Features of the Matrix Organizational Structure in Starbucks
Discuss about the Matrix Organizational Structure In The Starbucks Company.
The matrix organizational structure refers to where specialists from various functional areas are assigned areas to work on, after which they return to their areas after the completion of the work. Therefore, the workers have dual reporting relationships which make the structure different from the traditional hierarchy (Marques et al., 2015, p. 302). One of the Australian companies that use matrix organizational structure is the Starbucks Coffee Company. It is a multinational organization, which is the largest coffeehouse in the globe. The company’s stable leadership has been enabled by using the structure that best suits the company. Notably, an organizational structure is the determinant of the managerial and leadership styles to be used, the communication model, change and other factors that are critical to the organization. The Starbucks Company has changed over years to ensure that the business structure used is the one that meets the needs of the current market. In fact, matrix organizational model is unique to Starbucks though it is featured in the conventional typology of business structures. One of the notable things is that Starbucks has not developed because of using the matrix structure but has progressed due to using a structure that meets the demands of the organization’s needs (Snell et al. 2017). This has enabled the company not only optimize processes but also provide quality goods and services to its customers.
The matrix organizational structure in Starbucks has several features. One is the functional structure which refers to a grouping of workers based on their function in the business. Some of the groups formed are the HR, finance and marketing departments. These groups operate in the topmost positions in the organization, for example, the corporation’s headquarters (Kotabe and Helsen 2014). For instance, the human resource department develops policies to be used in all cafes of the company. The role of the functional department in the company is therefore to monitor top-down activities. The other matrix team is on geographic divisions, which deals with the regions that the corporate serves. As said before, Starbucks Company is a global organization with three markets that is China and the Asia Pacific, the Americas and Europe, Middle East, Russia, and Africa. For easier performance, the market is further divided into Western, Northwest, Southeast and Northeast blocks. Every locational sector has a senior leader, called the vice president who reports to other seniors that is the geographical and functional heads. One of the benefits of this division is that it helps the managers relate closely so as to meet the needs of the different regions.
Benefits of Using Matrix Structure in Starbucks Corporate
The other matrix aspect of the company is the product based section, which addresses product lines aspects. For example, there is the sector that handles the population needing coffee and the related goods, the other one serves populations requiring baked goods while others need the merchandise for example mugs. Therefore, the feature helps the organization serve its market with product lines because what may be demanded by one population may not be required by the other. Therefore the structure has enabled the organization to provide goods and services based on the goods lines. The final aspect of matrix organization in the company is a team (Acharya and Mishra 2017). They are developed in different parts of the organization but are most evident in the least organizational levels that are the Starbucks cafes. Every café has groups that work together to ensure that customers’ needs are met. These have aided the organization is providing efficient and effective services to consumers. From the explained structures in the organization, it is clear that Starbucks Company uses the matrix structure, where functional, geographical, product based and teams cooperate in serving the customers.
By using the matrix organizational structure, the company has attained several benefits that have enabled it to compete successfully in the global market. One is on resource coordination where leaders focus in the areas they are good at (Kerzner 2017). This is to say that each leader is concerned with the sector they are allocated and since they report to senior heads there has been resource coordination. For example, in the functional division, teams grouped together work effectively as they develop their goals and work to achieve them. The other benefit of using matrix organizational structure is on specialization (Goetsch and Davis 2014). The workers are placed in sectors they are good at which ensures that maximum production is ensured. Apart from that, there is motivation as workers are proud of their work. In specialization, employees are allowed to work in sectors they like or have the needed skills and leave rest for others. This is to say that the employees are not forced into work, which has enabled the corporate retain most of the employees across the globe. Also, the company has ensured its global success by the use of this structure. For example workers good in serving coffee services to buyers have been placed in the regions needing the product, which increases the quality of the goods, provided which makes the customers choose the company over the others.
The other benefit in using matrix organizational structure is on better communication. Since the operations are divided into different structures, communication is made easier. For example, the teams formed at the lowest level in the organization could pass information to the geographical team. Notably, every sector knows their role mostly in passing information to the seniors or to other departments (Bradley 2016). Where communication channel is reliable, the decision-making process becomes easy, as the views of every department are considered. Therefore, the possibility of wrong decisions or rejection by the workers is low. In addition, effective communication channel reduces errors in the company as information is passed in the right manner and at the right time. The Starbucks Company has gained competitive advantage across the globe due to an effective way of communication that has been enabled by matrix structure (Stark 2015). For example, when the geographical team realizes that the demand for goods is increasing, the leader communicates to the functional group which works to increase the supply to those regions. As a result, the needs of the market are met making the buyer prefer the company. On the other hand, effective communication ensures that issues realized in the company are solved at the right time. With the frequent changes in the market, mistakes are common, mostly to the large organizations. However, with a reliable communication channel, the problems are solved which prevents them from reaching the consumers, who would easily prefer other organizations.
