Technology Helps Starbucks
1) Analyze Starbucks using the competitive forces and value chain models. Starbucks is the world’s largest specialty coffee retailer with the assistance of technology. Starbucks uses management information system in order to sustain in a market. This technology assists them in many ways such as product quality, efficiency as well as customer service. Now, Starbucks have 1,700 coffee shops in 55 countries and grew throughout the United States and globally opening franchises at an impressive rate. The use of technology helps Starbucks to achieve low cost leadership. Starbucks can lower operational costs and offer price-reduced specials. Costs reduction from procedural changes made it possible for Starbucks to offer these lower prices. Starbucks has revamped its in-store technology with wireless technology and mobile digital platform. When Starbucks set out to improve its customer experience, it found that more than a third of its customers are active users of smartphones. So, the company implemented a technology that allows customers to pay using a smartphone app.
This technology is integrated with Starbucks Card system, which allows customers to pay with a pre-paid and rechargeable card at any Starbucks branch. When customers make a purchase using the app, a cashier scans a bar code displayed on the phone and resulting sale is charged to customer’s Starbucks Card account. With this technology, it can save time consuming and allow customers experience more efficient and quality service. Other than that, Starbucks pursued a more aggressive product differentiation strategy. This emphasizes the high quality of their drinks and efficient and helpful customer service.
Like many of their competitors such as McDonald’s and Dunkin’ Donuts, Starbucks is also eliminating inefficiency and enable them to save operational costs due to faster and better customer service. If Starbucks is able to reduce the time of each employee spends making a drink, the company can make more drinks with the same number of employees or with a fewer employees. Besides, to stay competitive, Starbucks is strengthening customer and supplier intimacy. Management information systems and streamlined business processes have allowed time saving to transfer into a better customer service. Therefore, customers now feel more connected with a friendlier service, the chain have also started adding names to their customer drinks to offer a more personalized service and better customer experience.
2) What is Starbucks’ business strategy? Assess the role played by technology in this business strategy. Starbucks’ business strategy is to continue to offer a unique experience such as offering high-end specialty coffees and beverages, friendly and knowledgeable servers and customer-friendly coffee shops. Technology assisted the business strategy by giving customers the benefits of free Wi-Fi access and Starbucks apps to access on their smartphones. Wireless technology enhanced Starbucks’ business process simplification effort. By 2011, Starbucks had returned to profitability and continuing growth, with plans to open 500 new stores because of the success of changes in business strategy.
3) How much has technology helped Starbucks compete? Explain your answer Technology has helped Starbucks in so many ways to stay competitive in market in order to sustain its life. With technology, Starbucks have been able to launch the Starbucks Digital Network, and the use of paying via Starbucks App on smart phones. Besides, technology also helps the baristas to make drinks faster without need to bend down to scoop coffee, cutting down on idle time while waiting for coffee to drain and finding ways to reduce amount of time to make coffee. The most important thing, technology has helped Starbucks to generate higher revenue and profits.