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  1. 1. StarbucksFrom Wikipedia, the free encyclopediaThis article is about the coffeehouse chain. For other uses, see Starbuck. Starbucks Corporation Type Public Traded as NASDAQ: SBUX NASDAQ-100 Component S&P 500 Component Industry Restaurants Genre Coffee house Founded Pike Place Market in Seattle, Washington (March 30, 1971) Founder(s) Jerry Baldwin Gordon Bowker Zev Siegl Headquarters Seattle, Washington, U.S. Number of 20,366 in 61 countries(November 16, 2012)[1] locations
  2. 2. Area served WorldwideKey people Howard Schultz (Chairman, President and CEO)Products Whole bean coffee Boxed tea Made-to-order beverages Bottled beverages Baked goods Merchandise Frappuccino beverages SmoothiesServices CoffeeRevenue US$ 13.29 billion (2012)[2]Operating income US$ 1.99 billion (2012)[2]Net income US$ 1.38 billion (2012)[2]Total assets US$ 8.21 billion (2012)[2]Total equity US$ 5.10 billion (2012)[2]Employees 149,000 (2011)[2]Subsidiaries Starbucks Coffee Company Tazo Tea Company Seattles Best Coffee Torrefazione Italia Hear Music Ethos Water
  3. 3. Evolution Fresh Website www.starbucks.comStarbucks Corporation is an American global coffee company and coffeehouse chain based in Seattle,Washington. Starbucks is the largest coffeehouse company in the world, with 20,366 stores in 61 countries,including 13,123 in the United States, 1,299 in Canada, 977 in Japan, 793 in the United Kingdom, 732 in China,473 in South Korea, 363 in Mexico, 282 in Taiwan, 204 in the Philippines, and 164 in Thailand. [1]Starbucks sells hot and cold drinks, coffee beans, salads, hot and cold sandwiches, sweet pastries, snacks,and items such as mugs and tumblers. Through the Starbucks Entertainment division and Hear Music brand,the company also markets books, music, and film. Many of the companys products are seasonal or specific tothe locality of the store. Starbucks-brand ice cream and coffee are also offered at grocery stores.From Starbucks founding in 1971 in Seattle as a local coffee bean roaster and retailer, the company hasexpanded rapidly. In the 1990s, Starbucks was opening a new store every workday, a pace that continued intothe 2000s. The first store outside the United States or Canada opened in the mid-1990s, and overseas storesnow constitute almost one third of Starbucks stores.[3] The company planned to open a net of 900 new storesoutside of the United States in 2009,[4] but has announced 300 store closures in the United States since 2008.[5] Contents [hide]1 History2 Corporate governance3 Products o 3.1 Tea o 3.2 Coffee quality4 Locations o 4.1 Current o 4.2 Former o 4.3 Unbranded stores o 4.4 Automated locations o 4.5 Facilities5 Advertising o 5.1 Logo
  4. 4. o 5.2 Partnerships6 Parodies and infringements7 Intellectual property o 7.1 Environmental impact  7.1.1 Recycling o 7.2 Fair trade o 7.3 Ethos water8 Controversy o 8.1 Market strategy o 8.2 Labor disputes o 8.3 Opening without planning permission o 8.4 Hoax letter o 8.5 "The Way I See It" o 8.6 US military viral email o 8.7 Gun controversy o 8.8 Same-sex marriage o 8.9 European tax avoidance9 Music, film, and television10 Parent company relationships11 See also12 References13 Further reading14 External links[edit]HistoryInterior of the Pike Place Market location in 1977.
  5. 5. The Starbucks store at 1912 Pike Place. This is the second location of the original Starbucks, which was at 2000 WesternAvenue from 1971 to 1976.The first Starbucks opened in Seattle, Washington, on March 30, 1971 by three partners: English teacher JerryBaldwin, history teacherZevSiegl, and writer Gordon Bowker. The three were inspired by coffee roastingentrepreneur Alfred Peet, whom they knew personally, to sell high-quality coffee beans andequipment.[6] Originally the company was to be called Pequod after a whaling boat from Moby-Dick but thisname was rejected by some of the co-founders. The company was instead named after the chief mate onthe Pequod, Starbuck.[7]From 1971–1976, the first Starbucks was at 2000 Western Avenue; it then was relocated to 1912 PikePlace.[8] The company only sold roasted coffee and did not yet brew coffee to sell.[9] During their first year ofoperation, they purchased green coffee beans from Peets, then began buying directly from growers.The Starbucks Center, Seattle.The company HQ, in the oldSears, Roebuck and Co.catalog distribution center buildingIn 1984, the original owners of Starbucks, led by Jerry Baldwin, took the opportunity to purchase Peets.[citationneeded] During the 1980s total sales of coffee in the USA were falling, but sales of specialty coffee increased,forming 10% of the market in 1989, compared to 3% in 1983.[10] By 1986 the company had 6 stores inSeattle[10] and had only just begun to sell espresso coffee.[11] Howard Schultz In 1987, the original owners sold
  6. 6. the Starbucks chain to Schultz who rebranded some of his own Il Giornale coffee outlets as Starbucks andquickly began to expand. In the same year, Starbucks opened its first locations outside Seattle at WaterfrontStation in Vancouver,British Columbia, and Chicago, Illinois.[12] By 1989 there were 46 stores across theNorthwest and Midwest in 1989 and Starbucks was roasting over 2,000,000 pounds (910,000 kg) of coffee ayear.[10] At the time of its initial public offering on the stock market in June 1992, Starbucks had grown to 140outlets and had a revenue of $73.5m, up from $1.3m in 1987. Its market value was $271m. The 12% portion ofthe company sold raised the company around $25m which would help it double the number of stores over thenext two years.[13] By September 1992, the share price had risen 70% to over 100 times the earnings pershare of the previous year.[9]The first Starbucks location outside North America opened in Tokyo, Japan, in 1996.[14] Starbucks entered theU.K. market in 1998 with the $83 million[15] acquisition of the then 60-outlet, UK-based Seattle CoffeeCompany, re-branding all the stores as Starbucks. In September 2002, Starbucks opened its first store in LatinAmerica, at Mexico City.In 1999, Starbucks experimented with eateries in the San Francisco Bay area through a restaurant chain calledCircadia.[16] These restaurants were soon "outed" as Starbucks establishments and converted to Starbuckscafes.In October 2002, Starbucks established a coffee trading company in Lausanne, Switzerland to handlepurchases of green coffee. All other coffee-related business continued to be managed from Seattle.[17]In April 2003, Starbucks completed the purchase of Seattles Best Coffee and Torrefazione Italia from AFCEnterprises for $72m. The deal only gained 150 stores for Starbucks, but according to the Seattle Post-Intelligencer the wholesale business was more significant.[18] In September 2006, rival DiedrichCoffee announced that it would sell most of its company-owned retail stores to Starbucks. This sale includesthe company-owned locations of the Oregon-based Coffee People chain. Starbucks converted the DiedrichCoffee and Coffee People locations to Starbucks, although the Portland airport Coffee People locations wereexcluded from the sale.[19]In August 2003, Starbucks opened its first store in South America in Lima, Peru.[20]In 2007, the company opened its first store in Russia, ten years after first registering a trademark there.[21]In March 2008 they purchased the manufacturer of the Clover Brewing System. They began testing the "fresh-pressed" coffee system at several Starbucks locations in Seattle, California, New York and Boston.[22]
  7. 7. Graph showing the growth in the number of Starbucks stores between 1971 and 2011. [12]In early 2008, Starbucks started a community website, My Starbucks Idea, designed to collect suggestions andfeedback from customers. Other users comment and vote on suggestions. Journalist Jack Schofield noted that"My Starbucks seems to be all sweetness and light at the moment, which I dont think is possible without quitea lot of censorship". The website is powered by the Salesforce software.[23]In May 2008, a loyalty program was introduced for registered users of the Starbucks Card (previously simply agift card) offering perks such as free Wi-Fi Internet access, no charge for soy milk & flavored syrups, and freerefills on brewed drip coffee.[24]A store in Seattle known for its use of the corporations new ideas reopened in the fall 2010 with a modifiedinterior design in which the espresso machines were placed in the middle of the store.[25]On November 14, 2012, Starbucks announced it will purchase Teavana for $620 million dollars in cash.[26]Corporate governanceHoward Schultz, CEO of StarbucksOrin C. Smith was President and CEO of Starbucks from 2001 to 2005.