Customer satisfaction which leads to competitive advantage is the other benefit realized in using matrix organizational structure (Heldman 2018). In the traditional hierarchical system, customer satisfaction is a problem due to the rapid changes that occur in the market. This is because; the structures formed take time to alter in meeting the needs of the market. With matrix structure, the case is different as the structure is flexible, which enables quick changes in meeting the needs of the market. For example, the functional division in the market could easily form customer service teams, where issues in customer service are identified. This is to say that the structure is helpful to the company, in meeting the exact needs of the buyers, which ensure that they are satisfied and thus retained in the organization. With that, the Starbucks Company has attained a competitive advantage in the market, because quick and right decisions are made concerning needs. Mainly, this is achieved by the manner in which the employees operate. Unlike in the traditional hierarchy where workers have to consider the top leaders for changes to take place, matrix structure allows them to make changes as long they are effective. By that, issues facing the buyers are solved fast. This has made the company attract and retain customers because they are served in the right way and challenges that come up are sufficiently solved.
In using the matrix organizational structure, the Starbucks Company has experienced several challenges while competing around the globe. One is on psychological stress as the structure is dynamic regarding form and function (Ashkenas et al.2015). Due to the frequent changes involved, workers do not have a stable way of doing things which makes them develop stress. This is because, they are guided in doing some aspects and before they get used to them, changes take place. The other issue is in conflict. In this organizational structure, authority boundaries are not clear, indicating that there are many people who would make decisions (Harrison and Lock 2017). This leads to conflicts in the organization. For example, an employee may receive a directive by a manager and at the same time, receive a different directive from another leader. In the end, the worker does not know the command to follow leading to confusion. The case is serious, as it leads to high workers dissatisfaction which lowers their turnover. Apart from that, conflicting directives lead to the buyer’s issues. For example, a complaint that is raised by the customers and the managers offer different solutions, it takes too long before it is solved as the workers do not know the right action.
The other disadvantage in using the matrix organizational structure is on inefficiency (McEvily et al. 2014). The presence of many managers, conflicting policies and methods as well as contradicting loyalties leads to ineffective leadership. Apart from that, inefficiency is caused by the functional managers who compete for the attention of the employees with the cross-functional team leaders. In some of the critical processes, the cross-functional managers do not have the mandate to make decisions which greatly affects progress (Lock 2017). The case is common with the Starbucks Company, with the idea that it is multinational. Thus, where conflicting policies are developed, inefficiency is experienced which takes long before it is solved as the region served by the company is large. In fact, the structure led to the lower profits to the organization as the company did not solve issues early enough to prevent negative impacts.
In addition, there is the challenge of cost as the workers are paid based on the skills that one has. On the other hand, there are many changes that occur in the business, indicating that workers receive different payments, considering the areas they have skills (Rothaermel 2015). In the matrix type of organizational structure, more managers are hired to control the different departments developed. This leads to more money as they receive large salaries. Although different departments are helpful, an organization that does not have a stable routine of doing things experiences problems as the payment structure is complicated. This is to say that the amount of money spent is coordinating the processes as well as paying the workers is too high, that the profit earned by the corporate is affected (Giusti et al.2015). In addition, complications develop is determining the priorities to be handled by the management. This is because, the different departments develop their own aims but the strategies are reported to the functional department, which is the topmost level. The functional sector develops issues while determining the processes to be handled first, which could lead to challenges in the organization.
Based on the issues experienced while operating with the matrix structure, several recommendations are useful. With the immediate recommendation being on prices. Between 2014 and 2016, the company hiked the prices of its products, with the aim to ensure operations margins (Lee and Vachon 2016). Where a company increases its prices, the buyers could easily opt buying the goods from another organization that offers at a lower cost. Though Starbucks Company has gained a competitive benefit, a risk occurs, mostly if the prices go too high. One of the solutions to this issue is introducing more types of goods for example the coffee. With that, buyers would purchase the goods they afford. The rich would buy the expensive products, which would support the operational costs. Thus, the prices would not be high but the company would still afford its operational costs. The other recommendation is on conflicts involved that lead to inefficiency in the company. The issue would be solved by training the workers on how information should flow and the process to be followed in making decisions. Motivating the workers is also helpful in ensuring that they persevere with the problems that could be experienced.
References
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