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Table of Contents I. Executive Summary Starbucks: A Brief History The Beginning of Howard Schultz¶s Legacy Conclusion Works Cited . IV. III. II. V.
In the end. and Gordon Bowker who all shared a love of fine coffees and exotic teas. His passion for coffee has turned this exexecutive for a Swedish company into the owner of a multi-billion dollar enterprise. Peet¶s Coffee and Tea had attracted many loyal clienteles and the owners of Starbucks hoped to the same with their new store. he kept on working towards his idea of opening up Italian style coffee bars no matter how many rejections he received from potential investors. Zev Siegel. Peet had opened up a small store in Berkeley. Schultz was able to raise the initial seed capital to open up his first coffee shop and through his dedication. Washington as Starbucks Coffee. By 1980. Starbucks: A Brief History Starbucks first opened its doors in 1971 in Seattle. and dark-roasting its own beans the European way to bring out their full flavor. the father of Starbucks Corporation. was able to raise the rest of the capital to open up more coffee shops and eventually purchased the original Starbucks. Tea. and Spice by Jerry Baldwin.Executive Summary The purpose of this paper is to take readers through the entrepreneurial venture of Howard Schultz. Their passion for coffee and commitment to educating their customers to appreciate the qualities of fine coffee helped them opened a second store in 1972. a Dutch immigrant who began importing fine Arabica coffees into the United States during the 1950s. However. The store specialized in importing fine coffees and teas. Through his passion and persistence for his dream. . the company had four Starbucks stores in the Seattle area (Thompson) and things got even better for the coffee company when Howard Schultz came into the picture in 1981. California in 1966 called Peet¶s Coffee and Tea. the inspiration of Starbucks came from Alfred Peet.
1997). in addition to selling beans and coffee equipment (Schultz. Shultz was intrigued by the store¶s philosophy and passion for coffee and couldn¶t stop thinking about Starbucks. Schultz noticed that this small retailer in Seattle was placing unusually large orders for a certain type of drip coffee maker and decided to investigate. in 1982. In addition. Destined to make this happen. there were still some disagreements about Shultz¶s ideas of expanding the business across the country and after attending a convention in Milan. a Swedish maker of kitchen appliances and house wares. that he had never experienced before. but Schultz was able to change their minds and was hired as the head of marketing and oversaw the retail stores. along with silent partner. Right there and then. From then on. He visited the small retailer and met the three owners. 1997). while working for Hammarplast. Baldwin and Bowker.The Beginning of Howard Schultz¶s Legacy In 1981. hence the beginning of his journey with Starbucks. Schultz realized that Starbucks was missing another opportunity to expand its business by serving fresh brewed coffee. 1997). However. 1997). ³noticed a strange phenomenon´ (Schultz. they finally agreed to give it a shot. The owners and Donovan decided against the idea. espresso.S. a passion and authenticity´ (Schultz. Schultz also received a small equity share of the company. operations. Even with the success of the espresso bar. as Vice President and General Manager of U. Schultz met with owners. Steve Donovan to present his vision for opening Starbucks stores across the United States and Canada. After a year of trying to convince the owners to try out an espresso bar. he knew in his heart that ³this was it´ (Schultz. and cappuccino in its stores. He knew there were great opportunities for Starbucks in the future because ³there was something magic about it. the owners were still not convinced that it was such a good idea because they felt the espresso drinks were a distraction .
Schultz left Starbucks and started his own business ± Il Giornale Coffee Company. he decided to go his own way. Balwin agreed to serve as a director and Gordon Bowker promised to be a part time consultant for six months (Schultz. They did not want customers to think of Starbucks as a place to get a quick cup of coffee (Schultz. It was Bowker who suggested the new company be named Il Giornale Coffee Company and Schultz accepted the suggestion and with the help of Bowker.000 of Starbucks¶ money into his coffee bar enterprise. Scott Greenburg drafted a new business plan for Il Giornale. But. His goal was to open fifty stores in five years. They did extensive research. As Schultz was drawing up the documents to his new venture. Schultz had the vision and Greenburg knew what information and projections were needed to attract private investors and how to outline the opportunities and risks. Schultz¶s and his friend. Frustrated and still unable to convince the owners to expand the business and hopefully to bring his Milan experience to Starbucks. Baldwin became Schultz¶s first investor. Schultz and Bowker observed local habits and took notes about the décor and menus. In 1985. Thus. 1997). He felt that the point of a coffee store was not just to teach customers about fine coffees but to who customers how to enjoy it (Schultz. taking pictures and videotaping baristas in action to help him with his business proposal to potential investors (Thompson). Jerry Baldwin announced that he would invest $150. Schultz thought the total opposite. Schultz¶s idea was to open stores that would serve coffee by the cup and espresso drinks. When Schultz and Bowker returned from their trip. the two set off to Italy to visit about five hundred espresso bars in Milan and Verona.000 in seed capital to . His dream was to bring back the romance and artistry and community he experienced in Italy. 1997).from the core business of selling the finest coffees. Shultz needed to raise at least $400. 1997).
