Question:
Case Study: Comparative Business Ethics & Social Responsibility.
In present competitive businesses environment, corporate social responsibility has emerged as one of the most important factor that every organizations have to follow. According to Christensen, Mackey and Whetten (2014) social responsibility is a concept that induces organizations to concern about many other things apart from the revenue only. In fact, the social responsibilities have a major role in the businesses of the companies as well. As per the article by Sebhatu and Enquist (2014) organizations are a part of the society. Therefore, organizations have to consider about the well-being of the society in order to represent itself as one of the responsible members of the society. Otherwise, it can damage the image and reputation of the organizations.
Starbucks regarded as one of the major coffee company of the entire world. The company established in the year of 1971. From the beginning of its businesses, Starbucks has able to gain huge popularity among its customers (Cha, Yi and Bagozzi 2015). It helps the organization to enhance its image among the customers. Therefore, Starbucks always remains very careful regarding the kind of affect any of its business strategy will have on the customers mind. Social responsibility is among those strategies that Starbucks consider very seriously. In many studies highlighted the fact that Starbucks is the global leaders in many of the key areas of social responsibilities (Elkington and Fisk 2014). Therefore, it has huge impact on the entire image and reputation of the company.
Starbucks image includes organizations commitment to sustainability and ethics. The study highlighted the fact that Starbucks launched a website named shared planet to address ethics related issues. The prime aim of this website is to achieve environmental stewardship, ethical sourcing and greater community involvement. It illustrates the kind of emphasize that the company has provided on the social responsibility. The company also associated with number of nonprofit organizations in order to help needy people of the society. Hence, study evaluated the fact that the Starbucks is hugely concerned regarding its image on the society. According to Pearce and Doh (2012) in modern competitive business atmosphere, organizations tries to maintain its social responsibility not only to help the society to move forward but it also helps the organizations gain competitive advantage in the market. Since, maintaining social responsibility allows organizations to develop a strong reputation from itself. In addition, Starbucks is the largest buyer of Fair Trade Certificate coffee (Korschun, Bhattacharya and Swain 2014). Therefore, the company has able generate huge amount of reputation for the company due to many years of good work. Thus, it is obvious that the company will try everything to maintain its reputation and image within the society in which they are doing businesses. Since, any negative impact on the social image or reputation can have major impact on the businesses of the company. As a result, it is obvious that Starbuck will try everything so that the company can able to maintain its reputation in the market.
Another factor that keeps Starbucks concerned towards the social responsibility is the kind of potential negative impact it can have towards the company. As mentioned earlier, Starbucks has able to create huge reputation for it by performing its social responsibility to its fullest. For instance, Starbucks has collaborated with Paper Recovery Alliances to address the social issues related to the packaging of the products. As per the article by Scherer et al. (2016) waste that comes from the packaging of the products has not only created huge amount of negative impact on the environment of the society but also has induces government to spend huge amount of money so that people whom are living in the society can able to live a healthy life. However, as the amount of waste is keep increasing, it actually creating huge challenges for the company. Thus, waste management initiative taken by Starbucks has able to gain praise from all sector of the society.
The study highlighted the fact that Starbucks makes almost 14.5 million loans to the poor farmers and planning to increase the amount to 20 million in 2015. In the year of 1998, Conservation International combined with Starbucks to promote sustainable agricultural practices. The company also developed many campaign for preventing deforestation. This highlighted the fact the concern of Starbucks on the overall development of the society. It also emphasizes the fact that Starbucks not only want to represent itself as one of the major coffee provider of the world but also want to represent itself as a responsible citizen of the society. Therefore, it is obvious the Starbucks will concern hugely on the social responsibility at the time of developing corporate strategy.
Another important factor that induces the company to maintain social responsibilities in the workplace is because of the childhood experience of Howard Schultz, the CEO of Starbucks. As Howard experiences his father condition because of the unsympathetic behavior by the employer, Starbucks focus to provide all its employees an atmosphere in which they can able to work healthily. Traditionally, Starbucks has able to maintain proper ethics and social responsibility in order to maintain strong relationship with the employees as well as with the suppliers. Especially, Starbucks has commendable relationship with the small size coffee suppliers. Since, Starbucks is the most popular organization in the coffee industry. Therefore, it can easily able to collect raw materials from the top most raw materials of the world but the company believes in providing all other suppliers the opportunity so that they can able to grow in the market. Starbucks Coffee and Farmer Equity Practices highlighted the social practices at the time of collecting raw materials from the farmers. Starbucks comparatively pay higher prices to the farmers in order to help them and their families to lead a healthy life. As opined by Eteokleous, Leonidou and Katsikeas (2016) Starbucks believes that in the theory of “People first and profit last”. Therefore, the organizations always keen to implement strategies that will help the organization to develop strong relationship with both internal as well as external stakeholders. Thus, all the strategies of Starbucks developed in such a way that it not only helps the company to gain profit but also induce them to perform all its social responsibility carefully.
