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  1. 1. Graduate Business School Assignment Cover SheetStudent name: SUMEET DUHANStudent number: 2804324Course: PGDIP-IBM Stage/year: 2Subject: INTERNATIONAL OPERATIONS MANAGEMENTStudy Mode: Full time YES Part-timeLecturer Name: LIZ CARROLLAssignment Title:No. of pages: 28Disk included? Yes No XAdditional Information: (ie. number of pieces submitted, size of assignment, A2, A3 etc.)Date due: 09/04/2012Date submitted: 09/04/2012Plagiarism disclaimer:I understand that plagiarism is a serious offence and have read and understood the college policy on plagiarism. I alsounderstand that I may receive a mark of zero if I have not identified and properly attributed sources which have beenused, referred to, or have in any way influenced the preparation of this assignment, or if I have knowingly allowedothers to plagiarise my work in this way.I hereby certify that this assignment is my own work, based on my personal study and/or research, and that I haveacknowledged all material and sources used in its preparation. I also certify that the assignment has not previouslybeen submitted for assessment and that I have not copied in part or whole or otherwise plagiarised the work of anyoneelse, including other students.Signed & dated: Sumeet Duhan (2804324) Page 1
  2. 2. TABLE OF CONTENTSS.No. Title Page No.1. Introduction……………………………………………………………….....32. Volkswagen Corporation……………………………………………………42.1. Internal supply chain………………………………………………………52.2. External supply chain………………………………………………………72.3. Operational strategy improves their competitiveness…………………….72.4. Challenges and Recommendations………………………………………..102.5. Country selection…………………………………………………………...133. Starbucks……………………………………………………………………...183.1 Internal supply chain………………………………………………………..193.2 External supply chain……………………………………………………….193.3 Operational strategy improves their competitiveness…………………….213.4 Challenges and recommendations for Starbucks ………………………..263.5 Country selection……………………………………………………………274. Conclusion……………………………………………………………………295. Reference……………………………………………………………………..30Sumeet Duhan (2804324) Page 2
  3. 3. IntroductionIn todays highly competitive international marketplace, the pressure on organizationsto search out new ways in which to form and deliver worth to customers grows everstronger. There‘s a growing recognition that through logistic potency and effectivemanagement of the availability chain each value reduction and repair enhancementare often achieved. The goal of offer chain management is to link the marketplace, thedistribution network, the producing method and also the procurement activity in suchthe way that customers are serviced at higher levels and nonetheless at a lower totalvalue (Christopher, 2012).Communication is ‗the academic also as informaladministration of allusive and appropriate information between firms‘(James andJames, 2003).Adaptation happens back assemblage and suppliers advance intransaction-specific investments (Heide and John 1988).We have selected Starbucks as a service company and Volkswagen as amanufacturing company. This report will define about the internal and external supplychain of both of the companies. To analyze he internal supply chain of Starbucks,we‘ve been so many times in Starbucks and saw how they accomplish their businesslike to take orders and confined their customers and for the external supply chain,we‘ve been their sites and added accessories which primarily begin from theirsuppliers and finished at Starbucks. In the case of Volkswagen internal supply chain,we talked about how they access into the steel industry to abate the time wasted,amount and to accommodate the aerial customer demand.And for external supplychain, we artlessly have gone through how they breach all their apparatus into alteredsmaller parts and accelerate their requirements into altered countries to gainadvantages of local action and to sustain their waiting time from distinct suppliers.After that we discussed about the each company‘s operational strategies which theyadopted and how these are helpful in gaining competitive advantage in thiscompetitive world. These strategies do not alone affectation benefits to the companybut additionally accord some challenges that each and every company should face andwork for the added success.Then assuredly we did market study for each companydepended upon altered factors like market efficiency, income and infrastructure andso on. The attributes of business and the countries in which they operate are the mainpillar of success of any business.Sumeet Duhan (2804324) Page 3
  4. 4. VOLKSWAGENIn 1937, the company known as ―Gesellschaft zur Vorbereitung des deutschenVolkswagens mbH‖ was founded and no one could imagine that it would be theEurope‘s largest automobile manufacturer. Its main headquarter is in Wolfsburg andthe Group accumulated the number of vehicles delivered to the consumers to 6.189million corresponding to a 9.8% share of the world car market in 2007.TheVolkswagen Group is fabricated up of nine brands from seven European countries:Volkswagen, Audi, Bentley, Bugatti, Lamborghini, SEAT, Skoda, Scania andVolkswagen commercial vehicles. Each brand has its own appearance and operates asan absolute article on the market.The Group operates 94 assembly plants in 18European countries and an added eight countries in the Americas, Asia and Africa.Each alive day, 501,956 advisers common aftermath some 34,500 vehicles, arecomplex in vehicle-related casework or plan in the added fields of business. TheVolkswagen Group sells its cars in 153 countries (Volkswagen, 2011).It is the goal of the Group to supply enticing, safe and environmentally sound vehicleswhich are competitive on an increasingly robust market and that set world standardsin their respective categories (Sharma, 2011).Sumeet Duhan (2804324) Page 4
