Starbucks - Clouds in Your Coffee

Starbucks, “Clouds in your Coffee.”

Executive Summary

Starbucks was started in 1971 as a neighborhood coffee store in Seattle, Washington by three friends. When Starbucks first opened its doors it started only selling coffee-making equipment and coffee beans. In the years after Starbucks grew from a little locally based coffee store to a globally known name. When Howard Schulz purchased the company in 1987, he helped create what is known as the “Starbuck Experience”.

Starbucks biggest challenge has been trying to keep the feel of the neighborhood coffee store while at the same time trying to maintain and increase profits and revenues. Since Starbucks has had to maintain a large-scale efficient and standardization to be able to grow, it has had to sacrifice some of the core principles that got the company to where it is today and has also lost some of the “Starbuck Experience.” As the company has grown, the company has faced the dilemma of trying to keep that neighborhood coffee store feeling and also having to keep the process as efficient and standardize as possible to be able to have the number of stores that they have. Starbucks has acknowledge this problem and because of this they are now trying to bring back into the stores some of the things that made the customer enjoy the “Starbuck Experience” from the beginning.

Background

Starbucks like mentioned above was started in 1971, it was started by three friends, Jerry Baldwin, Zev Siegel, and Gordon Bowker. The first Starbucks opened its doors in Seattle, Washington and it did not sell coffee drinks. After the first store was opened the three friends eventually opened 6 more stores but all were located in Seattle. The person who changed and molded Starbucks to be the company that they are today was Howard Schulz, who joined the company as the director of Retail Operation in 1982. Schulz went to Italy in 1983, while he was there he noticed how the Italian espresso bars operated and that then helped him form and mold what is known today as the “Starbuck Experience.” Even though, Schulz left the Starbucks in 1985, in 1987 Schulz purchased the Starbuck name and company from its three former owners for $4 million dollars and merged it with the company he had created Il Giornale.

Starbucks has grown from only seventeen stores in 1987 to over fourteen thousand stores worldwide 20 years later. After Schulz bought Starbucks in 1988 he offered full health benefits to not only all full-time employees but also to all the part-time employees. Then in 1991, Starbucks was also the first privately owned company to offer their part-time employees stock options.

In 1992, Starbucks went public and its initial market capitalization was just about $220 million. The company continued to expand and by 1993 they started a relationship with Barnes & Nobles