Definition: the operation strategy is “the decision which shapes the long-term capabilities of the company’s operations and their contribution to overall strategy through the on-going reconciliation of market requirement and operations resources.”

1. Table of contains
1. Overall Introduction…………………………………………………………...2
2. Introduction of Volkswagen…………………………………………………...3
2.1Critique their internal and external supply
chain and assess its impact on
the companies’ success and profitability………………………………………3
2.1.1 Internal supply chain……………………………………….……4
2.1.2 External supply chain………………..…………………………..5
3. Improve their competitiveness by the operational strategy…………….……...6
4. Location selection…………………………..……………………….………11
5. Introduction of Starbucks………………………………………...………….14
5.1 Internal and external supply chain of Starbucks………………………….…14
6. Operational strategy of Starbucks and its competitive advantage …………...17
7. Challenges presented by operational strategy and
Recommendations……………………………………………...…………...20
8. Location analysis for new operation of Starbucks…………...……………...22
9. Overall Conclusion………………………………………….……………..…24
10. Bibliography………………………………………………..………………..25
Appendix
1

2. 1. Overall Introduction
Our group choose Volkswagen from manufacturing companies and Starbucks from
service companies. This report shows the internal and external supply chain of both
companies. For Starbucks we visited one Starbucks coffee shop and looked at how
they operate their business (from taking orders to serving their customers) to analyse
their internal supply chain. And for external supply chain, we simply went to their
websites and other articles that starts from their suppliers and ends at Starbucks. In
case of VW internal supply chain, we discussed about how they enter into the steel
industry to reduce the time wasted, cost and to meet the high customers demand. And
for external supply chain, we simply went through how they break all their
components into different smaller parts and send their requirements into different
countries to take advantages of local policy and to save their waiting time from single
suppliers. Then we talked about what operational strategies each company adopted
and how these strategies give that company the competitive advantage in this
competitive market. Operational strategies do not only pose benefits to the company
but also give some challenges that each company should face and work for the further
success. So we also included challenges that each company face and the solution to
each challenges that we think that particular company should do. Then finally we did
market analysis for each company based on different factors like market efficiency,
infrastructure, and income and so on so that each company could be able to locate in
the beneficial location. The success of any business depends on the nature of business
and the countries in which they operate.
2

3. 2. Introduction of Volkswagen
The Volkswagen Group is one of the world’s leading automobile manufacturers and
the largest carmaker in Europe. In 2007, the Group increased the number of vehicles
delivered to customers to 6.189 million, corresponding to a 9.8 percent share of the
world passenger car market. The Group is made up of nine brands from seven
European countries: Volkswagen, Audi, Bentley, Bugatti, Lamborghini, SEAT,
Skoda, and so on. The Group operates 48 production plants in 13 European countries
and further more in the Americas, Asia and Africa. Around the world, more than
360,000 employees produce almost 25,400 vehicles or are involved in vehicle-related
services each working day. The Volkswagen Group sells its vehicles in more than 150
countries. It is the goal of the Group to offer attractive, safe and environmentally
sound vehicles which are competitive on an increasingly tough market and which set
world standards in their respective classes. (Volkswagen.com [Online])
2.1Critique their internal and external supply chain and assess its
impact on the companies’ success and profitability.
Supply Chain is the most important bridge to link each part of the operational parts. It
is defined by Martin Christopher (1992): “the network of organisations that are
involved, through upstream and downstream linkages, in the different processes and
activities that produce value in the form of products and services in the hands of the
ultimate consumer.” So the supply chain management will be related to the
company’s profitability and even success or not. Volkswagen also needs to have a
good management on their supply chain and operational expansions in world wide.
3

