IT Strategy Report for Starbucks
It is imperative for every company to have a distinctive element in its strategy for drawing in customers and producing a competitive edge. Starbucks has been triumphant in commanding its way in the market since its humble beginnings as a Seattle-based coffee shop back in 2008. Over the years, Starbucks has grown into having a competitive advantage over its competitors. The customer service is top-notch, and the atmosphere is rich that draws in crowds from all walks of life. Starbucks has indeed earned a sustainable competitive advantage by offering the highest quality coffee-based beverages, creation of an emotional attachment with customers, expansion of a global presence, expansion of the product line, and consistency in store operations.
A creative, unique strategy such as the one used by Starbucks is a company's most reliable ticket for developing a sustainable competitive advantage and earning above-average profits. A sustainable competitive advantage allows a company to attract sufficiently large numbers of buyers who have a lasting preference for its products or services over those offered by rivals, despite the efforts of competitors to offset that appeal and overcome the company's advantage. The bigger and more durable the competitive advantage; the better a company's prospects for winning in the marketplace and earning superior long-term profits relative to rivals (Gamble, Thompson & Peteraf, 2013, p. 7).
One of the greatest strengths for Starbucks is its customer service approach. It provides free Wi-Fi, great music, remarkable service, warm atmosphere, and an environment of community meeting-spot ultimately creating the principal ‘Starbucks Experience’. The major aim of the firm is to make its stores a ‘third place’ besides home and work. 2 An ongoing opportunity that can be perfected is improving on the customer’s enjoyment. Perhaps, adding beer and wine or adding a feature movie to its website could potentially create more enthusiasm.
Pera SWOT Analysis presented by a Harvard Scholar, some of the opportunities for Starbucks includes the following:
Expansion into emerging markets - Starbucks can influence the market using its size, experience, and financial smarts to make a new market share.
Expansion of retail operations - Starbucks sells its packed coffee products through large retailers. More opportunities in this regard are limitless.
Technological advances - Continue to leverage its partnership with Square, creating an ease of use for customers
New distribution channels – Expand its beta delivery system referred to as Mobile Pour
Brand extensions - Leverage its brand image into horizontal lines of business
Maintenance and Tracking
Maintaining and tracking company information can be considered an extremely intense process. The introduction of computerized maintenance has made tracking and maintaining information easier. There are many benefits to using computerized maintenance management software such as automation of the scheduling of inspections and maintenance which helps in the prevention of occurrence of system issues. System maintenance also improves employee workflow by allowing them to schedule and assign work quickly and easily. Lastly, the most important benefit of using a maintenance tracking system is that it makes it possible for employees to view their inventory to check what products they need to restock.
There are various other systems that can be used by Starbucks to help keep track and maintain company information. The system Starbucks will be using is called ManagerPlus (Manager+). ManagerPlus is a streamline maintenance operation system which allows one program to help the user manage the maintenance schedules, vehicles, usage, work orders, and more. With this program, the user is enabled to track costs, warranties, parts, as well as the cost of maintenance and the waste elimination. This system also automatically tracks maintenance and inspection history for simple regulatory compliance and reporting.4
Based on the case study as an Information Technology Manager, the following improvements are proposed:
Expand the Mobile Pour program which provides delivery by a barista on a scooter to the consumer that orders on the Mobile Pour app.
Introduce an app that allows the consumer(s) to place an order and walk into their local Starbucks and pick up at the delivery station.
Assist with the Square application to increase the ease of payment for consumers that do not want to use Google Pay or Apple Pay.
The additional resources would require human capital within the Information Technology Department (without increasing cost or expense).
Analyzing the current position and the future of Starbucks, strategy is determined by how it approaches the market and competitors of today. In its strategy, international and national managers are heading up with the CEO, Howard Schultz. Their marketing must increase to compete against international countries such as China, India, and Brazil along with the local and immediate competitors such as McDonalds and Duncan Donuts. All of the mentioned competitors offer almost the same services and products that Starbucks has and should not be underestimated (Jurevicius, 2016). However, with the plans that are laid out to carry the strategies to another level, Starbucks must be put back to where it needs to be.
Some of the weaknesses that they need to overcome are the rising of coffee beans, trademark infringements, competition of local and international companies, saturated markets, price sensitivity, and negativity from the public. However, by using the developed strategy, some other opportunities have risen. Some of those are to go after the markets in the international countries, increase in the single serve pods, flavored coffee in the United States, and the ability to offer courtesy coffee.
There is a different means of analyzing the strategy that management developed – the Porter’s Five Forces (Mind Tool, 2017). The tool is simple but has a powerful use. The five areas are supplier power, buyer power, competitive rivalry, threat of substitution, and threat of new entry. Supplier power addresses how the supplier can drive up the cost of goods and material to produce the product. Buyer Power addresses the power of how the buyer can make the prices of goods go down. Competitive rivalry develops how well the competitors can match what the company has to offer and what can Starbucks do to take advantage of this factor. The threat of substitution is the determination of whether the buyers substitute the product being sold by Starbucks or not (stressing their ability to stop or slow down the substitution). Threat of new entry means how easy it is for others to enter the market related to Starbucks and become a major distributor. In the diagram, the analysis of competitive rivalry can be observed in the center with the others pointing towards it.
Figure 1: Porter’s Five Forces (Mind Tools, 2017).