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Definition: the operation strategy is “the decision which shapes the long-term capabilities of the company’s operations and their contribution to overall strategy through the on-going ...

Definition: the operation strategy is “the decision which shapes the long-term capabilities of the company’s operations and their contribution to overall strategy through the on-going reconciliation of market requirement and operations resources.”

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  • 1. Table of contains1. Overall Introduction…………………………………………………………...22. Introduction of Volkswagen…………………………………………………...3 2.1Critique their internal and external supply chain and assess its impact on the companies’ success and profitability………………………………………3 2.1.1 Internal supply chain……………………………………….……4 2.1.2 External supply chain………………..…………………………..53. Improve their competitiveness by the operational strategy…………….……...64. Location selection…………………………..……………………….………115. Introduction of Starbucks………………………………………...………….14 5.1 Internal and external supply chain of Starbucks………………………….…146. Operational strategy of Starbucks and its competitive advantage …………...177. Challenges presented by operational strategy and Recommendations……………………………………………...…………...208. Location analysis for new operation of Starbucks…………...……………...229. Overall Conclusion………………………………………….……………..…2410. Bibliography………………………………………………..………………..25Appendix 1
  • 2. 1. Overall IntroductionOur group choose Volkswagen from manufacturing companies and Starbucks fromservice companies. This report shows the internal and external supply chain of bothcompanies. For Starbucks we visited one Starbucks coffee shop and looked at howthey operate their business (from taking orders to serving their customers) to analysetheir internal supply chain. And for external supply chain, we simply went to theirwebsites and other articles that starts from their suppliers and ends at Starbucks. Incase of VW internal supply chain, we discussed about how they enter into the steelindustry to reduce the time wasted, cost and to meet the high customers demand. Andfor external supply chain, we simply went through how they break all theircomponents into different smaller parts and send their requirements into differentcountries to take advantages of local policy and to save their waiting time from singlesuppliers. Then we talked about what operational strategies each company adoptedand how these strategies give that company the competitive advantage in thiscompetitive market. Operational strategies do not only pose benefits to the companybut also give some challenges that each company should face and work for the furthersuccess. So we also included challenges that each company face and the solution toeach challenges that we think that particular company should do. Then finally we didmarket analysis for each company based on different factors like market efficiency,infrastructure, and income and so on so that each company could be able to locate inthe beneficial location. The success of any business depends on the nature of businessand the countries in which they operate. 2
  • 3. 2. Introduction of VolkswagenThe Volkswagen Group is one of the world’s leading automobile manufacturers andthe largest carmaker in Europe. In 2007, the Group increased the number of vehiclesdelivered to customers to 6.189 million, corresponding to a 9.8 percent share of theworld passenger car market. The Group is made up of nine brands from sevenEuropean countries: Volkswagen, Audi, Bentley, Bugatti, Lamborghini, SEAT,Skoda, and so on. The Group operates 48 production plants in 13 European countriesand further more in the Americas, Asia and Africa. Around the world, more than360,000 employees produce almost 25,400 vehicles or are involved in vehicle-relatedservices each working day. The Volkswagen Group sells its vehicles in more than 150countries. It is the goal of the Group to offer attractive, safe and environmentallysound vehicles which are competitive on an increasingly tough market and which setworld standards in their respective classes. (Volkswagen.com [Online])2.1Critique their internal and external supply chain and assess itsimpact on the companies’ success and profitability.Supply Chain is the most important bridge to link each part of the operational parts. Itis defined by Martin Christopher (1992): “the network of organisations that areinvolved, through upstream and downstream linkages, in the different processes andactivities that produce value in the form of products and services in the hands of theultimate consumer.” So the supply chain management will be related to thecompany’s profitability and even success or not. Volkswagen also needs to have agood management on their supply chain and operational expansions in world wide. 3
