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. Teams are used in different parts of Starbucks Coffee’s organizational structure. The matrix structure followed by Starbucks has advantages of all other organizational structures that come under it. The policies they make are applicable to all Starbucks cafes. This feature of the corporate structure enables Starbucks to focus on product development. Starbucks has been facing difficulties throughout its growth. We’ve discussed Starbucks SWOT (Strengths, Weaknesses, Opportunities, and Threats) in an earlier post. it will enable the company to align our leaders closer to their customers and partners. The functional divisions make the working smoother, faster and reliable, as specialists people are doing the jobs, and the chances of them making errors are minimal. This is your conventional business with a business division, showcasing office, client benefit office, and so on. These locations have no geographical limitation. The company’s development depends on team-based factors and associated human resource management strategies. The basic principle of the structure is that the company provides decision making power to each manager. Starbucks Corporation’s organizational structure has many characteristics. How Organizational Functions Influence and Determine Organizational Structure of Starbucks Corporation Similar to the case of other multinational organizations, the company employs its structural characteristics to ensure that its operations are streamlined and properly managed. 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 . For example, the corporate HR department implements policies applicable to all of the company’s cafés. This structure fits within conventional typologies of organizational structures. Read this Business Case Study and over 89,000 other research documents. Its Advantages and Disadvantages, Adaptation Level Phenomenon – understanding its importance, Risk Matrix – Factors of a risk matrix and how to implement it, Prioritization Matrix – Different types and how to use a prioritization matrix, Divisional structure based on Geography and Product, Advantages of Starbucks Organizational Structure, Disadvantages of Starbucks Organizational Structure. These departments are most pronounced at the top levels of Starbucks’s corporate structure, such as at the corporate headquarters. However, after Howard Schultz resumed as the CEO in 2008, he changed the organizational structure to make customer satisfaction their priority again. The failure of the matrix structure in the 1970s caused a sharp decline in popularity. Starbucks Coffee’s corporate structure involves geographic divisions, which are based on physical location of operations. Just like the advantages, the matrix structure of Starbucks also accumulates the disadvantages of all other organizational structures under it. This team structure of the Starbucks organizational structure helps provide customers with better and specialized service. Each geographical division is flexible enough to design the products according to the preferences of people in that area. The merchandise that includes books, mugs, bottles, accessories, coffee and tea brewing equipment and Verismo system by Starbucks. Sakhartov, A. V. (2016). Lee, J. Y., Kozlenkova, I. V., & Palmatier, R. W. (2015). What are the advantages and disadvantage of Starbucks degree of vertical integration and channel expansion? Advantages of Starbucks Organizational Structure The matrix structure followed by Starbucks has advantages of all other organizational structures that come under it. The company has three regional divisions for the global market: (1) Americas, (2) China and Asia-Pacific, (3) Europe, Middle East, and Africa. However, teams are most visible at the lowest organizational levels, particularly at the coffeehouses. This site uses Akismet to reduce spam. Organizational structure Starbucks organization structure is unique just like it coffee, it is customized to the company’s needs and abilities. Therefore, different countries offer different product line. By 2007, the company was expanding rapidly, such that it shifted focus away from customers and toward strategic global expansion. Such adjustment makes Starbucks Corporation’s organizational structure specific to the needs of the business. Geographic divisions. Flat Decentralized Organizational structure in Starbucks improved the communication and customer responsiveness that results in faster product delivery and increased productivity. 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. This decline was worsened because of the lack of focus on customer experience. The human resource department, finance department, marketing department, sales department and so on. Product based divisional structure is also a part of Starbucks organizational structure. There are several brands owned by Starbucks: Starbucks and Seattle’s best coffee which produce coffee and other beverages. This article may not be reproduced, distributed, or mirrored without written permission from Panmore Institute and its author/s. Secondly, team working makes employees motivated and more productive as they get a sense of ownership and belonging. These organizational functions are referred to as: functional, divisional, network, and matrix organizations. The Business Structure And Organizational Structure Of Starbucks By empowering employees, managers ensured their satisfaction and as they performed well, they could establish cross-functional teams in which each department within Starbucks will know the details of business activities in … When Howard Schultz resumed the CEO position in 2008, he changed Starbucks Coffee’s corporate structure to bring focus back onto customer experience. ... For a more immediate example, take a multinational organization like Starbucks. Starbucks has a matrix organizational structure, which is a hybrid mixture of different features from the basic types of organizational structure. Starbucks has been successful in their operation for many reasons because management is cognizant that customers need to feel welcomed and relaxed based on the facility layout and location. We cover stories to empower you with the knowledge, tools & advice to help you thrive in life and business. At Starbucks the Formal Group has a formal organizational structure and involves a flat structure that is Board of