MIS G4 Word Final-Project Starbucks-ERP-system

UNIVERSITY OF ECONOMICS AND LAW
FACULTY OF INFORMATION SYSTEM
______________________
FINAL PROJECT REPORT
Management Information Systems

- 222IS3704 -
Analysis Starbucks’
Enterprise Resources Planning in MIS
Lecturer:
PhD. Lê Thị Kim Hiền
Group 4
Ho Chi Minh City, May 7th, 2023

Members
No. Full name Student ID Contribution Signature
1 Nguyễn Đinh Minh Anh K214162141 20%
2 Lý Vũ Thiên Ân K214161372 20%
3 Trần Thị Minh Hiền K214160989 20%
4 Phan Cao Bảo Trâm K214160996 20%
5 Huỳnh Thị Kim Ngân K214160992 20%
1
Acknowledgements
This study represents an important turning point in our study in the management
information systems course. In the process of making this report, there were some
errors, incompleteness and challenges encountered. All efforts at any level are unable
to be completed satisfactorily without the support and guidance of our teaching
assistant and course lecturer.
First and foremost, our team would like to appreciate and thank PhD. Le Thi Kim
Hien for such dedicated assistance and passionate advice.
Last but not least, our group would like to express our gratitude for the
introduction, suggestions and guidance of Ms. Huynh Tieu Yen - teaching assistant,
for sharing information and providing devoted support.
Sincerely,
Group 4
2
Commitment
We declare that the course final project "Analysis Starbucks’ Enterprise

Resources Planning in MIS" is the work of our whole team. The project study and the
performing process were carried out under the instruction of PhD. Le Thi Kim Hien -
the course lecturer and Ms. Huynh Tieu Yen - the teaching assistant.
The sections that use references in the project are listed and clearly stated in the
references section. At the same time, the content and results presented on the topic are
honest, transparent, and public, achieved by our team.
Ho Chi Minh City, May 7th 2023.
Group 4
3
Table of Content
Members ........................................................................................................................... 1
Acknowledgements .......................................................................................................... 2
Commitment ..................................................................................................................... 3
Table of Content ............................................................................................................... 4
List of Figures ..............................................................................................................7
List of Tables .................................................................................................................... 9
List of Acronyms ............................................................................................................ 10
Abstract ........................................................................................................................... 11
Chapter 1. Introduce to Starbucks ................................................................................. 12
1.1. Industry .......................................................................................12
1.2.“Top of mind” in F&B industry ....................................................................... 13
1.2.1. In the world .......................................................................................... 13
1.2.2. In Viet Nam .......................................................................................... 14
1.3. History ............................................................................................................. 15
1.4. Mission, Vision, Strategy, and Operation .......................................................18
1.4.1. Mission ................................................................................................. 19
1.4.2. Vision ................................................................................................... 20
1.4.3. Strategy .................................................................................................21
1.4.4. Operation .............................................................................................. 22
1.5. Starbucks’ position .......................................................................................... 23
1.6. Products and services .......................................................................................25
1.6.1. Products ................................................................................................ 25
1.6.2. Services .................................................................................................25
Chapter 2. Starbucks 5 Porter’s Forces Analysis ...........................................................27
2.1. Traditional Competitors .................................................................................. 27
2.1.1. McDonald’s .......................................................................................... 28
2.1.2. Dunkin Donuts ..................................................................................... 28
2.1.3. Costa Coffee ......................................................................................... 29
2.1.4. Tim Hortons ......................................................................................... 30
2.2. New market entrants ........................................................................................31
2.3. Substitute products and services ..................................................................... 32
2.3.1. Substitute Coffee Chain ....................................................................... 32
2.3.2. Independent coffee shops .....................................................................34
2.3.3. Other beverages ....................................................................................34
2.4. Customers ........................................................................................................ 37
2.4.1. Starbucks target market ........................................................................37
2.4.2. Buyer personas ..................................................................................... 39
2.4.3. The bargaining power of buyers .......................................................... 40
2.5. Suppliers .......................................................................................................... 41
2.5.1. Coffee beans ......................................................................................... 41
2.5.2. Other ingredients .................................................................................. 42
2.5.3. The bargaining power of suppliers ...................................................... 43
4
Chapter 3. Overview of Starbucks Management Information Systems ....................... 44
3.1. TPS (Transaction Processing System) ............................................................ 44
3.2. DSS (Decision Support System) ..................................................................... 44
3.3. CRM (Customer Relationship Management) ................................................. 44
3.4. SCM (Supply Chain Management System) ....................................................44
3.5. ERP (enterprise resource planning system) .................................................... 45
Chapter 4. Starbucks ERP System ................................................................................. 46
Overview .................................................................................................................46
4.1. Literature review ............................................................................................. 46
4.1.1. Definition of enterprise resource planning .......................................... 46
4.1.2. Other essential terms in solutions ........................................................ 47
4.2. ERP software solutions ................................................................................... 48
4.2.1. ERP software comparison ....................................................................48
4.2.2. Starbucks choose Oracle ERP solution ................................................51
1. Cost: ....................................................................................................................51
2. Technological capabilities: ................................................................................ 51
3. Customizability: ..................................................................................................52
4. Integrated: .......................................................................................................... 52
4.3. Analysis of Starbucks ERP system: ................................................................ 53
4.3.1. Origins and Milestone of Starbucks .....................................................53
4.3.2. Impact on the Starbucks’ operations of ERP .......................................54
4.3.3. Importance of the ERP implementation .............................................. 55
4.4. Analysis Starbucks ERP implementation process .......................................... 56
4.4.1. The stages of general ERP implementations ....................................... 56
4.4.2. The stages of ERP implementation of Starbucks ................................ 58
4.4.3. Starbucks doesn’t use third-party for ERP process ............................. 59
4.5. How ERP help Starbucks with Porter’s Five Force ....................................... 60
4.5.1. Low cost strategy ................................................................................. 60
4.5.2. Supplier and customer intimacy ...........................................................60
4.6. Limitation and Recommendation ....................................................................61
Chapter 5. Starbucks AI Applications ...........................................................................62
Overview .................................................................................................................62
5.1. Digital Flywheel Strategy ................................................................................62
5.1.1. Rewards ................................................................................................ 63
5.1.2. Personalization ..................................................................................... 65
5.1.3. Payment ................................................................................................ 66
5.1.4. Ordering ................................................................................................67
5.1.5. The Digital Flywheel ROI ....................................................................68
5.2. Starbucks AI applications ................................................................................70
5.2.1. Deep Brew ............................................................................................ 70
5.2.2. My Starbucks Barista ........................................................................... 74
5.3. Conclusion ....................................................................................................... 75
Chapter 6. Project Evaluation .........................................................................................76
6.1. Pert chart ..........................................................................................................76
6.2 Gantt chart ........................................................................................................ 77
Conclusion ...................................................................................................................... 78
5
Appendix A: Deep Brew challenges .............................................................................. 79
Appendix B: Blockchain and Sustainability .................................................................. 81
Appendix C: IoT and Coffee machine ........................................................................... 82
References .......................................................................................................................83
6
List of Figures
Figure 1.1.1: Net revenue of Starbucks from 2001 to 2022........................................... 12

Figure 1.2.1: Coffee shop chains in the world by number of stores...............................13
Figure 1.2.2: Top 10 most valuable restaurant brands.................................................. 14
Figure 1.2.3: Coffee shop chains in Vietnam by number of stores................................ 14
Figure 1.3.1: Three founders of Starbucks..................................................................... 15
Figure 1.3.2: Timeline of Starbucks from 1971 to 1986.................................................16
Figure 1.3.6: The evolution of Starbucks logo................................................................18
Figure 1.4.1: Starbucks Mission and Vision Statement Analysis Mind Map................. 18
Figure 1.4.2: Starbucks Mission Evolution.....................................................................19
Figure 1.4.3: Starbucks Organizational Structure......................................................... 22
Figure 1.5.1: Brand value of the 10 most valuable quick service restaurant brands
worldwide in 2021 (in million U.S. dollars)...................................................................23
Figure 1.5.2: Leading chain coffee house sales in the U.S. 2019 (in millions USD).... 23
Figure 1.5.3: Starbucks’ Worthon 52-week range accurate as of February 24, 2020.. 24
Figure 1.5.4: Revenue of Starbucks from 2003 to 2020................................................. 24
Figure 2.1.1: Top Coffee Brands in the Worlds by Revenue.......................................... 27
Figure 2.1.2: Starbucks Competitors.............................................................................. 27
Figure 2.3.1: Vietnam’s coffee market in 2022...............................................................33
Figure 2.3.2: Value of the global tea market from 2012 to 2025 (in billion U.S. dollars)
......................................................................................................................................... 35
Figure 2.3.3: Global Milk Tea Market Share, By Region (%) in 2021.......................... 36
Figure 2.3.4: Coffee chain market in Vietnam (4/2022).................................................37
Figure 2.4.1: Buyer Persona 1 “Andy”.......................................................................... 39
Figure 2.4.2: Buyer Persona 2 “Claire and Phil Dunphy”........................................... 40
Figure 4.2.1: Top 10 ERP softwares solution by analyst rating.................................... 48
Figure 4.2.2: Top Rated ERP Systems Comparison....................................................... 50
Figure 4.2.3: Starbucks technology transformation strategy......................................... 51
Figure 4.3.1: Starbucks ERP implementation milestone................................................ 53
Figure 4.4.1: A flowchart of the six phases of an ERP implementation........................ 56
Figure 5.1.1: Digital Flywheel Strategy......................................................................... 63
Figure 5.1.2: Starbucks’ Rewards Program................................................................... 64
Figure 5.1.3: Starbucks Personalization Vision............................................................. 65
Figure 5.1.4: Promotional offer notifications, order and pay through the mobile app.66
Figure 5.1.5: US Proximity Mobile Payment Users, by Platform, 2021........................66
7
Figure 5.1.6: Total dollars Starbucks hold in cash through digital purchase...............67
Figure 5.1.7: Starbucks’ ordering app............................................................................68
Figure 5.1.8: Number of active US Members by spend level (%).................................. 69
Figure 5.1.9: Digital Flywheel US Customers................................................................69
Figure 5.2.1: Deep Brew Roadmap.................................................................................71
Figure 5.2.2: Deep Brew orchestrator diagram............................................................. 72
Figure 5.2.3: Starbucks “Deep Brew”: Hyper Personalization Applications with
Reinforcement..................................................................................................................73
Figure 5.2.4: Example conversation of the feature........................................................ 74
Figure 6.1.1: Pert chart...................................................................................................77
Figure 6.2.1: Gantt chart................................................................................................ 77
8
List of Tables
Table 1.4.1: Evolution of Starbucks Mission................................................................. 19

Table 2.1.1: Comparison of McDonald’s and Starbucks Features............................... 28
Table 2.1.2: Comparison of Dunkin Donuts and Starbucks Features...........................29
Table 2.1.3: Comparison of Costa Coffee and Starbucks features................................29
Table 2.1.4: Comparison of Tim Hortons and Starbucks features................................ 30
Table 6.1.1: Tasks table.................................................................................................. 76
9
List of Acronyms
Abbreviation Definition
AI Artificial Intelligence
ERP Enterprise Resources Planning
CRM Customer Relationship Management
SCM Supply Chain Management
DSS Decision Support System
TPS Transaction Processing System
OLAP Online Analytical Processing
MIS Management Information System
F&B Food and Beverage
US United States
EDAP Enterprise Data Analytics Platform
ROI Return on investment
10
Abstract
Starbucks is by far the most recognized coffee chain in the world, with over
30,000 locations worldwide1 and a history spanning more than 80 years, and is one of
the most famous coffee shop businesses in the world and leads of style. The fact that
the coffee chain can be sustainable and increasing is another reason why the
organization wants to choose Starbucks, but in order to examine Starbucks, there are
other factors to consider, such as the fact that this is a coffee chain. Starbucks is a
multinational coffee company and coffeehouse chain that is renowned worldwide for
its high-quality coffee, drinks, and snacks. Starbucks is well-known for its
commitment to ethical sourcing, environmental sustainability, and social responsibility,
and has become a leader in the industry for these practices. They have created
guidelines to ensure that coffee is produced in environmentally and socially
responsible ways. Starbucks has established a link between community and coffee,
creating initiatives and projects to help the community and the environment.
Starbucks has a highly interconnected Management Information System (MIS)
chain that includes Transaction Processing System (TPS) for order processing and data
collection, Decision Support System (DSS) for data analysis and decision-making,
Customer Relationship Management (CRM) system for managing customer
relationships, Supply Chain Management (SCM) system for managing the supply
chain from procurement to delivery, and an Enterprise Resource Planning (ERP)
system for managing the supply chain from procurement to delivery. These
technologies work together to provide Starbucks with a comprehensive perspective of
its operations, allowing it to make educated decisions and provide a high-quality
customer experience.
Specifically, this study will primarily analyze Starbucks' ERP system, by
analyzing the special features of Starbucks' ERP system and how it works, the study
can provide insights into how the system helps the company manage its supply chain,
finance, and other business processes. Understanding the factors surrounding the ERP
system can also shed light on why Starbucks has been so successful in the highly
competitive coffee industry, and also learning about Porter's Five Forces system - this
analysis can provide insights into the strategies that Starbucks has used to successfully
navigate the competitive landscape and maintain its dominance in the industry.
In the last, we will introduce the Starbucks' AI Applications - Deep Brew, My
Starbucks Barista, and Starbucks digital transformation strategy - Digital Flywheel.
1
THE 10 LARGEST COFFEE COMPANIES IN THE WORLD, from https://www.zippia.com/advice/largest-
coffee-
companies/#:~:text=Starbucks%20is%20by%20far%20the,30%2C000%20stores%20around%20the%20globe.
retried April 23,2023
11
Chapter 1. Introduce to Starbucks
1.1. Industry
Starbucks, one of the international food and beverage groups, engages in the
production, marketing, and retailing of specialty coffee. Starbucks opened its first
store along the cobblestone streets of Seattle’s historic Pike Place Market in 1971
and it has since grown into one of the largest coffeehouse chains in the world, with
over 35.711 locations in more than 84 countries.
Starbucks operates through the following segments: North America;
International; and Channel Development. The North America and International
segments sell coffee and other beverages, complementary food, packaged coffees,
single-serve coffee products, and a focused selection of merchandise through
company-oriented stores, and licensed stores. The Channel Development segment
includes sales of packaged coffee, tea, and ready-to-drink beverages to customers
outside of its company-operated and licensed stores.
Figure 1.1.1: Net revenue of Starbucks from 2001 to 2022 2

