The Organizational Structure of Starbucks Coffee Company - Essay Example

? Organizational Structure Organizational Structure Describe the organizational structure of your selected organization. Compare and contrast that structure with two different organizational structures. The organizational structure of Starbucks Coffee Company has been modified last year to accelerate its growth strategy and meet the demands of future global opportunities. According to Howard Schultz, Chairman, President and CEO of Starbucks, their structure is in consonance with their “multi-brand, multi-channel strategy” (DeGrande, 2011). DeGrande goes on further to state that presently, Starbucks’ retail business is structured as Starbucks U.S. and Starbucks Coffee International (SCI). Starbucks has a three-region organizational structure namely: 1) China and Asia Pacific which includes all Asia Pacific markets and China; 2) Americas which is composed of the United States, Canada, Mexico and Latin America; and 3) EMEA which includes Europe, U.K., Middle East, Russia and Africa (DeGrande, 2011). DeGrande further describes that each region is headed by a president who oversees the company-operated retail business and works closely with the licensed and joint venture partners in each market (2011). All regional presidents report directly to Schultz. Each region coordinates with the Starbucks Global Consumer Products and Foodservice Team (DeGrande, 2011). Starbucks operates through licensed stores instead of franchise-operated stores. Starbucks Corporation controls all licensed stores which includes all food items sold. Each Starbucks store is headed by a store manager and under him are shift supervisors who acts as managers when the store manager is out (Schreiner, n.d.). All the other lower level employees, known as “baristas” report to the shift supervisors. The organizational structure of Starbucks may be differentiated with that of McDonald’s. Unlike Starbucks, McDonald’s uses the franchising system as the basis of its organizational structure. The strategic center of the franchisees is the McDonald’s headquarters which controls the operations of the entire network (Chapter 11 - Organizational structure and controls, n.d.). At the restaurant level, the organizational structure is headed by the general manager, assisted by the restaurant manager (Shetty, 2011). Under the restaurant managers are the assistant managers 1 & 2, to whom the shift running manager reports. Under the shift running manager are the floor manager, staff training crew and the other crew members. The Starbucks organizational structure may also be compared and contrasted with that of Unilever’s structure. Unlike Starbucks which has designed its structure on a per region basis, Unilever grouped its worldwide operations according to two global divisions, namely, the foods and home and personal care divisions (Chapter 11 - Organizational structure and controls, n.d.). However, a similarity in both companies’ structure can be identified in that there are also regional presidents who are responsible for the operations of each division in each region. The regions of the foods division are Asia, Europe, North America, Africa, Middle East and Turkey and Latin America. This structure may be described as the worldwide product divisional structure where the decision-making is centralized in the worldwide division headquarters (Chapter 11 - Organizational structure and controls, n.d.). • Evaluate how organizational functions (such as marketing, finance, human resources, and operations) influence and determine the organizational structure of your selected organization. The operation of any Starbucks store, as dictated by its organizational design is highly centralized. This will assure Starbucks customers that they will enjoy the same quality of coffee in any Starbucks outlet anywhere in the world. All products sold in Starbucks stores are standardized in that all product offerings in each store are the same. The Global Consumer Products and Food service Team make sure that the products are available at more than 100,000 stores around the world. One of the main reasons why Starbucks has opposed the franchising system structure is due to the fact that they would like to control the quality of their products and to retain the company culture that they have built through the years. With its current structure, they are able to achieve this goal. International expansion is undertaken by forging joint ventures and licensed agreements with prominent local retailers of a particular country. The marketing strategy of Starbucks center on the word-of-mouth advertising which is practiced worldwide. In terms of human resources, Starbucks organizational structure considers even its lowest level employees as partners and are therefore considered as instrumental towards achieving success. Quarterly open forums are held in every geographic region to keep the employees updated on the latest information about the company. Starbucks offer standardized training programs for its employees to ensure that the customers always have a positive experience whenever they visit any Starbucks store. Employee benefits are standardized among all Starbucks outlets. The organizational design of Starbucks have helped accomplished a deeper knowledge of the markets which Starbucks serve. International growth is forecasted to improve with the strong leaderships of the regional presidents (Schultz, 2011). On the financial side, Starbucks is able to control its costs and expenses better because the suppliers are centralized under the main headquarters. In this manner, the company is able to develop economies of scale which is advantageous for a global strategy. Respect for the local cultures and traditions of the communities where Starbucks exist is supported by the organizational structure of Starbucks which is based on the geographical location of its stores. • Explain how organizational design (such as geographic, functional, customer-based, product, service, hybrid, matrix, marketing channels, and departmentalization) helps determine which structure best suits your selected organization’s needs. Being an international company, the structure of Starbucks which is divided into regions best suits its strategy of accelerating its growth in the global market. The flow of information from the customers to the baristas and eventually to the corporate level is streamlined, giving management a better feedback system. Since the licensed stores are closely monitored by the regional presidents, the company’s strategy of offering standardized products and services across regions is effectively undertaken with the current organizational structure. Decisions are centralized; thus, integration and coordination is better achieved across countries. An organizational design which is geographically-based such as Starbucks is highly recommended for companies which operate worldwide. Starbucks operates in 55 markets outside the United States. This structure is often adapted by companies which are growing rapidly in the international market because they could better adjust their strategies to meet the highly competitive environment in each specific region. With the slowdown in the economy and a saturation in the coffee market in the US, it is but right that Starbucks seek to expand its market to the other regions of the world. An organizational structure based on geography best suits the company’s strategy of “multi-brand, multi-channel strategy”. References Chapter 11 - Organizational structure and controls. (n.d.). Retrieved January 4, 2012, from asso.nordnet.fr: http://asso.nordnet.fr/adreg/hitt%20et%20al%20chapitre%2011%20structure%20et%20c ontrole.pdf DeGrande, J. (2011, July 11). Starbucks announces new leadership structure to accelerate global growth. Retrieved January 3, 2012, from news.starbucks.com Web site: http://news.starbucks.com/article_display.cfm?article_id=547 Schreiner, E. (n.d.). Starbucks & its organizational design. Retrieved January 3, 2012, from smallbusiness.chron.com: http://smallbusiness.chron.com/starbucks-its-organizational- design-12857.html Schultz, H. (2011, November 3). Starbucks' CEO discusses Q4 2011 results - earnings call transcript . Retrieved January 4, 2012, from seekingalpha.com Web site: http://seekingalpha.com/article/305239-starbucks-ceo-discusses-q4-2011-results- earnings-call-transcript Shetty, N. (2011, January 31). Organizational structure of McDonald's. 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