Starbucks Corporation and Its AIS

GROUP (6): ASSIGNMENT

NAME: - ID

1.SUHAIB ALI ISMAIL……………………………………… 562

2.AHMED HUSSEIN ABDILAHI ……………………………. 617

3.AHMED ISMAIL JAMA …………………….………………. 597

4.ABDIFITAAX ABDILAAHI AHMED……………………… 571
5.ABDIQADIR MAHMOUD MOHUMED…………………… 587

Beder International University, Somaliland

 1.
Introduction
a. Description of Starbucks Corporation

Historical Background

Starbucks was founded in 1971 by Jerry Baldwin, Zev Siegl, and Gordon Bowker in Seattle,
Washington. Initially, it focused on selling high-quality coffee beans and equipment rather than
brewing coffee. The company’s transformation into a global coffeehouse chain began in 1987
when Howard Schultz acquired Starbucks. Schultz envisioned a café model inspired by Italy’s
espresso bars, emphasizing customer experience, ambiance, and community.

Starbucks opened its first international store in Tokyo, Japan, in 1996, marking the start of its
global expansion. Today, Starbucks operates in more than 80 countries with over 36,000 stores,
catering to millions of customers daily

Vision Statement:
“To establish Starbucks as the premier purveyor of the finest coffee in the world while
maintaining uncompromising principles as we grow.”

Mission Statement:
“To inspire and nurture the human spirit—one person, one cup, and one neighborhood at a time.”

Core Values:

1. Creating a culture of warmth and belonging where everyone is welcome.

2. Acting with courage, challenging the status quo, and finding new ways to grow.
3. Being present, connecting with transparency, dignity, and respect.
4. Delivering the best in everything Starbucks does.

b. Key Business Processes and Related AIS Subsystems

1. Order Management Process

o Business Process: Customer orders and payments via in-store, drive-thru, or
mobile app.
o Related AIS Subsystems:
 Point of Sale (POS): Processes orders and payments.
 Mobile App Integration: Allows for pre-orders and tracks loyalty rewards.
 2.
2.
Inventory Management Process
o Business Process: Tracks and replenishes stock (coffee, food items, supplies).
o Related AIS Subsystems:
 Inventory Management System: Monitors stock levels in real time.
 Supply Chain Management (SCM): Manages procurement and logistics.
3. Financial Reporting Process
o Business Process: Manages revenue, expenses, and financial reporting.
o Related AIS Subsystems:
 General Ledger System: Records financial transactions.
 Financial Reporting System: Generates income statements, balance sheets,
and cash flow reports.
4. Customer Relationship Management (CRM) Process
o Business Process: Engages customers through loyalty programs and personalized
marketing.
o Related AIS Subsystems:
 CRM System: Manages customer data and loyalty rewards.
 Mobile Application: Tracks purchases and offers personalized promotions.
5. Human Resource Management Process
o Business Process: Handles employee scheduling, payroll, and benefits.
o Related AIS Subsystems:
 HR System: Manages employee records and performance.
 Payroll System: Automates payroll processing.
6. Supply Chain Management (SCM) Process
o Business Process: Manages sourcing, procurement, and logistics.
o Related AIS Subsystems:
 SCM System: Tracks inventory and delivery schedules.
 Vendor Management System: Manages relationships with suppliers.
7. Marketing and Promotion Process
o Business Process: Launches marketing campaigns and targets customer segments.
o Related AIS Subsystems:
 Marketing Analytics System: Analyzes campaign performance and
customer engagement.

Starbucks' AIS integrates these subsystems to streamline operations, enhance customer

experience, manage inventory, and ensure accurate financial and HR management
 2.
System Documentation
a. Data Flow Diagram (DFD) for the Order Management Process

Overview:
The Order Management Process involves customers placing orders, the store fulfilling them, and
the payment being processed. Here is the Data Flow Diagram (DFD) for this process, broken
down into its components.

DFD Level 0 (Context Diagram)

This provides an overview of the high-level system and how it interacts with external entities.

 External Entities:
o Customer: Initiates the order and makes the payment.
o Bank/Payment Processor: Verifies and processes the payment.
 Processes:
o Order Management System: Central process that receives the order, processes
payment, and communicates with other systems (inventory, customer loyalty).
 Data Flows:
o Order Details: From customer to Order Management System (via app, in-store
POS).
o Payment Information: From customer to Payment Processor.
o Order Confirmation: From Order Management System to Customer (via app or
receipt).
o Payment Authorization: From Payment Processor to Order Management
System.
o Inventory Update: From Order Management System to Inventory Management
System (adjust stock levels).

DFD Level 1 (Detailed Diagram)

At this level, the main process (Order Management System) is broken down into sub-processes.

