MGT3009: Report on Starbucks International Supply Chain Strategy

This report provides a comprehensive analysis of Starbucks' global supply chain management. It begins with an introduction to supply chain management and then discusses Starbucks' international strategy, including international, standardization, localization, and transactional strategies. The report then examines Starbucks' global supply chain strategy, its strategic fit with the international strategy, and critically analyzes the elements of its supply chain, such as facilities, sourcing, inventory, transportation, and distribution. Furthermore, it delves into Starbucks' global distribution network design, offering recommendations for improvement. The report highlights the importance of adapting supply chain strategies to meet the demands of a global market and concludes by summarizing key findings and providing references.

Report on Coffee Shops
Starbucks

Table of Contents
INTRODUCTION ..........................................................................................................................4
Main Body.......................................................................................................................................4
Discuss international strategy.....................................................................................................4
Global supply chain strategy along with its strategic fit with international strategy..................6
Critically examine the elements of supply chain........................................................................7
Global distribution network design of Starbucks........................................................................9
Recommendation.......................................................................................................................11
CONCLUSION ............................................................................................................................11
REFERENCE.................................................................................................................................13

INTRODUCTION
Supply chain management refers a function to make product and service available to the
end user at right time. It is a wide concept which comprises several activities from the
conversion of raw material to the distribution of end product & service to customers (MORO,
2019). The present report is about Starbucks that is a multinational organization based on
America. It owns substantial chain of coffee-houses at international level. The report renders a
detailed overview regarding international strategy and its strategic fit with global supply chain of
company. It comprises different elements of supply chain management and their association with
each other. Lastly, some appropriate recommendations are also given in the report for further
enhancement .
Main Body
Discuss international strategy
Internationalization is really crucial for organizations to expand business in different
countries. As per the current trends, it is essential for a company to explore operations at
international level to ensure long term sustainability at market place. For this different strategies
are discussed as under:
International strategy: It is a strategy that is prepared by managers to expand business
across the globe in different countries. It requires detailed assessment of resources, market
dynamics, environment, competition prevailing within international market place. Nowadays, to
sustain in market for longer run, it is vital to expand business (Chang, 2020). In addition,
internationalization also helps to enhance the presence of brand in different countries that further
provides higher competitive advantage, With this, organization is able to serve domestic as well
as global audience that will provide substantial opportunities to earn potential profit margin. In
context of Starbucks, they are using international strategy through opening outlets in different
countries worldwide.
Standardization strategy: In this, organization assume whole world as single market
place thus provide similar products and services to the audience of different countries. Here, they
standardized their product in such a manner that it will be able to cater the needs & requirements
of domestic as well as international customers. This strategy is based on the assumption that one
identical product can fulfil needs of people across different locations. Under this, managers enter

into global market place but do not add any new variant in existing product and services as they
keep it standardized. In case of Starbucks, managers use standardization in order to develop
reliability and trust among customers so that they get the similar experience at each and every
outlets of organization in different countries.
Localization strategy: It is a crucial strategy that is used by several companies in order to
meet with needs and desires of international audience in significant manner (Luo and Zheng,
2018). Here, managers undertake extensive market research before entering into new market
place with an aim to get detailed information regarding culture, values, buying behaviour of
customers. In this, they emphasis to make appropriate changes in their product & services to
ensure sustainability in the environment of different countries. It is analysed that Starbucks takes
extensive market research regarding culture, preferences of local audience before start their
outlet. They design menu, interior, ambiance to address the desires of local customers but do not
compromise with core product. Localization strategy of organization includes a creative store
design along with mix of local products in order to grab the attention of local audience.
Transactional strategy: Here, organization simultaneously run business in different
countries at global level. Main aim of this strategy is to earn higher sales as well as profit margin
by exploring business operations in different countries at global level. Here, different franchise,
international branches are managed and control by headquarter of organization (Wang and
Ghauri, 2020). Policies are also determined by higher authorities that are applicable on different
branches at global level. It is essential to have uniformity and better co-ordination. In regards of
Starbucks, it uses transactional strategy by opening franchises in different nations world wide
with an aim to enhance the presence of brand.
With above stated points, it is analysed that transactional strategy is seems to the most
suitable strategy for Starbucks as it will help to explore business worldwide. In addition, market
research is the key function of entity that is essential to take appropriate decision of business
expansion. It is analysed that organization is moving from one to another strategy of
internationalization. At initial level, they were adopting localization by making modification in
core product as per the culture of different countries. Over the time, they emphasis to provide
similar experiences to all their customers regardless country so they focus on standardization
under which no variations will be done in core product. Therefore, Starbucks adopt different