  8. 8. Starbucks chairman, Howard Schultz, has talked about making sure growth does not dilute the companysculture[27] and the common goal of the companys leadership to act like a small company.In January 2008, Schultz resumed his roles as President and CEO after an eight-year hiatus, replacing JimDonald, who took the posts in 2005 but was asked to step down after sales slowed in 2007. Schultz aims torestore what he calls the "distinctive Starbucks experience" in the face of rapid expansion. Analysts believe thatSchultz must determine how to contend with higher materials prices and enhanced competition from lower-price fast food chains, including McDonalds and Dunkin Donuts. Starbucks announced it will discontinue itswarm breakfast sandwich products, originally intended to launch nationwide in 2008, in order to refocus thebrand on coffee, but the sandwiches were reformulated to deal with complaints and the product linestayed.[28] On February 23, 2008, Starbucks closed its stores from 5:30–9:00 pm local time to train itsbaristas.[29][30]ProductsA typical sales area, this one inPeterborough, UK, showing a display of food and the beverage preparation areaStarbucks stopped using milk originating from rBGH-treated cows in 2007.[31]In June 2009, the company announced that it will be overhauling its menu and selling salads and baked goodswithout high-fructose corn syrup or artificial ingredients.[32] This move was expected to attract health- and cost-conscious consumers and will not affect prices.[32]Starbucks introduced a brand new line of instant coffee packets called VIA "Ready Brew", in March 2009. Itwas first unveiled in New York City with subsequent testing of the product also in Seattle, Chicago and London.The first two VIA flavors include Italian Roast and Colombia, which were then rolled out in October 2009,across the U.S. and Canada with Starbucks stores promoting the product with a blind "taste challenge" of theinstant versus fresh roast. Many people could not tell the difference between the instant and fresh brewedcoffee. Some analysts theorized that by introducing instant coffee, Starbucks would devalue its own brand. [33]
  9. 9. Starbucks began selling beer and wine at at some US stores in 2010. As of April 2012 it is available at sevenlocations and others have applied for licences.[34]In 2011, Starbucks introduced its largest cup size, the Trenta, which can hold 31 ounces.[35] In September2012, Starbucks announced the Verismo, a consumer-grade single serve coffee machine that uses sealedplastic cups of coffee grounds, and a "milk pod" for lattes.[36]On November 10, 2011, Starbucks Corporation announced that it had bought juice company Evolution Freshfor $30 million in cash and plans to start a chain of juice bars starting in around middle of 2012, venturing intoterritory staked out by Jamba Inc. Its first store released in San Bernadino, California and plans for a Store inSan Francisco will be launched in Early 2013.[37]In 2012, Starbucks began selling a line of iced refresher beverages in its stores which contain an extractfrom green arabica coffee beans. The beverages are fruit flavored and contain caffeine but, according to thecompany, "with none of the coffee flavor". Starbucks green coffee extraction process involves soaking thebeans in water.[38]Name Measurement NotesDemi 3 US fl oz (89 mL) Smallest size. Espresso shots.Short 8 US fl oz (240 mL) Smaller of the two original sizesTall 12 US fl oz (350 mL) Larger of the two original sizesGrande 16 US fl oz (470 mL) Italian/Spanish/Portuguese/French for "large"Venti 20 US fl oz (590 mL), 26 US fl oz (770 mL) Italian for "twenty"Trenta 30 US fl oz (890 mL) Italian for "thirty"TeaStarbucks entered the tea business in 1999 when it acquired the Tazo brand for US$8.1 million.[39][40] In late2012 Starbucks stated it will be paying US$620 million in cash to buyTeavana[41] As of November 2012, there is
  10. 10. no intention of marketing Starbucks products in Teavana stores, though the acquisition will allow the expansionof Teavana beyond its current main footprint in shopping malls.[40]Coffee qualityKevin Knox who was in charge of coffee quality at Starbucks from 1987 to 1993 recalled on his blog in 2010how George Howell, coffee veteran and founder of the Cup of Excellence, had been appalled at the darkroasted beans that Starbucks was selling in 1990.[22][42] Talking to the New York Times in 2008, Howell statedthat the dark roast used by Starbucks does not deepen the flavor of coffee, but instead can destroy nuances offlavor.[22] The March 2007 issue of Consumer Reports compared American fast-food chain coffees and rankedStarbucks behind McDonalds Premium Roast. The magazine called Starbucks coffee "strong, but burnt andbitter enough to make your eyes water instead of open".[43]LocationsCurrent [1]As of November 16, 2012, Starbucks is present in 61 countries. CentralTranscontine Africa North America America & South Oceania Asia Europe Caribbean Americantal (Europeand Asia) Turkey Egypt Aruba Argent Argent Austr Bahrain Austria Russia Morocco Curaçao ina ina alia China Belgium El Brazil Brazil New Hong Bulgaria Salvador Chile Chile Zeala Kong Cyprus Guatemala Peru Peru nd Indone Czech Costa Rica sia Republic Puerto India Denmar Rico Sri k The Lanka Finland Bahamas Japan France Jordan German Kuwait y Lebano Greece n Hungary Macau Ireland
  11. 11. Malaysi Netherla a nds Oman Norway Philippi Poland nes Portugal Qatar Romani Saudi a Arabia Spain Singap Sweden ore Switzerl South and Korea United Taiwan Kingdom Thailan d United Arab Emirate sIn 2008, Starbucks continued its expansion, settling in Argentina, Belgium, Brazil, Bulgaria, the Czech [12]Republic and Portugal. [44]European and Scandinavian expansion continued in 2009 with Poland (April), Utrecht, Netherlands [45](August), and Sweden at Arlanda airport outside Stockholm (October).In 2010, the growth in new markets continued. In May 2010, Southern Sun Hotels South Africaannounced that they had signed an agreement with Starbucks that would enable them to brew Starbuckscoffees in select Southern Sun and Tsonga Sun hotels in South Africa. The agreement was partiallyreached in order for Starbucks coffees to be served in the country in time for the commencement of the [46]2010 FIFA World Cup hosted by South Africa. In June 2010, Starbucks opened its first storein Budapest, Hungary and in November the company opened the first Central American store in El [47]Salvadors capital, San Salvador.In December 2010, Starbucks debuted their first ever Starbucks at sea, where with a partnershipwith Royal Caribbean International; Starbucks opened a shop aboard their Allure of the Seas Royal [48]Caribbeans second largest ship, and also the second largest ship in the world. [when?]Starbucks is planning to open its third African location, after Egypt and Morocco, in Algeria. Apartnership with Algerian food company Cevital will see Starbucks open its first Algerian store [49]in Algiers.In January 2011, Starbucks and Tata Coffee, Asias largest coffee plantation company, announced plansfor a strategic alliance to bring Starbucks to India and also to source and roast coffee beans at Tata [50] [51]Coffees Kodagu facility. Despite a false start in 2007, in January 2012 Starbucks finally announced
  12. 12. a 50/50 joint venture with Tata Global Beverages Limited which will own and operate as Starbucks Coffee [52]"A Tata Alliance. Starbucks had previously attempted to enter the Indian market, in 2007, with a jointventure involving its Indonesian franchise and Kishore Biyani of the Future Group. However, the jointventure withdrew its foreign investment proposal with the Indian government. Starbucks did not cite any [53]reason for the withdrawal. Starbucks opened its first store in India in Mumbai on 19 October [54][55][56]2012.In February 2011, Starbucks started selling their coffee in Norway, the first Norwegian shop openedFebruary 8, 2012 at Oslo lufthavn, Gardermoen. Instead they supply Norwegian food shops withStarbucks. In October 2011, Starbucks opened another location in Beijing, China, at the Beijing CapitalInternational Airports Terminal 3, international departures hall; making the companys 500th store inChina. The store is the 7th location at the airport. The company plans to expand to 1,500 stores in China [57]by 2015. In May 2012, Starbucks opened its first coffeehouse in Finland, with the location [58]being Helsinki-Vantaa airport in Vantaa.Many bookstores have Starbucks licensed stores within them, including Barnes & Noble in the UnitedStates, Chapters-Indigo in Canada (company operated), Jarir Bookstores in Saudi [citation needed]Arabia, LivrariaSaraiva, Fnac in Brazil and B2S in Thailand. In October 2012, Starbucks [59]announced plans to open 1,000 stores in the United States in the next five years. The same month, the [60]largest Starbucks in the US opened at the University of Alabamas Ferguson Center. Starbucks at West Coast Plaza, Singapore Starbucks in İzmir, Turkey One Starbucks location in Hong Kong uses a retroBingSutt design