The study highlighted that Starbucks is one of the top most organizations regarding the kind of benefits that the organizations provide to all its employees. As mentioned earlier, Howard Schultz has faced lack of money at the time of growing up. Since, his father was treated unsympathetically by an organization and does not provide them the necessary health benefits that every individual expected to have at the workplace. As a result, Starbucks was developed with believe that every organization should value all their employees. The childhood experience also induces Howard Schultz to make sure that none of the employees from Starbucks will have to face situation that his father had to face. Thus, the company always put huge amount of focus to ensure every employees of the organization can actually able to receive high benefits level so that they can able to lead a healthier and happy life (Hill, Jones and Schilling 2014). This highlighted the unique perspective of the Starbucks as compared to any other organization.
According to Orlitzky (2013) the company has its unique way of treating all its employees. Since, the company offer arrangement of benefits to all the employees that are completely unheard of for coffee shop organization. Especially, Starbucks has paid huge amount of benefits to all its employees regarding their health, which very few organizations in the world will even think to consider. The corporate strategy of Starbuck focus on to create a healthy and friendly job environment in which every employees can able to share their believes and thoughts. According to Rothaermel (2015) one of the key to the success of any organization is to develop an atmosphere and job environment that can increase the satisfaction level of the employees. Now, as mentioned earlier, Starbucks is one of the few companies in the world that provide high level of benefits to all its employees. Therefore, the company has able to develop a workforce whom is highly motivated towards their work. Thus, it allows Starbucks to operate to the maximum level of efficiency. This helps the organization to achieve a high profit level. As a result, Starbucks has able to provide the high level of benefits to all its employees.
However, the study highlighted the fact that Starbucks is so concerned about the health level of its employees that it can even ready to cut short the businesses of the company. For instance, the company closed almost 10% of its stores in the year of 2008 so that it can able to provide the same level of health insurance to all its employees. This emphasizes how concerned Starbucks is for their employees. As per the article by Scherer, Palazzo and Trittin (2015) in this challenging business environment, everyone is trying to implement any strategy that have the potential to increase the present level of revenue for the company whereas Starbucks actually cutting its business opportunities so that it can able to provide high level of benefits to the employees. Thus, the company is unique not only in providing high level of benefits to the employees but also unique in terms of the mindset of conducting business. Hence, this unique mindset in conducting businesses has great roles in providing high level of benefits to the employees.
However, as per the article by Park, Lee and Kim (2014) revenue level also has huge amount of impact on the provided benefits to employees. Since, the company has able to gain huge amount of popularity in all over the world. It increases the revenue level of the company. This allows organization to provide this amount of benefits. The quality of products provided by Starbucks has able to increase the satisfaction level of the customers. This also helps the company to emerge as one the most popular brands of the world. Particularly, at the time of economic crisis, the company has able to restructure its strategy effectively. For instance, Starbucks upgrades its coffee brewing machines, introduced new items at a relatively low price and refocusing in its core product has able to attract customers all over the world. Therefore, the revenue level of the company remains almost unaffected. This also allows the organization to spend for the well-being of the employees (Chandler and Werther Jr 2013). Starbucks also focuses immensely on the present level of services in order to increase the satisfaction level of the customers. As a result, it able to attracts people from all parts of the world, which induces the company to provide high level of benefits to each of its employees.
According to Green and Peloza (2014) ethical and social responsibility has major impact on the businesses of the company. Specifically in the present competitive business environment, every organization is trying to implement strategies that will help the organization to gain competitive advantage in the market. Thus, maintaining social responsibility helps organizations to develop a strong reputation for them. As a result, more and more customers get attracted to the product and service offering of the company. In addition, the study highlighted that Starbucks is one of the top most organizations of the world that perform all necessary social responsibilities very carefully (Vallaster, Lindgreen and Maon 2012). This helps the organization to get close to its customer, as performing social responsibility helps to develop a emotional relationship with individuals from the society. Thus, maintaining social responsibility and business ethics does helps Starbucks to gain competitive advantage in the market.
