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Starbucks Management Practices

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Submitted By bgambewilliams
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Starbucks is one of the largest and most successful coffee chains in the world. “Starbucks is an international coffee and coffeehouse brand with 16,120 stores in 49 countries (around 11,000 of these are in the US).” (Foodprocessing-technology.com) They sell a range of coffee and baked goods along with a retail range of mugs, music CDs, books and its own brand of roasted coffee beans.
“The company was established in Seattle, Washington, US, in 1971. From its relatively humble start the company expanded rapidly until the 1990s, when it was thought that every working day a new Starbucks opened.” (Foodprocessing-technology.com) Schulz had a bigger dream one in which to expand outside of the Pacific Northwest.
In 1987 the Chicago store was opened. He found this store to be more troublesome than he had anticipated. Some of the issues he encountered were:
• Entry of the store was from the outside instead of the lobby it was located in.
• The customers were hesitating to go out in windy or bad weather.
• Sending fresh coffee from the Seattle store to Chicago was expensive.
• The rent was higher in Chicago.
Management addressed these issues as they arose. “The company solved the problem of freshness and quality assurance by putting freshly roasted beans in special FlavorLock bags that used vacuum packaging techniques with a one-way valve to allow carbon dioxide to escape without allowing air and moisture in.” (Thopmpson, Petrefaf, Gamble, Strickland) They chose to offset the more expensive rent by raising prices. You would think that they would lose customers however; once they caught on to the taste they were hooked. This could have been a really risky venture, especially with the obstacles Starbucks encountered. They found the solutions, and were so successful in Chicago that they opened their next store in Los Angeles, California in 1991. Their

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