Starbucks' Is the Best Yet to Come
Luis M. Cruz
BUS 402 Principles of Finance
January 21, 2013
This paper will be a SWOT analysis of the Starbucks Corporation, I will cover the company's Strengths, its weaknesses, some opportunities and the threats the company had to contend with. I will start with a little bit of the companies background.
Starbucks got its start in 1971 when three academics, English teacher Jerry Baldwin, history teacher Zev Siegel, and writer Gordon Bowker, all coffee aficionados opened Starbucks Coffee, Tea, and Spice in touristy Pikes Place Market in Seattle. The three partners who shared a love for fine coffees and exotic ...view middle of the document...
Another strength was that Starbucks put in a system to recruit, hire and train all of their baristas and store managers, training consisted of coffee history, drink preparation, customer service and retail skills, there was also a four-hour class on how to brew the perfect cup of coffee. Then there was the working environment, Starbucks pay scale was $9 -$12 per hour and with the fringe benefits it attracted motivated people with above-average skills and work habits. Furthermore there is a man with a love for Starbucks coffee and On his website, Mr. Winter, who was born Rafael Antonio Lozano, said that as of Monday, he had visited 4,775 Starbucks in North America and 213 in other parts of world. There are 5,715 corporate-owned Starbucks in the world, according to the Seattle-based company(Carol Rock). Finally I will mention the health benefits, which Schultz was recognized for by President Clinton in 1994, Schultz's plan to offer health benefits to all employees that work 20+ hours a week went in to affect in 1988, Starbucks would cover 75% of an employee's health care premium while the employee would cover the other 25%,(Marcus, A.A. (2011)).
Just like any company there are the weaknesses that go along with the strengths, and some of Starbucks weaknesses are as follows, the founders of Starbucks wanted to keep the company as only the purveyors of fine coffees and did not want to rock the boat by getting into the restaurant or coffee bar business, they did not have the shared revelation or ideas that Schultz had to modify the Starbucks stores to enter into the beverage business. Another weakness was the loss of trust for management by the employees at Starbucks in 1984, employees felt that they were being neglected after the acquisition of Peet's Coffee and Tea shops in San Francisco. This also lead to Schultz leaving Starbucks to open his own coffee business called Il Giornale's, but after 20 months in 1987 Jerry Baldwin and Gordon Bowker decided to sell the Starbucks Operation in Seattle , everything from the stores, the roasting plants to even the Starbucks name, which brings us to the opportunity part of this paper,(Marcus, A.A. (2011)).
Schultz knew that he had to buy Starbucks, and his board of directors agreed with him,(Marcus, A.A. (2011)).
Schultz started the ball rolling to convince investors to back him and even though there was a rival competing for the Starbucks operating he prevailed and came up with the $3.8 million needed to acquire Starbucks. Other opportunities' that came to light were the joint ventures with the Pepsi corporation and Dreyer's ice cream company, with Pepsi the shelf-stable version of both the can and bottled Frappaccino reached a $125 million dollar in sales in 1997and was expected to surpass $1 billion. with Dryer's ice cream Starbuck produced six different coffee ice creams and they were Dark Roast Espresso Swirl, Java Chip, Vanilla Mocha Chip, Biscotti Bliss and the Caffe Almond Fudge,...