  5. 5. Internal supply chain:Due to increase of demand and productivity, their supply chain flowed abundantquicker than earlier, so their logistic costs are added expensive. Volkswagenaccustomed a new diversification- Volkswagen logistic company to abate theextravagant fees on transferring these stocks to different department. But they aloneaccept planning and controlling functions. And moreover Volkswagen developedtheir steel plant additionally in his vertical diversifications. In adjustment to abate tothe minimum amount and time waste in the supply chain, they choose to advance thatpart by themselves. Such as the RFID tracking system is to clue their stocks in logisticprocess.The application takes advantage of an existing provider portal that already connectssuppliers with Volkswagen. That system permits the information collected via RFIDreads to be linked to specific purchase or delivery orders from VW, addressing one inall the challenges of RFID systems between firms – the way to connect the RFID taginformation with alternative data to create it meaningful (scdigest, 2009). Duhan (2804324) Page 5
  6. 6. Primary, suppliers can use handheld readers to scan RFID container IDs, which arerelated to the particular things within the containers primarily based on the acquisitionorder and whats really being shipped. Volkswagen can scan the containers once theyarrive to automate the receiving method. It‘ll additionally track empty containers asthey move back to suppliers, which means the system can offer asset tracking edgesadditionally to improving receiving processes and provide chain visibility to inboundmerchandise (scdigest, 2009).The system is predicated on 2 items of technology from IBM: A container management software system that involves an analytic application getting used to develop a web-based dashboard for container management. WebSphere Premises Server software, that acts as the information collection and ―middleware‖ application to push the RFID information into the portal and also the container management system.According to the Klaus Hardy Mühleck, cluster CIO and head of cluster IT atVolkswagen, ―Our long-term goal is to implement an integrated, paperless productionand logistics chain throughout the complete cluster,‖ ―The pilot project showed thatwe will reliably integrate RFID technology into our business processes at a minimumvalue,‖ he defined.The contributions they created within the supply chain were to form them success andsustained their competitive benefits, details as following: Improved client service, all the feedback may pass to the connected department directly and with the reality and recognize the important demand of every level within the supply chain encompassed customers. They cut the availability chain so as to urge the important customers‘ expect desires directly. Which will create Volkswagen can manufacture acceptable volume in correct quality avoiding the waste. Optimized their prices and investments, they will use their capital for additional comes. And that they saved cash from the supply chain and conjointly created it additional potency work for them. Cash flow is extremelySumeet Duhan (2804324) Page 6
  7. 7. necessary for each company, if they are doing not have the force on their money flow, therell be plenty of extra space for them to enhance.External supply chain:There are several different suppliers within the scale of Volkswagen supply chaintheyll not include; therefore the external suppliers are necessary for them. If theyllnot deal well with them, that may damage their internal supply chain and heavilyoverall performance. However recent years, Volkswagen invited a replacementtechnology for logistic with external provider. They break all their elements intototally different smaller elements, and send their necessities to totally different partnerin India, China and a few countries with their characteristics, in adjustment to sharethe benefits in native policy. It adored time to delay a large aggregate stock from onlyone partner and averaged the value from all suppliers. The results anyone partner orone country modified their condition, which may not influence the supply chain, inadditional saying, they afar the risks.Basically, offer chain management is a crucial issue for Volkswagen success andabiding their competitive advantages. It coordinated the relationships between internaland external suppliers and reassessment them. Conjointly they added the clientservice, created the client happy to urge what they absolutely need to urge.Operational strategy improves their competitiveness:This operations strategy binds the varied operations decisions and accomplishmentsinto an adamant constant acknowledgment to competitive forces by linking companypolicies, programs, systems, and accomplishments into an analytical acknowledgmentto the competitive priorities called and announced by the company or businessstrategy. In simpler terms, the operations strategy specifies how the close will applyits operations capabilities to abutment the business strategy.Sumeet Duhan (2804324) Page 7
  8. 8. Operations strategy includes a long-term concern for a way to best verify and developthe firms major operations resources in order that theres a high degree ofcompatibility between these resources and also the business strategy.An operation has two necessary roles it will play in strengthening the firms overallstrategy. One possibility is to produce processes that offer the firm a definiteadvantage within the marketplace. The second role that operations will play is toproduce coordinated support for the essential ways in which during which the firmsproduct win orders over their competitors, conjointly called distinctivecompetencies(, 2012). So it‘s an action between the operation resourcesand the market requirements. Operation Operation resources strategy Market requirementsIn adjustment to advance their competitiveness I will appraise the role of theVolkswagen operation.Through its achievement at five competitiveness objectives, the operations action canaccommodate a competitiveness advantages.Sumeet Duhan (2804324) Page 8
