QUESTION
Scenario
Starbucks is a speciality coffee house which originated in Seattle. Today the organisation has over 15,000 outlets worldwide. It sells a range of hot and cold drinks, food items and accessories. Its philosophy is to create an experience for the customer and a human connection. With the introduction of the Starbucks Card purchasing drinks, food etc. from the outlets has now been made a lot easier. Customers can top up their cards and use them as a method of payment.
Starbucks products are also available from supermarkets. Some of the range includes packets of coffee, coffee makers, gift sets etc.
Starbucks is constantly innovating its offer to keep up to date with competition from McDonalds, Cafe Nero, Costa Coffee etc.
You are required produce a report in order to answer the following questions making reference to Starbucks.
(Remember to use both theory and practical examples to support your responses)
Task 1 – The Scope of E-Business LO1
a) Differentiate between business to business (b2b) and business to consumer (b2c) transactions in relation to e-business within Starbucks.
b) Explain the business benefits of Starbucks having its own website.
c) Analyse the nature of e-business communication within Starbucks.
(Content – the internet, B2B transactions, B2C transactions, web presence, reduce costs, trust for e-business, data protection, mass communication, personal communication, internet communication)
Task 2 – How the internet works LO2
a) Explain how Starbucks transfers messages across the internet.
b) Describe the main features of HTML, the language of the web
c) Making reference to Starbucks differentiate between the internet, intranet and extranet.
(Content – IP/TCP, FTP, HTTP, POP, IMAP, URL’s, HTML, XML, internet, intranet, extranet, security)
Task 3 – E-Business Model LO3
a) Describe how Starbucks could use the internet to sell its products.
b) Differentiate between other business models for generating revenues from the internet, applying these to Starbucks.
c) Identify other uses of the internet for Starbucks, which may not generate revenue.
(Content – the five business models, supplying information, advertising)
Task 4 – Features of a Good Website LO4
a) Identify elements of Starbucks web page that may be used by search engines.
b) Explain the design features of Starbucks web page that make it attractive to visitors.
c) Describe what makes Starbucks website easy for visitors to use.
d) Explain the legal requirements of site design.
(Content – search engines, building websites with packages, attractive web pages: speed, attractive layout, colour scheme, pictures, links, clear and informative message, image, builds trust, encourages return, website usability, navigation, availability, legal requirements, visually impaired)
Student Guidelines
1. You should write this assignment in report style, although a formal report structure will not be required.
2. You should use diagrams and tables of figures where appropriate ensuring to reference their source.
3. You should include a bibliography using the Harvard referencing system.
4. All tasks are expected to be completed in the word limit of 2500-3000 words excluding table of figures, diagrams and appendices.
SOLUTION
EXECUTIVE SUMMARY
The organisation in discussion in this report is Starbucks. Having its origin in Seattle, Starbucks is a speciality coffee house. Today Starbucks has more than 16,000 outlets worldwide with new outlets opening in every nook and corner. It is primarily involved in the sales of hot and cold beverages, including foodstuff and accessories. In order to keep up in the line with competition from McDonalds, Cafe Nero, Costa Coffee etc., Starbucks is constantly making efforts.
INTRODUCTION
E- business today has become a vital part of leading firms and organisations. E-business, through the use of information technology, involves the creation of new and the restructuring of the existing value chains and business processes.
This report discusses the role and impact of internet and e-business on the functioning and business processes of Starbucks, a leading speciality coffee house. With the end of the year 2010 Starbucks had 16858 outlets across the world (Starbucks Coffee Company, 2011) and e-business did play a vital role in achieving such a figure. The report, with reference to Starbucks, discusses the scope of e-business, functioning of internet, models of e-business and the characteristics of a good website.
THE SCOPE OF E-BUSINESS
Business to Business (B2B)
B2B refers to the exchange of goods and services among different companies. It is the transaction between businesses and the ultimate consumer is not involved. It involves the manufacturers, wholesalers and retailers.
