Key Principles of Corporate Social Responsibility Based on Starbucks - Case Study Example

The concept of corporate social responsibility (CSR) which mainly draws from the notion that organisations do not exist in a vacuum but operate in anenvironment which can be classified as physical or social has evolved over time. According to information obtained from http://www.referenceforbusiness.com/management/Comp-De/Corporate-Social-Responsibility.html (2012), societies at all times expected the organisations to act responsibly. The concept of CSR gained momentum in the twentieth century where business was criticised for being too powerful and acting irresponsibly to the society and environment. Beginning 1900 to 1970s, various movements calling for business to be more responsive to the society rather than focusing on making profits only emerged. Businesses were called to accept responsibilities related to improvement of the society as a whole and this is the view obtaining on the ground at the moment. Thus, in order to gain a clear understanding of the concept of CSR, it is imperative to begin by defining its meaning. Corporate social responsibility (CSR) can be defined as the "economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time" (Carroll and Buchholtz 2003, p. 36, viewed from http://www.referenceforbusiness.com/management/Comp-De/Corporate-Social-Responsibility.html ). Strydom (2004, p.11) concurs with this definition when he says: “CSR is the concept that maintains that businesses are part of the larger society in which they exist and are accountable to the society for their operations.” This concept often goes hand in hand with the concept of ethics which is loosely defined as an attempt to make a distinction between something that is morally good from bad (Guarnieri & Kao, 2008). There is need for businesses to attempt to strike a fine balance between the organisation’s profit needs and the needs and interests of the stakeholders. A wide range of behaviours such as utilisation of environmental initiatives, sponsoring charitable events as well as demonstrating commitment to safety are some of the tenets of CSR which businesses are mandated to observe. Basically, the stakeholder concept holds that a stakeholder is an individual or group that is affected by the actions of the organisation (Smith, 2003). There are various kinds of stakeholders such as the customers, communities, shareholders, natural environment as well as civic groups among others. Against this background, this essay seeks to discuss the key principles of CSR as well as explain their importance for the stakeholders. A case study of Starbucks is going to be used to illustrate the degree to which this company follows those principles in order to be accountable for its actions to the communities and environment. The essay starts by describing the key principles of the company towards three stakeholders and this is followed by outlining the background of the company with regards to CSR. The other parts of the essay will look at how the corporation behaves towards three stakeholders namely the environment, community as well as the suppliers. Starbucks Coffee, Tea and Spice Company was founded in Seattle in 1971. According to its official website, the company’s founding principles were based on the belief that “businesses can- and should- have a positive impact on the communities they serve.” Thus, since ever its inception in 1971, the organisation has dedicated itself to earning the trust and respect of the customers, neighbours as well as partners. Starbucks has managed to achieve this feat by being responsible as well as doing good things to the planet as well as others. Its operations are mainly shaped by its founding principles which are more concerned with serving the interests of the people as well as the environment. The company’s reputation dates back to its ability to uphold the principles of establishing goodwill among its stakeholders. The historical background of Starbucks CSR initiative dates back to its early years in business as categorically stated in its vision: "Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow." According to CCT (2009), social consciousness has always been at the core of this organisation’s business. For instance, Starbucks always prided itself in doing the right thing like offering part-time workers health care benefits as well as paying premium prices to the farmers. The company also took into consideration the aspect of good working conditions for its employees given that it managed to retain the majority of them which bears testimony that they were satisfied with their working conditions. The company’s success mainly derives from its ability to establish meaningful relationships based on mutual trust with the customers, employees as well as members of the community. The company’s operations have also been guided by its concern to protect the environment. According to its historical background as well as the situation obtaining on the ground, it can be noted that Starbucks has been behaving well towards its stakeholders with regards to its CSR strategy. A critical evaluation of this strategy shows that the company has managed to maintain its founding principles with regards to CSR. It is undoubtedly true that every organisation operates in a physical environment which is the first stakeholder likely to be impacted by the operations of any given organisation (Smith, 2003). However, the company has implemented key principles geared towards protecting the environment from wanton damage as a result of its activities. According to its official website, the company has managed to find ways to minimize its environmental footprint, tackle climate change, and inspire others to do the same. At the core of its CSR strategy is the need to raise consciousness among all the stakeholders either directly or indirectly affected by its operations. The company has taken major strides in promoting