This report will provide an investigation regarding general information about the company, Starbucks. It highlights the operational systems that are being used throughout all the businesses and briefly about the strengths and weaknesses with reference to its IT systems. In addition, the report comments on the prospects of the company and assembles recommendations that can possibly enhance Starbucks implementation.
The headquarters is located in Seattle, Washington, United States (Starbucks Coffee/Headquarters, n.d.). Not only does this company produce coffee but also refreshments such as, pastries, salads, and sandwiches. The first Starbucks store was opened in 1971 in Seattle’s historic Pike Place Market. After a decade and a sip of the world’s finest fresh roasted whole bean coffee, the president and chief executive, Howard Schultz, joined the team. Starbucks was built out to be a unique company compared to others. A company that not only celebrated coffee, but also created a feeling of connection. (Our Heritage, n.d.).
Starbucks is only unique for their fresh roasted whole bean coffee but, that does not make it a unique product itself. This company faces many threats and competitors that include:
? Tim Horton’s
? Country style
? McDonalds Café
? Second cup
(Being a coffee producer, the following are the top 11 Starbucks competitors;, n.d.)
Structure of Organization
Picture of the organization chart from Starbucks: (STARBUCKS CORPORATION, n.d.)
Number of employees as of 2016:
There are 238,000 employees at Starbucks. (Starbucks Coffee/Number of employees, n.d.)
Levels of Management
? Top level – guide the performance of the organization as a whole.
? Middle level – oversee the work of large departments.
? First-line level – report to middle level. (Wright)
? Feedforward Control- ensure the right directions are set and the right resource inputs are available.
? Concurrent Control- ensure the right things are being done as part of workflow operations.
? Feedback Control- ensure that final results are up to desired standards.(Wright)
“To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” (Our Starbucks Mission Statement, n.d.)
“To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.” (GREGORY, 2017)
Information systems used at Starbucks
Some of the decisions making of Starbucks is to outline its goods and services, and strategy where they should locate it. The types of information systems used in Starbucks are:
• Transaction Processing System- (TPS) collects transactions that are done by the business. IBM TPS is used in every order of Starbucks (Borrello, 2016).
Starbucks uses Transaction Processing System (TPS) to collect, modify, retrieve, and store all transactions data. TPS brings the data into the Starbucks databases using electronic data interchange (EDI). EDI replaces paper documents with transaction data sent by telecommunication networks and provides communication from one computer to another without repetition of data (Transaction Processing and Management Reporting Systems, n.d.).
• Supply Chain Management System-(SCM) has to do with the activities that are being covered under distribution.
The supply chain management system at Starbucks uses HighJump Software Supply Chain Execution (SCE) solution system at Starbucks product distribution centers (Peters, 2002). The system improves the reporting system which enhances the production system.
• Decision Support System (DSS) – DSS gives management data about sales statistics between time periods, projected revenue, and possible outcomes of different decision alternatives (Borrello, 2016).
A singular DSS system called Oracle is used by the parent company. Online Analytical Processing (OLAP) is used for extensive data and statistical analysis that managers look at during decision making (Johan, 2014). OLAP runs on the Oracle Exadata platform that connects all servers and storage (Connolly, 2016).
• Intelligent Restaurant Information System (IRIS) – It is made up of the Point-of-Sale System (POS), which is a register with additional functions such as inventory control and cash management that only managers can access, and the Manager Work Station (MWS), which is a computer system that compiles and makes reports of all store information to manage the whole store business for each physical store (InfoTech, 2012).
Point-of-Sale system (POS) – POS is a mix of software and hardware used for transactions and daily store operations (Guinn, n.d.), with additional functions such as inventory control and cash management that only managers can access. The POS records all customer transactions in each store; the functions relate to customer service, sales, refunds, voids and discounts (InfoTech, 2012). An example of one POS Starbucks uses is in the Drive-thru; there are two POS monitors in which one inputs the customer’s order and the other takes the transaction (Baker, 2016). Also, POS has data on time of customer transactions, the quantity of food and drinks sold, and quantity of wasted and leftover inventory (InfoTech, 2012).
Manager Work Station (MWS) – MWS stores the data from the POS systems, analyzes it, and produces useful reports, charts, graphs, and diagrams. The MWS can be accessed through Starbucks’s intranet and it has different security levels for different level of employees (InfoTech, 2012).
