Introduction to Business Group Name: - Donald duckTitle of assignment: - Star Bucks detailsDate of submission: - 19 October 2006Students: - AIBAK / 48563

BURHAN / 48553 MUSTAFA / 48257 MUHAMED / 48256

Title Page

Introduction 2History and background 2Mission Statement 3Annual Report 4Vision 4Marketing Policy 5Target market 6Board of Directors 8Analyst Coverage 9Passion for Perfection 10Wireless Internet Access 11Menu 11Advertising 15Reflection page 15Conclusion, Reference 16

Introduction

Starbucks Coffee, Tea and spice, as it was originally known, roasted its first coffee beans in 1971. This tiny coffee house in Seattle, named after a character in the novel Moby Dick, was the vision of three men – Baldwin, Siegel, and Bowker – who cared passionately about fine coffee and tea. Their determination to provide the best quality coffee helped their business to succeed, and a decade later, their fourth store in Seattle opened.

Starbucks serves over 25 million customers a week in 7,500 stores around the world. And this figure is increasing rapidly with three or four new stores being opened everyday.

History and background

In New York, Howard Schultz, a businessman specializing in kitchen equipment, noticed that a small company in Seattle was ordering a large number of coffeemaker. Out of curiosity, he made the cross country trip to Seattle to find out more. Immediately he saw the Starbucks store, he knew that he wanted to be part of it. The three founder members weren’t initially very keen, but a persistent Schultz was eventually hired to be head of Starbucks marketing in 1982. He modeled the Starbucks stores on Italian espresso bars, and made them comfortable places to relax. Within the next ten years, Schultz had already opened 150 new stores and had brought the company! There are now stores all over Europe, Asia, and the Middle East. Today Starbucks is one of the world’s most recognized brands.

Starbucks purchases and roasts high-quality whole bean coffees and sells them along with fresh, rich-brewed, Italian style espresso beverages, a variety of pastries and confections, and coffee-related accessories and equipment -- primarily through its company-operated retail stores. In addition to sales through our company-operated retail stores, Starbucks sells whole bean coffees through a specialty sales group and supermarkets. Additionally, Starbucks produces and sells bottled Frappuccino® coffee drink and a line of premium ice creams through its joint venture partnerships and offers a line of innovative premium teas produced by its wholly owned subsidiary, Tazo Tea Company. The Company's objective is to establish Starbucks as the most recognized and respected brand in the world.

To achieve this goal, the Company plans to continue to rapidly expand its retail operations, grow its specialty sales and other operations, and selectively pursue opportunities to leverage the Starbucks brand through the introduction of new products and the development of new distribution channels.

Mission Statement

Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining the uncompromising principles while they grow.

The following six guiding principles will help to measure the appropriateness of the decisions:

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.

Starbucks is committed to a role of environmental leadership in all facets of the business.

They fulfill this mission by a commitment to:

Understanding of environmental issues and sharing information with our partners.

Developing innovative and flexible solutions to bring about change. Striving to buy, sell and use environmentally friendly products. Recognizing that fiscal responsibility is essential to our environmental future. Instilling environmental responsibility as a corporate value. Measuring and monitoring our progress for each project. Encouraging all partners to share in our mission.

Annual ReportEmbracing our differences Aside from extraordinary coffee, Starbucks has made a business out of human connections, community involvement and the celebration of cultures. Putting diversity into practice Talking about diversity is important. Acting on it is essential. Creating a place for customers to feel welcome, providing equal opportunities and benefits to every one of our partners (employees) and working with minority or women owned businesses are among the ways we meet and set new goals for an inclusive business.

While we serve coffee to the entire world, we strive to meet and respect the interests of our local communities. Our partnership with Magic Johnson’s Urban Coffee Opportunities helps introduce Starbucks to ethnically diverse communities throughout the country, providing even more places for people to connect.

Find out more about our diversity efforts in the CSR annual report and if you’d like regular updates, you can sign up for the Starbucks Social Responsibility newsletter.

VisionStar bucks vision in term of brand is that Star bucks will use the various resources available; to raise the Star bucks brand and strengthen it’s much admired and respected status among consumers in the years ahead. Star bucks business scope will strive to become not just the number one coffee and tea Company. Starbucks will avail of various new opportunities arising out of the expected liberalization of trading arrangements among various countries in the Middle East and Africa region, to create new business models and practices that improve operational efficiency.

