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... al 1995, specialty sales accounted for 10 % ($ 48. 1 M) of the Company's net sales. MAIL ORDER: The Company publishes a mail order catalog which offers its coffees, certain food items, and select coffee-making equipment and accessories. During fiscal 1995, mail order accounted for 3 % ($ 14. 4 M) of the Company's net sales.
LICENSED AIRPORT STORES: Starbucks has entered into a development agreement that allows Host International, Inc. to operate Starbucks retail stores in multiple airport locations. Starbucks receives a license fee and a royalty from Host and sells coffee to Host for resale in the airport stores. All airport stores operated by Host must follow Starbucks's tore operating procedures and all Host managers and employees who work in these stores must receive the same core training given to Starbucks' managers and employees. During fiscal 1995, sales from Host-operated licensed airport stores were less than one percent of the Company's net sales.
JOINT VENTURES: The Company has entered into a 50 - 50 joint venture with Pepsi-Cola Company to develop and distribute ready -to drink coffee based products. An early product of this venture was Mazagran, a lightly carbonated coffee drink. It commenced test marketing in the spring of 1995 and failed late that same year. The most recent product is Frappuccino. A cold blend of ice, milk, and coffee which will be sold with soft drinks and iced teas, where Pepsi already commands prime shelf space. Other joint ventures include the following: United Airlines has joined the ranks of Delta and Horizon Airlines in serving coffee on board.
Starbucks has also collaborated with Capitol Records Inc. , on two Starbucks jazz CDs, available in Starbucks stores. Redhook Brewery, part-owned by Anheuser-Busch uses Starbucks coffee extract in its Double Black Stout Beer. In October 1995, SBI signed an agreement with SAZABY Inc. , a Japanese retailer and restaurateur, to form a joint venture, which will primarily develop Starbucks retails stores in Japan. In another 50 - 50 deal, Dreyer's Grand Ice Cream Inc. , is distributing five flavors of Starbucks coffee ice cream to grocery freezers across the country beginning August 1996. In August, 1996, SBI signed an agreement with Bonvests Holdings Limited to open retail stores in Singapore. Just announced, October 1996, Starbucks announced an agreement with U.
S. Office Products Company (NASDAQ: OFIS) to distribute Starbucks fresh-roasted coffee and related products to the workplace through its distributorship. In addition to quality Starbucks coffee and serveware, distributors will furnish brewing equipment, condiments and other supplies, providing customers a full-service coffee experience. The Company is interested in other joint ventures with partners that can extend the brand. Although Starbucks is present on both coasts, the Company figures only 1 % to 2 % of the U.
S. population has tried its coffee. Their belief is that brand extension will gives access to new customers and channels of distribution. PRODUCT SUPPLY: Starbucks depends upon both its outside brokers and its direct contact with exporters for the supply of green coffee. Coffee is the world's second largest traded commodity and its supply and price are subject to volatility. Coffee of the quality sought by Starbucks tends to trade on a negotiated basis substantially higher than commodity coffee pricing.
Supply and price can be affected my multiple factors in the producing countries, including weather, political, and economic conditions. To lessen the risks associated with the increases in coffee prices and to allow greater predictability in the prices the Company pays for its coffees over extended periods, the Company enters into fixed price purchase commitments in order to secure an adequate supply of quality green coffee and fix a cost for future periods. Starbucks believes that, based on relationships established with its suppliers in the past, the risk of non-delivery on such purchase commitments is remote. Specialty foods, such as pastries, are generally purchased from local sources based on quality and price. Items bearing the Company's logos and trademarks are purchased under contract. Hardware items, such as coffee makers, are generally purchased directly from manufacturers.
EMPLOYEES: Starbucks realizes that one of their most important resources is their employees. The first guiding principle in their mission statement even refers to employees: "provide a great work environment and treat each other with respect and dignity. " Starbucks is attempting to imbued its values in the company culture. They use these values to give employees a sense of meaning to their work even if it is just pouring a cup of coffee. The people at Starbucks realize that they must treat their employees well if their company is to prosper.
At Starbucks, the employees are referred to as "partners. " Each partner (even part-time employees) is eligible to receive health care, participate in the Bean Stock program, and get a free pound of coffee each week. Under the Bean Stock program, employees are offered stock at 85 % of the fair market value four times per year. Starbucks employees also participate in a 401 (k) profit sharing plan. They may contribute to this plan on their own, and Starbucks will match 25 % of each employees contribution up to 4 % of the employees compensation.
Starbucks believes that they are in the "people development" business as well as in the coffee business. They have a non-discrimination policy with respect to age, race, sexual orientation, veteran status, or presence of handicap. They even hired a diversity manager in 1995 to improve the racial mix among their 11, 500 employees. Each employee completes an extensive training program that includes product expertise, a commitment to customer service, and well-developed interpersonal skills.
Starbucks professional baristas (coffee bartenders) complete up to 24 hours of training before entering their assigned store. This training gives them knowledge to answer any questions about coffee or the Company, and the knowledge to arrange tastings and demonstrations with any of the equipment in the store. While the industry turnover rate is about 400 percent a year, Starbucks maintains a turnover rate of only 50 percent. Due to this low turnover, Starbucks has reduced their training time and costs. Starbucks is profitable, and they believe that it is due to the value system of the Company.