Starbucks’ net revenue reached 32.91 billion U.S. dollars in 2022, reflecting an
increase over the previous year's total of 8.41%. The global coffeehouse chain has
seen a year-over-year increase in revenue for the past decade, except for the decline
in 2020 which could be attributed to stay-at-home measures implemented due to the
coronavirus (COVID-19) pandemic.
2
Companiesmarketcap, https://companiesmarketcap.com/starbucks/revenue/, viewed Mar 21, 2023.
12
1.2. “Top of mind” in F&B industry
1.2.1. In the world
Figure 1.2.1: Coffee shop chains in the world by number of stores 3

Starbucks is at the top of the list of successful coffee companies, and they
have 35,711 locations around the globe as of the end of 2022. Starbucks’ closest
competitor in terms of number of stores was McCafé, with 35,000 stores. Next in
the ranking was Dunkin’ Donuts, which, at 11,300 stores, had fewer than
approximately 3.1 times the number of McCafe outlets.
3
Sean Brennan, https://coffeeaffection.com/most-famous-coffee-chains/, Feb 06, 2023.
13
Figure 1.2.2: Top 10 most valuable restaurant brands 4
In 2021, the chain - which has over 30,000 stores globally, about half of
which are in the US - used the Covid 19 pandemic to further differentiate itself
from rivals and has adapted to focus on speed and convenience in its service.
This includes ramping up the pace of the construction of ‘drive-thru’ stores, a
renewed focus on a loyalty rewards scheme, and further integration of digital
technology across the business – all of which are reflected in a surge in drive-
through and mobile orders, accounting for 90% of all orders in the US in Q3 of
2020.
1.2.2. In Viet Nam
Figure 1.2.3: Coffee shop chains in Vietnam by number of stores

As of March 2023, Highland was the leading coffee shop chain based on
the number of stores in Vietnam with 604 stores, followed by The Coffee House
with 155 stores. Highland Coffee was also the coffee-shop chain with the highest
earning in Vietnam in 2019, having revenue of around 2.2 trillion Vietnamese
dong. After Highland, The Coffee House recorded a revenue of 863 billion
Vietnamese dong that year, followed by Starbucks with 783 billion Vietnamese
dong in revenue.5
Phuc Long also accounted for a great number of stores (132 locations).
Starbucks first arrived in Vietnam back in February 2013 after launching a coffee
shop in Ho Chi Minh City. Ten years after opening, the company now has 87
stores in 7 provinces in VietNam. Compared to other beverage chains, Starbucks
4
BrandFinance, https://goeco.link/UTywm, March 16, 2021.
5
Minh-Ngoc Nguyen, https://goeco.link/NonAH, Mar 2, 2021.
14
has a relatively modest number of stores, behind domestic chains such as
Highlands, The Coffee House, Phuc Long and Trung Nguyen Legend. However,
this is a rare foreign name, along with Café Amazon (Thailand) still standing and
making a mark in the battle between coffee chains, with the overwhelming
market share of domestic enterprises. After 10 years of penetrating the
Vietnamese market, the American coffee chain plans to hit 100 stores next
quarter.
1.3. History
Starbucks was founded by Jerry Baldwin, Gordon Bowker, and Zev Siegl, three
peers from the University of San Francisco who had a common interest in coffee
and tea, opening its first store in 1971 near the historic Pike Place Market in Seattle.
The name Starbucks was inspired by the classic tale "Moby-Dick," evoking the
seafaring tradition of the early coffee traders.
Figure 1.3.1: Three founders of Starbucks 6

Ten years later, a young New Yorker named Howard Schultz would walk
through these doors and become captivated with Starbucks coffee from his first sip.
After joining the company in 1982, a different cobblestone road would lead him to
another discovery. It was on a trip to Milan in 1983 that Howard first experienced
Italy’s coffeehouses, and he returned to Seattle inspired to bring the warmth and
artistry of its coffee culture to Starbucks. In 1985 Schultz founded Il Giornale,
offering brewed coffee and espresso drinks, and giving the Starbucks experience he
envisioned. Il Giornale was very successful and Schultz was eventually to acquire
6
Starbucks, https://archive.starbucks.com/record/our-founders, viewed Mar 21, 2023.
15
Starbucks, combining Il Giornale and Starbucks, and renaming everything
Starbucks Corporation.
Figure 1.3.2: Timeline of Starbucks from 1971 to 1986

By 1987, the original owners sold the Starbucks chain to their former director
of marketing, Howard Schultz, who rebranded his Il Giornale coffee outlets as
Starbucks and quickly began to expand the company to Chicago and Vancouver,
Canada. Starbucks expanded its headquarters in Seattle in 1990 and opened its first
licensed airport store at Seattle’s Sea-Tac International Airport the following year.

In 1992, Starbucks completed an initial public offering (IPO) and started testing
out the drive-through market in 1994, first offering the service in Southern
California. By 1996, they had crossed the Pacific to open our first store in Japan,
16
followed by Europe in 1998 and China in 1999. Starbucks dominated the coffee
market, by continuously finding new ways to reinvent the way people traditionally
thought about coffee, and finding new ways to keep people interested in the brand.
In 2010, Starbucks expanded digital offerings for customers with free unlimited Wi-
Fi.

Starbucks launched the first annual Global Month of Service to celebrate the
company's 40th anniversary and opened stores in Curacao, Guatemala and Morocco
in 2011. On June 4, 2018, Schultz announced that he would retire from active
management of Starbucks after 37 years. In 2021, Starbucks retained the title of the
world’s most valuable restaurant brand for the 5th consecutive year, despite
recording a 6% drop in brand value to US$38.4 billion.
17
By 2022, Starbucks announces People Positive aspiration to enhance the
well-being of 1 billion people globally by 2030. And Starbucks’ operation has
an evolution, Howard Schultz steps in as interim chief executive officer as the
company enters a new era of Reinvention; Laxman Narasimhan is named
Starbucks next ceo. Starbucks 2022 plans to open stores in Laos, estimated up
to here, Starbucks has a record total of 36,160 stores as of January 1, 2022.7
Figure 1.3.6: The evolution of Starbucks logo 8

1.4. Mission, Vision, Strategy, and Operation
Figure 1.4.1: Starbucks Mission and Vision Statement Analysis Mind Map 9
7
Starbucks Stories and News (Jan 24, 2019), About Us Company Timeline February 2023. viewed Apr 27, 2023
8
Natalia Vorobyeva, https://goeco.link/CrDDG, Jan 29, 2019.
9
Business Analysis, https://www.edrawmind.com/article/starbucks-mission-and-vision-statement-analysis.html,
viewed Mar 25, 2023.
18
1.4.1. Mission10
Figure 1.4.2: Starbucks Mission Evolution

In 2008, Starbucks unveiled what has become known as Starbucks Mission:
“To nurture and inspire the human spirit – one person, one cup, one
neighborhood at a time.”.
In 2014, Starbucks mission’s guiding principles were updated with a set of
values underscored by a commitment to be “performance-driven through the lens
of humanity.”
Laxman Narasimhan took over the reins as Starbucks CEO following a
unique six-month immersion unlike any other in Starbucks history in March 2023,
the mission was changed: “With every cup, with every conversation, with every
community – we nurture the limitless possibilities of human connection.”
Table 1.4.1: Evolution of Starbucks Mission
Time Mission Principles
1990 Establish Starbucks as Provide respect and dignity, embrace

the premier purveyor of diversity, apply excellence, develop
the finest coffee in the satisfied customers, contribute positively,
world while maintaining and prioritize profitability.
our uncompromising
principles as we grow.
2008 To inspire and nurture Coffee: Roasting the finest coffee beans
the human spirit – one ethically and carefully.
person, one cup and one Partners: can be ourselves.
10
A new mission for Starbucks from https://stories.starbucks.com/stories/2023/a-new-mission-for-starbucks/,
retried Mar 23,2023
19
neighborhood at a time. Customers: human connection
Stores: full of humanity.
Neighborhood: will lead
Shareholders: endure and thrive.
2014 To inspire and nurture Everyone is welcome.

the human spirit – one Act with courage, challenge the status quo,
person, one cup and one and grow the company.
neighborhood at a time.
Connect with transparency, dignity and
respect
Strive for excellence and accountability,
driven by humanity.
2023 With every cup, with Partner: Bridge to a better future

every conversation, with Customer: Uplift the everyday
every community – we
Farmer: Ensure the future of coffee for all
nurture the limitless
possibilities of human Community: Contribute positively
connection. Environmental: Give more than take
Shareholder: Generate long-term returns
1.4.2. Vision
To "establish Starbucks as the premier purveyor of the finest coffee in the
world while maintaining our uncompromising principles as we grow" according
to the company's vision statement.11 To become the top supplier, a company must
take the lead in ensuring that its coffee and other goods are of the highest caliber.
Starbucks is one of the world's largest chains of coffee shops and continues to
grow in order to fulfill this part of its vision statement.
Starbucks strives to nurture its principles, such as the welcoming
atmosphere and ethical conduct, in order to address its "uncompromising
principles" aspect. The business upholds this philosophy, particularly under the
direction of previous CEO Howard Schultz.
Starbucks continuously expands its chain around the world by establishing
coffee shops in new places, fostering the "growth" aspect of its vision statement.
11
Starbucks Mission and Vision Statement Analysis, https://www.edrawmind.com/article/starbucks-mission-
and-vision-statement-analysis.html , viewed Mar 23, 2023.
20
The company successfully carries out its mission, as evidenced by the more than
30,000 stores it has around the world.
When reading Starbucks' vision statement, one might notice that it is
inspiring, particularly in terms of attaining and preserving the company's position
as the industry leader. Starbucks' emphasis on leadership inspires the
management and other human resources staff members to take on new challenges.
1.4.3. Strategy
● Offering ‘third-place’ experience.
Starbucks locations are successfully positioned as a "third place" away
from homes and workplaces where people can spend time in a comfortable
and relaxed setting with companions or by themselves. Even customers are
allowed to complete their work in a Starbucks location. Most company-
owned stores overseas and all company-owned stores in the US provide free
wi-fi. Starbucks locations are carefully planned to encourage customers to
spend more money, remain longer, and make additional purchases.
● Selling coffee of the highest quality
Product differentiation is a category that describes Starbucks' business
approach. As a result, the large coffee chain company places a focus on the
quality of its goods, and customers are willing to spend more for high
quality. Excellent customer service, which is one of Starbucks' many
sources of economic advantage, adds to the company's allure.
● International market expansion with the focus on emerging economies
One of the main components of Starbucks' long-term business strategy
is international market expansion with a focus on emerging economies. As
of October 3, 2021, the business had expanded into 84 markets with 17133
company-operated stores and 16700 licensed stores, having begun in 1971
with just one coffee shop in Seattle's 1912 Pike Place.Since 1987, the
international coffee shop company has added two new locations on average
every day. By 2030, the business hopes to have 55000 stores, according to
long-term plans released by the company.
● Integrating technology into various business processes
Starbucks is clear that the goal of new technology is not just to
enhance its website or speed up payment processing for customers standing
in line. By incorporating technology into a variety of business processes
and procedures, including new product development, marketing message
communication, closing sales, and customer satisfaction tracking, the coffee
chain adds value related to technology. The introduction of the voice
21
ordering app, the introduction of the Mobile Order & Pay feature, and
"sending text message notifications to customers in the Seattle area when
their mobile orders are ready" are some of Starbucks' most notable
examples of value creation through technological integration.
1.4.4. Operation12
Starbucks' corporate structure is based on a functional hierarchy, and as a
result, groups are created at the Executive Vice President (EVP) and Senior Vice
President (SVP) levels based on business responsibilities.
Figure 1.4.3: Starbucks Organizational Structure
12
Starbucks Organizational Structure: A tall and divisional from https://research-methodology.net/starbucks-
organizational-structure-a-tall-and-divisional/, retried Mar 26, 2023
22
1.5. Starbucks’ position
Figure 1.5.1: Brand value of the 10 most valuable quick service restaurant brands
worldwide in 2021 (in million U.S. dollars)13
In 2020 and 2021, Starbucks ranked among the top 10 largest food and
beverage businesses in the globe. According to statistics, by 2021 Starbucks has
grown by nearly $20,000 since beating COVID-19 with a rise of 116% from 2020.
Figure 1.5.2: Leading chain coffee house sales in the U.S. 2019 (in millions USD)
13
www.statista.com
23
Starbucks is by far the largest coffeehouse chain in the world in terms of
revenue, generating more than 10 times the revenue of its closest competitor, Costa
Coffee (Restaurant Business, 2020). Although 74% of the company’s sales came
from beverages, food items contributed a sizable 19% to the overall revenue.
Figure 1.5.3: Starbucks’ Worthon 52-week range accurate as of February 24,

202014.
Starbucks has made specialty coffee mainstream, expanding from a few stores
to a whole empire with more than 32,660 stores worldwide (GOBankingRates,
2020).
Figure 1.5.4: Revenue of Starbucks from 2003 to 202015

