Starbucks Research

Introduction

Beyond North America, Singapore is the third international country to establish Starbucks to its consumers. Starbucks Coffee Singapore is a wholly owned subsidiary of Starbucks Corporation since June 2004. Its coffee houses pride itself on their single-origin premium coffee, which is well-known for its quality internationally.

Besides its coffees, Starbucks’ friendly employees, great music and cosy interiors help shaped the famous Starbucks Experience. Many of its direct competitors in the industry include Coffee Bean and Coffee Club. Customers that patron these places like the atmosphere and the service that they receive which is comparable to Starbuck’s. There has also been a proliferation of gourmet coffee outlets in the past decades, and therefore the market is gradually becoming overcrowded. Starbucks will therefore need to turn some heads and create higher brand equity in order to remain competitive with their competitors.

Operations Issue

As the quality of their coffees is closely tied to its branding, it is vital for Starbucks to ensure it maintains the freshness of its brews across different outlets internationally. The essence of this lies in its coffee beans, which Starbucks has taken great efforts to ensure that only the highest quality are selected from Latin America, Africa and Asia, before distributing it to their stores. Besides the coffee beans, other inputs are also sourced internationally before transferred to its retail outlets. A well-managed supply chain is hence particularly important to Starbucks and is likened to be one of its competitive advantages.

Despite the key role its supply chain plays, by 2008, Starbucks starting facing hiccups in its supply chain process. Even as sales were steadily increasing, its operational costs were also escalating. Supply chain expenses in the United States rose by more than US$125 million from October 2007 to the same period in 2008.

One factor contributing to this was its...