Starbucks Lithuania Global Network Management - Case Study Example

Starbuck’s Lithuania Table of Contents Introduction 3 Global Procurement or Buying 3 Justifying Changes 4 Implementation of the Knowledge 5 Global Network Management 7 Justify the Choice 7 Implementations of Global Network 8 Technology Transfer 10 Absorptive Capacity 11 Complementary Core Competencies 12 Outsourcing Flow Chart 13 Conclusion 15 References 16 Introduction To increase the effectiveness of Starbucks Corporation, it must focus on developing an effective Supply Chain Management (SCM) system. In order to maintain a continuous flow of products, Starbucks emphasises developing a supply chain to enhance the flow of products. The company has developed effective strategies to reduce the lead-time applicable for products and also the chances of stock shortage. Furthermore, the company has effectively developed a strategy that would enable delivery of goods within a span of 7-8 hours before the stock in hand expires. With the effective development of store ambience, the company is likely to enhance its ability to comply with the diverse needs of the consumers. Additionally, by providing quality products along with elegant services, the company is even likely to enhance its presence in the global domain and attract a large amount of consumers in Lithuania market (Schultz, 2012). In this regard, the paper elaborates the different usage of global supply strategies to develop a better understanding of the changes in the global procurement process. Furthermore, the essay intends to provide justifications for the changes and implementation of the same for the company. Elaborations have also been provided on the global network management system to maintain a proper supply of products and services. Global Procurement or Buying Global procurement has emerged as one of the most important needs for internationalised business organisations, such as Starbucks. The development of a proper supply chain has emerged to be one of the prime needs of developing a business across national boundaries. Developing a supply chain is noted as a complex task for the managers developing their business across a diversified demographic region (Lockamy & McCormack, 2004). Companies setting up business across various locations are also observed to be developing their buying behaviour to maintain a business that is going to enhance their global presence (Chan & Lee, 2005). Additionally, to meet the dissimilar needs of the consumers, the prime motive of the managers must be to develop a proper purchase and supply mechanism that would facilitate the supply of raw materials. This is important to consider, as it would assist the company to fulfil the requirements of the potential consumers whom they are providing support (Chopra & Meindl, 2007). Justifying Changes Lithuania is often accredited to offer versatile opportunities for the successful development of business in the beverage industry. Thus, the location might be strategically suitable for Starbucks. With fewer amounts of competitors present within Lithuania, the company is likely to find a better prominence in the new market and develop competitive edge within the same by increasing consumer preferences towards the brand (Yeniyurt & et. al., 2012). With efficient handling of supply chain management and a proper chain for procurement, the company would be able to handle its diverse needs effectively and likewise maintain a competitive level of service in Lithuania. Furthermore, with a motive to reduce the lead-time of the company, it must be maintaining its purchase and buying chain within the national as well as international domain to prevent from any disruption within the inflow of raw materials (Yeniyurt & et. al., 2012). The company must be developing a national as well as international supply chain for procurement in order to enhance timely supply of services and prevent longer waiting time that might reduce product obsolesce. Commendably, the availability of raw materials is even likely to reduce the costs involved with procurement and ensure quality products that are being supplied to the consumers in Lithuania. To increase its competitive edge, Starbucks is also likely to develop its image as a better place for relaxation and entertainment so that it could enhance its image among the consumers of Lithuania (Yang & Zhang, 2012). By maintaining effective supply of raw materials, the company will be able to ensure that it is credible to maintain a favourable relation amongst its consumers and ensure better quality services of products. Notably, by effectively handling lead-time and on time supply of goods as well as services, the company is likely to enhance its prominence in the global market and increase brand credibility amid the consumers (Yang & Zhang, 2012). Moreover, dealing with effective supply of goods as well as services is noted to be a challenging task for Starbucks to deal with in the global domain. Correspondingly, to enhance the presence and consumer preferences towards the products, the company tends to maintain its quality of products and even enhancing the standard of the same. Furthermore, by maintaining an international supply chain for procurement, parallel to the international chain of procurement, the company has been fostering its different needs and maintaining its level of competence in the global arena (Yeniyurt & et. al., 2012). It is worth mentioning that Lithuania market is an open market and there exist a huge demand for entertainment and socialisation among people. This characteristic of the market is going to act as a positive source for enhancing the market presence and developing the prominence of the same in the global domain (Yang & Zhang, 2012). Implementation of the Knowledge Implementation of knowledge gained about procurement is noted to be developing based on the different approaches of management to enhance the ability of the organisation to meet with diverse challenges and needs. Starbucks, to increase its sustainable domain, must develop its international presence and enhance its ability to sustain in the global domain. By developing an international supply chain for procurement, Starbucks will be able to ensure quality of the products that it serves besides ensuring the quality of its services (Roby, 2011). Moreover, by maintaining an international procurement, the