Marketing Policy

Starbucks customers are people of diverse ethnic, income and age groups with varying tastes and interests. We embrace their diversity and strive to provide excellent customer service to those we serve by offering products that are relevant to our customer base and their varying interests and tastes, including some products which may appeal to young people.

While the Company’s overall marketing, advertising and event sponsorship efforts are not directed at children or youth, Starbucks has a long history of supporting community activities and events important to our customers, including young people.

To help ensure all of our marketing efforts remain consistent with these principles, we have formalized our long-standing practices by implementing new review policies for all our marketing and communications activities.

Review and Enforcement Appropriate measures and best efforts are taken so that Starbucks advertising and marketing is not specifically aimed at reaching young consumers.

Communication of the policy: Starbucks policy on marketing to youth is shared with all staff within the marketing function.

Campaign and Sensitivity Review: Starbucks marketing materials and promotional campaigns undergo a formal “sensitivity review” process prior to their approval and distribution. This process, led by Marketing, involves a panel of Starbucks employees from key parts of the organization -- such as Customer Relations, Public Affairs, Corporate Social Responsibility, Diversity, Internal Communications, and Legal -- who review marketing elements and provide input verbally and in writing. The purpose of the panel is to identify in advance and avoid distributing marketing materials that could be inadvertently appealing to youth, racially offensive, widely contentious or culturally insensitive. If consistent feedback is provided from members of the panel about a potential issue, the Marketing team adjusts the materials or campaigns to alleviate the issue.

Media Buying: When planning and executing marketing campaigns in which paid advertising media is used, Starbucks has instructed its advertising agency to select media vehicles whose audience composition is closely aligned with Starbucks adult customer base.

Target marketDifferent companies have different abilities that enable them to serve their target market better, which is why some companies choose to focus much of their attention to specific segments. Starbucks primarily chooses to focus on the demographics,

psychographics and lifestyle of their customers. It is with the information gathered regarding these segments that Starbucks can better serve its customers.

Demographics are things such as age, sex, marital status, education, occupation and income. Starbucks targets both males and females, mainly 18-30 year olds, but really does cater for everybody's needs. And because young children don't usually drink coffee, Starbucks offers a range of non-coffee beverages to cater for the whole family. Hanging out in Starbucks gives the impression of being very with it and most of the people you see sitting in the stores exude a certain coolness and give off the image of having some sort of social status, with lots of money to spare. Starbucks customers are mainly in their final years of high school, in university or just starting to work. But whatever it is, they all have had a good education, and if they do have a job, it almost certainly includes a big income as well.

Demographics help to locate a target market and this information is often the most accessible and cost effective way to identify a target market (Schiffman et al, 2001). Even though factors such as personality and behavior are often first used to define a market segment, the consumer's demographic characteristics must be known in order to assess the size of the target market and to reach it efficiently (Schiffman et al, 2001).

Board of DirectorsAs part of Starbucks mission star bucks are committed to maintaining our uncompromising principles while they grow. In this regard, the Board of Directors has adopted governance principles and committee charters to lead Starbucks governance practices. Currently, the board has 11 directors, a substantial majority of whom meet all of the independence requirements of NASDAQ® and the U.S. Securities and Exchange Commission.

Howard SchultzStarbucks Corporationchairman

Jim DonaldStarbucks Corporationpresident and chief executive officer

Barbara BassGerson Bakar Foundationpresident

Howard BeharStarbucks Corporationdirector

William (Bill) BradleyAllen & Company LLCmanaging director

Mellody Hobson Ariel Capital Management, LLCAriel Mutual Fundspresident

Olden LeePepsiCo, Inc.retired executive

James Shennan, Jr.; Trinity Venturesgeneral partner emeritus

Javier TeruelColgate - Palmolive Companyvice chairman

Myron Ullman, IIIJ.C. Penney Company, Inc.chairman and chief executive officer

Craig WeatherupPepsi-Cola Companyretired chief executive officer

Analyst CoverageThe Analyst List - The names of the firms currently are providing research coverage on Starbucks.

Argus Research Banc of America Securities LLC Bear Stearns & Co. Inc. Buckingham Research CIBC World Markets Citigroup Investment Deutsche Bank Securities Goldman Sachs & Co. J.P. Morgan Securities Inc. JMP Securities Lehman Brothers McAdams, Wright, Ragen Inc. RBC Capital Markets Ragen MacKenzie Thomas Weisel Partners UBS Securities LLC William Blair & Co. LLC

Passion for PerfectionCoffee is a huge business. In fact, coffee is the second most valuable commodity after oil.