4. 2.1.1 Internal supply chain:
As the demand and productivity is increased, their supply chain flowed much quicker
than before, so their logistic expenses are more expensive. Volkswagen established a
new diversification- Volkswagen logistic company to reduce the expensive fees on
moving these stocks to each department. But they only have controlling and planning
functions. And Volkswagen developed their steel industry also in his vertical
diversifications. In order to reduce to the minimum cost and time wasted in the supply
chain, they choose to develop that part by themselves. Like the RFID system to track
their stocks in logistic process.
(Source: scdigest.com [Online])
The contributions they made in the supply chain were to make them success and
sustained their competitive advantages, details as following:
• Improved customer service, all the feedback could pass to the related
department directly and with the truth and know the real demand of each level
in the supply chain included customers. They cut the supply chain in order to
get the real customers’ expect needs directly. That can make Volkswagen can
produce appropriate volume in correct quality avoiding the waste.
4

5. • Optimised their costs and investments, they can use their capital for more
projects. And they saved money from the supply chain and also made it more
efficiency work for them. Cash flow is very important for every company, if
they do not have the force on their cash flow, there will be a lot of more space
for them to improve.
2.1.2 External supply chain:
There are many other suppliers in the scale of Volkswagen supply chain they can not
cover, so the external suppliers are also important for them. If they can not deal well
with them, that can damage their internal supply chain and overall performance
heavily. But recent years, Volkswagen invited a new technology for logistic with
external supplier. They break all their components into different smaller parts, and
send their requirements to different partner in China, India and some countries with
their characteristics, in order to share the advantages in local policy. It saved time to
wait a huge volume stocks from just one partners and averaged the cost from all
suppliers. The result is any one partner or one country changed their condition, that
will not influence the overall supply chain, in another saying, they separated the risks.
Generally, Supply chain management is an important factor for Volkswagen success
and sustained their competitive advantages. It coordinated the relationships between
internal and external suppliers and reassessment them. Also they enhanced the
customer service, made the customer happy to get what they really want to get.
5

6. 3. Improve their competitiveness by the operational strategy
A. Definition: the operation strategy is “the decision which shapes the long-term
capabilities of the company’s operations and their contribution to overall
strategy through the on-going reconciliation of market requirement and
operations resources.”
So it is very important for a company to access the role of operation strategy in detail
in order to understand the operation strategy & objective of each performance
Operation strategy helps the company to utilize their operation resource to satisfy the
market requirement. Also the feedback of the market requirement can adjust the
operation strategy. Then the distribution of the operation resources will change as
well. It is a function process between the operation resources & market requirement.
B. Then I will assess the role of the Volkswagen operation strategy in order to
improve their competitiveness.
The operations function can provide a competitiveness advantages through its
performance at five competitiveness objectives.
Volkswagen, as a car manufacture, I think the good quality of product and good
customer service is very important for them. Here is the five competitiveness
6

7. objectiveness of Volkswagen. I make a rank of score for each objectives of
Volkswagen.
10—very important 0—not relevant
• Quality - 9
The quality is very important for our company. Because our product is for the
daily used basis, and it highly related to peoples’ safety and life. Actually, our
product is branding by the high safety and high quality. Also use the new
technology is very important in the car manufactory industry, for example, the
new engine to save oil usage and reduce the air pollution.
• Speed - 7
The speed for delivery is just fine for us. Because it is car—not something like
coffee and TV, people are spending lots of money in purchasing their cars, so
they are prepared to wait for their cars. But also, we have to ensure that,
people do not need to wait too long for their cars. Because we are not offering
the luxury cars for which the customers may have more patient to wait for. So
we will manage our transport to be more efficiently.
• Dependability - 8
The dependability is important for us. Because first of all, we must ensure that
we are offering the product which the customers can trust. And also it is the
trend of the competition. More and more car advertising are describing this
philosophy, people are relax and have a fun time with their car. It is worth to
trust with. So this is we are pursuing to achieve.
• Flexibility - 8
It is also important for the car manufactory. With the development of the
global economic, people would like to have their own customized cars to
satisfy their different needs. This is what actually the car manufactories are
trying to do now. They are launching different levels and model of cars to
satisfy different market segments. Also they are doing the market research
positively to try to understand customer’s needs and new trend. So for our
company, it is important for us.
7

