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

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

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

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

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

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

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

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

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

4. Location selection

Volkswagen is considering locating a new operation in one of Japan, Thailand and

Singapore.

10

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

Weight Japan Thailand Singapore Japan Thailand Singapore1st Institutions 8 5,1 4 6,1 40,8 32 48,82nd Infrastructure 8,5 5,7 4,8 6,2 48,45 40,8 52,73rd Macroeconomic environment 6 4,1 4,9 5,2 24,6 29,4 31,24th Health and primary education 4 6,5 5,6 6,7 26 22,4 26,85th Higher education and training 6 5,3 4,3 5,8 31,8 25,8 34,86th Goods market efficiency 8 5,1 4,5 5,7 40,8 36 45,67th Labor market efficiency 9 5,1 4,8 5,9 45,9 43,2 53,18th Financial market development 7 4,6 4,4 5,8 32,2 30,8 40,69th Technological readiness 9 4,9 3,6 5,3 44,1 32,4 47,710th Market size 5 6,1 4,9 4,5 30,5 24,5 22,511th 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 40TOTAL 456,35 377,3 484,6

Pillars / FactorsRating Score

11

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

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

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

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

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

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

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

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

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

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

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 25th 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

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

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

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/konzern.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: https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html [Accessed November 7, 2010].

Katz, N., 2007. SupplyChainNetwork.com » Blog Archive » Definition of Supply

Chain. Available at: http://www.supplychainnetwork.com/definition-of-supply-chain/

[Accessed October 11, 2010].

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