Starbuck Corporate Social Responsibility - Essay Example

Starbuck Corporate Social Responsibility (CSR) Starbuck Corporate Social Responsibility (CSR Terms of reference 4 Starbuck’s business expansion 4 E-business 6 Potential ethical impacts of the company 7 Marketing strategy 7 Labor problems 7 Lack of planning permission 7 Protests by customers 8 Guns ban 8 Same sex marriage 8 Comparing the negative ethical issues and the company’s CSR Policies 9 Analysis of the current Starbucks CSR Strategy 9 Recommendations 10 Bibliography 11 Appendix 13 Abstract Starbuck Corporation is an international coffee company with its head quarter in Seattle, Washington. Currently, the company has over 20,000 stores in more than 60 countries global wide. However, majority of its stores are located in the United States, Canada, United Kingdom and large part of Asia among other parts of the world. The company offers wide range of food services ranging from beverages (hot and cold), pastries, whole bean coffee, full-leaf tea and micro ground instant coffee among others. Other stores also provide take away food like sandwiches and items like tumblers and mugs among others (Time out 2011). Other than meals, Starbuck offer beers and wines although this restricted to stores located in favorite locations (Schmenner 2004). This report will touch on the company global growth, its international competition, the company’s historical growth and its future growth plans. The report further tackles the growth methods used by the company and these include joint ventures, mergers, and property or asset acquisition among others. The company growth has some negative business ethics implications on its own workers and even those in other companies. Such include illegal outsourcing, poor salary schemes and even negative environmental and social impact to the neighboring community. Despite the challenges faced by Starbuck, the company has adopted some of the best business or corporate to enable it realize its goals and objectives. For instance, the company has a good number of stores in low economical countries to target the low earners who cannot afford services from more advanced coffee and fast food companies. The company also initiates numerous community projects to boost its relations with the locals, and this has positive impacts on its general income. Starbuck is well known for leasing with both national and international organizations as away of attracting more customers, hence increased income. The company involves the locals in major decision making and this makes them feel appreciated ("Starbucks Corporation Fiscal Report 2013). For instance, the company asks the locals of their opinions with regard to environmental and social impacts before major constructions are conducted. The locals’ opinions are incorporated in the environmental management plan to help mitigate the negative impacts from such new projects. Terms of reference The report will extract its facts and important information from the company’s financial records, its previous business analysis and recorded views of relevant stakeholders like the customers among others. Relevant information could also be obtained from previous researches, relevant findings by reputable economists, and business analysts and media houses among others. Starbuck’s business expansion The first Starbuck Company was in Seattle, Washington in 1971. The company only sold roasted coffee beans as it had no facilities to brew coffee. The company initially bought their raw coffee from Peets and then from the growers as coffee demand increased. In 1984, the demand for specialty coffee increased and this meant that Starbuck had to upscale its operations to satisfy the increased demand. Starbuck opened five more stores in Seattle by 1986. The company’s original owners later sold it to Howard Schultz, who was once the company’s employee. The new owner rebranded it its original coffee outlets to Starbuck and that marked the beginning of Starbuck’s growth. Various outlets were opened out of Seattle then to neighboring nations like Canada and Britain among others. The company had over 45 stores by the end of 1989. Three years later (1992), the company added 145 more stores and it overall revenue moved to 73.5 million USD from 1.3 million USD in 1987. Starbuck later sold its portion which further raised 25 million USD; hence, its market value was 271 million USD by 1992. The company doubled its stores by the end of the next two years and this was attributed by its good relations with its stakeholders, more so the customers and availability of capital (Starbucks Coffee Company profile 2008). The company later entered the Asian market by locating a store in Tokyo, Japan in 1996. It later entered United Kingdom two years later by rebranding all the Seattle Coffee companies that were in UK as Starbuck (Robichaux 2012). The company later moved to Latin America and it had a store in Mexico City. The company later conducted a market research in San Francisco and the positive findings saw various food outlets converted to Starbuck. More stores were opened in Switzerland, where it got its green coffee. By the end of April 2003, Starbuck successfully purchased Seattle Best Coffee and Torrefazione Italia which were formerly under AFC Enterprises and this saw Starbuck gain 150 more stores (Starbucks Coffee Company profile 2012). “Diedrich coffee” another coffee company decided to sell its shares to Starbuck and this saw the company increase its market share. Starbuck later ventured in South America and its products greatly spread in the region (Pendergrast 2011). In 2008, the company bought the original manufacturer of Clover Brewing system and started testing fresh pressed coffee in its famous outlets in New York and California among other developed regions. Later in 2013, Starbuck opened a store in Vietnam which was later followed by one in Colombia and this leads to total of 20,000 stores in more than 60 nations as per