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Starbucks Case

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The Birth
From the very beginning Starbucks was modeled on European coffee bars and conceptualized to be the ‘Third Place’ between home and office. To achieve this goal Schultz had focused on developing a coffee culture. Everything revolved around the high quality coffee which was controlled from the time it was harvested till it was consumed. Quality is everything for Starbucks, because coffee is such a perishable commodity the company knew that it was very vulnerable if its quality was compromised. This tight end-to-end control was the hallmark of Starbucks in its early days. They operated over 100 stores which were company owned and spent a great deal of time training employees. Schultz believed that employee happiness was paramount to the success of the company. To that end Starbucks offered medical insurance to all its employees even with the majority being part-time. These initiatives created a sense of ownership amongst the employees and this positivity trickled down to the customers. In the process of developing a coffee culture Schultz realized that the customer experience was as important as the end product. Roasting and grinding the beans in the store, creating coffee made to order, all of this created a kind of spectacle and consumers responded very favourably. To better reflect the European coffee bars on which it was modeled, each Starbucks location was designed to make customers stay and consume their beverage on site. Comfy seating arranged in a living room type setting, smooth ambient music, everything in the layout of the stores was not left to chance and was designed to magnify the Starbucks experience. In those early days Starbucks was a very lean organisation with a very limited product offering. Schultz by his own admission was trying to create coffee connoisseurs out of every customer that walked into the stores. This high degree of control,...

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