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Four Vs Analysis of Starbucks

University: BPP University School Of Business And Technology

  • Unit No: 3
  • Level: High school
  • Pages: 19 / Words 4819
  • Paper Type: Assignment
  • Course Code:
  • Downloads: 1583
Question :

This assessment will cover following questions:

  • Explain to what extent the operations of Starbucks are shaped and influenced by management of its supply chain, and its contribution to organisational performance
  • Discuss the global operations strategy adopted by Starbucks.
  • What is required for the effective functioning of that are of Starbucks’ operations.
Answer :
Organization Selected : Starbucks

Part A

Four Vs analysis of Starbucks

The four Vs is the framework that helps the organizations to have consistent operations within their organization and thus consist of four Vs which are

Volume

Volume is the quantity of products in which they are being produced. In short, it defines how much quantity of a product would be required to satisfy the needs as well as demands of the customers. The volume of the products is generally key to the business of Starbucks and is essential for their business. Starbucks is generally known for high-volume and low-cost coffee as well as fast food production (Wirtz and Zeithaml, 2018).

Variety

Variety is generally the variety and types of goods as well as services that are being produced by the organizations and sold in the market. Starbucks generally provides a range of products to their customers ranging from simple coffee and tea to different types of fast foods. Besides this, their services also vary from customer to customer (Dharamdass and Fernando, 2018).

Variations

Variation is the extent to which the demands and needs of different stakeholders change with time because of external factors. For example- due to change in the weather conditions demands of customers for food items fluctuates like in high temperature and summer, Customers generally prefer cold coffee thus Starbucks has a variety of items on its menu as per these changing demands.

Visibility

Customers predominately can track the experience and conveniently order via a well-through operation process (Campbell, Jardine, and McGlynn, 2016). Starbucks has incorporated a high degree of visibility in its operation process where the customers can easily track the purchased product through their tracking application. Besides this, Starbucks has a separate tracking system where they track the raw materials and different suppliers for smooth delivery.

Greggs four Vs

Volume

Greggs remains cautious and consistent when it comes to the volume of products. The volume of the products that Greggs produces in its bakery mainly depends on the needs and demands of the customers. Greggs remains concerned about its inventory level where it avoids producing a bulk quantity of bakery products. Instead, it precisely analyses the demands of the customers and hence produces a moderate volume (Thürer and et.al.,2018).

Variety

As variety is defined in terms of the kinds of products and services Gregg offers a variety of items to its customers ranging from sausage rolls to soup. Although it offers a range of bakery products to its customers all of them relate to a single product line which is the bread-based items and hence it has not changed its product line for ages.

Variations

Variation mainly relates to the change in demand with time thus Greggs is highly recognized for its high adaptivity to the changing environment. Since its establishment, Gregg has been adapting to the changing demands of the customers due to external factors and thus provides them entices them through this (Martyn and Anderson, 2018). For the autumn season, customers mainly wanted hot soups thus Greggs in 2015, started serving chicken curry soup for autumn.

Visibility

Greggs has developed an application where customers can easily track their order and see the live status to ensure smooth and convenient delivery. Besides this, the employees employed at the outlet are highly employed to make the experience of customers memorable and unforgettable (Wirtz and Lovelock, 2016).

Difference in profiles

The major difference between the profile of Starbucks and Greggs is the variety that they are offering to the customers. On the one hand, Starbucks has extended its product line from coffee and beverages to the coffee creamer market on the other hand, Greggs has lack behind in this aspect where they are very slow at innovating their product line (Padma and Wagenseil, 2018). In comparison to Starbucks, Gregg remains cautious of its inventory level and hence prevents bulk production which saves its production cost while Starbucks is well recognized for bulk volume due to which their production costs remain somewhat high.

four Vs analysis

Illustration 1: 4 VS Analysis
(Source: The 4V's of operation management, 2013)

Performance Objective Analysis

Performance objectives are the targets that the organizations set for achieving their long-term as well as short-term objectives.

Starbucks

Quality

Quality is primarily how high value the organizations deliver to their customers and comply with various standards. Starbucks is well-known for its high-quality products and services and thus provides a world-class quality to its customers. The Arabica beans that are being used in their coffee are generally purchased from farms that are present in developing countries and later on these beans go through a thorough process and then are delivered (Yerpude, Singhal, and Rathod, 2019).

Speed

Speed mainly refers to the pace at which the services and products are being offered to the customers. Starbucks is highly recognized for its great and easy process where the products are efficiently delivered to the customers. To make this process effective, Starbucks has a well-defined supply chain where the products that are being ordered by customers are tracked from time to time through RFID to ensure rapid delivery.

Dependability

It is the most important part of the performance objective which addresses how dependable the organization is while ensuring the timely delivery of services and products to customers. Starbucks has a wide chain of suppliers across the countries and thus is highly efficient in delivering the ordered products on time (Sun and Zhu, 2018).

Students Also Like To Read About Concepts and Philosophies Of Organisational Behaviour - BBC

Flexibility

Flexibility is predominately the extent to which organizations can change their operations to match the requirements and needs of customers. This performance objective is highly essential for organizations to adapt to the changing needs of customers. Starbucks every year comes up with something new to adapt to customers' requirements. For example- more than half of the population likes to drink coffee or other beverages along with some snacks that would make their taste more mesmerizing thus to fulfill this demand, Starbucks opened a Kiosk in their outlets where customers can read newspapers along with their food (Duggan, 2017).

Cost

Cost is the extent to which organizations keep their production low and thus offer the products at low prices to their customers. Starbucks has an extensive production process where every product undergoes thorough testing. Due to the production in bulk volume, Starbucks generally incurs high production costs and this is the reason behind the high price of its products.

