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Management in Starbucks
Question 1: What types of departmentalization are being used? Explain your choices.
There is also functional departmentalization in the SVP level with functions of finance, coffee and global procurement and corporate social responsibility. In the support center, there is also functional departmentalization with the functions of accounting finance, IT, sales and supply chain management. The same also goes for the zone offices with functions of HR, facilities, account management, finance and sales.
Question 2: Do you think it’s a good idea to have a president for the US division and for the international divisions? What are the advantages of such an arrangement? Disadvantages?
It is a sound idea as Starbucks has established its biggest market in the US whose needs and wants would be consistent across the country. Having a president there would place focus and accountability on this critical market. The international division would have its own set of challenges which would need a president with international experience and perspective.
The disadvantage would be that different cultures may arise in different divisions. The centers of power may be too large for the CEO to handle.
Question 3: What examples of the six organizational structural elements do you see discussed in this case? Describe.
Specialization in skills is reflected in the functions that show the process for coffee making: coffee and global procurement, roasting plants and the retail stores. Administration is also broken down as accounting, finance and IT. In the roasting plant, there is the production team and the distribution team. Departmentalization was already illustrated in Question 1. The chain of command is shown upwards as the retail store, zonal office, regional center and headquarters. Span control is illustrated as narrow with three presidents reporting to the CEO and a normal span for 8 to 10 stores reporting to the district manager at the zone level. Centralization is not too strong as there are three presidents. Formalization is already high as there are job positions for almost all functions. In the store alone, there is the barista, the assistant store manager and the store manager. For the drive-in window alone, there would be order-taker, the cash register operator, the espresso machine operator and a “floater” who can assist anywhere.
Question 4: Considering the expense associated with having more managers, what are some of the reasons why you think Starbucks decided to decrease the number of stores each district manager was responsible for, thus increasing the number of managers needed? Other than the expense, can you think of any disadvantages to this decision?
Closer supervision is a consequence of a narrower span of control. The fewer the stores a district manager will oversee, the more time he can devote to ensure quality in all facets of operations. Quality is the driver or this decision.
More managers would widen the span of control of higher managers which would increase stress.
Question 5: Give some examples of the types of communication taking place at Starbucks.
The frequent and regular visits of executives to the stores are an example of interpersonal and informal communication. It is also upward communication as the primary objective is to get feedback at the store level. The Starbucks Broadcast News is an example of formal and downward organizational communication that runs through the chain network. The internal communication audit is a formal and upward organizational communication which solicits employee feedback.
Question 6: Suppose that you are the Starbucks store manager in St. John's, Newfoundland and Labrador. How do you find out what is going on in the company? How might you communicate concerns or issues that you have?
With such a far-flung location, the use of the internet should be optimized. The manager should visit the website daily. He can also connect with employee forums and keep in personal touch with colleagues in other locations. The combination of formal news and the grapevine would give a good feel of company affairs.
The best way to communicate concerns is to email first and then to make follow calls via phone or internet. Audio-video applications like Skype would be most effective for serious discussions.
Question 7: Jim Donald has said that Starbucks' long-term goal is to have 15,000 US stores and 30,000 stores globally. In addition, the company has set a financial goal of attaining total net revenue growth of 20% and earnings per share growth of 20 to 25%. How will the organizing function contribute to the accomplishment of these goals?
The key is increase the number of stores without a proportional increase of headcount. This can be achieved by increasing the span of control with the help of a better reporting system. At the store level, employees should be able to perform as many roles as possible to minimize manpower.
Question 8: Starbucks has said that it wants people who are "adaptable, self-motivated, passionate and creative team players." How does the company ensure that its hiring and selection process identifies those kinds of people?
The best way to verify is the use of the on-the-job probation period of 3-6 months. Actual work performance will ultimately reveal if these qualities are indeed present in the applicant.
Question 12: Which of the Guiding Principles affect the organizing function of management? Explain how the ones you chose would affect how Starbucks' managers deal with (a) structural issues (b) communication issues and (c) HR issues.
Provide a great work environment and treat each other with respect and dignity.
Embrace diversity as an essential component in the way we do business.
Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee.
Develop enthusiastically satisfied customers all of the time.
Contribute positively to our communities and our environment.
Recognize that profitability is essential to our future success.
Provide a great work environment and treat each other with respect and dignity.
Job positions, roles and responsibilities must be well-defined so there can be efficiency and harmony among employees working together. Policies and methods in communications should be in place so employees can have channels for feedback and information. The practice of respect and dignity in any HR issue, no matter how severe, will prevent situations from deteriorating beyond recovery.
(“The Way We Do Business”)Works Cited
"The Way We Do Business". Starbucks Coffee Company, Russia. Web. 5 July 2016. <http://starbuckscoffee.ru/EN_US/_ABOUT_STARBUCKS/MISSION_STATEMENT.HTM>.
