Course Code: Course Title: Section: Group No.

: Project Title: Date:

ISM003 Information System Management 1 4 Starbucks Company (International) 17th April, 2011

Prepared by
Full name in English Chin Pui Kee, Nessa Kwan Yee Ki (Kiki) Student ID 8047975 8086098

Content
1. Executive Summary --------------------------------------------------------------------------------------- P. 2 - 3 2. Introduction ---------------------------------------------------------------------------------------- P. 4 3. Background Information 3.1 History --------------------------------------------------------------------------------------- P. 5 - 6 3.2 Business Strategy ---------------------------------------------------------------------------------------- P. 7 3.3 Business Flow ---------------------------------------------------------------------------------------- P. 8 4. Information Resource 4.1 Hardware ---------------------------------------------------------------------------------------- P. 9 4.2 Software ---------------------------------------------------------------------------------------- P. 10 - 11 4.3 Database ---------------------------------------------------------------------------------------- P. 12 4.4 Cost of the system ---------------------------------------------------------------------------------------- P. 12 5. Information Participants ----------------------------------------------------------------------------------- P. 13 - 15 6. Analysis ------------------------------------------------------------------------------------ P. 16 - 17 7. Recommendation ----------------------------------------------------------------------------------------- P. 18 8. Conclusion ----------------------------------------------------------------------------------------- P. 18 9. References ----------------------------------------------------------------------------------------- P. 19

Executive Summary
This report discovers how information system can help Starbucks Corporation becomes the largest coffeehouse company in the world by describing hardware, software and database used to obtain, store and analyze data.

Starbucks has used four main types of hardware in their stores: two types of modem, computer, wireless internet and printer.

Starbucks has used four main software systems: Point of Sale System, Manager Work Station, Automated Labor Scheduling, Intelligent Restaurant Information System and Starbucks Card Mobile App.

The database Starbucks has used is Starbucks Enterprise Data Warehouse (EDW), the largest fact tables consist of billions of rows, are range partitioned, and hold 39 months of data for reporting purposes.

According to the annual report of Starbucks in 2010, capital expenditures in fiscal 2010 totaled $441 million, primarily for remodeling and renovating existing

company-operated retail stores, opening new retail stores, and investment in information technology systems.

Results of information analyzed show that different information participants can access different perspectives to get the information and participate in the operation with diverse security level.

Analysis

Starbucks takes advantages by using software developed by a stuffing management technology system: Operational excellence New products, services and business model Improved decision making Competitive advantage Survival

For the Recommendation, we recommend Starbucks make a faster and more efficient system as Information System have to be updated. For the up-to-date reason, we also

suggest Starbucks Invest in new technologies like new monitors, wireless system and Printers.

Limitation of Information System is they have to Updated regularly. Moreover, as the System cannot run by themselves, they need to train their staff how to cope with those new technologies. There is also risk on using Information System like Virus and Hacker attack. Sometimes the Computers would out of serve.

Introduction
Since I was small, I like to drink coffee and my dream is to open a coffee shop in the future. In order to fulfill my ideal, I am going to do a research on a successful Coffee Company Starbucks Coffee Company.

I choose this company because it has a lot of stores throughout the world, such as United States, United Kingdom, Japan, Hong Kong, France. In addition, it has received many rewards and recognition. For instances, No. 1 Best Coffee, Fast Food and Quick Refreshment categories andNo. 1 Most Popular Quick Refreshment Chain from Zagats Survey of National Chain Restaurants in 20092010, one of the Worlds Most Ethical Companies from Ethisphere in 20072010, one of the 100 Best Corporate Citizens from Corporate Responsibility Officer/Business Ethics in 20002010, one of The 100 Best Companies to Work For from FORTUNE in between 1998 to 2000 and 2002 to 2010.

From the above rewards and recognition, it shows the popularity Starbucks has in this industry. By analyzing this international company from its system, business strategy, structure, business ethics, and so forth, I can understand Starbucks more and point out the pros and cons of it. Therefore, I can learn and intimate its way to success and open my own coffee shop.

In this project, first introduce the background of the Starbucks (history, business strategy and business flow), followed by the information system of it, then how the participant is going to use it, and last is how this company can achieve by using these information systems.