Schultz compared creating a company to raising children in that "values breed success. " The employees must be taught the values and then placed in the stores. When they falter, they must be helped back to their feet. After all, employees who are happy at their job will keep the customers "coming back for more. " Peter Hopkins, a twenty-nine year old employee of Starbucks was shocked to learn that as an employee of Starbucks, he would receive health insurance, a stock plan, and be paid above minimum wage. After less than a year of working for the Company, Hopkins can attest that at Starbucks the employees "all share common goals. We all have this common belief in the product we sell. " ENVIRONMENTAL POLICIES: Starbucks's trong commitment to the environment is guided by an environment committee.
The company endeavors to offer an environmentally safe product, as it believes that the welfare of people, plant and product are linked. In the Starbucks Environmental Mission Statement: "Starbucks is committed to a role of environmental leadership in all facets of our business. We will fulfill this mission by a commitment to: Understanding of environmental issues and sharing information with our partners (employees). Developing innovative and flexible solutions to bring about change. Striving to buy, sell and use environmentally friendly products. Recognizing that fiscal responsibility is essential to our environmental future.
Instilling environmental responsibility as a corporate value. Measuring and monitoring our progress for each project. Encouraging all partners to share in our mission. " Starbucks is constantly examining every aspect of their business by looking at ways to reduce, re-use and recycle. The following are some sampling of their environmental activities: All stores are equipped with special water purification systems to insure your coffee is free of contaminants. They sell and encourage use of wear filters and constantly promote the use of brewing methods that avoid the use of paper filters: including French press, gold filters and espresso machines. All company paper products are made of recycled paper wherever possible; including paper bags and boxes, all catalogues and brochures, publications and letterheads.
Paper cups and coffee filters are made from oxygen-whitened (rather than chlorine-bleached) paper, which does not release dioxins into the environment. A wide selection of re-usable, inexpensive thermal cups are offered at all stores, and a discount is offered to encourage their use. Re-use of coffee bags is also encouraged, and rewarded with the same discount. Individual stores are encouraged to pursue recycling arrangements appropriate for their specific location. Many stores recycle milk cartons and waste paper, and several compost coffee grounds for the use of local gardeners.
They are currently exploring comprehensive, store-wide recycling programs that would include all paper goods, milk cartons, and spent coffee grounds. They are also testing bio-degradable coffee bag materials. Starbucks' policy to "recycle and conserve wherever possible" is exemplified by the 10 cent discount it provides to customers who reduce waste by using their own mugs or refillable coffee bags. Starbucks offers these discounts to help stimulate environmental responsibility amongst its customers. Inevitably, paper products are used, but Starbucks has insured that paper from their inert non-toxic, poly-lined paper cups are recyclable where state / city programs are in place. Starbucks' environmental conscience extends to its emphasis on and support of, sustainable, responsible and organic agricultural methods.
Starbucks' concern for avoidance of petro-chemical based insecticides and fertilizers is an example of how the company supports the "double bottom line" concept of stakeholder responsibility. Organic farming is not only beneficial for the environment, but protects the workers' health, as well as the safety and quality of the coffee consumed here. So far, the company has yet to offer a line of organic coffee. Starbucks buys from coffee-producing regions around the world, most of which are developing countries. According to Starbucks, their Vice President of coffee Dave Olsen has a personal relationship with the coffee plantation owners in an effort to support workers' rights as well as maintain good water quality and support smaller farms.
SOCIAL RESPONSIBILITY AND ETHICS: Social responsibility is more than simply charity. According to Mr. Milton Friedman, "The Social Responsibility of Business is to Increase Its Profits. " It may involve efforts to identify social needs as the basis for profitable activities. Most studies show that the corporation's interests are served by its being socially responsible. Many benefits accrue to the socially responsible corporation. These include better motivated employees, more loyal customers, and more supportive communities.
When these benefits are realized, one will agree that corporations should be socially responsible. Starbucks is making significant efforts to be a socially responsible company. They make contributions to local charities that focus on children, the environment, and AIDS research / support . Starbucks donates time and materials to various children's organizations and schools as well as The Children's Orthopedic Hospital, Special Olympics, Northwest Harvest, Sound Keeper, Puget Sound Alliance, beach clean-ups and numerous organizations supporting AIDS research. In addition, Starbucks makes coffee donations to homeless shelters in every state where their retail stores are located. Starbucks is also an active supporter of the arts and is involved in numerous events including the International Film Festivals in Washington DC, Vancouver, BC, and Seattle; Museum of Contemporary Art (in Los Angeles) benefits; Firs Night (a non-alcoholic New Year's Eve party in Vancouver BC) and the Chicago Jazz Festival.
Starbucks also supports Summer Jazz Cruises in Tacoma, WA. As Starbucks grows and reaches new markets, Starbucks Coffee has made a commitment to continue to be a strong supporter of local, non-profit organizations, and events in each community. During 1994, Starbucks suffered embarrassing grassroots protests because it sources beans from export houses that pay Guatemalan workers below a living daily wage, about $ 2. 50 a day. Starbucks is no worse than the average wholesaler, but it has a better-than-average reputation as a new breed, values-driven corporation. So when protesters leaflet ted Starbucks stores, and targeted its annual meeting, a peace plan was offered. In February 1995, Starbucks completed a code of conduct to do business abroad, thus becoming the first U.
S. importer in the agricultural commodities sector, to try to improve working conditions in the w...
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Research essay sample on Complete Analysis Of The Starbucks Coffee Company