The income at Starbucks has tripled in the last ten years. Pre-pandemic
projections anticipated Starbucks' revenue to soar over the following few years due
14
Number of Starbucks Worldwide 2022/2023: Facts, Statistics, and Trends from
https://financesonline.com/number-of-starbucks-worldwide/ retried Mar 25,2023
15
Net revenue of Starbucks worldwide from 2003 to 2022 from https://www.statista.com/statistics/266466/net-
revenue-of-the-starbucks-corporation-worldwide/ retried Mar 25,2023
24
to its global growth and multi-billion dollar deal with Nestle in 2018. However,
Starbucks reported only $23.518 billion in revenue in 2020 as a result of the
epidemic, losing $3.2 billion (CNBC, 2020). (Starbucks, 2020). Starbucks
anticipates that after the COVID-19 vaccine becomes available, coffee consumption
will increase by more than 20% by 2022. (CNBC, 2019).
1.6. Products and services
1.6.1. Products
● Coffee
Starbucks is best known for its high-quality coffee, which is sourced
from around the world and roasted in-house. The company offers a range of
coffee beverages, including drip coffee, espresso, cappuccinos, lattes, and
macchiatos.
● Tea
Starbucks also offers a variety of tea beverages, including hot and iced
teas, tea lattes, and tea infusions. The company sources its tea from ethical
and sustainable suppliers and offers a range of flavors and varieties.
● Food Items
Starbucks offers a variety of food items, including pastries, sandwiches,
wraps, salads, and snacks. The menu varies by location and may include
seasonal items or regional specialties.
● Cold Beverages
In addition to hot coffee and tea beverages, Starbucks offers a range of
cold beverages, including iced coffee and tea, cold brew, frappuccinos, and
refreshers.
● Retail Products
Starbucks sells packaged coffee and tea products, as well as merchandise
such as mugs, tumblers, and coffee accessories. These products are
available both in-store and online, as well as through grocery stores and
other retail channels.
Overall, Starbucks offers a diverse range of products designed to meet the
needs and preferences of its customers, whether they're looking for a quick coffee
on the go, a sit-down meal, or a retail product to enjoy at home.
1.6.2. Services
● In-Store Experience
25
Starbucks is known for its inviting and comfortable atmosphere,
designed to encourage customers to stay and enjoy their coffee or tea in-
store. The company offers free Wi-Fi, comfortable seating, and a relaxed
ambiance.
● Drive-Thru
Many Starbucks locations offer drive-thru service, allowing customers to
quickly order and pick up their coffee or tea without leaving their car.
● Mobile Ordering
Starbucks' mobile app allows customers to order and pay for their
purchases ahead of time, so their drink is ready and waiting when they
arrive at the store.
● Rewards Program
The Starbucks Rewards program allows customers to earn points for
every purchase they make, which can be redeemed for free drinks, food,
and other rewards.
● Catering
Starbucks offers catering services for events and meetings, including
coffee and tea service, food platters, and other catering options.
● Delivery
In some markets, Starbucks has partnered with third-party delivery
services to offer delivery of coffee and food items.
Overall, Starbucks offers a range of services designed to make it easy and
convenient for customers to enjoy their coffee and tea, whether they're in-store or
on the go. From the mobile app to drive-thru service, Starbucks has evolved to
meet the changing needs and preferences of its customers.
26
Chapter 2. Starbucks 5 Porter’s Forces Analysis
2.1. Traditional Competitors

There are wide dimensions for the beverage business to compete with others.
They can originate from: packaging, pricing, the invention of new flavors,
additional function, different marketing strategies, distribution plan. Furthermore,
competition is divided into horizontal and vertical ways (same product lines or same
industry but different product types). The bellowed picture illustrates the shares of
coffee market in 2020.
Figure 2.1.1: Top Coffee Brands in the World by Revenue

From this, it can be seen that Starbucks competitors in terms of coffee shops
are some brands that are mentioned below.
Figure 2.1.2: Starbucks Competitors
27
2.1.1. McDonald’s
McDonald’s made significant progress in the quality of its product
offering through the McCafé chain. The company generated over $23 billion in
revenues in 2021, of which $9.78 billion from owned restaurants and $13 billion
from franchised restaurants. The biggest difference between the two is the
expansion model for each business and specialty offerings. Whereas McDonald’s
grows through franchising, Starbucks stores are company owned. On the other
hand, Starbucks is famous for coffee drinks while McDonald’s is known for
meat-based fast foods. According to Kai Jordan16, some features of McDonald’s
can be compared to Starbucks as below:
Table 2.1.1: Comparison of McDonald’s and Starbucks Features
Features McDonald’s Starbucks
Location Over 38,000 stores in over Over 33,800 outlets in over 80

100 countries countries
Menu Huge variety of food items Numerous specialty drinks and

compared to drinks. variations and not many food
options
Price range Prices are quite affordable Prices are higher
It can be seen that McDonald’s is more expanded in the number of stores,

it also has a wider option in terms of food and the price is more affordable.
However, when it comes to the main part about coffee, Starbucks have more
special drinks and offer a lot of different drinks.
2.1.2. Dunkin Donuts
Dunkin Donuts was founded in 1950, operates in almost 13,000 locations
across 42 countries. Both firms share similar primary objectives and provide
comparable coffee options (but different food options). In terms of scale, shop
ownership, and branding, their business strategies also differ greatly. However,
despite having started 20 years after Dunkin' Donuts, Starbucks has expanded
quickly and is now a much larger business. Starbucks made more than $23.5
billion in sales in 2020, while Dunkin' Brands only made $1.3 billion.
16
Jordan, K. (2022). McDonald's vs. Starbucks - starbmag. StarbMag. Retrieved April 28, 2023, from
https://starbmag.com/mcdonalds-vs-starbucks/#more-9013
28
Additionally, Starbucks has a larger global presence than Dunkin' Brands, with
about 30,000 locations compared to 13,000 for Dunkin.
Some other features can be summarized as in the table below.
Table 2.1.2: Comparison of Dunkin Donuts and Starbucks Features
Features Dunkin Donuts Starbucks
Franchising Almost every Dunkin’ corporate-owned

Brands location is a
franchise
Branding and food remains an essential markets itself as a beverage

Focus part company that also provides a
more traditional coffee house
dining experience
Quality more affordable prices and higher-end brand

caters to the middle class
2.1.3. Costa Coffee

Costa Coffee has over 2,000 stores in the United Kingdom. Coca-Cola
Company acquired Costa Coffee in 2019 for £3.9 billion, focusing on Non-
American markets. According to John Moretti17, Starbucks is better than Costa
Coffee, which is almost just as good. Starbucks spans over 70 countries across
the globe compared to Costa Coffee that only spans about 33 countries, and there
is not even a Costa Coffee available in the United States. Starbucks offers a
wider variety of coffee drinks, such as many themed Frappuccino coffee drinks.
Although both Starbucks and Costa Coffee are two of the largest and best coffee
chains globally, Starbucks comes out on top.
Table 2.1.3: Comparison of Costa Coffee and Starbucks Features
Features Costa Coffee Starbucks
Location Has about 3883 locations in Has over 33500 locations in

various countries in the 84 countries around the
world world
17
Moretti, J. (2021, November 17). Costa Coffee Vs. Starbucks (Comparing The Best Coffee Chains).
BaristaJoy. Retrieved April 28, 2023, from https://baristajoy.com/costa-coffee-vs-starbucks/
29
Menu Its beverages are more on The menu is diverse and
the traditional side caters for everyone’s needs
Has numerous food items to Food options are few

choose from
Price Range Its products are priced Many of its products are
affordably expensive
2.1.4. Tim Hortons

Tim Hortons has 5,000 quick-service restaurants in 14 countries. This
brand offers a range of products, including muffins, cookies, pastries, bagels, and
Greek yogurt with mixed berries. Some features can be compared to Starbucks as
below
Table 2.1.4: Comparison of Tim Hortons and Starbucks Features
Features Tim Hortons Starbucks
Location Has around 5,000 stores in Has over 33,500 locations in

14 countries 84 countries around the
world
Menu The beverage menu is not The menu is diverse and

that diverse caters for everyone’s needs
Has numerous food items Food options are few
Price Range Affordable pricing Most products are expensive
It can be seen that Starbucks is a multinational coffee chain operating over

33,000 stores worldwide. Competitive pressures are a direct result of the company’s
global reach and also the nature of the industry it operates in.
30
Starbucks faces strong competition from McDonald’s, a company with a
similarly large network of global franchises. Using existing infrastructure, many of
these franchises sell premium coffee products through a McCafé store.
Dunkin’ Donuts and Tim Hortons are also significant Starbucks competitors in
the North American market. In Europe and elsewhere, Costa Coffee is leveraging
the power of parent company Coca-Cola to establish a strong presence.
2.2. New market entrants
The specialty coffee industry is very competitive, particularly in aspects of
product quality, innovation, service, convenience (such as delivery service and
mobile ordering), and pricing, and Starbucks are up against considerable and
continuous competition in all of these categories across all of our channels and
markets. On the other hand, even though it’s a competitive industry, the possibility
of new entrants to be successful in the industry is moderate and the influence of
new entrants to Starbucks is moderate either.
- Cost of initial investment
Costs of initial investment in a business similar to Starbucks are
moderate as they can lease stores, equipment etc. at a moderate level of
investment. Also, the level of saturation in the industry is moderately high.
New entrants can compete with brands like Starbucks on a local level.
At a localized level, small coffee shops can compete with the likes of
Starbucks because there are no switching costs for the consumers which
means there are many coffee providers available, consumers can easily
switch their providers by simply going to a different coffee shop in the
morning.
However their possibility of being successful remains low to moderate,
since Starbucks has over 32,000 locations in 80 countries, even if a tiny
local coffee chain drives one or two Starbucks stores out of business, there
are still many Starbucks coffee shops that would remain profitable.
- Cost of supply chain
Because potentially attractive locations for coffee businesses are
already filled by coffee chains, restaurants, and retail outlets, new market
entrants may encounter significant challenges in getting access to
distribution networks. Based on Starbucks’ size, scope and ability to pay,
Starbucks has access to better quality coffee and a larger number of
suppliers globally.
- Cost of brand development
31
But this relatively easy entry into the market is usually countered by
large incumbent brands identities like Starbucks who have achieved
economies of scale by lowering cost, improved efficiency with a huge
market share. There is a moderately high barrier for the new entrants as
they differentiate themselves from Starbucks’ product quality, its prime real
estate locations, and its store ecosystem ‘experience’.
The brand image, brand loyalty, and market share of Starbucks can
mitigate this risk effectively. It has the infrastructure, efficiency, and very
high product quality as its defense against this threat.
In summarize, entry barriers to new market entrants is moderate since the level
of saturation in the coffeehouse chain industry is moderately high, making it
challenging for new entrants to establish a presence and costs of establishing a
business similar to Starbucks is moderate due to factors such as the need for high-
quality coffee beans and the costs associated with developing an effective supply
chain network; For Starbucks, the switching costs are negligible due to maintaining
its brand strength and building its brand loyalty.
In conclusion, the moderate level of entry barriers to new market entrants,
combined with the high brand development costs and costs of supply chain make
new entrants a moderate force for Starbucks, which means that the threat of new
entrants is moderate, Starbucks is able to maintain its market dominance and
withstand the threat of new entrants.
2.3. Substitute products and services
In the specialty coffee sector, substitute goods no longer have as much of an
impact. Many businesses that previously posed a threat to the specialty coffee
industry by offering substitute products have actually joined the market and are now
directly competing by providing their own premium coffee options. The caffeinated
soft drinks provided by Pepsi and Coca-Cola are the main substitute goods that
continue to threaten the specialty coffee business. Even so, the luxury coffee market
is not seriously threatened by these substitute goods. Studies on the proportion of
meals or snacks that included a carbonated soft drink instead of coffee over the past
five years have revealed a shift in consumer taste. Coffee has steadily surpassed
carbonated soft drinks in popularity. This is primarily explained by the health risks
connected to carbonated soft drinks and the recent research demonstrating coffee as
a reasonably healthy option. (Harding, 2000).
2.3.1. Substitute Coffee Chain
In the world:
32
● Dunkin' Donuts: This chain is known for its coffee and doughnuts.
Affordable coffee and breakfast sandwiches with a variety of flavors and
has a presence in more than 30 countries worldwide.
● Costa Coffee: This UK-based coffee chain has a presence in 31 countries
and is known for its signature Mocha Italia blend.
● McCafé: McDonald's coffee brand, McCafé, has grown in popularity and
is now available in over 30 countries.
● Tim Hortons: This Canadian chain is known for its Coffee, donuts,
sandwiches, soups, teas, hot chocolate and has a presence in over 25
countries.
There are numerous other chains that sell coffee and associated goods.
These companies might provide comparable menu options, prices, and
environments to Starbucks.
In Vietnam:
Figure 2.3.1: Vietnam’s coffee market in 202218

