Strategic Management - Week 4 Case Starbucks + Founded in 1971 in Seattle, USA by Jerry Baldwin, Zev Siegl & Gordon Bowher. + Initial days — Selling whole bean coffee in Seattle's Pike Place Market. + 1987 - Founders sold Starbucks to Howard Schultz for $4 million. + Has grown remarkably fast over its short life & exceptionally profitable. + Average annual revenue growt” year (1993 - 2015). Starbucks + Maintains good relationship with coffee beans supplier countries. + Highest quality coffee beans are procured e.g., Narino Supremo coffee beans from Columbia (differentiation). + Proper balance of flavor & acidity of coffee beans are ensured. + Aroma & taste of brews are evaluated. * Coffee beans roasting is close to an art form at Starbucks. + Enforces almost fanatical standards about coffee quality & service. * Spends far less on advertising tha 5. Instead, it invests in securing highly visible locations, innovating in its menu & building an iconic, ubiquitous brand,+ With good customer relations, Starbucks seeks to create a long-term relationship with customers. “"We're not just selling a cup of coffee, we are providing an experience” Howard Schultz Ginyu Pampering Employees + The culture at Starbucks toward employees is laid back & supportive. 7 + Employees are empowered to make decisions without constant referral to management, & are encouraged to think of themselves as partners in the business. + Offers an industry-leading benefits package to both part-time & full-time employees (medical insurance, paid holidays, stock option plan etc.) + Employee turnover is discouraged by stock option plan. + Company's culture is a major component of its profitability. |" + Training programs are extensive at Starbucks. + Schultz is very sensitive to the well-being of employees. + Quality of work force is Starbuck's sustainable advantage. [Jaa “Happy employees are the key to competitiveness and growth” Howard Schultz Rea Growth, Diversification & International Expansion * In spite of Schultz slow-growth policy in early years (only company owned stores & minimum license agreement), the company was consistently one of the fastest-growing in the US. Over time, Starbucks loosened its licensing policy & began accelerating the rate at which it permitted licensed stores (important for international markets). High-quality products & services, well-managed branding & a reputation for social responsibility made the company attractive to both consumers & investors. + In addition to expanding its menu selection, Starbuck’s continued its diversification (drive- through service locations, single serve coffee packets, acquisition of Bay Bread (2012), acquisition of Evolution Fresh etc.) From a single store opened in Japan in 1996, the company had a well diversified presence around the world by 2015. = ‘AHEAD cis AEN Starbucks, 2023 + World’s largest coffeehouse chain + Annual revenues ~ USD 32.25 billion (2022)+ Employees ~ 4,02,000 (2022) + 35,711 stores in 84 countries (Nov 2022) * Industry - coffee shop + Products ~ coffee beverages, smoothies, tea, baked goods, sandwiches etc. + Subsidiaries ~ Ethos Water, Hear Music, Boulange Bakery, Teavana, Torrefazione Italia, Tata Starbucks + Competitors ~ Caribou Coffee, Peet’s Coffee & Tea, Dunkin Donuts, McDonald's etc.