Operations Management and Service: Starbucks Case Study Analysis

This report provides a comprehensive analysis of Starbucks' operations management, encompassing various aspects of its business strategy. Part A of the report focuses on comparative analyses, including the Four Vs (Volume, Variety, Variation, Visibility) and performance objectives, comparing Starbucks to Greggs. It also includes a design analysis, examining the impact of these factors on customer service processes and store layout. Part B delves into the operational area of quality management at Starbucks, evaluating its global operations strategy within the macro environment. The report further examines key requirements, capabilities, and challenges faced by the company, providing an in-depth analysis of its selected operational area. Finally, the report concludes with recommendations for improvement.

Operations Management
and Service

Table of Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
1. Comparative Four Vs Analysis................................................................................................3
2. Comparative Performance Objective Analysis .......................................................................5
3. Design Analysis ......................................................................................................................7
PART B............................................................................................................................................8
1. Overview of the selected operational area...............................................................................8
2. Evaluate the global operations strategy of Starbucks and macro environment.......................8
3. Demonstrate the key requirements, capabilities and challenges of the company....................9
4. Analyse as well as evaluate the chosen operational area of Starbucks..................................10
5. Recommendations..................................................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES .............................................................................................................................14

INTRODUCTION
Operations management is the business practice which generate the high level of
efficiency in the organization. This process include the conversion of raw material into finished
goods. Effective operations management will maximise the productivity as well as profitability
of the company (Annarelli and Nonino, 2016). In context of service industry, organizations has
functional responsibility to produce services which satisfy the customers. So operations
managers need to take necessary decisions which helps in maximising productivity as well as
profitability. This assessment based on the case study of Starbucks which is American based
Coffee company and they have coffee chain all over the globe. This project report cover the
various topics such as Four Vs analysis, performance objective analysis and design analysis in
the first part. In the second part of this report include the overview of the selected operations of
the selected organization, their strategies, key requirement, capabilities & challenges. In addition,
report include the evaluation of selected operation area and some recommendation for the
improvement.
PART A
1. Comparative Four Vs Analysis
Four V's Analysis Starbucks Greggs
Volume It is refer to the quantity of products
which produce by the company and
sold to the consumers in the specific
time period. In Starbucks, they serve
quality food along with great
customer services which make them
popular among the consumers.
Starbucks approximately sold 75000
cups of coffee in a weak which
match the high quality standard.
Organization can measure their
growth in terms of total selling
quantity of goods in a foxed time
period. In comparison to Starbucks,
demand of products is high which is
beneficial for the company because
they manufacture products on bulk.
Greggs sell around 1.5 million of
products in a weak and these
products include the sausage rolls.
Variety It is refer to the variety of product
company offer in order to attract
Greggs is a public sector large size
organization and they operated in

large number of customer who have
different taste and preference
regarding coffee. Starbucks offer the
variety of coffee products such as 30
different types of blends & single
origin premium coffees, handcrafted
beverages, baked foods and each
product type has different variety
which encourage customers to try
their products.
this sector from last 80 years
(Bromile and Rau, 2016). So they
offer variety of products such as
sausage roll, Vegan products,
pasties, sandwiches, soup etc.
Company offer variety of products
which helps in attracting customers
or maximise the revenue of the
company.
Variation In order to increase demand of their
products among the customers they
need to introduce variety of products
in the market which helps in
increasing demand as well as revenue
of the company. For the variation of
products in the company will be
possible after intense research of
market which help the management
of Starbucks to understand the
market demand and as well as
consumer preferences in the
beverages. Because of popular
demand of coffee among the
consumers provide the great
opportunity in front of Starbucks.
Greggs company differ various
products but it does not have
enough variations because they
offer different products but they
have very limited variation and it
will happen due to lack of research
or innovation in the food. Managers
need to explore market and identify
the variation which provide the
great opportunity or able to
maximise the demand as well as
revenue. In the weekends company
enjoy the higher sales that is
beneficial for the company.
Visibility This aspect include that how much
organizational services experienced
by the customers. It is very important
that company should follow the
In this dimension company have to
perform as per the target group or
they have to formulate strategies
accordingly (Chandler and Lusch,

