Supply Chain Apple-Starbucks-Consumer
In the partnership between Starbucks and Apple, the supply chain flows from the musicians to the final customer buying product at the Starbucks store. The musicians upload their music to iTunes and then Apple makes the music available to the participating Starbucks stores. The store then plays the music and the consumer can download a piece of music that they like and have heard within the store. The partnership thus involves more than just Apple and Starbucks but also the owners of music pieces. Some parts of the supply chain can be outsourced. The first part is at the end of Apple and the music it uploads to its iTunes library (Krishnamurthy, Jegen & Brownell, 2009). The company could outsource the music from production companies other than getting it directly from the musicians. The production companies have a large portfolio and thus would be an advantage to the partnership in various ways. The first is that Apple will be able to upload more songs and at a faster rate as compared to when they have to get it from individual artists.
The other advantage is the cost, which will reduce drastically due to the economies of scale. The other opportunity of outsourcing is through getting music using third-party applications that are solely dedicated to playing new and old music such as YouTube and Spotify. It saves on the cost that Apple would have to pay in search of music content that would be appealing to consumers. Apple could also outsource its app development from web developers and application developers other than those at Apple. Different applications that have been outsourced by Apple that relate to music have proven to be successful over the years. The company could thus outsource other apps that the consumer would be willing to use to download or listen to music. This is a good thing in that the company will always have up to date applications that enhance the consumer experience. It would also reduce the cost of constant app development and modification to meet the needs of the consumer. Outsourcing means that Apple will leave the music docket to the experts in the music industry. They have the knowledge and ability to identify tracks that consumers would love. Outsourcing music streaming apps would also reduce costs for Apple in relation to infrastructure management and maintenance.
Starbucks does not provide its internet as it does not have an internet infrastructure of its own. The company thus has to get a third party to provide internet solutions within its facilities. Without the internet the partnership would fail as consumers cannot download the music that they love on their devices. Playback and streaming are only possible through the availability of the internet. Various companies can support internet infrastructure within Starbucks. The first company that initially won the contract in the partnership was AT & T, which is one of the biggest internet and cellular network companies in the United States. The company offered the internet to Starbucks locations with speeds of up to 1.5 megabytes per second. Starbucks also got into a partnership with Google who provides the current Wi-Fi at the stores (Tibken, 2013).
From the above revenue model, Apple goes to producers or Original Equipment Manufacturers (in this case the artists) to get information and data on music it wants to upload to its iTunes. In turn apple [pays a certain amount of money (a) to the producers of the music. The company uploads the music to its iTunes store and makes the information/data available to Starbucks in partnering locations. Starbucks then provides the information to the consumer through constant playback of music from the iTunes library in their locations. The consumers enjoy the music at the store and purchase Starbucks products as they use free Wi-Fi and listen to music, generating revenue (c) for Starbucks. After hearing a track that they love, the consumer will want to download the same and thus pay a certain amount to Apple (b) to allow the download to proceed (between $0.99 and $1.29 per song). Apple further makes revenue by having monthly subscriptions that allow consumers to listen to music on iTunes for a fee of $10 monthly.
From the revenue diagram Apple thus earns revenue through the download of music by the customer. Starbucks, on the other hand, receives revenues through the purchase of its products by consumers that visit their store. Starbucks partners with Apple to create a promotional strategy through which consumers at the stores could get coupons or discount cards to purchase music on iTunes. What motivates more consumers to Starbucks stores and thus generates more revenues for the company through increased sales.
Other companies could also benefit from the partnership similar to that of Starbucks and Apple. Good examples are fast food restaurants such as Wendy’s or Chick-fil-A, which attract a huge number of consumers to their premises. The restaurants have different locations all over the country and would provide a good avenue for consumers to listen to music provided by apple. Another partner would be beauty and therapy businesses such as Lodge at Woodloch Spa. Such are businesses that consumers would enjoy visiting and at the same time listen to music provided through Apple iTunes. The partnerships would provide mutual benefits for Apple and the other partners in various ways. One is that the other partners to Apple would be able to attract more consumers to their locations. The availability of free internet and streaming of music would attract many consumers as they can meet their entertainment needs even as they carry out other activities such as dining (Sinclair, 2018). More consumers to the premises will increase the revenues and cash flow at partnering locations and thus better financials for the partners. On the other hand, the partnership will benefit Apple in that it will be a way it can advertise its music and entice consumers to listen to and purchase the same.
The partnership between Apple and Starbucks benefits both companies in ways that help them improve their business. The partnership creates awareness of products offered by Apple and entices consumers to purchase such products. On the other hand, it creates convenience in Starbucks stores thus creating a huge influx of consumers to business locations all over the country. Consumers play a vital role in the business model of Starbucks. Increased consumers and convenience improves the brand and value of the company and also attract new customers to the coffee shop. The partnership thus generates revenue for all partners. Other businesses such as food restaurants and beauty therapy spas and businesses could also benefit from such a partnership. The reason is that such businesses have the capability of employing a similar business model as the one used by Starbucks and Apple.