● Highlands Coffee: This Vietnamese coffee chain has over 500 locations
across the country and is known for its signature ca phe sua da
(Vietnamese iced coffee with sweetened condensed milk).
18
Vietnam's coffee culture survives 10 years of Starbucks https://e.nhipcaudautu.vn/companies/vietnams-coffee-
culture-survives-10-years-of-starbucks-3351350/, retrieved April 20,2023
33
● The Coffee House: This chain has over 150 locations in Vietnam and is
known for its modern, Instagram-worthy cafes and a wide range of
coffee drinks.
● Trung Nguyen Coffee: This Vietnamese coffee brand has been around
since 1996 and is known for its strong, flavorful coffee blends, has nearly
100 locations in Vietnam
● Phuc Long Coffee & Tea: This chain has over 100 locations in Vietnam
and is known for its premium tea and coffee blends.
2.3.2. Independent coffee shops
Independent coffee shops are typically less expensive than Starbucks. These
bars usually don't have expensive rent or expensive international marketing and
advertising expenses. Compared to Starbucks, independent coffee brands
frequently offer a more relaxed and welcoming ambiance. Some people prefer to
relax and enjoy their cup of coffee in areas that are calm, not too busy, and not
too noisy. Customers frequently get a feeling of place and culture from
independent coffee brands. Some stores might offer specialty beverages, regional
coffees, and unusual flavors. Independent coffee brands frequently have staff
that are happy and energetic, making customers feel more at home and unique.
2.3.3. Other beverages
The refreshment industry is a large one, offering a wide range of goods like
soft drinks, teas, coffees, condensed milk, smoothies, beer, wines, and spirits,
among many others. The refreshment industry has experienced rapid growth,
particularly in nations with advanced economies and sizable populations. In a
study published by the market research company Technavio, it is predicted that
between 2020 and 2024, the global beverage market will expand at a rate of
about 5% per year.
● Tea
In 2020, the market for tea was estimated to be worth approximately
207.1 billion dollars, and by 2025, that figure is anticipated to increase to
266.7 billion dollars. Tea has historically been very popular all over the
globe. Records of its use begin in the third century AD, and it is believed to
have its roots in China. The drink, which was first consumed medicinally,
gained popularity for leisure use during the Tang period and spread to other
Asian nations. The popularity of the leaves expanded to the West in the
16th century after European traders brought them back to Europe.
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Figure 2.3.2: Value of the global tea market from 2012 to 2025 (in billion
U.S. dollars)19
Black tea, green tea, oolong tea, pomelo tea, lotus seed tea, and lotus
leaf tea are some of the different types of tea available on the market. Every
variety of tea has unique qualities and a specific place in the market.
However, black tea and green tea continue to be the two most common
types of tea in the world and make up a sizable portion of tea sales. China,
India, and Japan are currently the three largest tea-consuming countries in
the globe. More than 2 million tons of tea are consumed in China annually,
which accounts for 39% of the world's total tea output. With more than 1.3
million tons of tea consumed annually, India is both the world's biggest
producer and consumer of tea. Meanwhile, Japan is known as a pioneer in
the production and consumption of high-quality green tea.
Therefore, tea is considered as a perfect substitute for Starbucks in
terms of caffeine content in tea and traditional flavor as well as the habit of
many people.
● Bubble Tea
The Milk Tea Market size is estimated to reach $26.4 billion by 2027,
growing at a CAGR of 5.8% during the forecast period 2022-2027. In Asia,
particularly in tea-drinking nations like Taiwan, Hong Kong, China, Japan,
Singapore, Malaysia, and Vietnam, the bubble tea industry is expanding
19
www.statista.com
35
quickly. Milk tea is also becoming more and more well-liked in the US,
particularly in major places like Los Angeles, New York, and San Francisco.
Additionally, Australia, some Middle Eastern nations, and Europe all enjoy
milk tea. The chart below will show more clearly the milk tea market,
specifically in 2021:
Figure 2.3.3: Global Milk Tea Market Share, By Region (%) in 2021
Many different types of people visit the milk tea market, including
young people, students, and the aged. Customers can select their preferred
milk tea and garnishes from a variety of options.
● Alcohol
The alcoholic beverage market is one of the largest and growing in the
world, with a wide range of products and diverse consumer segments. The
alcoholic beverages market is estimated to grow at a CAGR of 3.5%
between 2022 and 2027 and the size of the market is forecast to increase by
USD 440.18 billion. In 2017 the market size was at USD 2195 billion.
Beer, wine, whisky, gin, vodka, tequila, and other cocktails are
common market beverages. The United States, China, Japan, the United
Kingdom, Germany, France, Australia, and Canada are the top producing
and consuming nations for alcoholic drinks.
This is regarded as a premium alternative to Starbucks' beverage
industry.
● Local beverages
Local beverages are those that are specific to an area or culture. These
drinks are frequently prepared using traditional techniques and ingredients
36
that are obtained locally. Local beverages are an integral part of a place's
culture and can provide insight into its residents' past and present. To
compete with strongest substitutes products, Starbucks has implemented
various seasonal and localization policies to cater to the preferences of
different customers around the world.
Even though many policies have been implemented, local beverages
may be the most dreaded Starbucks alternatives on the market as they
attempt to take over its rankings.
Typically as Vietnamese coffee - The world's leading producer of
coffee, and Vietnamese coffee is renowned for having a stronger flavor than
other varieties. Robusta beans are more commonly used by Vietnamese
people, whereas Arabica beans are used in Starbucks goods. While the
caffeine concentration of Starbucks Arabica beans is only 1.5%, that of
Robusta beans can reach 2.7%. Starbucks drinks are undoubtedly
insufficient for those who are accustomed to domestic coffee goods.
Vietnamese consumers require a strong beverage to wake up and keep them
going throughout a lengthy workday, and the large coffee chain does not
provide this. The main cause of Starbucks' "struggle" in Vietnam is this.
The chart below shows more about market coffee in VietNam.
Figure 2.3.4: Coffee chain market in Vietnam (4/2022)

2.4. Customers
2.4.1. Starbucks target market
● Starbucks Demographic Segmentation
37
Starbucks age demographics is typically between 22 and 60, with the
average age of the Starbucks customer being 42 years. The Starbucks
customer demographics includes both male and female, highly educated and
in a high income bracket, earning an average of over $90,000.
Starbucks target demographic includes students, professionals and
employees. The typical Starbucks customer is single or newly married, as
well as parents of younger or older children. It is a popular coffeehouse
brand for a wide swath of the population in the middle to upper classes.
● Starbucks Geographic Segmentation
Starbucks is a global brand with stores in North America, Europe. Asia
Pacific, the Middle East, Africa and China. The United States has the most
Starbucks stores of any country, with California in the lead, home to just over
3000 locations, representing 19% of all US stores.
Starbucks geo spread is mostly urban and suburban areas, capturing a
large walk-in crowd and drive-thrus. It is important to note that the Starbucks
menu varies depending on location, offering food and beverage products that
are suitable for the local target market, like Maple Macchiato in Canada, and
Sakura Blossom Latte in Japan.
● Starbucks Behavioral Segmentation
Starbucks customers are loyal, often developing a habit of visiting the
store regularly. One customer noted that they buy from Starbucks every day,
adding up to over $2000 a year.
Starbucks stores are typically located in urban and suburban areas, making
them an ideal meeting spot or a place for professionals to open their laptops
and work. Even so, order pickups and drive-thru are by far the most popular
way to purchase, comprising 80% of orders even before the pandemic.
● Starbucks Psychographic Segmentation
Being of high socioeconomic status and professionally driven, Starbucks
target audience are busy achievers and explorers, with budget to spare and
spend. They place value in the brands they choose, are health conscious,
socially aware and care about the environment.
As part of its appeal to the target demographic, for example, Starbucks
launched a reusable cup program in its Seattle HQ, aiming to position itself
as a sustainability leader by eliminating 100% of disposable cup waste in its
management offices.
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2.4.2. Buyer personas
Figure 2.4.1: Buyer Persona 1 “Andy”

For Andy, every day must start with a cup of coffee. He often goes to
Starbucks to work instead of working at home as Starbucks offers good wifi,
food, and drinks, along with a little bit of background noise that helps him focus.
Andy is a loyal customer of Starbucks because they have quality products
that he can get anytime, anywhere, and value the availability of healthy options
for his busy lives. Andy is mainly quality - sensitive and willing to pay higher
prices for premium - quality products. Still, the prices cannot be excessively
high compared to the market because he can easily switch to a competitor if he
is dissatisfied with the quality or price of Starbucks' products.
Tech savvy individual, Andy utilizes his mobile devices for everything –
from reading the news to keeping up on work emails, to syncing his schedules
(time management) to taking pictures; his devices keep him in-the-know and
connected not only to each other but to everything around him.
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Figure 2.4.2: Buyer Persona 2 “Claire & Phil Dunphy”
From the moment they wake up to the moment they go to bed, their days
feel packed to the brim. Between dropping the kids off at school, work, sporting
events, homework, and everything in-between, coffee feels like a requirement
for them to be able to get through it all.
Claire and Phil are loyal customers of Starbucks because the company has
quality products that they can get anytime, anywhere, and they value the
availability of healthy options for their busy, on the go family and life.
Both driven in their careers, Claire and Phil try to maintain a work - life
balance and want to give their kids and each other the world but struggle to find
a quiet moment for just the two of them to connect.
➔ Based on the feedback received from both Andy and Claire & Phil
personas, the biggest need and want is for more healthy food and beverage
options at reasonable prices. Whether consumers are trying to make a conscious
effort to properly fuel their bodies while being cognizant of their own time
limitations, the need for more healthy food options is a priority.
2.4.3. The bargaining power of buyers
In Porter’s Five Forces analysis model, the bargaining power of customers
is based on the influence of individual customers and their groups on the
coffeehouse business environment. The following external factors contribute to
the strong bargaining power of customers relative to Starbucks:
● Low switching costs between coffee shops (strong force)
40
Starbucks' customers can switch providers easily and cheaply. As there
are many coffee providers available, consumers can easily switch their
providers by simply going to a different coffee shop in the morning.
Especially in bigger cities, there are numerous different coffee shops on
almost every street which enables customers to switch between them with
no problems.
● High availability of substitute foods and beverages (strong force)
There are many substitutes available that make consumers able to try
out different types of coffee providers and choose the one which works best
for them based on availability and taste preferences. They can, for example,
go to a vending machine or buy a coffee machine to make coffee
themselves at home.
● Small size of individual buyers (weak force)
If even ten or twenty Starbucks customers drop out, it will not have a
large impact on the company. This is because there are millions of
customers making small daily orders in different Starbucks stores
throughout the world.
The bargaining power of consumers or buyers is among the most
significant forces affecting the coffeehouse industry determined in this Five
Forces analysis. With low switching costs and high availability of
substitutes, these strong external factors overshadow the fact that individual
purchases are small compared to Starbucks’ total revenues. However, low
switching costs and high substitute availability lead to the overall strong
force of the bargaining power of customers against Starbucks. Such a strong
force in this component of the Five Forces analysis shows that the
bargaining power of customers is a top-priority strategic issue.
Overall, customers' ability to switch providers easily and cheaply, high
availability of substitutes and relatively small order size of an individual buyer
make the power of customers a strong factor for Starbucks, meaning that the
bargaining power of buyers is high.
2.5. Suppliers
2.5.1. Coffee beans
The suppliers of coffee beans for Starbucks are varied and include both
large and small producers from different regions of the world. Starbucks sources
its coffee beans from Latin America, Africa, and Asia, among other regions.
Some of Starbucks' key coffee bean suppliers include:
41
● C.A.F.E. Practices certified farms: Starbucks works with farms that meet
their C.A.F.E. Practices criteria, which include sustainable farming
practices, fair treatment of workers, and protection of the environment.
● Fairtrade certified farms: Starbucks also sources coffee beans from
Fairtrade certified farms, which ensure fair prices and working conditions
for farmers and workers.
● Smallholder farmers: Starbucks also works with smallholder farmers who
grow coffee beans in smaller quantities and may lack access to resources
and infrastructure.
● Coffee cooperatives: Starbucks sources coffee beans from cooperatives of
smallholder farmers, which help to empower farmers and improve their
livelihoods.
Starbucks' relationships with its coffee bean suppliers are based on long-
term partnerships that aim to improve the sustainability and quality of coffee
production while ensuring fair treatment of farmers and workers.
2.5.2. Other ingredients
About the suppliers of other ingredients besides coffee beans for Starbucks,
based on the area, it has a big difference. In a specific country - USA, it has some
information include:
● Milk: Starbucks sources milk from a number of suppliers, including
Clover Sonoma, which provides organic milk from family-owned farms in
California, and Dairy Farmers of America, a cooperative of more than
14,000 farmers across the United States.
● Food: Starbucks works with a variety of food suppliers, including La
Boulange, a bakery based in San Francisco that provides baked goods such
as croissants and pastries for Starbucks stores, and Ethical Bean Coffee, a
Fairtrade certified coffee roaster that also supplies chocolate for Starbucks'
drinks.
● Syrup and sauce: Starbucks sources syrups and sauces for its drinks from
a number of suppliers, including Fontana, which provides a range of
syrups and sauces such as vanilla syrup and caramel sauce, and Monin,
which supplies flavors such as hazelnut and gingerbread.
● Packaging: Starbucks works with a range of packaging suppliers,
including International Paper, which provides the cups and sleeves for
Starbucks' hot drinks, and Berry Global, which provides the lids and
straws for its cold drinks.
42
Overall, Starbucks' relationships with its suppliers of other ingredients are
also based on long-term partnerships that aim to promote sustainability and
responsible sourcing practices while providing high-quality products for
customers.
2.5.3. The bargaining power of suppliers
Suppliers are crucial for the success of Starbucks, as they provide the
company with a variety of products and ingredients that are necessary for its
operations. In addition to coffee beans, suppliers provide milk, food items, syrups
and sauces, packaging materials, and other products that Starbucks uses in its
stores. Without reliable and high-quality suppliers, Starbucks would not be able
to maintain its reputation for offering premium products to its customers.
If Starbucks were to lose one of its suppliers for any of its key ingredients,
it could potentially have a significant impact on the company's operations and
reputation. For example, if Starbucks lost a coffee bean supplier, it could lead to
a shortage of certain types of coffee or a decrease in the quality of coffee that
Starbucks is able to offer. This could negatively impact customer satisfaction and
sales. Similarly, if Starbucks lost a milk supplier or a supplier of other key
ingredients, it could result in a shortage of certain menu items or a decrease in the
quality of products that Starbucks is able to offer. In some cases, this could even
lead to the temporary closure of certain stores or a decrease in overall revenue for
the company.
Therefore, it is crucial for Starbucks to maintain strong and diverse supplier
relationships, and to have contingency plans in place to address any potential
disruptions to its supply chain. This may include identifying alternative suppliers,
adjusting menu offerings, or implementing other strategies to minimize the
impact of any supply chain disruptions.By the way, Starbucks has a range of
suppliers in almost categories, if one of them leave, it doesn't affect too much to
Starbucks, meaning that the bargaining power of suppliers is moderated.
43
Chapter 3. Overview of Starbucks Management
Information Systems
3.1. TPS (Transaction Processing System)