  13. 13. Starbucks in Angeles City, Philippines Starbucks in Lima, PeruStarbucks in San Salvador, El Salvador Starbucks in Beirut
  14. 14. Starbucks in old Orange Daily News building[edit]FormerIn 2003, Starbucks closed all six of its locations in Israel, citing "on-going operational challenges" and a [61][62]"difficult business environment."The Starbucks location in the former imperial palace in Beijing closed in July 2007. The coffee shop hadbeen a source of ongoing controversy since its opening in 2000 with protesters objecting that the [63][64]presence of the American chain in this location "was trampling on Chinese culture."In July 2008, the company announced it was closing 600 underperforming company-owned stores and [65][66]cutting U.S. expansion plans amid growing economic uncertainty. On July 29, 2008, Starbucks alsocut almost 1,000 non-retail jobs as part of its bid to re-energize the brand and boost its profit. Of the new [67]cuts, 550 of the positions were layoffs and the rest were unfilled jobs. These closings and layoffseffectively ended the companys period of growth and expansion that began in the mid-1990s.Starbucks also announced in July 2008 that it would close 61 of its 84 stores in Australia in the following [68]month. Nick Wailes, an expert in strategic management of theUniversity of Sydney, commented that [69]"Starbucks failed to truly understand Australias cafe culture."In January 2009, Starbucks announced the closure of an additional 300 under-performing stores and theelimination of 7,000 positions. CEO Howard Schultz also announced that he had received board approval [70]to reduce his salary. Altogether, from February 2008 to January 2009, Starbucks terminated an [71]estimated 18,400 U.S. jobs and began closing 977 stores worldwide.In August 2009, Ahold announced closures and rebranding for 43 of their licensed store Starbucks kiosksfor their US based Stop & Shop and Giant supermarkets. However, Ahold has not yet abandoned the [72][73]licensed Starbucks concept; they plan to open 5 new licensed stores by the end of 2009.In July 2012, the company announced that they may begin closing unprofitable European stores [74]immediately.[edit]Unbranded storesIn 2009, at least three stores in Seattle were debranded to remove the logo and brand name, and [75][76]remodel the stores as local coffee houses "inspired by Starbucks." CEO Howard Schultz says the [77]unbranded stores are a "laboratory for Starbucks". The first, 15th Avenue Coffee and Tea, opened inJuly 2009 on Capitol Hill. It serves wine and beer, and plans to host live music and poetry [78] [75][79]readings. Although the stores have been called "stealth Starbucks" and criticized as "local- [80]washing", Schultz says that "It wasnt so much that we were trying to hide the brand, but trying to do [77]things in those stores that we did not feel were appropriate for Starbucks."[edit]Automated locationsStarbucks has automated systems in some areas. These machines have 280 possible drink combinationsto choose from. They have touchscreens and customers get to play a game while they wait for their [81]order.[edit]FacilitiesFree Wi-Fi Internet access varies in different regions. US & Canadian card holders can access 2 hours ofInternet access through AT&T Inc. in the United States and through Bell Canada within Canada. In
  15. 15. Germany customers can get 2-hours of free Wi-Fi through BT Openzone, and in Switzerland and Austriacustomers can get 30 minutes with a voucher card (through T-Mobile).In September 2009, Starbucks in the UK rolled out free Wi-Fi at most of its outlets. Customers with aStarbucks Card are able to log-on to the Wi-Fi in-store for free with their card details, thereby bringing the [82]benefits of the loyalty program in-line with the United States. Beginning in July 2010, Starbucks plansto offer free Wi-Fi in all of its US stores via AT&T and information through a partnership with Yahoo!. Thisis an effort to be more competitive against local chains, which have long offered free Wi-Fi, and [83]against McDonalds, which began offering free wireless internet access in 2010. On June 30, 2010,Starbucks announced it would begin to offer unlimited and free Internet access via Wi-Fi to customers in [84]all company-owned locations across Canada starting on July 1, 2010.AdvertisingStarbucks sign in Naga City, PhilippinesStarbucks at Ibn Battuta Mall, DubaiThe store in Insadong, Seoul, South Korea with Hangeul script sign
  16. 16. Starbucks Coffee (星巴克咖啡) in Xian, ChinaStarbucks coffee in Nicosia, CyprusLogoIn 2006, Valerie ONeil, a Starbucks spokeswoman, said that the logo is an image of a "twin-tailed [85]mermaid, or siren as shes known in Greek mythology". The logo has been significantly streamlined [86]over the years. In the first version, which was based on a 16th-century "Norse" woodcut, the Starbucks [87]siren was topless and had a fully visible double fish tail. The image also had a rough visual texture and [88]has been likened to a melusine. In the second version, which was used from 1987–92, her breastswere covered by her flowing hair, but her navel was still visible. The fish tail was cropped slightly, and theprimary color was changed from brown to green, a nod to Bowkers Alma Mater, the University of San [89]Francisco. In the third version, used between 1992 and 2011, her navel and breasts are not visible atall, and only vestiges remain of the fish tails. The original "woodcut" logo has been moved to theStarbucks Headquarters in Seattle.At the beginning of September 2006 and then again in early 2008, Starbucks temporarily reintroduced itsoriginal brown logo on paper hot-drink cups. Starbucks has stated that this was done to show thecompanys heritage from the Pacific Northwest and to celebrate 35 years of business. The vintage logo [90]sparked some controversy due in part to the sirens bare breasts, but the temporary switch garneredlittle attention from the media. Starbucks had drawn similar criticism when they reintroduced the vintage [91]logo in 2006. The logo was altered when Starbucks entered the Saudi Arabian market in 2000 to [92]remove the siren, leaving only her crown, as reported in a Pulitzer Prize-winning column by Colbert I.King in The Washington Post in 2002. The company announced three months later that it would be using [93]the international logo in Saudi Arabia.In January 2011, Starbucks announced that they would make small changes to the companys logo, [94]removing the Starbucks wordmark around the siren, enlarging the siren image, and making it green.
  17. 17. Original brown logo, used from 1971–1987. Green logo used from 1987–2010, still being used as a secondary logo. Redesigned logo used from 2011–present.PartnershipsStarbucks has agreed to a partnership with Apple to collaborate on selling music as part of the"coffeehouse experience". In October 2006, Apple added a Starbucks Entertainment area to the iTunesStore, selling music similar to that played in Starbucks stores. In September 2007 Apple announced thatcustomers would be able to browse the iTunes Store at Starbucks via Wi-Fi in the US (with norequirement to login to the Wi-Fi network), targeted at iPhone, iPod touch, iPad, and MacBook users. TheiTunes Store will automatically detect recent songs playing in a Starbucks and offer users the opportunityto download the tracks. Some stores feature LCD screens with the artist name, song, and albuminformation of the current song playing. This feature has been rolled out in Seattle, New York City, and [95]the San Francisco Bay Area, and was offered in limited markets during 2007–2008. During the fall of2007, Starbucks also began to sell digital downloads of certain albums through iTunes. Starbucks gaveaway 37 different songs for free download through iTunes as part of the "Song of the Day" promotion in2007, and a "Pick of the Week" card is now available at Starbucks for a free song download. Since 2011Starbucks also gives away a "Pick of the Week" card for app downloads from the App Store. A Starbucksapp is available in the iPhone App Store.
