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Executive Summary

Three friends and coffee aficionados in Seattle, Washington founded Starbucks

Corporation in 1971. The original Starbucks sold only coffee beans and coffee making

equipment, not coffee drinks. Howard Schultz joined the company in 1982 as director of Retail

Operations. He tried to convince the founders of the company to incorporate the idea of selling

coffee at the locations after he observed the operations of Italian espresso bars, during a trip to

Italy in 1983. Schultz eventually purchased Starbucks for $4 million and merged it with his own

company called Il Giornale, retaining Starbucks name (Moon, Y, & Quelch, J., 2006).

Since its creation in 1971, Starbucks had faced many changes, and obstacles. Like the

need for large-scale changes in efficiency and standardization, optimizing revenue, lowering

costs, and at the same time maintaining quality. However, at the same time wanted to provide

customers with the "Starbucks Experience", as a neighborhood coffeehouse. The analysis

conducted for this case study will help to determine if the proposed recommendations would

conflict with Starbucks operating model. These recommendations would help Starbucks to

consistently grow operations, and overcome many obstacles as the company expand its

operations to more profitable emerging markets (Moon, Y, & Quelch, J., 2006).

Background

Starbucks defined its business objectives as establishing the company "as one of the most

recognized and respected brands in the world" by continuing the rapid expansion of its retail

operations into new market, growing its specialty operations, and constantly looking for new

opportunities to capitalize on the Starbucks brand. Consequently, Starbucks has invested

significant resources in the hiring, training, and retention of employees in order to build a more

capable and stable workforce (Kotha, S. & Glassman, D., 2003). The expansion of its