What were the main reasons for Starbucks success?
Mistakes which other companies did - and Starbucks not:
-companies didn?t rise enough money to finance growth
-companies franchised too early and too widely
-companies lost control of quality
-companies didn?t invest in systems and processes
-companies hired inexperienced people or the wrong
people
-companies were so eager to grow that they picked the
wrong real estate locations.
-companies didn?t have the discipline to walk away from a
site if they couldn?t make the economics work.
-All of them lost money, they didn?t use their years of
losses to build a strong foundation for growth.
You can?t create a world-class enterprise without investing it.
Table of Contents
1. Background
2. Mail order
3. Growing strategy
4. “Flavorlock”- bags
5. People
6. Going public
7. Growing in U.S. and International
8. Connecting with the customer
9. Key Development
10. Suppliers as Partners
11. Situational Analysis
14. Coffee Tree - Starbucks Company Tree
15. Financial Highlights
16. Stores opened at year end 2004:
17. The Coffee Industry
19. The firm's value chain:
20. Starbuck Haters
21. Summary
22. Future
Objectives & Topics
This research paper examines the historical development, strategic evolution, and operational success of the Starbucks Corporation. It investigates how Howard Schultz transformed a local coffee bean retailer into a global brand through innovative store concepts, a unique organizational culture, and a distinct "third place" customer experience, while addressing the challenges of rapid international expansion.
- Historical growth from a Seattle-based retailer to a global enterprise.
- Strategic management of international expansion and joint ventures.
- Organizational culture, employee relations, and the "partner" concept.
- Supply chain management and the development of long-term vendor partnerships.
- Brand positioning and the "coffeehouse experience" as a core competitive advantage.
Excerpt from the Book
Italian espresso
1983 Schultz attended an international housewares show. He discovered the ritual and the romance of coffee bars in Italy. He recognized that coffee is an integral part of the culture in Italy – Italians start their day at an espresso bar and later in the day return with their friends. Schultz also found out that Starbucks sold great coffee beans, but didn’t serve coffee by the cup.
The Italians had turned the drinking of coffee into a symphony, and it felt right. This also Schultz wanted to do at Starbucks, he brought this new ideas to the owners, but was turned down.
In April 1984 Jerry Baldwin agreed to test an espresso bar when Starbucks opened its sixth store.
Also in 1984 Starbucks bought Peet’s Coffee and Tea. At this time Peet’s Coffee and Tea had around the same size as Starbucks – five locations.
After this deal the company was now so heavily leveraged that there was no money available for growth or innovation.
But Schultz wanted to grow faster with the Italian concept he had seen at his trip to Italy. So in late 1985 Schultz left Starbucks to start own company – a coffee-bar-enterprise – with the name “Il Giornale” (pronounced: ill jor-nahl-ee).
Summary of Chapters
1. Background: Covers the origins of Starbucks in 1971 and Howard Schultz's early influence on the company.
2. Mail order: Discusses the early expansion of Starbucks through catalog sales before it became a retail giant.
3. Growing strategy: Examines the transition to a professional management team and the recruitment of experienced leaders to fuel growth.
4. “Flavorlock”- bags: Details the technical innovation of vacuum packaging that made large-scale distribution possible.
5. People: Focuses on the internal culture, employee benefits, and the stock option plan that transformed staff into partners.
6. Going public: Highlights the company's 1992 IPO and the rapid store expansion that followed.
7. Growing in U.S. and International: Outlines the strategy of global penetration and the management of company-operated versus licensed stores.
8. Connecting with the customer: Explains the focus on the "coffeehouse experience" and barista training.
9. Key Development: Summarizes recent milestones, including music industry ventures and new leadership changes.
10. Suppliers as Partners: Describes the relational procurement model focused on quality and long-term sustainability.
11. Situational Analysis: Provides a strategic overview of Starbucks’ corporate and operational management.
14. Coffee Tree - Starbucks Company Tree: Analyzes the company’s social conscience and commitment to community and farming development.
15. Financial Highlights: Presents the growth trajectory of revenues and earnings as reported in annual documentation.
16. Stores opened at year end 2004: Provides detailed data on store expansion and the record growth experienced in 2004.
17. The Coffee Industry: Analyzes the competitive landscape, consumption trends, and Starbucks' position within the specialty coffee market.
19. The firm's value chain: Breaks down the primary and secondary activities that contribute to Starbucks’ competitive advantage.
20. Starbuck Haters: Explores external criticism and internal dissent regarding the brand's rapid growth and operational pressures.
21. Summary: Recaps the core factors of Starbucks' success, including product quality, branding, and strategic positioning.
22. Future: Offers a speculative look at the challenges ahead, warning against over-expansion and the importance of maintaining original values.
Keywords
Starbucks, Howard Schultz, Coffee Industry, Specialty Coffee, Retail Strategy, International Expansion, Value Chain, Corporate Culture, Bean Stock, Frappuccino, Coffeehouse Experience, Strategic Alliances, Brand Management, Market Penetration, Sustainability.
Frequently Asked Questions
What is the primary focus of this research paper?
The paper provides a comprehensive analysis of the evolution of the Starbucks Corporation from its founding in 1971 to its status as a global leader in the coffee industry by 2005.
What are the central themes explored in the text?
The core themes include the strategic implementation of the "coffeehouse experience," international expansion models, human resource strategies (partner concept), and the importance of supply chain quality control.
What is the main objective of the author regarding Starbucks?
The objective is to explain how Starbucks achieved competitive advantage through differentiation, quality, and specific growth strategies while identifying the potential risks of over-commercialization.
Which scientific methods are applied in the analysis?
The author employs a qualitative situational analysis, SWOT analysis, and an assessment of the firm's value chain based on annual report data and existing business literature.
What topics are covered in the main body of the work?
The main body covers historical developments, organizational structure, market expansion strategies, financial performance data, and the role of corporate responsibility and partnerships.
Which keywords characterize this paper best?
Key terms include Starbucks, Coffeehouse Experience, Strategic Expansion, Partner Concept, and Value Chain Analysis.
How does Starbucks manage its entry into foreign markets?
Starbucks utilizes a variety of methods including joint ventures with local partners, licensing agreements with existing retailers, and establishing wholly-owned subsidiaries to ensure quality control.
What is the "third place" concept mentioned in the summary?
It refers to the idea of a social environment that is neither work nor home, where customers can relax, socialize, or reflect, which serves as a central pillar of the Starbucks brand experience.
- Arbeit zitieren
- DI Dr Thomas Strutzmann (Autor:in), 2005, The Starbucks Corporation: past, present and future , München, GRIN Verlag, https://www.grin.com/document/186060
