The Value Chain Analysis Of Starbucks

1473 Words 6 Pages
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
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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.
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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

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