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Starbuck’s Strategy And Internal Initiatives To Return To Profitable Growth

1486 words - 6 pages

Case Summary
In 1971, three academics, Jerry Baldwin, Zev Sigler, and Gordon Bowker, opened Starbucks Coffee, Team, and Spice in Seattle, Washington. They were inspired by the success of Peet’s Coffee and Tea in Berkeley, California. However, they focused on selling high-quality whole beans and coffee products, making the store was consistently profitable. By 1980, Starbucks had four locations in the Seattle area. In 1981, Howard Schultz, vice president and general manager of U.S. operations for a Swedish maker of coffee and kitchen equipment, visited Starbucks and was immediately enamored by the business philosophy and opportunity. For over a year Schultz pressed for a position at Starbucks and was finally hired in September 1982.
However, Schultz’s vision to expand and reconstruct Starbucks conflicted with the owner’s desire to retain a retail focus. So, in 1986, Schultz struck out on his own and founded Il Giornale Coffee Company. The following year, Schultz acquired Starbucks for $3.8 million dollars when the owners decided to focus their attention on running Peet’s Coffee and Tea, which they had acquired in 1984. Howard Schultz names the new company Starbucks Corporation and became the company’s first CEO.
By April 2010, Starbucks had become the world’s premier roaster and retailer of specialty coffees, with 8,812 company-owned stores and 7,852 licensed stores in more than 50 countries. Schultz stepped down as CEO in 2000. Nonetheless, declining stock prices, eroding customer traffic, and perceived dilution of the Starbucks brand caused the Board of Directors to ask Schultz to return to his role as CEO and lead a major restructuring and revitalization initiative. Between 2008 and 2010, Schultz drove a transformation of the Starbucks’ strategy in order to return the company to profitable growth.
Company Update
Today, Starbucks Corporation is a premier roaster, marketer and retailer of specialty coffee around world. It has about 182,000 employees across 19,767 company operated and licensed stores in 62 countries. The company’s product mix includes roasted and handcrafted premium and high quality priced coffees, tea, and an assortment of fresh food items and other beverages. Its brand portfolio includes Starbucks Coffee, Seattle's Best Coffee, Tazo Tea, Evolution Fresh, La Boulange, and Torrefazione Italia Coffee. Starbucks also retails a variety of coffee and tea products through distributions channels such as licensed stores, grocery and national foodservice accounts (Starbucks).
Starbucks Strategy
Starbucks Corporation current strategy is to continue its expansion internationally. CEO Howard Schultz has stated that the company is "significantly under-stored" in North America” (Peterson) Therefore, Starbucks is planning to open 1,500 more stores globally this year, including 600 in North America. Many of those locations will be drive-thru locations.
Several years ago, Starbucks Corporation fell off its bandwagon with its aggressive...

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