Operations Strategy and Process Design in Starbucks Coffee

Subject: Case Studies
Pages: 8
Words: 1847
Reading time:
7 min
Study level: Master

Introduction

Only an effective management system can provide an industrial enterprise with effective functioning and competitive advantages in market relations. Today, the company itself should determine and predict the parameters of the external environment, the range of products and services, prices, suppliers, sales markets, and much more. The company is required quickly and, most importantly, correctly respond to any external and internal environment changes and adjust its activities following them. It means that the company’s management should always look for new original moves.

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The Concept of Operational Management

A clear understanding of the production management process is fundamental. The production management process consists of two essential elements: management strategy and tactics or strategic and operational management (Ramos, de Morais, and Barbosa-Póvoa, 2018). These elements are strictly interrelated and mutually dependent, but they represent independent subsystems with their theory, methodology, and established application practice. Working, especially strategic management, is of great importance because, thanks to them, managers will perform better in the market, correctly assess the situation, and take the necessary steps for the organization.

Operational management is the final stage of production management, at which the process of developing and implementing solutions to prevent deviations and failures in production is carried out. In case of problems, their immediate elimination is carried out. It ensures the unconditional fulfillment of production programs and operational planned tasks. The decision-making of management personnel characterizes active production management in an actual or existing production situation (Ramos, de Morais, and Barbosa-Póvoa, 2018). In these conditions, the developed, planned tasks or decisions of the heads of production departments should ensure a strict and precise time sequence to implement planned works.

Components of Strategic Management

An effective management process is based on the four main components: volume, variety, variation, and visibility. Every operation management process should contain a value since creating products and services is based on this. Volume is the amount of a specific product produced that is necessary to meet the demand for this product (Ramos, de Morais, and Barbosa-Póvoa, 2018). Volume is an essential component of production, as it demonstrates customers’ confidence in this product or service.

Variety refers to the different types of goods and services that are produced and sold to customers. Organizations that provide a variety of goods or services increase the potential for sales and profit and reduce dependence on only one or two products (Ramos, de Morais, and Barbosa-Póvoa, 2018). A variation is an indicator of a change in the level of demand associated with certain external factors. If the production processes do not follow exact patterns, this causes problems with the quality and quantity of products.

Visibility is the process of creating value for all the company’s operations combined. Buyers and customers should carefully familiarize themselves with its products and services (Ramos, de Morais, and Barbosa-Póvoa, 2018). Organizations need to make sure that all signs and inscriptions are clear and understandable and customers can quickly find what they need. Operational managers are engaged in developing procedures and processes that help the organization to have a high level of volume, variety, variation, and visibility. As already mentioned, strategic process design is a powerful tool in the conditions of acute competition in any field of activity. The purpose of this work will be to consider strategic process design on the example of the Starbucks coffee chain.

Operations Strategy and Process Design in Starbucks Coffee

For a clear example of implementing strategic personnel management, the company “Starbucks” will be considered. The company “Starbucks” is currently one of the leading chain coffee shops on a global level. Its history dates to 1971 in Seattle (USA), with a small store offering, selected varieties of coffee of its roasting (Fariss, 2021). In addition to drinks, Starbucks coffee shops offer their visitors fresh pastries, a cozy atmosphere, uninterrupted Internet access via Wi-Fi (Fariss, 2021). Perhaps that is why the chain’s coffee shops are so popular among young people and people in business who do not part with a laptop and a cup of coffee – all conditions are created for them here.

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It should be noted that the indicators of volume, variety, variation and visibility of the Starbucks coffee chain have a reasonably high level. The products of the coffee chain are characterized by a wide variety of flavors that are suitable for all customers. Customers can observe the coffee-making process themselves to be sure of the high quality of the drink. In addition, the management of the coffee chain is always set up for feedback to meet all the needs of the client. The company’s turnover reaches $ 13 billion a year, and the market capitalization is almost $ 60 billion (Kurniawan, 2020, para 3). The company’s marketers and brand managers know their business and develop many exciting tricks to promote the brand even further.

Numerous actions are carried out in the Starbucks coffee chain, for example, farmers supply coffee beans, which are then distributed by intermediaries, mill owners, and corporate societies. Thus, marketing organizations and exporters receive coffee beans, and importers and brokers supply coffee beans to certain places (Azriuddin et al., 2020). The Starbucks coffee chain has its roasters, and they buy coffee beans directly from importers.

After that, the workers roast the coffee beans and supply them to numerous distributors and various cafes, restaurants, and retail stores (Azriuddin et al., 2020). After the procedure with coffee beans, customers can enjoy their favorite coffee. Coffee goes through several stages of preparation before it is taken to the customer. A special Starbucks operations management team carefully monitors the correctness of the preparation stages.

The main management level includes the general director, the director of finance, and the corporation’s secretary. In addition, the main level consists of the presidents of trade zones and vice-presidents, whose sphere of responsibility supplies. Starbucks has many departments, including the human resources department, the department that deals with legal issues, the international relations department, the marketing department, and the coffee quality department. Managers work closely together to ensure that the final product has a high level of quality. Thus, all internal departments of the corporation should interact to achieve all the goals set.

