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Howard schultz - Starbucks

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Howard schultz - Starbucks

  1. 1. BEHAVIOURAL SCIENCE ASSIGNMENT ON Howard Schultz (Chairman and CEO) BY Uday Sanghi (A30606412031) BBA-5
  2. 2. Contents S no. Topic Page No. 1 Synopsis 3 2 Early Life and Carrier 2 4 3 Controversies 5 4 Success Story 6 5 Awards 9 6 Conclusion 9
  3. 3. HOWARD SCHULTZ – CEO OF STARBUCKS 3 Synopsis Born in Brooklyn, New York, on July 19, 1953, Howard Schultz graduated from Northern Michigan University with a bachelor's degree in communications before becoming director of retail operations and marketing for the Starbucks Coffee Company in 1982. After founding the coffee company Il Giornale, in 1987, he purchased Starbucks and became CEO and chairman of the company. In 2000, Schultz publicly announced that he was resigning as Starbucks's CEO. Eight years later, however, he returned to head the company. In 2012, Starbucks included more than 17,600 stores and its market cap was valued at $35.6 billion.
  4. 4. 4 Early Life and Career Howard D. Schultz was born in Brooklyn, New York, on July 19, 1953, and moved with his family to the Bayview Housing projects in Canarsie, a neighborhood in southeastern Brooklyn, when he was 3 years old. Schultz was a natural athlete, leading the basketball courts around his home and the football field at school. He made his escape from Canarsie with a football scholarship to Northern Michigan University in 1970. After graduating from the university with a Bachelor of Science degree in communication in 1975, Schultz found work as an appliance salesman for Hammarplast, a company that sold European coffee makers in the United States. Rising through the ranks to become director of sales. In 1979 he became a general manager for Swedish drip coffee maker manufacturer, Hammarplast where he became responsible for their U.S. operations with a staff of twenty. A year later, he joined Starbucks as the Director of Marketing. On a buying trip to Milan, Italy for Starbucks, Schultz noted that coffee bars existed on practically every street. He learned that they not only served excellent espresso, they also served as meeting places or public squares; they were a big part of Italy's societal glue, and there were 200,000 of them in the country. After a successful pilot of the cafe concept, the owners refused to roll it out company-wide, saying they didn't want to get into the restaurant business. Frustrated, Schultz decided to leave Starbucks in 1985. He needed $400,000 to open the first store and started the business. He simply did not have the money and his wife was pregnant with the first baby. Jerry Baldwin and Gordon Bowker offered to help. Schultz also received $100.000 from a doctor who was impressed by Schultz’s energy to “take a gamble”.By 1986, he raised all the money he needed to open the first store. Two years later, the original Starbucks management decided to focus on Peet's Coffee & Tea and sold its Starbucks retail unit to Schultz and Il Giornale for $3.8 million.
  5. 5. Schultz renamed Il Giornale with the Starbucks name, and aggressively expanded its reach across the United States. Schultz's keen insight in real estate and his hard-line focus on growth drove him to expand the company rapidly. Schultz did not believe in franchising, and made a point of having Starbucks retain ownership of every domestic outlet. 5 Controversies Speaking to CNBC in February 2009 about his concerns over the global economic crisis, Schultz said that "the place 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, although I've noticed Starbucks is in a great deal of trouble", and suggesting that Schultz was projecting his own company's trouble in the United Kingdom onto the wider national economy. An official comment from Starbucks read that "It is a difficult economic situation in the US and around the world. Please be assured that Starbucks has no intention of criticising the economic situation in the UK. We are all in this together and as a global business we are committed to each and every market we serve." Chairman Howard Shultz is staunchly pro-Israel. In 1998, the Jerusalem Fund of Aish HaTorah gave him “The Israel 50th Anniversary Friend of Zion Tribute Award” for “playing a key role in promoting a close alliance between the United States and Israel.” In 2002, Israel’s Foreign Ministry praised him for being key to the country’s long-term PR success, through his provocative speeches accusing Palestinians of terrorism, calling intifada resistance anti-semitism, asking Americans to back Israel against a common enemy, and sponsoring fund raisers for Israeli causes.
  6. 6. Jointly with the Israeli-based Delek Group, Starbucks Coffee International operated a joint venture in Israel, opened six stores, then shut them after heavy losses. What makes Howard Schultz so successful? His core ideology was on very strong grounds. This includes the core values and purpose of his business, that is, Starbucks. 6 1. Starbuck’s Core values: He always emphasized on their rare capability – Coffee. There was always quality, quality and quality. No matter how many ups and downs were there, he ensured that the quality of the coffee was maintained and the customers were always happy. It was not always about work. He was passionate about what it. He did what he liked to do. Following your heart was his main motto. He had a very deep sense of belongingness towards his store. He was very attached to it and that’s why everyone else feels the same about the Starbucks now. He agreed that customer is the king of the market. He always placed customers and their preferences on the top. He made sure that the customers connect with the stores, have a good time and uplift the mood of the customers so that they come back again and again. He made sure that such an environment was built in all of the Starbucks maintaining integrity.
  7. 7. Not only the customers, but the other stakeholders also felt that they were a part of Starbucks. The reward of Starbuck’s success was passed on to the shareholders too so that they felt they are involved in every step. 7 2. Core Purpose: His core purpose of setting up Starbucks sums everything up – “ to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” Envisioning the future He was not only content with the present well being of the company but also looked forward towards expansion of the company that could make a difference in the world. His vision for the future was, “To become a giant global coffee company which leads on innovation”. Why was the Starbucks experience so different from all the other coffee stores?
  8. 8. 1. “Make it your own” – Customise the experience the way you 8 want it to be. 2. “Everything matters”- Focus on what you are doing. Never lose focus on your customer’s experience and their point of view. 3. “Surprise and delight” – Do the unexpected so that the customer feels special buying the cup of coffee. 4. “Embrace resistance” – Learn from your mistakes and don’t have any scope of repeating them again. 5. “Leave your mark” – Do your job in such a way that the next time they come, they would want to be served coffee by you. Do such work that they remember you!
  9. 9. 9 AWARDS In 1998, Schultz was awarded the "Israel 50th Anniversary Tribute Award" from the Jerusalem Fund of Aish Ha-Torah for "playing a key role in promoting a close alliance between the United States and Israel". In 1999, Schultz was awarded the "National Leadership Award" for philanthropic and educational efforts to battle AIDS. The recipient of the 2004 International Distinguished Entrepreneur Award, presented to him from the University of Manitoba for his outstanding success and commendable conduct of Starbucks. In 2007 he received the FIRST Responsible Capitalism Award. On March 29, 2007, Schultz accepted the Rev. Theodore M. Hesburgh, C.S.C., Award for Ethics in Business at the Mendoza College of Business at the University of Notre Dame. The same night, he delivered the Frank Cahill Lecture in Business Ethics. Schultz became Fortune Magazine's "2011 Businessperson of the Year" for his initiatives in the economy and job market. Conclusion: Howard Schultz’s vision has led Starbucks as the leading global player in the young, growing market for coffee especially. They have altered the rules of the game in the US from coffee being just a commodity of trade to creating a “third place experience”. Their success majorly depends on critically understanding the needs and experiences of the customers and empathizing with them all around the world.

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