Operations and Project Management | Starbucks Case Study
This report critically evaluates the operation management policies which are implemented by the companies for running their business efficiently. Besides that, this study has chosen the Starbucks company as a large organisation for assessing its operation management. The primary objective of this paper is to review and evaluate the efficiencies of the operation management strategies of this company and provide suitable recommendations for its improvement as well. This company belongs to the coffee shop industry, and it was founded in the year 1971 by Zev Siegel, Gordon Bowker and Jerry Baldwin (Starbucks.com 2018). Besides that, the headquarter of this company is situated in Washington of the USA which controls the 26,696 outlets of this company worldwide. In this present period, the president, as well as CEO of this company, is Kevin Johnson, and the executive chairman is Howard Schultz (Starbucks.com 2018). The main products of this business organisation are coffee beverages, baked goods, tea, sandwiches and smoothies which are appreciated by people all over the world (Starbucks.com 2018). Starbucks has several subsidiaries such as Starbucks Coffee Company, Evolution Fresh, Ethos water, Tazo, Hear Music, Torrefazione Italia, La Boulange and Teavana. The number of employees is more than 238,000 who are providing their services in various locations of this business organisation (Starbucks.com 2018).
This section of the study identifies the primary differences between operation and operation management policies focusing on the Starbucks company. Operation management is a significant part of the management which deals with the designing and handling of the production process, manufacturing as well as the provision of services. Mohammadiet al. (2014) have ........
This section of the study identifies the primary differences between operation and operation management policies focusing on the Starbucks company. Operation management is a significant part of the management which deals with the designing and handling of the production process, manufacturing as well as the provision of services. Mohammadiet al. (2014) have mentioned the fact in a research study that there aretwo significant areas of this management such as logistics as well as supply chain management. The operation manager has to focus on various issues such as resources, strategy, planning, forecasting, cost, control, requirements as well as input and output.
As discussed by Bahmaniet al. (2014), the process by which a business organisation runs this operation management is known as operation. It is different from the concept, operation management in some ways that it involves the overall procedure. Sometimes, people get confused between these two concepts, but ultimately, these concepts are different. The operation process is associated with planning the goods which the customers are willing to buy, sourcing the raw materials or other elements, warehousing, transporting products and delivering goods. On the other hand, as mentioned by Albrechtet al. (2016),the operation management process is involved with predicting sales, enhancing productivity, fulfilling the demands of the consumers and improving quality standards.
The basic policies of the operation management are forecasting, scheduling, capacity planning, assuring quality, the location of facilities, employee motivation as well as managing inventory. Besides that, the operation strategy is required in order to fulfil the overall operational targets which have been set by the company. As per the discussions of Zhou (2016),it is a sequential process of organisational goal, business goal, product or service goal, SWOT (Strengths, Weakness, Opportunity, Threats) and operations strategy.
From the year 1971, the Starbucks Coffee Company has been committed to sourcing as well as roasting the best quality Arabica coffee of the world (Starbucks.com 2018). Jinet al. (2015) have mentioned that in this present time, this company is one of the most well-known coffee producing company. The goals of this company are to build a company with soul, selling coffee beans without artificial flavours, satisfy the customers and provide the best quality of coffee as well. In order to review and evaluate the operation management principles of this Starbucks company, the strengths, weakness, opportunities and threats of this company must be identified. These are explained with the help of table 1 below which demonstrates the SWOT analysis of Starbucks company.
This company is the market leader in the coffee market, and the customers are also satisfied with the taste and quality of the coffee. Besides that, Shabanpouret al. (2015) have argued that this business organisation has outlets in more than 40 countries with many employees.
The prices of the products of Starbucks are high compared to its competitors due to the high operating cost, and it is not affordable to many people.
This company has already entered the Asian markets such as India, Pakistan and Bangladesh and has been able to capture these markets as well. Starbucks has made co-branding with other companies, especially with the food manufacturers in the global market.
This company is now facing fierce competition from its rival companies such as Café Coffee Day, Barista and Gloria Jean's Coffee. Besides that, some people have started avoiding coffee due to the health-related issues such as obesity.
Table 1: SWOT analysis of Starbucks Company
(Source: Keaheyet al. 2017)
Based on the SWOT analysis, the operation management strategies of this Starbucks company can be identified by this study. From the arguments of Radnoret al. (2016),the most significant policies of this company are described below.
- This company has well-known fixed costs due to high experience which helps them to predict the future demand as well as scheduling their budget as well.
- Starbucks company always produces the best quality coffee which assures their standard in the international market (Sedaghatiet al. 2014).
- This company has recruited a considerable number of staffs who are provided proper training as well as business etiquettes.
