Description

attached is someone else assignment to critique  In the Discussion Board, you will write a one-page critique regarding another student’s product plan.  Find another student’s posting from the week 9 assignment and respond to it.  You must select a student that has no prior critiques.  How do you critique something? How to write a critique Study the work under discussion. Make notes on key parts of the work. Develop an understanding of the main argument or purpose being expressed in the work. Consider how the work relates to a broader issue or context. (From a business perspective, what problem(s) does it solve?)

 

 

 

 

 

Signature Assignment

 

Xiaochan Cai, Dillon Alinsod, Feihong Zhao

Fashion Institute of Design and Merchandising

BUMT 3200: Management Information Systems

Mrs.Treidl

March 9, 2021

 

 

 

 

 

 

 

 

 

 

Table of Contents

 

 

 

Discipline of Innovation: A Case Study of Starbucks                                                                3

Strategy                                                                                                                                           5

Questions                                                                                                                                        9

Finding Information                                                                                                                      14

Systems                                                                                                                                         15

Sources                                                                                                                                          20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discipline of Innovation: A Case Study of Starbucks

The success of many firms today depends on the adoption of innovative practices to benefit from emerging opportunities in the market. Drucker (2002) defines innovation as an individual or investors’ effort to create focused and purposeful change in businesses’ social or economic potential. It is a way to make more money by producing new products or improving existing ones to profit from market opportunities. The sources of innovation can either be external or internal, with internal opportunities including industry and market changes, process needs, incongruities, and unexpected occurrences. In contrast, external opportunities include new knowledge, changes in perception, and demographic changes (Drucker, 2002). The paper shows how Starbucks can benefit from demographic changes to attract more customers, especially centennials and millennials.

Starbucks was founded in 1971, and it connects with many customers each day with quality products in over 30,000 retail outlets spread across 80 countries. The firm offers the finest coffee and products, such as handcrafted beverages, fresh food, tea, and ready-to-drink beverages. Although the company has been performing well from 2015 to 2019, its performance has declined significantly because of the COVID-19 outbreak. Customers are not allowed to visit its outlets often because of social distancing policies imposed by the government. This has led to a reduced number of employees and customers on the outlets as a measure to ensure safety through social distancing. As a result, Starbucks is experiencing challenges in offering customer services across its outlets and delivering ordered products.

The current challenges faced by Starbucks are common among other investors in the hospitality and service industry. However, all is not lost for this company because it takes advantage of demographic changes in the service industry. According to Drucker (2002), this is one form of innovation that involves using emerging technologies to deliver quality services to consumers (Drucker, 2002). Some of the established firms in the industry use robots to replace the workforce, especially during this pandemic. Although Starbucks is planning to introduce artificial intelligence in most of its outlets by 2022, this is the time to take advantage of emerging robotic technology to replace human resources in delivery orders to customers to avoid spreading COVID-19. Adapting to these demographic changes is crucial because it will guarantee constant operations during the pandemic and reduced interaction among workers to reduce the chances of spreading the virus.

Although robotic technologies are capital intensive, demographic changes come as an opportunity for Starbucks. Unlike other firms in the industry that find it difficult to sustain all workers due to financial problems, using robots to prepare and deliver products to consumers will make Starbucks more competitive than rivals, such as McDonald’s and Costa Coffee. Automation will ensure that the firm abides by government regulations on social distancing by reducing customers’ congestion at various outlets (Webster & Ivanov, 2020). It will also help minimize overhead costs, such as payment of workers, workplace conflicts, and customer service decline by employees planning to sabotage operations.

The outbreak of COVID-19 has driven some entrepreneurs, especially firms in the hospitality industry, out of the market because of government regulations to reduce the spread of the virus. Starbucks is among the affected firms because of the reduced revenues recorded during the 2020 financial year. However, the company can take advantage of demographic changes in this industry, such as automation of services using robots to replace human resources.

 

Strategy

The coffee business has been around for hundreds of years. Naturally, any legal substance which is globally loved is going to have a fiercely competitive market. Take a look at the sugar, marajuana, and tobacco market. Undergraduate Michaela Cieplik said, The coffee shop industry in the U.S. includes 20,000 stores with combined annual revenue of about $11 billion (Cieplik, 2008, p.1). With that said Starbucks has 13,000 stores world wide, which makes them the world’s largest coffee retailer (Cieplik, 2008).

