Organizational Behavior and Leadership Challenges at Starbucks

This report provides an in-depth analysis of Starbucks' organizational behavior and leadership, focusing on its challenges in the Australian market. It examines the company's organizational culture, structure, and the issues it faced due to a lack of understanding of the local coffee shop culture and customer preferences. The report highlights the importance of administrative and situational theories in organizational behavior and explores the ethical principles relevant to cultural heritage conservation. It identifies key issues such as cultural barriers, a lack of organic product offerings, and ineffective leadership practices. The report proposes several solutions and recommendations, including the implementation of transformational leadership, changes in the menu to cater to local tastes, the recruitment of Australian employees, enhanced training and development programs, and the development of effective marketing strategies. The study concludes that a positive organizational culture is crucial for business development and that Starbucks needs to adapt to local market dynamics to succeed.

Running head: ORGANIZATIONAL BEHAVIOR AND LEADERSHIP
Organizational behavior and leadership
Name of the student
Name of the university
Author note

1ORGANIZATIONAL BEHAVIOR AND LEADERSHIP
Table of contents
Introduction.................................................................................................................................................3
Analyze the culture and structure of the industry........................................................................................3
OB issue in Starbucks..................................................................................................................................5
Solutions and recommendations..................................................................................................................7
Conclusion...................................................................................................................................................9
Reference list.............................................................................................................................................10

2ORGANIZATIONAL BEHAVIOR AND LEADERSHIP
Introduction
The term organizational behavior indicates the behavioral aspects in the workplace. In
order to develop the behavioral understanding of the employees, effective organizational
behavioral practices are needed (Biermeier-Hanson, 2015). It can be denied that creating proper
workplace environment, every organization needs to follow the positive characteristics of
organizational behavior (Ashkenas et al., 2015). Positive organizational culture helps in terms of
improving the interrelation between the employees and customers. The purpose of this study is to
shed light on organizational culture of Starbucks in the Australian market. Starbucks is America
based coffee selling organization, which has got strong position in the global market. However,
in case of Australia, it has faced the huge failure due to its improper organizational culture. The
study has examined the behavioral issues of the organization and its impact on the business
improvement. At the end of this study, measurable recommendations have been provided that
can help Starbucks to overcome the challenges.
Analyze the culture and structure of the industry
In the words of Hogan and Coote (2014), coffee has become a global commodity and due
to this reason in different countries coffee shop culture have been introduced by adding their own
flavors. By adding own histories, the coffee culture of Australia has become famous in the world.
In case of Australia, it has been identified that a well-established coffee shop culture is being
shown in this country. In case of urban areas the emerging Australian coffee culture has been
adopted after the migration of southern European people. The espresso culture has been
transformed over the time and most the cases, the family owned independent coffee shop
business is shown in Australia. Analyzing the industrial culture in Australia, it has been
identified that strong organizational culture is being followed in this country. Customer

3ORGANIZATIONAL BEHAVIOR AND LEADERSHIP
satisfaction is the effective leadership practices are the major influential factor in the well-
established Australian corporate culture (Thompson, 2014). As the study has already discussed
that Australian coffee shop culture has been developed depending on the country heritage and
history, in that the large portion of customer satisfaction depends on the emotional and cultural
values. In the words of Withey and Gellatly (2015), strong and effective management practices
are being followed by the coffee selling industry. Therefore, examining the coffee culture in
Australia, it can be said that the industry aims to focus on employee engagement and customer
satisfaction by maintaining the country’s values.
On the other hand, it cannot be denied that the organizational structure is one of the major
key drivers in business development. As stated by Brettel, Chomik and Flatten (2015), a strong
organizational structure can help in terms of providing the efficient service to thee customers. In
case of Starbucks, it has been identified that the company follows matrix organizational
structure. The functional department of Starbucks maintains feature related hierarchy. The top-
down monitoring process is being done by the department. Teams work under the functional
department. In each café, the company appoints organized team for delivering standard quality of
services. Teams is being used as the important centralized component in the entire organizational
structure and in case of establishing the customer-centric field support, an effective team leader
is being appointed in every branches. In the below diagram, organizational structure of Starbucks
has been shown.

