Starbucks Success Business

Starbucks first established in the year of 1971. There have three partners who are English teacher Jerry Baldwin, history teacher Zev Siege, and writer Gordon Bowker had expanded their first store named as Starbucks Coffee, Tea and Pike Place which locate in Seattle’s Pike Place Market. They were analyzing that each invest $1350 and they had borrowed $5000 from bank to hold the company of Starbucks. (Starbucks Corporation Company Background 1999) According to (Yahoo! Answers History Starbucks 2007), Alfred Peet had encourage them to open the store of Starbucks, so Alfred Peet was the first merchandise of green coffee that selling to them, so Starbucks is started to sell the high-quality coffee beans and equipment. However, they were suggesting changing their transaction object into growers of the coffee bean when they found out who the growers are. After few ten years, Starbucks could be a successful coffeehouse company with essential operation business in products and services, management style, and marketing target.

In 1982, Howard Schultz joins Starbucks. He was impressed by the popularity and culture of espresso bars in Milan, and therefore saw the establishment potential in Seattle. It was a success. In 1990s, Starbucks expands beyond Seattle, first to the rest of the United States, then the entire world. In 1996 Starbucks opened its first overseas store in Tokyo, Japan. Starbucks had to be well-known brand in the world with more than 13,000 stores in 39 countries. After becoming one of the first companies to offer stock options to its part-time employees, Starbucks becomes a publicly traded company. With the background of Starbucks Corporation, It was named as a name of character in a novel ‘Moby-Dick’. Starbucks had owning 7,521 self-operated store and 5,647 licensed stores in 39 countries around the world. Beside that, when customer having their order at Starbucks, they are able to enjoying their order with an entertainment. Through the Starbucks Entertainment division and Hear Music brand, the company has ventured beyond the refreshments into books, music, and film and other. Refer to (HP, about Starbucks Coffee Company 2007), Starbucks Coffeehouse Company had business as leading retailer, roaster and brand of specialty coffee that they have expand more than 6000 retail locations in countries such as North and South American, Europe and so on. Starbucks has always provided the products which are the best coffee and fitness coffee experience offering to customer. Besides the quality of products, they also provide services as awesome environment, entertainment and social.

What specially produce by Starbucks? There have drinks and foods serves out by Starbucks which are hot drinks such as drip brewed coffee, espresso-, hot chocolate and so on where the non-espresso-based drinks include tea, and ice-blended drinks. Starbucks also are offering foods to customer that includes pastries, sandwiches and salads. Besides drinks and foods, Starbucks has sales product to consumer such as coffee mugs and other paraphernalia that related to coffee beans. Comfortable environment offer to customer when they having their order in Starbucks with an entertainment. Types of entertainment are including music, books, films and other. (Wikipedia, Starbucks 2007)

Specialty products of Starbucks are one successful key in business. According to . (Starbucks Corporation Product Line 1999)Starbucks stores serve a variety of very expensive and sweet drinks to customer. May be much of people have thinking that Starbucks products are quite expensive to purchase and only for rich family, but Starbucks have determined in their business plan, because they emphasize that the products they are produce are ever in quality and best. They are brewed coffees that will change in weekly to maintain their quality standard. Starbucks has expanding their various products due to season. Talent brewed by Starbucks such as cappuccinos has made with ‘dry’, ‘wet’, ‘extra hot’, ‘soy’, and ‘organic’. Nowadays, ‘Frappuccino’ is high demand products offer by customer which that is combination with ‘frappe’ and ‘cappuccino’, that have few types of Frappuccino such as Frappuccino blended beverage, Frappuccino Light blended beverage, Frappuccino Juice Blended with real fruit juice and ‘Power Frappuccino’ with nutrition as protein, carbohydrates, and vitamins. Other drinks like Tea have included “Chai Tea Latte”, a combination of black tea, exotic spices, honey, and milk; ‘Double shot’ as espresso drinks. In other way, foods of Starbucks cannot belittle, they are offering fresh breakfast as sandwiches, pastries, salads and other foods item like ice-cream, juices, and bottled water. As explain in easy ways, Starbucks is almost selling all the drinks are related to coffee beans.

Besides products of Starbucks, services are also the element of successful businesses. One service of Starbucks is analyzed as ‘The Third Place’. Meaning of ‘The Third Place’ is other place beside home and work. In the café of Starbucks, they have provided outfitted with stuffed chairs and tables with hard backed chairs. These could upper-class of environment to comfort the customer. In the service, Starbucks has provide free electricity for customer and also wireless internet connection, so any customer who don’t have internet service at home, Starbucks could allowed them come through surf net their laptop and have online. Starbucks is a common place for businessman to having their business and transaction with client, because of awesome environment and best quality of coffee. Starbucks has always provided fresh air and aroma in environmental. According to (Wikipedia, Starbucks 2007), Starbucks Company has noted a policy as ‘non-smoking’ in almost in all of their stores, but this policy has never establish in countries such as Germany, Vienna and Mexico City. In such countries, Starbucks has smoking room for them normally on upstairs of outlet. The reason of smoking banned is because of the coffee aroma will be affect by smoke and no more adulterated. ‘The third Place’ is generally state by Starbucks to provide the personal entertainment where can fulfill the customer in their tea-time and they can have enjoyable with the music and magazine provided.