Business to Consumer (B2C)
B2C refers to the exchange of goods and services between the business and the consumer. Through B2C the product reaches the ultimate consumer (Levy, 2008)
If the above transactions are carried out using an electronic medium they then come under
e-business.
For e.g.: Customer purchasing coffee from a Starbucks outlet using a Starbucks card is an electronic B2C transaction whereas Starbucks buying its raw coffee from suppliers is a B2B transaction (Starbucks Coffee Company, 2011).
Starbucks website and business benefits
In today’s time when e-business has touched the lives of millions, it becomes important for the organisations to have web presence and a good website. Having its own website has helped Starbucks to have business benefits. Using its website Starbucks has created mass awareness for its products. As the business of the company has crossed geographical boundaries it is to the credit of the website that a potential customer sitting anywhere around the globe can have access to the company at his or her own convenience without any time boundation as a website offers 27X7 environment. Through the online store of Starbucks products can be purchased from the company sitting at one’s home. The Starbucks customers are able to get and analyse important information about the latest products, the current price lists, and eye catching promotions etc. in detail from the website of the company. Also, Starbucks launched its first online forum in the year 2008 where people can discuss on various topics and issues.
All these features of a website have helped Starbucks to benefit from business.
E-business communication within Starbucks
A huge part of Starbucks today depends on e-business communication. From its stores getting hotspots for Wi-Fi access to the customers recharging the Starbucks card, depends on e-business. The nature of e-business is going dynamic. Starbucks has to maintain a consistency and accuracy in its e-business processes. It also has to ensure the privacy and security of its customers with so many online crimes happening. Also, it has to maintain the global appeal of its e- business as the geographical boundaries no longer matter.
STARBUCKS AND INTERNET
Internet is a global connection of computers. In order to connect and distinguish itself each computer has a unique identity called the IP (Internet Protocol) address. In order to connect to the internet an individual needs the help of an Internet Service Provider (ISP). Now the message is transferred using a protocol stack. At the generators end this stack converts the text into electronic signals and then at the receivers end, back to text. TCP/IP protocol stack is used on the internet. The TCP/IP stack has various protocol layers starting from application protocol layer having particular protocols for applications such as e-mail, FTP, WWW et al.
Next is the TCP (Transmission Control Protocol) Layer which guides packets to a particular location using a port number on the computer. Then is the IP (Internet Protocol) Layer directing packets, using an IP address, to a specific computer. Last is the Hardware Layer which includes modem for phone lines, Ethernet network card etc., using which data is converted to network signals and then back to data.
Hyper Text Transfer Protocol (HTTP) is the application protocol using which the internet functions. In order to establish a link with each other web browsers and web servers use HTTP. FTP (File Transfer Protocol) is used to transfer a file using the internet and for the E-mail reclamation the use of POP( Post Office Protocol) or IMAP (Internet Message Access Protocol) is done (Shuler, 2005). Starbucks also uses the above discussed applications to connect to the internet.
Features of HTML
The principal mark up language for web pages is HyperText Markup Language (HTML).
It designs the basic frame of any webpage. Every HTML begins with a declaration, followed by HEAD and BODY elements. The TITLE tags are required. All other tags are optional. If the declaration is not used it becomes difficult to determine that which version of HTML is used. The head of the document is indicated by the head element which contains information and tags defining the document such as Title. The body contains the document itself with associated markup required for presentation or structure (Powell, 2003).
Internet, Intranet and Extranet
Internet is the worldwide system of interconnected computer networks using the TCP/IP suite to serve millions of people globally.
The internet consists of countless networks which include private, government, academic, public and business networks. The scope of these networks expands locally to globally as they are linked using a wide assortment of networking technologies which include electronic, wireless and optical technologies. Starbucks offers free Wi-Fi internet connection to its customers. Wi-Fi is the wireless technology to connect to the internet. Through its website Starbucks has touched millions of customers, educated and informed the customers about themselves. It runs a forum on its website where customers can generate and share ideas.