  9. 9. I anticipate the best quality of product and best client service is actual important forVolkswagen as a car manufacture. Here is the 5-competitiveness objectiveness ofVolkswagen. I accomplish a rank of account for each objectives of Volkswagen. 0-Not appropriate 10-very essential a) Quality - 8The quality is extremely vital for our company. As a result of our product is for thedaily used basis, and it highly associated with peoples‘ safety and life. Actually, ourproduct is branding by the high safety and top quality. Additionally use the newtechnology is extremely vital within the automobile manufactory business, forinstance, the new engine to avoid wasting oil usage and scale back the air pollution. b) Speed - 6The speed for delivery is simply fine for us. As a result of its car—not one thing likeoccasional and television, folks are spending millions of cash in getting their cars, sothat they are ready to attend for his or her cars. But also, weve got to make sure that;folks dont have to be compelled to wait too long for his or her cars. As a result of wehave a tendency to be giving the luxurious cars that the purchasers might have a lot ofpatient to attend for. Therefore well manage our transport to be a lot of efficiently. c) Dependability - 7The dependability is vital for us. As a result of initial of all, we have a tendency toshould make sure that we have a tendency to are giving the merchandise that thepurchasers will trust. And additionally its the trend of the competition. A lot of and alot of automobile advertising are describing this philosophy; folks are relaxed andhave a fun time with their automobile. It‘s price to trust with. Therefore this can bewe have a tendency to are pursuing to realize.Sumeet Duhan (2804324) Page 9
  10. 10. d) Flexibility - 7It is additionally vital for the automobile manufactory. With the event of the worldeconomic, folks would really like to own their own customized cars to satisfy theirtotally different desires. This can be what truly the automobile manufactories areattempting to try to currently. They‘re launching completely different levels andmodel of cars to satisfy different market segments. Additionally theyre doing themarket analysis completely to undertake to grasp customer‘s desires and new trend.Therefore for our company, its vital for us. e) Cost – 6It will have an effect on our business, however not such a lot as a result ofVolkswagen isnt famous by low value like Toyota and Honda. Actually, we have atendency to be famous by the top quality and safety. However additionally as amanufactory, we have a tendency to can‘t forget the price as a result of it influencesthe profit margin for our company. The economy of scale is extremely vital within theautomobile manufactory. Therefore its the competition trend to try to therefore.Actually, Volkswagen is gap two main manufactures in China, Shanghai andChangchun to share the low labor value so as to realize the high profit margin.Challenges and RecommendationsWhat challenges do the operational strategies allowance and acclaim means in whichduring which theyll be overcome. Quality - 8Total Superior Management (TQM) is the main and important challenge. There areabounding samples of manufacturers who have encountered quality problems on oneSumeet Duhan (2804324) Page 10
  11. 11. product and therefore the consequences on the complete image impacted theentire company.RecommendationQuality ought to be a section of the company culture, each employee, each actor ofthe business ought to be pondering ways in which to enhance, to regulate themerchandise in the least steps of its producing. Speed - 6Delivery speed is a smaller amount and fewer vital to customers. Automobile makesspecialize in their money objectives and cut back their stock levels. They even havemerchandise that is a lot of and a lot of customizable for purchasers. These 2 factorsincrease time of delivery, and it issues all the automobile makers. But as customers‘needs amendment, speed of delivery isnt the challenge, maintaining the correct levelof stock and answering all customers‘ desires is.RecommendationAn absolute sales anticipation helps managing the stock levels; there should be biggeradvice amid the financial and sales departments. Answering every charge of thecustomer is an objective but it should not be at any cost. Dependability - 7Customers accept a manufacturer‘s calmness in its actions, calm with aproposdeadlines and consistently producing the same quality.RecommendationImplementing processes and management that will facilitate having similar productand delivery time no matter downside arises.Sumeet Duhan (2804324) Page 11
  12. 12. Flexibility - 7Flexibility is the better challenge, abbreviation amount while accretion the array ofproduct. Flexibility puts burden on the employees, the development of a caracclimated to yield a couple of years and now it takes a brace of months.RecommendationTraining the humans to be able to acclimate new technologies and new aliveenvironments. The efficient the workers are, the most adjustable the company will be. Cost - 6Volkswagen will quickly become the biggest automobile manufacturer within theworld. High sales are a lot of able way to minimize costs, acknowledgment toeconomies of scale.RecommendationUsing ―platforms‖, bodies of vehicles that are aggregate for various brands andmodels among the cluster helps accomplishing economies of scale whereas all addedlocations can be customized to customers. Advance in R&D helps anticipatingindustry changes as well, the automotive business evolves rapidly, technologies arise,and trends drive sales. VW have to be compelled to watch these anxiously andinfluence them as abundant as accessible by anticipating and investing.Sumeet Duhan (2804324) Page 12