TPS is a basic business system that serves the organization’s operational level.
Starbucks has developed a well-organized Transaction processing system that
collects the data and stores it in the multilevel data storage facility of the
organization. Starbucks uses IBM TPS system to punch in every order and store
information such as of sales, COGS, wastage, etc. It is used at the point of sale
(POS) of outlets, that is, the location where goods are sold or where transactions
occur.
3.2. DSS (Decision Support System)
DSS serves management level with data, analysis for making decisions. DSS is
a computer program application that analyzes business data and presents it so that
users can more easily make their business decisions. Starbucks uses
OnlineAnalytical Processing (OLAP) to do the large-scale data analysis and
statistical analysis that act as reference for decision making. A singular DSS system
called Oracle is used at the parent company. Oracle generates monthly reports on
which important decisions are based.
3.3. CRM (Customer Relationship Management)
Customer relationship management (CRM) is a technology for managing all
your company’s relationships and interactions with current and potential customers.
Starbucks does not publicly disclose which CRM software they use. However,
based on various industry reports and speculation, there are two ways Starbucks
uses CRM is through social media, StarbucksMembership Cards and recently is
Push & In-app Notifications.
In 2017, Starbucks embarked on a journey to create a custom-developed, AI-
driven recommendation platform (“Deep Brew”) to serve customers with relevant
product recommendations across multiple channels including in-app ordering and
digital menu boards.
3.4. SCM (Supply Chain Management System)
Supply chain covers all activities from product development to production, to
the information systems required to direct these actions. The supply chain
management system at Starbucks helps improve their reporting system which
further enhances their production process. Since Starbucks does not outsource its
44
procurement and has to source coffee from diverse coffee bean producers on their
own, they need the expertise of supply chain management.
- For order visibility and management, Starbucks likely uses an order
management system (OMS).
- For inventory management, Starbucks likely uses an inventory management
system (IMS).
- For shipping and transportation management, Starbucks likely uses an
advanced shipping and transportation management (AS/TM) system.
- For warehouse management, Starbucks likely uses a warehouse
management system (WMS)
3.5. ERP (enterprise resource planning system)
ERP is a software application that is used by organizations to manage and
integrate their business processes, such as inventory management, order
management, production scheduling, and finance and accounting. Starbucks
employs an ERP system to manage its supply chain operations, finance and
accounting functions, and other business processes. Starbucks uses Oracle to
support some or all of these functions.
45
Chapter 4. Starbucks ERP System
Overview
The food and beverage industry consists of fresh, prepared, or packaged food
as well as alcoholic and nonalcoholic beverages; it includes manufacturing,
packaging, and distribution, which requires lots of coordination and integration
amongst different departments, locations, and people. Only then would maintaining
the expiries and satisfying the consumer demand in a timely and efficient manner be
possible. This highlights the need for ERP in the very competitive, vast, and
complex food and beverage industry. F&B have strict regulatory requirements,
highly complex and competitive supply infrastructure, and smart and impactful
tactics that you are required to apply to remain relevant and profitable within your
market space. ERP provides a wide range of useful features and functions that are
invaluable when managing perishable stock. Some of these features include batch
tracking, batch traceability, predictive stock management, Quality Assurance
monitoring, and warehousing applications.
Starbucks, as a prominent player in the coffee and beverage industry, requires
a robust system to manage its operations effectively. Starbucks has large-scale
operations, manages a vast supply chain network, and operates thousands of stores
worldwide. Starbucks uses Oracle ERP – a cloud-based software solution used to
automate back-office processes and day-to-day business activities. Starbucks has its
own customer-centric approach to business. ERP software allows Starbucks to
manage customer information, enabling the company to offer personalized
recommendations and promotions. Additionally, Starbucks operates in a highly
competitive industry where small differences in pricing or service can have a
significant impact on customer loyalty. By using ERP, Starbucks can analyze data
in real-time, monitor trends and performance, and make quick, informed decisions
that help it stay ahead of the competition.
4.1. Literature review
4.1.1. Definition of enterprise resource planning
Enterprise resource planning (ERP) refers to a type of software that
organizations use to manage day-to-day business activities such as accounting,
procurement, project management, risk management and compliance, and supply
chain operations. A complete ERP suite also includes enterprise performance
management, software that helps plan, budget, predict, and report on an
organization’s financial results.
46
ERP systems tie together a multitude of business processes and enable the
flow of data between them. By collecting an organization’s shared transactional
data from multiple sources, ERP systems eliminate data duplication and provide
data integrity with a single source of truth (Oracle, n.d.).
4.1.2. Other essential terms in solutions
- Oracle: Oracle is a software company that provides ERP software
solutions to businesses of all sizes. Oracle ERP Cloud is a comprehensive
suite of integrated cloud-based applications that can be customized to meet
the unique needs of an organization.
- CRM (Customer Relationship Management): This is a module within an
ERP system that focuses on managing customer interactions and
relationships. It includes sales, marketing, and customer service
functionalities to help organizations build and maintain relationships with
their customers.
- SCM (Supply Chain Management): This is a module within an ERP
system that focuses on managing the flow of goods, services, and
information from suppliers to customers. It includes functionalities such as
procurement, inventory management, and logistics to help organizations
optimize their supply chain operations.
- E-commerce: This term refers to the buying and selling of goods and
services online. Some ERP systems have modules that support e-
commerce activities, such as online sales, order management, and payment
processing.
- Business Intelligence (BI): BI refers to a set of tools and techniques used
to analyze and interpret business data, providing insights that can inform
decision-making. Many ERP systems have BI modules or integrations
with third-party BI tools to help users gain a better understanding of their
business performance.
- Analytics: Analytics refers to the process of collecting, processing, and
analyzing data to gain insights and make informed decisions. Many ERP
systems have analytics capabilities, allowing users to create custom
reports and dashboards to monitor key business metrics.
4.2. ERP software solutions
4.2.1. ERP software comparison
Recall from the Literature review, ERP (Enterprise Resource Planning) is a
software that enables businesses to integrate their key business processes in real-
time, such as finance, HR, supply chain management, and customer relationship
47
management. This software helps organizations to improve their efficiency,
reduce costs, and increase productivity.
There are several ERP systems available in the market. Nevertheless, this
project will compare 3 ERP systems which are the largest and leaders of ERP
solutions in the market Oracle, SAP, and Microsoft.
Figure 4.2.1: Top 10 ERP softwares solution by analyst rating20

A brief look at SAP, Oracle and Microsoft:
● SAP
Five former IBM employees launched SAP in 1972 to merge all
business operations and process data in real time. In 2011, SAP pushed to
the cloud with SAP HANA and SAP S/4HANA in 2015.
● Oracle
Three engineers created Software Development Laboratories in 1977
and changed the name to Oracle in 1982. Oracle released its first fully-
integrated enterprise apps suite in 2000, called E-Business Suite 11i, and
created a condensed cloud database in 2013.
● Microsoft
Microsoft Dynamics 365 Business Central (formerly Microsoft
Dynamics NAV) is an ERP and CRM software-as-a-service offering
20
SelectHub, Best Enterprise Resource Planning (ERP) Software, from https://www.selecthub.com/c/erp-
software/, retrieved 4/4/2023
48
designed for small and medium-sized organizations. Combining features
from Microsoft NAV and Dynamics CRM and easily connecting to Office
365 and PowerBI.
Comparison of three ERP software systems based on some key criteria:
1. Features: All three ERP systems offer advanced features such as financial
management, HR management, supply chain management, customer
relationship management, and more. However, the specific features and
functionalities may vary depending on the implementation.
2. Cost: The cost of implementing an ERP system can vary depending on
factors such as the size of the organization, the number of users, and the
specific features needed. In general, SAP's ERP solution is quite
expensive on the whole, Oracle and SAP are known to be more expensive
compared to Microsoft.
3. Customization: All three ERP systems offer some level of customization,
but the degree of Customization and flexibility may vary depending on the
system. It's worth noting that the level of customizability can also vary
depending on whether the ERP software is implemented as an on-premises
or cloud-based solution which will be discussed at the deployment options
criteria.
4. Integration: Integrations with other systems such as CRM, HR, finance,
and supply chain management are critical for an ERP system. All three
systems have integration capabilities, but the integration capabilities may
vary depending on the vendor implementation.
5. User Interface: All three ERP systems provide end users with user-
friendly user interfaces, however the user experience may differ based on
the implementation.
6. Support and maintenance: Technical support and maintenance are
provided by all three ERP systems, although the quality of these services
may differ based on the vendor's deployment.
7. Deployment options: ERP solutions that can be managed from the cloud
are ideal, as you can forego additional expenditures for on-premise
hardware while also relying on the expertise, increased security and
redundant servers of your provider.
49
Figure 4.2.2: Top Rated ERP Systems Comparison21
In conclusion, the choice of an ERP system depends on multiple factors
such as the size of the organization, the current IT infrastructure, the complexity
of business processes, and the specific features needed. It's important for
organizations to conduct a thorough evaluation of the available ERP systems
based on their specific requirements and budget to select the most suitable ERP
system for their business needs.
4.2.2. Starbucks choose Oracle ERP solution
Starbucks selected Oracle to enhance customer connection and convenience.
Gerri Martin-Flikinger, the executive vice president and CTO of Starbucks, led
her group on a transformation and modernization journey that enabled the
21
Software Testing Help (March 22, 2023), Best ERP Software 2023: Top Rated ERP Systems Comparison,
from softwaretestinghelp.com/best-erp-software-systems/#Comparison_Of_The_Best_ERP_Software_Tools,
retrieved 3/4/2023.
50
company to quickly pivot at the start of the pandemic. She has admitted that with
increased agility, Starbucks was able to quickly spin up services to meet new
customer requirements including mobile order and pay, voice order, nationwide
delivery, curbside pickup, and new drive-thru and pick-up locations.
Figure 4.2.3: Starbucks technology transformation strategy22

Starbucks selected Oracle as its enterprise resource planning (ERP)
provider over Microsoft or SAP for a number of reasons. Some potential causes
include:
1. Cost:
SAP's ERP solution is known to be quite expensive, and it may not have
been within Starbucks' budget. Additionally, the cost of implementing and
customizing Dynamics 365 could also have been a factor. Oracle's ERP
solution is known to be more expensive than Microsoft Dynamics. However,
Starbucks may have considered the total cost of ownership, including
implementation, training, and maintenance, when making its decision.
2. Technological capabilities:
Starbucks considered that Oracle's ERP solution was better suited to their
specific business requirements, particularly when it came to dealing with
large volumes of transactions and data. Oracle's ERP solution is well-known
for its scalability and capability in handling complicated activities.
SAP's products are also highly scalable and can handle large volumes of
data, but it's known more for its focus on manufacturing and finance
processes. They may not have been the best fit for a company like Starbucks,
which operates in multiple countries and has complex global supply chain
management requirements.
Furthermore, SAP's ERP solution is also known for its advanced
capabilities, similar to Oracle. However, Starbucks may have had specific
requirements that only Oracle could meet. Additionally, if Starbucks was
already using other Oracle applications, they may have felt that it made more
sense to stay within the same technology stack, which will be discussed in
the integration criteria.
22
Oracle, Starbucks selects technology to enhance customer connection and convenience, from
https://www.oracle.com/events/customer-spotlight/starbucks/, retrieved 4/4/2023.
51
While Microsoft Dynamics 365 is a powerful solution, it may not have
the specific capabilities that Starbucks requires in terms of large-scale
operations, integration, and advanced ERP functionality.
Also recall from the comparison, more ideal than other systems, Oracle
provides the cloud-based deployment options which consistent and enhanced
the digital transformation strategy of Starbucks.
3. Customizability:
Starbucks recognized Oracle's software to be more adaptable to their
requirements. Oracle's solution is highly customizable, allowing
organizations to adjust it to their own processes, workflows, and needs. This
enables Starbucks to centralize all their data and operations on a single
platform, which enables them to make faster, more informed decisions.
While both SAP and Dynamics 365 can be customized to some extent,
Oracle's ERP solution may have been seen as the more flexible option.
Starbucks needs a solution that could be tailored to their specific processes
and workflows.
4. Integrated:
Oracle's ability to integrate with other business systems, including CRM,
accounting, and SCM, are very impressive. This can be important for
companies with complex operations, as they may need to integrate data from
multiple systems to make informed decisions.
While both SAP and Microsoft Dynamics 365 can be integrated with
other business systems, Oracle may have been seen as the better option due
to its more advanced integration capabilities. Starbucks considered that
Oracle's solution could integrate data more seamlessly from multiple systems.
Additionally, Oracle also has an excellent partner relationships and
ecosystem, which includes a wide range of third-party vendors and technology
providers. This ecosystem can help businesses customize their solutions, extend
their capabilities, and implement their systems more quickly and efficiently.
However, Starbucks does not have a 3rd party to implement their ERP system.
They have a dedicated team of ERP and IT professionals who are responsible for
implementing and maintaining the ERP system at their corporate office and
stores. This topic will be discussed later in the section.
Overall, the choice of a particular ERP solution depends on the specific
needs and requirements of the organization. In the case of Starbucks, the
company likely needed a solution that could support its complex global SCM
requirements and provide real-time visibility into its operations across multiple
countries. While SAP and Dynamics 365 are both strong ERP solutions,
52
Starbucks may have chosen Oracle because it provided the best combination of
cost, technological capabilities, customizability, and integration for their specific
needs.
4.3. Analysis of Starbucks ERP system:
4.3.1. Origins and Milestone of Starbucks
Prior to implementing ERP (Oracle) in 2003, Starbucks utilized several
technologies to manage its operations. One of the key technologies was an online
ordering system - allowing customers to order online and avoid waiting in line
and an automated payment system to reduce wait times and increase efficiency in
store management. Starbucks also utilized a human resources management
system to manage and develop its staff.
After implementing ERP (Oracle), a range of technologies are replaced by
that system. This is the overview of milestone Starbucks implementing ERP -
Oracle by the year:
Figure 4.3.1: Starbucks ERP implementation milestones

