PLANET STARBUCKS

Prepared by:
Jyoti Ghanchi (A-19)
Pratik Kotak (A-26)
Milan Parmar (A-40)
Jignesh Patel (A-42)
 Introduction
• Company was originally founded by Gerald Baldwin ,
Gordon Bowker and Ziev Siegl in 1971 as a Gourmet
coffee bean roaster and distributor.
• Starbucks named from STARBO (mining camp of the
19th century) and MOBBY Dick (the first mate’s name in
the classic American novel of whaling on the open
seas).
• In 1982, Howard Schultz joined the company as a
member of their marketing team.
• In 1984 Starbucks opened their 1st espresso coffee bar.
 Contd…
• In 1985 Howard left the starbucks and opened
his own firm 1l Giornale with financial backing
of his former partners that sold coffee and
assorted coffee beverages made exclusively
with starbucks beans.
• In 1987 Howard bought Starbucks for $3.8
million from his former partners.
 Timeline
• STARBUCKS
• 1971 --- Company established
• 1982 --- Howard Schultz joined the company as a
member of a marketing team
• 1984 --- Starbucks opened their 1st espresso
coffee bar
• 1985 --- Howard left Starbucks
• 1987 --- Howard bought Starbucks in $3.8 million
• 1990 --- Howard Schultz added key leaders in the
business
• 1990 --- Omnipresent within the U.S and
Canada
• 1992 – Went public
• 1995 – 1998 --- Declining stage in sales per
store because of high expansion
 Success behind Starbucks ???
• You get more than the finest coffee when you visit Starbucks.
You get great people, first rate music, a comfortable and
upbeat meeting place and sound advice on ordering coffee at
home.

• Starbucks is the place where you can sit back and be yourself.

• Starbucks is – the kind of third place where you can escape,

reflect, read, chat or listen.
Why Starbucks went in Global market ???

• Omnipresent within the U.S. and Canada

throughout the 1990s.
• Between 1999-2002. the company averaged
sales growth of over 25% per annum.
• By 2003 the North American coffee market
reached saturation.
• So Howardfound the only way to continue
their growth is to go in global market.
 Domestic Expansion

• 1980-1990 --- Starbucks focused expansion in

Pacific Northwest and California market
• 1993 --- Washington D.C.
• 1994 --- Boston
• After 1994 --- Minneapolis , New York , Atlanta
, Dallas , Houston
• By 1995 Starbucks was present in more than
40 states in America.
 INTERNATIONAL EXPANSION:

• 1988 --- Vancouver and British Columbia

• 1995-1996 --- in Japan, joint venture with
Sazaby (A Japanese retailer and distributor
with its own chain of Afternoon Tea Stores)
• 1998---Middle East
• 1999 --- China
• 2001---Switzerland, Australia
• 2002--- Spain, Germany, Greece
 Starbucks concept
• It is based on three-legged stool for global
development.
1) retail coffee and assorted specialty item.
2) specialty sales.
3) frappuccino coffee drink & specialty coffee ice
cream.
 Contd..
• Bean stock:
“means offer its employees a stock owner-ship
plan. also offered shared to both full time &
part time employees.”
 people
• 1989- Howered Behar with more than 20 year
experience in retail business joined as the director
of store operation.
• Behar focused on the people so in 1991 the stock
owner ship plan was introduced.
• So that Starbucks offer health care benefits to all
employees who work more than 20 hr/week.
• In 1991 Orin Smith joined the company as a chief
financial officer & he strong believer in process
development.
 Supply chain

• Backward integration:
purchase green coffee directly from farmers.
P.E.S.T.E.L. Analysis
 Political Environment
• Anti globalization movement
– Market analysts questioned the ability to
successfully expand their business.
• Global week of action against Starbucks
– In mid 2001 coffee industry was in crisis.coffee
price were in all time low. So the farmers were
going into debt and losing their land. But
Starbucks kept their higher margin with
consumers.
 Economic Environment
• Because of the omnipresent of Starbucks stores in U.S
and Canada the company averaged sales growth of over
25% per annum in between 1999-2002.

• Starbucks introduced their IPO in 1992.

• Reduced the supply chain to improve the quality and so

they can get premium price from the consumers.

• Outright pricing : so they can directly negotiate with

farmers.
 Social Environment
• Donation to Care Institution :
– Starbucks is the largest north American corporate donor. In 1991
they donated $2 million.
• Starbucks had contributed $43,000 in 2001 to the
construction of health clinic and school.

• Bean Stock: offer its employees a stock ownership plan. They

offered shares to both full-time and part-time employees.

• Starbucks offered health care benefits to all employees who

worked more than 20 hours per week.
 Technological Environment
• They developed a new brand named Serena
organic blend coffee.
• Organic coffee was grown without the use of
synthetic pesticides, chemical fertilizers.
 Legal Environment
• Rapid expansion was confronting the firm with
employee fatigue.
• Store managers and employees were
overworked and underpaid.
• It was eliminated in 2000 as a result of the
settlement of a class action suit brought in
california by some store managers.
2002

2001

2000 net revanue

net assets

1999

1998

0 500 1000 1500 2000 2500 3000 3500

 net profit(million)$
250

200

150

net profit(million)$

100

50

0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
 company-owned licenced

3496

2971

2446

2038

1622

1270

1078
929
809
627
530
399
261
162 179
94 133
49 75
3 11 26
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002