Starbucks is a Seattle
-based company founded by CEO Howard Schultz in 1985. There are currently 2500 locations around the world
(the next biggest retailer of specialty coffee owns 371). This retail giant owns 38% of the coffeehouse business in North America
and 60% of the Seattle market. Schultz' vision for the company was born out of a trip to Italy where he saw the proliferation of espresso bars. The first three
years of business were dismal, and at one point Schultz and the firm were supported entirely by his pregnant wife's salary.
Obviously, things have turned around. Starbucks competes based on a high quality product and good service. It boasts the top 6% within the industry for employee satisfaction. Bill Clinton has recognized it as one of the only chains of any kind to offer even their part-time employees benefits and stock options. It also has one of the most recognized brands in the world. It currently has stores in England, the Middle East and Asia.
Taking over the World? Currently, Starbucks has strategic alliances with Kraft for the grocery store market and Pepsi for their Frappuccino bottled beverage. They are also the official coffee of Barnes and Noble, United Airlines and many more. Is this ubiquity a problem? No one says 'I would like a disposable tissue please', they say, 'I would like a Kleenex'. Will 'I would like a specialty coffee' soon become 'I would like a Starbucks'?
Starbucks is very worried about this trend. Being a huge money grabbing multi-national runs counter to the new-age-green-glowing image they try to project. They have already been accused of union-busting in Canada and have been fiercely criticized for so grudgingly and slowly conceding to the fair trade coffee activists. Their predatorial cluster strategy described by goneaway has stirred up many emotions as coffee houses have traditionally been places with strong community ties.
Forcing out Competition?Starbucks became 'big' because they brought coffee to young people. From about 1960 onwards, coffee consumption had been going down as young people of the 70's and 80's preferred to drink pop. Starbucks attached a brand and a culture to coffee drinking again, and since it entered the market in the mid-80s, coffee drinking rates have taken a steep upturn, and have actually surpassed those of 40 years previous. It is entirely possible that many of the independent coffee houses, whose extinction has been decried by the appearance of Starbucks, are actually riding on the coat tails of the giant who popularized coffee again. In Japan, where the coffee quality has been famously low, the appearance of Starbucks has upped the quality of all competition considerably.
All Powerful?The North American specialty coffee market is beginning to slow so Starbucks is looking increasingly at international markets. They have locations in Kuwait, Korea and even in the Forbidden City. What? They don't say 'not for all the tea in China' for nothing but Starbucks is choosing to challenge it. They are also trying to enter European markets, with already 150 locations in Britain and soon to enter Switzerland. How are Italians going to react to this American company serving espresso, coined by some as their national drink?
Many people fear Starbucks and assert that they are ‘taking over the world’. Remember, Starbucks is not a shitty operating system forcing a monopoly on us. It is not a Pharmaceutical with patents forcing exorbitant prices. It is simply a coffee house that knows how to use good strategic business practices.