Background Information
History Starbucks Coffee opens its first store in Seattles Pike Place Market,

Washington in 1971. By the time, it was a roaster and retailer of whole bean and ground coffee, tea and spices.

In 1984, Howard Schultz convinces the original founders of Starbucks to test the coffee bar concept in downtown Seattle, where the first Starbucks (Starbucks first store) Caff Latte is served. This successful

experiment is the genesis for a company that Schultz founds in 1985.

In 1988, Starbucks comes out with their first mail-order catalog, enabling mail-ordering of their coffee in all 50 states.

In 1991, it becomes the first U.S. privately owned company in history to offer a stock option program to all its employees.

In 1992, it completes initial public offering (IPO) with common stock being traded on the NASDAQ National Market under the trading symbol SBUX.

In 1996, it forms a partnership and expanded to Japan (first store outside of North America) and Singapore.

(Howard Schultz)

In 1997, it establishes The Starbucks Foundation, benefiting local literacy programs. In 2001, it introduces ethical coffeesourcing guidelines developed in partnership with Conservation International.

In 2002, Starbucks enters into licensing agreements with national Fair Trade organizations to sell Fair Trade certified coffee in the countries where Starbucks does business.

In 2010, it expands digital offerings for customers with free unlimited WiFi, Starbucks Digital Network in U.S. stores and coffee offerings with ultra premium Starbucks

Reserve line and Starbucks Natural Fusions, the first nationally branded naturally flavored packaged coffee. Moreover, Seattles Best Coffee reinvents business strategy to extend brands reach.

Now, Starbucks Corporation is an international coffee and coffeehouse chain. It is the largest coffeehouse company which welcomes millions of customers every day, in more than 17,000 locations in over countries. There are 17,009 stores thought out the world (till January 2, 2011) 8,870 stores are company-owned and 8,139 stores are licensed stores.

Business Strategy

Starbucks obtained three main strategies. They are rapid store expansion strategy, strategy on product line and coffee purchasing strategy. This enabled the initially West Coast yuppie fad to become a global phenomenon.

In the rapid store expansion strategy, Starbucks has saturated the market by domestic store expansion and international store expansion. For domestic store expansion, Starbucks has introduced a three-year expansion strategy and Starbucks everywhere approach. While the international store expansion, it launched company-owned and company-operated stores or licensing, create a new subsidiary (Starbucks International) and expanded its consumer products channel in South Pacific region. Moreover, employees have training and recognition. There are systems to recruit, hire and train baristas and store managers. In addition screening, training programs, awards for partners. In real estate, store design, planning and construction. There are a broad range of store formats, a stores of the future project team, high-traffic, high-visibility store locations, controls of average store opening costs and Wi-Fi availability at stores. In store ambience, it has the concept of everything matters and assessment of standards.

The Starbucks strategy has always involved thinking outside the box. In addition to clustering its outlets, the Starbucks strategy involves engaging in smart strategy on product line. It provides a wide range of products choices, rolling out fresh, new initiatives, including a new product line of hot sandwiches and breakfast food and new drinks such as coffee liqueurs and special product promotion, selling music CDs, acquisitions hear music and ethos water, joint ventures with the right companies, such as their successful alliance with Pepsi-Cola Co, Dreyers Grand Ice Cream and Jim Beam Brands. The Starbucks strategy is now also expanding online, allowing customers to pre-order and prepay for products via the Internet.

Last but not least is the coffee purchasing strategy. Starbucks built relationship with growers and exporters, checks on agricultural conditions and crop yields, and searches out varieties and sources that would meet Starbucks standards. By using fixed-price purchase commitment and purchasing coffee future contracts, it contributes to the sustainability of coffee growers which helps environment conservation. Furthermore, it has purchased and marketed Fair Trade Certified coffee. It also promotes coffee cultivation methods that protected biodiversity and maintained a healthy environment.

Business flow

Coffee beans begin at the farm on coffee trees. After trees are planted, it takes between one and three years for the trees to bear coffee cherries, which typically contain two beans. Each tree produces 2,000 to 4,000 beans a year approximately one pound of roasted coffee. There are between 50 and 70% of the global coffee supply came from small-scale farms by 2001.

