Infinity Computer Systems Distributed Database

Infinity Computer Systems Distributed Database CHAPTER 1 Company Profile Company Profile: Infinity computer systems is a Sri Lanka based company engaged in selling computers, computer components and software applications to the local buyers. The company had pledged to provide the local market with the latest in products in IT for an affordable price as they appear in the world market, gaining an edge over its competitors. This well known secret has been the formula of success of the company to achieve rapid growth in a short time span. Company has wide range of computer hardware and software products on offer to the customers. One key market sector that the company is aiming to spread their reach in future is mobile handheld devices such as smart phones. Having started the business in 1999 with just two employees, today Infinity computer systems has grown into one of the biggest IT and computer components vendors in Sri lanka and in the South Asian subcontinent. Currently the company has 3 branches One in Mumbai, India and one in Kandy; a town in central part of Sri lanka and the head quarters situated in Colombo and employ 102 full time staff in all three branches. Infinity computer systems has a market share of about 30% in Sri lanka. Furthermore company has realize the benefits of the boom in IT sector in India and is aiming to expand the Mumbai branch to serve as a major computer hardware and software vendor in India to increase the revenue. Colombo head office and Mumbai branches maintains two large warehouses for storing directly imported products. Mumbai branch also directly engage with suppliers and manufacturers for buying stocks with minimal supervision form the Colombo head office. Kandy branch depends on Colombo head office for obtaining stocks and when dealing with major decisions. At Infinity computer systems theres a qualified sales and customer service team available to provide customers with expert product selection assistance and support. They try to keep an open dialogue with customers, so feedback and suggestions are always welcomed and highly appreciated. Be it a hard core gamer, student, small or medium sized business or an IT professional, Infinity Computer System has the right solution to cater every IT need. Current System: Due to the popularity of the company, Everyday a large number of business transactions are carried out at infinity computer systems outlets, resulting in heavy usage of databases and database applications. Stock maintenance, Human resource management as well as and sales and marketing departments all rely on database systems in day to day operations in Infinity computer systems all 3 branches. Currently Infinity computer systems utilize a centralized database system with relational database architecture to store data. The central database system is located in Colombo head office branch. Colombo, Mumbai and Kandy branches access the database in real time through the company WAN in day to day operations. The database system consists of following major tables which are related to other sub tables. Employees Stocks Sales Database manages separate tables for each branch that are logically related to above three main tables. The basic structure of the database table architecture is as follows. Both Mumbai branch and Kandy branch share Colombo central database. Disadvantages of Current System Due to the centralized nature of the current system, company faces number of difficulties and uncovered the following disadvantages. The main disadvantage of the current systems is single point of failure. If central database fails all the branches affect by it and all business activities comes to a halt. Furthermore breakdown in WAN line also affect the accessibility to the network. Slow access time is a major concern as well. Because, all three branches access the database simultaneously, current database systems has difficulties in processing queries quickly leading to frustration by many users. This affects negatively the fast phased nature of the infinity computer systems working environment as well as customer serving time. The sluggish nature of the current system is not appropriate in any mean to the upcoming expansions of the India branch that the company management is planning to execute in near future. specially, Mumbai branch will need a database which has quick access and has the ability to sustain a rapid growth in both capacity as well as demand. Areas Where Current System Lacks Security Current WAN network has a huge security hole as none of the site is protected by a firewall. This allows hackers and other malware programs such as worms to penetrate in to the network easily and it pose a great threat to the data at rest as well as those which are travelling on the network. The current system does not use any type of encryption when transferring data between remote sites and the main site. This pose a great threat for data such as Passwords and usernames as user authentication is done at the main site (Colombo) rather than the local sites. Lack of encryption means, anyone who intercept data get the access to user authentication information. Furthermore, the absence of encryption pose a threat to other data that transferred between main and remote sites as results for use queries. Because company database stores data that is vital and confidential to Infinity computer systems. If the data such as sales records and price listings fall in to rival business organizations hands, they can gain advantage over Infinity computer systems. User authentication system of the current database system has less than adequate authentication mechanism which grant access to all areas of the database system with single point of authentication. This pose a threat to data as staff of the company with all levels of position have the easy access to almost all of the company data. Solution To overcome the problems currently faced by Infinity Computer systems, a distributed database system can be implemented. In a distributed database environment, database is distributed over many locations where end users have quick access. Configuration and advantages of the new database system will be described in the next chapter. CHAPTER 2 Distributed Database Distributed database is a collection of multiple, logically interrelated databases distributed over a computer network. In a distributed database environment, users have the ability to access data from different sources that are located at multiple locations. When a database is distributed over many locations, it produces the challenge of retrieving the data from many locations and present it to system user. Furthermore managing the database becomes a critical function as well. This is where distributed database management system (DBMS) comes in to play. DBMS is a software system that manages the Distributed Database and provides the access mechanism to the users of the database. By tightly integrating with various systems and databases in a distributed environment, DBMS make the distribution transparent to the user. Infinity Computer Systems Distributed Database Overview Depending on the current geographical distribution of the branches and the WAN architecture, Infinity Computer Systems database can be distributed in to three branches to maximize the productivity and access times as well as obtaining many other advantages over existing centralized database. Out of many available, There are two major types of database design architectures we can consider when designing our company database system. They are, Multiple Site Processing, Multiple Site Data architecture using either Homogenous or Heterogeneous Distributed Database Management Systems(DDBMS). Out of above two architectures we will implement Homogenous Multiple Site Processing, Multiple Site Data architecture for Infinity Computer Systems distributed database. A distributed Multiple Site Processing, Multiple Site Data Multiple Site Processing, Multiple Site Data (MPMD) scenario refers to type of database that is fully distributed with multiple data processor support which includes transaction processors at multiple sites. When all the sites of the logically related distributed database utilize and integrates the same type of Database Management System(DBMS) at all sites of the distributed network its called Homogenous DBMS. Infinity Computer Systems Distributed Database Architecture Combining the concepts described above new distributed database architecture of the company can be demonstrated as below. As shown in the figure 4 and 5 in the new architecture, Both Mumbai and Kandy branches will maintain a copy of the database that consisting of records related to their respective branches. Colombo branch will maintain two databases. one includes data related to Colombo branch and a main database which will hold records related to all three branches. The new distributed database use relational database architecture. With this new architecture each branch will get the ability to access their very own database which is located locally. With this implementation, processing of the data also will be decentralized to all three branches. Apart from accessing the locally located database, both Kandy and Mumbai branches will be able to access the main database that is located in Colombo head office. The distributed database management system (DDBMS) will consist of Distributed Query Processor(DQP), that handles distributed queries, a Distributed Transaction Manager (DTM) for processing distributed transactions, a Distributed Metadata Manager (DMM) for managing distributed metadata, a Distributed Integrity Manger (DIM) for enforcing integrity among the various components of the distributed database system and a Distributed Security Manager (DSM) for enforcing security constraints across the database. LANs of all three branches were redesigned To facilitate the modifications to the new distributed database architecture, following section describes each LAN site with their new features and configurations. New LAN Architecture of Colombo Site Colombo branch function as the heart of the new distributed database system. As Colombo branch handles all management and financial decisions its important for Colombo branch to have access to data quickly. For this purpose, Colombo LAN is revamped as shown in the following figure to facilitate the functions of new distributed database. Being a company that is engaged in selling state of the art computers, accessories and networking products, its important to have faster access to database as well as fast access to different interconnected nodes within the LAN itself for this purpose Colombo site LAN is completely redesigned to facilitate the new database system. The old token ring based topology was replaced with a new Gigabit Ethernet LAN with Star topology. Gigabit Ethernet provides data rate of up to 1000 Mbp/s for LAN data. The new database server and backup server is implemented as a separated segment in the LAN. The separation is done through the router. The switches that connect Accounting and human resource department, Sales department and Warehouse department connects to a central switch, which in return connects to the router. Database server and Backup server connects to a switch, which in return connects to the router which also has the built-in firewall capability. The router segments the database section of the LAN form the other sections. This way it helps to reduce the congestion in the Local LAN. It helps faster access to database within the Colombo LAN itself as well as faster processing for incoming queries that are coming from other branches through WAN. The addition of the firewall protects the internal LAN form unauthorized access. This helps to protect the data of the company. The backup server provides continuous back up facility to the database. It helps to recover database in an event of a failure of the main database. New LAN Architecture of Mumbai Site Mumbai branch function as the second important branch after Colombo head office. Furthermore with managements intention to expand it in future to facilitate more storage and attain more sales targets that covers a larger customer base, makes it essential to have a good infrastructure in the LAN at Mumbai branch. For this purpose, Mumbai branch LAN also revamped as shown in the following figure to facilitate the functions of new distributed database and future additions. Mumbai branch LAN also revamped with an