Directors, Managers and staff. First, the geographic divisions make it possible for the firm to meet the specialized needs of different customers in different countries. The other different types of organizational structures that combine to from Starbucks organizational structure are geographic divisional structure, functional structure, team structure and product based divisional structure. Team structure is mostly followed on the lower levels of the organization, for example in the café’s cooking and delivery systems. Starbucks organizational structure also includes brand based divisional structure. The company recognizes the importance of strategic alignment involving various facets of the business. Managerial Decisions. Employees’ teams were given better training, functional divisions were formed, and product based & geographic divisional structure was introduced. Check out our compilation of catchy coffee slogans. Matrix is a highly decentralized whereas bureaucratic is highly centralized. The Organization structure of Starbucks is similar to most large groups of its size. Press Esc to cancel. Also, in the U.S. market, Starbucks Coffee’s organizational structure involves further geographic divisions: (a) Western, (b) Northwest, (c) Southeast, and (d) Northeast. In this article, we are going to review the advantages and disadvantages of each organizational structure: Functional, Projectized, and Matrix. Starbucks organizational structure is a traditional functional structure. As the largest coffeehouse chain in the world, the company maintains its industry leadership partly through the appropriateness of its corporate structure. In this case, for example, aligning the corporate structure with trends in the coffee and coffeehouse industries stabilizes Starbucks’s market presence and market share. 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. This feature of Starbucks’s corporate structure enables the business to provide effective and efficient service to consumers. Moreover, in the United States, the divisions are Western, Northwest, Southeast and Northeast. Teams. An efficient frontier in organization design: Organizational structure as a determinant of exploration and exploitation. The functional structure means each department is working for a different function. The corporate culture of Starbucks encourages collaborative efforts through effective communication. Excerpt from Case Study : Matrix Structure for Organizations Within an increasingly complex commercial environment, the manifestation of matrix organisations is increasing. The teams might want other teams to do bad instead of doing better themselves. Currently, they are selling personalized coffees. Such development provides competitiveness that the business needs, especially in considering the threats identified in the SWOT analysis of Starbucks Corporation. However, the fundamentals of the structure come of a mix of other basic organization structures. This type of understanding in organizational cultural behavior promotes achievement and consistency for Starbucks. The end results of employing the mechanistic organizational structure has made Starbucks's to produce high quality and standardized goods and services ad also enhanced excellent customer services and enhanced communication both internally and externally. For example, the company has an HR department, a finance department and a marketing department. create more capacity for their field teams The brand is present across 75 countries all over the world. Learn about Starbucks Mission and Vision Statements. Advantages of Level Decentralized Structure In Starbucks the Managers and subordinates likewise are working with communications better. What is a Triple Net Lease? Advantages of Starbucks Organizational Structure. The structural characteristics identified are the ones that matter most at the corporate level, involving Starbucks’s headquarters and executive direction. The functional hierarchy feature of Starbucks Coffee’s organizational structure refers to grouping based on business function. In a nutshell, Starbucks Corporation has adopted both divisional and matrix organizational cultures to administer and control 6,800 retail and specialty stores. With the help of this structure, each division can focus on different products to make them better. At the time of the rapid growth of the company is 2007, the management’s focus changed from customer satisfaction to global expansion. In this article, we will discuss what a matrix organizational structure is as well as the advantages and … Understanding the benefits and downsides of a matrix organizational structure can help you determine if this type of structure is best for your company. This structure is followed at the top hierarchy of the firm. They have definitive levels of authority for each level of management (Irani, 2013). Valuing employees and their contribution. Selecting Corporate Structure for Diversified Firms. Starbucks Corporation (Starbucks Coffee Company) uses its organizational structure to facilitate business development in the global coffee industry. 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. Csaszar, F. A. The organization is controlled by a Board of Directors who functions from the Group HQ based in Seattle, Washington. The geographic divisional structure can make the heads in divisions so powerful that they might start making big decisions according to their will. Structural marketing: Using organizational structure to achieve marketing objectives. Starbucks organizational structure plays a big role in its products’ development and innovation. Starbucks Corporation reforms its organizational structure over time. These divisions address product lines. The following are the main features of Starbucks Coffee’s corporate structure: Functional Hierarchy. New regional divisions were created and teams at the company’s cafés were given better training. In this way, each local manager reports to at least two superiors: the geographic head (e.g. 