Operations Management Report: Starbucks and Greggs Case Study Analysis

This report provides a comprehensive analysis of the operations management strategies of Starbucks and Greggs. Part A focuses on a comparative analysis, examining the 'Four Vs' framework (Volume, Variety, Variation, Visibility), comparative performance objectives, and design analysis for both companies. Part B delves into Starbucks' operational area, exploring its global operations strategy, the surrounding macro environment (using PEST analysis), key requirements, capabilities, and challenges. The report also includes an evaluation of Starbucks' operational areas and offers recommendations for improvement. The analysis highlights the importance of planning, control, and adapting to the macro environment for effective operations management, emphasizing how these factors influence customer service processes and store layout decisions for both companies. The report provides a detailed comparison of the two companies across key operational dimensions.

Operations
Management and
Service

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
Comparative four Vs analysis......................................................................................................1
Comparative performance objectives analysis.............................................................................3
Design analysis............................................................................................................................5
PART B............................................................................................................................................6
Overview......................................................................................................................................6
Global operations strategy of Starbucks and surrounding macro environment...........................6
Key requirements, capabilities and challenges............................................................................7
Analysis and evaluation of the operational area..........................................................................8
Recommendations......................................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Operations management can be defined as the process of administering different business
practices for the purpose of attaining higher level of efficiency to carry out operational activities.
Main purpose of it is to convert the labour and material in products and services so that an
organisation can generate higher profits (Babich and Kouvelis, 2015). For the effective execution
of business it is very important for the top level managers to pay attention towards it. This report
is segregated in two different parts first one is based upon comparative analysis of Starbucks and
Greegs Store. For this purpose different topics are discussed in this part which are Four Vs,
comparative performance objectives and design analysis. The second portion of the assignment
is based upon analysis of operational area of Starbucks. The topics which are discussed in this
part are macro environment, global operation strategy, key requirements, capabilities and
challenges etc. Additionally, analysis and evaluation of the operational areas along with
recommendations are also covered in this portion of the report.
PART A
Comparative four Vs analysis
Four Vs encompasses the operations process which is the core elements of any
organisation because it helps in the generation of final output which is served to the customer in
order to satisfy their prevailing need (Copacino, 2019). It simply involve the transformation of
input that include raw material, capital, equipment as well as knowledge into the desirable output
that is final goods and services.
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It simply involve the four V's that include Volume, Variety, Variation and Visibility
dimension whose role is to systematically carry out operations process by transmitted the raw
material intro finished goods. Explantation of elements are determined below:
Volume Dimension: On the basis of repeatability of orders by carrying out organised
tasks helps the company to manage the low cost operations in order to accommodate the high
volumes. Almost all the successful companies that deliver immense choices and maintain the
taste of customer gain the advantage of high volume by compensating the cost of products.
Variety Dimension: It simply represent the variants that are offered by company in order
to accommodate the needs of diverse people. Usually the customer gets attracted towards the
company that have wide options in terms of the flavour and sizes that represent the flexibility of
company and help to carry out smooth business operations.
Variation Dimension: This include either standardization as well as customised design
of the products that are served by company in order to meet the needs of the customer. Under
standardised design all the commodities are based upon the uniform procedure as well as design.
So the customer does not get much choices in terms of design, features and colours. Whereas, as
per customised services the company give the priority to customer in terms to get the product as
well as choice on the basis of their likings (Durugbo and Erkoyuncu, 2016).
Visibility Dimension: it involve the role of customers in terms to track their order and
gain personalised experience. This has increased the transparency between the company and
customer where end user can not get manipulated. This leads in delivering the enriched customer
experience.
Basis of difference Starbucks Greggs
Volume Dimension Starbucks get the opportunity to
serve the wide range of customer
due to its well established
goodwill for which it has high
volume dimension and get high
profit margin.
Greggs has the emerging bakery
chain that offer quality food to
high income group due to which it
is low in volume dimension.
Variety Dimension The company successfully serve
various types of coffee, tea and
It involve bakery items,
sandwiches, pastries and is low in
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bakery item due to which it offer
high variety.
variety dimension.
Variation Dimension Starbucks offer low variation
because it concentrated in
standardised services.
Greggs company serve both
standardised and customised
services as it is high to take
personal orders
Visibility Dimension High visibility leads to use of
online application of Starbucks
helps the customer to track their
services.
With the help of notification and
email marketing the customer gets
update which determine it has
comparatively low visibility.
