Human Resource Department

ASSESSMENT 1
LEADERSHIP AND MANAGEMENT CONCEPTS

[Imran Imtiaz Butt]

16/05/2017
Table of Contents:

Table of Content……………………………………………………………………………..…….…………………….……02

1. Introduction…………………………………………………………………………….…..…..……………….........03
1.1 Current Organizational Structure……………………………….………………………………….…..…03
2. Discussion……………………………………………………………………………….…..…..…………………………05
2.1 Leaders vs. Managers………………………………………………………………………….…................05
2.2 Definition of Manager……………………………………………………….….……………………………….05
2.3 Definition of Leader…………………….…………………………………………………………………...……06
2.4 Difference between Managers and Leaders……………………………………………………………08
2.5 Management Theories for the growth of Organization in current time period……….09
2.5.1 Chaos Theory……………………………………………..………………………………………………..10
2.5.2 Management by Objectives………………………………………………………………………….10
2.6. Roles of Leaders and Functions of Managers in Situational context………………………...12
2.7. Models of Leadership and Management on Starbucks…………………………………………..…13
2.7.1. Systems Leadership……………………………………………………………………………………..13
2.7.2. Contingency Theory……………………………………………………………………………………..14
3 Conclusion…………………………………………………………………………………………………………………..15
4 Bibliography………………………………………………………………………………………………………………..16

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1- Introduction:

In present time, consuming coffee has become a daily routine for many people. Started from
the sixteenth century in Muslim civilization has now reached at every corner of the world. In
Europe, coffee took some time to become prevalent, but once it became widespread then
many coffee houses began to establish as a place where literature, societal and political
discussion can be done. Coffee soon substituted the beer as New York City’s preferred morning
drink when it crossed the Atlantic Ocean in eighteenth century and reached America (Steven
Topik, 2004). From then till now, Coffee has been diversified in so many forms such as
Cappuccinos, Lattes, Frappuccinos and many more. And today, the most prominent
organization in coffee industry is Starbucks which covered its multifaceted voyage in the form
of organization into a culture, with its control over marketplace and its formation of a
trademark tantamount to loyalty, trustworthiness, permanence and reliability.

Starbucks initiated its operation with only a single coffee shop offering finest fresh-roasted
whole bean coffee at Seattle around 46 years ago. As the company got bigger, a new idea was
emphasized to recruit most capable employees having leadership qualities and able to continue
the momentum of the business. Vast amount of capital was being dedicated to introduce a
system which has the ability to run the organizational structure adequately and to maintain the
predictable future volume of the business. Then, the company continues toflourish, and now
Starbucks has more than 23,000 retail stores in more than 60 nations and around 165,000
employees (Starbucks, Company Profile, 2015). It is considered to be number one coffee chain
in the world today (Ektajalan, 2013). Now the company is fervent to maintain its brand name by
taking unbendable approach to fairly sourcing the uppermost quality coffee with the mission
statement of “inspiring and nurturing the human spirit, one cup, one person and one
neighborhood at a time”.

Starbucks never has been a low cost brand in front of its competitors, because it follows the
Porter’s Differentiation Focus Technique which offers its products and services to particular
market segment and differentiates itself with unique offerings and outstanding quality from
other competitors (Larson R., 2009). Starbucks concentrates on specialized and innovative
assortments, which particularly presents modified lines of coffee and tea related goods within a
premium cost.

1.1- Current Organizational Structure:

Organization structure is fairly significant for any company which is helpful to manage
company’s internal and external matters and all its activities related to business. The
organizational structure of Starbucks is purely based on Matrix structure, this type of structure
is the combination of traditional functional structure (such as the implementation of any order
directly comes from top management level) and product-based structure (such as the order
comes from product manager to implement any changes with respect to market niche).
Particularly, staff reporting to department managers is also looped up with project or product

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managers to follow their orders too. This structure is developed to deal with dynamic market
where market norm constantly changes from time to time. However, it helps the organization
in eliminating communication gaps between different departments and encourages the
company in implementing of innovative ideas in its products. Consequently, there are dual lines
of influence from two bosses, one is for function and one is for product which somehow creates
confusion and conflicts that which order should be followed first (Mullins, 2005).

