Starbucks-Operations Management

Starbucks was built under a profit-centric business design, using a multi-component system profit model. This model is defined in The Profit Zone, by Adrian Slywotzky and David Morrison; “In some businesses, there are several components of the production and selling system, and each component has radically different profit characteristics. Failure to maximize participation in the highest-profit components depresses the profitability of the entire system. On the other hand, full participation in the less profitable components is required to win the market for the most profitable components.”(1) They continue to explain the coffee industry specifically, “In coffee, the components are grocery, cafes, and kiosks. Grocery is low margin, cafes are high margin, and kiosks are even higher still.” (2)

Starbucks has found their place in these areas and more.

The third area of structural decisions is what technological factors need to be considered. In terms of Starbucks, they have an automated point of sale system that has scanning capabilities. The scanner is able to read products sold as well as the Starbucks Card, which is card that carries a prepaid balance for future purchases. Also, in regards to the espresso machines, there are some locations with traditional machines while others have automated espresso machines.

Not only do they sell their beans in grocery stores, they also have partnered with Dreyers to sell ice cream products, and with Pepsi to sell bottled FrappucinoÒ Drinks. The have kiosks in grocery stores, malls and airports. They also have cafes, some offering drive through service. Their cafes offer specialty coffee drinks, beans, pastries, CD’s, and coffee accessories. Additionally, they have mail order service available as well as the option to purchase products through their website. Finally, they offer a variety of services specific to business consumers. They provide office beverage service to larger companies, complete with brewing equipment and merchandise with the Starbucks logo i.e. cups and napkins. Starbucks offers office delivery service for smaller companies, which includes ready to brew packages of coffee, certain pastries, and tea. Foodservice is also an option for restaurants, hotels and resorts, universities, and a variety of other large establishments.

A company creates a business strategy to formulate a plan as to how they are going to beat out the competition. Since Starbucks does not have a nationwide competitor, it is safe to say that they have succeeded. The company accomplished this by a selective rollout as opposed to a nationwide rollout. They were able to create a brand name that signified quality coffee by choosing specific cities, and gaining the loyalty of consumers. Once a certain area proved to be successful, the company would then move on to saturate another market. Star

Some topics in this essay:
Hanna Newman, Frappucino� Drinks, David Morrison, Starbucks Web, Starbucks Card, Howard Schultz, Operations Management, , Finally Denver, business operations, kiosks grocery, retail operations, hanna newman, grocery stores, structural decisions, espresso machines, mass service, According Hanna, human resources issues, service service, according hanna, production planning control, according hanna newman, specialty coffee drinks, hanna newman operations,