The Value Chain Analysis Of Starbucks

Great Essays
Starbucks Corporation is an American coffee company and coffeehouse chain. Starbucks was established in Seattle, Washington in 1971 by Jerry Baldwin, Gordon Bowker and Zev Siegl. To begin with, the three partners only sold roasted whole coffee beans, and it was not until they sold the company to employee Howard Schultz in 1987 . Schultz, still the Chairman and CEO of Starbucks.
Value Chain Analysis
Michael Porter states that getting competitive advantage can be achieved through analysis of the company’s value chain. A company’s value chain is a system of interdependent activities which are connected by linkages.
The value chain is included in the company’s larger stream of activities, which are connected when one activity affects the effectiveness
…show more content…
Value Chain at Starbucks: Inbound Logistics
In order to deliver on its promise to customers of offering products at everyday low prices at its stores, Starbucks utilizes economies of scale in its inbound logistics activities by having excellent supply chain methodology that involves negotiating globally with managers negotiating with and developing strategic alliances with vendor partners for products.
1. Transportation
Transportation was planned by reducing costs and improving efficiencies. As part of that effort, the sourcing group worked on identifying the cost drivers were increasing. The contracts we had was to paying the prices, and the shipping costs, by breaking items down by ingredient rather than just purchase price. Starbucks built more effective 'should cost' models, including benchmarking ingredients and processes, which showed that the company could negotiate better prices.
2.
…show more content…
Human Resources
Starbucks has a strong commitment to investing in their employees, which they feel is their greatest competitive advantage.
The Company values its employees and considers them as important stakeholders in the business.
Compensation plans such as performance bonuses and employee stock ownership plans help in retention of employees as well as recognition programs and emphasizing an open-door policy with management.
3. Technological
Mobile Order & Pay allows Starbucks customers to order in advance via an app and pick up their order from their chosen location, thus eliminating queues and making coffee-to-go even more convenient.
Stores has been designed to act as a theatre in order to showcase an experiential coffee experience.
Spotify and Apple Music, an attempt to create a next generation music ecosystem.
Wireless charging in stores is also being trialled in the US, thanks to a partnership with Duracell Powermat — sure to become a big draw for many customers

4. Firm Infrastructure
Company-operated restaurants
This segment includes revenues from company-owned restaurants. The company-operated restaurants entail SBUX managing every aspect of the store. The segment accounts for more than 79% of Starbucks

Related Documents

  • Improved Essays

    Starbucks Research Paper

    • 1847 Words
    • 8 Pages

    C.E.O Howard schultz provides informative and strict training regimen to properly train and educate employees to provide excellent customer service. He has provided benefit programmes and stock options for employees which encourage productivity. This keeps employees happy and looks after their welfare which is an important and constantly argued point of MNC`s. Market strategy: Gaijin Pot, (2011) explains starbucks change their stores according to their customers within that area. e.g In the metropolitan area customers like to come alone and for longer periods of time, so they have made their seating arrangements more flexible.…

    • 1847 Words
    • 8 Pages
    Improved Essays
  • Improved Essays

    Marketing Model Starbucks

    • 1287 Words
    • 6 Pages

    In addition, Starbucks use the main places such as cafes, online store, Starbucks app, and retailer to distribute the products. For instance, when company use main places such as online store it can help the customer to reduce time to order the food or products from this firm. Therefore, it can help to increase a customer satisfaction. Besides, Starbucks App can help the firm to promote about the merchandise item that firm produce to customer. Thirdly, promotions is very important tool to advertise the product to the customer.…

    • 1287 Words
    • 6 Pages
    Improved Essays
  • Improved Essays

    ➢ Low switching cost. Porter Five force analysis model indicates that substitutes have strong potential to negative impact Starbucks Coffee’s business Starbucks customers can easily shift to substitutes because there are many substitutes such as beverages from restaurants, bottled beverages and other good from grocery stores. As Starbucks has Partnered with several firms to extend its brand into new categories’ For example it joined with PepsiCo to sump the Starbucks brand on bottled Frappuccino drinks Marked in a joint venture with Brayers, Starbucks ice cream is now the leading brand of coffee ice cream. Moreover at the same time it is trying to squeeze more business out of its regular coffee shop, Starbucks is also examining new store concepts. In Seattle, it is testing Café Starbucks; A Europeans style family bistro with a menu featuring everything from huckleberry pancakes to oven roasted seared sirloin and Mediterranean chicken breast on focaccia.…

