Operations Management Report: Starbucks Global Strategy and Analysis

This report provides a comprehensive analysis of Starbucks' operations management, examining key aspects such as the Four Vs (Volume, Variety, Variation, and Visibility) to differentiate its operations from competitors like Greegs. The report delves into performance objectives, utilizing a pol...Read More

Operations Management
Service Excellence

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
1) Analysis of Four Vs...........................................................................................................1
2) Analysis of performance objectives...................................................................................3
3) Analysis of design..............................................................................................................6
PART B............................................................................................................................................7
1) Overview of operational area.............................................................................................7
2) Global operations strategy of the company and surrounding macro environment............7
3) Requirements, capabilities as well as challenges...............................................................8
4) Analysis together with evaluation of operational area.......................................................9
5) Recommendations............................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
All business concerns implements practice that manages resources which produces
services and commodities is expressed as operations management. In this, resources consist of
technology, people, information, equipments and technology (Bolton, 2019). The objective of
operations management is concerned with producing essential commodities in right quantities
and with right qualities as per scheduled time and minimum costs. Correspondingly, service
excellence refers to the potentiality of organisation to consistently meet together with manage
expectations of customers. Successful companies coalesces specialized service excellence with
wonderful personal services for meeting desires of customers promptly. The report is prepared
on the basis of Starbucks which is global operating coffee house having approx 30000 retail
stores in uncountable countries. It has made contractual agreements with international partners
and worldwide licensed cafes addition to network of franchises.
The report is bifurcated in two parts. In Part A, discussion is made on Analysis on Four
Vs, Performance objectives and design among two companies. While, Part B highlight about an
operational area, global operations strategy of the firm, impacts of macro environment,
requirements and challenges faced by the company and evaluation of the operational area.
Further, recommendations are made to the company for improving operations as per the analysis
made in previous sections.
PART A
1) Analysis of Four Vs.
Overview of Four Vs: All operations procedures involves one common thing that is they
takes inputs such as capital, time, technology and many more for transforming all into valuable
outputs (Bell and Orzen, 2016). However, companies do this in distinct manner as the Four Vs
are different among all. Volume, Visibility, Variety along with variation are the known Four Vs
that creates differentiation among operations process of two companies. The following is Four
Vs profile diagram of two businesses that are Starbucks and Greegs:
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From above diagram, it is analysed that Four Vs are essential elements in operations
process of an institution (Chaffey and Smith, 2017). They are defined as:
Volume: Volume dimension is key for companies to organise all operations. It states about
the quantity of produced items by the company to meet demands of external forces that are
customers and market.
Variety: Variety dimension outlines different kinds of activities that are performed in
operations process (Davis and et. al., 2018). It is mentioned to wide range of commodities an
organisation offers to attract people and generate maximum revenues.
Variation: Variation dimensions show slight differences in products that addresses
different business models and helps companies to manage time and resources in entire
procedures of operations. It is termed to trivial distinction and random variables which sustain
offerings of business in market.
Visibility: Visibility dimension is all about customers potentials to see and track orders
within procedures of operations. When there is high visibility dimension then customers gains
huge experiences through tracking their delivery of demanded commodities. In contrary, low
visibility dimension affects customers experience to huge level.
From the definition of Four Vs, it is analysed that these all are involved in operations
management of an organisation and engrosses fast cycle timings, great efficiency and hence forth
(Drew, McCallum and Roggenhofer, 2016). The differences of mentioned dimensions among
two confectionary companies that are Greegs and Starbucks are mentioned below:
Four Vs Analysis Starbucks Greegs
Volume The volume of Starbucks’
operations is seen in its
Greegs manages its
production of beverage
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repeatability tasks along with
systemisation of work while
providing coffee cups and other
commodities to customers in
different locations. It has high
volume low cost coffee cups and
beverage production.
commodities is effective
manner. It has set high
standards as well as large
procedures which drives
operations at high volume
and provide low cost base to
entity.