The study mentioned that Starbucks has always able to move one step ahead with its innovative thought process which allow the company to gain popularity in the market. For instance, Starbucks has developed environmental mission statement in the year of 1992 that way before the concept of “go green” adopted in the market by other organization (Green and Peloza 2015). By the statement Starbucks focuses on to minimizes the waste and also looks to recycle it so that it had minimum negative impact on the environment. Therefore, Starbucks tries to offer plastic cups with different sizes at a price $1. Since, the cups can be reused to at least 30 times, which will minimize disposal of around 4 billion cups from the entire world. Hence, it can potentially have major positive impact on the environment.
Another major ethical factor that has played important role in developing popularity for the company is the way the company has treated all its employees. As mentioned earlier, Starbuck believe in “People first, profit last” policy (Caruana and Chatzidakis 2014). Therefore, it always focuses on to providing the best possible benefits to the employees so that all the employees of the organization can able to live a healthy and happy life. In fact, the company is so concerned with the well-being of the employees; it is ready to cut its profit to a great extent. As opined by Mallory and Rupp (2014) ethical practices in business will primarily have to focus on the perspectives of people such as employees, customers and suppliers associated with the business. In this case study, it was mentioned that Starbucks has able to develop a strong relationship with all its stakeholders from the beginning of the business with its unique thought process. For instance, practices like closing 10% of stores of the company just to ensure that the benefit level of the employees don not get affected is just something else, as many other well known company will take the other option of cutting the number of employees so that the profit level of the company remains in a satisfactory level. On the other hand, the study also mentioned that Starbucks has shown great commitment to its entire supplier to help them to grow in their businesses. The study also mentioned that Starbucks consciously tried to provide high prices to the farmers so that they can able to live a healthy life. It also provided almost $70 million loans to support farmers so that they can able to live a healthy life. Starbucks also tried to engages with different size of suppliers so that the entire coffee businesses can able to grow together. As per the article by Drumwright and Murphy (2014), Starbucks has been considered as one of the top organizations in the world regarding the maintenance of ethical practices. The company also has invested huge amount of money in the development of the health clinics and schools so that the society can able to grow efficiently. As a result, the company has able to gain huge amount of popularity among the people all across the world. This has major impact on the businesses of Starbucks. Hence, it can be said that the ethical and social responsibility practices does have major influence on the businesses of Starbucks.
On the other hand, Starbucks has also provided high quality product and services in order to gain the popularity among the people all over the world. It also has able to introduce new product offering so that it can able to keep all the customers associated with the organization. The company also has put in huge amount of effort to ensure that the quality of the products can be remaining intact (Fontaine 2013). The study highlighted a case where Starbucks enlisted around 1000 customers for over the period of 1500 hours in order to make its new product flavor perfect. Thus, it enlightens the fact how conscious Starbucks is regarding to its quality of the product. The study also highlighted that Starbucks held the largest countrywide coffee testing in order to make sure that the company has able to provide the highest quality of products (Carroll, Primo and Richter 2016). Starbucks has also joined with Conservation International to make sure that the coffee beans that will used by the company is in the highest quality. It allows the company to deliver coffee of highest quality to attract major portion of the customer. Thus, it can be state that Starbucks product quality and variety of product offering has major impact on the businesses of the company.
Another major aspect that Starbucks keep in mind is the customer satisfaction level at the time of visiting the shops of Starbucks. The management of the company believes that customers experience will have to be consistent in all the stores of Starbucks. Otherwise, the service level of the company will not able to achieve the desired amount of customer satisfaction level. The study mentioned that Starbucks replaces its coffee machines with the new high-tech ones so that the customers feel attracted towards the products of the company (Antonetti and Maklan 2014). In addition, Starbucks also introduced mobile payment apps namely Square Wallet to enables customer to pay without using credit or debit cards. This has created major impact on the satisfaction level of the customer. The study also mentioned that Starbucks also tried label the amount of calories each of their product has printed on its packaging so that health conscious customers can able to purchase the product of the company much more freely (Ragas and Culp 2014). Starbucks also tried to provide e-Gifts to the customers to keep them happy and satisfied with the product and services of the company.
In order to maintain a good environment, Starbucks has tried to implement three things. Firstly, the management circulated comment cards and mission statement to all new partners. Secondly, the company consciously tries to relate guiding principles it support. Thirdly, Starbucks developed a mission review system to evaluate it strategy with principle of the company. Thus, it highlighted the fact that the company has put in huge amount of effort to ensure that the company’s environment remains in good order so that it can more focus on the customer needs and wants.
Thus, it can be said that the success of Starbucks is a combined result of both the factors. As Starbucks has mange to implement both the factors top gain popularity in the market.
References:
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Caruana, R. and Chatzidakis, A., 2014. Consumer social responsibility (CnSR): Toward a multi-level, multi-agent conceptualization of the “other CSR”. Journal of Business Ethics, 121(4), pp.577-592.
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