November 17, 2010
Executive summary for Starbucks
For the second week within accounting, Team B was assigned to choose an organization, and to research the annual financial reports from the last two-three fiscal years. As a Team, we have chosen to discuss and analyze the vast coffee franchise called Starbuck’s. While using Starbucks' balance sheet, income statements, and cash flow chart, this will help us to determine how well Starbuck’s is doing with their consumers, and throughout the globe. So now let us start off with explaining a brief history for this successful company, along with all the data and records we were able to retrieve.
A small coffee shop was opened in 1971 by three men, Zev Siegl, Gordon Bowker, and Jerry Baldwin in Seattle’s Pike Place Market; they named the shop Starbucks Coffee, Tea, and Spices. The retail company was successful in the sale of tea, spices, ground coffee, and roasted whole bean coffee. However, in 1980 Siegl sold his part of the business. In 1982, Baldwin hired Howard Schultz, a salesperson of plastic, into the Starbucks venture. After experiencing popular espresso bars in Milan while on a business trip Schultz discovers the potential for Seattle. Finally, Schultz shares his discovery of lattes and mochas with Seattle and the city instantly become fans of coffee (Gourmet Coffee Zone.com, 2008).
Currently, Starbucks is enjoyed by millions of customers daily in over 50 countries and have facilities in more than 16,000 locations. Interestingly, the Starbucks name birth from the classic American novel, Moby Dick, written by the author Herman Melville.
After the mid 80’s Starbucks continued to be a success to coffee drinking through-out the United States and eventually, the world. Following is the history of Starbucks road to success (Starbucks Corporation, 2010).
• 1987 - Starbucks opens stores in Vancouver and Chicago.
• 1988 - Full-time and part-time employees are offered full health benefits
• 1992 - Starbucks’ common stock is being traded under the trading symbol “SBUX” on the NASDAQ.
• 1996 - Begins selling bottled coffee drink through Pepsi-Cola.
▪ Japan store opens as the first store outside of North America
• 1997 - The Starbucks Foundations is established to benefit the local community.
• 1999 - Promotes to grow coffee in an environmentally safe way by partnering with Conservation International.
• 2002 - Becomes licensed to sell coffee as Fair Trade Certified in other countries.
• 2009 - Starbucks is the world’s largest buyer of Fair Trade Certified coffee (Starbucks Corporation, 2010).
The Starbucks mission is “to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time” (Starbucks Corporation, 2010).
Starbucks has an Audit and Compliance Committee (the “Committee”) to oversee internal audits, external audits, and accounting and financial reporting activities performed by Starbucks Corporation. The Committee is responsible for monitoring the company by reviewing Starbucks financial information that is provided to internal and external users. However, the Committee ensures that integrity is practiced on the board of directors. Furthermore, if needed, independent auditors are not restricted but accountable to the Committee. Ultimately, the Committee carries the responsibility to provide advice and guidance to board of directors to avoid oversight (Starbucks Corporation, 2010). In 1992, Starbucks first day of trading began at $17 per share and closed at $21.50 per share. Starbucks Corporations is listed under the ticker symbol “SBUX” on the NASDAQ (Starbucks Corporation, 2010).
As of September 28, 2008, Starbucks Corporation’s cash and cash equivalent was $269.8 million for the end of the annual reporting period for 2008. At the end of the fiscal year of 2009,...