The MWS is used by employees to punch in and out of work, by shift managers to access cash management function, by store managers to track sales by product, wasted products, see when customers come to the store most and to plan short term budgets (InfoTech, 2012).
IRIS is also used for electronic ordering of food, stationery, and packaging. Also, it helps managers identify customer needs through accurate reports, helps with implementing sales by demand and marketing strategies, and helps with making production plans based on actual demand (InfoTech, 2012).
Starbucks uses various social media services to constantly openly communicate with their customers and keep them informed about what Starbucks is doing. Starbucks also uses these services to hear their customers’ responses and ideas and show them Starbucks cares about their opinion. Therefore, Starbucks has established a strong feedback network. Whenever Starbucks adds and makes changes to their information system infrastructure and inform their customers about it, they get valuable feedback, from their strong feedback network, and improve their infrastructure. They also hear ideas from their customers. They provide free Wi-Fi at all their stores after their customers provided this idea (Sbux, 2016).
Customer Relationship Management (CRM) and Use of Internet
Every day, technology is growing at a rapid pace and continues to evolve. Starbucks has managed to improve the customer experience and customer satisfaction by providing free Wi-Fi to everyone. This company has also conducted various ways to attract customers, put their brand out there, gain customer loyalty, add to their customer database, and maintain a positive relationship with their customers. Starbucks uses customer management system through social media, and Starbucks Reward system and mobile order and pay app. They regularly maintain and upgrade customer data (Jain, n.d.).
Social Media Services
The social media services listed below are a part of Starbucks customer relationship management (CRM).
• Twitter – MBS Framework that allows Starbucks to reach out to customers via micro post. Starbucks uses tweets to provide knowledge to customers and as a promotion tool. In return, Starbucks gets relevant knowledge from customers who express their expectations about the organization (Alton & Banerjee, 2013).
• Facebook – SNS framework that promotes interconnectivity between Starbucks and customers through conversations. Starbucks provides large amount of information about its products, organization culture and locations to keep them updated about any changes. Starbucks also directly asks its customers about their opinions, preferences and feedback (Alton & Banerjee, 2013).
• Foursquare – LMS framework that helps Starbucks manage location-specific customer knowledge using geo-tagging. Starbucks provides customers of daily events such product launches happening at certain locations. With Foursquare platform, Starbucks can understand their customers’ location preferences (Alton ; Banerjee, 2013).
• MyStarbucksIdea.com – With CDS framework Starbucks can give their customers information by notifying them of content related to current products, as well as about customers’ ideas that are: being looked over, coming out soon, or set in motion. This encourages loyalty from customers who feel that Starbucks cares about their ideas. Starbucks’s idea to provide free Wi-Fi at all its stores came from MyStarbucksIdea platform (Alton ; Banerjee, 2013).
In addition to their advertisements, Starbucks has managed to come up with promotions and different strategies to maintain their customer loyalty.
Starbucks Reward System and Mobile Order and Pay App
Starbucks has a loyalty program, a part of Starbucks CRM, where a customer gets “stars” for each purchase they make or when they use services from tech companies partnered with Starbucks, such as Spotify (Sbux, 2016). When a certain number of stars are accumulated, customers get many benefits. Benefits they are eligible for are birthday rewards, free Apple iTunes download, free drinks and food, free refills and drink upgrades, and promotional pricing (McNew, 2014). The rewards system is available on a mobile application and a physical card. To get the benefits using a card, they must use it when paying for their order (Watson, 2018). Mobile Order and Pay, another part of Starbucks CRM, is a smartphone-based application, available for Android, iPhone, and Blackberry (Adkins, n.d.), that lets customers order in advance via the app and pay using the app when picking up the order. The app shifts the reward system from card-based onto a digital platform. Benefits of the mobile app is reduction of order taking time and processing payments, decreased customer wait times, and better utilization of an employee’s time (Sbux, 2016). When customers load money onto the app, Starbucks is able to secure future sales as well as make sure money is spent on them, not their competitors (McNew, 2014). The point-of-sale system (POC) detects the proximity of a customer’s smartphone and gives a barista the customer’s preferred order (Marr, 2018). Through the rewards program and mobile application, Starbucks amasses huge amount of data on customers like their beverage preferences, frequency of visits, locations they have visited, what time they have visited and so on (Yu, 2017). In exchange for providing a personalized customer experience, Starbucks receives loyalty and positive feedback from its customers. Improvements of its products and customer experience leads to increased sales from existing and new customers (Yu, 2017). More people will sign up for the rewards and mobile app, which in return increases Starbucks’s database allowing them to have effective targeted marketing and more improvements to the organization (Marr, 2018).
