Starbucks

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STARBUCKS CORPORATION
By Aaron Salsman
Gay Ann Christy
MGMT 360
9-26-2012

Introduction
Starbucks Corporation (NASDAQ: SBUX) operates in the Food and Beverage Industry, it is an international specialty coffee company that roasts, markets, and retails its product on a global scale. With over 17,000 locations in 55 countries around the globe and annual revenue topping $11 billion, Starbucks is the largest specialty coffeehouse company in the world (CNN, 2012). Their products include Italian-style espresso beverages, regular and decaf coffee beverages, cold blended iced coffee beverages, pre-packaged roasted whole bean and soluble coffees, and premium teas. Starbucks locations also offer several food items, such as fresh pastries, salads, prepared sandwiches, oatmeal, as well as juice and bottled water. Starbucks also markets its own line of pre-packaged coffee and tea products as well as bottled and canned beverages for sale through various retailers (CNN, 2012). The corporation’s largest competitor is McDonalds Corp.; other competitors include Nestle, Dunkin’ Brands Group Inc., Caribou Coffee, and Green Mountain Coffee Roasters Inc (Yahoo, 2012). Starbucks began in 1971 when 3 entrepreneurs; Jerry Baldwin, Zev Siegel, and Gordon Bowker – began selling their whole bean coffee and coffee supplies in Pike Place Market in Seattle, Washington (Harris, 2008). They named their store Starbucks, after the first mate in Herman Melville’s novel, Moby Dick (Starbucks). They were inspired by a Dutch immigrant by the name of Alfred Peet who owned and operated Peet’s Coffee and Tea in Berkeley, California beginning in 1966. Peet specialized in importing fine European coffees and teas and teaching clientele how to prepare the specialty brewed beverages at home. Baldwin, Siegel, and Bowker became regular clients of Peet’s and began ordering their coffee supplies from him. In 1980, Siegel sold his share of the company to the two remaining partners who continued to grow the business. By 1981, Starbucks had grown to 5 locations and had turned a profit for every year they were in business. In 1982, Howard Schultz joined the company as Manager of Retail Sales and Marketing. A year later, Schultz took his first trip to Italy and was infatuated with the coffee culture that exists that country. With a vision of bringing something similar to America, he approached the two remaining owners of Starbucks about turning the business into a national chain of cafes modeled after the Italian coffee bar. The owners declined, making it clear that they did not want to be in the restaurant business. Undeterred, Schultz continued to work on his business idea and began to seek out investors. In 1985, Schultz opened his first Italian style coffee bar where he served Starbucks coffee, he named it Il Giornale’s. The café was an immediate success and he soon expanded to 3 locations. In 1987, Baldwin and Bowker agreed to sell Starbucks to Schultz for $4 million at which time Il Giornale’s became Starbucks, creating the foundation for the soon to be multi-billion dollar legendary java giant (Harris, 2008). Organizational Challenges

According to the text, organizations, large and small, face many challenges. The five major organizational challenges are: Managing in a global environment; Designing and structuring (or restructuring); Improving quality, empowering organization members, and enhancing competitiveness; Reducing complexity, increasing speed, and reacting to environmental changes; and Providing ethical and moral management of the organization (Hodge, Anthony, & Gales, 2003). Starbucks has faced many challenges since it began; one of the most important, fundamental challenges was how to constantly and consistently obtain the very best coffee products in the world to deliver to their customers. To do this, Starbucks put people on the ground in places such as, South America, The Caribbean, Africa, Europe, and Asia – not only searching for the very best...
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