architecture similar to that of the Colombo LAN. The old network topology of Token Ring based architecture is replaced with a new STAR Topology Gigabit Ethernet. Gigabit Ethernet provide the faster access to data within the LAN, which is much need in day to day communication within the organization. Furthermore it lays the foundation to future expected expansions to the Branch. The router segments the LAN area consisting of distributed database from that of the other areas of the LAN. This helps to prevent congestion and improves the data transfer efficiency of the LAN as well as providing faster a access to data for both local and distributed queries. The router is equipped with a built in firewall which protects the internal LAN from unauthorized access, thus protects the valuable data of Infinity computer systems. Database server is connected to a backup server which backs up the data of the main database server. It helps to recover the main server in an event of a failure. New LAN Architecture of Kandy Site Kandy branch also revamped to facilitate the new changes to the database system. The architecture of the LAN is nearly similar to that of the other two branches. following figure shows the new architecture. The most notable addition to Kandy branch is the addition of the T1 line which replaced the previous ISDN line that connects the branch LAN to the company WAN. The T1 line provides the faster access to distributed data as well as internet. This makes it easier for all branches as it provides same speed of access to all three branches data without creating any bottle necks. The LAN is designed as a Gigabit LAN using a Star topology which provides fast data transmission within the LAN. The router has built-in firewall which protects the internal LAN form intrusions. The database server section of the LAN is segmented using the router. This helps to control the congestion and allows the faster access to data for local and distributed queries. Backup database server provide data backup functionality for main database server which helps in quick recovery of the main database server in an event of a failure. New Features of the Proposed WAN Network architecture and Distributed System There are few new features were introduced to the existing WAN network to make it compatible with Distributed database system and address certain security holes that presented in the existing WAN. Firewalls have been introduced to each local site to protect each LANs of all three branches. This feature address the issue of network being exposed to Worms and hackers threats. Firewalls block malicious traffic that are not authorized to enter any segment of the Infinity computer system network while allowing legitimate traffic to access any part of the network ISDN line that connected Kandy branch to the WAN has been replaced with a high bandwidth T1 line. This allows the distributed queries to access Kandy branch data at the same speed as the of the other two branches; Colombo and Kandy as well as Mumbai branch being benefitted from accessing the other two sites data much faster than the existing ISDN line. Each LAN of all three branches have been introduced with a new LAN segment which consists of distributed database and processing systems and it was segmented through the router to reduce the congestion so that both local and remote data traffic gets the ability to access the database faster. Security Enhancements Provided by New System The new system is designed to provide encryption for user authentication data. This prevents the data interceptors from understanding the data related to user authentication and authorization. The proposed system is designed with a multi level security control system. Multilevel security controls ensure users cleared at different security level access and share the companys distributed database in which data is assigned different security levels. This prevents the lower level staff from gaining access to data that are not relevant to them and it ensure the security of the data. Advantages of the New Database System There are number of advantages of the new distributed database system. The most significant advantage of the new system is, speed. with having locally available database for each branch there is no longer a need to connect to the Colombo head office database during day to day operations giving fast access to data that is located at each branch LAN. Fast access to database means rapid operations in all task in the company environment as well as quick service for customers. Having redundant data in two company branches apart from Colombo head office means higher availability. Even if a failure occur in the main branch database, it has the ability to quickly recover from the regional branches. In the same manner should a failure occur in a regional branch database, it has the ability to recover from main database in Colombo branch with minimal downtime. The distributed architecture of the database reduce the strain on the main database servers as workstations connected each branchs database server shares the processing workload between them. this result in faster processing of queries. There will be a tremendous reduction in network traffic as well. In the old configuration, company WAN was highly utilized for database traffic. specially Colombo branch received a huge amount of database traffic every day. with the new configuration, branch offices are no longer needed to utilize the WAN to access database. This frees up the WAN traffic and allow all branches to utilize it for other more critical tasks. As the database query processing is distributed between branches, there is no longer a need to maintain high cost high-end servers for processing. This reduces company expenditure in long run. New database system provides the ability to expand both in quantity and processing power. This provides the platform to carry out planned expansions for Mumbai branch without having to worry about recourses and infrastructure. Removal of Reliance on a Central Site. In the existing centralized system, both remote branches of the company as well as Colombo branch is depend on same database that is located in Colombo. But the proposed system eliminates this reliance and provide a independent database system for each branch with the ability of also connecting with the databases of the other branches through the Distributed database management system and eliminates single site of failures. With fragments as the unit of distribution in the new architecture, a transaction can be divided in to several sub queries that operates on fragments. This increases the degree of concurrency or parallelism in the system. Possible Problems in the New Architecture Complexity The new distributes database system hides the distributed nature of the system from the user. Though it provides an acceptable level of performance, reliability and availability is more complex than the existing centralized database architecture. The fact that certain data, specially Colombo and Mumbai stocks related data are replicated in Colombo and Mumbai branches, ads an extra level of complexity when dealing with synchronization between these elements. So the software must be designed to handle the data replication adequately, if not it will lead to degradation of availability, reliability and overall performance of the entire system. Cost The increased complexity of the new distributed database architecture leads to higher costs in hardware and software resources as well as maintenance costs. Difficulties in integrity control Validity and consistency of stored data is referred to as Database integrity. Integrity is usually is expressed in terms of constraints, which are consistency rules that DBMS is not allowed to violate. Enforcing integrity constraints requires that defines the constrains but that are not related to actual update operation itself. In a Distributed DBMS environment like the proposed Infinity computer systems architecture, the processing and communication cost that are required to enforce such integrity constraints may be prohibitive. Security Unlike the centralized DBMS system which the access can easily be controlled, new Distributed database system which consists of fragmented and replicated data which are located at multiple sites, the security control is more challenging. Furthermore the network itself needs to be made secure in order to protect the data that travel between three branches. CHAPTER 3 Detailed structure and functionality of distributed database In this chapter, structure of the distributed database of infinity computer systems and the functionality of the distributed components will be discussed in greater detail. Table Format There are three major tables used in the database architecture. They are Employees, sales and stocks. Following is the table format for each table. As shown in the figure 7, Employees, Sales and Stocks tables are fragmented and located at all three branches according to the relevance of the site where the data is accessed most often. This architecture make the data access time faster and keep the communication costs down. Furthermore data of the Stocks_CMB, are vertically fragmented and located at the Mumbai branch database site with the table name of Stocks_CMB_FRG. During the fragmentaion of Stock_CMB all attributes of the Stock_CMB table were allocated in to Stocks_CMB_FRG except UNITPRICE attribute, because it is irrelevant to INDIAN territory thus it reduce the wastage of storage space due to repetition of irrelevant data. The purpose of allocating Colombo head office Stock data in the Mumbai site is to allow faster access because Mumbai branch of Infinity computer systems, run its own warehouse and deal with manufacturers and suppliers directly. This makes it important fir Mumbai branch have the ability to access the Colombo stock data very often and quickly so that both branches can maintain a healthy stock for everyday business. Colombo branch retains a copy of the Stocks tables related to Mumbai site as well as maintaining its own stock table related to Colombo stocks. In this new design, Sto ck_MBI table that is located in the Colombo head office site is configured to synchronize with Stock_MBI table, two times a day, during midday and then at the end of the working day. In a nutshell, following is the way the database is distributed across three branches. Employees and Sales Tables that were previously located in the Colombo branch, were fragmented according to the relevancy where data items are physically belong and located at their relevant branches. Stock_MBI is replicated at Mumbai (Stock_MBI_LCL) site while retaining a exact copy in Colombo branch Stock_KDY table is transferred to Kandy site from its previous position of Colombo Stock_CMB table is Vertically fragmented and located a copy at Mumbai branch. Data Allocation Method There are four methods to consider when choosing a data allocation method for proposed distributed database architecture for Infinity computer systems. They are, Centralized Fragmented Complete Replication Selective Replication Out of the above methods, we use Selective Replication as the data allocation method for proposed distributed database architecture. Selective Replication is a combination of Fragmentation, replication and centralized data allocation methods. In this method some data items are fragmented to maximize high locality of reference and others, which are used at many sites and are not frequently updated, are replicated; otherwise data items are centralized. This approach gives combination of advantages of all the other three methods. Using the selective replication method, we will only be distributing data related to Kandy and Mumbai branch to their respective branches while keeping a main database at Colombo branch which will consist of records related to all branches. This will serve as a redundant database as well as a central repository where all data related to companys all three branches can be easily retrieved. Following section describes how the above distribution was done by using relational algebra. Fragmentation of Database for Allocation of Data at Various Sites When distributing a database across multiple sites, one of the main factors need to consider is the fragmentation of database items such as Tables. Fragmentation consists of breaking a relation in to smaller relations or fragments and storing the fragments at different sites. By fragmenting, data can be distributed to the sites