Starbucks Company initiated its business operation in the year 1971 as a retailer and roaster of whole bean and ground coffee, tea and spices in a single store within Seattle’s Pike Place market.
Starbucks Company follows the matrix organizational structure that includes the functional hierarchy, geographic divisions, product-based divisions and the teams. The company has diverse group of employees that was recorded to be 277000 in the year 2017 that deliver exceptional consumer experience (Saguy & Sirotinskaya, 2017).
The company offers exceptional range of products for its consumers to enjoy in store or at home (Popkin & Hawkes, 2016). Such products include coffee, merchandise of coffee and tea brewing equipments, freshly baked foods, tea and ready-to-drink coffee beverages.
The target consumer segment for this company includes consumers belonging to 25 to 40 years of age belonging to high income group and another target consumer segment includes consumers belonging to 18-24 years age of richer families (Schopfel, Roche & Hubert, 2015). The major competitors of Starbucks are observed to include well-established companies like Café Coffee Day, Dunkin Donuts, Barista and Mc Donald’s Mc Café those offer frequently innovated products based on changing consumer preference trend (Walker, Decker & McClements, 2015).
The vision of Starbucks Company is to nurture and inspire the human spirit focusing on “one person, one cup and one neighborhood” at a time. The business goals set by this organization includes positioning itself as a responsible company through maintaining a balance between profitability and social conscience and to maintain a sustainable position through offering exceptional and sustainably sourced coffee beans.
Two major disruptive technologies or business processes those are deemed to affect the business operation of Starbucks Company in the industry for sustaining its competitive position are explained under:
Justification the Ways in which Chosen Technology or Processes are Disruptive
The Disruptive Problem and Question
The disruptive innovation in the technologies and the business processes are greatly observed in the coffee industry that increases the demand for premium coffee and snack products which is majorly drive by several factors encompassing disposable income, per capita coffee consumption, coffee pricing, attitudes towards health and demographics (Balasubramaniam, Martinez-Monteagudo & Gupta, 2015). The disruptive question that is to be answered through completion of this research is:
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Strengths · Fully or partially automated process · On-time delivery or consumer satisfaction · Cost reduction · Continuous improvement |
Weaknesses · 5-10% error rate · Quality checks · Unstructured input for processing · Performance variance all through the system |
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Opportunities · Process improvement · A strong change management · Data quality process system incorporation · Roadmap for future projects |
Threats · Cognitive process · Unstable process · Cash of system or hard disk · Application downtime |
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Political factors |
Tax policy and employment laws effect the business operations of Starbucks. Moreover, laws and regulations in other nations from where Starbucks purchases raw materials (Gupta, 2013). |
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Economic factors |
Starbucks need to deal with increasing labor and personal costs. The inflationary business surrounding and falling profitability is resulting in an increased stress for the company (Koumparoulis, 2013). |
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Environmental factors |
Several Starbucks business practices concern the international advocacy groups and activists. Certain other environmental factors include rules and regulations along with environmental issues at a global level (Iglinski et al., 2016). |
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Social factors |
Starbucks can provide cheaper products in consideration to demand of consumers (Barbara et al., 2017). These social factors include changing family patterns in USA and Europe and changing values of population. |
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Technological factors |
Starbucks introduced Wi-Fi abilities through which consumers can sip coffee and surf web along with enjoying work. The company has also enabled mobile payments (Zalengera et al., 2014). |
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Competitive rivalry or competition |
The large number of competitor organizations and low switching costs has strong force. Variety of companies operating in the industry has moderate force (Porter & Heppelmann, 2014) |
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Bargaining power of consumers |
Low switching costs and high substitutes availability has strong force and the small size of individual buyers have a weak force (E. Dobbs, 2014). |
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Bargaining power of suppliers |
Moderate size of individual supplies has moderate force and the high supply variety and large overall supply has a weak force (Cheng, 2013). |
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Threat of Substitutes |
Strong forces include high substitute availability, low switching costs and high affordability of substitute products (Delgado, Porter & Stern, 2014). |
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Threat of New Entrants |
Cost of operating business and the supply chain cost have moderate force. Moreover, high cost of brand development has weak force (Ghazavi & Cheraghali, 2013) |
Disruptive Technology
Robotic Technology is observed to be applicable to Starbucks in attaining improvement of its declining sales margin. This disruptive technology will facilitate in implementing innovative methods of rolling out services all across its coffee joints. In dealing with such issue, Starbucks can implement this technology to modernize its product offering process through performing simple functions such as creating beverages and brewing coffee in all its coffee joints. Moreover, cloud computing process of data mining is also deemed to be an applicable business development process in the business of Starbucks Company as it can facilitate the business to improve consumer satisfaction along with restoring relationships through simplifying process of consumer orders.