transparency which make other
people aware about how they
perform in their operations or achieve
desired outcomes. In context of
Starbucks, there are various practices
and procedures which are clearly
visible to the consumers. At the time
of placing order for their products
they get the information regarding
different location of shops where
they can order their food. Company
launch launch its mobile application
as well which create more value for
the customers.
2015). So organizations provide
various options to their customers
regarding products so they can
satisfy their needs as well as
desires. In Greggs, company open
corporal stores where variety of
products available in the single
stores so consumers can buy
everything from single place. Due
to various products and other bands
in the stores will reduce the
visibility and unable the consumers
to recognise actual product of
Greggs company.
2. Comparative Performance Objective Analysis
It is the multi objective analysis which helps the organizations to compare their
performances with other organizations.
Illustration 1: Polar Diagram, 2019.
(Source: Polar Diagram, 2019)

On the basis above diagram it has been interpreted that with the help of green line Our
company is depicted which is Starbucks one of the leading coffee shops (Polar Diagram, 2019).
Similarly, competitor or rivalry of Starbucks which is Greggs is depicted from the red colour
line. The objective of Competitive performance analysis is to help the company to reach at the
Required performance that is shown with blue colour. Thus, it is the stable state for company to
carry its operations.
Operation performance help the company to focus on the areas where it can work and
prepare strategy in order to overpower the competitors. This possibly helps to overpower the
competitive pressure. Explanation of diverse elements are determined below:
Dependability: It reflect the measure by which company depend upon the other parties
in order to deliver the products to customers (Heizer, Render and Munson, 2017). This leads to
the consistency by which planned actions are carried out by managing the processes effectively.
Flexibility: For the flexible operations businesses configure diverse requirement by
constantly managing the product line of firm. This helps to produce diverse offering in order to
meet the dynamic market condition and scheduling the delivery wisely.
Cost effectiveness: This factor helps the organisation to work on their pricing strategy so
that better services are delivered and customer finds it worth path. This situation of cost
effectiveness can only be meet if the firm do justification by matching prices with commodities.
Quality: It represent certain specification that need to be sustainably meet out in order to
manage the desirable performance of firm. The company needs to focuses on the quality as well
as features to create the value addition.
Speed: This depict how effectively the company deliver the final products to the
customer and meet out the sales target. Proper forecasting and helps the firm to research,
manufacture and offer services to end user.
Basis of differences Starbucks Greggs
Dependability Within Starbucks the sales as
well as time incurred in the
delivery of final product is high
is dependability because it is
backed up by quality as well as
This is low in dependability
because sales and time duration
taken by Greggs does not rest
upon quality.

cost.
Flexibility The company experiences rigid
operations which direct affect the
sales as well as generation of
revenue.
Being flexible it successfully
manges the revenue as well as
profitability due to which there is
higher scope of productivity.
Cost effectiveness The company sells and product
and modify the service as per
preferences so cost effectiveness
is relatively high.
It simply targets to prestigious
customer due to which cost
effectiveness is low.
Quality Enterprise at times compromise
the quality of product due to
because it immense concentrate
on the price factor.
It serve significant quality because
different component like price as
well as delivery time is not
associated with sales items.
Speed Dependency affect the
processing speeding of firm.
Unlike Starbucks it take less time
in order to carry out delivery
speed.
3. Design Analysis
Impact on design of customer service process:
Four V's or performance objective analysis impact the overall customers services because
organizations perform various activities. It is very beneficial for the company so they need to
start with the planning and further monitor the whole performance. In context of Starbucks, they
need to ensure that they offer variety as well as variation because customers getting bore with the
use of similar good and it should be visible for customers can recognise their products. Along
with this, they need to focus on customers services which is the most important aspect of
maximising sales (He and et.al., 2017). Quality products and match customer expectation will
helps in satisfying consumers. Starbucks should ensure that product is cost effective, flexible,
timely deliver the food etc. On the other hand, Greggs also offer variety of product but it does
not have enough variation due to lack of market research. Company produce cost effective
products which is affordable for the middle or lower class people as well. It positively impact the