Variety Starbucks is popular for its variants
ion coffee. It serves wide variety of
coffee types that are hot coffee,
cold coffee, filtered coffee, Turkish
coffee, espresso, flavoured coffee
and various combinations
(Fredendal and Hill, 2016).
Greegs serves its customers
through offering variants of
commodities like
sandwiches, sweet items,
baked products and sausage
rolls.
Variation Starbucks has gained leading
position in coffee industry for
offering variations in products in all
its stores.
Greegs is leading company
that produces variations of
savoury products and provide
them as per customer
customisation.
Visibility The operations performed by
Starbucks to serve coffee and other
products in its stores are clearly
visible to customers that states that
it has high visibility dimension.
Greegs generally has low
visibility dimension as
savouries are produces at
factories and are offered at
different stores that limits
people to see its operations.
2) Analysis of performance objectives.
All companies whether small of large sets performance objectives as they leads to boosting
production efficiency in entire operations (Operational performance objective analysis. 2020). In
this context, polar diagram is used for comparing operations performances of entities likes
Greegs and that of Starbucks. The diagram is underneath:
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From above polar diagram, it is said that the blue line outlines performance objectives of
Starbucks while the orange line delineates performance objective of Greegs. The performance
objectives are set by the company on the basis of five elements that are as defined below:
Speed: Speed refers to how efficiently operations are performed in minimum timings.
The performance objective related with speed is related to deliver demanded products in least
time in order to increase sales demand and attracting wide customer base.
Quality: Quality is defined to the desired level in which a commodity conforms to
specification (Gardiner and Reefke, 2019). Performance objective concerned with quality is
about having producing desirable commodity that is easily be served, reliable, performs well and
durable in nature.
Cost: Cost refers to level of variations in unit cost of commodity that is measured by
changes within factoral changes. Performance objective related with cost involves volume
addition to variety of tangible items.
Dependability: Dependability is termed as the reliance of operations on the time taken
for producing tangible items of company. performance objective associated to dependability
measures out the manner in which company is more dependent when it is related with timely
delivery of organisational products to customers as per planned prices together with costs.
Flexibility: Flexibility is defined as configuration of product lines for dealing with
numerous requirements as well as adjustments of product lines for new requirements
(Ghobakhloo and Azar, 2018). The performance objective linked to flexibility states about ability
of organisation to produce distinct quality commodities along with adopting operations as per
different market conditions.
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The differences on the basis of the above performance objective elements between
Greegs and Starbucks are stated below:
Performance
objective analysis
Starbucks Greegs
Speed Starbucks has performance
objective of speedily delivering
coffee and other demanded
products. This defines the
efficiency of operations of the
company.
Greegs has objective of speed to
provide its savoury products to
customers without making them
wait in longer queues.
Quality The products of Starbucks are
produced and offered at high
quality that meets customers’
requirements. The firm has opted
various quality check tools that
assist in rejecting products that are
not up to desired quality.
Greegs also offers high quality
savoury commodities as per the
market needs and desires. It uses
quality control techniques that
measures quality of all products
offered at different stores
(Giannakis and Papadopoulos,
2016).
Cost Starbucks serves variations in
products through considering the
level of variation involved in unit
costs as measured through changes
in factors variety.
Greegs is involved in wide
operations which keeps its costs
high. The entity has low cost
effectiveness as its major
targeted sections are those that
are able for afford high prices.
Dependability Starbucks is majorly dependent on
wide franchises addition to licenses
cafes to meet sales objectives. It
makes its product available to
customers through its cafes and
other retailers.
Greegs is the company that
maintains its dependency on its
own opened stores so that all its
demanded commodities in
market are provided in less
timing.
Flexibility Starbucks has great flexibility in its Greegs has less flexibility in
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operations as it produces coffee in
accordance to making changes in
the tastes as per customers. It
produces variants of coffee that
suits distinct preferences of market
(Heizer, 2016).
operations as its products once
produced are difficult to change.
