Journal 1

.pdf

School

Southern New Hampshire University *

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Course

690

Subject

Marketing

Date

Apr 3, 2024

Type

pdf

Pages

Uploaded by nicolemaio323

It's remarkable to think that the now iconic coffee chain - which is a household name - began with just a single store selling coffee beans in 1971. Starbucks hit the ground running, rapidly climbing up to 17 stores by 1987 and then nearly quadrupling that number in the following two years. In 1994, the coffee giant opened its first drive-thru location, and in 1996 they began to open stores globally. As of January, 2022 Starbucks has over 36,000 total stores worldwide (Starbucks, 2023). Even with this concise company history, it's evident that there's much to learn from Starbucks, and glancing into their operational strategy could pave the way for the growth and success of other companies. THE FOUR CRITERIA Starbucks has a company structure that includes both service operations a well as manufacturing. In the United States, Starbucks has five roasting plants, two of which also function as distribution centers. In these plants, green coffee beans, full-leaf tea and fresh juice ingredients are processed to deliver the end-product (Starbucks, 2024). Additionally, there is the service component of the business, which takes place within the over 36,000 coffee houses world-wide. Within a store location, customers can order a handcrafted beverage and expect to interact with a “passionate team who are obsessed with craft coffee, extraordinary ingredients and meaningful customer connections” (Starbucks, 2024). Starbucks has multiple product lines that it offers within its store locations. These include both pre-made products, as well as products to be consumed at home. According to Starbucks, the full range of offerings are as follows: coffee, handcrafted beverages, merchandise, fresh food,

and consumer products that include both coffee and tea, and ready to drink beverages (Starbucks, 2013). The coffee industry is also known to be a highly competitive market. It is said that more than one billion people consume coffee every day, and over 125 million rely on working within the coffee industry to support their families. The coffee industry generates over $200 billion annually (Momin, 2023). The coffee industry has competition within both retail giants, and smaller specialty shops. Up to 62% of specialty coffee shops don’t make it to see their second anniversary (Montgomery, 2023). In terms of global vision, it is clear that Starbucks has already shown a desire to expand far beyond the United States. The global coffee giant is currently present in over 80 countries world-wide. Starbucks began opening international stores in 1987 - when the first location outside of the United States was opened in Vancouver, Canada (Starbucks, 2023). THE TEN CRITICAL DECISION AREAS Starbucks’ operations spans across all ten critical decision areas. Their products include not only the variety of handcrafted beverages, merchandise and pre-made products, but also the production of their own brand of coffee beans. These beans are used both in-store, and are available for purchase for use at home. In relation to quality and sustainability, 99% of Starbucks coffee is verifiably ethically sourced. They have implemented their C.A.F.E. practices (Coffee and Farmer Equity) that focuses on measuring farms against economic, social and environmental criteria (Starbucks, 2024). It is assumed that Starbucks would have employed a variety of standardized processes in order to have grown its current magnitude. This could be processes

within manufacturing - such as processing coffee beans, or reduction of fresh tea leaves. Processes could also expand into the service sector - with the creation of the handcrafted beverages moving from customer order to delivery. In respect to locations that affect the supply chain, Starbucks has distribution centers on both the east and west coast, and roasting plants in five different locations that cover most of the United States (Starbucks, 2024). Starbucks layout encompasses one of a typical “chain” restaurant. The coffee houses are typically designed to shuffle the customer into a line for the register, with either side of the line surrounded by small shelves of merchandise for the consumer to browse while they wait to be served. This is done to encourage additional browsing and possibly additional purchases. Starbucks human resource component involves investing in their employees. This includes but is not limited to: education and student loan management, food and beverage benefits, health coverage, paid time off and financial well-being perks (Starbucks, 2024). Starbucks has done exceedingly well taking control of their supply chain. This is partially due to the fact that they have such large purchasing power. According to Starbucks, they comprise over 3% of the worlds coffee bean purchases and make those purchases from over 30 countries worldwide (Starbucks, 2024). Purchasing coffee in such a large volume gives an innate negotiating power other smaller companies may not have. Starbucks manages their inventory by using computer programs through their checkout process. When tracked properly, this can provide data to each franchise to determine the appropriate amount of inventory needed in each location, at any given time of year. In regards to scheduling, Starbucks needs to be able to schedule enough human resources around peak times within each location. This would ensure that each customer gets the highest quality of service. Lastly, maintenance comes into play with

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