  • 4. 2.1.1 Internal supply chain:As the demand and productivity is increased, their supply chain flowed much quickerthan before, so their logistic expenses are more expensive. Volkswagen established anew diversification- Volkswagen logistic company to reduce the expensive fees onmoving these stocks to each department. But they only have controlling and planningfunctions. And Volkswagen developed their steel industry also in his verticaldiversifications. In order to reduce to the minimum cost and time wasted in the supplychain, they choose to develop that part by themselves. Like the RFID system to tracktheir stocks in logistic process.(Source: scdigest.com [Online])The contributions they made in the supply chain were to make them success andsustained their competitive advantages, details as following: • Improved customer service, all the feedback could pass to the related department directly and with the truth and know the real demand of each level in the supply chain included customers. They cut the supply chain in order to get the real customers’ expect needs directly. That can make Volkswagen can produce appropriate volume in correct quality avoiding the waste. 4
  • 5. • Optimised their costs and investments, they can use their capital for more projects. And they saved money from the supply chain and also made it more efficiency work for them. Cash flow is very important for every company, if they do not have the force on their cash flow, there will be a lot of more space for them to improve.2.1.2 External supply chain:There are many other suppliers in the scale of Volkswagen supply chain they can notcover, so the external suppliers are also important for them. If they can not deal wellwith them, that can damage their internal supply chain and overall performanceheavily. But recent years, Volkswagen invited a new technology for logistic withexternal supplier. They break all their components into different smaller parts, andsend their requirements to different partner in China, India and some countries withtheir characteristics, in order to share the advantages in local policy. It saved time towait a huge volume stocks from just one partners and averaged the cost from allsuppliers. The result is any one partner or one country changed their condition, thatwill not influence the overall supply chain, in another saying, they separated the risks.Generally, Supply chain management is an important factor for Volkswagen successand sustained their competitive advantages. It coordinated the relationships betweeninternal and external suppliers and reassessment them. Also they enhanced thecustomer service, made the customer happy to get what they really want to get. 5
  • 6. 3. Improve their competitiveness by the operational strategy A. Definition: the operation strategy is “the decision which shapes the long-term capabilities of the company’s operations and their contribution to overall strategy through the on-going reconciliation of market requirement and operations resources.”So it is very important for a company to access the role of operation strategy in detailin order to understand the operation strategy & objective of each performanceOperation strategy helps the company to utilize their operation resource to satisfy themarket requirement. Also the feedback of the market requirement can adjust theoperation strategy. Then the distribution of the operation resources will change aswell. It is a function process between the operation resources & market requirement. B. Then I will assess the role of the Volkswagen operation strategy in order to improve their competitiveness.The operations function can provide a competitiveness advantages through itsperformance at five competitiveness objectives.Volkswagen, as a car manufacture, I think the good quality of product and goodcustomer service is very important for them. Here is the five competitiveness 6
  • 7. objectiveness of Volkswagen. I make a rank of score for each objectives ofVolkswagen. 10—very important 0—not relevant • Quality - 9 The quality is very important for our company. Because our product is for the daily used basis, and it highly related to peoples’ safety and life. Actually, our product is branding by the high safety and high quality. Also use the new technology is very important in the car manufactory industry, for example, the new engine to save oil usage and reduce the air pollution. • Speed - 7 The speed for delivery is just fine for us. Because it is car—not something like coffee and TV, people are spending lots of money in purchasing their cars, so they are prepared to wait for their cars. But also, we have to ensure that, people do not need to wait too long for their cars. Because we are not offering the luxury cars for which the customers may have more patient to wait for. So we will manage our transport to be more efficiently. • Dependability - 8 The dependability is important for us. Because first of all, we must ensure that we are offering the product which the customers can trust. And also it is the trend of the competition. More and more car advertising are describing this philosophy, people are relax and have a fun time with their car. It is worth to trust with. So this is we are pursuing to achieve. • Flexibility - 8 It is also important for the car manufactory. With the development of the global economic, people would like to have their own customized cars to satisfy their different needs. This is what actually the car manufactories are trying to do now. They are launching different levels and model of cars to satisfy different market segments. Also they are doing the market research positively to try to understand customer’s needs and new trend. So for our company, it is important for us. 7