An intranet is a communication network in an organisation which utilizes the internet technology. Only the employees can access the intranet to share. Intranet serves as a medium for employees to share information and create a pool of documents and projects which can be accessed by all employees from different locations (Coulter & Robbins, 2009). The store portal, an intranet service for Starbucks, provides information such as recipes, tips, and news about the company to all the employees of Starbucks which helps them to learn and serve better.
An extranet is again a communication network using the internet technology. Extranet allows the authorised users within the organisation to communicate with outsiders like suppliers, customers, etc.(Coulter & Robbins, 2009). Starbucks provides a username and password to create an account on its website. Using this account the authorised customer can recharge the Starbucks card and participate in various schemes etc.
E-BUSINESS MODEL
Starbucks efficiently uses internet to sell its products. Firstly, it has a good and informative website and with the help of search engine optimization attracts visitors. Secondly, it offers access to Wi-Fi Internet connection for free to its card holders, which is an intelligent step to capture the market. As the market is being saturated Starbucks has stepped into online strategies and collaborated with AT&T which will install hot spots in Starbucks stores. In order to boost business Starbucks can hoist its advertisement on various websites. Apart from its own web forum it can also engage in social networking, creating more awareness and thus increasing business.
Starbucks uses Merchant business model. It has its own online store where people can buy different products.
The other business models are Advertising model, Community model, Brokerage model and Subscription model.
Advertising model provides a combination of content and ads. When there is high level of traffic this model is effective. For e.g.: online newspapers. Starbucks can use this model and showcase advertisements on its website.
The community model thrives on the trend of online communities. The business in the community model fetches money by giving space for advertisements, sales of the products or at times considerable donations are made by the members of the community. This model can be used by Starbucks as it can charge people joining its community where it can provide expert advice related to its products
Under the subscription model the businesses charge fees from the users for their services. For e.g.: AOL. This model can be used by Starbucks as it can charge a certain fees for recharging the Starbucks card and providing Wi-Fi access.
The brokerage model brings the buyers and sellers together at a common platform and charges a fee for the transactions.
There are other uses of internet which may not generate revenue for Starbucks. In order to increase its web presence it can sponsor various fund raising campaigns on the internet. It can take up social concerns and spread awareness regarding them. It can ensure the connectivity with all its concerns including employees and keep a track of the developments.
STARBUCKS’ WEBSITE
A website is a wonderful online brand and sales channel and Starbucks has made a great use of this channel. The Starbucks website at www.starbucks.com is visually very appealing and anyone can spend a huge amount of time browsing through it. Under various headings the website provides almost every type of information needed, like, a page titled Our Coffee allows a customer to investigate, research and discover his favourite coffee. In order to find a stores location and perks one can visit the Our Stores page. All promotions and rewards can be reached on a section on Starbucks card. About Us gives all the historic information about the company. The customers can choose to shop online using this website (Burkes, 2009). The language used in the website is simple and can be easily understood. It delivers clear and informative messages. The speed of operation is remarkable and links available can be easily navigated to. All these features and many more makes it easier for the visitors to use the website, thus, building trust among the users and enabling and encouraging them to return back.
Moreover, the website is aesthetically designed. It uses attractive web pages with attractive layouts. The colour schemes and the pictures on display grab the attention of the visitor and makes the website attractive for the visitor. The visitors are also attracted by the online forum of Starbucks, My Starbucks Idea where they can voice their opinion and ideas.
Search Engine Optimization
To browse about something without knowing the exact web address one has to use search engines. There are many webpage elements that are monitored by search engines and affect the search engine rankings. Changes on one’s website can affect the search engine rankings (George, 2011). The main elements affecting the search engine rankings are keywords included in or associated with a webpage, anchor texts used in links in a webpage, size and colours of images used in a webpage, the position of text or images used on the web page, tags assigned to the webpage, updated content on the website, search queries used to find the page etc.
