Organizational Structure: Starbucks Re-organizes structure and continues to grow

Hey everyone,

Time for a blog post about something you all may find interesting, organizational structure!

You know how you have some friends that know absolutely useless facts about random stuff like sports?  Maybe what actors starred in a random movie?  Well my guilty obsession is reading about businesses I find interesting and learning as much as I can about them.  Now I can’t tell you why I enjoy learning about this kind of stuff so much, my best guess is that I appreciate seeing innovation and watching companies grow.

This brings me to one of my favourite companies to read about: Starbucks. 

I remember Starbucks from a very early age because I remember watching that one Simpsons episode where they are constantly going to the mall and eventually all the other stores in the mall closed down because a new Starbucks would be opening up in their place.  It was a company that took the world by storm, many doubted the success that Starbucks would have, but through constant innovation and re-organization they’ve been able to beat every odd stacked against them.

Now back to organizational structure and why do I keep raving about Starbucks, as of 1 year ago , Starbucks has split the organization into three separate districts in order to better handle operations and keep their clients happy.  They employ a matrix organizational structure that utilizes communication channels, “the matrix organizational structure is a very effective way to take full advantage of all communication channels. Whether the organization wishes to label the organizational structure or not, the structure is the pivotal point of success in its organizational communication,” (George & Jones, 2005).

They have utilized the matrix organizational structure in their benefit to better serve their customers.  A matrix organizational structure is “an organizational design that groups employees by both function and product. The organizational structure is very flat, and the structure of the matrix is differentiated into whatever functions are needed to accomplish certain goals,” (What is a Matrix Structure, ND).  They have created products that tailor to specific regions and have now created a stronger organizational structure to accommodate the needs of their customers during their expansion.

“Starbucks retail business is currently structured as Starbucks U.S. and Starbucks Coffee International (SCI), which encompasses 54 markets outside the United States. Starbucks will move to a new three-region organizational structure:

• China and Asia Pacific: All Asia Pacific markets and China
• Americas: United States, Canada, Mexico and Latin America
• EMEA: Europe, U.K., Middle East, Russia and Africa”

(Starbucks, 2011).

Since Starbucks has been able to focus on specific regions, they are able to put management in place to oversee each region.  This will prove to be much more effective than expecting a CEO to monitor a manager for each region.  “A president for each region will oversee the company-operated retail business, working closely with both the licensed and joint-venture business partners in each market, (Starbucks, 2011).

Another goal that Starbucks has had is they wanted to expand their company to feature the multiple brands they carry.  One of the biggest brands that everyone may know that Starbucks owns is Seattle’s Best Coffee.  Seattle’s Best Coffee is currently served in every Macs convenience store and Subway in North America.  Another big brand that Starbucks own is Tazo Tea, and as tea is the second most consumed beverage in the world (second to water, not Coca Cola!) it is in their best interest to build both brands through this new structure.

The Starbucks corporation does not ignore their customers, most of their success is based on the fact that their products are tailored to their customers, and not vice versa.  “Starbucks does a great job in using technology, marketing tactics, and their employees to communicate success, goals, and vision to the customer. Examples of this can be seen on the Starbucks website. The website shares the companies guiding principles, vision as a company, social responsibility, and mission statements,” (SeaZone|Yahoo Voice, 2009).

The point I want every one to take from today’s blog isn’t that Starbucks is one of the most powerful corporations in the world (even though it is).  But rather the reason for their incredible success is the ability to operate a dynamic organizational matrix structure to accommodate customer needs and make it work for them.

If RIM in Waterloo would have taken a step back and divided the markets up by region, maybe they may have stood a chance? (too soon?) But really, they had that colossal service outage in the Middle East and have their devices have been in many countries in Asia, could this be because there was no operations manager specifically focusing on that region?  Food for thought.

One final note: I do not intend to bash RIM, I really liked that company, and still do.  I just wish they made better decisions.

Thanks for taking the time to read this everyone, please comment on the RIM question!
References:

Understanding and Managing Organizational Behavior (4th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

http://news.starbucks.com/article_display.cfm?article_id=547

http://www.businessmate.org/Article.php?ArtikelId=186

http://voices.yahoo.com/successful-application-organizational-behavior-2435551.html?cat=3