Starbucks International Operations Essay

3357 words - 14 pages

Starbucks’ International Operation
All's Not Well with Starbucks
For Howard Schultz, Chairman of Starbucks Corp., this list was special as Starbucks featured in the list. It was a dream come true for the Seattle-based entrepreneur.
Though the U.S. economy was reeling under recession and many major retailers were reporting losses and applying for bankruptcy, Starbucks announced a 31 % increase in its net earnings and a 23% increase in sales for the first quarter of 2003. Analysts felt that the success of Starbucks showed that a quality product speaks for itself. The fact that Starbucks spent less than 1 % of its sales on advertising and marketing strengthened this view. In addition to ...view middle of the document...

By 1981, the number of Starbucks stores had increased to five, and Starbucks had also established a small roasting facility in Seattle. Around the same time, Schultz, who was working with Hammarplast—a Swedish housewares company that marketed coffee makers—noticed that
Starbucks, a small company from Seattle, was ordering more coffee makers than anyone else. In order to find out more about the company, Schultz visited Seattle. Schultz was so impressed by the company and its founders that he offered to work for the company.
In 1982, Schultz joined Starbucks as marketing manager, with an equity stake in the company. During his first year at Starbucks, he studied the various types of coffee and the intricacies of the coffee business. The turning point came in 1983, when Schultz was sent to Milan, Italy, for an international housewares show. There he observed that every street in the city had an espresso coffee bar where people met and spent time. Schultz realized that Starbucks could introduce espresso coffee bars in the United States. He put forward this idea to his partners, but they did not like the idea of selling espresso coffee. However, after a lot of persuasion from Schultz, they agreed to allow him to sell espresso coffee in their retail shop. The business picked up, and by the weekend, they were making more money by selling the beverage than by selling coffee beans. Still, the partners refused to venture into the beverage business, so Schultz decided to quit the company and start out on his own.
In April 1985, Schultz opened a coffee bar called II Giornale in Seattle, with a seed capital of $ 150,000 invested by Jerry Baldwin and Gordon Bowker. The rest of the capital was raised through private placement. Soon, the second and third stores were opened in Seattle and Vancouver respectively. During 1987, when Schultz heard that Starbucks' owners were selling off six stores along with a roasting plant and the Starbucks brand name, he raised $3.8 million through private placements and bought Starbucks. Because Starbucks was a more established name, Schultz decided to retain it instead of II Giornale. Schultz expanded Starbucks to Chicago, Los Angeles, and other major cities. But with increasing overhead expenses, the company reported a loss of $1.2 million in 1990. However, Schultz was confident of his business plan and continued his expansion spree. He even hired employees from companies such as PepsiCo. By 1991, the number of Starbucks stores had increased to 116, and Starbucks became the first privately owned company to offer employee stock options. In 1992, Starbucks was listed on the New York Stock Exchange at a price of $17 per share.
The strategy Starbucks adopted was to blanket a region with its new stores. By doing so, it could reduce the customers' rush in one store and also increase its revenues through new stores. This helped the company to reduce its distribution costs and the waiting period for customers in its stores,...

Other Papers Like Starbucks International Operations

Starbucks International - Foreign Market Entry Strategy

1043 words - 5 pages Starbucks International - Foreign Market Entry Strategy Starbucks International has gone beyond the normal philosophy of Starbucks, to create a re-birth of their product line in foreign countries. Typically in the United States, Starbucks owns its entire line of coffee-bar stores outright with no franchise investments or partnerships. However, their international operations are quite the opposite. Starbucks International has adopted a

Analyse of Starbucks Essay

5384 words - 22 pages valuesbased approach for building very strong internal and external relationships with suppliers, which drives the successful deployment of its business strategy of organic expansion into international markets, horizontal integration through smart acquisitions and alliances that maintains their long-term strategic objective being the most recognized and respected brands in the world. 3.2) Starbucks SWOT Analysis: Strengths:  Strong Market

Strategy Analysis

5384 words - 22 pages successful deployment of its business strategy of organic expansion into international markets, horizontal integration through smart acquisitions and alliances that maintains their long-term strategic objective being the most recognized and respected brands in the world. 3.2) Starbucks SWOT Analysis: Strengths:  Strong Market Position and Global Brand Recognition: Starbucks has a significant geographical presence across the globe and maintain a

Apple & Starbucks

1350 words - 6 pages infrastructure services used in international Starbucks retail stores, support centers, and manufacturing facilities as part of its sourcing strategy. As stated by Brian Crynes, Starbucks CIO, “Our global IT infrastructure program delivers standard services to our international markets in support of Starbucks growth targets.” The new services will support as Starbucks expands its presence from over 3,600 to 20,000 stores in international markets