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. Organizational Structure of Starbucks Research Paper on Organizational Environment Starbucks In-Depth Analysis Assignment Starbucks, as defined earlier is one of the leading coffee retail corporations across the globe. The geographical organizational structure is common in large, multinational companies, but it may also suit some medium-sized businesses. The main benefits obtained from the implementation of this structure are fewer employee-employees and employee-employers conflicts increased productivity, and performance. The organizational structure of Starbucks is decentralized in nature. Structure of Organization; Advantages of Functional Organizational Structure. At the cafés, baristas clearly communicate with each other to fulfill orders. Global Milk brands in 2020 – What makes them successful? For GDPR compliance, we do not use personally identifiable information to serve ads in the EU and the EEA. Starbucks has a matrix organizational structure, which is a hybrid mixture of different features from the basic types of organizational structure. 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. Thus, Starbucks Corporations organizational culture supports efficiency in business processes, which contributes to quality of service, positive customer experience, and business cost-effectiveness. 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. This way, each lower level manager reports to two heads, the geographical head, and the functional head. They have been able to tackle all its problems and come out swinging, each time better than before. Functional groups are responsible for the organization-wide development and implementation of Starbucks Corporation’s generic competitive strategy and intensive growth strategies. For example, the person heading the IT department will have the education and skill necessary to shoulder this … Moreover, the team structure might create unhealthy competition amongst firms. Around the country it is split into regional jurisdictions with … See our Privacy Policy page to find out more about cookies or to switch them off. A company’s organizational or corporate structure influences all areas of the business, including management and leadership, communication, change strategies and management, and other variables critical to business success. Starbucks, a very popular American brand that came into being in 1971 and has been serving coffee at more than 28000 locations. In this case, the structural design involves intersections among various components of the business. Corporate HR Manager). Type above and press Enter to search. Its development history suggests that the company will continue acquiring more firms in the future to support its growth strategies. Also, they collaborate as teams to make the order fulfillment process efficient. This characteristic is hierarchical. President of Europe, Middle East, and Africa Operations) and the functional head (e.g. Collaboration and Communication. In the functional structure part of Starbucks organizational structure, Starbucks has different groups of employees taking care of different functions. We use cookies for website functionality and to combat advertising fraud. Amongst the several different types of organizational structures, Starbucks follows the one which is the best for them. For example, Starbucks has divisions for merchandise goods such as mugs and books, bakery items such as sandwiches and a division for coffee & other beverages. 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. They might start threatening the central control too, if there exists a conflict between the divisions and central control. Copyright by Panmore Institute - All rights reserved. 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 … There are several advantages to using the matrix organizational structure. (Draft, 2012, p.78). They also sell fresh food that includes sandwiches, pastries, oatmeal, salads and so on. The authority in matrix structure flows from more than one ways. 1. This structure divides employees into different groups in a way that each group works for a different product. Starbucks’ sales took a drop in 2007 because their focus went away from customer satisfaction. By having Level decentralized framework, it will save you money, time and increased the communication process and decision making inside the business. We’re a strategy, business & marketing resource. Starbucks Coffee Company supports its competitive advantages through the characteristics of its corporate structure. Starbucks Coffee Company supports its competitive advantages through the characteristics of its corporate structure. Starbucks organizational structure is a matrix structure and is one of the best successful organizational structure examples. Different organizational structures that combine to form Starbuck’s matrix structure are divisional structure, … Learn how your comment data is processed. This duplication of authority can be harmful and confusing for employees. In. 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. Team effectiveness is a major determinant of the financial performance of franchised locations and company-owned coffeehouses. At Starbucks employees are referred to as partners and they are taken care of by the company via competitive compensation packages. 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. This feature of Starbucks’s corporate structure enables closer managerial support for geographic needs. ... Starbucks Organizational Structure 763 Words | 4 Pages. The empire filters back: Consumption, production, and the politics of Starbucks Coffee. Third, the product-based division makes it possible for each division to focus on their product and work on their development and innovation. The functional hierarchy of the corporate structure facilitates top-down monitoring and control, with the CEO at the top. A matrix structure gives an organization a flat structure while bureaucratic structure makes the entire structure of an entity flat. Starbucks organizational structure can be classified as divisional and the business is divided into the following divisions: 1. For example, people in some countries like strong coffee while those in other countries like the lighter version. For example, in each café, the company has teams organized to deliver goods and service to customers. In this way, the company develops and innovates its products with support through its organizational structure. 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. The current corporate structure of Starbucks is a result of reform to improve customer experience and business financial performance. 