where they used more often. There are two approaches to distribute database elements across multiple sites. They are, Distribute one copy of each database table in all sites Distribute portions of the selected tables that are important to local sites In our company case we will be using the second method mentioned above. In that method we will be distributing only the data in the three main tables that are related to each site (Branch). When fragmenting data in a table there are three techniques used. They are, Horizontal fragmentation Vertical fragmentation Hybrid fragmentation For our company distributed database we use both horizontal and vertical fragmentation to distribute table data among three branches. More precisely, For Employee table and Sales table we use Horizontal fragmentation and for Stocks_CMB table we use Vertical Fragmentation. The reason for using vertical fragmentation for stock table is because Mumbai branch deals with manufacturers and other vendors who provides hardware and software stocks directly to Mumbai branch. Horizontal Fragmentation In horizontal fragmentation, certain rows of the tables are put in to a base relation at one site, and other rows are put in to a base relation at another site. In other words, the rows (tuples) of a relation are distributed to many sites as disjointed fragments. In infinity computer systems database, we use the horizontal fragmentation as follows, to fragment Employees and sales tables. When selecting the criteria to horizontally fragment the Employees and Sales tables is the relevance of data to the location. As shown above, the current employee table, we fragment by considering the BRCODE field. BRCODE indicates the branch where the employee works. By doing so we can build three new tables out of the above database table and allocate them to each of the 3 branches of the company. We can horizontally fragment employees table in to 3 separate logically related tables as follows. Using relational algebra to do the horizontal fragmentation of Employees table To do the above horizontal fragmentation of employees table in to three tables we can use relational algebra SELECT operation. Our intention is to fragment the table in to three small fragments so each table would contain Employees related to their respective branch. To achieve this, Relational algebra operations are, Employees_CMB = SELECT(Employees_Table) WHERE BRCODE = CMB Employees_MBI = SELECT(Employees_Table) WHERE BRCODE = MBI Employees_KDY = SELECT(EMP_TABLE) WHERE BRCODE = KDY Executing the above three formulas results in following three table fragments: Employees_CMB (contains 2 tuples) Employees_MBI (contains 2 tuples) Employees_KDY (contains 1 tuple) Relational algebra operation for fragmenting Sales Table We can divide sales tables in to three fragments through the SELECT algebra operation as follows and it will result in three tables containing sales data related to each of the three branches. Sales_CMB = SELECT(Sales_Table) WHERE BRCODE = CMB Sales_MBI = SELECT(Sales _Table) WHERE BRCODE = MBI Sales_KDY = SELECT(Sales _Table) WHERE BRCODE = KDY Vertical Fragmentation Vertical Fragmentation works by splitting a table between attributes. Vertical fragmentation is used in situations where some sites needed to access the attributes of the tables of many data items in a table. This fragmentation is more difficult than horizontal fragmentation as more options exist. The fragmentation can be achieved by either Grouping attributes to fragments or Splitting relations in to fragments For fragment Colmbo branchs Stock_CMB Table, we use the first method mentioned above. Relational algebra operation for Vertical fragmentation of Sales_CMB Table For vertical fragmentation, relational algebra Project operation is used. We fragment the above table to form a new table called Stocks_CMB_FRG. This new table will contain all the attributes of the above table except UNITPRICE. Following is the relational algebra Project operation. Stocks_CMB_FRG = PROJECT(Stocks_CMB) TOCKCODE, ITEMNO, QTY, S LASTIN, NEXTIN Executing the above operation will result in creating the following table. Stocks_CMB_FRG Data Model The data model consists of three layers called schemas. Each schema defines a set of views that database can be seen. The three schemas are, External schema layer Represents the view of the database that users and/or applications might see Conceptual schema layer At this level the database objects such as tables, columns, views, and indexes are defined. These definitions provide mappings to the next level of the model, which is where the physical layout of the database is defined. Internal schema layer This layer defines the actual layout of the records and fields. Distributed databases of all three branches are modeled according the above structure and all three branches maintain their own set of the above model. In local sites, when users access the data stored locally, they access them as defined in the external Views. Conceptual schema maps the logical structure of the tables to Internal Schema which defines the physical storage of data on the discs. The abov Infinity Computer Systems Distributed Database Infinity Computer Systems Distributed Database CHAPTER 1 Company Profile Company Profile: Infinity computer systems is a Sri Lanka based company engaged in selling computers, computer components and software applications to the local buyers. The company had pledged to provide the local market with the latest in products in IT for an affordable price as they appear in the world market, gaining an edge over its competitors. This well known secret has been the formula of success of the company to achieve rapid growth in a short time span. Company has wide range of computer hardware and software products on offer to the customers. One key market sector that the company is aiming to spread their reach in future is mobile handheld devices such as smart phones. Having started the business in 1999 with just two employees, today Infinity computer systems has grown into one of the biggest IT and computer components vendors in Sri lanka and in the South Asian subcontinent. Currently the company has 3 branches One in Mumbai, India and one in Kandy; a town in central part of Sri lanka and the head quarters situated in Colombo and employ 102 full time staff in all three branches. Infinity computer systems has a market share of about 30% in Sri lanka. Furthermore company has realize the benefits of the boom in IT sector in India and is aiming to expand the Mumbai branch to serve as a major computer hardware and software vendor in India to increase the revenue. Colombo head office and Mumbai branches maintains two large warehouses for storing directly imported products. Mumbai branch also directly engage with suppliers and manufacturers for buying stocks with minimal supervision form the Colombo head office. Kandy branch depends on Colombo head office for obtaining stocks and when dealing with major decisions. At Infinity computer systems theres a qualified sales and customer service team available to provide customers with expert product selection assistance and support. They try to keep an open dialogue with customers, so feedback and suggestions are always welcomed and highly appreciated. Be it a hard core gamer, student, small or medium sized business or an IT professional, Infinity Computer System has the right solution to cater every IT need. Current System: Due to the popularity of the company, Everyday a large number of business transactions are carried out at infinity computer systems outlets, resulting in heavy usage of databases and database applications. Stock maintenance, Human resource management as well as and sales and marketing departments all rely on database systems in day to day operations in Infinity computer systems all 3 branches. Currently Infinity computer systems utilize a centralized database system with relational database architecture to store data. The central database system is located in Colombo head office branch. Colombo, Mumbai and Kandy branches access the database in real time through the company WAN in day to day operations. The database system consists of following major tables which are related to other sub tables. Employees Stocks Sales Database manages separate tables for each branch that are logically related to above three main tables. The basic structure of the database table architecture is as follows. Both Mumbai branch and Kandy branch share Colombo central database. Disadvantages of Current System Due to the centralized nature of the current system, company faces number of difficulties and uncovered the following disadvantages. The main disadvantage of the current systems is single point of failure. If central database fails all the branches affect by it and all business activities comes to a halt. Furthermore breakdown in WAN line also affect the accessibility to the network. Slow access time is a major concern as well. Because, all three branches access the database simultaneously, current database systems has difficulties in processing queries quickly leading to frustration by many users. This affects negatively the fast phased nature of the infinity computer systems working environment as well as customer serving time. The sluggish nature of the current system is not appropriate in any mean to the upcoming expansions of the India branch that the company management is planning to execute in near future. specially, Mumbai branch will need a database which has quick access and has the ability to sustain a rapid growth in both capacity as well as demand. Areas Where Current System Lacks Security Current WAN network has a huge security hole as none of the site is protected by a firewall. This allows hackers and other malware programs such as worms to penetrate in to the network easily and it pose a great threat to the data at rest as well as those which are travelling on the network. The current system does not use any type of encryption when transferring data between remote sites and the main site. This pose a great threat for data such as Passwords and usernames as user authentication is done at the main site (Colombo) rather than the local sites. Lack of encryption means, anyone who intercept data get the access to user authentication information. Furthermore, the absence of encryption pose a threat to other data that transferred between main and remote sites as results for use queries. Because company database stores data that is vital and confidential to Infinity computer systems. If the data such as sales records and price listings fall in to rival business organizations hands, they can gain advantage over Infinity computer systems. User authentication system of the current database system has less than adequate authentication mechanism which grant access to all areas of the database system with single point of authentication. This pose a threat to data as staff of the company with all levels of position have the easy access to almost all of the company data. Solution To overcome the problems currently faced by Infinity Computer systems, a distributed database system can be implemented. In a distributed database environment, database is distributed over many locations where end users have quick access. Configuration and advantages of the new database system will be described in the next chapter. CHAPTER 2 Distributed Database Distributed database is a collection of multiple, logically interrelated databases distributed over a computer network. In a distributed database environment, users have the ability to access data from different sources that are located at multiple locations. When a database is distributed over many locations, it produces the challenge of retrieving the data from many locations and present it to system user. Furthermore managing the database becomes a critical function as well. This is where distributed database management system (DBMS) comes in to play. DBMS is a software system that manages the Distributed Database and provides the access mechanism to the users of the database. By tightly integrating with various systems and databases in a distributed environment, DBMS make the distribution transparent to the user. Infinity Computer Systems Distributed Database Overview Depending on the current geographical distribution of the branches and the WAN architecture, Infinity Computer Systems database can be distributed in to three branches to maximize the productivity and access times as well as obtaining many