Understanding Starbucks Organizational Structure1

Starbucks has grown significantly in years and is an exemplary model for others to follow.
Starbucks has been facing difficulties throughout its growth. They have been able to tackle all its
problems and come out swinging, each time better than before. The major part of Starbucks’
success depends upon Starbucks organizational structure.

Amongst the several different types of organizational structures, Starbucks follows the one which
is the best for them.

 Starbucks: A Global Power Brand

Starbucks, a very popular American brand that came into being in 1971 and has been serving
coffee at more than 28000 locations. These locations have no geographical limitation. The brand is
present across 75 countries all over the world. Currently, they are selling personalized coffees.

The merchandise that includes books, mugs, bottles, accessories, coffee and tea brewing
equipment and Verismo system by Starbucks.

They also sell fresh food that includes sandwiches, pastries, oatmeal, salads and so on. Starbucks
slogans have also played a big part in brand building.

Learn about Starbucks Mission and Vision Statements

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https://www.advergize.com/business/starbucks-organizational-
structure/#The_Starbucks_Organizational_Structure
  The Starbucks Organizational Structure

Starbucks organizational structure is a matrix structure and is one of the best successful
organizational structure examples. A matrix structure is the combination of more than one
organizational structures. The authority in matrix structure flows from more than one ways.

We’ve discussed Starbucks SWOT (Strengths, Weaknesses, Opportunities, and Threats) in an

earlier post.

The employees answer to more than one managers and transfer of messages takes place in more
than one ways. The other different types of organizational structures that combine to from
Starbucks organizational structure are geographic divisional structure, functional structure, team
structure and product based divisional structure.

In the functional structure part of Starbucks organizational structure, Starbucks has different
groups of employees taking care of different functions. The human resource department, finance
department, marketing department, sales department and so on. This structure is followed at the
top hierarchy of the firm. The policies they make are applicable to all Starbucks cafes.

 Divisional structure based on Geography and Product

The geographical divisional structure forms three main regional divisions including China and Asia-
Pacific,America, and Europe, Middle East, Russia, and Africa. Moreover, in the United States, the
divisions are Western, Northwest, Southeast and Northeast.

Each division of Starbucks organizational structure has its own senior vice president who controls
things in that division and is answerable to central management. This way, each lower level
manager reports to two heads, the geographical head, and the functional head. Each geographical
division is flexible enough to design the products according to the preferences of people in that
area. Therefore, different countries offer different product line.

Product based divisional structure is also a part of Starbucks organizational structure. This
structure divides employees into different groups in a way that each group works for a different
product. For example, Starbucks has divisions for merchandise goods such as mugs and books,
bakery items such as sandwiches and a division for coffee & other beverages.

 Starbucks organizational structure also includes brand based divisional structure.

Starbucks Brands

There are several brands owned by Starbucks: Starbucks and Seattle’s best coffee which produce
coffee and other beverages. Teavana that produces a variety of teas, La Boulange that produces
French baked items, Evolution Fresh which produces juices and Tazo tea which produces teas,
herbs, and spices. With the help of this structure, each division can focus on different products to
make them better.

Starbucks organizational structure plays a big role in its products’ development and innovation.
Team structure is mostly followed on the lower levels of the organization, for example in the café’s
cooking and delivery systems. This team structure of the Starbucks organizational structure helps
provide customers with better and specialized service.

 Starbucks growth

At the time of the rapid growth of the company is 2007, the management’s focus changed from
customer satisfaction to global expansion. Starbucks’ sales took a drop in 2007 because their focus
went away from customer satisfaction.

However, after Howard Schultz resumed as the CEO in 2008, he changed the organizational
structure to make customer satisfaction their priority again. Employees’ teams were given better
training, functional divisions were formed, and product based & geographic divisional structure
was introduced.

 Advantages of Starbucks Organizational Structure

The matrix structure followed by Starbucks has advantages of all other organizational structures
that come under it. First, the geographic divisions make it possible for the firm to meet the
specialized needs of different customers in different countries.

For example, people in some countries like strong coffee while those in other countries like the
lighter version. Secondly, team working makes employees motivated and more productive as they
get a sense of ownership and belonging. Third, the product-based division makes it possible for
each division to focus on their product and work on their development and innovation.

The functional divisions make the working smoother, faster and reliable, as specialists people are
doing the jobs, and the chances of them making errors are minimal. Finally, the matrix structure
allows the firm to utilize its human resources efficiently by hiring them for more than one tasks.

 Disadvantages of Starbucks Organizational Structure

Just like the advantages, the matrix structure of Starbucks also accumulates the disadvantages of
all other organizational structures under it. First, the matrix structure creates a situation where an
employee has to answer to two bosses at the same time, functional and geographic heads here.

This duplication of authority can be harmful and confusing for employees. As they have to decide
about whose orders to follow and whose work should be given priority. The functional structure
means each department is working for a different function.

A lack of co-ordination amongst them can be harmful to the firm as one would not know what the
other is up to and what the other needs.

 The Leadership Threat

The geographic divisional structure can make the heads in divisions so powerful that they might
start making big decisions according to their will. They might start threatening the central control
too, if there exists a conflict between the divisions and central control.

Moreover, the team structure might create unhealthy competition amongst firms. The teams
might want other teams to do bad instead of doing better themselves. The competition amongst
teams is beneficial for the firm till it is healthy, but after that, it can prove to be detrimental for the
firm.

Source:

https://research-methodology.net/starbucks-organizational-structure-a-tall-and-divisional/