Starbucks’ main competitors include Mcdonalds, and Dunkin’ Donuts. Julia Hawley said, In 2006, Dunkin’ upped the ante and declared war against Starbucks when it launched its “America Runs on Dunkin'” ad campaign. While Starbucks has created an intentionally chic and upscale environment, Dunkin’ Donuts represents itself as an All-American brand (Hawley, 2019,p.1). Although this helped Dunkin, it still wasn’t enough to take down the coffee giant, Starbucks. Mcdonalds on the other hand out performed Starbucks in 2017, mostly because of the menu expansion (Hawley, 2019). Mcdonalds prides themselves as more of an american restaurant rather than a coffee chain.

The coffee robot aka coffee haus has baristas worried and hoping they can keep their jobs. According to the Washington Post, Now comes Briggo, a company that has created a fully automated, robotic brewing machine that can push out 100 cups of coffee in an hour — equaling the output of three to four baristas, according to the company (Holley, 2019, p.1). If Starbucks implements this coffee robot they can put out more product in less time and save money because they won’t need baristas. Starbucks will also blow its competition out of the water simply because they will be getting more coffee to more people faster than its competitors. If you are in a rush and need your coffee, you do not want to wait in a long line for your coffee, you can go on an app and order your coffee the exact way you like it and simply pick it up. The last opportunity about getting a coffee robot would be that Starbucks would not have to pay the robot to work which would lower costs in coffee itself, you would be paying solely for your coffee. With opportunities and innovation also comes risk. Starbucks has to think that if they implement the coffee robot, will the benefits outweigh the risks. Hayley Peterson said, Roughly 6 million to 7.5 million retail jobs “likely will be automated out of existence in the coming years, leaving a large portion of the retail workforce at risk of becoming ‘stranded workers,'” according to the 56-page report by investment advisory firm Cornerstone Capital Group (Peterson, 2017, p.1). Yes, a coffee robot would be faster and save a lot of money but millions of jobs will be lost. That will be Starbucks’ biggest risk along with the outlash from the public and its employees.

Starbucks is one of the famous companies in the country that serves almost 100 million customers. The introduction of robots to handle some works and deliver for the company could be a game-changer because most of the work could be handled through technology. The situation would mean that most of the operations in the company would be handled by robot such as some packaging work, and delivering products to consumers.

Objectives

The main objective of the ideas is to ensure that there is efficiency in service delivery is enhanced, and customers are in a position to receive products at the required time. The application of robot could ensure that there is enhanced delivery since the technologically controlled robot could work more than humans. The robots would be efficient in delivering goods since they are controlled by technology and would mean that they could work fast and cover vast areas (Mims, 2020). Another objective of using robots at the workplace is to allow for effective and efficient delivery of services. Customers are the core aspect in any form of business, and through the application of robot to handle some of the work at the premises, it would allow efficient service delivery. Robots are labour intensive and could handle most of the work and thus enabling the Starbucks business to save some funds (Warnick, 2020). Another objective is to align the operations of the business with technology. In contemporary times there have been many organizations are incorporating technological changes for the purpose of aligning themselves to the digital world. The situation would allow the company to revolutionize its operations by employing robots at the same time saving on the operational costs.

Innovation

In the wake of Coronavirus, many organizations are looking for ways to employ some means which would enable businesses to become sustainable.  The employment of technology would enable the company to make use of robots that are designed to work as human beings. Innovation could be required to ensure that the robots interact effectively with customers (Mims, 2020). The situation could require a modern software that would contain some of their responsibilities such as packaging, accepting orders and delivering goods to some consumers (Mims, 2020). The company could rely on automation and digitization of their operations and enable robots to serve them in the best way possible. The design of the robot would be in such a way that it could be operated through mobile applications where customers would place their orders and track the process of delivery. The situation could allow speed and convenience because the robot s handling various duties could be coordinated through some form of technology to facilitate service delivery.