18+ Risks and Disadvantages of Technology, How to Build Your Business Identity on a Tight Budget. The executive or the team leader has the knowledge and experience of that particular field. Types of Organization Structure are: Functional: Likewise, normally called a bureaucratic authoritative structure, the utilitarian structure partitions the organization in view of strength. Geographic Divisions. Each division head is given flexibility in adjusting strategies and policies to suit specific market conditions. If you want to learn more about organizational structure types in Project Management you should check out our 100% Online and Self-Paced Project Management Professional Certification Training . The employees answer to more than one managers and transfer of messages takes place in more than one ways. Best Green Tea Brands in the world in 2020: What makes them the best? A functional organizational structure is one in which the organizations guidelines are followed to the letter. Managers and subordinates in Starbucks stay closer to their customers. The Advantages and Disadvantage of Starbucks. The major part of Starbucks’ success depends upon Starbucks organizational structure. The geographical divisional structure forms three main regional divisions including China and Asia-Pacific,America, and Europe, Middle East, Russia, and Africa. (2013). Corporate structure, ownership and the likelihood of innovation. Starbucks evolves to ensure that its organizational structure matches current business needs. Howard Schultz, President, Starbucks Corporation When considering the organizational structure for his new corporation, Schultz had four basic organizational functions he could have chosen. Also, different levels of the organization are responsible for maintaining the integrity of the corporate structure. Claver-Cortes, E., Pertusa-Ortega, E. M., & Molina-Azorín, J. F. (2012). 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 primary reason for the firm’s success is its structure. Starbucks’s corporate culture influences how such team effectiveness is achieved. Starbucks slogans have also played a big part in brand building. The matrix structure followed by Starbucks has advantages of all other organizational structures that come under it. At the Branches the Formal Team was made up of Managers and Subordinates which both shared common specialties. However, the ones enumerated above are the most significant in shaping strategic management decisions in the business. The matrix organisational structure; a case study Starbucks... Starbucks Is The Biggest Most Valuable Fast Food Brand Worldwide. A matrix structure is the combination of more than one organizational structures. How knowledge management mediates the relationship between environment and organizational structure. Save my name, email, and website in this browser for the next time I comment. Starbucks has grown significantly in years and is an exemplary model for others to follow. Read More More about Organizational Culture Of Starbucks Enter your email address below to subscribe to my newsletter. There are several other key advantages as well: Collaboration between different departments Finally, the matrix structure allows the firm to utilize its human resources efficiently by hiring them for more than one tasks. Through the effective design and development of its organizational structure, Starbucks Corporation keeps growing despite competitive pressure from these firms in the international market. Each division of Starbucks organizational structure has its own senior vice president who controls things in that division and is answerable to central management. The competition amongst teams is beneficial for the firm till it is healthy, but after that, it can prove to be detrimental for the firm. It is expected that the company’s future organizational structure will involve additional product-based divisions to account for further diversification. First, the geographic divisions make it possible for the firm to meet the specialized needs of different customers in different countries. Starbucks SWOT (Strengths, Weaknesses, Opportunities, Matrix Structure: Examples, Definition, Advantages and Disadvantages, Hierarchical Structure vs Flat Structure: Pros and Cons, Types of Branding: Learn more about branding and its significance. Love, J. H., Ashcroft, B., & Dunlop, S. (1996). Starbucks has product-based divisions in its organizational structure. Smith, M. D. (1996). The Advantages and Disadvantage of Starbucks The Matrix Organizational Structure: A Case Study Starbucks. For example, the coffee chain offers stock options and health … Liao, C., Chuang, S. H., & To, P. L. (2011). For example, the company has a division for coffee and related products, another division for baked goods, and another division for merchandise like mugs. One imagines that implementing Starbucks Pickup will require crossing a number of organizational boundaries and will create a certain amount of … Product-based Divisions. 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. However, the business experienced significant decline in sales in that year. Starbucks Coffee Company SWOT Analysis & Recommendations, Starbucks Corporation’s Organizational Culture & Its Characteristics, Starbucks Coffee’s Mission Statement & Vision Statement (An Analysis), Starbucks Coffee’s Stakeholders: A CSR Analysis, Starbucks Corporation’s Marketing Mix (4Ps) Analysis, Starbucks Coffee Five Forces Analysis (Porter’s Model) & Recommendations, Starbucks Coffee PESTEL/PESTLE Analysis & Recommendations, Starbucks’s Generic Strategy & Intensive Growth Strategies, Starbucks Coffee's Operations Management: 10 Decisions, Productivity, McDonald’s Organizational Structure & Its Characteristics - An Analysis, McDonald’s Five Forces Analysis (Porter’s Model) & Recommendations, McDonald’s Mission Statement & Vision Statement (An Analysis), Burger King’s Organizational Structure Analysis, Hard Rock Cafe Inc. 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. As they have to decide about whose orders to follow and whose work should be given priority. The matrix structure followed by Starbucks coffee is one of the best organizational structure examples. A matrix structure is, strictly speaking, where we have multiple bosses – more than one formal reporting line, whether solid or dotted. Organizational Structure. Each geographic division has a senior executive. 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