- In 2003, Starbucks implemented Oracle's ERP technology to support
its financial and supply chain operations.
- In 2006, Starbucks expanded its use of Oracle's ERP technology to
include its human resources and payroll systems.
- In 2008, Starbucks upgraded its ERP system to Oracle's latest version,
which included improved reporting capabilities and a more user-
friendly interface.
53
- In 2010, Starbucks began using Oracle's ERP technology to manage
its inventory levels and improve its supply chain management.
- In 2013, Starbucks announced that it would be implementing Oracle's
cloud-based ERP system, which would provide real-time data
analytics and improved scalability.
- In 2019, Starbucks continued to expand its use of Oracle's ERP
technology, announcing plans to implement the Oracle Autonomous
Database to improve its data management and analysis capabilities.
4.3.2. Impact on the Starbucks’ operations of ERP
Before implementing Oracle's ERP solution, Starbucks faced various
challenges in managing its financial and supply chain operations. However, after
implementing the ERP system, Starbucks has achieved several benefits. Here's a
comparison of the benefits before and after the implementation of Oracle's ERP
solution:
Before implementing the ERP:
- Inefficient manual processes: Starbucks used manual processes to
manage its financial and supply chain operations, which resulted in
errors and delays.
- Lack of visibility: Starbucks had limited visibility into its inventory
levels and supply chain operations, which made it difficult to manage
its business operations effectively.
- Siloed systems: Starbucks used different systems for different
functions, which made it difficult to integrate data and make
informed business decisions.
After implementing the ERP:
- Streamlined processes: Oracle's ERP solution has enabled
Starbucks to streamline its financial and supply chain operations,
reducing errors and delays and improving overall efficiency.
- Improved visibility: The ERP system has provided Starbucks with
real-time visibility into its inventory levels and supply chain
operations, enabling the company to make informed business
decisions.
- Integrated systems: The ERP system has integrated all of Starbucks'
systems into one platform, enabling seamless data integration and
improved collaboration across functions.
54
- Enhanced reporting and analytics: Oracle's ERP solution has
provided Starbucks with enhanced reporting and analytics
capabilities, enabling the company to make data-driven decisions and
optimize its business operations.
4.3.3. Importance of the ERP implementation
The implementation of Oracle's ERP solution has been crucial in supporting
Starbucks' global expansion and growth. Here are some key ways in which the
ERP system has enabled Starbucks to expand and grow its business:
- Scalability: Oracle's ERP solution is highly scalable, which has
enabled Starbucks to expand its operations to new markets and regions
without compromising on efficiency or data management.
- Standardization: The ERP system has enabled Starbucks to
standardize its business processes and systems across all of its
locations, ensuring consistency and efficiency in its operations.
- Real-time data: The ERP system provides real-time data on inventory
levels, sales, and other key metrics, enabling Starbucks to make
informed decisions about its business operations and expansion
strategies.
- Supply chain management: The ERP system has enabled Starbucks
to optimize its supply chain management, ensuring timely delivery of
products and minimizing waste.
- Enhanced collaboration: The ERP system has improved
collaboration across different functions and teams within Starbucks,
enabling seamless communication and data sharing.
- Improved customer experience: The ERP system has enabled
Starbucks to improve its customer experience by ensuring timely
delivery of products, accurate inventory management, and efficient
order processing.
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4.4. Analysis Starbucks ERP implementation process
4.4.1. The stages of general ERP implementations
Figure 4.4.1” A flowchart of the six phases of an ERP implementation 23

Step 1: Discovery & Planning
This entails conducting system study and selection, assembling a project
team, and outlining specific system requirements.
The project team will be in charge of a wide variety of implementation-
related tasks, such as developing the project plan and target dates, making sure
enough resources are allotted, choosing products and designs, and managing
the project on a day-to-day basis.
Getting a thorough grasp of current problems, such as process
inefficiencies and requirements for the ERP system, will be one of the team's
early objectives. As the company establishes a clear understanding of its
requirements, the team may choose and purchase an ERP system during this
phase. Choosing an on-premises or cloud-based ERP solution is a significant
choice.
Step 2: Design
The design process creates a detailed design for the new ERP system
based on specific requirements and knowledge of existing workflows. This
23
6 Key Phases of an ERP Implementation Plan from https://www.netsuite.com/portal/resource/articles/erp/erp-
implementation-phases.shtml, retrieved 5/4/2023
56
entails creating brand-new, more effective workflows and other company
procedures that utilize the system. Users should be involved in the design
process because they are the ones who know the existing business procedures
the best. Involving them in the planning process also increases the likelihood
that they will embrace the new system and make the most of it.
Gap analysis can be used to find process nuances and peculiarities that
might call for ERP software modification or adjustments to workflow or
processes to better fit the ERP system itself.
Step 3: Development
In order to support the redesigned processes, this entails configuring and,
where required, customizing the software. It might also entail creating
integration with any other business apps already in use by the company that
the ERP system won't take the place of.
Additionally, data migration preparation, which frequently entails
extracting, transforming, and loading data from various systems, each of
which might use a different structure and contain duplicate or inconsistent data,
needs to start. In this phase, the project team should choose which data to
move rather than migrating all historical data at once, much of which is
probably irrelevant.
Step 4: Testing
Concurrent testing and creation are possible. For instance, the project
team might try particular modules and features, make corrections or
adjustments in light of the findings, and then retest. A different ERP package
could be tested while another is still being developed. Initial testing of the
software's fundamental features should be followed by thorough testing of all
of its features, which should include letting some workers use the system for
all of their regular tasks. This step ought to include end-user orientation
training as well as testing of the migrated data.
Step 5: Deployment
Despite your best efforts to prepare the staff for the shift, there may be
many moving parts and some confused employees, so be ready for potential
problems. The project team needs to be accessible to respond to queries,
explain the system to users, and try to resolve any problems. If problems arise,
the implementation associate ought to be able to assist with troubleshooting.
Users may need some time to get used to the method and experience the
desired productivity gains.
Step 6: Support and Updates
57
After deployment, ERP implementation needs to be maintained to keep
users satisfied and make sure the company reaps the intended benefits. During
this period, the project team may still be in charge of the ERP system, but its
attention will now be on gathering user feedback and modifying the system as
necessary. With the addition of new features to the system, extra development
and configuration may be required. Additionally, the method will require
training for new employees.
4.4.2. The stages of ERP implementation of Starbucks
Starbucks uses an Oracle ERP system to automate administrative functions
and everyday business processes, including supply chains, finance, procurement,
and project management.
Step 1: Discovery & Planning
The objectives, schedule, spending plan, and resources needed for the
execution project would be decided by Starbucks. They would also choose an
implementation partner and organize a project crew.
In this phase, Starbucks would examine its existing business procedures
and pinpoint areas where Oracle ERP could be used to enhance them. To
identify the differences between their current procedures and the functionality
provided by Oracle ERP, they would also perform a gap analysis.
Step 2: Design
Starbucks would create the Oracle ERP system to suit their unique
company requirements based on the step 1 stage. Configuring the system,
making any necessary customizations, and creating any necessary system
connections would all fall under this category.
Step 3: Testing
The ERP system needs to be fully tested before going live to make sure it
works as intended. Run test scenarios as part of the testing process, then
examine the outcomes to find any problems.
Step 4: Deployment
Data from Starbucks' current systems would have to be moved over to
the new Oracle ERP system. This would entail evaluating the data migration
procedure as well as mapping data fields from the old system to the new
system.
Step 5: Support & Updates
After installing the ERP system, Starbucks will need to train its staff on
how to utilize it. For various user groups, this would entail developing training
58
materials and holding training sessions. This stage improves the system's
performance and to hunt for weaknesses so that it can be updated in upcoming
upgrades.
The new Oracle ERP system's launch is the last step. This entails
switching from the old systems to the new ones, making sure that all of the
data has been successfully moved, and constantly watching the system
throughout its first few days of operation.
Overall, in order to increase operational effectiveness, customer satisfaction,
and decision-making abilities, an Oracle deployment of Starbucks would
necessitate a comprehensive strategy that connects numerous software platforms.
This would necessitate extensive planning, testing, and training to guarantee a
seamless switch to the new system.
4.4.3. Starbucks doesn’t use third-party for ERP process
Starbucks manages its business operations using an ERP (Enterprise
Resource Planning) system created by the corporation. Due to the following
factors:
- Customization: Starbucks was able to adapt the system to its particular
company needs and operations by creating a separate ERP system. This
improves operational procedures and corporate management efficiency.
- Security: As a well-known company, Starbucks has access to a wealth of
vital information regarding its clients, payment methods, retail
operations, and manufacturing techniques. The establishment of a
distinct ERP system enables the business to guarantee the protection and
safety of this crucial data.
- Integration: By creating a distinct ERP system, Starbucks will find it
simple to integrate the system with its other apps and services. This
facilitates more seamless management of data and business processes.
Furthermore, employing a third-party ERP system may result in increased
expenditures for Starbucks, particularly when customizing and updating the
system to meet the company's demands. Starbucks will be subject to the
constraints and limitations of the third-party ERP system, and may not be able to
make adjustments to the company's demands quickly and efficiently
As a result, Starbucks' decision not to utilize a third party to build the ERP
system can be viewed as a means for the company to optimize its business
operations, boost flexibility, and lower costs.
59
4.5. How ERP help Starbucks with Porter’s Five Force
4.5.1. Low cost strategy
In terms of this strategy, Starbucks has utilized Oracle to streamline its
operation and reduce costs
The ERP system eliminated the need for paper forms and emailing orders.
Operating costs are decreased due to the fact that less personnel is needed to
operate the entire system effectively. Also, with the accounting system being
integrated into the system Starbucks is able to maintain a watchful eye on all
transactions that occur allowing them to see what is costing them too much and
need to make improvements on.
By streamlining its operation, Starbucks cut down on idle time of
employees; therefore, Starbucks can make more drinks with the same or even
fewer workers. This also improves the supply chain management by providing
real-time data on inventory levels, demand patterns and supplier performance.
Therefore, Starbucks can optimize its supply chain and reduce costs.
4.5.2. Supplier and customer intimacy
To deal with customers and suppliers forces, Starbucks applied:
- Customer relationship management: Oracle enables Starbucks to
manage customer interactions and track customer behavior across
multiple channels. This allows Starbucks to personalize its promotion
and marketing, enhancing customer satisfaction, and customer loyalty.
- Product introduction and development based on customer preferences:
Starbucks uses Oracle Simphony POS for daily transactions in stores and
is integrated into the app24. The database offers valuable analytical
information to help research and develop new products. Oracle’s POS
“delivers guest-centric marketing and content” that is analyzed behind
the scenes of the IT department at the Starbucks headquarters. Using its
app, Starbucks gauge customer preferences through application profiles
which could lead the way to innovate new products.
+ In 2016, Nitro Cold Brew was introduced as a response to customer
demand for a more elevated cold brew experience. It has been
reported that the sales of cold brew beverages had grown by 20%
year-over-year. During the fiscal third quarter ended June 27, cold
beverages accounted for 74% of total America beverage sales.
24
W, R., & Watkins, R. (2021, February 16). What POS System Does Starbucks Use? [2021] - The Rise Small
Business. The Rise SMB. Retrieved April 10, 2023, from https://therisesmb.com/what-pos-system-does-
starbucks-use/
60
+ Sous Vide Egg Bites was introduced in 2017 for customers looking
for a protein-packed, on-the-go option. It soon become a popular
breakfast item.
- Less procedure for suppliers: The system also creates a coordinated
effort between the finance department and the procurement department
by releasing funds at the point of origin paperless. This has reduced the
lag time that stores have to wait for supplies compared to conventional
systems which generally take an extended time to go through many
people and different processes before stores are supplied with the
required goods. Suppliers also gain the same benefit by receiving instant
payment and reducing their legislative compliance requirements.25
4.6. Limitation and Recommendation
- Lack of adequate training: Regardless of how effectively the system was
designed and tested, inadequate training can have disastrous effects on the
project and is frequently a primary factor in the perception of a "failed"
implementation. Starbucks should establish opportunities for training the
employees on how to use the system. They should ensure internal staff are
involved throughout the implementation in hands-on learning and training,
integrate system training into onboarding procedures to new staff, and create
cheat sheets, user manuals, and checklists, and put them in a centralized, well-
organized internal file sharing tool so they are easily accessible.
- Perpetual Improvement: The difficulty with ERP adoption is that it is a
continuous process that necessitates monitoring and updating. It must be
flexible and scalable, evolving along with the business rather than staying the
same. The project team is in charge of managing the project, fixing defects, and
adding new functionality as needed after the program has been deployed. It is
crucial to conduct periodic audits or reviews to assure the ERP systems'
ongoing effectiveness because Starbucks will use them for years after
installation. The system should be modified to include more functionality if it
cannot change to meet the business's evolving needs.
- Cost overruns: After implementation kicks off, ERP projects are notable for
running past their budgets. Many businesses misjudge the amount of effort
involved in switching to a new business system, which leads to overspending.
Starbucks ought to plan more than they expect for these and other
considerations need to be taken-for costs to prevent blowing the budget.
25
Soni, A. (2020, 8 22). Role of Supply Chain Function in Starbucks Coffee. LinkedIn. Retrieved April 10,
2023, from https://www.linkedin.com/pulse/role-supply-chain-function-starbucks-coffee-anesh-soni-anesh-soni/
61
Chapter 5. Starbucks AI Applications
Overview
Starbucks is leveraging AI, machine learning, big data, analytics, and IoT
technologies to accelerate digital transformation and enhance customer experiences
and operational efficiencies. Starbucks’ internal AI platform, Deep Brew, allows it
to innovate and experiment by leveraging machine learning technologies to
customize the drive-thru experience for customers and automate inventory
management and preventive maintenance through its IoT-connected machines.
Starbucks has also partnered with Microsoft to leverage the latter’s blockchain
technology, allowing customers to track the journey of coffee beans for their drink.
Starbucks unveiled an innovative conversational ordering system in the early
2017, My Starbucks Barista, powered by groundbreaking Artificial Intelligence
(AI) for the Starbucks Mobile App. Starbucks Mobile App customers will be able to
place their orders via voice command or messaging interface, delivering
unparalleled speed and convenience, enhancing customer loyalty and engagement
and further extending the accessibility of the Starbucks app.
Starbucks has adopted a digital flywheel strategy in order to improve its
overall business performance. This strategy involves utilizing a circular model of
growth, where actions taken in one area of the business contribute to the success of
other areas, thereby generating a continuous cycle of growth.
5.1. Digital Flywheel Strategy
In 2017, Starbucks revealed its new digital transformation strategy: the
“Digital Flywheel.” Built around four pillars (rewards, personalization, payment,
and order), the goal was to merge the physical customer touchpoints with the digital
to “not only drive superior business results in the short term, based on rewards,
ordering, and personalization, but we also make it very challenging for digital
companies to outmaneuver us in the physical world,” according to Starbucks’ Chief
Strategy Officer Matt Ryan. This fundamental modernization of our technology
stack will replace legacy rewards and ordering functionality with the new scalable
cloud-based platform for rewards and ordering, improved customer data
organization, and tighter integration with store-based operating systems, including
inventory and production management.26
At its core, the Digital Flywheel is essentially a positive feedback loop for data
collection. The increased personalization, which is driven by AI, increases sales,
26
Stuart Lauchlan, https://diginomica.com/digital-aint-seen-nothing-yet-says-starbucks-chief-strategy-officer,
July 27, 2017.
62
which generates even more data for Starbucks to use for personalization. The data
from the Digital Flywheel is a quality, first-party data set which can be used to train
the personalization AI further, generate new insights, and train other ML models for
different parts of the business. 50% of Starbucks’ sales are from their mobile app27,
and this number is growing, so the quality and volume of Starbucks’ data will only
keep growing.
Figure 5.1.1: Digital Flywheel Strategy28

