Starbucks Analysis

Starbucks opened operations in Seattle's Pike Place Markets in 1971 with the future aim of providing coffee to a number of restaurants and surrounding bars. With the recruitment of Howard Schultz who led the marketing and retail efforts of Starbucks in 1982, the company took a change in direction through the views of Schultz, who after visiting Italy tried to adapt the same principles in order to a strong bar culture. Schultz then utilized Starbucks ability to provide quality coffee beans and opened up a new store called Il Giornale, which brewed coffee from these particular beans. By 1987, Il Giornale had decided to take over the assets of Starbucks and also, further changed its name to Starbucks Corporation. By the end of the year, Starbucks had increased the number of stores to 17 and furthered its location span by entering Chicago and Vancouver.

In 1990, the company took further steps forward with expansion of the Seattle headquarters and an increase in resources with the opening of a new roasting plant. Relationships and other ventures also took off during the early nineties as the company looked to development organizations to further its progress. By 1995, the company really established its name with the opening of the 676th store as well as increasing the products in store with the addition of compact discs a result of a previously popular experiment with Ð''in-house' music. In 1996, the company kept on stretching its reach by entering into the market of Japan, Singapore and Hawaii. This was achieved through joint ventures including the one formed with Sazaby Inc., which pushed through the development of coffee houses in Japan. By the year 2000, things had progressed so far that 3,300 stores were already opened, the company had ventured into countries ranging from England to Australia and a website was created to keep up operations with the latest technology.

The current international situation for Starbucks seems to be an emerging part of their business and the reorganization of this is proved by their aim to become a leading global company through making a difference in peoples lives all around the world. This goal is quite close to being achieved as proved the Starbucks current locations in international markets and the successfulness of these ventures. The current countries in which Starbucks are located in are: Australia, Bahrain, Canada, Hong Kong, Israel, Japan, Kuwait, Lebanon, Malaysia, New Zealand, Oman, Peoples Republic of China, Philippines, Qatar, Saudi Arabia, Singapore, South Korea, Switzerland, Taiwan, Thailand, Untied Arab Emirates, United Kingdom, and the United States.

Overall, the aim of becoming a worldwide global brand seems to be working in favor of the company and is helping it to attract the attention of many major companies who would like to share a partnership (starbucks.com). This is all positive news for the company because it provides a strong basis for future development of international markets, which further strengthens the mission to become one of the leading specialty coffee retailers in the world. According to the company fact sheet, as of November 2006, Starbucks had 7,102 company-operated outlets worldwide: 5,668 of them in the United States and 1,434 in other countries and U.S. territories. In addition, the company has 5,338 joint-venture and licensed outlets, 3,168 of them in the United States and 2,170 in other countries and U.S. territories. This brings the total locations (as of November, 2006) to 12,440 worldwide (www.wikipedia.com). It's these types of goals which prove the potential of this brand to become so popular and well known, that it would be as recognizable as major names such as McDonalds and Coca-Cola.

Product Line

Starbucks stores offered a choice of regular or decaffeinated coffee beverages, a special "coffee of the day," and a broad selection of Italian-style espresso drinks. In addition, customers could choose from a wide selection of fresh-roasted whole-bean coffees (which could be ground on the premises and carried home in distinctive packages), a selection of fresh pastries and other food items, sodas, juices, teas, and coffee-related hardware and equipment. In 1997, the company introduced its Starbucks Barista home espresso machine featuring a new portafilter system that accommodated both ground coffee and Starbucks' new ready-to-use espresso pods. Power FrappuccinoÐ'--a version of the company's popular Frappuccino blended beverage, packed with protein, carbohydrates, and vitaminsÐ'--was tested in several markets during 1997; another promising new product being tested for possible rollout in 1998 was Chai Tea Lattè, a combination of black tea, exotic spices, honey, and milk.

The company's retail sales mix was roughly 61 percent coffee beverages, 15 percent whole-bean coffees, 16 percent food items, and 8 percent coffee-related products and equipment. The product mix in each store varied, depending on the size and location of each outlet. Larger stores carried a greater variety of whole coffee beans, gourmet food items, teas, coffee mugs, coffee grinders, coffee-making equipment, filters, storage containers, and other accessories. Smaller stores and kiosks typically sold a full line of coffee beverages, a limited selection of whole-bean coffees, and a few hardware items.

In recent years, Starbucks recently entered the music and film business. Starbucks Entertainment is one of the producers of the 2006 film "Akeelah and the Bee". Retail stores heavily advertised the film before its release. The company also began selling special jazz and blues CDs, which in some cases were special compilations that had been put together for Starbucks to use as store background music. Hear Music is the brand name of Starbucks' retail music concept. The idea for selling the CDs originated with a Starbucks store manager who had worked in the music industry and selected the new "tape of the month" Starbucks played as background in its stores. He had gotten compliments from customers wanting to buy the music they heard and suggested to senior executives that there was a market for the company's music tapes. Research that involved looking through two years of comment cards turned up hundreds asking Starbucks to sell the music it played in its stores. The Starbucks CDs, created from the Capitol Records library, proved a significant addition to the company's product line. Some of the CDs were specifically collections designed to tie in with new blends of coffee that the company was promoting. Starbucks also sold Oprah's Book Club selections, the profits of which were donated to a literacy fund supported by the Starbucks Foundation. The company was constantly engaged