Starbucks’ Organizational Structure & Its Characteristics

Starbucks Coffee Company organizational structure, coffeehouse business corporate structure divisions and departments, management analysis case study
A Starbucks café at the Shinbashi Yurikamome train station in Tokyo. Starbucks’ organizational structure (company structure) evolves to support business growth in the global coffee and coffeehouse industry. (Photo: Public Domain)

Starbucks’ organizational structure (company structure) provides the framework for implementing strategies and managing business development in the global coffee industry. As the largest coffeehouse chain in the world, the company maintains its industry leadership partly through the appropriateness of its business structure. A company’s organizational structure or corporate structure influences all areas of the business, including management and leadership, communication, change strategies and management, and other variables critical to business success. Starbucks evolves to ensure that its company structure matches current business needs. For example, the company adjusts its business structure upon expansion through the acquisition of other firms, such as Ethos Water. This adjustment makes Starbucks’ organizational structure specific to the needs of the business. This structure fits within conventional typologies of organizational structures. Strategic goals based on Starbucks’ mission and vision are attained through the support of the multinational coffeehouse company’s organizational structure.

Starbucks Coffee Company supports its competitive advantages through the characteristics of its company structure. These competitive advantages are essential for interacting with the industry environment, which involves the strong force of competition shown in the Five Forces analysis of Starbucks. The company competes with other coffeehouse businesses, like Tim Hortons, as well as food-service firms, like McDonald’s, Dunkin’, Wendy’s, Subway, and Burger King. Through its effective organizational design and corresponding organizational structure, Starbucks Corporation keeps growing despite competitive pressure from these firms in the international market.

Starbucks’ Organizational Structure Type & Characteristics

Starbucks has a matrix organizational structure, which is a hybrid mixture of different features from the basic types of organizational structure. In this case, the structural design involves intersections among various components of the coffeehouse chain business. For example, the company’s product-based divisions intersect with functional groups and geographic divisions, which in turn intersect with other parts of the organization. The following are the main features of Starbucks’ structure:

  1. Functional hierarchy (business function)
  2. Geographic divisions (areas or regions of operations)
  3. Product-based divisions (product type, e.g., food and merchandise)
  4. Work teams (groups for tasks and objectives throughout the business organization)

Functional Hierarchy. The functional hierarchy of Starbucks’ organizational structure refers to grouping based on business function. For example, the coffee company has an HR department, a finance department, and a marketing department. These departments are most pronounced at the top levels of Starbucks’ company structure, such as at the corporate headquarters. This characteristic is hierarchical. The corporate HR department implements policies applicable to all the company’s offices and cafés. The functional hierarchy of the company structure facilitates top-down monitoring and control, with the CEO at the top. Functional groups are responsible for the organization-wide development and implementation of Starbucks’ competitive strategy and growth strategies.

Geographic Divisions. Starbucks’ company structure involves geographic divisions, which are based on the physical location of market operations. The coffee company has two regional divisions for the global market: (1) North America and (2) International. Also, in the U.S. market, Starbucks’ organizational structure involves further geographic divisions: (a) Western, (b) Northwest, (c) Southeast, and (d) Northeast. Each geographic division has a senior executive. In this way, each local manager may receive directives from at least two superiors: the geographic head (e.g., President of North America Operations) and the functional head (e.g., Starbucks Corporate HR Manager). This feature of the business structure enables closer managerial support for Starbucks’ geography-based business needs. Each division head is given flexibility in adjusting strategies and policies to suit specific coffee market conditions.

Product-based Divisions. Starbucks has product-based divisions in its organizational structure. These divisions address product lines. For example, the company has a division for coffee and related products and another division for merchandise, such as mugs. This feature of the company structure enables Starbucks to focus on product development. In this way, the company develops and innovates its coffee and related drinks and food products with support from its organizational structure. This product development provides competitiveness that the business needs, especially in dealing with the threats identified in the SWOT analysis of Starbucks.

Teams. Teams are used in different parts of Starbucks’ organizational structure. However, teams are most visible at the lowest organizational levels, particularly at the coffeehouses. For example, each café has teams organized to provide goods and service to customers. This feature of the company structure enables the coffee business to deliver effective and efficient service to consumers. Team effectiveness is a determinant of the financial performance of licensed store locations and company-owned coffeehouses. Starbucks’ organizational culture (corporate culture) influences how team effectiveness is achieved. The coffee company’s development depends on team-based factors and associated human resource management strategies.

The characteristics of Starbucks’ organizational structure shape strategic management decisions in the business. Also, different levels of the business organization are responsible for maintaining the integrity of the company structure. The identified structural characteristics present a framework that influences corporate strategy and executive direction involving Starbucks’ headquarters.

Development of Starbucks’ Structure

Starbucks Corporation reforms its organizational structure over time. In 2007, the company expanded rapidly and shifted its focus away from customers and toward the strategic global expansion of the coffeehouse chain. The business experienced a significant decline in sales in that year. This decline worsened because of the lack of focus on customer experience. When Howard Schultz resumed the CEO position in 2008, he changed Starbucks’ company structure to bring focus back onto customer experience. New regional divisions were created and teams at the company’s cafés were given better training.

The current corporate structure of Starbucks is a result of reforms to improve customer experience and business financial performance. The company recognizes the importance of strategic alignment involving various facets of the coffee business. Aligning the company structure with trends in the coffeehouse industry stabilizes Starbucks’ market presence and market share. It is expected that the company’s future organizational structure will involve additional product-based divisions, such as divisions for new services complementing food and beverage, to account for further diversification. Its development history suggests that Starbucks will continue acquiring more firms in the future to support its growth strategies, including diversification.