Organizational Structure of Starbucks - Essay Example

Starbucks’ Organizational Structure Introduction Starbucks is one of the most successful firms in the United s. The firm is a multinational firm, operating in all the six continents. Since its inception, the firm has changed its organizational structure a number of times (The Associated Press, 2011). This is always geared towards making its business better and customer focused. Of late, Starbucks has changed its organizational structure to meet its most important need; customer satisfaction. The firm, according to The Associated Press (2011), has moved into a matrix organizational structure which will help the firm to better utilize its resources and to make it easier and better for the firm to satisfy its customers. Starbucks’s reorganization of its structure has come in the trail of its rapid growth. With rapid growth, the firm has encountered more challenges in satisfying its customers and this has increased the concern on how the firm will operate in the future. To deal with these new challenges, the firm, under the leadership of Howard Schultz, has deiced to take a matrix structure. A matrix organizational structure is considered to be the best organizational structure since it helps the organization to better utilize its resources (Galbraith, 2008). In a matrix organizational structure such as found in Starbucks, all resources, especially human resources, are not fixed on one function but are loosely attached so that they can be deployed to be used in any part of the organization when they are needed there (Simms, 2008). Starbucks has employed this structure, to go align with its new needs for human resources. The matrix structure in Starbucks is implemented over the functional structure which forms the chassis of Starbucks’ structure. The Starbucks is in contrast to that of its competitor, MacDonald’s (Torresjan, 2014). MacDonald’s is a fast food restaurant that sells fast food as well as coffee and is also based in the US (Jargon, 2013). The firm uses a hierarchal structure headed at the top by a chief executive officer who oversees the firms (Torresjan, 2014). According to (Macdonlads.com, 2014) the CEO Don Thompson and oversees all of MacDonalds business across the world. However, although the MacDonald’s organizational structure is different from that is Starbucks by taking up a hierarchical structure, it is also similar to the one for Starbucks in that it also takes a functional structure where various functions at certain levels are given to the different people (The Associated Press, 2011). However, the main difference is the reporting line where in the MacDonald’s structure, employees have on reporting line as opposed to the case in the Starbucks structure. In the Starbucks case, the employees may have multiple reporting lines due to the matrix organizational structure of the organization. Tim Hortons is a coffee and donuts firm that is based in Ontario, Canada and was stated in Ontario in 1964 (Tim Hortons, 2014). The firm is a competition for Starbucks in that is sells the same products in the same markets that Starbucks operates. The firm has a functional organizational structure where the functions of its operations are divided into different divisions (Prnewswire, 2014). The organizational structure in Tim Hortons is both related to and distinct from the one at Starbucks in a number of ways. First, the structure at Tim Hortons does not take advantage of the cross-functional nature of the matrix design as is the case in Starbucks (Lau, 2010). The functional structure makes it easier for Tim Hortons to operate in an international market but limits its resources. How different functions of Starbucks have determined its structure The various functions such as marketing, finance, human resources, and operation have affected the structure of Starbucks in a very fundamental way. As has already been noted, the firm changed its structure so that is could meet the needs of a fast growing firm. As Starbucks has grown its marketing functions have shifted and there is a need to ensure that the requirements of the consumers are met in a more effective way. Starbucks realized that it was having issues with regard to meeting the need s of the customers. This was evidenced by the almost failing warm breakfast product which Starbucks almost discontinued in 2008. The firm realized that its size, while giving it an advantage, was also giving it some disadvantages in trying to serve the market. Operations processes are also another factor that has determined the organizational and management structure of Starbucks. The firm operates in an international market and this brings in new management problems. To deal with the issue of geographical barriers, Starbucks uses a functional/divisional structure as the chassis of its structure (Miller, 2012). This means that the matrix structure if the Starbucks’ organizations structure is built on this functional structure. Matrix structure works best for organizations that are not too much distributed geographically. For an organization that is as geographically distributed as Starbucks, the need to make sure that these resources are well coordinated has led to the firm having to tweak its matrix structure to also include the functional and divisional structure that helps in coordinating the various geographical areas where the firm operates. This is very important for the firm in order to deal with local markets. Organizational design Organizational design is very important in determining how an organization is going to organize its resources to meet its needs. If for instance an organization is built in a way that is geared to focus in customer needs, the organization will have to take a design that is aligned with this. Organizations that are built on the team spirit for instance are likely to take a functional structure where each functions is given a team to deal with that particular projects. For an organization such as Starbucks, it its focus on integrating resources leads to the firm having to use a modified matrix structure in order to curb both geographical barriers as well as make sure that the organization meets its needs. As Daft (2010) says, the organizational structure could be the determining factor on if the firm will gain success or failure. A firm that is able to determine the best organizational structure for its business has better chances of succeeding. Regardless of the strategy of a business, the ultimate determining factor for a business success is the structure it uses and how this structure aligns with this business strategy. References: Daft, L.R. (2010). Organization Theory and Design. London, UK: Cengage Learning. Galbraith, R.J. (2008). Designing Matrix Organizations that Actually Work: How IBM, Proctor & Gamble and Others Design for Success. Hoboken, NJ: John Wiley & Sons. Simms, H. (2008). Organisational Behaviour and Change Management. New York, NY: Select Knowledge Limited. Jargon, J. (2013, April 10). McDonalds Tackles Repair of Broken Service . Retrieved April 30, 2014, from http://online.wsj.com/news/articles/SB10001424127887324010704578414901710175648 Lau, K. (2010, June 08). Time Hortons Serves up a cup f Sustainablity. Retrieved April 30, 2014, from IT World Canada: http://www.itworldcanada.com/article/tim-hortons-serves-up-a-cup-of-sustainability/41652 Miller, C. (2012, March 12). A Changed Starbucks. A Changed C.E.O. Retrieved April 30, 2014, from http://www.nytimes.com/2011/03/13/business/13coffee.html?pagewanted=all Prnewswire. (2014, April 30). Tim Hortons Inc. announces changes to strengthen and streamline executive management structure . Retrieved April 30, 2014, from www.prnewswire.com: http://www.prnewswire.com/news-releases/tim-hortons-inc-announces-changes-to-strengthen-and-streamline-executive-management-structure-57556177.html The Associated Press. (2011, July 11). Starbucks Reorganizes for Growth. Retrieved April, 30, 2014, from http://www.nytimes.com/2011/07/12/business/starbucks-reorganizes-top-management.html?_r=0 Torresjan, S. (2014, March 21). Old McDonald’s. Retrieved April 30, 2014, from http://www.nytimes.com/2014/01/22/opinion/old-mcdonalds.html Macdonlads.com. (2014, April). Don Thompson: President and Chief Executive Officer. Retrieved April 30, 2014, from Macdonlads.com: http://www.aboutmcdonalds.com/mcd/our_company/leadership/don_thompson.html Tirm Hortons. (2014). Corporate Profile. Retrieved April 30, 2014, from www.timhortons.com/ca/en/about/profile.html: http://www.timhortons.com/ca/en/about/profile.html References Read More