Assignment B

Business Intelligence

Analysis on Starbucks

Student Id

Northumbria University
Abstract
The main aim of this report is to perform critical appraisal of impact of business intelligence
tools on organizations like Starbucks. This report will focus on the evaluation of business
performance of Starbucks using SAS analytics. Starbucks was one of the leading coffee chain
restaurants in the world owning 36% market share. However, its profit and revenue performance
is declining since 2018. The predictive analysis was employed by Starbucks which is believed to
increase company revenue by 21%. The loyalty program of Starbucks is the continued driving
force to move its business forward. Starbuck’s Esri has made its huge market competitor,
although its market rivals too established data analysis. It has currently 14 million loyalty
program member and planning to grow its reward program more. This report will analyze the
Starbucks data using SAS analytics and recommend strategic business decision making.
Table of Contents
Abstract............................................................................................................................................2

Introduction......................................................................................................................................4

Background..................................................................................................................................5

Context of the study.....................................................................................................................6

Outline of the study.........................................................................................................................7

Critical appraisal of implementation of Business intelligence in Starbucks...................................8

Drivers of implementation of BI systems in organization...........................................................8

Barriers of BI implementation in organization............................................................................8

Findings...........................................................................................................................................9

Recommendation...........................................................................................................................14

Conclusion.....................................................................................................................................14

References......................................................................................................................................15
Introduction
Business decision making during last decade entirely relied on marketing information for
survival. With the advent of globalization, the worldwide market transformed very rapidly and
depended on high quality technical support for business decision making. Market environment
changes always presented constant challenge for business decision making. Hence, there was a
strong demand for accurate prediction behind decision making. Business intelligence (BI)
systems development promoted successful prediction with strong accuracy and supported
decision making. BI systems aid in the increased business performance and consumer
satisfaction. Current, BI systems have been established with storage, analysis and retrieval of
large amount of data which is supposed to be transitioned from knowledge to decisions based on
accurate analysis with avoidance of errors. BI technical systems favors in the business solutions
and integration of management information systems comprising of digital analytics and its
strategy. BI tools respond very quickly for internal and external environment of organization. BI
based decision making not usually restricts itself with consumer behaviour analysis and market
and based strongly on business performances. According to (Mohammad, 2013), Business
knowledge apparatuses make business insight instruments work and backing choices and
activities. It should been take in to thought that business insight instruments work and supporting
choices in all degree of administrations beginning from chief and finishing with operational
level. Maria (2005) referenced that the BI apparatuses are not strategies that settle on choice, but
rather they support dynamic cycle and business developmental. The two Powers and Williams
(2007) concurred that BI devices lead to right future expectation through establishes
incorporation climate that fill holes among business work and give explicit data which dependent
on chronicled information. Powers additionally talks that BI framework is an information which
leads driven framework more than model driven and the significance of the entire whole
outcomes and forecasts which depends on gathered and prepared information. so the level of
choice characters which dependent on the precision of the gathered of information. Petrini and
Pozzebon (2008) refered to that the BI framework rely upon chronicled data which permits the
ability of choice. They are considering the BI framework from two side's administrative and
specialized methodologies. The administrative methodology comprises of information created
from outer also, interior conditions. BI systems undertake accurate decision making established
at right time in order to boost up the revenue performance based on good use of its resources.
From technical point of view, BI systems is the special application fixes data and changes the
information to support problem solving and establish accurate decision making.

