BBPP1103 Principles of Management: Starbucks Organizational Structures

This report provides an analysis of organizational structures, with a specific focus on Starbucks Coffee and its global business operations. It discusses various organizational structures, including functional, geographic, matrix, and product-based structures, and evaluates the advantages and disadvantages of each in the context of Starbucks' business model. The report highlights how Starbucks utilizes these structures to manage its operations across different regions and product lines, emphasizing the importance of adapting strategies to suit local market conditions and business needs. The analysis considers the impact of these structures on management, leadership, communication, and strategic implementation within the organization. Desklib offers this report, along with a wealth of other solved assignments and study resources, to aid students in their academic pursuits.

Principles of Management
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Running head: PRINCIPLES OF MANAGEMENT

PRINCIPLES OF MANAGEMENT
Contents
Introduction...........................................................................................................................................2
Organisational structures......................................................................................................................2
Evaluation of Geographic structure.......................................................................................................4
Evaluation of Matrix structure...............................................................................................................6
Evaluation of Product structure.............................................................................................................8
Conclusion...........................................................................................................................................10
References...........................................................................................................................................11
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Introduction
An organisational structure is an illustration that specifies the manner business activities are
directed in an organisation to attain a defined goal and purpose and these activities mostly
consist of roles, responsibilities and regulations within a firm. Also the organisational
structure determines the manner information and line of command flows between different
levels of hierarchy in a firm so as to ensure clarity and transparency of decisions at different
levels. In this report the different types of organisational structures has been discussed with
specific focus on Starbucks Coffee which is renowned across the world for their high quality
of roasted coffee beans and high passion for coffee products. Starbucks offers their customers
unique and fulfilling experience more than just coffee and provides a premium selection of
tea, coffee beans, fine pastries and other delectable items to satisfy taste buds of consumers.
Each of Starbucks store offers warmth, artistry and appeals customers with music and
ambience where people can sit, relax and chat or even work. Starbucks is highly committed
to offer highest standard of quality in coffee throughout the world and engage their
consumers and community with responsible business practices and approaches. Starbucks
has strong organisational structure that promotes their business activities to ensure global
dominance in coffee industry and their structure impacts all their areas of business including
management, leadership, communication, strategic change and implementation as well as
other elements of business to ensure exceptional success by meeting business needs.
Starbucks has four types of organisational structures that involves intersections among
different elements of their business. For instance Starbucks product structure intersect with
the functional and geographic divisions which in turn intersect with other sections of the
business. The main elements of Starbucks organisational structure includes functional
structure, geographic divisions, product based division and matrix based structures.
Organisational structures
According to Shahabadi & Pourkiani (2014) the organisational structure specifies the manner
in which a firm distributes their line of authority, accountability and arrange the
responsibilities for people and their jobs so as to maintain clarity of work, performance and
objectives to be attained. The organisational structure determines the possibility for
acceptable behaviour of employees in a firm in alignment to their responsibility and reporting
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systems and even illustrates the firm’s relationship with their external environment to
demonstrate their arrangement of group of jobs and pattern through organisational chart. The
organisational structure of a firm depicts both reporting and operational process and
relationships and its components or building blocks consist of department or division,
hierarchy of management, process, regulations and objectives and specific temporary
building blocks like task force or committee. These organisational structures shape and
support in implementation of primary goals to promote their attainment in an effective way
and hence presence of appropriate organisational structure helps to identify and address
human and business realities so as to determine long term success. Hence organisational
structure effectively guides the behaviour of employees and teams so as to maximise their
productivity, efficiency, flexibility and motivation to attain pre-established goals. A strong
organisational structure is build on key elements such as work specialisation which means a
firm’ is divided into separate subdivision of jobs and their specialisation. The other element is
departmentalisation where firm is divided into basis of job divisions (Lee, Kozlenkova &
Palmatier 2015). Further organisational structure is grouped on basis of line of command
which illustrates line of reporting and on basis of span of control which specifies the way a
manager can effectively direct a group or individual. The other element of appropriate
organisational structure is determining whether the firm would follow centralisation or de-
centralisation to empower authority of decision and formalisation which ensures degree of
rules and regulations to be directed to staffs and managers of firm. An example of
organisational structure followed at Starbucks is given below:
Functional structure: in this structure a firm is grouped according to purpose and it allows the
division of firm based on specified function or area that empowers a specialist personnel to
direct authority, line of command and control within specified and defined scope of authority
(Syed, Azhar & Shahid 2013). For example a firm can practise functional structure and
divide responsibilities, line of command into functions like Sales & Marketing, Finance,
Engineering or Production etc where each function is headed by specialist Vice President
who are controlled by a Group President. Under each specialist VP like HR there exist
functional managers who are empowered to take decisions and give instructions to other
employees in their specified division so as to enforce control and command. Like managers
under HR function are authorised to enforce advice or decision in context to safety and labour
rights, relations.
