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Value Chain of Starbucks

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 Value Chain of Starbucks

The Value chain of a company is what makes its value add up through a complex process of

different activities that makes a potential profitable initiative further developing the company’s

or the firm’s finances. It involves the department of supply chain alongside the logistics working

together in order to ease the process of importing consumables and necessities from the

suppliers. A value chain focuses more directly on the value added to the product alongside the

procurement process from the purchase request upto the goods received taking into account the

payment process and the money transfer as well. These steps or processes all add up to the

ultimate addition of value additions and profit variations from time to time as it is hard to keep a

stable profit all year round. In this essay, I will be talking about the way the value chain adds

value to a product and increases profitability through its different activities.

One of the challenges that Starbucks faces is their import of coffee into the different stores

within the cities as the cities are very crowded and trucks cannot just roam around it given the

traffic and high demand of beans to the stores. Thus, the company is thinking of providing a

higher number of smaller cars that supply to the stores for their coffee consumption and intake.

The value chain of Starbucks is the way it imports its beans to make the coffee. However,

Starbucks has spent thousands to millions of dollars on the import of carefully bred and selected

beans from around the world in order to deliver the most delicious coffee. Value chain consists of

various activities through which it can increase the value of a product’s overall quality. These

activities differ from firm to firm as different firms operate differently from each other. “Every
firm is a collection of activities that are performed to design, produce, market, deliver, and

support its product. ... A firm's value chain and the way it performs individual activities are a

reflection of its history, its strategy, its approach to implementing its strategy, and the underlying

economics of the activities themselves” (Jeremy 103).

One of the opportunities for Starbucks is for Starbucks to start growing their own beans which

has many potential financial benefits such as reducing the cost of long-distance transportation

and encouraging or fueling locally produced goods that would increase more job opportunities

and more local people benefiting from the chain of businesses merging together and becoming

more profitable. “Value is added to the beans through Starbucks’ proprietary roasting and

packaging, which helps to increase their selling value. The beans are then sent to distribution

centers, a few of which are company-owned and some of which are operated by other logistic

companies.” (Bajpai, 2020)The managers and business owners’ main goal and main area of

focus is to make sure that the inputs, such as their investments, are turned into outputs, such as

their profits and they want to make sure that they are aware and able to oversee the process in the

making meaning that they will be all under their control. “The concept of value chain analysis

helps business managers to better identify useful and wasteful activities. By looking beyond

standard means of efficiency analysis while also seeking to integrate and capture value chain

analysis in business metrics, stakeholders can make important insights related to operational

processes” (Bajpai, 2020). The activities that are helpful for the business and the activities that

look promising on the outside but have a financially dreadful effect on the inside must be well

considered by the company’s owners as both of them help in the improvement or the downfall of
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the company as a whole. Giving too much of a focus to an activity that would please some

customers while pushing others back is very dangerous and has to be carefully planned before

any implementation.

In conclusion, Starbucks coffee store has been one of the most prominent coffee providers in the

world having been globalized into a global franchise. The value chain of the company depends

upon the activities and supply chain performances of the goods delivered from the supplier

where each step of the process adds value to it. It can also be used to carefully set the value of a

product so that it isn’t too expensive for buyers to buy and also it isn’t too cheap as well.

Works Cited

Bajpai, P. (2020, May 06). Analyzing Starbucks' Value Chain. Retrieved May 23, 2020, from

https://www.investopedia.com/articles/investing/103114/starbucks-example-value-chain-model.a

sp

Shapiro, Jeremy F., et al. “Optimizing the Value Chain.” Interfaces, vol. 23, no. 2, 1993, pp.

102–117. JSTOR, www.jstor.org/stable/25061732. Accessed 23 May 2020.