Greggs

Quality

Greggs is highly concerned with the quality of the products and services that they serve to their customers. The wheat that this bakery uses for its bakery products goes through a high refinement process and is taken directly from the farmers after its cultivation. Thus, the wheat goes through a thorough process where it is reduced to granular pieces and then delivered to the customers in the form of bread-related products (Ferdowsian, 2016).

Speed

Greggs has a well-structured supply chain through which the products and services are being delivered to the customers efficiently. The mobile application of Greggs has enabled customers to order their food more efficiently and conveniently. Greggs through the use of advanced technology tracks the order of customers and hence measures its timely delivery.

Dependability

Greggs has made its website highly customized so that customers can conveniently order their food and hence search for the different aspects easily. This has helped Greggs to enlarge its customer base as due to high consistency in delivery and more convenience, customers are more likely to visit Greggs frequently (Movahedi, Miri-Lavassani, and Kumar, 2016). 

Flexibility

As flexibility mainly relates to how organizations change their operation to meet customer needs Greggs is widely known to mold their services and products as per the changing demands. For example- Greggs analyzed that customers are constantly looking for online food applications where they apart from ordering food can also see ordering time and processing time, customize websites, and design in an innovative way to fulfill customer expectations.

Cost

As Greggs remains cautious of its inventory level and thus does not produce its products in bulk quantity their production cost remains low. Instead of ordering in bulk volume, Greggs orders its raw materials in frequent periods which lowers their production cost. Due to low production costs, the company normally keeps the prices of its products low and offers at a low price without compromising quality (Fernandes and et.al.,2017).

Difference in Markets

Starbucks mainly targets urban people having high incomes and thus keeps its focus on white-collar professionals who want coffee to relax from their busy schedules. On the other hand, Greggs targets rural as well as urban markets and thus concentrate their focus on both high-income groups as well as low-income group (Kerzner, 2018). This eventually affects the objectives of the operation. For example- Starbucks targeting high-income professionals will have different objectives like high prices while Greggs targeting high-income as well as lower groups will have different objectives like prices ranging from low to high.

Polar diagram

Illustration 2: Polar diagram
(Source: Polar Diagram, 2018)

Design Analysis

Design of customer service process

The four Vs and performance objectives of both Starbucks and Gregg highly influence their customer service process. For example- The various dimensions of the four Vs and performance objectives show that Starbucks has a separate online inquiry portal where the customers can easily enquire about any aspect of the outlet. Besides this, these four vs and performance objectives have also influenced the customer services process of Greggs and have enabled them to develop an EMEA queue and divide it into tier 1 queue and tier 2 queue. In this, customers do not have to stand in a long queue for their orders and thus can easily see the processing time (Lee and BAKER, 2017).

Customer service process
Illustration 3: Customer service process
(Source: Customer service process, 2012)

Store layout

The four Vs and the performance analysis have also influenced the typical store layout of Starbucks and have helped them to attract customers. The outlet of Starbucks consists of a round table with cutting edge along with chairs and sofas and every table has a space of around 18 inches in between them. Besides this, the store has a straight floor plan where the shelves, as well as racks of the kitchen, are arranged in a straight line to avoid traffic and ensure organized flow. On the other hand, Greggs's store has angular floor plans to give a sophisticated vibe to the customers and to increase visibility. It store has a dining area which is of varying sizes along with the front counter presentation window. In front of this presentation window, there is a separate cafe built having tables and bean bags (Gloet and Samson, 2017).

Store layout

Illustration 4: Store layout
(Source: Store Layout Design: 9 Tips for Arranging Your Retail Shop, 2018)

The major characteristics of the core operations generally consist of volume, variety, variation, and visibility which helps the organizations to conduct their operations efficiently. Customer services and layout design play an important role in these operations and thus help to provide quality services to customers. Having the right process and layout enables the outlets to ensure an organized flow of products and thus helps to manage the core operations efficiently (Suarez, Calvo-Mora, and Roldán, 2016).

The layout design and process are highly affected by performance trade-offs. When the performance of any aspect is highly enhanced then it eventually decreases the performance of another aspect and this is a performance trade-off. If the outlet has a great customer service process but the layout decision is not up to the mark and is causing heavy traffic at the workplace then this will eventually reduce the market position and performance of the company. Thus, it is essential to have a proper balance of every aspect whether customer service or design layout.

Related Article: Which of the Following is NOT a Common Feature of a Financial Institution?

Part B

Overview

Supply Chain Management

Supply chain management is the overall administration of the flow of products and services and thus involves converting raw materials into finished products. The supply chain of Starbucks is highly imperative and thus helps the company to effectively manage its operations. The management of the supply chain of Starbucks streamlines the activities from the supply side and consists of functions ranging from procurement of raw materials to final transportation (Dinu, 2017). Due to the highly structured supply chain, Starbucks has a wide range of suppliers spread across different countries who are involved in the proper delivery of raw materials to the company and the efficient delivery of products to customers and clients. This supply chain not only helps in efficient operations but also assists in increasing the performance of Starbucks. Due to the efficient and timely delivery of products to the customers, the company can go beyond the expectations of customers and this eventually increases its consumer base.

Key Requirements & Challenges

Requirements

To effectively streamline the supply chain process, there are huge day-to-day requirements that Starbucks considers

Input

This is the raw material that is being used for manufacturing the process. Starbucks is regularly involved in ordering a great amount of raw materials to manufacture different products. Each production division daily produces units of products and for this, they want raw materials. Thus, the management of the company takes the advice from production division on how much raw material will be required and then orders the required amount for production (Wirtz and Zeitha

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