other advantages over existing centralized database. Out of many available, There are two major types of database design architectures we can consider when designing our company database system. They are, Multiple Site Processing, Multiple Site Data architecture using either Homogenous or Heterogeneous Distributed Database Management Systems(DDBMS). Out of above two architectures we will implement Homogenous Multiple Site Processing, Multiple Site Data architecture for Infinity Computer Systems distributed database. A distributed Multiple Site Processing, Multiple Site Data Multiple Site Processing, Multiple Site Data (MPMD) scenario refers to type of database that is fully distributed with multiple data processor support which includes transaction processors at multiple sites. When all the sites of the logically related distributed database utilize and integrates the same type of Database Management System(DBMS) at all sites of the distributed network its called Homogenous DBMS. Infinity Computer Systems Distributed Database Architecture Combining the concepts described above new distributed database architecture of the company can be demonstrated as below. As shown in the figure 4 and 5 in the new architecture, Both Mumbai and Kandy branches will maintain a copy of the database that consisting of records related to their respective branches. Colombo branch will maintain two databases. one includes data related to Colombo branch and a main database which will hold records related to all three branches. The new distributed database use relational database architecture. With this new architecture each branch will get the ability to access their very own database which is located locally. With this implementation, processing of the data also will be decentralized to all three branches. Apart from accessing the locally located database, both Kandy and Mumbai branches will be able to access the main database that is located in Colombo head office. The distributed database management system (DDBMS) will consist of Distributed Query Processor(DQP), that handles distributed queries, a Distributed Transaction Manager (DTM) for processing distributed transactions, a Distributed Metadata Manager (DMM) for managing distributed metadata, a Distributed Integrity Manger (DIM) for enforcing integrity among the various components of the distributed database system and a Distributed Security Manager (DSM) for enforcing security constraints across the database. LANs of all three branches were redesigned To facilitate the modifications to the new distributed database architecture, following section describes each LAN site with their new features and configurations. New LAN Architecture of Colombo Site Colombo branch function as the heart of the new distributed database system. As Colombo branch handles all management and financial decisions its important for Colombo branch to have access to data quickly. For this purpose, Colombo LAN is revamped as shown in the following figure to facilitate the functions of new distributed database. Being a company that is engaged in selling state of the art computers, accessories and networking products, its important to have faster access to database as well as fast access to different interconnected nodes within the LAN itself for this purpose Colombo site LAN is completely redesigned to facilitate the new database system. The old token ring based topology was replaced with a new Gigabit Ethernet LAN with Star topology. Gigabit Ethernet provides data rate of up to 1000 Mbp/s for LAN data. The new database server and backup server is implemented as a separated segment in the LAN. The separation is done through the router. The switches that connect Accounting and human resource department, Sales department and Warehouse department connects to a central switch, which in return connects to the router. Database server and Backup server connects to a switch, which in return connects to the router which also has the built-in firewall capability. The router segments the database section of the LAN form the other sections. This way it helps to reduce the congestion in the Local LAN. It helps faster access to database within the Colombo LAN itself as well as faster processing for incoming queries that are coming from other branches through WAN. The addition of the firewall protects the internal LAN form unauthorized access. This helps to protect the data of the company. The backup server provides continuous back up facility to the database. It helps to recover database in an event of a failure of the main database. New LAN Architecture of Mumbai Site Mumbai branch function as the second important branch after Colombo head office. Furthermore with managements intention to expand it in future to facilitate more storage and attain more sales targets that covers a larger customer base, makes it essential to have a good infrastructure in the LAN at Mumbai branch. For this purpose, Mumbai branch LAN also revamped as shown in the following figure to facilitate the functions of new distributed database and future additions. Mumbai branch LAN also revamped with an architecture similar to that of the Colombo LAN. The old network topology of Token Ring based architecture is replaced with a new STAR Topology Gigabit Ethernet. Gigabit Ethernet provide the faster access to data within the LAN, which is much need in day to day communication within the organization. Furthermore it lays the foundation to future expected expansions to the Branch. The router segments the LAN area consisting of distributed database from that of the other areas of the LAN. This helps to prevent congestion and improves the data transfer efficiency of the LAN as well as providing faster a access to data for both local and distributed queries. The router is equipped with a built in firewall which protects the internal LAN from unauthorized access, thus protects the valuable data of Infinity computer systems. Database server is connected to a backup server which backs up the data of the main database server. It helps to recover the main server in an event of a failure. New LAN Architecture of Kandy Site Kandy branch also revamped to facilitate the new changes to the database system. The architecture of the LAN is nearly similar to that of the other two branches. following figure shows the new architecture. The most notable addition to Kandy branch is the addition of the T1 line which replaced the previous ISDN line that connects the branch LAN to the company WAN. The T1 line provides the faster access to distributed data as well as internet. This makes it easier for all branches as it provides same speed of access to all three branches data without creating any bottle necks. The LAN is designed as a Gigabit LAN using a Star topology which provides fast data transmission within the LAN. The router has built-in firewall which protects the internal LAN form intrusions. The database server section of the LAN is segmented using the router. This helps to control the congestion and allows the faster access to data for local and distributed queries. Backup database server provide data backup functionality for main database server which helps in quick recovery of the main database server in an event of a failure. New Features of the Proposed WAN Network architecture and Distributed System There are few new features were introduced to the existing WAN network to make it compatible with Distributed database system and address certain security holes that presented in the existing WAN. Firewalls have been introduced to each local site to protect each LANs of all three branches. This feature address the issue of network being exposed to Worms and hackers threats. Firewalls block malicious traffic that are not authorized to enter any segment of the Infinity computer system network while allowing legitimate traffic to access any part of the network ISDN line that connected Kandy branch to the WAN has been replaced with a high bandwidth T1 line. This allows the distributed queries to access Kandy branch data at the same speed as the of the other two branches; Colombo and Kandy as well as Mumbai branch being benefitted from accessing the other two sites data much faster than the existing ISDN line. Each LAN of all three branches have been introduced with a new LAN segment which consists of distributed database and processing systems and it was segmented through the router to reduce the congestion so that both local and remote data traffic gets the ability to access the database faster. Security Enhancements Provided by New System The new system is designed to provide encryption for user authentication data. This prevents the data interceptors from understanding the data related to user authentication and authorization. The proposed system is designed with a multi level security control system. Multilevel security controls ensure users cleared at different security level access and share the companys distributed database in which data is assigned different security levels. This prevents the lower level staff from gaining access to data that are not relevant to them and it ensure the security of the data. Advantages of the New Database System There are number of advantages of the new distributed database system. The most significant advantage of the new system is, speed. with having locally available database for each branch there is no longer a need to connect to the Colombo head office database during day to day operations giving fast access to data that is located at each branch LAN. Fast access to database means rapid operations in all task in the company environment as well as quick service for customers. Having redundant data in two company branches apart from Colombo head office means higher availability. Even if a failure occur in the main branch database, it has the ability to quickly recover from the regional branches. In the same manner should a failure occur in a regional branch database, it has the ability to recover from main database in Colombo branch with minimal downtime. The distributed architecture of the database reduce the strain on the main database servers as workstations connected each branchs database server shares the processing workload between them. this result in faster processing of queries. There will be a tremendous reduction in network traffic as well. In the old configuration, company WAN was highly utilized for database traffic. specially Colombo branch received a huge amount of database traffic every day. with the new configuration, branch offices are no longer needed to utilize the WAN to access database. This frees up the WAN traffic and allow all branches to utilize it for other more critical tasks. As the database query processing is distributed between branches, there is no longer a need to maintain high cost high-end servers for processing. This reduces company expenditure in long run. New database system provides the ability to expand both in quantity and processing power. This provides the platform to carry out planned expansions for Mumbai branch without having to worry about recourses and infrastructure. Removal of Reliance on a Central Site. In the existing centralized system, both remote branches of the company as well as Colombo branch is depend on same database that is located in Colombo. But the proposed system eliminates this reliance and provide a independent database system for each branch with the ability of also connecting with the databases of the other branches through the Distributed database management system and eliminates single site of failures. With fragments as the unit of distribution in the new architecture, a transaction can be divided in to several sub queries that operates on fragments. This increases the degree of concurrency or parallelism in the system. Possible Problems in the New Architecture Complexity The new distributes database system hides the distributed nature of the system from the user. Though it provides an acceptable level of performance, reliability and availability is more complex than the existing centralized database architecture. The fact that certain data, specially Colombo and Mumbai stocks related data are replicated in Colombo and Mumbai branches, ads an extra level of complexity when dealing with synchronization between these elements. So the software must be designed to handle the data replication adequately, if not it will lead to degradation of availability, reliability and overall performance of the entire system. Cost The increased