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.