Discuss about the Corporate Social Responsibility of Starbucks.
Corporate Social Responsibility is the commitment made by a business to act ethically and to make contribution towards the economic development and improving the life quality of workforce as well as of their families, of the local community and society as a whole (Schwartz, M. (2011). CSR is the obligation of the company towards its shareholders and those groups or people who have interest in the company. CSR is not concerned only with the shareholders; it also includes customers, suppliers, investors and employees; and the community that surrounds the business (Anaejionu, R, 2016). We know that shareholders have various needs and that has to be fulfilled by the company. The customers desire for safe products and valuable services from the company whereas, an employee is in need of fair wage policy and working conditions should be safe. An investor wants to enhance its profit by making investment in the company and the community expects that the business limits its activities that are responsible for causing pollution. CSR aims at maximizing the good causes and reducing the bad effects in the business activities (Kotler, P and Lee, N, 2011).
There are basically four areas that describe the social responsibility of a corporate. These are – legal, ethical, economic and philanthropic.
Legal: A corporate should always ensure that their business practices are legal and are obeying regulations to protect the consumer needs, because the customers rely on a business that are truthful regarding the products and services that they offer (Werther, W and Chandler, D, 2010). If a company is penalized or ceased to perform its activities due to illegal practices it will ultimately affect the customers of that company (Brennan, D, 2011).
Economic: The economic responsibility of a company is to make profit and to be capable of returning a good amount of interest to their investors. Creation of job opportunities to the community and the contribution of producing useful products and services is also the responsibility that lies in the hand of a company.
Ethical: The ethical responsibility of an organization is to manage waste, recycle and balance consumption. These areas are often regulated by the government and it is voluntary for a company to go beyond what law requests to bring sustainability for future generation.
Philanthropic
It is the philanthropic responsibility of a company to promote human welfare and to spread goodwill of its own (You, J, 2015). All these areas are covered under the scope of CSR of an organization.
Starbuck was founded in 1971; it was the first retail store that opened in Seattle’s Pike Place Market in US. The name of the company is an inspiration from Moby Dick, that it was an evoke from the romance of high seas with the seafaring tradition of early traders who dealt in coffee. In 1981, Howard Schultz showed interest in Starbuck and wanted to be a part of it. He worked very hard and his ideas had potential to expand the enterprise outside Seattle. Currently, Starbuck has reached a new height of success in expanding their business worldwide and it also aims at providing excellent customer services to maintain the reputation of the company.
Starbucks totally believes in conducting business ethically and to strive to do business in a right manner to bring success. Business Ethics and Compliance is a process that strongly supports the mission of Starbucks and helps to protect the culture and reputation of the company. This program aims at developing and distributing awareness and to facilitate legal compliance along with ethical training. Starbucks takes initiative to investigate into the matter and issues that brings conflicts and disinterest of the partners. All the partners are requested to discuss issues and challenges that the company faces by building good communication channels (Simpson, J and Taylor, J, 2013).
As a result of this program it was developed that most of the issues where related to the employees of the company. This trend is the same in other companies as well. After this the company made sure that these issues are resolved as soon as possible and the enterprise can maintain its ethical code of conduct in their business activities.
To maintain the standard of Business Conduct, the company has issued a booklet which is distributed to all its partners so that it becomes helpful at the time of decision making (Mullerat, R, 2010). It sets standards so that a brief statement can be obtained regarding the company’s expectation and the ways to match the desired standards. The standard of business conduct program helps in accomplishing the mission and objectives of the company by maintaining their core values.
Starbucks aims to commit good governance, ethical code of conduct and social responsibility in the way they perform their business. The employee satisfaction and retention of the company is high because of the good CSR practices (Fridell, G, 2007). Customers are attracted more to the company because they perform CSR responsibly and this is the driving force for the organization. The measures company take to reduce its impact on the environment are initially cost consuming but for the longer run they prove to be beneficial in terms of reducing environmental damage and cost saving. The company invests in the measures to strengthen their supply chain that ensures them a sustainable growth. The company seeks approval and necessary licenses to operate from the concern regulating authority.