  18. 18. Starting on June 1, 2009, the MSNBC morning news program Morning Joe has been presented as"brewed by Starbucks" and the shows logo changed to include the company logo. Although the hostshave previously consumed Starbucks coffee on air "for free" in the words of MSNBC president Phil Griffin, [96]it was not paid placement at that time. The move was met with mixed reactions from rival newsorganizations, viewed as both a clever partnership in an economic downturn and a compromise of [97]journalistic standards.Parodies and infringementsStarbucks has been a target of parodies and imitations of its logo, and has used legal action againstthose it perceives to be infringing on its intellectual property. In 2000, San Francisco cartoonist KieronDwyer was sued by Starbucks for copyright and trademark infringement after creating a parody of its sirenlogo and putting it on the cover of one of his comics; later placing it on coffee mugs, t-shirts, and stickersthat he sold on his website and at comic book conventions. Dwyer felt that since his work was a parody itwas protected by his right to free speech under U.S. law. The case was eventually settled out of court, asDwyer claimed he did not have the financial ability to endure a trial case with Starbucks. The judgeagreed that Dwyers work was a parody and thus enjoyed constitutional protection; however, he wasforbidden from financially "profiting" from using a "confusingly similar" image of the Starbucks siren logo.Dwyer was allowed to display the image as an expression of free speech, but he can no longer sell [98]it. In a similar case, a New York store selling stickers and T-shirts using the Starbucks logo with the [99][100]words "f—k off" was sued by the company in 1999. An anti-Starbucks website, [101], which encouraged people to deface the Starbucks logo was transferred to [102][103]Starbucks in 2005, but has since resurfaced at Christian bookstoresand websites in the US are selling a T-shirt featuring a logo with the siren replaced by Jesus and the [104]words "Sacrificed for me" around the edge.Other successful cases filed by Starbucks include the case won in 2006 against the chain Xingbake inShanghai, China for trademark infringement, because the chain used a green-and-white logo with a name [105]that sounded phonetically similar to the Chinese for Starbucks. Starbucks did not open any storesafter first registering its trademark in Russia in 1997 and in 2002 a Russian lawyer successfully filed arequest to cancel the trademark. He then registered the name with a Moscow company and asked for [21]$600,000 to sell the trademark to Starbucks, but was ruled against in November 2005.In 2003, Starbucks sent a cease-and-desist letter to "HaidaBucks Coffee House" in Masset, BritishColumbia, Canada. The store was owned by a group of young Haida men, commonly referred to as"bucks." After facing criticism, Starbucks dropped its demand after HaidaBucks dropped "coffee house" [106]from its name. Sam Buck Lundberg, who owns a coffee store in Oregon, was prohibited from using [107]"Sambucks Coffee" on the shop front in 2006.In 2005 Starbucks lost a trademark infringement case against a smaller coffee vendor in South Korea thatoperates coffee stations under the name Starpreya. The company, Elpreya, says Starpreya is namedafter the Norse goddess, Freja, with the letters of that name changed to ease pronunciation by Koreans. [108]The court rejected Starbucks claim that the logo of Starpreya is too similar to their own logo. A barowner in Galveston, Texas, USA won the right to sell "Star Bock Beer" after a lawsuit by Starbucks in
  19. 19. 2003 after he registered the name, but the 2005 federal court ruling also stated that the sale of the beer [109]must be restricted to Galveston, a ruling upheld by the Supreme Court in 2007.Ongoing cases include a dispute over the copyright application for Seattles Rat City Rollergirls logo in [110] [111]2008 The company claimed the roller derby leagues logo by a Washington artist was too similar toits own. Starbucks requested an extension to further examine the issue and possibly issue a complaint,which was granted by the Trademark Office. The July 16, 2008 deadline passed without action by the [112]corporation. Starbucks launched action against an Indian cosmetics business run by Shahnaz Husain,after she applied to register the name Starstruck for use with coffee and related products. She said her [113]aim was to open a chain of stores selling coffee and chocolate-based cosmetics.Others have used the Starbucks logo unaltered and without permission, such as a café in Pakistan that [114]used the logo in 2003 in its advertisements and a cafe in Cambodia in 2009, the owner saying that [115]"whatever we have done we have done within the law".Intellectual propertyEnvironmental impactGrounds for your GardenIn 1999, Starbucks started "Grounds for your Garden" to make their business environmentally friendlier.This gives leftover coffee grounds to anyone requesting it for composting. Although not all stores andregions participate, customers can request and lobby their local store to begin the practice.In 2004, Starbucks began reducing the size of their paper napkins and store garbage bags, and lightening [116]their solid waste production by 816.5 t (1,800,000 lb). In 2008, Starbucks was ranked No.15 on theU.S. Environmental Protection Agencys list of Top 25 Green Power Partners for purchases of renewable [117]energy.
  20. 20. In October 2008, The Sun newspaper reported that Starbucks was wasting 23.4 million liters (6.2 millionUS gal) of water a day by leaving a tap constantly running for rinsing utensils in a dipper well in each of [118] [119]its stores, but this is often required by governmental public health code.In June 2009, in response to concerns over its excessive water consumption, Starbucks re-evaluated itsuse of the dipper well system. In September 2009, company-operated Starbucks stores in Canada & theUnited States successfully implemented a new water saving solution that meets government healthstandards. Different types of milk are given a dedicated spoon that remains in the pitcher and the dipperwells were replaced with push button metered faucets for rinsing. This will reportedly save up to 150 US [120][not in citation given]gal (570 l) of water per day in every store.A bin overflowing with Starbucks cupsRecyclingStarbucks began using 10% recycled paper in their cups in 2004, which they claimed was the first timethat recycled material had been used in a product that came into direct contact with a food or [121]beverage. In 2005 Starbucks received the National Recycling Coalition Recycling Works [122]Award. Allen Hershkowitz of the Natural Resources Defense Council called the 10% content [121]miniscule but Starbucks claimed they only used 10% recycled material because it is more expensive.Starbucks bought 2.5 billion cups for stores in North America in 2007. The 10% recycled paper cups usedby Starbucks are not recyclable, because the plastic coating that prevents the cup from leaking alsoprevents it from being recycled. The plastic cups used for cold drinks are also non-recyclable in mostregions. Starbucks cups were originally made using plastic No.1 (polyethylene terephthalate, PETE) butwere changed to plastic No.5 (polypropylene, PP). The former type of plastic can be recycled in mostregions of the U.S. whereas the latter cannot. Starbucks is considering using biodegradable materialinstead of plastic to line the cups, and is testing composting of the existing cups. The exception to this isstores in Winnipeg, Manitoba, Canada, where paper cups are recycled to a local company called"Wrigglers Wranch", where they are composted. The majority of Starbucks stores do not have recycling [123]bins; only 1/3 of company-owned stores recycled any materials in 2007; however, improvements have
  21. 21. since been made and recycling bins are popping up in more stores (the only thing hindering Starbucksability to have bins in every store is the lack of facilities for storage and collection of recycling in certain [citation needed]areas.)Starbucks gives customers a 10-cent discount when they bring their own reusable cup, and it now usescorrugated cup sleeves made from 85 percent post-consumer recycled fiber, which is 34 percent less [123]paper than the original.Fair tradeStarbucks coffee beans [124]In 2000, the company introduced a line of fair trade products. Of the approximately 136,000 metrictons (300 million pounds) of coffee Starbucks purchased in 2006, only about 6% was certified as fair [125]trade.According to Starbucks, they purchased 2,180 metric tons (4.8 million pounds) of Certified Fair Tradecoffee in fiscal year 2004 and 5,220 metric tons (11.5 million pounds) in 2005. They have become thelargest buyer of Certified Fair Trade coffee in North America (10% of the global market). Transfair [126]USA, a third-party certifier of Fair Trade Certified coffee in the United States, has noted the impactStarbucks has made in the area of Fair Trade and coffee farmers lives:Since launching its FTC coffee line in 2000, Starbucks has undeniably made a significant contribution tofamily farmers through their rapidly growing FTC coffee volume. By offering FTC coffee in thousands ofstores, Starbucks has also given the FTC label greater visibility, helping to raise consumer awareness inthe process. [127]All espresso roast sold in the UK and Ireland is Fairtrade.Groups such as Global Exchange are calling for Starbucks to further increase its sales of fair trade [128]coffees.Beyond Fair Trade Certification, Starbucks argues that it pays above market prices for all of its [citation needed]coffee. According to the company, in 2004 it paid on average $1.42 per pound ($2.64 kg) for [129]high-quality coffee beans, 74% above the commodity prices at the time.After a long-running dispute between Starbucks and Ethiopia, Starbucks agreed to support and promote [130]Ethiopian coffees. An article in BBC NEWS, states that Ethiopian ownership of popular coffeedesignations such as Harrar and Sidamo is acknowledged even if they are not registered. The mainreason Ethiopia fought so hard for this acknowledgement was to allow its poverty-stricken farmers a