It is because the company has
set large machine which
produces products in mass
numbers as per given
instructions.
3) Analysis of design.
Design analysis can be defined as systematic practice to develop a design of
organisational premise (Hickman and Silva, 2018). With design analysis, business concerns
improve their way of working as to met desires of customers effectively. From the information of
Four Vs analysis and Performance objective analysis, the following influences are identified:
Influences on customer service process design
Starbucks: Starbucks is the company that works to met desires for coffee among
customers. It applies all the Four Vs together with all elements of performance objectives in all
its stores that influences positively on its designs of distinct stores. With this, it also serve
effective experiences of customer services through keeping flexibility among operations and
maintains quality within variants of products that adds huge values in its services offered to
customers at stores.
Greegs: Greegs is the confectionary business that has variety of stores in different
locations. The stores of the company have excellent interiors and exterior that attracts wider
customers and influences its services optimistically (Jones and Kober, 2019). Moreover it serves
its products to long distant customers through suppliers so that customer services are provides on
time that results in gaining popularity in international market. it also makes changes in its stores
and procedures for meeting demands about products which leads in making entire customer
service process better.
Influences on layout of stores
Starbucks: The layout of stores that are under Starbucks name are extremely attractive
and gives customers a refreshing experiences. For example, the machines and technologies in the
coffee house are set in sequential order that makes tasty coffee and refreshes customers. The
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entire operations in the store are properly maintained that help managers to perform all activities
of trade in effective manner and this influences store layout positively (Lam and Dai, 2015).
Greegs: The store layout of Greegs are designed in the manner that influences customers
behaviours through directing store flow, general ambiance together with merchandise payments.
All the products offered by the entity are displayed on large screens that assist customers to make
orders in accordance to their desires. With this, managers handle trading performances in
efficient ways that gives competitive edge in dynamic sector.
PART B
1) Overview of operational area.
Supply chain management is operational area considered in the case study for Starbucks.
Supply chain management is defined to management of important processes of company that are
concerned with product flow along with conversion of materials and resources to ready to use
items. With supply chain management, Starbucks has gained huge success in managing
operations in different locations. It uses vertical incorporated supply chain in which all phases of
operations involving coffee beans and technology as inputs to make cup coffee for customers are
operated successfully. It has wide scope as the entity manages supply with more than 300000
coffee growers across the globe (Supply Chain Putting the Star in Starbucks, 2019). As per the
managers of the institutions, interactions with suppliers ensures availability of coffee beans and
various other materials easily for producing tasty coffee with desired quality. This improves
entire performances through making contributions in day to day operations that influences
practices to huge level.
2) Global operations strategy of the company and surrounding macro environment
The global strategy adopted by Starbucks is to add more stores in international market
(Starbucks global strategy, 2020). With this strategy, the company has opened approx 30000
stores with the help of international suppliers. The main purpose behind the strategy is to make
position in untapped market. Moreover, it is analysed that supply chain management has key in
global operations strategy of the entity as suppliers are the one who provide information about
demand of products in the untouched market and managing the chains are support to open stores.
However, macro and business environment influence the global strategy at huge level. To
analyse the influences, PEST analysis is done which is as follows:
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Political: The political environment is associated with the extent in which political
authorities intervenes in operations of company (Lusch and Vargo, 2014). It is seen that different
countries have different political system that restricts workings of companies through interfering
in the operations. For example, when Starbucks planned to open the store in China, it faced huge
difficulties in trading there and suppliers were materials were also not available to the company
that influenced the strategy drastically.
Economic: Economic environment of a country is related with its market performances. It
involves business cycle changes, mechanisms of interest, foreign exchange rates and
unemployment level. Opening stores in the country whose economy is falling influences the
strategy at another extent. The share or market position of the company aggressively started
decreasing and this hampered in its operational area.