company will be able to trade its raw materials at cheaper rates from the different sections of the globe and even lower the rate of the costs of production. This will certainly enable Starbucks to meet the diverse needs of the stakeholders as well as ensure the maintenance of standards, policies as well as procedures to develop standard quality of services that the company is providing to the end users (Burks, 2009). However, management of international procurement chain is noted to be stressful for the companies and is even likely to affect the timely supply of goods and services. Moreover, international maintenance of procurement has an intrinsic involvement with governmental rules as well as regulations that affect the development of the overall needs of services (Patton, 2006). The development of international procurement chain is therefore difficult to manage, based on the diversified mode of operations that are followed in different sections of the globe. Hence, management of supply chain that is spread at different regions of the globe can be identified as affecting the operations of Starbucks and its operations as well as services at the global domain (Roby, 2011). The execution of different tools of management of supply chain by the company is derived through outsourcing of different units that are related with the procurement procedure of the company. By developing a procurement procedure, Starbucks will be able to ensure that the quality of the raw materials and the standard of the same could be duly maintained in long run (Burks, 2009). Global Network Management Management of global network is one of the prime requisites of companies that are dealing in the global business, as similar to Starbucks. Starbucks is successfully developing its chain of services and products across the globe based on effective management of its different supply chains and efficient utilisation of available resources. By developing the global networking system, the company has been effectively developing different strategies to fulfill the diversified demands of its consumers belonging from different sections of the globe (Burks, 2009). Justify the Choice With continuous variation observed in the domain of supply and diversified strategies of businesses, a company, in order to sustain, has to manage a continuous process of learning to enhance the different policies that would be developing its credibility to maintain competitive prominence. In this regard, Starbucks has been successfully managing its knowledge sharing process in order to ensure a standard of services that will be offered to the consumers in Lithuania. In addition, with effective management of knowledge, Starbucks is developing an excellent chain of cafés across different nations (Burks, 2009). This chain of business that the company has been projecting across the globe is noted to get developed by effective use of strategies and continuous learning. By maintaining a continuous process of knowledge management, the company will be able to develop an efficient chain of business and ensure consumer satisfaction. With the effective maintenance of a continuous process of learning, the company will be able to manage a standard in its products and services, across all its franchises and service centres. With the management of a standard process and efficient knowledge sharing, Starbucks has been successfully developing its services in the Lithuania market (Chan & Lee, 2005). Knowledge management strategies within the global domain are identified as affecting the performances prevalent within the global arena and help in authenticity of the different needs of the services that further enables providing quality services to the clients. Starbucks has been developing its global presence through efficient management of different services and products with considerable contribution made towards developing consumer preferences towards the products and services that are being provided by the company across the global arenas wherein they are serving (Roby, 2011). The company needs to develop a global manufacturing capacity so that it can effectively enhance the ability to meet the diverse needs of the consumers. Furthermore, dealing with food products as well as freshly brewed coffee is observed to be maintained at a standard level, so that the company is capable of maintaining its quality needs and enhancing consumer’s preferences in the global domain (Leeman, 2010). Implementations of Global Network Implementation of global networking system is also one of the major needs of Starbucks while dealing with the different needs of consumers at the global domain. Maintaining standard as well as quality of the products os often observed to be a challenging task for the company dealing in the global arena. By setting up international networks, the company is even likely to face challenges of delayed supply of raw materials along with low standards of products. Thus, the company should be maintaining a local along with the global network so that the chances of discrepancies can be reduced and the company can effectively maintain the standard of the products and services in the global domain. By developing a global manufacturing network, Starbucks will be able to develop its prominence as well as consumer preferences to maintain the standard of products supplied to the consumers (Burks, 2009). Correspondingly, developing a global manufacturing network will be able to maintain the different needs of consumers based on their ethnicity and cultural backgrounds. This will even assist the company to maintain a proper standard of the services that it will be providing to its consumers in the global market. Additionally, with the incorporation of strategies of global networking system, Starbucks will be able to manage its lead-time and enhance the level of consumer satisfaction in its future endeavours. Furthermore, by reducing the cost of production with a cheaper availability of raw materials, the company will be able to manage the other costs, providing the consumers with effective value and generating consumers’ preferences towards the company (Burks, 2009). The following graphs reflect the development of the café. Fig. 1: Coffee Outsourcing by Starbucks Source: (Starbucks Coffee Company, 2003) Fig. 2: Store Design of Starbucks Source: (Starbucks Coffee Company, 2003) Technology Transfer