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Company Starbucks Corporation Essay

Starbucks is a coffeehouse chain store that was founded in 1971 across the pike place market in Seattle Washington in the United States of America by three partners who were inspired by Alfred peet. Its original location was at 2000 Western Avenue but it was later moved to pikes house in 1912. In 1987 star backs was sold by thyme original owners and it quickly began to expand. The first star backs location outside of north America was opened in Tokyo in 1996and the company also entered the uk markets in 1998 with the acquisition of the then 60 outlets of the Seattle coffee company as it rebranded all the stores to star backs. The legal structure of starbucks is that of a corporation. (Chevrier, 2003)

 It is the largest coffeehouse company in the world with 7521 self operated and 5647 licensed stores in over 40 countries which makes a total of 13,168 stores worldwide. The company has its headquarters in the USA Seattle Washington with Howard Schultz as the current chairman. The key people in the company are the president and the chief executive officer who are the main decision makers in the organization. Similarly the company has a chain

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of restaurants as well as coffee shops all over the world and its products includes coffee, frapuccino, torrefazione Italia coffee, hear music as well as pasqua coffee. (Ashkenazim, 2002)

The company has 147,436 total numbers of employees working in the organizations chain stores. The employees enjoy the full benefits such as dental cover, health and vision insurance as well as the stock option grants which match the employees work. The company also serves dip brewed coffee; espresso based hot drinks as well as other cold and hot rinks together with some snacks.

Through its entertainment division the company ventured beyond refreshments into the books, music and the film industry and many of its products are seasonal or very specific to the stores locality. The company also sells its brand ice cream and coffee at the grocery stores. Since its formation as a local coffee bean roaster and retailer in Seattle Washington the company has rapidly expanded by opening new stores globally. (Anderson, and Metcalf, 2003)

The company’s domestic growth has since slowed down though the company still continues to expanding in the foreign markets. The company’s chairman has expressed his concerns about the tensions which exist in the company between its rapid expansion and the company’s collective desire to act like a small company. Star backs have a variety of beverages and they also have a “you-call-it” culture which allows the customer to specify all the drinks modifications.

The company supplements its beverages by offering them with pastries salads, sandwiches bottled water and juices. The company does not franchise with individuals within the northern part of America but it does enter into licensing arrangements with some other companies. An example of this would be the company’s location in the airpots, major food services corporations, grocery stores, campuses and also hospitals. Internationally the company stores are however operated by the companies in which star bucks hold a controlling interest.

In most companies in the world, starbucks 50% or less of the companies operating under its licensing agreements. Starbucks US brands LLC, is a star bucks owned company which currently owns and holds the property rights to an approximate of 120 star bucks coffee company trademarks and patents and it is located in Nevada. Starbucks sued an American cartoonist for the infringement of their copyright and trademark and it has also successfully sued its Chinese competitor for the same issue of trademark infringement.

Starbucks as a company has similarly been faced with criticism and controversy for instance in china the company’s coffee shop has been facing a lot of protests as the Chinese people believed that it was trampling on their culture. This led to the closure of the coffee shop in July 207 in china. Starbucks as a company has been using some methods which aid in its expansion so that it can maintain its dominant position in the market place.

These methods include buying out the competitors leases, acquiring the independent coffee shops and then converting them into star bucks stores and also the clustering of several locations in small geographical areas so that the company can further saturate the market. However these methods have been named by some critics as anti-competitive. The company has been applying very high standards of excellence to the purchasing roasting and the fresh delivery of its coffee to its customers.

The company starbucks has been regarded by some people as an anti globalization movement as they criticizes the company’s fair trade policies and he labor relations. Although the company has endured so much criticism its monopoly in the global coffee bean market starbucks only accounts for only 2% of the global coffee production.

The company introduced a line of fair trade products in the year 2000 and it now offers three options for the socially conscious coffee drinker and this increased its purchases thus making it the largest buyer of certified fair trade coffee in North America. The company has notably made some significant contributions to the family farmers through their rapidly growing coffee volumes. (Cordero, Ditomaso and Farris, 1996)

Some groups like the global exchange are on the other hand calling for starbucks to further increase its sales of the fair trade coffees. However the fair trade certification has very high costs and many growers are unwilling to pay for the certification. The top competitors of the starbucks corporation include; Nestle, Dunkin and Tim Horton’s and there are also other minor competitors who are approximately 22 in number. The company’s industry includes leisure where there are restaurants and cafes as well as the specialty eateries, the beverages and the retail where there are consumer electronics and appliances retail. The company’s market share has remained constant amongst its competitors over the last four years. (Allard, 2002)

This share shift has further been driven by the new competitors like Nestle in the market as well as the new innovations which have given way to better quality products in this industry. The company seems to be thriving for growth as it opens more outlets in more parts of the world. The company aspires to be the most efficient in meeting the consumers needs in the coffee industry as well as providing the highest quality products especially coffee. The specific factors which drive the company’s growth include its broad customer database which keeps expanding due to the high quality standards of services that are provided.

An analysis and description of Starbucks Corporation Competitors

 
The competitors of Starbucks Corporation

  Revenue (M)
Profit Margin (12 mos) Employees Market Cap (M)
McDonald’s Corporation $21,586.4 13.6% 465,000 $67,180.2
Sodexho Alliance (ADR) $18,099.5 4.3% 332,096 $11,211.3
Yum! Brands, Inc. $9,561.0 11.6% 53,200 $17,860.8
Starbucks Corporation $7,786.9 11.3% 145,800 $20,030.5
Darden Restaurants, Inc. $5,567.1 9.6% 156,500 $6,251.9
Brinker International, Inc. $4,376.9 7.3% 113,900 $2,975.7
Jack in the Box Inc. $2,765.6 7.2% 44,300 $2,091.7
Wendy’s International $2,439.3 4.3% 7,000 $3,014.1
CBRL Group, Inc. $2,351.6 5.0% 64,000 $980.4
Burger King Holdings, Inc. $2,234.0 10.0% 39,000 $3,489.4
Tim Horton’s Inc. (USA) $1,691.6 21.6% 1,665 $6,916.2

Source; Starbucks Corporation, (2007): competitors, Retrieved from http://www.investor.reuters.com/business accessed on 6th October, 2007

Reference

About The Starbucks Coffee Company Australia (2007): retrieved from

                http://www.starbucks.com.au/en-AU/  accessed on 9th October, 2007.

Allard, M.J. (2002):  Theoretical underpinnings of Management: Understanding and managing diversity: readings, cases and exercises. 2nd ed. Harlow: Prentice Hall. Pp3–12

Anderson, T. and Metcalf, H. (2003):  Organizational Design: stacking up the evidence. London: Chartered Institute of Personnel and Development.

Ashkenazim, N. (2002):  The Design of the coffee shop.  The new frontiers in organizational research. Journal of Management Vol. 28, No. 3 pp307–336

Chevrier, S. (2003):Cross-cultural management in multinational project groups Journal of World Business. Vol. 38, No. 2, summer pp141–146

Cordero, R., Ditomaso, N. and Farris, G.F. (1996):  Gender and race/ethnic composition of technical work groups: relationship to creative productivity and morale. Journal of Engineering and Technology Management No. 13 pp205–220

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