  13. 13. Country selectionSingapore, Japan and Thailand are the countries where Volkswagen is considering anew operation.The Global Competitiveness Index 2011-2012 rankings GCI 2011-2012 GCI 2010-2011 Country/Economy Rank Score Rank ScoreSingapore 2 5.63 3 5.48Japan 9 5.40 6 5.37Malaysia 21 5.08 26 4.88 moves up by one rank to 2nd position, advancement the advance a part ofAsian economies. The country‘s institutions still to be adjourned as the best in theworld, ranked 1st for both their lack of corruption and government efficiency.Singapore places 1st and 2nd, respectively, for the ability of its goods and activitymarkets and leads the apple in agreement of monetary market development, ensuringthe able allocation of these factors to their best use. Singapore conjointly has world-class basement (3rd), with accomplished roads, ports, and air carriage facilities. Inaddition, the country‘s competitiveness is strengthened by a robust focus oneducation, accouterment individuals with the abilities required for a rapidly alterationall-around economy. In adjustment to strengthen its competitiveness further,Singapore could encourage even stronger acceptance of the latest technologies (10th)as able-bodied as measures that abutment the composure of its companies (15th)(WEF, 2011).Sumeet Duhan (2804324) Page 13
  14. 14. JAPANJapan slides three places to rank 9th, with an achievement agnate to endure year‘s. 23The country continues to enjoy an above competitive edge in business composure andinnovation, ranking 1st and 4th, respectively, in these 2 pillars. Company spending onR&D stays top and Japan edges from the supply of many scientists and engineers,buttressing a robust capability for innovation. Indeed, in agreement of accessionoutput, this pays off with the second-highest amount of patents per capita. Further,firms accomplish at the highest end of the worth chain, bearing high-value-addedappurtenances and services. The country‘s all-embracing competitive performance,however, continues to be abject down by severe macroeconomic weaknesses (113th),with top account deficits over several years (135th), which accept led to the bestpublic debt levels in the absolute sample by far (over 220 percent of GDP in 2010)(WEF, 2011).MALAYSIAMalaysia scores 5 ranks to achieve 21st position, registering improvements beyondthe board. The country‘s progress is decidedly noteworthy in the institutions andmacroeconomic atmosphere pillars, as able-bodied as in several measures of marketefficiency. A part of the arresting advantages of this able and constant performanceare its able and complete banking sector— which places a part of the world‘s a lot ofdeveloped, just abaft Singapore and Hong Kong—and its awful economicalmerchandise market, ranked 15th. In addition, its macroeconomic bearings has biggerclearly over the accomplished year to ability 29th place, even admitting the countrycontinues to run a budget deficit of about 5 percent of GDP. As it moves againstacceptable added innovation driven, Malaysia can get to advance its achievement intechnological and education readiness. In the closing dimension, the country places alow 44th, with area for advance in technological adoption by both businesses and thepopulation at massive. In agreement of college education and training (38th),convalescent access remains a priority in lightweight of low enrollment rate of 69percent (101st) and 36 percent (66th) for secondary and tertiary education,respectively (WEF, 2011).Sumeet Duhan (2804324) Page 14
  15. 15. Rating Score Pillars/factors Weight Singapore Japan Malaysia Singapore Japan Malaysia1st Institutions 7 6.1 5.1 4.6 48.7 40.7 332nd Infrastructure 8.5 6.2 5.7 5.0 52.6 48.44 40.33rd Macro 6 5.2 4.1 5.0 31.1 23.6 29.7 environment4th Health & 5 6.7 6.5 6.2 26.7 26 22.3 primary education5th Higher 6 5.8 5.3 4.6 34.5 31.7 25.5 education & training6th Goods market 7 5.7 5.1 4.8 45.7 40.7 35 efficiency7th Labor market 9 5.9 5.1 4.7 53.5 45.8 43.5 efficiency8th Financial 7 5.8 4.6 5.3 40.4 32.1 30.5 market development9th Technological 9 5.3 4.9 4.2 47.8 44.1 32.3 readiness10th Market size 5 4.5 6.1 4.7 22.3 30.4 24.411th Business 7 5.1 5.9 4.8 40.4 47.1 33.5 sophistication12th Innovation 7 5 5.5 4.1 41 43 26.3 Total 484.7 453.64 376.3 Duhan (2804324) Page 15
  16. 16. Our factors are affiliated to:a) InstitutionsIt‘s the acknowledged and authoritative framework of the country, it is actualimportant in our business area important amounts of money are complex and areaacknowledged conflicts can appear with partners. Weight: 7b) InfrastructureEffective modes of transport, including superior roads, railroads, ports, and airtransport, accredit us to get our appurtenances and casework to bazaar in a defendedand appropriate address and facilitate the movement of workers to the a lot ofacceptable jobs. Weight 8.5c) Macroeconomic environmentEconomic adherence is not actual important; we focus on the economy of the entirearea and not the country on its own. Its accent is average. Weight: 6d) Health and primary educationPoor health leads to cogent costs to business, as ailing workers are generally absent oraccomplish at lower levels of efficiency. Furthermore, all our advisers charge a basicakin of education. Compared to added factors it is the atomic important. Weight: 5e) Higher education and trainingOur business is adult and requires top accomplishment personnel. Weight: 6f) Goods market efficiencyGood supply-and-demand conditions, area barter works properly. We cannot allowaccepting suppliers in a monopolistic scenario for example. Weight: 7Sumeet Duhan (2804324) Page 16
