Starbucks: A Story of Growth - case study presentation for EBS/DBS

Case Study Presentation by: Brandon J. Murray 1

A Story of Growth


Starbucks Mission

“to inspire and nurture

the human spirit – one person, one cup and

one neighborhood at a

time.”

“establish Starbucks as

the premier purveyor of the finest coffee in the world

while maintaining our uncompromising principles

as we grow ”

THEN NOW


Starbucks Founded

Howard Schultz acquires Starbucks

U.S. Coffee Consumption in a major slump!


The Rise of the

Coffeehouses

!   In San Francisco & New York, small specialty coffeehouses and roasters were being established

!   Starbucks was created in this mold, aiming to roast and sell excellent coffee


We should sell prepared

coffee drinks like the Italians

are doing!!


Mr. Schultz leaves Starbucks!

We love roasting and selling beans ...not interested in selling prepared

drinks.


Mr. Schultz buys Starbucks!

Now I think I WILL make & sell those prepared coffee drinks!!


Starbucks Expansion !   In 1996, Starbucks began executing two

initiatives: !  Selling Starbucks products through mass

distribution channels !  Dramatically expanding its footprint


Mass Distribution Channels

“ to accelerate growth of the

Starbucks brand into the grocery channel across

the United States.” –Howard Schultz, in response to Kraft agreement


Licensing Agreements!By 2008, 16% of of Starbucks revenues came from sources other than its company-owned retail stores.


Starbucks Retail Expansion

1996 1,015 Stores

2001 4,709 Stores

2007 15,011 Stores


Competitor Latte Prices v .

Starbucks


Schultz Returns as CEO

I’m back…. now check out my transformational

agenda to cut $580 million in 2009 and

deliver 90% of store orders on time and

without errors.


Store Closed for…

•  Mr. Schultz closes nearly 1,000 underperforming stores

•  Mr. Schultz closes Starbucks stores nationwide for an afternoon to retrain all baristas


Business Process Improvement

!  Starbucks makes operational changes to their brewing stations and coffee bean “default roast” selections.


Starbucks gets back to its roots…

!  “ round, smooth, and balanced…a mild, sweet finish. ”

- Howard Schultz, describing his ‘Consistent Brew 19’ (renamed to Pike Place Roast)


Moving business “away from the store”

!  Starbucks produces an instant coffee !  Starbucks produces a single-serve pod coffee !  Starbucks applies VIA technology to sell shelf-

stable Frappuccino, ice-cream, and even beer

“Never be without great coffee” – Howard Schultz, slogan on VIA

“faster, easier, and doesn’t force the entire household to drink the same thing in the morning.” – Howard Schultz, on single-serve Pods


!  Seattle's Best Coffee !  15th Avenue Coffee and Tea !  Roy Street Coffee and Tea

Starbucks pursues coffee initiatives outside of their own brand


Manufacturing Brewing Equipment •  What is a Clover coffee machine?

!   An $11,000 USD coffee machine which makes a superior brew by controlling dose, brewing temperature, and brew time.

•  What benefits did Mr. Schultz see with the Clover? 1) Produces superior cup of coffee 2) Offered customers “theater & romance” 3) Makes a single cup at a time, allowing to brew from smaller batches of specialty beans

“Frankly, we just don’t want anyone else to have it.” -‐ Michelle Gass, SBUX execu3ve in response to Clover acquisi3on


My “Starbucks Experience”

•  Starbucks, with CEO Howard Schultz at the helm, has been an inspiration for regular coffee consumers like me - - all the way to national and global business leaders alike.

•  I have enjoyed this Starbucks Case Study project immensely!


QUESTIONS? THANK YOU…

1) For your time, 2) For this opportunity to analyze a fascinating business case, and of course 3) For considering me for your graduate programme.


[ Backup Slide ]


Company Timeline: Howard Schultz & Starbucks

!   1981: Howard Schultz visits the company that's buying so many drip coffeemakers from the Swedish company he represents and falls in love with it.

!   1982: He becomes Starbucks' director of retail operations and marketing. !   1983: He travels to Milan !   1985: He founds Il Giornale !   1987: Leads a group of investors to buy Starbucks when it had fewer than 20 stores and

plans to open 125 new stores in five years. !   1992: Takes the company public (IPO). Starbucks ends fiscal year with 165 stores. !   1996: Begins selling bottled Frappuccino drinks !   2000: Steps down as CEO, a title that goes to Orin Smith. Schultz remains chairman. Ends

fiscal year with 3,501 stores. !   2003: Acquires Seattle’s Best Coffee Company !   2005: Smith retires and is replaced by Jim Donald. Starbucks ends fiscal year with 10,241

stores. !   2008: Schultz reclaims CEO position and Donald leaves the company. More than 15,000

stores worldwide. Starbucks acquires Clover Brewing System. Launches Pike Place Roast. !   2009: Launches Starbucks VIA Ready Brew Coffee !   2011: Launches Starbucks K-Cups portion packs – Green Mountain Coffee Roasters !   2012: Total Stores = 17,651 (as of July 01, 2012)

Starbucks: A Story of Growth - case study presentation for EBS/DBS

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Transcript of Starbucks: A Story of Growth - case study presentation for EBS/DBS