Starbucks' International Operations|Business Strategy|Case Study|Case Studies

Starbucks' International Operations

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Case Details:

Case Code : BSTR058
Case Length : 12 Pages
Period : 1982 - 2003
Organization : Starbucks' International
Pub Date : 2003
Teaching Note : Available
Countries : USA
Industry : Food and Beverage

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note

The history of Starbucks dates back to 1971, when Jerry Baldwin, Zev Siegl and Gordon Bowker launched a coffee bean retailing store named Starbucks to sell specialty whole-bean coffee in Seattle.

By 1981, the number of Starbucks stores increased to five and Starbucks also established a small roasting facility in Seattle. Around the same time, Howard Schultz (Schultz) who was working with Hammarplast – a Swedish housewares company which (marketed coffee makers) noticed that Starbucks, a small company from Seattle, was ordering more coffee makers than anyone else. In order to find out more about the company, Schultz visited Seattle. Schultz was so impressed by the company and its founders that he offered to work for the company. In 1982, Schultz joined Starbucks as marketing manager, with an equity stake in the company. During his first year at Starbucks, he studied the various types of coffee and the intricacies of the coffee business.

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The turning point came in 1983, when Schultz was sent to Milan (Italy) for an international housewares show. There he observed that every street in the city had an espresso coffee bar, where people met and spent time.

Schultz realized that Starbucks could introduce espresso coffee bars in the US. Schultz put forward this idea to his partners. But they did not like the idea of selling espresso coffee. However, after a lot of persuasion from Schultz, they agreed to allow him to sell espresso coffee in their retail shop. The business picked up and by the weekend they were making more money by selling the beverage than by selling coffee beans. Still when the partners refused to venture into the beverage business Schultz decided to quit the company and start out on his own. In April 1985, Schultz opened a coffee bar - Il Giornale in Seattle, with a seed capital of $150,000 invested by Jerry Baldwin and Gordon Bowker. The rest of the capital was raised through private placement...

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