At Starbucks, there are numerous requirements for the quality of work that all corporation employees should know. The corporation’s staff must be sure that the Starbucks coffee chain has a high level of hygiene and that it meets all the requirements. For example, coffee grinders should always be kept in proper conditions. Ground coffee should not be left unattended in stores, and after using it, it is necessary to throw it away immediately (Azriuddin et al., 2020). These aspects relate to the field of operations management, so the corporation’s administration should always ensure that the competence of employees remains at a high level. All Starbucks departments are responsible for their actions and adhere to the company’s rules, increasing operational competence. Thus, thanks to the high indicators of competence and responsibility of employees, Starbucks coffee successfully passes every preparation stage.

Also, an essential component of Starbucks ‘ operational strategy is proper planning and use of resources. Employees of the corporation should not waste time but should focus on their duties. In addition, an essential aspect is the correct distribution of money for numerous Starbucks projects. Effective and well-thought-out spending of monetary resources increases the level of operational management in the corporation. In addition, there is such a phenomenon in the market as prevailing circumstances that a business should follow. Customers can choose medium or light roasting of coffee beans, depending on their taste preferences (Azriuddin et al., 2020). The tastes and preferences of customers are vital in any market segment. The role of the corporation’s administration is to determine the stages of meeting the needs of customers. Thus, for Starbucks to be an operationally competent corporation, its management must be well versed in all aspects of the market.

The main activity of Starbucks coffee shops is the preparation of coffee drinks, which include cappuccino, espresso, caramel macchiato, and mocha chino. The growth of the corporation’s production is ensured by creating recipes that can be used to make coffee drinks. In addition, at this stage, it should become clear that the product planning for production is practical and economically profitable (Azriuddin et al., 2020).

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Collecting beans and other ingredients includes the supply of coffee beans from importers involved in marketing and boards of directors. The purpose of this procedure is to determine the satisfactory quality of the obtained coffee beans. The distribution departments take care of the uniform delivery of coffee beans to all retail stores and coffee shops (Azriuddin et al., 2020). When retail stores receive a portion of grains, they fry them, brew them and grind them, then serve the customer a cup of fragrant coffee.

Mobile applications have a positive impact on the production procedure. The corporation can openly and easily interact with customers using mobile applications. For example, the administration of Starbucks can find out the client’s opinion about the operational efficiency of the corporation using mobile applications. With the help of mobile applications, it is possible to increase sales, stimulate repeat purchases, improve the average receipt and customer loyalty. In addition, the use of mobile applications will help the corporation automate business processes, simplify communication with customers, and quickly analyze the audience’s reaction.

Recommendations for Improvement

Although the operational management in the Starbucks coffee chain seems to be effective and high-quality, it is possible to offer several recommendations for improvement. To start with, Starbucks should reduce its dependence on suppliers because working only with certain companies will be challenging to find a replacement for them in case of unforeseen circumstances (Khushman, 2019). Perhaps this company should expand the list of suppliers so that it has a backup option in case of unforeseen circumstances. Moreover, it is recommended to periodically conduct aptitude tests among managers so that the quality of production and service does not fall.

In addition, it may be necessary to make the prices of Starbucks products slightly lower since high prices cause a decrease in the level of purchasing power of the population. Furthermore, Starbucks should take into account the latest trends in processing and apply these trends in all its enterprises. It is necessary to constantly update the equipment with which employees prepare coffee and other beverages. In addition, great attention should be paid to planning and spending the company’s available resources so that revenues do not fall and expenses do not increase.

Conclusion

Summing up, it is possible to conclude that organizational culture is a crucial component of the successful functioning of the organization, a positive attitude to work, and labor efficiency. Effective operational management impacts the perspective of employees to the organization and the results of colleagues’ activities. It ensures the cohesion of the entire team, creates incentives for employee motivation, and increases the team’s initiative. Effective operational management should include compliance with emerging market requirements, rational use of manufactured goods, and sustainability aspects for the business. The active management of Starbucks is highly efficient and reliable, but the author has proposed several recommendations for improvement.

Reference List

Azriuddin, M., Kee, D. M. H., Hafizzudin, M., Fitri, M., Zakwan, M. A., AlSanousi, D.,… and Kurniawan, O. (2020). “Becoming an international brand: A case study of Starbucks”, Journal of the Community Development in Asia (JCDA), 3(1), pp. 33-43. Web.

Fariss, N. (2021) ‘Starbucks’ dream of a global taste’. In The Routledge handbook of digital media and globalization. Routledge, pp. 100-110.

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Khushman, A. (2019). An Evaluation of Entrepreneurial Activities and Growth Strategies–The Case of Starbucks Coffee House. Web.

Ramos, T. R. P., de Morais, C. S., and Barbosa-Póvoa, A. P. (2018) ‘The smart waste collection routing problem: Alternative operational management approaches”, Expert Systems with Applications, 103, pp. 146-158. Web.