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'Starbucks Corporation' (NASDAQ: SBUX) ), is a coffeehouse chain based in the United States. Named after the first mate in the novel ''Moby-Dick'', Starbucks is the largest coffeehouse company in the world,[1] with 7,521 self-operated and 5,647 licensed stores in 40 countries, making a total of just over 14,000 stores worldwide.[2] Starbucks serves drip brewed coffee, espresso-based hot drinks, other hot and cold drinks, snacks and items such as mugs and coffee beans. Through its Starbucks Entertainment division and Hear Music brand, the company has ventured beyond refreshments into books, music, and film. Many of these products are seasonal or specific to the locality of the store. Starbucks brand ice cream and coffee are also sold at grocery stores.
From its founding in Seattle, Washington, as a local coffee bean roaster and retailer, Starbucks has experienced a rapid expansion. In the 1990s, the company was opening a new store every workday, a pace that continued into the 2000s. Domestic growth has since slowed down, though the company continues to expand in foreign markets. The first international location outside of the U.S. and Canada was established in 1996, and they now constitute almost one third of Starbucks' stores.[3]
History
The first Starbucks was opened in Seattle, Washington, in 1971 by three partners: English teacher Jerry Baldwin, history teacher Zev Siegel , and writer Gordon Bowker. The three were inspired by Alfred Peet, whom they knew personally, to open their first store in Pike Place Market to sell high-quality coffee beans and equipment. The original Starbucks location was at 2000 Western Avenue from 1971-1976. That store then moved to 1912 Pike Place. During their first year of operation, they purchased green coffee beans from Peet's, then began buying directly from growers.
A Starbucks coffee shop in Leeds, United Kingdom
Entrepreneur Howard Schultz joined the company in 1982, and, after a trip to Milan, suggested that the company sell coffee and espresso drinks as well as beans. The owners rejected this idea, believing that getting into the beverage business would distract the company from its primary focus. To them, coffee was something to be prepared in the home. Certain that there was much money to be made selling drinks to on-the-go Americans, Schultz started the ''Il Giornale'' coffee bar chain in 1985.
In 1984, the original owners of Starbucks, led by Baldwin, took the opportunity to purchase Peet's (Baldwin still works there today). In 1987, they sold the Starbucks chain to Schultz's Il Giornale, which rebranded the Il Giornale outlets as Starbucks and quickly began to expand. Starbucks opened its first locations outside Seattle in Vancouver, British Columbia, Canada (at Waterfront Station) and Chicago, Illinois, United States that same year. At the time of its initial public offering on the stock market in 1992, Starbucks had grown to 165 outlets.
Schultz hired Wright Massey to completely redesign the stores in 1995, who created the Synergistic Rollout Program that built one store per day, saving Starbucks US$20 million a year. Massey also established the Creative Services Group which produced the brand identity and the store design through a brand story. In the book "Pour Your Heart into It", Schultz stated: "Wright's goal was to raise our store design to a higher level, leaping ahead of our competitors. He aimed to create a lyrical and aesthetic new design, with richness and texture, strong enough to tell the Starbucks story, going beyond just a revised new color scheme, another kind of wood, or a new style of chairs, and trying to capture the essence of the Starbucks experience. He directed his creative team to draw from culture and mythology to weave a fantastic tale."
Starbucks created a visual brand language that was recognizable and distinctive, the way Coca-Cola maintained the color red, the Spencerian script, and the green bottle for over 100 years. The visual brand language consisted of icons, stories, and color palettes that convey the look and feel of Starbucks graphics.
The first Starbucks location outside of North America opened in Tokyo in 1996. Starbucks entered the U.K. market in 1998 with the acquisition of the then 60-outlet Seattle Coffee Company, re-branding all its stores as Starbucks. By November 2005, London had more outlets than Manhattan,[4] a sign of Starbucks becoming an international brand.
In April 2003, Starbucks completed the purchase of Seattle's Best Coffee and Torrefazione Italia from AFC Enterprises, bringing the total number of Starbucks-operated locations worldwide to more than 6,400. On September 14, 2006, rival Diedrich Coffee announced that it would sell most of its company-owned retail stores to Starbucks. This sale includes the company owned locations of the Oregon-based Coffee People chain. Starbucks representatives have been quoted as saying they will convert the Diedrich Coffee and Coffee People locations to Starbucks stores.[5][6]
Another reason for the success of Starbucks is their policy of predatory pricing[7] - that is, the company would open a branch close to a rival firm's, using competitive pricing to attract customers away from their rivals. Once the rival had left the area, Starbucks would then be able to set its own price. [8]
Starbucks' chairman, Howard Schultz, has talked about the tension that exists in the company between their rapid expansion (they aim to eventually operate 40,000 retail stores worldwide)[9] and their collective desire to act like a small company.