With the advancement in business and advent of globalization, the business competitors not
only aim at the product they sell but also they compete with each other in terms of
organizational culture and internal environment. Organizational culture consists of experiences,
expectations, values and philosophy that holds the organization together and is conveyed in
internal working environment, self-image, interactions with the external atmosphere and
future expectations. Organizations which have weak culture are always at the brink of getting in
the state of oblivion, but companies having strong organizational culture tend to progress more
and be on top for long period (McKenna, 1994).

Organizational culture of any company can be measured through various scales; one scale is to
judge the degree of organizational culture is Great Holsfedes cultural framework. This
framework uses different indexes to evaluate the organizational culture, such as Power
distance index, Masculinity vs. Femininity, Uncertainty Avoidance index, Individualism vs.
Collectivism and Long term vs. short term orientation (Holsfedes, 1991).

Starbucks has a very unique and strong organizational culture. By evaluating the organizational
culture of Starbucks on Great Holsfedes cultural framework, it has become evident that
Starbucks has a very high power distance index because there is favoritism among the
employees and every employee has equal rights and treatment. On Masculine vs. Feminine

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scale, the Starbucks treat every employee same without any gender discrimination, therefore it
has high male vs. female level. In terms of uncertainty avoidance index, Starbucks has low index
because the company need to take risks as it has many franchises in different countries. As
considering Individualism vs. Collectivism, Starbucks relates to a very high collectivistic
category, because it has branches everywhere and all branches contributes collectively to
provide brilliant services and products but all branches are being monitored by core team to
maintain quality. On judging long term vs. short term orientation scale, Starbucks has always
been a long term oriented company because it still pays attention on green environment and
other philanthropic activities.

2- Discussion:

2.1- Leaders vs. Managers:

The word “manager” and “leader” are observed differently by different people. Some may
perceive both these words similar and mostly apply them interchangeably throughout the
expressions and phrases. But some may perceive them extremely contrary to each other, such
as their perception becomes that one cannot be a good leader and a good manager at the same
time. Somehow, the correct understanding of both terms can navigate the differences between
them and their responsibilities in the growth of organization. According to Capowski, the leader
has the essence of creativity and passion, but on the other hand, manager has the essence of
persistency and rational thinking. Leader is daring, innovative, flexible, inspirational and
autonomous, while manager is analytic, consulting, deliberate, steady and authoritative
(Capowski, 1994).

2.2- Definition of Manager:

The concept of manager is quite imprecise. This notion is very extensive in terms of
organizational and management sciences. The large amount of diversity in administrative
workers intensifies the complexity of this notion, in result there is no commonly accepted and
universal definition of manager in the texts. However, many researchers have presented their
own perspective over the definition of manager such as, manager as an individual who is firstly
accountable for the comprehension of management process. That the manager takes decision,
makes plan, organizes, controls and supervises finance, human and information resources
(Griffin, 2000).

In Starbucks, managers should emphasize on the effective management process, and evaluate
the possibility of obtaining company’s goals by building a diverse workforce, shape
organizational culture, increase competencies, focus on SWOT analysis and develop a diverse
network of suppliers.

Below is the SWOT Analysis of Starbucks that needs to be addressed by the management to
perform better on future.

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 Strengths Weaknesses

o Starbucks is the number one coffee chain o The company is mainly dependent upon
in the world. coffee related products, and need to
o Has always been consistent in providing diversify.
great taste and services.
o Starbucks Corporation is a high earning o Starbucks marketing is very weak,
organization. Its consolidated net revenue because company only relies upon the
increased 16% to $5.7 billion (Starbucks word of mouth and never concentrated
News, 2016). on advertisements and other promotional
o Starbucks has more than 23,000 retail activities.
stores in more than 60 countries.