complexity of the new distributed database architecture leads to higher costs in hardware and software resources as well as maintenance costs. Difficulties in integrity control Validity and consistency of stored data is referred to as Database integrity. Integrity is usually is expressed in terms of constraints, which are consistency rules that DBMS is not allowed to violate. Enforcing integrity constraints requires that defines the constrains but that are not related to actual update operation itself. In a Distributed DBMS environment like the proposed Infinity computer systems architecture, the processing and communication cost that are required to enforce such integrity constraints may be prohibitive. Security Unlike the centralized DBMS system which the access can easily be controlled, new Distributed database system which consists of fragmented and replicated data which are located at multiple sites, the security control is more challenging. Furthermore the network itself needs to be made secure in order to protect the data that travel between three branches. CHAPTER 3 Detailed structure and functionality of distributed database In this chapter, structure of the distributed database of infinity computer systems and the functionality of the distributed components will be discussed in greater detail. Table Format There are three major tables used in the database architecture. They are Employees, sales and stocks. Following is the table format for each table. As shown in the figure 7, Employees, Sales and Stocks tables are fragmented and located at all three branches according to the relevance of the site where the data is accessed most often. This architecture make the data access time faster and keep the communication costs down. Furthermore data of the Stocks_CMB, are vertically fragmented and located at the Mumbai branch database site with the table name of Stocks_CMB_FRG. During the fragmentaion of Stock_CMB all attributes of the Stock_CMB table were allocated in to Stocks_CMB_FRG except UNITPRICE attribute, because it is irrelevant to INDIAN territory thus it reduce the wastage of storage space due to repetition of irrelevant data. The purpose of allocating Colombo head office Stock data in the Mumbai site is to allow faster access because Mumbai branch of Infinity computer systems, run its own warehouse and deal with manufacturers and suppliers directly. This makes it important fir Mumbai branch have the ability to access the Colombo stock data very often and quickly so that both branches can maintain a healthy stock for everyday business. Colombo branch retains a copy of the Stocks tables related to Mumbai site as well as maintaining its own stock table related to Colombo stocks. In this new design, Sto ck_MBI table that is located in the Colombo head office site is configured to synchronize with Stock_MBI table, two times a day, during midday and then at the end of the working day. In a nutshell, following is the way the database is distributed across three branches. Employees and Sales Tables that were previously located in the Colombo branch, were fragmented according to the relevancy where data items are physically belong and located at their relevant branches. Stock_MBI is replicated at Mumbai (Stock_MBI_LCL) site while retaining a exact copy in Colombo branch Stock_KDY table is transferred to Kandy site from its previous position of Colombo Stock_CMB table is Vertically fragmented and located a copy at Mumbai branch. Data Allocation Method There are four methods to consider when choosing a data allocation method for proposed distributed database architecture for Infinity computer systems. They are, Centralized Fragmented Complete Replication Selective Replication Out of the above methods, we use Selective Replication as the data allocation method for proposed distributed database architecture. Selective Replication is a combination of Fragmentation, replication and centralized data allocation methods. In this method some data items are fragmented to maximize high locality of reference and others, which are used at many sites and are not frequently updated, are replicated; otherwise data items are centralized. This approach gives combination of advantages of all the other three methods. Using the selective replication method, we will only be distributing data related to Kandy and Mumbai branch to their respective branches while keeping a main database at Colombo branch which will consist of records related to all branches. This will serve as a redundant database as well as a central repository where all data related to companys all three branches can be easily retrieved. Following section describes how the above distribution was done by using relational algebra. Fragmentation of Database for Allocation of Data at Various Sites When distributing a database across multiple sites, one of the main factors need to consider is the fragmentation of database items such as Tables. Fragmentation consists of breaking a relation in to smaller relations or fragments and storing the fragments at different sites. By fragmenting, data can be distributed to the sites where they used more often. There are two approaches to distribute database elements across multiple sites. They are, Distribute one copy of each database table in all sites Distribute portions of the selected tables that are important to local sites In our company case we will be using the second method mentioned above. In that method we will be distributing only the data in the three main tables that are related to each site (Branch). When fragmenting data in a table there are three techniques used. They are, Horizontal fragmentation Vertical fragmentation Hybrid fragmentation For our company distributed database we use both horizontal and vertical fragmentation to distribute table data among three branches. More precisely, For Employee table and Sales table we use Horizontal fragmentation and for Stocks_CMB table we use Vertical Fragmentation. The reason for using vertical fragmentation for stock table is because Mumbai branch deals with manufacturers and other vendors who provides hardware and software stocks directly to Mumbai branch. Horizontal Fragmentation In horizontal fragmentation, certain rows of the tables are put in to a base relation at one site, and other rows are put in to a base relation at another site. In other words, the rows (tuples) of a relation are distributed to many sites as disjointed fragments. In infinity computer systems database, we use the horizontal fragmentation as follows, to fragment Employees and sales tables. When selecting the criteria to horizontally fragment the Employees and Sales tables is the relevance of data to the location. As shown above, the current employee table, we fragment by considering the BRCODE field. BRCODE indicates the branch where the employee works. By doing so we can build three new tables out of the above database table and allocate them to each of the 3 branches of the company. We can horizontally fragment employees table in to 3 separate logically related tables as follows. Using relational algebra to do the horizontal fragmentation of Employees table To do the above horizontal fragmentation of employees table in to three tables we can use relational algebra SELECT operation. Our intention is to fragment the table in to three small fragments so each table would contain Employees related to their respective branch. To achieve this, Relational algebra operations are, Employees_CMB = SELECT(Employees_Table) WHERE BRCODE = CMB Employees_MBI = SELECT(Employees_Table) WHERE BRCODE = MBI Employees_KDY = SELECT(EMP_TABLE) WHERE BRCODE = KDY Executing the above three formulas results in following three table fragments: Employees_CMB (contains 2 tuples) Employees_MBI (contains 2 tuples) Employees_KDY (contains 1 tuple) Relational algebra operation for fragmenting Sales Table We can divide sales tables in to three fragments through the SELECT algebra operation as follows and it will result in three tables containing sales data related to each of the three branches. Sales_CMB = SELECT(Sales_Table) WHERE BRCODE = CMB Sales_MBI = SELECT(Sales _Table) WHERE BRCODE = MBI Sales_KDY = SELECT(Sales _Table) WHERE BRCODE = KDY Vertical Fragmentation Vertical Fragmentation works by splitting a table between attributes. Vertical fragmentation is used in situations where some sites needed to access the attributes of the tables of many data items in a table. This fragmentation is more difficult than horizontal fragmentation as more options exist. The fragmentation can be achieved by either Grouping attributes to fragments or Splitting relations in to fragments For fragment Colmbo branchs Stock_CMB Table, we use the first method mentioned above. Relational algebra operation for Vertical fragmentation of Sales_CMB Table For vertical fragmentation, relational algebra Project operation is used. We fragment the above table to form a new table called Stocks_CMB_FRG. This new table will contain all the attributes of the above table except UNITPRICE. Following is the relational algebra Project operation. Stocks_CMB_FRG = PROJECT(Stocks_CMB) TOCKCODE, ITEMNO, QTY, S LASTIN, NEXTIN Executing the above operation will result in creating the following table. Stocks_CMB_FRG Data Model The data model consists of three layers called schemas. Each schema defines a set of views that database can be seen. The three schemas are, External schema layer Represents the view of the database that users and/or applications might see Conceptual schema layer At this level the database objects such as tables, columns, views, and indexes are defined. These definitions provide mappings to the next level of the model, which is where the physical layout of the database is defined. Internal schema layer This layer defines the actual layout of the records and fields. Distributed databases of all three branches are modeled according the above structure and all three branches maintain their own set of the above model. In local sites, when users access the data stored locally, they access them as defined in the external Views. Conceptual schema maps the logical structure of the tables to Internal Schema which defines the physical storage of data on the discs. The abov

Case Study of Starbucks

When the announcement was made in mid 2008 that Starbucks would be closing nearly three-quarters of its 84 Australian stores there was mixed reaction. Some people were shocked, others were triumphant. Journalists used every pun in the book to create a sensational headline, and it seemed everyone had a theory as to what went wrong. This case outlines the astounding growth and expansion of the Starbucks brand worldwide, including to Australia. It then shifts focus to describe the extent of the store closures in Australia, before offering several reasons for the failure and lessons that others might learn from the case. . Background Founded in 1971, Starbucks' first store was in Seattle's Pike Place Market. By the time it went public in 1992, it had 140 stores and was expanding at a breakneck pace, with a growing store count of an extra 40-60% a year. Whilst former CEO Jim Donald claimed that â€Å"we don't want to take over the world†, during the 1990s and early 2000s, Starbucks were opening on average at least one store a day (Palmer, 2008). In 2008 it was claimed to be opening seven stores a day worldwide.Not surprisingly, Starbucks is now the largest coffee chain operator in the world, with more than 15,000 stores in 44 countries, and in 2007, accounted for 39% of the world's total specialist coffee house sales (Euromonitor, 2008a). In North America alone, it serves 50 million people a week, and is now an indelible part of the urban landscape. But just how did Starbucks become such a phenomenon? Firstly, it successfully Americanised the European coffee tradition – something no other coffee house had done previously.Before Starbucks, coffee in its current form (latte, frappacino, mocha, etc. ) was alien to most US consumers. Secondly, Starbucks did not just sell coffee – it sold an experience. As founding CEO Howard Schultz explained, â€Å"We are not in the coffee business serving people, we're in the people business serving coffee† (Schultz and Yang, 1997). This epitomised the emphasis on customer service such as making eye contact and greeting each customer within 5 seconds, cleaning tables promptly and remembering the names of regular customers.From inception, Starbucks' purpose was to reinvent a commodity with a sense of