Implementation of Robotic Technology and Artificial Intelligence in the process of product offering can provide Starbucks with decreasing their workforce overhead. Moreover, implementation of cloud computing data mining applications can facilitate the company in improving its coffee ordering process as it can recommend food and drinks items to consumers and encourage them to try something new. These technologies can also facilitated the company in developing a point-of-sale system that will be capable of identifying the target consumers through their smart phones and serve them with preferred orders.
The perspective towards implementation of robotic, AI and data mining or cloud computing process and technology is observed to be highly positive as most of the major organizations such as Barista and may other coffee joints. This is for the reason that through implementation of such disruptive technologies has helped them in getting food delivery and preparation automated that saves them time and to offer consumers with fine-dining experience (Geum, Jeon & Lee, 2016).
Starbucks Company can respond to such disruptive technology for bringing in “tsunami of Change” in its business process and increase its sales margin. The company can use artificial intelligence technology in connecting with all its consumers for increasing sales. It can alo develop cloud based “digital flywheel” that can offer personalized consumer experience worldwide. To enhance consumer service, Starbucks can personalize its consumer service through developing its e-mail program. It can develop a real-time artificial intelligence based personalized engine that can be linked with reward cards spending data that can facilitate automatic generation of 400,000 personalized variants each week (Cuerva, Triguero-Cano & Córcoles, 2014). Cloud computing based data mining system can facilitate in developing effective ownership models through getting major pieces of data from all such stores all across the world by the cloud system. This encompasses enhancing real-time order management along with facilitating offering better tracking processes with increasing visibility of the incoming orders. Moreover, cloud computing can also facilitate in innovating business processes can facilitate the company to respond to market competition through constantly enhancing efficiency of its business technologies. In responding to the market competition from the disruptive technologies, Starbucks can use cloud computing data mining technology the company can organize work in a manner that it can organize the work in a manner that can address increasing demand (Martins, Rindova & Greenbaum, 2015).
In response to technological business process disruption within the food and beverage industry, it has been observed that AI technology is used by “CHOPCHOP” in guiding their users through the cooking orders till its preparation step-by-step. This food joint also offers the opportunity to its users a list of ingredients along with coordinating with the suppliers in delivering food to consumers’ doorstep. Moreover, an effective instance of cloud computing use for data mining is observed in “Briggo Company” where they maintain a pool of computing resources in support of application workloads which can be assessed everywhere and facilitates in personalizing account of consumers and along with saving their favorites so tht they exactly obtain the drink they desire within minutes. Moreover, an effective example of implementation of Robotics in the food and beverage industry is observed in case of Briggo’s robotic technology in which they have developed an industrial robot which will memorize orders of the consumers to make it personalized for each of them. This technology of the company can facilitate its consumers in placing their order on touch screen built within wooden facade of the robot and they can key in an emergency order for cappuccino order by means of companion i-phone application.
From observing the practical implementation of disruptive technologies by companies such as “CHOPCHOP” and “Briggo Company” and the lessons learned from their efficient use of AI, cloud computing and robotic technology has facilitated in developing suitable technological response by Starbucks. From analysis of the technology used by these companies, Starbucks can focus on using robotics in trying to improve its coffee cart though mechanization. Based on the consumers’ selection, this technology implementation can facilitate in calculating the quantity of ingredients, Moreover, it can also make efficient use of AI technology in setting the parameters that will include milk fat, temperature, size and additional additives that can develop a fine quality brewed coffee for its consumers with technology. Moreover, based on technological improvements in data mining by Briggo, Starbucks can make effective use of cloud computing to manage its data in order to transform its coffee experience (Popkin & Hawkes, 2016). Moreover, this technology implementation can also be used by Starbucks to attain competitive edge in the market through attaining better management of big data. Moreover, Starbucks can also respond to such disruptive technology prevailing within the market through implementing “Software as Service (SaaS)” which is a subscription to cloud-hosted software, which they can use without making efforts to maintain the software or hardware. Through using this cloud computing technique, the company can modify its “Point of Sale (POS)” that can facilitate the coffee joint in reducing its on-site malfunction risk that can affect its overall payment system.
