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Starbucks Company was established in 1971. It was a result of a partnership of three people namely, Jerry Baldwin, Gordon Bowker, and Zev Siengel. The three partners derived their inspiration from Alfred Peet who inspired them to open their first coffee store in the Pike Place Market aimed at selling high-quality beans of coffee and equipment. The first store was located at 2000 Western Avenue in 1971-1976. It was then moved to the 1912 pike place and it is still operational to date. In the initial years of operation, the company bought green coffee from a single middleman Peet after which they started buying directly from the growers. The company opened its branches outside Seattle in Vancouver, Canada, British Colombia, Illinois, the United States, and Chicago in 1987. Canada is currently the largest market of Starbucks than anywhere else in the world. Outside of the United States, the first location was established in Tokyo in 1996. (www.starbucks.co.uk)
Howard Schultz joined the company in 1982 and took over as its president. He offered his advice to the company to sell espresso and coffee drinks along with the beans. His advice was turned down because owners thought that getting involved in the beverage business would be a stumbling block to the company’s primary goal. Schultz was certain that more money would be generated in selling drinks and in 1985 he went ahead and started the IL Giornale coffee chain. In his position as the president of Starbucks Howard necessitated the expansion of the company beyond North America to areas such as London and made the company an internationally recognized brand. He speeded up the purchase of Torrefazione Italia and Seattle’s best coffee from the AFC Enterprises which brought the total number of acquisitions to 6,400. Due to his management capability, the company overcame every operational odd and remained top of its key competitors such as Diedrich Coffee Company. Unable to withstand the wave of competition Diedrich coffee company sold most of its retail stores to Starbucks. Howard ensured that the growth of the company did not dilute the culture of the company and remained focused on the company’s goals and objectives. (Kiviat, 2006)
Howard Schultz resumed his roles in January 2008 as the president and the chief executive officer of the company after eight years of retirement. His main future plan and challenges are to restore the distinctive Starbucks experience in the midst of harsh and rapid competition. His first program was the abolishment of warm breakfast products in order to refocus the brand on all coffee things. He also announced the replacement of Verismo 801 by Mastrena which is manufactured by the Thermo plan AG. Another of his many future plans is to introduce a customer reward program by entering into the energy market. He also plans to stop the selling of the pre-ground beans in order to bring aroma, theater, and romance to the American stores by carrying out additional grinding of all whole bean coffee. He has also put in place the procedures of forwarding acquisition of the coffee equipment company which initially was involved in the manufacture of the brewing system. (Allison, 2007)
The company faced different problems before the return of Howard Schultz as the president and the chief executive officer of the company. The company was labeled as the main contributor to problems of globalization. Activists groups criticized the company’s policies of fair trade, environmental impact, as well as labor relations. This went as far as vandalization of Starbucks during the WTO meeting held in Seattle. Methods used by the company to maintain its dominance in the market have also been said to be anti-competitive. For example, the company’s expansion program into the United Kingdom market raised much controversy after the firm used its capital to obtain and influence locations that were at the edge of collapse due to persistent loss.
Critics maintained that this was one way the company was using to drive away small companies from the market. Labor disputes are also another problem the company has faced before the return of Howard. In March 2006, the company suffered a great blow when it was ordered to compensate its three workers to the tune of $ 2,000 in back wages. Two of its fired employees were also reinstated. In 2005 the company also paid $ 165,000 to settle charges of being retaliated against for being pro-union. A major blow came in November 2005, when a strike organized by Unite Union paralyzed almost every operation in the company. Howard Schultz has promised to transform the company from the negative criticism that has undermined the growth of the company as per the projected rate of growth. He plans to ensure that consumers get satisfied by the products they consume putting in mind the fact that a word of mouth from a customer is powerful than critics. (Kiviat, 2006)
Work Cited Source
Allison, M. Union Struggles to Reach Starbucks workers, New York: New York Press, 2007.
Kiviat, B. The Big Gulp at Starbucks, New York: New York Press, 2006.
Klein, N. No Logo for the Starbucks, New York: Flamingo, 2007.
Malon, M. Restaurant Business at Starbucks, London: Oxford University Press,2007.
Pendergrast, M.Uncommon Grounds: The History of Coffee and How It Transformed Our World, New York: Basic Books, 1999.
Schultz, H. and Dori, J. Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time, New York: Hyperion, 1999.
Walker, R. Consumed: Big gulp New York Times Magazine, Retrieved 2007.
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