Starbucks Business

11 Pages 2790 Words

Introduction
Company overview
Starbucks, the coffee making and serving company took its unique name from a character of the novel “Moby Dick” and has its roots in Seattle, Washington. Here you can still find the very first coffee shop at the pike place market, which has been opened since 1971. In 1987, Starbucks was bought by Howard Schultz and ever since has been exploring all over the United States. Today Starbucks is the most known chain of coffeehouses around the world (Lambert, Emily “The buck stops here”, Forbes 2003 Volume 171, p.52). There are over 6500 coffee stores all over North America and 30 other countries around the world. According to Fortune Magazine three new stores are opened every day making Starbucks biggest competitor Starbucks itself by cutting off up to 30% of neighboring store` s sales. The company’s strategy is to “blanket an area completely, even if the stores cannibalize one another` s business”, as it “cuts down on delivery and management costs, shortens customer lines at individual stores, and increases foot traffic for all the stores in an area” (Daniels, Cora “Mr. Coffee, The man behind the $ 4.75 Frappuccino makes the 500”Fortune 2003 Volume 147).
This is probably why Starbucks became so popular and famous with an unbelievably high average visit rate of 18 times a month by a typical consumer (growing 6-8% a year) and a minimum cost of advertising (only 1% of their annual revenues). No other business company reaches the numbers that Starbucks has. In March 2003, they even made it to Fortune Magazine’s top 10 of 500 of America` s most admired companies for the first time.
Starbucks’ sales have kept on increasing up to 20% a year ever since they went public in 1992 (Holmes, Stanley “Planet Starbucks to keep up the growth, it must go global quickly”, Business Week, 2002, issue 3798). Starbucks does not just sell coffee in their stores. They have joint ven...