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Case Analysis Business Analytics

Location data is very important to Starbucks' business strategy. The Atlas system helps Starbucks managers make better decisions about new store locations by providing analytics on demographics, foot traffic, and performance of nearby stores. While Starbucks location decisions in 2007-2008 led to many store closures due to a lack of tools to properly analyze data, later decisions from 2011-2012 were more successful due to the implementation of the Atlas system, which uses market data and demographic information to determine the best locations without hurting sales at existing stores. Getting the location right for new Starbucks stores is crucial as each new store represents a $1 million investment.

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686 views2 pages

Case Analysis Business Analytics

Location data is very important to Starbucks' business strategy. The Atlas system helps Starbucks managers make better decisions about new store locations by providing analytics on demographics, foot traffic, and performance of nearby stores. While Starbucks location decisions in 2007-2008 led to many store closures due to a lack of tools to properly analyze data, later decisions from 2011-2012 were more successful due to the implementation of the Atlas system, which uses market data and demographic information to determine the best locations without hurting sales at existing stores. Getting the location right for new Starbucks stores is crucial as each new store represents a $1 million investment.

Uploaded by

Rhea Ramirez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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DATA DRIVE STARBUCKS LOCATION DECISIONS

1. HOW IMPORTANT IS LOCATION DATA TO STARBUCKS’S BUSINESS STRATEGY?


EXPLAIN YOUR ANSWER.

Location for Starbucks Company is very important because it dictates how


a certain business will boom for a certain location. The business thinks that
improperly situated stores could cannibalize sales of more established stores. They
also think that there is a possibility that Starbucks stores become too
commonplace and consumers tire of the Starbucks Brand. In this scenario, we can
infer that the business didn’t want to close hundred of stores again because of its
improper placing which may lead to decrease in sales and lost of customers. The
company wanted to grow the business in such way that they plan every detail of
the business because one wrong movement means a lot.

2. HOW DO LOCATION ANALYTICS HELP STARBUCKS MANAGERS MAKE BETTER


DECISIONS? GIVE EXAMPLES OF TWO DECISIONS THAT THE ATLAS SYSTEM HELPS
SUPPORT.

Location analytics help the Starbucks management to make a good


decision in money aspects. By having this analysis, the management can check
or verify whether or not the place where a new shop will be put up will be
profitable. By using the Atlas system, they can see the demographics, workflow
and store performance. It can check the environment of the store location and it
can also examine the customers, the nearby stores, the transportations and many
more aspects and from the conclusion of the analysis. They can decide whether
or not it is good to put that business in that place.

3. COMPARE STARBUCKS DECISIONS ABOUT STORE LOCATION IN 2007-2008 AND


2012. WHAT MADE THE LATER DECISIONS MORE SUCCESSFUL? WHAT
MANAGEMENT. ORGANIZATION, AND TECHNOLOGY FACTORS WERE INVOLVED?

In lately 2007-2008 many Starbucks store were subsequently closed due to


lack of sufficient expertise and tools to analyze data properly. Using GIS is not
enough to conquer all data just like inundated date and making decisions. So,
Starbucks senior management approach new strategy and tried to open again a
new series store in 2011 and 2012 and the results has a big impact to continue the
grow in sales in US Business by using ATLAS powered by software ESR it is a market
planning and store development application. Also, it is the leading vendor of GIS
that analyze the massive amount of location- based and demographic data to
determine the best place to open Starbucks store without hurting sales at other
Starbucks location.
4. WHAT IS THE VALUE TO STARBUCKS OF A GOOD DECISION ABOUT WHERE TO OPEN
A STARBUCKS STORE? EXPLAIN YOUR ANSWER.

Starbucks uses a market planning and store development application called


Atlas powered by software from ESRI which analyzes massive amounts of location-
based data and demographic data to find the best place to open Starbucks.
Atlas provides a workflow window wherein it helps the user move the new
Starbucks store site through approval, permitting, construction, and opening. Also,
it helps them test different scenarios to ascertain whether the original assumptions
are correct. According to Rob Sopkin, Starbucks Vice-President of Store
Development East, every decision about opening a store represents about a $1
million investment for Starbucks. Although one would think that a few
underperforming stores wouldn’t matter that much.

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