customers and provide effective services which make them loyal for future and maximise their
product demand as well as revenue.
Impact on design of store layout and flow:
Every organizations has to focus on store layout so they can attract large number of
customers in their stores. In the current structure of organization, they offer their product through
online as well as offline stores through placing order from the stores and mobile applications. In
context of Starbucks, they need to ensure that online ordered product will deliver on time as well
as they focus on those customers as well who sitting in the shop or wait for their order as well.
They need to focus on store layout which required to be unique in comparison to their
competitors (Leyer, 2016). Effective customer services in the store as well as when they order
product online through delivering food speedy is very beneficial for them. On the other hand,
Greggs offer bakery products or it available through online and offline mode. It helps in getting
competitive advantage or make them able to serve more customers at the same time. It further
beneficial to maximise the productivity as well as profitability through achieving subsensible
goals & objectives.
PART B
1. Overview of the selected operational area
Quality management is the tool which is used by the organizations in order to improve
their products quality or they ensure that it will meet the customers needs & desire. This
operational area plays essential role in the business where managers concern about the product
quality which maximise the customer loyalty, cash inflow, employees satisfaction, healthy
working environment etc. Starbucks focus on the quality management which help them to
maximise their overall production as well as revenue. With the help of quality management, they
improve the operational efficiency as well as effectiveness (Li and et.al., 2016). It further help
the Starbucks to improve the quality of range of coffees which they offer to the consumers.
Through implementing quality management in their operations they able to maximise the
demand which further helps in maximising sales as well as revenue. It is also beneficial to
deliver more output in the less time.

2. Evaluate the global operations strategy of Starbucks and macro environment
Starbucks is the huge brand which deals in the coffee sector and offer variety of coffee
products which is very popular among the consumers. They already vary famous coffee brand in
the UK and it will be possible with the help of their global strategy. So Starbucks company
follow the various strategy to the global expansion where quality strategy is one of them. Here
they focus on the quality of products and the services which maximise customer satisfaction
level or improve their experience as well (Lee, Wang and Trappey, 2015). Starbucks should
focus on the quality of their coffee products because it is the major factor which influence the
production as well as profitability (Mahadevan, 2015). Along with this, there are macro
environmental factors which affect the Starbucks and it will be evaluated with the help of PEST
analysis which mentioned below:
Political Economic
There are various government rules &
regulations regarding food standards quality
which Starbucks have to satisfy otherwise
they unable to run their operations in the UK
market.
Improved infrastructure will provide the
great opportunity for the Starbucks in the UK
for its expansion.
High labour cost become the threat for the
company because company wanted to produce
quality product at lower price but it will impact
the overall cost of production.
In order to provide quality product in the UK
market, Starbucks use the high quality coffee
beans which increases the cost of product which
can reduce the demands as well.
Social Technological
Due to high demand of coffee in the market
become opportunity for the Starbucks which
motivate them to expand their business
globally (Osborne and et.al., 2015).
Starbucks have opportunity to target middle
class people through introducing new
products at reasonable and affordable price.
Starbucks have opportunity through maximise
their purchase by using mobile applications.
Also provide various services which make them
able to gain revenue through mobile purchase.
Starbucks focus on quality strategy where
customer satisfaction is most important so they
provide effective customer services in their
mobile application by using latest technology.

3. Demonstrate the key requirements, capabilities and challenges of the company
There are various requirement or capabilities of Starbucks which need to analyse and it
will be possible with the help of VRIO framework and it mentioned below:
Resources &
Capabilities
Valuable Rare Inimitable Organized
Quality of coffee Yes Yes No Yes
Customer
service
Yes Yes No Yes
Speciality in
coffees
Yes No No Yes
Atmosphere of
shop
Yes Yes No Yes
Analysis:
Starbucks company have capability which help them to get growth in the market because
they are valuable in quality of coffee, effective customer service, variety in coffee products as
well as environment of shops. Company have rare resources such as quality, atmosphere and
customer service but it can be achieved by any organizations as well. All the resources are
difficult to inimitable because other coffee companies also can provide the quality product or
services but does not match the level as Starbucks offer (Shen, 2015). In order to produce quality
product they organization each activity, provide satisfactory customer service, have speciality
and good atmosphere.
Challenges:
There are various quality related issues company face which can impact the overall
production or profitability. Some of the challenges discussed below:
Increase price of its coffee products: Starbucks use the premium price policy in order to
maximise their profit margin. But they need to maximise their customer base and it will only
possible when they reduce price of their coffee products and target the middle class customers as
well. Because if they wanted to increase their market size in the coffee industry they should

