A Changing World Thesis And Outline

Posted By Admin @ Mar 02, 2022

Tittle: Report on Production and Operation Management of Starbucks

Type: Report

subject: Operation Management




Production and Operation Management of Starbucks America

Introduction of Production and Operation Management of Starbucks America

The first Starbucks store was founded in 1971 at Pike Place Market in Seattle. At the time of its launch in 1992, the company had 140 branches and expanded rapidly. The number of branches increased from 40 to 60% per year. While former CEO Jim Donald said "we don't want to dominate the world," Starbucks opened at least one store per day in the 1990s and early 2000s on average (Palmer, 2008). In 2008, seven stores opened daily worldwide. Not surprisingly, Starbucks is now the world's largest coffee chain operator, with more than 15,000 stores in 44 countries, representing 39% of total sales of coffee specialties in the world in 2007 (Euromonitor, 2008a ). North America only serves 50 million people per week and today is an indelible part of the urban landscape.

But how did Starbucks become such a phenomenon? First, it has made the Americanization of European coffee successful, something that no other coffee has done. Before Starbucks, coffee in its current form (coffee with milk, frappucino, mocha, etc.) was curious for most American consumers. Second, Starbucks not only sold coffee but also an experiment. Founding CEO Howard Schultz said: "We are not involved in the coffee industry serving people, but in the coffee industry" (Schultz and Yang, 1997). This includes a focus on customer service, such as eye contact, greeting each customer in 5 seconds, immediately clearing the tables and remembering the names of permanent customers. From the beginning, Starbucks' objective has been to reinvent a product that has a sense of romance, atmosphere, sophistication and a sense of community (Schultz and Yang, 1997). Subsequently, Starbucks created the "third place" in people's lives, somewhere between home and work, where they can sit and relax. This was a novelty in the United States, where coffee culture in many small towns consisted of a coffee filter on a hot plate. In this way, Starbucks not only wants to sell coffee but also to provide an experience. It was designed as a coffee for modern life. The establishment of the cafeteria as a social center with comfortable chairs and music was also an important part of the Starbucks brand.

All this came with an excellent price. While people knew that Starbucks was more expensive than many other café stores, they still visited outlets where one could "to see and being seen." In this way, the brand has become widely recognized and has become a status symbol, and everyone must complement it on their way to work. Therefore, Starbucks not only revolutionized the way Americans drank coffee but also revolutionized people's willingness to pay.

Expansion of Production and Operation Management of Starbucks America

By 2008, consumer confidence in Starbucks in Australia was 90% (Shoebridge, 2008), with each outlet selling on average twice as much coffee (270 per day) as other coffee shops in Australia (Lindhe, 2008). Half of Starbucks' global business in the next decade will be in Asia (Euromonitor, 2006, Browning, 2008). In fact, Starbucks has performed well in international markets that traditionally lacked a coffee-drinking culture such as Japan, Thailand, Indonesia, and China. In fact, it was responsible for the development of the categories in these markets.

The first Starbucks stores opened in Tokyo in 1996 outside the United States. Since then, Japanese Starbucks stores are more profitable than US stores. Not surprisingly, Japan is the best foreign market for Starbucks outside of North America. Each year, more than 100 new stores open in Japan, and coffee is more popular in terms of size and value than tea (Lee, 2003, see also Uncles, 2008). Unlike its entry into the Australian market, Starbucks has slightly changed its recipe for the Japanese market, for example, by inventing Frappucino green tea, which offers smaller drinks and pastries.

Starbucks entered the market of Saudi Arabia in 2000. The Middle East customers’ evolving characteristics which have been moving toward empathy for the affordable upmarket has been cleverly identified by Starbucks. Thus, the company has made astonishing popularity in the Middle East region with its capability of grasping a blend of both low and high tastes, triggering the average customers who have not familiar with Starbucks to experience the brand’s connection and elevation. Starbucks kept on expanding its business to enter the market of Scotland, Austria, Wales, and also Switzerland in the year of 2001.

Despite the fact that the unit expansion has supported Starbucks in increasing its sales, the company has acquired positive same-store sales development ever since 2010. Starbucks has also cannibalized its own sales with above than 14,000 sites spread out only in the United States. In brief, from only a normal coffee bean store in Seattle, Starbucks has succeeded to establish 30,000 international coffee supremacy houses across the globe (Whitten, 2019). The figure below presents the detail number of Starbucks stores from 1987 to 2017.