The company‘s board of directors strongly takes the responsibility in following the ethical governance principles. The company’s board has always been classified and the criteria for the appointment of the board member have always personal integrity and ethics on the top of the list along with considering professional and personal background. A strong and ethical corporate culture is important for the success of the organization. The company provides guidelines through a program called Starbucks Business Ethics and Compliance.
The way the company manages its corporate social responsibility shows that the company is willing to identify and prioritize the issues that have emerged and is able to address them in a systematic and integrated manner. Along with a dedicated team to take care of the CSR initiatives the company has also formed three cross-functional teams that take care of the specific responsibilities, the teams are, Emerging Issues Council and CSR Executive Committee.
The Emerging Issues Council was established in the year 2004 to identify and map the external key trends and issues that may impacts the business of the company. The council may involve external stakeholders to gain input once the issues are identified.
CSR Executive Committee was established to strengthen the overall CSR governance of the company. The aim of this committee is to set strategies and policies, to monitor the progress the company has made against its objectives, to oversee the CSR structure of organization at the local, regional and global level, to ensure that the integration and implementation is done throughout the company and to approve and review the social investment activity (Wolf and Ruth, 2014).
Starbucks manages its CSR policies in such a way that the emerging challenges can be easily evolved. It has a shared accountability for CSR, so the company is relying on a dedicated CSR group (Niahkaew, P, 2010). In Starbucks the top executives are reported on day to day basis if there is any CSR related issues. This group aims at managing CSR at different levels; at the business level, department or division level. Beside this group there are other groups that ensure that the company is successful in matching the legal formalities prescribed by the Government in this regard.
Starbucks social responsibility is considered to be the best CSR strategy which focuses on the three pillars which are Community, Following Ethical Sourcing, and Taking Care of the Environment. It is observed that Starbucks is working for the development of the society. Its prime focus is to give back to the society what they have actually utilized. To create a positive impact on the society it has developed many community stores associating with the local nonprofit organizations. It has focused all its resources in developing the community resources by incorporating various social service schemes (Environmental Stewardship,2016)
They have integrated social responsibility as a part of their corporate strategy. Howard Schultz has emphasized on Corporate Social Responsibility while focusing on its structure. Their prime focus is development of community and environment as they are the most essential for any country. Social responsibility is a pattern used by the organizations to support the natural resources throughout the world. Starbucks is a pioneer leader of promoting social responsibility in its daily working (Wolf, Ruth, 2014).
Starbucks has more than 24,464 stores which are operating in 34 countries and serving the best coffee to its customers. Their mission is to provide their customers the best coffee experience by supporting the environment and their farmers. They are focused on promoting their brand as the ethical brand throughout the world. There multiple programs for the society are considered one of the best schemes. Many organizations are focusing on developing their CSR plan as per the Starbucks. The employees are asked to promote the organizational interest in the favor of the company. For accomplishing the purpose Starbucks has developed various plans to accommodate the environmental balance in their daily practice (Ottman, 2011).
Starbucks understands that most of the carbon emission is created through their stores; therefore they are focusing on developing eco-friendly projects. Starbucks is focusing on utilizing the renewable source of energy as this will cause a lesser harm to the society. Several investments are made in developing energy efficient plants. There store are striving hard on developing the plants which are creating an efficient energy (Goals & Progress: Energy Conservation,2016).
The stores are utilizing a lot of water in the daily routine job which is a matter of concern for the company. Starbucks is utilizing a technique which makes less water wastage. All their stores follow strong instructions which are helping in managing the renewable resources (Water Conservation, 2016).
Non-renewable resources are causing harm to the environment. Starbucks work with the local community for recycling the resources which it is putting into use. They have introduced various rewards points in reducing the garbage which is created by them. It offers a ten cent reduction rewards to its customers which own a reusable cup (Recycling and Reducing Waste, 2016).
They are always finding new ways to design their stores which are putting lesser impact over environment. They are utilizing responsible business materials and energy efficient material to create a difference to the society. They are using LEED Certification programs to protect the environment which was created by United States Building Council. The materials they are using for the construction are energy efficient. The green Starbucks building signify environment friendly measures (Building Greener Stores, 2016).
