Week 1 Written Assignment – Starbucks Michael Scipione

1) During the early 1980’s the specialty coffee market was a very small segment of the roasted and instant coffee market – accounting for less than a tenth of total industry sales. The big three industry giants; General Foods, Nestle and Procter & Gamble controlled 60% of the roasted coffee market and 80% of the instant coffee market. Howard Schultz, who never had any experience in the coffee industry, saw this as a great opportunity to use his talents and a hunch – to build a strong company and seize a large market segment in the sales of high-quality coffee.

2) Starbucks prides it company’s strengths on the following principles: strict quality standards, which for example includes rules for precise brewing of espresso (18 to 23 second brewing time and will be thrown away if not served within 10 seconds of brewing); an organizational culture based on the principles “strict standards on how coffee should be prepared and delivered to customers” and “a laid-back, supportive and empowering attitude to its employees”; location strategy based on conquering one area of a city/region at a time, placing their stores in highly visible areas and never having too many stores to close together; using the C.A.F.E. principles, which stand for Coffee and Farmer Equity Practices – which are the following: A) Build mutually beneficial relationships with coffee growers and suppliers. B) Increase economic, social, and environmental sustainability in the industry including conservation and biodiversity. C) Provide economics incentives for suppliers who adhere to C.A.F.E. standards. D) Promote transparency and economic fairness within the supply chain.

3) I believe the source of Starbuck’s competitive advantage lays in the quality of their customer service and production/presentation. I believe that as along as