Origin and Growth of Star Bucks Research Paper

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Starbucks Coffee Company Introduction & Overview

Starbucks came into being in 1971 and was named after the first mate in Moby Dick by Herman Melville. The first store of Starbucks was opened in Seattle's Pike Place Market. Gordon Bowker, Jerry Baldwin, and Zev Siegl were the first three owners of Starbucks. It is Starbucks' mission to be "an inspiration as well as nurturing force for the human spirit." The coffee beans roasted and later on sold by Starbucks are of very high quality. These beans are also used in making Italian style espresso beverages. The store also sells equipment and accessories associated with coffee, pastries and other edible items that compliment coffee. Usually all these products are sold by the company through retail stores that are operated by the company. The main objective of the company is to make Starbucks the most respected and popular brand around the globe (Nielsen & Mortensen, 2008).

Starbucks can easily be said to be one of the biggest Coffeehouse Company in the whole world. Its stores have a very coffee-house sort of atmosphere with Wi-Fi and couches placed throughout the stores. Starbucks also gives licenses for their stores; however, these licenses are only given to other businesses and not to individuals. For instances, Starbucks has licensed stores to Noble booksellers and Barnes in States. In some of these establishments the atmosphere being provided to the customers is a lot like that of Starbucks itself but there are also placed which just have counters to sell the pastries and coffee. About 90% of the revenue being generated by this company comes from Starbucks stores. The main headquarters of the store is located at the same place where the very first store was opened on 30th of March, 1971 (Mallernee, 2010).

Later on a change in the direction of the company took place when the current CEO Howard Schultz went to Italy and decided to adapt the principles that he saw there in order build and promote the bar culture in Starbucks outlets. Giornale was a new store opened by Schultz by utilizing the ability of Starbucks to provide its customers with quality coffee beans. The assets of Starbucks were taken over by Giornale in 1987 for 3.8 million; the name of the store was also changed to Starbucks Corporation. Presently, the total number of Starbucks stores in approximately 49 countries is 17,133, from among these 11,068 are present in U.S., around 1,000 are in Canada and more than 800 are located in Japan (Mallernee, 2010).

Ethical and Social Responsibilities

Starbucks believes in the fact that it is important for the businesses to impact the communities in which they are located in a positive manner. The trust and respect of neighbors, customers and partners is very important to Starbuck. They keep on making efforts to earn and maintain this respect by behaving in a responsible manner and doing the things which in their opinion are better for the planet as well as the people. There are a number of principles being implemented by Starbucks in order to achieve their mission statement such as efforts being made to understand the problems present in our environment, trying to sell, buy and use the products which are environment friendly as well as sharing the positive information with their partners. There are also some buying policies which have been implemented by Starbucks according to which they purchase their products from the suppliers who also follow the environment friendly policies (Mallernee, 2010)

Environmental Stewardship

It was in 2006 that the business practice ethics were formalized by Starbucks in the manual with the title "Standards of Business Conduct." The manual is a great source of guide for the employees that are referred to as the partners by Starbucks as; these employees are the ones who interact with the customers as well as the suppliers (Mallernee, 2010).

The 'Starbucks Information Security Standards' was also created by the company which helps in dealing with the information and technology present within the company. Lastly, the 'Starbucks Privacy Statement' was created to guide the management of the company in handling the private information regarding the firm. It was in 2010 that Starbucks was recognized for its ethics as; it was noted to be a company that not just has strong vision and mission statements but also implements them in their daily lives (Mallernee, 2010).

Ideation Phase

The process of coming up with new ideas as well as forming the process of generating, developing as well as communicating is known as ideation. An idea is considered to be the most rudimentary part of a thought which can be abstract, visual or concrete. It is for the sake of business value that ideation is done; it can be in the form of improvement in the quality of the already present products, some new service or lesser costs (Geereddy, 2012). Peet's was purchased by the original owner of Starbucks along with Jed Baldwin in 1984. In U.S. The sales of coffee were decreasing in the 1980s however, the sales of specialty coffee improved as a result of which in 1989 the specialty coffee had a 10% market share rather than 3% as compared to 1983(Nielsen & Mortensen, 2008).

In 1992 during the time of initial public offering (IPO) on the stock market, Starbucks had 140 outlets which were generating total revenue of U.S.$73.5 million as compared to U.S.$1.3 million in 1987. U.S.$271 million was the market value of the company by that time and the company was able to raise U.S.$25 million after selling 12% of the company (Nielsen & Mortensen, 2008). By July of 2013 the Starbucks apps on the mobiles of customers were responsible for more than 10% of the store purchases. The "Tweet-a-Coffee" promotion that was launched by the company in October of 2013 was also done by making use of the mobile platform. According to a research that was conducted later on, as a result of all this campaign purchases worth U.S.$180,000 were made by 27,000 people (Mallernee, 2010).

Start-up to Growth & Expansion

It was in 1996 that in Tokyo, Japan the very first Starbucks location opened outside of North America. In 1998 Starbucks entered the U.K market and at that time they had a total of 83 million USD acquisitions of 56 stores as it rebranded the UK-based Seattle Coffee Company to Starbucks. Mexico City had the first Starbucks built in it in 2002. An experiment was done by Starbucks when they came up with eateries via a restaurant chain known as Circadia in San Francisco Bay. However, soon afterwards these restaurants were converted into the Starbucks Cafes and establishments (Nielsen & Mortensen, 2008).

A coffee trading company was established by Starbucks in the October of 2002 in Lausanne, Switzerland. The purpose of this establishment was to be responsible for the green coffee purchases. Seattle's Best Coffee as well as Torrefazione Italia was bought by Starbucks from AFC Enterprises in April of 2003 for $72 million. Even though the quantity of stores that Starbucks was able to get from this deal were only 150 however, according to the Seattle Post-Intelligencer the wholesale business that was acquired was of a lot more importance (Nielsen & Mortensen, 2008).

It was announced by the rivals of Starbucks, Diedrich Coffee, in 2006 that majority of their retail stores owned by the company will be sold to Starbucks. Diedrich Coffee and Coffee People locations were converted to Starbucks by the company even though the Portland airport Coffee People locations were not a part of the deal (Nielsen & Mortensen, 2008).

Graph showing the growth in the number of Starbucks stores between 1971 and 2011

(Retail and Consumer, 2011).

A website was designed by Starbucks by the name My Starbucks Idea. The purpose of this website was to get the suggestions and ideas of the customers. In May of 2008 Starbucks came up with a loyalty program for the registered users of the Starbucks Card. This program offered the loyal customers with various benefits such as free Wi-Fi, free refills on brew drip tea or coffee etc. (Kotler & Armstrong, 2013). The purchase of Tevana was announced by Starbucks on 14th of November 2012 for a total of U.S.$620 million (Kotler & Armstrong, 2013).

Starbucks carried on with its growth and in 2008 it opened up outlets in Argentina, Bulgaria, Brazil, Belgium, the Czech Republic and Portugal. The expansion continued to take place in Scandinavia and Europe in 2009. Growth kept on taking place in the new markets throughout 2010. In December of 2010 Starbucks was able to open it first ever outlet at sea. This happened when Starbucks collaborated with Royal Caribbean International and opened up a place aboard their Allure of the Seas Royal Caribbean's 2nd biggest ship which is also the 2nd biggest ship in the world (Kotler & Armstrong, 2013).

The Starbucks coffee started being sold in the Norwegian food shops in February 2011 as Starbucks started to sell their roasts to these outlets. It…[continue]


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