Control Mechanisms and the Starbucks Corporation The purpose of this paper is to identify four types of control mechanisms, feed-forward, concurrent, feedback, and financial, and their application in the Starbuck Corporation. The control mechanisms are compared and contrasted along with determining the effectiveness of these control mechanisms, and examining the positive and negative reactions. Finally, students will explain how these controls affect the four functions of management. Control Mechanisms Every business needs to have controls in place to remain competitive and survive in business.
Without controls, the company would operate in chaos for a short period before the business collapses. When operating a business, a manager needs to understand the different control types; bureaucratic, market, and clan. Within each of these control types, control mechanisms exist that define the type of control used. Feed-forward Feed-forward is the control mechanism that establishes guidelines for future events and is proactive rather than reactive. By planning future events within a business, less chaos or “fires” will need to be put out.
It also allows regular employees to make decisions without needing managerial approval. Concurrent Concurrent control mechanisms are those that take place in real-time. With the growing use of technology, concurrent mechanisms are the most prolific mechanism in any organization. In the case of Starbucks, technology allows managers to monitor outflow, product consumption, trends, etc. Feedback The feedback control mechanism takes place after an event. Once a problem or solution has been recognized, the information flows from one person to another.
If it is a problem that has been acknowledged then the feedback is given promptly and then in writing for future use in discipline or training. If it is a solution that has been noticed, the solution is documented and implemented as a new procedure. Financial Financial controls exist in every organization so money flow can be monitored. This can take place at the lowest level, the cash register at Starbucks, or at the highest level, the analysis of financial statements. The financial control also can be monitored by a manager when determining the need for staffing employees during certain periods throughout the day.
Compare/Contrast When discussing the four control mechanisms, their basic commonalities are that they are used in a cycle. The time in which the mechanisms are used is a difference. Another difference is that they are used for different types of control within the organization; however, feed-forward, concurrent, and feedback all have a direct relationship with the financial control mechanism. Application and Effectiveness For nearly 40 years, Starbucks has grown into a large and successful business. Maintaining control is vital for survival. Control systems are designed to eliminate idiosyncratic behavior and keep employees directed toward achieving the goals of the firm” (Bateman & Snell, 2009, p. 603). Feed-forward control is used to maintain growth in a very competitive and complex marketplace. Starbucks does extensive research on factual information, like how much coffee is being consumed in a certain areas. This and other research will lower the chance of failure, fluxes in the economy, and trends in the marketplace. A very proactive organization, Starbucks is very effective at feed-forward control.
For example, their commitment to ethically sourcing and roasting coffee is one of many reasons for success. According to Jim Donald, CEO of Starbucks, “store visits are a fundamental part of concurrent control” (Bateman & Snell. 2009. p. 580). For example, the CEO of Starbucks is a firm believer of visiting with managers and front-line workers to monitor properly the corporation’s standings. This concurrent control enables the executives to obtain firsthand information of the employees’ and customers’ experiences.
For example, Starbucks introduced their products in grocery stores in 1998 with the understanding that consumers wanted the ability to brew the world-known coffee in their homes. The information gained from concurrent controls enables Starbucks to keep a pulse on the heart of their business. Today, Starbucks is second only to Caribou in market capitalization (Yahoo, 2010). Feedback control happens after every event and helps Starbucks stay within acceptable standards. Starbucks takes pride in their ability to use feedback to be creative, innovative, and responsive to their stakeholders.
For example, management noticed the need for health benefits in the late 1980s for their employees. Feedback also brought the introduction of Wi-Fi, which helped make their coffee shops a community gathering place. Most recently, Starbucks revamped its food offerings to items made without artificial flavors, trans-fats, dyes, and high-fructose corn syrup (Starbucks, 2010). The effectiveness of Starbucks feedback controls allows them to try new ways of doing business and helps secure their success. Financial controls have been another key component to Starbucks’ success.
They monitor the individual cash flow from each store all the way up to the CFOs of Starbucks. Store managers can determine the stores needs based on proper information from the financial controls. An effective illustration of this is Starbucks’ more than 550 specialty cafes and kiosks in North America (Starbucks, 2010). The kiosks serve freshly brewed coffee to the public and provide instant financial data to the organization. Reactions Limiting actions of employees using feed-forward control can cause resentment toward management, despite the best intentions of the management team.