Opportunities Threats

o Starbucks has the opportunity to enter in o No one really knows if the company for
the market segment of Pakistan and coffee will grow or stay in favor our
Bangladesh. consuming customers.
o Starbucks can be affected with the rise in
o More Co-branding with different food
the cost of coffee and dairy goods.
and beverages chains.
o Starbucks' achievement has escort to the
o Introducing new products in existing market entry of many competitors and
cafes to diversify the menu. copy-cat brands that pose possible
threats.

Table 1: SWOT Analysis of Starbucks

2.3- Definition of Leader:

There are many definitions of leader in literature which defines the characteristics and spirit of
the leadership. According to Gary Yukl (2006), Leadership is not only a trait but it is a process of
influencing individuals to recognize and be in agreement about what needs to be done and how
it can be done, and a process of assisting others with shared efforts to achieve common
objectives. According to Peter Northhouse (2007), leadership is a phenomenon where one
charismatic personality influences a group of persons to attain a shared target. These two
definitions from different authors on different time period suggests that there are common
elements circulating the term “Leadership”, such as (1) Leadership is a process, (2) Influencing
individuals known as leadership, (3) Leadership exists in the form of group, (4) Achieving the
desired goal is the core concept of leadership, and (5) The achievable goals are shared by
leaders with their followers.

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According to Craig Perrin (2010), Leadership is divided into 6 zones which triangulates on a
larger leadership construct.

Reflection: Leaders self-assess their beliefs, motives, attitude and action to verify that whether
they are capable of making good decisions or not. After succeeding in this zone, then leaders
take responsibility to lead.

Society: Leaders implement principles such as respect, fairness and transparency to serve larger
good and to encourage individuals to take socially responsible actions.

Diversity: Leaders respect and leverage such basic differences as gender, age, ethnicity and
beliefs which help in meeting the needs of customers representing different cultures.

Ingenuity: Leaders offer and execute practical ideas and help others to do same which help
other people to adapt changes quickly and to develop a shared picture of a positive future.

People: Leaders mingle with others on the humanitarian level to improve association which
helps in building trust of colleagues and customers.

Business: Leaders make plans, develop strategies, organize work with others and guide effort
toward predicted results which helps in developing and implementing effective business plans.

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2.4- Difference between Managers and Leaders:

Many authors have put forward the theory upon leadership vs. management;all of these
theories have some common points, such as managers are thought to be organizers, budgeters
and controllers. On the other hand, leaders are thought to be visionaries, charismatic, big
picture and the one who can revolutionize whole the organization. One theory introduced by
Zalenik (2004) that leaders and managers are two quite different individuals, manager’s goals
come from necessities, while leaders’ goals emerge from the place of active attitudes. Leaders
will utilize their strength to inspire others to be creative about problem solving, while managers
only confirm that the organization should work fine in day to day business. Kotterman (2006)
put forward the comparison table of leaders vs. managers which is given below:

Process Manager Leader

Setting a new plan  Planning and Budgeting.  Defines direction and
 Designprocedure steps sets vision.
and form timeline.  Designs strategic
 Shows impersonal procedures and attain
stance upon the idea objective.

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 and objectives.  Shows very
zealousstance upon the
idea and objectives.
Networking and Human  Managesemployees  Line up organization
Development  Maintains formation of  Communicates the
the company mission, vision and
 Allocatejob path
 Allocate authority  Put weight on creation
 Applies the vision of alliance, groups and
 set up policies and partnerships that
plans to apply vision appreciate and
 Displays low emotion understand the vision
 Restricts employee  Displays high emotion
choices  Raisesemployee
choices
Plan Execution  Monitors and manages  Inspires and motivates
processes  Invigorates employees
 Recognizes problems to crush barriers to
 Resolves problems change
 Monitor results  Satisfies essential
 Takes low risk approach human needs
in solving problems  Takes high risk
approach in solving
problems
Plan Outcome  Managers visualize  Endorses useful and
order and predictability remarkable changes,
 Provides predictable such as fresh products
results over and over or methods in
again to leadership and improving labor
other stakeholders relations
Table 2: Differences in processes betweens leaders and managers in organization (Kotterman,
2006)