February 2014, as indicated in the appendix (Starbucks Corporation Quarterly Report 2013). The articles with this information were satisfactory as the events through which the company expanded its operation are chronological and they further indicate the ways through the company acquired more market share. This include through acquisition, joint ventures and mergers among others, as explained above. E-business The company appreciated the use of e-business strategy to ensure its customers’ satisfaction. For instance, by the end of 2013, the company launched Starbuck application after partnering with various mobile companies. This enabled customers to order for their favorite products through their mobile phones among other communication appliances. “Tweet-a-Coffee” was a promotion in 2013, where customers were expected to buy a gift to a friend worth 5 dollars by signing “@tweetacoffee”. The campaign enabled the company raise more funds and even create more awareness of the company’s products (Starbucks Corporation." Student Resources 2013). Starbuck currently have various websites through which customers can log in and order for their favorite products before being delivered to them once payments are made. The company has also partnered with online money transfer companies like PayPal to ease transactions (Gupta 2014). The company’s community website “My Starbuck Idea” launched it 2008 has enabled the community give their suggestions or feedbacks to relevant allegations that has enabled the company improve the quality of its services. The website is managed by Salesforce software. In the same year, the company launched a loyalty program where Starbuck cards were offered to some registered users (Fabricant 1992). The cards enabled the users to access free Wi-Fi, free soy milk as well as flavored syrup among other free services. Customers could also purchase their favorite products using the cards. Potential ethical impacts of the company Marketing strategy It is believed that some of the methods the company used to raise capital were unethical. The company bought its competitors leases, despite operating at a lose to maintain its marketing position. This made them open many stores in small geographical areas causing saturation in such localities. For instance, it purchased Seattle Coffee Company in United Kingdom, and then used the capital to open more stores. Some of the stores had to operate at losses due to the market saturation. This was not fair for the small independent companies as they were either forced to close down or sell their companies to Starbuck. Labor problems The company has experienced some wrangles with its employees in various countries. The company only agreed to reinstate its two fired employees and pay 2000 USD to workers as back wages after the workers joined various unions. In short the company has not been treating its employees as stipulated in the labor Act (Holland 2007). The employees had to seek help from various employees’ boards and unions to see justice offered to them. Starbuck declared no wrong doing in 2005, when it paid 165,000 USD to its eight employees who suffered some consequences for being pro-union (miller 2008). Lack of planning permission The company has been accused in UK for opening new stores without legal planning permits. In other words the company is only keen of revenues but not following some local business laws that were stipulated for reasons. For instance, the company did not acquire planning permission after purchasing some outlets and converting them to restaurants. In 2008, the company went a head to complete a store in Brington, England although it requests to have the store was refused by the local authority. The authority turned down the permission claiming there were many such stores in the locality and this could compromise the existing stores. Protests by customers Customers in Arabic nations complain that the company sends part of its revenue to Israeli military. The war between of Jewish and Arabs have seen some customers decline their relations with Starbuck. This is due to the fact that the company’s CEO is Jewish and he has been presented with various awards from his native communities (Gonzalez, 2014). Guns ban Various companies or stores prohibit the carrying of guns in their stores. However, Starbuck allows its customers to be comfortable with their guns and this is a threat to those without guns. In 2010, a group of people organized a boycott of Starbuck stores following the company’s permission for clients or customers to carry their guns to the stores (Forbes 2013). However, Starbuck defended itself by declaring it obeys the local laws in its areas of operations. Open carry law operates in 43 states of the U.S. The company further decaled that it support gun carry in states where such is allowed and prohibits it in states where such is prohibited. Despite these, this saw the company lose many clients to its competitors. Same sex marriage The company suffered some blow when its executive supported same sex marriage. Various stakeholders boycotted the company. However, the CEO did not plead with such stakeholders, if anything he gave them the choice to sell Starbuck’s shares and buy some from other companies. This was not well received by other shareholders among other stakeholders (Brewer, Brissenden and Carmin 2012). Comparing the negative ethical issues and the company’s CSR Policies The company stipulates fare treatment to all its stakeholders irrespective of race, culture and tribe among others. However, it is clear the company’s decisions do not favor some religious groups, more so the Arabs and Muslims. It is believed that the CEO being Jew has compromised the company’s relations with the Arab stakeholders ("STARBUCKS CORP Annual Report 2012). For instance, the company supported same sex marriage which is completely prohibited by the Muslim community. Furthermore, the CEO was arrogant to the stakeholders who opposed the move