  17. 17. g) Labor market efficiencyWhen VW settles new operation in a country, it needs bags of people, some with adultskills. The aggregation cannot teach anybody and needs to acquisition in the countryits appropriate human resources. Weight: 9h) Financial market developmentOur business requires abundant investments, in plant and accessories especially. It is acontinued appellation investment and we have to be able-bodied accurate by a properbanking arrangement for example. Weight: 7i) Technological readinessThe country that we will accomplish in has to be compatible with our technology. Allare computer systems, way of working, and processes in general. Our merchandiseshould be as economical as attainable and therefore need economical technology.Weight: 9j) Market sizeAgain, we tend to concentrate on the region, and also the country‘s domestic marketisnt the foremost necessary criteria. Weight: 5k) Business sophisticationAs we plan with bags of partners, and our desires are rising every day, the businessnetwork have to be sophisticated, able-bodied developed suppliers and industries.Weight: 7l) InnovationOur industry is so competitive that success can alone be accomplished throughinnovation. Weight: 7Further to all the abstracts in the WEF address and the weight of every factor,Singapore is the best destination for us.Sumeet Duhan (2804324) Page 17
  18. 18. STARBUCKSThree coffee lovers Gordon Bowker, Jerry Baldwin, ZevSiegel in 1971, foundedStarbucks. Howard Schultz has abutting the Starbucks in 1982 and the turning pointin company‘s history was his appointment to Italy in 183, area he saws a coffee barculture. He likes the abstraction and suggests introducing the ready-to-drink coffee inUS. Howard Schultz buys Starbuck for $3.7million with its six retail food and oneroasting plant in 1987.Starbucks Corporation is the one of the fastest growing Coffee companies of theWorld and it‘s based in Washington, United States. Starbucks coffee acquirement andsells top superior broiled beans with the beginning rich-brewed coffee. And a varietyof exceptional tea and coffee articles and accessories absolute altered retails stores.Starbucks as well sells its trademark to some retail food and this practice is acceptedin Starbucks as specialty operation.Starbucks is currently operating in added than 49 countries with 17000 stores. Theabsolute amount of advisers in Starbucks was 176000 at 28, September 2008. InUnited States Starbucks has 11,068 (6,764 Company Owned, 4,304 Franchised) foodwith the about advisers of 143000 with 136000 are working in retail area and addedare affianced in administering and administration activities (Todeva, 2012).Sumeet Duhan (2804324) Page 18
  19. 19. Internal Supply ChainThe objectives of Internal supply chain management systems is to anticipateorganizations activities and contest spawn during its work flow and offers across-the-board appearance of upstream and after activities (Hyder 2009). Our one of the teamplanned to go one Starbucks coffee center abreast city center to beam theirperformance. To analyze the employee activities, we stayed there about 3 hours. Andwe got that every employee are able-bodied behaved, able-bodied dressed and all ofthem are able-bodied accepted about their duties and responsibilities. When customervisit into the coffee shop they yield their order and the way they make coffee andadded menu is actual transparent. It looks like their organizational structure is totallyflat because still the store administrator was present over there; he was not giving anyapprenticeship during working time. Starbucks was called to FORTUNE‘s ―100 BestCompanies to Plan For‖ list for the 11th time in 2009. Starbucks is accustomed as anice place to work for acceptable reason: we accept fabricated alleviative our partnerswith dignity and respect one of our allegorical attempt ( advisers knew their responsibilities. They are appropriately demography thecustomers‘ order, advancing coffee or added dishes as ordered and carrying it to thecustomers. They consistently acceptable the acknowledgment for the service thatcustomers receive.External supply chainCoffee beans could appear from all over the world—about 50 percent came fromLatin America, 35 percent from the Pacific Rim, and 15 percent from East Africa. Alot of the coffee producers were baby to medium-sized family-owned farms. Somefarms were able to action their coffee beans, but a lot of awash their outputs toprocessors through bounded markets (mills, exporters or cooperatives). Theprocessors turned low ―cherry‖ into block or inexperienced low, and again awash it tosuppliers who were exporters or distributors. These suppliers provided aboundingcasework to processors and farmers, such as marketing, dry milling, abstruse coffeeexpertise, financing, and export logistics. The layout below depicts the easy andsimple supply chain of Starbucks from the farmers to the Starbucks (gbs).Sumeet Duhan (2804324) Page 19
  20. 20. affects the lives of over twenty five million farmers in additional than seventycountries round the world, several of that are developing regions. Traditional coffeeassembly methodswill usually adversely have an effect on the encircling surroundingsthrough the employment of harmful chemicals and unnecessary deforestation.Although Starbucks occasional Company purchases solely 2 % of the world‘soccasional, Starbucks has used its position within the international marketplace todemonstrate how innovation in combining company social responsibility and businessstrategy will result in long-term economic and environmental sustainability.―Contributing absolutely to our communities and surroundings is at the center ofStarbucks,‖ said Howard Schultz, Starbucks chairman. ―Starbucks is committed toconstantly improving our environmental footprint in each level of our provide chain,from occasional farmer to client. Starbucks as well incentivize the farmers with lowamount loans, continued appellation affairs and affirmed price. ―This artistic newmanner of doing business has the potential to enhance the lives of individuals and alsothe international surroundings. The success of supply chain management of Starbucksmainly depends upon its relationship with farmers, processors, exporters/ distributorsand customers. It believes that if theres smart relationship and trust among the tradingparties then therell not be any downside in obtaining top quality occasional beans forthe corporate (Nelson 2005).Sumeet Duhan (2804324) Page 20
