For entry into the EBS European Business School / DBS Durham University Business School - dual Executive MBA programme, I was asked to analyze a case study from Kellogg School of Management at Northwestern University. I then had to write a handful of essays and give a 1-hour presentation consisting of 30 min of briefing and 30 min of Q/A from the EBS faculty audience. Starbucks Corporation is known world-wide for their specialty coffee innovation and creative business design. Over time Starbucks has built a business around a relaxing, somewhat romantic atmosphere that brings to the customer a European feel and thus provides a strong user experience for its customers. In Starbucks’ earliest days, coffee consumption in the United States (US) was considered nothing special. Most US coffee offered a similar taste and wasn’t offered in a special “European” environment. With this absence of uniqueness, convenience was the dominant criteria used by US consumers to choose their coffee. Enter Starbucks.

1. A Story of Growth
Case Study Presentation by:
Brandon J. Murray
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2. Starbucks Mission
THEN
NOW
“establish Starbucks as
“to inspire and nurture
the premier purveyor of the
finest coffee in the world
while maintaining our
uncompromising principles
as we grow
the human spirit –
one person, one cup and
one neighborhood at a
”
”
Case Study Presentation by:
Brandon J. Murray
time.
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Brandon J. Murray
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4. U.S. Coffee Consumption in a major slump!
Starbucks Founded
Howard Schultz
acquires Starbucks
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Brandon J. Murray
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5. The Rise of the
Coffeehouses
! In San Francisco & New York, small specialty
coffeehouses and roasters were being established
! Starbucks was created in this mold, aiming to roast
and sell excellent coffee
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Brandon J. Murray
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6. We should sell
prepared
coffee drinks
like the Italians
are doing!!
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Brandon J. Murray
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7. We love roasting
and selling beans
...not interested in
selling prepared
drinks.
Mr. Schultz leaves Starbucks!
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Brandon J. Murray
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8. Mr. Schultz buys Starbucks!
Now I think I
WILL make & sell
those prepared
coffee drinks!!
Case Study Presentation by:
Brandon J. Murray
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9. Starbucks Expansion
! In 1996, Starbucks began executing two
initiatives:
! Selling Starbucks products through mass
distribution channels
! Dramatically expanding its footprint
Case Study Presentation by:
Brandon J. Murray
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10. Mass Distribution Channels
“ to accelerate
growth of the
Starbucks brand
into the grocery
channel across
the United States.”
–Howard Schultz, in response to Kraft agreement
Case Study Presentation by:
Brandon J. Murray
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11. Licensing Agreements!
By 2008, 16% of
of Starbucks
revenues came
from sources
other than its
company-owned
retail stores.
Case Study Presentation by:
Brandon J. Murray
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12. Starbucks Retail Expansion
1996
1,015
Stores
2001
4,709
Stores
2007
15,011
Stores
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Brandon J. Murray
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13. Competitor Latte Prices
v
.
Starbucks
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Brandon J. Murray
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14. I’m back….
Schultz
Returns
as CEO
Case Study Presentation by:
Brandon J. Murray
now check out my
transformational
agenda to cut $580
million in 2009 and
deliver 90% of store
orders on time and
without errors.
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15. Store Closed for…
• Mr. Schultz closes nearly 1,000
underperforming stores
• Mr. Schultz closes Starbucks stores
nationwide for an afternoon to retrain
all baristas
Case Study Presentation by:
Brandon J. Murray
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16. Business
Process
Improvement
! Starbucks makes operational changes
to their brewing stations and coffee
bean “default roast” selections.
Case Study Presentation by:
Brandon J. Murray
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17. Starbucks gets back to its roots…
! “ round,
smooth, and
balanced…a
mild, sweet
finish. ”
- Howard Schultz, describing his ‘Consistent
Brew 19’ (renamed to Pike Place Roast)
Case Study Presentation by:
Brandon J. Murray
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Brandon J. Murray
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19. Moving business
“away from the store”
! Starbucks produces an instant coffee
! Starbucks produces a single-serve pod coffee
! Starbucks applies VIA technology to sell shelfstable Frappuccino, ice-cream, and even beer
“Never be
without great
coffee”
“faster, easier, and
doesn’t force the
entire household to
drink the same thing
in the morning.”
– Howard Schultz, slogan on VIA
– Howard Schultz, on single-serve Pods
Case Study Presentation by:
Brandon J. Murray
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20. Starbucks pursues coffee initiatives
outside of their own brand
! Seattle's Best Coffee
! 15th Avenue Coffee and Tea
! Roy Street Coffee and Tea
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Brandon J. Murray
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21. Manufacturing Brewing Equipment
• What is a Clover coffee machine?
! An $11,000 USD coffee machine which makes a superior brew
by controlling dose, brewing temperature, and brew time.
• What benefits did Mr. Schultz see with the
Clover?
1) Produces superior cup of coffee
2) Offered customers “theater & romance”
3) Makes a single cup at a time, allowing to brew from smaller
batches of specialty beans
“Frankly, we just don’t want anyone else to have it.”
-­‐
Michelle
Gass,
SBUX
execu3ve
in
response
to
Clover
acquisi3on
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Brandon J. Murray
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22. My “Starbucks Experience”
• Starbucks, with CEO Howard Schultz at
the helm, has been an inspiration for
regular coffee consumers like me - - all
the way to national and global business
leaders alike.
• I have enjoyed this Starbucks Case
Study project immensely!
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Brandon J. Murray
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23. QUESTIONS?
THANK YOU…
1) For your time, 2) For this opportunity
to analyze a fascinating business case,
and of course 3) For considering me for
your graduate programme.
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Brandon J. Murray
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24. [ Backup Slide ]
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Brandon J. Murray
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25. Company
Timeline:
Howard
Schultz
&
Starbucks
! 1981: Howard Schultz visits the company that's buying so many drip coffeemakers from
the Swedish company he represents and falls in love with it.
! 1982: He becomes Starbucks' director of retail operations and marketing.
! 1983: He travels to Milan
! 1985: He founds Il Giornale
! 1987: Leads a group of investors to buy Starbucks when it had fewer than 20 stores and
plans to open 125 new stores in five years.
! 1992: Takes the company public (IPO). Starbucks ends fiscal year with 165 stores.
! 1996: Begins selling bottled Frappuccino drinks
! 2000: Steps down as CEO, a title that goes to Orin Smith. Schultz remains chairman. Ends
fiscal year with 3,501 stores.
! 2003: Acquires Seattle’s Best Coffee Company
! 2005: Smith retires and is replaced by Jim Donald. Starbucks ends fiscal year with 10,241
stores.
! 2008: Schultz reclaims CEO position and Donald leaves the company. More than 15,000
stores worldwide. Starbucks acquires Clover Brewing System. Launches Pike Place Roast.
! 2009: Launches Starbucks VIA Ready Brew Coffee
! 2011: Launches Starbucks K-Cups portion packs – Green Mountain Coffee Roasters
! 2012: Total Stores = 17,651 (as of July 01, 2012)
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Brandon J. Murray
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