Starbucks: A Story of Growth

            This case presents the story of growth for Starbucks that how this company became such a huge success all over the world since its inception. In more than four decades of its operations, which started from Seattle, Washington, and now the company has its presence in 50 countries with more than 17000 retail stores. The company Starbucks is the main player, which has been focused in this case along with many other stakeholders, who played their part in last forty years. The Company belongs to coffee retailing industry, like coffee shops, which served variety of coffee to its customers. The company has enjoyed huge success in this industry over the years. The CEO of Starbucks, Mr. Howard Schultz has been a major force behind developing this idea of business and keeping it on its winning course. He always reminded his workers about the success and struggle like when he spoke to his workers during the holiday season, he said that “We have won in many ways, but I feel it’s important to remind us all of how fleeting success and winning can be”.

            The company started its operations in 1971, and it was the time, when United States was experiencing a decline in the coffee consumption. However, company started its mission with an idea to come up with great taste of coffee, which enabled them to open five retail outlets until 1982. During a visit to Italy, Howard Schultz saw the great idea of coffe shops with brewing coffee and making tasteful espresso. He understood that United States was lacking such coffee shops, so when he came back to United States, he presented this idea to Starbucks, but his idea was turned down. Then Howard Schultz opened his own coffee espresso shop with the name in I1 Giornale in 1986. His business started to gain much attraction from the customers, and finally he was able to Starbucks in 1987. The new Starbucks coffee shops came with great taste of coffee that American had never enjoyed before.

            Starbucks knew that they had to be very selective in its approach so they opened coffee retail stores with targeted location. The coffee shop industry was changing quickly and Starbucks did all, what was needed to comply with the transforming business environment. That’s why they were able to have huge expansion from year 1996 to year 2006. They started selling its bottled coffee drink through mass distribution channels. Their strategy proved so successful that in 1998, the company was able to sell more than $50m of ground specialty and whole bean coffee in different range of grocery stores. The other area of expansion was by doing licensing agreements. Like, in 1995, an agreement was done between Starbucks and United Airline that coffee provided in all United Flights will be provided by Starbucks. In the same way, they did an agreement with Hyatt Hotels in 2001 that all room services and restaurants of the hotel will be served by Starbucks coffee. Then company shifted its focus towards expansion o its retail coffee stores.

            This was the time, when company was also facing the issue of great competition increasing in the coffee shop industry. In 2006, more than 24000 specialty coffee shops were operating in the United States, which was a huge challenge for Starbucks to deal with. The other big giants in the business-like McDonald’s and Dunkin’ Donuts also started serving specialty coffee, which increased the competition to next level for Starbucks. The company also started to face challenges in terms of its financial performance, so Schultz returned as Starbucks CEO in 2008. He came up with a transformational agenda for the company to reinvent its successful business. Then Starbucks started to pursue new growth initiatives from 2009 to 2011. Some of the recommend growth methods for the company proved extremely successful like they expanded their business away from the coffee stores and also developed non-Starbucks branded businesses. The company also changed its strategy by acquiring the coffee equipment company. This transformational agenda proved extremely successful and company was again on its roadmap of success with great growth.