An Overview of Starbucks Corporation and Role of World Trade Organization in Starbucks
Starbucks is that rare business story, a company that has single-handedly brought life to an old commodity and established anew. Thirty-three years ago few US consumers drank premium coffees like lattes, and espressos let alone pronounced them correctly; today millions do. It is all part of a coffee trend that Starbucks largely started. More than a fad product, an entirely new food ‘agenda’ is taking shape. Starbucks has had great success in developing its company. Unlike many traditional consumer companies, such as Proctor & Gamble, Starbucks did not develop its name through the supermarket. Rather, Starbucks grew its reputation through company owned retail outlets.
These outlets, which combine company standards of design with location-specific tailoring. are the engines that have powered Starbucks growth. Starbucks first store was opened in 1971 at a waterfront in Pike’s Place. This tiny Seattle based chain with innovative ideas of how to do business exploded in a few years and has changed the process of drinking coffee not only in US but worldwide. Starbucks has since exploded turning coffee shops into a global trend.
According to figures found on starbucks.com, there were one hundred and sixteen Starbucks in the country in 1991, and then by 1996, there were one thousand fifteen. As of today, they now have over 8,000 stores in numerous different countries in every hemisphere, all for the purpose of serving the best quality coffee and products. With so many company owned stores across the world and with the intention yet of increasing, the company has transformed coffee into a lifestyle accessory with as much elegance as the latest fashion trend.
Starbucks Coffee is an example of a successful international launch of a U.S. business. Howard Shultz CEO, and writer of, ‘Pour your Heart into it’, says ‘since our first international store opened in Japan in August 1996, we have demonstrated the power of the Starbucks brand and the relevancy of our in-store experience to consumers worldwide. He also said, We embarked on a growth plan to build a global company and today we are recognized as one of the leading brands worldwide. Starbucks success was built on two things:
- the store experience (Starbucks’ image)
- the quality of its products
Which consumers believe “really is a better cup of coffee”. As it has grown the company has reported years of revenue growth of over 50%. Starbucks Coffee is a part of an American culture that has proven not only to be a successful company, but also one of great morals and business ethics. Starbucks made coffee not only ‘cool’ but created an immensely successful business. Starbucks success was not always so easy. Back in the 70’s, there were no signs of coffee as a strong business. Coffee consumption in the US peaked in the 1960s, but by 1971 was on a steady decline.
Following price fluctuations in the 1950s and 60s, several quotas for how much coffee was to be produced were set. These quotas helped keep prices stable and sufficient to cover producer’s costs of production and living. “The value of retail sales of coffee has doubled since the early 1990s from US$30 billion to US$65 billion although producers have seen their share of retail sales during the same time period halve from around US$12 billion to US$5.5 billion. For small farmers declining prices have a direct impact on overall household revenues and access to basic needs”
Nowadays, Starbucks is becoming less of treat for US consumers and more of a everyday staple. Starbucks sells more than just coffee; Bottled frappuccino which is a joint venture with PepsiCo, and Dreyers, (Starbucks-branded ice cream) have done exceptionally well in supermarkets. Ice-cream represents an additional potential of $40 million. Having Pepsi and Dreyers as joint partners will enable rapid supermarket penetration. They have contracts with many big name businesses like United Airlines, Kraft, Marriott, Albertsons, and many other miscellaneous companies to expand their distribution of coffee, and products to all that seek them.
You can find the Starbucks coffee brand being served on most airline flights, Barnes n’ Nobles bookstores, and in Hotel rooms worldwide. Retail outlets currently continue to offer baked goods, confections, and coffee-related equipment and merchandise–much of which is carried through its online store and mail order brochures. In fact, they have never done classic advertisement, such as billboards, TV, or radio ads, but still manage to be among the top 100 brands worldwide. The wide varieties and quality of Starbucks coffee’s and products has contributed widely to their thirty three years of success in which they have managed to attract a great number of loyal consumers. Finally, rather than franchising stores, Starbucks owns all their locations.
