ORGANIZATIONAL DESIGN OF STARBUCKS

Starbucks Corporation was founded in 1971 in Seattle, Washington as a coffee bean roaster, marketer, and retailer (its headquarters). Since then, the company has grown to become the world’s largest coffeehouse chain. It presently has operations in 68 countries spread over different continents. Starbucks employees were expected to number roughly 238,000 as on September 27, 2015. The company also enjoys strong revenue returns (“”Starbucks Corporation SWOT Analysis.“”). The organization’s industry leadership can be traced in part to the suitability of its organizational architecture. Organizational design refers to the way a firm is to be structured and operated by the staff so as to achieve its goals (Ed. Law, Jonathan). The organizational structure of a company significantly influences leadership and management, communication, and change among other crucial variables to business success.

Organizational design is mainly made up of two components namely: organizational structure and organizational design. An organizational structure helps an organization achieve its aims through critical activities like task allocation, supervision, and coordination. It could also be perceived as a perspective through which organizational members view the firm and its environment.

Starbucks has evolved over the years to have an organizational structure that is at par with current business needs. Although Starbucks prides itself with a unique organizational structure, it could be characterized on the basis of a conventional typology of organizational structures. The company enjoys tremendous success since its organizational structure expands with the company thus allowing the business to optimize the quality of its goods and services as well as its processes. The company’s organizational structure can be described as ‘matrix’ because it’s a hybrid mixture of various features of the mundane organizational structures. Key features of Starbuck’s organizational structure include; geographic divisions, functional structure, teams, and product-based divisions.

Starbucks has also dominated the market due to brilliant organizational design elements such as specialization, centralization and decentralization, departmentalization, span of control, and chain of command.

• Specialization

Specialization refers to the degree to which each task is performed by none other than the personnel meant to execute that particular activity on more or less full-time basis. Jobs at Starbucks Coffee Company have been specialized particularly in the organization’s retail level. For instance, some stores belonging to the firm operate with drive-thru windows. There will be four employees working at the drive-thru window at any given time. One will work with the espresso machine, one will handle cash, another will take orders, and the fourth will be a “floater” who can fill in anywhere when needed.

• Departmentalization

Departmentalization refers to the act of dividing up the day to day activities of an organization and officially assigning them to different units or members of the organization. Starbucks perceives departmentalization as a matter of great importance. In fact, the company has grouped its business into three aspects namely: functions, products, and departmentalization. Starbucks exercises departmentalization through the following five main ways:

Product – the company groups jobs by product line. Each manager is then allocated responsibility over an area within the organization based on their specialization.

Process – Here activities are grouped based on either product or customer flow

Functional – the firm groups tasks according to functions to be performed and goals it wants to achieve

Geographical – This means grouping activities by areas. The Starbucks company sees this as a splendid way to run every activity smoothly while connecting all members of the organization to the vision and strategic direction of their leaders. Furthermore, it acts as an effective way for the company to pursue its innovative strategic initiatives and continue growing globally.

Customer – The company groups jobs based on frequent customers

• Span of Control

The Starbucks Coffee Company deploys this design element by using the right number of personnel a manager can handle so as to ensure maximum productivity. Span of control also includes having district managers visit from eight to ten stores from time to time to enhance quality of service.

• Formalization

Formalization means the extent to which procedures, instructions, and rules are adhered to in an organization. While formalization and flexibilization are usually confused to mean the same thing, they are different. However, formalization can always include elements of flexibilization. (Mattes, Jannika, et al. pp. 476) For this reason, the Starbucks Corporation leads in formalizing their jobs by ensuring their employees undergo a thorough training. This shows that the firm does not let their workforce execute tasks without proper training or knowledge.

• Chain of Command

Chain of command means the flow of authority starting from the top to the bottom along distinguished organizational lines (Kurian). Starbucks company’s organization structure is made up of a chief executive officer (CEO) and board members responsible for making policies and decisions. In order to implement the rules, the CEO is supposed to discuss with their chiefs and thus conduct a proper way to manage the chain of command (Ingar, Grev. pp. 12)

• Centralization and Decentralization

In centralization, important decisions are made by the executive or the top-level management. Decentralization is the process of assigning decision-making authority to tiers of the organization including departments, divisions, subsidiaries or branches or simply lower levels of an organization. The Starbucks company involves the lower level management in the decision-making process. The organization also gives the lower level management equal significance in this process.

Works Cited

”Chain of command.“ The AMA Dictionary of Business and Management, George Thomas Kurian, AMACOM, Publishing Division of the American Management Association, 1st edition, 2013. Credo Reference, https://libproxy.usc.edu/login?url=http://search.credoreference.com/content/entry/amadictbm/chain_of_command/0?institutionId=887. Accessed 16 Apr 2017.

Ingar, Grev. ”How To Manage Your Chain Of Command“. Birmingham Business Journal, vol 31, no. 26, 2014, p. 12. Factiva, doi:0889-2237.

Mattes, Jannika, et al. ”Formalisation and Flexibilisation in Organisations – Dynamic and Selective Approaches in Corporate Innovation Processes.“ European Management Journal, vol. 32, no. 3, 2014, pp. 475-486, doi:10.1016/j.emj.2013.09.002.

Organizational design.” A Dictionary of Business and Management. Ed. Law, Jonathan. : Oxford University Press, 2016. Oxford Reference. 2016. Date Accessed 16 Apr. 2017 .

“Starbucks Corporation SWOT Analysis.” Starbucks Corporation SWOT Analysis, 04 Aug. 2016, pp. 1-12. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=bth&AN=117930747&site=ehost-live.