The business management concept of the value chain was introduced and described by Michael Porter in his popular book Competitive Advantage: Creating and Sustaining Superior Performance in 1985. A value chain is a series of activities or processes that aims at creating and adding value to an article (product) at every step during the production process.
Businesses aim at enhancing their margins and thus work to change input into an output which is of a greater value (the difference between the two being the company’s profit margin). The logic behind it is simple: The more value a company creates, the more profitable it is. The enhanced value is passed on to the customers and thus further helps in consolidating a company’s competitive edge.
Value-chain business activities are divided into primary activities and secondary activities. The primary activities are directly related to the creation of a good or service, while the support activities help in enhancing the efficiency and work to obtain a competitive advantage among peers. (For related reading, see Industry Handbook: Porter’s 5 Forces Analysis.)
) to understand this better. The Starbucks journey began with a single store in Seattle in the year 1971 to become one of the most recognized brands in the world. Starbucks mission is, per its website, “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”
The inbound logistics for Starbucks refer to company-appointed coffee buyers selecting the finest quality coffee beans from producers in Latin America, Africa and Asia. In the case of Starbucks, the green or unroasted beans are procured directly from the farms by the Starbucks buyers. These are transported to the storage sites, after which the beans are roasted and packaged. They are then sent to distribution centers, a few of which are company owned and some of which are operated by other logistic companies. The company does not outsource its procurement, ensuring high quality standards right from the point of selection of coffee beans.
Starbucks operates in 65 countries, either in the form…