Organizational Analysis: Starbucks - Essay Example

? Organizational Analysis Ahmed Alrashdi ACE 623, Organization and Administration in Adult and Community Education November 10, Organizational Analysis: Starbucks I. Identifying the Organization: A. Name of organization: Starbucks Corporation, to focus on Starbucks Indiana Commons. It should be noted however, that analysis of a specific Starbucks outlet, such as Indiana Commons would still be patterned and sourced from the entire corporation since all policies, regulations, trainings and compliance and conformity to mission, vision, and values are adhered to using the same standards. One could not simply analyze Starbucks Indiana Commons as disconnected from the entire organization since it sourced all policies, regulations, and standards from one main source. B. Type of organization: Starbucks Corporation is a non-educational organization that offers specialty coffee through strategically located branches all over the world. Its standard industry classification code is 5812 which is defined as “eating places (which includes) establishments primarily engaged in the retail sale of prepared food and drinks for on-premise or immediate consumption. Caterers and industrial and institutional food service establishments are also included in this industry” (Marigold Technologies, n.d., p. 1). It is therefore also classified as a global business concern that caters to different people around the world. According to the information disclosed in nyjobsource.com (2012), the total number of Starbucks stores as of April 2012 is “17,420 locations worldwide with 12,570 in the Americas” (par. 1). C. Classification according to Blau and Scott From Blau and Scott’s types of organizations, it could be deduced that Starbucks is classified as a business concern where external customers are served from offering specialty coffee and other food products in various strategic locations. D. Funding source(s) In a report published online by Obi (2009), it was explicitly disclosed that “Starbucks’ primary source of financing comes from proceeds from issuance of commercial papers” (Obi, 2009). From a review of its financial statements, it was specifically indicated that operating activities provide funds sources amounting to as much as “$1.6 billion for fiscal year 2011” (Starbucks Corporate, 2012, p. 36). The noted operating activities specifically mean selling coffee and other products offered in Starbucks store outlets. E. Brief history of the organization including major changes and developments The first Starbucks store was reportedly opened in 1971 at Seattle’s Pike Place Market (Starbucks Corporation, 2012). Having been in operations for 41 years now, Starbucks has grown into a global organization with 54 coffee blends. Aside from coffee, other drink options include Frappuccino, chocolate beverages, smoothies, Tazo teas, and Refreshers (Starbucks, 2012). Likewise, there are an array of food products such as sandwiches, pastries, breakfast offerings, yogurt, ice cream and petite treats. The opening of other store locations within the United States had been unprecedented since marking 17 new stores in 1987 to 1,412 ten years after that. To date, specifically as of July 1, 2012, its official website revealed a total of 17,651 stores has been established and is currently operational globally. For Indiana Commons, this particular store outlet was opened five or six years ago, as revealed by Liz, the Shift Supervisor that one successfully interviewed. Thereby, when compared to the entire organization, the Starbucks Indiana Commons is relatively new. It is likewise noteworthy that Starbucks has grown, not only in terms of offering more coffee varieties and food products or in the number of stores opened around the world; but more so, in the number of rewards garnered through the years. The following rewards have been recently acknowledged and received, as shown in Table 1: Table 1: Recent Rewards, Starbucks Corporation Reward Awarded By Year “No. 1 Best Coffee” Fast Food and Quick Refreshment categories Zagat’s Survey of National Chain Restaurants 2009?2011 No. 1 Most Popular Quick Refreshment Chain Zagat’s Survey of National Chain Restaurants 2009?2011 One of “The 100 Best Companies to Work For” Fortune 1998–2000, 2002–2012 One of the “Most Admired Companies in America” One of the “World’s 50 Most Innovative Companies” Fortune Fast Company 2003–2012 2012 One of the “World’s Most Ethical Companies” Ethisphere 2007-2012 One of the “100 Best Corporate Citizens” Corporate Responsibility /Business Ethics 2000-2012 “Sustainability Design Award” Global Green USA 2011 “Most Ethical Company, European Coffee Industry” Allegra Strategies 2009-2011 “Business Person of the Year,” Howard Schultz, Starbucks chairman, president and chief executive officer Fortune 2011 Source: Starbucks Corporation: Starbucks Company Recognition, 2012 From all the awards, it could be contended that the awards focused on Starbucks being noted as one of the most ethical companies due to its adherence to ethical standards; as well as being admired for offering the best coffee and its ability to provide quick refreshments that are apparently most appreciated by clients. F. Purpose of the organization The official website of Starbucks defines its mission statement as follows: “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” (Starbucks, 2012). To achieve the defined mission, the organization abides by clearly defined principles categorized according to their high quality of coffee; manifesting