Comparative performance objectives analysis
While performing comparative performance analysis of two companies polar diagram
could be used. For the purpose of determining the difference between the performance of
Starbucks and Greggs Store following diagram is formed:
Illustration 1: Polar Diagram, 2019
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The green line in the above diagram is representing Starbucks and the red one is for
Gregg. Both of the companies are having different status in the market and it is very important
for all of them to maintain all the five elements of the diagram which are cost effectiveness,
dependability, speed, quality and flexibility. The blue line in the diagram is for required
performance of both the entities for which each of them is needed to make sure that all the
elements are maintained properly (Gibson and Parkman, 2018). Description of all of them is as
follows:
Cost effectiveness: This objective states that all the companies want that the products
and services which are sold by them to the customers should be cost effective so that it can help
to reach business goals. By achieving this objective an organisation will be able to maximise
sales and profits.
Dependability: This component is related to the operational performance in which it is
analysed that the entity is dependent upon the cost and price when it comes to the delivery of
products and services to the customers.
Speed: This objective is related to the speed which is used by companies to deliver all the
products and services for the purpose of generating sales. It is required to be focused as it can
help to improve performance of business.
Flexibility: This objective is related to the level of flexibility which is shown by an
organisation towards the operational activities. If it is high then it results in good performance
and lower may leave negative impact upon the whole enterprise (Gupta and Starr, 2014).
Quality: It is the last objective which measures the ability of delivering best quality
products to the customers according to their requirements.
The comparison of Starbucks and Greggs Store on the basis of all the objectives is as
follows:
Performance objectives Starbucks Greggs Store
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Cost effectiveness The cost effectiveness of the
company is high as it sells all
the products according to the
buying capacity of customers
(Cost effectiveness of
Starbucks, 2019).
Cost effectiveness of the
enterprise is lower because it
target only upper class
customers therefore the cost of
all its products is very high.
Dependability The sales and time involved in
delivery of products is
dependent upon quality and
cost therefore the level of
dependability is very high.
Sales and delivery time is not
dependent upon cost and
quality because the enterprise
believes that products should
be delivered as soon as
possible.
Speed Speed of delivery in the
organisation is lower than the
normal because of the higher
level of dependency.
Delivery speed of products
within the organisation is low
because of lower dependency
upon cost ad quality.
Flexibility Flexibility within the
organisation is very low which
leaves impact upon sales and
revenues as it is not possible
for the entity to modify its
operations.
Flexibility within the entity is
very high which helps the
managers to generate higher
revenues and profits.
Quality Quality of all the items which
are sold by the enterprise is
lower than the required one
because of higher focus upon
price.
All the items which are sold by
it have good quality because
price and delivery time are not
considered to sale items.
Design analysis
In order to meet the expectations of customers it is very important for all the
organisations to make sure that they focus upon Four Vs and performance objectives analysis as
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it can help to form the proper and appropriate design. Both of them influence deign of customer
service process and store layout of Greggs and Starbucks because the management have to
consider all the elements of the analysis's for effective execution of operational activities.
In Starbucks and Greggs Store managers focus upon all the elements of Four Vs analysis
which help them to formulate the structure and layout of the organisation properly. All the
decisions which are formed for customer service process and store layout helps to cope with core
operations characteristics as all of them are used for the purpose of reaching business goals. All
the decisions are affected by performance and its trade offs which are also known as objectives.
The main reason behind their impact is importance of their consideration in the process of
formulation of strategy for the business procedures (Gupta, 2016).
Both the strategies used for the purpose of analysis leave impact upon customer service
process as the management have to make changes in the decisions which are taken for the
purposes of fulfilling needs of consumers due to modification in the elements of analysis. Store
layout and flow is also get impacted due to these components because the top level executives
have to consider the alteration in the factors of the models while setting the design.
PART B
Overview
The main key operational area of Starbucks is planning and control which is mainly
focused by management for the purpose of effective execution of business activities (Heizer,
2016). It is totally influenced by managers as it is the main responsibility of them to plan and
control all the operations which are performed by staff members so that the long term objectives
could be achieved. This area contributes in the high organisational performance because if all the
strategies will be planned and controlled in effective manner then it may help an enterprise attain
competitive advantage in the market which will be beneficial to generate higher profits. The key
operational area has helped Starbucks to improve its performance continuously as it help to
reduce the possibility of uncertainties because it controls all the negative events.
Global operations strategy of Starbucks and surrounding macro environment
Starbucks is one of the largest coffee houses in UK which is operating business all
around the world. The key operational area of the entity which is contributing in the
organisational performance is planning and control. The global strategy of the enterprise is to
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expand its business in multiple locations by launching new and innovative items world wide.
