Company Analysis

Company Overview

The original founders of Starbucks envisioned Starbucks becoming a regional business in the Seattle area that sold packaged whole beans and coffee equipment. The founders were passionate about coffee and wanted others in their community to appreciate coffee and tea as much as a wine enthusiast appreciates good wines. The initial Starbucks did not offer brewed coffee sold by the cup. The operation was set up to sell whole beans and the apparatus to grind and brew the beans. Customers were given samples along with the sales pitch on the merits of dark roasted coffees. At this time the ambitions of the three founders was to educate the public about coffee. Sales at the store grew by word of mouth and a favorable article in a local newspaper. The founders decided to also buy their own coffee roaster and developed their own blend of coffee beans. This was the start of Starbucks roast brand of coffee beans. Within a year another store was opened in Seattle and again exceeded expectations. Within ten years Starbucks had expanded to four local stores and was selling whole beans and drip coffeemakers.

Management

Howard Schultz, Chairman of the Board of Directors, was the founder of Starbucks Corporation and has held several executive positions, from Chief Executive Officer to Chief Global Strategist since 1982. Prior to joining Starbucks, David A. Pace, Executive Vice President, Partner Resources, was president of i2 Technologies and prior to that worked for Tricon Restaurants International (Shetty pp 45-169).

The management team at Starbucks Corporation consists of highly experienced and well established managers. These are proven executives who mainly worked in the retail and food/beverage industries. When hiring managers the focus is on hiring managers who have experience in managing and growing retail chains (Smith p 879). All are close in age, have similar backgrounds and share the Starbucks vision to grow and sustain Starbucks.

Organizatonal Strategy And Mission

The primary strategy of Starbucks is to continue to grow by opening a record number of stores nationally and internationally. This was evidenced by the 22 per cent increase in total new revenues in fiscal 2006 and an increase in total net revenues to $7.8 billion; a net earnings increase of 14 per cent to $564 million; and an increased return on equity to 25 per cent for the year 2006. Starbucks five-year plan is to grow by 20 per cent each year. ...