Background
The concept of business intelligence and data science act as constant drivers of the business
today. This study illuminate the impact of BI tools on business performance of Starbucks.
Starbucks have been using micro strategy technology since 2005. Starbucks went mobile
technology supporting mobile ordering considering customer safety and ongoing convenience.
The definition of Business Intelligence is the process of technology, the process involved that
needed to transition of data to plan that stimulate cost effective business action. Business insight
envelops information warehousing, business logical devices and substance the executives. The
following definition referenced the grouping of activities which requested to climb to go through
all stages that the BI devices perform, and it covered the both side, the administrative and the
specialized ideas of BI framework. Another idea of BI framework is the interaction that goes
through numerous stages to meet the craving objectives. The stages start from the yield to the
asset to assemble information. Accordingly various sources are accessible in the business to
gather information, for example, record, reports, remarks and meetings, the subsequent stage is
to deciphering and investigating this information to be perceived, these two phases are managing
accessible information just and no moves to be made during this stage. BI highlights are firmly
identified with targets. Needs for specific destinations pushes to add new highlights to meet these
targets. BI parts are gatherings to make a totally coordinated framework that functions as a spine
to permit association support and to get by with right reaction to environmental pressure. OLAP
gives us of multidimensional dreams of information which are put away in distribution center
this part execution numerous sorts if missions like: Answering confounded questions by
deciphering these inquiries in a huge mode and recovering the required information in reports
and justifiable articulations. OLAP gives the client a likelihood to get to information stockroom.
OLAP makes models that make life simpler to clients to arrange issue in straightforward
structures and shows all factors influence the issue model. Advanced analytics examination
prevalent model of OLAP and it thinks often more about the future forecast which dependent on
measurements handled and conveyed by OLAP. OLAP has progressed examination highlights; it
manages convoluted issues and immense measure of information. Information Warehouse and
Data Mart part is going about as an information source that assists BI with verifiable profound
data which is vital for OLAP to counter complex inquiries. In numerous investigates and studies,
information warehouse and information market are not quite the same as one another. Then
again, a few explores consider the two of them as one. Information Mining is the principal job of
this part is orders unstructured information into levels and classes. The subsequent job is to think
in profoundly to extricate verifiable information and give impending expectations. Furthermore
information mining used to examine chaotic information which dependent on put away
information in stockrooms and information markets. "Information mining and OLAP have
commonly similar parts in BI framework yet the thing that matters is that OLAP creates report
with outline and results while information mining is more definite situated. It conveys
examinations and measurements". BI components possess four components such as OLAP,
Advanced analytics, Data warehouses and Data mining. The benefits of these components of BI
are analysis of huge amount of data, development of data models and generation of reports and
drafting the conclusion, statistical reporting, input of data using OLAP models, providing
multidimensional view on business data, detailed reporting supporting business decision making,
and also provides future prediction of behaviour based on the historical data. (Mohammad, 2013)

Context of the study

This study is devoted to analyze the Starbucks using business intelligence analytics tool.
Decision making process commences with identification of problem, analyzing the problem and
deriving at conclusive decision making. There four important aspects of business decision
making namely intelligence, design, analysis and implementation. Decision making caters the
operational activities of Starbucks. Currently, Starbucks completely rely on BI tools for
positioning the new stores mapping customer demands and market. The declining revenue
performance of Starbucks from 8.17% to 6.6% in 2018 was observed. Although Starbucks owns
36.7% market share in UK, the revenue performance of the stores are still declining. Starbucks
closed more than 100 stores in US during global recession (CNBC, n.d). However, they have
hired 20 business analysts to employ decision making using regional dataset on store
performance to close or function the store if they are economic viable. Starbucks currently
employs Esri’s analytics which is location based analytical program to analyze the sales based on
maps. It uses location, traffic patterns, population density and average income of the region for
opening new stores in a specific region. Starbucks generally transforms menu preferences based
on the consumer demand. For instance, Starbucks build out the k line cups for bottled beverages
both from consumer preference and market demand. Also, Starbucks found that their tea
consumers preferred unsweetened tea and hence created two types of k cups for tea with and
without sugar. Hence, it is evident that the Starbucks generally strengthened its functioning
based on its ability to use data analytics and expand its menu in its new digital dashboards of the
store. The advanced digital boards will permit Starbucks to change which items it highlights to
drive and build deals deliberately. The loads up can include various things dependent on
schedule of day, climate, and that's just the beginning (for example lunch things in the early
evening, cold beverages when the climate is more sultry). In principle, the digital menu board
can likewise be utilized to powerfully change costs for the duration of the day and season to
reflect shifts popular. In spite of the fact that Starbucks utilizes commonly accessible data to
advise its choices, for example, store area, its actual upper hand is its stash of elite client
information. Starbucks has in excess of 14 million individuals pursued its Starbucks Rewards
dedication program. Rewards addressed 36% of U.S. organization worked deals a year ago and
versatile installment was 29% of exchanges. Through this, Starbucks can perceive what explicit
individuals are requesting and change contributions appropriately. By understanding what
reliability clients are requesting and how regularly they request it, they can send buyers
customized offers and advertising materials to help drive more deals. (Vitt, 2010)

