Starbucks Organizational Structure In A Nutshell

Starbucks follows a matrix organizational structure with a combination of vertical and horizontal structures. It is characterized by multiple, overlapping chains of command and divisions.

Department	Type	Details	Advantages	Drawbacks
Retail Stores	Divisional	– Separate divisions for company-operated stores and licensed stores.	– Specialization in retail operations for different types of stores. – Efficient management of company-operated and licensed stores.	– Potential variations in customer experience between company-operated and licensed stores. – Challenges in standardizing operations across divisions.
Coffee Sourcing and Quality	Divisional	– Division dedicated to sourcing high-quality coffee beans and ensuring quality control.	– Expertise in coffee sourcing and quality assurance. – Ensures consistent coffee quality across locations.	– Potential difficulties in coordinating sourcing and quality efforts with retail operations. – Risk of supply chain disruptions affecting quality.
Marketing and Product Innovation	Functional	– Functional teams responsible for marketing, product development, and innovation. Functional managers oversee these activities.	– Specialization in marketing strategies and product innovation. – Efficient product development and marketing processes.	– Potential misalignment between marketing/product innovation and retail operations. – Challenges in translating innovation into successful products.
Human Resources	Functional	– Functional department responsible for HR-related activities across the organization. Functional HR managers.	– Efficient management of HR functions and workforce planning. – Expertise in HR matters and compliance.	– Limited integration between HR and other operational departments. – Potential challenges in addressing unique HR needs in different divisions.
Finance and Accounting	Functional	– Functional department responsible for financial management and accounting. Functional finance managers.	– Efficient financial management, budgeting, and accounting processes. – Expertise in financial matters.	– Limited integration between finance and operational departments. – Potential misalignment with budgeting and financial needs at different levels.
IT and Technology	Matrix	– Cross-functional teams with members reporting to both product leaders and functional IT managers.	– Enhanced collaboration between IT, technology, and product development. – Efficient utilization of IT resources.	– Potential conflicts and complexity due to dual reporting structures. – Challenges in resource allocation and decision-making.

Table of Contents

Understanding the Starbucks organizational structure

Starbucks is a large and popular café chain, with over dozens of thousands of stores in 70 countries around the world.

The company is one of several large multi-national corporations to successfully implement a matrix structure. In general terms, a matrix structure consists of functional and product-based divisions with multiple chains of command. It is also well suited to organizations that have a diverse range of products or services.

Starbucks is controlled by a board of directors who operate in the company headquarters of Seattle, Washington. In the United States, the company is split into regional jurisdictions run by district managers who oversee a group of stores. Each store is run by a store manager and shift supervisor who oversees a group of staff.

Importantly, Starbucks promotes an inclusive culture among its staff. The company seeks to recognize exemplary employee performance and encourages them to develop hard and soft skills – regardless of title or pay bracket. With these skills, Starbucks gives employees the autonomy to serve customers in a way they deem best. Given that authority and empowerment are given to low-level employees, the company can also be said to incorporate aspects of a flat organization structure.

The four elements of Starbucks organizational structure

There are four key elements to the Starbucks organizational structure.

Below we will take a look at each in more detail.

Functional hierarchy

Functional hierarchy refers to the grouping of departments according to business functions. Examples include the human resource and marketing departments.

It should be noted that functional hierarchy is the most traditional aspect of the matrix structure. Much of the decision-making in each Starbucks department is centralized and only occurs at company headquarters. For instance, the corporate human-resource department makes policy changes applicable to every Starbucks café.

With the CEO at the helm, functional groups exercise top-down control to develop and then execute competitive growth strategies.

Product-based divisions

Starbucks also has several product-based divisions. These encompass divisions for coffee, merchandise, and baked goods to name a few.

They also include divisions for the numerous brands operating under the Starbucks banner, including Evolution Fresh juices and Teavana bottled teas.

Geographic divisions

With a presence in 70 countries, optimizing the structure of geographic divisions is vital for Starbucks.

In 2011, the company ditched the Starbucks U.S and Starbucks Coffee International (SCI) divisions to create three new regions:

Americas – further divided into the Western, Northwest, Southeast, and Northeast United States.
China and Asia-Pacific, and
Europe, Middle East, Russia, and Africa.

Each division has a senior executive who is given flexibility in adapting strategies to the particular geographic region. The senior executive reports to both the geographic head and the functional head.

Teams

Teams are invariably found in Starbucks in every Starbucks café. The company understands that team performance and good customer service drive the financial success of every location.

As noted earlier, teams are motivated and empowered to perform in such a way that they further personal goals and enhance Starbucks’ corporate culture.

Key takeaways

Like many successful multi-national corporations, Starbucks employs a matrix organizational structure. The matrix structure is characterized by multiple chains of command and combines aspects of product and function-based structure.
With a focus on low-level employee empowerment and autonomy, Starbucks also embodies some aspects of a flat organizational structure. However, the company retains a strong preference for hierarchical corporate governance.
Starbucks also has product-based divisions to help structure the various product categories and brands for sale in each café. It also utilizes geographic divisions to simplify the management of its global presence.

Starbucks Business Model

Key Highlights

Matrix Organizational Structure: Starbucks employs a matrix organizational structure, which combines both vertical and horizontal structures. This structure is characterized by multiple overlapping chains of command and divisions.
Global Presence: Starbucks operates in over 70 countries and has a large number of stores worldwide.
Board of Directors and Headquarters: The company is overseen by a board of directors based in its headquarters in Seattle, Washington.
Regional Jurisdictions: In the United States, Starbucks is divided into regional jurisdictions led by district managers who supervise groups of stores.
Inclusive Culture and Employee Empowerment: Starbucks promotes an inclusive culture and empowers its employees, encouraging skill development regardless of title or pay. This empowerment extends to low-level employees and reflects aspects of a flat organizational structure.
Functional Hierarchy: The functional hierarchy organizes departments based on business functions, and decision-making often occurs centrally at the company headquarters.
Product-Based Divisions: Starbucks has divisions for various products, including coffee, merchandise, baked goods, and brands like Evolution Fresh and Teavana.
Geographic Divisions: The company optimized its geographic divisions by reorganizing into three regions: Americas, China and Asia-Pacific, and Europe, Middle East, Russia, and Africa. Each division has a senior executive with flexibility in adapting strategies to their region.
Team Emphasis: Teams play a crucial role in every Starbucks café, emphasizing the importance of team performance and customer service for the company’s success.
Hybrid Structure: While Starbucks embraces aspects of a flat organizational structure through employee empowerment, it retains a hierarchical corporate governance preference.
Management of Product Categories and Brands: Product-based divisions help structure the various product categories and brands sold in Starbucks cafés.
Global Management Simplification: Geographic divisions simplify the management of Starbucks’ global presence by assigning senior executives to specific regions.