Other notable technology
The way coffee is brewed is also changing due to technological advancement. Starbucks purchased Coffee Equipment Co., a company known for its single serving coffee maker called “Clover” (Adkins, n.d.). The Clover brews coffee to an ideal temperature, produces an ideal flavour using precision technology, and controls flow of brewing water. The Clover is connected, via Ethernet port, to the cloud (Adkins, n.d.). The cloud-based services the Clover data is on is called CloverNet (Adkins, n.d.). The Clover records machine performance and tracks customer preferences (Elgan, 2014). Mastrena is the machine used for making espressos (Baker, 2016).
New Store Locator
Starbucks utilizes Atlas, a mapping and business intelligence tool created by Integral GIS and Ersi, to determine new store locations (Yu, 2017). The tool takes traffic pattern, population density, demographics, and proximity to other Starbucks stores into consideration to decide potential locations for new services. The tool can also predict what would happen to close by Starbucks stores if a new store were to open (Ali, 2017).
The Analysis and Recommendation Section
Starbucks has always been known for their great coffee but what contributes to bringing the customers back is their amazing and respectful customer service(Greenspan,2017). Starbucks continuously has new ideas for example Starbucks releases various concoctions of drinks seasonally. Starbucks will release at least three different limited-edition drinks for the seasons of winter, fall, summer, and spring to keep their customers happy and surprised Starbucks takes pride in their one hundred percent fresh brewed coffee (Carey,2009). Even though Starbucks has a lot of competition they continue to keep themselves ahead in the game by building a personal relationship with their customers and rewarding them for their purchases with valued gifts(Greenspan, 2017). Starbucks takes pleasure in pleasing their customers but most of all Starbucks understands they wouldn’t be where they are as a business if it weren’t for their employees. Starbucks takes it upon themselves to train their employees for at least 24 hours. Starbucks also pays their employees in stocks so as the company grows so does their shares in stock. Employees have been able to pay for full amounts of school loans, down payments on houses and even weddings. Starbucks faces a huge force of competitive businesses.(Greenspan,2017) Coffee and drinks aren’t hard to come by in our day and age so they continue to face the competition of McDonalds, Tim Horton’s, country style and many other coffee spots. Coffee is very cheap, making it very hard to keep loyal customers(greenspan,2017). Starbucks mission is “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”(Farfan,2017). Starbucks continues to treat their customers and employees as their own regardless of skin tone, accent, ethnicity, or sexuality. There was an outbreak that had happened in the year of 2018 where a black woman had asked for the bathroom code and they hadn’t given it to her because she didn’t make a purchase, another person had come in requesting the same thing and had a different outcome because they were white. This offended many people of color because minority already has to deal with a lot in society and Starbucks is the last place you’d expect any racist action, especially because they take pride in treating their customers with love and kindness.(Garfield, 2018) Due to the situation Starbucks had fired the employee that caused this outbreak because this employee did not fit their description of a valued Starbucks customer. Starbucks takes place in 65 different countries and purchases their merchandise from Africa, Asia and South American. They’re also known for procuring the green coffee beans. Starbucks is also infamous for their technological advancements. Starbucks makes it easy to order through your own cellular phone through their app and with their Starbucks credits. Starbucks allows you to pre-order your beverage or food before you reach their location saving you time. Starbucks also offers their customers credit with every drink they buy.
Nevertheless, Starbucks is the third most admired company in the world in 2017 due to their fantastic staff and best roasted coffee. They started off as something small and grew tremendously over a period of time. They have managed to expand their e-business and internet to have more convenience towards their customers. Also, Starbucks have developed new and improved technologies to help increase the businesses productivity. Even though there are developments, there are some positive and negative aspects towards it. In addition, there are still some improvements that are recommended to advice in regards to Starbucks’s business productivity.
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