  22. 22. chance to make more money. Unfortunately, this has not been the case. In 2006 Starbucks says it paid$1.42 per pound for its coffee. At, the coffee Starbucks bought for $1.42 per pound had a selling price,after transportation, processing, marketing, store rentals, taxes and staff salary and benefits of $10.99 per [131]pound. As of August 2010, Starbucks sells only one Ethiopian coffee on its website and it isproclaimed by the website to be new.Ethos waterEthos, a brand of bottled water acquired by Starbucks in 2003, is sold at locations throughout NorthAmerica. Ethos bottles feature prominent labeling stating "helping children get clean water", referring tothe fact that $.05 from each $1.80 bottle sold ($.10 per bottle in Canada) is used to fund clean waterprojects in under-developed areas. Although sales of Ethos water have raised over $6,200,000 for cleanwater efforts, the brand is not incorporated as a charity. Critics have argued that the claim on the labelmisleads consumers into thinking that Ethos is primarily a charitable organization, when it is actually a for-profit brand and the vast majority of the sale price (97.2%) does not support clean-water [132][133]projects. The founders of Ethos have stated that the brand is intended to raise awareness of third-world clean water issues and provide socially responsible consumers with an opportunity to support the [134]cause by choosing Ethos over other brands. Starbucks has since redesigned the American version ofthe Ethos water bottles, stating the amount of money donated per bottle in the description.ControversyA local coffee shop in New Yorks East Village claiming it had to close because Starbucks is willing to pay higher rent for thespaceMarket strategy
  23. 23. Starbucks footprint in the United States, showing saturation of metropolitan areasSome of the methods Starbucks has used to expand and maintain their dominant market position,including buying out competitors leases, intentionally operating at a loss, and clustering several locationsin a small geographical area (i.e., saturating the market), have been labeled anti-competitive by [135]critics. For example, Starbucks fueled its initial expansion into the UK market with a buyout of SeattleCoffee Company, but then used its capital and influence to obtain prime locations, some of whichoperated at a financial loss. Critics claimed this was an unfair attempt to drive out small, independent [136]competitors, who could not afford to pay inflated prices for premium real estate.Labor disputesBaristas work inside the Seattle store at 1912 Pike Place.Starbucks workers in seven stores have joined the Industrial Workers of the World (IWW) as [137]the Starbucks Workers Union since 2004.According to a Starbucks Union press release, since then the union membership has begun expanding to [138][139]Chicago and Maryland in addition to New York City, where the movement originated. On March 7,2006, the IWW and Starbucks agreed to a National Labor Relations Board settlement in which threeStarbucks workers were granted almost US$2,000 in back wages and two fired employees were offered [140][141][142]reinstatement. According to the Starbucks Union, on November 24, 2006, IWW memberspicketed Starbucks locations in more than 50 cities around the world in countries including Australia,Canada, Germany, and the UK, as well as U.S. cities including New York, Chicago, Minneapolis and San [143]Francisco, to protest the firing of five Starbucks Workers Union organizers by Starbucks and todemand their reinstatement.
  24. 24. The Reverend Billy leading an anti-Starbucks protest in Austin, Texas in 2007 [144] [145] [146]Some Starbucks baristas in Canada, Australia and New Zealand, and the United States belongto a variety of unions.In 2005, Starbucks paid out US$165,000 to eight employees at its Kent, Washington, roasting plant tosettle charges that they had been retaliated against for being pro-union. At the time, the plant workerswere represented by the International Union of Operating Engineers. Starbucks admitted no wrongdoing [137]in the settlement. [145]A Starbucks strike occurred in Auckland, New Zealand, on November 23, 2005. Organized by UniteUnion, workers sought secure hours, aminimum wage of NZ$12 an hour, and the abolition of youth rates.The company settled with the Union in 2006, resulting in pay increases, increased security of hours, and [147]an improvement in youth rates.In March 2008, Starbucks was ordered to pay baristas over US$100 million in back tips in aCalifornian class action lawsuit launched by baristas alleging that granting shift-supervisors a portionof tips violates state labor laws. The company plans to appeal. Similarly, an 18-year-old barista inChestnut Hill, MA has filed another suit with regards to the tipping policy. Massachusetts law also states [148][149]that managers may not get a cut of tips. A similar lawsuit was also filed in Minnesota on March 27, [150]2008.[edit]Opening without planning permissionStarbucks has been accused by local authorities of opening several stores in the UK in retail premises,without the planning permission for a change of use to a restaurant. Starbucks has argued that "Undercurrent planning law, there is no official classification of coffee shops. Starbucks therefore encounters thedifficult scenario whereby local authorities interpret the guidance in different ways. In some instances, [151]coffee shops operate under A1 permission, some as mixed use A1/A3 and some as A3".In May 2008, a branch of Starbucks was completed on St. Jamess Street in Kemptown, Brighton,England, despite having been refused permission by the local planning authority, Brighton and Hove City [152][153]Council, who claimed there were too many coffee shops already present on the street. Starbucksappealed the decision by claiming it was a retail store selling bags of coffee, mugs and sandwiches, [154]gaining a six month extension, but the council ordered Starbucks to remove all tables and chairs from
  25. 25. [155]the premises, to comply with planning regulations for a retail shop. 2500 residents signed a petition [156]against the store, but after a public inquiry in June 2009 a government inspector gave permission for [157]the store to remain.A Starbucks in Hertford won its appeal in April 2009 after being open for over a year without planning [158] [159] [160] [161]permission. Two stores in Edinburgh, one in Manchester, one in Cardiff, one in Pinner and [151]Harrow, were also opened without planning permission. The Pinner cafe, opened in 2007, won an [162] [163]appeal to stay open in 2010. One in Blackheath, Lewisham was also under investigation in 2002for breach of its licence, operating as a restaurant when it only had a licence for four seats and waslimited to take away options. There was a considerable backlash from members of the local communitywho opposed any large chains opening in what is a conservation area. To this date, the Starbucks is stilloperating as a takeaway outlet.[edit]Hoax letterThere have been calls for boycott of Starbucks stores and products because it has been wrongly claimed [164]that Starbucks sends part of its profits to the Israeli military, but such allegations are based on a hoax [165]letter attributed to the President, Chairman and CEO of Starbucks Howard Schultz, who is Jewish and [166]supports Israels right to exist. He is a recipient of several Israeli awards including "The Israel 50thAnniversary Tribute Award" for "playing a key role in promoting a close alliance between the United [167]States and Israel."The hoax letter claiming that Schultz had donated money to the Israeli military was actually written by [166][168] [169]Andrew Winkler, editor of the website and an AustralianHolocaust denier. Winkler [166]has admitted fabricating the document. Starbucks responded to these claims, widely circulated on theinternet, stating that "Neither Chairman Howard Schultz nor Starbucks fund or support the Israeli Army. [167]Starbucks is a non-political organization and does not support individual political causes." The protestsagainst Starbucks derived from the Winkler letter were not the first, these reported occurred in June 2002 [168]in Cairo, Dubai and Beirut universities in response to Schultzs criticism of Yasser Arafat.Starbucks has been a regular target of activists protesting against the Israeli intervention in Gaza over the(false) claims. Starbucks was forced to close a store in Beirut, Lebanon due to demonstrators shouting [170]anti-Israel slogans and causing customers to flee. Demonstrators hung several banners on the shopswindow and used white tape to paste aStar of David over the green-and-white Starbucks sign. They alsodistributed a letter saying Schultz "is one of the pillars of the American Jewish lobby and the owner of the [171]Starbucks," which they said donates money to the Israeli military.A store on Piccadilly with its windows boarded up after being smashed by protesters
  26. 26. A damaged front window of a Starbucks coffee shop in TorontoOn January 2009, two Starbucks stores in London were the target of vandalism by pro-Palestinian demonstrators who broke windows and reportedly ripped out fittings and equipment after [172][173][173][174][175][176][177]clashes with riot police."The Way I See It"Quotes by artists, writers, scientists and others have appeared on Starbucks cups since 2005 in a [178]campaign called "The Way I See It". Some of the quotes have caused controversy, including one bywriter Armistead Maupin and another by Jonathan Wells that linked Darwinism to eugenics, abortion and [179]racism. Disclaimers were added to the cups noting that these views were not necessarily those of [citation needed]Starbucks.US military viral emailA US Marines Sergeant emailed ten of his friends in August 2004 having wrongly been told thatStarbucks had stopped supplying the military with coffee donations because the company did not supportthe Iraq War. The email became viral, being sent to tens of millions of people. Starbucks and the [180]originator sent out a correction, but Starbucks VP of global communications, Valerie ONeil, says the [181][182][183]email is still forwarded to her every few weeks.Gun controversyAs gun laws in many US states have become more relaxed, and more states have adopted opencarry or concealed carry statutes, some gun owners have begun carrying guns while performing everyday shopping or other tasks. Many stores and companies have responded by banning the carrying ofguns on their premises, as allowed by many states local laws. Starbucks has not instituted a policybanning guns in their stores. [184][185]In 2010, the Brady Campaign proposed a boycott of Starbucks due to their gun policy. At that time,Starbucks released a statement saying "We comply with local laws and statutes in all the communities weserve. That means we abide by the laws that permit open carry in 43 U.S. states. Where these laws dontexist, openly carrying weapons in our stores is prohibited. The political, policy and legal debates around [186][187]these issues belong in the legislatures and courts, not in our stores."
