STARBUCKS
Starbucks Corporation was established in 1985 and is the leading retailer market for providing coffee. It is known for offering tea, coffee, and other beverages, including a variety of food items. The corporation is now operating in 5 continents and two countries – Latin America, Europe, Africa, China/Asia Pacific, Middle East, including the Canada and the United States. The corporation is offering fresh juice, chocolate beverages, espresso, Frappucino drinks, iced coffee, and fresh meals to its customers. It also offers stored value cards to their loyal customers where these cards can be used as a means of purchasing the company’s products (Reuters n.d).
Supply Chain Management
Supply chain management is a business strategy in which all the links of networks are coordinated; thus, resulting in the effective movement of products and services of the company through the supply chain management of suppliers of raw materials, which are provided to the manufacturers and then passed on to the distributors of the goods. Supply chain management encourages information sharing such as sales data, sales promotions, and the prediction of demand. The importance of supply chain management is that it provides business performance and strategic coordination within the organization and balances the demand and supply, including the incorporation of the demand and supply management. Supply chain management is used by business organizations as an approach to managing the movement of information, services, and raw materials through warehouse and factories until the finished product is transferred to the consumer. It is a strategy that improves the profitability and competitive strength of the company. The problem with the supply chain management is that its analysis becomes complicated as a result of the various entities involved, such as the wholesaler, consumer, suppliers, and manufacturers. However, supply chain management has been used by companies as a business strategy for improving their performance. This includes increased revenues, cost effectiveness, and decrease number of product defects
Starbucks uses Michael Porter’s Five Forces in that that Shapes Strategy rather than focuses on their rivals. Starbucks focuses more on the revenues and the profitability of the company; hence, they utilize the five forces which include the threat of the substitutes, the bargaining power of the buyer, the threat of new entrants, the bargaining power of suppliers, and industry rivalry (Baig et al 2011; Deshpande 2012; Porter 2008).
Starbucks uses supply chain management as a business strategy in order to expand their business. The company is completely aware of the consequences that may arise when they mishandle the supply chain. As such, the company manages its own supply chain, ensuring that they provide the customers with high quality coffee. Given the situation of the company, Starbucks wants to operate its own business – open company owned stores. They did not want their business to be franchised because they are afraid that this would mean giving up the superior quality of their coffee. The Starbucks Corporation knows that the reason behind their customers’ loyalty to their products despite the high prices is because of the quality of their coffee. For instance, if the farmers do not achieve a good price for the coffee beans that are sold, the Starbucks would not invest on the maintenance and the fertilizer that are involved in growing high quality coffee beans (Paryani 2011).
References
Baig, V.A; Akhtar, J., 2011. Supply Chain Management: Value Configuration Analysis
Approach. Vision, [e-journal] 15(3).
Deshapande, A., 2012. Supply Chain Management Dimensions, Supply Chain Performance and
Organizational Performance: An Integrated Framework. International Journal of Business and Management, 7(8), pp. 2- 19
Paryani, K., 2011. Product Quality, Service Reliability and Management of Operations at
Starbucks. International Journal of Engineering, Science and Technology, [e-journal] 3(7). Available through: http://www.ijest-ng.com/vol3_no7/ijest-ng-vol3-no7-pp1-14.pdf
Porter, M., 2008. Five Forces that Shapes Strategy. [pdf]. Harvard Business Review
Reuters, n.d. Starbucks Corporation. [online]. Available at:
http://www.reuters.com/finance/stocks/companyProfile?symbol=SBUX.O