by encouraging them to sell their shares and buy shares from other companies. This was completely the opposite of the policies stipulated in the company’s CSR. However, the company has maintained its good relations with its traditional stakeholders like coffee farmers. It ensures good and efficient communications to such stakeholders (Reeves 2009). Analysis of the current Starbucks CSR Strategy Starbuck leant its lessons when it violated some of its stakeholders’ beliefs and norms. This saw some stakeholders shift to various companies and this saw the company reduce its revenue. Currently, the company accepts all people irrespective of race or religion among other factors. The CEO had appreciate the fact the company’s success is a key subject of the stakeholders corporations. Starbuck had to review its CSR strategies to ensure it’s effective (Starbucks Case Study 1987). The company current initiates various projects and campaigns to the community to improve lives in such localities and improve the company’s relations with its stakeholders. There are few stores of the company in Africa, meaning the company’s top management team could be having issues with Africans. Currently, there are only few stores in morocco and Egypt yet the demand for coffee is higher in other African nations. If any thing the few stores in Africa could be existing because of the economical stability in such areas. Recommendations However, much could still be done to ensure harmony between the company and the community. For instance, the company should avoid participating in any politics in the countries where it operates and instead liberal. It could also avoid decisions that could offend some community members and instead remain non partisan, for instance, the company could remain silent on same marriage issue and let its stakeholders do what they think is right for them (The Daily Telegraph 2013). The company could also ensure its employees re from different races, religions, education backgrounds and origins to ensure diversity in the company. This will be appreciated by stakeholders as everyone want to be where his or her people are appreciated. A lot still need to be done on the company’s corporate strategy as it tends to lose its customers to some of its competitors. The company could venture more into developing nations like those in Africa and provide various aids to boost or improve life in such areas. For instance, the company could establish health centers for deadly diseases like cancer, as this is one of the biggest hurdles in such nations. Furthermore, the company could fund some NGOs like World Vision to see water projects implemented to improve lives in such localities (Jenifer 2011). This will enable the company increase its customers and beat its competitors who target the rich from developed nations. This will further enable the company enjoy the advantage of first move, as it is expected that more companies will follow the lead should they learn the demand in such developing nations. Bibliography 1.  "Starbucks Corporation 2013 Q4 Quarterly Report , Form 10-Q, Filing Date Jan 28, 2014". http://investor.starbucks.com. Retrieved February 21, 2014. 2.  "Starbucks Corporation 2013 Fiscal Report, Form 10-K, Filing Date Nov 18, 2013". Retrieved February 21, 2014. 3.  "STARBUCKS CORP 2012 Annual Report Form (10-K)" (XBRL). United States Securities and Exchange Commission. November 18, 2013. 4. "Starbucks". http://www.forbes.com. May 2013. Retrieved February 21, 2014. 5. Gonzalez, A. (February 13, 2014). "Starbucks enters its 64th company, oil-rich Brunei". The Seattle Times. 6.  Gupta, H. (June 14, 1992). "Stocking Up On Starbucks -- Brokers, Observers Help Answer Questions About Investing In Company". The Seattle Times. 7.  Starbucks Case Study. (1987-10-27). Retrieved on 2013-07-18. 8. "Company Profile". Starbucks Coffee Company. February 2008. Retrieved May 13, 2009. 9.  Miller, Claire (January 29, 2009). "Starbucks Will Close 300 More Stores".The New York Times. Retrieved June 6, 2011. 10. Time Out (2011). Time Out Guide San Francisco. Time Out Guides.ISBN 978-1-84670-220-4. Retrieved 9 April 2013. 11.  Jennifer M. (2011-06-15). "No ones going to drink a cup of Pee-quod! How Starbucks was almost named after the doomed ship in Moby-Dick-haha". London: The Daily Mail. 12.  Stephen Brewer; Constance Brissenden; Anita Carmin (26 September 2012).DK Eyewitness Travel Guide: Pacific Northwest. Dorling Kindersley. pp. 135–.ISBN 978-1-4053-7081-3. Retrieved 12 November 2012. 13.  Linda Dono Reeves (1992-09-08). "Coffee firms plans to go national are percolating". USA Today. 14.  "Starbucks Corporation." Student Resources. N.p., n.d. Web. 13 Mar. 2013. 15.  Mark Robichaux (2012-11-06). "Boom in Fancy Coffee Pits Big Marketers, Little Firms". The Wall Street Journal. 16.  Florence Fabricant (2 September 1992). "Americans Wake Up and Smell the Coffee". The New York Times. 17.  "Forty years young: A history of Starbucks". London: The Daily Telegraph. 2011-05-11. Retrieved 2012-11-13. 18. Pendergrast, M. (2011). Uncommon Grounds: The History of Coffee and How It Transformed Our World. London: Texere. 19. Schmenner, R. (2004). Making Business location decisions. New York: Prentice Hall. 20. Holland, J. (2007). Employment Law. London: Oxford University. Appendix Regions with Starbuck’s stores Africa North America Oceania South America Asia Europe Egypt Morocco Aruba The Bahamas Canada Curaçao Costa Rica El Salvador Guatemala Mexico Puerto Rico United States Australia New Zealand Argentina Brazil Bolivia (2014) Chile Colombia (2014) Peru Bahrain Brunei China Hong Kong India Indonesia Japan Jordan Kuwait Lebanon Macau Malaysia Oman Philippines Qatar Saudi Arabia Singapore South Korea Taiwan Thailand Turkey United Arab Emirates Vietnam Austria Belgium Bulgaria Cyprus Czech Republic Denmark Finland France Germany Greece Hungary Ireland The Netherlands Norway Poland Portugal Romania Russia Spain Sweden Switzerland United Kingdom Read More