Starbucks for the win :)

Starbucks Organizational Chart: http://www.cogmap.com/chart/starbucks-corporation

Starbucks follows the traditional structure of a company in that it has a CEO, board of directors and management. The CEO of Starbucks is Howard Schultz, as is indicated by his position at the top of the chart. The duties of a CEO include acting as a figurehead for the organization, leading the team of directors and devising corporate strategy. Although the organizational chart shows the senior management team, there isn’t enough information to determine who sits on the board of directors. Despite the fact that most large companies appoint directors from each functional area of the business (i.e.: marketing, human resources, finance) to sit on the board, this is not always the case. Nevertheless, the role of the senior management is the day-to-day implementation of the organization’s policy. Hence, its structure is similar to the pyramidal structure shown in slide 5.

As can be seen from the chart, Starbucks has organized itself by functional departments, examples being David Pace (EVP of Partner Resources, AKA human resources) and Dorothy Kim (EVP of Operations). This is similar to the chart shown in slide 2. However, it is also somewhat organized by geographic location, examples being Launi Skinner (President of Starbucks Coffee US) and James Alling (President of Starbucks Coffee International).

Furthermore, the chain of command can be determined from the chart through the use of vertical lines to show who has direct authority over others. For example, Martin Coles (the COO) reports directly to Howard Schultz (the CEO). Starbucks appears to have a relatively long chain of command, as there are as many as four levels at hierarchy even at the senior managerial level. This means it may take longer for a message to pass through different levels of hierarchy, thereby hindering effective communication.

Moreover, it can also be seen that Starbucks has a relatively narrow span of control like the diagram in slide 4, which is to say that each manager controls a relatively small number of subordinates. An example of this would be Dorothy Kim (EVP of Operations), who only controls two subordinates, Willard Hay (SVP of Coffee and Global Procurement) and Peter Gibbons (SVP, Starbucks Coffee Global Manufacturing Operations). A narrow span of control means Starbucks is a relatively tall organization similar to the ones depicted on the left side of slide 3, which has both advantages and disadvantages. Benefits include the fact that it is easier and more time-effective to communicate with employees in smaller teams. Smaller teams may also be more productive due to the existence of team spirit and specialization. Also, the fact that there are greater opportunities for promotion might motivate employees. However, the fact that there are more managers means this method of organization is more costly. Also, taller organizations often mean delegation is necessary, which can be a double-edged sword. While it can improve efficiency and accountability, not to mention act as a motivating factor for the “delegates”, delegation can also wreak havoc if the communication of instructions proves to be a failure.

Finally, the official channels of communication of Starbucks can also be noted from the chart. For example, communications that concern the partner resources team would only go through the Howard Schultz (the CEO), Martin Coles (the COO), David Pace (EVP of Partner Resources, AKA human resources) and Margaret Giuntini (SVP Partner Resources, U.S. Business).

Side note: although many other terms such as centralized/decentralized, matrix structure and flexible structures are used to describe organizations, there isn’t enough information given in the organizational chart to determine how these apply in the context of Starbucks

Buyology

Link: http://www.time.com/time/specials/packages/article/0,28804,1894410_1893209_1893463,00.html.

For a non-fiction book about business, Buyology by Martin Lindstrom is sure making a lot of waves across the world of business and beyond, and for good reason, too. After using MRIs of more than 2000 consumers to observe their behaviour with regard to conventional marketing techniques, Lindstrom found that most ads actually fail to achieve their intended purpose, sometimes even going so far as to backfire miserably, as can be seen with the example of the cigarette carton label. Instead, he contends that purchasing decisions are often subconscious and emotional rather than rational. Although some may argue his scientific method of analyzing the tastes of consumers may not apply to the real world, the evidence provided so far is fairly concrete. Personally, I found his fusion of biology and business fascinating, as it proves that most areas of study are interdisciplinary by nature.

Topics from the syllabus the article covers include 4.1 The Role of Marketing, 4.2 Marketing Planning, 4.3 Product, 4.5 Promotion. However, I will only focus on one of these topics, 4.5 Promotion.

Lindstrom's research certainly has many implications about conventional notions of promotion. By pointing out that large warnings on cigarette packets only stimulate the desire to purchase the good in question, governments and NGOs involved in de-marketing such "demerit goods" may need to reconsider alternate promotion strategies to achieve their intended effect. Additionally, businesses should start considering ways to appeal to the hearts of their target audience rather than their heads, as it appears that consumers tend to go on their instinct more than anything else (hence proving that humans are irrational?). An example of such a method would be appealing to consumers’ nationalism instead of touting the benefits of the product in question. If organizations choose to take Lindstrom’s research into consideration when considering their promotion strategies, they might just be the push they need to capture more market share and profits in the long run. Although one must inevitably consider the ethical implications of researching the biology behind consumer desire, it must be said that cracking the biological code to marketing would undoubtedly give any business an edge.