The Management Structure of Starbucks Coffee

The Management Structure of Starbucks Coffee

Executive Summary

Starbucks Coffee is a company that capitalizes on its corporate structure to enhance its business agenda in the global arena. Being the largest chain of coffeehouses in the world, Starbucks enjoys a competitive advantage in the industry partially through the aptness of its management structure. The company has thousands of cafes across the globe and primarily profits from the sale of coffee and tea beverages. It boasts of a heavy workforce that runs into hundreds of thousands and relatively low employee turnover. Starbucks has a matrix organizational structure, which is the least bureaucratic and the most excellent human resource policy. The McKinsey 7-S model can assist in describing the company’s change and innovation strategy. In addition, Starbucks’ communication channel, which flows in all organizational directions, is effective for its employees. The company’s management controls different processes to guarantee the realization of desired goals at all corporate levels. On the other hand, the CEO exhibits several servant and transformational leadership styles to run the company and address various management issues.

Introduction

Every business entity employs various strategies to gain a competitive advantage over others and enjoy a larger market share eventually. The management or corporate structure is one crucial strategy that influences many areas of a firm’s operations including leadership style, change in management strategies, communication, and other factors essential for business growth (Geereddy, n.d.). Starbucks is a good example of a company whose management structure has evolved to match its present business needs (Geereddy, n.d.). For instance, the firm altered its organizational structure after its business expansion, which came after it acquired Seattle’s Best Coffee and Ethos Water (Geereddy, n.d.). Founded in Seattle in 1971, Starbucks rose to become the world’s most renowned and fastest-growing businesses. Initially characterized by a gradual but sure growth, the firm expanded rapidly towards the close of the 1980s and into the 1990s. At the start of the 21st Century, Starbucks had approximately 9,000 s outlets worldwide (see app. 1).

Company Products/Services, Number of Employees and Turnover

Among the most renowned cafes worldwide, Starbucks primarily benefits from the sale of assorted coffee and tea beverages alongside selling roasted exotic coffee beans (“Starbucks Company Profile”, n.d.). The company’s main product, however, is fresh-brewed coffee, which is, however, supplemented by other products such as hot and iced espresso drinks, non-coffee beverage blends, Tazo teas, and smoothies among others. The company also sells various types of merchandise such as coffee brewers and grinders, coffee mugs and coffee accessories, home espresso machines, premium chocolate, and compact discs. Fresh food is also available at Starbucks with sandwiches, baked pastries, salads, and yogurt parfaits as part of the menu. Finally, there are other available global consumer products, such as Starbucks liqueurs and an assortment of super-premium ice creams.

The number of employees at Starbucks has been rising steadily through the years, which corresponds to the firm’s growth in global presence. The present total number of employees is estimated at 346, 000, which is up from the 2015 figure of 238, 000 (“Starbucks Company Profile”, n.d.). Appendix 2 illustrates the steady rise in staff at Starbucks from 2015 to date. Among the core reasons for Starbucks sustained popularity over the years is the quality of its coffee and an incredible customer service. Starbucks is widely acclaimed for its employee satisfaction. The firm’s staff turnover rate is approximately 65% as that of managers is about 25% per annum (“Starbucks Company Profile”, n.d.). Unlike other similar corporations, Starbucks’ turnover rate is significantly low, thus making Starbucks be among the best businesses with a high consumer satisfaction and employee motivation.

Organizational Structure and Design

Starbucks Coffee’s organizational structure is a matrix type. It is a hybrid one that comprises diverse aspects of the cardinal types of management structure (Meyer, 2019). Particularly, the company’s structure is characterized by interchanges among its varied units. For instance, Starbucks' product division intersects with both its geographic and functional divisions, which also cooperate with other sections of the company. The main elements of this firm’s management structure are a functional hierarchy, geographical units, product-oriented units, and dedicated teams. Appendix 3 provides an overview of the company’s matrix type of management structure.