5.1.1. Rewards
Starbucks’ Mobile Loyalty Program rewards its loyal customers via various
mobile app-based service providers and its own digital platforms. It is the best
loyalty program in the retail sector, with over 25 million active members.
Members earn stars for each dollar they spend. Those stars can then be redeemed
for free food, drinks, or merchandise. Those members generated 53% of
Starbucks sales in the first quarter of 2022.29
While loyalty programs have been around for a long time, they are now
viewed as one of the best methods for converting the average consumer into a
digital customer. In the past few years, Wendy’s, Taco Bell, Burger King, and
McDonald’s have launched their own loyalty programs. These loyalty programs,
like Starbucks Rewards, are tied to the retailer’s app, meaning the most efficient
way of accumulating rewards is by using the retailer’s app to make and pay for
orders. Once a customer uses your app frequently in the guise of accumulating
points, it becomes easy to gather data on their shopping apps, which you can then
use to provide customized offers.
27
Emma Liem Beckett, https://www.restaurantdive.com/news/starbucks-digital-success-partially-driven-by-ai-
engine-ceo-kevin-johnson/599182/, April 28, 2021.
28
Anmol Parande, https://blog.anmolparande.com/starbucks-coffee-with-a-side-of-ai-a0f494b378df, December
23, 2021
29
Motley Fool Transcribing, https://www.fool.com/earnings/call-transcripts/2022/02/01/starbucks-sbux-q1-
2022-earnings-call-transcript/, Feb 1, 2022
63
Figure 5.1.2: Starbucks’ Rewards Program30
30
Starbucks, https://stories.starbucks.com/press/2020/starbucks-to-update-loyalty-program-and-app-this-fall-to-
offer-more-ways-to-pay-and-earn-stars/, July 21, 2020.
64
5.1.2. Personalization
Figure 5.1.3: Starbucks Personalization Vision31

"Personalization in our DNA" is a statement by Starbucks that emphasizes
their commitment to creating personalized experiences for their customers.
Personalization is a key factor in building strong customer relationships and
driving business success. By leveraging technology and data to create more
customized experiences, they hope to continue to strengthen their brand and meet
the evolving needs of their customers. To achieve this, Starbucks has
implemented a number of initiatives, such as the My Starbucks Rewards program,
and mobile ordering and payment options.
Members of the rewards program and mobile app authorize Starbucks to
gather a lot of information about their coffee-buying habits, from their preferred
drinks to what time of day they are usually ordering. So, even when people visit a
"new" Starbucks location, that store’s point-of-sale system is able to identify the
customer through their smartphone and give the barista their preferred order. In
addition, based on ordering preferences, the app will suggest new products
customers might be interested in trying. This intel is driven by the company’s
digital flywheel program, a cloud-based artificial intelligence engine that’s able
to recommend food and drink items to customers who didn’t even know they
wanted to try something new. It’s so sophisticated that the recommendations will
change based on what makes the most sense according to the day’s weather, if it
is a holiday or a weekday, and what location customers are at.
31
Microsoft Developer (8/5/2019), Youtube, Starbucks “Deep Brew”: Hyper Personalization Applications with
Reinforcement, from https://www.youtube.com/watch?v=XxK1PyaF1bw, retrieved on 4/4/2023.
65
Figure 5.1.4: Promotional offer notifications, order and pay through the mobile
app32
5.1.3. Payment
Starbucks’ wallet is linked to credit card, Paypal, Apple Pay, or Chase and
can even be linked to a barcode system, which allows users to scan the barcode to
pay and eliminate the use of cash.
Figure 5.1.5: US Proximity Mobile Payment Users, by Platform, 202133
32
Andrea Xue (Aug 11, 2019), Towards Data Science, Starbucks Offer Personalization — Sending the right
offer to the right customer, from https://towardsdatascience.com/starbucks-offer-personalization-sending-the-
right-offer-to-the-right-customer, viewed April 27, 2023.
33
eMarketer, https://www.insiderintelligence.com/chart/245782/us-proximity-mobile-payment-users-by-
platform-2021-millions, March 1, 2021.
66
Starbucks’ mobile app is so popular that, until recently, it had the most
mobile payment users in the United States. Only within 2021 has Apple passed
Starbucks, with 43.9 million mobile payment users last year, while Starbucks
comes in second with 31.2 million users. That high usage rate has led to 38% of
Starbucks’ transactions being made digitally in the first quarter of 2022.34
Figure 5.1.6: Total dollars Starbucks hold in cash through digital purchase35
Due to the fact that numerous customers use the Starbucks cards or the
Starbucks mobile app to make purchases, Starbucks claims to have $2.4 billion in
cash that customers saved for future usage. More than that amount is held in
deposits at numerous American banks.
Additionally, Starbucks gains a lot of data from that. Because they
established this entire environment where customers use the Starbucks app, place
mobile orders, and are connected to that particular proprietary system, they own a
lot of that data in a way that few other businesses have.
5.1.4. Ordering
Starbucks is set to offer an omnichannel experience to its customers by
expanding the use of Mobile Order & Pay feature, introduced in 2015 on its
mobile app. Partnering with Uber Eats, Starbucks is slowly rolling this program
out to broader markets. It allows all customers to order and pay via app and pick
34
Motley Fool Transcribing, https://www.fool.com/earnings/call-transcripts/2022/02/01/starbucks-sbux-q1-
2022-earnings-call-transcript/, Feb 1, 2022.
35
Wall Street Journal (13/1/2022), How Starbucks Operates Like a Bank While Serving/ Coffee, from
https://www.youtube.com/watch?v=1-OJX1rwnl8, viewed April 27, 2023.
67
up items at the store later, by eliminating the need for customers to use a stored
value account.
Figure 5.1.7: Starbucks’ ordering app

5.1.5. The Digital Flywheel ROI
Customer-centric innovations like the above drive regular customers to
migrate to the digital platform which further contributes to Starbucks’ bottom
line. After joining the rewards program on the Starbucks app, spend has
increased by a minimum of 20% across all customer segments.
68
Figure 5.1.8: Number of active US Members by spend level (%)36
With 12 million active users, almost 20% of all Starbucks customers and
growing, the company can observe customers and store data in real-time and use
it to create personalized targeting.
Figure 5.1.9: Digital Flywheel US Customers 37

Almost halfway into executing on its five-year innovation strategy through
the digital flywheel, Starbucks is seeing the payoffs. It’s posting strong annual
and quarterly financial growth that executives say is a direct reflection of their
on-going commitment to endless digital transformation. In fiscal 2018, it saw
double-digit growth in topline revenue of $24.7 billion. Meanwhile, fiscal Q1
36
Amazonaws, http://q4live.s22.clientfiles.s3-website-us-east-
1.amazonaws.com/869488222/files/doc_presentations/2016/SID16_1206_MattR_GerriMF.pdf, retrieved April
17, 2023.
37
Amazonaws, http://q4live.s22.clientfiles.s3-website-us-east-
1.amazonaws.com/869488222/files/doc_presentations/2016/SID16_1206_MattR_GerriMF.pdf, retrieved April
17, 2023.
69
2019 saw the company post 9 percent growth, and Starbucks shares have been on
a steady upward trajectory since the start of the year.38
5.2. Starbucks AI applications
5.2.1. Deep Brew
There is an abundance of data at Starbucks processes around 100 million
transactions every week across its more than 30,000 locations worldwide. Before
joining Starbucks, CEO Kevin Johnson spent more than three decades in the
technology business, including 16 years at Microsoft and 5 years as CEO of
Juniper Networks. It seems to be the reason that Starbucks has been at the
forefront of leveraging data analytics and artificial intelligence in order to
generate value for partners and customers along with optimizing operations.
Starbucks created a machine learning system that collects enormous
amounts of crucial information about customer behavior and preferences - Deep
Brew. Recall from the above section, Starbucks' digital flywheel approach, which
connects an effective rewards program, integrated payment options,
personalization in the form of special offers, and quick, efficient order
procedures, is at the core of this platform.
Deep Brew is Starbucks' successful AI-driven platform that drives the
brand’s personalization engine, optimizes store labor allocations, and drives
inventory management in stores39. It is a part of Starbucks' digital flywheel
strategy that links a powerful program of rewards, simplified payment methods,
personalization in the form of special offers40. As part of its digital flywheel
initiative, Deep Brew has been a huge success.
● Deep brew roadmap
38
Ericka Chickowski, https://digirupt.io/starbucks-digital-flyweel-strategy-continues-to-pay-off/, April 4, 2019.
39
Deep Brew: Transforming Starbucks into an AI & data-driven company. https://hyperight.com/deep-brew-
transforming-starbucks-into-a-data-driven-company/ tr 27/4/2023.
40
How to Navigate the Ambiguity of a Digital Transformation, from https://hbr.org/2021/11/how-to-navigate-
the-ambiguity-of-a-digital-transformation 27/4/2023.
70
Figure 5.2.1: Deep Brew Roadmap41
Deep Brew initiative was first launched in 2019 and introduced Machine
Learning into Starbucks and helped them deploy models into production in
their global organization. One of the competitors of Starbucks is McDonald
whose strategic acquisition of Dynamic Yield to build a more customized
drive-thru that was intended to introduce reinforcement learning and
machine learning to the fast food chain. In consequence, this “butterfly
effect” gave Starbucks the idea to come up with Deep Brew.
Under those circumstances, the Starbucks executive suite became
interested in finding a solution to this action and began considering
incorporating machine learning into their own company. Deep Brew was
the perfect response and solution to the fast-moving market changes.
Deep Brew played a particularly important role at drive-thrus during
COVID pandemic the previous year. With it, Starbucks could customize the
suggestions that showed up on the screen at various drive-thru retailers. In
addition to other elements like the day of the week, the hour of the day, the
temperature, the volume of traffic, etc. Every store in every nation has a
unique personality. All of these ideas were taken into account by Starbucks
while developing their Deep Brew-based recommendation system.
● Analysis Deep Brew
The Deep Brew landscape currently intersects with 2 other areas -
underlying data and touchpoint.
This Deep Brew orchestrator diagram works because Starbucks has
amazing data and a lot of people created the foundation which is the
enterprise data analytics platform EDAP. EDAP is the lake where Starbucks
pull in all the data from all the sources and from the lake, they take the data,
41
Brian Ames, Data Innovation Summit 2020 talk DeepBrew – Machine Learning at Starbucks – a Roadmap.
71
load it into their Deep Brew platform, run it through a compute layer, and
the result reaches and talks to multiple touchpoints such as the mobile app,
digital drive-thru, website, social media. Starbucks is collaborating with
Microsoft to implement Azure Sphere.
Figure 5.2.2: Deep Brew orchestrator diagram42

Input (Underlying data): Starbucks Deep Brew takes input from various
sources, including the mobile application, loyalty system, and social media
platforms. The data collected includes customer purchasing history,
location data, interaction with in-store and mobile ordering systems,
purchases of gift cards, and social media activity. The data is analyzed to
gain insights into customer behavior, preferences, and interests, then used to
create personalized product recommendations and promotions.
Process: To support consumer-facing global scale applications like Deep
Brew, Starbucks needs a scalability and capability infrastructure. Brewkit
was simply a framework that Starbucks created to provide zero friction
analytics which are able to handle batch, real-time, and all analytics
workloads on a single technological stack.
42
Microsoft Developer, Starbucks “Deep Brew”: Hyper Personalization Applications with Reinforcement,
viewed March 27, 2023
72
Starbucks Deep Brew uses AI and machine learning algorithms to
analyze the input data and generate personalized recommendations for
individual customers, which are then pushed to the mobile application. The
recommendations include menu items, beverage preferences, and
promotions. Deep Brew uses predictive analytics to identify patterns in
customer behavior, and to make real-time predictions about customer
preferences and purchasing behavior. This data is then used to make real-
time decisions about production and inventory management and labor
optimization, enabling managers to make real-time adjustments to staffing
and scheduling to ensure that stores are running smoothly.
Output (Touchpoint): As all of you know, Starbucks is all about human
connection, and technologies play a bigger and bigger role in those
interactions. Starbucks use Deep Brew in order to achieve their mission and
brand promises:
● Get to know their customers better
● Make personalized recommendations
● Improve customers experience
● Reduce waste and improve operational efficiency
Figure 5.2.3: Starbucks “Deep Brew”: Hyper Personalization Applications