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2.5- Management Theories for the growth of Organization in current time period:

The present world is moving very fast and things become changed very quickly. Due to the
globalization and brand awareness in consumers’ minds, companies can never articulate that
they are doing business in simple and stable environment. Now the companies are working in
such an environment that not only changes within a short span of time but also unpredictable.
It is the duty of the managers to produce results in the time of rapid social and technological
changes. By performing these tasks, there are several methods which are designed for the
continuously changing business environment. Two methods are discussed in this report, one is
chaos theory and other is management by objectives.

2.5.1- Chaos Theory:

The term “Chaos” can be elaborated as unsure change which cannot be judged or predicted.
Chaotic systems can be expressed as a mixture of order and disorder behaviors that can display
a wide range of behavior. Chaos theory is the study of these systems whose variables are non-
linear and can be changed with the short passage of time. This theory is used in bringing
together the unpredictable variables of market with the distinctive patterns which can be
helpful in making short terms decisions (Cartwright, 1991).

2.5.2- Management by Objectives:

The “Management by Objective” also known as MBO is the type of approach in which all the
managers require to set specific objectives which has to achieved in the future and continually
ask what more can be implemented. These objectives and goals are assigned by every
subordinate in group effort with the knowledge of the superior at the initial time of the
appraisal period. The theory behind (MBO) is to make sure that everyone within the company
has a clear understanding of the goals or objectives, of that company, as well as attentiveness
of their own functions and responsibilities in obtaining those goals (Howell, 1967).

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Companies in current tough competitive surroundings need to take on continuous change and
implement innovative ideas to outlast. In these surroundings where competition at its peak
with continuously changing scenarios of business day by day due to the advent of
modernization, survival of the company by using conventional management approach would be
a waste. Even though, Starbucks has been nurturing inclusion and diversity practices within the
place of work, but somehow there are hurdles in changing the mentalities, thinking and
working pattern of the staff. Managers in Starbucks or any organization should implement MBO
efficiently which can be helpful for the employees to participate in setting of objectives so that
everyone will be encouraged towards the achievement of company’s goals and managers
should also understand the core idea of chaos which is the “order” in abnormalities, so it can be
used to reveal the butterfly that formed the storm.

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2.6- Roles of Leaders and Functions of Managers in Situational context:

The leadership and management controls and commands its followers or employees depending
upon their ability to fulfill the task in different situations, hence this situational context can be
applicable on both micro and macro levels (Bainbridge & Thomas, 2002). Leadership and
management must deal with the changing abilities of the employees or followers and changing
complexity of the jobs as they approach toward goal accomplishment and the maturity of that
job. Job maturity clearly defines the individual’s ability to complete the job with different
phases so that it is up to the leadership and management that how should they tackle with this
situation (Mark et al., 2009).

In situational context, the job maturity subordinates are the primary situational factors describe
the roles of leaders and functions of manager. Hersey and Blanchard in 1996 put forward a
model of situational leadership and management which described the roles of leaders and
managers on different stages of task performance. Components of this model hold the concept
that each situation requires a special leadership and management style and the finest course of
action is reliable on the situation at hand. This model is comprised of four styles in the scale
between directive behavior and supportive behavior. These four leadership and management
styles are given below:

1) S1 – Directing (or Telling):

One of the core leadership styles is directing. The Leader or Manager provides a lot of guidance
and direction to his/her followers or employees by telling them what to do and how to do the
task but provide less supporting. The top management should clearly identify the employee and
personally delegate the work to their attention. In large organizations, the top management
deals with the managers who disseminate the work to other employees.

2) S2 – Coaching (or Selling):

The second leadership style is coaching. The leader or manager shows intense amount of both
direction and support behavior. Leadership and management tell followers what to do but also
encourage them and support them. The top management needs to take time to instruct and
show the managers what is required in the job and how to go about it.

