Discuss the below:
Q1. Discuss five operations management strategic decisions that led Starbucks to generate great success in the market according to the given case.
Starbucks Operations Management
Starbucks Coffee Company was founded in 1971 as a delicate coffee and tea vendor. In 1985, chairman and CEO Howard Schultz altered the business into what is now - an international coffee brand manufactured on the wisdom of coffee, high-quality goods, and a desire of teaching customers about the values of coffee and tea. Today, Starbucks has expanded from its Seattle roots and markets imported coffee, fine tea, Italian style espresso, cold beverages, food products and coffee fixtures.
It has created lifetime relationship with several coffee bean manufacturers and farmers and has linked a solid brand image to all of its employees. Starbucks has become a successful global coffee brand business due to their application of specific operations management principles. They have taken the set of operations management decisions and utilized them to prosper into a globally known coffee business.
The company is offering fine whole bean coffee along with other verities of premium tea and espresso beverages. They also offer sodas and juices, pastries and coffee-associated equipment such as coffee mugs. Starbucks vends its products through its company managed retail stores, warehouse club chains, office coffee distributors, institutional foodservices such as hotels and airlines, mail-order catalogs and though it's electronic store. The products and services are manifestly offered through the original brand design.
The arrangement of each Starbucks store gives their customers a great quality product and service. The company's delicious coffee and other enjoyable food items are two of significant ways this is given. Additional ways include the display racks, tables, chairs, fixtures and store background music. The administration of Starbucks is merely accountable for quality service. Furthermore, Quality service is linked with profitability; therefore the administration is continuously flourishing to accomplish this. To guarantee quality, Starbucks offers surveys in their stores that allow their customers to rate their performance against the company‘s high standards. In addition to that, The Company chooses sites for the stores where accessibility is available
Q2. A coffee shop owner wants to make a decision on purchasing a new espresso machine and he is having three options for the espresso machine. The fixed costs and variable costs are given below
Machines Fixed cost Variable cost
Machine A $ 600 $12
Machine B $1100 $8
Machine C $1800 $4
Machine D $2700 $1
a. Over what range of production is each machine most economical
b. Which machine should the owner choose for production of 200 cups of coffee and why? What would be the profit for selling this quantity if the selling price is $15 per cup?