An Analysis of The Operations Of Starbucks

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1. INTRODUCTION

1.1 Overview & Location

The company is well reputed American multinational coffee chain. It’s headquarters based in Seattle, Washington.  The company was founded in 1971. Greggs also located close to BPP University a few feet’s away from Starbucks. Greggs is the largest bakery chain in London. It was founded in 1939. Although both companies have their reputations and customers have their preference towards the products of both the companies. As both are located closer to BBP University the student footfall is expected more here. It can also be said that their major customers’ would-be students from the university. The reason for the students’ preference could be the 6 min walk to both.                                                     

An Analysis of The Operations Of Starbucks
An Analysis of The Operations Of Starbucks
An Analysis of The Operations Of Starbucks

Figure 2 and 3 shows the location of both Starbucks and Greggs in London. Both are surrounded by many other food joints or coffee shops but their prime location makes them more preferred. Close to airways and easy roadways makes them most preferred. 

1.2 Demographic

The American coffee chain Starbucks offers facilities like take-outs, bike parking space, provide Wi-Fi facility, provide ambience for working and outdoor seating. The mode of payment is also made easier as they accept both credit and debit cards. The timing during weekdays are 6:00 am to 9:30 pm, 6:30 am to 9:30 on Saturdays and 7:00 am to 9:30 pm on Sundays. People from almost every age groups are likely to be seen here. Due to the ambience, people prefer mostly prefer this place for meetings, group studies, discussion etc.

Greggs is a bakery chain whose main product are cakes, pastries and freshly baked bread. Not only have this had they also sold selective drinks and sandwiches. It is located near Shepherd’s Bush station. The bakery timing during weekdays is 6:30 am to 7:00 pm, 7:00 am to 7:00 pm on Saturdays and 9:00 am to 6:00 pm on Sundays. The place is visited more by those who have sweet tooth or preference for bakery products. Both the shops are visited by people from all age groups and religions. As the locations are closer to university so they are preferred more by students.

1.3 Services Offered

The opening timing for Starbucks during weekdays are 6:00 am to 9:30 pm, 6:30 am to 9:30 on Saturdays and 7:00 am to 9:30 pm on Sundays. Starbucks offer many products which come under the fields’ drinks, food and at-home coffee. (Appendix 1). The timing for Greggs during weekdays is 6:30 am to 7:00 pm, 7:00 am to 7:00 pm on Saturdays and 9:00 am to 6:00 pm on Sundays. The breakfast is served till 11 am. The products offered are sandwiches, pasta, salads and soups, drinks and snacks,baked products, doughnuts, platters etc. (Appendix 2).

1.4 Comparative Four Vs Analysis

The 4 V Analysis is conducted to the assessment of the operation ion conducted in the organisation. This analysis helps understand the needs of the customer and with the analysis, the company can work on its gaps (Bamford & Forrester, 2010).

These 4 Vs are listed below

  1. Volume
  2. Variety
  3. Variation
  4. Visibility.

Volume: This isthe number of products created or delivered within the company. In comparison to Greggs, Starbucks has a vast range of varieties in products. The surveys show that recently converted bakery into a coffee shop (Greggs) is working wonders and earning profit.As per the survey, the average number of customers during weekdays is less in Starbucks in comparison to Greggs and same is the case during weekends. A survey was conducted to conduct to observe the visitors in both Greggs and Starbucks during weekdays and weekends.(Telegraph, 2015).

The table below gives the details:

Name of the CompanyVisitors during WeekdaysVisitors during Weekend
Starbucks120 customers180 Customers
Greggs150 Customers200 Customers

Table 1 Volume of customers visiting Starbucks and Greggs (Observation Approx)

From the above table we can conclude that Greggs have more footfall in comparison to Starbucks both in weekdays and weekends.