  • 8. • Cost - 7 It can affect our business, but not so much because Volkswagen is not famous by low price like Toyota and Honda. Actually, we are famous by the high quality and safety. But also as a manufactory, we cannot forget the cost because it influences the profit margin for our company. The economy of scale is very important in the car manufactory. So it is the competition trend to do so. Actually, Volkswagen is opening 2 main manufactures in China, Shanghai and Changchun to share the low labor cost in order to achieve the high profit margin.C. ChallengesWhat challenges do the operational strategies present and suggest ways in which theycan be overcome. • Quality - 9 Total Quality Management is the biggest challenge. There are hundreds of examples of manufacturers who have encountered quality issues on one product and the consequences on the brand image impacted the whole company.RecommendationQuality should be part of the corporate culture, every employee, every actor of thebusiness should be thinking about ways to improve, to control the products at all stepsof its manufacturing. • Speed - 7 Speed of delivery is less and less important to consumers. Car makes focus on their financial objectives and reduce their stock levels. They also have products that are more and more customizable for customers. These two factors increase time of delivery, and it concerns all the car manufacturers. However as customers’ requirements change, speed of delivery is not the challenge, maintaining the right level of stock and answering all customers’ needs is. 8
  • 9. RecommendationA precise sales forecast helps managing the stock levels; there should be bettercommunication between the sales and financial departments. Answering every needof the customer is an objective but it should not be at any cost. • Dependability - 8 Customers perceive a manufacturer’s seriousness in its actions, including respecting deadlines and always producing the same quality.RecommendationImplementing processes and control that will help having the same product anddelivery time whatever problem arises. • Flexibility - 8 Flexibility is the biggest challenge, reducing cost while increasing the variety of product. Flexibility puts pressure on the employees, the development of a car used to take a couple of years and now it takes a couple of months.RecommendationTraining the people to be efficient to adapt new technologies and new workingenvironments. The better the employees are, the most flexible the company will be. • Cost - 7 Volkswagen will soon become the largest car manufacturer in the world. High sales are most effective way to reduce costs, thanks to economies of scale.RecommendationUsing “platforms”, bodies of vehicles that are shared for different brands and modelswithin the group helps doing economies of scale while all other parts can becustomized to customers. Investing in R&D helps anticipating industry changes aswell, the automotive business evolves rapidly, technologies arise, and trends drivesales. VW ought to watch these carefully and influence them as much as possible byinvesting and anticipating. 9
  • 10. 4. Location selection 10
  • 11. Volkswagen is considering locating a new operation in one of Japan, Thailand andSingapore. WEF world competitiveness index 2010:Country/Economy Rank 2010 Score 2010 Rank2009Singapore 3 5.48 3Japan 6 5.37 8Thailand 38 4.51 36Singapore and Japan are highly developed countries; both are in the top 10competitiveness rank. Thailand is in another stage of its development.Cultural factors are not the most relevant factors for our industry, the three countriesare very different, and we can note that Singapore has a lower long term orientationand lower uncertainty avoidance index, which is good for our business.4.1 Factor rating method Rating Score Pillars / Factors Weight Japan Thailand Singapore Japan Thailand Singapore1st Institutions 8 5,1 4 6,1 40,8 32 48,82nd Infrastructure 8,5 5,7 4,8 6,2 48,45 40,8 52,73rd Macroeconomic environment 6 4,1 4,9 5,2 24,6 29,4 31,24th Health and primary education 4 6,5 5,6 6,7 26 22,4 26,85th Higher education and training 6 5,3 4,3 5,8 31,8 25,8 34,86th Goods market efficiency 8 5,1 4,5 5,7 40,8 36 45,67th Labor market efficiency 9 5,1 4,8 5,9 45,9 43,2 53,18th Financial market development 7 4,6 4,4 5,8 32,2 30,8 40,69th Technological readiness 9 4,9 3,6 5,3 44,1 32,4 47,710th Market size 5 6,1 4,9 4,5 30,5 24,5 22,511th Business sophistication 8 5,9 4,2 5,1 47,2 33,6 40,812th Innovation 8 5,5 3,3 5 44 26,4 40 TOTAL 456,35 377,3 484,6 11
  • 12. Our factors are directly linked to: i) Institutions It is the legal and administrative framework of the country, it is very important in our business where important amounts of money are involved and where legal conflicts can arise with partners. Weight: 8 ii) Infrastructure Effective modes of transport, including quality roads, railroads, ports, and air transport, enable us to get our goods and services to market in a secure and timely manner and facilitate the movement of workers to the most suitable jobs. Weight 8.5 iii) Macroeconomic environment Economic stability is not very important; we focus on the economy of the whole region and not the country on its own. Its importance is average. Weight: 6 iv) Health and primary education Poor health leads to significant costs to business, as sick workers are often absent or operate at lower levels of efficiency. Furthermore, all our employees need a basic level of education. Compared to other factors it is the least important. Weight: 4 v) Higher education and training Our business is sophisticated and requires high skill personnel. Weight: 6 vi) Goods market efficiency Good supply-and-demand conditions, where trade works efficiently. We cannot afford having suppliers in a monopolistic situation for example. Weight: 8 vii) Labour market efficiency 12