Social: Attitudes, preferences, interests and behaviours of targeted population also
influences strategies and operational areas of the company. For example, population of China
prefers culture of drinking tea over coffee that resulted in huge influences of the workings of
Starbucks in opening stores and managing sustainability in Chinese market.
Technological: Technological environment is rapidly growing and influences global
strategies addition to operational areas of business concerns (Mann, 2014). In case with
Starbucks, when the company has acquired required machines and other technologies in least
prices in the technological environment of China then its all the operations were influences
positively as managers were able to manage supply chain for technology and other automations.
3) Requirements, capabilities as well as challenges.
Starbucks is the company that has huge capabilities and requirements to manage supply
chain in competitive market. To analyse key requirements and capabilities, administrators opted
VRIO analysis which is model that assist in evaluation of organisational resources in terms of
requirements and capabilities (Martyn and Anderson, 2018). As per the framework, following
are requirements and capabilities of Starbucks:
Requirements and Valuable Rare Imitable Organised
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Capabilities
Technology ✓ ✗ ✗ ✗
Skilled manpower ✓ ✓ ✗ ✗
Infrastructure ✓ ✓ ✓ ✗
Production Secret ✓ ✓ ✓ ✓
From above analysis, the key requirements to maintain day to day activities of Starbucks
are Technology, Infrastructure, Production Secret and Skilled manpower. All these are valuable
to the company as they assist in improvising competitive advantages in tough beverage industry.
The rare components are those that are not available with other companies in market and in
context to Starbucks, its skilled manpower, production secret and infrastructure are rare that
helps ineffectively functioning entire operations areas. The next is inimitable which are costly
imitate by rival firms. The inimitable capabilities of the coffee company are infrastructure along
with production secret as the entity made huge attempts in achieving them (Mitchell, 2015). The
last category is of organised and in association to Starbucks, its production secret is organised as
only top managers are aware about the information that makes its coffee different from others.
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While realising the requirements and challenges, managers of Starbucks faced huge
challenges that are listed below:
 Starbucks faced challenge of acquiring skilled employees while opening store in
untapped market. Moreover, The company failed in sourcing people that can manage
entire supply chain as per the desired criterion.
 Another challenge faced by managers of the coffee house while realising requirements
was improper setting of infrastructure in the new locations. This impact on its supply
chain management because of having limited resources and improper knowledge about
market customer needs.
4) Analysis together with evaluation of operational area.
Starbucks has effective management team that have abilities to manage all its resources
involved in operations area that is supply chain management. In context to coffee house
company, it has strong supply chain management that performs critical tasks in obtaining
effective suppliers across the globe to collect coffee and related materials so that healthy as well
as delicious items are provided to end consumers. Organisational managers adopts effective rule
of design, forms, mechanisms, sources and deliver supply chain for planting grounds of coffee to
brewing delicious coffee cup for targeted customers through opening its stores in untapped
market (Qiu, 2014). Majorly, supply chain of Starbucks is engrosses towards planning requires
materials, sourcing them, producing coffee cups and other commodities along with distributing
them through licensed cafes or franchises to end population for the purpose of building and
maintaining relations with multiple service providers. The entity has made contractual
agreements with multiple networks so that its supply chain management leads to achieving
success for opening stores within untapped market that impacts favourably on its operations
performances.
The coffee organisation has large number of resources that are managed effectively. Its key
capabilities addition to requirement is infrastructure, technology, production secret and skilled
manpower which are properly managed as per the necessities of companies. The technology
available with the company is implemented on accurate locations in the stores that produces
quality of products and meet experiences of customers. The skilled resources perform their
working for improve customer satisfaction and also learns wide tactics to make distinct variants
of coffee and other products (Revilla and Saenz, 2017). The secret production influences
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brewing of coffee and helps in making changes in production through analysing market needs.
Along with this, it has been analysed and evaluated that Starbucks’ operations performance
impacts supply chain management. It impacts on producing required number of coffee cups and
making them available to customers as per wants. When the supply chain limits restricts or
performs activities slowly then its other operations are hampered for producing and serving same
coffee cup as customer demands. For this, the business concerns arrange resources from multiple
suppliers and manage chain by limiting hurdles in order to attain suitable results.