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Fig: Functional structure
Source: Organisationalchart.com (2018)
The organisation that practices functional structure features separate hierarchy for each
function thus forming a large network of functional departments where each of the
department is grouped on basis of job that relate to organisational function or specialist skills
like marketing, production etc and chain of command in each department lead to a functional
head who in turn reports to high level leaders like Chairman or President. Such functional
structure facilitate operational effectiveness as well as improves quality of product due to
specialist being engaged in every functional area and even resources are allocated by function
rather than being disseminated across the firm (Gebauer & Kowalkowski 2012). One of the
demerits of functional structure is that it supports narrow specialisation instead of general
management expertise as such functional managers do not qualify to lead top executive
position. Secondly functional units are highly concentrated on their own area so they may
lack responsiveness for entire organisational needs.
Evaluation of Geographic structure
According to Prange & Schlegelmilch (2016 the geographic organisational structure is
practised in those firms that have their operations spread across wide regions or geographies
and such structures ensures that all their business activities are operated in a region and
managed together to leverage advantage by focusing on local business preferences.
Geographic structure is followed in multinational firms as centralised coordination of
different regional branches often becomes difficult so separate activities are organised and
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controlled according to geographic area. This kind of structure helps firms that have multiple
units in different regions to have separate reporting and functional system across different
geographic location, operate different regions as per local demand and yet be directed under
centralised business policies. Also based on size of firm, separate geographic location may
report to each Business Unit head across different regions or may report directly to top
executives located in business Headquarter and hence the reporting systems under geographic
structure can adapt to size and industry of a firm. The geographic structure helps an
organisation that has widespread national and international offices to have own internal
structure, management for each region which allows them to operate independently (Guisado-
gonzález, Wright & Guisado-tato 2017). Also it allows firms to use local, experienced
resources to operate a firm’s activities and this is advantageous in overseas operations where
firms need support in transitioning their operations to particular foreign markets or region.
Fig: Geographic structure
Source: Organisationalchart.com (2018)
Example Starbucks Coffee’s organisational structure is even divided into geographic
divisions that are based on different regions or areas where they operate business across the
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world. Starbucks mainly has three regional or geographic divisions across their global market
namely America Division, Asia Pacific Division and Europe, Middle East and Africa
(EMEA) Division. The America Division of Starbucks organisational structure oversees
business operations across US market and this further consist of geographic regions or
divisions i.e. Western, Northern, Northwest, Northeast and Southeast. Each of these
geographic areas of Starbucks has Senior Executive. In the structure of Starbucks each local
manager reports to at least two senior heads like President of EMEA division (geographic
head) and Corporate HR Manager (functional head) and this characteristics of Starbucks
organisational structure ensures close managerial support to address geographic business
needs. Further each geographic division head has flexibility to adjust and direct strategies as
well as policies to suit to particular market situations or demands. As such it enables better
operational and strategic leverages like strong communication with local supplier, customers,
proper collaboration with teams at each location, better capability to serve local needs and
customise approach as per local market condition, capability to encourage positive
competition between various departments as well as geographic structure helps Starbucks
operate each of their different business units in different geographies to operate adequately
suiting to regional culture, norms, languages and preferences as well as regulations that exist
in each geographic location to ensure better attainment of business goals particularly related
to logistics, resource and staffing. Along with advantages some disadvantages that are
associated with geographic structure includes likely conflict between local and central
management as separate geographic division often may take larger autonomy. Other demerits
may include possible duplication of efforts, resource and functions, loss of some economies
of scale.
