Further about Starbucks

I have connected one of the managers of starbucks in China, we communicated by the e-mail. According to the conversation with the chinese manager I got more information about the starbucks strategy that developing in chinese market.
In  1999 the starbucks first joined the China market, because international management for lack of experience, so the starbucks in China set up a joint venture company or license operating mode, this is also called the first to put members of the company development stage. Up to 2006, starbucks have traveled to Shanghai unified starbucks, guangdong beautiful heart starbucks and Beijing American big starbucks equity recovery,which Starbucks has won back the area of the market in China and the right of control.However, Starbucks should find its own way to support the supply chain. There goes the three channels: special channel, direct channel and retail channels. Special channels are for airlines and other retail service, direct channel processing a mail-order business, retail channel is your shop and joint venture shops service. Starbucks company use supply chain operation mode to support the three channels. On November 12, 2010, starbucks, announced in yunnan PuErXian build a coffee farm. This is the first time Starbucks have their own place to farm coffee .In yunnan coffee farm, it is the custom to upstream industry chain which is an important step in the development. “The master raw materials in him hand, avoid to ensure that the whole industry chain masters of stable, become life threatening one move ahead of starbucks." Schultz has mentioned in his autobiography, in 1994 and 1995, starbucks has therefore hanging by a thread. That year due to severe concussion, starbucks coffee was hoarding coffee beans, and is pressure of public opinion, leading to share price vibrations substantially. Now, schultz says, starbucks will insist on supply chain vertical integration, "from the seeds in a cup of pure”.AlsoStarbucks made according to the inventory production mode, with the rise of the modular design, production gradually turned into a specific places in the assembly, including assembly, packaging and labeling activities.

  

Starbucks’ common use of information technology

The main use of unified commodity code Bar code, format and sales management system (POS) terminal scanner record purchase information, and establish the electronic data interchange (EDI), the mechanism through business documents form guide, and Database retail (Database) with fast retailing response (QR) delivery systems, and other important information technology import, and let the retail sales and purchasing process more smoothly.

Sales management system (POS)

Starbucks relys on POS machines provide data, starbucks has fixed report format (a Word document), each branch through E-mail reported these data about once a week, set a substandard goods, have the professional logistics company whic is responsible for distribution.

Electronic Data Interchange(EDI)

Is the way to the computer, computer in need not human intervention, based on prior to set a standard format, automatic transmission material, processing information. Retailers and suppliers of business documents exchange is often using the technology, through computer with a fixed form standard form to transfer mechanism, transfer material including sales material, purchase orders, invoices, return single, stock, single, etc.

 

Rapid response system (QR)

Also known as efficient consumer response (ECR), for a inventory management system designed to reduce the stock retailers in the lead time (vinyl), reduce inventories that investment, improve customer service level, reduce strategy expenses, etc.

Business Process piping System Process Pipeline System (get)

To set up a similar deal under single and other business program structure including improved B2B commercial support, each order of the group purchase order, multiple each purchase orders multiple shipments, support 64 bits of currency, support delivery and tariff let Starbucks quickly perform to set the order and the function of the program, including used to calculate the delivery, gifts, vouchers, pay the tax program and together plugin (plug-manufacturer in) the integration of components.

ChanPinXing record System (Product Catalog System)

ChanPinXing record system and goal setting system operation, to help with general sale plan, and to meet the conditions of the customer feedback sale. And business analysis system integration, can be enabled products sales report; And your profile system integration, and may, according to the user profile build custom directory.

Business analysis System (get Analytics System)

Containing a Starbucks gathered information website, but also by its material gathering and analysis function that providing the ability of Starbucks identification business trends and grasping the market direction.

Being soul

Based on network interface allows Starbucks, business manager of the execution of the common to commercial operation, such as production promotion activities, and updates the product material, modify your profiles or check the business analysis system to produce a report.

Solutions website (no Site)

Including B2B and B2C solutions website, both function complete e-commerce applications, it contains build e-commerce sites necessary resources.

Answer to chap 4.6

Starbucks uses AT&T for their WIFI connection. They use a subscription system and a "Starbucks Gift Card" system, all run by SBC Communications Inc. Basically, in order to connect, you will need AT&T WIFI credits or simply purchase a Starbucks Gift Card for as little as $5.00, go online and register your card via starbucks.com. Once you jump over some small hoops, and signing up for a free AT&T account, you may go to any starbucks and purchase something small like a newspaper with your newly registered Starbucks Card and have two hours of "free" WIFI access for that day only. Moreover, you will have to accept a security certificate in order for your notebook to access the internet. As far as the hardware Starbucks is using, it is a Cisco server through their network. Most 'cafe' type places usually have free Wifi using standard routers (Linksys, Netgear, etc.) to allow connection to the internet absolutely free.

