Mae Warnagiris
ACC 495
November 30, 2014
Dr. Susan Ferrell
Starbuck’s Mergers & Acquisitions; a Winning strategy for sustainable success
Abstract: Developing a business strategy that employs a winning combination of factors is a challenge for most businesses. However, finding the right mix can lead to long term sustainable growth and profit. For many companies a key component in their mix is an aggressive expansion strategy customized with mergers and acquisitions. Starbuck’s is no exception, the Starbuck’s we all know began from a merger, and grew to the giant it is today by an excellent strategy including several partnerships and acquisitions.
A company’s business strategy can make or break a company, determining long term success and growth or flash in the pan success. One of the leaders of a winning business strategy is Starbuck’s. They have proven by their longevity, financial success and brand recognition that they have what it takes to make it long term. The company culture is brilliant, promoting a sustainable advantage by attracting and keeping good employees, making it an attractive place to work, and passing their passion on to their customers, making it a staple for many consumers. Starbuck’s has continually grown adapted and fostered sustainable working relationships across the globe. But one of the biggest keys to their continued success is not only their aggressive expansion but also the mergers and acquisitions they have undertaken in the last several years. No one could have imagined that a company with such a modest start would become such a corporate giant.
Starbuck’s began in Seattle, WA in 1971 as a premium coffee roaster and retailer when three men, English teacher, Jerry Baldwin, History teacher, Zev Siegel and writer Gordon Bowker decided to share their love of coffee with the people of Seattle. The operating was running well with high quality roasting standards the men were able to sell their premium beans as well as coffee products, such as coffee and espresso makers in their Pike Place store. By 1981 their success prompted Howard Schultz, Vice President and Manager for a Swedish kitchen appliance maker to take notice of the high sales of his products and visit the store. Within moments Schultz was enveloped with the passion of Starbuck’s and driven to become a part of the Starbuck’s team. Schultz was mesmerized not only by the superior coffee, atmosphere of the location but most importantly the philosophy that the company held so passionately. He could see their passion not only in delivering the premium coffee but also in educating their customers to be coffee connoisseurs. “Schultz recalled, “There was something magic about it, a passion and authenticity I had never experienced in business.” (Thompson & Shaw, 2010)
Schultz had a vision for Starbuck’s and wanted to come aboard and launch an aggressive expansion. After several failed attempts at joining the Starbuck’s team, Schultz was hired in 1982 as the head of marketing and retail stores. He engrossed himself in the retail operations and learned as much as he could about the company, the philosophy, the roasting process and coffee in general. In 1983, Schultz to a trip to Milan, Italy that would make Starbuck’s history; while in Milan he discovered the Italian coffee bar, the culture and the range of coffee drinks. He felt Starbuck’s had to step up and create the same experience for its customers in the United States. He met great resistance with the owners of Starbuck’s and after much persuasion convinced them to let him give it a try with a small corner of the sixth store in downtown Seattle. The sales exceeded even Schultz’s expectations, however even with the success Baldwin did not want to pursue the project.
Shortly after Schultz left Starbuck’s and started Giornale, but in 1987 when it was announced Starbuck’s was going to be sold, he knew he needed to acquire it. He purchased Starbuck’s for