Star bucks comb the world for the perfect combination of climate, soil, elevation, and agricultural practices that come together to produce a great coffee. When searching for coffees, the only question for Starbucks is this: Which coffees from a given location best represent the perfect intersection of climate and skilled horticulture? It is a search for unmistakable regional flavors, what a French wine-maker would call goût de terroir, the taste of the place. At Starbucks, coffee is a fresh produce, not a commodity. When the inevitable happens and a given coffee estate or region has an "off" year, they simply don't offer that coffee. They make this tough decision rather than offering a lower quality selection to our valued customers. They buy coffee solely on its performance in the cup.

The coffee they buy is truly special, spectacular coffee. The coffee buying team evaluates over one thousand "offer samples" each year. The evaluation process includes roasting small batches of coffee and tasting these batches in a process called "cupping." Only a very few of these sampled coffees make it into our warehouses. Starbucks coffee buyers spend approximately 18 weeks per year traveling to countries of origin. The purpose of these travels is not to directly buy coffee. The goal is to continue to learn about coffee and to strengthen relationships with growers and suppliers. These relationships are critical to our future success - they solidify our role as champions of quality and progress at every level of the coffee business. It is because of these relationships that Starbucks gets the first pick of the best crops worldwide.

Wireless internet accessHigh-speed wireless Internet service – now available at Starbucks Travel at blazing speeds on the Internet -- all from the comfort of your favorite cozy chair.Starbucks now offers wireless broadband Internet service throughout North America, offering T-Mobile HotSpot in the U.S. and Bell Hotspot in Canada.Available at thousands of Starbucks locations, you can find the one nearest you by using our Store Locator. Just select "Wireless Hotspot Available" as the Store Type and we’ll provide you a list of Wi-Fi enabled stores near you.

The many conveniences of Wi-Fi You’ll get the speed you need to quickly and easily check your e-mail, download files you need for your next meeting, surf the Web and get work done in coffeehouse comfort.

Tune into Hear Music online at Starbucks Open your browser at any Wi-Fi enabled Starbucks to watch complimentary Wi-Fi content from Hear Music. Listen to music clips or watch videos of artist interviews, recording sessions and concerts all while you enjoy a latte.

MenuCoffee and Espresso Beverages are made with genuine Starbucks® Espresso. Decaffeinated coffee, non-fat milk and soy milk are available upon request. For most of our drinks, you can add:

Caramel - .35¢     Espresso Shot - .55¢     Flavor Shot - .55¢

  Drink  Tall   Grande   Venti  

Coffee of the DayRegular and Decaf

$1.40 $1.60 $1.70

Caffé LatteEspresso & steamed milk

$2.55 $3.10 $3.40

Caffé AmericanoEspresso & hot water

$1.75 $2.05 $2.40

White Chocolate Mocha White chocolate flavored version of our classic Caffé Mocha

$3.20 $3.75 $4.00

Caffé MochaEspresso, cocoa, steamed milk & whipped cream

$2.75 $3.30 $3.55

Cappuccino Espresso, steamed & foamed milk

$2.55 $3.10 $3.40

Caramel Macchiato Foamed milk marked with espresso, vanilla & real caramel

$2.80 $3.40 $3.65

  Drink  Tall   Grande   Venti  

Iced Caffé Latte Espresso & milk poured over ice

$2.55 $3.10 $3.50

Iced Caffé Mocha Espresso & steamed milk

$2.75 $3.30 $3.70

Iced Caffé Americano Espresso & water poured over ice

$1.75 $2.05 $2.50

Iced White Chocolate Mocha White Chocolate, Espresso, & milk over ice

$3.20 $3.75 $4.15

Iced Caramel Macchiato Espresso, milk & vanilla over ice, & topped with real caramel

$2.80 $3.40 $3.80

Tazo® Iced Chai LatteLightly sweetened black teas, spices & milk served over ice

$2.70 $2.95 $3.35

Tazo® Iced Tea Traditional black tea blend - crisp & refreshing

$1.25 $1.40 $1.70

FrappéMayfield ice cream, milk, and espresso blended to a milkshake consistency

  $4.15

Creamice®Milk, espresso, and any of our list of flavors blended into a smooth, creamy delight

