Managing the Global Value Chain

Question: Discuss about the Managing the Global Value Chain. Answer: Description of Competitive Advantage for Coffee Retails: This part of the report has given a detailed account on the competitive advantages of three different coffee retail chains. Here, the discussion has been made on the Starbucks, Gloria Jeans's and Nespresso. Competitive Advantage of Starbuck: In terms of competitive advantage, Starbuck maintains the level of its competencies by being one of the leading organization for product innovation. This statement can be supported by the evidence that indicates that the companys recent launch Pumpkin spice latte has followed near about 150,000 incremental visits on the initial two days (forbes.com 2017). Another potential competitive advantage of Starbuck is its capability for being flexible to satisfy the changing preferences of consumers. In this context it can be said that, it is this particular core competency of Starbuck that has supported the organization to get success in the beverage market of China. On the other hand, it should be contemplated here that it is Starbucks continuous social consciousness that has led the company to open numerous stores in several regions, which are economically backwards (forbes.com 2017). Furthermore, in terms of mighty competitive advantages, Starbucks flexible expansion strategy and its cont inuous preference for not franchising should also be considered with high priority. Competitive Advantage of Gloria jeans Coffee: Gloria Jean's coffee has the competitive edge over other coffeehouse retailers in the context of franchising. It looks for the franchises those are capable and skilled of expanding the business further. Another important fact in this regard is that Gloria Jeans has focused on a particular target market such as the group belongs to the age group of 18-25 years old (Barney 2012). Such small target market has helped the organization to give an intense focus on the requirements and demands of that target market. Competitive Advantage of Nespresso: The main competitive advantage of Nespresso is that it can produce a large quantity of coffee in minimum time, reducing the labor cost and serving the maximum customers (Alon and Eugene 2012). Another important advantage is Nespresso offers premium price coffee and with the continuous growing market, it tends to capture the 20 to 40 percent of the share of European coffee market (Matzler et al. 2013). Competitive Advantages in Terms of Enterprise Value: The companys tatal value is measured by Enterprise Value. In the more specific perspective, the measurement of the theoretical takeover price is beingrepresented by the enterorise value that an investor would have to pay for the purpose of acquiring a particular firm. Thus it is an important financial aspect to judge the companys competitive advantages. As per the value ascertained (referred to excel), EV value of the Nespresso is the largest (7990 million) compare to other two organisations. Thus, it can be concluded that Nespresso has more competitive advantages over Gloria jeans and Starbucks Corps Limited in the recent times. Enterprise value: Market value of common stock + market value of preferred equity+ market value of debt + monority interest - cash and investment Starbucks Corps Limited EV 1474.9 million Gloria jeans EV= 513.438 million Nespresso EV= 7990 million Table 1: Valuation of Enterprise of the selected companies Supply Chain Analysis of the Coffee Retail Chains: Starbucks: Inbound Logistics refers to the collection of the resources. Starbucks has its dealers those buy coffee from direct coffee producers of Africa, Asia and Latin America. Coffee beans are then transported to the storage centers where they are roasted and then packaged. After that, the packed beans go to the distribution center. Starbucks has its distribution center; it does not rely on the outsourcing to secure the quality of their products and takes control of the entire process right after the selection of the coffee beans. Starbucks operates its business in 65 countries either directly or through providing the license. The company has more than 21000 stores across the globe (Geereddy 2012); hence, Starbucks exports the resources to all its stores operated by itself as well as the licensed stores also (Hazen and Byrd 2012). Starbucks does not allow any intermediaries in for the selling of their products. Starbucks has always focused on retaining the quality of their products and standard of the service; thus, there is enormous scope for this organization for market expansion. However improved marketing strategy is required. Starbucks is required to focus on the trend of the Australian coffee culture and act accordingly for the better response from the customers. Gloria Jeans: Gloria jeans is recognized for its franchise system; the organization has adopted a program called Master Franchise Partner (MFP). The interested candidates must focus on the mission and vision of the Gloria Jeans Coffee. If the candidate is suitable, then it will be responsible solely for the service. When an interested candidate is applying for the franchise, the fact should be kept in mind that the resources can be easily sourced or supplied. Gloria Jean's Coffee has expanded its business with the help of 185 stores and 100 franchises within the years (Jacobs and Chase 2013). The organization is looking forward to expanding its market it North America and South Asian countries like China and India. Hence, the company is required to export its products to these countries. There is a huge opportunity for Gloria Jeans for the market expansion. Proper promotion and strategic management are required for the better result. Gloria jean's coffee is one of the favorite coffee shops in Melbourne. Quality of the products and standard of the service has helped this organization to yield this reputation. Nespresso: Nespresso selects the farmers from rainforest alliance for the supplying of their resources. Moreover, it provides feedbacks on the quality of the products to the farmers. As per the report published by the organization, it reveals that the organization has bought almost 1.3 million coffee bags in the year of 2011. Suppliers of the resources can easily sustain the market demand. Partners of Nespresso ventures fund adequately for the activities; thus, the suppliers can sustain the market easily. The number of the coffee suppliers for the Nespresso has almost doubled in three years (Matzler et al. 2013). It is clear from the information that the number of suppliers has been increasing with market demand. Nespresso can easily expand its business. With the changing behavior of the new generation regarding the drinking habit of coffee the scope for the market, expansion is getting higher day by day. Nespresso has become successful to take the position of a popular coffee retail chain; however, it needs to revise its marketing strategy due to the tough competition from other coffeehouse retailers. Reference List: Agha, S., Alrubaiee, L. and Jamhour, M., 2012. 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