Value Chain Analysis
All organisations make decisions which have an effect on their profitability and competitive position. The process of making these decisions is known as strategic planning and it is done to aid the company in positioning against rivals in the industry using a competitive edge. According to Porter (2011), the value chain analysis is an approach that can be useful in developing an organisation’s strategy. Through value chain analysis, a company can understand the interrelationships between certain activities that create value, and create competitive advantage. A value chain is a method to conceptualise that are needed to provide the customer with the service or the product. The analysis provides a depiction of how product gains costs and value along the design, manufacturing, marketing, delivery and service path to the consumer (Ensign, 2001, p. 18). As shown in the figure below, the value chain model is divided into two sections namely support activities and primary activities.

Figure 1 Value Chain Analysis
Source: Porter (2011)
Therefore, the value chain seeks to analyse a business’s internal activities in an effort of understanding costs, determining activities where value should be added and using the differentiation strategy for competition purposes. According to the model provide by Porter (2011), the primary functions are basic activities and areas including inbound logistics, operations, outbound logistics, marketing, and sales, and service. On the other hand, the support activities include infrastructure, technological development, human resource management, and procurement. The primary focus in this assignment is the operations component of a food and beverage company like Starbucks.
The operations component of the value chain involves management of the process which converts the inputs in form of energy, labour, and raw materials into the needed output of the service or the good (Lusby, and Panlibuton 2004). Currently, Starbucks operates in approximately 65 countries globally either as licensees or stores that are directly owned. Internationally, the company has more than 21, 000 stores including Teavana, Starbucks Coffee, Evolution Fresh, and Seattle’s Best Coffee retail locations (Frue 2011). The annual report of the firm depicted that in the fiscal year 2017 79% of the total net revenue was generated from stores that are directly operated by the company. On the other hand, the stores licenses to operate under its name accounted for 10.5 percent of the revenues.
The operations component matters and is vital for a number of reasons. First, the company offers services and products globally. Therefore, to compete with other brands in the same industry, it is critical for Starbucks to build a consumer base that is strong while at the same time ensuring that they keep their brand name reputable. Consumers in different parts of the world order the premium service and as a result, the company gets to record massive sales annually. Thus, it becomes a win-win situation for both the customers and the organisation.
Starbucks manages the production services to ensure that consumers are provided with food and beverages of the highest quality. For example, the company strives to procure quality coffee beans leading to a product that customers are willing to buy at an extra coin. The process of producing the coffee includes invention of new tastes, and procuring of the raw materials. The company has been able to survive in the market for decades because of the consistency in production of quality beverages globally.

References
Ensign, P.C., 2001. Value chain analysis and competitive advantage. Journal of General Management, 27(1), pp.18-42.
Frue, K. 2011. Value Chain Analysis Example Using Primary Activities.[ Online] http://pestleanalysis.com/value-chain-analysis-example/[Accessed 10th April 2018]
Lusby, F. and Panlibuton, H., 2004, October. Value chain analysis. In Presentation by Action for Enterprise at SEEP Network annual general meeting pre-event workshop (25–26 Oct.), Washington, DC.
Porter, M.E., 2011. Competitive advantage of nations: creating and sustaining superior performance (Vol. 2). Simon and Schuster.