  $3.65

  Drink  Tall   Grande   Venti  

Espresso Starbucks espresso roast, smooth & satisfying

$1.45 $1.75  

Espresso Macchiato Espresso gently marked with foam

$1.45 $1.75  

Espresso Con Panna Espresso topped with whipped cream

$1.45 $1.75

  Drink  Tall   Grande   Venti  

Tazo® Chai Latte Lightly sweetened black teas & spices, steamed with milk

$2.70 $2.95 $3.35

Tazo® Hot Tea Black tea blend - A variety of flavors are available

$1.15 $1.65 $1.70

Hot ChocolateThe finest cocoa, blended with hot milk

$2.20 $2.45 $2.70

Steamed Cider Rich apple cider steamed to perfection - now in stock year-round

$1.75 $2.00 $2.25

Steamed MilkWhole, 2% & non-fat Add a shot or two of any of our flavors to give it a kick*

$2.00 $2.25 $2.50

Fountain Drink Coke, Diet Coke, Sprite, Mellow Yellow, Dr. Pepper or Minute Maid Lemonade

$1.00 $1.50

MilkshakeMade with delicious Mayfield® Ice Cream. Chocolate, Vanilla, Strawberry, or Flavor of the Month

$3.65

Coke Float Coke and Mayfield® Ice Cream.Try it blended.

$2.50

  Item Price       

Mayfield® Ice Cream Chocolate, Vanilla, Strawberry, and our flavor of the month

$1.00per scoop

   

Ice Cream Sandwich Straight out of the ice cream hall-of-fame

$0.75    

Orange Push-UpThe childhood classic

$1.00    

Some things never change. Gourmet Muffins Chocolate Chocolate Chip, Blueberry, and Bannana Nut

$2.50    

CookieLarge, mouth-watering cookiesFlavor selection varies

$1.25    

PopcornGet it while it's hot. Get it while it's buttered.

$1.00    

  *Add a shot of flavor to any of our drinks - $0.55 per flavor

Almond Creme de Mint Amaretto HazelnutCaramel Irish Creme Cherry RaspberryCinnamon Vanilla

(Regular and Sugar-Free)

  Item Price      

Bottled Frappuccino® Vanilla, mocha or coffee flavor

$1.40    

Starbucks Doubleshot® $1.75  

Dasani®Regular, Lemon, and Strawberry

$1.40    

Vault® $1.40    

Coca-Cola Blãk ® $1.40    

Power Aid® Lemon-lime, Mountain Blast, and Fruit Punch

$1.40    

Pro Slammers® Hard Chocolate

$1.40    

Bottled Juice Apple or Orange

$1.40    

Full Throttle ®Regular and Fury varieties

$2.00  

Advertising

In fiscal 2005, Starbucks spent $87.7 million on advertising, which includes

billboards, online advertising and signs at Safeco field. That's about 1.4 percent of its

2005 revenues.

For comparison, Coca-Cola spent $2.5 billion, and Nike spent $1.7 billion during their

most recent fiscal years, each about 11 percent of revenues.

ReflectionWe learnt many things from this assignment. We understood the main things of star bucks like the target market, vision, history and many other things.

ConclusionStarbucks must continue to grow very rapidly--and for a long time--to justify its

valuations. Maybe it will. Maybe it won't. We do know that the company's sales

growth has slowed, its earnings growth is highly unpredictable, and that it has earned

low returns on its capital thus far--all factors that lower the odds of success. Because

Starbucks' rapid growth in the 1990s has come at a time of economic prosperity, one

also wonders how well the company will do in the next recession. After all, premium

coffee is not one of life's necessities. The correct conclusion is not that Starbucks is a

"sell," as the parlance goes on Wall Street. After examining the pros and cons, you

might feel comfortable with the risks and decide to go ahead and invest. Just realize

that capitalizing on the premium-coffee craze through Starbucks is a high-stakes

game.

Reference1. www.starbucks.comDate visited - 3 September 2006

2. http://www.starbucks.com/aboutus/default.asp

Date visited - 3 September 2006

3. http://www.starbucks.com/aboutus/overview.aspDate visited - 6 September 2006

4. http://www.starbucks.com/aboutus/environment.aspDate visited - 7 September 2006

5. http://www.starbucks.com/aboutus/marketingPolicy.aspDate visited - 5 September 2006

6.http://www.starbucks.com/ourcoffees/menuboard.asp?category%5Fname= Coffee+Menu+BoardDate visited - 3 September 2006

7. www.echeat.com/starbucksDate visited - 15 September 2006

8. www.google.com/starbucksDate visited - 15 September 2006