8. • Cost - 7
It can affect our business, but not so much because Volkswagen is not famous
by low price like Toyota and Honda. Actually, we are famous by the high
quality and safety. But also as a manufactory, we cannot forget the cost
because it influences the profit margin for our company. The economy of scale
is very important in the car manufactory. So it is the competition trend to do
so. Actually, Volkswagen is opening 2 main manufactures in China, Shanghai
and Changchun to share the low labor cost in order to achieve the high profit
margin.
C. Challenges
What challenges do the operational strategies present and suggest ways in which they
can be overcome.
• Quality - 9
Total Quality Management is the biggest challenge. There are hundreds of
examples of manufacturers who have encountered quality issues on one
product and the consequences on the brand image impacted the whole
company.
Recommendation
Quality should be part of the corporate culture, every employee, every actor of the
business should be thinking about ways to improve, to control the products at all steps
of its manufacturing.
• Speed - 7
Speed of delivery is less and less important to consumers. Car makes focus on
their financial objectives and reduce their stock levels. They also have
products that are more and more customizable for customers. These two
factors increase time of delivery, and it concerns all the car manufacturers.
However as customers’ requirements change, speed of delivery is not the
challenge, maintaining the right level of stock and answering all customers’
needs is.
8

9. Recommendation
A precise sales forecast helps managing the stock levels; there should be better
communication between the sales and financial departments. Answering every need
of the customer is an objective but it should not be at any cost.
• Dependability - 8
Customers perceive a manufacturer’s seriousness in its actions, including
respecting deadlines and always producing the same quality.
Recommendation
Implementing processes and control that will help having the same product and
delivery time whatever problem arises.
• Flexibility - 8
Flexibility is the biggest challenge, reducing cost while increasing the variety
of product. Flexibility puts pressure on the employees, the development of a
car used to take a couple of years and now it takes a couple of months.
Recommendation
Training the people to be efficient to adapt new technologies and new working
environments. The better the employees are, the most flexible the company will be.
• Cost - 7
Volkswagen will soon become the largest car manufacturer in the world. High sales
are most effective way to reduce costs, thanks to economies of scale.
Recommendation
Using “platforms”, bodies of vehicles that are shared for different brands and models
within the group helps doing economies of scale while all other parts can be
customized to customers. Investing in R&D helps anticipating industry changes as
well, the automotive business evolves rapidly, technologies arise, and trends drive
sales. VW ought to watch these carefully and influence them as much as possible by
investing and anticipating.
9

10. 4. Location selection
10

11. Volkswagen is considering locating a new operation in one of Japan, Thailand and
Singapore.
WEF world competitiveness index 2010:
Country/Economy Rank 2010 Score 2010 Rank2009
Singapore 3 5.48 3
Japan 6 5.37 8
Thailand 38 4.51 36
Singapore and Japan are highly developed countries; both are in the top 10
competitiveness rank. Thailand is in another stage of its development.
Cultural factors are not the most relevant factors for our industry, the three countries
are very different, and we can note that Singapore has a lower long term orientation
and lower uncertainty avoidance index, which is good for our business.
4.1 Factor rating method
Rating Score
Pillars / Factors Weight Japan Thailand Singapore Japan Thailand Singapore
1st Institutions 8 5,1 4 6,1 40,8 32 48,8
2nd Infrastructure 8,5 5,7 4,8 6,2 48,45 40,8 52,7
3rd Macroeconomic environment 6 4,1 4,9 5,2 24,6 29,4 31,2
4th Health and primary education 4 6,5 5,6 6,7 26 22,4 26,8
5th Higher education and training 6 5,3 4,3 5,8 31,8 25,8 34,8
6th Goods market efficiency 8 5,1 4,5 5,7 40,8 36 45,6
7th Labor market efficiency 9 5,1 4,8 5,9 45,9 43,2 53,1
8th Financial market development 7 4,6 4,4 5,8 32,2 30,8 40,6
9th Technological readiness 9 4,9 3,6 5,3 44,1 32,4 47,7
10th Market size 5 6,1 4,9 4,5 30,5 24,5 22,5
11th Business sophistication 8 5,9 4,2 5,1 47,2 33,6 40,8
12th Innovation 8 5,5 3,3 5 44 26,4 40
TOTAL 456,35 377,3 484,6
11