This study has tried to evaluate to what extent, this Starbucks company has been successful in fulfilling the basic strategies of the operation management. This company has formed various types of global, competitive, quality, process, layout as well as inventory management strategies for the purpose of operation management. In most of the cases, the company has been able to meet the requirements in terms of maintaining quality, inventory, forecasting, managing inventory and other factors. For example, this business organisation has expanded their stores in various countries such as Japan, China, Kuwait, New Zealand, Lebanon, Thailand, South Korea, Singapore and so on (Keaheyet al. 2017). As per the literature of Ichinoseet al. (2015), sometimes they have started joint ventures with the local businessmen which increase the profit for both the parties. Besides that, the Starbucks company has designed their outlets in such a way that everybody easily gets attracted to those stores. On the other hand, there are still some factors which need to be improved in this company. For example, the price of coffee is costly in this company and therefore, a large section of people cannot afford it.
There are two significant models such as six sigma methodology as well as lean principles which are used by the business organisations for the purpose of continuous improvement (Radnoret al.2016). Both these models have the same goals such as to improve the quality of the products as well as the delivery system. Zhou (2016) have suggested that another similarity betweenthese two models is that both the frameworks want to satisfy the customers as well as the employees of an organisation. The six sigma methodology is based on five factors which are explained with the help of figure 1.
Figure 1: Six Sigma Methodology
(Source: Kavousiet al. 2015)
From the above picture, this paper has recognised the significant factors of this six sigma model which are defined, measure, analyse, improve and lastly control (Kavousiet al. 2015). In the first stage of this six sigma model, the process, as well as the problem, is identified. Then, the current performance of the business organisation is measured followed by the analysis of the causes and significant issues. In the later stage, the improvement actions are determined as well as implemented, and finally, the improved process is maintained by the company. From the discussions of Wakuiet al. (2016), this is the main essence of this model. On the other hand, the lean model is another model which deals with the continuous improvement plan of a business organisation. This model has some specific principles which are represented with the help of figure 2.
Figure 2: Lean Principles
(Source: Pyzdeket al. 2016)
According to the discussions of Boeret al. (2017), the main principles of this model are described below:
- Define the value: The value should be defined from the perspectives of the customers, and that must be expressed in terms of a specific service or product.
- Map the value system: All the values should be added which would bring the product to the customers within a proper timeframe (Deihimiet al. 2016).
- Make the process flow: There should be a continuous flow of products, services as well as information through the entire process.
- Pull from the customer: The feedback from the customers should be received by a company so that they can understand their difficulties and mitigate those problems.
- Work towards perfection: Every business organisation should put their maximum level of effort so that they can be perfect in their works (Deihimiet al. 2016).
Focusing on the above two models, this Starbucks company should implement an improvement model so that they can provide excellent services to the customers. As discussed by Boeret al. (2017), after executing this continuous model, this company would be able to reduce their shortages to a certain extent. The Continuous Improvement Model of the Starbuckscompany has been represented with the help of figure 3 below.
Figure 3: Continuous Improvement Model of Starbucks
(Source: Pyzdeket al. 2016)
As discussed by Pyzdeket al. (2016), this model has addressed four vital issues such as commitment, strategy, process and lastly performance. The company should be committed to fulfilling their goals set by the management department as well as compelling the awareness. Besides that, they have to set a proper strategy including the vision and mission and deliverables as well. On the other hand, there should be a proper framework for the purpose of process mapping and process analysis. Finally, the performances of all the employees of this Starbucks company should be evaluated by a performance appraisal model.
This section of the paper has provided some useful recommendations for the improvement of the operation management process of this Starbucks company based on the continuous improvement plan.
- Reduce the price level:
The prices of Starbuck coffee is very high compared to the other coffee producing companies of the world. In order to attract more customers, this company should reduce prices of their products to some extent (Kavousiet al. 2015).As mentioned by Deihimiet al. (2016), the profit of this business organization is mainly dependent on the coffee product. The main competitors of this Starbucks company areCafé Coffee Day, Barista as well as Gloria Jean's Coffee. Hence, if they do not reduce their price level, then some of their customers would switch to the other brands.
- Employee motivation:
Another factor should be mentioned in this context that this business organisation should give more emphasis on motivating their employees as a part of their operation management. In order to retain the existing employees and enhance their productivity as well, this Starbucks company should motivate and encourage their employees.If their productivity increases, that, in turn, would increase the overall productivity and expansion of the company (Deihimiet al. 2016).
From the entire study, it can be concluded that this Starbucks is one of the leading coffee manufacturers in the world. Operation management is a significant process of the management system, and this paper has evaluated the operation management system of this company. From the SWOT analysis, it has been found that this company has expanded their business in various countries of the world and still, they have more opportunities. On the other hand, there are some other companies such as Café Coffee Day, Barista and Gloria Jean's Coffee which are main competitors of this company. Besides that, this paper has discussed two vital models on continuous improvement process such as six sigma methodology as well as lean principles. In order to survive in this competitive world, this Starbucks company has to take some proper policies such as mitigating price and employee motivation for improving their performances.