Management Information Systems. Role Of It In Starbucks

2915 words - 12 pages

Management Information and Technology

The role of IT in Starbucks in gaining
competitive advantage




Table of Contents
Executive Summary 3
Introduction 3
Analysis 3
Bargaining power of suppliers: 4
Bargaining power of customers: 4
Threat of new entrants: 4
Threat of substitute products: 4
Competitive rivalry within the industry: 5
Primary activities: 5
Secondary activities: 7
Conclusion 9
Recommendations 9
References 10

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Moreover at the peak of the globalisation, information technology has put e-commerce and business to the upper level.
The purpose of the paper is to recognise the importance of information systems in immense sized commercial enterprises, primarily to Starbucks Corporation. The first part of the report focuses on, the compatibility of the corporation via Michael Porter’s competitive force model. whereas the second part shall illuminate Starbucks’s transaction processes and services Furthermore the paper examines possible actions which might enhance Starbucks stores future success in the UK.
Starbucks is a multinational US company, now operating in more than 50 countries, was founded in 1971 in Seattle’s Pike Place Market. It had been a single store with a narrow storefront selling roasted whole bean coffee. Nowadays the company sells coffee in more than 17.000 locations around the world and its annual revenue for 2011 was 11,7 billion US dollars. Being only a coffee company it is still expanding year by year. (web1)



Bargaining power of suppliers:

The company’s whole coffee beans suppliers are mainly in Central America and they possess small power to negotiate raw products prices, the reason for that the Starbucks is a large specialty coffee retailer in the market and none of them would want to lose it. However the company is concerned with the climate change, because it is leading to decrease coffee plantations in certain areas in the world, which may lead to boost the bargaining power of the suppliers. (web2)

Bargaining power of customers:

The customers in this industry in the UK feature a high bargaining power because there is a great variety of choices for them and it is very challenging for the company to influence the buyers to pay premium prices for the Starbucks products. (Ryan C. Larson 2008). Nevertheless, the organisation has managed to differentiate its products. For example, customers are offered with a special type of hot chocolate which is made by baristas in the stores and it is called ‘Signature hot chocolate’. The hot chocolate has more flavour comparing to ordinary hot chocolate and it is sold very well despite the fact it is £3.35 per a small cup. (from an oral interview, 2012). This differentiation has mitigated buyer power, since consumers have less choice; therefore they are less price sensitive. (M.E.Porter, 1998)

Threat of new entrants:

The UK’s specialty coffee market is saturated, the existing players such as Starbucks, Costa Coffee, Cafe’ Nero and Cafe’ Nova are already established their national distribution systems via which they can transport goods at a considerably lower cost in comparison to potential new entrants who would not have such ability at the commence of the business and face a high competition. (Ryan C. Larson 2008) Starbucks expands and maintains its market share in the UK...

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