Six months after opening the first Il Giornale.25 million to launch at least eight more coffee bars (Schultz. In the end. The acquisition was completed in August of 1987 and Il Giornale and Starbucks became Starbucks Corporation with Howard Schultz as its president and CEO. Schultz knew that this would be the opportunity of a lifetime and had to buy Starbucks. Schultz raised over $1. a second store was opened in the Seattle Trust Tower in downtown Seattle and by April 1987. a majority of Schultz¶s time was spent on trying to raise the $1. British Columbia.open up the first Italian style coffee bar and after that. a third store was opened in Vancouver. Margolis invested $100. Schultz¶s first outside investor was a physician named Ron Margolis. would need another $1. the original owners of Starbucks. in March of 1987. By mid 1987. meeting with over two hundred potential investors pitching his business plan. the roasting plant. The newly acquired Starbucks Corporation had a total of nine stores at time and the business plan Schultz presented to investors was to open 125 stores in the next five years. That seed capital ensured Schultz to secure a lease and start building the first Il Giornale store and the store opened its doors in April of 1986.8 million needed to buy Starbucks. decided to sell the Seattle stores. The rest of the seed capital came from Arnie Prentice. 1997). In addition.65 million from about thirty investors. sales for the three stores reached $1.5 million annually (Schultz.000 to Schultz¶s venture. fifteen .25 million needed to open the other eight stores. However. only keeping Peet¶s assets in San Francisco. With the backing of the board of directors and his newly hired financial and accounting team. Schultz was able to raise $3. whom Schultz¶s wife knew through professional contacts. and the name Starbucks. He spent over a year to try to raise the capital. co-chairman of a financial services firm. 1997). they were able to draw up a set of financial projections for the combined operations and a financing package that included a stock offering to Il Giornale¶s investors and within weeks.
dedication and passion to pursue his dream have made the company what it is today.7 billion in 1999. finance. who was just learning his new role as CEO. who had over twenty years of experience in the beverage industry. Having an experienced management team and Schultz¶s vision. with the help of venture capitalists. Schultz also brought in people to Starbuck¶s board of directors who had experience in growing a retail chain and who could add valuable perspectives. the company had sales of over $10. thirty in the fourth and thirty five in the fifth years. However. Starbucks had over 2. By 1992. which far exceeded the original 1987 business plan¶s objective of 125 stores. he set out to hire the most experienced management team. twenty five in the third year. By 1998. Starbucks experienced unprecedented growth throughout the 1990s and offered its initial public offering in June of 1992. Today. Starbucks became the nation¶s No.in the first year. . Conclusion Howard Schultz has come a long way since working for the original Starbucks in 1982. In addition.7 billion. He continued to hiring people with a great deal of experience in managing and expanding retail chains. first hiring Lawrence Maltz. revenue was expected to reach $60 million in 1992 (Thompson). which is an increase of over a $1 billion increase from 2009. Schultz believed that Starbuck¶s success was dependent on exceptional customer service.009 stores operating in more than fifty countries. twenty in the second year. His hard work. So. including Schultz himself. With annual sales of $1.200 stores worldwide and was on target to breaking $2 billion in 2000 (Entrepreneur. as executive vice president in charge of heading operations. Starbucks is still the premier roaster and retailer of specialty coffee in the world with 17. and human resource. 2008). 1 specialty coffee retailer. In 2010. there were a total of 161 Starbucks stores. the company lacked an experienced management team.
This is one of the reasons why Starbucks Corp¶s has grown dramatically. These benefits have created a more dedicated work force. In addition. as well as offered stock options to everyone in the company. By giving his employees a vested interested in the company. Schultz states that it . he extended health care benefits to all employees. including part-time employees. in turn promoting a high level of customer service and a low employee turnover rate. Starbucks was able to become the country¶s leading specialty coffee store. To attract and motivate these employees. . ³has made all the difference´ (Thompson). By rounding up the most experienced players.which meant having employees who were very knowledgeable of the company¶s products and who had the skills and personality to share the company¶s passion for coffee with its customers. his picks of a strong management team has also contributed to the success of the company.
html .asp?ticker=SBU X:US Entrepreneur.mhhe. (2011. A.com: http://www.mhhe. Retrieved February 8.com/aboutus/company-information Thompson. (2008. 2011.com: http://www. 2011.html Schultz.). from buisnessweek.entrepreneur. New York : Hyperion. from http://www.com. (n. H.com/business/management/thompson/11e/case/starbucks. &. (n.Works Cited Bloomberg Business Week.com: http://investing.starbucks.).d. 2011.com/businessweek/research/stocks/financials/financials. from entrepreneur. Retrieved Feburary 8. October 10). February 13). 2011. (1997). www. from starbucks. Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time.d. A. Retrieved Feburary 13. Retrieved February 8.businessweek. Starbucks.com/growyourbusiness/radicalsandvisionaries/article197692.