romance, atmosphere, sophistication and sense of community (Schultz and Yang, 1997). Next, Starbucks created a ‘third place' in people's lives – somewhere between home and work where they could sit and relax. This was a novelty in the US where in many small towns cafe culture consisted of filter coffee on a hot plate. In this way, Starbucks positioned itself to not only sell coffee, but also offer an experience. It was conceived as a lifestyle cafe.The establishment of the cafe as a social hub, with comfortable chairs and music has been just as important a part of the Starbucks brand as its coffee. All this came with a premium price. While people were aware that the beverages at Starbucks were more expensive than at many cafes, they still frequented the outlets as it was a place ‘to see and be seen'. In this way, the brand was widely accepted and became, to an extent, a symbol of status, and everyone's must-have accessory on their way to work.So, not only did Starbucks revolutionise how Americans drank coffee, it also revolutionised how much people were prepared to pay. Consistency of product across stores, and even national boundaries, has been a hallmark of Starbucks. Like McDonald's, Starbucks claims that a customer should be able to visit a store anywhere in the world and buy a coffee exactly to specification. This sentiment is echoed by Mark Ring, CEO of Starbucks Australia who stated â€Å"consistency is really important to our customers †¦ a consistency in the product . . . he overall experience when you walk into a cafe . . . the music . . . the lighting . . . the furniture . . . the person who is working the bar†. So, whilst th ere might be slight differences between Starbucks in different countries, they all generally look the same and offer the same product assortment. One way this is ensured is by insisting that all managers and partners (employees) undergo 13 weeks of training – not just to learn how to make a coffee, but to understand the nuances of the Starbucks brand (Karolefski, 2002) and how to deliver on its promise of a service experience.The Starbucks formula also depends on location and convenience. Starbucks have worked under the assumption that people are not going to visit unless it's convenient, and it is this assumption that underlies their highly concentrated store coverage in many cities. Typically, clusters of outlets are opened, which has the effect of saturating a neighbourhood with the Starbucks brand. Interestingly, until recently, they have not engaged in traditional advertising, believing their large store presence and word-ofmouth to be all the advertising and promotion t hey need.Starbucks' management believed that a distinctive and memorable brand, a product that made people ‘feel good' and an enjoyable delivery channel would create repeat business and customer loyalty. Faced with near-saturation conditions in the US – by 2007 it commanded 62% of the specialist coffee shop market in North America (Table 1 ) – the company has increasingly looked overseas for growth opportunities.As part of this strategy, Starbucks opened its first Australian store in Sydney in 2000, before expanding elsewhere within New South Wales and then nationwide (albeit with 90% of stores concentrated in just three states: NSW, Victoria and Queensland). By the end of 2007 Starbucks had 87 stores, enabling it to control 7% of the specialist coffee shop market in Australasia (Table 1 ). By 2008, consumer awareness of Starbucks in Australia was 90% (Shoebridge, 2008), with each outlet selling, on average, double the number of coffees (270 a day) than the rest of Australia's coffee shops (Lindhe, 2008). . Expansion into Asia Starbucks currently operates in 44 markets and even has a small presence in Paris – birthplace and stronghold of European cafe culture. Beyond North America, it has a very significant share of the specialist coffee shop market in Western Europe, Asia Pacific and Latin America (Table 1) and these regions make strong revenue contributions (Table 2). It is in Asia that they see the most potential for growth as they face increasing competitive pressure in their more traditional markets.Half the international stores Starbucks plans to operate in the next decade will be in Asia (Euromonitor, 2006; Browning, 2008). Indeed, Starbucks has done well in international markets where there has not traditionally been a coffee drinking culture, namely Japan, Thailand, Indonesia and China. In effect it has been responsible for growing the category in these markets. The first Starbucks outside the US opened in Tokyo in 1996, and since then, Starbucks' Japanese stores have become twice as profitable as the US stores.Unsurprisingly then, Japan is Starbucks' best performing overseas market outside North America. More than 100 new stores open each year in Japan, and coffee is now more popular than tea in terms of both volume and value (Lee, 2003; see also Uncles, 2008). As opposed to their entry into the Australian market, Starbucks made small changes to its formula for the Japanese market; for example, the invention of a green tea frappucino, and the provision of smaller drinks and pastries to conform to local tastes.Starbucks arrived in China in 1998 and by 2002 had 50 outlets, and 165 outlets by 2006 (BBC News, 2006), quickly becoming the nation's leading coffee chain. Starbucks now sees China as its key growth market due to the size and preferences of the emerging middle class. In the Asia-Pacific region, Starbucks command of the specialist coffee shop market grew from 15% in 2002 to 19% in 2007 (refer to Table 2). The total market for cafes in China grew by over 135% between 1999 and 2004 to reach US$2. 6 billion.It is projected to grow another 144% by 2008 to reach US$6. 4 billion in sales. More specialty coffee shops are opening across China as a middle class with strong purchasing power emerges, although this rise in coffee consumption is highly concentrated in large cities such as Beijing, Shanghai and Guangzhou. Starbucks has said that it expects China to become its biggest market after the US and the plan is to open 100 stores a year (Euromonitor, 2006). Significantly, certain Western brands are valued by Chinese consumers and Starbucks appears to be one of them.A growing number of China's 500 million urbanites favour Starbucks for its ambience, which is seen as an important signal of service quality, and Starbucks' design concept rests easily with China's consumers, who tend to lounge with friends while sipping coffee. Its outlets in China frequently maintain larger seating a reas than average outlets in other countries, and plush chairs and davenports are provided to accommodate crowds that linger. However, success for Starbucks in China is not a given, and they will face several challenges in the coming years.China's accession to the WTO has led to the gradual relaxation of the policy governing foreign-owned retail outlets, and this will lead to more foreign investment and thereby competition (Lee, 2004). Several multinationals are engaged in selling coffee (including KFC, McDonald's, Yoshinoya, and Manabe), and a number of local brands have recently emerged, some even imitating Starbucks' distinctive green and white logo and its in-store ambience (notably Xingbake in Shanghai). Furthermore, the reduction of import tariffs on coffee will also encourage foreign investment in coffee. . The Australian retail coffee industry Australia's taste for coffee is a by-product of the waves of immigrants arriving on the country's shores following World War II. Euro pean migrants, predominantly Greeks and Italians, were the first to establish the coffee culture, which was later embraced more widely in the 1 980s. For decades Australians enjoyed a variation of the ‘lifestyle coffee experience' that Starbucks created from scratch in the US. Australians did not need to be introduced to the concept of coffee as many other countries did.Savouring a morning cup of coffee was already a ritual for many consumers. It is fair to describe Australia's coffee culture as mature and sophisticated, so when Starbucks entered Australia in 2000, a thriving urban cafe culture was already in place. This established culture saw Australians typically patronise smaller boutique style coffee shops, with people willing to travel out of their way for a favoured cup of coffee, especially in Melbourne where coffee has developed an almost cult-like following.For Australians, coffee is as much about relationships as it is about the product, suggesting that an impersona l, global chain experience would have trouble replicating the intimacy, personalisation and familiarity of a suburban boutique cafe. Furthermore, through years of coffee drinking, many Australians, unlike American or Asian consumers, have developed a sophisticated palate, enjoying their coffee straighter and stronger, and without the need to disguise the taste with flavoured, syrupy shots. This love of coffee is easily quantified. The Australian market is worth $3 billion, of which $1. billion relates to the coffee retailing market. For every cup of coffee consumed out of home, two cups are consumed at home (AustraIAsian Specialty Coffee Association, 2006). Per capita consumption is now estimated at 2. 3 kg-twice as much as 30 years ago. Whilst Australians are among the highest consumers of instant coffee in the world, they are increasingly buying coffee out of the home (Euromonitor, 2008c). More than 1 billion cups of coffee are consumed in cafes, restaurants and other outlets each year, representing an increase of 65% over the last 10 years.Even between 2000 and 2005, trade sales of coffee have increased about 18%. In 2007, the growth in popularity of the cafe culture resulted in trade volume sales growing at an annual rate of 5%. Some 31% of the coffee sold through foodservice is takeaway, and it is thought that ‘fast coffee' will be a growth area in future years (Euromonitor, 2008d). There is also a trend towards larger takeaway sizes, with 400 ml cups increasing in popularity (Euromonitor, 2008d). One might argue that Starbucks drove these trends, especially in regards to larger sizes.There are almost 14,000 cafes and restaurants serving a variety of coffee types in Australia, and during 2006/07, they generated $9. 7 billion in income (Australian Bureau of Statistics, 2008). However, despite these statistics, the coffee business does not guarantee success. As Paul Irvine, co-founder of Gloria Jean's notes, â€Å"Australia is a tough retail market a nd coffee retailing is particularly tough†. According to official statistics, the cafe business is not always profitable, with the net profitability of cafes falling to about 4%.For a cafe to be successful, it has to offer marginally better coffee than local competitors, and do so consistently. Coffee drinkers in Australia are discerning, and they will go out of their way to purchase a good cup of coffee. They are not as easily persuaded as people from other countries simply to visit their nearest cafe. Secondly, for a cafe to make a profit, it needs to turn over 15 kg of coffee a week The national average is 11 kg, so a cafe has to be above average to begin with to even make a profit. Any newcomer needs to understand this before entering the market.The other significant constraint on profitability is the cost of hiring baristas, with a good one costing between $1000 and $1500 a week (Charles, 2007). However, it seems that this is a necessary cost in order to deliver a superio r product. The question that then begs to be asked is: How well did Starbucks understand this existing coffee culture? Did they under-estimate the relational aspect of coffee purchasing in Australia, as well as the importance of the quality of ingrethents and the skills of the person making each cup?Did they overestimate the value consumers attach to the in-store experience and the ‘third place' concept? Or did they just look at the statistics regarding coffee consumption and think that operating in Australia was a license to print money? Did they simply see Australia as the next logical step to global domination? Starbucks has 87% of the US specialty coffee shop market, and only now is it beginning to feel pressure from non-traditional competitors such as Dunkin Donut, 7 Eleven, McCafe and Krispy Kreme (Burritt, 2007).However, in Australia, the competitive landscape is different. Gloria Jean's dominates the high-street part of the coffee retailing market and McCafe dominates the convenience end (Shoebridge, 2008). Other significant competitors include The Coffee Club and Wild Bean Cafe (an add-on to BP petrol stations) and Hudson's Coffee (see Table 3). All offer a similar in-store experience to Starbucks, with McCafe from 2007 onwards refurbishing many McDonald's stores to imitate the Starbucks' experience, albeit at the economy end of the market. 