Starbucks is a global quick service provider, one of the largest in the world, and the largest with a coffee focus. According to the company's latest annual report, it operates just over 23,000 stores globally, around 53% of which are company-owned. The rest are franchised. The franchise business model is utilized in many of the company's major markets, and has been a feature of some of its major international expansion efforts, particularly in Asia. The franchising, however, complicates some of the international operations for the company, as it seeks to deliver a consistent brand experience across all stores, anywhere in the world. This paper will examine the extent to which Starbucks centralizes aspects of its international operations, and the steps it takes to ensure a high level of consistency in its operations no matter where in the world or whether the operation is company or franchise-owned.
As with most major global brands, a lot of how Starbucks competes is on the basis of the differentiation that the brand offers The Starbucks brand is one of the most valuable in the world (Interbrand 2015). The brand conveys a promise to consumers, and that promise holds significant value in the marketplace. The brand is a lifestyle promise that goes beyond coffee, something that each and every store must deliver, making operations an essential element of the brand promise (Leifer 2015).
Operations Strategy Formulation
Whether a store is owned by the company or owned by a franchisee, there are specific elements that the store must possess. This is part of the strategy formulation, but so too is the idea that whatever ownership structure or management structure a store has, the company should have means by which consistency in the store experience can be achieved. Starbucks has always taken the view the Starbucks experience is a critical component of the brand, and that the brand has significant value to offer the consumer (Michelli 2009).
The base strategy is to offer a consistent, premium experience. The coffee is just one aspect of the experience -- a comfortable setting and a high level of service are also critical elements. The coffee is priced at a premium, and part of the justification for that pricing is that one pays for the totality of the experience. Having a high level of consistency around the world is another critical element of the overall operations strategy. Franchisees are expected to be indistinguishable from company-owned stores in terms of their execution of the Starbucks vision. There are a number of different approaches that the company makes to ensure this.
Operations Strategy Implementation
Having a vision for the company to deliver a consistent experience anywhere in the world is one thing, being able to execute on that is another. The company needs to be able to execute on that. There are a few different elements to this execution. First, it is understood that a higher degree of control exists with company-owned stores. Yet, it is also understood that on many levels, especially with things like human resources and dealing with suppliers, it is important to have local experience. Thus, most international operations have a mix of franchisees, and new country launches are typically done via franchisees. Starbucks seeks out partners with high levels of experience in their respective nations, as a means of ensuring that execution in these areas is at a high level. This is the model that the company used to enter Japan, and it enjoyed success. More recently, Starbucks partnered with the Tata conglomerate to enter the Indian market (Malviya, 2016), capitalizing on that company's operational expertise in that country to ensure that there were no intercultural issues.
Once the company gains operational expertise, it typically buys back franchises in these nations. Within the past few years, it has made major buybacks of franchises in both Japan and China (Galani 2014). Ultimately, such buyouts are about control, but they are a part of the company's strategy to ensure a high level of consistency, which is easier to attain through ownership once the company develops a reasonable level of competency at operating in a given country.
Another element of the strategy implementation is the range of training programs that are offered. These programs allow for employees at all levels, and franchisees, to fully understand the Starbucks Experience, and how to create that experience in their stores. One of the key focal points of training for customer-facing staff is that the company sells an experience, not just a product, and as such staff must adhere to particular standards of customer service (West, no date). By articulating what this...
Starbucks relies on their suppliers for a constant supply of consistent, high quality products. This stakeholder relationship is strong for both groups. A key group of supply-side stakeholders for Starbucks are coffee growers. The company's size makes them one of the world's largest purchasers of coffee beans. It is not just size that makes Starbucks important, however. Their high visibility means that they are in a position of influence with
Corporation Starbucks is a successful coffee chain. The organizational structure is geographic, and decision making is mainly centralized with respect to strategy, and many operational decisions even at the local level come with strong guidance from head office. There are a few key issues, however, that need to be addressed. One is the relatively weak leadership pipeline within the organization, another is the distribution of resources to facilitate expansion and finally
Starbuck's Pricing Strategy: Throughout its history, Starbucks Corporation has established a reputation for having the most expensive coffee products in the marketplace. The evident premium pricing at Starbucks are combined with the premium name or brand that the organization has also developed. While the prices of Starbucks coffee products are relatively expensive, the high prices are approved by many customers in many places where the firm has its operations. Pricing act
The company operates high volume retail outlets and has adopted a saturation strategy. Yet, inventories at the retail level are kept low in order to control costs. This is facilitated by strong logistics. Deficiencies in logistics would hamper growth prospects and compromise the Starbucks Experience. Moreover, the firm's ability to translate this competency into international markets will go a long way to determining how successful the company can be
In this, Krispy Kreme's strategy appears to be more focused upon monetary profit than risk-taking strategies for the sake of long-term customer relations. The company's franchising practices for example show that monetary strategy takes precedence over long-term quality assurance, whereas Starbucks' focus is upon using the company's inherent strengths to ensure the company's future growth. 3. Outcomes In general, both Krispy Kreme and Starbucks show favorable outcomes as a result of their
STARBUCKS Case analysis Case: Starbucks Five Highly Relevant Facts After showing swift initial growth, Starbucks' share price declined 75% within two years. The strategy adopted by the CEO to address this problem was to radically cut back the company's U.S. expansion and focus on the quality of Starbucks' coffee and customer service rather than increasing the quantity of new stores. Although the global recession had an impact on Starbucks' revenue, there were deeper and more long-standing
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now