Starbucks Case Study

CASE 1-1

Starbucks—Going Global Fast

The Starbucks coffee shop on Sixth Avenue and Pine Street in
downtown Seattle sits serene and orderly, as unremarkable as
any other in the chain bought years ago by entrepreneur Howard
Schultz. A few years ago however, the quiet storefront made front
pages around the world. During the World Trade Organization
talks in November 1999, protesters flooded Seattle’s streets, and
among their targets was Starbucks, a symbol, to them, of freemarket capitalism run amok, another multinational out to blanket
the earth. Amid the crowds of protesters and riot police were
black-masked anarchists who trashed the store, leaving its windows
smashed and its tasteful green-and-white decor smelling of tear
gas instead of espresso. Says an angry Schultz: “It’s hurtful. I think
people are ill-informed. It’s very difficult to protest against a can
of Coke, a bottle of Pepsi, or a can of Folgers. Starbucks is both
this ubiquitous brand and a place where you can go and break a
window. You can’t break a can of Coke.”
The store was quickly repaired, and the protesters scattered to
other cities. Yet cup by cup, Starbucks really is caffeinating the
world, its green-and-white emblem beckoning to consumers on three
continents. In 1999, Starbucks Corp. had 281 stores abroad. Today, it
has about 7,000—and it’s still in the early stages of a plan to colonize
the globe. If the protesters were wrong in their tactics, they weren’t
wrong about Starbucks’ ambitions. They were just early.
The story of how Schultz & Co. transformed a pedestrian commodity into an upscale consumer accessory has a fairy-tale quality.
Starbucks grew from 17 coffee shops in Seattle 15 years ago to over
19,000 outlets in 58 countries. Sales have climbed an average of
20 percent annually since the company went public, peaking at
$10.4 billion in 2008 before falling to $9.8 billion in 2009. Profits
bounded ahead an average of 30 percent per year through 2007...