5. Growth grinds to a halt . . . store closuresIn recent times however things have started to go wrong for Starbucks. Internationally, company earnings declined as cashstrapped consumers faced record petrol prices and rising interest rates meaning they have had to pull back on gourmet coffee and other luxuries. Sales fell 50% in the last 2 years, the US share price fell more than 40% over the past year and profits dropped 28% (Bawden, 2008; Coleman-Lochner and Stanford, 2008; Mintz, 2008). Consequently, Howard Schultz, the founder and chairman of Starbucks, resumed the position of CEO in 2008 with the aim of revitalising the business.He slowed the pace at which stores were opened (and in fact closed more stores than he will open in the coming year), introduced key performance targets (KPTs) and an employee rewards system in the US, and simultaneously shut down every store in America for three and a half hours of staff training (Muthukumar and Jain, 2008). Customer-oriented initiatives have included the addition of more food, the launch of the Starbucks card and Starbucks express, and the provision of high-speed wi-fi internet access (Hota, 2008).Notably, Schultz acknowledges that the company's focus has been more on expansion than on customer service – the very thing that was at the heart of its unique value proposition. However, it seems that these measures were too late for the Australian operation. On 29th July 2008, Starbucks announced that it would be closing 61 of its 84 Australian stores (i. e. , 73%) by August 2008, resulting in a loss of 685 jobs. All of these stores had been under-performing (8 were in SA, ACT and Tasmania, 28 in NSW, 17 in Victoria and 8 in Queensland).This decline of Starbucks in Australia was not as sudden as many would have us believe and in fact some reports (Edwards and Sainsbury, 2008; Shoebridge, 2008) indicated that by late 2007 Starbucks already had: * accumulated losses of $143 million; * a loss of $36 million for that financial year; * lost $27. 6 million the previous financial year; * loans of $72. 3 million from Starbucks in the US; * was only surviving because of its US parent's support. These closures saw 23 stores kept open in prime locations in Sydney, Melbourne and Brisbane. But this begs the question: can a 23-store chain be viable for the brand in the long-term?Based on the approximate numbers in Table 3, Starbucks had a 6% share of stores in Australia before the closures; this has now fallen to a share below 2%. Even before the closures, Australasia represented only 1% of company sales (Table 2) and now the f igure is expected to be much lower. This may not make much commercial sense as it will be difficult to achieve economies of scale in terms of marketing and purchasing, and such small numbers are totally out of step with the clustering strategy adopted in its strongest markets -the US, Japan and China.However, it could also be argued that with Starbucks' strategy of global domination, it is unlikely that it will ever close its Australian business entirely. Whilst Starbucks' management have been keen to suggest that â€Å"this decision represents business challenges unique to the Australian market and in no way reflects the state of the Starbucks business in countries outside of the United States†, the US market has also suffered. By September 2008, 600 stores had closed (or were due for closure), with about 12,000 workers, or 7% of Starbucks' global workforce affected (Mintz, 2008).It should be noted that the situation in the US has only worsened as a result of the global fina ncial crisis. 6. So what went wrong? Opinions abound as to why Starbucks failed in Australia. Our research suggests there is some truth to many of these opinions. Whilst the troubled economy might seem an easy scapegoat, with people tightening their belts and eating out less, it is unlikely that this was the core problem as evidenced by the continuing growth of their competitors. Indeed, coffee is no longer considered a luxury item by many Australians, but rather an affordable part of their daily routine.Instead, there is substantial evidence to suggest a number of factors combined to bring about Starbucks' demise. 6. 1. Starbucks overestimated their points of differentiation and customer perceived value of their supplementary services â€Å"I just think the whole system, the way they serve, just didn't appeal to the culture we have here† Andrew Mackay, VP of the Australian Coffee Traders Association, in Martin (2008) Whilst there was initial curiosity and hype about Starbuck s, after trying it, many Australians quickly found that it failed to offer a particularly unique experience that was not offered by other chains or cafes.Given the strong established coffee culture and discerning palates of Australians, the core product – coffee – was not seen as particularly different from, say, a latte or short black from a good suburban barista, Gloria Jean's or Coffee Club. Its point of difference in Australia, where a coffee culture already existed, had to be in its supplementary or value-adding services – i. e. , its unique servicescape, engaging customer service, brand image and so on (Lovelock et al. , 2007).But was this worth a premium price, especially as the competition began replicating Starbucks in-store experience? Starbucks has since been harshly criticised by Australian consumers and the media. Their coffee has been variously described as ‘a watered down product', ‘gimmicky', and consisting of ‘buckets of milk'. These are not the labels you would choose to describe a coffee that aspires to be seen as a ‘gourmet' product. It has also been criticised for its uncompetitive pricing, even being described as â€Å"one of the most over-priced products the world has ever seen† (Martin, 2008).Even the idea of the third place has come under criticism – â€Å"why would you want to sit around a pretend lounge room drinking a weak and expensive coffee when you can go around the corner and have the real thing? † (Wailes, 2008). It seems that Starbucks' rapid expansion, its omnipresence, somewhat standardised store design and recent insistence on staff achieving various sales KPTs (key performance targets) such as serving ‘x' customers per hour, all combined to diminish the instore experience. The introduction of sales targets for front-line employees, for example, meant staff and baristas had less time to engage with customers.It began to stray too far from its roots and the very values upon which the brand was built. Some of these actions were forced upon Starbucks by emerging competitors seeking to imitate the brand, and thus gain a slice of the ever growing lifestyle coffee market. Starbucks' points of differentiation were systematically being eroded and, in a sense, the brand that taught the world that coffee is not a commodity was itself becoming one. 6. 2. Declining service quality The brand has also come under fire for declining customer service as it continued to expand.For example, the quality of baristas is said to have declined as Starbucks widened its pool of applicants in order to meet demand at new stores. Can a 17 year old high school student really compete with a boutique trained barista with a passion for coffee? By not offering a better experience and product than emerging direct competitors, Starbucks found itself undermined by countless high street cafes and other chains that were selling stronger brews at lower prices and often offering better or equal hospitality.Whilst they may have pioneered the idea of a ‘third place', it was an easy idea to copy, and even easier to better by offering superior coffee, ambience and service. Now, with so many coffee chains around, Starbucks have little point of differentiation, even wi-fi internet access has become commonplace across all types of cafe. Furthermore, while customers were offered promotional rewards for returning to Starbucks, the card-based scheme is no more sophisticated than equivalent me-too cards at Gloria Jean's, Coffee Club, Hudson's and many independent cafes.And as noted earlier, one of the things that set Starbucks apart from the competition – i. e. , acknowledging customers (often by name for regulars) within a few seconds of entering the store and seriously engaging with them, began to unravel when Starbucks imposed both customer service and sales targets for its cafes. The imposition of these targets plus an ever widening range an d complexity of coffees to remember and make to perfection, meant staff morale and inevitably customer service levels declined. In fact in the USA some staff were so disillusioned with the imposition of sales targets because it meant they simply didn't have time to engage with customers) they posted blogs openly stating that Starbucks had lost its way. Finally, it appears that Starbucks were not even delivering on their core promise of serving superior coffee in comfortable surroundings, thus justifying its premium price. By switching to vacuum packaged coffee, consumers are denied the store-filling aroma of the coffee beans. The switching of traditional coffee machines to automated espresso machines (which can make coffees 40% faster and move customers through the lines more quickly), has also resulted in a loss of ‘theatre' (Grove et al. 2000) for people wanting to see their coffee made that way and has also had implications for taste. In-store, it has been noted that there are fewer soft chairs and less carpeting, and Starbucks recently lost ground in the ‘service and surroundings' category of the Brand Keys 2007 Customer Loyalty Engagement Index (Cebrzynski, 2008). It seems that Starbucks is now less about the quality of the coffee, and is more about the convenience of faster service and being on every corner – whilst still charging a premium. 6. 3. Starbucks ignored some golden rules of international marketingIronically, it seems that the very thing that made Starbucks successful in the first place, its ability to adjust the original (European) business model and coffee tradition to local (US) conditions, is the thing that let it down. Whilst Starbucks has made minor changes to its menu in countries such as Japan and Saudi Arabia, it generally offers the same products all around the world. When the company came to Australia, it brought its ‘American' offering, simply bringing what worked in the US and applying it here, without rea lly understanding the local market.But with more than 235 ethnicities speaking more than 270 languages and dialects, companies wanting to get ahead in Australia need to be aware that they are not dealing with one homogeneous market. Unfortunately what worked in the US was â€Å"bitter, weak coffee augmented by huge quantities of milk and sweet flavoured syrups. Not so much coffee, as hot coffee-based smoothies†. For the Australian consumer raised on a diet of real espresso, this was always going to be a tough sell (Mescall, 2008) As McDonald's Australia chief executive Peter Bush noted, US retailers that have had trouble making it work in Australia (e. . , Starbucks, Denny's, Arby's, Taco Bell) are those that have â€Å"introduced formulae developed for US palates and for the US way of doing business . . . These formulae have, at best, modest relevance in Australia†. Peter Irvine, co-founder of Gloria Jean's, also noted that â€Å"US retailers often arrive in Australi a thinking the size of their overseas chains and the strength of their brands in other markets will make it easy for them to crack the local market. Their focus is on global domination rather than the needs of the local consumers†.Further, there is a strong sense in Australia of buying local, supporting the community, having relationships with the people you buy from, and supporting ethically-minded businesses. Starbucks clashed completely with that, whereas local stores can differentiate themselves as being local and non-corporate. Furthermore, some would argue that Starbucks has become a caricature of the American way of life and many Australians reject that iconography. Many are simply not interested in the ‘super-size' culture of the extra-large cups, nor want to be associated with a product that is constantly in the hands of movie stars. 