Reactions can vary depending on which side of the control an employee falls. Many individuals object to being treated “like a child,” but understand the need for such control mechanisms. In fact, much of the time the feed-forward control process takes place without being identified as such but is simply considered “preventative measures” (Ishikawa & Smith, 1972, p. 163). Concurrent controls also receive positive and negative reactions. Managers and employees with various cultural backgrounds can view a situation differently, thus proposing a multitude of solutions.
Previous experience of how to remedy a problem can also vary within managers of an organization. For middle managers who use concurrent control, a fine line exists between quality supervision and “micro-managing”, which often brings negative sentiment from employees. The same actions that result in negativity from employees can also evoke positive feedback from upper management, knowing that a project is being well supervised. Feedback is very important to managers and is one of the most useful tools to help managers make corrections to existing procedures.
As can be imagined, feedback can be the complete opposite of what was expected during the planning phase. Reactions can vary from surprise to reassurance, depending on the information received. Financial controls hold managers accountable for goals set by the corporation. Often, Starbucks employees and managers stress when faced with aggressive sales goals. Some may react with feelings of being “set up to fail. ” The success of a Starbucks store is dependent on the volume of customers served, and forces outside the control of store personnel can contribute to falling short of sales goals.
At the same time, other employees see the controls as challenges, and do what is necessary to meet the goals set by management (Droege, 2006). Functions of Management The control mechanisms identified in Starbucks affect the four functions of management in similar ways. Planning, organizing, leading, and controlling are the functions of management that add support to the control mechanisms. The control mechanisms compliment the functions of management and improve the possibility of success in achieving the goals and objectives of Starbucks. Planning
Planning is the beginning stages of management in which decisions are made to achieve organizational goals. The feed-forward control effects planning because it complements the process, which is used before operations begin to ensure the planning stage is carried out properly (Bateman & Snell, 2009). Organizing Organizing is the coordination of resources including finances to achieve organizational goals. The financial control affects organizing because money is the resource that needs to be assembled and coordinated to accomplish the goals.
In addition, balance sheets and profit and loss statements are used to ensure the resources are allocated properly (Bateman & Snell, 2009). Leading Leading is the effort put forth by management to stimulate high-performance by the employees to achieve organizational goals. Feedback affects leading because information is the focus and is used to correct deviations from past events. The information provided either good or bad, will be appreciated by employees who will want to reach the acceptable level (Bateman & Snell, 2009). Controlling Controlling is monitoring performance and making necessary changes to achieve organizational goals.
The concurrent control has a direct effect on controlling because it involves directing, monitoring, and fine tuning performance to ensure the plans are being carried out properly to achieve the organizational goals (Bateman & Snell, 2009). Conclusion Starbucks is very passionate about achieving their goals and objectives by strong management functions. These functions of management and control mechanisms are used by Starbucks, which is committed to doing business responsibly and focuses on earning the trust and respect of their customers, partners, and neighbors.
Effective in all aspects, Starbucks is an organization in which many other companies should follow. Starbucks considers ethics, the environment, and the community as an inspiration to achieve their goals through a strong core of managers (Starbucks Coffee, 2010). References Bateman, T. S. , & Snell, S. A. (2009). Management: Leading and collaborating in a competitive world. 8th edition. Retrieved May 30, 2010 from https://ecampus. phoenix. edu/content/eBookLibrary2/content/TOC. aspx? assetdataid=0dd00b95-d78d-40a8-bf5e-3f72f654d901&assetmetaid=f65d6fdb-d2b7-4710-8429-2e86eeb1129c.
Droege, S. (2006). Management Control. In M. H. Helms (Ed. ), Encyclopedia of Management (5th ed. , pp. 490-492). Detroit: Gale. Ishikawa, A. , & Smith, C. H. (1972). A feedforward control system for organizational planning and control. Abacus , 8 (2), 163-180. Starbucks Coffee. (2010). Company profile. Retrieved May 30, 2010 from http://assets. starbucks. com/assets/company-profile-feb10. pdf Starbucks Coffee. (2010). Newsroom. Retrieved May 30, 2010 from http://news. starbucks. com/news/ Starbucks Coffee. (2010). Timeline. Retrieved May 30, 2010 from