Evaluation of Matrix structure
According to Moodley, Sutherland & Pretorius (2016) Matrix organisational structure is a
type of hybrid structure between divisional and functional structure and is mostly found in
larger multinational firms and this structure permits the leverage of both functional and
divisional structures to coexist together in one single firm. A matrix structure allows
reporting levels at both horizontal and vertical level. Like for instance staffs may be part of
functional group like delivery but may serve in teams that support new product development.
This type of organisational structure usually has different members from numerous groups
working together to develop new product line. Example, in each Starbucks outlets there are
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teams that support to deliver products or services to customers and these front sales teams
often work together with product innovation team to enable Starbucks to offer more effective
and innovative product or service to consumers. The effectiveness of teams under matrix
structure is a major driver of financial performance of Starbucks at different franchise
locations and owned coffee stores where teams are better focused to meet customer needs
efficiently through product development and high customer oriented team culture to build
better service delivery to customers through use of combined expertise and team work.
Matrix structure enables Starbucks staffs to own more responsibility not only related to their
department or function but also be responsible for organisational goals. Also matrix structure
allows managers and employees of Starbucks to get out of their comfort area and work
together in expertise areas to manage special business needs as specific to skills and hence
this allows employees to focus on their best potentials and capabilities. Hence managers
under matrix structure coach staffs to ensure well trained and competent resources are used to
maximise performance and effectiveness of attaining specified goals of division which helps
to maximise competency of resources. Further matrix structure ensure better communication
not just from top down but also between divisions. In matrix structure staffs can interact with
managers and further higher up the hierarchy level which ensures that everyone is involved in
decision making and its implementation to attain functional and divisional objectives with
better workplace coordination and communication (Král & Králová 2016). Hence matrix
structure in Starbucks empowers their staffs by giving them more authority and higher sense
of autonomy which helps them work effectively with strong inputs, ideas to foster creativity
and better problem solving. However a challenge in matrix structure occurs as staffs may
find difficulty to follow line of command due to directions or instructions given from two
diverse managers so employees are required to prioritise their work obligations to ensure
effective attainment of goals.
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Fig: Matrix Structure
Source: Organisationalchart.com (2018)
Evaluation of Product structure
According to Qiu, Wang & Nian (2014) the product structure is practiced in large diversified
firms where division and related business activities are arranged as per product and all
activities essential to manufacture and market a product or group of specific products are
organised together. In product structure the senior level executives of the product group
generally has significant autonomy over operation of product in given market and the
integrated business unit is departmentalised as per type of products and hence product
structure is beneficial for large multinational companies where product extension,
diversification, manufacture and marketing of products is the main concern. Further the
common organisational policies are decided by the senior level executives within the
philosophical principles of the firm and the benefit of product structure arrangement is that
senior level executives and other teams or groups can oversee specific needs of their product
line and become expert in its development, improvement, manufacture and distribution. Also
under product structure employees are assigned to self-sufficient division as per specific
product line or service that is produced, according to customers that are dealt with and as per
geographical location that is served. The product structure has numerous layers of managers
and staffs and each layer can have their own marketing or sales or other teams and the
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manager in product structure usually reports to Head of firm by product type such as division
related to general items or products as well as to head of functional division centrally like HR
or Finance heads. Product based structure has several advantage like it helps to focus
distinctively on business activities related to specific product line and has specialised
competence for a particular products’ manufacture and distribution. The business activities
can be targeted to major customers that make substantial size of business and hence meet
customer needs more appropriately with focus on particular segments (Verle, Markič, Borut
Kodrič, & Zoran 2014). Also due to extended expertise within particular product line
response to market condition or changes can be addressed more rapidly and with flexibility to
encourage better competitive advantage and performance in each divisions. However there
are certain disadvantages like difficultly to scale, potential of duplication of functions and
resources like different sales teams for each division. Also other demerits may include over
emphasising divisions goals over organisational goals, loss of central control over each
division and conflict among different division.
