case study report business ethics topic starbuckss mission social responsibility and brand strength

Why do you think Starbucks has been so concerned with social responsibility in its overall corporate strategy?...7 2.. In regard to the social responsibility and brand strength of Starbu

NATIONAL ECONOMICS UNIVERSITY ADVANCED EDUCATIONAL PROGRAM

CASE STUDY REPORT COURSE: BUSINESS ETHICS

TOPIC: STARBUCKS’S MISSION: SOCIAL RESPONSIBILITY AND BRAND STRENGTH

Lecturer : Nguyen Bich Ngoc

Student name : Tran Phuong Thao

Student ID : 11225977

Class International Business Management 64B :

Hanoi - 05/2023

TABLE OF CONTENTS

PART I: INTRODUCTION 1

PART II: SUMMARY 2

2.1 New product offerings 2

2.2 Starbucks culture 2

2.3 Corporate social mission 3

2.3.1 Environment 3

2.3.2 Employees 3

2.3.3 Suppliers 3

2.3.4 Customers 4

2.3.5 Communities 4

2.4 Brand evolution 4

2.5 Success and challenges 5

2.5.1 Success 5

2.5.2 Challenges 6

PART III: ANSWER THE QUESTIONS 7

1 Why do you think Starbucks has been so concerned with social responsibility in its overall corporate strategy? 7

2 Is Starbucks unique in being able to provide a high level of benefits to its employees? 8

3 Do you think Starbucks has grown rapidly because of its ethical and socially responsible activities or because it provides products and an environment customers want? 9

REFERENCES 10

PART I: INTRODUCTION

Starbucks Corporation, commonly known as Starbucks, is a renowned multinational coffeehouse chain that was founded in 1971 in Seattle, Washington In its early years, Starbucks primarily sold coffee beans and equipment, with a small storefront located in Seattle's historic Pike Place Market; however, it wasn't until Howard Schultz joined the company in 1982 as director of retail operations and marketing that Starbucks experienced significant growth and transformation The clear evidence is that Starbuck has become the third largest chain restaurant in the United States and expanded around the world

Inspired by a trip to Italy, where he experienced the rich coffeehouse culture, Schultz had the intention of making Starbucks into “the third place” for consumers to frequent, after home and work With a view to providing a greater degree of access and convenience for non-pedestrian customers, the company decided to select rural or off-highway to cater to a wide range of customers and increased the expansion of stores equipped with drive-thru lanes without the need to park and enter the store With retail outlets, Starbucks also engages in the sale of coffee and tea products through online platforms to provide convenience and accessibility to customers who prefer to shop online or may not have easy access to physical stores

In regard to the social responsibility and brand strength of Starbucks, these two aspects have played a significant role in transforming successfully from a small coffee retailer into a globally recognized brand that transcends traditional notions of a coffee company The former, social responsibility is clearly shown by five factors: environment, employees, suppliers, customers, communities and Starbuck has had suitable scheme for each of them As for brand strength, it reflects the ability to adapt and remain relevant in

an ever-changing market by consistently delivering quality products, creating inviting spaces, embracing innovation, and prioritizing social responsibility

PART II: SUMMARY

Starbucks has successfully introduced new products and initiatives to remain competitive and enhance the customer experience In 2008, Starbucks launched its Pike Place Blend after extensive customer input and a nationwide coffee tasting The company also partnered with Conservation International to ensure sustainable sourcing Responding to customer feedback, Starbucks introduced the Blonde Roast blend in 2011 for those desiring a lighter option Starbucks prioritizes consistency in the customer experience, upgrading equipment and implementing measures like limiting baristas to making two drinks at a time to improve quality and reduce errors To foster brand loyalty, Starbucks introduced the reloadable Starbucks Card in 2001 and partnered with Square to offer the Square Wallet mobile app for convenient payments In 2013, Starbucks began labeling calorie information and introduced healthier options like wholesome salad bowls, responding to the increasing demand for wellness-focused choices

Starbucks has a strong commitment to its mission statement and guiding principles, which prioritize people over profits To keep the mission alive over the decades, Starbucks distributes the statement and feedback cards during partner orientations, consistently relates decisions to the guiding principles, and established a

"Mission Review" system for partners to comment on decisions Howard Schultz advocates for ethics in business and believes that while it can be difficult to do the right thing at all times, in the long term it is better for a company to take short-term losses than lose sight of core values

Starbucks' corporate culture has led to its recognition as one of Fortune's "100 Best Companies to Work For" for nearly a decade The care the company shows its employees such as not cutting back employee health care costs despite the recession is a large part of what sets it apart Starbucks also shows the commitment to ethics and sustainability through initiatives - the Shared Planet website with a view to keeping customers within the company

