What Is Starbucks Value Chain?

Value Chain Analysis of Starbucks

A value chain studies the value added at various intervals through a series of activities that aim to create profitable value for a product offering. Porter talks about value chain analysis from multiple angles. There are a few essential components to be aware of when beginning to understand value chain analysis.

Primary and secondary activities are usually the main activities of value-chain business. The creation of a good or service is the primary activity. The support activities help in enhancing the efficiency and work of an offering to obtain a stronger competitive advantage.

There is no middleman in the selling of Starbucks products. Most of the products are sold in stores. Storage and distribution to retail locations are important.

Aggressive marketing is not as effective as Starbucks invests in superior quality products and a high level of customer service. Sampling in areas around the stores is one of the need-based marketing activities carried out by the company. The supply chain has procurement integrated across it.

Porter talks about procurement as a support activity. Many companies will have standards for their procurement dealings. The procurement relationships vary widely.

The Starbucks Company

The coffee beans are transported to the Starbucks facility for storage and refinement after being picked from the farms. They undergo a roasting technique by Starbucks that increases shelf life. The beans are packed and sent to the distribution center.

The company relies on native suppliers to maintain the quality of coffee beans, and does not involve third-party vendors as of now. The company has more than 32 thousand stores in 83 countries. Around 80% of Starbucks revenue comes from company-owned stores and the rest comes from its monitored facilities and sister brands.

Starbucks has one of the most aggressive marketing strategies in the industry. The company invests a lot to maintain the highest standard of customer satisfaction. Starbucks has been around for almost 50 years and has a strong infrastructure in almost every department.

Starbucks has several other regional offices around the world, but the main office is in Seattle. Starbucks has over 349,000 employees worldwide, including baristas, brew staff, corporate employees, and so on. Starbucks has an employee satisfaction rate of over 80 percent, which is the highest in the food and service industry.

Value chain analysis used to add value to a product and reduce costs. It is a combination of internal and supporting activities to change input to add value to the product. Starbucks buyers pick the finest coffee from coffee producers in Asia, Africa, and Latin America.

The beans are obtained from the farms by the buyers of Starbucks and then they are moved to the storage units where they are roasted and packaged before being sent to the distribution units. The company has some companies that manage them. Starbucks does not contract any supplier to certify or standardize the quality of the beans.

The infrastructure of a company can be thought of as a physical thing but the facilities, services, and structure can also be included in the infrastructure of a company. Starbucks infrastructure consists of different departments which are associated with the operations of the company. The Starbucks team in green apron provide good customer service and the managers supervise the stores.

Starbucks - A welcoming environment

Logistics is concerned with the distribution of the final product. Starbucks has an in depth supply chain operation that ensures the coffee beans are kept fresh when they are delivered to retail stores, wholesalers, grocery stores and through mail order. Starbucks uses a direct mailing system to deliver coffee to consumers who are not near a store.

The key to increasing the value of Starbucks is marketing and sales, it identifies what the customers want and gets the word out about the brand. Starbucks brand equity is a concern for marketing. They used to focus on retail equity, but now they want to focus on the brand bring joy to everyone.

Starbucks focuses on the service offered, making sure that the customer is satisfied after the product has been sold. Starbucks has extensive training and education for their baristas so they are prepared when on the clock. They look for employees who will be able to offer the best coffee experience and who will work well with customers.

Starbucks has set guidelines to create a welcoming environment in every store. They gain from their steady increase in stock and sturdy finances. Human resource management is the process of hiring and training employees.

Starbucks Value Chain Analysis

Starbucks is involved in the production and selling of the product to targeted customers. Starbucks can improve its performance by analyzing its primary value chain activities. Strong relationships with suppliers are important to receive, store and distribute the product.

Starbucks can face challenges in product development phases without analyzing the in-bound logistics. Every aspect of transformation from raw material to finished product is analyzed in-bound. Some examples of inbound logistics include retrieving raw material, storing inputs and internally distributing the raw material and components to start production.

It includes both manufacturing and service operations. Ensuring the competitive success of Starbucks is dependent on analyzing operational activities. Starbucks can achieve consistent economic growth, increase profitability and set a powerful basis for competitive advantage by increasing productivity.

Outbound logistics involves activities that deliver the product to the customer. Material handling, warehousing, scheduling, order processing, transporting and delivering to the destination are some outbound logistics activities. Starbucks can analyse and improve outbound logistics to find competitive advantage sources and achieve its goals.

When outbound activities are managed with optimal costs and product delivery processes, it increases the customer satisfaction and growth opportunities for the firm. Starbucks should pay particular attention to its outbound value chain activities when its products are not fresh and need to be delivered quickly. Starbucks can stand out from the competition with effective and wisely integrated marketing activities.

Starbucks: A diversified business intelligence system

The company has relationships with trading companies and exporters. The program's focus is on ethical source of cocoa, where it has achieved the milestone of ethically 99%. Starbucks sources coffee from all over the world.

The brand had over 12,000 company operated stores in 2015, and most of them are in leased properties. There were 10,808 licensed stores in September. The company has used both licensed and company operated stores.

The brand operates in over sixty countries where leased facilities are used for administrative offices, training facilities and storage. Starbucks has a focus on human resource policies that provide staff with the kind of satisfaction they want from their jobs. The focus is on being ethical and customer oriented while creating a work environment that facilitates collaboration.

Starbucks uses technological development to serve its target market. Coffee still plays a major role in the business despite technology not being the focus. Information technology systems are used in a wide range of businesses from point of sale to online and mobile payment systems.

The Starbucks Company Generic Strategy

The Generic Strategy of the Starbucks Company is seen as having a competitive advantage and competitive scope. The company's focus is on the anticipated business and marketing strategies, and the cost of leadership is a major emphasis. The cost of leadership relates to the need to reduce costs in the aspects of the business operations that are planned in advance.

It is important to control the profit margins so that they are not used to make money. Product development, advertising, and customer service are included. The tables below show the trend analysis.

Only the selected financial data will be examined in order to address the financial performance of the Starbucks Company. The analysis will look at the dates from 2010 to the present. The issues that the company could face in the future could be considered with respect to the growth opportunities for the business of the Starbucks Company.

The menu expansion strategy is the main element for Starbucks' future growth. Adding more items to the menu does not mean that it will increase the number of orders or lead to higher customer satisfaction. The coffeehouse industry is maturing, which could pose risks for the company in terms of decreasing the well-established brand of the global coffee shop.

If Starbucks responds quickly to the feedback of the target customers, it is possible to achieve growth in the existing market. The Starbucks Company has a strong market position and ways to take advantage of it. It should continue to deliver the highest quality products and services.

Starbucks: An investment strategy for a new American retailer

You will need an initial investment of around $325,000. Starbucks is picky about the locations of its licensees, which must be in high-traffic areas with lots of walk-in customers. Starbucks stores in the US are owned by the company.

Starbucks has not used franchising to expand its operations. Starbucks is not a franchise for retailers. You can open a Starbucks kiosk at a few locations or explore franchising with other companies.

In the year of 2011, Marques Thomas graduated with an masters degree. Since then, he has worked in retail and consumer service as a manager, advisor, and marketer. The founder and head writer of QuerySprout.com is Marques.