Case: Starbucks Going Global Fast
A historical perspective of Starbucks revealed that the company began in 1971 with three individuals having like passion for fine coffees and exotic teas. English teacher Jerry Baldwin, History teacher Zev Siegel, and writer Gordon Bowker collectively combined their thoughts and resources and opened a store called Starbucks Coffee, Tea, and Spice in a marketplace in Seattle. They selected the name Starbucks in honor of Starbuck, a character in Herman Melville’s book, “Moby Dick”. A two-tailed mermaid, encircled by the words Starbucks, is used as the company’s logo. The company grew from 17 coffee shops in Seattle to over 16,000 outlets in 50 countries. It is reported that their sales escalated at a rate of 20 percent annually, peaking at approximately $10.4 billion in 2008. With a swift rise to success came a swift downfall in 2009 as the Company experienced an unprecedented decline in sales of $9.8 billion. Their profits surged further at an average rate of 30 percent per year through 2007 peaking at $673, and then plummeted to $582 billion and $494 billion in 2008 and 2009, respectively. To reduce cost, the company closed 475 stores in the United States. During 2010 the company once again realized revenue increases up to a record total of $10.7 billion. The company reported that operating income increased by $857 million in comparison to 2009’s $1.4 billion. The full-year operating margin of 13.3 percent represented the highest full-year consolidated operating margin in the company’s history. With this once again upward trend in profitability, one has to wonder if Starbucks have found the answer to its sales strategy. The volatility of its sales have somehow haunted the financial stability of this company in the past, and it seems that only time will reveal whether this fluctuating tendency will become a fixation of the past. Amidst the great expansion and success, Starbucks has encountered numerous...
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