  • 13. When VW settles new operation in a country, it needs thousands of people, some with sophisticated skills. The company cannot train everyone and needs to find in the country its required human resources. Weight: 9 viii) Financial market development Our business requires heavy investments, in plant and equipment especially. It is a long term investment and we must be well supported by a healthy banking system for example. Weight: 7 ix) Technological readiness The country which we will operate in must be compatible with our technology. All are computer systems, way of working, and processes in general. Our products must be as efficient as possible and thus require efficient technology. Weight: 9 x) Market size Again, we focus on the region, and the country’s domestic market is not the most important criteria. Weight: 5 xi) Business sophistication As we work with thousands of partners, and our needs are increasing every day, the business network must be sophisticated, well developed suppliers and industries. Weight: 8 xii) Innovation Our industry is so competitive that success can only be achieved through innovation. Weight: 8Further to all the data in the WEF report and the weight of each factor, Singapore isthe best destination for us. See charts in appendix. 13
  • 14. 5. Introduction of StarbucksStarbucks Coffee Company is the leading retailer, roaster and brand of specialtycoffee in the world, with more than 6,000 retail locations in North America, LatinAmerica, Europe, the Middle East and the Pacific Rim - wherever there is a demandfor great coffee (http://ie.starbucks.com/en-ie/). The company sells coffee, Italian-style espresso beverage and complementary food items, a selection of premium teasand coffee-related accessories and equipment. Starbucks committed to ethicallysourcing and roasting the highest quality Arabic coffee in the world. Today, withnumbers of stores around the globe, the company is the premier roaster and retailer ofspecialty coffee in the world (http://news.starbucks.com/). 5.2Internal and external supply chain of Starbucks Supply chain means the total movement of raw materials, services, finished goods, and monies between suppliers and their customers, from product inception to final product disposition (Katz 2007). For the success of any business in this competitive market, proper management of internal and external supply chain is essential. Similarly it is important for Starbucks to manage its supply chain because of its wide expanded operations. It has to depend heavily on the suppliers from different countries for the materials it required. The supply chain of Starbucks starts from the farmers who grow the coffee beans and ends with the customers who consume its coffee including (beverage and complementary foods tea and coffee-related accessories). 14
  • 15. Internal supply chain Internal supply chain management systems objective is to visualize organizations activities and events spawn during its work flow and offers panoramic view of upstream and downstream activities (Hyder 2009). Our team decided to visit one Starbucks coffee shop near city centre to observe their performance. We stayed there nearly for 2 hours analysing the employee activities. And we found that every employee are well behaved, well dressed and all of them are well known about their duties and responsibilities. When customers enter into the coffee shop they take their order and the way they prepare coffee and other menu is very transparent. It seems like their organizational structure is flat because even the store manager was present over there, he was not giving any instruction during working time. In 2009, for the 11th time, Starbucks was named to FORTUNE’s “100 Best Companies to Work For” list. Starbucks is recognized as a great place to work for good reason: we have made treating our partners with respect and dignity one of our guiding principles (www.news.starbucks.com). All employees knew their duties. They are properly taking the customers’ order, preparing coffee or other dishes as ordered and delivering it to the customers. They always welcome the feedback for the service that customers receive.External supply chainStarbucks source coffee beans from all over the world- 50% from Latin America, 35%from Pacific and 15% from East Africa (www.scaa.org). Most of the farmers aresmall and medium sized family owned farms. Some firms are able to process theircoffee beans themselves but sold them to the processors through local markets (mills,exporters and co-operatives). The processor turned coffee “cheery” into green coffeeand then sold it to the suppliers such as exporters or distributors and finally to theStarbucks. The diagram below shows the simple supply chain of Starbucks; fromfarmers to the Starbucks. 15