Time to Market

Starbuck is a well-established business and has been in the market for sometimes and would like to ensure that its robots are efficient in service delivery. The business would work with other technology companies such as Microsoft, IBM, Jupiter networks and outsource technological equipment that would be effective in their robots. The existing technological companies such as Apple, Microsoft, among others have been tested and could be relied on since the manufacturing companies have a business name and experience while designing technological products (Warnick, 2020). Besides, it could be cheaper to outsource some technological equipment such as robots instead of building new ones. The Starbucks would partner with the existing technology companies and procure robots which are designed to perform some human-like functions. Such robots could be installed with software and programs that enabled them to handle some works such as deliver goods for the company.

 

 

 

 

 

 

 

 

 

 

 

 

Questions

1. Which attributes should Starbucks keep?

Starbucks should keep incorporating new and cultural implementations into their coffee. According to Forbes, “Even as the company concentrated on diversifying its business away from coffee, to its consumer product goods segment and food, it came out with new and innovative products, such as substituting dairy with soy-milk, or almond-milk” (Speculations, 2016, p.1). Starbucks should also keep their extremely popular seasonal drinks, according to drinkripples, “With the first fiscal quarter ending on December 30th every year, holiday sales can make or break first quarter fiscal results for Starbucks. In 2019 the company exceeded all expectations in the first quarter and posted global revenues of $6.63 billion, a number largely powered by a record-breaking $4.6 billion in North American sales.” (Ripples, 2019, p.1).

2. Which attributes should Starbucks change or re-design?

Starbucks is viewed as a very personal and loving coffee chain. With that said statista says, “World-famous coffeehouse chain, Starbucks, accounted for 31,256 stores worldwide in 2019” ( Lock, 2021, p.1). This is costing Starbucks around $20 billion in revenue. If we lessen the amount of stores globally it would save an extreme amount of money, according to restaurant investment guru, “Starbucks is one of the highest paying restaurant tenants in rent averaging over $60 per square foot.” (Garner, 2017, p.1).

3. What is Starbucks’ target market?

According to Slideshare, “15. Segmenting and Targeting Markets  Starbucks uses demographic segmentation(markets by age, gender, income, ethnic background, and family life cycle) as well as geographic segmentation (markets by region of a country or the world, market size, market density, or climate)

16. Demographic Segmentation Starbucks„ main target market is men and women between the ages of 25-44, which accounts for almost half (49%) of its total business. Young adults, aged 18-24, are the next large group that Starbucks targets. They bring in about 40% of Starbucks’ sales.
17. Geographic Segmentation Starbucks also uses geographic segmentation. Starbucks is located all around, specifically in upscale locations, near offices, and near many college campuses.
18. Target Marketing for young adults (aged 18-24 ) Starbucks target this group through the growth of technology and innovative ideas. Starbucks positions itself as a place college students can hang out, study, write papers, and meet people.
19. Target Marketing for Men and Women (aged 25-44) Starbucks targets this group by offering certain drinks that appeal to them. Starbucks targets this group creating the “third place” to go to between home and work by creating this unique and relaxing “experience” and “atmosphere” as customers within this range tend to have high income and professional careers.” (Khatter, 2012, p.1).
20. How many employees does Starbucks have and how much are they getting paid?

Starbucks has around 350,000 employees with an average pay of $12 an hour. This means the average employee makes around $24,208 a year, if you multiply that by 350,000 we get an average of $8.5 billion for employee salary.

5. How much is a coffee robot and how much money would it save?

CafeX robotic barista is $25,000 this means if Starbucks put these in all their 31,256 stores and replaced their baristas worldwide it would cost about $790 million. Starbucks would save about $7.6 billion not including the reduction of price on their coffee since you will no longer have to pay for manual labor.

6. . What pricing strategy does Starbucks utilizes?

Generally, the brand utilizes a value-based pricing strategy to maximize profit. In other words, it utilizes research and customer analysis to make precise improvements in price, so that it can acquire the highest number that consumers are willing to pay on the condition that it does not make customers disappointed (Dawson, 2020). Overall, Starbucks’ prices are relatively higher than those of its competitors. In Russia, its highest price is 12 dollars and in most Asian countries, its prices are between seven to eight dollars (Wang, n.d.).

7. What promotion channels will Starbucks focus on?

Starbucks utilizes various channels to promote its products, from social media to television advertisements. The marketing media mix makes the brand increasingly famous. Compared with other key global brands such as Nike and Apple, Starbucks spends significantly less on marketing (Bergstrom, 2018).

