Case Study: Starbucks' Crisis Analyzed Through MBO & Operations

This case study examines the crisis faced by Starbucks, particularly its supply chain issues in 2008, through the lens of Management by Objectives (MBO) and operational principles. It analyzes the factors contributing to the crisis, including rapid expansion and supply chain management challenges. The study applies the 4D principles (Direction, Discovery, Design, and Delivery) and the five performance objectives (Quality, Speed, Dependability, Flexibility, and Cost) to understand Starbucks' transformation. It also discusses the supply chain objectives from both customer and supplier perspectives, highlighting areas of alignment and mismatch. Furthermore, it includes a calculation of customer wait times, providing a quantitative aspect to the analysis. The conclusion emphasizes Starbucks' ability to overcome its challenges through effective operational transformation. This document is available on Desklib, where students can access similar case studies and assignments.

MBO Starbucks

TABLE OF CONTENTS
 INTRODUCTION
 ANALYZATION OF CRISIS OF STARBUCKS FROM THE OPERATIONAL
PRINCIPLES
 PRINCIPLES OF 4 D AND THE 5 PERFORMANCE OBJECTIVES
 DISCUSSION ON SUPPLY CHAIN OBJECTIVE OF STARBUCKS
 CALCULATION OF NUMBER OF CUSTOMERS AND AVERAGE TIME THEY
HAVE TO WAIT BEFORE EXIST
 CONCLUSION
 REFERENCES

INTRODUCTION
 Starbucks corporation is a USA based multinational
organization of coffee-houses and roaster reserves that are
headquarters in Seattle.
 The strategic direction of this organization has been to
expand its operations in the international market through
multiple stores in different parts of the world.
 The products of this organization was primarily different
types of coffee however it differentiated from different
practices and application of organizational operations.
 In this project the analyzation of a crisis faced by
Starbucks from the perspective of operations principles
have been discussed.

ANALYSATION OF CRISIS OF STARBUCKS
FROM THE OPERATIONAL PRINCIPLES
 The crisis which the Starbucks faced was in its
supply chain.
 This crisis was upon this organization in 2008 in which
it faced issues with its supply chain and as a result of
which its operations were affected.
 As a result of supply chain which was considered to be
the reason of its supply chain expansion which it did.
 It can be said as the victim of its own success which
was due to the rapid expansion it made for its work in
the world.

CONTINUE..
 INNOVATION :
 This organization has brought innovation in its products and services which it
provides multiple times in the organization and also develop innovative food
items for its customers to enjoy.
 In this crisis the innovation which the business planned was to expand its
business which lead to sudden issues in its management of the supply chain.
 Due to its lack of capacity in the supply chain it was not able to successfully
manage the supply chain practices as a result of which helps the business to
grow successfully.

PRINCIPLES OF 4 D AND THE 5
PERFORMANCE OBJECTIVES
 Starbucks transformation after its supply chain crisis was can be understood with
the help of 4D PRINCIPLES as follows,
 FIVE PERFORMANCE OBJECTIVES

CONITNUE..
DIRECTION
 Transformation of Starbucks started with a departure point that consists of the following
directions and purpose,
 VISION- For Starbucks the vision was to create a balance between cost and performance for
make significant change in operations.
 MISSION- To decrease the cost of operation in its supply chain.
 PURPOSE- In order to uplift the organization from the financial crisis which was upon them.
 VALUES- Starbucks brought back some of the most transformational leaders it had, Schultz.
 STRATEGY- Its strategy was to simplify all the operational areas as a part of its transformation.

CONITNUE..
 QUALITY
 At the starting of 2008 when the organization was facing a
crisis Starbucks was falling behind in the quality
department.
 However, since the organization has been able to transform
its business it has influenced a focus on the service and
quality for providing what its customers needs.
 Starbucks believes that their business strategy will be
worthless if its is not able provide the quality in its products.

DISCUSSION ON SUPPLY CHAIN
OBJECTIVE OF STARBUCKS

CONTINUE..
 WHAT CUSTOMERS WANT?
 As a customer of Starbucks all we need is gain personalized offers, and get
asked for our feedbacks such that we can suggest. The customers think that the
suppliers of the Starbucks need to have the followings things in their arsenal,
 They need to make delivery of goods always on time.
 The suppliers need to provide the adequacy of flexibility.
 Suppliers need develop a more personal relationship with the organization and
customers.

CONTINUE..
 WHAT SUPPLIERS BELIVE CUSTOMERS WANT
 The suppliers of Starbucks believes that the following are the demands of the
customers,
 Customer want loyalty as the main part of the suppliers according to the
supplier.
 The customers want the services of the Starbucks to be more simplistic so that
they are also less costly.
 The customers desire are always to have creativity in the services they are
getting from the company.

CONTINUE..
 REASON OF MISMATCH
 It has been concluded with the help of this chart and discussion that most
demands of the customers are met by Starbucks.
 However, there are certain areas in which Starbucks can improve. Such as the
cost efficiency needs to be improved by the company for ensuring that the
products of the available to the company at the cheapest rates.
 The reason there is a mismatch in the customer and supplier perspective is that
customers want to be aware of the operations of the suppliers by for maintaining
the competitive viability the suppliers are refrained from doing so.

CALCULATION OF NUMBER OF CUSTOMERS AND
AVERAGE TIME THEY HAVE TO WAIT BEFORE
EXIST
Arrival rate (ra ) = 25
Service time (t s ) = 5
Service rate (rs ) = 12
Utilization = (ra) / (rs) 2.08
Average number in system = u/(1-u) = -1.92
Average waiting time in queue = [u/(1-u)].t s = [u/(1-u)].ts = -9.62
Average waiting time in system = ts/(1-u) = -4.62

CONCLUSION
 With the help of this project it can be concluded that the Starbuck
is a very effective organization which was able to overturn its
mistakes that it made with the help of transformation operations.
 In this project there has been the discussion of the crisis which
was upon Starbucks at the beginning of its operations which
helped it to gain the insights of the mistake they made with their
supply chain.
 In this project the analyzation of the principles of the 4D and the 5
performance objectives has been discussed considering the
operation of Starbucks and how it transformed its operations.

REFERENCES
 Azriuddin, M., and etl.al., 2020. Becoming an international brand: A case
study of Starbucks. Journal of the Community Development in Asia
(JCDA). 3(1). pp.33-43.
 Chuang, H.J., 2019. Starbucks in the world. HOLISTICA–Journal of
Business and Public Administration. 10(3). pp.99-110.
 Grill, C.M., Hotels, C. and Kitchens, C., 2021. Operations Management in
the Hospitality Industry. Artificial intelligence (AI). 62. p.120.