Organization Development Implemented in Starbucks

5410 words - 22 pages OD Implemented in Starbucks 1 ORGANIZATION DEVELOPMENT IMPLEMENTED IN STARBUCKS INDIRAN MBS141104 LEE YEW HOONG MBS141102 CHONG KUEN SOON MBS1133 CHIA WI PEAW MBS141106 MOHD FAIZAL MBS141114 SEM I 2015/2016 UBSE1123 – Session 01 International Business School, UTM Lecturer Name: Dr Harcharanjit Singh Submission Date: 05th Dec 2015 OD Implemented in Starbucks 2 Table of Contents 1.0 Introduction

Starbucks Success Concept

4589 words - 19 pages retail operations, grow its specialty sales and other operations, and selectively pursue opportunities to leverage the Starbucks brand through the introduction of new products and the development of new distribution channels (Starbucks Company Profile, 2012). 3. Impact on Business Trade In the past, Starbucks was a single store in Seattle, Washington and today has moved into a global market and is the largest Coffeehouse company in the

Strategic Initiative Paper: Starbucks

1399 words - 6 pages growth Starbucks created a new position of zone vice presidents, the zone vice presidents became responsible for the overall operations of the area, it recruit had prior experience in operating and marketing experience within the retail chain industry. Currently Starbucks is seeing a decline in the market share due to decline in patronage in their locations and a slowing economy. They have developed new strategy and revisited things that have

Starbucks Brand Audit

3635 words - 15 pages together, inspire conversation and finally to been seen as a brand that helps to make the world a better place, through numerous CSR initiatives. The Starbucks brand has been part of the company since it began operations and has been a unifying element throughout its international expansion. As the parent corporation and the brand are synonymous, they naturally provide heavy financial support for the brand. Nielsen released figures showing that

Case 1-1 Starbucks---Going Global Fast

869 words - 4 pages fiscal and monetary policies affecting the operations of Starbucks. • The Prices of coffee in world commodity markets - prices may be affected for example by natural disasters like droughts. • Changes in customers' disposable income - for example due to economic downturns. • Fluctuations in world currency rates. 2. What are the major sources of risk facing the company and discuss potential solutions. Ans. I think Starbucks

Cherns Case Study

1493 words - 6 pages Chain 5 Competitive advantages 5 Competitive disadvantages 5 SWOT 6 Job performance 7 a. KSA 7 b. Motivation 7 c. Environmental 8 Compensation 8 Training at Starbucks 8 Barista Basics Training Program 8 Shift Supervisor Training Program 8 District Manager Training Program 9 References 10 Starbucks Company Analysis Introduction History of Starbucks Starbucks is a well-known international coffee brand, which

Marketing Plan

1615 words - 7 pages * Registration benefits only apply to the first card registered in an account 5.3 Place Supply Chain Operations Partners responsibilities that include more than 70,000 outbound deliveries a week to Starbucks retail stores, distribution channels and outlets worldwide, keeping Starbucks products flowing from suppliers to customers is, needless to say, a complex exercise – but we’re able to do so with a world-class Supply Chain Operations organization

Related Essays

Starbucks Essay

1262 words - 6 pages Globalization and Starbucks Globalization has impacted almost every organization currently in operation. Even when organizations choose to limit their activities and operations to a specific geographical region, globalization becomes part of operations as new technologies bring international attention and customers to the company. In the end, few organizations are able to escape the impact of globalization. Given the importance of

Starbucks In Tiawan Essay

3042 words - 13 pages President Starbucks Coffee Corporation was established on January 1, 1998 in Taiwan. The United States Starbucks Coffee International Company cooperates with Taiwan’s Uni-President Corporation by joint venture. (President Starbucks Coffee Corporation, 2009.) Starbucks Coffee International Inc. is the Starbucks Coffee Company’s licensing firm. Howard Schultz, the CEO in the Starbucks Coffee Company, focused on cultural characteristics and the

Starbucks As An International Business Essay

4198 words - 17 pages ' Donuts' retail footprint also overlaps largely with that of Starbucks, their customer experience is much more similar to the coffee-to-go model rather than the "third place to work and relax" model. Consequently, they are likely to compete more directly with McDonald's than with Starbucks. International Operations For many years analysts have observed that the US coffee-bar market may be reaching saturation. They point to market consolidation

Starbucks And International Strategy Essay

939 words - 4 pages In this module I will examine Starbucks and its international strategy. Starbucks, is the number one specialty coffee retailer in the U.S. operating nearly 5,900 company-operated shops/kiosk in a variety of locations (office buildings, shopping centers, airport terminals, and supermarkets) throughout the U.S. and 25 countries. The world known "brand name" corporation sells coffee drinks and beans, pastries, and other food items and beverages, as