Variety

It reflects the variety of goods or products offered by the company to the customer. In comparison to Starbucks, it is observed that Greggs don’t have much to offer to its customers. From the figure below shows the variety of products offered by both Starbucks and Greggs. Starbucks focuses on 4 main areas: Food, Brewages, Coffee beans and coffee equipment.  Starbucks offer 11 breakfast choices whereasGreggs offers 14 options. There are 16 lunch options and Greggs offer 8 pasta, salad and soup choices. Starbucks has 6 fresh fruits and there are 24 varieties of sandwiches, 4 platters, 18 Balanced Choice Menu and 9 Pasties and bakes in Gregg’s menu. Whereas Starbucks offer a vast range of 18 Espresso based drinks, 13 tea options, 11 Muffins, Pastries & Doughnuts, 20 Cakes & cookies.

An Analysis of The Operations Of Starbucks

 Figure 4 Starbucks Product Areas

Greggs Products

Figure 5 Greggs Products

Variation

The term refers to the changes in the demands of products or the services provided by the organizations. These changes can occur due to any reason like weekends, holidays, offers etc. The consumer preference shifts from time to time and so does their food preferences. During peak hours as both are located near to the university the rush is expected early morning and during lunch hours and during this time students are likely to order something instant whereas during holidays and weekends they don’t mind waiting.

Visibility

This refers to the ease of the customer to go through the products. This means that the products are displayed in such a manner that they are easily visible to the consumer so that he can make his choices. When it comes to food it’s all about the display in both stores there is clear visibility to the products so the consumer can peek a glance easily. (Steve Brown, 2013)

Food
Figure 9Tempting food display

2. Performance Objectives Analysis

The performance analysis is a very critical part for any organisation which is done through three parameters i.e. quality, flexibly, speed and dependability. These parameters give a clear picture of the performance of the company.

  1. Quality: As Starbucks is concerned about being a global brand they have been very careful towards the quality of their products. As their Tagine says “Proud to Serve” the company has lived up to it whereas Greggs with its vast verities have a focus on nutritional aspect and served its customer.

Comparing reviews from various popular apps it is observed that both Starbucks and Greggs are on the same level when it comes to performance. On google review, Starbucks has 4.1 ratings and Greggs is on 4.2 ratings out of 5. On zomatoStarbucks score 3.5 and Greggs score 2.9 out of 5. (Ismail, et al., 2010)

Reviews

Flexible: Being aglobal brand Starbucks have alwaysfocused on customer preference as per the regions. The product alterations are done as per the customer and the regions. In some regions of Asia milk coffee and tea is preferred. The brand has some alterations to its products as per its customer demands. Greggs no doubly has lived up to its reputation over the years and have provided a large variety to its customers.

Speed: This aspect focuses on the speed at which the food is prepared and delivered. No one likes to wait for long hours and customers always consider speed under store performance. The reviews are rated on the performance of the base which includes speed and it’s quite evident the services are little slower in both the stores.(Nwachukwu & Chladkova, 2019)

Dependability: It has been observed that Starbucks ranks more in comparison to Greggs. The flexibility to the menu as per customer requirement all over the globe makes it more dependable and flexible.(Danny Samson, 2008)

3. Design analysis

From the basic imagers provided above it is clear that both Starbucks and Greggs have focused on 4 V’s. In comparison to both, it is observed that Starbucks have an upper hand in case of Variety and visibility as they have a wide range of products with a very attractive display. In the case of Greggs, they strictly follow the volume and variation aspects. Though both try their best to satisfy their customers at some point they lack in customer services and sometimes results in delay in deliveries. In comparison to Greggs Starbucks have suffered a lot due to its slow serving issues. They have worked on this aspect and tried to live up to their customer’s expectations.

Starbucks Layout

Figure 13 Starbucks Layout.

The above basic layout gives the idea of proper utilisation of space. The layout is designed in such a way that provides prover visibility and movement to its customers. This reflects the proper sitting place.

The Greggs layout reflects the indeed has put up an effort for the showcasing its products which again covers volume and visibility aspect. So many food racks that too in such proximity might affect the movement in the store. During the rush hours, food racks at multiple places could be one of the drawbacks.