minimise prices and it will be possible by using cheap coffee beans or spend less on their
promotional activities.
Raising price of coffee beans: One of the major contribution is to increase the price of
product is raise in the price of coffee beans (Slack and Brandon-Jones, 2018). Increase in the
demand of coffee will reduce the inventory level of coffee beans from last 2 years. In order to
maintain their profit margin they should focus on other bakery items which can maximise the
revenue.
4. Analyse as well as evaluate the chosen operational area of Starbucks
In the Starbucks, management need to manage their resources that is valuable or rare for
the company which make them capable to achieve their operational goals & objectives. In the
quality management, above mention resources or capabilities are most important such as quality
of coffee, customer services, atmosphere of coffee shop or speciality in coffee. Managers of
Starbucks should ensure that staff members follow the quality standards and monitor the quality
of coffee because it is the strength of company. Starbucks offer quality products to their
customers in order to satisfy them which further helps in maximising demand which
automatically increase the profit margin. Another valuable resources are customers service which
is very important so management of Starbucks have to ensure that they provide effective
customer services which make them loyal for this brand. In addition, speciality in coffee s is very
important because it help the company to attract customers or make them loyal for the longer
period (Storey and et.al., 2016). Managers of Starbucks should concern regarding shop
atmosphere and it could be decent, peaceful where people come & talk and they find the good
infrastructure as well. It provide them valuable experience in Starbucks which helps in satisfying
customers or fulfil their needs.
Quality management is the practice which followed by the Starbucks for the effective
operations management. Company use this practice in order to improve the quality of product
which is very important because it helps in maximising demand of products. Along with this, it is
the major factor which make them popular in the market or provide growth in the market. With
the help of quality management, business get the various benefits as well as improve their
operational performance. It helps in meeting customers expectation regarding product quality
and match the organizational requirements.

Starbucks face the challenges regarding high price of their products or increase the price
of coffee beans which automatically maximise the cost of production. In order to resolve these
issues, management need to focus on their strategies which they build to face those challenges.
Management of Starbucks try to reduce price of coffee by using cheap coffee beans which helps
in reducing overall cost of product and high price will be affordable for premium class people. In
order to target middle class market they need to reduce product price in order to maximise their
customer base.
In order to improve quality of their products Starbucks company follow the total quality
of products where they focus on the area which helps them to improve their product quality.
Total quality of management (TQM) is an management approach which include the various
functions such as marketing, finance, human resources etc. They focus on meeting customer
expectation as well as needs which further helps in achieving business goals & objectives.
Starbucks implement this theory in their operations in order to improver their product quality
and provide various benefits such as meet customers requirement, reduced overall product cost,
improve team work, focus on improvement plan etc. TQM help the Starbucks to improve their
product quality and ensure that customers are satisfy with it.
5. Recommendations
On the basis of above discussion, it has been recommended that Starbucks should adopt
some changes in order to improve their operations and ensure that it will maximise the efficiency
as well. In order to improve their product quality as well as services for the customers they need
to target more group and make strategy accordingly. Some of the recommendation to improve
their quality are mentioned below:
 Starbucks should build a strong product strategy which help them to attract more
people and it further maximise the demand as well as revenue of the company.
 Company already implement the quality management tool to improve their product
quality but further they have to focus on customer satisfaction as well. In order to
maximise their sales they need to target more people where they have to reduce the price
of coffee (Wang and et.al., 2015). Quality is all about satisfy their customers through
delivering good product along with effective services which forces them to visit again or
experience the product as well as service again.

 They should implement quality management system (QMS) which help them to audit
their process along with certified body. It include the 7 principles of quality which is
important to implement in order to fulfil the quality standards. QMS helps in improving
credibility as well as brand image of the company that is most important as well as
enhance customer satisfaction level.
 Starbucks should analyse or test their market before launching their products in the
market. It help them to add new features or fix the errors which they currently found with
the help testing products. Along with this, they need to conduct market research in order
to understand the demand of customers and their expectation regarding product.
CONCLUSION
From the above discussion it has been concluded that operations management is the
important process which help the organization to convert raw material into finished goods. In the
organization there are various areas of operations which they have to perform such as quality
management to improve product quality. It further helps in satisfying customer's needs &
expectations which make them loyal for the future. At the time of performing their task,
organization face the various challenges which can impact the overall production as well as
profitability which can be resolve by using TQM approach to reduce production cost or improve
quality.

REFERENCES
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Online
Polar Diagram. 2019. [Online]. Available Through:
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