Starbucks Corporation Is a US Global Coffee Business - Term Paper Example

? Management Number Many businesses have emerged from small beginnings to grow into large-scaleenterprises. While many are mistaken into thinking that a large pool of financial resources is the chief factor which is responsible for the growth, expansion and stability of businesses, this is usually not the case. Instead, there are Introduction & Thesis Statement Background information Starbucks Corporation is a US global coffee business and coffeehouse chain which is based in Seattle, Washington. Presently, Starbucks enjoys the status of the world’s largest coffeehouse company, having 20,891 stores in 62 countries. 65% of these stores are in the United States, while the rest are distributed in Canada [1,324 stores], Japan [851 stores], China [806 stores], the United Kingdom [556 stores], South Korea [377 stores], Mexico [291 stores], Taiwan [206 stores], Germany [167 stores], Thailand [171 stores], and Turkey [179 stores]. All Starbucks stores serve hot and cold beverages, whole-bean coffee, snacks, full-leaf teas, micro-ground instant coffee and pastries. There are Starbucks stores which also deal in food items, hot and cold sandwiches and even in crockery [particularly, mugs and tumblers]. There are also other Starbucks stores which under the program dubbed Starbucks Evenings provide a variety of wines, beers and appetizers after 4:30 PM. Starbucks stores, through its Hear Music brand and Starbucks Entertainment division also sells music, film and books. Other Starbucks stores also sell coffee and ice-cream and deal in grocery stores. Additionally, a greater part of Starbucks stores deal in seasonal products, or products which may be specific to the location of a given product. Thesis or Main Idea of the Case Study One of the key concerns that accost Starbucks Corporation is the need to come up with an effective operations management system which is to facilitate the forecasting supply chain demand for Starbucks Corporation. So far, Starbucks Corporation has managed an effective sales and expansion strategy which has enabled it garner a 10% growth in the market between 1980 and 1989, even when the total sales of the US coffee were declining. This is to the effect that by 1987, Starbucks Corporation was already operating six stores in Seattle, just after embarking on the sale of espresso coffee which was not so popular at the time. By 1989, Starbucks was operating 46 stores across the Midwest and Northwest and was also roasting 2,000,000 pounds of coffee. The next decade was also evident of Starbucks Corporation’s growth. In June 1992, Starbucks was already running 140 outlets and had a large pool of revenue amounting to 73.5 million US dollars. By 1992, the company had a rise in its share price by 70%. By 2013, Starbucks Corporation had developed an in-store purchases mobile phone application to pave way for greater online interaction with clients. Research studies also show that at least 27,000 clients had engaged with Starbucks Corporation and made purchases worth 180,000 US dollars, since Starbucks began using online sales. Despite the gains which Starbucks Corporation has made to facilitate increase the volume of its sales and to penetrate different and newer markets, it is a fact that there are several challenges which the company has to deal with. This is especially the case when it is considered that the supply chain demand for Starbucks Corporation has to contend with a myriad of issues such as competition from other competitors, impenetrable regions and markets and a market that is drifting away from the love of coffee and tea beverages [which are Starbucks Corporation’s main products]. To underscore the magnitude of the problem which accosts Starbucks Corporation’s supply chain demand, it is important to appreciate underlying ethical and diversity issues. Among many ethical issues, it is quite a dilemma that Starbucks Corporation should seek to circumvent health concerns that are always associated with the consumption of coffee. Secondly, it remains to be seen, how Starbucks Corporation will try to circumvent social diversity issues which cut across different people. Methodology The Situational Analysis of the Problem or Issue The problem at hand is aggravated by the fact that Starbucks is having great difficulty in penetrating Europe’s full-fledged cafe culture. The extent of this difficulty is underscored by the fact that Starbucks has been compelled by this inability to consider scaling back its presence in Europe. There is also the fact of different regional tastes being a matter of concern. For instance, in France, Starbucks Corporation’s Expresso is deemed too charred for French palates. The gravity of his is that even if European traffic is to pick up, clients may easily switch to lower priced menu alternatives. There are other analysts who observe that presently, Starbucks Corporation has been engaging itself in self-cannibalization: exorbitant real estate and cost of labor in Europe are turning out to compress margins for Starbucks Corporation. Closely related to this is the fact that franchised store margins which Starbucks brags of are presently, repeatedly outpacing the company-operated margins. The gravity of this is that higher profit margins that are being attributed to Starbucks are not necessarily a testament to improved performance. Starbucks Corporation is also dealing with an increasing number of competitors, particularly, niche competitors. Some of these competitors are Caribou Coffee and Coffee Bean & Tea Leaf- organizations that are carving out a strong niche for themselves in the margins of premium tea and coffee market. It is also a fact that Costa Coffee, a London-based business is also hampering Starbucks from penetrating India, through the stiff wave of competition. In a separate wavelength, it is imperative of Starbucks Corporation to acknowledge the fact that there are immensely deeper-pocketed competitors that have begun to compete for premium space. For instance, McDonald’s has made open, its plan to sell baggage coffee throughout its Canadian stores. This may serve as a prelude to similar marketing and selling campaigns in the United States, in spite of assurances from McDonald’s public relations office that McDonald’s has no intent on selling coffee anywhere, presently. This may be a decoy meant at hoodwinking Starbucks Corporation into making strategic blunders. It is also important for Starbucks Corporation to acknowledge the double-dip recession that is having its sway over mature Starbucks markets such as Canada, the United Kingdom and the United States. This trend can easily alter the spending patterns of Starbucks’ clients. Starbucks’ 10-K filing stated that Starbucks is increasingly becoming dependent on global markets for growth and expansion, particularly in the aforementioned mature markets. However, the fact that Europe remains the biggest single market poses several challenges for Starbucks. This fact is underscored by the fact that while Starbucks’ sales in China and the UJS remain strong, European sales have plummeted in 2012, given that European consumers are becoming increasingly amenable to discretionary spending. The causes/effects of the situation or problem How the problem or issues evolve (overnight or overtime) How course concepts can be applied to provide greater understanding of the situation How ethical and diversity issues will be addressed Results/Discussion; How can the problem or issue be solved? What specific recommendations can be made for improving the situation? Using course learning's, explain your rationale for these suggestions How will these recommendations, if implemented, enhance organizational effectiveness? How will ethical and diversity issues impact your recommendations? References Lyles, M. A., Flynn, B. B. & Frohlich, M. T. (2008). All Supply Chains Don’t Flow Through: Understanding Supply Chain Issues in Product Recalls. Management and Organization Review, 4 (2), 167 – 182. Mohd, N. F. (2010). Sustainable Supply Chains: A Study of Interactions among the Enablers. Business Process Management Journal, 16 (3), 508 – 529. Munson, C. (2013). Ethical Product Sourcing In the Starbucks Coffee Supply Chain. Pullman: FT Press/ Pearson Education Inc. Sean, P. G., Robert, L. C. Brian, J. G. & Zachary, W. 2012. Understanding Satisfaction with Supply Chain Management Careers: An Exploratory Study. The International Journal of Logistics Management, 23 (1), 135 – 158. Read More