Part B

Planning and Control

Overview:

In management, the first fundamental step that takes place is planning. Planning can be defined as the beforehand decision making of what, when and how it is to be done. It is a mental process that involves setting down the goals for the organizations and the various objectives in the path of it. It is done before acting to minimize risk and avoid any unpleasant surprises planning on its own is incomplete without the follow-up action to cross-check whether the process has been implemented correctly towards the achievement of the organizational goals. This follows up action is known as control. Planning and controlling go hand in hand. In a massive commercial organization like Starbucks, both planning and control are of paramount significance. Starbucks has over 30000 stores worldwide, without proper planning and controlling, running such a large chain of stores is not possible. This ensures efficiency as well as customer satisfaction.

Starbucks operations global strategy and surrounding macro-environment:

To run a global business organization like Starbucks, it is essential to pay attention to the attributes surrounding the wider macros of the business environment. Planning helps the organization by laying down the fundamental organizational objectives. The next step is to develop the premises on which the organization proceeds through. It focuses on present as well as future factors affecting the business. A global organization has to deal with a multitude of possibilities and assumptions which may be of political, social-economical, and environmental. For example, some countries may not permit the usage of a particular raw material or it is not adequately available. It could also be an issue within the organization itself. So, it is necessary to assess and evaluate all the factors and variables affecting the functioning of the organization via the process of planning. Controlling helps in verifying and supervising the execution of the planning process(Ng & Tan, 2015). It ensures that all the steps involved in the accomplishment of the organizational goals are executed perfectly, leaving no weak points or loopholes coming back to cause damage shortly. The global operations strategy of Starbucks reflects the proper usage of this process. In 1995, Starbucks invested around $1.5 million to set up a new company called Starbucks Coffee International, focusing its expansion in the Asian continent. Retail stores were set up with a systematic licensing system to ensure the authenticity and originality of the product offered. Next step led to the establishment of a powerful advertisement system to reach as many people as possible. Starbucks took advantage of the growing popularity of Internet marketing. They started sponsoring various popular personalities and organizations that led to the organization’s establishment as the pioneer in the world of coffee production. Then the rapid expansion of retail stores took place. The international success of Starbucks is down to its strong strength and rapid expansion of stores at accessible locations. These well-equipped Wi-Fi-connected stores are always full of an inviting, comfortable and peaceful ambience that provides a perfect atmosphere to the customers. This is all possible thanks to a strategic planning and controlling procedure.(CheikhI & Alaouid, 2019)

Key Requirements, Capabilities, and Challenges:

Running a global business like Starbucks is not an easy task, by any means. Behind the curtains, the organization faces numerous challenges. The first challenge is to fulfil the key requirements. As a food service provider, the fundamental requirement is the ample availability of fresh and healthy raw materials. Different countries have different parameters for running eateries which must be met. Then, the recruitment of quality staff members is another challenge for the organization. As Starbucks is a customer-friendly interactive service provider, it is vital to recruiting staff that is well equipped with mental and social behaviour that feels friendly and comfortable to the customers. In a world of online reviews, it is not unheard of when consecutive negative reviews led to the permanent loss of customers for a business. Thirdly, it is critical to keep the final cost of the product in line with the financial capacity of the target audience. For example, a store near a university must keep pricing in line with the expenditure capacity of the target audience, which is the students of the university. Local business bodies pose another major challenge as they can provide a similar final product for lesser cost as they incur much lower running costs due to the lack of auxiliary services provided by them. A proper planning process is of great importance as it helps in giving a blueprint of the upcoming challenges. This helps in eradicating or at least minimizing hurdles and selection of best alternative methods. Controlling helps by running a step by step check of the activities happening inside as well outside the organization. Various requirements such as legal formalities required to run an eatery across the globe, quality of the raw materials being used, and the final customer experience are very crucial to be kept under supervision to ensure the successful running of the business. At Starbucks, these requirements and challenges are dealt with very professionally with the help of prior planning and subsequent controlling. Customer satisfaction is of decisive for the organization. This is ensured by the diligent, intelligent and industrious management of Starbucks.(Muhammad Azriuddin, 2020)

4. Analysis and Evaluation:

A thorough analysis of a Starbucks retail store was conducted to compile this report. The major observations are-

