Starbucks Case Study

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AmbaiU MBA Graduation Paper

Starbucks Corporation Case Study

The Starbucks Corporation: Past, Present and Future

By Hervé R. AUCH-ROY – PEN: 1207HA December 21, 2004.

http://www.ambaiuniversity.net/

Hervé R. AUCH-ROY

AmbaiU PEN: 1207HA

1

AmbaiU MBA Graduation Paper

Starbucks Corporation Case Study

Table of Contents A) Introduction
- An unusual coffee encounter – 3 3 3 3 4 4 4 5 6 6 6 7 8 9 9 10 11 12 12 13 17 17 18 19 19 20 21 23 23 25 26 27 28

B) Starbucks: Past
B.1) Early days - The original coffee shop: cofounders’ philosophy - Howard Schultz enters the picture - Collecting ideas - Expanding the vision and building the concept - Howard Schultz’s Il Giornale venture B.2) Shifting gears - A shift in the company profile: Starbucks acquisition - Building the management team - Expansion and partnerships. Keeping the pressure - Building the workforce - Mission statement, Values and Principles - Innovation - Quality matters - Expansion strategy - IPO and Stock performance - Financing B.3) Starbucks historical growth analysis

C- Starbucks: Present
- Snapshot - Financial analysis - Competition - Macro environment - SWOT analysis - “Starbucks Haters, Inc.” -

D) Starbucks: Future
- Financial perspective - International expansion - Recommendations -

E) Conclusion References

Hervé R. AUCH-ROY

AmbaiU PEN: 1207HA

2

AmbaiU MBA Graduation Paper

Starbucks Corporation Case Study

A) Introduction
- An unusual coffee encounter On a sunny Wednesday morning of April, my customer visit was scheduled for 10 am. As usual, I was early and decided to get a cup of coffee and review my presentation material. I pulled into the parking lot of the first mall, and walked into what I thought was a regular coffee shop; I was in for a surprise. At first, I went back to my car with my cup, and as I was going to turn on my laptop computer, my cell phone rang: the meeting was postponed. The strong fresh coffee aroma had already filled up my car, and I recalled the warmth of this shop that I just walked out of; now that I had plenty of time, I decided to go back there and sit down for a while. This shop was unlike any other I had experienced; people there remembered me and greeted me with a “Nice to see you again!”. Somehow, they must have known that I would come back. I picked up a news paper and sat at the counter; I remember feeling captivated by the atmosphere. Looking around me in the shop, I noticed that many items were for sale as well: cookies, teas and mugs. I grabbed my cup and looked at the logo, and remembered that I had been in another one of those coffee shops somewhere else in the US. “That must be a chain of some sort”, I remember thinking. Back at home that evening, I went onto the internet to look for it. I discovered the Starbucks Corporation. How can a coffee shop be a “corporation”? And why did it feel so familiar to walk in that coffee shop that day?

B) Starbucks: Past
B.1) Early days - The original coffee shop: cofounders’ philosophy It all started in 1971 when English teacher Jerry Baldwin, history teacher Zev Siegel, and writer Gordon Bowker opened a store called “Starbucks Coffee, Tea, and Spice” in Seattle, WA. They shared a passion for quality coffee and exotic teas, and named the shop after the coffee-loving first mate in Herman Melville's Moby Dick. While they invested themselves $1,350 each, they had to borrow another $5,000 from the bank. In the beginning, they purchased their coffee from Alfred Peet, a Dutch immigrant who had started a coffee shop in the San Francisco Bay Area in 1950 (“Peet’s Coffee and Tea”). Alfred Peet was a passionate for coffee, and he urged them to deepen their knowledge. Soon, the Starbucks cofounders purchased a used roaster from Holland, and set up roasting operations in a nearby ramshackle building. Baldwin was keeping the books and developing a growing knowledge of coffee, and Bowker was the "magic, mystery, and romance man.", in...
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