Company profile
Starbucks Headquarters, Seattle.
As of February 2007, Starbucks had 7,521 company-operated outlets worldwide: 6,010 of them in the United States and 1,511 in other countries and U.S. territories. In addition, the company has 5,647 joint-venture and licensed outlets, 3,391 of them in the United States and 2,256 in other countries and U.S. territories. This brings the total locations (as of February 2007) to 13,168 worldwide.
Starbucks can be found in many popular grocery chains in the U.S. and Canada, as well as in many airports.
Starbucks' corporate headquarters are in Seattle, Washington, United States. As of March 2007, the members of the company's board of directors are Howard Schultz (Chair), Jim Donald, Barbara Bass, Howard Behar, Bill Bradley, Mellody Hobson, Olden Lee, James Shennan, Jr., Javier Teruel, Myron Ullman, III, and Craig Weatherup.
Products
A Starbucks Java Chip Frappuccino
Starbucks stores serve a variety of beverages. For example, brewed coffees that change on a weekly basis as well as other hot drinks, both espresso-based (like lattes and cappuccinos) and non-espresso based (like hot chocolate, steamed cider and "cremes", Starbucks' term for steamed milk with various flavored syrups added).
Starbucks has a 'you-call-it' culture allowing the customer to specify all modifications to the drink. For example a complicated drink could be an iced, decaf, triple grande, soy, no-whip, five sugar Mocha. Flavored syrups and whipped cream can be added; cappuccinos can be made with more foam ("dry") or less foam ("wet"). Starbucks also offers iced drinks, such as its signature "Frappuccino Blended Coffee", a flavored drink of coffee, milk and sugar blended with ice. The name is a portmanteau of “frappé” and “cappuccino,” and was introduced in 1995.
Starbucks supplements these offerings with made-to-order hot breakfast muffin sandwiches (in some regions), pastries, salads, cold sandwiches, juices, and bottled water as well as coffee merchandise and at-home brewing equipment, and bagged or scooped coffee beans.
Stores
Starbucks does not franchise with individuals within North America but does enter into licensing arrangements with some companies.[10] One example is of Starbucks store locations in airports, most of which are operated by HMSHost (formerly Host Marriott Services). HMSHost does not accept the Starbucks coupons or employee discounts. Other locations include grocery stores, major food services corporations, college and university campuses and hospitals. In addition, Starbucks has partnered with Magic Johnson's Johnson Development Corporation to open retail locations in low-income urban areas.[11]
Staffing
There are usually from two to six partners (as Starbucks employees are called), all of them trained baristas, in each retail store at any one time. Black aprons labeled "Coffee Master" are worn by employees who have completed the Coffee Master course, which educates employees in not only the tasting, but also growing regions, roasting and purchasing (including fair trade practices) aspects of the coffee industry.
In the United States Starbucks offers full benefits such as health and vision insurance as well as stock-option grants and 401k with matching to employees who work at least an average of 20 hours a week per financial quarter.
As of 2007, Starbucks was voted as the 16th best company to work for in the United States, up from 29th in 2006. In 2005 it was voted the 11th best.[12]
Starbucks was also voted as one of the top ten UK workplaces by the Financial Times in 2007.
The Third Place
Starbucks in Frankfurt am Main, Germany
Starbucks envisions local outlets as a "third place" (besides home and work) to spend time, and store design is intended to achieve this. The café section of the store is often outfitted with stuffed chairs and tables with hard-backed chairs. Most stores provide free electricity for customers, and many stores also have wireless internet access provided by T-Mobile.[13] Both an unsecured and secured (with a client) Wi-Fi connections are available.[14]
The company is noted for its non-smoking policy at almost all of its outlets, despite predictions that this would never succeed in markets such as Germany, where there are otherwise few restrictions on smoking. Outlets in Vienna and Mexico City, which have smoking rooms separated by double doors from the coffee shop itself, and a smoking room upstairs in the Largo do Senado, Macau, branch are the closest the company has come to making an exception. According to the company, the smoking ban is to ensure that the coffee aroma is not adulterated. The company also asks its employees to refrain from wearing strong perfumes for similar reasons. Starbucks generally does not prohibit smoking in outside seating areas.
