Starbucks

Starbucks

Company Background

The original idea of creating the Starbucks coffeehouse giant came from three men from Seattle in 1971. They had a small business going and recruited a man by the name of Howard Schultz in 1982 because he had a great reputation in the business world. Schultz was just the addition that the company needed. He was on a business trip in Italy and took notice to the overwhelming amount of coffee bars there and how customers frequented the establishments more than once throughout the day.

Howard immediately recognized this as a huge opportunity. He wanted to bring this kind of lifestyle to the American culture and did not take no for an answer when his business partners at Starbucks refused to take part in the offer (Mergent, 2011).

Howard Schultz opened a coffeehouse by the name of II Giornale in Seattle and sold Starbucks coffee there. He had great success and offered to buy Starbucks from the three owners in 1987, who agreed for the price tag of $4 million. Howard changed the name of his three stores over to Starbucks and did not look back after that point. He knew that Americans would eventually be turned on to the idea of the coffee bar scene, and in 1991 the firm turned over a profit. This same year, Schultz established an agreement CARE and in 1992 the firm was made public, starting out at $17 a share (Datamonitor, 2011).

Schultz made it a point to company own all its stores in North America, with the exception of the licensing agreements in airports. Then the company split into Starbucks North America and Starbucks International with the onset of Starbucks' first joint venture in 1995 with Sazaby Inc., a company based in Japan. This started Starbucks' move to the international market, while still keeping focus on expanding stores throughout America. Starbucks also began its music industry in 1995, selling compact discs (Stanley, 2010).

Discussion

Starbucks began to introduce new products to its line, including the Frappuccino, a low fat iced coffee using light cream for the more health consciences coffee drinker. Another new product was Starbucks' line of ice cream, to be sold in grocery stores with licensing agreements. By 1996, the Starbucks line of coffee ice cream and ice cream bars were the number one brand of coffee ice cream in the United States. This same year, the North American Coffee Partnership was established, joining Starbucks and Pepsi-Cola Company to sell bottled versions of the Frappuccino (Credeur, 2008).

By pushing expansion further, there were 2,135 Starbucks locations by 1999. The Starbucks International branch expanded to China, Kuwait, Korea and Lebanon. They also made a big step in their tea industry, acquiring Tazo teas. This was a big step for Starbucks because prior to this they did not have a good grip on the tea industry and with expansion to tea drinking countries such as China, they needed this strong addition. The Asian market is one that is proving to be important right now for Starbucks, ...