It has been observed that there are several implications of implementing disruptive technologies in Starbucks focused on the ongoing market trends. For instance, effective use of artificial technology implementation can facilitate Starbucks in attaining advantage of improving consumer experience and maintain sustainable position in the marketplace. Moreover, managing big data with cloud computing can also have positive implications on the company’s managing costs and operational systems through automating the operational aspect of the company. Cloud computing can also facilitate in innovating business processes can facilitate the company to respond to market competition through constantly enhancing efficiency of its business technologies (Saguy & Sirotinskaya, 2014). In responding to the market competition from the disruptive technologies, Starbucks can use cloud computing data mining technology the company can organize work in a manner that it can organize the work in a manner that can address increasing demand. Use of AI technology can facilitate in enhancing consumer experience having positive implications on Starbucks return on investment. In addition, robotics technology in the process of coffee offering can facilitate the company in attaining incremental improvements which can further facilitate the company in reducing its wastage by 3% to 5% each year by presuming the raw materials needed for each month.
Perspectives on disruptive technology implementation such as robotics, artificial intelligence and cloud computing are deemed to be highly advantageous for Starbucks in sustaining successfully in fiercely competitive marketplace. Moreover, it is also deemed that through innovation of its business processes by means of robotics, the company can attain competitive advantages for the company through aligning its success with long-term success of its consumers.
With the growth of artificial intelligence over the years, it is definitely going to be aggressive in 2018. More brands and organizations would use artificial intelligence for customization of user experience, while evaluating data, browsing history and purchasing trends. Starbucks manages above 90 million transactions per week, which implies that it handles huge amount of data and it aims to extract value from the same. In the mind of the management of Starbucks, data could be used for tailoring the expectations of the customers. Since the organizations find out ways for leveraging their artificial intelligence, the applications of generating effects are enormous. Artificial intelligence offers endless sources of opportunities so that the user experience could be tailored for each client. From product development to promotions, few decisions generally assigned to marketing analysts could be in suitable hands, if they are delegated to effective machines. This is because computers could be more agile, precise and unbiased than any individual, if supplied with accurate data (Schopfel, Roche & Hubert, 2015).
For dealing with this issue, Starbucks needs to incorporate artificial intelligence features to its consolidated rewards loyalty program. The technology intends to cross-analyze significant amount of data points such as time of the day, previous purchases and weather updates for initiating real-time interactions conveniently. For example, with the help of artificial intelligence, Starbucks would be able to suggest various combinations from its menu to the customers that might want to have coffee when they are near to the location of Starbucks (Walker, Decker & McClements, 2015).
As cloud computing is becoming an increasingly enterprise technology, organizations have started to respond to the real world benefits for developing new business models, improving relationships with the clients, including staffs and partnering expertise into operational procedures. Moreover, the organizations are using the cloud of developing pliable assembly models enabling them in integrating past investments with existing innovations along with quick transformation of the business models, when needed. In addition, the big organizations are seeking benefits by using hybrid cloud environments providing the capability of hosting automated services in a restricted environment, which could be accessed easily. This has assisted in assuring privacy and security of information preserved within the cloud while providing ease of use and flexibility.
However, there are certain present day issues associated with cloud computing. The first issue is bandwidth cost (Balasubramaniam, Martinez-Monteagudo & Gupta, 2015). With the help of cloud computing, Starbucks could save its costs related to hardware acquisition; however, they might experience an increase in bandwidth cost within the next two years. Hence, the organization needs to have adequate bandwidth for delivering complex and intensive data across the network. In addition, cloud computing often goes through frequent outrages due to the lack of timely services by the cloud providers. Starbucks is required to monitor cloud services continually along with supervising its business performance, dependency and robustness.