recycling of waste material, using energy efficient means, promoting green building as well as raising awareness about climatic change as well as the dangers of global warming among all members of the community and other stakeholders. Environmental protection is at the core of the company’s operations and this stance has earned it a good reputation as an environmentally conscious organisation. According to Article 13 (2002), Starbucks has covered lot of ground with regards to CSR initiative in various communities it operates in. For instance, the company has engaged in various community activities such as providing donations as well as cash to organisations as well as groups in communities. Its workers also engage in voluntary services to improve the standard of welfare in various communities. The organisation also takes part in informal activities such as engaging in local literacy organisations, regional AIDs walks as well as clean ups for international activities like Earth day as a way of raising awareness among the stakeholders about the importance of such activities. It can also be noted that the company has been involved in quite a number of community building initiatives especially in the United States and these are meant to improve the quality of the welfare of the people. Suck kind of initiatives include grants, cash or product donations, economic investment is under developed communities, uplifting of parks as well as engaging in violence prevention programmes. As noted already, there is need to establish goodwill with the values and norms of any given society the organisation would be operating in as a way of promoting mutual understanding. In this regard, CSR entails doing good things by the company to the society in which it would be operating in. A sense of trust has been created among the members of the community which is an indication of positive behaviour by the organisation. In as far as the suppliers are concerned, it can be noted that Starbucks has taken major strides in trying to uphold the principle of CSR when dealing with its suppliers. According to its official website, Starbucks has indicated that it is committed to “buying and serving the highest-quality, responsibly grown, ethically traded coffee to help create a better future for farmers.” This prompted the company to offer premium prices to raw materials that have been grown in an environmentally responsible manner in a bid to stimulate positive changes in the coffee market which could also lead to sustainable production of coffee in the supply chain. Essentially, the organisation is concerned with promoting sustainability for the benefit of the future generations. The guidelines for this initiative is that all the suppliers who satisfy the following conditions which include issue related to quality, environmental impacts, energy, water fair working conditions as well as biodiversity will be rewarded accordingly. Outstanding suppliers who uphold all these principle will be awarded the preferred status where an independent or a third party will be responsible for verifying this particular information. Over and above, it can be noted that the concept of CSR holds that organisations should be accountable for their actions to the communities in which they are operating in as far as the welfare of the community members is concerned. Organisations have to be aware of the fact that their activities affect the environment as well as various stakeholders in different ways hence they ought to be accountable for their actions. Through an analysis of the operations of Starbucks, it has been observed that the effective implementation of the CSR strategy is advantageous to the organisation as it can gain a competitive advantage as a result of customer loyalty likely to be created on the basis of mutual trust among the stakeholders about the operations of the organisation. A closer analysis of the case study of Starbucks shows that the company has been doing its best with regards to upholding ethical standards towards its stakeholders. The company is seen taking a leading example with regards to promoting good moral principles in its operations. The achievements that have so far made by the company to show that it has been acting in an ethical manner include the following: the company has managed to establish mutual trust with its stakeholders which has resulted in customer loyalty as well as long term relationships. The company has also managed to appeal to various stakeholders as a result of its goodwill activities to the communities. The company has also managed to retain its employees which show that they are satisfied with their work. All these factors bear testimony that Starbucks has been operating in an ethical manner and this has significantly contributed to its reputation. It has also been noted that a company that is conscious to the needs of the stakeholders stand better chances of operating viably and effectively as a result of a strong customer base created from the relationship that exists. It is widely acknowledged that it is easier to retain existing customers who are loyal to the organisation than to look for new customers. References Article13 2002, CSR best practice: Starbucks- A vision grounded in CSR, Viewed 07, March, 2012,. CCT, 24 August, 2009, CSR at Starbucks: A holistic approach, viewed 07 March, 2012, . Corporate social responsibility, viewed 07 March, 2012, . Guarnieri, R. & Kao, T. (2008) Leadership and CSR – a Perfect Match, People & Strategy, 2008, Vol. 31 Iss. 3, pp. 34-41. Finlay, P 2000, Strategic Management: An Introduction to business and corporate Strategy, Pearson Education, Harlow. Smith, C. (2003) Corporate Social Responsibility: Whether or How? California Management Review, Vol. 45, Iss. 4, pp. 52-76, Viewed 07 March, 2012, . Starbucks [official website, 2012], Being a responsible company, viewed 07 March, 2012, . Strydom, J 2004, Marketing, 3rd Edition, Juta & Co Ltd, Cape Town: CT. Read More