passion and encouraging diversity in their partners; boldly envisioning the upliftment of the spirits and lives of its customers; creating an inviting and humane atmosphere of each of its stores; and ensuring that their shareholders are duly rewarded (Starbucks Corporation, 2012). G. Size of the organization G.1 Number of Employees From the information gathered from Macro Axis, Inc. (2012), the total number of employees of Starbucks was noted as 149,000. (Macro Axis, Inc., 2012). Dividing this total number to the total number of stores (17,651), one would generate a rough average of 8 to 10 employees per store. This is a fairly reasonable number since as one enters a Starbucks store (one is very near the Indiana Commons store located at 2125 Oakland Avenue, Indiana, Pennsylvania) customers would normally see one or two store personnel in charge of serving the customer (where one could directly be responsible for preparing the coffee; one takes the order and runs the cash register; one could be the store manager; two (2) personnel could be in charge of backroom, one security personnel; and others in supplies inventory (2) and accounting, marketing and finance (2). Likewise, from the results of the interview, one learned that Starbucks Indiana Commons have three Shift Supervisors, Liz (the person one interviewed), Megan, and Amanda. Joni was noted as the Manager and whose time schedule at Indiana starts at 5:30 in the morning and ends at 2:00 pm. Therefore, in her absence, any of the Shift Supervisors addressed relevant concerns relating to administrative and managerial issues. G.2 Programs There are diverse programs that are being implemented by Starbucks including the Forest Carbon Programs, community programs, the Starbucks Foundation program, a program that supports farmers and communities which produce and grow coffee beans, the corporate social responsibility program, programs for business (foodservice, office coffee, licensed stores, and Card Corporate Sales programs), for wellness, Youth Leadership Grants, and various community service programs, just to name a few (Starbucks, 2012). G.3 Store Locations From their country locations, it could be noted that Starbucks have expanded in the general country areas such as Asia Pacific; China; Europe, Middle East and Africa (EMEA), and countries classified under International Co-operated such as Australia, Brazil, Canada, among others (Starbucks, 2012). In the United States alone, it was noted that as of January 2011, there were 11,131 stores. From the recently opened stores, the following were specifically identified from the organization’s timeline: in 2011, stores in Guatemala were opened; and in 2012 stores in “Costa Rica, Curacao, Finland, Morocco and Norway” (Starbucks Corporation, 2012) were opened. II. Rational Systems Perspective A. How the Organization is Supposed to Function The entire organization is governed by its CEO, Howard Schultz who administers a wide range of managerial functions and departments ranging from the Chief Information Officer, Marketing, Chief Financial Officer, Legal, Supply Chain Operations, Partner Resources, Public Affairs, Global Development, Channel Development, Global Coffee, Strategy, International Operations, and those spearheading operations in the Americas, China and the Pacific, and EMEA, among others (The Official Board, 2012). There are 10 members of the Board of Directors and as much as 39 identifiable executives (The Official Board, 2012). In its simple organizational chart, the structure is vividly illustrated below: Figure 1: Organizational Chart, Starbucks Corporation Source: Liquiori, n.d. In an earlier published report, it was explicitly stated that “the firm is organized as a matrix between functional and product divisions…Because of the overlap in these divisions (e.g., Marketing and Retail North America), many employees report to two division heads. Notes Troy Alstead, the company’s Director of International Planning and Finance, “we have avoided a hierarchical organization structure, and therefore we have no formal organization chart” (Starbucks Corporation, 1997, p. 2). When the Shift Supervisor at Indiana Commons was asked on the store outlet’s organizational chart, Liz was actually not aware that an organizational chart exists for their particular store outlet. The rationale for this could be explained from the manner by which authority was vested from the President of the Americas region, as to be explained in the next section. The fact likewise corroborates the statement above that the organization purposely avoided a hierarchical organizational structure, as such, no formal organizational chart has been clearly disseminated and communicated within specific Starbucks outlets that were subsequently opened. B. How Decision Making Occurs in the Organization As viewed from the organizational chart, it could be deduced that the paramount decision-maker is Howard Schultz, the CEO and President of the organization. However, from the lines drawn, he significantly delegates authorities to respective executive officers who represent different functions and areas of responsibilities. As emphasized in the recent published report: “Starbucks retail business is currently structured as Starbucks U.S. and Starbucks Coffee International (SCI), which encompasses 54 markets outside the United States. Starbucks will move to a new three-region organizational structure: China and Asia Pacific: All Asia Pacific markets and China Americas: United States, Canada, Mexico and Latin America EMEA: Europe, U.K., Middle