There were many entertainments that provided in Starbucks store. Starbucks Entertainment was mostly selects the best in music, books and film to offer Starbucks customers the opportunity to discover quality entertainment in a fun and convenient way as part of their daily coffee routines. According to (Starbucks Company Profile 2007), Partnership of Starbucks has made an entertainment that may impact the entertainment industry with the music, labels and filmmakers. In provide additional entertainment to customer, Starbucks Entertainment has teamed with other corporation to create a iTunes store online, this could offering to customer in buying, download and preview the Starbucks entertainment such as music title and specially created play lists in a convenient online music buying experience.

Starbucks has a successful image with their greater management style, but they will also incoming managerial problem. Starbucks has tried their best to increase market share of the non-coffee drinker. As people know, Starbucks is one of the most successful and admired companies in the world. Starbucks has grown from a single coffee shop in Seattle 33 years ago to 5,945 outlets in United States and 2,392 more in 28 countries. SWOT analysis is an analysis of the organization’s strength, weakness, opportunity and threat that might lead to a restructure and successful solution to its internal and external problems. (SWOT Analysis Starbucks 2000)

In the strength analysis, as people know, Starbucks Corporation is well-known coffeehouse in the world; of course Starbucks is making profitable business every year. According to (SWOT Analysis Starbucks Strength 2000), Starbucks has made a profit in excess of $600 million from sales of $5000 million in year 2004. Beside that, Reputation of Starbucks has built up because of the quality of products and services and also their market is going to everywhere has human lives in the world with almost 9000 cafes in 40 countries. In additional, Starbucks mention that they have a strong ethical value to a role of environmental leadership in their business that could effect to customer enjoyable and comfortable. Last strength for Starbucks is a respected employer that values its workforce, because of in the year 2005 Starbucks was one of the Fortune Top 100 Companies to Work For. Even though Starbucks has a lot of strength, but it still have such of weaknesses need to aware in business. Referring to (SWOT Analysis Starbucks Weaknesses 2000), To attract new customer, Starbucks has always produce creativity new specialty product but they emphasize that their innovation of new products may be stumble over time, so they need to develop another new product when previous products is outdated. Next weaknesses will be analyze is Starbucks has much dependant on the main competitive advantage, if other competitor has similar advantage to customer, Starbucks may getting risk in their business operation. Other weakness is the retail of coffee could slow the process of send into other sectors. Starbucks has over concern their business in the home market at United State of American with over three quarter of their stores; they should spread out more of their market to other countries.

Furthermore, in opportunities analysis, Starbucks are always appreciating their opportunity coming, because they believe it will advantage to them. According to (SWOT Analysis Starbucks Opportunities 2000), Starbucks Company has created a service that customers can create their own music CD by using CD-Burning. This service has expanding in 2004 in one of their store ‘Santa Monica’ café with Hewlett Packard. Besides, Starbucks has an opportunity that expands their new markets for coffee to India and the Pacific Rim nations for the beginning step. The company has retail their new products and services in their store which are Fair Trade and so on. Starbucks has taking their good opportunity to co-branding with other manufacturers and brand franchising to manufacturers to transmission drinks and foods; products and services. Furthermore, there has some threat that Starbucks would be taking. According to (SWOT Analysis Starbucks Threat 2000) Starbucks are suggesting to rises the cost of the coffee and other products. Besides that, Starbucks has never know what will be occur in the future, whether demand on coffee will be upward or other substitute beverage would be replace to coffee. Who can know the future? At last, Starbucks are successful on their business with conception in Pike Place Market since 1971, but it’s could also create much of competitors and copy cat refer to their talent of operation, may be the businesses would compete by other company in future.

Besides planning strategy, human resources management is also the reason of Starbucks to be successful company. The value of Starbucks’ employees have acknowledge by the company. According to (Starbucks Company Profile 2007), Starbucks has more than 145000 employees which work about part-time or full-time in their entire café and store. Average of Starbucks employees are 26 years old. Starbucks Company is providing the benefit package that includes healthcare benefits and stock option grants through Bean Stock to the employees. The chairman of Starbucks’ Schultz state that ‘They have the most knowledgeable workforce in their industry.’ Schultz emphasize that number of store they were opened is not main point, but they are concerned to growth and development of the employees. Furthermore, Schultz believed that their people are a core of successful reason. Employees have to know the basic knowledge as communication skill, ideas, commitment and connection that provide to customer.

