Product and pricing decisions
ON THE JOB: FACING A BUSINESS CHALLENGE AT STARBUCKS
Brewing Up Success Nationwide
Have you had your coffee yet today? If so, did you open a can of Folgers and brew it yourself, or did you hand $2 to a barista and ask for a “single tall skinny mocha no whip with extra cocoa”? More and more coffee drinkers are getting their daily dose of java from Starbucks Coffee Company. Founded in 1971, Starbucks originally sold its trademark dark-roasted coffee beans in a few Seattle stores. But everything changed when current chairman and CEO Howard Schultz took over in 1987. Schultz envisioned selling gourmet coffee beverages in hip neighborhood coffee bars like the ones he saw on every corner while vacationing in Italy. He wanted Starbucks to be a meeting place where people could exchange ideas and escape from everyday hassles. And from day one he wanted to go national.
Schultz focused on building a competitive advantage through a loyal, well-trained labor force that delivers consistently superior products and service. He also fostered a company commitment to employer responsibility, environmental stewardship, passion for coffee, and integrity in customer relations. His efforts paid off. In a decade, Starbucks grew to over 1,100 stores in 22 states and 3 foreign countries. In the United States, Starbucks literally changed the defi1ition of “a good cup of coffee.” Loyal customers are described as “religious” about the product. In fact, Starbucks is so highly regarded that the company is leveraging its reputation with brand extensions. Bottled coffee beverages, ice cream, music CDs, and a coffee-laced beer now bear the Starbucks logo and are available on grocery store shelves. In addition, the company receives hundreds of joint venture proposals for new products every week.
But even though the