Prepared by:

ROHIT JAIN (B-14) PANKAJ LAHOTY (B-17) MILAN MALKAN (B-18) PARTH PATIBANDHA(B-34)

Introduction
Founder: Gerald Baldwin , Gordon Bowker and Ziev Siegl

Their primary product was the selling of whole bean coffee

in one Seattle store. In 1982, Howard Schultz joined the company as a member of their marketing team. In 1984 Starbucks opened their 1st espresso coffee bar. In 1986 based on Italian coffee cafes, selling brewed dark roast coffee. By 1987 Schultz had expanded to three coffee bars and bought Starbucks from the original owners for $3.8 million. In the 1990s, Starbucks was opening a new store every workday, a pace that continued into the 2000s.

Timeline
1971 --- Company established 1982 --- Howard Schultz joined the company as a

member of a marketing team 1984 --- Starbucks opened their 1st espresso coffee bar 1985 --- Howard left Starbucks 1987 --- Howard bought Starbucks in $3.8 million 1990 --- Howard Schultz added key leaders in the business- Orin Smith CFO & Howard Behar Director Store Operations 1992--- IPO issue 1995-1998--- international expansion 2001--- implementation of CSR

Starbucks Experience
Starbucks is the place where you can sit back and be

yourself, they were not at home, not at work, but at a third place.

Starbucks concept
It is based on three-legged stool for global development.

1) retail coffee and assorted specialty item. 2) specialty sales. 3) Frappuccino coffee drink & specialty coffee ice creams sold through other retailers globally.

Starbucks Mission Statement Principles

Provide a great work environment and treat each other

with respect and dignity. Embrace diversity as an essential component in the way we do business. Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee. Develop enthusiastically satisfied customers all of the time. Contribute positively to our communities and our environment. Recognize that profitability is essential to our future success.

Supply chain
Farmer--- collector--- miller---exporter---importer
Backward integration:

purchase green coffee directly from farmers.

As a result they refined their coffee quality from

bypassing much of the middle market.

Expansion
Starbucks applied market-swarming expansion

techniques. This led them as ubiquitous-- everywhere.

1)Domestic Expansion 2)International Expansion

Domestic Expansion
In later 1980 and early 1990s --- in pacific northwest

and California
In 1993--- washington D.C. market In 1994--- in boston In 1994--- company expanded rapidly to the major

metropolitan areas of Minneapolis, New york, Atlanta, Dallas and Houston.

International Expansion
Two basic structures for international expansion-

1) Company owned 2) Licensing agreements

Characteristics in international partners: 1. Shared values and corporate culture 2. Strong multi-unit retail/ restaurant experience 3. Dedicated human resources 4. Commitment to customer service 5. Quality image 6. Creative ability, local knowledge, and brand building

skills

Cont
In 1988--- first store in Vancouver, British columbia
In 1996--- Asia In 1998--- middle east In 2001--- Europe In 2002--- Latin Maxico At present days starbucks expand their business by

giving franchise policy ex. Barista

Cont
Japan--- JV with Sazaby, a Japanese retailer in 1995 JV proved very successful which led to IPO in 2001, the only unit

within Starbucks international independently of the parent.

network

to

be

listed

CHINA--- first store opened in 1999 in Beijing . In 3 years they opened 35 stores & became successful in the

culture grounded with tea. The one opened in Beijings flourished.

forbidden city in 2001 also

Europe ---- an already established market which was not

considered open for American entry. 2001 Switzerland & Austria , then expanded into Spain , Germany , Greece in 2002.

P.E.S.T.E.L. Analysis
Political Environment Anti globalization movement Market analysts questioned the ability to successfully expand their business. By reducing supply chain there is a chance of

politically exposure for starbucks.

Global week of action against Starbucks In mid 2001 coffee industry was in crisis. coffee price were in all time low. So the farmers were going into debt and losing their land. But Starbucks kept their higher margin with consumers.

Economic Environment
Starbucks introduced their IPO in 1992. Reduced the supply chain to improve the quality and so

they can get premium price from the consumers.

Outright pricing : so they can directly negotiate with

farmers. Starbucks faced criticism from NGOs that urged the company to acquire certified coffee beans ensuring that those coffee beans were grown and marketed under certain economic and social conditions. In the early 2000s, it experienced declining sales and revenues.

Social Environment
Understanding of environmental issues.

ex. By the end of 2002 they had 1312 of its total 5886 stores outside of the U.S.
Sharing information with the partners. They sell and use innovative and environmental

friendly products.
Environmental responsibility as a corporate value:

Donation to Care Institution :

Starbucks is the largest north American corporate

donor. In 1991 they donated $2 million.

Cont
Starbucks had contributed $43,000 in 2001 to the

construction of health clinic and school.

Bean Stock: offer its employees a stock ownership plan.

They offered shares to both full-time and part-time employees.

Starbucks offered health care benefits to all employees

who worked more than 20 hours per week.

Technological Environment
They developed a new brand named Serena organic

blend coffee.
Organic coffee was grown without the use of synthetic

pesticides, chemical fertilizers.

They sells primarily whole bean coffees through a

specialty sales group, super market and online at www.starbucks.com

Legal Environment
Service quality and employee motivation and retention

were continuing issues. Store managers and employees were overworked and underpaid. It was eliminated in 2000 as a result of the settlement of a class action suit brought in california by some store managers.

Revenue/ store
0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Revenues (mn $)

Net profit (mn $)

250 200 150 100 50 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 net profit (mn $)

Corporate Social Responsibility

In the late 1990s, Starbuck was criticized for

benefitting from lower-cost sourcing and their unwillingness to help improve the economic conditions of the coffee growers.
In 2001, implemented CSR for the economic

development of the people in its supply chain.

Fair Trade Certified Brand

In this partnership starbucks promises consumers that the farmers who produced the coffee beans were paid a guaranteed min. price that helps support for farm families.

Cont
Infrastructure, including schools, clinics, and coffee

processing facilities. Supplemental funding for farm credit programs to support farm capital needs Contributions to CARE, providing direct support to farmers and farm communities around the world. Outright pricing: in which price was directly negotiated with small and medium-sized farmers, cutting out the supply chain.

Cont
Starbucks had initiated a company program called

Commitment to origins, dedicated to creating sustainable growing environment in coffee originating countries. 1. Shade grown Mexico coffee 2. Fair Trade Certified Coffee 3. Serena Organic Blend Coffee

Conclusion
Although starbucks had actively pursued a number of

CSR initiatives, it was accused of polishing its image rather than improving the lives of coffee growers.
As starbucks moved into more and more countries,

labor and real estate practices came under increasing scrutiny.