East, Russia and Africa A president for each region will oversee the company-operated retail business, working closely with both the licensed and joint-venture business partners in each market. They will also work closely with Starbucks Global Consumer Products and Foodservice team to continue building out Starbucks brands and channels in each region” (Starbucks Corporation, 2011). Thus, for Starbucks at Indiana Commons, it would be understood that the store manager would be reporting to the President of the Americas region. Joni, as noted to be the Store Manager at Indiana Commons could have been officially delegated to manage and govern the store’s operations and assign Shift Supervisors in her absence. Since the outlet is opened from 6:00 am to 9:00 pm, therefore, one shift supervisor was assigned per eight-hour shift on a rotation basis to cover the times when the manager is not on duty. This would ensure that all managerial functions are duly addressed even in the absence of the Store Manager. In fact, to address inquiries regarding the current organizational analysis paper, one’s concerns were effectively addressed by Liz, the Shift Supervisor from 1 pm to 9 pm. Decisions pertaining to the operations of the Indiana Commons store would be made by the store manager subject to the policies explicitly disseminated by the head office and the regional office. Any concern that is not within the conditions stipulated in the company policies and procedures should be elevated to the next higher authority. Using the scenarios, and the new multi-brand, multi-channel strategy, the decision-making process could be deemed a combination of democratic and authoritarian, or participative and centralized at the same time. This simply means that although operations within the store level are under the jurisdiction and governance of the store manager, the implication is that this pattern would depend on the kind of decision-making scenarios that would be made. For routine and everyday operating procedure, the set of policies and procedures communicated across the line is expected to be adhered to. C. Nature of the Relationship with Parent Organization using Schroeder and Burch Schroeder’s classification system is not applicable in this organization. D. Maximizing Efficiency and Effectiveness through the Organizational Structure The structure and the strategies designed and implemented in the organization significantly maximize both efficiency and effectiveness. The financial success of each Starbucks store depends on the ability of the store managers to minimize costs and to maximize revenues. As such, potentials of its human resources and other internal resources (funds, assets, and systems) are inherently utilized to the optimum level of competencies to ensure that prospects for growth and profits are achieved, as planned. The new structure that delegates leaders in various regions where Starbucks operate enhance efficiency in terms of enabling streamlining of focus in opportunities that pertain to that particular region. Likewise, threats or risks are also mitigated and appropriate addressed, as needed. III. Natural Systems Perspective A. Evidence of Climate through Artifacts The organizational culture of Starbucks is deemed to be unique and supportive of the distinct talent and skills of its employees. It could be observed from communications in their official website the employees are actually termed partners. In so doing, as partners, employees perceive equal importance to productively contribute towards organizational goals. As stipulated, “the policy at Starbucks towards employees is laid-back and supportive. They are encouraged to think of themselves as partners in the business. Schultz believes that happy employees are the key to competitiveness and growth” (Starbucks Corporation, 1997, p. 7). Employees don distinct prescribed dress codes such as black polo with collar tucked in a black or khaki pants and with black or brown shoes. A green iconic apron that contains the logo of Starbucks could be seen worn over the shirt by baristas and front-line personnel. This prescribed dress code is likewise seen and applicable at Starbucks Indiana Commons. The Shift Supervisors are identified from the rest of the Baristas due to their lack of apron; but are likewise wearing the same dress code of black polo with collar and their shirts were tucked in khaki pants. The Starbucks Indiana Commons store is distinctly differentiated from other stores due to the cozy atmosphere that is created. Tables and chairs that could comfortably fit pairs or groups of customers are effectively designed for the purpose of inviting customers to spend time for various purposes: a quick sip of their aromatic coffee, a fast nibble of their quickly served food items with any of the offered drinks, or to spend longer times with friends to chat, conduct a group meeting, and even work on one’s homework or office presentation, as needed. There are offered mugs and memorable items for sale, including a wide-array of coffee beans put in display to be savored by appreciating clientele. All of these are supportive of the culture of Starbucks that encourages camaraderie and good interpersonal relationships. At Starbucks Indiana Commons, customers could appreciate how beautifully the store is decorated for Christmas. When one came in for the interview, there were several mugs that were put on display, candy canes, and all sort of gifts all over the store. They even have Christmas CD albums displayed right in front of the register