The coffee export process varied greatly depending on origin country and buyer. In some countries, beans were exported through government coffee boards while other countries used private exporters only. After they were shipped to import country, coffee beans were visually inspected and test-tasted for quality through a process called cupping. After passing inspection, coffee was stored in warehouses until it was shipped to roasters. Large roasters also stockpiled green coffee at the import warehouses to help decrease their exposure to market conditions.

After buying green coffee, the beans are shipped to roasting facilities where the beans are roasted until they receive their characteristic color and aroma and then cooled. Once the beans are cooled, roaster blend beans from different countries to balance the flavors and strengths. This process is essential because it allows for a consistent flavor even if supplies vary due to prices and availability. Roasters then package, market, and distribute coffee through a variety of methods. The largest roasters grind and vacuum-pack coffee in packed bricks or cans and distribute their product through wholesale channels. These roasters supply coffee for restaurants, airlines, and hotels in addition to selling directly to consumers through supermarket channels. Specialty coffee, in contrast, is roasted and packaged in a manner to guarantee quality and freshness. It is sold in both whole bean and ground forms through wholesale and retail channels.

According to Starbucks executives, their chief concern with fair trade coffee was finding top quality beans from cooperatives that have not demonstrated an ability to produce quality beans to Starbucks standards. From earlier cupping analyses, Starbucks had little evidence that fair trade met its quality standards. Starbucks was beginning to move toward purchasing more of their coffee through direct relationships with exporters or farmers and negotiated a price based on quality. The company was willing to pay higher prices for great quality beans and had developed long-term contracts with many of its suppliers. Starbucks then sell these beans on their stores.

Information Resources
Hardware

There are two types of modem: The speed touch cable modem and the ISDN (integrated services digital network) modem

The speed touch cable modem and the ISDN connect the store computer system to the Starbucks retail network. The Retail Network is the communication access between the store and the internet. This allows the management work station to send and receive large quantities of data and information.

There is a wireless internet provided by T-mobile, which allows customers to connect to the wireless network. There are two pieces of equipment: the Cisco Router and the Cisco Wireless access point

Connected to the Point-of-Sale computer system there is a Printer used to print reports of any nature, and a cash scale which counts Cash in a faster way and more accurately, mainly it is used to count the tills and at the end of this process all data are send to the system. At the Point of sale, there are two small printers where all receipts come out, and two (chip and pin) credit and debit card machines.

To protect retailers, a new security system has been designed for cards which will use a smart chip. When customers pay using one of these cards, rather than signing a confidential security number (PIN) is entered.

Software

Starbucks has used five main software systems: Point of Sale System, Manager Work Station, Automated Labor Scheduling, Intelligent Restaurant Information System and Starbucks Card Mobile App.

1. Point of Sale System

The Point of sale consists in two touch screen tills used by deployed partners that need to insert their username and specific password before to start. From the Point of sale, managers can access different managers functions menu, such as paid in and Paid Out, and Refund to customers.

These manager functions are security measures for cash management and inventory control in the store.

By ringing items through the tills, data such as time, customer transaction, quantity of food and drinks sold, quantity of wasted items, are transferred to the Manager Work Station where data are stored, analyzed and produced in form of reports, graphic, charts or diagrams.

2. Manager Work Station

The Manager Work Station can be accessed in the office where there is a computer connected to the intranet, a private

communication channel for employees to access the organization network that

resembles the internet. To access the system it is required to sign in with a password and the partners ID. The system recognizes security level and allows accessing the function assigned to the security level. The normal partners can just access the time punching option, which is that function that record staff punches in and out for breaks and shift.

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3. Automated Labor Scheduling Planning and building labor schedules that maximize productivity as well as manage payroll functions.

By using scenario-based instruction that is realistic to Starbucks workforce

requirements.

4. Intelligent Restaurant Information System

Starbucks Coffee Company limited uses a Management information system called IRIS which stands for Intelligent Restaurant Information System.