Also the Starbucks Serves Up Digital Music.In-store CD burning service will be installed in coffeehouses in Seattle and Texas. The Hear Music media bars will feature the necessary hardware and software, provided by HP, for customers to search Starbucks' digital song library, choose and listen to tracks, and burn them to a CD.

CDs whose song lists are compiled by customers will cost $8.99 for the first seven tracks and $0.99 per additional track.Customers will also be able to purchase full-length albums at prices that are similar to what conventional retail outlets charge. They will be able to burn these albums off the digital song library or buy them in the standard shrink-wrapped format if they are in stock at the store.

·Business Strategy·

Business strategy：

Store Expansion Strategy

The firm’s target areas are favorable demographics that could be supported by company infrastructure. Also strategy evolved to blanket major metro areas with stores and tighter control over operations compared to franchising. In addition, there is two-pronged approach to international expansion which is Company-owned and operated and License local partners.

Product Differentiation Strategy

The first initiative is in-house specialty sales group to market Starbucks products to restaurants, airlines, hotels, universities, hospitals, businesses and select retailers and Second initiative is joint venture with PepsiCo .Also it introduced Starbucks VIA Ready Brew in 2009 .

Workplace Strategy

They would like to attract, motivate, and reward store so that generating enthusiasm and achieving high levels of customer service. So they support Health care coverage for all employees, Stock option plan, Stock purchase plan, Competitive pay and training and recognition.

Coffee Purchasing Strategy

The coffee source is from multiple geographic areas, for example Coffee beans grown in 70 countries by 25 million small farmers. So there are three- key strategy elements, paying enough to ensure small farmers covered their costs, using fixed-price purchasing arrangements to limit Starbucks’ exposure to sudden price jumps and Working directly with small coffee growers.

Critical competitive factors:

Strengths	Opportunities
•       Strong brand equity •       Wide geographic presence •       High quality product (strong research and purchasing strategy) •       Strong financials	•       Strategic transformation initiative 2008-2010 •       Overseas expansion •       Product line extensions
Weaknesses	Threats
•       Heavy restructuring and store operating expenses •       Aggressive expansion	•       Lack of ownership of coffee farms can lead to price fluctuations •       Consumer preferences and health concerns •       Competition from fast-food services

The function of MIS:

The shift manager of Starbucks told us he identify two management information systems in Starbucks, which is a Management information system called IRIS (Intelligent Restaurant Information System) It provides a number of reports that can be used to help to manage store profitability. These reports can be viewed on the computer monitor or can be printed for review or archive. Store Managers can use the Management information System to prepare short term budget to plan long term profit and prepare proper forecasts. The Iris system helps the managers to identify customer needs trough accurate reports, so to implement sales and marketing strategy and to plan production based on actual demand. The Iris system can be also accessed to check and monitor inventory. Also the hardware components of the computer system are used in Starbucks. This allows the management work station to send and receive large quantities of data and information. There is a wireless internet provided by T-mobile, which allows customers to connect to the wireless network. To protect retailers, a new security system has been designed for cards which will use a smart chip. When customers pay using one of these cards, rather than signing a confidential security number (PIN) is entered. Recommendations are about training staff and limitation of the computer system used. The management information resources used by STARBUCKS’ partners are really accurate and detailed. The manager suggested us investing in new technologies such as new monitors, wireless system, printers etc.