Starbucks has a high search engine ranking and the key is search engine optimization. If an individual types the word ‘coffee’ Starbucks will appear on no. 2 even though it doesn’t have the word coffee on its homepage. This is with the help of anchor texts used in used in links on the website (Search Engine University, 2011). Similarly it is also found that visitors of the Starbucks website have strong affinity levels toward various categories which include commerce, cosmetics, luxury goods, food, fragrances, jewelry, women, and pharmacy. Moreover the visitors of Starbucks have also been seen to visit sites related to other restaurants, shopping, printing and graphics (SEO analysis now, 2009). This information can be used to relate the website links and optimize the search. Thus, using the various elements in a webpage the search can be optimized.
Legal requirements of the site design
Any company should follow certain legalities or guideline while developing a website. If these legal guidelines are not followed the company has a risk of coming under liability which can be either civil or criminal depending upon the nature.
The website must include the details of the company as per The Companies Act of 1985. It should be made certain that the word “Copyright” and the copyright symbol is included where necessary. Disclaimer or Terms and conditions should be included in order to specify to the users that to which extent the information available on the website can be used. Also, it is made clear here that if any liability arises from the use or download of information from the website by the user, the company won’t be liable for it (Paula Dauncey, 2008).
Moreover, the access of websites has seen a considerable rise in the number of disabled people using it. Thus, in order to address any discrimination faced by disabled people, The Disability Discrimination Act 1995 (DDA), was introduced. Some basic design principles are laid down by the Web Accessibility Initiative (WAI) and the Royal National Institute for the Blind (RNIB). These principles should be followed by all the websites which makes the website more user friendly.
Then there is The Data Protection Act and The Consumer Protection Regulation (2000). The Data Protection Act ensures that any personal information collected on internet by the company will be protected by using SSL protection certificate. This act has been a great help when it comes to online payment where sensitive information is required. If the website is not protected the information can find wrong hands and can be misused. The Consumer Protection Regulation ensure the rights of the customers that there should be complete transparency while conducting online sales and the customer should be properly informed about the product or services that he wants to buy and other things related to the purchase like tax, price etc.
CONCLUSION
Starbucks is already a leader in its market segment. Now, it has to strive to keep up will the challenges that come its way everyday. E-business at this hour comes as an aid and has helped Starbucks to maintain its position. Starbucks should keep innovating and amplifying the use of e-business in order to sustain competition and manage its market position. It has a website which has all the characteristics of a good website. It should manage it well and keep it up to date. Now, with e- business Starbucks can each the untouched
REFERENCES
Burkes M B 2009, Starbucks, Greenwood Publishing Group, United States.
Coulter M & Robbins S.P 2009, Management, Pearson Education, South Asia
George 2011, Elements that influence your search engine rankings, viewed on 26 october 2011, < http://www.georgescifo.com/2011/01/10-web-page-elements-that-influence-your-search-engine-rankings/>.
Levy M 2008, Marketing, The Tata Mc-GrawHill Education, New York
Powell A 2003, The complete reference HTML and XHTML, McGraw Hill, U.S.A
Dauncey P 2008, Website legal requirements, IT Wales, viewed on 26 October 2011, <http://itwales.com/Website_legal_requirements_997364.htm>.
Search Engine University 2011, How to rank #2 for a single keyword that has 357 million competitors without using the keyword?, viewed on 26 October 2011, <http://www.searchengineu.com/public/326.cfm>.
Seo Analysis Now 2009,Case Study: Caribou Coffee vs. Starbucks, viewed on 24 October 2011, < http://sites.google.com/site/seoanalysisnow/case-study-caribou-coffee-vs-starbucks>.
Shuler R 2005, How does the internet work, viewed on 25 October 2011, <http://www.theshulers.com/whitepapers/internet_whitepaper/index.html>.
Starbucks Coffee Company, 2011, viewed on 24 October 2011, <http://assets.starbucks.com/assets/aboutustimelinefinal72811.pdf>.
Starbucks Coffee Company, 2011, viewed on 24 October 2011, <http://www.starbucks.com/responsibility/sourcing/farmer-support>.
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