Example, in Starbucks the product based structure has three divisions that are focused on
product lines like Starbucks has a division for Coffee and related products, other division for
Baked products and third division for merchandise like mugs, general items etc. The
characteristics of Product structure of Starbucks ensure them to oversee their particular
product development and ensure its further improvement through innovation in product or
services which supports organisational structure. These capabilities provide competitiveness
to support business needs of Starbucks specifically by consideration of their strengths,
weakness and opportunities.
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Fig: Product Structure
Source: Author
Conclusion
Thus it can be concluded that use of different structures at Starbucks has enabled their
employees ability to meet different roles and responsibilities and combination of different
structure has ensured better control and coordination between both internal environment and
outside with clarity of power and authority. It has even helped to ensure better flow of
information between different levels so as to form capable and informed decisions backed
with focused goal and approaches . Further it has even ensured better distribution of power
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President
Marketing &
Sales
Operations Operations Operations
Vice
President
Product A
Vice
President
Product B
Vice
President
Product C
Marketing &
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amongst departments to ensure high level of interdependence as well as autonomy in decision
making to ensure higher effectiveness.
References
Gebauer, H., & Kowalkowski, C. (2012). Customer-focused and service-focused orientation
in organizational structures. The Journal of Business & Industrial Marketing, 27(7),
527- 537. doi:http://dx.doi.org/10.1108/08858621211257293
Guisado-gonzález, M., Wright, L. T., & Guisado-tato, M. (2017). Product-process matrix and
complementarity approach. Journal of Technology Transfer, 42(3), 441-459.
doi:http://dx.doi.org/10.1007/s10961-015-9435-6
Král, P., & Králová, V. (2016). Approaches to changing organizational structure: The effect
of drivers and communication. Journal of Business Research, 69(11), 5169. Retrieved
from https://search.proquest.com/docview/1822372165?accountid=30552
Lee, J., Kozlenkova, I. V., & Palmatier, R. W. (2015). Structural marketing: Using
organizational structure to achieve marketing objectives. Journal of the Academy of
Marketing Science, 43(1), 73-99. doi:http://dx.doi.org/10.1007/s11747-014-0402-9
Moodley, D., Sutherland, M., & Pretorius, P. (2016). Comparing the power and influence of
functional managers with that of project managers in matrix organizations: The
challenge in duality of command. Journal of Economic and Management Sciences,
19(1), 103-117. Retrieved from
https://search.proquest.com/docview/1772108129?accountid=30552
Prange, C., & Schlegelmilch, B. B. (2016). Towards a balanced view of innovations.
Management Decision, 54(2), 441-454. Retrieved from
https://search.proquest.com/docview/1773169333?accountid=30552
Qiu, J., Wang, Z., & Nian, C. (2014). An approach to filling firms' knowledge gaps based on
organizational knowledge structure. Journal of Knowledge Management, 18(1), 1-18.
doi:http://dx.doi.org/10.1108/JKM-05-2013-0191
Shahabadi, M. E., & Pourkiani, M. (2014). EXPLANATION OF THE RELATIONSHIPS
BETWEEN DIFFERENT TYPES OF ORGANIZATIONAL STRUCTURE AND
STRATEGIC CAPABILITIES OF EMPLOYEES: DESCRIPTIVE ANALYSIS.
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Journal of Business and Management Review, 4(1), 96- 106. Retrieved from
https://search.proquest.com/docview/1564432006?accountid=30552
Syed, S. H., Azhar, S. M., & Shahid, M. (2013). Strategic orientations and organizational
types: A theoretical link. Journal of Organization and Human Behavior, 2(3), 17-31.
Retrieved from https://search.proquest.com/docview/1478027462?accountid=30552
Verle, K., Markič, M., Borut Kodrič, & Zoran, A. G. (2014). Managerial competencies and
organizational structures. Industrial Management & Data Systems, 114(6), 922-935.
doi:http://dx.doi.org/10.1108/IMDS-01-2014-0019
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