To respond the challenges that is improper infrastructure setting and acquiring skilled
resources, administrators of Starbucks have undertaken wide remedial actions along with
implemented them in real situations. For improper infrastructure setting, managers have adopted
SaaS Opportunities, intelligent management systems and CyberSecurity (Tempel, Seiler and
Burlingame, 2016). At same time, the recruiting team of company has used various external
recruitment methods such as employment agencies, advertisements and campus recruitment to
get skilled candidate having knowledge to carry out operations performances.
Starbucks team has adopted Transformation process model in its operational area of
supply chain management. The model includes changes in information forms, changes in
location related with information, customers and materials, changes in psychological customers
state and hence forth (Santos and Frederico, 2018). It comprises inputs, transactional practices
together with outputs that creates link among monitoring and controlling workings of entire
conversion process that helps the company to transfer resources or ingredients into coffee that
increases experiences of the targeted market audience and business environment of coffee house.
With the model, the management team properly loads materials and schedules activities in order
to deliver coffee products promptly.
5) Recommendations.
Business concerns require certain recommendations for improvising entire performances of
operations. In this context, following are some of recommendations to Starbucks to improve
operations:
Employee participation while making decisions: It is recommended to top level
management of Starbucks that they must enhance participation of employees while framing
decision. With this, they will be able to get wide ideas and thoughts for certain problems.
Moreover, this will also help company to make proper modifications in operations at appropriate
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time and gain huge revenues. At the time when the managers will work on the recommendation
then they will be able to set proper infrastructure and attract large audiences towards the stores
(Victorino and et. al., 2018). Furthermore, it will enhance seating capacities, order taking
facilities and serving customers effectively.
Customised orders: Starbucks managers are also recommended to work on customised
orders through providing coffee and related products. In various cases, the stocks or inventory of
the company goes out which impacts drastically on performances of the entity. This affects its
order processing as because of shortage of inventory the company is unable to serve customers
and meet their orders on time. Along with this, this recommendation will help the company to
work with proper infrastructure and make timely delivery.
Employee recruitment: recruiting team of Starbucks is recommended to use suitable
recruitment methods for sourcing candidates that have effectiveness to work in the company.
Addition to this, the company will be able to analyse the needs to develop skills and
competences of existing manpower so to make them potential enough to be positioned at vacant
jobs in the company (Hickman and Silva, 2018). The implementation of the recommendation
will benefit the coffee house to hire skilled and competent people who can make huge attempts
in enhancing operations performance.
CONCLUSION
As per mentioned assessment, it is concludes that organisation must manage their
operations and gain excellence on services to maintain positions in tough competition. Four Vs
analysis describes essential elements that help in transforming inputs into effective outputs.
Operational performance objective refers to performance areas of business concerns for which
huge improvements are made by managers as they bids in meeting strategies and objectives. The
design of company recognises dysfunctional aspects concerned with procedures, systems, work
flows along with structures that fits business realities and helps in implementing new changes.
Operation area of supply chain management involves the ways in which while chain of supply is
managed by sole entity. PEST Analysis assist in analysing influences of macro business
environment on strategy of company. The key requirements of company include technology,
production secret, skilled manpower and infrastructure. At same time, challenges faced in
achieving success in global strategy includes problems in acquiring skilled personnel and issues
in setting infrastructure in other locations.
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Online
Objectives of Operational Performance. 2019. [Online] Available through:
<https://www.planettogether.com/blog/objectives-of-operational-performance>.
Starbucks global strategy. 2020. [Online]. Available through: <
https://edition.cnn.com/2019/07/25/investing/starbucks-earnings/index.html>
Supply Chain Putting the Star in Starbucks. 2019. [Online] Available through:
<https://www.fronetics.com/supply-chain-putting-star-starbucks/>.
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