Business_Essay

Chris Perez Howard Schultz and Starbucks Coffee Company Howard Schultz was born on July 19, 1953 in Brooklyn, New York. He was the oldest of three children of Fred and Elaine Schulz, both of whom were from Jewish families. Money was tight in their household. When he was 12, Howard began earning money as a paperboy, and as he got older he held a number of part-time jobs. In 1971 he got a football scholarship to play for Northern Michigan, and in 1975 he received his B.S., becoming the first college graduate in his family. The next year Schultz entered the Xerox’s sales training program where he excelled fast and became a full sales representative. However Schultz became restless, and at age 26 he took a job with Hammerplast where he rose quickly to vice president and general manager. But at age 28 he was again restive, and in 1981 he visited with a small Hammerplast client in Seattle who happened to be Starbucks Coffee, Tea and Spice. As he was there the major thing he noticed was how everything was being sold differently then what he was used to. Things were sold by knowledgeable salespeople scooping coffee beans from bins behind a counter in a store devoted to coffee and tea. Schultz believed that all people would have this same reaction so he wanted to be part of the retailer’s growth. In 1982, Schultz joined the company, married Sheri Kersch, and moved to Seattle to work at Starbucks. Schultz traveled to Milan on a buying trip and came back with an idea to run Starbucks with the Italian coffee bar culture, but the idea was shot down by his bosses. Determined to pursue his own dream, he left Starbucks in 1985, and raised $400,000 from private investors to start his own company. Shultz’s new store II Giornale started on April 8, 1986 and became a huge success. Within six months of the store’s opening, he was attracting more than 1,000 customers a day. In early 1987, Schultz saw an opportunity to expand his business so he bought the Seattle assets of Starbucks, including its name, for $3.8 million. Growth continued to accelerate as the company entered the southern California market in 1991. Starbucks became immediately popular in Los Angeles. The LA Times had named Starbucks coffee the best in America. With large cities such as Los Angeles, San Francisco, and Chicago drinking Starbucks on a daily basis, their sales increased almost 300%. Since Starbucks was increasing so rapidly, other companies such as Gloria Jean’s Coffee Beans tried to build a presence in this market as Starbucks did. By the 1990s, Starbucks had emerged as one of the leading specialty coffee purveyors in the country. Choosing to give health-care to all employees who worked 20 or more hours a week which he felt would create loyal workers and dedicated barista’s who would create friendships with the “regulars” was one of the best things that Schultz could’ve done for his company. This is because now his customers and employees felt a connection with Starbucks. Without it, people don’t feel financially or spiritually tied to their jobs. The company continued to grow. By the end of the 1990s, the retailer averaged almost two store openings a day. As the number of outlets increased, Starbucks’ sales exploded. Total sales surpassed $100 million and four years later climbed to almost $700 million. On August 2, 1996, Starbucks Coffee company opened its first store outside North America. The new store was situated at a prime corner in Tokyo’s swank Ginza district. Schultz has said that re remembers being told that culturally, the Japanese refuse to carry to-go food or beverages on the street. Yet many customers were walking out the door proudly carrying their Starbucks cups with the logo showing. This showed him that Starbucks had taken a life of its own in Tokyo as it did in New York and Seattle. One big thing that they did with Starbucks was making alliances with big organizations such as Dreyer’s Grand Ice Cream, Pepsi-Cola Company, etc.. This increased their sales tremendously. This gave them more loyal customers through other businesses, and another way to experience Starbucks coffee. By the close of 1996, Starbucks was the most widely recognized brand of specialty coffee in the US. But the executives believed that what the company actually provided was a consistent, satisfying “coffee experience” that combined premium coffee beverages with an inviting atmosphere and service. The customers were not only coming in for the coffee now, but for the knowledge that they acquire from the employees about the coffee that they are buying. With the newly added beverages getting added to the menu such as Frappucino’s, this attracted more and more people to come and experience new things at Starbucks. By 2000, the burgeoning market for specialty beans and beverages had permanently altered how American consumers thought about, purchased, and enjoyed coffee. At the beginning of the twenty-first century, the company was the leading global player in the young growing market for specialty coffee. This position depended critically, as Schultz and others realized, on Starbucks’ consistent ability to interest, understand, and empathize with consumers around the world.