Answer to chap3(5 force model)
Rivalry Among Sellers
Starbucks competes with a variety of smaller scale specialty coffee shops, mostly concentrated in different regions of the country: Caribou Coffee and Peet’s Coffee and Tea
Starbucks also competes against two of the largest companies: Dunkin Donuts, who claims to be "the world's largest coffee and baked goods chain" and McDonald’s
Threat of New Entrants       
Economies of scale within the specialty coffee industry have increased as the size of the top players has increased (Dunkin' Donuts and McDonald's).
As the industry matures, the ability to access distribution channels and select from the highest quality coffee beans has become increasingly difficult.
Starbucks has very loyal customer bases stemming from its past advertisements, customer service, objective product differentiations and early entry into the industry. This makes it more difficult for new entrants to gain a solid customer base.
Suppliers
Many farmers who sell to Starbucks and other premium coffee chains are united by an initiative known as Fair Trade Certified Coffee.
Substitute ProductsPrimary substitute products still posing a threat to the specialty coffee industry are the caffeinated soft drinks offered by Pepsi and Coca-Cola.
At present, these substitute products pose little threat to the premium coffee industry; coffee has gradually gained preference over carbonated soft drinks (health concern).
Suppliers are more powerful today.  Increased unity among the coffee farmers, decreased significance of specialty coffee retailers’ purchases as a proportion of premium coffee bean sales, and increased importance placed on high-quality coffee beans by purchasers have combined to increase the bargaining power of the supplier group.
By locking their coffee suppliers into long-term contracts to dilute potential price volatility, Starbucks diminished suppliers’ ability to play one buyer against another, which decreases the suppliers’ bargaining power.
Buyers
Primary buyers in the specialty coffee industry remain individual consumers, who neither engage in concerted behavior nor individually purchase in large volumes relative to the total sales of a corporation such as Starbucks.
Buyers have an enormous selection of retailers from whom they can buy.
Threat of backward integration. This threat can be carried out if a buyer chooses to start a “mom and pop” specialty coffee store in close proximity to an established specialty coffee store.

Starbucks Introduction

Beginning

• Formed: 1971 – Seattle, Washington
• Partnership
• Jerry Baldwin (English Teacher)
• Zev Sigel History (Teacher)
• Gordon Bowler (Writer)
• Inspired by Alfred Peet (sold beans & equipment)
• Bought beans from Mr. Peet in the first year, then purchased them directly from growers   
• From 1971-1975, company located at  2000 Western Avenue in Seattle, Washington
• Currently located at 1912 Pike Place in Seattle

Social responsibility

Starbucks Corporate Social Responsibility – Giving back to communities and the environment. Treating people with respect and dignity. Serving the world’s best coffee. Every day, we demonstrate our beliefs in the guiding principles of our mission statement in the way we do business. In fact, corporate social responsibility at Starbucks runs deeply throughout our company.

Commitment to Origins – By making investments that benefit coffee producers, their families and communities, and the natural environment, Starbucks is helping to promote a sustainable model for the worldwide production and trade of high-quality coffee.

Commitment to Environment – From promoting conservation in coffee-growing countries to in-store “Green Teams” and recycling programs, Starbucks has established high standards for environmental responsibility.

Commitment to Communities – We strive to be a responsible neighbor and active contributor in the communities where our partners and customers live, work and play.

Commitment to Partners – At Starbucks, we believe in treating people with respect and dignity. This is especially true of the way we treat the people who work for Starbucks – our partners.

Mission Statement

Our mission: To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time. Here are the principles of how we live that every day.

Our Coffee – It has always been, and will always be, about quality. We’re passionate about ethically sourcing the finest coffee beans, roasting them with great care, and improving the lives of people who grow them. We care deeply about all of this; our work is never done.

Our Partners – We’re called partners, because it’s not just a job, it’s our passion. Together, we embrace diversity to create a place where each of us can be ourselves. We always treat each other with respect and dignity. we hold each other to that standard

Our Customers – When we are fully engaged, we connect with, laugh with, and uplift the lives of our customers – even if just for a few moments. Sure, it starts with the promise of a perfectly made beverage, but our work goes far beyond that. It’s really about human connection.

Our Stores – When our customers feel this sense of belonging, our stores become a haven, a break from the worries outside, a place where you can meet with friends. It’s about enjoyment at the speed of life – sometimes slow and savored, sometimes faster. Always full of humanity.

Our Neighborhood – Every store is part of a community, and we take our responsibility to be good neighbors seriously. We want to be invited in wherever we do business. We can be a force for positive action – bringing together our partners, customers, and the community to contribute every day. Now we see that our responsibility – and our potential for good – is even larger. The world is looking to Starbucks to set the new standard, yet again. We will lead.

Our Shareholders – We know that as we deliver in each of these areas, we enjoy the kind of success that rewards our shareholders. We are fully accountable to get each of these elements right so that Starbucks – and everyone it touches – can endure and thrive.

Long-Term Vision

•      Be the undisputed coffee authority

•      Engage and inspire Starbucks partners

•      Ignite emotional attachment with customers

•      Expand global presence

•      Lead the way in ethical sourcing and environmental impact

•      Create innovative growth platforms

•      Deliver sustainable economic model