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

NATIONAL ECONOMICS UNIVERSITYADVANCED EDUCATIONAL PROGRAM

CASE STUDY REPORTCOURSE: BUSINESS ETHICSTOPIC: STARBUCKS’S MISSION: SOCIALRESPONSIBILITY 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

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 renownedmultinational coffeehouse chain that was founded in 1971 in Seattle, Washington In itsearly years, Starbucks primarily sold coffee beans and equipment, with a small storefrontlocated in Seattle's historic Pike Place Market; however, it wasn't until Howard Schultzjoined the company in 1982 as director of retail operations and marketing that Starbucksexperienced significant growth and transformation The clear evidence is that Starbuckhas become the third largest chain restaurant in the United States and expanded aroundthe 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 tofrequent, after home and work With a view to providing a greater degree of access andconvenience 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 storesequipped with drive-thru lanes without the need to park and enter the store With retailoutlets, Starbucks also engages in the sale of coffee and tea products through onlineplatforms to provide convenience and accessibility to customers who prefer to shoponline or may not have easy access to physical stores.

In regard to the social responsibility and brand strength of Starbucks, these twoaspects have played a significant role in transforming successfully from a small coffeeretailer into a globally recognized brand that transcends traditional notions of a coffeecompany The former, social responsibility is clearly shown by five factors: environment,employees, suppliers, customers, communities and Starbuck has had suitable scheme foreach of them As for brand strength, it reflects the ability to adapt and remain relevant inan ever-changing market by consistently delivering quality products, creating invitingspaces, embracing innovation, and prioritizing social responsibility

PART II: SUMMARY

Starbucks has successfully introduced new products and initiatives to remaincompetitive and enhance the customer experience In 2008, Starbucks launched its PikePlace Blend after extensive customer input and a nationwide coffee tasting The companyalso partnered with Conservation International to ensure sustainable sourcing.Responding to customer feedback, Starbucks introduced the Blonde Roast blend in 2011for those desiring a lighter option Starbucks prioritizes consistency in the customerexperience, upgrading equipment and implementing measures like limiting baristas tomaking 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 tooffer the Square Wallet mobile app for convenient payments In 2013, Starbucks beganlabeling calorie information and introduced healthier options like wholesome saladbowls, responding to the increasing demand for wellness-focused choices.

Starbucks has a strong commitment to its mission statement and guidingprinciples, which prioritize people over profits To keep the mission alive over thedecades, Starbucks distributes the statement and feedback cards during partnerorientations, consistently relates decisions to the guiding principles, and established a"Mission Review" system for partners to comment on decisions Howard Schultzadvocates for ethics in business and believes that while it can be difficult to do the rightthing at all times, in the long term it is better for a company to take short-term losses thanlose sight of core values

Starbucks' corporate culture has led to its recognition as one of Fortune's "100 BestCompanies to Work For" for nearly a decade The care the company shows its employeessuch as not cutting back employee health care costs despite the recession is a large part ofwhat sets it apart Starbucks also shows the commitment to ethics and sustainabilitythrough initiatives - the Shared Planet website with a view to keeping customers withinthe company.

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

supports fair trade practices, sustainable agriculture, and initiatives to preventdeforestation

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

Howard Schultz prioritized creating a positive work environment due to hispersonal experiences Schultz emphasizes the importance of a shared vision andemployee contributions; therefore, offer all employees who work more than 20 hours perweek a comprehensive benefits package that includes stock options, medical, dental aswell as vision benefits Despite the financial impact, Starbucks closed 10% of its stores in2008 to maintain employee health insurance, demonstrating its commitment toprioritizing people over profits To improve employee well-being, Starbucks introducedthe "Thrive Wellness" program, offering resources like smoking cessation, weight loss,and exercise support Starbucks' focus on employee welfare reflects its dedication tobeing a supportive and responsible employer.

Starbucks actively engages in many practices with organization to help farmers gotpremium prices in order to make profit such as constructing schools and health clinics, tobenefit coffee-growing communities Additionally, through Farmer Support Centers invarious countries, Starbucks provides technical assistance and training to ensure high-quality coffee production The company has donated around $70 million for loans andfarmer support initiatives Starbucks is a significant buyer of Fair Trade Certified, shade-grown, and certified organic beans, supporting environmental and economic efforts In2013, 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 withCARE, a relief and development foundation, contributing to projects like clean watersystems, health training, and literacy programs.