6. 4.Expanding too quickly and forcing themselves upon an unwilling public In the US, Starbucks started in Seattle as a single sto re. In a nation bereft of a genuine cafe culture, that single store captured people's imagination, and soon became a second store, quickly followed by a third. Before long, Starbucks had become a demand-driven phenomenon, with everyone wanting a Starbucks in their local area. McDonald's grew exactly the same way in Australia, opening just one or two stores in each city – nowhere near enough to meet demand – thus creating an almost artificial scarcity, which created huge buzz around the brand experience.Krispy Kreme did the same. But when Starbucks opened in Australia, they immediately tried to impose themselves with multiple store openings in every city – adopting the US-model of expansion through store clusters. Australians were not given a chance to ‘discover' it. As Mescali (2008) points out â€Å"they took key sites, hung huge signs, made us order coffee in sizes and gave the coffees weird names. Starbucks said to us – ‘that's not how you drink coffee. This is how you drink coffee'†.They took the Coca-Cola strategy of being available wherever people looked, but this quickly led to market saturation. Their expansion did not hurt their competitors so much as themselves, and they found themselves cannibalising their own stores. Furthermore, by becoming too common, the company violated the economic principles of cultural scarcity and the novelty wore off. By having too many outlets, becoming too commercial and too widely used, it began to lose its initial appeal of status and exclusivity. It began to have a mass brand feel, certainly not the warm feeling of a neighbourhood cafe.Furthermore, they became more reliant on less affluent consumers who now, with a worsening economy, are spending less, making Starbucks more vulnerable to economic fluctuations. 6. 5. Entering late into a highly competitive market â€Å"In America, Starbucks is a state of mind. In Australia, it was simply another player. † Barry Urqu hart, quoted in Delaney (2008) From Day I1 Starbucks got off on the back foot. They lacked the first-mover advantage they had in the US and Asia, finding themselves the late entrant in an already very developed, sophisticated and competitive market.Indeed, the competitive landscape in the Australian retail coffee market is very different to that of other countries. Here, Starbucks found themselves competing with hundreds of independent cafes and speciality coffee chains (see Table 3), where the coffee was generally better and the staff knew their customers by name. Significantly, they were also the last of the major chains to gain a presence in Australia. 6. 6. Failing to communicate the brand Worldwide, Starbucks rarely employs above-the-Iine promotion, and this was also the case in Australia.Instead, they maintained that their stores are the core of the business and that they do not need to build the brand through advertising or promotion. Howard Shultz often preached, â€Å"Buil d the (Starbucks') brand one cup at a time,† that is, rely on the customer experience to generate word-of-mouth, loyalty and new business. But in a market as competitive as Australia, with a consumer whose palate is discerning and whose loyalty often lies with a specific barista, advertising and promotion was essential to communicate the Starbucks message.The issue is not so much about building awareness – which, at 90%, is high – but to communicate what the brand means and to give consumers reasons for patronising Starbucks. Their lack of advertising made this branding issue even worse, with many people unable to articulate why they should be loyal to Starbucks. At the same time, competitors were communicating their messages very effectively – McDonald's, for instance, is a heavy spending, award-winning, advertiser in the Australian market.Added to which, more subversive counter-messages were coming from those who saw in Starbucks a ‘brand bully' ri ding rough shod over the nuanced tastes and preferences of local cultures (Klein, 2000; Clark, 2008). In other words, a range of strong contrary messages were undermining Starbucks' own very limited communications. 6. 7. Unsustainable business model Starbucks' product line is limited primarily to coffee. Sometimes a new product idea will be developed, such as the Frappucino, but these tend to have limited product life cycles and/or are seasonal.For example, the Frappucino has traditionally made up 15% of (summer) sales, but recently sales have been down, suggesting that customers are already bored with it (Kiviat, 2008). Furthermore, in the instance where other products were offered, people failed to purchase them as they only really associate Starbucks with coffee and generally seek food elsewhere. This is a very different model to The Coffee Club which has much more of a cafe feel to it, or McDonald's which has a full range of breakfast and lunch/dinner items that can be complemen ted by a McCafe latte.Hence the average transaction value at Starbucks is lower than its competitors, and therefore more customers must pass through its doors to reach the sales and profit levels of its competitors. It also creates conflict with the Starbucks ethos of the third place (and allowing people to sit around for 30 minutes sipping lattes and reading, talking or surfing) versus the need to get people in and out quickly and not take up valuable ‘real estate' (which in itself means that the average Starbucks store needs to be much bigger than the average cafe).Unlike most of the other retail coffee chains, Starbucks does not use a franchise model, preferring to lease and fit-out its own outlets. This means more cash is being spent upfront, and in Starbucks' case, more debt accrued. But adopting a franchise model would have numerous other advantages than just minimising this. It would mean that local investors, with a good sense of the local market, put their own money i nto the business and take an active role in running it and shaping its direction. 7.What are the main lessons from this case study? Several key lessons emerge that should be of interest to both domestic and international marketers. 7. 1. Crossing international borders is risky and clearly Starbucks did not do their homework, or ignored their homework Well conceived market research involving both primary and secondary data, including qualitative and quantitative approaches, would have uncovered the extent of the ‘coffee culture' that existed in 2000 when Starbucks entered the Australian market.It seems inconceivable that Starbucks management, or at least its Australian representatives, were not sufficiently apprised of the extent to which many consumers were already well acculturated in terms of buying and consuming European styles of coffees such as short black, lattes and cappuccinos, nor the extent to which many customers were in fact loyal to their suburban cafe or competit ive brands such as Gloria Jean's. As a late market entrant, Starbucks clearly failed to do thorough homework on the market before entry – this is a failure in terms of due diligence.Alternatively, they chose to ignore the messages that were coming from any due diligence that they had undertaken. This may or may not have been due to some arrogance on the part of Starbucks, or due to the fact that they considered they had a strong global brand which would meet with universal acceptance. An example of where Starbucks did do its homework, and act on it, was in France when it entered that market in 2006, establishing a cafe in the middle of Paris.Research had clearly shown the American way of consuming and socialising over a coffee was an anathema to many French, so Starbucks held back from entering the French market and when they finally entered it was with great trepidation, expanding at a very slow pace and testing the market at every step. 7. 2. â€Å"Think global but act loc al† This familiar maxim in international marketing should be well understood. While Starbucks had brand awareness as a major global brand, it failed to adapt the product and the customer experience to many mature coffee drinkers in Australia.As noted earlier, all the evidence suggests that it simply tried to transplant the American experience into the Australian market without any adaptation. In particular, it failed to adapt either its core product or its supplementary services to create the intimacy, personalisation and familiarity that is associated with established boutique cafes in Australia. 7. 3. Establish a differential advantage and then strive to sustain it A question of strategy that Starbucks perhaps failed to address was, â€Å"Is our product differentiation sustainable in the long term and does it ontinue to justify a price premium? † As noted earlier, it can be argued that the core product in this case, that is the coffee itself, is essentially a commodit y, and that Starbucks' coffee, according to many consumers, was no different to the competition, and in some cases inferior. Then Starbucks' points of difference clearly revolved around its brand image and supplementary services. It was these supplementary services, such as its unique servicescape and excellent customer service, that they used to justify a premium price. However, as competitors (e. g. The Coffee Club) quickly imitated the ‘Starbucks experience' (i. e. , their supplementary services, ambiance, etc. ), by providing premium coffee and an intimate casual experience, Starbucks' value proposition began to fade. In other words, their key points of difference could be easily imitated and were not sustainable. Faced with this scenario, the onus was on management to re-fresh and evolve any lingering differential advantage that Starbucks might have had or, at the very least, give customers reasons to continue patronising Starbucks through its communications. 7. 4.Don't l ose sight of what made you successful in the first place As more and more competitors emerged, both individual cafes and chains such as Gloria Jean's and The Coffee Club, competitive pressures forced Starbucks to impose rigid sales targets on their frontline staff including baristas to increase store productivity. However, the imposition of these KPTs and the pressure to serve more customers more quickly meant that Starbucks forgot the very thing that made it unique in the early days, namely, to provide a customer experience in an intimate casual setting that set it aside from competitors.As more pressure was placed on staff to have higher throughput, this meant that baristas and other employees had little time to engage with customers. In other words, Starbucks forgot about the very things that made it unique in the first place. This is akin to the Wheel of Retailing hypothesis (Hollander, 1960) where a no-frills retailer gradually moves upmarket in terms of variety of product, pri ce and more services and within several years finds itself competing with the more established premium supermarkets that were the very competitors that they tried to distance themselves from in the first place.The only difference with Starbucks is that it reversed the direction of the Wheel – by gradually moving downmarket it brought itself into direct competition with cheaper operators and lost sight of what made it successful in the first place. 7. 5. Consider the viability of the business model It has to be questioned whether the Starbucks' business model is viable in the long term, or even the medium term. A business model that uses a premium price to justify the excessive floor space and elaborate servicescape, and allows customers to sit in this environment for an hour sipping one latte, has to be questioned.Given that Starbucks do not have the array of products that, say, a McDonald's might have and, as documented earlier in this case, therefore do not generate the sam e sales volumes and revenues, it is hard to see how the Starbucks' model is financially viable. 8. Conclusion In summary, it appears on all the evidence that Starbucks not only misjudged the Australian coffee culture but also misjudged the extent of the competition, and failed to adapt its offering to the local market.Furthermore, with the advent of high quality barista training, the availability of premium coffee beans and the technology to produce a high quality cup of coffee (at a modest cost), sole operators who knew their customers by name, were able to set up business as viable competitors. 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