HR Structure and Management (Staffing, Benefits and Compensation, and Motivation)

The early 2000s were a challenging period for Starbucks as the company struggled to attain and retain its staff to safeguard its projected growth. The HR team discovered that success in the retail chain required a team of motivated and devoted employees (Tikson & Hamid, 2018). As a result, the company started to select the right staff and retain them. People have their personal expectations on where they feel their goals can be realized. Therefore, any organization with well-designed human resource policies would identify competent workers and match them accurately to their areas of expertise (Tikson & Hamid, 2018). The HR management in Starbucks, therefore, ensures that the candidates selected can identify the job’s rapport with their goals and personality. After hiring the right people, Starbucks invests in their training to ensure that they would perform their duties efficiently. The company’s management acknowledges that critical decisions such as whom to hire, the kind of training to offer, what to pay, and the evaluation of employee performance have a significant impact on staff motivation and their ability to provide quality service to the customer (Tikson & Hamid, 2018). The substantial investment that Starbucks makes in its staff through its extensive training program illustrates the company’s commitment to empowering its employees. The policies that demonstrate the firm’s commitment to becoming a responsible business hinge on hiring, workplace environment, diversity, and wage and hour rules. The Starbucks\ hiring policy complies with the company’s global human rights standard. The firm’s hiring practices promote equal opportunity (Tikson & Hamid, 2018). In addition, recruitment decisions are based on work-related standards, and the use of forced labor is not condoned. Starbucks’ workplace environment facilitates a fair treatment through which employees work with each other with dignity and respect. Moreover, Starbucks embraces workplace diversity by creating and promoting an all-inclusive working environment, thus enhancing its strategic advantage. Finally, the firm adheres to all applicable labor laws, thus ensuring that every worker is compensated correctly. Employee motivation is another vital consideration for any organization since it influences workers’ behavior. Staff motivation revolves around the psychological forces within an individual that determine their behavior in the organization, level of effort, and resilience during hard times (“Starbucks Company Profile”, n.d.). Money plays a significant role in work motivation. In this regard, many companies such as Starbucks offer an attractive benefits plan. At Starbucks, employees received various special benefits such as company’s stock dividends. The stock dividends make the employees feel like they own a part of the company, thus motivating them to ensure the stability of the firm’s performance and an increase in its profit margins. Starbucks also rewards its employees with full healthcare benefits and comprehensive training. The working environment also facilitates healthy relationships between employees and managers. Through its interactive structure, employees at Starbucks can learn among themselves while at their job, which motivates everyone in the firm to satisfy themselves and achieve a new level of performance.

Change and Innovation Management Processes

Starbucks' change and innovation strategy could be analyzed using the McKinsey Framework, as illustrated in appendix 4. The McKinsey 7-S model assists in identifying seven internal components of a corporation that should be aligned for it to be successful. The 7-S model addresses a wide variety of situations where it plays a crucial role in examining how various parts of an organization work together. For instance, it can help to improve organizational performance or determine the best approach when implementing a proposed strategy (Rivero, 2015). Some important features of Starbucks' change and innovation processes include redefinition of customer experience, product improvement, and business expansion. With reference to product improvement, Starbucks has strengthened its coffee products for its England and Ireland customers in specific products, such as cappuccino, latte, and mocha. Starbucks is also keen on expansion. After the 2009 closure of its five stores, the firm is expanding with twenty-six new stores currently, up from the twenty-two new stores opened in 2018 (Meyer, 2019). Besides, Starbucks plans to bolster its expansion by unveiling own stores rather than providing licenses and franchises to others. Starbucks also capitalizes on systems to enhance its brand value. For instance, the company has embraced the social media business to promote its brands through popular channels such as Twitter, Facebook, and YouTube. With regard to shared values, Starbucks focuses on improving people’s interactions by creating an experience in which individuals would find it comfortable and convenient to visit their premises just to unwind. The company, therefore, seeks to create a third place apart from work and home for individuals to hang around. Starbucks has also embraced sustainable sourcing as a measure of countering opposition across the world, where the firm was accused of exploiting poor farmers through unethical supply chain maneuvers (Meyer, 2019). Finally, the company always intends to give back to the community through corporate social responsibility.

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