The company actively partners with nonprofits and organizations to promote responsible sourcing, environmental stewardship, and community involvement Starbucks

supports fair trade practices, sustainable agriculture, and initiatives to prevent deforestation

2.3.1 Environment

In 1992, Starbucks established an environmental mission statement, forming an Environmental Starbucks Coffee Company Affairs team to develop eco-friendly policies and reduce the company's environmental impact They implemented recycling, energy conservation, and educational initiatives through the "Green Team." Starbucks' progress can be tracked on their Shared Planet website Recently, they hosted Cup Summits to create a decomposable disposable cup As a result, Starbucks introduced a $1 plastic cup for multiple uses, aiming to decrease the global waste of 4 billion cups

2.3.2 Employees

Howard Schultz prioritized creating a positive work environment due to his personal experiences Schultz emphasizes the importance of a shared vision and employee contributions; therefore, offer all employees who work more than 20 hours per week a comprehensive benefits package that includes stock options, medical, dental as well as vision benefits Despite the financial impact, Starbucks closed 10% of its stores in

2008 to maintain employee health insurance, demonstrating its commitment to prioritizing people over profits To improve employee well-being, Starbucks introduced the "Thrive Wellness" program, offering resources like smoking cessation, weight loss, and exercise support Starbucks' focus on employee welfare reflects its dedication to being a supportive and responsible employer

2.3.3 Suppliers

Starbucks actively engages in many practices with organization to help farmers got premium prices in order to make profit such as constructing schools and health clinics, to benefit coffee-growing communities Additionally, through Farmer Support Centers in various countries, Starbucks provides technical assistance and training to ensure high-quality coffee production The company has donated around $70 million for loans and farmer support initiatives Starbucks is a significant buyer of Fair Trade Certified, shade-grown, and certified organic beans, supporting environmental and economic efforts In

2013, Starbucks purchased its first coffee farm in Costa Rica, moving closer to its goal of

sourcing 100% ethically produced coffee by 2015 Starbucks has also partnered with CARE, a relief and development foundation, contributing to projects like clean water systems, health training, and literacy programs

2.3.4 Customers

To recover from the global economic crisis, Starbucks prioritized strengthening its brand and customer satisfaction This involved upgrading coffee-brewing machines, introducing healthier and budget-friendly food and drink options, and refocusing on the core product With a focus on addressing the obesity epidemic, Starbucks ensures menu items are under 500 calories and participates in sodium reduction programs Specifically, enhancing customer experience rather than rapid expansion became a high priority such

as offering free Wi-Fi in all its U.S stores to encourage customers to relax and spend time there

2.3.5 Communities

Starbucks aims to create community-oriented coffee shops that serve as “instant gathering spots”- a place that draw people together Store managers are encouraged to donate to local causes, with one Seattle store donating over $500,000 to an African American school

Howard Schultz also believes in literacy’s transformative power for underprivileged children Through the proceeds from his book, created the Starbucks Foundation to support literacy programs, grant opportunities, and partnerships with organizations like Jumpstart To address unemployment, Starbucks partnered with the Opportunity Finance Network and launching Create Jobs for the USA This program provides funds to Community Development Financial Institutions, enabling support for small businesses, community centers, and housing projects Starbucks contributed $5 million to this initiative, reflecting its commitment to literacy, community development, and social responsibility

Starbucks understands the importance of modifying its brand to adapt to changing consumer demands While known for its premium coffee beverages, they now sell a variety of items in their stores, including coffee accessories, teas, muffins, CDs, water, grab-and-go products, and upscale food items This expansion into food sales, which

accounts for 20% of their revenue, helps mitigate the risks associated with rising coffee prices Starbucks also made strategic acquisitions to enhance their brand value and offer high-quality breakfast sandwiches, Paninis, and wraps To signify their shift into the consumer packaged goods business, Starbucks redesigned its logo by removing the words and enlarging the mermaid, indicating their broader range of offerings beyond coffee as belowed:

2.5.1 Success

Starbucks has become a leading global brand in the high-end coffee industry, renowned for its quality products and balanced business approach While it has faced criticism for its impact on smaller coffee shops and the homogenization of retail culture, Starbucks is praised for its employee relations and benefits The company has prioritized social and environmental initiatives, such as ethical sourcing of coffee, supporting farmers, and promoting sustainability Starbucks' commitment to fair trade and community development has enhanced its brand image and customer loyalty By investing in employee benefits, including healthcare and education, Starbucks has

become a role model for the fast-food industry The company's efforts to create a positive impact on society have not only attracted socially conscious consumers but also contributed to its overall brand strength and long-term success