  • Space management – There was a clear lack of space for the number of customers present on a Monday morning. Around 25% of customers were waiting in the line for the next table to free up. This shows that there is a need for space management. This will lead to more customers to enjoy the services and a higher level of satisfaction.
  • Delay in service – The customers waiting for the delivery of their order was a rather discouraging sight. They were constantly checking their timepieces with visible disappointment on their faces. This delay in service could be due to the following;
  • Lack of staff – Understaffing leads to increased workload and a definite delay in services.
  • Underperforming equipment – A retail store of Starbucks heavily relies on high-quality equipment, and if it is not performing as expected, it may elongate the preparation time and lead to delay in service.
  • Incompetent management – Management must exercise proper discipline in every task carried out in the store to ensure timely services to the customer.
  • Business personnel – The seats were dominated by the presence of business personnel. Face to face meeting, video call meets and simple phone conferences were very common. This shows the favouritism of Starbucks among the business class over other service providers like Greggs’.(Khan et al, 2015).
  • Casual meetings – Casual meetings among university students, friends and other people of different age groups were happily sipping their coffee. This shows how people from different working backgrounds and different age groups were happy and comfortable in their Monday mornings, thanks to an inviting, peaceful and soothing atmosphere. This is not matched by rivals like Greggs’.
  • Variety – Despite being famous for the coffee, the customer’s plates were loaded with a variety of snacks and dishes accompanied by their coffee. Leaving behind the competition that solely serves baked foods, Starbucks offer a variety of refreshments along with their coffee to attract more and more customers. The satisfaction level of the customers was visible after every delightful bite.
  • To go services – Not everyone wants to enjoy a cup of coffee on a chair, some prefer to have it on their way to work. The retail store offered to-go services in high-quality packaging to the customers in a hurry.
  • Parking space – Most urban service providers suffer from a lack of parking space for the customers. The retail store of Starbucks had ample space of parking for the vehicles of their customer so that they can enjoy their coffee without worrying about the parking ticket. This gives Starbucks a sharp edge over Greggs, who do not provide parking space(Handfield, 2020).

Evaluation – The Starbucks retail stores are well run, save for a few shortcomings here and there. If the issue of space management and service provision is sorted out, the experience is nearly flawless. There is a reason why Starbucks today is much more than a mere coffee place, it has become a brand image, a lifestyle symbol and a ‘first thing in the morning’ place for millions of people all across the globe. It enjoys a strong position in social media. Starbucks ensure an enjoyable experience anywhere across the globe thanks to its massive chain of stores.

This delightful experience may seem like an easy task to an amateur. But it takes a lot of effort to keep this flowing. The preparations start well before the sun rises and continue till midnight. The staff works in shifts to ensure efficiency. Staying one step ahead of the competition and fulfilling the customer demands based on their feedback is given a high priority. The importance of rightful planning and controlling cannot be ignored here. From the arrangement of fresh coffee beans to cooking the perfect sandwich, till the customer leaves the parking lot with a smile, everything is possible thanks to the constant planning and supervision carried out by super-efficient management. 

Recommendations:

They say nothing is perfect. Which is true, but we can always strive towards perfection. Starbucks follows the same, they strive towards providing a perfect experience to the customers. This is the reason behind their rapid growth. But despite an enjoyable experience, there are a few areas where there is room for improvement. These are-

  • Space – As previously discussed, space management is not as good as it could be. Finding people waiting for their tables on a Monday morning is a common sight. Proper space administration must be promoted to maximize the number of tables available without overcrowding the stores. This must be considered when the existing stores are renovated or new stores are established.
  • Delivery – Delay in delivery was also previously discussed which translated into extended and more than the acceptable time between receiving and delivering the order of the customer. This can be achieved by-
  • Recruitment of the required number of staff
  • Regular checkup and maintenance of the machinery used daily.
  • Taking care of other factors behind this delay such as lethargy among the staff members or a general lack of discipline.
  • Promoting more options for health-conscious customers – Refreshments at Starbucks are often loaded with calories, which may not be healthy for a large portion of their target audience. A provision of healthier versions of their offering for people working on their health will be greatly appreciated by one and all.
  • Private Lounges – As previously mentioned, Starbucks is the go-to place for the business personnel. Provision of private lounges will take this experience to the next level.
  • Eco-friendly products – Promotion of eco-friendly products should be performed, especially considering the ongoing hazards on our planet. Starbucks can promote a thoughtfulness of using eco-friendly products by cutting down the usage of plastics.
  • Edible containers – This is like an extension to the eco-friendly pathway for Starbucks. Providing edible containers in different flavours can be a clever and great way of eliminating plastic from their daily inventory and attract more kids and adults alike.