8. Will Starbucks localize its products to adjust to foreign markets?

Yes. Before it decides to enter a foreign market, it will conduct a wide range of research about the market. Usually, it makes menus consistent with the demands of local people on the condition that it does not damage its symbolic brand. Its localization strategy is to combine local products with creative store design (Racoma, 2019).

9. Will Starbucks adjust its promotion channels to adjust to foreign markets?

Not really. In the global market, Starbucks utilizes its digital marketing strategy that mainly relies on social media. The content on social media is diverse, including recipes, photographs, articles, and features (Phlywheel, 2020). Admittedly, due to the different Internet environments in different markets, Starbucks cooperates with different local influencers.

10. Is the product in the right place where the consumer needs to buy it?

Answer: This question will be addressed through research to identify and know where the clients would likely buy the product. Through research, it is easy to find out whether there are opportunities in the available distribution channels to enhance the presence of the product in the market. The organisation can try potential retailers, wholesalers or franchising. According to research by Kotler and Armstrong (2014), while making decisions on the best distribution channel, the organization needs to set channel objectives that meet clients’ needs, identify the major channel alternatives and evaluate them.

11. How can probable defects be avoided during the manufacturing process to avoid wasting manufacturing resources?

Answer: This can be done through the use of the six sigma process which is a data driven technique that helps eliminate defects in manufacturing of products. This is by reducing cost, time cycle or reducing the changeability manufacturing of the manufacturing process to improve the quality of product and increase the profits. According to research, the process follows a step by step process that has four phases (Sanders & Hild, 2000). These comprises consists of measuring the existing manufacturing system, analyzing the system to determine potential defects from available statistical data, improving the plan by finding best solutions and developing a test plan to ensure the process is perfect. Finally, there is the control phase which involves the manufacturing team modifying operating instructions, procedures and policies to prevent future defects.

12. How can we have the Key Performance Indicators (KPIs) to make data driven decisions?

Answer: This can be done by having the products financial reports on time. The organization also needs management reports to help in making decisions that will help increase profitability and performance.  These documents can be balance sheets, cash flow statements, income statements and monthly reports that describe the organization’s operations and financial conditions (Parmenter, 2015).

 

 

 

 

 

 

 

 

 

 

 

Finding Information

While finding information I had to keep in mind facts, statistics, and truth. I did not want to give false or fake information. I used google and used keywords for my questions. I mainly use google business for statistics as they are giving live updates to how well or poor your company is doing. While searching for sources I always have to check a second site to see if the information aligns. With google the top results from searches usually are the most reliable even if they are a .com website rather than a .edu, or .net.

For example, for answering question 6, I searched the keywords “Starbucks” and “pricing strategy”. Hence, I selected two sources: “How Starbucks uses pricing strategy for profit maximization” and “Starbucks’ pricing strategy”. Similarly, when searching for the second, third, and fourth questions, I also followed the same steps and eventually gathered these sources: “Starbucks marketing strategy: How to create a remarkable brand”, “Starbucks’ digital marketing strategy: How do they do it?”, and “How Starbucks adapts to other cultures”. Based on the information from these sources, I found answers to these questions.

 

Doing research effectively is important because it is to inform action, prove a theory, and contribute to developing knowledge in your choice of field and/or study. It’s also an aid to business success, an exercise of the mind, and a means to understand various issues and increase public awareness. When analyzing information in general, you have to think about reviewing, organizing the information, and deciding on how to analyze the information. Even though we have so much access to information it doesn’t always mean that it’s correct or reliable- the whole point of doing research is we want answers and we want the facts.

 

Systems

• Decision Support Systems

o   “The DSS can be employed by operations management and other planning departments in an organization to compile information and data and to synthesize it into actionable intelligence. In fact, these systems are primarily used by mid- to upper-level management.” (Segal, p.1, 2020). DSS will be useful to see how many cups of coffee are bought throughout a year, how much we pay employees, and help make the decision on getting the coffee robot. The DSS that starbucks uses is oracle. “Starbucks had built its point-of-sale data warehouse on Oracle technology. It also uses Oracle Exadata Database Machine to scale and seamlessly migrate its existing data warehouse to Exadata to expand insight and facilitate decisions, even with big data, according to Oracle.” (Venkatraman, p.1, 2014).

