Starbucks originated from humble beginnings, emerging in 1971 as a coffee machinery and supplies store in Seattle, Washington. As Starbucks prepared for world domination during the 1980s, these offerings increased to include specialty drinks, such as the caffe’ latte, which became the signature beverage of Starbucks. The brand rapidly expanded as Starbucks storefronts opened throughout the United States and Canada first, ending fiscal year (FY) 1987 with a total of 17 stores. The first international Starbucks storefronts were opened in 1996 in Japan and Singapore as the total number of stores climbed to 1,015 as Starbucks began to acquire other companies, specifically Seattle’s Best Coffee, Teavana, and Evolution Fresh, to complement the Starbucks’ line. By June 28, 2015, Starbucks was well on the way to world domination as 22,519 stores had opened world-wide, serving a variety of pastries, breakfast items such as oatmeal, sandwiches, wraps, and paninis, and salads available at numerous locations. In addition, Starbucks developed an Internet presence through the establishment of a web site and on-line store (Starbucks, 2016).
The organizational structure is an imperative aspect for any business regardless of the size. As such, the organizational structure of Starbucks has evolved through the development of a unique, fluid foundation that provides flexibility to match the ever-changing current needs of the business, designed to optimize the processes as reflected through the quality of the products and services provided. The organizational structure Starbucks applies to operations addresses four primary features consisting of a functional structure, geographic divisions, product-based divisions, and teams. The functional structure applies to the groupings comprised of business functions as separated by department, such as finance, HR, and marketing, demonstrating a hierarchal organizational structure which is more apparent among the upper management as facilitated through top-down monitoring under the leadership of a chief executive officer (CEO) (Meyer, 2015).
The geographical divisions of Starbucks’ infrastructure is separated into three regional divisions as reflected by the global market with divisions established for China and the Asia-Pacific, the Americas, and Europe, the Middle East, Russia, and Africa (EMEA). The U.S. market is further divided into geographical divisions consisting of Western, Northwest, Southeast, and Northeast following the hierarchal model with senior vice presidents of operations leading each geographical division while the manager of each store reports to the President of U.S. Operations, who serves as the geographical head, and the Corporate HR Manager, serving in the capacity of the functional head; however, each division head is afforded flexibility to adjust the strategies and policies to satisfy the needs of each specific market (Meyer, 2015).
Starbucks organizational structure also includes product-based divisions. The product-based divisions bear the responsibility to develop the product lines Starbucks offers. These divisions are area-specific, such as one division is responsible for coffee and related products, another addresses merchandising, while another develops baked goods. This provides Starbucks with the ability to develop innovative products with support provided throughout the organizational structure (Meyer, 2015).
The final facet of Starbucks’ organizational structure consists of teams. Even though teams exist throughout the organizational structure, they are most prevalent among the lower levels of the corporate structure as demonstrated through the teams that work in conjunction to deliver goods and services to the consumer. The teams in the storefronts focus on customer service achieved by providing effective and efficient service. The importance of teams was emphasised as Starbucks’ applied focus to the quest for global domination, which resulted in a decline in sales and subsequent profit margin as customer service suffered. However, the organizational structure implemented at Starbucks provided the ability to correct the issue by establishing more regional divisions and providing in-depth training to the teams (Meyer, 2015).
Starbucks demonstrated gains throughout the first quarter of fiscal year 2016 with a consolidated sales growth of 8 percent. The Americas market demonstrated the highest levels of sales growth at 9 percent, followed by the China and the Asia-Pacific at 5 percent while the growth in the EMEA market was a modest 1 percent (Starbucks Corporation, 2016). Certain trends emerged during an analysis of the annual income statement, reflecting an increase in total revenue and cost of revenue while the largest increase was observed in the gross profit. On 30 September 2013, Starbucks recorded a gross profit of $8,484,500,000 as annual sales reached $14,866,800,000. The amount of gross profit increased to $9,589,000,000 on 28 September 2014 with annual sales of $16,447,800,000 while 27 September 2015 recorded annual sales of $19,162,700,000 as gross profit reached $11,375,200,000 (Nasdaq, 2016). Once operating expenses were applied, the net income as it was applicable to common shareholders reached $8,300,000 in 2013, $2,068,100,000 by fiscal year end in 2014, and $2,757,400 by fiscal year end in 2015 (Figure 1) (Nasdaq, 2016).
Throughout its history, Starbucks has demonstrated the ability to recover quickly from downturns within their organizational structure through the ability to make adjustments to the organizational structure in a manner that ensures the continuity of the business. Starbucks has firmly entrenched themselves in the international market as being a high-quality chain coffee shop. The ability to initiate adjustments and corrective measures to address the issues that arise has provided Starbucks with a stability that has eluded other major corporations. As Starbucks contains to attain world domination in a highly competitive marketplace, increased sales and subsequent increases in gross profit has been recorded. Starbucks emerged as a trendsetter and continues to do so. This trend is expected to continue into the foreseeable future as Starbucks popularity increases and the brand continues to expand.
- Meyer, P. (13 September 2015). Sarbucks Coffee Company’s Organizational Structure. Panmore Institute. Retrieved from http://panmore.com/starbucks-coffee-company-organizational-structure
- Nasdaq. (2016). SBUX Company Financials. Retrieved from http://www.nasdaq.com/symbol/sbux/financials?query=income-statement
- Starbucks Corporation (21 January 2016). Financial Release: Starbucks Delivers Record Q1 Revenues and EPS. Retrieved from http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-newsArticle&ID=2131218
- Starbucks. (2016). Starbucks Company Timeline. Retrieved from http://www.starbucks.com/about-us/company-information/starbucks-company-timeline