International operations
Countries that contain Starbucks stores
A typical sales area, this one in Peterborough, UK, showing a display of food and the beverage prepation area
Internationally, however, Starbucks stores are generally operated by companies in which Starbucks holds a controlling interest. Starbucks owns 50% or less of the companies operating under licensing agreements in Austria, the Bahamas, Bahrain, parts of Canada (Quebec and the Maritimes), China (Beijing, Hong Kong, Macau, Taiwan, Shanghai only; other locations have Starbucks as the controlling owner), Cyprus, France, Greece, Indonesia, Japan, Jordan, Korea, Kuwait, Lebanon, Malaysia, Mexico, New Zealand, Oman, Peru, Puerto Rico, Philippines, Qatar, Saudi Arabia, Spain, Switzerland, Turkey, and the United Arab Emirates.[15]
Stores are now found in Australia, Austria, Bahamas, Bahrain, Brazil,[16] Canada, Chile, Greater China (including Hong Kong, Macau, and Taiwan), Cyprus, Denmark, Dominican Republic, Egypt, France, Germany, Greece, Indonesia, Ireland, Japan, Jordan, Kuwait, Lebanon, Malaysia, Mexico, New Zealand, Oman, Peru, Philippines, Puerto Rico, Qatar, Romania, Russia[17], Saudi Arabia, Singapore, South Korea, Spain, Switzerland, Thailand, Turkey, United Arab Emirates, and the United Kingdom.
New stores are also going to be opened in Argentina, Colombia, Czech Republic, Hungary, India, Morrocco and Poland.[18][19]
In March 1998, it opened its first store in Taiwan. January of 1999, it opened its first mainland China store in the capital city - Beijing. May of 2000, it opened its first Chinese eastern store at Shanghai's Huaihai road's Libao skyscraper. In the same month, first Hong Kong was opened. August of 2002, it opened its first store in Macau. So far, it has about 500 stores in Greater China. There are about 230 stores in mainland in 22 cities. In September 2005, Starbucks donated 500 million US dollars to start its "Starbucks Chinese educational program" to help improve the Chinese educational situation, especially the middle west poor areas. At the end of 2005, "Starbucks business management, Ltd" was established in Shanghai to manage the business in Greater China.
Intellectual property
Starbucks U.S. Brands, LLC, is a Starbucks-owned company that currently holds and owns the property rights to approximately 120 Starbucks Coffee Company patents and trademarks. It is located at 2525 Starbucks Way in Minden, Nevada.[20]
Name
The company is named in part after Starbuck, Captain Ahab's first mate in the book ''Moby-Dick'', as well as a turn-of-the-century mining camp (''Starbo'' or ''Storbo'') on Mount Rainier. According to Howard Schultz's book ''Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time'', the name of the company was derived from ''Moby-Dick'', although not in as direct a fashion as many assume. Gordon Bowker liked the name "Pequod" (the ship in the novel), but his creative partner Terry Heckler responded, "No one's going to drink a cup of Pee-quod!" Heckler suggested "Starbo." Brainstorming with these two ideas resulted in the company being named for the ''Pequod's first mate, Starbuck.[21]
International names include:
★ Arabic-speaking countries: ستاربكس
★ China, Taiwan, Hong Kong: Pinyin: xīng bā kè (''星 xīng'' means "star", while ''巴bā 克kè'' is a transliteration of "-bucks")
★ South Korea: 스타벅스 transliteration (seu-ta-beok-seu), often used in conjunction with the English name
★ Japan: スターバックス transliteration (sutaabakkusu)
★ Thailand: สตาร์บัคส์ transliteration (sa taa bak)
Logo
The logo is a "twin-tailed mermaid, or siren, or ''mixoparthenos'' as she's known in Greek mythology".[22]
The logo has been streamlined over the years. In the first version, the Starbucks siren was topless and had a fully-visible double fish tail. In the second version, her chest was covered by her flowing hair, but her navel was still visible, and the fish tail was cropped slightly. In the current version, her navel and chest are not visible at all, and only vestiges remain of the fish tails. The original logo can still be seen on the Starbucks store in Seattle's Pike Place Market and on certain coffee bags.