4ORGANIZATIONAL BEHAVIOR AND LEADERSHIP
Figure: Organizational structure of Starbucks
(Source: Created by author)
OB issue in Starbucks
Analyzing the current situation of Starbucks in Australian market, it can be identified that
slowly expandable strategy has been followed by Starbucks in this country. After completion of
rapid launching process the company did not provided opportunities to the Australian
customers for appetizing to the company (Abc.net.au, 2018). Analyzing thee organizational
issue of Starbucks, lack of understanding of Administrative theory has been identified. In the
administrative theory, different departments are being introduced for accomplishing the entire
organizational task in an effective manner. In the words of Thompson (2017), by following the
administrative theory, it becomes easier for the organization to achieve its goals in the diversified
working culture. In this theory different human behavioral factors are being discussed.
CEO
Business
Analyst
Quality
assurance
manager
Team Team
Development
manager
Team

5ORGANIZATIONAL BEHAVIOR AND LEADERSHIP
Due to its world wise brand popularity, the management was over confident regarding the
success of the company in Australian market. It cannot be denied that coffee culture in Australia
is totally different from American coffee culture. In that case, it becomes harder for the
American company Starbucks to fulfill the expectations of the customers. In case of Starbucks, it
can be said that the company has not followed the administrative theory in the workplace, as its
result, it become harder for the employees to cope up in the Australian coffee shop culture.
Analyzing the Ethical principles, it can be said that cultural heritage conservation is very
important to be followed by the organization to fulfill the emotional needs of the customers.
Examining the coffee shop culture in Australia, it has been identified that historical values are
the major priority of the coffee industry, in that case, Starbucks has failed to fulfill the customers
value, due to lack of understanding of the cultural principles.
On the other hand, thriving Australian Coffee culture is biggest threat for the American
coffee brands. Large customers in Australia prefer espresso and which has created dissimilarity
for Starbucks in the market. Hence, it can be said that without any research, Starbucks entered in
the Australian market. Due to lack of understanding of the customers’ need, the products of the
company have not been appreciated by the Australian people. Due to this reason, within first 7
years of entering in the Australian market, $105 million loss has been faced by Starbucks and
in 61 locations it had closed its stores (Abc.net.au, 2018).
As stated by Wikström and Treiber (2016), in the theoretical aspects it can be said that
situational theory of organizational behavior has higher level of significance in terms of
providing the mathematical foundation to the situational systems. In the year 1980, Keith Devlin
and Jon Barwise developed the situational theory. In this theory it is mentioned that in case of
bringing the business development, the organizations needs to focus on bringing the required

6ORGANIZATIONAL BEHAVIOR AND LEADERSHIP
changes its service pattern for adjusting in the new market. In the situational theory, the
situational analysis of a management is being defined. It has been discussed that it is the
responsibility of a leader to analyze a situation and depending on the situation the organizational
functional pattern needs to be changed. Due to lack of understanding for situational
consequences, Starbucks has made some mistakes. Although Starbucks recruited the efficient
employees in the Australian stores, but cultural barriers have brought major challenges for the
company. Most of the stores, the American employees were recruited by Starbucks, in that case
the cultural gap between the employees and the customers has created dissatisfaction among the
employees. Analyzing the taste of Australian people, it has been identified that they prefer
organic products. Starbucks failed to serve organic products to the Australian people, which has
also influenced its failure (Sbs.com.au, 2018).
As most of the employees in Starbucks are American people, they are unaware of the
values of Australian people (Sbs.com.au, 2018). By adopting product optimization strategy,
Starbucks has mainly focused on the US stores, in the meantime, due to improper guidance to the
employees, the cultural diversification in the workplace created barriers for its development.
Due inappropriate implementations of leadership strategies in the workplace, the religious
issues have been occurred in the workplace, which has influenced organizational culture.
Solutions and recommendations
Analyzing the entire situation in Starbucks, it can be said that due to lack of
understanding and proper leadership implementation are the major key driver of the company
failure. Due to lack of efficiency and understanding of the customers’ need has brought tough
situation for the company. In that case, research and development practices can be beneficial in
terms of understanding the needs and demands of the customers. Due to lack of proper leadership

