Starbucks and Its Position in the Operating Model

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Starbucks and Its Position in the Operating Model Quadrant
Starbucks and Its Position in the Operating Model Quadrant Essay
Exclusively available on IvyPanda
Updated: Aug 31st, 2022
Executive Summary
Appraisal: Starbucks Business Model Canvas
Technology Solutions Proposal
Starbuckss Position in the Operating Model Quadrant
Literature Review
Conclusions and Recommendations
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Executive Summary
This research report focuses on . The company has been analyzed in relation to the business model canvas, and the important components in relation to the model have been identified. Technology solutions that can help improve these components have been provided. Through analysis using the Operating Model Quadrant, Starbucks fits in the Digital Master quadrant. Reasons have been provided to explain why the organization fits in this part of the quadrant. Lastly, a literature review is availed in relation to how the organizations senior management can maintain its capabilities and remain digital masters. The conclusion and recommendations part summarizes the main points and explains the best way forward for the company.

The chosen organization for this research report is Starbucks Corporation, an American coffeehouse based in Seattle, Washington. The company has been in operation since 1971 when the first store began offering coffee to customers, and today, it has grown into an international organization serving high-quality products to customers in at least 30,000 stores in about 80 markets (Starbucks Coffee Company, 2021). Herein is an analysis of Starbucks and the role that Information Technology (IT) plays in the organization. Components related to the company are provided through the business model canvas, and two of them get appraised. There is also a discussion of how the business model can be improved through IT and its technology or leadership capabilities. These capabilities are the basis of the development of a playbook to help senior management through a literature review. These different discussions of the company are of the essence in understanding how it operates and uses technology.

Appraisal: Starbucks Business Model Canvas
Key Partners
Retail stores
Distribution companies
Subsidiary firms
Key Activities
Management of distribution
Brand licensing
Public relations
Value Proposition
The best coffee globally
Simple and fast services
High-quality products
Relaxed environment with music
Customer Relationships
Unique experiences
Online customer care
Starbucks reward program
Free Wi-Fi
Strong presence on social media platforms
Customer Segments
Mass market
Coffee enthusiasts
Key Resources
30,000 coffee stores in 80 markets
Coffee processing equipment
Farmers equity program
Quality of coffee
Coffee and grocery shops
Retail shops
Starbucks app
Social media networks
Cost Structure
Ingredients and farmer compensation
Rental funds
Tax payment
Producing, marketing, and distributing
Revenue Streams
Product sales
Licenses payment
Channel development
Key partners and value proposition are two major business model components that are very important to the company. The organizations relationship with farmers is particularly of the essence because they form a very important part of its supply chain by providing the company with coffee beans. Compensation is done fairly, and ethical sourcing forms an important part of the companys business practices. For this reason, the company has created lasting relationships with all its partners in different parts of the world.

In terms of value proposition, the company has succeeded in creating an environment where customers get the best coffee experience. Consequently, the organization has earned the reputation of the preferred high-quality coffee destination. Experiences provided to customers ensure that they come back another day for more coffee and other products. In addition, the organizations market share has been maintained as customers have developed loyalty to the brand. These two components have ensured that the company survives in the highly competitive beverage industry.

Technology Solutions Proposal
Technology plays an important role in business practices that characterize modern organizations. Today, organizations are increasingly finding themselves in a position where they have to leverage technology solutions to improve or maintain their operations. Starbuckss business model is one that can be improved through the implementation of various technology solutions to its business model components. Each solution will be applied in relation to its benefits to the specific business model component.

Key partners. Partners should always be kept close to the business because of the increased importance they have to a company like Starbucks. Therefore, IT should be leveraged to build stronger relationships with them. One way that this can be achieved in the context of the coffee company is through the creation of a website where all key partners are brought together, and they can interact with each other. This will enable them to discuss matters related to the company and provide the company with feedback on important issues. In addition, links can be added such that key partners can hold online meetings with the company.
Value proposition. Starbucks can enhance its value proposition by taking advantage of its Internet presence. In this regard, technology can help the organization to communicate better with its customers and partners through personalized communication using data obtained from its consumer base. For example, personalized e-mails and encouraging more customer reviews from its to inform potential and existing customers about the value it brings to them through its operations and products. This will increase sales for the company and thus create more revenue. Moreover, the organization will be able to acquire a bigger market share and offer customized services.
Starbuckss Position in the Operating Model Quadrant
In the operating model quadrant, Starbucks fits well in the Digital Masters quadrant. The business fits in this quadrant because it is capable of driving its vision and business as opposed to technology. In addition, the company has maintained profitability in the last five financial years, and between 2016 and 2019, gross profit margins were at least 28% (Finbox, 2021). Over time, Starbucks has grown significantly, and much of its growth has been credited to excellent leadership in the organization, particularly by the former CEO Howard Schultz. Under his guidance, the company has grown into the global coffeehouse it is today. All along, technology has been embraced, but it is leadership that played the most crucial role in the companys growth. For example, through the companys website and mobile app, customers can order various products. Since its inception, the number of locations or stores that the organization runs has grown exponentially, and this illustrates the speed at which the company has moved to conquer the market it operates in. The company has also been able to adapt to the market over time. This can be illustrated by the companys efforts towards introducing other products on top of its main offering, which is coffee.