  27. 27. In 2012, the National Gun Victims Action Council published an open letter to Starbucks, asking them torevise their policy, and also proposed a "Brew not Bullets" boycott of the chain until the policy is changed, [188][189][190]with Valentines Day selected as a particular day to boycott the chain.In response, gun rights advocates started a counter "Starbucks Appreciation Day" buycott to supportStarbucks stance, and suggested paying for products using two-dollar bills as a sign of Second [191][192][193]Amendment support.Same-sex marriageIn January 2012, a Starbucks executive stated it supports the legalization of same-sex marriage. This [194]resulted in a boycott by the National Organization for Marriage, a traditionalist Christian group. On the [195]other hand, 640,000 people signed a petition thanking Starbucks for its support.European tax avoidanceIn October 2012, Starbucks faced criticism after a Reuters investigation found that the companyreportedly paid just £8.6m in corporation tax in the UK over 14 years, despite generating over £3bn in [196][197]sales. This included no tax having been paid on £1.3bn of sales in the three years prior to 2012. Itis alleged Starbucks was able to do this by charging high licencing fees to the UK branch of the business, [198]allowing them to declare a £33m loss in 2011. The British subsidiary pays patent fees to the USAsubsidiary, purchases coffee beans from the Netherlands subsidiary (where corporation tax is lower than [199]the UK) and the Swiss subsidiary for other "miscellaneous services". A YouGovsurvey suggested thatStarbucks brand image was substantially weakened by the controversy surrounding how much tax it pays [200]in the UK several weeks after the allegations surfaced. Starbucks chief financial officer (CFO)appeared before the Public Accounts Committee in November and admitted that the Dutch governmentgranted a special tax rate to their European headquarters which the UK business pays royalties [201]to. Dutch law permits companies to send royalties collected from other countries to be transferred [202]totax havens without incurring taxes, unlike in the rest of the EU. The CFO denied that they chose theNetherlands as their European headquarters to avoid tax, but rather because they have a coffee [201]roasting plant there. Until 2009 the royalty rate was 6% of UK sales but after being challenged by UK [202]tax authorities it was reduced to 4.7%. The CFO told the committee this reflected costs such asdesigning new stores and products, but admitted that there was no detailed analysis by which the rate isdecided. The coffee they serve in the UK is purchased from the Swiss subsidiary which charges a 20% [201]markup on the wholesale price and pays 12% corporation tax on profits. Coffee is not transported to [203]Switzerland but the 30 people who work in the subsidiary assess coffee quality. Regarding howStarbucks frequently reports a loss in the UK, the CFO told the committee Starbucks are "not at all [201]pleased" about their financial performance in the UK. MPs replied that it "just doesnt ring true" that thebusiness made a loss, pointing out that the head of the business had been promoted to a new post in the [204][196]USA and they consistently told shareholders that the business was profitable.In Ireland, Starbucks subsidiary Ritea only paid €35,000 in tax between 2005 and 2011 and thesubsidiary recorded losses in every year other than 2011. Ritea is owned by Dutch-based Starbucks [205]Coffee Emea. Their French and German subsidiaries make large losses because they are in heavily indebt to the Dutch subsidiary which charges them higher interest rates than the group pays to borrow.Reuters calculated that without paying interest on the loans and royalty fees, the French and German
  28. 28. subsidiaries would have paid €3.4m in tax. The Dutch subsidiary that royalties are paid to made a €507kprofit in 2011 from revenues of €73m, while the company that roasts coffee made a profit of €2m in 2011 [202]and paid tax of €870k.Protesters, who were unimpressed by the companys offer to pay £20 million tax in the next two years, [206]took part in protests in December 2012 in affiliation with UK Uncut.Music, film, and televisionMain article: Hear MusicStarbucks second Hear Music Coffeehouse at the South Bank development adjacent to the River Walk in downtown SanAntonio, Texas.Hear Music is the brand name of Starbucks retail music concept. Hear Music began as a catalogcompany in 1990, adding a few retail locations in the San Francisco Bay Area. Hear Music waspurchased by Starbucks in 1999. Nearly three years later, in 2002, they produced a Starbucks operaalbum, featuring artists such as Luciano Pavarotti, followed in March 2007 by the hit CD "Memory AlmostFull" by Paul McCartney, making McCartney the first artist signed to New Hear Music Label sold inStarbucks outlets. Its inaugural release was a big non-coffee event for Starbucks the first quarter of 2007.In 2006, the company created Starbucks Entertainment, one of the producers of the 2006 film Akeelah [207]and the Bee. Retail stores heavily advertised the film before its release and sold the DVD.Parent company relationshipsStarbucks maintains control of production processes by communicating with farmers to secure beans,roasting its own beans, and managing distribution to all retail locations. Additionally, Starbucks’ Coffeeand Farmer Equity Practices require suppliers to inform Starbucks what portion of wholesale prices paid [208][209]reaches farmers.
