Technological Strategies Used by Starbucks - Coursework Example

Table of contents Executive summary…………………………………………………………………….…3 Introduction………………………………………………………………………………..3 Background to the company……………………………………………………………….4 Starbucks use of technology………………………………………………………………..4 Technological issues and analysis of possible solutions…………………………………...5 The Square Wallet software and the mobile applications…………………………..6 Chain stores………………………………………………………………………….7 Scheduling software……………………………………………………………….....8 Digital networking……………………………………………………………………8 Budget approximations…………………………………………………………………….....8 Conclusion…………………………………………………………………………………….9 Recommendations…………………………………………………………………………..…9 Appendices………………………………………………………………………………..…..10 References…………………………………………………………………………… Executive summary This report aims to look deeper unto the technological strategies used by Starbucks, the challenges it faces and gives an analysis of solutions. Several literatures will be used to establish the merits of the strategies and their weaknesses in order to support the solutions. Starbuck is known as the largest coffee house in the world. Talpau and Boscor (2011) state that it began as one store before opening many more stores and expanding to several locations. Its expansion has also been favored by the diversification of its products and use of technology. It has grown to offer related services such as snacks, pastries, wines and entertainment that make it not only to be chosen for coffee but also as a meeting avenue(Talpau & Boscor, 2011). Its technological advancement is seen through its popularity in social media such as facebook, Foursquare and Twitter, use of a mobile application for iphones and a wireless digital network that is free. All these technological strategies have contributed towards a fast delivery of services to consumers where one is not required to visit the stores in person. However, the company is still lacking and faces some technological challenges that have majorly been brought up by its strategy of going global. Introduction Star-Bucks operate in a macro environment because it has expanded to many locations in the world. Ryan and Jones (2009), acknowledge that such an expansion brings on board diversified consumer tastes and preferences and a variety of competitive technologies too. The challenges it faces majorly arise because it has expanded very fast to many places without paying attention to consumer preferences to such locations. Though the company has been widely known for its technological advancement, changing consumer preferences, the increasing smart-phone revolution and increased competition put it at a high risk. One of the challenges that Starbucks faces revolves around its fast adoption of technology and its use. Background information Starbuck as a company started in the year 1971 with headquarters in Seattle, Washington. The founder of the company were Zev Siegal, Jerry Baldwin and Gordon Borker who started by selling beans and coffee makers (Shezray, Khan & Waqas, 2014). It majorly started as coffee roaster Retail Company but has expanded to form a chain of coffee houses. Its growth has also seen diversification of its products in that it now offers high premium teas, snacks and other pastries. The company has grown to be the largest coffee house company globally. The company has also expanded its locations to 63 countries with a total of 20737 stores (Talpau & Boscor, 2011). It is widely known for its expertly cooked coffee that comes in varieties. Its comfortable and conducive atmosphere also gives it a plus to consumers when they are making choices. One of the strategies that the company has used is suiting product to locations based on the tastes and preferences of the customers in that location. It not only deals with coffee but also entertainment by marketing films, books and music. Being technologically savvy has been one of the strategies that have contributed towards the expansion of Starbucks. Star-bucks use of technology The use of technology by Star-Bucks has been widely visible. However, for the purposes of this paper, only a few technologies with issues will be discussed. One of the technologies with a challenge relates to its payment systems. The company partnered with Square and invested 25 million on it and adopted its transaction processing. It adopted the Square wallet which is software and a mobile card reader with the aim of increasing their opportunity to gather more consumers. The wallet was meant to be used alongside the Star-bucks mobile app (The Seattle Times.2010). Another technology relates to its structural design and management. At Starbucks, the stores form a vast network of chain coffee houses. The technology is advanced to the extent that the executives are able to oversee the operations from the headquarters. Stores have their managers who have to report directly to the corporation. Any changes, new programs and even staff recruitment are controlled from the headquarters. They have an integrated system that enables supervision and control from the headquarters. The third technology revolves around how the employees are managed and scheduled. It is a concern because the employees are a vital component to any organization. Shezray et al. (2010) highlights that in assigning tasks and time of duty to the employees, Starbuck uses scheduling software. The technology has been used to support efficiency and boost sales. However, it is critical to note that it has its own challenges too that will be discussed in the following section. Finally, another technological advancement of Starbuck is its support towards the internet. The company offers free Wi-Fi networks to the consumers at some of its stores and especially in the headquarters. It also a good social platform meant to increase consumer awareness. One of the strategies it uses is that posts in sites such as Facebook are done by the facebook team. Technological issues and analysis of possible solutions The Square Wallet software and the mobile applications One of the technological problems stated above relates to how the company transacts its business. In order to quicken the transactions and benefit from them, the company partnered with Square and adopted their Wallet app alongside their payment method (Ryan &Jones, 2009). The problem related to the use of the software was that it was adopted so fast that resulted to the company getting a bad publicity from the consumers. The reason for such reputation was that both the staff and the consumers of Starbucks did not clearly understand how the application worked. The strategy has merit in that such partnerships created a higher chance of gaining a large market share (Porter, 1998). It meant that Starbucks had a platform to show their products to the consumers of Square. Another