strategy to explore operations worldwide and also undertake extensive market research in order
to ensure long term sustainability of business.
Global supply chain strategy along with its strategic fit with international strategy
Supply chain management is a crucial function of every business that is undertake to
ensure timely availability of products & services to end users. It is essential to provide value as
well as experience to customers that further provide an edge to company over other competitors.
There are several organizations that are working at global level thus the concept of global supply
chain is really important to follow to maintain proper supply of goods for international as well as
domestic audience.
Global supply chain strategy
It refers to the planning to maintain whole supply chain in such an efficient manner that
will help to generate optimum level of customer satisfaction. Effective approaches of global
supply chain management help to provide products to end users in minimum cost. In addition, it
is also crucial to meet with demands of customers of different countries in timely manner.
Further, there are several individuals such as manufactures, suppliers are integrated with each
other so that goods can be provided to target audience at right time (Sáenz, Revilla and Acero,
2018). It also comprises activities of conversion of raw material into finish goods that is essential
to provide final product to consumers. Here, proper resources, technologies should use by
managers in order to maintain whole process effectively.
It is analysed that there are different approaches such as lean production, Just in time are
used for appropriate supply chain management. These technologies are helpful to reduce down
overall cost of production that will further help company to earn adequate profit margin (Kodzi,
2019). In context of Starbucks, it adopts vertically integrated supply chain strategy in order to
ensure timely delivery of products to end users reside at different countries. With this,
organization ensures involvement in each and every step of supply chain from purchasing of raw
material( beans) to the distribution of end product. Managers are involve in every single step of
supply chain that is essential to provide goods to customers in minimum possible cost. It is
analysed that they are operating business in nearly 76 countries at 30000 locations worldwide.
This presence make organization enable to meet with demands of consumers in timely manner.
In 2008, company make some necessary changes in existing supply chain. However, with large
presence, they were able to meet with the needs of customers in timely manner but on another

side it was increasing operating cost. So, managers analyse the requirement to make some
changes in present strategy so that they will be able to respond market demand in cost effective
manner. For this, they start to cut down operating expenses so that company can earn sufficient
profit margin. Therefore, supply chain management of Starbucks is effective and they make
appropriate changes overtime to address the needs of customers in an efficient and cost effective
manner.
Strategic fit of global supply chain with international strategy
International strategies are adopted to expand operations within different locations. It is
analysed that there should be effective association between global supply chain and international
strategies. It is essential to attain organizational objective to serve customers in better manner. It
is monitored that Starbucks has been expanded business at global level thus managers are
required to maintain proper supply chain and logistic management strategies in order to fulfil the
demand arise at global market place (Snell and Lemley, 2017). To survive at international market
for longer run, it is essential to prepare appropriate strategies to meet with future situations such
as sudden rise in demand. It is analysed that Starbucks has expanded business but they were not
able to manage the cost. Thus, they had to make necessary changes in existing approaches of
supply chain to bring efficiency within organization. Therefore, managers are required to make
proper strategies so that they will be able to address the requirements of customers in timely
manner. There is great association between global supply chain and international strategy as
organization is required to maintain effective supply chain in order to meet with demands of
global audience. It will provide higher competitive advantage to organization and will also help
to address future uncertainties in right manner.
Critically examine the elements of supply chain.
Supply chain management refers to considered all flows of goods / services that involves
all process which converts raw material into finished goods. In which it includes various
elements in order to supply goods to consumers. Some of elements are as follows:
Facilities : The term facilities in supply chain management includes all those place where
operating unit are organised as well as warehouse where all production units are stored like
processing centres, distribution centres and even office since information is manipulated in order
to move and track the product or services (Laari, Töyli and Ojala, 2017). In context of Starbucks

it is vital to pass all information to all members of each department of product such as to
inventory manger, logistic or supply manger for the smooth running of all business operations.
Sourcing / procurement: Suppliers plays essential role in supply chain management.
Product/ services sold are made of up different sources of raw material. Hence it is important to
buy suitable quality raw material at cost effective rates. If the suppliers are not able to supply on
time within stipulated budget then business will bound to suffer a huge loss and gain negative
reputation. Procurement seen as helping to streamline process as well as reduces the raw material
cots and determines better sources of supply. In context of Starbucks, the agents of company
travel to Asia, Latin America and Africa in order to procure high grade raw material for brining
the finest coffee for their consumers (Rebs, Brandenburg and Seuring, 2019). The agents
establish strategic relationship and partnership with the suppliers in order to build
reconnaissances and communication related to standards of company. High quality standards are
kept up with direct involvement of firm, from initial point to section point of coffee beans with
references to Starbucks.
Inventory: The term inventory refer to controlling, overseeing purchases from suppliers
& consumers, maintaining storage of stock, controlling the amount of product for sales and order
fulfilment etc. all comes under inventory. In supply chain management it is essential that an
inventory is kept and maintained thoroughly. Inventory means the ready list of all item such as
raw material and other necessary resources that are required for production. This list needs to be
updated on regular basis in order to demarcate the available stick and the required stock.
Inventory management is a crucial function in supply chain management because without
appropriate inventory management the sales and production is not possible. In context of
Starbucks corporation, their inventory management needs to may more attention towards this
components as it directly effects the supply chain.
Transportation and distribution: The term transportation / distribution refers to carrying
out raw material to manufacturing unit and delivering the finished goods in to the market. At this
point the delivery of goods on time is very mandatory in order to sustain smooth running of
business operations. If it will not carried out then company may faces loss in term of financial as
the stick in warehouse will increase and the warehouse charges will goes higher (Moktadir and
et.al., 2018). If entities of company will pay attention towards this components and take good
care of that then it will offers various benefits from production & transportation of their goods on

