Starbucks opens a new store in China every 15 hours. This hugely popular global coffee brand generates an annual revenue of over $22 billion thanks to their 25,000 stores located across six continents. How did they achieve this level of success? By focusing on their supply chain.
Back in the early 2000s, Starbucks’ business was starting to gain momentum but their supply chain and logistics teams were struggling to keep up. The famous coffee business quickly realized that they needed to put strategies and technologies in place to master the movement of their ingredients, materials and products. By making use of a vertically‐integrated supply chain, the company is involved in every step of the process, as coffee beans move from farms to the cup of coffee that is ultimately sold to consumers.
Last year, Starbucks announced that they were working with Microsoft to develop a blockchain‐ enabled supply chain tracking system that pairs with a mobile app and allows customers to track the journey of the beans they buy and the coffee they drink. This Azure‐based blockchain service creates a transparent electronic ledger that supply chain participants can use to input transactional data. Not only does this kind of thing improve coffee supply chain scrutiny, it also secures better incomes for farming communities.
What can we learn from Starbucks?
In comes down to one thing – transparency. In fact, in March 2019, the coffee giant announced their “digital transparency plan”, which aims to verify that their coffee beans as 100% ethically and sustainably sourced. The initiative traces the genesis of beans from around 380 000 coffee farms and shares this information with customers. Smart tracking is an essential part of this transparency push. By using these connected tracking solutions, Starbucks can identify supply chain inefficiencies, reduce costs, eliminate errors, improve performance and, ultimately, increase profit margins. It’s all about mastering how to move ingredients, materials and products as affordably as possible. But they’re not the only ones doing this kind of thing. According to Gartner, more than half of new business processes will incorporate some elements o the Internet of Things (IoT) in 2020. W. Roy Schulte, VP and distinguished analyst at the Gartner explained back in 2016:
“Uses of the IoT that were previously impractical will increasingly become practical. The IoT is relevant in virtually every industry, although not in every application. There will be no purely ‘IoT applications.’ Rather, there will be many applications that leverage the IoT in some small or large aspect of their work.”
In line with this, McKinsey & Co predicts that the IoT will have a total potential economic impact of anywhere from $3.9 trillion to $11.1 trillion a year by 2025. Smart sensors and IoT‐enabled tracking devices will be attached to everything from individual products and crates to shipping containers. These connected technologies will be embedded throughout manufacturing facilities and warehouses and will aid the tracking of entire transportation fleets. In the case of agricultural products, like coffee, which are especially susceptible to delays, which can have an adverse impact on the quality of the product. As such, is critical to be able to monitor temperature variations and other environmental factors as these items move from farms to processing facilities and on to distribution centers to supermarkets and restaurants.
Over the last years, being able to verify product authenticity and trace the source of products has become hugely important. This is especially true as producers and regulators place greater emphasis on tackling counterfeit goods and as they champion supply chain sustainability. Emerging technologies enable this visibility.
Question 1 (Marks: 15)
Q.1.1 With the use of examples, discuss the different levels of management at Starbucks. In your discussion, also identify and explain the management skills needed at each level of management at Starbucks.
Identify and explain the management skills needed at each level in Starbucks. 1 mark x 4
Example per level of management specific to Starbucks. 1 mark x 3
Q.1.2 Advise a friend on the importance of logistics and supply chain management as an area of management in an organisation.
NB: You are required to do additional research and your answer should be a minimum of 150 to a maximum of 200 words. Markers are to stop marking after the threshold of 200 words has been reached. Please indicate the word count at the end your answer.
Management theories have developed over time. The management team of Starbucks is interested in the Quantitative approaches. Discuss the quantitative approach to management and the two quantitative theories.
Q.3.1 Explain what a SMART goal is and develop a SMART goal for Starbucks specific to their business in South Africa.
Important: You must clearly show how the SMART goal was developed.
Q.3.2 An important function of being a leader is to activate employees toward achieving organisational goals, like the SMART goal you developed in the previous question. Discuss how the managers at Starbucks can empower employees in the modern business environment and why empowering employees must be approached with care.
NB: Additional research is required and your answer should be a minimum of 250 to a maximum of 300 words. Markers are to stop marking after the threshold of 300 words has been reached. Please indicate the word count at the end your answer.
Question 4 (Marks: 20)
As the business consultant for Starbucks South Africa, you have asked for your advice on the
Q.4.1 Explain to the management team of Starbucks why organising as a management function is important in Starbucks.
NB: You are required to do additional research and your answer should be a minimum of 150 to a maximum of 200 words. Markers are to stop marking after the threshold of 200 words has been reached. Please indicate the word count at
the end your answer.
Q.4.2 The management team of Starbucks South Africa has asked you to identify and explain the type of departmentalisation that will best suit Starbucks South Africa. Justify your answer.
Question 5 (Marks: 25)
In a report format of no more than 1 000 – 1 200 words, identify and discuss the micro‐ environment factors that affects Starbucks’ performance and decision‐making in South Africa. You are required to refer to the case study provided and conduct your own research.
• Your answer should be a minimum of 1 000 to a maximum of 1 200 words. Your lecturer will not mark beyond the maximum word count for the question. Please indicate the word count at the end your answer.
• A report requires a clear introduction, discussion paragraphs and conclusion, use of paragraphs, headings, sub‐headings and academic tone.
• Use appropriate theory from your textbook.
• Demonstrate use of further academic research.
Answers to above questions on Starbucks Case
Answer 1: There are different levels of management in an organisation and these are basically classified into three main types such as top level management, middle level management and lower level management. The roles and responsibilities of different levels of management are different, and the case analysis of Starbucks also indicates that there are mainly three levels of management in the organisation. The top level management is responsible for undertaking strategic decisions such as expanding the operations of Starbucks in new countries such as China, decision in relation to developing new products etc.
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