Based on the changing needs of development and enhanced amount of technology usage, the transfer needs to be followed in a specific way. Starbucks has been majorly concerned about the development of different features that would ensure world class coffee quality and maintain the quality of excellence of the same. In order to fulfil these targets, the café is majorly aligned towards import of world class brew, which would ensure that its standard is maintained at all the sectors in an equity way (Burks, 2009). The following diagram explains the similar subject matter: Exporting Firm Absorptive Capacity The firms’ ability to gather valuable information and implement the same into the system for generating more revenue is often termed as the absorptive capacity. Based on the continuous process of development, it is important for the people to develop a competitive domain, which is quite prominent in creating competitive edge and ensuring sustainable development. The absorptive capacity of the firms increases their dynamic capability and also enhances the effectiveness of the same (Martin & et. al., 2003). The organizations of today, irrespective of their mode of operation, need to develop their respective businesses based on innovative capacities of operations and ensure effective development based on flow of information. The absorptive capacity that has been depicted below reflects that the company i.e. Starbucks has been successfully enhancing its global presence based on efficient handling of diverse flow of information and applying the same to generate revenue (Martin & et. al., 2003). The following diagram represents the absorptive capacity of Starbucks based on the vertical flow of technological information: Fig.3: Absorptive Capacity about International Technology Flow Complementary Core Competencies The core competencies of Starbucks are noted to be based on the continuous development of technologies that would ensure that the firm is maintaining its sustainability based on positive development and ensure that its franchise is capable to develop respective core competencies. To increase the effectiveness of the system, the company has been successfully channelizing its supplies and ensuring prospective development towards enhancing the effectiveness of the system. Starbucks in Lithuania has been successfully developing its franchise based on the management of overall quality of coffee products and other beverages being served to the potential customers (Grant & Gregory, 1997). Hence, to develop its franchise in Lithuania, the company has majorly sought assistance from its suppliers and other contractors. The following diagram represents the core competencies of the company: Fig.4: Complementary Core Competencies Outsourcing Flow Chart Starbucks is planning to develop its franchise in Lithuania based on the norms of outsourcing and developing competencies based on Supply Chain Management (SCM). Hence, to enhance the effectiveness of the company, Starbucks has been efficiently handling the needs of progression, nurturing the efficiency of the contractors to develop goods and supply the exact quality of products ensuring maintaining the standards of the same. Thus, to ensure wider development in the quality of the products, the company has been successfully importing fresh brew and ensuring that the quality of the fresh brew is maintained and enhance the endurance of products such as the cup of coffee. By maintaining a flow of supplies from the different suppliers, the company has been successfully ensuring uninterrupted flow of raw materials (Grant & Gregory, 1997). The following diagram provides a better insight towards the outsourcing of the company. Fig.5: Outsourcing Flow Chart Conclusion Based on the above discussion, it can be asserted that Starbucks is likely to face huge challenges for implementing international policies and enhancing consumer preferences. With effective maintenance of the different strategic development approaches incorporated, the company is even likely to enhance its prominence in the global domain and develop an effective management of consumer preferences at large. Additionally, through effective maintenance of the different global networking chains, the company will be able to develop an efficient management of services and raise its ability to comply with the diverse needs of services in Lithuania. Correspondingly, this will also help in enhancing strategic competitive abilities of Starbucks to meet the diverse needs of the consumers within the new market and thus, maintain a standard of services. References Burks, M., 2009. Starbucks. USA: ABC-CLIO. Chan, C. K. & Lee, H. W. J., 2005. Successful Strategies in Supply Chain Management. Pennsylvania: Hershey. Chopra, S. & Meindl, P., 2007. Supply Chain Management: Strategy, Planning, &Operation. New Jersey: Upper Saddle River. Grant, E. B. & Gregory, M. J., 1997. Adapting Manufacturing Processes for International Transfer. International Journal of Operations & Production Management, Vol. 17, No. 10, pp. 994-1005. Leeman, J. J. A., 2010. Supply Chain Management: Fast, Flexible Supply Chains In Manufacturing And Retailing. Germany: Book on Demand. Lockamy, A. & McCormack, K., 2004. The Development of a Supply Chain Management Process Maturity Model Using the Concepts of Business Process Orientation. Supply Chain Management: An International Journal, Vol. 9, No. 4, pp. 272-278. Martin, G. & et. al., 2003. When Absorptive Capacity Meets Institutions And (E) Learners: Adopting, Diffusing And Exploiting E-Learning In Organizations. International Journal of Training and Development, Vol.7, Iss.4, pp. 228-244. Patton, J. D., 2006. Logistics: Technology and Management the New Approach. New York: Jamaica. Roby, L., 2011. An Analysis of Starbucks as a Company and an International Business. Liberty University, pp. 1-35. Schultz, H., 2012. Pour Your Heart Into It: How Starbucks Built A Company One Cup At A Time. New York: Hachette. Starbucks Coffee Company, 2003. Corporate Social Responsibility. Annual Report, pp. 1-36. Yang, W. & Zhang, Y., 2012. Research on Factors of Green Purchasing Practices of Chinese. Journal of Business Management and Economics, Vol. 3, Iss. 5, pp. 222-231. Yeniyurt, S. & et. al., 2012. Integrating Global and Local Procurement for Superior Supplier Working Relations. International Business Review, pp. 1-12. Read More