At the beginning of September 2006, Starbucks temporarily reintroduced its original brown logo on paper hot drink cups. Starbucks has stated that this was done to show the company's heritage from the Pacific Northwest and to celebrate 35 years of business. The vintage logo has sparked some controversy due to the siren's bare chest. Recently, an elementary school principal in Kent, Washington, was reported as asking teachers to "cover up" the mermaid of the retro cups with a cup sleeve of some kind.22
Parodies and infringements
In 2000, San Francisco cartoonist Kieron Dwyer was sued by Starbucks for copyright and trademark infringement after creating a parody of its siren logo and putting it on coffee mugs, t-shirts, and stickers that he sold on his website and at comic book conventions. Dwyer felt that since his work was a parody it was protected by his right to free speech under U.S. law. The judge agreed that Dwyer's work was a parody and thus enjoyed constitutional protection; however, he was forbidden from financially "profiting" from using a "confusingly similar" image of the Starbucks siren logo. Dwyer is currently allowed to display the image as an expression of free speech, but he can no longer sell it.[23]
In 2003, Starbucks successfully sued a Shanghai competitor in China for trademark infringement, because that chain stores used a green-and-white logo with a similar sounding Chinese name.[24]
In 2005 Starbucks lost a trademark infringement case against a smaller coffee vendor in South Korea that operates coffee stations under the name and style Starpreya. The company, Elpreya, says Starpreya is named after the Norse goddess, Freja, with the letters of that name changed to ease pronunciation by Koreans. The court rejected the Seattle-based retailer's claim that the logo of Starpreya is too similar to the famous Starbucks logo.
DC Comicsuniverse present a coffee company called "SunDollers", which was originally based in Star City, but is now present in every city, like Gotham City and Metropolis.
Other uses
''Playboy'' Magazine featured a pictorial of Starbucks baristas posing nude in its September 2003 issue. The issue featured Signe Nordli on the cover, wearing the green Starbucks barista apron with the logo altered to show the Playboy "Rabbit Head" logo instead of the Siren. Nordli also was shown posing nude beside a pinball machine, and clothed with other baristas in a replica Starbucks.
Criticism and controversy
Starbucks at the Forbidden City in Beijing (closed since July 2007)
The Starbucks location in the former imperial palace in Beijing closed in July 2007. The coffee shop had been a source on ongoing controversy since its opening in 2000 with protesters objecting that the presence of the American chain in this location "was trampling on Chinese Culture".[25][26][27][28]
Labor disputes
Since 2004, workers at seven Starbucks stores in New York City have joined the Industrial Workers of the World (IWW) as the Starbucks Workers Union.[29] According to a Starbucks Union press release, since then, the union membership has begun expanding to Chicago and Maryland.[30] On March 7, 2006, the IWW and Starbucks agreed to a National Labor Relations Board settlement in which three Starbucks workers were granted almost US$2,000 in back wages and two fired employees were offered reinstatement.[31][32][33] According to the Starbucks Union, on November 24 2006, IWW members picketed Starbucks locations in more than 50 cities around the world in countries including Australia, Canada, Germany, Great Britain and New Zealand, as well as U.S. cities including New York, Chicago, Minneapolis and San Francisco,[34] to protest the firing of five Starbucks Workers Union organizers by Starbucks and to demand their reinstatement.
Some Starbucks baristas in Canada,[35] Australia and New Zealand,[36] and the United States[37] belong to a variety of unions.
In 2005, Starbucks paid out US$165,000 to eight employees at its Kent, Washington, roasting plant to settle charges that they had been retaliated against for being pro-union. At the time, the plant workers were represented by the IUOE. Starbucks admitted no wrongdoing in the settlement.
A Starbucks strike occurred in Auckland, New Zealand, on November 23, 2005. Organized by Unite Union, workers sought secure hours, a minimum wage of NZ$12 an hour, and the abolition of youth rates. The company settled with the Union in 2006, resulting in pay increases, increased security of hours, and an improvement in youth rates.[38]
According to Starbucks Chairman Howard Schulz, "If they had faith in me and my motives, they wouldn't need a union." According to ''The Seattle Times'', "The International Union of Operating Engineers Local 286 had trouble with Starbucks at its Kent roasting plant, where the union no longer represents workers".[39] (see also WTO Ministerial Conference of 1999 protest activity).