 Processes:
o Receive Order: Captures order details from the customer.
o Process Payment: Communicates with the payment processor to authorize
payment.
o Update Inventory: Updates stock levels based on the items ordered.
o Provide Confirmation: Sends confirmation to the customer with the order status.
 Data Flows:
o Order Details: From customer to Receive Order process.
o Payment Information: From customer to Process Payment.
 o Payment Authorization: From Payment Processor to Process Payment.
o Inventory Update: From Update Inventory to Inventory Management System.
o Order Confirmation: From Provide Confirmation to Customer.
 External Entities:
o Customer: Inputs order and payment details.
o Payment Processor: Handles payment authorization and communication

b. Documentation Techniques Used

a. Data Flow Diagrams (DFD):

A DFD is used to visualize how data moves within a system, illustrating the processes
that transform the data, the data stores, and the external entities that interact with the
system. The documentation focuses on the flow of information between entities and the
system.
a. Levels of DFD:
i. Level 0 (Context Diagram): Provides a high-level overview of the system
and interactions with external entities.
ii. Level 1 (Detailed DFD): Breaks down the primary process into more
detailed sub-processes, showing how data is handled at a granular level.
b. Processes and Data Stores:
a. Processes represent functions that transform data (e.g., receiving the order,
processing payment).
b. Data Stores represent places where data is held (e.g., Inventory Database,
Customer Database).
c. External Entities are external systems or users that interact with the system (e.g.,
Customers, Payment Processors).
d. Data Flows show the movement of data between the processes, stores, and
entities.
c. Data Flow Notations:
a. Circles/Rectangles: Represent processes (functions).
b. Arrows: Indicate the flow of data (inputs/outputs).
c. Open-ended Rectangles: Represent data stores (repositories of data).
d. Squares: Represent external entities (users or systems that interact with the
system).
d. Leveling:
a. Leveling is used to decompose the DFD from a high-level overview (Level 0) to
detailed sub-processes (Level 1). This technique helps in understanding complex
systems by breaking them down into manageable sections.
 3. Internal Controls and Fraud Prevention in Starbox AIS:

a. Current Internal Controls:

o Access Control: Role-based access with passwords and potentially multi-factor
authentication (MFA).
o Segregation of Duties (SoD): Separation of responsibilities to prevent fraud.
o Audit Trail: Logs transactions and user actions for tracking.
o Transaction Authorization: Managerial approval for sensitive transactions.
o Data Backup and Integrity: Regular backups and checks for data consistency.
b. Enhancements to Prevent Fraud and Ensure Data Integrity:
o Strengthen Access Control: Implement MFA, review user permissions, and
automate session timeouts.
o Enhance Segregation of Duties: Automate SoD, conduct periodic cross-checks,
and set up violation alerts.
o Improve Audit Trail and Monitoring: Capture detailed logs, monitor in real-
time, and secure audit logs.
o Automate Transaction Authorization: Use automated approval workflows,
validate transactions in real-time, and generate exception reports.
o Enhance Data Backup: Encrypt backups, store securely, and test recovery
regularly; use hashing for data integrity.
o Leverage AI and Machine Learning: Introduce AI tools for fraud detection and
predictive analytics for risk assessment.
o Periodic Fraud Risk Assessments: Regular fraud assessments and external
audits.
 o Employee Training: Provide fraud prevention training and establish
whistleblower policies.

4.Ethical in AIS

Ethical Issues Related to the Implementation and Operation of AIS in Starbox

The implementation and operation of an Accounting Information System (AIS) in a business

like Starbox introduce several ethical challenges that can impact data integrity, privacy,
transparency, and employee trust. Below are the key ethical issues related to AIS in Starbox:

1. Data Privacy and Confidentiality:

o Issue: AIS systems handle sensitive financial and personal data. If not properly
protected, this data could be exposed, leading to breaches of confidentiality.
o Ethical Concern: Businesses must ensure that customer, employee, and business
partner data is kept confidential and used only for legitimate purposes. Misuse or
unauthorized access to sensitive data violates ethical standards and could cause
harm to individuals and damage the company’s reputation.
2. Accuracy and Integrity of Financial Data:
o Issue: AIS systems process financial data that directly influences business
decisions, reporting, and compliance.
o Ethical Concern: The integrity of the data must be maintained. Any intentional
manipulation or falsification of financial data (e.g., for personal gain or to deceive
stakeholders) is a breach of ethics. Ethical practices require businesses to
implement controls that prevent errors and fraud, ensuring that data is accurate
and reliable.
3. Employee Surveillance and Privacy:
o Issue: AIS systems can monitor employee activities, especially in financial
processes, potentially leading to invasive surveillance.
o Ethical Concern: There is a fine line between monitoring for fraud prevention
and infringing on employee privacy. Ethical concerns arise when surveillance
becomes excessive, creating a culture of distrust, or when employee data is used
for unintended purposes.
4. Bias in Algorithms and Decision-Making:
o Issue: Many modern AIS systems use AI and machine learning to analyze data,
predict outcomes, or detect anomalies.
o Ethical Concern: If these algorithms are biased or built on incomplete or skewed
data, they could produce discriminatory outcomes, such as unfairly targeting
certain transactions or employees. It is critical to ensure that AIS algorithms are
designed and tested for fairness and transparency, avoiding unintended biases.
5. Conflict of Interest:
 o Issue: Employees or managers with access to the AIS may have personal interests
that conflict with the business’s interests.
o Ethical Concern: For example, an employee approving a transaction for a
company they personally benefit from could lead to unethical behavior. Ethical
guidelines should prevent conflicts of interest and ensure that employees disclose
personal stakes in any transaction or decision.

