Operations Management and Service Excellence: Starbucks Report

This report undertakes a comprehensive analysis of Starbucks' operations management and service excellence, beginning with an introduction to the core concepts. Part A provides a comparative Four Vs analysis of Starbucks and Greegs, evaluating their volume, variety, variation, and visibility. It then delves into a comparative performance objective analysis, examining cost, speed, dependability, quality, and flexibility. Design analysis assesses the impact of design on customer service processes and store layout. Part B offers an overview of Starbucks' operational area, focusing on planning and control. The report explores Starbucks' global operations strategy within its macro environment, identifies key requirements, capabilities, and challenges. It includes an analysis and evaluation of operational areas and concludes with recommendations for the company. The report highlights Starbucks' strategies, including expanding into untapped areas and launching innovative products, to increase market share and customer segments.

Operations
Management and
Service Excellence

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
Comparative Four Vs Analysis..............................................................................................1
Comparative performance objective Analysis........................................................................3
Design Analysis......................................................................................................................6
PART B............................................................................................................................................7
Overview................................................................................................................................7
Starbucks global operations strategy along with surrounding macro environment...............8
Key requirements, capabilities additions to challenges..........................................................9
Analysis as well as evaluation of operational area...............................................................10
Recommendations................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
The management area involved in the practices related to designing and controlling entire
production procedure for converting materials into useable or valuable commodities is described
to operations management (Bell and Orzen, 2016). Likewise, service excellence is defined to the
mechanisms that delivers customer expectations as well as fulfils unmet desires in slightly higher
manner. The present assessment is prepared by considering Starbucks that is multinational
beverage entity that serves huge proportion of customers on day to day basis. The global
practices of the organisation are dependent on services that are provided by number of global
partners and worldwide network of licensed Starbucks cafes addition to franchises.
The assessment is prepared in two parts wherein PART A discusses about Four VS
Analysis among two organisations, analysis of performance objectives and analysis of design of
both companies. Further, PART B engrosses overview of key operational area, organisational
global operational strategy, key challenges, capabilities and requirements. Moreover, operational
are is evaluated and some recommendations are provided to the company.
PART A
Comparative Four Vs Analysis
Four Vs Analysis is the framework that involves four elements which are essential for an
entity to differentiate itself from others. With these elements, an organisation transform scare
resource towards producing valuable products for the purpose of attaining effectiveness in the
operations (Brown, 2017). The analysis efficiency among two companies such as Starbucks and
Greegs is stated through Four Vs profile Diagram that is below:
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As per above diagrams, it is said that 4V’s are Volume, Visibility, Variety addition to
Variation that are important in operational context of Starbucks and Greegs. The definition of
each is as follows:
Volume: Dimension of volume is described as physical number of items produced in
business. High output volume shows repeatable operations because of procedure familiarity. In
this, specialised manpower along with machines are evidence of maximum operational
efficiency.
Variety: Dimension of variety refers to distinct activity types that are performed in
processes of transforming inputs into effective commodities (Campbell, Jardine and McGlynn,
2016). It also encounter additional operational complexities and match customer requirements to
offered commodities.
Variation: Dimension of variation is defined to slight differences as well as random
variables that are uphold in organisational offerings. In this, procedures are easier to manage at
the time demand is predicable and resources are used effectively in entire operational aspect.
Visibility: Dimension of visibility refers to the proportion of operational processes that
the clients really experiences. In context to an organisation, customers experiences little of the
operational process but they enjoys outputs a lot.
Basis of
differentiation
Starbucks Greegs
Volume Starbucks offers wide volume of
specialist items in beverage industry
and produces huge number of same
things. It serves wide variant of
coffee at high quality for meeting
Greegs is specialised in producing
high volume of savoury products to
meet demands across the globe. The
company produces products in more
volume than that of Starbucks
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demand of whole nation. The entity
sells approximate of 8.2 million cups
of coffee in a day (Gong, 2015).
because of having more
commodities and also demand for all
that motivates the employees to
generate huge production volume.
Variation The coffee of Starbuck is mostly
preferred by customers. In this
context, the company offers huge
variations of tastes in its coffee at
different locations across the globe.
All the products of Greegs are
demanded by customers across
nation. In this, the company offers
limited variety in particular
commodity and focus more in
increase the sales demand of
available items.
Visibility At the stores of Starbucks, operations
of producing coffee and other
products are easily visible to
customers while making orders.
The operations performed at Greegs
are less visible to customers. It is
because the company produces
products at different premise and
offer them at their outlets.
Variety Starbucks has limited product
variety. It is so the company is well
popular for coffee and only focuses
on offering variants of coffee. Other
then coffee, some of its main
categories are tea, smoothies, baked
items and frappuccino.
Greegs offers large variety of
savoury commodities in market. It is
specialise in sandwiches, bakes,
sweet items, vanilla slices, sausage
rolls and doughnuts (Heizer, 2016).