To recover from the global economic crisis, Starbucks prioritized strengthening itsbrand and customer satisfaction This involved upgrading coffee-brewing machines,introducing healthier and budget-friendly food and drink options, and refocusing on thecore product With a focus on addressing the obesity epidemic, Starbucks ensures menuitems are under 500 calories and participates in sodium reduction programs Specifically,enhancing customer experience rather than rapid expansion became a high priority suchas offering free Wi-Fi in all its U.S stores to encourage customers to relax and spendtime there.

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

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

Starbucks understands the importance of modifying its brand to adapt to changingconsumer demands While known for its premium coffee beverages, they now sell avariety 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 coffeeprices Starbucks also made strategic acquisitions to enhance their brand value and offerhigh-quality breakfast sandwiches, Paninis, and wraps To signify their shift into theconsumer packaged goods business, Starbucks redesigned its logo by removing the wordsand enlarging the mermaid, indicating their broader range of offerings beyond coffee asbelowed:

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 facedcriticism 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 prioritizedsocial and environmental initiatives, such as ethical sourcing of coffee, supportingfarmers, and promoting sustainability Starbucks' commitment to fair trade andcommunity development has enhanced its brand image and customer loyalty Byinvesting 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 positiveimpact on society have not only attracted socially conscious consumers but alsocontributed to its overall brand strength and long-term success.

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

Another challenge for Starbucks is the substantial waste generated by disposablecups: approximately 4 billion cups end up in landfills each year, while only 5 percent wasrecycled Although Starbucks has taken a lot of ecofriendly initiatives, it is notsatisfactory in fact Furthermore, a common criticism considered as a challenge is thecompany’s strategy for location and expansion Its “clustering” strategy, placing aStarbucks literally on every corner, forced many smaller coffee shops out of business, formost of the 1990s and 2000s Hence, Starbucks had a change in policy that is pullingback on expansion, closed hundreds of stores around the United States, and focused moreon international markets.

The challenges Starbucks experienced convinced others to focus on the strengthsand embrace the opportunity reasonably Despite setbacks, Starbucks continues to expandglobally and the future definitely looks bright.

PART III: ANSWER THE QUESTIONS

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

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

The first reason for Starbucks' commitment to social responsibility is itsunderstanding of the interconnectedness between business success and social well-being.The company recognizes that thriving communities provide a supportive environment forits stores and customers, leading to increased customer loyalty and sustainable growth.By investing in initiatives like literacy programs, job creation, and communitydevelopment, Starbucks strengthens the social fabric and economic vitality of the regionsit operates in.

Secondly, engaging in social responsibility initiatives also helps Starbucks buildstrong relationships with its stakeholders By demonstrating a commitment to ethicalpractices, sustainability, and community engagement, the company fosters trust andloyalty among its customers, employees, suppliers, and communities; hence, create apositive impact on the communities it serves This, in turn, contributes to long-termbusiness success and enhances the brand's reputation.

Thirdly, social responsibility initiatives can positively influence employee moraleand motivation Starbucks recognizes that fostering a sense of purpose and engagementamong its workforce is crucial for productivity and employee retention By providingopportunities for employees to engage in socially responsible activities, such asvolunteering or supporting local communities, Starbucks creates a positive workenvironment and strengthens employee loyalty.

Lastly, integrating social responsibility into its corporate strategy enablesStarbucks to address critical social and environmental issues The company recognizesthat it has the resources and influence to drive positive change, and by leveraging its scaleand 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 moralobligation but also a strategic imperative By actively engaging in social andenvironmental initiatives, the company can create shared value, positively impactcommunities, 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 toits employees?

Starbucks is often recognized for providing a relatively high level of benefits to itsemployees compared to many other companies, particularly in the service industry Whileit may not be the only company offering such benefits, Starbucks has established areputation for its comprehensive employee benefits package

One of the notable benefits Starbucks offers is its comprehensive healthcarecoverage, including medical, dental, and vision insurance for all full-time and part-timeemployees 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 In2008 Starbucks decided to close 10 percent of stores in order to continue to provideemployees with health insurance This decision exemplifies the company's commitmentto prioritizing its employees, as reflected in its guiding principle of "people first, profitslast" Starbucks also helps employees overcome challenges in life, difficulties, stress, andissues 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 competitivecompensation and financial benefits The company offers stock options, 401(k) retirementplans with employer matching, and generous tuition reimbursement programs Starbucksalso provides various performance-based incentives, including bonuses and paid vacationtime.

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