Literature Review
Starbucks, in relation to its operations, is categorized as a Digital Master. In this regard, it is of the essence that senior management remains capable of maintaining this position. Drawing from the playbook proposed in the literature review below, the major components that the company needs to focus on are digital leadership, digital transformation, change in leadership style, and the development of digital capabilities.

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Businesses today are highly dynamic, and companies in modern times are required to maintain a high level of innovation that is guided by digital leadership. Digital leadership that is in line with the notion of dynamic capability has both direct and indirect impacts on the development of innovation (Mihardjo, Sasmoko, Alamsyah, & Elidjen, 2019). It is important to note that organizations in modern times should continuously adopt digital technologies to drive change, and this is the case across industries. Through technology, organizations become more competitive and can pursue more business opportunities. Moreover, revenue can be enhanced due to the positive effects of digital technology. Being a major driver of organizational growth, organizations should, therefore, seek to use digital technologies to ensure that they improve their revenue bases.

Digital technology and leadership affect the competitive advantage of sustainability for companies. Digital technology is a major driver of change in different industries and it, together with innovation management, influences sustainability in terms of competitive advantage (Wasono & Furinto, 2018). In addition, digital leadership determines, to a large extent, the ability of a business to be innovative. The implication here is the survival of businesses in the modern world requires that businesses develop digital capabilities that they can leverage for innovation and subsequent growth.

Industry 4.0 is an important aspect of todays business environment largely because of the digital transformation that it has brought. On top of this digital transformation, Industry 4.0 has led to process changes and in how companies are organized, particularly in the area of leadership (Klein, 2020). The current environment requires that leaders act swiftly and remain flexible in the modern networked organizations and, at the same time, be capable of managing their organizations digital transformation. However, as companies are still in the early stages of digital transformation, the concept of digital transformation is yet to receive consensus in terms of its understanding. There are certain characteristics that leaders in the digital era are expected to have, including adaptability, innovative vision, creativity, agility, digital intelligence, knowledge-oriented, and digital talent scouting, among others.

The increase in the use of digital technologies today has changed organizational leadership. In the digital era, leaders should exercise openness and collaboration (Anak Agung Sagung, & Sri Darma, 2020). They should also abide by rules and not just individual digital capability. Possessing the characteristics that identify digital leaders is of the essence for modern leaders. As the digital transformation triggered by the fourth industrial revolution cannot be avoided, leaders have no escape route, and they should make every effort to develop these qualities for the development of their organization.

Organizations that are highly dependent on the success of supply chains stand to benefit from the development of digital capabilities and leadership. The pursuit of digital competence in the area of the supply chain produces new leaders responsible for certain parts of the chain, and the outcome is a completely reshaped supply chain collaboration (Frankowska & Rzeczycki, 2020). As such, the application of technology in the supply chain is capable of ensuring better collaboration for companies and enhancing operations. Therefore, organizations should be keen to see to it that they implement digital solutions in their supply chain.

Conclusions and Recommendations
Starbucks Coffee Company is a global company that operates coffee stores in about 30,000 locations around the world. To a certain degree, the organization has been able to use technology in its operations. Through good leadership, the company has grown and is now a renowned coffeehouse in the world. An analysis of the company using the business canvas model reveals that key partners and value proposition components of the model are the most important for the organization. The reason for this is the way the company operates, from how it sources its coffee to the treatment of customers. These components can be improved through the implementation of relevant IT solutions. Regarding the element of key stakeholders, the development of a partners website can offer substantial help in bringing them together and increasing the organizations engagement with them. In terms of value proposition, the company can improve greatly through personalized communication, which can easily be fueled by its strong Internet presence. Being a Digital Master, strong leadership, and the ability to act with speed has proved to be key aspects of its survival.

In todays highly digitized global market, the success of companies such as Starbucks is highly dependent on the ability to implement technology solutions. In this regard, Starbucks should aim at a full digital transformation by taking advantage of the solution that the ongoing digital revolution presents. Given that even the new businesses in the industry are increasingly turning to technology, the company should make use of its financial capability to increase its online presence. By putting a team of IT experts together to guide it in the digital transformation, the organization would be better placed to continue its success in the future. The various leaders in the organization would adapt better to the changes by undergoing training to equip them with the necessary skills and knowledge.

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Anak Agung Sagung, M. A., & Sri Darma, G. (2020). Revealing the digital leadership spurs in the 4.0 industrial revolution. International Journal of Business, Economics & Management, 3(1), 93-100. Web.

Finbox. (2021). The gross profit margin for Starbucks Corporation.

Frankowska, M., & Rzeczycki, A. (2020). Reshaping supply chain collaboration the role of digital leadership in a networked organization. In Working Conference on Virtual Enterprises (pp. 353-364). Springer: Cham.

Klein, M. (2020). Leadership characteristics in the era of digital transformation. Business & Management Studies: An International Journal, 8(1), 883-902.

Mihardjo, L., Sasmoko, S., Alamsyah, F., & Elidjen, E. (2019). The influence of digital leadership on innovation management based on dynamic capability: Market orientation as a moderator. Management Science Letters, 9(7), 1059-1070.

Starbucks Coffee Company. (2021). Starbucks Company Profile.

Wasono, L. W., & Furinto, A. (2018). The effect of digital leadership and innovation management on incumbent telecommunication companies in the digital disruptive era. International Journal of Engineering and Technology, 7, 125-130.

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Reading time 7 min
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