time. So it become vital to transfer secure and safely. In context of Starbucks, their transport
management needs to ensure that there will be zero % damage and minimal loss in transit.
Information sharing: In supply chain management flow of information plays vital role in
order to become successful it become crucial that a business stays informed with all the
information about various aspects of their production. If entities of company have proper
information, then they will able to understood the market trends of supply and demand about a
particular product and will able to timely disseminated through various levels of business.
Information is crucial in a knowledge based world economy and if it is got ignored then there
may be chances of spell doom for prospects of business. With relevance to Starbucks, they
always shares information to all individual of all outlets in order to carry out all function
effectively. By this the conflict will also eliminates and there will be smoothing running of
business.
Global distribution network design of Starbucks.
Global supply chain distribution refers to supply of goods or services throughout a
transnational companies global network in order to maximize the profit and minimizes the
removals. It includes mainly six main areas such as logistics, competitors orientation, consumers,
supply chain coordinator , supply management and the operation management (Xu and et.al.,
2020). And all these are divided into four categories i.e. marketing, logistics, supply management
and the operation management. In which a successful global supply chain requires complying
with various international regulations set by a variety of non- governmental companies.
Additionally, it is also vital to have proper relation with among function or elements of supply
chain.

In context of Starbucks, the connection of all five element with each other of global
supply chain distribution is very essential as if the stock in inventory is maintained properly then
there will be smoothing running of procurement process. If the magnate team of inventory and
determination of transportation policy are normally carried out by various groups of peoples in
the company. These activities interact when transportation is used in order to replace the
inventory and when transportation alternatives have different speed relatability and cost
characteristics. In distribution network the initial element that comes is planning which includes
all planning that are needs to effectively carried out all function or operation in smooth way
(Brinch, 2018). Then production of product or services is carries out which requires raw material
and that is carried out with the help of transportation process in which some of the raw material
is stored for future product as there is possibilities in which problem may occur such as cost
increment of raw material that time it become useful to store some raw material in warehouse.
After that supply of goods from production unit is carried out. In which management team of
production store some of produced unit in warehouse as it is not possible to produce a large
amount of product instantly so it is vital to store some stock for future safety. So that time

inventory aids company to store the manufactured units. Then supply of product or services id
carried on the demand basis and that is again carried out with the help of transportation process
at this point it is important to ensure that there will be 0 percent loss during transportation in
order to reduce the cost (Jia, Gong and Brown, 2019). With relevance to Starbucks, their
production team initially procure the raw material from various nation in order to lower the cost
and purchase finest coffee bean for their consumers. And then produces wide variety of coffee
products for meeting the needs and demands of consumers. After production they transfer their
product from one place to another at various location of Starbucks outlets with the help of
logistic team. All these are the factors which affect the smooth running of business operation if
entities will not considered any of element.
Recommendation
By effectively analysing the supply chain strategy, it is possible to neglect the gab that
may be arises in between succession and planning like supply chain are leans, cost effective and
dependable. If the entities of company wish to ensure that their supply chain coasts sty low while
the process remain reliable then it is important to re evaluate the supply chain management
strategy along with goals and planning of company.
Another recommendation for improving supply chain management could be elimination
of data silos. A data silos is a situation in which one or group of users has access to info that are
required by multiples users or group. In order to run a lean supply chain, it can be acts as
adverse, if demand planner, supply chain manager and procurement agent will not assess the
same information.
Goods supply chain management requires planning about suppliers and other factors such
as location so it is important to have a demand planner within company. So it will help out in
order to meet the demands of consumers on time.
CONCLUSION
From above discussed report it has been analysed that global supply chain management
play vital role in a company as it reduces the freight costs, shipping time, improved risk
mitigation as well as help entities of company in determining the areas where they faces
problems. Additionally, it improves the quality of control and keeping up the demands. For
successful execution of all these, it is important to selects appropriate international strategy and

for this assignment translational strategy is selected as it permits company to open their
franchises at various location. Apart from this, a supply chain management includes various
elements such as inventory, distribution channels etc. in order to manufacture and transport the
goods to consumers.

REFERENCE
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