Comparative performance objective Analysis
For comparing existing operations performance among Starbucks and Greegs, polar
diagram is mapped that is as follows:
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From above polar diagram, it is said that non dotted maroon colour line represents
operational performance of Greegs and dotted red line represents performances of operations of
Starbucks stores. As per this, it can be stated that the markets in which these companies executes
operations are different and both have distinct positions in the market. For these companies, it is
necessary to maintain five dimensions as stated in polar diagram that are speed, flexibility,
quality, cost and dependability (Ivanov, 2018). The elements are as defined in detail:
Cost: The element that is concerned with monetary amount which an organisation has
spent in its operations to accomplish performance objectives is defined as cost. According to cost
objective,
Speed: The elapsed time among request from customers for the commodities or services
and receipts to them is said as speed. Entities also have performance objectives for speed that is
to deliver demanded goods to customers as soon as they make orders.
Dependability: Dependability is described as doing things as per the promises made to
customers on time. It is perceived that customers judge dependability of operations after
experiencing the offered commodities.
Quality: It is defined as consistent confirmation to expectations of customers. It has huge
influence on satisfaction as well as dissatisfaction on customers. Companies set performance
objective of quality in order to provide best quality of offerings that meet customer expectations.
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Flexibility: Flexibility refers abilities to change operations and the mechanisms they are
doing to respond uncertain circumstances. Operational performance objectives are to meet
flexibilities in product, volume, delivery and many more.
The comparison between companies such as Greegs and Starbucks on the basis of
operational performance objectives are stated below:
Elements of operational
performance objectives
Starbucks’ store Greegs
Cost In case with Starbucks, it has high
costs effectiveness because the
products are offered as per
purchasing capacity of customers
(Jaca and Psomas, 2015).
In context to Greegs, it is seen
that the cost effectiveness is low
because the targeted population
of the company are rich people
who can afford its high prices.
Speed Starbucks deliver its products at
normal speed as the company is
more dependent on its
international partners that are
network of franchises together
with cafe stores.
Greegs has effective distribution
system which delivers
demanded products by
customers at high speed.
Dependability Starbucks’ sale of coffee cups are
more dependent on its opening
hours, availability of products,
keeping reasoning time of queue
and partners working.
In case with product sales of
Greegs, that are largely
dependent on distributors and
suppliers as distributors deliver
commodities and suppliers
provide raw material for further
production (Johnston and
Marshall, 2016).
Quality Starbucks has expertise in
preparing high quality of coffee
cups and other products as
effective performance operations
are opted by the company that
Greegs has productive and
competent workforce that
determines standards of quality
at which commodities will be
produced and also checks them
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ensures working with quality
standards.
time to time that states that more
focus is given on quality by the
company.
Flexibility Starbucks fails in working or
adopting changing scenarios in
external market because of which
its flexibility within performance
operation are generally low
(Mahadevan, 2015).
Greegs execute operations
through adopting external
changes through forecasting
future and making remedial
actions in case when some
uncertain situation occur that
states it has high flexibility in
performance of operations.
Design Analysis
It is defined to systematic course of developing and analysis designs. This is widely used in
companies as customers are attracted towards designs of organisational stores and make
purchases for the commodities offered. This leads to improving productivity addition to
profitability through developing design of stores for performing different operations effectively
(Nicholas, 2015). As per Four Vs Analysis and Performance Objective Analysis, the influences
of designs of different aspects are underneath:
Impact of design on customer service process
Starbucks: Administration of Starbucks executes multiple operations by considering Four
V’s along with performance objectives in different stores. This impacts on increasing customer
base through attractive design or layout of stores. With this, company is influenced positively as
the marketers properly recognises demands of customers and provide information to
organisational managers in order to make attempts for accomplishing operations via suitably
designing customer services (Pasian, 2015). This assist entity to maintain flexibility in
performance objectives to keep sequential orders along with providing coffee in accordance with
taste to make customers satisfied and enhancing customer base. Moreover, Starbucks managers
also opts high end technological mechanisms to produce coffee and deliver them in faster
manner in order to add values within customer services.
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Greegs: Greegs managers majorly focus towards availability of commodities at the time
customers demand its savoury items that impacts in customer attractiveness as well as enhancing
design process. The company executes operations with the help of suppliers to obtain high
quality materials and delivery systems to make timely delivery that impresses customers
resulting towards impacting positively on designs for service processes. Furthermore, the entity
has effective design process team that operate entire tasks successfully and make changes in
procedures to produce products to meet customer demands that leads to make service procedures
better.
Impact of design on store layout addition to flow
Starbucks: In Starbucks, all the layouts of stores are well designed that help management
system in maintaining effectiveness within all operational practices. In the production unit of the
coffee company, all the machines and techniques are placed in sequential manner which converts
raw materials and ingredients into tasty coffee and are ready to serve to customers in least
possible duration. The stores of the company have large spaces for customers to enjoy variants of
coffee and experience the refreshing surroundings.