The IRIS is made up of two components: 4.1 The Point of Sale System (POS) in addition to regular register functions offers some functions to be accessed only by Store Manager(SM), Assistant Manager(ASM) and Shift Supervisor(SS), with the correct security level. 4.2 The Manager Work Station (MWS) compiles and reports all store information to effectively manage all aspects of store business.

It displays all the different functions available on the IRIS, some of which are only accessible by partners with the correct security which consists in typing the correct username and password.

5. Starbucks Card Mobile App

In addition to the mobile payment capability, the app allows customers to manage their Starbucks Card account, check their card balance, reload their card with any major credit card (iPhone users can also use the PayPal feature), check their My Starbucks Rewards status and find a nearby Starbucks store with the store locator feature. Customers can pay with their smartphone by holding their mobile device in front of a scanner on the countertop and scan the Starbucks Card Mobile Apps on-screen barcode to make a purchase.

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Database

In the case of the Starbucks Enterprise Data Warehouse (EDW), the largest fact tables consist of billions of rows, are range partitioned, and hold 39 months of data for reporting purposes. The use of a sliding window partitioning scheme was employed as a means for managing this large volume of fact data. In this case, a sliding window scheme implies partitions and tablespaces are added and dropped as time passes. Therefore, a PL/SQL package that automatically adds and drops partitions as well as adds/drops tablespaces is used to maintain the table DDL in the warehouse. Figure 8 shows an example of the Sliding Window Scheme.

As a result of the data being split at the month level over 39 separate tablespaces, the data volumes in each tablespace will average 180-200 GB in size. In the next few years, new periods (i.e. months) of data are expected to average 250-300 GB and this is believed to be a relatively manageable size from a backup and recovery standpoint.

The implementation of the sliding window partitioning scheme also called for setting tablespaces containing fact data to read-only after 2 months. RMAN can automatically skip read-only tablespaces and thus optimize backup and recovery operations.

Cost of the systems

According to the annual report of Starbucks in 2010, capital expenditures in fiscal 2010 totaled $441 million, primarily for remodeling and renovating existing company-operated retail stores, opening new retail stores, and investment in information

technology systems.

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Information Participants
1. Users

Starbucks Card Mobile App

Starbucks Card Mobile App allows customers to manage their Starbucks Card account, check their card balance,

reload their card with any major credit card (iPhone users can also use the PayPal

feature), check their My Starbucks Rewards status and find a nearby Starbucks store with the store locator feature. It is a basic business system that serves the organizations operational level. Therefore, it is a Sale and Marketing System and Transaction Processing System.

2.

Workers

Point of Sale System

Workers like Cashiers, they will use Point of Sale System which Perform and record daily routine transactions necessary to conduct business like Sales order entry. Paid in and paid out occurs when money is taken from the till to buy items necessary for the store operations and any kind of emergency. Other functions such as Cash Skim, Void transactions or refunds occur when money is given back due to complaints or customers are returning faulty merchandise. It also serves the organizations operational level. Therefore, it is also Sale and marketing system and Transaction Processing System

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3.

Administrator

Point of Sale System

Point of sales System serves predefined, structured goals and Decision making which is Transaction Processing System and Finance and accounting system. The Point of sale consists in two touch screen tills used by deployed partners that need to insert their username and specific password before to start. From the Point of sale, managers can access different managers functions menu, such as paid in and Paid Out, and Refund to customers.

Manager Work Station

Manager Work Station serves predefined, structured goals and Decision making. So it is Transaction Processing System and Finance and accounting system. Manager Work Station decided for Store Managers to identify business requirements and customer needs, to identify peak time in the store, to increase or amend product ordering, to control wastage and track stock and decide whether is necessary to cut labor. Managers can access staff information and personal details in the work station, they can insert new partners, terminate partners, maintain employee records, track employees training and process payroll.

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Automated Labor Scheduling

Automated Labor Scheduling decided for Store Managers to plan and build labor schedules that maximize productivity as well as manage payroll functions which is a human resources system and Management Information System..

Intelligent Restaurant Information System

Intelligent Restaurant Information System provides a number of reports that can be used to help to manage store profitability and accessed to check and monitor inventory which is a function of Inventory management system. These reports can be viewed on the computer monitor or can be printed for review or archive. Store Managers can use this Management information System to prepare short term budget to plan long term profit and prepare proper forecasts.

