Howard Schultz Strategy with Starbucks

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When Howard Schultz first experienced Starbucks Coffee, Tea and Spice he was immediately smitten by the operations and business culture, and actively pursued a job with them. At that time, Starbucks Coffee, Tea and Spice was an 11 year old coffee shop with six stores in Seattle specializing in high-quality coffee beans. Starbucks Coffee, Tea and Spice desired to bring fine coffee to their customers, so to that end, they imported quality coffee beans, roasted them to their own exacting specifications and sold the beans and high-end coffeemakers to their customers, so customers could make superb coffee at home. The only coffee brewed onsite was the sampling of a roast, in order for a customer to determine if they wanted to buy that flavor, and as part of the education of their customers base to appreciate, and presumable buy more, quality coffee over the common variety available at the grocery store. Schultz, after a company trip to Italy where he accidently discovered the espresso bars of Milan, came back home with an idea of how to transform the business. His excitement was not shared by the owners, and when little changed over the next two years, Schultz left Starbucks Coffee, Tea and Spice to start his own company Il Giornale. At Il Giornale he did what he wanted to do at Starbucks Coffee, Tea and Spice – create the energy, ambience and community of the Italian coffeehouses in Seattle. Within two years the owners of Starbucks Coffee, Tea and Spice wanted to sell their business and Schultz happily purchased and combined both businesses, calling them Starbucks Corporation (SBUX). Schutlz, now in possession of the original stores, the roasting plant and his coffeehouses, was ready to fully explore his strategy. His plan was to create a place where his customer could enjoy premium coffee and feel pampered and relaxed, making the stop at his coffeehouse a part of the customers’ day – a 3rd place where they could go – an “urban oasis” (Rumelt, 2011) (the 1st...
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