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Starbucks Used To Be A Small Business

Written by: Ilya Bodner

Article Overview: When our forefathers arrived on this continent they brought with them a vision of a new world with thriving commerce and raucous marketplaces. No matter what the media may be pushing on us about the economy, the vision of our predecessors is just as alive today as it was a couple centuries ago. If you don't believe it, then kick yourself next time you're standing in line at Starbuck's waiting to pay $4 for a cup of coffee.

Starbucks Used To Be A Small Business

Creating a Market with a Cup of Coffee Howard Shultz was a poor kid struggling to make his way through college, and because he believed he could create a need for caramel macchiatos and chai lattes, he is now the head of a 30-something billion dollar multinational string of coffee shops. After interviewing Shultz, 60 Minutes reporter, Scott Pelley decided the entrepreneur is "creating his own subculture and intends to take the whole world along."

Shultz first became interested in Starbuck's when as a plastic salesman he was intrigued by the volume of plastic drip-brewing thermoses it was buying from the plastics manufacturer that employed him. Shortly after coming on board with Starbuck's he found himself in a love affair with the pulsating coffee culture of . He suddenly was struck with the idea that patrons would be receptive to elegant gathering places with a spirit of community exchange, all the while sipping on connoisseur coffees to their heart's content.

In 1987 when Starbuck's when up for sale, his inspiration swayed investors to fork over $3.8 billion and he eventually exceeded his goal of 125 outlets in 5 years with 165 stores by 1992. By 2008 there were approximately 11,000 stores in the , with another 4,000 - 5,000 in foreign countries. With fiscal 2009 Q1 net earnings down to $63.3 million, the hot beverage mogul will be making some changes to streamline the operation and increase profitability.

Shultz is a firm believer that the success his empire is based on the philosophy behind the operations - that he created a place for humanity to meet and make human connections. It's an alternative environment to work and home. He says the reason Starbuck's stores are opened across the street from each other is to cut back on the lines where something like 40 million people a week wait to imbibe 300 million plus gallons of brew each day..

Find Your Niche and Make It Happen

Pretty much everyone in this country comes from pioneering stock or from people that knew how to gather the right resources to make something happen. Find your "niche" and build a company around it that offers an alternative solution for a need that's waiting to be filled. The resources, technology, information, financing and business mentoring are all available to support your efforts. This is one of the greatest times in history to launch a business.

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Article Tags: 60 minutes, caramel, chai, coffee culture, coffee shops, coffees, community exchange, connoisseur, cup of coffee, drip, foreign countries, howard shultz, human connections, love affair, poor kid, q1, scott pelley, spirit of community, starbuck, subculture



Related Forum Posts
My entry - 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read - this is a fascinating book about the history of Business theory, and I'd recommend it to anybody. 2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto. 3. PADI: The Business of Diving Book Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.
Starbucks vs Dunkin' Donuts - OT, but amusing... I saw a funny commercial for Dunkin Donuts the other day. Woman goes into a fancy coffee place and wants to order a large coffee, but she can't. The coffee comes in three sizes, but they are... and then the sales girl rattles off three Italian-sounding names... And then a Dunkin Donuts spokesman comes on and says, "Small, medium and large. We keep it simple." I assume this is a dig at the pretentiousness of Starbucks, where they name their sizes in a pretentious way. (I have to admit I've only been to a Starbucks once, to get some cookies - as I don't even drink coffee - but the prices were outrageous!)
Starbucks: Licensing vs Joint-Venture - Hello there i have a few questions, i would like to hear from you some ideas and opinions for my case study... 1) Why do you think Starbucks has recently elected to expand internationally primarily through local joint-ventures, to whom it licenses its format, as opposed to a pure licensing strategy? 2) And I was also wondering, what are the advantages of a joint-venture entry mode for Starbucks over entering though wholly owned subsidiaries? On occasion, Starbucks has chosen a wholly owned subsidiary to control its foreign expansion, e.g. uk or thailand? why? 3)And which theory of FDI best explains the international expansion strategy adopted by Starbucks? Thanks for helping me... Best Guy
Re: Why isn't Starbucks instant coffee selling? - I believe that's their strategy... Starbucks is making breakfast sandwiches and bagels now. They're definitely preparing for battle. Maybe there will be Starbucks Diners in the future?
The Starbuck's experience - [quote="Sebastien":3j66y8cv]Being French, I don't really understand what you call the Starbucks experience. We didn't have coffee shops in France until a couple years ago when (surprise!) Starbucks came in. So what's the Starbucks experience? Waiting in line 10 minutes for a cup of coffee? haha I think I understand what you're saying though. I think Starbucks has had tough competition lately with a bunch of coffee shop brands popping up and this is a natural move away from their core business (an actual coffee shop). We're seeing that Starbucks are actually not as profitable as everybody thought. As a side note, I've always said that some day there will be a huge financial scandal about Starbucks. A company just can't grow that fast in a healthy way. Anyways. So Starbucks is calling back founder and old CEO (I'm too lazy to look up his name on Google) to put Starbucks back on track and these vending machines might be some of his first projects. I think it is great to take advantage of such a good brand and do extend it further than a coffee shop.[/quote:3j66y8cv] Hi Sebastien, According to branding expert Martin Lindstrom, "Starbucks' objective is to create an intimate and even romantic atmosphere...The lighting is subdued to keep it cozy. The chairs and floor may be a little scuffed, but that makes it feel comfy and homely, and less intimidating...The music is soothing and sophisticated" (BRANDsense 158). So the Starbucks experience is essentially founder Howard Schultz's recreation of the coffee bar culture in Milan and the reason why they feel they can charge people outrageous prices for coffee. In fact, Starbucks isn't selling coffe, they're selling a unique and memorable brand experience to their customers.


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