  • 16. Source: Starbucks Corporation: Building a Sustainable Supply chainCoffee affects the lives of over 25 million farmers in more than 70 countries aroundthe world, many of which are developing regions. Traditional coffee productionmethods can often adversely affect the surrounding environment through the use ofharmful chemicals and unnecessary deforestation. Although Starbucks CoffeeCompany purchases only two percent of the world’s coffee, Starbucks has used itsposition in the global marketplace to demonstrate how innovation in combiningcorporate social responsibility and business strategy can lead to long-term economicand environmental sustainability. “Contributing positively to our communities andenvironment is at the heart of Starbucks,” said Howard Schultz, Starbucks chairman.“Starbucks is committed to constantly improving our environmental footprint in everylevel of our supply chain, from coffee farmer to customer. Starbucks also incentivizethe farmers with low cost loans, long term contracts and guaranteed price. “Thiscreative new way of doing business has the potential to improve the lives of peopleand the global environment. The success of supply chain management of Starbucksmainly depends upon its relationship with farmers, processors, exporters/ distributorsand customers. It believes that if there is good relationship and trust among thetrading parties then there will not be any problem in getting high quality coffee beansfor the company (Nelson 2005). 16
  • 17. Today, the company is leading in its industry all over the world because of its propermanagement of its internal and external supply chain. The relationship they aremaintaining with their suppliers and customers is contributing them to become thesuccessful company in the world. It comes under the Fortune magazine’s top 100global companies of the world and top 20 America’s most admired companies(www.company.monster.com) in terms of revenue they generate, profit they earn andthe way they treat the customers and community.6. Operational strategy of Starbucks and its competitive advantage Coffee is at the heart of Starbucks history. Since 1971, Starbucks hasbeen excited and inspire people to enjoy the finest quality coffee available. And stillthey hope to share their same passion as people begin to explore the world of coffee(www.starbucks.com). When someone simply say coffee then people tend toremember Starbucks. Starbucks is successful in building the image (coffee as asubstitution of Starbucks) in the eye of customers. The operational strategies ofStarbucks that leads them to gain competitive advantages are as follow: • Building relationship with farmers and suppliers: Starbucks believe that the relationship with farmers and suppliers has ensured them in having access to the highest quality coffee. They search for those who will bring the same passion to growing, harvesting and processing that Starbucks does to blending, roasting, packaging and brewing. Passion equals attention to detail at every step of the journey due to which Starbucks is able to differentiate itself and gain competitive advantage as compared to suppliers (www.starbucks.com). • Quality of coffee: Starbucks is well recognized for the quality of its product and services. Starbucks sample coffees from around the world – more than 150,000 cups a year to seek only the finest, richest and most interesting beans. 17
  • 18. Starbucks purchases only the finest, high altitude Arabica coffee beans available as they have a more refined flavour and quality than the more common Robusta beans (www.starbucks.com). When people get quality product and/or services, they obviously prefer to go to that place again and again. So quality helps Starbucks in attaining competitive advantage.• Constantly developing new ideas and product line: The Company was constantly engaged in efforts to develop new ideas, new products, and new experiences for customers that belonged exclusively to Starbucks. Schultz and other senior executives drummed in the importance of always being open to re-inventing the Starbucks experience. Also, Starbucks stores offered a choice of broad selection of coffee beverage and Italian-style espresso drinks. In addition, customers could choose from a wide selection of fresh-roasted whole-bean coffees (which could be ground on the premises and carried home in distinctive packages), a selection of fresh pastries and other food items, sodas, juices, teas, and coffee-related hardware and equipment (Thompson 1997).• Employee selection and training: Employees are the backbone of every company. To get success and competitive advantage, every company should be aware because it is the employees who perform all the operation of the business. So Starbucks vice president for human resources used some simple guidelines in screening candidates for new positions: "We want passionate people who love coffee . . Were looking for a diverse workforce, which reflects our community. We want people who enjoy what theyre doing and for who work is an extension of them. Every partner/barista hired for a retail job in a Starbucks store received at least 24 hours training in the first two to four weeks (www.starbucks.com).• Promoting healthy environment through its operation: Starbucks is using recyclable or reusable cups to reduce the environmental pollution. Their goal is to make all their cups 100% reusable or recyclable by 2015 (www.starbucks.com). It believes that its commitments and environmental awareness provides benefit to the company as well as its stakeholders such as employees, suppliers, farmers, business partners, consumers and community. 18