7ORGANIZATIONAL BEHAVIOR AND LEADERSHIP
practoces in the workplace, the cultural barriers between the American employees and Australian
customers has been increased. In this situation, effective transformational leadership practice
needs to be introduced in the workplace. Analyzing the organizational culture in Starbucks, it has
been pointed out that rather than understanding the taste of Australian people, sweet coffee items
are being served by Starbucks, which created dissatisfaction among the customers. In order to
deal with the situation, the company focus on bringing changes in its menu.
Depending on the preference of the customers, the items can be launched in the
Australian market. It cannot be denied that Starbucks does not follow the ethical principle of
heritage conservation. The study has repeatedly discussed that the customers in Australia, give
high priority to their history and heritage. In that case, a monitoring team needs to be developed
in the workplace, which will work to deal with the cultural barriers in the workplace.
Recruitment of Australian employees can be beneficial for dealing with the diversified
culture in the workplace. If the company will recruit Australian employees, it will be easier for
them to understand their needs. On the other hand, customer satisfaction needs to be the first
priority for the company in order to sustain in the competitive Australian market. Feedbacks of
the customers, needs to be addressed in right manner. With this initiative, it will be easier for the
company to deal with the emerging customer complaints.
Training and development is very important for bringing the situational awareness in the
workplace. It cannot be denied that the employees in Starbucks are not efficient enough to
manage the cultural expectations of the customers. Due to this reason, business revenue of the
company has got affected. A training development team needs to be appointed for improving the
efficiency of the employees. In order to encourage employees for dealing with the diversified
culture, knowledge and information regarding the cultural values needed to be shared. Proper

8ORGANIZATIONAL BEHAVIOR AND LEADERSHIP
monitoring process needs to be developed in the workplace, so that management can identify the
weak employees and train them properly. Strong organizational policies needs to be developed
so that discrimination can be avoided.
In order to improve the organizational culture, Maslow hierarchy of needs theory can
followed. In that case, understanding the needs of the customers, different discount offers can be
introduced. Due to recent failure, Starbucks has faced negative impact in its brand image. In this
situation effective marketing strategies needed to be developed by the company. Both the direct
and indirect marketing policies are required for developing its brand image in the competitive
market. Quality measuring initiatives can also be beneficial for assuring the standard quality of
products. Analyzing the demands of the Australian customers, it has been identified that most of
the Australian customers prefer the organic products, therefore, a separate organic product
section needs to be developed by the company especially for the Australian market. Lab testing
of the products can help to assure good quality of products for the customers.
Conclusion
In the above study, it can be concluded that effective organizational culture has higher
level of contribution in terms of bringing the business development. In order to sustain in the
competitive business environment, the positive organizational culture is required. Analyzing the
organizational culture of Starbucks, it has been identified that although the company has
developed strong image in the global market, bit in case of Australia, due to lack of
understanding of the customers’ demands, the company has faced major barrier. On the other
hand, it is true that huge different between the Australian and American coffee shop culture, it
has become challenging for the company to satisfy the customers’ need. In this situation,

9ORGANIZATIONAL BEHAVIOR AND LEADERSHIP
effective leadership practices, motivational techniques, marketing practices have been suggested
in this study that can help Starbucks for sustaining in the competitive market.
Reference list
Abc.net.au (2018). Retrieved from: https://www.abc.net.au/news/2008-08-07/32188[ Accessed
on 11th Nov, 2018]
Ashkenas, R., Ulrich, D., Jick, T., & Kerr, S. (2015). The boundaryless organization: Breaking
the chains of organizational structure. John Wiley & Sons.
Biermeier-Hanson, B. (2015). What about the rest of us? the importance of organizational culture
in nepotistic environments. Industrial and Organizational Psychology, 8(1), 27-31.
Brettel, M., Chomik, C., & Flatten, T. C. (2015). How organizational culture influences
innovativeness, proactiveness, and risk‐taking: Fostering entrepreneurial orientation in
SMEs. Journal of Small Business Management, 53(4), 868-885.
Hogan, S. J., & Coote, L. V. (2014). Organizational culture, innovation, and performance: A test
of Schein's model. Journal of Business Research, 67(8), 1609-1621.
Sbs.com.au (2018). Retrieved from: https://www.sbs.com.au/news/thefeed/story/why-starbucks-
just-cant-crack-australian-market[ Accessed on 11th Nov, 2018]
Thompson, J. D. (2017). Organizations in action: Social science bases of administrative theory.
Routledge.
Thompson, J. D. (2017). Organizations in action: Social science bases of administrative theory.
Routledge.

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Wikström, P. O. H., & Treiber, K. (2016). Situational theory: The importance of interactions and
action mechanisms in the explanation of crime. The handbook of criminological theory,
415-444.
Withey, M. J., & Gellatly, I. R. (2015). Organizational Structure, Situation Strength and
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