Has Starbucks Met its Match?



The popular coffee franchise has made a statement in a number of different markets, but has it met its match against Vietnam? The Seattle based coffee chain put its first location in Ho Chi Minh City in February. This country is known to have a very specific way of making coffee; nothing like what Starbucks has in the U.S.

The main concern here is if Starbucks will thrive in this new country, or become a complete failure. I believe The Critical Decisions of Operations Management should be highly considered.  One of the points is based on the design of goods and services. Starbucks has made a point to please the locals by making a special drink called the Asian Dolce Latte to appeal to local palates. By doing this Starbucks has a better chance to win over the locals that are so keen to stick to their original tastes.  When taking a domestic product abroad, I believe having differentiation in the good or service is also extremely important. Since Starbucks has a flavor of coffee unlike anything the Vietnamese are used to, this differentiation can potentially give them the competitive advantage they need in order to succeed. Starbucks CEO Howard Shultz quotes, “The environment that we create, the store design, the experience…they all add up to a much different position to anything that anyone in Vietnam currently occupies.”

Another critical decision is location strategy. Now, Shultz did not just wake up one morning and decide he wanted a new location in Vietnam. There are currently over 3,000 locations in Asia alone. Starbucks in fact purchases a large quantity of Arabica coffee from Vietnam, thus building a location in Vietnam makes a lot of sense. If they can move closer to the supply, this could greatly reduce exporting costs. To be even more specific, Starbucks purposely located their café in the capital’s higher-end neighborhood, District 1. Here, those that live in the area can afford the expensive taste that Starbucks has. Starbucks essentially nailed it on the head when it comes to this aspect: they are now near raw materials, and they are near to their target customers.

Going global has given Starbucks a vast amount of knowledge on how to succeed. However, they also face some cultural issues as well. As I stated before, the type of coffee served at Starbucks in the U.S. is much different than what the Vietnamese are used to. They enjoy a more bitter and higher caffeinated drink, and in order for Starbucks to do well, they must adjust to the new scene and roll with it. They have also brought a roast-duck wrap and a French baguette to the menu to achieve this goal.

Overall, I believe Starbucks has done an amazing job going global, and if they review and understand the critical decisions of operations management, they will continue to strive to new levels.

Thoughts for discussion:

Will Starbucks succeed in their takeover of Vietnam? Why or why not?
What does this mean for local coffee shops?





How To Save J.C. Penney: Shut Hundreds Of Stores, Say Business Professors


J.C. Penney has been a popular shopping mall back to the time, however, currently J.C. Penney appear problems to face.J.C. Penney hired Ron Johnson as J.C. Penney CEO in June 2011, and Johnson started a new strategy of Pricing method for J.C. Penney such as “Every Day” Price and ” Best Price”. However, those methods do not help company sale profit increase. Although J.C. Penney stock has been risen, total sale of 2012 decrease a lot after Ron Johnson took over CEO position. In Fact, Johnson gave wrong strategy for J.C. Penney.

Therefore, J.C. Penney fired CEO Ron Johnson and solved problems itself. J.C. Penney have been operated for more than 100 years. In the article, Bruce Clark, a professor of marketing stated that some J.C. Penney are old, and it had not opened more new stores in the last five years. J.C Penney located from suburb to downtown, it has been experienced peak or trough. Nowadays, there are more competitors than old modernization, such as Macy’s, Sears and Nordstrom; these stores are mostly located in downtown and mid-range areas. J.C. Penney has financial problems because they did not do well in operation management. To have a good operation management, it need a great critical thinking.

In addition, in the end of article, it mentioned that the main focus of J.C. Penney for now is to open stores in higher end malls. I think that it has this idea, this main focus because it can attract more higher-income customers to shop J.C. Penney so that it can earn more sales. Also, if J.C. Penney are going to put stores in higher end malls, they have to have great critical decision to save stores. Since it will be closing 700 stores out of 1100 J.C. Penney stores, it need to offer great design of goods and services, managing quality and supply chain management. In Chapter 1, we discuss in-class of ten critical decisions, and I think these three decision areas are more concern for J.C. Penney. Since they have a bad strategy of pricing and cash drain before, it need these decisions to operate well J.C. Penney.

If J.C. Penney really decide closing stores, I believe that it is a tough decision since it is a large company with 1100 stores and open more than 100 years, and it would cause a lot of effects, such as it will make handles all closing stores problems, a lot of employee and employers losing job opportunities, destructing of  operating covenants  and paying penalty. Therefore, if J.C. Penney do not close that 700 stores and have new strategy development, I think that J.C. Penney can be back on track, for example, like the Chapter 2 strategy, the elements of operation management strategy are low-cost products, high-value offerings and efficient, flexible operations adaptable to consumers etc.  Therefore, I think that it should not close stores, and I believe that each of J.C Penney stores still have value so they should not give up, and they just need a great strategy and critical decisions of management.

Reference: http://www.forbes.com/sites/clareoconnor/2013/04/12/how-to-save-j-c-penney-shut-hundreds-of-stores-say-business-professors/