FAR EASTERN UNIVERSITY

Institute of Accounts, Business and Finance

BUSINESS ADMINISTRATION

[INTEGRATIVE CASE: Starbucks]

An Integrative Case Study

Presented to the Faculty and Synchronous Class of
Institute of Accounts, Business, and Finance
City of Manila

In Partial Fulfillment
of the Requirements for the course
Supply Chains and Logistics Management

By

Baguino, Jersey Anne A.

Bautista, January Christy C.
Galapon, Mark Joseph
Reniva, Paolo Angelico F.
Roque, Andre Kim B.
Sandoval, Joshua Andrhy P.
Shingkai, Airi O

February 2021

ENM1106 Supply Chains and Logistics Management 2nd Semester 2020 - 2021
 FAR EASTERN UNIVERSITY
Institute of Accounts, Business and Finance
BUSINESS ADMINISTRATION

Table of Content

Acknowledgement……………………………………………………………………………………………….. i
Table of Content…………………………………………………………………………………………………. ii
I. Executive Summary …………………………………………………………….……… 1
II. Introduction……………………………………………………………………………….. 2
III. Aims………………………………………………………………………………………….. 3
a. Statement of the Problem
b. Objectives
IV. Method………………………………………………......................................... 4
V. Results………………………………………………………………………………………. 5
VI. Discussion………………………………………………………………………………….. 6
VII. Recommendation………………………………………………………………………… 7
VIII. References…………………………………………………………………………………. 8

ENM1106 Supply Chains and Logistics Management 2nd Semester 2020 - 2021
 FAR EASTERN UNIVERSITY
Institute of Accounts, Business and Finance
BUSINESS ADMINISTRATION

Executive Summary

Starbucks is one of the top coffee brands around the world. Similar to other
big companies, they are using the concepts of Forecasting and Capacity
Management to improve their sales and overall brand performance in the market.
It’s one of the reasons why they are still in the top of the coffee market
competition.
With the current pandemic happening, Starbucks is not exempted in
adjusting to the new normal. And by identifying which avenues the company can
approach towards in ensuring that the company is able to perform well even if the
current market is against their brand.
This case study focuses primarily on loyal customers and has done a
predictive analysis with current qualitative and primary data to identify current
trends and to predict future trends in customer preference in coffee drinks.
Solutions offered are focused with the brand dealing with the new normal
that has affected the country for a year now.

ENM1106 Supply Chains and Logistics Management 2nd Semester 2020 - 2021
 FAR EASTERN UNIVERSITY
Institute of Accounts, Business and Finance
BUSINESS ADMINISTRATION

Introduction

Forecasting and Capacity Management (or previously referred to as Demand

Management), work together in handling future decisions for an organization or a
business. It works very well with current information technologies and has been a
big help for large companies in further improving their products and services.
Starbucks, being one of those large companies, has used Big Data in order to
understand and predict a customer’s previous, current, and future purchases. With
an aim to improve their customer experience, which is the backbone of their top-
notch brand, understanding their customers is the main concern. Aside from how
to serve your coffee, Starbucks also improves the experience by creating a
personalized experience for each and every customer.
Studies regarding the improvement of the customer experience is one of the
main concerns of large companies. With the application of Machine Learning (AI),
these companies are able to determine trends faster than competitors. This same
concept is also applied to create a personal experience for every customer, as
injecting the experience with a personal taste has made services more comfortable
for consumers.

Aims

This study aims to know how Starbucks can continue to operate given the
current situation we are facing.
Statement of the problem

• What did they do when the consumers shifted their purchasing pattern when
the pandemics started?

• How did they handle their supplies when their demand decreases because
of the change in the consumers pattern?

ENM1106 Supply Chains and Logistics Management 2nd Semester 2020 - 2021
 FAR EASTERN UNIVERSITY
Institute of Accounts, Business and Finance
BUSINESS ADMINISTRATION

• What did they do with their stores when their sales dropped because of the
pandemic?
Objectives
To identify what strategies, we can develop to help Starbucks adapt with the
world’s current situation and continue to provide their products and services to
their customers. Given the fact that Starbucks has been a part of the daily routine
of a lot of people because of their product.