with Reinforcement 43
43
Microsoft Developer (8/5/2019), Youtube, Starbucks “Deep Brew”: Hyper Personalization Applications with
Reinforcement, from https://www.youtube.com/watch?v=XxK1PyaF1bw, retrieved on 4/4/2023.
73
5.2.2. My Starbucks Barista
While some advocate the idea that technology hinder human interaction,
making all the process cold and emotionless. My Starbucks Barista is Starbucks’
voice in proving the opposite thing. This innovation comes to the play to enhance
customer experience, turning the act of ordering on the mobile platform a more
humane experience.
My Starbucks Barista is a feature integrated in Starbucks mobile app that
allows customers to order and pay for their food and drinks just by speaking.
Instead of having to sift through the almost endless number of menu options
offered for mobile orders, users can just send a message. The process mimics the
order-at-the-counter experience but emphasizes convenience by recreating it on
the mobile device. The function processes incoming orders using artificial
intelligence via a new messaging interface in the Starbucks app. Customers can
also communicate with the virtual assistant by messaging their order in a chatbot-
like approach. The assistant can help customers process the payment and confirm
the location they want to place their purchase.44
Figure 5.2.4: Example conversation of the feature
44
Bishop, T. (2016, December 7). Coffee from a chatbot: Starbucks unveils 'My Starbucks Barista' AI
technology for mobile orders. GeekWire. Retrieved April 27, 2023, from
https://www.geekwire.com/2016/coffee-chatbot-starbucks-unveil-starbucks-barista-ai-technology-placing-
mobile-orders/
74
With the release of My Starbucks Barista - an innovative conversational
ordering system, this coffee giant stepped forward in the growing wave of
companies using AI and chatbots to supplement human employees.
5.3. Conclusion
Starbucks' Digital Flywheel strategy has been a tremendous success, enabling
the company to merge the physical and digital touchpoints for its customers,
resulting in increased personalization, sales, and data collection. The four pillars of
the strategy - rewards, personalization, payment, and ordering - have been
instrumental in providing customers with an exceptional experience that keeps them
coming back for more.
With over 25 million active members, the Starbucks Rewards program is one of
the best loyalty programs in the retail sector, generating 53% of the company's sales
in the first quarter of 2022. By leveraging technology and data, Starbucks has been
able to create more customized experiences and strengthen its brand, while also
meeting the evolving needs of its customers.
The use of AI and the cloud-based platform for rewards and ordering have
enabled Starbucks to collect and analyze first-party data, generate new insights, and
train other ML models for different parts of the business.
With its continued focus on the Digital Flywheel strategy, Starbucks is well-
positioned to maintain its leadership position in the coffee industry and drive
superior business results in the long term.
75
Chapter 6. Project Evaluation
In the Management Information Systems course, our Group 4 was tasked with
analyzing Starbucks' Enterprise Resource Planning as the final project. The project's
goal was to learn how Starbucks uses the ERP system to run its operations and to
comprehend the Starbucks AI application. The team was given three months to
complete the project, which required in-depth research. Significantly, the team worked
well together to complete the project successfully.
The team consists of five members, each assigned specific tasks based on their
strengths and interests. To cooperate on the project, the team used several
communication platforms such as Messenger, Google Meet, Trello, and Google
Drive. The project was divided into six sections, and each member equally contributed
to every part of the project, ensuring that all aspects were thoroughly analyzed.
6.1. Pert chart
Table 6.1.1: Tasks table
ID Tasks Dependent o r p ET
1 Team’s role and requirements - 1 1 1 1
2 Define scope of the project 1 1 1 1 1
3 Develop timeline and management tool 1 1 1 1 1
4 Research for main topic of the project 2,3 5 6 8 6
5 Implement essay in document 4 47 48 56 49
6 Review and Revision 5 3 4 9 5
7 Complete presentation slide 6 3 9 12 9
8 Define members’ presentation section 6 0.5 1 1 1
9 Rehearsal 7,8 0.5 0.5 1 0.5
10 Report 9 0.5 0.5 0.5 0.5
76
Our group decided to use a Pert chart to break down a big project into simpler
tasks and assign suitable time periods to each activity, making it easier to determine
which activities are important and which can be completed independently.
This Pert chart below illustrates all the phases of the project, including the
initial research phase, the topic analysis phase, the essay implementation and
presentation preparation phase, and the final report.
Figure 6.1.1: Pert chart

6.2 Gantt chart
Our Group also used the Gantt chart in order to visualize the project schedule
and identify critical paths, milestones, and resource allocation along with tracking
the progress of the project and identifying potential issues that may impact the
timeline.
Figure 6.1.2: Gantt chart
77
Conclusion
The study has provided an overview of Starbucks' enterprise resource planning

(ERP) system and its implementation process, as well as an analysis of how ERP has
helped Starbucks with Porter's Five Forces. The study also explored the limitations and
provided recommendations for the ERP system. Starbucks has implemented a range of
Management Information System (MIS) such as TPS, DSS, CRM, SCM and especially
ERP with the application of Oracle. Furthermore, the study discussed Starbucks' AI
applications, specifically its Digital Flywheel Strategy and the various AI applications
it has implemented.
The findings of this study demonstrate the significant benefits of implementing
an ERP system in Starbucks, such as increased efficiency, improved decision-making,
and enhanced supply chain management. The study also revealed that Starbucks has
been successful in leveraging AI to enhance the customer experience and drive
business growth. However, the study also identified some limitations and challenges of
implementing an ERP system in Starbucks, including the high cost and complex
implementation process. To overcome these challenges, the study recommends that
Starbucks should develop an effective plan for broadening their system with more
applications in the future. Moreover, some of the solutions which were implemented in
Starbucks are mentioned in the study could be obsolete in the near future, they need to
develop constantly to keep up with current technology age.
Also, this study highlights the importance of ERP systems and AI applications in
the food and beverage industry, specifically for companies like Starbucks. As
technology continues to evolve and new AI applications emerge, it will be crucial for
Starbucks to remain at the forefront of innovation to remain competitive in the market.
78
Appendix A: Deep Brew challenges
Recall from the 5.2.1., Deep Brew section, Starbucks essentially needs to have
scalability and reliability at the analytics platforms where the data analytics and
machine learning algorithms process begin, to support consumer facing global scale
applications like Deep Brew. Therefore, the introduction of Brewkit frameworks to
Starbucks allow to take modern analytics capabilities across Starbucks and enable the
largest and smaller data science teams to do analytics at scale without restriction.
Starbucks Deep Brew platform is currently expanding and providing highly
personalized recommendations to clients. But, in order to get to this point, Starbucks
had to go through all of the above and learn some hard lessons - or, as Brian Ames,
Lead Manager Data Science, Analytics Ops at Starbucks, calls them, the "Seven
Deadly Sins" to avoid.
Some of the pitfalls to avoid while deploying a machine learning system at
scale in a large organization are:45
- Having no meaningful and aligned uplift to the others in the organization
- Having no baseline to ensure that you do no harm to existing operations
- Not having clear expectations about different jobs impact: is it going to
“uplift” or take over their jobs
- No easy access to security guidelines and expertise.
- Not taking into account operations.
- Having people that are multi-threaded or have conflicting priorities – not
having dedicated teams with regular standup meetings
- Telling people that it can’t be done, and not showing up for it.
In reality, there are still some challenges that Starbucks could face while
implementing their digital platform such as:
Customers opt-in: Some customers may be hesitant to share their personal data,
and may prefer not to receive personalized recommendations based on their
purchasing history. This could limit the program's ability to deliver truly
personalized experiences to customers, and could potentially impact customer
satisfaction. The more quality data Starbucks collects, the more it can make the
right decisions to grow their business
Constant innovation and adaptation: The data analytics landscape is constantly
evolving, with new methods, technologies, and insights emerging on a regular
45
Hyper Right, Deep Brew: Transforming Starbucks into an AI & data-driven company, from
https://hyperight.com/deep-brew-transforming-starbucks-into-a-data-driven-company/#h-deep-brew-a-platform-
that-elevates-humanity-business-and-customer-experience, viewed April 16, 2023.
79
basis. In order to stay ahead of the curve and continue to deliver value to
customers and the company, Starbucks Deep Brew must continuously adapt and
evolve to meet the changing needs of the market.
In terms of future opportunities, Starbucks Deep Brew has the potential to
expand into new areas and markets. The program's ability to create personalized
experiences and optimize operations could potentially be harnessed in other industries,
such as healthcare, finance, or retail.
Additionally, the program's focus on predictive analytics could potentially be
expanded to include more advanced machine learning and artificial intelligence
capabilities, allowing for even more sophisticated and accurate predictions.
Overall, while Starbucks Deep Brew is a successful data analytics program that
has delivered real value to the company and its customers, there are still challenges
and opportunities for improvement. The program's future success will depend on its
ability to continue to innovate, adapt, and evolve to meet the changing needs of the
market.
80
Appendix B: Blockchain and Sustainability
Starbucks has been a leader in sustainability, with initiatives to reduce waste,

conserve water, and support farmers in developing countries. They have set a goal to
have 100% of their coffee ethically sourced by 2020. Their goal is to become resource-
positive, which means giving back more than they take from the planet. They aim to
store more carbon than they emit, eliminate waste, and conserve and replenish more
freshwater than they use. Starbucks has set targets to cut their carbon, water, and waste
footprints in half by 2030.46
Some of their focus areas include expanding plant-based menu options, shifting
away from single-use to reusable packaging, investing in regenerative agriculture,
reforestation, forest conservation and water replenishment in their supply chain,
working on better ways to manage their waste and innovating with more responsible
stores, operations, manufacturing and delivery.47
“Every coffee has a story to tell, and I could not be more excited for people to
be more connected to the whole coffee experience, from bean to cup, and meet the
many people whose hard work, time and attention makes coffee possible,”48 said
Michelle Burns, Starbucks’ senior vice president, Global Coffee, Tea and Cocoa.
Starbucks partnered with Microsoft to introduce Digital Traceability in their
sustainability commitment to ensure the transparency of their supply chain and
promote ethical sourcing practices. Digital traceability allows Starbucks to track their
coffee beans from the farm to the roasting facility and ultimately to the customer.
Customers can digitally “meet” the farmers who grow Starbucks’ raw coffee by
scanning a code on their bag of beans. The tool is accessible via browser and the
Starbucks app.49 This information can then be shared with customers and stakeholders
to demonstrate Starbucks' commitment to sustainability and ethical sourcing practices.
The introduction of a traceability tool that both protects the Starbucks brand and
helps to improve product quality, consumer trust, and experience. Starbucks' clever
move will put them ahead of the competition thanks to its digital traceability
application.
46
Starbucks, Becoming Resource Positive, from https://www.starbucks.com/responsibility/planet/, viewed April
20, 2023.
47
Starbucks Stories, Planit, from https://stories.starbucks.com/stories/planet/, viewed April 20, 2023
48
Starbucks Stories, New Starbucks traceability tool explores bean-to-cup journey, from
https://stories.starbucks.com/stories/2020/new-starbucks-traceability-tool-explores-bean-to-cup-journey/, viewed
April 20, 2023.
49
Brain Station (21/8/2020), Starbucks Launches Blockchain-Enabled Traceability, from
https://brainstation.io/magazine/starbucks-launches-blockchain-enabled-traceability, viewed April 20, 2023.
81
Appendix C: IoT and Coffee machine
More than a dozen pieces of equipment, including coffee makers, grinders, and
blenders, are required to run almost 16 hours per day in each Starbucks location. Any
one of those devices could experience a bug, resulting in service calls and costly
repairs. More importantly, equipment issues may compromise Starbucks' top priority
of offering consistently excellent customer service.
As part of their Digital Flywheel strategy, Starbucks has begun collaborating
with Microsoft to implement Azure Sphere, which is made to protect the upcoming
wave of linked internet of things (IoT) devices across its shop equipment, in order to
minimize interruptions to that experience and securely connect its gadgets in the cloud.
These coffee machines have sensors and connection capabilities that allow them to
interface with other devices and systems including inventory management systems,
mobile apps, and data analytics platforms.50
Starbucks gains various advantages from IoT-enabled coffee equipment. They
provide real-time monitoring of coffee machine performance, which aids in identifying
and addressing faults. This leads to enhanced uptime and higher customer satisfaction.
Furthermore, the machines can communicate with inventory management systems to
ensure that they are always stocked with the appropriate ingredients and supplies,
reducing waste and increasing operational efficiency..
Furthermore, Starbucks' Internet of Things coffee machines are linked to the
company's mobile app, allowing customers to order drinks remotely and pick them up
in-store. Customers enjoy this function since it allows them to avoid the queue and
save time. Customers may also customize their beverages and store their preferences,
resulting in a more customized experience.
In conclusion, the incorporation of IoT technology into Starbucks' coffee
machines has aided in improving operating efficiency, reducing waste, and improving
customer experience.
50
Jennifer Sokolowsky (6/5/2019), Microsoft, Starbucks turns to technology to brew up a more personal
connection with its customers, from https://news.microsoft.com/source/features/digital-
transformation/starbucks-turns-to-technology-to-brew-up-a-more-personal-connection-with-its-customers/,
viewed April 20, 2023.
82
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UNIVERSITY OF ECONOMICS AND LAW

FACULTY OF INFORMATION SYSTEM

FINAL PROJECT REPORT

Management Information Systems

PhD. Lê Thị Kim Hiền

Ho Chi Minh City, May 7th, 2023

No. Full name Student ID Contribution Signature

1 Nguyễn Đinh Minh Anh K214162141 20%

2 Lý Vũ Thiên Ân K214161372 20%

3 Trần Thị Minh Hiền K214160989 20%

4 Phan Cao Bảo Trâm K214160996 20%

5 Huỳnh Thị Kim Ngân K214160992 20%

We declare that the course final project "Analysis Starbucks’ Enterprise

Figure 1.1.1: Net revenue of Starbucks from 2001 to 2022........................................... 12

Table 1.4.1: Evolution of Starbucks Mission................................................................. 19

ERP Enterprise Resources Planning

CRM Customer Relationship Management

SCM Supply Chain Management

DSS Decision Support System

TPS Transaction Processing System

OLAP Online Analytical Processing

MIS Management Information System

F&B Food and Beverage

EDAP Enterprise Data Analytics Platform

ROI Return on investment

Figure 1.1.1: Net revenue of Starbucks from 2001 to 2022 2

Figure 1.2.1: Coffee shop chains in the world by number of stores 3

Figure 1.2.3: Coffee shop chains in Vietnam by number of stores

Figure 1.3.1: Three founders of Starbucks 6

Figure 1.3.2: Timeline of Starbucks from 1971 to 1986

Figure 1.3.3: Timeline of Starbucks from 1987 to 1991

Figure 1.3.4: Timeline of Starbucks from 1992 to 2010

Figure 1.3.5: Timeline of Starbucks from 2011 to 2023

Figure 1.3.6: The evolution of Starbucks logo 8

Figure 1.4.2: Starbucks Mission Evolution

Time Mission Principles

1990 Establish Starbucks as Provide respect and dignity, embrace

2014 To inspire and nurture Everyone is welcome.

2023 With every cup, with Partner: Bridge to a better future

Figure 1.4.3: Starbucks Organizational Structure

Figure 1.5.3: Starbucks’ Worthon 52-week range accurate as of February 24,

Figure 1.5.4: Revenue of Starbucks from 2003 to 202015

2.1. Traditional Competitors

Figure 2.1.1: Top Coffee Brands in the World by Revenue

Figure 2.1.2: Starbucks Competitors

Features McDonald’s Starbucks

Location Over 38,000 stores in over Over 33,800 outlets in over 80

Menu Huge variety of food items Numerous specialty drinks and

Price range Prices are quite affordable Prices are higher

It can be seen that McDonald’s is more expanded in the number of stores,

Features Dunkin Donuts Starbucks

Franchising Almost every Dunkin’ corporate-owned

Branding and food remains an essential markets itself as a beverage

Quality more affordable prices and higher-end brand

2.1.3. Costa Coffee

Features Costa Coffee Starbucks

Location Has about 3883 locations in Has over 33500 locations in

Has numerous food items to Food options are few