12. Our factors are directly linked to:
i) Institutions
It is the legal and administrative framework of the country, it is very
important in our business where important amounts of money are involved
and where legal conflicts can arise with partners. Weight: 8
ii) Infrastructure
Effective modes of transport, including quality roads, railroads, ports, and
air transport, enable us to get our goods and services to market in a secure
and timely manner and facilitate the movement of workers to the most
suitable jobs. Weight 8.5
iii) Macroeconomic environment
Economic stability is not very important; we focus on the economy of the
whole region and not the country on its own. Its importance is average.
Weight: 6
iv) Health and primary education
Poor health leads to significant costs to business, as sick workers are often
absent or operate at lower levels of efficiency. Furthermore, all our
employees need a basic level of education. Compared to other factors it is
the least important. Weight: 4
v) Higher education and training
Our business is sophisticated and requires high skill personnel. Weight: 6
vi) Goods market efficiency
Good supply-and-demand conditions, where trade works efficiently. We
cannot afford having suppliers in a monopolistic situation for example.
Weight: 8
vii) Labour market efficiency
12

13. When VW settles new operation in a country, it needs thousands of people,
some with sophisticated skills. The company cannot train everyone and
needs to find in the country its required human resources. Weight: 9
viii) Financial market development
Our business requires heavy investments, in plant and equipment
especially. It is a long term investment and we must be well supported by a
healthy banking system for example. Weight: 7
ix) Technological readiness
The country which we will operate in must be compatible with our
technology. All are computer systems, way of working, and processes in
general. Our products must be as efficient as possible and thus require
efficient technology. Weight: 9
x) Market size
Again, we focus on the region, and the country’s domestic market is not
the most important criteria. Weight: 5
xi) Business sophistication
As we work with thousands of partners, and our needs are increasing every
day, the business network must be sophisticated, well developed suppliers
and industries. Weight: 8
xii) Innovation
Our industry is so competitive that success can only be achieved through
innovation. Weight: 8
Further to all the data in the WEF report and the weight of each factor, Singapore is
the best destination for us. See charts in appendix.
13

14. 5. Introduction of Starbucks
Starbucks Coffee Company is the leading retailer, roaster and brand of specialty
coffee in the world, with more than 6,000 retail locations in North America, Latin
America, Europe, the Middle East and the Pacific Rim - wherever there is a demand
for great coffee (http://ie.starbucks.com/en-ie/). The company sells coffee, Italian-
style espresso beverage and complementary food items, a selection of premium teas
and coffee-related accessories and equipment. Starbucks committed to ethically
sourcing and roasting the highest quality Arabic coffee in the world. Today, with
numbers of stores around the globe, the company is the premier roaster and retailer of
specialty coffee in the world (http://news.starbucks.com/).
5.2Internal and external supply chain of Starbucks
Supply chain means the total movement of raw materials, services, finished goods,
and monies between suppliers and their customers, from product inception to final
product disposition (Katz 2007). For the success of any business in this competitive
market, proper management of internal and external supply chain is essential.
Similarly it is important for Starbucks to manage its supply chain because of its
wide expanded operations. It has to depend heavily on the suppliers from different
countries for the materials it required. The supply chain of Starbucks starts from the
farmers who grow the coffee beans and ends with the customers who consume its
coffee including (beverage and complementary foods tea and coffee-related
accessories).
14

