Howard Schultz and the Starbucks Company
1.0 CASE SUMMARY
Starbucks is a specialty coffee company located in Seattle, USA. The company CEO is Howard Schultz, who bought the company in 1987 for $3.8 million. Before purchasing Starbucks, Schultz was an employee there before deciding to leave the company to open his own coffee bar, Il Giornale in 1985.
After purchasing Starbucks, Schultz continued to expand the business rapidly by attracting more investors to gain financing. The company relied on positive word of mouth to attract customers to try its specialty coffee while emphasizing on the social experience of customers in its stores. This move has led to customers associating Starbucks with quality coffee and social experience in its outlets through immense public support and recommendation.
By July 1992, Starbucks conducted its initial public offering to gain capital to continue its planned expansion which it achieved by the end of October, where it had 165 store all over the USA. In line with its goals and objectives, Starbucks expanded into Canada to bring the total of stores to 676 units which includes both USA and Canada in 1995.
The first international expansion of Starbucks outside of North America was in Tokyo on August 1996 on an upscale district. As of 2000, Starbucks has over 3500 stores and outlets across various countries with revenue reaching $2.2 billion.
2.0 PROBLEM STATEMENT
2.1 Main Problem Statement
After analyzing all aspects and factors, the main problem statement found for this case study is as follows:
“The rapid and over expansion plan of Starbucks store-owned outlets to capture the maximum market share has lead to many problems”
As stated above, Starbucks is facing the problem of fast and over expanding of its outlets as the company tries to gain as much market share and opportunities as possible. This, however has led to many problems such as cannibalization of business through clustering and low net income margin despite achieving record sales and revenues.
The
Starbucks is a specialty coffee company located in Seattle, USA. The company CEO is Howard Schultz, who bought the company in 1987 for $3.8 million. Before purchasing Starbucks, Schultz was an employee there before deciding to leave the company to open his own coffee bar, Il Giornale in 1985.
After purchasing Starbucks, Schultz continued to expand the business rapidly by attracting more investors to gain financing. The company relied on positive word of mouth to attract customers to try its specialty coffee while emphasizing on the social experience of customers in its stores. This move has led to customers associating Starbucks with quality coffee and social experience in its outlets through immense public support and recommendation.
By July 1992, Starbucks conducted its initial public offering to gain capital to continue its planned expansion which it achieved by the end of October, where it had 165 store all over the USA. In line with its goals and objectives, Starbucks expanded into Canada to bring the total of stores to 676 units which includes both USA and Canada in 1995.
The first international expansion of Starbucks outside of North America was in Tokyo on August 1996 on an upscale district. As of 2000, Starbucks has over 3500 stores and outlets across various countries with revenue reaching $2.2 billion.
2.0 PROBLEM STATEMENT
2.1 Main Problem Statement
After analyzing all aspects and factors, the main problem statement found for this case study is as follows:
“The rapid and over expansion plan of Starbucks store-owned outlets to capture the maximum market share has lead to many problems”
As stated above, Starbucks is facing the problem of fast and over expanding of its outlets as the company tries to gain as much market share and opportunities as possible. This, however has led to many problems such as cannibalization of business through clustering and low net income margin despite achieving record sales and revenues.
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