Starbucks Case Study

Executive Summary

Coffee has become an essential beverage in our society. Adults consume a huge proportion of coffee in their daily routine. In North America, it is proven that ninety percent of adults consume coffee. It usually served hot which contains caffeine, is a xanthine alkaloid compound that acts as a stimulant in humans. Coffee has become a remedy for sleepiness or for staying up late for work or for project. It also became part essential source of breakfast, snacks, and even for breaks during work for lot of people. Coffee is one the fastest made beverage in any shop and consumers does not seem mind to stop at the shop before going to their work, long trip, or during short breaks. It became a habit for the morning workers that they visit the coffee shop to get the coffee to go or through drive-thru which the customers do not have to get off their vehicle and get their coffee through the window. Even for during the long road trip, the driver might stop at the service station to get some coffee for break to keep him/her wake up. In school, students might consume lot of coffee during the exams to do all-nighter for keep themselves up. More and More of adults and young adults are adapting with the culture of having coffee and making as their daily routine.

This huge amount of consumption not only started recently, the consumption has started since the Stone Age. They consume it bit differently from the today's world. In the Stone Age they chew on the seeds or leaves to have the effect of easing fatigue. Then later, they found out when the seed was in boiling water, the caffeine had increased effect.

Coffee also brings friends, family, co-workers, and acquaintances together. Coffee shops have become a great place to hangout to have a chat, or meet, or to introduce someone. "Let get together for coffee" is famous line today's world to invite to shop and have a chat among friends, families, and life partners. This famous expression also being used as a start of relationships between a male and female: for example anyone could use this statement for pick up line to reason to date. Coffee is becoming a part of lives.

There are numerous coffee shops today. Consumers would have hard time choosing which coffee they prefer the most. A famous reputation coffee shop is considered as Starbucks, which they serve a rich coffee made from rich coffee beans. Their expansion is a very competent and outstanding. They have over 12,000 locations with unique products than their competitors. They face lot of challenges internally as well as externally. Starbucks have lot of competitors such as Tim Horton's which majority of them are located in Canada, Dunkin Donuts and big and famous in United States, and other being Second Cup, McDonald, and many others. S The episode of Starbucks Company during 1996 through 2005 is closely analyzed internally, externally, and in strategic manner.

Situation

Introduction:

Drinking coffee is part of the daily life for a lot of people. Individuals can brew their own cup of coffee at home or at work; or stop by the Tim Horton drive-thru window. Yet the coffee drinking culture is evolving. Growing number of coffee drinkers are seeking for better quality and variety than just a cup of coffee. When it comes to specialty coffees, the Italian style, Seattle-based Starbucks Coffee Company is considered the most prominent, as well as the world's largest coffee shop chain.

Mission Statement

"Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow."

When creating the mission statement, senior executive team did a good job on expressing how the company valued their employees. The draft was submitted to all employees for review and changes were made with regard to employees' comments. The mission statement and its principles provided a strong sense of how Schultz wanted the company to be, the six principles of Starbucks are stated as follow:

* Provide a great work environment and treat each other with respect and dignity.

* Embrace diversity as an essential component in the way we do business.

* Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee.

* Develop enthusiastically satisfied customers all of the time.

* Contribute positively to our communities and our environment.

* Recognize that profitability is essential to our future success.

The first four principles provide a guideline for the operation of Starbucks

Last 2 points, taken social responsibility while maximizing shareholder's profit

Background

Founded in 1971, Starbucks started out as a local coffee bean roaster and retailer by three partners, Jerry Baldwin, Zev Siegel and Gordon Bowker. They opened the first store at Pike Place Market, Seattle. The original Starbucks sells roasted coffee beans, tea, spices and related equipments. During the first year of operation, Starbucks purchased green coffee beans from local supplier Peet's; later on began to purchase straight from the beans growers. Recognitions of Starbucks began to build up among the local society for its high quality roasted whole bean and ground coffees.

At 1982, an entrepreneur, Howard Schultz, the current chairman of Starbucks, joined the company as director of retail operations and marketing. Mr. Schultz was inspired by the espresso bars found on the streets of Milan during a business trip to Italy. Mr. Schultz returns with a suggestion that Starbucks should go beyond of just selling roasted coffee beans - an Italian style coffeehouse that offers brewed coffee and espresso beverages as well as high-quality beans; the prototype of today's Starbucks. But the beverage business idea was rejected by the owners since they believed that coffee should be prepared at home and it would distract the focus of the company. Mr. Schultz then started II Giornale coffee bar chain in 1985 to sell brewed coffee and espresso drinks made from Starbucks coffee beans. In 1987, II Giornale acquired Starbucks assets with the help of local investors and changed its name to Starbucks Corporation. Hence, Starbucks began to operate in today's Italian coffeehouse