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Starbucks Infrastructure

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Submitted By jj2873
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Pages 8
Starbucks

ECO/365
May 4, 2015
Christopher Rakovalis

Starbucks

Starbucks is the leading retailer in specialty coffee in the world, serving 50 million customers globally every day (Bussing-Burks, 2009). Starbucks is proposing a new delivery service to maximize profitability and increase its competitive advantage in the marketplace. There are different factors that affect demand, supply and equilibrium prices in the market. To be successful and have long-term profitability the strategic planning group must explore the price elasticity of demand, fixed cost and cost structure.

History of Starbucks The name Starbucks was inspired by the first mate of the whaleship from the novel Moby Dick (Bussing-Burks, 2009). Starbucks started out with three friends, Gorgon Bowker, Jerry Baldwin and Zev Siegel (Bussing-Burks, 2009). Their goal was to serve the world’s finest fresh-roasted whole bean coffees in a warm and welcoming setting where friends and family can meet. They open their first store named Starbucks Coffee, Teas and Spices in 1971 (Bussing-Burks, 2009). The three friends invested $1350 each and borrowed $5000 from a bank. The rent only cost $137 a month, and overhead costs were fairly low (Bussing-Burks, 2009). The first store was located in a storefront at Pike Place Market in Seattle. Within ten years, Starbucks grew to four stores and owning a roasting plant.

Howard Schultz, CEO of Starbucks, joined the company in 1982 (Bussing-Burks, 2009). Howard was a self-made million who grew up in public housing in Brooklyn (Bussing-Burks, 2009). Shortly after joining Starbucks Howard he traveled to Milan. In Italy, he experienced the taste and feel of their coffeehouses. He brought back the espresso bar to the United States, and it was a hit. In 1992, Starbucks went public and expanded at an alarming rate, and by 2008, Starbucks had grown to 16,680

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