With the help of it the organisation has planned to capture large market share. Planning and
control operational area players vital role in this strategy as with the help of it strategies are
planned and controlled in systematic manner for ignoring possibility of uncertainties. The macro
environment and business environment influences the strategy (Hitt, Xu and Carnes, 2016). For
the purpose of analysing it PEST analysis could be used and all the elements of it in context of
Starbucks are discussed below:
Political: Governmental policies, instability of political parties, trade restrictions etc. are
the elements of this factor. All of them are influencing the global strategy of Starbucks because
the management have to formulate all the policies according to the political environment of the
country in which it is operating business. The taxation related rules of those nations from which
raw material is bought by Starbucks are required to be followed by it which is a big challenge for
it as it is not possible to make changes in policies according to different countries.
Economic: Exchange rates, economic environment of the market, inflation, deflation,
unemployment etc. are the examples of this elements. The labour cost in most of the countries is
rising continuously which is influencing the global strategy of expansion because the company
will not be able to buy material from those nations due to higher cost (Khanna, 2015).
Social: Lifestyle, attitude, buying behaviour, age, career distribution etc. are social
factors which are influencing the global strategy of Starbucks. Family patterns in USA and
Europe are changing continuously which is resulting in modification in consumer preferences. It
is influencing the expansion strategy because the organization have to offer products according
to the culture and attitude of customers living in different nations.
Technological: Changes and awareness of technology, level of innovation automation
etc. are part of this factor. Currently the availability of speciality coffee machines for home use is
increasing massively which is affecting the global strategy of the company as due to this sales in
technologically advanced countries is decreasing (Mahadevan, 2015).
Key requirements, capabilities and challenges
For the purpose of performing planning and control related functions it is very important
for Starbucks to analyse the key requirements and capabilities so that all of them could be carried
out properly (Reid and Sanders, 2019). For the purpose of analysing them VRIO model could be
used. All the elements of it are discussed below:
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Capabilities Valuable Rare Inimitable Organised
Market research ✓ ✗ ✗ ✗
Skilled staff ✓ ✓ ✗ ✗
Properly managed
activities
✓ ✓ ✓ ✗
Timely changes
in policies
✓ ✓ ✓ ✓
Analysis: On the basis of VRIO analysis it has been determined that the major
requirements and capabilities for planning and control are market research, skilled staff, properly
managed activities and timely changes in policies. All of them are valuable for Starbucks
because with the help of all of them managers will be able to formulate effective decision for
betterment of enterprise. Market research is not rare for the enterprise as all the companies
conduct it for the purpose of gathering market data. Rest of the capabilities are rare because all
the entities do not pay attention towards all of them. Skilled staff is not inimitable as most of the
competitors of Starbucks such as Costa Coffee are having experienced and knowledgeable
employees. Properly managed activities and timely changes in policies are inimitable for the
organisation because it is not possible for other companies to copy them (Seppänen, Huiskonen
and Karppinen, 2014). The third capability is not organised systematically because the managers
pay attention towards formulating policies according to latest changes in the environment. The
last element is organised properly because management believes that it can help to reach the
business goals.
There are various challenges and problems which are faced by Starbucks. All of them
could be understood with the help of following points:
 The market research is the major requirements for executing planning and control related
operations and the organisation is not able to perform it in systematic manner which
results in lack of availability of data for decision making.
 The another issue which is faced by the organisation is lack of skilled employees due to
which effective plans could not be performed (Smith, Maull and CL Ng, 2014).
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Analysis and evaluation of the operational area
Managers in Starbucks are managing the resources and capabilities properly for the
purpose of attaining all the long term business goals such as profit maximisation, customer and
staff engagement. For this purpose, market research, skilled employees, proper management of
activities, timely changes in policies etc. capabilities are managed properly by the managers of
the entity as it can help to execute operations in the predetermined way. All of them are
controlled and planned properly as they managers want to make sure that their efforts results in
the higher competitive advantage of the company.
For the purpose of managing all the capabilities and requirements in planning and control
operational area managers gather detailed information of all the resources which are required to
perform all the operational activities. Afterwards, all of them are collected so that it can result in
effective execution of all the plans which are formed to be the market leader in the coffee house
industry. In planning and control operational area the capabilities and requirements are managed
by the managers of Starbucks by keeping detailed information of all of them and making efforts
to arrange them for running the business (Stevenson and Sum, 2014).
All the resources and capabilities leave impact upon operational performance because the
availability of them will help to perform all the operations in systematic manner. On the other
hand, lack of them may result in inappropriate execution of all the operations which will affect
the performance in negative manner. As managers make efforts to arrange the capabilities and
requirements such as skilled staff, market research, changes in policies and properly managed
activities for planning control therefore it helps to improve overall performance of business.
