1. Analyse
Starbucks using the competitive forces and value chain models.
The following case study on the
global coffee chain Starbucks is based on the ability of competing with the
assistance of technology. Companies are using management information systems to
assist them in many ways such as product quality and efficiency as well as
customer service/customer intimacy. Starbucks is proud owner to 16,850 coffee
shops and has internationally opened global franchises. Starbucks hit a few
business implications in the year of 2008 and had to use different business
strategies. In regards to the competitive forces, Starbucks had to alter their
ideas in order to remain at a competitive level.
The use of information systems
achieves a low cost leadership; there are low operational costs and
therefore a company can afford to charge lower prices. Starbucks engaged in the
mobile digital platform when realising over a third of their customers
were smart phone owners. The Starbucks App allows regular customers o pre
pay/top up their card and use this at every branch to pay for their drinks by scanning
bar code displayed on their phone. The app allows customers in a hurry to pay
quickly, showing the use of management information systems at a retail level of
the supply chain making the customer experience more efficient and of a better
quality. Streamlining business processes meant a shorter customer wait due to
the time of making the drink being reduced, which essentially meant each
barista could make more drinks by the hour, therefore increasing revenue.
Starbucks also used product
differentiation and information systems to alter their existing menu. They
have now enabled new products for customer convenience and offered price
reduced specials; to be able to charge lower prices Starbucks had made
alterations in their supply chain. They had to match what their fellow
competitors were offering, although thanks to low cost leadership Starbucks
were able to operate more efficiently and save on operational costs due to
faster and better customer service. The reductions spent in making the drinks
allowed the company to return to the profitable level.
The third competitive force being to
focus on the market niche meant Starbucks had to attempt on narrowing
the target market better than their competitors. An information system assists
this strategy as it can produce data to analyse future sales and marketing
techniques. Using the fact that the mobile digital platform meant many
consumers use smart phones; Starbucks engaged into the ‘Starbuck Digital
Network’ which is a portal designed specifically for mobile devices and
optimized for smart phone operating systems. The site offers free Wall
Street Journal access, iTunes downloads and various other perks. Starbucks
loyal customers spend time in the stores and receive free Wi-Fi access.
Strengthening customer and
supplier intimacy is essential for large companies whose consumers may feel
insignificant. The case study displays customers felt as though they were
visiting a fast food chain due to the their experience being very brief.
Management information systems and streamlined business processes have allowed
time saving to transfer into providing a better customer service; customers now
feel more connected with a friendlier service, the chain have also started
adding names to their customer drinks to offer a more personalised service and
better customer experience.
2. What is Starbucks’ business
strategy? Assess the role played by technology in the business strategy.
Starbucks business strategy was to
continue serving high end speciality coffee and improve the customer service so
that consumers did not feel like they were visiting a local fast food chain.
Additionally, to also improve customer service and eliminating inefficiencies
in coffee production. Technology assisted the business strategy due to the addition
of the mobile digital platform and the Starbucks Digital Network, giving
customers the benefit of free Wi-Fi access and Starbucks Apps to access on
their smart phones.
3. How much has technology helped
Starbucks compete? Explain your answer.
Without the use of technology within
the innovation of Starbucks, the company would have been unable to launch the
Starbucks Digital Network, and the use of paying via the Starbucks App on smart
phones. To add, the newer in store technology helped the baristas to make
drinks faster, improving customer service and speed of service, allowing the
company to generate a higher level of revenue.
1. What functions are provided by
the Web site?
The Starbucks website offers a range
of services to their consumers. Customers are able to look up the different
types of drinks, either hot or cold, and the various flavours to choose from.
The menu is also available online, offering sandwiches/Panini’s, breakfast
items and fresh fruit. Additionally, customers are able to top up their
Starbucks Card to gain rewards for when they use their card at each store. It
is also possible to view previous transactions and to download the Starbucks
App for smart phones.
2. How does the Web Site support
Starbucks’business strategy?
Due
to the website offering the facilities such as topping up the Starbucks Card,
this is synchronised with the use of the Starbucks app, therefore customers can
get all information on the website and then use this to their advantage. The
website allows customers to enter their card details securely so that when they
top up money, this will automatically appear when they open the App on their
smart phone. The website has helped the Starbucks’ business strategy by being
more efficient.
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