  29. 29. Howard SchultzFrom Wikipedia, the free encyclopedia Howard Mark Schultz Born July 19, 1953 (age 59) Brooklyn, New York, United States Alma mater Northern Michigan University Occupation Chairman and CEO of Starbucks Salary US$ 21,775,000[1] Net worth $1.5 Billion Religion Judaism Spouse(s) Sheri Kersch Schultz Children 2
  30. 30. Website StarbucksHoward Mark Schultz (born July 19, 1953) is an American businessman and writer. He is best known as thechairman and CEO[2] ofStarbucks and a former owner of the Seattle SuperSonics. Schultz co-founded Maveron, an investment group, in 1998 with Dan Levitan.In 2012, Forbes magazine ranked Schultz as the 354th richest person in the United States, with a net worthof $1.5 billion.[3] Contents [hide]1 Biography o 1.1 Career2 Ownership of the Seattle SuperSonics3 Controversy4 Awards5 References6 Further reading7 External linksBiographyHoward Mark Schultz was born to a German-Jewish family on July 19, 1953 in Brooklyn, New York, the son ofex-US Army trooper and then truck driver Fred Schultz, and his wife Elaine.[4] With his younger sister, Ronnie,and brother, Michael, he grew up in the CanarsieBayview Houses of the New York City Housing Authority. AsSchultzs family was poor, he saw an escape in sports such as baseball, football, and basketball. He wentto Canarsie High School, from which he graduated in 1971.[5] In high school, Schultz excelled at sports and wasawarded an athletic scholarship to Northern Michigan University[4] – the first person in his family to go tocollege. A member of Tau Kappa Epsilon, Schultz received his bachelors degree in Communications in 1975.He has two children, named Eliahu Jordan, who goes by Jordan, and Addison.Career
  31. 31. After graduating, he worked as a salesperson for Xerox Corporation. In 1979 he became a general managerfor Swedish drip coffee maker manufacturer, Hammarplast.[4] In 1981, Schultz visited a client of Hammarplast,a fledgling coffee-bean shop called Starbucks Coffee Company in Seattle which he joined as the Director ofMarketing a year later.[6] On a buying trip to Milan, Italy for Starbucks, Schultz noted that coffee bars existed onpractically every street. He learned that they not only served excellent espresso, they also served as meetingplaces or public squares; they were a big part of Italys societal glue, and there were 200,000 of them in thecountry.On his return, he tried to persuade the owners (including Jerry Baldwin) to offer traditional espresso beveragesin addition to the whole bean coffee, leaf teas and spices they had long offered. After a successful pilot of thecafe concept, the owners refused to roll it out company-wide, saying they didnt want to get into the restaurantbusiness. Frustrated, Schultz started his own coffee shop in 1985, named Il Giornale after the Milanesenewspaper. Two years later, the original Starbucks management decided to focus on Peets Coffee & Tea andsold its Starbucks retail unit to Schultz and Il Giornale for $3.8 million.Schultz renamed Il Giornale with the Starbucks name, and aggressively expanded its reach across the UnitedStates. Schultzs keen insight in real estate and his hard-line focus on growth drove him to expand thecompany rapidly. Schultz did not believe in franchising, and made a point of having Starbucks retain ownershipof every domestic outlet.Schultz authored the book Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time withDori Jones Yang in 1997. His second book Onward: How Starbucks Fought for Its Life Without Losing ItsSoul with Joanne Gordon, was published in 2011.On January 8, 2008 Schultz regained his status as CEO of Starbucks after an eight-year hiatus.[7] At this time,Schultz was earning a total compensation of $9,740,471, which included a base salary of $1,190,000, andoptions granted of $7,786,105.[8] Schultz is a significant stakeholder in Jamba Juice.[9]Ownership of the Seattle SuperSonicsSchultz is the former owner of the NBAs Seattle SuperSonics. During his tenure as team owner, he wascriticized for his naivete and propensity to run the franchise as a business rather than a sports team. [10] Schultzfeuded with big name star Gary Payton, feeling that Payton disrespected him and the team by not showing upto the first day of training camp in 2002.[citation needed]On July 18, 2006, Schultz sold the team to Clayton Bennett - chairman of the Professional Basketball ClubLLC, an ownership group from Oklahoma City - for $350 million, after having failed to convince the cityof Seattle to provide public funding to build a new arena in the Greater Seattle area to replace KeyArena. At thetime of the teams sale, it was speculated that the new owners would move the team to their city some timeafter
  32. 32. the 2006-2007 NBA season.[11] On July 2, 2008, the city of Seattle reached a settlement with the newownership group and the SuperSonics moved to Oklahoma City and became the Thunder for the 2008-09 NBAseason.[12] The sale to the out-of-state owners considerably damaged Schultz popularity in Seattle.[13] In a localnewspaper poll, Schultz was judged "most responsible" for the team leaving the city.[14] Before the city ofSeattle settled with the Oklahoma City ownership group, Schultz filed a lawsuit against Bennett - in April 2008 -to rescind the July 2006 sale based on what Schultz claimed was fraud and intentional misrepresentation,perhaps trying to reduce the damage to his local image for having sold the team to out of state owners.However, Schultz quickly dropped the lawsuit in August 2008. When Bennett purchased the SuperSonics andits sister franchise in the WNBA, the Seattle Storm, for $350 million, he agreed to a stipulation that he wouldmake a "good-faith best effort" for one year to keep both teams in Seattle. The sincerity of the good faith effortwas widely disputed by the way Bennett acted and by direct quotes from his partnerAubrey McClendon. OnJanuary 8, 2008, Bennett sold the Storm to Force 10 Hoops, LLC, an ownership group of four Seattle women,which kept the team in Seattle.[15]ControversySpeaking to CNBC in February 2009 about his concerns over the global economic crisis, Schultz said that "theplace that concerns us the most is western Europe, and specifically the UK", which he considered to be in a"spiral", expressing concern with the levels of unemployment and consumer confidence in the country.Lord Mandelson, the then-UK Business Secretary, responded saying that Britain was "not spiralling, althoughIve noticed Starbucks is in a great deal of trouble", and suggesting that Schultz was projecting his owncompanys trouble in the United Kingdom onto the wider national economy. Mandelson was later overheard ata drinks reception, saying: "Why should I have this guy running down the country? Who the hell is he? How thehell are [Starbucks] doing?"[16]An official comment from Starbucks read that "It is a difficult economic situation in the US and around theworld. Please be assured that Starbucks has no intention of criticising the economic situation in the UK. We areall in this together and as a global business we are committed to each and every market we serve."[16]AwardsIn 1998, Schultz was awarded the "Israel 50th Anniversary Tribute Award" from the Jerusalem Fund of AishHa-Torah for "playing a key role in promoting a close alliance between the United States and Israel". [17]In 1999, Schultz was awarded the "National Leadership Award" for philanthropic and educational efforts tobattle AIDS.[18]
  33. 33. The recipient of the 2004 International Distinguished Entrepreneur Award, presented to him from the Universityof Manitoba for his outstanding success and commendable conduct of Starbucks. [19]In 2007 he received the FIRST Responsible Capitalism Award.[20]On March 29, 2007, Schultz accepted the Rev. Theodore M. Hesburgh, C.S.C., Award for Ethics in Business atthe Mendoza College of Business at the University of Notre Dame. The same night, he delivered the FrankCahill Lecture in Business Ethics.[21]Schultz became Fortune Magazines "2011 Businessperson of the Year" for his initiatives in the economy andjob market.[22]SWOT Analysis for Starbucks Coffee Company(I developed this SWOT Analysis as an assignment in my Strategic Marketingclass)SWOT Analysis 1. A. StrengthsStrength 1: Developed a niche in the market as a high-end brand of coffee,offering rich, exotic coffee blendsStrength 2: The atmosphere in their coffee bars provides customers with afeeling of sophistication, style and a sense of knowledge. This has turned into aStarbucks culture.Strength 3: Have attracted employees who are well educated and eager tocommunicate the message of their product.How do these strengths enable the firm to meet customers’ needs?These strengths enable the firm to meet customer’s needs because they allowthe customer to experience a rich, exotic blend of coffee, and a way of life.They focus on the quality of their product so that the customer can taste thedifference between their gourmet cup of coffee and the traditional, cheap cup
