Starbuck Case Study
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.
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. Management Information Systems in Action: 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.
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.