Operational Strengths & Weaknesses
After the acquisition completion between Starbucks and Il Giornale operations were complementary to each other. More particularly, Starbucks stores were equipped with espresso machines in the context of broader product mix offering beyond classical coffee and tea variety. Additionally, they were remodeled to look more Italian than Old World nautical. Similarly, Il Giornale green replaced the traditional Starbucks brown. Inside Starbucks customers used to have a very positive experience. The main reason for that, except from the core broader product mix, was the special treatment that customers received by stores staff.
Actually, store employees were knowledgeable about Starbucks products, paid attention to detail in preparing the company’s espresso drinks, possessed the skills and personality to deliver consistent pleasing customer service. Starbucks was not only a simple coffee shop that sold products, but also a high quality service-provider. One desire of Starbucks was to generate enthusiastic commitment on behalf of its employees and, thus, provide higher levels of customer service. People that used as stores staff tend to be young enough in order to express more enthusiasm, communicating more effectively company’s value.
This is why a lot of employees were part-timers. Employees paid special attention of what pleased customers. This is a special
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Concerning flavored coffees, Starbucks applied a sophisticated recipe. More particularly, Starbucks would provide flavored coffee by adding hazelnut syrup to the drink, rather than by adding hazelnut flavoring to the coffee beans during roasting. Operations were flexible enough in order to offer what customers wanted. Through careful observation from company’s stores’ people it was possible to detect customers preferences and wants. For example, Starbucks product mix was further broadened including lattes with nonfat milk.
Store operations adjusted in order to satisfy more customers’ needs. More particularly, after the first stores operated for only standing up customers, special seating areas were added to help make Starbucks a desirable gathering place where customers could meet and chat or simply enjoy a peaceful interlude in their day. Comfortable store environment was developed in company’s stores. More particularly, a lot of stores had fireplaces, leather chairs, newspapers, couches and lots of ambience. Inside Starbucks stores customers could use new technology features.
More particularly, customers using a Wi-Fi notebook computer while at Starbucks locations equipped with wireless broadband Internet service could surf the Web or take advantage of special Starbucks sponsored multimedia promotions. The obvious objective was the repeated sales by heightening the “third place” Starbucks experience, and enticing customers into perhaps buying a second latte or espresso while catching up on e-mail, listening to digital music, putting the finishing touches on a presentation or assessing their corporate intranet. Starbucks created a superb atmospherics inside its stores.
Actually, management considered that this atmospherics would serve both in further building company’s brand image and used as a key differentiation tool for competitive advantage. The company wanted to ensure that store fixtures, merchandise displays, the colors, the artwork, the banners, the music and the aromas all blended to create a consistent, inviting, stimulating environment that evoked the romance of coffee, and that rewarded customers with ceremony, stories, and surprise. It is worthwhile to mention that stores operations, among others, allowed inside stores smell coffee only.
Baristas became familiar with regular customer learning their names and their favorite drinks. Actually, this made customer show stronger commitment to Starbucks and, of course, loyalty. This baristas’ behavior can be considered to be in the context of their training and top management encouraging to stores’ personnel to treat customers properly. All licensing shops communicated Starbucks brand name. Actually, all these shops had to follow Starbucks’ detailed operating procedures and all managers and employees working at these stores received the same training given to Starbucks managers and store employees.
Starbucks had built strong relationships with coffee suppliers. Actually, company’s personnel traveled regularly to coffee-producing countries building strong relationship with growers and exporters and monitoring the whole conditions concerning coffee production. Starbucks spent time in order to ensure that it purchased the best quality. Company’s personnel were searching out varieties and sources that would meet its exacting standard of quality and flavor. Starbucks purchased only high-quality arabica coffee beans. Starbucks purchasing strategy secured the company from price risks.
Due to high coffee price volatility, the company used fixed price purchase commitments to limit its exposure to fluctuating coffee prices in upcoming periods. Starbucks paid special attention to coffee roasting operations. Actually, the company considered the roasting of its coffee beans to be something of an art form entailing trial and error testing of different combinations of time and temperature to get the most out of each type of bean and blend. Starbucks coffee beans used fresh in order company’s coffee drinks to be made.
Actually, Starbucks coffee beans didn’t keep their excellent quality if packaged. This is why Schultz didn’t want Starbucks to pursue supermarket sales. The reason was because this would mean pouring beans into clear plastic bins where they could get stale, thus compromising the company’s legacy of fresh, dark-roasting, full-flavor coffee. Starbucks didn’t express any special capabilities applying mail order sales and using dot-com business. This is why the company discontinued mail order section along with divesting all its dot-com business.