Seda Guler Assignment 1 Kennedy K Amofa BUSI 522: Organizational Theory And Practice 11/03/2019 1. Provide a general overview of the company of your choice and their industry. 2. Describe the current organization structure. 3. Analyze the relevance of the current organizational structure, design, their influence on organizational effectiveness, especially in relationship to the dimension in which the organization is struggling. 4. Identify any possible challenges of current organizational structure and design. 5. Explain the role of the senior management team to address these problems. 6. Provide recommendations to attain an optimal organizational design to realign the organizations vision, mission, core values, and core competences to create competitive advantage in the market place. Starbucks Corporation The company I have chosen is Starbucks Corporation. Starbucks Corporation was formed in 1985 as a Washington corporation, (together with its subsidiaries, “Starbucks” or the “Company”) purchases and roasts high-quality whole bean coffees and sells them, along with fresh, rich-brewed coffees, Italian-style espresso beverages, cold blended beverages, a variety of complementary food items, coffee-related accessories and equipment, a selection of premium teas and a line of compact discs, primarily through Company-operated retail stores (CSIMarket). Starbucks Corporation is one of the largest coffee shop chains in the world which is available in more than 28000 locations. One of the main reasons for its success is its remarkable organizational structure. The company`s organizational structure determines their management, leadership, communication and an acts as an indicator of its success. Starbucks provides a good example of how divisions and responsibilities must be regulated and placed within the organizational structure. Starbucks ’organizational structure falls into a category of matrix structure and is one of the most successful organizational structure examples. A matrix structure is the mixture of more than one organizational structures featuring functional organization, geographic divisions, teams and product based divisions. The authority in matrix structure flows from more than one ways. When we ask the question what is matrix organizational structure? Seeking to respond to the requirements of the contemporary society, the majority of large international corporations all over the world are either already applying or currently seeking to implement a matrix organizational structure. A matrix is an organizational structure that shares the power among more than one dimension (Horney and O’Shea 2009). A matrix organization is characterized as an organization having several managers, competing goals, influence without authority and accountability without control (Hall 2013). The matrix encourages innovation and fast decision making, and speeds the distribution of information to those who know how to use it. Several studies have been conducted on the implementation of matrix management and the advantages and problems that might occur relating to matrix style of company structure (Schnetler, 2019). At Starbucks, employees report to several managers, not just one. Communication process of messages takes place in more than one ways. The functional structure division of Starbucks Coffee’s organizational structure is explained as grouping based on business function. They have different groups of employees taking care of different functions in this division. How this works is Starbucks Company has a Human Resources department, a finance department, a sales department and a marketing department and so on. These departments are most stated at the top hierarchy of Starbucks Coffee’s organizational structure which is at the corporate headquarters. For instance, the corporate HR department implements policies regarding to all Starbucks coffee shops. The organizational structure division of the firm’s organizational structure works as top-down monitoring and control, with the CEO at the top as we can see above in the pyramid (Sobiya, 2018). The geographical divisional structure has three main regional divisions including China and Asia-Pacific, America, and Europe, Middle East, Russia, and Africa. In addition to this, in the United States, the divisions are divided into Western, Northwest, Southeast and Northeast. Every division has their own senior vice president who is in charge of that division as well as answers to the central management. This way, each lower level manager reports to two top levels, the geographical top level, and the functional top level. Each geographical division has flexibility on the products they want to design depending on the preferences of the customers in their areas. Therefore, different regions or countries may have different product line offerings. Starbucks organizational structure also has a product based divisional structure. This structure encourages employees to work in teams focusing on certain product lines. For example, these products could be merchandise, food items such as pastry or sandwiches, mugs and books, and so on. Starbucks organizational structure has significant role on its products’ development and said to be innovative. Lastly, Starbucks organizational structure includes a team structure as part of their lower levels of the hierarchy. The team structure help with customer service to provide better service to the customers. Starbucks has experienced the advantages of their matrix organizational structure. However, there have been several challenges the company has to deal with every day. Some of the challenges include: First, the matrix structure creates a situation where an employee has to answer and report to two top managers at the same time, which are functional and geographic top level executives. This can be time consuming, confusing and harmful to the employee performance. Because, they have to decide which person`s management style they need to follow, it might be confusing for them to follow each person`s orders and whose rules to prioritize first. As the functional structure means that each department works for a different function. This may cause a lack of coordination and teamwork. This example may lead uncertainty in company and employees may be unwilling to simply accept that their situation is transformed constantly and eager that they build in their practical group (Mullins, 2005). The top management has considered these disadvantages of the matrix structure and has recently reported that they are planning to make "significant changes" to its organizational structure, including corporate layoffs at top levels. According to a Bloomberg report, the company CEO sent a messages to its employees internally stating that “"We must increase the velocity of innovation that is relevant to our customers, inspires our partners, and is meaningful to our business," Johnson said in the memo. “To accomplish this, we are going to make some significant changes to how we work as leaders in all areas of the company." The leadership and organizational changes are set to begin (Business Insider, 2018). This was said because Starbucks `s sales have decreased in the last few years. In conclusion, as I mentioned earlier Starbuck has matric organizational structure. Matrix organizational structure has its advantages but also has a complex characteristic. It is both vertical framework and a strong horizontal structure. I believe that matrix organizational structure creates a versatile organization. My recommendation would that the company still has a lot of potential to develop their organizational structure and make things more technical. Starbucks seems to have built a strong organization and a well-organized employee management training system. If they provide more trainings for their leaders, I believe that the company get over the disadvantages of the matrix organizational structure. They could also develop an employee performance reward system to make their employees more satisfied at work. I also recommend Starbucks to develop well organized training system to prepare them to the matrix organizational structure. Works Cited Hall K (2013) Making the matrix work: how matrix managers engage people and cut through complexity. London, Boston: Nicholas Brealey Publishing. Horney N, O’Shea T (2009) Matrix organizations: design for collaboration and agility http://agilityconsulting.com/resources/ Agility Org/Matrix Organizations.pdf Schnetler, R. (n.d.). CHARACTERISTICS OF MATRIX STRUCTURES, AND THEIR EFFECTS ON PROJECT SUCCESS. Retrieved November 3, 2019, from http://www.scielo.org.za/pdf/sajie/v26n1/03.pdf. Sobiya, & Waiz, S. (2018, December 18). Understanding Starbucks Organizational Structure. Retrieved from https://advergize.com/business/starbucks-organizational-structure/. Starbucks Corporation. (n.d.). Retrieved November 3, 2019, from https://csimarket.com/stocks/SBUX-Business-Description.html. Starbucks To Change Organizational Structure | Markets Insider. (2018, September 24). Retrieved from https://markets.businessinsider.com/news/stocks/starbucks-to-changeorganizational-structure-1027560305.