This paper examines Starbucks' matrix-style organizational structure, explaining how it blends functional and divisional design to manage a complex multinational operation. The paper contrasts functional and divisional organizational models before describing how Starbucks combines both through overlapping regional and functional divisions. A detailed case study of Starbucks' entry into Japan illustrates why nationally specific divisions are essential for adapting products and services to local consumer habits. The paper concludes by weighing the drawbacks of matrix structures — such as cost and inter-divisional conflict — against their advantages for a brand committed to delivering a personalized customer experience worldwide.
Some organizations are functional in their organizational design, which means that responsibilities are allocated based on the functions of various employees. A good example is an organization that has an advertising division, an IT department, and other segments with specific purposes. Other organizations are divisional in design — for example, a company may be divided geographically or by products or brands. A matrix-style organization attempts to offer the best of both formats. It strives to focus on functionality while still offering an individualized product experience, using divisions that focus on products, regions, or other organizational areas.
Starbucks' organizational structure is matrix-like in nature. In addition to a CEO and managers overseeing general functions such as human resources, Starbucks has managers responsible for specific components of the brand, such as Seattle's Best brand coffee. There are also divisions that focus on the operations of UK Starbucks, France, Japan, and various regions of the United States.
Some of the responsibilities of these divisions overlap. For example, there is a Starbucks division in charge of the Far East, but also a separate division that oversees Greater China and Development. While this does pose the risk of overlapping organizational capabilities, each specific, independent cell of the company is empowered to cater to the needs of not only the nation but the specific functions of Starbucks within that nation. The Greater China division, for instance, can address areas particular to growing the brand in the developing world, whereas the Asia Pacific division addresses the needs of all Pacific Rim countries (Organizational chart Starbucks, 2011, The Official Board).
A good example of the matrix structure's value is the Retail Japan division within the Starbucks organizational matrix. When Starbucks initially moved into Japan, it deployed a fairly generic approach typical of the corporation at the time. However, Starbucks came to realize that there were aspects of operating in Japan that had to be addressed for the brand to thrive and grow.
Because Japanese homes are considerably smaller than American homes, Japanese consumers tend to linger much longer where they eat. Japanese consumers are also far more likely to eat meals at cafés. This required Starbucks to create a larger array of meal-based foods rather than relying primarily on pastries. Japanese consumers also tend to prefer tea over coffee, and once the initial novelty of coffee-drinking wore off, Starbucks was compelled to incorporate a wider variety of beverages (Lewis, 2003). Starbucks made coffee-drinking in Japan more popular than it had been before the company established itself on Japanese soil, but the brand had to adopt a nationally specific approach to thrive and suit the needs of Japanese consumers. Having a division specifically devoted to understanding Japanese consumer habits was vital in facilitating Starbucks' growth in that market.
"Matrix structure supports diverse global store experiences"
"Weighs matrix trade-offs against Starbucks' mission"
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