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Analysis
What Starbucks have achieved after using these information systems?

Starbucks takes advantages by using software developed by a stuffing management technology system.

1. Operational excellence Starbucks from using the above information system, it can improve efficiency and attain higher profitability. Furthermore, information system can increase productivity and revenue

2. New products, services, and business models

Starbucks has introduced a new service called Starbucks Mobile Apps which can create wealth.

3.

Improved decision making

Management Information System can help Manager making decision for Just-in-time production of goods and services, the suitable allocation of resources and faster response time. For online ordering, like buying Starbucks Cards and Coffee machine, it can Reduce cost and gain more customers

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4. Competitive Advantage on Information System

a.

Starbucks Company and small coffee shop

When you walk in a Small Coffee Shop, you can see the only Information system they have used is Point of Sales System or a cashier machine. Unlike Starbucks which is an International Company. They have to organize huge amount of Data by using complex information system.

b.

Starbucks Company and Pacific Coffee Company Starbucks and Pacific Coffee Company (PCC) are quite similar in information systems, because both of them are using complex information system. Yet, Starbucks Company has more stores and globalized than Pacific Coffee Company. Thus Starbucks information systems are more complexes than PCC. Furthermore, Starbucks has a new service called Starbucks Mobile App which PCC does not have yet.

5. Survival

Nowadays, Information Technology is a necessity. Actually Starbucks Company has done a lot of it, such as Starbucks official website, gift card, Starbucks Mobile App, etc.

(Starbucks official website)

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Recommendation
On the above evidences we can see the advantages on the information systems, yet everything has pros and cons.

We have found some limitations of it, like they have to Updated regularly. Moreover, as the System cannot run by itself, they need to train their staff how to cope with those new technologies. There are hidden risk on using Information System like Virus and Hacker attack. In addition, sometimes the computers would out of serve.

Counter with the limitations above, we have some advises for Starbucks.

First, we recommend Starbucks make a faster and more efficient system as Information System have to be updated.

Second, for the up-to-date reason, we also suggest Starbucks Invest in new technologies like new monitors, wireless system and Printers.

Conclusion
After doing this research on Starbucks Company, I have a deep understanding on the information systems (IS) of it. If I would like to open a successful coffee shop, I am not only focusing on the quality of the coffee and food, but also need to put a lot of effort on the information systems of my company. As a good information system can achieve on operative excellent, improved decision making, comparative advantage, etc which can increase productivity and revenue.

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Reference
Arthur, T and John. G, Starbucks Becomes a Public Company. McGraw-Hill College Division. Available: http://www.mhhe.com/business/management/thompson/11e/case/starbucks-2.html (Accessed on 10April 2011) Chris, S, Starbucks Coffee Company - MIS Review. Free Research Papers. Available: http://www.freeonlineresearchpapers.com/starbucks-coffee-mis-review (Accessed on 10April 2011) Chien, T and Greg, G, Very Large Database Backup & Recovery Best Practices. Oracle Corporation. Available: http://www.oracle.com/technetwork/database/features/availability/vldb-br-128948.pdf (Accessed on 1 April 2011) James, M, At last! A faster way to get espresso -- the Starbucks iPhone mobile payment way. Traveler 2.0. Available: http://traveler2.typepad.com/blog/2011/01/starbucks-iphone-mobile-payments.html (Accessed on 10 April 2011) Joseph L., Starbucks Training. Docstoc 2010. Available: http://www.docstoc.com/docs/8390743/Starbucks-Training (Accessed on 10April 2011) Starbucks Corporation, Executive Biographies. Starbucks Corporation. Available: http://news.starbucks.com/executive+biographies/?start_row=11 (Accessed on 10April 2011) Centurion System Inc. 2009, Starbucks Point of Sales, Centurion System Inc., America, viewed 10 April 2011, <http://www.centurionsys.com/Graphics/CSIPORTJPEG/starbucks_pos.jpg>. Gizmoe 2011, Starbucks iPhone Apps, MacApper, America, viewed 10 April 2011, <http://macapper.com/wp-content/uploads/2011/01/115004-starbucks_qr_code.jpg>.

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