• Customer data platform (CDP):

CDP is a marketing system managed by marketers and it can connect all kinds of and all sources of customer data, either external or internal. Data sources mainly include transactional and order data, behavioral, web, and mobile data, profile data, product data, and CRM & offline data sources. By using this platform, Starbucks will facilitate its operations of customer data and the offering of personalized service. Businesses such as Deutsche Bahn are using this system.

 

• PurchaseControl:

PurchaseControl is a flexible and convenient purchasing software. With it, companies can better control their financial operations and purchasing activities. Also, the software can upgrade the work procedures of companies, ensure visuality, improve data security, and eliminate papers. The integration of PurchaseControl, Quickbooks Online, and Xero can help accounting teams to simplify their work. Businesses such as ELLEGIS, HCA, BRINKS, and TOSHIBA are using this software to manage their business.

• QuickBooks

QuickBooks is an example of an inventory management software that is responsible for keeping track records of stocks (Nah et al., 2001). Notably, the software is necessary for getting optimum results in a business perspective such as delivery of products, tracking inventory levels, sales, and orders (Ceccagnol et al., 2012). The software tool provides an interactive user interface with the organized data stored in a spreadsheet (Mabert et al., 2001). In this way, it helps organization to provide services to the clients and reflecting the total cost of performing a business (Liberatore & Pollack-Johnson, 2003). It works con-currently with PC especially in the department of Procurement.

• Freshwork

Freshwork is an example of customer relationship management that takes care of key functions of human resource department such as in-house training of employees, structuring hierarchy of employees, performance calculation, employee recruitment, and managing employee behavior (Ragins & Greco, 2003). The software is versed in the department of human resource as it acts as a link with other integrated enterprise resource management software’s (Peppard, 2000). This system may have linked with other departments to deal with profile management and compensation of employees.

• Sage

Generally, sage is an example of enterprise relationship program software that keeps track of profits, return of investments, ledger management, accounts payable, fixed asset management, accounts receivable and risk management (Liberatore et al., 2001). The software acts as a link with inventory management software (Payne & Frow, 2005). The software is well collaborated in the department of finance and uses PC to run its daily function (Liberatore & Pollack-Johnson, 2003).

• Basecamp

Basecamp is a project management software relevant for organizing and planning projects (Liberatore et al., 2001). In particular, the software is mostly used in the department of project affairs and it enables the company to track project evolution when it comes to cost and time (Jiang & Klein, 2000). According to Shan & Zhu (2013), the software acts as a connection with inventory management software when it comes on receiving invoices of costs needed to compete a certain project.

 

 

 

Conclusions

An analysis is crucial to understand how Starbucks operates. I have learnt Starbuck is a worldwide coffee company with its headquarters in the United States. I researched that Starbucks has more than 27,600 stores worldwide (Azriuddin et al., 2020). Additionally, the company’s growth has been accelerated by its plan to promote brand awareness. For instance, the company uses excellent marketing strategies such as colours, logos, among other visual elements. They also use social media to sell their products to customers to serve a wider scope. Management information systems (MIS) is a computer designed to help businesses achieve an excellent plan and direction. MIS could help Starbuck managers prevent unauthorized persons from accessing the stores. Additionally, the technology could help the company manage its customers and workers effectively by assisting them to cope with new technology and protecting the data (Geereddy, 2014). They use strong passwords to prevent cybercriminals from stealing data. Therefore, MIS is sufficient to facilitate problem-solving and decision making in the company. During this assignment I have learned how much a company can save using modern technology. We discussed the discipline of innovation of Starbucks, we looked over their target market and demographics. The struggles they had to overcome during COVID-19 and how Starbucks could save lots of money if they invested in a coffee robot. We then thought out and discussed a strategy on how to implement a coffee robot into a people person environment. All of Starbucks competitors and how they could benefit from a coffee robot as well. Next, we asked ourselves questions such as, which attributes should the company keep, and answered the questions using fact and research. Then we discussed how we found that information and how reliable our sources were. Lastly, we went over the different departments in the company and what information systems they use and what those IS do for the department.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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