Value chain analysis is a method of examining each activity in a business’s value chain in order to determine where possibilities for development lie. One of the best examples of Value Chain Analysis can be Starbucks. Starbucks is a coffeehouse and roastery international corporation located in Seattle, Washington. This corporation can be considered the world’s largest coffeehouse chain due to its diversity, impeccable service, constant improvements, and expansion. The Value Chain Analysis of Starbucks can be performed in two parts, with one part responsible for primary activities and another part shedding light on secondary activities. As a result, among the primary activities of Starbucks are logistics, sales and marketing, and services. Whereas among the secondary activities are infrastructure and technological development.
It is evident that the first among the primary activities is logistics. Starbucks’ logistics management relates to business coffee purchasers selecting the highest quality product, which is beans, from suppliers in Latin America, African, and Asian countries (Chang). The company’s raw coffee beans are purchased straight from suppliers by the company’s purchasers. The product is then transferred to storage facilities, where the beans are roasted and packed. Starbucks’ patented processing and wrapping add worth to the product, helping to boost the selling price (Chang). The beans are then delivered to distribution facilities, most of which are managed by the corporation and some of which are run by third-party logistics organizations. The firm does not subcontract its sourcing, guaranteeing strict standards from the time the product is selected.
When it comes to the sales and marketing part of Starbucks, the company uses relatively few, if any, intermediaries in their product sales. The vast majority of the goods are available in shops (Chang). On the other hand, warehousing and delivery to retail shops are critical. The corporation spends more on high-quality goods and excellent customer service than it does on promotional campaigns (Chang). Nevertheless, the corporation conducts need-based marketing initiatives in the form of sampling in regions near the coffee shops when new products are released.
Loyal customers can guarantee the solid foundation for such impressive sales. The given corporation is known for its high-quality customer service, which tries to increase consumer loyalty. The Starbucks coffeeshops are known to have products with high prices (Chang). However, Starbucks’ trademark retailing goal has always been to give consumers with a one-of-a-kind experience. As a result, high prices are driven by demand, which in turn is stimulated by excellent service (Chang). In the given circumstances, service training plays an essential role in the value chain that contributes to the uniqueness of its products (Chang). Every coffee made by a Starbucks barista or every product purchased by a customer shows the quality of service and generates a significant amount of value.
As for the secondary activities of Starbucks, infrastructure should be defined first. Infrastructure covers managerial, financial, and legal divisions and other departments that will be essential to maintaining the running process of the corporation. Starbucks has numerous management teams working at its company headquarters (Chang). Additionally, the company also employs on-site administrators who help to supervise well-designed and appealing shops, along with outstanding customer service given by a committed team of staff (Chang). As a result, Starbucks has a team of professionals, solving issues and ensuring that the criteria mentioned above are met.
The last point to be discussed is the technological advancements of Starbucks, which is a part of its secondary activities. Above all else, the corporation is famous for its implementation of modern technology and new techniques, not just in coffee-related procedures that imply maintaining stability in flavor and freshness while cutting costs (Chang. In fact, it also means connecting with the consumers and creating a picture of a customer-oriented business.
Due to the obvious open and limitless Wi-Fi, many customers utilize Starbucks locations as a temporary office or gathering spot. Such an approach helps not only maintain the level of the already existing customer base but also bring a new customer. Moreover, the company created a number of forums where consumers can make comments or ask a question, along with the ability to voice their thoughts freely and share their experiences (Chang). Such open communication facilitates the process mentioned above and helps create a responsible atmosphere. Thus, technology aids in the implementation of the input, particularly in the field of its loyalty program.
Hence, the value chain analysis idea assists corporate leaders in better identifying profitable and inefficient operations. Shareholders may get vital insights into organizational functions by exploring beyond typical performance analysis methods and attempting to incorporate and reflect on value chain analysis in crucial metrics. In the example of Starbucks, various activities, both secondary and primary, are seen as vital. The corporation pays attention not only to customers but to the product as well. The primary activities of the corporation are focused on creating a solid foundation for customers, sales and marketing, and logistics. The secondary activities, in turn, support the primary by employing teams of professionals and implementing technological advancements.
Chang, Wen-Jung. “Experiential marketing, brand image and brand loyalty: a case study of Starbucks.” British Food Journal, vol. 3, no.1, 209-223, (2020).