Starbucks Coffee’s Organizational

Structure & Its Characteristics

Starbucks Corporation (Starbucks Coffee Company)

uses its organizational structure to facilitate 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 corporate structure. A
company’s organizational 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 organizational structure
matches current business needs. For example, the
company adjusted its corporate structure upon
expanding its business through the acquisition of
other firms, such as Ethos Water and Seattle’s Best
Coffee. Such adjustment makes Starbucks
Corporation’s organizational structure specific to the
needs of the business. This structure fits within
conventional typologies of organizational structures.
 Similar to the case of other multinational
organizations, the company employs its structural
characteristics to ensure that its operations are
streamlined and properly managed.

Starbucks Corporation’s Organizational Structure

Type and 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 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 Coffee’s corporate structure:

1. Functional hierarchy
2. Geographic divisions
3. Product-based divisions
4. Teams
Functional Hierarchy. The functional hierarchy
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’s
corporate structure, such as at the corporate
headquarters. This characteristic is hierarchical. For
example, the corporate HR department implements
policies applicable to all of the company’s cafés. The
functional hierarchy of the corporate 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 Corporation’s generic
competitive strategy and intensive growth strategies.

Geographic Divisions. Starbucks Coffee’s

corporate structure involves geographic divisions,
which are based on physical location of operations.
The company has three regional divisions for the
global market: (1) Americas, (2) China and Asia-
Pacific, (3) Europe, Middle East, 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
executive. In this way, each local manager reports to
at least two superiors: the geographic head (e.g.
President of Europe, Middle East, and Africa
Operations) and the functional head (e.g. Corporate
HR Manager). This feature of Starbucks’s corporate
structure enables closer managerial support for
geographic needs. Each division head is given
flexibility in adjusting strategies and policies to suit
specific 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, another division for baked goods, and
another division for merchandise like mugs. This
feature of the corporate structure enables Starbucks
to focus on product development. In this way, the
company develops and innovates its products with
support through its organizational structure. Such
development provides competitiveness that the
business needs, especially in considering the threats
identified in the SWOT analysis of Starbucks
Corporation.

Teams. Teams are used in different parts of

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

Starbucks Coffee’s Corporate Structure

Development
Starbucks Corporation reforms its organizational
structure over time. By 2007, the company was
expanding rapidly, such that it shifted focus away
from customers and toward strategic global
expansion. However, the business experienced
significant decline in sales in that year. 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 corporate 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 reform to improve customer experience and
business financial performance. The company
recognizes the importance of strategic alignment
involving various facets of the business. In this case,
for example, aligning the corporate structure with
trends in the coffee and coffeehouse industries
stabilizes Starbucks’s market presence and market
share. It is expected that the company’s future
organizational structure will involve additional
product-based divisions to account for further
diversification. Its development history suggests that
the company will continue acquiring more firms in
the future to support its growth strategies.

Boundaryless Organization:-
While traditional organizational structures have defined
vertical and horizontal borders and hierarchies,
boundaryless organisations are defined specifically by a
lack of structures and an approach to business that is
based on the free flow of information and ideas to drive
innovation, efficiency and growth in a world that’s
constantly changing. The concept was pioneered by well-
known management thinker and former General Electric
chairman Jack Welch, who wanted to break down existing
barriers between different parts. Adaptability and
flexibility are important criteria of boundaryless
organisations.
Boundaryless organizations will often make use of the
latest technology and tools to facilitate the breaking down
of traditional borders, such as virtual collaboration and
flexible working. With regard to employees, they may
have more responsibility for their own projects and targets
and be more able to achieve results in a way that’s
appropriate for the project at hand. Because many
boundaryless organizations are dispersed across
geographic borders, employees may be from different
cultures and countries but must work together. Because of
this, boundaryless organizations require a strong set of
core values and a strong vision.

3. VIRTUAL ORGANIZATIONAL
STRUCTURE
The term virtual organization is used to describe a
network of independent firms that join together, often
temporarily, to produce a service or product. Virtual
organization is often associated with such terms as
virtual office, virtual teams, and virtual leadership. The
ultimate goal of the virtual organization is to provide
innovative, high-quality products or services
instantaneously in response to customer demands.
The term virtual in this sense has its roots in the
computer industry. When a computer appears to
have more storage capacity than it really possesses
it is referred to as virtual memory. Likewise, when an
organization assembles resources from a variety of
firms, a virtual organization seems to have more
capabilities than it actually possesses.

EXAMPLES OF VIRTUAL ORGANIZATIONS

An industry that is known for its use of partners and
alliances is the entertainment industry, which has
partnered with the computing, communications,
consumer electronics, and publishing industries to
convert movies, textbooks, and other software into
digital formats.
Increasing numbers of firms are moving to these
new organizational forms. Corning, the glass and
ceramics maker, is one such firm known for making
partnerships work to their advantage. Corning has
partnered with such firms as Siemens, Germany's
electronics conglomeration, and Vitro, Mexico's
largest glassmaker. Alliances are so important to
Corning's business strategy that the corporation has
defined itself as a network of organizations.
Computer organizations that have successfully
implemented forms of this new structure include
Apple Computer and Sun Microsystems. When
Apple Computer linked its easy-to-use software with
Sony's manufacturing skills in miniaturization, Apple
was able to get its product to market quickly and
gain a market share in the notebook segment of the
PC industry.
Sun Microsystems has been considered another
highly decentralized organization comprised of
independently operating companies. Sun positions
information systems as a top priority, trying to
achieve faster and better communication. With
numerous "SunTeams," members operate across
time, space, and organizations to address critical
business issues. Sun managers identify key
customer issues and then form teams with the
critical skills and knowledge needed to address the
issue. This team might include sales people,
marketing personnel, finance, and operations from
various places around the globe; customers and
suppliers may become episodic members as
necessary. Weekly meetings may take place via
conference calls. Critical to the team's success is the
selection of talent from the organization, defining a
clear purpose for the team's efforts, and establishing
communication links among the team members.
Sun has been working on further development of
technologies such as EDI (Electronic Data
Interchange) and RFID (Radio Frequency
Identification technology). Both EDI and RFID will
impact information exchange globally and across
numerous industries.