SWOT & PEST ANALYSIS

SWOT & PEST Analysis



SWOT & PEST Analysis

Introduction

In 1998 Howard Schultz had ample reason to be proud of what Starbucks had accomplished during his past 11 years as the company's CEO. The company had enjoyed phenomenal growth and become one of the great retailing stories of recent history by making exceptional coffee drinks and selling dark-roasted coffee beans and coffee-making equipment that would allow customers to brew an exceptional cup of coffee at home. It already had over 1500 stores in North America and the Pacific Rim and was opening new ones at a rate of more than one per day. Its stock price increase nine fold.

The first Starbucks was opened in Seattle 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 knew personally, to open their first store in Pike Place Market to sell high-quality coffee beans and equipment. Each invested $1,350 and borrowed another $5,000 from a bank to open the Pikes Place store. This location is still open today, though it is not in the same exact location it was when it opened. The original Starbucks location was at 2000 Western Avenue from 1971 to 1976. That store then moved to 1919 Pike Place. A second Starbucks store was opened in 1972. By the early 1980s, the company had four Starbucks stores in the Seattle area and could boast profit able every year. During their first year of operation, they purchased green coffee beans from Peet's, and then began buying directly from growers. The new company's logo, designed by an artist friend, was a two-tailed mermaid encircled by the store's name.

Background and History

In 1981, Howard Schultz, vice president and general manager of U.S. operations for Hammarplast--a Swedish maker of stylish kitchen equipment and house wares--noticed that Starbucks was placing larger orders than Macy's was for a certain type of drip coffeemaker. Curious to learn what was going on, he decided to pay the company a visit. The morning after his arrival in Seattle, Schultz was escorted to the Pikes Place store by Linda Grossman, the retail merchandising manager for Starbucks.

Bowker, a slender, bearded man with dark hair and intense brown eyes, appeared at the door and the three men sat down to talk about Starbucks. Schultz was struck by their knowledge of coffee, their commitment to providing high-quality products, and their passion for educating customers about the merits of dark-roasted coffees. Baldwin told Schultz, "We don't manage the business to maximize anything other than the quality of the coffee."2 Starbucks purchased only the finest arabica coffees and put them through a meticulous dark-roasting process to bring out their full flavors. Schultz was struck by the business philosophy of the two partners. Top-quality, fresh-roasted, whole-bean coffee was the company's differentiating feature and a bedrock value. It was also clear to Schultz that Starbucks was strongly committed to educating its customers to appreciate the qualities of fine coffees, rather than just ...