  21. 21. Today, the corporate is leading in its trade everywhere the planet as a result of itscorrect management of its internal and external provide chain. The connection theyremaintaining with their suppliers and customers is contributing them to become thesuccessful company within the world. It comes beneath the Fortune magazine‘s primeone hundred international corporations of the planet and prime twenty America‘smost admired corporations in terms of revenue they generate, profit they earn and alsothe manner they treat the shoppers and community.Operational Strategy improves their Competitive AdvantageProduct lineStarbucks aliment offered an alternative of standard or decaffeinated coffeebeverages, an appropriate "coffee of the day," and an ample alternative of Italian-styleespresso drinks. In addition, customer could accept from an advanced alternative offresh-roasted whole-bean coffees (which could be arena on the bounds and agitatedhome in characteristic packages), an alternative of beginning pastries and addedaliment items, sodas, juices, teas, and coffee-related accouterments and equipment.The companys retail sales mix was about 61 percent coffee beverages, 15 percentwhole-bean coffees, 16 percent aliment items, and 8 percent coffee-related articlesand equipment. The merchandise combine in every store varied, depending on theadmeasurement and site of every outlet. Larger aliment agitated a greater kind ofwhole coffee beans, gourmet aliment items, teas, coffee mugs, coffee grinders, coffee-making equipment, filters, accumulator containers, and added accessories. Smalleraliment and kiosks about awash a abounding band of coffee beverages, a restrictedchoice of whole-bean coffees, and a few accouterments items.The company was consistently affianced in efforts to advance new ideas, newproducts, and new adventures for barter that belonged abandoned to Starbucks.Schultz and added arch admiral drummed in the accent of consistently acceptingaccessible to re-inventing the Starbucks experience.Sumeet Duhan (2804324) Page 21
  22. 22. Building a Top Administration TeamSchultz connected to strengthen Starbucks top administration team, hiring humanswith all-encompassing acquaintance in managing and accretion retail chains. OrinSmith, who had an MBA from Harvard and 13 years acquaintance at Deloitte andTouche, was brought in as arch banking administrator in 1990 and again was answerto admiral and arch operating administrator in 1994. The four key admiral during thecompanys determinative years—Howard Schultz, Dave Olsen, Howard Behar, andOrin Smith—contributed the a lot of to defining and abstraction the companys values,principles, and culture. As the company grew, added admiral were added inmarketing, abundance supervision, specialty sales, human resources, finance, andadvice systems. Schultz as well took affliction to add humans to Starbucks board ofadmiral who had acquaintance growing a retail chain and who could add admiredperspectives.Staff TrainingAccommodating quick advance as well meant putting in systems to recruit, hire, andtrain baristas and store managers. Starbucks vice chairman for human resourcesacclimated some simple guidelines in screening candidates for new positions: "Wewish amorous humans who adulation coffee. Were analytic for a assorted workforce,which reflects our community. We wish humans who relish what theyreaccomplishing and for who work is an extension of themselves."16 Some 80 percentof Starbucks staff was white, 85 percent had some apprenticeship above top school,and the boilerplate age was 26.Every partner/barista assassin for a retail job in a Starbucks abundance accustomed atatomic 24 hours training in the aboriginal two to four weeks. Everyone wasaccomplished in the Star Skills, three guidelines for on-the-job interpersonal relations:(1) advance and enhance self-esteem, (2) accept and acknowledge, and (3) ask forhelp.Each time Starbucks opened aliment in a new market, it undertook an aboverecruiting effort. Eight to 10 weeks afore opening, the company placed ads to rentbaristas and activate their training. It sent a Star team of accomplished managers andSumeet Duhan (2804324) Page 22
  23. 23. baristas from absolute stores to the breadth to advance the store-openingaccomplishment and to conduct one-on-one training afterward the companysacademic classes and basal acclimatization sessions at the Starbucks Coffee Academyin San Francisco.Product SupplyDave Olsen, Starbucks senior vice chairman for coffee, abandoned spearheadedStarbucks efforts to defended best coffee beans to provide the companys growingneeds. He travelled consistently to coffee-producing countries—Colombia, Sumatra,Yemen, Antigua, Indonesia, Guatemala, New Guinea, Costa Rica, Sulawesi, PapuaNew Guinea, Kenya, Ethiopia, Java—building relationships with growers andexporters, blockage on agronomical altitude and crop yields, and analytic out varietiesand sources that would accommodated Starbucks burdensome standards of superiorand flavor.Starbucks entered into fixed-price purchase commitments in adjustment to defendedan able accumulation of superior blooming coffee beans and to absolute itsacknowledgment to clashing coffee prices in accessible periods. If satisfactory fixed-price commitments were not available, the company purchased coffee futures affairsto produce worth protection.Bonding with CustomersAbout 5 million customers per week were patronizing Starbucks stores in aboriginal1998. Stores did regarding half of their business by 11 am. Loyal customerspatronized a Starbucks store 15 to 20 times a month, spending conceivably $50monthly. Some customers were Starbucks fanatics, advancing in daily. Baristasbecame accustomed with approved customers, acquirements their names and theiradmired drinks. Christine Nagy, a field administrator for Oracle Corporation in PaloAlto, California, told a Wall Street Journal reporter, "For me, its a circadian call or Ialpha accepting withdrawals."17 Her accepted adjustment was a custom drink: a decafgrande nonfat no-whip no-foam extra-cocoa mocha; if the baristas saw her appearthrough the door, she told the reporter, "They just [said,] We charge a Christinehere."Sumeet Duhan (2804324) Page 23
