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02/20/2012

Operations Management Decisions Of Starbucks


 

Assignment 2

Operations Management Decisions: Starbucks

Introduction

            In order to stay competitive in the marketplace and to ensure marketability, the management should be able to provide high quality products with affordable cost, timely delivery and flexibility. In addition, the management should also have the ability to differentiate the product offered. Such factors are the responsibilities of the operations managers. In this regard, the management should make an efficient decision in ten aspects of operation management system..  This paper will analyze Starbucks in line with these aspects.

Overview of Starbucks

    Starbucks Coffee has been known in the global market as one of the fastest growing brands. The objective of the management is to establish a unique and competitive brand in the market. The operational strategy of the coffee business is to attain their business enterprise aims through their rapid expansion in terms of retail operations in the global market scene.   Starbucks’ vision is to be greatly recognized in the global market and in order to attain this operations managers believed that Starbucks they should be able to adhere to the 10 critical decisions of operations management.

Starbucks’ Analysis 10 critical decisions

Indeed, making an industry successful in particular setting demands needs detailed studies as well as examination of the factors which will create the best results which will enable the company to meet their objectives. One of the critical decisions for considering strategic operations management is in terms of the product and design decision. Accordingly, product and service designs affect most of the change and transition approach. They are the ones which identify the costs of operations and also the quality of the offered products or services. In this regard, the management should be able to develop product design approaches in accordance with the changes and trends in the market place to sustain marketability and market share of the business enterprise.

            In case of Starbucks, the business enterprise purchase and roast high quality whole coffee beans and sell these to their consumers with enriched Italian style espresso coffee beverages along with confections and pastries and other coffee-related product that are sold directly within their stores and branches. In addition, Starbucks also provide coffee bean products in accordance with the specialty sales groups as well as other retail industries. In addition, the enterprise also attempted to innovate some of their coffee products that made their clients become more interested. Such innovation include the frapuccino coffee drinks and coffee latte and other premium product teas produced by their subsidiary like Taso Tea Business enterprise (Thompson, Strickland & Gamble, 2005).

The next thing to consider is the selection of the location. It has been said that market location depends on the nature of the business and it is noted to be the most critical aspects for business enterprise success. The operations manager’s decision affects costs like the operations management costs, transportation cost, as well as rent and also human resource within the area.  In the case of Starbucks, the operations manager is able to consider convenient and marketable location for the business enterprise. Accordingly, the location factor is considered to be one of the important reasons why consumer chooses specific coffee shop. Most of the Starbucks coffeehouse is located in shopping malls and those areas that are near the commercial centers and areas.  The location of the Starbucks are able to make the business enterprise become the number one choice for different consumers since they perceive that coffee bars are an essential place to relax from busy lifestyles.

The third factor to consider in decision making in operations management is the process as well as the layout design. The selection of the right approaches as well as in making decisions on suitable layouts and process affect management decisions to consider specific technology, the kind of approaches with suitable layouts. In addition, this is done in line with the procurement of the resources and also develops maintenance approaches. Such is part of the strategy of Starbucks as they are able to consider technologically advance layout design. The management of Starbucks have initiated their online strategy by considering WI-FI-enabled branches and stored.  The business enterprise also permits diversification of their products as they acquire Hear Music which is devoted in providing assistance to individuals in line with the discovery of great music.

In addition, the operations manager of Starbucks understands that the more they become to the needs of their clients, the greater the possibility to gain customer loyalty, Hence, having strong brand loyally permits the company to sustain competitive advantages and give them the market opportunity to charge a premium price for its products or to sell more coffee products to their clients. Hence, Starbucks conducts periodic market research to be able to understand the preferences of their clients.  In addition, Starbucks establishes comfortable environment some wherein their clients can relax or conduct business. The Starbucks has been able to introduce broad-band Internet access to enable people to keep in touch with their business or hold meeting while enjoying in their coffee offers.

As part of the operations management, a business enterprise has to generate the right and efficient decision in line with the capacity needs, human resource requirements, purchasing decisions, as well as inventory requirements. This is also included in the process and layout decisions in operations management since it have great effects in the processes and materials to be allocated in relations with each other.

It can be noted that the Starbucks’ operations consists of coffee roasting activities provided to their consumers. In line with their operational capacities and capabilities by modifying their operational competencies which include internal approach and linkages with their suppliers as well as partners and the manners in which managed their entire operations (Buyers & Lindahl, 1999).

It can be said that Starbucks management has been able to adhere to other critical decisions in operations management. Part of the operations management decision of the business enterprise is their decision to expand Starbucks through their' flexibility as well as innovation.  To be able to cope with the effects of market changes and to have sustainable competitive advantage, the operations manager of Starbucks has been able to expand and improve the business enterprise so as to conduct business operations as well as activities on a global market which involves market expansion of Starbucks through the store presence of their brand in various parts of the world.

