Starbucks has grown significantly in years and is an exemplary model for others to follow. Starbucks has been facing difficulties throughout its growth. They have been able to tackle all its problems and come out swinging, each time better than before. The major part of Starbucks’ success depends upon Starbucks organizational structure.
Amongst the several different types of organizational structures, Starbucks follows the one which is the best for them.
Starbucks: A Global Power Brand
Starbucks, a very popular American brand that came into being in 1971 and has been serving coffee at more than 28000 locations. These locations have no geographical limitation. The brand is present across 75 countries all over the world. Currently, they are selling personalized coffees.
The merchandise that includes books, mugs, bottles, accessories, coffee and tea brewing equipment and Verismo system by Starbucks.
Learn about Starbucks Mission and Vision Statements
The Starbucks Organizational Structure
Starbucks organizational structure is a matrix structure and is one of the best successful organizational structure examples. A matrix structure is the combination of more than one organizational structures. The authority in matrix structure flows from more than one ways.
We’ve discussed Starbucks SWOT (Strengths, Weaknesses, Opportunities, and Threats) in an earlier post.
The employees answer to more than one managers and transfer of messages takes place in more than one ways. 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.
In the functional structure part of Starbucks organizational structure, Starbucks has different groups of employees taking care of different functions. The human resource department, finance department, marketing department, sales department and so on. This structure is followed at the top hierarchy of the firm. The policies they make are applicable to all Starbucks cafes.
Divisional structure based on Geography and Product
The geographical divisional structure forms three main regional divisions including China and Asia-Pacific,America, and Europe, Middle East, Russia, and Africa. Moreover, in the United States, the divisions are Western, Northwest, Southeast and Northeast.
Each division of Starbucks organizational structure has its own senior vice president who controls things in that division and is answerable to central management. This way, each lower level manager reports to two heads, the geographical head, and the functional head. Each geographical division is flexible enough to design the products according to the preferences of people in that area. Therefore, different countries offer different product line.
Product based divisional structure is also a part of Starbucks organizational structure. This structure divides employees into different groups in a way that each group works for a different product. 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.
Starbucks organizational structure also includes brand based divisional structure.
There are several brands owned by Starbucks: Starbucks and Seattle’s best coffee which produce coffee and other beverages. 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. With the help of this structure, each division can focus on different products to make them better.
Starbucks organizational structure plays a big role in its products’ development and innovation.
Team structure is mostly followed on the lower levels of the organization, for example in the café’s cooking and delivery systems. This team structure of the Starbucks organizational structure helps provide customers with better and specialized service.
Check out our compilation of catchy coffee slogans.
At the time of the rapid growth of the company is 2007, the management’s focus changed from customer satisfaction to global expansion. Starbucks’ sales took a drop in 2007 because their focus went away from customer satisfaction.
However, after Howard Schultz resumed as the CEO in 2008, he changed the organizational structure to make customer satisfaction their priority again. Employees’ teams were given better training, functional divisions were formed, and product based & geographic divisional structure was introduced.
Advantages of Starbucks Organizational Structure
The matrix structure followed by Starbucks has advantages of all other organizational structures that come under it. First, the geographic divisions make it possible for the firm to meet the specialized needs of different customers in different countries.
For example, people in some countries like strong coffee while those in other countries like the lighter version. Secondly, team working makes employees motivated and more productive as they get a sense of ownership and belonging. 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 divisions make the working smoother, faster and reliable, as specialists people are doing the jobs, and the chances of them making errors are minimal. Finally, the matrix structure allows the firm to utilize its human resources efficiently by hiring them for more than one tasks.
Disadvantages of Starbucks Organizational Structure
Just like the advantages, the matrix structure of Starbucks also accumulates the disadvantages of all other organizational structures under it. 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.
This duplication of authority can be harmful and confusing for employees. As they have to decide about whose orders to follow and whose work should be given priority. The functional structure means each department is working for a different function.
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.
The Leadership Threat
The geographic divisional structure can make the heads in divisions so powerful that they might start making big decisions according to their will. They might start threatening the central control too, if there exists a conflict between the divisions and central control.
Moreover, the team structure might create unhealthy competition amongst firms. The teams might want other teams to do bad instead of doing better themselves. 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.