  24. 24. Mail Order SalesStarbucks revealed a mail-order catalog that was broadcast six times a year and thatoffered coffee, candies and pastries, and choose coffee-making equipment andaccessories. An appropriate business gift-giving archive was mailed to businessaccounts during the 1997 Christmas anniversary season. The company as well had anelectronic store on the net. In 1997, sales of this analysis were about $21.2 million,about 2 percent of absolute revenues; about 50,000 mail-order customers were activeup to accept account deliveries of Starbucks coffee as of backward 1997. Starbucksadministration believed that its direct-response business accomplishment helped pavethe way for retail amplification into new markets and able cast acceptance in existingmarkets.Joint VenturesIn 1994, afterwards months of affairs and experimentation, PepsiCo and Starbucksentered into a collective adventure adjustment to actualize new coffee-related articlesfor mass administration through Pepsi channels, including algid coffee drinks in acanteen or can.In October 1995 Starbucks partnered with Dreyers Grand Ice Chrism to providecoffee abstract for a new band of coffee ice chrism fabricated and broadcast byDreyers beneath the Starbucks brand. The new line, featuring such flavors as DarkRoast Espresso Swirl, JavaChip, Vanilla MochaChip, Biscotti Bliss, and CaffeAlmond Fudge, hit supermarket shelves in April 1996; by July, Starbucks coffee-flavored ice chrism was the top-selling super premium cast in the coffee segment. In1997, two new low-fat flavors were added to accompaniment the aboriginal sixflavors, forth with two flavors of ice chrism bars; all were able-bodied accustomed inthe marketplace. Added new ice chrism articles were planned for 1998.Also in 1995, Starbucks formed with Seattles Redhook Ale Brewery to actualizeDouble Black Stout, a stout beer with an attempt of Starbucks coffee abstract in it.Sumeet Duhan (2804324) Page 24
  25. 25. International expansionIn markets alfresco the continental United States (including Hawaii), Starbucksaction was to authorization an acclaimed and able bounded company with retailingability in the ambition host country to advance and accomplish new Starbucks stores.In some cases, Starbucks was a collective adventure accomplice in the alimentalfresco the continental Untied States. Starbucks created a new subsidiary, StarbucksCoffee International (SCI), to arrange across amplification and activate to body theStarbucks cast name globally via licensees; Howard Behar was admiral of SCI.Going into 1998, SCI had 12 retail stores in Tokyo, 7 in Hawaii, 6 in Singapore, and 1in the Philippines. Agreements had been active with licensees to start gap stores inTaiwan and Korea in 1998. The company and its licensees had affairs to accessible asabounding as 40 aliment in the Pacific Rim by the end of September 1998. Thelicensee in Taiwan foresaw an abeyant of 200 stores in that country alone. Thepotential of locating stores in Europe and Latin America was accepting explored.Corporate responsibilityStarbucks was the better accumulated contributor in North America to CARE, acommon abatement and development alignment that sponsored health, education, andaltruistic aid programs in a lot of the Third World countries area Starbucks purchasedits coffee supplies. In addition, CARE samplers of coffee and CARE-related mugs,backpacks, and T-shirts were offered in the companys mail-order catalog; anallocation of the amount on all sales was donated to CARE.Thus we can say that the operational action of Starbucks is to access top superiorbeans from farmers by advancement acceptable accord with them in adjustment tofulfill their demand yet as fulfilling the company responsibility towards thecommunities. . And these will facilitate them to actualize able cast image in themarket place and accretion competitive advantage (Gamble, 2012).Sumeet Duhan (2804324) Page 25
  26. 26. Challenges and RecommendationsDependent on suppliers and business partnersSuppliers and business partners are the center body locations for the organization inadjustment to be success that awful depends on the affiliation amid them. Moreover,the success is accessible in company if there is blend of the superior product andcasework and that will be accessible alone if their business partners and suppliersappearance them acceptable affiliation and adherence in active the business.However, it is actual difficult assertive the acceptable accord amid business partnersand suppliers in continued run or in approaching because approaching is uncertain. Asfor example, if any of the suppliers are abort to accumulation the superior coffeebeans appropriate on time again it can anon bassinet the cast of the Starbucks and thatmay advance to customer loss and assuredly the profit margin of every store ability bebeneath in compared to antecedent times. Therefore, Starbucks are managingacceptable relationship with their suppliers so that their accumulation alternation willbe able and any break in the supply chain can accord them negative impact onStarbucks operation.In adjustment to break these kinds of problems and accept ascendancy over suppliersoperation, abstracts