Organizational Structure. Corporate HR Manager). Starbucks Coffee Company supports its competitive advantages through the characteristics of its corporate structure. First, the geographic divisions make it possible for the firm to meet the specialized needs of different customers in different countries. Enter your email address below to subscribe to my newsletter. ... Starbucks Organizational Structure 763 Words | 4 Pages. These locations have no geographical limitation. Each geographic division has a senior executive. At the Branches the Formal Team was made up of Managers and Subordinates which both shared common specialties. Howard Schultz, President, Starbucks Corporation When considering the organizational structure for his new corporation, Schultz had four basic organizational functions he could have chosen. One benefit of the matrix structure is that it allows cross-collaboration between staff and departments that may not always have opportunities to work together. Also, different levels of the organization are responsible for maintaining the integrity of the corporate structure. Teams are used in different parts of Starbucks Coffee’s organizational structure. For example, the corporate HR department implements policies applicable to all of the company’s cafés. In a nutshell, Starbucks Corporation has adopted both divisional and matrix organizational cultures to administer and control 6,800 retail and specialty stores. For example, people in some countries like strong coffee while those in other countries like the lighter version. What are the advantages and disadvantage of Starbucks degree of vertical integration and channel expansion? Collaboration and Communication. The major part of Starbucks’ success depends upon Starbucks organizational structure. Advantages of Starbucks Organizational Structure. The company competes against large and small coffeehouse businesses, as well as food service firms like McDonald’s, Dunkin’ Donuts, Wendy’s, and Burger King. The following are the main features of Starbucks Coffee’s corporate structure: Functional Hierarchy. At the time of the rapid growth of the company is 2007, the management’s focus changed from customer satisfaction to global expansion. These departments are most pronounced at the top levels of Starbucks’s corporate structure, such as at the corporate headquarters. These competitive advantages are essential in interacting with the industry environment, which involves the strong force of competition shown in the Porter’s Five Forces analysis of Starbucks Corporation. The current corporate structure of Starbucks is a result of reform to improve customer experience and business financial performance. However, teams are most visible at the lowest organizational levels, particularly at the coffeehouses. They might start threatening the central control too, if there exists a conflict between the divisions and central control. Starbucks’ sales took a drop in 2007 because their focus went away from customer satisfaction. Moreover, in the United States, the divisions are Western, Northwest, Southeast and Northeast. Starbucks slogans have also played a big part in brand building. Type above and press Enter to search. Secondly, team working makes employees motivated and more productive as they get a sense of ownership and belonging. A matrix structure gives an organization a flat structure while bureaucratic structure makes the entire structure of an entity flat. President of Europe, Middle East, and Africa Operations) and the functional head (e.g. Press Esc to cancel. This team structure of the Starbucks organizational structure helps provide customers with better and specialized service. Its development history suggests that the company will continue acquiring more firms in the future to support its growth strategies. Product based divisional structure is also a part of Starbucks organizational structure. Corporate structure, ownership and the likelihood of innovation. The geographic divisional structure can make the heads in divisions so powerful that they might start making big decisions according to their will. (Draft, 2012, p.78). The employees answer to more than one managers and transfer of messages takes place in more than one ways. The matrix organisational structure; a case study Starbucks... Starbucks Is The Biggest Most Valuable Fast Food Brand Worldwide. Starbucks operations are divided into the following geographic divisions or segments: Americas (US, Canada and Latin America) Europe, Middle East and Africa (EMEA) China/Asia Pacific (CAP) Channel Development All other segments 2. A lack of co-ordination amongst them can be harmful to the firm as one would not know what the other is up to and what the other needs. Starbucks’s corporate culture influences how such team effectiveness is achieved. Starbucks organizational structure is a traditional functional structure. The basic principle of the structure is that the company provides decision making power to each manager. Team effectiveness is a major determinant of the financial performance of franchised locations and company-owned coffeehouses. For example, the company adjusted its corporate structure upon expanding its business through the acquisition of other firms, such as Ethos Water and Seattle’s Best Coffee. The organization is controlled by a Board of Directors who functions from the Group HQ based in Seattle, Washington. Starbucks organizational structure is a matrix structure and is one of the best successful organizational structure examples. Starbucks has been facing difficulties throughout its growth. For example, in each café, the company has teams organized to deliver goods and service to customers. The teams might want other teams to do bad instead of doing better themselves. A matrix structure is the combination of more than one organizational structures. Organizational Structure of Starbucks Starbucks uses a mechanistic structure as a contemporary design Starbucks Organizational Culture and Environment Starbucks Corporation is considered as one of the leading coffee house chains that offer best quality coffee to its customers. As part of the Company’s recently introduced Transformation Agenda, Starbucks communicated several organizational structure changes to its partners (employees) that will better focus efforts on enhancing the customer experience. Starbucks organizational structure also includes brand based divisional structure. Structural marketing: Using organizational structure to achieve marketing objectives. This feature of Starbucks’s corporate structure enables the business to provide effective and efficient service to consumers. The matrix structure followed by Starbucks has advantages of all other organizational structures that come under it. For example, the person heading the IT department will have the education and skill necessary to shoulder this … These competitive advantages are essential in interacting with the industry environment, which involves the strong force of competition shown in the Porter’s Five Forces analysis of Starbucks Corporation . Thus, Starbucks Corporations organizational culture supports efficiency in business processes, which contributes to quality of service, positive customer experience, and business cost-effectiveness. Managerial Decisions. As they have to decide about whose orders to follow and whose work should be given priority. Such adjustment makes Starbucks Corporation’s organizational structure specific to the needs of the business. The organizational structure of Starbucks is decentralized in nature. In this article, we will discuss what a matrix organizational structure is as well as the advantages and … Starbucks evolves to ensure that its organizational structure matches current business needs. Global Milk brands in 2020 – What makes them successful? Selecting Corporate Structure for Diversified Firms. We cover stories to empower you with the knowledge, tools & advice to help you thrive in life and business. With the help of this structure, each division can focus on different products to make them better. In. First, the matrix structure creates a situation where an employee has to answer to two bosses at the same time, functional and geographic heads here. Moreover, the team structure might create unhealthy competition amongst firms. 