University of Phoenix
Starbucks Control Mechanisms
Control systems are developed and implemented as a means to control resources and to
ensure that employees act in a manner that is beneficial to their organizational goals. Starbucks
was started in 1971 in Seattle, Washington with a goal to imports the world’s finest coffees to the
cold, thirsty people of Seattle. Starbucks has since become a worldwide phenomenon with more
than 16,000 stores in 48 countries. Starbucks, like most major corporations have many control
methods. This paper will discuss hierarchy control, regulative control, financial control, and clan
control and how they are used within the Starbucks Organization.
Regulative controls are described as coming from standing policies and standard operating procedures (Encyclopedia of Management, nd.). In today’s corporate society, many companies have started using a more decentralized and flat organizational structure. Because of this, their boundaries blur, and include “suppliers in inventory management and customers in new product development, forging cooperative alliance with competitors, and developing virtual organizations in which employees are geographically dispersed and may meet only a few times each year” (Encyclopedia of Management, nd.). In some instances, it is possible that regulative controls could actually prevent companies from obtaining goals.
Financial controls can include budgets, balance sheets, and profit and loss statements (Bateman & Snell, 2009). According to B Corporation, they “are the means by which an organization’s resources are directed, monitored, and measured.” These controls hold managers responsible in an effort to secure profits for companies (Encyclopedia of Management, nd.) and place limits on spending. Financial controls are important ways of protecting resources and making sure that a company’s account records and reporting are accurate.
Hierarchy control basically says that all decisions need to be made by those in higher positions. In a traditional hierarchy control, power, and authority flows down from the top. This form of bureaucratic control has been around for centuries, and usually has formal rules and standards in place. Control systems of this type are typically designed “to measure progress toward set performance goals” (Bateman & Snell, 2009). While this approach is still found in companies today, many are choosing to modify their structures to allow for a more employee friendly approach, such as the clan control. Clan controls are “based on the norms, values, shared goals, and trust among group members” (Bateman & Snell, 2009). Today, more than ever, many companies hold their employees to high standards and expect integrity of them. Because of this, employees strive for effective controls on their own. Companies have turned to clan controls, encouraging employees to take responsibility of their own actions. Employees are given guidelines under which they are to work, and are expected to make good judgments. Employees have common goals and trust one another, and formal controls may be less necessary (Bateman & Snell, 2009). When using these control mechanisms as a resource to implement the standards of the goals of the business, it is vital to know the positive and negative aspects. Utilizing these controls could be beneficial to the business but they can also cause detrimental damage to it if they are not managed or implicated properly. Because Starbucks is one of, if not, the only largest coffee brewer in the world today, they should ensure all necessary control mechanisms into their daily routine in order to maintain their effective customer service. Because a hierarchy describes the structure of the management from the top of the company, which is the managing director, in this case would be Howard Schultz,...