Research Proposal: Efficacy of Different Mechanisms, Techniques

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¶ … efficacy of different mechanisms, techniques, models, and frameworks that are used in planning a project. In order to tie the discussion to a particular industry and to provide real world examples of principles, forms, and structures I discuss, I will address project planning within the coffee service industry. Where specifics will enhance understanding of the discussion tenets, I will use the Starbucks Coffee Company as the corporate example.

Organizational structure. Starbucks Coffee Company provides a distinctive corporate model that can serve as a frame of reference when addressing corporate strategy and types of organizational structure. The coffee shops associated with the Starbucks Coffee Company chain create a large network of stores / java cafes. The Starbucks brand is sizable and the organizational structure reflects the complexity of brand management on such a large scale. Starbucks' corporate operations are overseen by teams of executives located in its Seattle, Washington, headquarters. The regional groups of Starbucks' stores located across the country are overseen by district mangers, who, in turn, report directly to Starbucks' headquarters. A store manager and an assistant store manager provide leadership at the retail store level. Shift supervisors at the stores may function as managers-on-duty when store managers or assistant store managers are not present. Baristas make up the lowest tier of employees at the retail store level. Regardless of the official position titles of Starbucks employees, all workers are referred to as Starbucks' partners. Starbucks employees are considered integral to corporation's success. Notably, Starbucks also works to establish close relationships with their customer base. These corporate attitudinal markers are indicative of the Starbucks' culture, which has had a profound impact on operations -- and many say on the company's overall success through several volatile decades.

From this brief description of the component parts of the organizational structure of Starbucks Coffee Company, I propose that a matrix structure is used to group employees by function and product. Teams of employees are charged with accomplishing the functional work across many different products. Starbucks application of the matrix (Kloppenberg, 2009) structure supports their focused corporate strategies, combing product-based and functional divisions such that most employees report to two supervisors. This configuration acts to promote team spirit and corporate identity. Within the matrix, employees are trained and empowered to make substantive decisions. That this system works well is evidenced by the superior customer service and customer-brand engagement that is a trademark of Starbucks Coffee Company. The matrix organizational structure could easily be a barrier to effective operations (Kloppenberg, 2009), but Starbucks has finessed the networking and connections within the matrix such that it supports, rather than inhibits, operations.

It is important to recognize that the Starbucks Coffee Company has many subdivisions that are focused on coffee bean processing, prepared foods, and vendor relations to address procurement, supply chain, and research and development. In addition, Starbucks retail stores also include licensed storefronts, but they are not true franchises. The licensed stores may be found in bookstores, grocery stores, or other places where a Starbucks store is not located in a stand-alone building, which is typically owned by Starbucks. All Starbucks stores, licensed or conventional retail operations, are held to the same strict standards -- the Starbucks reputation depends on it. Indeed, consistency across Starbucks sites is a hallmark of the brand. For this reason, all of the items that are sold in the retail stores and the licensed stores are established and approved by the pertinent executives at Starbucks corporate offices. This measure of control is critical to effective brand management. The Starbucks Coffee Company name is synonymous with the brand, the products sold, and the services provided.

Starbucks Corporate Strategy & Strategic Management

Starbucks' overall corporate strategy is to introduce relevant new products in all its channels and to selectively develop new channels of distribution. Specifically, Starbucks will focus on a continuation of its disciplined global expansion of its retail and licensed store base, the evolution of the Global Responsibility strategy, and a focus on being an employer of choice.

Starbucks is using acquisitions plus innovation to fuel growth. This is a stronger position than moving up on acquisitions alone. International expansion is a target and the plan is to open approximately 500 net new stores globally in the next several years, with approximately 100 new stores in the U.S. And approximately 400 new stores located internationally, the majority of which are expected to be licensed stores.

Strategic management will focus on leveraging the valuable lessons learned in the U.S., capitalizing on large expansion opportunities outside the U.S., growth and scale in the more mature existing markets, and emphasizing expansion in key emerging markets like China and Brazil, and continuation of disciplined global expansion of its retail and licensed store base.

Starbucks plans to aggressively go after the at-home and office single-served market, as well as the $21 billion global instant coffee category. Diversification will include brew in the grocery channel and the introduction of a new customizable Frappuccino® blended beverage. Market research provides evidence of "new muscle on how to go to market at retail as evidenced by the fantastic customer and partner response to Starbucks VIA in our stores" ("Earnings call transcript," 1Q 2010). Marketing expenses are anticipated to be higher in order to support the launch of Starbucks VIA® Ready. The company's brand portfolio includes Tazo tea, Ethos water, Seattle's Best Coffee, and Torrefazione Italia Coffee. The Global Responsibility Strategy is based on Starbucks' commitments to sustainability of quality coffee and the communities in which it does business.

With regard to the single cup serving strategy that is the focus of this project proposal, Starbucks plans to supply coffee for Courtesy Products' CV1 one-cup brewers in as many as 500,000 upscale U.S. hotel rooms. In the international markets, Starbucks' CEO Howard Schultz said almost 40% of households in Germany own single-cup brewers, versus about 6% in the United States. In Germany, the market leader has an "open system" -- meaning any coffee roaster can provide so-called "coffee pods" for the machine. Keurig, on the other hand, is a closed system with U.S. patents set to expire next year. Schultz is quoted as saying that, "The single-serve segment of the coffee industry is poised for a sea change of innovation." ("Starbucks Annual Report," 2010)

U.S. store operating expenses were 36.6% of total revenues, a 350 basis point improvement over last year, primarily driven by the continued application of lean principles in our store operating model, plus the effect of company-operated store closures. I will point out here that we improved labor management and labor costs in our stores over the past year at the same time as we've seen a dramatic improvement in customer satisfaction scores.

The U.S. operating margin improvement is largely the result of the comp store sales growth as well as the work we started at the beginning of fiscal 2009 to better align our cost structure to the changing business environment. As a reminder, we reported $580 million in savings in fiscal '09, but only $75 million fell into the first quarter with the cumulative impact growing as the year progressed (Earnings Call, Q1 2010)

Organizing knowledge and expertise: T-shaped management. The complexities of a matrix organizational structure can be addressed through effective communications. According to (Hansen & Von Oetinger, 2001), the greatest assets that companies may possesses could well be the "wealth of expertise, ideas, and latent insights that lies scattered across or deeply embedded in their organizations." The most effective way to address this situation and co-opt these important assets is an approach known as T-shaped management.

In order to implement a T-shaped management strategy, the traditional lines of corporate hierarchy and communication may need to be breached. In effect, a manager who implements a T-shaped approach will work to ensure that function-based silos are not established by ensuring the knowledge flows freely horizontally across the organization in a horizontal manner. Moreover, the T-shaped management approach requires the same degree of diligence with regard to the flow of information and monitoring of performance in a vertical direction, encompassing the individual business units. In consideration of the matrix organizational structure adopted by Starbucks Coffee Company, the T-shaped management approach would address the horizontal functional units and the vertical product-related teams as they interface with the function-focused teams. In this manner, T-shaped management can be used to effectively counterbalance the tendency of business units to compete rather than collaborate. Hansen & Von Oetinger (2001) assert that this approach is especially effective in large corporations like Starbucks Coffee Company where the business units function with considerable autonomy.

Starbucks has not always been a nimble company and it has, on more than one occasion, tended to grow too fast and has suffered from the impact of cannibalization. Moreover, since the company has been round for several decades, it has seen its fair share of economic disruption. The corporate strategy of Starbucks has sometimes had to change course in order to address substantive changes in the space.… [END OF PREVIEW]

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