They would send employees to participate the training and development program. Every new employee will have at least 24 hours training time in first two to four weeks. There have six types of training included classes on history guide of Starbucks, drinks and foods preparation, knowledge in coffee, customer services provide to customer, retail skills of products, and a workshop called ‘Brewing the Perfect Cup’. Each of training has to consume for 4 hour. (Starbucks Corporation Employee Training 1999) On-the-job training to employees of Starbucks has include employees has to maintain and self-improve from the job; listen and acknowledge; and can ask for help from their peer or coworker.Beside that, staffing of Starbucks, can only be two to four partners includes Assistant Manager or store manager in one stores. Any employee who completed the Coffee Master course can be high standing and known as ‘Coffee Master’ in other words is manager of Starbucks. Certification could be taking from several tests. That is depending on how professional of employees in tasting, growing, roasting and purchasing of the products and services. Coffee Master has worn black aprons whereas normal employees are wearing standard green aprons. (Wikipedia, Starbucks 2007)

Last element of successful key is the target marketing of Starbucks. To be maximizing their market, Starbucks has establish geographic expansion strategy in 1992 and 1993 that they has focus in a targeted area, this is because that has more convenience connection between stores and build up an infrastructure that is link together with the branches store. Starbucks would like to selected a large city to serve as a “hub”; teams of professionals were located in hub cities to support the goal of opening more and more again stores in the target region. Once the stores plant in entire hub areas, additional stores were slowly to spreading to other area as opened smaller surrounding the hub region area to widely area. (Starbucks Corporation The Store Expansion Strategy 1999)

Starbucks has doing market research such as survey; questionnaire and observation by using ‘Customer Relationship Management’ to ensure the expectation of customer. As the information they have concern are about dimension of segmentation will be demographics include age and household status of customer to having their products. They are selected married couples age 25 – 54 with children to be their primary target market. According to the research, they found that these households spend more than other households on non-alcoholic beverages away from home. They are trying to consume the product to child with the coffee-free Frappuccino. Starbucks has also implement a strategy with some event to encourage parents buying a Frappuccino to their child as free game of soccer victory and even a trip to family on holiday. They expect that this could influence to child purchasing decision and always in the child’s mind remain until when they are mature. (Starbucks: “The Non-Coffee Treat” Segmentation n.d)

In other of marketing planning of Starbucks is goes international. Starbucks can be well-known and making profitable business is depend on their market in other 39 countries. Nowadays, Starbucks has located many branch stores to international. According to (Starbucks Company Profile 2007) Time series of the Starbucks opened are following: The first branches that Starbucks opened in overseas were in 1996 which store in Tokyo, Japan and after store in Singapore. Year 1997: Philippines; Year 1998: U.K., Taiwan, Thailand, New Zealand and Malaysia; Year 1999: Beijing, Kuwait, South Korea and Lebanon; Year 2000: United Arab Emirates, Hong Kong, Shanghai, Australia, Qatar, Saudi Arabia, and Bahrain; Year 2001: Switzerland and Austria; Year 2002: Oman, Germany, Spain Mexico, Puerto Rico, Macau and Shenzhen, Greece and Indonesia; Year 2003: Turkey, Peru, Chile and Cyprus; Year 2004: France; Year 2005: Jordan, Bahamas and Ireland; Year 2006: Brazil and Egypt; Year 2007: Romania.

Structure of Starbucks is also their market strategy that could attract the customer because of specialty building. According to (Starbucks Corporation Real Estate, Store Design, Store Planning, and Construction 1999), Starbucks had began to create their own structure of building starting from year 1991, they are build up an own in-house team of architects and designers to modified their building. They analyze that every stores has convey right image and characteristics. In different places, they would design different structure of building to coordinate to environment. Stores had to be custom-designed because Starbucks didn’t buy real estate and build its own freestanding structures; rather, each space was leased in an existing structure and thus each store differed in size and shape. Most stores were located in office buildings, downtown and suburban retail centers, airport terminals, university campus areas, or busy neighborhood shopping areas convenient to pedestrian foot traffic.

According to (Starbucks Company Profile 2007), Starbucks has many competitors, where the two largest competitors are Dunkin’ Donuts and Krispy Kreme, direct competitors such as fast food stores McDonald’s and Burger King etc. and some small coffee shop. From the case, Starbucks is tried to push forward some and upgrade to different element compare to competitors. To ensure further market growth and be competitive, Starbucks is developing new products for non-coffee drinkers; they are producing the latest Frappuccino such as Java Chip Frappuccino, Double Chocolate Chip Frappuccino, Strawberries & Crème Frappuccino, and Café Vanilla Frappuccino. Starbucks is taking a good competitive advantage to customer comparing to their competitors. They have several important points to maximize their customer by using brand experience, brand quality, guarantee health on product, and convenient access.

In conclusion, people are recognizing Starbucks Coffeehouse Corporation is one of very successful businesses in the world. As reason of successful, Starbucks has mention that their businesses aren’t just for drinks and foods, but their main business purpose is to undertaking in an emotional experience of their operation. Beside that, they are guarantee the quality of their products and services and enjoyable environmental that could create a loyal customer. They also perceive the health of coffees to the customer and never affect to their healthy. Somewhere there has people to living; Starbucks would locate a store to those places. In many locations Starbucks offers drive-thru windows, which are more convenient then its competitors.

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