15. Internal supply chain
Internal supply chain management system's objective is to visualize organization's
activities and events spawn during its work flow and offers panoramic view of
upstream and downstream activities (Hyder 2009). Our team decided to visit one
Starbucks coffee shop near city centre to observe their performance. We stayed
there nearly for 2 hours analysing the employee activities. And we found that every
employee are well behaved, well dressed and all of them are well known about their
duties and responsibilities. When customers enter into the coffee shop they take
their order and the way they prepare coffee and other menu is very transparent. It
seems like their organizational structure is flat because even the store manager was
present over there, he was not giving any instruction during working time. In 2009,
for the 11th time, Starbucks was named to FORTUNE’s “100 Best Companies
to Work For” list. Starbucks is recognized as a great place to work for good
reason: we have made treating our partners with respect and dignity one of our
guiding principles (www.news.starbucks.com). All employees knew their duties.
They are properly taking the customers’ order, preparing coffee or other dishes as
ordered and delivering it to the customers. They always welcome the feedback for
the service that customers receive.
External supply chain
Starbucks source coffee beans from all over the world- 50% from Latin America, 35%
from Pacific and 15% from East Africa (www.scaa.org). Most of the farmers are
small and medium sized family owned farms. Some firms are able to process their
coffee beans themselves but sold them to the processors through local markets (mills,
exporters and co-operatives). The processor turned coffee “cheery” into green coffee
and then sold it to the suppliers such as exporters or distributors and finally to the
Starbucks. The diagram below shows the simple supply chain of Starbucks; from
farmers to the Starbucks.
15

16. Source: Starbucks Corporation: Building a Sustainable Supply chain
Coffee affects the lives of over 25 million farmers in more than 70 countries around
the world, many of which are developing regions. Traditional coffee production
methods can often adversely affect the surrounding environment through the use of
harmful chemicals and unnecessary deforestation. Although Starbucks Coffee
Company purchases only two percent of the world’s coffee, Starbucks has used its
position in the global marketplace to demonstrate how innovation in combining
corporate social responsibility and business strategy can lead to long-term economic
and environmental sustainability. “Contributing positively to our communities and
environment is at the heart of Starbucks,” said Howard Schultz, Starbucks chairman.
“Starbucks is committed to constantly improving our environmental footprint in every
level of our supply chain, from coffee farmer to customer. Starbucks also incentivize
the farmers with low cost loans, long term contracts and guaranteed price. “This
creative new way of doing business has the potential to improve the lives of people
and the global environment. The success of supply chain management of Starbucks
mainly depends upon its relationship with farmers, processors, exporters/ distributors
and customers. It believes that if there is good relationship and trust among the
trading parties then there will not be any problem in getting high quality coffee beans
for the company (Nelson 2005).
16

17. Today, the company is leading in its industry all over the world because of its proper
management of its internal and external supply chain. The relationship they are
maintaining with their suppliers and customers is contributing them to become the
successful company in the world. It comes under the Fortune magazine’s top 100
global companies of the world and top 20 America’s most admired companies
(www.company.monster.com) in terms of revenue they generate, profit they earn and
the way they treat the customers and community.
6. Operational strategy of Starbucks and its competitive advantage
Coffee is at the heart of Starbucks history. Since 1971, Starbucks has
been excited and inspire people to enjoy the finest quality coffee available. And still
they hope to share their same passion as people begin to explore the world of coffee
(www.starbucks.com). When someone simply say coffee then people tend to
remember Starbucks. Starbucks is successful in building the image (coffee as a
substitution of Starbucks) in the eye of customers. The operational strategies of
Starbucks that leads them to gain competitive advantages are as follow:
• Building relationship with farmers and suppliers: Starbucks believe that the
relationship with farmers and suppliers has ensured them in having access to
the highest quality coffee. They search for those who will bring the same
passion to growing, harvesting and processing that Starbucks does to blending,
roasting, packaging and brewing. Passion equals attention to detail at every
step of the journey due to which Starbucks is able to differentiate itself and
gain competitive advantage as compared to suppliers (www.starbucks.com).
• Quality of coffee: Starbucks is well recognized for the quality of its product
and services. Starbucks sample coffees from around the world – more than
150,000 cups a year to seek only the finest, richest and most interesting beans.
17

