Starbucks Organizational Structure & Culture A Starbucks Coffee Company case study PDF

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Course: Organization Graduation: Company Creativity and Innovation 2019/2020 Starbucks Organizational Structure & Culture A Starbucks Coffee Company case study Introduction Starbucks Coffee Company is the largest coffeehouse chain in the world. The firm’s industry leadership is partly attributed...

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Course: Organization Graduation: Company Creativity and Innovation 2019/2020





Starbucks Organizational Structure & Culture A Starbucks Coffee Company case study Introduction Starbucks Coffee Company is the largest coffeehouse chain in the world. The firm’s industry leadership is partly attributed to the appropriateness of its organizational structure. A company’s organizational structure influences management and leadership, communication, change, and other variables critical to business success. Starbucks has evolved to have an organizational structure that matches current business needs. This organizational structure is unique to Starbucks, although it can be characterized based on a conventional typology of organizational structures. Starbucks succeeds because its organizational structure grows with the business, enabling the company to optimize processes and the quality of its goods and services.

Features of Starbucks Coffee’s Organizational Structure Starbucks has a matrix organizational structure, which is a hybrid mixture of different features from the basic types of organizational structure. The following are the main features of Starbucks Coffee’s organizational structure: • • • •

Functional structure Geographic divisions Product-based divisions Teams

Organisational structure Functional Structure. The functional structure feature of Starbucks Coffee’s organizational structure refers to grouping based on business function. For example, the company has an HR department, a finance department and a marketing department. These departments are most pronounced at the top levels of Starbucks Coffee’s organizational structure, such as at the corporate headquarters. This feature relates with hierarchy in the organizational structure of Starbucks. For instance, the corporate HR department implements policies applicable to all Starbucks cafés. The functional structure feature of the firm’s organizational structure facilitates top-down monitoring and control, with the CEO at the top. Geographic Divisions. Starbucks Coffee’s organizational structure also involves geographic divisions. At present, the company has three regional divisions for the global market: (a) China and Asia-Pacific, (b) Americas, and (c) Europe, Middle East, Russia and Africa. Also, in the U.S. market, Starbucks Coffee’s organizational structure involves further geographic divisions: (a) Western, (b) Northwest, (c) Southeast, and (d) Northeast. Each geographic division has a senior vice president. In this way, each Starbucks manager reports to two superiors: the geographic head (e.g. President of U.S. Operations) and the functional head (e.g. Corporate HR Manager). This feature of Starbucks Coffee’s organizational structure supports closer managerial support for geographic needs. Each division head is given a high degree of flexibility in adjusting strategies and policies to suit specific market conditions. Product-based Divisions. Starbucks also uses product-based divisions in its organizational structure. These divisions address product lines. For example, Starbucks has a division for coffee and related products, another division for baked goods, and another division for merchandise like mugs. This

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Course: Organization Graduation: Company Creativity and Innovation 2019/2020



feature of the firm’s organizational structure enables focus on certain product lines. In this way, Starbucks effectively develops and innovates its products with support from its organizational structure. Teams. Teams are used in different parts of Starbucks Coffee’s organizational structure. However, teams are most notable at the lowest organizational levels, particularly the Starbucks cafés. In each café, the firm has teams organized to deliver goods and service to customers. This feature of Starbucks Coffee’s organizational structure enables the company to provide effective and efficient service to consumers.

Note on Starbucks Coffee’s Organizational Structure Starbucks has reformed its organizational structure over time. By 2007, the company was expanding rapidly, such that it shifted focus away from customers toward strategic global expansion. However, Starbucks experienced significant decline in sales in 2007. This decline was worsened because of the lack of focus on customer experience. When Howard Schultz resumed the CEO position in 2008, he changed Starbucks Coffee’s organizational structure to bring back focus on customer experience. New regional divisions were created, and teams at Starbucks cafés were given better training. Thus, the current organizational structure of Starbucks is a result of this reform to improve customer experience and the firm’s financial performance.

Culture Starbucks Coffee Company’s organizational culture is one of the most distinct characteristics of the firm. A company’s organizational culture widely influences employees and business performance. In Starbucks Coffee’s case, the company’s organizational culture permeates all aspects of its business. However, Starbucks cafés are where the company’s organizational culture is most easily observable. The way café employees work with each other and how they interact with customers are indicators of Starbucks Coffee’s organizational culture. The warm and friendly ambiance in these cafés is part of the company’s distinction from competitors. Starbucks has an organizational culture that relates with the company’s strategies for successful brand development and global expansion.

Features of Starbucks Coffee’s Organizational Culture Starbucks Coffee’s organizational culture has a number of key characteristics. The combination of these characteristics is unique to the firm. The company describes its organizational culture as a culture of belonging, inclusion and diversity. In this regard, the main features of Starbucks’ organizational culture are: 1. 2. 3. 4. 5.

Servant Leadership (“employees first”) Relationship-driven approach Collaboration and communication Openness Inclusion and diversity

Servant Leadership. Starbucks has a servant leadership approach, which significantly characterizes the company’s organizational culture. In this approach, leaders, managers and supervisors emphasize support for subordinates to ensure that everyone grows in the company. This feature of Starbucks’ organizational culture translates to the employees-first 2



Course: Organization Graduation: Company Creativity and Innovation 2019/2020

approach. The company highlights the importance of caring for employees. Former Starbucks President Howard Behar developed this feature of the firm’s organizational culture because he believed that employees who are cared for are the ones who care about customers. Relationship-driven Approach. Starbucks also has an organizational culture that supports warm and friendly relationships. For instance, at Starbucks cafés, baristas exhibit warm friendly bonds with each other. This feature of the company’s organizational culture extends to customers, who are also treated with warmth. Through emphasis on relationships, Starbucks develops the coffee culture that drives consumer demand for the company’s specialty coffee products. Collaboration and Communication. The organizational culture of Starbucks encourages collaborative efforts through effective communication. At the cafés, baristas clearly communicate with each other to fulfill orders. Also, they collaborate as teams to make the order fulfillment process efficient. Thus, Starbucks’ organizational culture supports efficiency in business processes, which contributes to quality of service, customer experience, and business cost-effectiveness. Openness. Openness is another major characteristic of Starbucks Coffee’s organizational culture. Initially, employees had a culture of fear to speak up to their superiors. To address this issue, former Starbucks President Behar introduced open forums to encourage employees to ask questions and communicate with superiors. A culture of openness developed. Through this feature of its organizational culture, Starbucks empowers employees and facilitates innovation. Inclusion and Diversity. Starbucks has an anti-discrimination policy that shapes its organizational culture. This policy prohibits any form of discrimination based on gender, race, ethnicity, sexual orientation, religion, age, cultural backgrounds, life experiences, thoughts and ideas. Through this feature of the organizational culture, Starbucks facilitates sharing and rapport among employees, as well as innovation based on diverse ideas. This aspect of the company’s organizational culture also makes customers feel welcome at Starbucks cafés.

Note on Starbucks Coffee Company’s Organizational Culture Starbucks has gone through significant changes in its organizational culture. These changes are based on issues and problems leaders like Howard Schultz and Howard Behar identified. As a way of enhancing business performance, Starbucks instituted reforms in its organizational culture. Today, the company’s organizational culture is a distinct characteristic that builds competitive advantage and develops a consumer population of loyal Starbucks fans.

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