  • 19. • Corporate responsibility: Starbucks was the largest corporate contributor in North America to CARE, a worldwide relief and development organization that sponsored health, education, and humanitarian aid programs in most of the Third World countries where Starbucks purchased its coffee supplies. In addition, CARE samplers of coffee and CARE-related mugs, backpacks, and T-shirts were offered in the companys mail-order catalog; a portion of the price on all sales was donated to CARE.Thus we can say that the operational strategy of Starbucks is to obtain high qualitybeans from farmers by maintaining good relationship with them in order to fulfil theirdemand as well as fulfilling the corporate responsibility towards the communities.And this will help them to create strong brand image in the market place and gaincompetitive advantage. 19
  • 20. 7. Challenges presented by operational strategy and RecommendationsStarbucks can be recognized as the leading company in its coffee industry through outthe world; however it is not free from the challenges in handling their business in longand short run as well as in its operational strategy. Additionally, there are manyfactors that will affect the operational strategy of the company for example: sourcingof raw materials, highly developed competition and rapid innovation in the market.Following are the main challenges of operational strategy and the ways by which thechallenges can be overcome:Dependent on suppliers and business partnersSuppliers and business partners are the main body parts for the organization in orderto be success that highly depends on the relation between them. Moreover, the successis possible in company when there is blend of the quality product and services andthat will be possible only when their business partners and suppliers show them goodrelation and loyalty in running the business. However, it is very difficult certain thegood relationship between business partners and suppliers in long run or in futurebecause future is uncertain. As for example, if any of the suppliers are fail to supplythe quality coffee beans right on time then it can directly hamper the brand of theStarbucks and that may lead to customer loss and finally the profit margin of eachshop might be less in compared to previous times. Therefore, Starbucks are managinggood relationship with their suppliers so that their supply chain will be strong and anybreaks in the supply chain can give them negative impact on Starbucks operation.In order to solve these kinds of problems and have control over suppliers operation,materials and information flow, the company can use backward integration. Backwardintegration will help the organization to be more visible and clear but the companyshould not be careless and should understand on the needs, wants and expectation ofthe suppliers including farmers of that company.Quality of the productStarbucks is popular among the customer because of its quality of the coffee orproduct and services which helped them to attain the brand image. They are availablein limited shops as they are expensive to common customers. Starbucks has high 20
  • 21. quality product with expensive price and because of which the customer who hasaverage earning finds hard to visit to starbucks where as customers whose income islow they can’t afford the price of the coffee in starbuck. Therefore, in order to reducethis, in the processing phase they can use more new technology equipment.Global expansionStarbucks is a global company as it has its branches all over the world but because ofthat it has to face many problems because of difference in the country’s rules andregulations like difference in tax rate, exchange rate, trade unions and politicalinstability. In order to overcome such problems the company has to choose thecountry that gives facility to the global business so that they can run smoothly.Dependent on information technologyIn this competitive world all the companies are directly related to informationtechnology and so does starbucks. For the proper flow of operation like supply chainmanagement, point of sales and processing they relies heavily on informationtechnology. In this supply chain if any of the systems fails then this directly affect thecompany and they may bear risk and huge loss. Therefore, in order to solve thesekinds of problem they must at first train their employees and on regular basis theyshould check and evaluate their operation system. 21
  • 22. 8. Location analysis for new operation of StarbucksStarbucks currently have 16706 stores in more than50 countries including 8850company oriented stores and 7856 licensed store and also they are planning to opennew stores. (Source: Starbucks, 2010)Starbucks is planning to open their new stores in one of the Asian country Japan,Thailand or Singapore by looking at the factors like location, market, demand andother factors I recommend starbucks to choose Japan instead of Thailand andSingapore because the demand of coffee on Japan is very high as it stands thirdposition in largest coffee consumption in the world after united states and Germany.There are already 877stores in Japan till the and of March 2010 but in Singaporecontain 35 and Thailand contains 132 coffee shops. (Source: Starbucks, 2010).Starbucks have already stared its operation in Japan in the year 1995 and