    • 751 Words
    • 4 Pages
    Improved Essays
  • Great Essays

    The Starbucks Corporation and its successful marketing strategies are definitely something that anyone interested in business can learn about. Their marketing strategy emphasizes on the quality of their products. Yes, the price is slightly expensive than others but it is guaranteed that the customers will be served with only the best ingredients, all for the satisfaction of their customers. Customer satisfaction is a very important issue with Starbucks. From the moment you enter the store to the very last drop of your coffees, it is a must that customers feel the uniqueness of enjoying their Starbucks coffee experience.…

    • 1889 Words
    • 8 Pages
    Great Essays
  • Improved Essays

    In order to reflect the company’s organisational culture, it creates a warm and friendly atmosphere. Starbucks focuses on a premium customer experience so their layout strategy does not expand space utilisation for tables and seats. The café therefore offers more leg space but it’s premium products are at a higher price - Starbucks holds customer experience over space usage. Job Design and Human Resources: Organisational culture is incorporated in all aspects of the business under Starbucks’ human resource management. At the cafés, the company uses work teams of baristas, as they care about their Starbucks workers.…

    • 1210 Words
    • 5 Pages
    Improved Essays
  • Great Essays

    This famous coffee chain uses an Oracle Siebel CRM service by way of its loyalty scheme that is connected to the Oracle ERP policy. This made Starbucks have large data and numbers secured in one system specially its point of sale data to increase vision and streamline determinations. For the reason that there are many divisions especially in the Middle East Area, Starbucks aims to have always its systems running and connected to be aware of how its operation going. Likewise, it facilitated knowing the customers’ average spending time in their store in order to improve their experience and make them stay more in the store. Most specialists decided that placing the systems in the main phase for a business will lead to a healthy practice and sustainable business.…

    • 1149 Words
    • 5 Pages
    Great Essays
  • Improved Essays

    They are used to identify the appropriate group of people among the general public as future customers for the business. From this information they target that segment of people by positioning products and services that are in their wants and needs. Meaning segmentation, targeting and positioning is to decide who to sell to and from that decide how to positon products and services accordingly. Starbucks Coffee uses the following types of positioning: ♣ Mono segment positioning. Starbucks targets the premium customers segment of people who are willing to pay extra for the quality of their products and services ♣ Adaptive positioning.…

    • 1273 Words
    • 6 Pages
    Improved Essays
  • Great Essays

    Starbucks Supply Chain

    • 1351 Words
    • 5 Pages

    Starbucks is continuously analyzing consumer’s trend in order to bring its innovative products to the shelves, since research shows that most of the coffee is still consumed at home. Michal Conway, president of Starbucks Global Channel development said in April 21, 2015 “Some of our grocery spaces pull through design elements from Starbucks stores… It’s like a mini store with design features like a pendant light, tile backsplash, a counter that mimics the hand-off plane – signal a unique experience.” Furthermore, Starbucks has also been working with retailer such as Wholefoods to add its Evolution Fresh and La Boulange bakery lines (that was initially acquired to supply its own stores) to the supermarket’s shelves. My Starbucks Reward loyalty program is an ingenious form to link the channel development-customer – retail function of the supply chain. Through this program, “customers earn Starbucks stars – redeemable for free beverages and food at Starbucks retail stores – when they purchase Starbucks-branded products in CPG channels”. This is another element that Starbucks has implemented in order to increase and maintain customer’s…

    • 1351 Words
    • 5 Pages
    Great Essays
  • Improved Essays

    The above-mentioned functional activities are the reason why Starbucks thrive and stay competitive because they knew what their customers want and need: coffee and adjacent products that complements their coffee and retailing the same coffee beans, coffee machines and other products they used in making their drinks. Does Starbucks care for their customers and financial needs? Not only Starbucks served best coffee and drinks to their customers, they are also known to be responsive to their customers need and want, that is why they charge premium for their drinks and coffee. This above-statement is reinforced in our textbook that says, “the more desired product attributes a company’s value chain builds into its products, the higher the price that must be charged to cover the costs of developing and making the product” (Jones and George 278). Based on the above-mentioned, we can say that Starbucks really care for their customers, but how about the premium price they charge for their drinks?…

    • 800 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    When this disastrous event happens, Café Direct is willing to provide the money to help them produce coffee again. Since they are promoting a new organic coffee that is more expensive, the objective is for the producers of Machu Picchu to receive a higher income. This company eliminates “the middle man” and has a direct connection with everyone that is working with the product. Café Direct also wants customers to be fully aware of what they are putting into their supermarket…

    • 1080 Words
    • 5 Pages
    Improved Essays