They advocate on utilizing the energy efficient resources. They have collaborated with various communities to improve the coffee production, and restoration of the natural habitat. They are promoting the interest of their farmers while implementing the energy friendly resources. Starbucks knows that they are utilizing a huge amount of resources from the environment which makes it necessary to focus on the eco-friendly use of resources (Tackling Climate Change, 2016)
It has partnered with various organizations to promote the interest of their farmers. They have issued certain guidelines for managing the ethical sourcing of coffee. The project is called as CAFÉ (Coffee and Farmer Equity) practices. They emphasize on growing the coffee in a way which is beneficial for people as well as the environment. This program is focuses on managing the natural resources with the needs. The program is focused on sustainable utilization of environment by combining the goals in meeting the requirements (Starbucks C.A.F.E. Practices, 2016).
There initiatives are made on fair pricing, precision, responsible buying and an environmental friendly purchase. They have combined the efforts with the third party to monitor the interest of the farmers. They are working with the local government and ensuring that their farmers are not deprived of utility.
The cocoa farming is also given much priority same as the CAFÉ program. Starbucks ensures that the cocoa they are using is based on high standards. For this purpose they have teamed up with many organizations in the favor of promoting the interest of the farmers in the West Africa.
Howard Schultz believes in the theory of giving back to the society. The large amount of coffee is imported from the African and Asian countries. It is believed that long term success of an organization depends upon the farmers who are growing high standard coffee. They have launched various programs for supporting the interest of their farmers. A support center for farmers is introduced to teach them the techniques of farming. It will help Starbucks in managing the resources under the harsh circumstances.
Social change is a part of the competitive world as the world is growing at a rapid speed. Companies are utilizing the resources at the same time which is causing a burden over the environment. Profit and social responsibility are mutually important for the success of the organization. Both are valuable for estimating the brand value, which largely shows that both the concepts are correlated (Ethical Sourcing: Coffee, 2016).
The interest of the stakeholders is important while managing the corporate social responsibility. The company works under various circumstances where it needs to manage the interest of various people. Starbucks is focused on managing the interest of its stakeholders by focusing on them individually. The various stakeholders whose interest is allied with the interest of the organizations are as follows:
Globalization has led to cross-border transactions which has caused a burden over the environment. The whole world is concerned over the growing environmental issues. Various programs of Starbucks are focused on managing the interest of the stakeholders. They are regularly emphasizing on the policies which enables safeguarding the environmental issues.
The interests of the suppliers are given prior importance while managing the environment. Starbucks consider that the interest of the farmers is their utmost duty. They should be given equal importance by focusing on various initiatives. Starbucks is known for the best quality of coffee all over the world. Although the brand is quiet expensive but they have a large follower of coffee lovers around the world. A program related to improving farming techniques is introduced over the past decade to manage the quality level of coffee.
Strengthening the brand name and customer’s satisfaction is the priority of Starbucks. They are focused to serve the interest of their customers in developing the programs which provides utmost benefit to their customers. They have introduced different products as per the taste of their customers. Developing product as per the taste bud of the local customers is the USP of the brand.
Starbucks is a place for various community meetings. It is providing a major source to voluntary organization to procure the funds. They are focused on establishing 50 stores by 2018 to promote the community interest. It is the part of CSR to work in good faith for the under privelidge communities.
Starbucks understands that the employees are the biggest asset in an organization. Schultz has focused on creating a friendly environment for the employees where they can grow. For providing the best culture to its employees they have introduced the health care programs. To achieve the safety of the employees they closed 10% of their stores in 2006 to provide health benefit schemes. Their policy focuses on benefiting the interest of the employees. They have introduced Bean stock scheme which promotes the interest of the employees and creates a sense of belongingness. It is essential for an organization to focus on the physical and intellectual well-being. Starbucks has realized that it will help them to achieve the result on a long run. Nowadays many organizations understand the importance of CSR and they know that it will benefit them in a long run (Peng, 2009) (Scott,2016).
In the present world Starbucks is the leading retailer of coffee, it produces and sells a wide variety of beverages, and pastries and confections all over the world (Gilbert, S, 2008). It also sells their beans to airlines, businesses and hotels, restaurants, and produces a premium line of teas long with a line of small disc packs in their company related stores. The company has made a huge success in the global world because of an excellent approach shown by their employees. Starbucks try to relate their activities keeping in view the culture and values of their valuable customers. They invest and create a unique relationship with their employees and try to develop an understanding to meet the expectations of their employees. Starbucks is an innovator by following all the guidelines related to discipline and good management. They try to bring innovation and new ideas in the business to cope up with the emerging changes in the needs and wants of their potential customers.