Greegs: Greegs has store layout in which all its offering are displayed on large screens and
with this customers makes orders for their needed commodities. Moreover, the management
team effectively handle entire trading operations for maintaining flow of items in international
market (Pheng and Meng, 2018). With this, the organisation gains success in achieving
competitive edge within confectionary industry.
PART B
Overview
The operational area in case with Starbucks is largely related to planning and controlling
wherein all the manpower of the coffee company emphasis on properly planning all business
operations and controlling obstacles or issues in path of success. The scope concerned with
planning and controlling within Starbucks operation is high as this assist in attaining competitive
edge in the industry and acquiring growth or objectives in stimulated duration. With effective
planning and controlling, managers of Starbucks set standards or benchmarks for the operations
and execute strategies while errors arise. It is analysed that the performance of the entity is
closely linked with planning addition to controlling as through these operational areas, all the
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high operational performance are acquitted on time and programmes are planned effectively.
Moreover, deviations are also controlled among set performance and actual outcomes that
resulted in making huge income (Prajogo, Oke and Olhager, 2016).
Starbucks global operations strategy along with surrounding macro environment
Starbucks is well popular enterprise within confectionary sector and has made huge
number of development in pat duration. In context to its global strategy, the managers emphasis
on expanding into untapped areas through launching innovative confectionary items across the
globe. The main objective behind the strategy is to grab larger proportion of market shares and
enhance segments of customers. Further, it is said that operational area that is planning and
controlling plays crucial role in the global strategy as with these all the guidelines, benchmarks
and procedures are planned in advance, addition to this, all the deviations and uncertain factors
are controlled for attaining effective results of the strategy.
Macro environment is external business environment that influences global strategy of a
company in huge manner (Ronchi, 2018). For the purpose of analysing the influences of the
macro and business environment, PEST Analysis is done that includes four factors as discussed
below:
Political: Different nations have different political systems which make decisions as per
changing scenarios. In case with Starbucks, it becomes quite difficult to analyse governmental
policies laid by different political systems and making sudden changes in their working that
influences its global strategy to carry out operations.
Economical: Factors like corruption level, business cycle, economic market conditions
and interest mechanisms are economic factors. For example, banks of UK are making changes in
their interest rates that influences global strategy laid by administrators of Starbucks as it
becomes difficult for the company to get loans at minimum interest rates for practicing
operations to open the store.
Social: Purchase behaviour, attitude and disposable income of an individual are social
factors that have main role in influencing global strategy of an institution (Schmitt, 2017). In
context to Starbucks, it is seen that it has to make rapid changes in the taste of its coffee as per
population of different nations like USA, UK and others that influences the strategy of expansion
in untapped areas of these nations.
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Technological: Innovation and awareness within technologies are key dimensions that
influence organisational strategy to go international. Starbucks has effective management team
that installs different techniques in context to machines and artificial intelligence in their stores
hat influences its international strategy positively for increasing sales demand in different
nations.
Key requirements, capabilities additions to challenges
In case with Starbucks, it is important to execute its operational tasks through effective
planning and controlling. For this regards, it is crucial for managers to analyse existing
requirements addition to capabilities so that all the upcoming operational areas are executes
properly (Schwarz, Hall and Shibli, 2015). By using VRIO framework, all the key capabilities as
well as requirements in context to Starbucks are underneath:
Requirements and
Capabilities
Valuable Rare Imitable Organised
R&D Skills ✓ ✗ ✗ ✗
Human resource
management
✓ ✓ ✗ ✗
Production secret ✓ ✓ ✓ ✗
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Coffee House setup ✓ ✓ ✓ ✓
As per VRIO Analysis of Starbucks, it is said that they key requirements addition to
capabilities are Coffee House Setup, R&D Skills, production secret and human resource
management. These all capabilities are valuable to company as they helps in planning and
controlling operations to attain competitive edge. The requirements that are part of rare category
or are not available to other firms includes Human resource management, Production secret and
Coffee House setup as the company made huge efforts in these. Furthermore, the imitable
capabilities of Starbucks are production secret along with Coffee House setup as rivals fails in
copy these actions. The next is organised capability that is Coffee House setup as the entire
management team emphasis in setting layout and machines in effective manner to gain desired
state.
From the past years, Starbucks has faced huge challenges and issues. Certain of them are
as followings:
 Starbucks has experienced a key challenge in its food demand because of changing
preferences of customers. Due to this, it become cumbersome difficult to plan and control
variances in its food menu (Wirtz and Lovelock, 2016).
 Starbucks also faced another challenge of labour turnover that hampers its
implementation of operations that are planned and controlling them on time.
 The company also faced issue related to marketing research in order to carry out its
planning and controlling systematically. This leads to lack of data and information for
formulating decisions for upcoming durations.
Analysis as well as evaluation of operational area
Starbucks is the company that have effective management team to manage all its
requirements together with capabilities for fulfilling unmet needs of customers along with
improving organisational productivity. In this regards, research and development skills, coffee
house setup, human resource management and production secret are certain its capabilities which
are used in carry out entire operational practices on determined duration. The company managers
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