and advice flow, the aggregation can use backward integration.Astern integration will advice the alignment to be added arresting and bright but theaggregation should not be absent-minded and should accept on the needs, wants andapprehension of the suppliers including farmers of that company.Quality of the productStarbucks is accepted a part of the customer because of its superior of the coffee orproduct and casework which helped them to attain the cast image. They are accessiblein bound shops as they are big-ticket to accepted customers. Starbucks has topsuperior product with big-ticket amount and because of which the customer who hasaverage earning finds harder to appointment to Starbucks area as customer whoseassets is low they can‘t allow the amount of the coffee in Starbucks. Therefore, inadjustment to abate this, in the processing appearance they can use added newtechnology equipment.Sumeet Duhan (2804324) Page 26
  27. 27. Dependent on advice technologyIn this aggressive apple all the companies are directly accompanying to advicetechnology and so does Starbucks. For the right flow of operation like supply chainmanagement, point of sales and processing they relies heavily on advice technology.In this supply chain if any of the systems fails again this directly affect the companyand they may buck riskand huge loss. Therefore, in adjustment to break these kinds ofproblems they have to at aboriginal alternation their advisers and on approved basethey should analysis and appraise their operation system.Country SelectionStarbucks currently accept 16706 foods in added than50 countries including 8850aggregation aggressive food and 7856 licensed store and as well they are going toaccessible new stores. (Source: Starbucks, 2010)Starbucks is planning to accessible their new food in one of the Asian country Japan,Malaysia or Singapore by searching at the factors like location, market, appeal andadded factors I acclaim Starbucks to decide on Japan instead of Thailand andSingapore because the appeal of coffee on Japan is actual top as it stands thirdposition in better coffee burning in the apple afterwards affiliated states and Germany.There are already 877 stores in Japan till the and of March 2010 but in Singaporeaccommodate 35 and Thailand contains 132 coffee shops. (Source: Starbucks, 2010).Starbucks accept already stared its operation in Japan in the year 1995 and theiroperation and actuality in the Japanese market was absolutely acknowledged inagreement of superior and achievement as a aftereffect there are abounding foodoperating currently. The success of the every boutique of Starbucks is because theyaccept ascendancy over the supply chain management and acceptable affiliation a partof their business partners and suppliers like farmers and so on. Therefore, if anaggregation opens new store here then it will not be a big issue to administer theirsupply chain.Sumeet Duhan (2804324) Page 27
  28. 28. Japanese humans provide capital antecedence to the whole image and superior of theproduct rather than amount of the product. Likewise Starbucks as well got the topwhole image and superior product that will match the needs of every Japanese people.Japan has 5th rank in purchasing ability parity and Singapore has 40thand Malaysia has30th rank respectively, which acutely shows that the active accepted of Japanesehumans is analogously college than that of Singapore and Malaysia (CIA the appleactuality book, 2010) and Japan has 6.00 purchasing ability parity and Singapore has0.34 which acutely shows that the active accepted of Japanese humans is analogouslycollege than that of Singapore and Malaysia (Weforum, 2010).Although all of them are Asian countries Japan is the place for foreign currencyexchange rate, has accomplished activity force, acceptable market size and hasabundant basement for supply chain in compared to Singapore and Malaysia. Theaggrandizement amount of Japan in compared with the two added nations are low butthe tax adjustment and amount is college than added two countries Japan is the best toselect to launch new shop by because added factors (Weforum, 2010).ConclusionVolkswagen and Starbucks are two companies that accept acceptable supply chainmanagement and operations administration in general. It is actual absorbing to gothrough their processes and analyze their strategies. We accept there is place forimprovement, these companies who accept all-international operations, appointment-challenging issues that crave able assay abilities and absolute ―tools‖ to affected them.In adjustment to expand each company have to ask it all the questions we answered inthis report. Selecting a new area in an above investment and the competiveness of themarkets does not allow authoritative mistakes. Success depends on your strategy,decidedly your all-embracing operations strategy.Sumeet Duhan (2804324) Page 28
  29. 29. ReferencingChristopher, M., 2012. Logistics & supply chain management, creating value-addingnetworks (3rd ed.) CHRISTOPHER Martin: Librairie Lavoisier. Available at: Intelligency Agency, 2010. CIA - The World Factbook -- CountryComparison:National product. Available at: factbook/rankorder/, 2012. Operations Strategy. Available at:, J., 2012. Starbucks Case Study. Available at:, Starbucks Corporation: Building a Sustainable Supply - Stanford graduatebusiness school. Available at:, A., James, N., 2003. Business Market management- understanding, creatingand delivering value, second ed.scdigest, 2009. RFID News: Volkswagen says it will be First Automaker toExtensively Use RFID in Daily Supply Chain Operations Available at:, R., 2011. Brand assignment on Volkswagen brand audit. Availableat:, E., 2012. Starbucks Assignment.Available at:, 2011. Volkswagen Group Production Plants Availableat:, 2011. The Global Competitiveness Report 2011-2012: Country ProfileHighlights. Available at: Duhan (2804324) Page 29