3) S3 – Supporting (or Participating):

In this phase, Leaders and Managers engage in supporting behavior by forming two way
communications with followers but provide less direction. Management needs to take time to
provide support to the managers when they need it. The CEO also should reward the
employees when they perform excellent tasks in order to motivate them.

4) S4 - Delegating:

The leadership and management do little to support or direct. The top management should
frequently and randomly check the progress of the work they have allocated. Good leaders also
delegate duties based on their preferences or skills of the employee.

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 Figure 4: Four styles of leadership and management

2.7- Models of Leadership and Managements on Starbucks:

Leadership and management deals with their followers and employees with many different
models, many authors have put forward different theories related to leadership and
management working models. Starbucks can use these models effectively to limit the poor
decision makings which can cause serious problem to the company. There are many different
approaches that can be assembled into a number of categories to a level, show the modes of
which thinking of leadership and management has evolved historically. Some of the models are
defined in this report.

2.7.1- Systems Leadership:

Systems leaders are those individuals who design strategies to a whole system to optimize all
types of organizational entities (individuals, groups, business units and whole company) for
constant great performance. Those leaders see the system as a whole and act such a way that it
replicates the awareness of the large picture. They put their effort to keep their peers across
multiple levels and layers (Fullan, 2005).

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Systems Leadership is committed to altering the contexts at all levels. The leadership maintains
both micro and macro perspectives. Systems leadership has a full understanding of macro level
patterns that drive the micro level patterns in organization. It has the knowhow of the
dynamics at micro level, such as the issues of employees and their feelings in working at this
level. The understanding of micro and macro dynamics allows the systems leadership to grasp
the control of the whole system, not just a part or a particular level (Heifetz & Linsky, 2009). It
would be necessary for Starbucks to address misunderstanding issues that directed to lower
performance of the company. Starbucks can compute the output with respect to its internal
operations. Management can check the production processes and upon the outcome, it can
evaluate the performances of the employees working in the company (Mbanote, 2011).
Through this approach, management can pinpoint the loophole in the process chain before
some problem can occur. Starbucks management should closely check the productivity scale, if
it is declining then it should be addressed immediately with effective decision making. In 2009,
Starbucks faced a serious financial loss and 77% drop in second-quarter net income which
resulted in the closing of many retail shops (Flynn, 2009). One major reason behind this setback
was due to weak global economy, but some researchers say that the internal environment of
the company was not good at all. However, company managed to regain its status again, but
Starbucks continuously implement this model to ensure the safe company’s future.

It is the duty of the manager to analyze the micro and macro aspects of the organization to fully
understand the whole system and work for the betterment of his/her employees which can
ultimately help the manager to attain the Starbucks goals.

Figure 5: Systems Leadership interrelation with Micro and Macro Environment

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2.7.2- Contingency Theory:

Leaders analyze the condition in which they are involved and then adopt a style that is suitable
to their specific surroundings. This necessitates the leader to correct his/her style to the
condition that he/she faces.

The contingent theory was put forward by Fiedler (1967) which is based on the three main
factors:

 Leader-Followers relations:
The relationship between the leader and his followers are built upon trust which defines the
willingness of the follower that how far they follow the command of their leader.

 Job Structure:
The job structure includes the extent to which the job is clearly described and the standard
procedures required to complete the job on time.

 Leader’s Power:
This describes the position of the leader in the company and the degree to which he/she
influence the followers by giving rewards or imposing sanctions.

In Starbucks, the efficacy of leadership is essential in identifying the dissatisfaction of

employees in top level decisions. The contingency model needs leaders to vary with the
situation so that the company’s performance will not be affected. Related to this case,
Starbucks New Zealand faced decrease in the performance of employees due to their lack of
interest on prevailing situation dealings. In these situations, the leadership should take
immediate decision to strengthen the relationship with their employees, which can be possible
to motivate them and provide a proper task description to them. An immediate meeting with
the union leaders and addressing the issues would have kept the hopes of the workers intact
and they would perform with goodwill and efficiency. Contingency model of leadership is
adopted by my companies as an organizational behavior to deal with worst case scenarios
(Zaccaro, 2007).