2.5.2 Challenges

During the global recession in 2008, Starbucks faced a decline in sales of expensive coffee drinks, prompting a strategic shift The company slowed its global growth plans and focused on strengthening its brand, customer satisfaction, and loyalty Howard Schultz returned as CEO, Starbucks successfully recovered from the recession and resumed its international expansion efforts However, entering new markets posed new challenges In Italy, where Starbucks originated, the company needed to adapt to the different coffee culture to appeal to Italian consumers Similarly, Starbucks faced resistance when breaking into the UK market, leading to store remodeling and public scrutiny regarding tax payments Despite these obstacles, Starbucks has set its sights on China as its largest market, although it must navigate cultural sensitivities and adapt its strategy accordingly

Another challenge for Starbucks is the substantial waste generated by disposable cups: approximately 4 billion cups end up in landfills each year, while only 5 percent was recycled Although Starbucks has taken a lot of ecofriendly initiatives, it is not satisfactory in fact Furthermore, a common criticism considered as a challenge is the company’s strategy for location and expansion Its “clustering” strategy, placing a Starbucks literally on every corner, forced many smaller coffee shops out of business, for most of the 1990s and 2000s Hence, Starbucks had a change in policy that is pulling back on expansion, closed hundreds of stores around the United States, and focused more

on international markets

The challenges Starbucks experienced convinced others to focus on the strengths and embrace the opportunity reasonably Despite setbacks, Starbucks continues to expand globally and the future definitely looks bright

PART III: ANSWER THE QUESTIONS

1 Why do you think Starbucks has been so concerned with social responsibility in its overall corporate strategy?

Social responsibility often refers to an organization’s responsibility that aims to enhance its positive influence on stakeholders and diminish any negative consequences With this definition, Starbucks' emphasis on social responsibility in its overall corporate strategy can be attributed to several factors

The first reason for Starbucks' commitment to social responsibility is its understanding of the interconnectedness between business success and social well-being The company recognizes that thriving communities provide a supportive environment for its stores and customers, leading to increased customer loyalty and sustainable growth

By investing in initiatives like literacy programs, job creation, and community development, Starbucks strengthens the social fabric and economic vitality of the regions

it operates in

Secondly, engaging in social responsibility initiatives also helps Starbucks build strong relationships with its stakeholders By demonstrating a commitment to ethical practices, sustainability, and community engagement, the company fosters trust and loyalty among its customers, employees, suppliers, and communities; hence, create a positive impact on the communities it serves This, in turn, contributes to long-term business success and enhances the brand's reputation

Thirdly, social responsibility initiatives can positively influence employee morale and motivation Starbucks recognizes that fostering a sense of purpose and engagement among its workforce is crucial for productivity and employee retention By providing opportunities for employees to engage in socially responsible activities, such as volunteering or supporting local communities, Starbucks creates a positive work environment and strengthens employee loyalty

Lastly, integrating social responsibility into its corporate strategy enables Starbucks to address critical social and environmental issues The company recognizes that it has the resources and influence to drive positive change, and by leveraging its scale and reach, it can contribute to solving pressing global challenges such as climate change, inequality, and poverty

In conclusion, Starbucks understands that social responsibility is not just a moral obligation but also a strategic imperative By actively engaging in social and environmental initiatives, the company can create shared value, positively impact communities, and ensure a sustainable future for both its business and the world

2 Is Starbucks unique in being able to provide a high level of benefits to its employees?

Starbucks is often recognized for providing a relatively high level of benefits to its employees compared to many other companies, particularly in the service industry While

it may not be the only company offering such benefits, Starbucks has established a reputation for its comprehensive employee benefits package

One of the notable benefits Starbucks offers is its comprehensive healthcare coverage, including medical, dental, and vision insurance for all full-time and part-time employees who work more than 20 hours a week This is uncommon in the service sector, where many part-time workers often lack access to affordable healthcare benefits In

2008 Starbucks decided to close 10 percent of stores in order to continue to provide employees with health insurance This decision exemplifies the company's commitment

to prioritizing its employees, as reflected in its guiding principle of "people first, profits last" Starbucks also helps employees overcome challenges in life, difficulties, stress, and issues that may affect their job productivity through its Employee Assistance Program ( free of charge, sponsored by the employer)

Additionally, Starbucks is known for its commitment to providing competitive compensation and financial benefits The company offers stock options, 401(k) retirement plans with employer matching, and generous tuition reimbursement programs Starbucks also provides various performance-based incentives, including bonuses and paid vacation time

Moreover, Starbucks stands out for its emphasis on creating an inclusive and supportive work environment The company offers diversity and inclusion training, partner networks, and resources for career development and advancement Employees are eligible for a range of benefits related to work-life balance, such as parental leave, paid sick time, and flexible scheduling options