Starbucks Operations and Consistency Essay

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Starbucks is a global quick service provider, one of the largest in the world, and the largest with a coffee focus. According to the company's latest annual report, it operates just over 23,000 stores globally, around 53% of which are company-owned. The rest are franchised. The franchise business model is utilized in many of the company's major markets, and has been a feature of some of its major international expansion efforts, particularly in Asia. The franchising, however, complicates some of the international operations for the company, as it seeks to deliver a consistent brand experience across all stores, anywhere in the world. This paper will examine the extent to which Starbucks centralizes aspects of its international operations, and the steps it takes to ensure a high level of consistency in its operations no matter where in the world or whether the operation is company or franchise-owned.

As with most major global brands, a lot of how Starbucks competes is on the basis of the differentiation that the brand offers The Starbucks brand is one of the most valuable in the world (Interbrand 2015). The brand conveys a promise to consumers, and that promise holds significant value in the marketplace. The brand is a lifestyle promise that goes beyond coffee, something that each and every store must deliver, making operations an essential element of the brand promise (Leifer 2015).

Operations Strategy Formulation

Whether a store is owned by the company or owned by a franchisee, there are specific elements that the store must possess. This is part of the strategy formulation, but so too is the idea that whatever ownership structure or management structure a store has, the company should have means by which consistency in the store experience can be achieved. Starbucks has always taken the view the Starbucks experience is a critical component of the brand, and that the brand has significant value to offer the consumer (Michelli 2009).

The base strategy is to offer a consistent, premium experience. The coffee is just one aspect of the experience -- a comfortable setting and a high level of service are also critical elements. The coffee is priced at a premium, and part of the justification for that pricing is that one pays for the totality of the experience. Having a high level of consistency around the world is another critical element of the overall operations strategy. Franchisees are expected to be indistinguishable from company-owned stores in terms of their execution of the Starbucks vision. There are a number of different approaches that the company makes to ensure this.

Operations Strategy Implementation

Having a vision for the company to deliver a consistent experience anywhere in the world is one thing, being able to execute on that is another. The company needs to be able to execute on that. There are a few different elements to this execution. First, it is understood that a higher degree of control exists with company-owned stores. Yet, it is also understood that on many levels, especially with things like human resources and dealing with suppliers, it is important to have local experience. Thus, most international operations have a mix of franchisees, and new country launches are typically done via franchisees. Starbucks seeks out partners with high levels of experience in their respective nations, as a means of ensuring that execution in these areas is at a high level. This is the model that the company used to enter Japan, and it enjoyed success. More recently, Starbucks partnered with the Tata conglomerate to enter the Indian market (Malviya, 2016), capitalizing on that company's operational expertise in that country to ensure that there were no intercultural issues.

Once the company gains operational expertise, it typically buys back franchises in these nations. Within the past few years, it has made major buybacks of franchises in both Japan and China (Galani 2014). Ultimately, such buyouts are about control, but they are a part of the company's strategy to ensure a high level of consistency, which is easier to attain through ownership once the company develops a reasonable level of competency at operating in a given country.

Another element of the strategy implementation is the range of training programs that are offered. These programs allow for employees at all levels, and franchisees, to fully understand the Starbucks Experience, and how to create that experience in their stores. One of the key focal points of training for customer-facing staff is that the company sells an experience, not just a product, and as such staff must adhere to particular standards of customer service (West, no date).

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By articulating what this experience entails, Starbucks thus provides a blueprint for customer interactions that can be translated to any market. Since the objective is to have a standardized experience, there is little need for local customization.

One of the major challenges that the company has faced in maintaining its ability to implement effectively during periods of high growth. Rapid growth stretches supply chains thin, and makes training more difficult as the average tenure of employees is lowered. The company has at times had to slow the pace of growth in certain areas to ensure effective implementation of its strategic mission with respect to daily operations at the store level (Gibbons 2011).

Operations Strategy Monitoring

The company utilizes a number of different metrics in order to monitor performance. These include basic accounting metrics that measure performance on aggregate, as can be found in financial statements, to more refined metrics. Same store sales is one aggregate metric, and while it does not identify specific issues, it is a good way to evaluate the top line performance of stores (Jones 2014). The company has its own specs for things like coffee temperature, for the time it takes to fill an order, and other such service standards. Managers can measure the effectiveness of individual employees, but it is also possible for the company head office to measure at the store or unit level as well

Monitoring also occurs at a more refined level. There are two main ways that this occurs. First, managers play a role in ensuring quality standards at each location. This is where training comes into play, because training is as essential for managers and franchisees as it is for other employees. The managers have checklists of performance specs to which they are expected to adhere, and they also play a critical role in ensuring adequate level of performance of the other store-level employees. Management at head office also must play this role when it comes to the performance of franchisees. They must monitor these outlets independently to ensure that standards are adhered to.

Starbucks also has a secret shopper program where they evaluate the performance of each store. The secret shopper visits stores throughout the day and they work with specs to which the shop must adhere. This independent verification of performance is a key means by which the company monitors the performance of its stores (Enderson 2016), and Starbucks uses this method around the world.

There are also a number of different means by which the company ensure standards at the logistics level. Starbucks is one of the world's largest buyers of coffee, and therefore has strategic partners in that industry to provide beans. The company roasts in house and even has some vertical integration in owning some farms, such as in India and China. This ensures a certain degree of quality control that the company has over its key product. With other products, Starbucks uses a list of suppliers that have been vetted by the company, and franchisees are expected to use these same suppliers. The objective is that headquarters is monitoring the different inputs that go into the Starbucks Experience, and the franchisee merely has to put those elements together. This prevents, for example, franchisees from cutting corners on elements of the experience that affect the customer.

Operations Strategy Control

There are a number of means by which Starbucks exerts control over its operations strategy. Contractual agreements are a major method by which Starbucks ensures compliance. The company's brand is a powerful attraction; indeed, anybody can set up a coffee shop and it is the branding and systems for which a franchisee pays a premium. The threat of losing a franchise for non-compliance is the threat of losing a critical revenue stream for the franchisee. Thus, the contract is the primary means by which compliance is enforced, especially when combined with independent monitoring of performance. All Starbucks suppliers and performance are given contractual obligations with respect to performance. Regardless of the strength of the legal system in their country, they are bound to follow these contractual obligations because of the importance of Starbucks' partnership to their bottom lines, given the size of the company. Whether enforced by the legal system or simply by the company's bargaining power, Starbucks uses contracts as a primary means of enforcing all operations performance standards.

There are other elements of control, however. The training programs that are part….....

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