6. Unauthorized Access and Data Manipulation:

o Issue: AIS systems must prevent unauthorized users from gaining access to
sensitive financial data.
o Ethical Concern: If employees or external parties manipulate or access data
without proper authorization, it compromises the trust and accuracy of the system.
Ethical practices require the implementation of robust access controls, regular
monitoring, and clear accountability for data integrity.
7. Transparency in Reporting:
o Issue: Businesses must ensure transparency in financial reporting, with clear and
honest disclosures.
o Ethical Concern: Ethical issues arise when companies use their AIS to hide or
manipulate financial information to mislead investors, regulators, or customers.
This lack of transparency undermines trust and can lead to legal and reputational
consequences.
8. Fairness in System Access and Use:
o Issue: AIS provides various levels of access to different users depending on their
roles within the organization.
o Ethical Concern: Ethical issues may arise if certain employees are given
excessive privileges or others are denied necessary access due to favoritism or
discrimination. Fairness in system access should ensure that all users can perform
their jobs without bias or unfair treatment.
9. Exploitation of Technology:
o Issue: The automation of financial processes can improve efficiency, but it could
also lead to unethical practices if employees or the organization exploit the
technology.
o Ethical Concern: Over-reliance on AIS can result in situations where human
oversight is minimized, reducing accountability. Ethical concerns arise when
employees are not adequately trained to use the system responsibly, or when AIS
is used to bypass legal or regulatory requirements.
10. Third-Party Vendor Ethics:
o Issue: Many businesses rely on third-party vendors for their AIS infrastructure,
software, or data management.
 o Ethical Concern: If a third-party vendor fails to follow ethical standards, it could
impact data privacy, security, or the reliability of the AIS. Businesses must ensure
that third-party providers adhere to ethical practices and compliance regulations to
prevent issues like data misuse or fraud.

5.Recommendations for AIS Improvements in Starbox:

1. Cloud-Based AIS:
o Migrate to a cloud-based AIS for better scalability, flexibility, and cost savings.
Cloud solutions offer real-time access to data from anywhere, reduce the need for
physical IT infrastructure, and ensure automatic updates and security patches.
2. AI and Machine Learning Integration:
o Incorporate AI and machine learning to enhance automation, such as data
entry, reconciliation, and fraud detection. These technologies will also enable
predictive analytics, helping to forecast financial trends and improve decision-
making by analyzing large datasets.
3. Increased Automation of Routine Processes:
o Automate repetitive tasks like invoicing, payroll, expense tracking, and tax
calculations. This reduces human error, saves time, and ensures consistency in
financial operations, allowing employees to focus on more strategic tasks.
4. Improved User Interface (UI) and User Experience (UX):
o Redesign the AIS interface to be more intuitive and user-friendly, reducing
training time and minimizing mistakes. A streamlined UI improves employee
adoption and efficiency, allowing quicker access to essential features.
5. Advanced Analytics and Reporting:
o Integrate business intelligence (BI) tools such as Power BI or Tableau for
customizable and detailed financial reporting. These tools enable data
visualization, better forecasting, and more informed decision-making by
providing clearer insights into financial data.
6. Blockchain Technology:
o Implement blockchain to ensure the integrity and transparency of financial
data. Blockchain's immutable nature ensures that records are secure and
transparent, reducing the risk of fraud and offering a clear audit trail for all
transactions.
7. Mobile-Optimized AIS:
o Develop a mobile-optimized version or app of the AIS to allow remote access to
financial data and reports. This ensures that key decision-makers can review and
make decisions on-the-go, improving flexibility and timeliness in financial
oversight.
8. Integration with Other Systems (ERP, CRM):
 o Integrate the AIS with other business systems like Enterprise Resource
Planning (ERP) and Customer Relationship Management (CRM) tools to
eliminate data silos and enable seamless data flow. This ensures consistency
across departments and improves overall operational efficiency.
9. Enhanced Cybersecurity:
o Strengthen cybersecurity measures by implementing multi-factor
authentication (MFA), end-to-end encryption, and conducting regular
security audits. These measures ensure that sensitive financial data is protected
from cyber threats and unauthorized access.
10. Collaboration Tools:
o Integrate collaboration tools such as document sharing, task management, and
real-time communication within the AIS. This improves team coordination,
speeds up decision-making, and streamlines cross-functional workflows in
financial operations.