Method:

Since the start of pandemic last year 2020, Starbucks lost a revenue of $3 billion,
but during the first quarter of 2021, they were able to recover their sales as the
number of Starbucks Rewards members rose to 15%. Mobile orders represented a
quarter of transactions, up from 17% before the crisis.
This study is qualitative and secondary data as the researchers gathered the
data of revenue from Forbes, an the interview with Starbucks’ CEO on how they
handle the current situation and gain back their revenue. The researchers will be
suggesting in using predictive analysis through their customer loyalty cards,
website and mobile app in order for them to know the consumer’s purchasing
pattern. With the help of predictive analysis, Starbucks will be able to maintain
their sales by identifying what is the most in demand product and for them to know
what product should be allocated more resources and be prioritized. Also, they can
be able to analyze the in-demand products with the help of quantitative
information which means that they will be able to identify the most preferred
products by the number of customers.

ENM1106 Supply Chains and Logistics Management 2nd Semester 2020 - 2021
 FAR EASTERN UNIVERSITY
Institute of Accounts, Business and Finance
BUSINESS ADMINISTRATION

Results

Starbucks has started gathering data and using predictive analysis during the
pandemic, Starbucks is using a Website, Loyalty Card, and Mobile App as their
source to gather the data and knowing purchasing patterns of the consumers.
Due to the gathering of data, Starbucks was enabled to identify the products
that are in demand for the consumers. allowing for them to focus on what
resources to be prioritized during the pandemic.
Although Starbucks has a huge revenue loss during the pandemic. They still
try to cope up by using their mobile app and other 3rd party delivery apps such as
Grab Food, Uber Eats, and Food Panda. Because of mobile apps, Starbucks has
given their consumers different types of personal promos to convince their
consumers to order more. Generally, their revenue comes from the Delivery and
Store Pickup during the pandemic. Allowing them to continuously serve the
consumers despite the challenges of the Covid-19 pandemic.
Discussion:

Due to the COVID-19 Pandemic, large companies were forced to close some,
if not all of their branches and Starbucks is not an exemption. Starbucks, one of the
most famous coffee shops were also affected by the pandemic. They were forced
to adapt with changes while the pandemic is ongoing. We conducted our study on
how Starbucks can manage to keep and make profits and keep the demand going
while having this pandemic. The case study we made is extremely significant for
Starbucks as it will help them keep the demand high and it will help Starbucks be
ready for future events, even unforeseen ones.
Based on the results, Starbucks is still coping with the loss of dine-in privilege
of customers, but they managed to keep the demand high by providing option to
patronize Starbucks even at home. Starbucks managed to provide promos and
discounts when using 3rd party apps like Grab food, Lalamove, Food Panda, etc.

ENM1106 Supply Chains and Logistics Management 2nd Semester 2020 - 2021
 FAR EASTERN UNIVERSITY
Institute of Accounts, Business and Finance
BUSINESS ADMINISTRATION

The study made is significant for the growth of Starbucks during the
pandemic as it will help them improve their profit during these trying times.
Starbucks have done a great job in meeting the needs of its customers even while
lockdown.
Starbucks use the disruption of the COVID-19 pandemic to move aggressively
and further differentiate (WARC, 2020). This includes their supply chain
forecasting. New concepts about product development, logistics, and sales &
operation we’re change to accommodate the complications of the “new normal”.
As they begin to take measures to respond to the pandemic. The company is
temporarily switching to a drive-thru and delivery-only model, ensuring that even
in this tough situation, the end user can get their product.
The demand for services for delivery is at its peak. Starbucks could learn
precisely which consumers are leaning to have their cups of coffee shipped to
them in different areas. Take this information, combine it with the knowledge
obtained across the same time period from a further analysis of order pickup, and
instantly Starbucks would be able to determine what kinds of services and what
kinds of stores it needs to construct for the coming years.
The study assumes that Starbucks will not experience any additional business
interruptions, especially in their supply and demand, as Covid-19 forces all
generations to think digital first. Given the major financial effect of briefly closing
down many of its stores during the pandemic, Starbucks is now doubling down on
attempts to turn its cafes into an "on-the-go" format as it provides more drive thru,
curbside pickup and delivery services. (Klebnikov, 2020). Pre-pandemic, Starbucks
has always had one of the best omnichannel retail experience (Walton, 2020). For
years, they have been doing this and now their ideas and tests are beginning to pay
off. By 2022, Starbucks is expecting a significant turnaround in demand for its
coffee.
This study only shows that Starbucks is ready to cope with what COVID-19
has thrown at it and will potentially emerge stronger than ever from this pandemic

