Informal and Formal Groups

Company overview

Starbucks corporations are one of the largest stores that deal in the retail market with more than 7,000 stores in 25 countries. It is said to have strong position in the market since it gets the largest share through its retail market. It carries out intensive market expansion and wide arrays of distribution channels innovatively by differentiating its products, hence making the company to have a competitive advantage. This company has a flat organizational structure whereby this structure allows for employees' involvement in the utilization of cross-functional work teams in its strategic planning processes. It operates many different stores in most of the industrialized countries of the world. This company uses the organizational theory which has led to its success. It is the use of the organizational theory whereby the company has been in a position to utilize its resources effectively, hence to increase the production. The company can be seen as a leader in this category when compared to other companies. For example, Starbucks Inc. uses the decentralized structure in most of its stores; decentralized structures are one of the structures which lead to an improved performance of a company. There are several ways that make Starbucks different from the other companies (DeSanctis & Fulk, 2000).

Organization structure

Organizational theory can be defined as the study of the whole organization, the various strategies which are used by the organization, how these organizations adapt, and the various structures that guide this organization towards its success. On the other hand, organizational structure specifies firm formal reporting relationships, controls, procentures, authority, and the various decision making processes. Most of the organizations are seen as complex, goal-oriented, and dynamic, hence the need to understand these organizational structures and the various strategies which are different from other organizations has led to its success. It is the study of these organizations which leads to the benefits of identifying the various common themes for the purpose of solving so many organizational problems, maximizing the organizational efficiency, increasing its productivity, and lastly meeting the needs of its stakeholders. It is the role of the company to follow the organizational theory to ensure that most of its goals have been achieved. It is under the organizational structure whereby the organization can differentiate itself from the other companies by the use of different organizational structures. Starbucks' organizational structure has three categories: market structure, product structure, and geographic structure. Market structure is where several groups function by the types of customers so that each division contains the functions it needs to serve a specific segment of the market. Starbucks provides quality coffee to its customers and also huge discounts for those items that are of good quality (DeSanctis & Fulk, 2000).

Formal and informal groups

Organizations have so many informal groups. The formation of these groups and their importance came into existence in the 1920s. It is said that when people come together and start interacting with each other for a long time, they form informal groups. Groups are thought to have internal social structure which is based on dominance and friendship relations. In the informal groups, there are also social leaders. These informal groups are said to affect the organizational structure. The informal groups are established in this company to ensure that communication has been effective. Instead of using the various stages in order to reach those above, then these groups can be used to help solve those problems. For example, Starbucks uses the informal groups to address the matters which arise in this company. It is through this group that the information is communicated to the rest of the workers. Also, under informal group, the interest group works towards achieving the employees' social needs. As a result, you find that this group can affect the organization structure since it is not working towards meeting the specified goals of the company (Clegg, Hardy, & Nord, 1997).

Formal groups, on the other hand, are those groups which are given legitimacy by the organization. For example, at the Starbucks Company, the formal group is the formal organizational structure of the company which involves the flat structure involving the board of directors, managers, and the staff. This group consists of a manager and his subordinates, and both of them share a common specialty. Since Starbucks' organizational structure is the marketing structure, it is this organizational structure which determines the group's aim of meeting the company's goals and objectives, and this is getting the largest share of the market. All these groups have their own norms which make them to work together, and no group is superior to the other. It is through these groups that the organization can define its structure. (Ruggles & Holtshouse, 1999).


Organizational theory is important in any organization. It is in this organizational theory that a company can study its structure processes, competencies, and production activities. After analyzing the organizational theory, this company can realize its desired goals since it will have identified the various structures and areas of competencies to use so that it can achieve its desired goals. It is the role of every organization to make use of the organizational theory since it is through the studying of the organizational theory that this company can be in a position to succeed. A good example is the case of Starbucks. It has used the organizational theory, hence leading to its diversified level of success. Organizational groups are also important since it is through these groups that the organization can know how it is structured.


Clegg, S., Hardy, C., & Nord, W. (Eds.). (1997). Handbook of Organization Studies. Thousand Oaks, CA: Sage.

DeSanctis, G., & Fulk (Eds.). (2000). Shaping Organizational Form. Sage Publications: Thousand Oaks, CA.

Ruggles, R., & Holtshouse, D. (1999). The Knowledge Advantage. Capstone US, Dover, NH.

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