Starbucks always looks to improve itsservices, this is reflected by their regular expenditure on research and development. These recommendations look to add to their enjoyable experience.

Conclusion:

Starbucks is an international brand in today’s world. It is popular among teenagers, businessmen, celebrities and grownups alike. Their vast network of a chain of stores across the globe shows their ability to provide the highest quality of service in over 80 countries. This thorough analytical report on this organization throws light on the fundamental reasons behind its success. Their addictive coffee, delicious snacks and offerings, and an enjoyable ambience subconsciously force the customers to come back every time they crave a worthy cup of coffee as they will struggle to find a similar experience anywhere else like Greggs’. The shortcomings are also highlighted with the motive of improvement. The top management must focus their attention on proper planning and controlling of their organization to keep on moving forward. Conclusively, it is safe to say that despite strong competition, Starbucks is well ahead of its rivals.

References

Bamford, D. & Forrester. P. (2010). Essential Guide to Operations Management: Concepts and Case Notes, West Sussex: John Wiley & Sons

Ismail, A.I., Rose, R.C., Abdullah, H. and Uli, J., 2010. The relationship between organisational competitive advantage and performance moderated by the age and size of firms. Asian Academy of Management Journal15(2), pp.157-173.

Lamming, R., Steve, B. & John, B. (2012). Strategic Operations Management. London: Routledge

Hughes, L. (2018). Workplace Ethics – Starbucks Case Study [Online]. Available at: https://customwritings.co/workplace-ethics-starbucks-case-study/ (Accessed: 05 April 2020)

Starbucks. (2019). Community: Creating Pathways to Opportunity [Online]. Available at:  https://www.starbucks.com/responsibility/community (Accessed: 06 April 2020).

Zomato (2020). Greggs Menu [Online] Available from https://www.zomato.com/london/greggs-1-shepherds-bush/menu Accessed 6 April 2020

Zomato (2020). Starbucks Menu [Online] Available from https://www.zomato.com/london/starbucks-uxbridge/menu Accessed 6 April 2020

Samson.D. & Singh, P. (2008). Operations Management: An Integrated Approach, Cambridge: Cambridge University Press

Nwachukwu, C. and Chladkova, H., 2019. FIRM RESOURCES, STRATEGIC ANALYSIS CAPABILITY AND STRATEGIC PERFORMANCE: ORGANISATIONAL STRUCTURE AS MODERATOR. International Journal for Quality Research13(1).

Khan et al. (2015). Starbucks: An analysis of supply chain risk and mitigation strategies [Online]. Available at: https://sfkcorp.com/2015/04/28/starbucks-an-analysis-of-supply-chain-risk-and-mitigation-strategies/ (Accessed: 07 April 2020).

Handfield, R. (2020). Supply Chain Resource Cooperative [Online]. Available at: https://scm.ncsu.edu/scm-articles/article/what-is-supply-chain-management-scm (Accessed:  06 April 2020).

Ng, J.C.Y. and Tan, H.T., 2015. GOING GLOBAL: DO YOU HAVE THE NECESSARY STRATEGIC AND RESOURCES FIT?. Indian Journal of Management Science5(1), p.96.

L’AUDIT MARKETING, U.M.D. and DE, C., 2019. MARKETING AUDIT A METHOD OF A CONDUCT EVALUATION OF THE MARKETING STRATEGY AND THE BUSINESS PERFORMANCE. Revue Internationale du Marketing et Management Stratégique1(4), p.156.

Azriuddin, M., Kee, D.M.H., Hafizzudin, M., Fitri, M., Zakwan, M.A., AlSanousi, D., Kelpia, A. and Kurniawan, O., 2020. Becoming an International Brand: A Case Study of Starbucks. Journal of the community development in Asia3(1), pp.33-43.


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