and happy, jolly songs were played in the background as clients savor their cups of coffee and enjoy the food that they ordered. B. Evidence of Climate through Espoused Values The espoused values of Starbucks which is expressly seen and communicated online through their official website are expected to be echoed to various store outlets. All relevant information required to be learned of the organization (from its historical growth, to store locations, products (coffee and menu), investor relations, corporate responsibility, financial information and other issues and concerns can be easily accessed and viewed. The implication of this is that customers would be enticed to view and learn more comprehensively on the organization in its entirety, regardless of location or time. This therefore manifests the organization’s commitment for the principle of uplifting of the spirits and lives of its customer (Starbucks Corporation: Mission Statement, 2012). The value of transparency and good governance is therefore being exemplified. In fact, during the interview, when asked about communtiy programs that Starbucks Indiana Commons initiate, Liz indicated that their outlet participated in Back to School programs, as well as organizing talent shows where one is currently planned for December 2012. Likewise, the store displays include hanging stockings and encouraging customers to donate whatever they could afford, in cash or in kind; and the proceeds would be given to the American Cancer Association. C. Evidence of Culture through Underlying Assumptions The fact that Starbucks has garnered awards and accolades as one of the world’s most ethical companies is due to their paramount commitment for corporate social responsibility and sharing through community service. For instance, in response to the imminent need to address climate change and global warming, the Global Responsibility Manager of Starbucks has reported that the organization allegedly assists Sumatran farmers respond to climate change, to wit: “with the help of our partners at Conservation International, it’s our goal to help farmers address these challenges as they arise through our C.A.F.E. Practices program. Helping farmers thrive in the midst of a changing climate is fundamental to our mission statement, and helps to secure the future of the thing we are most passionate about: incredible coffee” (Starbucks Corporation: Helping Sumatran Farmers, 2012, par. 3). This fact was also corroborated by Liz, the Shift Supervisor at Indiana Commons who emphasized that they do not just buy coffee from farmers, but they hire these farmers to grow coffee for the organization. In doing so, the organization helps the entire community and supports the pledge for social responsibility and community development. IV. Open Systems Perspective A. Resource providers 1. Tangible resources The most important resource or raw material being carefully selected by Starbucks is its coffee beans. Likewise, part of the organization’s tangible resources are the company’s fixed assets, including furniture and fixtures, the coffee maker, the buildings and land, (which could be purchased or rented), and current assets (inventory items which include their coffee, and ingredients for other food products). The coffee mugs on display, as well as other store equipment, furniture and fixtures, office and kitchen supplies, all form part of the tangible resources. 2. Intangible resources The corporate name and brand established by Starbucks as a premium source of specialty coffee has been regarded as one of its crucial intangible resources. Likewise, as customers have started to develop loyalty and profess continued support to their various products, the rewards and accolades receipt become part of the intangible resources of the organization. B. Regulators Being a business concern that offers food products, the government agencies that regulate and regularly monitor Starbuck’s operations include the Food and Drug Association (FDA), a division of the U.S. Department of Health and Human Services (DHHS); the Office of Consumer Affairs & Business Regulation (OCABR); the Equal Employment Opportunity Commission (EEOC) of the U.S. Department of Labor; the Occupational Safety and Health Administration (OSHA); the IRS, and the Environmental Protection Agency (EPA). As a service and global organization, the raw materials that they use, as well as their waste and disposal systems are being monitored and regulated. Likewise, agencies such as the FDA and OCABR ensures the safety and protection of the customers in terms of the adherence to the highest standards of quality for the raw materials used, including water that goes to their products. The EPA monitors waste disposal including potentials for recycling coffee cups and other recyclable materials. The EEOC and OSHA govern concerns regarding employee hiring, maintenance, and development; as well as compliance to occupational safety standards within the organization. Finally, the IRS monitors that the organization complies with paying their taxes to generate enough revenues for the government. C. Competitors/collaborators From among the most pressing competitors of Starbucks, the following are observed and noted: McDonalds, Dunkin Donuts, Yum Brands, Darden Restaurants. In terms of collaborators, it could be noted that Starbucks has effectively established 20 collaborators as explicitly identified in their official website through Our Relationships (Starbucks Corporation, 2012). These collaborators are organizations that affiliate with