18. Starbucks purchases only the finest, high altitude Arabica coffee beans
available as they have a more refined flavour and quality than the more
common Robusta beans (www.starbucks.com). When people get quality
product and/or services, they obviously prefer to go to that place again and
again. So quality helps Starbucks in attaining competitive advantage.
• Constantly developing new ideas and product line: The Company was
constantly engaged in efforts to develop new ideas, new products, and new
experiences for customers that belonged exclusively to Starbucks. Schultz and
other senior executives drummed in the importance of always being open to
re-inventing the Starbucks experience. Also, Starbucks stores offered a choice
of broad selection of coffee beverage and Italian-style espresso drinks. In
addition, customers could choose from a wide selection of fresh-roasted
whole-bean coffees (which could be ground on the premises and carried home
in distinctive packages), a selection of fresh pastries and other food items,
sodas, juices, teas, and coffee-related hardware and equipment (Thompson
1997).
• Employee selection and training: Employees are the backbone of every
company. To get success and competitive advantage, every company should
be aware because it is the employees who perform all the operation of the
business. So Starbucks' vice president for human resources used some simple
guidelines in screening candidates for new positions: "We want passionate
people who love coffee . . We're looking for a diverse workforce, which
reflects our community. We want people who enjoy what they're doing and for
who work is an extension of them. Every partner/barista hired for a retail job
in a Starbucks store received at least 24 hours training in the first two to four
weeks (www.starbucks.com).
• Promoting healthy environment through its operation: Starbucks is using
recyclable or reusable cups to reduce the environmental pollution. Their goal
is to make all their cups 100% reusable or recyclable by 2015
(www.starbucks.com). It believes that its commitments and environmental
awareness provides benefit to the company as well as its stakeholders such as
employees, suppliers, farmers, business partners, consumers and community.
18

19. • Corporate responsibility: Starbucks was the largest corporate contributor in
North America to CARE, a worldwide relief and development organization
that sponsored health, education, and humanitarian aid programs in most of
the Third World countries where Starbucks purchased its coffee supplies. In
addition, CARE samplers of coffee and CARE-related mugs, backpacks, and
T-shirts were offered in the company's mail-order catalog; a portion of the
price on all sales was donated to CARE.
Thus we can say that the operational strategy of Starbucks is to obtain high quality
beans from farmers by maintaining good relationship with them in order to fulfil their
demand as well as fulfilling the corporate responsibility towards the communities.
And this will help them to create strong brand image in the market place and gain
competitive advantage.
19

20. 7. Challenges presented by operational strategy and
Recommendations
Starbucks can be recognized as the leading company in its coffee industry through out
the world; however it is not free from the challenges in handling their business in long
and short run as well as in its operational strategy. Additionally, there are many
factors that will affect the operational strategy of the company for example: sourcing
of raw materials, highly developed competition and rapid innovation in the market.
Following are the main challenges of operational strategy and the ways by which the
challenges can be overcome:
Dependent on suppliers and business partners
Suppliers and business partners are the main body parts for the organization in order
to be success that highly depends on the relation between them. Moreover, the success
is possible in company when there is blend of the quality product and services and
that will be possible only when their business partners and suppliers show them good
relation and loyalty in running the business. However, it is very difficult certain the
good relationship between business partners and suppliers in long run or in future
because future is uncertain. As for example, if any of the suppliers are fail to supply
the quality coffee beans right on time then it can directly hamper the brand of the
Starbucks and that may lead to customer loss and finally the profit margin of each
shop might be less in compared to previous times. Therefore, Starbucks are managing
good relationship with their suppliers so that their supply chain will be strong and any
breaks in the supply chain can give them negative impact on Starbucks operation.
In order to solve these kinds of problems and have control over suppliers operation,
materials and information flow, the company can use backward integration. Backward
integration will help the organization to be more visible and clear but the company
should not be careless and should understand on the needs, wants and expectation of
the suppliers including farmers of that company.
Quality of the product
Starbucks is popular among the customer because of its quality of the coffee or
product and services which helped them to attain the brand image. They are available
in limited shops as they are expensive to common customers. Starbucks has high
20