For the purpose of responding all the problems such as improper market research,
unskilled employees etc. which are faced by Starbucks different steps could be taken by the
management. All of them are as follows:
 The managers can take initiatives to plan and control the activities which are performed
for the purpose of conducting market research. With the help of it appropriate
information which is required for the formulation of future strategies could be gathered
and the problem could be responded properly.
 Lack of skilled staff's problem is also faced by Starbucks which affects organisational
goals such as profit maximisation, customer and staff engagement etc. because of an
organisation is not having expert employees then it is not possible to achieve objectives
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(Wynstra, Spring and Schoenherr, 2015). It could be responded by the management by
performing all the recruitment and selection related activities properly which will help to
hire skilled employees and respond to the problem appropriately.
 Another step which could be taken by the managers of Starbucks to respond the problems
is finding the causes of them so that effective strategies for resolution of the challenges
could be formulated. This initiative will also be beneficial to ignore the possibility of
negative impacts such as lower profitability and productivity etc. of the problems.
For the purpose of responding the problems which are faced by the organisation
managers of the company can adopt an appropriate theory which is strategic planning. With the
help of it the management will be able to define the goals, direction, and decision making in
systematic manner. It may lead the organisation towards success because with the help of it all
the capabilities and resources could be managed in systematic manner. The theory will guide the
top level executives to analyse all the requirements strategically and then find the way in which
all of them could be fulfilled. It is also beneficial for the allocation of resources to the
departments which are liable to achieve the long term business goals. Main purpose of using this
theory is to make sure that all the strategies which are formed previously will be achieved
successfully or not. Strategic planning theory will guide all the lower and top level managers to
find best suitable ways in which they can manage all the requirements and capabilities properly
so that it can help to perform all the operational activities and achieve the goals successfully. In
Starbucks all the main resources such as skilled employees, market research etc. could be
managed properly with the help of strategic planning theory. Application of it will guide the
employees to find the simple ways to perform all the jobs which are allocated to them for the
purpose of reaching the predetermined objectives of business.
Recommendations
For the purpose of improving the planning and control area of the operations managers in
Starbucks can take different steps which can help them to make proper modifications in the
strategies which are mainly formed for this specific area. Following recommendations are
provided to the top level executives of Starbucks:
 Analysing actual position of business: It has been recommended to the managers of
Starbucks to analyse the actual position of the enterprise before formulating plans as it
will be beneficial for implementation of them. This step of them will guide them to find
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the best suitable strategies which are required to be implemented in future so that the
actual performance of organisation could be enhanced (Zhang, Lawrence and Anderson,
2015).
 Communicating all the plans with staff members: The managers are also
recommended to communicate all the business plans with employees so that they can
provide their opinion for the same and proper changes could be made in them. This
suggestion is provided because by paying attention towards it the managers will be able
to control and plan properly with proper support of staff.
CONCLUSION
From the above project report it has been concluded that operation management is the
process of managing all the operational activities which are performed by the organisation. For
the purpose of analysing actual position of the enterprise four Vs analysis could be used and
along with that operational performance could also be measured for business. For the purpose of
analysing performance polar diagram could be used. While running operations in different
locations global operations strategy is required to be analysed so that impact of macro
environment upon it could be determined. While identifying requirements and capabilities VRIO
model could be used and to respond the challenges faced by companies strategic planning theory
can be implemented.
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REFERENCES
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Gibson, P. and Parkman, R., 2018. Cruise operations management: Hospitality perspectives.
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Gupta, S. and Starr, M., 2014. Production and operations management systems. CRC Press.
Gupta, V. K., 2016. Strategic framework for managing forces of continuity and change in
innovation and risk management in service sector: a study of service industry in
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Heizer, J., 2016. Operations management, 11/e. Pearson Education India.
Hitt, M. A., Xu, K. and Carnes, C. M., 2016. Resource based theory in operations management
research. Journal of Operations Management. 41. pp.77-94.
Khanna, R. B., 2015. Production and operations management. PHI Learning Pvt. Ltd..
Mahadevan, B., 2015. Operations management: Theory and practice. Pearson Education India.
Reid, R. D. and Sanders, N. R., 2019. Operations management: an integrated approach. John
Wiley & Sons.
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processes. International Journal of Services and Operations Management. 17(4).
pp.439-452.
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Management. 34(2). pp.242-269.
Stevenson, W. J. and Sum, C. C., 2014. Operations management. McGraw-Hill Education.
Wynstra, F., Spring, M. and Schoenherr, T., 2015. Service triads: A research agenda for buyer–
supplier–customer triads in business services. Journal of Operations Management. 35.
pp.1-20.
Zhang, J. J., Lawrence, B. and Anderson, C. K., 2015. An agency perspective on service triads:
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<https://marketrealist.com/2014/01/understanding-starbucks-cost-structure-operating-
expenses/>
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