Social Responsibility as a Part of Product Development Strategy - Essay Example

Outline Introduction 2. Social Responsibility a. Social Responsibility as a Part of Product Development Strategy b. Social Responsibility as aCore of Environmentally Friendly Policies 3. Codes of Ethics a. Norms and Principles 4. Community and Business Involvement 5. Social Responsibility and Strategic Approach to Management a. Management Philosophy b. Management Policies 6. Conclusion Introduction Starbucks is a global coffee retailer and sandwich industry leader. The company was established in 1971, and since that it provides its customers with unique tastes of coffee and beverages. Today, Starbucks obtains a competitive and leadership position competing with such giants as McDonald’s and Dunkin’ Donuts, Costa Coffee and Caffè Nero. Starbucks was opened in 1971 in Seattle, Washington. Social responsibility and ethics become an important and integral part of company’s strategy and goals. Starbucks states that: “Our Commitment to Being a Deeply Responsible Company Contributing positively to our communities and environment is so important to Starbucks that it’s one of the six guiding principles of our mission statement” (Starbucks Home Page 2008). Social Responsibility as a Part of Product Development Strategy In order to respond to social responsibility issues, star bucks make them as a core of its business strategies. Talking about its product, Starbucks underlines: “We’re passionate about ethically sourcing the finest coffee beans, roasting them with great care, and improving the lives of people who grow them. We care deeply about all of this; our work is never done” (Starbucks Home Page 2008). This statement shows that as a well-managed company of today, Starbucks will make every effort to meet its obligations to society (Moon and Quelch 2002). To help them with this, some companies have written objectives and policies in this area. In spite of this, social objectives and goals exist in an area that is not always easy to assess and objectively appraise. Just because it is not easy is no excuse for not trying to do something constructive about it (Beauchamp and Bowie 2003). To gain some semblance of control in this area and to make certain that social objectives are actually being met, more companies have started using a social audit to measure, monitor, and evaluate the contributions that the company is making to society. As helpful as an information and social responsibility status report might be to both the company and the stockholders, care must be taken in generating this data and the resulting report. The company must determine the best medium for disclosing the information to the public. The disclosure medium, whether a specific section of an annual report or a separate document, must be devoted to social responsibility activities in order to show in a meaningful and effective manner the interrelationship of company resources and company commitments (Carroll and Gannon 1997). Social Responsibility as a Core of Environmentally Friendly Policies In order to meet social responsibility principles, Starbucks pays a special attention to neighborhoods and environmental; problems. Under a free market economy, private industry, local governments, and county, state, and federal governments can, and do, sometimes relieve themselves of certain costs associated with disposal of waste materials by using the atmosphere, oceans, lakes, rivers, and landfills, as free waste receptacles. If it is to the economic advantage of the particular emitter to do so, it will normally take advantage of this free resource (Sims, 2003). The cost problem is, however, passed onto another party (hereafter referred to as the receptor) and the ultimate costs for the entire pollution region may not be reduced; in fact, if the costs to the receptors are in excess of the costs to the emitters to reduce their discharge or disposal of pollutants, the ultimate costs to society as a whole may be increased. Starbucks follows the policy of clean land and air: “Every store is part of a community, and we take our responsibility to be good neighbors seriously. We want to be invited in wherever we do business. We can be a force for positive action— bringing together our partners, customers, and the community to contribute every day” (Starbucks Home Page 2008). Some of this involvement is primarily charitable, while other community affairs with which business becomes involved pays a direct return to the company. It is difficult to separate one from the other because in most instances both community and business reap positive rewards from any business participation in community affairs. The general theory behind much of it is that by business participating in community affairs it makes the community a better place in which to live. By making the community a better place to live, it helps improve the community for all those who live there and as an inducement for hiring new employees from distant communities -- possibly needed experts from other cities (Beauchamp and Bowie 2003). Codes of Ethics Starbucks developed special codes of ethical rules and practices for employees to ensure moral and ethical principles are met. Great steps forward have been taken by business in bringing the stakeholder into its confidence and attempting to grant them many of their desires. Much has been done and more needs to be done; however, care must be taken that the stakeholders do not go overboard and demand from industry more than they truly need or deserve (Sims, 2003). Society must also exhibit some restraint and patience in their demands on business. This is not to say that where stakeholders have a legitimate problem or complaint that they should not take appropriate action to rectify the situation (Carroll and Gannon 1997). Societys demands on industry have been extensive and industry has tried in most instances to respond favorably to this initiative. In some instances these demands have caused the stakeholders new problems, for which they blame industry. One instance is the case of home fast food preparation and the extensive use of plastic containers. On the one hand, it has helped working people to have good meals on short notice, but has caused trash and garbage landfill problems as a result. As in all other situations, it is again emphasized that all parties involved must cooperate and work together to solve the problems -- not just yell at each other. Starbucks stipulates that: “We know that as we deliver in each of these areas, we enjoy the kind of success that rewards our shareholders. We are fully accountable to get each of these elements right so that Starbucks—and everyone it touches—can endure and thrive” (Starbucks Home Page 2008). This statement