Strategic Management Starbucks

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Final case
Starbucks

Table of Contents

Background Information………………………………………………………………………………………………………..1 Discussion of Strategy……………………………………………………………………………………………………………2 5 Forces Model………………………………………………………………………………………………………….............3 Driving Forces………………………………………………………………………………………………………………………..5 Key Success Factors……………………………………………………………………………………………………………….6 SWOT Analysis……………………………………………………………………………………………………………………...7 Analysis of Financials…………………………………………………………………………………………………………….9 Managerial Worry List………………………………………………………………………………………………………….10 Recommendations……………………………………………………………………………………………………………….12

Background Information
Today, Starbucks has proved to be a leading innovator and an example of success in an industry originally thought of as unrewarding. There have been many ideas for the future of the company that were challenged and rejected. But with careful planning, hard work, and determination, the Starbucks we know today was able to emerge and lead a revolution in the coffee serving business. The company of Starbucks didn’t quite start out the way everyone would first think. There were three founders of the original base of the company. In 1971 Jerry Baldwin, Zev Siegel, and Gordon Bowker invested about $6,350 each to start up a business they originally called Starbucks Coffee, Tea, and Spice. Their location was perfect, being nestled in the very attractive Pikes Place of Seattle Washington. And by early 1980, they had already managed to open three more stores in the surrounding area of Seattle. Things were going extremely well and profits were more than expected. They thought they had found a niche. An area of the market that customers were interested in and that they can make a future out of selling coffee. The quick, convenient, espresso or cup of coffee we know today from Starbucks is not what the original three creators shaped their name with. Starbucks Coffee, Tea, and Spice was a small store dedicated to the procedure of buying quality coffee beans and spices, learning the correct process and steps, and then taking the ingredients home to create later. There was nothing more than a sample taste of coffee given in the store around the early years of the company. But there was still a major interest from the customers for this experience. Customers loved the environment, the knowledge from the staff, and the quality ingredients that they couldn’t buy anywhere else. This all worked for everyone, but Starbucks didn’t realize its potential until Howard Shultz showed up. Howard Shultz was a vice president for a small kitchen equipment company and was interested in the success of Starbucks and how they were selling many of his company’s appliances. He walked into the store in Pikes Place Seattle and it was love at first sight. He was drawn in by the noise, environment, and the aroma. After this one experience, he knew his future was with Starbucks and creating the business of coffee. But it wasn’t an easy entry. Shultz had to pretty much beg and plead his case for why he can change this company for the better. He proposed many different plans, and the original three founders were hesitant but eventually caved in and let Shultz join the team. From that point on, Starbucks exploded onto the scene, expanding more and more until they hit a speed bump that sparked a new idea. Mr. Shultz had an idea to change their focus from a store and a take home experience, to a comforting café and “third place” experience. This was his way of wanting the customer to feel like Starbucks could be their “third place” between work and their house. Baldwin and Bowker did not like the idea, expressing that they didn’t want it to be a restaurant and to stray too far away from what is working for them. Shultz tried to slowly change Starbucks but the co-founders weren’t having it. Shultz eventually left and started his own company called II Giornale Coffee. It was his idea of where he wanted Starbucks to go but without...
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