ENM1106 Supply Chains and Logistics Management 2nd Semester 2020 - 2021
 FAR EASTERN UNIVERSITY
Institute of Accounts, Business and Finance
BUSINESS ADMINISTRATION

because it has been doing the responsibility of ensuring themselves flexible and
prepared for the future.
Recommendations

• In-store Touch menu/QR code menu

The coronavirus (COVID-19) pandemic has now spread across the
globe and it will therefore take a while for the hospitality industry to recover.
It is already clear that by contacting infected materials, the coronavirus will
spread. This puts services such as restaurants on the spot as numerous
individuals share much of the surface every day. Although a good start is
washing and disinfecting tables and restaurants, there is also one thing that
individuals need and share; menus. To keep your customers safe, creating a
PDF QR Code for your menu will limit cross-contamination from sharing
physical menus.

• Offer free delivery fee by using Starbucks mobile app or 3rd party app.
Free delivery entices customers to purchase by wrapping all costs into
the price of each item. Free delivery can be an efficient campaign method
targeted at helping the customer as well as the company. There are many
ingenious ways of producing profits and having customers coming back.

• Install plexiglass guards at the front counter.

Minimized encounters between restaurant workers and customers: a
temporary brand standard involving the construction of plexiglass as a
physical barrier between restaurant personnel and guests at the front
counter of all restaurants available for carry-out should be introduced.

ENM1106 Supply Chains and Logistics Management 2nd Semester 2020 - 2021
 FAR EASTERN UNIVERSITY
Institute of Accounts, Business and Finance
BUSINESS ADMINISTRATION

References

Klebnikov, S. (2020, June 10). Here’s How Starbucks Plans To Transform Stores For
The Post-Coronavirus World. Retrieved from Forbes.com:
https://www.forbes.com/sites/sergeiklebnikov/2020/06/10/heres-how-
starbucks-plans-to-transform-stores-for-the-post-coronavirus-
world/?sh=5604baeb4d64
Walton, C. (2020, April 3). 3 Ways Starbucks Will Emerge From COVID-19 Stronger
Than Before. Retrieved from Forbes.com:
https://www.forbes.com/sites/christopherwalton/2020/04/03/3-ways-starbucks-
will-emerge-from-covid-19-stronger-than-before/?sh=56a938621844
WARC. (2020, August 3). How Starbucks is using COVID-19 crisis to differentiate
the brand. Retrieved from WARC^:
https://www.warc.com/newsandopinion/news/how-starbucks-is-using-covid-19-
crisis-to-differentiate-the-brand/43929
Morai Logistics. Case Study: How Starbucks Brews Logistics Success. Retrieved
from http://morailogistics.com/wp-content/uploads/2017/04/Morai-Logistics-
eBook-Starbucks-Case-Study.pdf
Marr, Bernard. (May 2018). Starbucks: Using Big Data, Analytics, And Artificial
Intelligence to Boost Performance. Forbes. Retrieved from
https://www.forbes.com/sites/bernardmarr/2018/05/28/starbucks-using-big-
data-analytics-and-artificial-intelligence-to-boost-
performance/?sh=557d760665cd
Wilson, Eric, CPF. (May 2018). Starbucks Uses Predictive Analytics and Your
Loyalty Card Data. Institute of Business Forecasting and Planning. Retrieved from
https://demand-planning.com/2018/05/29/how-starbucks-uses-predictive-
analytics-and-your-loyalty-card-data/
Leblanc, Rick. (July 2019). How Starbucks Changed Their Supply Chain
Management. The Balance Small Business. Retrieved from

ENM1106 Supply Chains and Logistics Management 2nd Semester 2020 - 2021
 FAR EASTERN UNIVERSITY
Institute of Accounts, Business and Finance
BUSINESS ADMINISTRATION

https://www.thebalancesmb.com/how-starbucks-changed-supply-chain-
management-4156894
Rahman, Was. (January 2020). Starbucks Isn’t a Coffee Business – It’s a Data Tech
Company. Marker. Retrieved from https://marker.medium.com/starbucks-isnt-a-
coffee-company-its-a-data-technology-business-ddd9b397d83e
Maynard, M. (2021, January 28). Starbucks store traffic isn't picking up, but it sees
a silver lining. Retrieved February 21, 2021, from
https://www.forbes.com/sites/michelinemaynard/2021/01/27/starbucks-store-
traffic-isnt-picking-up-but-it-sees-a-silver-lining/?sh=c363c7a22baa

ENM1106 Supply Chains and Logistics Management 2nd Semester 2020 - 2021