shows that social responsibility and sustainable strategies are a part of overall management processes and approach to marketing (De George, 1999). Community and Business Involvement Approaches to social responsibility determined by Starbucks encompass all areas of involvement between the community and business and sometimes the government. In the not too distant past, when one spoke of community involvement, it usually meant the immediate or close vicinity (town, city, county, or state) of where the business was located. In todays modern world of high-speed travel and communication and many multiple business locations, it has in many instances expanded so that today it can encompass total regions, nations, or even the entire world. National and multinational businesses thus have a large complex of communities with which to concern themselves (Donaldson et al 2002). When and how deeply should a business involve itself in community affairs, other than supplying basic jobs to the people of the community, presents a set of questions that each business will have to evaluate on an individual basis. Certainly economics enter into the picture. If a business is new and just starting up it can be expected to participate only minimally; if it is long established, stable, and profitable then it will be expected to get more deeply Some large companies are very sincere and quite adept at handling corporate urban development and other social responsibility problems. For example, Starbucks on the leading edge of corporate social responsibility, applies its resources of cash management expertise and technology to three major areas of social responsibility, including work creation, educational programs, and community welfare. Each of these areas has an issue manager who is responsible for research, preparation, and implementation of an action plan; specific criteria are then applied to determine project selection (De George, 1999). Social responsibility and Strategic Approach to Management In many instances management has tightened its belt and cut back on employment levels; devised programs to divest themselves of older, more costly workers through early retirement programs; stripped pension funds; hired part-time people for whom they need pay no insurance or retirement benefits; implemented plant closedowns; have forced concessions out of union; and have in some cases even cut back on executive bonuses (Moon and Quelch 2006). If it can be agreed on that ethical behavior is legal behavior plus some other element, then it is important that this additional element be identified, if possible (Donaldson et al 2002). At first blush, many people will probably agree that this additional element is the collection of moral principles and values of what is right and what is wrong and what is good and what is bad, as determined by group behavior or by some member of the group. At this point of definition, it appears that ones behavior is ethical if it is legal and in accordance with group norms. Based on discussions and some recent philosophies, this is what many would have everyone believe. Starbucks claims: We work together on a daily basis with partners (employees), suppliers, farmers and others to help create a more sustainable approach to high-quality coffee production, to help build stronger local communities, to minimize our environmental footprint, to create a great workplace, to promote diversity and to be responsive to our customers” (Starbucks Home Page 2008). ’ This definition is, however, short sighted and flawed in that it does not clearly define "group" or the standards and values upon which the "group ethical norms" are based (Frederick, 2002). For Starbucks, once the social audit is completed it must be appraised and evaluated. The depth, the detail, and the completeness of the audit that is desired must be reflected in the makeup of the initial audit measuring and monitoring procedure that is used. A detailed appraisal and evaluation cannot be obtained from a simple measuring and monitoring program (Mahoney 1990). The literature describes numerous approaches that show how to appraise and evaluate the social audit and determine the companys true involvement in the social responsibility arena. The major contributions in this area will be combined and condensed into four representative approaches. The first three approaches emphasize use of quantitative methods, whereas the fourth approach simply lists what the company has done in this area. The six criteria used for strategic planning are: (1) quality of leadership, (2) quality of management, (3) financial strength and stability of the institution, (4) potential favorable impact of grant in relation to size of grant, (5) degree of risk involved in awarding the grant, and (6) overall rating, based on comparison with other grants previously awarded, immediate needs of the grantee, and merits of supporting a particular project. Thee criteria ensures ethical and moral approach t problem-solving and sustainable policies created and introduced by management (Kotler and Lee, 2004). Concussion In sum, the analysis of Starbucks policies and strategies show that it uses social responsibility as a core of its business and as a framework for relations with outside world. Once both company capabilities and community needs are established, then some form of selection process must be established for determining which project or projects will be undertaken by the company. For proper business and social conduct, these ethical standards and values must be shared by not only individuals but by the total business community and society as a whole. Without agreement by all parties involved, only legality exists to control the actions of everyone. Bibliography Beauchamp, T.L., Bowie, N. 2003, Ethical Theory and Business. 7th edition, Upper Saddle River, New Jersy: Pearson Prentice Hall. Carroll, S. and Gannon, M. 1997, Ethical Dimensions of International Management, Thousand Oaks, CA: Sage. De George, R. 1999, Business Ethics, 5th edn, Englewood Cliffs, NJ: Prentice Hall. Donaldson, T., et al. 2002, Ethical Issues in Business, 7th edn, Upper Saddle River, NJ: Prentice Hall. Frederick, R. (ed.) 2002, A companion to business Ethics. Blackwell Publishers. Kotler, Ph., Lee, N. 2004, Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. Wiley. Mahoney J. 1990, “An International look at business ethics”, Journal of Business Ethics, vol. 9, no 7, pp. 545-550. Moon, Y., Quelch, J. (2006). Starbucks Delivering Customer Service. Harvard Business School. Robbins, S. 2002, Organizational Behavior. Pearson Higher. Sims, R.R. 2003, Ethics and Corporate Social Responsibility: Why Giants Fall. Praeger. Starbucks Home Page. 2008. Retrieved 30 October 2008 from www.starbucks.com Read More