News Article Analysis Organizational Theory

The article by Dr. Kathy Iversen a business consultant provides a lot of insight into practical application of organizational theories in management. The article features Starbucks an American based company coffeehouse company which has over 15,000 chain stores in more than 40 countries. The article focuses on Starbucks rehiring of former CEO after a downward trend due to what he terms as “…myopic focus on operational effectiveness led by new, post-founder management began to negatively impact the customer experience.” (Iversen, 2008, 3).

The author compares Starbucks fate with Apple, Swarbs and Dell transformation after the later companies effectively applied tools and systems in the organization that boosted innovation and profitability. The following are three fundamental issues focused in the report in relation to implementation of a good and effective organizational structure that could transform Starbuck’s trend to a profitable path.

The organizational structure should apply systems and models that are dynamic thus are able to change with the corporate world for the business to remain profitable. A good organizational model should have effective channel of communication, feedback mechanism and facilitate good response and decision making process. The organizational culture and work environment models should facilitate optimal performance by ensuring that employee capabilities are properly utilized and encourage responsibility and innovation in the workplace.

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Dynamism in the corporate world.

The corporate sector in modern times is subject to perpetual change therefore, organizational models adopted should accommodate this change in their organization by putting in place relevant tools to prepare it for this eventuality. External environment analysis focusing on customer, competitors changing trends and adoption of new marketing strategies are vital to ensure that the company remains relevant thus profitable.

The author gives an example of Apple which changed to music enjoyment instead of computing to recapture its market and future profitability (Iversen, 2008). This shows how effective a good which focuses on investing in new fields can help a company reinvent itself into profitability path. Bureaucratic organizational model tend to focus on cost cutting rather than adoption to the innovation, for a company such as Starbucks given its level of maturity, implementing models that focus on new ideas would be the most appropriate in a move to reclaim its lost glory (Daft, 2001 pg. 107)

Effective Communication in Organizational Models.

Effective communication is one of the most important elements in establishing an organizational model. There are two main distinction namely formal communications which is utilized in big established diverse companies and informal communication channels which lead to open interactive dialogue both horizontally and vertically in the organization.

The advantages of the later is that it will help facilitate free flow of information thus for analysis of the market, an element which is essential for most businesses. In addition informal means of communication works best in volatile and uncertain environments such as the one which Starbuck’s is facing thus if correctly implemented can lead to quick response and decision making (Daft, 2001, pg.14).

Organizational Culture.

According to Daft (2001, pg 30) scholars have pointed out that corporate culture and sound internal processes are key elements in good organizational models to the extent that they promote effective running of the organization. A fluid and flexible structure will encourage constant experimenting and learning thus ensuring better policies, procedures are adopted to ensure dynamism and innovation in the organization. For instance, given the fact that Starbucks is a service oriented company, employee training and empowerment can lead to certain beneficial attributes such as, smoothing the progress of change since they directly interact with the customer thus can be able to get the information needed by management to effect change and enhanced customer relation and satisfaction thus building of clientele and profitability (Iversen, 2008).

Conclusion.

Though, the author did not explore on the organizational approach and design, the best design proposed in this paper would be a decentralized approach with emphasis on organic systems of organization as opposed to mechanistic/ bureaucratic approach. Firstly, given that Starbucks is a multi national company with coffee houses all over the world. A centralized system will fundamentally inhibit flexibility and restrict decision making process and timely response to customer needs. On the other hand a decentralized approach will encourage each store to make decision based on customer needs, create diversity and promote dynamism and innovation factors that are vital for profitability.

However, this approach might lead to loss of control and direction by top management thus leadership skills are essential to ensure that while chains are flexible, the company’s vision, brand name and direction is uniform to ensure sustainability and balanced growth. Secondly, good organic structures ensure that communication is free-flowing, employees are empowered and well motivated and generally the internal processes lead to optimal production hence growth (Daft, 2001, pg 64). There should be both formal and informal channels of communication that are strong and consistent to ensure that management is in control and allow timely information flow in the organization.

References

1. Daft, R. (2001) Essentials of Organization Theory and Design. South-Western.
2. Iversen, K. (January, 15th 2008). Brewing a fresh pot at Starbucks. Forbes Magazine. Retrieved March 11th 2008 from http://www.forbes.com/personalfinance/2008/01/15/starbucks-schultz-apple-pf-ii-in_ki_0115soapbox_inl.html

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