In order to deal with this trend, Starbucks is needed to develop point-of-sale data warehouse on Oracle technology. For hosting automated services, the organization could utilize Oracle Exadata Database Machine for scaling and seamlessly transferring the existing data warehouse to Exadata for expansion of insight as well as facilitation of decisions, even with big data, as per Oracle. Therefore, Starbucks needs to align innovation related to information technology with business objectives and in order to manage innovations; cloud information technology is of immense significance.
Implementation of advanced modifications in artificial intelligence- New advancements in the artificial intelligence technology implementation in Starbucks is recommended through which the consumers will get ore tempted in buying more coffee from the coffee joint. For instance, the “Digital Flywheel Program” of Starbucks will be backed up by Artificial Intelligence through which the company’s regular customers will find all its changing desires to be fulfilled through attaining innovative and super quality food and beverages based on consumers’ daily needs. Moreover, the AI technology can also be used in Starbucks in manner that “personalized technology” can be implemented to more dynamic and highly integrated digital and media world. This can also consider increasing usage of mobile payment option every time they purchase based on their daily needs.
Implementation of Robotics- New innovations in the robotic technology can be used by Starbucks in which this technology can play a vital role in the coffee joint for ensuring complete automation of its coffee delivery services in selected locations. Moreover, implementation of “Robotic Kitchen System” can serve to be an innovative implementation by Starbucks for managing food and coffee beverage preparation through several robots placed in an assembly line that can allow Starbucks to divert its focus to more creative business activities and business expansions.
Implementation of recent innovations in cloud computing- This technique can be used by the compaany in evaluating a vast amount of data that must consider proximity to other locations of the company, demographics and traffic patterns in recommending a new store location. In maintaining competitive edge through cloud computing, Starbucks is recommended to implement “mapping and business intelligence tool” through which it can attain the power of data intelligence by means of Atlas and it can also support in predicting impact on its other business locations if the new store of Starbucks is opened through its business expansion process. Starbucks can also respond to such disruptive technology prevailing within the market through implementing “Software as Service (SaaS)” which is a subscription to cloud-hosted software which they can use without making efforts to maintain the software or hardware. Implementation of advanced POS systems along with cloud computing applications like Open Table and Yelp can facilitate the company to track their sales on their mobile phones along with attaining data on issues that resulted in high number of orders getting returned.
Conclusion
The objective of this paper was to analyze the ways in which certain disruptive technologies or processes impacts Starbucks business and the ways in which the company responds to such situation to maintain a competitive edge. It was gathered from the paper that there are several implications of implementing disruptive technologies in Starbucks focused on the ongoing market trends. Effective use of artificial technology implementation can facilitate Starbucks in attaining advantage of improving consumer experience and maintain sustainable position in the marketplace. It is also deemed that through innovation its business processes by means of robotics, the company can attain competitive advantages for the company through aligning its success with long-term success of its consumers. Moreover, it has also been gathered that cloud computing can also facilitate in innovating business processes can facilitate the company to respond to market competition through constantly enhancing efficiency of its business technologies. In responding to the market competition from the disruptive technologies, based on technological improvements in data mining by Briggo, Starbucks can make effective use of cloud computing to manage its data in order to transform its coffee experience. Cloud computing can also facilitate in innovating business processes can facilitate the company to respond to market competition through constantly enhancing efficiency of its business technologies.
Robotic Technology is observed to be applicable to Starbucks in attaining improvement of its declining sales margin. This disruptive technology will facilitate in implementing innovative methods of rolling out services all across its coffee joints. In dealing with such issue, Starbucks can implement this technology to modernize its product offering process through performing simple functions such as creating beverages and brewing coffee in all its coffee joints. Moreover, cloud computing process of data mining is also deemed to be an applicable business development process in the business of Starbucks Company as it can facilitate the business to improve consumer satisfaction along with restoring relationships through simplifying process of consumer orders. From observing the practical implementation of disruptive technologies by companies such as “CHOPCHOP” and “Briggo Company” and the lessons learned from their efficient use of AI, cloud computing and robotic technology has facilitated in developing suitable technological response by Starbucks. From analysis of the technology used by these companies, Starbucks can focus on using robotics in trying to improve its coffee cart though mechanization. Based on the consumers’ selection, this technology implementation can facilitate in calculating the quantity of ingredients, Moreover, it can also make efficient use of AI technology in setting the parameters that will include milk fat, temperature, size and additional additives that can develop a fine quality brewed coffee for its consumers with technology.
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