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Starbucks Value Chain Analysis

The document provides a detailed value chain analysis of Starbucks, highlighting its primary activities such as inbound logistics, operations, outbound logistics, marketing and sales, and service, which contribute to its competitive advantage. It also discusses support activities including infrastructure, human resource management, technology development, and procurement that enhance the company's operational efficiency. Overall, value chain analysis serves as a tool for identifying areas for improvement and increasing margin efficiencies within the business cycle.

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Malini
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52 views1 page

Starbucks Value Chain Analysis

The document provides a detailed value chain analysis of Starbucks, highlighting its primary activities such as inbound logistics, operations, outbound logistics, marketing and sales, and service, which contribute to its competitive advantage. It also discusses support activities including infrastructure, human resource management, technology development, and procurement that enhance the company's operational efficiency. Overall, value chain analysis serves as a tool for identifying areas for improvement and increasing margin efficiencies within the business cycle.

Uploaded by

Malini
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Value Chain Analysis:

Starbucks’ Primary Activities


Porter’s value chain analysis discusses five primary activities.
 Inbound Logistics
The inbound logistics for Starbucks refer to company-appointed coffee buyers selecting the finest quality coffee beans from producers in Latin
America, Africa, and Asia. In the case of Starbucks, the green or unroasted beans are procured directly from the farms by the Starbucks buyers.
These are transported to storage sites, after which the beans are roasted and packaged.
Value is added to the beans through Starbucks’ proprietary roasting and packaging, which helps to increase their selling valu e. The beans are then
sent to distribution centers, a few of which are company-owned and some of which are operated by other logistic companies. The company does
not outsource its procurement, ensuring high-quality standards right from the point of selection of coffee beans.
 Operations
Starbucks operates in more than 80 markets, either in the form of direct company-owned stores or licensed stores. (Starbucks does not follow the
traditional franchising terms.) The company has more than 32,000 stores globally. It is also the owner of several brands, including Teavana,
Seattle’s Best Coffee, and Evolution Fresh.
According to its financial reports, the company generated 81% of its total net revenue during the first half of its 2020 fiscal year from its company-
operated stores while the licensed stores accounted for 11%.
 Outbound Logistics
There is very little or no presence of intermediaries in product selling for Starbucks. The majority of the products are sold in stores. However,
storage and distribution to retail locations are important.
 Marketing and Sales
Starbucks invests more in superior quality products and a high level of customer service than in aggressive marketing. However, need-based
marketing activities are carried out by the company during new product launches in the form of sampling in ar eas around the stores.
 Service
Starbucks aims at building customer loyalty through its in-store customer service. A signature retail objective of Starbucks has always been to
provide customers with a unique Starbucks Experience.
Service training is a key component of the value chain that helps to make its offerings unique. A substantial amount of value is created when
baristas make drinks for customers.

Starbucks' Support Activities


Porter outlines four kinds of support activities that can be important in value chain analysis.
 Infrastructure
This includes departments like management, finance, legal, etc., which are required to keep the company’s stores operational. Starbucks employs
business managers in its corporate offices. It also has store managers on-site that help to oversee well-designed and pleasing stores
complemented with good customer service provided by the dedicated team of employees in green aprons.
 Human Resource Management
The committed workforce is considered a key attribute in the company’s success and growth over the years. Starbucks employees are motivated
through generous benefits and incentives. The company is known for taking care of its workforce, a key reason for a low turnover of employees,
which indicates great human resource management. There are many training programs conducted for employees in a setting of a work culture,
which keeps its staff motivated and efficient.
 Technology Development
Starbucks is very well-known for the use of technology, not only for coffee-related processes (to ensure consistency in taste and quality along with
cost savings) but to connect to its customers. Many customers use Starbucks stores as a makeshift office or meeting place because of free and
unlimited Wi-Fi.
Starbucks has launched several platforms where customers can ask questions, give suggestions, openly express opinions, and sh are experiences.
Technology helps to implement this feedback, especially in the area of its rewards program.
Starbucks also uses Apple’s iBeacon system, wherein customers can order a drink through the Starbucks phone app and get a not ification of its
readiness when they walk in the store.
 Procurement
Procurement is integrated across various aspects of the supply chain. Porter discusses procurement as a support activity. Many companies will
establish broad terms, requirements, and standards for all of their procurement dealings. However, procurement relationships typically vary widely.
Starbucks handles all of the procurement for its own coffee beans, which it sees as one of its competitive advantages.

The Bottom Line


The concept of value chain analysis helps business managers to better identify useful and wasteful activities. By looking beyond standard means
of efficiency analysis while also seeking to integrate and capture value chain analysis in business metrics, stakeholders can make important
insights related to operational processes.
Overall, value chain analysis can be used to potentially identify value improvement opportunities throughout various steps of a business cycle, also
adding to improved margin efficiencies.

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