Introduction
With globalization and advancement in information technology, enterprises have expanded their operations beyond national borders. Business firms no longer operate in the same geographical regions.
As a result, competition in the global markets has intensified. Businesses have been forced to define better ways of responding more quickly to this change in the business environment.
The type of structure adopted by an organization has far-reaching effects on its success in the competitive environment.
In order to stay put in business, a business firm must adopt and implement organizational structure that would enable it quickly respond and adapt to the market changes.
Case Study: Starbucks Corporation
Brief History and Background
Starbucks is an international company headquartered in Seattle, Washington. Since its inception in 1971, the company has realized significant growth. It has been expanding its business operations to many countries of the world.
Currently, Starbucks Corporation is the largest coffee company in the world. It is estimated to have more than 19,000 stores in 60 countries.
The significant achievements of the company are attributed to effective leadership and appropriate organizational structure.
Starbucks’ Organizational Structure (Matrix Structure)
Intense competition has forced the company to adopt and implement organizational structure to allow it respond more quickly to rapid changes in the business environment.
Starbucks has embraced matrix organizational structure which facilitated grouping of employees by both product and function.
Employees in the organization are grouped into teams so that they can take advantages of each other when accomplishing duties. The structure is flat and differentiated according to functions needed to achieve specific goals.
Similarities and Differences between Matrix Structure and Functional Structure
Functional structure has also been widely adopted by numerous companies around the world. Notably, functional structure has features similar to those of matrix structure.
In both cases, an organization classifies its employees into divisions and allows functions to be integrated.
Despite these similarities, they are distinct differences between the two. A matrix structure is more complicated than a functional structure.
With a matrix structure, an organization is divided according to products and functions. Therefore, every employee serves two divisions i.e. a product and functional division.
By contrast, functional structure requires an organization to divide its employees basing on their abilities and qualifications. Unlike functional structure, matrix structure encourages employees to share knowledge.
Similarities and differences between Matrix and Bureaucratic Structure
Both structures are better suited for typically but not large scale organizations. In both structures, employees’ undertakings are intertwined hence they are jointly responsible for outputs of the organization.
Organizations which have adopted bureaucratic structures are not differentiated whereas firms which have matrix structure are highly differentiated. Bureaucratic structures are highly standardized while matrix organizations have low standardization.
A matrix structure gives an organization a flat structure while bureaucratic structure makes the entire structure of an entity flat. Matrix is a highly decentralized whereas bureaucratic is highly centralized.
How Organizational Functions Influence and Determine Organizational Structure of Starbucks Corporation
Basically, an organizational structure defines how tasks are undertaken and reporting relationships which enable a firm to control and coordinate various activities in a bid to attain predetermined goals and objectives.
Therefore, an organization must adopt and implement a structure that would facilitate attainment of the stated goals. In the paradigm case, human resources, marketing and finance operations have influenced the company to adopt matrix organizational structure.
In order to stay put in the competitive business environment, Starbucks Corporation must be ready to respond to the changing needs and demands of the consumers, and this constitutes marketing functions. The company must react to new customers’ needs and demands.
As such, it must ensure that lead-times for new products and services are reduced. Therefore, the company has to adopt matrix structure since it will allow it to survive in fast-paced environments.
Starbucks has adopted aggressive marketing and product-placement business strategy which can only be achieved through departmentalization. In this case, employees’ efficiency and effectiveness is paramount.
Division of employees by function and product allows the organization to coordinate their efforts. Starbucks organization values greater flexibility in various business operations.
The organizational needs in respect to human resource are changing constantly hence the company must adopt matrix structure as oppose to hierarchical structure. Since the company has various departments, open communication between employees or stakeholders is valuable.
The employees ought to share knowledge and cooperate so as to improve quality of products and service delivered to the customers. Matrix structure is one of the organizational structures that have been proved to open up for communication.
For a long time, Starbucks Corporation has been using teams of employees to perform all operations. Previous management of the entity has had the belief that use of teams allows employees to take the advantages and to make up for the limitations of each other. This would enhance maximum production both in short term and long term.
How Organizational design Determines Starbucks’ Organizational Structure
Starbucks is a customer-based coffeehouse company and it is operating in a fast-paced business environment. The challenge of most companies around the world has been meeting new customers’ demands.
Therefore, the company must ensure that it has measures and processes that enhance quick response to the ever-changing needs of the customers. It must have effective and productive workforce at all times so as to guarantee quality products and services.
As such, this has necessitated the corporation to employ matrix structure so as to adapt easily to the market changes. The structure inspires high degree of readiness to respond promptly to the new demands of consumers. The company handles different projects geared towards meeting the needs of the customers.
Therefore, it must assign specialized resources to launched projects when need be. This can be realized only if there is matrix organization.
In a classical view, Starbucks’ activities have been grouped into departments in its quest to achieve intended goals and objectives. The company has adopted formal departmentalization which witnessed grouping of various activities by functions.
In the United States, the company is operating under four distinct divisions which include Northwest/Mountain, Northeast, Southeast and Western/Pacific. In order to have maximum communication between various departments and division, the company had to embrace matrix organizational structure.
The departments and divisions must support the goals and visions of each other, and this mandated the corporation to adopt matrix structure.
Conclusion
Arguably, an organization structure influence the success of an entity in modern business environment.
Starbucks Corporation has realized great deal of achievements due to its matrix organizational structure which has facilitated specialization and efficiency among the employees.
It can be concluded that the structure is suited for companies operating in fast-changing environments.