Organizational structure of Starbucks

Introduction
Starbucks is an American chain of coffee shops and roasting facilities with its main office in Seattle,
Washington. It was established in 1971 and now has more than 33,800 locations throughout 80 nations.
These are almost all concentrated or located in the US. Initially established as a trader of coffee beans by
Jerry Baldwin, Zev Siegel, and Gordon Bowker, the business enjoyed some success in its early years
before being bought out by Howard Schultz in the early 1980s, who decided to transform the coffee
bean store into a variety of coffee shops offering espresso-based drinks. Starbucks is largely responsible
for the development of the so-called "second wave of coffee culture" since it over time offered
customers a larger selection of coffee experiences, including its line of Frappuccino drinks and well-
known Pumpkin Spiced Latte. Between 1986 and 2000, while serving as CEO, Schultz actively expanded
the franchise, first in Seattle and then all throughout the country. Pacific Coast. Under the direction of
Schultz's successor, Orin Smith, who was in charge of presenting Starbucks as a significant player in fair
trade coffee, market share grew during the early 2000s. Jim Donald, Smith's replacement as CEO,
directed the business from 2005 until the financial crisis of 2008, at which point Schultz took over again
as CEO and spent the 2010s increasing the company's market share, broadening its product line, and
refocusing the brand on corporate social responsibility. Schultz served until 2017, when Kevin Johnson
took over. Johnson abruptly retired in 2022.

Organizational Structure type and Characteristics

Starbucks uses a matrix organizational structure; it is a hybrid fusion of several characteristics from the
fundamental varieties of organizational structure. The structural design in this instance involves
crossovers between numerous elements of the chain coffee shop industry. For instance, the organization's
geographic and functional divisions intersect with the product-based divisions of the corporation, which
in turn intersect with other areas of the business. By employing this kind of organizational structure,
Starbucks Corporation seeks to combine the best aspects of most of the organizational structure. The
primary components of Starbucks' corporate structure are as follows:
1. Functional hierarchy. This refers to the grouping based organizational structure on a business
function. For instance, the company has a coffee company has an HR department, a finance
department, and a marketing department. The mentioned departments are the most prominent at
the top levels of Starbucks’ corporate structure, such as the corporate headquarters. Company
cafés must follow policies that the corporate HR department implemented. This facilitates top-
down monitoring and control, with the CEO on top. Functional groups are responsible for the
organization-wide development and implementation of Starbucks Corporation’s generic
competitive strategy and intensive growth strategies.
2. Geographic and product-based division (Divisional organization). Geographic divisions under
Starbucks' corporate structure are based on the actual locations of its market operations. For the
international market, the coffee company has three geographic divisions: (1) America, (2) China
and Asia-Pacific, (3) Europe, Middle East, and Africa. There is a senior executive for each
geographical section. Each local manager so reports to a minimum of two superiors: the
 geographical head (e.g., President of Europe, Middle East, and Africa Operations) and the
functional head (e.g., Starbucks Corporate HR Manager). Starbucks's organizational structure
allows for closer managerial assistance for its location-based business requirements. The ability
to modify plans and policies to fit certain coffee market situations is granted to each division
leader. For the product-based division, Starbucks has a division for coffee and related products,
another division for baked goods, and another division for merchandise, such as mugs. This
feature of the corporate structure enables Starbucks to focus on product development. In this way,
the company finds another way to get profit and a way to develop and/or innovate its coffee
related products.

Why did they use matrix organizational structure? Cite the advantages and disadvantages.
The organizational structure of Starbucks Corporation changes throughout time. The company's
focus changed away from customers and toward the strategically plan global expansion of the
coffeehouse chain in 2007 as a result of the company's rapid growth. The company's sales did, however,
significantly fall that year. The lack of attention given to the client experience caused this decline to
worsen. In order to refocus on the customer experience, Howard Schultz modified Starbucks Coffee's
business structure when he took over as CEO again in 2008. Additionally, teams at the company's cafés
received greater training and new regional divisions were established. Starbucks' present corporate
structure is the consequence of changes made to enhance the customer experience and the financial
performance of the company. The corporation is aware of how crucial it is for diverse aspects of the
coffee industry to connect strategically. In this instance, for instance, stabilizing Starbucks' market
presence and market share requires coordinating the corporate structure with industry movements in the
coffeehouse sector. In order to allow for increased diversification, it is anticipated that the company's
organizational structure would include more product-based divisions in the future, such as divisions for
brand-new services that complement food and beverage. Based on its development trajectory, Starbucks
is likely to keep acquiring businesses to support its growth plans, which include diversity.
The matrix structure may oftentimes be adopted by companies that need to manage daily
operations in conjunction with ongoing projects. It can allow a company to maintain its departmental
structure while projects are in progress. Similarly, the matrix structure may include employees from
different departments to work collaboratively on projects. All projects the team members may be working
on can eventually be completed while their functional roles within the organization are permanent.

Advantages
1. Cooperation or collaboration among different departments. By bringing together highly talented
team members from various divisions, it enables the organization to make the most of its own
resources rather than looking for expertise and assembling project teams from outside the
company.
2. Combines project and functional management structures. To improve efficiency, adjust to shifting
markets, and react more swiftly to market demand, the matrix structure integrates the project
management framework with the functional management structure.
3. Allows interdepartmental communication. The matrix structure promotes a more open work
atmosphere by allowing various divisions to collaborate, ultimately making the organization more
dynamic.
Disadvantages
1. The decision-making process can be slowed down. Decisions that may need to go through both
managers may occasionally take longer to process than in a typical structure due to the nature of
the matrix involving several managers. Additionally, decisions that involve numerous processes,
such as in quality assurance, can be slowed down when the matrix is used in conjunction with
multiple supervisors and team members.
2. Too much work can cause overload. Since team members frequently have project workloads in
addition to their regular functional responsibilities, the matrix organizational structure can
occasionally result in work overload for team members. Due to time constraints, employees may
become burnt out, overlook or fail to complete duties, or their job quality may degrade.
3. Measuring employee performance might become difficult. Observing an employee's performance
while they are engaged in a project could be challenging. This is due, to the fact that team
members may essentially fill more than one job, both functionally and with regard to the project's
tasks.