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Operations Management & Productivity, Wendy’s Organizational Structure Characteristics (Analysis), Microsoft Corporation’s Organizational Structure & Its Characteristics (An Analysis), Costco Wholesale’s Organizational Structure Analysis, McDonald’s PESTEL/PESTLE Analysis & Recommendations, Sony Corporation’s Organizational Structure Pros & Cons, Porter’s Five Forces analysis of Starbucks Corporation, Starbucks Corporation’s generic competitive strategy and intensive growth strategies, Starbucks Corporation – Corporate Governance. When Howard Schultz resumed the CEO position in 2008, he changed Starbucks Coffee’s corporate structure to bring focus back onto customer experience. In this article, we are going to review the advantages and disadvantages of each organizational structure: Functional, Projectized, and Matrix. Geographic Divisions. The matrix structure followed by Starbucks has advantages of all other organizational structures that come under it. It is expected that the company’s future organizational structure will involve additional product-based divisions to account for further diversification. There are several other key advantages as well: Collaboration between different departments We’re a strategy, business & marketing resource. Liao, C., Chuang, S. H., & To, P. L. (2011). Starbucks wishes to grow revenue by 10% each year by satisfying customers by all means and having employees to be involved and contribute in making Starbucks a better company. Employees’ teams were given better training, functional divisions were formed, and product based & geographic divisional structure was introduced. Smith, M. D. (1996). New regional divisions were created and teams at the company’s cafés were given better training. Just like the advantages, the matrix structure of Starbucks also accumulates the disadvantages of all other organizational structures under it. The human resource department, finance department, marketing department, sales department and so on. However, the business experienced significant decline in sales in that year. This feature of the corporate structure enables Starbucks to focus on product development. Flat Decentralized Organizational structure in Starbucks improved the communication and customer responsiveness that results in faster product delivery and increased productivity. Advantages of Level Decentralized Structure In Starbucks the Managers and subordinates likewise are working with communications better. At the cafés, baristas clearly communicate with each other to fulfill orders. Around the country it is split into regional jurisdictions with … They also sell fresh food that includes sandwiches, pastries, oatmeal, salads and so on. For example, the coffee chain offers stock options and health … Starbucks has a matrix organizational structure, which is a hybrid mixture of different features from the basic types of organizational structure. Learn about Starbucks Mission and Vision Statements. Currently, they are selling personalized coffees. The company’s development depends on team-based factors and associated human resource management strategies. Read More More about Organizational Culture Of Starbucks The Starbucks corporation is an exemplary model of an organization that has successfully made it to the top through their ability to effectively change management, create guidelines for the decision making process through their vision, and finally has become a pioneer offering corporate benefits … it will enable the company to align our leaders closer to their customers and partners. Therefore, different countries offer different product line. The functional hierarchy of the corporate structure facilitates top-down monitoring and control, with the CEO at the top. Advantages of Starbucks Organizational Structure The matrix structure followed by Starbucks has advantages of all other organizational structures that come under it. There are several advantages to using the matrix organizational structure. Starbucks Coffee’s corporate structure involves geographic divisions, which are based on physical location of operations. The main conceptual benefits of the new matrix organization, such as flexibility and efficiency, are the actual flaws in the conflict because the organization is immersed in the new equipment shortage. Starbucks has grown significantly in years and is an exemplary model for others to follow. Starbucks Corporation reforms its organizational structure over time. How Organizational Functions Influence and Determine Organizational Structure of Starbucks Corporation We use cookies for website functionality and to combat advertising fraud. Starbucks has a matrix organizational structure, which is a hybrid mixture of different features from the basic types of organizational structure. (2013). Amongst the several different types of organizational structures, Starbucks follows the one which is the best for them. Teams. 18+ Risks and Disadvantages of Technology, How to Build Your Business Identity on a Tight Budget. A functional organizational structure is one in which the organizations guidelines are followed to the letter. As the largest coffeehouse chain in the world, the company maintains its industry leadership partly through the appropriateness of its corporate structure. This article may not be reproduced, distributed, or mirrored without written permission from Panmore Institute and its author/s. What is a Triple Net Lease? Valuing employees and their contribution. Starbucks has product-based divisions in its organizational structure. The brand is present across 75 countries all over the world. An efficient frontier in organization design: Organizational structure as a determinant of exploration and exploitation. Starbucks, a very popular American brand that came into being in 1971 and has been serving coffee at more than 28000 locations. For example, the company’s product-based divisions intersect with functional groups and geographic divisions, which in turn intersect with other parts of the organization. Organizational structure Starbucks organization structure is unique just like it coffee, it is customized to the company’s needs and abilities. Teavana that produces a variety of teas, La Boulange that produces French baked items, Evolution Fresh which produces juices and Tazo tea which produces teas, herbs, and spices. In this way, the company develops and innovates its products with support through its organizational structure.