Starbucks strives on keeping not only customers happy but their employees as well. Shultz’s early on dedication to “employee happiness as an integral part in keeping good, quality, long lasting employees” proved to be successful in all these aspects. “People try to classify us as a restaurant company or a specialty coffee company, but that focus is just too narrow. It’s important to recognize that what we have built is one of the most powerful consumer brands in North America.”- Starbucks Chairman and CEO Howard Shultz in an interview with Nations Restaurant News.”
Top management at Starbucks believes that employees make the store that they work in. They have proved to be successful with the approach to employees with turn over rates reported as “lower than industry average”. A Starbucks employee needed to be very knowledgeable, communicative, and helpful to the customers. Starbucks uses strong cultural incentives to drive the identification of opportunities. In the book, Mission statement #2 in his reads: “Provide a great work environment and treat each other with respect. They provide things like health insurance and stock options to all of their staff, regardless of how much time they put in and/or if they are part time employees, which is very uncommon nowadays.
These programs have made Starbucks one of Fortune’s ‘100 best companies to work for. They have received numerous awards for company growth. Starbucks promotes internal promotions and continues to encourage employees to speak out about ideas they may have while providing incentives. At Starbucks all employees are called “partners,” signaling a level of responsibility maintained by few companies with sales in the billions of dollars. Anyone who has an idea uses a one-page form to pass it to the senior executive team–and gets a response. When the company pursues an idea, its author, regardless of tenure or title, is typically invited to join the launch team as a full-time member.
New-style marketing organizations, by contrast, hire marketers not for jobs but for two broad kinds of roles: those of integrators and specialists. Integrators are marketers with broad skills who coordinate the delivery of products and services to the market from beginning to end. Specialists–more narrowly focused marketers with specialized skills–can be mobilized quickly to provide the particular expertise a given opportunity team requires. Starbucks is one of them and finding its way of capturing the market it will surely pay high attention to the recruitment process.
Social Responsibility, charities, foundations, and community have kept Starbucks ahead of the competition. Their active role and strong commitment and dedication to children’s education, many local causes, group organizations and the global environment for those countries who continue to provide their coffee have put a positive impact on how the company is viewed. According to Starbucks website, Social Responsibility consists of the following: The Starbucks Foundation, Commitment to origins, Building community, Environmental affairs, and many others. With one of their mission statements: ‘Contribute positively to our communities and our environment it is easy to see why they are a highly respected business.
The social responsibility activities that Starbucks has done so far, has benefited the company tremendously. By supporting literacy programs, they attract more educated customers. By providing medical aid, and monetary donations to those countries that supply their coffee beans, they ensure future availability and supply to their buisnesses. Not to mention the amount of jobs they have brought to numerous cities, and countries. Most importantly, they are able to establish themselves as an important part of not just the business aspect but also of the social. Of course, their interest is not mainly for the good of humanity. They want to make money and ensure their profits. But the way to these profits leads through the development of and fair trade with poor countries
Howard Schultz, along with the other managers at Starbucks, believes that the benefits of employee satisfaction, and community and global outreach outweigh the costs. With an average sale of $3.50 per cup of coffee, most customers return at an average of 16 times a month! This is proof that Starbucks has become an integral part of American Society.
There mission is not to jeopardize the quality, ambiance, or service due to expansion into a global marketplace. Besides writing, adopting, and implementing a mission statement, Starbucks has outlined their guiding principles, which is closely followed throughout their business:
- 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 not a perfect company. However, it has proved to be a company who has managed to make the voyage to success without compromising key principles of the guiding vision. As Starbucks embarks onto the 21st century, will Starbucks be able to maintain the integrity of its vision? I believe so. With excellent business values, and a strong sense of leadership backing them, Starbucks has continually proved itself to be the American dream of what a successful company can be.