STARBUCKS

STARBUCKS

Introduction

Organizations aspiring to be leaders in the industry focus not only on improving their internal strengths but also on competitive forces. They always keep an eye on competitive forces and accordingly enhance their value chain to get advantage over rivals. They adjust their strategies to align and surpass their competitors. The role of technology in business is growing substantially with the passage of time. Companies must embrace the advanced technology to improve their processes so that cost reduces and overall efficiency increases. Starbucks is a global leader in premium, high-quality coffee. The implementation of advanced information systems will increase its capacity to improve its current products and launch new and innovative products.

Competitive Forces and Value Chains

Companies focus on two primary areas for their development, growth and sustainability. First they try to continuously improve their output, by modernizing and improving their manufacturing processes. Second, they are very vigilant about the presence of competitive forces. Competitive forces are factors that influence the competitive position of the company in its industry. They help in identifying the competitive strength or weakness of a company.

An article published in Harvard Business Review in 1979 with the title “How Competitive Forces Shape Strategy”. Michael E. Porter wrote this article. Expanding on this theme, Porter gave the idea of Five Forces. It assumes that five forces determine competitive power in a business. Porter's Five Forces model is a good addition to already existing SWOT and PEST tools. According to Porter, the type of any firm determines its profitability. This is based on the economic concepts of perfect competition and monopoly. The competitive forces model provides an insight of the firm's profit avenues. The five forces are the threats posed by competitive rivalry, powerful buyers, powerful suppliers, potential new entrants, and substitute products. These forces studied together determine the profit potential of an organization in the industry (Dobbs, 2012).

Value Chain is a high-level view of the business. It analyzes inputs, processes, and outputs. Michael Porter introduced this concept in 1985 in his book. Porter's value chain model assumes that competitive advantage is achieved through a series of distinct activities a business performs. These activities can be classified as support activities and primary activities (Zhang et.al, 2012). Primary activities relate directly to the manufacturing, selling, and maintaining a product. Support Activities, for example human resource management, increase effectiveness or efficiency of primary activities. Value Chain Analysis identifies which activities are to be done by a firm and which are candidates for outsourcing. Selection of activities is directly linked to achieving competitive advantage.

Role of Information Systems (IS) in Value Chain

Companies make huge investments into the development, enhancement, and maintenance of computerized information systems (IS). IS plays an important role in both primary and support activities of the organization, and spending for Information Systems is increasing with the passage of time. This shows that top organizations are realizing the importance of technology. IS adds value due to their specific capabilities, which are the capability to select and acquire information resources, the ...