Case Study on "Starbucks Case"

Case Study 5 pages (1247 words) Sources: 3

[EXCERPT] . . . .

By standardizing products and processes Starbucks is able to capitalize on quantities of scale. Starbucks has developed its supply chain so thoroughly that it serves as a model for other firms in different industries to try to emulate (Locke, 2011). To achieve a heterogeneous customer service experience the company uses a corporate owned model for their individual locations as opposed to a franchise model in which they allow individual ownership of the retail locations with local partners.

Utilizing a centralized ownership model has many advantages for Starbucks. By keeping direct ownership of their locations, they have greater control over the operations and customer service standards. This has been one of Starbucks greatest assets in creating an experience that is replicable in all parts of the world. They were able to control quality of the products as well as the services and atmosphere in their locations. A more decentralized structure would have made it more difficult for Starbucks to replicate their atmosphere and the concept of the third place.

There are also many limitations to the centralized ownership control that Starbucks uses. Although it can control quality to the perceptions of value that they set, the same experiences may not be valued in every market equally. For example, customers many have different preferences in Atlanta then in Chicago and especially in foreign markets such as in Beijing. Having a rigid centralized control model that standardizes products and services does not allow for much regional flexibility to take advantage of local and regional consumer preferences.

Furthermore, another disadvantage is that Starbucks is exposed to more risk than if it shared its risk with local owners as would be the case in a franchise model. There is a financial risk to the company because it has focused all of its resources on its current product and service niche. During the last recession, Starbucks had to close many of its locations because it was overexposed financially to the effects of the economic downturn. The same could be said with any changes in human resources that were implemented on a global scale. If the change was not well received by the consumer base, then its effects would be magnified on a larger scale than in implementing changes locally or regionally.

The hardest aspect of Starbucks model for a competitor to try to emulate would most likely be the brand image. Starbucks has been successfully able to turn a commodity product into a differentiate product that has a high level of consumer loyalty. Although the third place concept played a big role in developing the brand, the brand image carries over to other niches as well. For example, the Starbucks brand also is successful in kiosks that serve coffee as well as in grocery stores that sell Starbucks beans. These niches do not use the atmosphere that Starbucks has create in their coffee shops, rather the brand image that is an extension of the retail locations in general. It would be extremely difficult for a competitor to be able to replicate the amount of brand power that Starbucks has generated over the last few decades.

Works Cited

Cooke, J. (2010, September 18). From bean to cup: How Starbucks transformed its supply chain. Retrieved from Supply Chain Quarterly: http://www.supplychainquarterly.com/topics/Procurement/scq201004starbucks/

Locke, D. (2011, April 13). What Your Supply Chain Can Learn from Starbucks. Retrieved from Sourcing Innovation: http://blog.sourcinginnovation.com/2011/04/13/what-your-supply-chain-can-learn-from-starbucks.aspx?ref=rss

Moore, J. (2006, August 28). Tribal Knowledge. Retrieved October 31, 2012, from http://tribalknowledge.biz/notes-updates/starbucks-mailbag-1/ READ MORE

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