Outline of the study

The study aims at the analysis of Starbucks business performance in its target markets. Starbucks
is one the leading Coffee chain restaurants in the world. Its performance and profit share reduced
to 18% during 2018 – 2020. This study employed SAS analytics to evaluate the gathered data on
business performance of Starbucks. The results will be interpreted in the form of table and
graphs. The study will recommend few strategies to improve the business performance.
Recruitment of BI tools and artificial intelligence software are widely used by multinational
companies to get business insight about their data (Bahrami et al, 2012). Starbucks perform 90
million transactions per week from stores all over the world, this coffee giant has been employed
cutting edge BI technology and big data analytics using Artificial intelligence to aid in direct
marketing, business and sales decisions. The reward program on mobile app of Starbucks has
reached 17 million users and 13 million active users. It also performs the targeted marketing
using mobile app. It sends personalized offers and discounts as well as birthday emails with
recent purchase history to re-engage them with the store (CNBC, n.d). It also launched virtual
barista assistant which was programmed by artificial intelligence algorithm. Artificial
intelligence provide seamless customer experience is the greatest accomplishment of the
Starbucks. It also launched new digital flywheel program which is developed based on the cloud
systems architecture that possess capability to recommend customers food and drink. The
recommendation differs to the users based on the weather, holiday or week day and location.
This study will aim at the BI analytics using SAS and aid in business decision making based on
the available data.

Critical appraisal of implementation of Business intelligence in

Starbucks
Drivers of implementation of BI systems in organization
The major drivers of Business intelligence systems adoption within organisations includes

1. The capacity of a BI system for help produce better business choices by means of
opportune, exact and more extensive investigation of accessible corporate data resources
2. The capacity of BI to distinguish development openings
3. The capacity of BI to decrease expenses and wastage by recognizing spaces of high
consumption, operational shortcomings and dissecting conditional records
4. Support key changes continuously (or close to ongoing)
5. Distinguish dangers and dangers
6. Increment client productivity
7. Improve and quantitative working environment efficiency by worker, division or capacity
8. Improve operational and production network efficiencies (Noman, 2010)

Barriers of BI implementation in organization

The main barriers of the BI implementation includes

1. Breaking down of the knowledge silos based on each department

2. Integration of the BI tools with other performance management, operational management
and finance transaction systems of the organization
3. Establishment and maintaining of suitable level of the data quality to the feed to the BI
systems
 4. It is hard to secure high rates of users
5. Transforming the organizational culture based on data based decision making from gut
feel based one.
6. It is hard to secure financial sponsorship and essential financial back up by tangible ROI
(Noman, 2010)

Starbucks perform the predictive analysis using the data gathered from the digitalization of
customer loyalty card of Starbucks. This card allows the customer to retrieve the record of
transactions performed in last 12 months. Data scientists of Starbucks now identifies the patterns
of the consumption like type of the coffee preferred, where was it bought and during which part
of the day. Hence, it is evident that Starbucks implemented machine learning techniques to
understand customers and apply decision making by location mapping via ArCGs Esri.

Findings
SAS EG Project Flow

Number of Starbucks stores in the world 2003 – 2020

The above SAS EG line plot reveals that the sum of Starbucks stores increased around the world
during 2003 to 2020. There is a slowdown of store count during 2008 to 2012. This is due to the
global economic crisis. Currently, Starbucks own 32,660 stores around the world. Year over
year, Starbucks have doubled up their growth during last decade.

Regression analysis

Root 1.62713 R- 0.8988

MSE Square
Depend 2012.5 Adj R- 0.8832
ent Sq
Mean
Coeff 0.08085
Var

The model summary reveals that R squared value is 0.89 at 95% C.I. This infers that this model
is 89% accurate to predict the relationship between year and growth of company owned and
licensed stores.

Analysis of
Variance
Source DF Sum of Mean F Value Pr > F
Squares Square
Model 2 305.581 152.790 57.71 <.0001
9 9
Error 13 34.4181 2.64755
5
Correct 15 340
ed Total

The ANOVA table reveals that there is significant difference between model and error, F(57.71)
is 0.005<0.0001.

Parameter Estimates
Variable DF Paramet Sta t Value Pr > |t|
er nd
ard
Estimate Err
or
Intercept 1 1998.258 7.4 268.25 <.0001
49
35
 Company_oper 1 -0.00192 0.0 -0.71 0.4899
ated 02
71
Licensed_store 1 0.00605 0.0 2.25 0.0426
s 02
69

Year = 1998 – 0.00192 (Company operated store) + 0.00605 (Licensed store)

The above regression equation infers that the number of company operated stores are decreasing
with the relative increase of year and 0.6% increase of licensed stores with the increase of year.
This infers that the growth of company owned Starbucks stores are lesser than licensed stores in
the world.

