Starbucks Coffee Company’s Organizational Structure

Starbucks Coffee Company organizational structure case study analysis
A Starbucks café at the Shinbashi Yurikamome train station in Tokyo. Starbucks Coffee’s organizational structure grows and changes to support the company’s needs. (Photo: Public Domain)

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.

Starbucks Coffee’s organizational structure evolves to serve the needs of the business. This structure supports the company’s concerns in global expansion and diversification.

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:

  1. Functional structure
  2. Geographic divisions
  3. Product-based divisions
  4. Teams

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 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.

References
  • Claver-Cortes, E., Pertusa-Ortega, E. M., & Molina-Azorín, J. F. (2012). Characteristics of organizational structure relating to hybrid competitive strategy. Journal of Business Research65(7), 993-1002.
  • Corporate Governance – Starbucks Coffee Company.
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  • Koehn, N. F. (2002). Howard Schultz and Starbucks Coffee Company. Harvard Business School.
  • Lee, J. Y., Kozlenkova, I. V., & Palmatier, R. W. (2015). Structural marketing: Using organizational structure to achieve marketing objectives. Journal of the Academy of Marketing Science43(1), 73-99.
  • Liao, C., Chuang, S. H., & To, P. L. (2011). How knowledge management mediates the relationship between environment and organizational structure. Journal of Business Research64(7), 728-736.
  • Smith, M. D. (1996). The empire filters back: consumption, production, and the politics of Starbucks Coffee. Urban Geography17(6), 502-525.
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