Starbucks in terms of assisting them in community service, ethical sourcing, environmental stewardship, and assisting in community involvement. For instance, as noted by Liz, the Shift Supervisor, during the interview, the proceeds of the donations for the Christmas stocking drive at Indiana Commons would be donated to the American Cancer Association. Therefore, American Cancer Association is a collaborator in the area of community service. In this regard, Starbucks benefit from generating a positive corporate image due to focusing on social responsibility and the recipients of the donation through collaborators would be beneficial to them as they continue to serve community members through soliciting support from organizations such as Starbucks. D. Being Served Public/Stakeholders Name Nature of Relationship Strategies to Enhance the Relationship Resource Providers Coffee Producers Worldwide Can be strengthened Finding alternative sources from cheaper but good quality coffee producers Regulators FDA, OCABR, EEOC, OSHA, EPA, IRS Can be strengthened Being proactive and adhering to standards, as required Competitors McDonalds, Dunkin Donuts, Yum Brands, Darden Restaurants Can be diminished Offering competitive prices and other products that cater to their target markets Collaborators Abyssinian Development Corporation; American Red Cross; Business for Social Responsibility (BSR); Calvert Foundation; and 15 more organizations (Starbucks Corporation: Our Relationships, 2012) Can be strengthened Intensified collaboration through more projects and programs that serve the needs of local communities Actual Consumers Young Adults to Adults; average to high income; both genders Can be strengthened Provision of loyalty rewards, discounts, and freebies Potential Consumers Health conscious customers Can be improved Luring them to try the products by emphasizing health benefits and conformity to high quality of raw materials used The chart indicates the various stakeholders and the public that Starbucks regularly interacts with. As disclosed, the public is composed of resource providers, regulators, collaborators, even competitors, as well as current and potential customers. Specific names of these stakeholders were likewise identified according to their respective categories. Likewise, the nature of relationship is seen to be strengthened, be diminished, or be improved. Finally, strategies for enhancing the relationships were specifically noted as potential means to forge stronger bonds with crucial stakeholders, or addressing the need to be more competitive and enhancing the organization’s competitive advantage, as required. V. Recommendations for change From the information that were presented, it could be deduced that inasmuch as Starbucks has exhibited leadership and exemplary corporate image through manifesting commitment and dedication to sharing its blessings to the community, organizations such as Starbucks could still have room for improvement for the better. From the section that evaluated actual and potential consumers, it could be inferred that the nature of relationship with these identified stakeholders and publics could still be strengthen and improved. For instance, although Starbucks have identified good suppliers of their raw materials, including exemplary quality of coffee beans, this should not preclude them from searching for other alternative sources, especially from countries that they have established relationships with. Their relationships with various collaborators could also be strengthened by supporting the programs and endeavors of these organizations and solicit ways to further share their financial success. As for its relationship with its competitors, Starbucks could work on diminishing the pressing competitive thrusts through a more comprehensive examination of the competitors’ strategies and work to either counteract these strategies and offer better alternatives to their customers through offering pricing strategies (discounts) or freebies and promotional items. Finally, having identified their current and potential customers, Starbucks must work on continuing to satisfy the needs of their customers through improvements in their locations (conducive atmosphere for spending interpersonal relationships) and enticing new clientele through emphasizing health and nutritional benefits of their food products. Overall, Starbucks, as an entire organization, has become a legend in offering a wide array of especially brewed coffee which could be savored within their stores that are easily accessible in various strategic locations worldwide. By being true to their mission and through embodying the principles and values that were revealed, all of its established locations including Starbucks Indiana Commons would be expected to emulate the excellence and professionalism exhibited by the entire company and to continue serving coffee lovers way into the future. References Starbucks. (2012, June 6). Retrieved from nyjobsource.com: http://nyjobsource.com/starbucks.html Liquiori, T. (n.d.). Starbucks Corporation. Retrieved from thomasliquori.me: http://www.thomasliquori.me/Word%20Files/Starbucks.htm Macro Axis, Inc. (2012). Starbucks Number of Employees. Retrieved from http://www.macroaxis.com/invest/ratio/SBUX--Number_of_Employees Marigold Technologies. (n.d.). SIC Code 5812 - Eating Places Mailing List. Retrieved from http://www.marigoldtech.com/lists/sic.php?sic-code=5812 Obi, M. (2009). Annual Report: Starbucks Corporation. 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