Management accounting

Running head: MANAGEMENT
Management accounting
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MANAGEMENT ACCOUNTING 1
Table of Contents
Introduction....................................................................................................................................................2
The value chain of the operations..................................................................................................................2
Classification of the processes and activities into value-added and non-value-added..................................5
Description of an activity-based accounting system......................................................................................7
Activity-based accounting system to Starbucks under analysis....................................................................7
Conclusion...................................................................................................................................................10
References....................................................................................................................................................11

MANAGEMENT ACCOUNTING 2
Introduction
Starbucks Corporation is considered to be an American coffeehouse chain and coffee company
founded in 1971 in Seattle, Washington, United States. The company operates around 28,218
locations across the world. The company is determined to be the major representative of second
wave coffee that distinguishes itself from other coffee-serving venues (Starbucks – The Best
Coffee and Espresso Drinks. 2019). The locations of Starbucks serve micro ground instant coffee
namely VIA, sandwiches whole-bean, hot and cold drinks, full and loose leaf teas that include
Teavana tea products, caffe latte, espresso and many more. The total number of employees that
are employed within the organization is around 238,000. The revenue of the company is around
US$22.387 billion, whereas, it’s operating net income is around US$4.135 billion (Lee & Tang,
2017). The net income of the company is estimated by US$2.885 billion. The major competitors
of Starbucks are Costa Coffee, Cafe Coffee Day, McDonald, Dunkin Donuts, and KFC. In the
tea segment, the indirect competitors of Starbucks are, Tazo, Twinings, Tetley, Dilmah and The
Republic of Tea.
Therefore, the paper will help in evaluating the value chain of the operations related to the
activities and processes of value added and non-value added services. It will help in classifying
the processes and activities and will determine whether the activities and processes are value-
added and non-value added. The paper will help in describing the activity-based accounting
system of Starbucks. It will analyze whether the activity based accounting system helps measure
the cost of the activities and also helpful in the pricing strategy of the company.
The value chain of the operations
Ordering of food
Starbucks has made ordering of food easier by adding dedicated stations by which the customers
can place their order through mobile phones. These services give baristas new tablets and differ
from existing on-store registers. The mobile ordering system is regarded as a digital marketing
tool that enables customers to view new menus ahead of time (Manders, Caniëls & Paul, 2016).
Along with notification from the email or app, Starbucks generates interest in new menu items
before entering into the store. Starbucks has also enabled customers to order their food through
Amazon’s Alexa that has been assimilated into Ford vehicles.

MANAGEMENT ACCOUNTING 3