merit is that the partnership created a strong ground for the company and made it more competitive in the global world. However, the problem it raised is that the consumers fail to understand how the software works. The staff also have limited understanding meaning that they have little capacity of helping the consumers incase a problem related to the software emerges. Consultation with my partner brought up the option of training the employees first on how the application works. The training should be chronological in that the management staff should be trained first before streaming it to other employees. The management should be trained by the technological experts of Square who have a clear understanding on how the software works and who can offer reliable outline on how it should be adopted. The boss should also invest money to educate the staff, an in-house training carried out by those managers who underwent the Square training. Dividing the training into outsourced and in house will reduce costs compared to if they were only outsourced. Because of its many stores, in house training can be easily managed by sending in house trainers to other locations. Customer awareness should also be taken into consideration by use of advertisements. The consumers should be made aware that the company has adopted the technology and be shown a step by step process how the software works through the use of media. Such a step will ensure that the company keeps it consumers, acquires new ones and gains a good reputation. It will also reduce the amount of time that the customers wait in stores thereby making them more efficient. Another recommendation in relation to the above is that the mobile application should be integrated with its loyalty program. This step will act as a motivation to consumers and be able to sustain them because it gives rewards to the consumers. Chain stores Having a network of chain stores across the globe is not a bad strategy because it ensures that the company sustains it branding. Ryan and Jones (2009) argue that the technology however, has shortcomings due to a fast changing consumer audience. Customer diversification is widening from one environment to another, they are becoming more aware and knowledgeable. We gave a possible solution where the coffee shops, especially those in different countries should be left to operate independently. Giving them the autonomy even relating to new product creation will ensure that customers get satisfied. Long distance monitoring and supervision is itself a problem because one may not be clearly informed about the needs of the customers. Running independently will enhance efficiency and proper management of the resources and employees. It will also contribute to quick problem solving that will enhance the reputation of the organization. Store managers should therefore be given the independence and authority to decide on product branding, marketing and other related processes that will also contribute to the competitiveness of the organization Scheduling software The scheduling software, though promising is limited in the following ways. After analyzing it with my partner, we came to the conclusion that the software cannot work well on its own; it requires human intervention in order to work effectively. Involving people will make it work for both the operators, employees and customers. Allowing the managers to control the software is necessary to do away with any surprises. Better management calls for the mangers to acquire the skills towards the use of the software. The employees will also need to be informed about the schedules in advance so that they can be prepared towards the same. In the long run, it will contribute to a conducive environment that caters for the needs of those involved. Digital networking In relation to networking, consumers are becoming increasingly informed and are using such avenues to interact with organizations. The company should increase interaction with the consumers through calling for feedback using the sites and managing them on several occasions. Introduction of the digital photos in social media especially Facebook is critical in sustaining consumer loyalty and connection. Because customers are changing and most of them are working from home, The organization should install free wireless internet in its stores. It should also rent a meeting space to those working from home and offer devices such as printers at affordable costs. Burning of CDs is also recommendable so that consumers can store information. Budget approximations The company will outsource Square experts for them to train the management team on how the Wallet software works. It will require five experts that will train the mangers for 15 days. Because outsourcing is expensive, It will cost the company around $400. The managers will then be required to train other staff on the same. The company will also incur training mangers on the scheduling software and other costs related to expansion that will add up to 1000. Conclusion In conclusion, globalization and intense competition pose a threat to Starbuck regardless of it being the giant in the industry. It is therefore, critical that measures such as expanding internet connectivity, autonomizing stores, training employees and consumer and managing scheduling software be adopted. Such step will contribute towards its overall success and gaining a larger market share than it currently has. Recommendations The paper offers the following recommendations: Increasing connectivity with consumers and expanding the wireless network to all its stores. Allowing managers to manage the scheduling software and informing employees in advance Training employees and educating consumers of the Wallet software Giving store autonomy and independence in running functions. Appendices: Fig 1: A table showing approximated costs Possible solutions Estimated costs Expansion of digital networks $200 Training staff $600 Controlling the scheduling software $50 Creating independent stores $ 100 Miscellaneous expenses $50 Total $1000 Fig 2: A chart showing approximated costs and time References Porter, M.E. (1998). Competitive strategy: techniques for analyzing industries and competitors. New York. The Free Press. Ryan, D., & Jones, C. (2009).Understanding digital marketing: Marketing strategies for engaging the digital generation. United States: kogan page Publishers Shezray H., Khan, F & Waqas, M., (2014, Sept 29). Brewing Innovation. Business Today. 23(18):142-146 The Seattle Times company (2010, June 6). Starbuck shifts to meet challenges. The Seattle times. Retrieved, www.seattletimes.com Talpau, A., Boscor, D. (2011). Customer oriented marketing-A strategy that guarantees success: Starbucks and McDonalds. Bulleting of the Translvania University of Brasov. 4(1):51-58 Read More