The major challenges faced by Starbucks are competitors and there increased interference in their product line, as the rivals started to deal in the same products that Starbucks has been dealing in. Starbuck has an issue of lack of experience in conducting business activities in a market that is price sensitive and due to this it sometimes becomes difficult to maintain its position against their business rivals. Starbucks is now trying to plan its marketing mix strategy so effective that it becomes impossible for their competitors to maintain such strategies in their conduct. The ultimate upscale in their retail mix builds loyalty towards their customers and brings growth to the economy as a whole.
Conclusion
Starbucks is an enterprise that takes its CSR very serious to develop and maintain a healthy relationship with their customers, suppliers, investors and shareholders. Starbucks has successfully maintained its position in the global market by maintaining ethical code of conduct as per the market standard and values. The employees take initiative in bringing a feeling of satisfaction in the minds of their customers and dealers so that they can achieve a strong trust and loyalty from them. By fulfilling all the necessary requirements that an effective CSR policy demand for, Starbucks is one of the leading retailers who deal in coffee and various other products all over the world.
References
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Brennan, D. (2011). Corporate Social Responsibility: The Corporate Governance of the 21st Century. Kluwer Law International.
Building Greener Stores,(2016)(Online) . Available from: https://www.starbucks.in/responsibility/environment/green-building (Accessed on 29/09/16)
Environmental Stewardship. (2016).(Online) . Available from: https://www.starbucks.in/responsibility/environment (Accessed on 29/09/16)
Ethical Sourcing: Coffee.(2016).(Online).Available from: https://www.starbucks.com/responsibility/sourcing/coffee (Accessed on 29/09/16)
Fridell, G. (2007). Fair Trade Coffee: The Prospects and Pitfalls of Market-driven Social Justice. University of Toronto Press.
Gilbert, S. (2008). The Story of Starbucks. The Creative Company.
Goals & Progress: Energy Conservation.(2016).(Online).Available from: https://www.starbucks.com/responsibility/global-report/environmental-stewardship/energy-conservation (Accessed on 29/09/16)
Kotler, P and Lee, N. (2011). Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. John Wiley & Sons.
Mullerat, R. (2010). International Corporate Social Responsibility: The Role of Corporations in the Economic Order of the 21st Century. Kluwer Law International.
Niahkaew, P. (2010). Fairtrade and how Starbucks Engages in CSR. Faculty ofJournalism and Mass Communication, Thammasat University.
Ottman,J.(2011). The New Rules of Green Marketing: Strategies, Tools, and Inspiration for Sustainable Branding. Berrett-Koehler Publishers
Peng,M.(2009). Global Business 2009.USA: Cengage Learning
Recycling and Reducing Waste,(2016)(Online) . Available from: https://www.starbucks.in/responsibility/environment/recycling (Accessed on 29/09/16)
Schwartz, M. (2011). Corporate Social Responsibility: An Ethical Approach. Broadview Press.
Scott,K.(2016). Starbucks enhances pay and benefits package for US staff. (Online).Available from: https://www.employeebenefits.co.uk/issues/july-online-2016/starbucks-enhances-pay-benefits-us-staff/ (Accessed on 29/09/16)
Simpson, J and Taylor, J. (2013). Corporate Governance Ethics and CSR. Kogan Page Publishers.
Starbucks C.A.F.E. Practices,(2016) )(Online).Available from:https://www.scsglobalservices.com/starbucks-cafe-practices (Accessed on 29/09/16)
Tackling Climate Change,(2016)(Online) . Available from: https://www.starbucks.in/responsibility/environment/climate-change (Accessed on 29/09/16)
Water Conservation,(2016)(Online) . Available from: https://www.starbucks.in/responsibility/environment/water (Accessed on 29/09/16)
Werther, W and Chandler, D. (2010). Strategic Corporate Social Responsibility: Stakeholders in a Global Environment. SAGE.
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You, J. (2015). Legal Perspectives on Corporate Social Responsibility: Lessons from the United States and Korea. Springer
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