Comparison of Company owned and Licensed outlets of Starbucks among nations

US holds the top most position of Starbucks outlets both company owned and licensed stores.
China is the second largest nation with highest stores of Starbucks in the world

Variable Mean Std Dev Minimu Maximu N

m m
Company_owned 1655.6 2948.23 0 8941 10
Licenced_store 1092.1 1904.99 0 6387 10

The mean company owned outlets of Starbucks is 1655 and licensed store is 1092. There is a
significant high number of company outlets than franchisee owned in the world. The second
position of china infers that China is currently new global capital of Starbucks.

Consumer preferences based on Age

The above line chart clearly reveals that consumer preferences on Starbuck products decreases
with the age. It illustrates that targeted marketing is essential to boost revenue and profits. On the
other hand, customized marketing and sales strategy is required to boost sales among elderlies.
It was observed that revenue increased with the relative increase in the number of stores during
2003 to 2020.

Simple Statistics
Variable N Mean Std Dev Sum Minimu Maximu
m m
Number 18 19365 7568 348568 7225 32660
_Stores
Revenu 18 14.3261 7.09547 257.87 4.1 26.51
e 1

The mean number of stores of Starbucks in the world is 19365 ± 7568. The mean revenue gained
by stores are 14.32 million dollars ± 7.09.

Correlation analysis

Pearson Correlation Coefficients, N =

18

Prob > |r| under H0: Rho=0

Revenue
Number 0.98292
_Stores
<.0001
The Pearson’s r value is 0.98 at p<0.001 99% C.I. The number of stores have strong relationship
for the revenue performance. The decrease of store count is one of the key reason for the
decrease of revenue from 2018 – 2020. Hence, opening new store outlets could possibly increase
the profit and revenue performance of the Starbucks in UK and rest of the world.

Recommendation
This study performed quantitative analysis on Starbucks sales dataset using SAS enterprise
Guide version 7.11. The study observed that the number of stores steadily declined since 2018 to
2019 and 2020. The company owned outlet stores opened during 2018 to 2020 is observed to be
zero. Hence, it is recommended that Starbucks should open few outlets in UK based on Esri’s
location mapping, income and market demand to boost up the profitability ratio. The loyalty
program and discount reward programs should target elderly age group to attract the customers
towards the stores. The study recommends the launching of regular BI systems and ERP systems
for boost up revenue and convenience of reporting.

Conclusion
This study has evaluated the importance of business decision making using BI tools for
Starbucks. The study employed quantitative methodology using secondary research methods via
SAS EG version 7.11 to accomplish the objectives. The study recommends the implementation
of BI tools to collaborate the sales data, analysis and reporting across the geographical locations.
The opening of new company outlets, targeted sales reward coupons for elderly people and
improvement of convenient sales options for the customers are recommended for Starbucks
References
CNBC. (n.d), Starbucks digital analytics, Available online:
https://www.cnbc.com/2016/04/06/big-data-starbucks-knows-how-you-like-your-coffee.html

CNBC. (n.d). Starbucks rewards, Available online: https://www.cnbc.com/2017/05/04/starbucks-

reward-members-can-now-earn-stars-at-the-grocery-store.html

Noman, N. (2020). Analysis of Starbucks Customer Data for Business Intelligence, Available
online: Analyzing Starbucks Customer Data for Business Intelligence | by Noman Nasir Minhas |
Nerd For Tech | Medium

Maria, F. (2005). Improving the utilization of external strategic information, Master Thesis,
Tampere University of Technology.

Vitt, E., Luckevich, M., and Misne, S. (2010). Making better Business Intelligence Decision
faster, O‟Reilly media, Inc.

Matei, G. (2010). A collaborative approach of business intelligence systems”, (2010). Journal of

Applied Collaborative Systems, 2(2): 91-101.

Bahrami, M., Arabzad, M., and Ghorbani, M. (2012). Innovation in Market Management by
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Behavioral Sciences, 41: 160-167.

Mohammad, A. (2013). The role of Business Intelligence Tools in decision making process, Int.
Journal of Computer Applications, 73(13): 24 – 32

Power, D., and J. (2008). Understanding data-driven decision support systems, Information
Systems Management, Vol.25, No.2, (2008), pp: 149–154.

Petrini, M., and Pozzebon, M. (2008), What role is business intelligence playing in developing
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