  34. 34. of black liquid found in convenient stores. Moreover, they provide customerswith feeling of sophistication, style, and a sense of knowledge when they walkinto their coffee bars. In doing so, they replicated authentic, Italian-stylecoffee bars to allow customers to experience a way of life when they visit theirstore. They are successful with this because they hire employees who are welleducated and eager to express the Starbucks culture.How do these strengths differentiate the firm from its competitors?These strengths differentiate the firm from its competitors because Starbuckshas developed a niche in the market as a high-end brand of coffee. This isdifferent from the traditional cup of coffee found in convenient stores or athome because Starbucks focuses on the quality of their coffee by using thefinest coffee beans and maintaining freshness with their Flavor Lock Bags.Furthermore, the atmosphere inside a Starbucks coffee bar provides customersa feeling of sophistication, style, and a sense of knowledge. This ischaracteristics of their store that cannot be matched by other competitor’slocations such as McDonalds. Also, Starbucks has gained loyal and dedicatedemployees. This has transitioned into excellent customer service.B. WeaknessesWeakness 1: Many people believe that coffee is a substitute product. Thismeans that people are willing to find other means of consumption if priceincreases or availability is diminished.Weakness 2: Although Starbucks provides excellent customer service due totheir loyal and dedicated employees, they do this at a cost. They pay theiremployees more than restaurants and retailers. Furthermore, they offerbenefits to full-time and part-time employees. This results in high costs for thecompany.How do these weaknesses prevent the firm from meeting customers’ needs?The most important reason that these weaknesses prevent the firm frommeeting the customer’s needs is because in the event that prices should rise atStarbucks, or the economy should experience a recession, people are likely to
  35. 35. spend more conservatively. This is because many people treat coffee as asubstitute product. If consumers are not loyal coffee drinkers and they chooseto spend conservatively, they might prefer a cheap cup of coffee over thepremium price that Starbucks charges for its gourmet coffee.How do these weaknesses negatively differentiate the firm from itscompetitors?These weaknesses differentiate this firm from its competitors because othercompetitors are not getting hit as hard during this economic recession. This isbecause Starbucks most significant competitors are low-price operators such asMcDonalds. While Starbucks operates as a high-end, higher priced product,consumers are likely to turn to these competitors if they are spending moreconservatively.C. Opportunities (external situations independent of the firm—notstrategic options)Opportunity 1: Emerging international markets.Opportunity 2: Technological advancements.How are these opportunities related to serving customers’ needs?These opportunities are related to serving customer needs because Starbuckswill be able to satisfy the desire for their coffee –along with the experience– inother countries. Emerging international markets allow Starbucks to expandwhile our country is experiencing and economic recession. Furthermore,technological advancements allow Starbucks to increase quality and decreasewaiting time. Technology is continuously improving, making things quicker,faster and better. It most certainly will make its way towards the coffeebusiness.What is the time horizon of each opportunity?Starbucks has already begun flourishing in these emerging internationalmarkets, beginning in China. Specifically, they have opened 420 stores andconsider it a great opportunity because of the large number of people in this
  36. 36. area. Furthermore, the company has considered buying high-end brewingmachines that will allow baristas to act more easily with customers, providingan even better experience.D. Threats (external situations independent of the firm)Threat 1: Economy experiencing a recession.Threat 2: Emergence of competitors.Threat 3: Rise in the cost of coffee & dairy products.How are these threats related to serving customers’ needs?These threats are related to serving customer’s needs because they impact theprice the consumers pay for a cup of coffee. While our economy is experiencinga recession, consumers who are not loyal coffee drinkers are likely to look forsubstitute products. This is because substitute products, such as coffee fromMcDonalds are less expensive. These competitors are emerging and flourishingduring this economy because gourmet coffeehouses like Starbucks are havingtrouble lowering prices while the cost of coffee beans and dairy products arerising.What is the time horizon of each threat?Time can only tell when the economy will turn around. Signs point to stabilityin the near future, but until this happens, Starbucks will be under pressure tocompete with low-cost operators such as McDonalds. Although Starbucks hasalways competed against low-cost operators, the emergence and flourishing ofthese competitors during this economic recession will continue to act as athreat.E. The SWOT MatrixStrengths: Opportunities:•Developed a niche in the market as a • Emerging international markets.
  37. 37. high-end brand of coffee • Technological advancements.• The atmosphere in their coffee barsprovides customers with a feeling ofsophistication, style and a sense ofknowledge.• Have attracted employees who arewell educated and eager tocommunicate the message of theirproduct.Weaknesses: Threats:• Many people believe that coffee is a • Economy experiencing a recession.substitute product. • Emergence of competitors.• Although Starbucks providesexcellent customer service due to their • Rise in the cost of coffee & dairyloyal and dedicated employees, they this at a cost.F. Developing Competitive AdvantagesDescribe ways that the firm can match its strengths to its opportunities tocreate capabilities in serving customers’ needs.The firm can math its strengths to its opportunities to create capabilities inserving customer needs by selling the Starbucks experience in foreigncountries. There are emerging international markets for coffee, such as China,who seem to be accepting the taste and culture of the Starbucks brand.However, Starbucks must be aware of the fact that, although the demographicsmight tell them to expand in a certain area, not everyone is enthusiastic aboutAmerican culture. Furthermore, Starbucks must maintain the quality andcustomer service that distinguishes them from the competition.Also, technological advancements have influenced Starbucks to consider buyinghigh-end brewing machines that will allow baristas to act more easily with
  38. 38. customers, providing an even better experience. The experience is the focalpoint of what Starbucks is trying to sell when you walk into their coffeehouse.Are these capabilities and competitive advantages grounded in the basicprinciples of operational excellence, product leadership, and/or customerintimacy? If so, how are these capabilities and advantages made apparent tocustomers?These competitive advantages allow Starbucks to enter an untapped marketand create first mover advantages. There are many countries that value coffee;however, Starbucks is becoming and internationally noticed brand.Can the firm convert its weaknesses into strengths or its threats intoopportunities? If not, how can the firm minimize or avoid its weaknessesand threats?The firm can convert its weaknesses into strengths by maintaining the qualityof their product and the excellent customer service their business was builtupon. Although we are experiencing an economic recession, Starbucks hasdeveloped a niche product that many people are still willing and able to buy.Does the firm possess any major liabilities (unconverted weaknesses thatmatch unconverted threats) or limitations (unconverted weaknesses orthreats that match opportunities)? If so, are these liabilities and limitationsapparent to customers?The firm does possess major liabilities. This is because the economy is facing arecession and there are still many people that believe coffee is a substituteproduct. If prices rise, people might be looking to buy the cheaper product. Ibelieve these limitations are apparent to customers because Starbucks saleshave staggered over recent years, causing them to close underperformingcoffeehouses.Can the firm do anything about its liabilities or limitations, especially thosethat impact the firm’s ability to serve customers’ needs?
  39. 39. The firm can continue to provide excellent customer service and maintaingreat quality in their product in order to serve customers’ needs. This is theniche that separates them from the rest of the competition. Moreover, this isthe base to what their company was built upon. There are many consumersthat will still be willing to pay a premium price for a premium product.G. Developing a strategic focus.What is the overall strategic focus of the marketing plan? Does the strategicfocus follow any particular direction, such as aggressiveness, diversification,turnaround, defensiveness, or niche marketing?The overall strategic focus of the marketing plan is to reenergize the companyby returning to its roots. Howard Shultz is once again CEO of Starbucks. Hismain priority is to excel in customer service and maintain the quality of hisgourmet coffee that everybody recognizes. For instance, he terminated theidea of selling hot breakfast sandwiches inside the coffeehouse, due to conflictof scent with the coffee beans. Also, Starbucks has considered buying high-endbrewing and espresso machines that will allow baristas to act more easily withcustomers. Furthermore, he continues to stress education and training toemployees to allow better customer service and quality. In addition, they havedeveloped web-sites and social networks to allow customer feedback, alongwith developing ideas for energy drinks and health oriented items. These areall steps on bringing Starbucks back to its grassroots.Describe the firm’s strategic focus in terms of a strategy canvas. How doesthe firm’s strategic thrust provide sufficient focus and divergence fromother firms in the industry?Although many believe that Starbucks is saturating the market by opening uptoo many locations, Howard Schultz believes that weaker stores can be closedand stronger ones can take their place. At the beginning of the company’sexistence, Shultz aimed for replication of authentic, Italian-style coffee bars.These bars were social gathering places, usually two to three to a block. Shultzhas always been a firm believer in growth; thus, although we are experiencingan economic recession, Starbucks still hopes to grow and become a worldwide
  40. 40. leader. This differs from other firms in the industry who are taking a moreconservative approach.