theiroperation and existence in the Japanese market was quite successful in terms ofquality and performance as a result there are many stores operating currently. Thesuccess of the every shop of Starbucks is because they have control over the supplychain management and good relation among their business partners and suppliers likefarmers and so on. Therefore, if a company opens new store here then it will not be abig problem to manage their supply chain.Japanese people give main priority to the brand image and quality of the productrather than price of the product. Likewise Starbucks also got the high brand image andquality product that will match the need of every Japanese people. Japan has 4 th rankin purchasing power parity and Singapore has 45th and Thailand has 25 th rankrespectively, which clearly shows that the living standard of Japanese people iscomparatively higher than that of Singapore and Thailand (Source: CIA the world factbook, 2010) and Japan has 6.00 purchasing power parity and Singapore has 0.34which clearly shows that the living standard of Japanese people is comparativelyhigher than that of Singapore and Thailand. (Source:Weforum, 2010)Although all of them are Asian countries Japan is the place for foreign currencyexchange rate, has educated labor force, good market size and has enough 22
  • 23. infrastructure for supply chain in compared to Singapore and Thailand. the inflationrate of Japan in compared with the two other nations are low but the tax regulationand rate is higher than other two countries Japan is the best to select to open new storeby considering other factors.(Source: Weforum, 2010) 23
  • 24. 9. Overall ConclusionVolkswagen and Starbucks are two companies that have good supply chainmanagement and operations management in general. It is very interesting to gothrough their processes and analyse their strategies. We believe there is place forimprovement, these companies who have international operations, encounterchallenging issues that require strong analysis skills and precise “tools” to overcomethem. In order to expand every company must ask itself all the questions we answeredin this report. Selecting a new location in a major investment and the competivenessof the markets does not allow making mistakes. Success depends on your strategy,particularly your international operations strategy. 24
  • 25. 10. BibliographyChase, R.B., Jacobs, F.R., Aquilano, N.J., 2004, Operations Management forcompetitive advantage, 10th Edition, U.S. McGraw-Hill/Irwin.Volkswagen Group International Homepage. Available at:http://www.volkswagen.com/vwcms/master_public/virtualmaster/en2/unternehmen/konzern.html [Accessed November 12, 2010].Christopher, M., “Logistics and Supply Chain Management”, 3rd Edition, Chapter 1.,U.S. Pearson Education Ltd.Chopra. S., Meindl. P., 2004, Supply Chain Management, Strategy, planning, andoperation. 2nd Edition, U.S. Pearson Education International.Central Intelligency Agency, 2010. CIA - The World Factbook -- CountryComparison :: National product. Available at:https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html[Accessed November 7, 2010].Katz, N., 2007. SupplyChainNetwork.com » Blog Archive » Definition of SupplyChain. Available at: http://www.supplychainnetwork.com/definition-of-supply-chain/[Accessed October 11, 2010]. 25
  • 26. K.Schwab, World Economic Forum - Global Competitiveness Report, Available at:http://www.weforum.org/en/initiatives/gcp/Global%20Competitiveness%20Report/index.htm [Accessed November 10, 2010].Nelson, R., 2005. Starbucks Coffee Company to Receive 2005 World EnvironmentCenter Gold Medal for International Corporate Achievement in SustainableDevelopment — World Environment Center. Available at:/Starbucks%20Coffee%20Company%20to%20Receive%202005%20World%20Environment%20Center%20Gold%20Medal%20for%20International%20Corporate%20Achievement%20in%20Sustainable%20Development%20%E2%80%94%20World%20Environment%20Center.htm [Accessed October 15, 2010].Our Coffee - Whole Bean Coffee. www.starbucks.com. Available at:file:///C:/Users/anita/Desktop/IOM/Our%20Coffee%20-%20Whole%20Bean%20Coffee.htm [Accessed October 17, 2010].RFID News: Volkswagen Says it will be First Automaker to Extensively Use RFID inDaily Supply Chain Operations. Available at:http://www.scdigest.com/assets/On_Target/09-03-30-1.php?cid=2356 [AccessedNovember 12, 2010].http://ie.starbucks.com/en-ie/. Available at: http://ie.starbucks.com/en-ie/ [AccessedOctober 11, 2010].Starbucks Newsroom: About Starbucks. http://news.starbucks.com/. Available at:http://news.starbucks.com/about+starbucks/ [Accessed October 11, 2010].2009. Starbucks Newsroom: Facts About Starbucks and Our Partners (Employees).news.starbucks.com. Available at: http://news.starbucks.com/article_display.cfm?article_id=225 [Accessed October 15, 2010].Starbucks Coffee Japan, 2010. Starbucks Coffee Japan | About Us. Available at:http://www.starbucks.co.jp/en/company.html.[Accessed at: 31st October 2010]Thompson, A., 1997. Our Coffee - Whole Bean Coffee. www.mhhe.com. Available at:file:///C:/Users/anita/Desktop/IOM/Our%20Coffee%20-%20Whole%20Bean%20Coffee.htm [Accessed October 17, 2010]. 26
  • 27. world economic forum, 2010. World Economic Forum - Global CompetitivenessReport. Available at: http://www.weforum.org/en/initiatives/gcp/Global%20Competitiveness%20Report/index.htm [Accessed November 9, 2010]. 27