Operations management in decision making in Starbucks have been able to deal with their inputs, changes and outcomes which differ across the branch of the business enterprise and markets. In Starbucks, gaining customer loyalty is part of their operations management decision (Chow & Holden, 1997). By providing the customers their demands in the market place, Starbucks are able to gain loyal consumers who buy their products even at its highest price.

            The Starbucks Coffee outlets operate under the business enterprise logos and symbols as each store provide large range of special product offers targeting executives, professionals and even students. Starbucks Coffee offers unique blends of coffee products which roasted into perfections.

            The operations management is conventionally characterized as a stable system in which components as well as products or services move smoothly from the business enterprise to end consumers. Operations management design models considered decisions making process which are worth millions of dollars (Hane & Sudar, 1998) McKinnon's interview study found that Operations management managers are responding to such pressures by such actions as increased back loading, improved business operations, the redesign of packaging as well as changes in the ordering system (McKinnon, 1998).

Part of the capacity and capability process of Starbucks is its strategic operation management through changes in packaging, special offers like freebies as well as convenient stores and providing the latest trends in the coffee market to meet changing needs and demands of their consumers.  Starbucks Coffee is able to competitively stay in business catering specifically to middle-class to class A sector of the population. Starbucks Coffee highly considered the enterprise’s focus to its niche market highlighting the values of quality and economical purchasing behavior. The operations manager of the Starbucks permits various people in this market segment to choose freely from the stores broad range of coffee products.

The operations management concerns in the coffee market industry is normally confronted with different challenges which address speed as well as a reliable delivery system of the business enterprise as business operations essentials to compete competitively in today’s global trade

Starbucks operates through their branches and store to serve its promise of providing high quality and increased value of its coffee products and services. Efficient deliveries of their supplies as well as efficient demand forecasts of coffee products needs which the Starbucks accounts to enable effective business operations in every locale that it serves. The operations manager of Starbucks also consider cost-effective as well as time-efficient routing and product placements, and include storage approach as the keys to the business enterprise’s achievements to become one of the most recognized coffee market industry. The business enterprise’s high consideration to their coffee products perishability as well as tangibility, trends in coffee products demands and strategic operations management made it possible for the Starbucks to continue its operation and initiate expansion plans to other locales (Daft, 2003)

            In terms of human resource management, Starbucks has been able to consider having efficient management of cultural diversity. Since, they are considering international market, the management sees to it that they are able to adapt to the culture of their employees. In doing so, Starbucks has been able to utilize four aspects of management styles which consider transformation view, power, paradigm shift and also their social responsibility view (Proctor, 2000). Into his regard, the management of Starbucks has focused on the area of transforming their employees to be a good source of providing and meeting the changing needs of the global market. In this regard, the human resource management of Starbuck has been able to provide visionary value. The employee management approach has been able to enhance not only the manager’s way of managing as well as facilitatiting their subordinates but most specifically the fact that it develops both the performance of their employees and the organization which is seen in the entire operations of Starbucks. Furthermore, the management of Starbucks provides decisions making in enabling their employees to be motivated and be morally matured in controlling their responsibilities. Moreover, it enhances their ability to become more flexible, innovative and creative leading to have employees with self-satisfaction and self-fulfillment. The Starbucks provides intensive training and education for their employees. Through the human resource management used as part of the operations management approach in Starbucks, the company has been able to continuously meet their business goal.

            The operations manager should also consider the inventory process as part of the operations management approach (Waller et al, 1999; Chen et al, 2000). Herein, the management should see to it that their needed products for specific operations such as one week or one month are given emphasis to avoid problems in providing end products to consumers.

Conclusion

Starbucks is truly one of the largest and most recognized coffee industry in the global scale.  But it is undeniable that large industries are always entitled in considering efficient management approach, specifically in their operations..   In order for Starbucks to continuously grow in the market environment, it is significant that the operations manager will be able to consider the 10 critical aspects of decision making.

Apparently, such ten critical decisions in operations management are very important to identify the business enterprise’s success top be able to fulfill their mission, vision and objectives. Only by considering strategic operations decisions and review such in timely basis in ensuring that the decisions made are feasible for the present market condition, the Starbucks will be able to pass all problems and hassles in the future of the business.

In summary, the plausible operations management approach of Starbucks cited in this report had been selected based on the operations management system approach. Generally, these operations management decisions making can be of benefit the company not only in terms of gaining profit as well as market share but also in overcoming management issues.

Reference

Daft, R. (2003). Management. 6th Ed. Cincinnati, Ohio: Thomson South-Western.

Hane, C & Sudar A 1998, Collaborative Supply Chain Design Using Optimization & Simulation, INFORMS Conference Presentation.

Thompson, AA Strickland AJ & Gamble J 2005, “Starbucks in 2004:  Driving for Global Dominance”. Crafting and Executing Strategy (Fourteenth Edition), McGraw-Hill, New York, pp. C2-C32.

 

 

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