1. Why do you think Starbucks has been so concerned with social responsibility in its overall corporate strategy?
2. Is Starbucks unique in being able to provide a high level of benefits to its employees?
Starbucks was founded in 1971 by three partners in Seattle’s renowned open-air Pike Place Market and was named after the first mate in Herman Melville’s Moby Dick. Howard Schultz joined Starbucks in 1982 as director of retail operations and marketing. Returning from a trip to Milan, Italy, with its 1,500 coffee bars, Schultz recognized an opportunity to develop a similar retail coffee-bar culture in Seattle.
In 1985, the company tested the first downtown Seattle coffeehouse, served the first Starbucks Café Latté, and introduced its Christmas Blend. Since then, Starbucks has been expanding across the United States and around the world, now operating nearly 17,000 stores in 49 countries. Historically, Starbucks has grown at a rate of about three stores a day, although the company cut back on expansion during 2009 in response to the global economic recession. In fact, in 2009 Starbucks made the decision to close 600 underperforming stores in the United States and 61 in Australia. The company nevertheless serves 50 million customers a week and has net revenues of approximately $10.4 billion a year.
Starbucks purchases and roasts high-quality whole coffee beans and resells them, along with freshly brewed coffee, Italian-style espresso beverages, cold blended beverages, bottled water, complementary food items, coffee-related accessories and equipment, premium teas, and a line of CDs primarily through company-operated retail stores. It also sells coffee and tea products and licenses its trademark through other channels and through some of its partners. Additionally, Starbucks produces and sells bottled Frappuccino coffee drinks, Starbucks Doubleshot espresso drinks, and a line of super-premium ice creams.
Starbucks locates its walk-in stores in high-traffic, high-visibility locations. While Starbucks can be found in a few shopping malls, the company generally focuses on locations that provide convenient access for pedestrians and drivers. The stores are designed to provide an inviting coffee-bar environment that is an important part of the Starbucks product and experience. Because the company is flexible regarding size and format, it can locate stores in or near a variety of settings, including downtown and suburban retail centers, office buildings, and university campuses. It can also situate retail stores in select rural and off-highway locations to serve a broader array of customers outside major metropolitan markets and to further expand brand awareness. To provide a greater degree of access and convenience for non-pedestrian customers, the company has increased development of stores with drive-through lanes.