21. quality product with expensive price and because of which the customer who has
average earning finds hard to visit to starbucks where as customers whose income is
low they can’t afford the price of the coffee in starbuck. Therefore, in order to reduce
this, in the processing phase they can use more new technology equipment.
Global expansion
Starbucks is a global company as it has its branches all over the world but because of
that it has to face many problems because of difference in the country’s rules and
regulations like difference in tax rate, exchange rate, trade unions and political
instability. In order to overcome such problems the company has to choose the
country that gives facility to the global business so that they can run smoothly.
Dependent on information technology
In this competitive world all the companies are directly related to information
technology and so does starbucks. For the proper flow of operation like supply chain
management, point of sales and processing they relies heavily on information
technology. In this supply chain if any of the systems fails then this directly affect the
company and they may bear risk and huge loss. Therefore, in order to solve these
kinds of problem they must at first train their employees and on regular basis they
should check and evaluate their operation system.
21

22. 8. Location analysis for new operation of Starbucks
Starbucks currently have 16706 stores in more than50 countries including 8850
company oriented stores and 7856 licensed store and also they are planning to open
new stores. (Source: Starbucks, 2010)
Starbucks is planning to open their new stores in one of the Asian country Japan,
Thailand or Singapore by looking at the factors like location, market, demand and
other factors I recommend starbucks to choose Japan instead of Thailand and
Singapore because the demand of coffee on Japan is very high as it stands third
position in largest coffee consumption in the world after united states and Germany.
There are already 877stores in Japan till the and of March 2010 but in Singapore
contain 35 and Thailand contains 132 coffee shops. (Source: Starbucks, 2010).
Starbucks have already stared its operation in Japan in the year 1995 and their
operation and existence in the Japanese market was quite successful in terms of
quality and performance as a result there are many stores operating currently. The
success of the every shop of Starbucks is because they have control over the supply
chain management and good relation among their business partners and suppliers like
farmers and so on. Therefore, if a company opens new store here then it will not be a
big problem to manage their supply chain.
Japanese people give main priority to the brand image and quality of the product
rather than price of the product. Likewise Starbucks also got the high brand image and
quality product that will match the need of every Japanese people. Japan has 4 th rank
in purchasing power parity and Singapore has 45th and Thailand has 25 th rank
respectively, which clearly shows that the living standard of Japanese people is
comparatively higher than that of Singapore and Thailand (Source: CIA the world fact
book, 2010) and Japan has 6.00 purchasing power parity and Singapore has 0.34
which clearly shows that the living standard of Japanese people is comparatively
higher than that of Singapore and Thailand. (Source:Weforum, 2010)
Although all of them are Asian countries Japan is the place for foreign currency
exchange rate, has educated labor force, good market size and has enough
22

23. infrastructure for supply chain in compared to Singapore and Thailand. the inflation
rate of Japan in compared with the two other nations are low but the tax regulation
and rate is higher than other two countries Japan is the best to select to open new store
by considering other factors.(Source: Weforum, 2010)
23

24. 9. Overall Conclusion
Volkswagen and Starbucks are two companies that have good supply chain
management and operations management in general. It is very interesting to go
through their processes and analyse their strategies. We believe there is place for
improvement, these companies who have international operations, encounter
challenging issues that require strong analysis skills and precise “tools” to overcome
them. In order to expand every company must ask itself all the questions we answered
in this report. Selecting a new location in a major investment and the competiveness
of the markets does not allow making mistakes. Success depends on your strategy,
particularly your international operations strategy.
24

25. 10. Bibliography
Chase, R.B., Jacobs, F.R., Aquilano, N.J., 2004, Operations Management for
competitive advantage, 10th Edition, U.S. McGraw-Hill/Irwin.
Volkswagen Group International Homepage. Available at:
http://www.volkswagen.com/vwcms/master_public/virtualmaster/en2/unternehmen/k
onzern.html [Accessed November 12, 2010].
Christopher, M., “Logistics and Supply Chain Management”, 3rd Edition, Chapter 1.,
U.S. Pearson Education Ltd.
Chopra. S., Meindl. P., 2004, Supply Chain Management, Strategy, planning, and
operation. 2nd Edition, U.S. Pearson Education International.
Central Intelligency Agency, 2010. CIA - The World Factbook -- Country
Comparison :: National product. Available at:
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