Coffee bean market
Although it has endured much criticism for its purported monopoly on the global coffee-bean market, Starbucks only accounts for roughly two percent of global coffee production. In 2000, the company introduced a line of fair trade products[40] and now offers three options for the socially conscious coffee drinker. According to Starbucks, they purchased 4.8 million pounds (2,180 t) of Certified Fair Trade coffee in fiscal year 2004 and 11.5 million pounds (5,220 t) in 2005. They have become the largest buyer of Certified Fair Trade coffee in North America (10% of the global market) and the only company licensed to sell Certified Fair Trade coffee in 23 countries.[41] Transfair USA,[42] the only third-party certifier of Fair Trade Certified coffee in the United States, has noted the impact Starbucks has made in the area of Fair Trade and coffee farmer's lives by saying:
{{bquote|Since launching {their} FTC coffee line in 2000, Starbucks has undeniably made a significant contribution to family farmers through their rapidly growing FTC coffee volume. By offering FTC coffee in thousands of stores, Starbucks has also given the FTC label greater visibility, helping to raise consumer awareness in the process.}}
Of the almost 300 million pounds of coffee Starbucks purchased in 2006, about 6 percent was certified as fair trade.[43]
Groups such as Global Exchange are calling for Starbucks to further increase its sales of fair trade coffees. However, fair trade certification can cost US$20,000 to US$30,000, and many growers are unwilling or unable to pay for certification. As a result, the supply of fair trade coffee is increasing slowly.
Other ventures
Main articles: Hear Music
Starbucks entered the music industry in 1999 with the acquisition of Hear Music, and the film industry in 2006 with the creation of Starbucks Entertainment. Starbucks Entertainment was one of the producers of the 2006 film ''Akeelah and the Bee''. Retail stores heavily advertised the film before its release.
Hear Music is the brand name of Starbucks' retail music concept. Hear Music began as a catalog company in 1990 and was purchased by Starbucks in 1999. Nearly 3 years later, in 2002, they produced a Starbucks Opera Album, featuring such artists as the late Luciano Pavarotti, and Andrés Alfaro.
See also
★ Coffeehouse
★ List of coffeehouse chains
★ List of companies based in Seattle
References
1. Hoovers.com. URL last accessed September 5, 2006.
2. Starbucks Company Fact Sheet. URL last accessed March 17, 2007.
3. Starbucks Company Profile
4.
5. [1]
6. [2]
7. "An example is Starbucks, who cluster their shops in areas where there are already other cafés, even though this might result in short-term losses, as a way eventually to force others out." in [3]
8. Klein, N. ''No Logo'' (Flamingo 2001), pp135-140
9. The Big Gulp at Starbucks, , Barbara, Kiviat, TIME,
10. Frequently Asked Questions
11. Urban Coffee Opportunities
12. 100 Best Companies to Work For: Starbucks
13. T-Mobile HotSpotLocations
14. Wireless Internet Access - T-Mobile Hotspot Client
15. Starbucks Corporation International Partnership Summary
16. (actually starting within the year)
17. Reuters - "Starbucks opens first coffee shop in Russia"
18. Yahoo! Finance - "Starbucks Plans to Expand Into Argentina."
19. AmRest - "RB 23/2007 Joint Venture Agreements with Starbucks"
20. USPTO
21. Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time'', , Howard, Schultz, Hyperion, 1997,
22. The Insider: Principal roasts Starbucks over steamy retro logo
23. Cartoonist Kieron Dwyer Sued By Starbucks
24. Eyeing a Billion Tea Drinkers, Starbucks Pours It On in China Janet Adamy
25. International Herald Tribune: ''Starbucks closes coffeehouse in Beijing's Forbidden City''
26. CNN.com: ''Starbucks out of China's Forbidden City''
27. BBC News: ''Forbidden City Starbucks closes''
28. theage.com: ''Protests shut Starbucks in Beijing's imperial palace''
29. Union struggles to reach, recruit Starbucks workers Melissa Allison
30. http://www.starbucksunion.org/node/1151
31. New York Magazine
32. NLRB Settlement
33. New York Press
34. http://www.starbucksunion.org/node/1149
35. Vancouver Courier
36. Starbucks staff stir for wage lift Simon Collins
37. Crain's Chicago Business
38. National Business Review
39. In August 2006, a store in Vancouver de-unionized as the employees unanimously voted on the subject.
Retail market
Starbucks has come to be regarded by some, particularly in the anti-globalization movement, as symbolic of the problems posed by globalization. Several activist groups maintain websites criticizing the company's fair-trade policies, labour relations, and environmental impact, and hold it as a prime example of U.S. cultural and economic imperialism. Several Starbucks locations were vandalized during the WTO meeting held in Seattle in late 1999. Although no organization claimed responsibility for the vandalism, the anarchist circle-A symbol was spraypainted on several stores.Edition.cnn.com URL last accessed July 3, 2006.
40. Seattleweekly.com URL last accessed July 3, 2006.
41. URL last accessed July 3, 2006.
42. Transfair USA URL last accessed July 3, 2006
43. TheStar.com - living - The fine print of ethical shopping:
External links
★ Starbucks' official website, needs Macromedia Flash
★ Starbucks IWW Union
★ Critical article from PickyGuide
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