3- Conclusion:

Nowadays most of the world’s population for one reason or another heard about Starbucks.
Being a successful leading organization, it also has to manage and deal with large amount of
internal and external issues in order to sustain its position for being on top of the coffee chains
in the globe. The company’s position will be intact if its employees become passionate and
eager to adopt change. Passion is a vital trait which a leader must possess, which inspires the
others as well. Great communication skills are essential and should be present between higher
and lower levels. Leaders within Starbucks must have competency, situational dealings, strong
positions, good relationship with the employees, humbleness and values, those values must be
synchronized with the core values of the company. Starbuck has shown tremendous

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development to make sure that their leaders hold these attributes, that is the reason why
Starbucks is on the top position, but in order to retain this status in future, Starbucks should
implement Leadership and Management training with full swing throughout the business which
should not be limited to only heads of the departments but to the entire higher management
teams because trainings limited to the MD level is a waste of time. Training possibly will
energize the business leaders and provide them encouragement which results in distribution of
positivity throughout the organization for new business culture.

4- Bibliography:

Capowski, G., (1994), “Anatomy of a leader: where are the leader of tomorrow?”, Management
Review, Vol. 83 Issue 3, p.10-18

Cartwright, T. J. (1991),“Planning and chaos theory', Journal of the American Planning

Association”,57(l), pp. 44-56.

Craig Perrin (2010), “Leader vs. Manager: What’s the Distinction?”. Florida, USA.

Ektajalan. (2013, June 20).“Top 10 Largest coffee chains in the world. List Dose”. Retrieved from
http://listdose.com/top-10-largest-coffee-chains-in-the-world/

Fiedler, F.E. (1967), A Theory of Leadership Effectiveness, New York: McGraw Hill

Flynn, Laurie J. (2009), “Starbucks, Awaiting Recovery, Says Profit Fell 77%”,
http://www.nytimes.com/2009/04/30/business/30sbux.html

Fullan, M, (2005) Leadership & sustainability: Systems thinking in action, California, Corwin
Press.

Griffin R.W. (2000),“Podstawy zarządzania organizacjami” Wyd. Nauk. PWN, Warszawa.

(Translated)

Heifetz, R. A., Grashow, A., & Linsky, M. (2009). The practice of adaptive leadership. Boston,
MA: Harvard Business Press.

Howell, R.A. (1967), "Management by Objectives: A Three-stage System" Business Horizons.

Kotterman, J., (2006), “Leadership vs Management: What’s the difference?” Journal for Quality
& Participation, Vol. 29 Issue 2, p.13-17

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Larson, R. (2008),“Starbucks a strategic analysis: past decisions and future options” [Electronic
version]. Brown University.

Mbanote. (2011), “Management: Model of Organizational Behavior”

McKenna, E. (1994),“Business Psychology and Organisational Behaviour” Lawrence Erlbaum, p.

211.

Mullins (2005),“Management and Organisational Behaviour” Prentice hall. UK 7th Ed. p-88.

Northouse, P. G. (2007),“Leadership: Theory and practice (4th ed.)”. Thousand Oaks, CA: Sage.
Steven Topik, The World Coffee Market in the Eighteenth And Nineteenth Centuries, from
Colonial To National Regimes

William L. Bainbridge and Thomas, Donald (2002).Sharing the Glory. Leadership. Volume 31,
Number 3, Pages 12-15

Yukl, G. (2006),“Leadership in organizations (6th ed.)” Upper Saddle River, NJ: Pearson-Prentic
Hall, p.8.

Zaccaro, S. J. (2007), “Trait-based perspectives of leadership”, American Psychologist, 62(1), 6.

Zalenik, A. (2004), “Managers and Leaders: Are They Different”, Harvard

Business Review, January 2004.

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