Starbucks

The original Starbucks opened in Seattle, Washington, in 1971 by three partners: English teacher Jerry Baldwin, history teacher Zev Siegel and writer Gordon Bowker. The three were inspired by Alfred Peet, whom they personally knew, to open their first store in Pike Place Market to sell high quality coffee beans and equipment. In 1982 Howard Schultz joined Starbucks as director of retail operations and marketing. After traveling to Italy and discovering the Italian coffee bar that sold espresso by the cup. When he returned, he wanted to apply that to their business in 1983. Within 2 months they were selling over 700 customers a day. In 1987 the owners of Starbucks Coffee Company decided to sell their business to a group of local investors for $3.7 million. The new investors were told they were going to open 125 Starbucks Coffee stores in the next 5 years. The company started expanding rapidly.

Starbucks is the #1 specialty coffee retailer. Starbucks business model was to sell the company’s own premium roasted coffee along with espressos, pastries, coffee accessories and teas. Their business model goal was to expand internationally and to take over other coffee businesses. Starbucks products are:

 Coffee: more then 30 blends and single-origin coffees

 Handcrafted Beverages: hot and iced espresso, non-coffee blended beverages and Tazo teas

 Merchandise: assorted home espresso machines, coffee brewers and grinders, premium chocolate, coffee mugs and gift items

 Fresh Food: sandwiches and salads

 Entertainment: selection of the best in music, books and film

 Starbucks Card: card purchased to be able to swipe and are reusable

Starbucks is currently doing well in the market. There last trade was $22.81 and there yearly high was $37.14. There revenue up to September 2007 is $9.4 million and their gross profit is $5.4 million. Starbucks has an $8 billion Market Capitalization, 20+% annual sales growth rate and 11 years of 5+% comparable store sales revenue growths. Although the price per stock hit a year low, the overall average of the year is very well. Starbucks has very high quality products, although high prices, they pride themselves on satisfying their costumers all the time which separates them from their competitors. This makes their customers come back and spend their money for their products. Starbucks differentiation strategy was offering interesting coffee-related drinks, their unique coffee blending and roasting process, their employees received great deal of training to become very knowledgeable about coffee in order to provide an exceptional service to their customers and their ability to find perfect locations for their stores which enables them to maximize market share.

Starbucks security team has built the Enterprise Security Platform, a central security facility that monitors critical facilities such as roasting plants, container loading sites and retail stores. It also watches risk management conditions. They also provide in-store training incase of a robbery or any other mechanical malfunction. Starbucks has a copyright and trademark on their logo, which had been infringed upon by a San Francisco artist who had been putting it on coffee mugs, t-shirts, stickers and sold on his website, where he was brought up on a law suite from Starbucks.

Starbucks management and organization is very strong and don’t have many issues. The organization understands the enormous value of unique regional differences and attributes. They give back to the people who grow the coffee beans in Guatemala, Indonesia, Kenya and Ethiopia by giving them better living conditions. Starbucks technology site is a huge part of their business success. They are always coming up with something new to improve the store and to better satisfy their customers. Starbucks employees whether full or part time qualify for a comprehensive benefits package that includes stock option grants, health, medical, dental and vision benefits. Starbucks had recently started a drive-thru so people didn’t have to get out of their car to walk into the store, and yet receive the same quality service as if they were in the store. There big innovation which started 3 years ago was the Starbucks Card. It’s like a gift card but reload able. It is going to reach the $1 billion mark at the end of the fiscal year. Starbucks published a mail-order catalog that was distributed six times a year that included all their products. This accounts for 5% of total revenues and had expanded retail into new markets.

Starbucks information systems provide them to have an