Decision and Control the Organization Term Paper

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The businesses all utilize the same brand, but are otherwise quite different from one another. Within the main retail business, the breakdown by geography is also logical, because there are some product and service differences between the geographic regions. The regional breakdowns also allow for better management and more direct corporate control. For example, having a manager for the Asia Pacific region who is based in the region allows for closer monitoring of the company's efforts in each different market, essential since for the most part Starbucks' Asian properties are owned by large franchise operators.

There is little cause for making changes to the job design. The functional design with geographic groupings subordinated reflects that first and foremost Starbucks is about a set of product/service offerings. The geographical scope of those offerings is secondary to the offering itself. The cafe business, for example, cannot have much meaningful input into the packaged beverages business, so there is no need for the company to be organized geographically. A matrix structure would imply that the geographic divisions are not subordinated, but again would also be more suitable for a company where the different product/service units require some degree of coordination with each other. That simply is not the case with Starbucks, so the existing organizational design is both appropriate and effective.

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4. According to the 2011 Annual Report, Starbucks offers a number of different equity incentive plans to its employees, depending on the status of the employee within the company. The offerings in these plans include a variety of stock options, restricted stock units and employee stock purchase plans. These plans orient the employees in particular to long-term objectives, as shareholders of the company. Managers are oriented both long-run with the stocks and short-run with options, as they orient only until the expiration date.

These plans are in addition to basic compensation that is offered in the form of wages or salary. Managers receive salary, for example. There may be small performance-based bonuses, but managers would also be oriented to receive raises based on performance over the short run. While there is need for short-term incentives, this also creates the aforementioned agency problem. A recommendation to resolve this would be that short-term incentives have a long-term component -- paid out in extra stocks for example -- as this would compel lower-level managers to take a long-term view of the firm and of their careers with the firm, rather than becoming absorbed in the pursuit of short-term results.

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