assignment report business ethnics case 2 starbucks mission social responsibility and brand strength

And to be more convenience for non-, bpedestri custormers, Starbucks also opened drive-thru lanes and the company analso announced that in the next 5 years 60 percent of brand new stores

BỘ GIÁO DỤC VÀ ĐÀO TẠO TRƯỜNG ĐẠI HỌC KINH TẾ QUỐC DÂN

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ASSIGNMENT REPORT: BUSINESS ETHNICS

CASE 2: STARBUCKS’ MISSION: SOCIAL

RESPONSIBILITY AND BRAND STRENGTH

Lecturer : Dr Nguyen Bich Ngoc Student Name: Nguyen Hong Nhung Student ID : 11211424

Class : International Business Management B63

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Table Of Contents

I INTRODUCTION 3

II NEW PRODUCT OFFERINGS 5

III STARBUCKS CULTURE 6

IV CORPORATE SOCIAL MISSION 7

VI SUCCESS AND CHALLENGES 11

VII ANSWERING THREE QUESTIONS 13

1 Why do you think Starbucks has been so concerned with social responsibility in its overall corporate strategy? 13

2 Is Starbucks unique in being able to provide a high level of benefits to its employees? 14

3 Do you think that Starbucks has grown rapidly because of its ethical and socially responsible activities or because it provides products and an environment that customers want? 14

VIII CONCLUSION 15

IX REFERENCES 17

I INTRODUCTION

- Starbucks was founded by three partners in Seattle in 1971 I 1982 Howard n Schultz joined Starbucks in the role of director of retail operations and marketing While having a trip to Milan, Italy Howard noticed that there are 1500 coffee shops in Italy he realized the opportunity of coffee bars in Seattle while returning from the trip

- In 1985 Starbucks has launched their first Starbucks café latté in the first downtown Seattle coffeehouse and named it Christmas Blend After that thousand of stores were open across the USA and around the world, now operating 20,000 stores in 63 countries Millions of customers were served in a week and that helped the company's revenue to reach 13 billion in that year That has made Starbucks lied among the top 3 largest restaurant chains in the US

- Howard Schultz wanted to turn Starbucks to a place that every coffee lovers or ineven normal buyers would stop by after their work and on their way home which called the third place In order to make that come true, Starbucks located their “ ”coffee shops in crowded and high-visibility locations which included office building ookstores, university campuses And to be more convenience for non-, bpedestri custormers, Starbucks also opened drive-thru lanes and the company analso announced that in the next 5 years 60 percent of brand new stores will be drive-thrus

- In order to expand more retail product chains, Starbucks had st ores and sell theirs products such as Frappuccino coffee drinks, Starbucks Doubleshot espresso drinks, super-premium ice creams and VIA coffees through other channels such as Walmart, Target Starbucks also collab with Courtesy Products and launched

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single-cup Starbucks packets and placed them in hotel rooms After that branded coffee and tea pods were also a collaboration b ween Starbucks and etGreen Moutain Coffee Roasters These two companies are very famous so the collab between them would bring beneficial for boths This partnership help Starbucks aproach a new technology in order to working on a new product and Green Mountain also attracted new amoun of consumers based on Starbucks t reputation The Keurig machines expanding far from North American is the next goal that Starbucks and Green Mountain head to ed

Starbucks Green Moutain owned a line of singleStarbucks serve which is the Keurig machines but being in a partnership with each others did not stop Starbucks to introduce their own line of single-serve coffee to the pub which called Verismo 580 Brewerlic Now that consumers could make their own coffee at home which save lots of money and time and still have the same flavour as the p that come from any cuStarbucks stores A that time, Green Moutain also launched another brewer t machine called Rivo which used fresh milk that different from Starbucks’s

machine Since then, the battle between the two brands has raged for monopoly the single-serve coffee market

- There are some negative comments about Starbucks and one of that is the company’s “clustering strategy for location and expansion in the 1990s and 2000s ”in which opening a shops in every corner, forced smaller business to closed That is when people think that do we really needed two Starbucks stores on the same street but just opposite each others The criticism plus the obal collapse have glmade Starbucks to change their policy and by that they had closed hundreds of stores in the USA and decided to head out to the international markets

II NEW PRODUCT OFFERINGS

- In 2008, Starbucks decided that they want to focused more what they aim for at the first place which is Pike Place Blend and also blended coffee In 2011 in order to launched their new product which called Blonde Roast blend Starbucks had hold the largest c fee tasting over the country with the input of 1000 customers over of1500 hours, they also enrolled forces with Conservation International to make sure that the beans were harvested regularly with high quality

- The next goal that Starbucks headed to is their customers experience They decided to change all the old espresso machines into brand new machines with better technology some included the Clover Brand single-cup brewing machines so that the buyers could have a nice freshly brewed cup of coffee based on their adjustment to the coffee Starbucks also required to all the baristas can only make two cups at the same tim and hoped that would make an increased in the quality e of the coffee

- Starbucks Card was introduced to the public in 2001 which is a way to encourage loyalty customers keep purchasing by associated with the mobile payments company they also launch an app called Square Wallet which help buyers to keep their credit, debit or Starbucks card information in that app Nearly 7000 company-owned Starbucks stores could be used by this app and eventually could send a Starbucks gift card for family or friends through the Internet In 2013, people were very concern about their health and always aim for a healthier l estyle which ifinclude about the food, Starbucks annouced that they will label the calories of each beverages and foods on the menu and they also come up with a wholesome salad bowls with less than 450 calories during the summer

6 III STARBUCKS CULTURE

- In order for their partners to have a better decisi s and actions in the future the ondirectors team decided to builded up a mission statement that specified the guiding principles for the company After compiling the mission statement, the team collected from all Starbucks partners showed that people first profits last To ‘ ’ keep the mission an guiding principles working through many decaded s there are 3 things that being done over the time The three things all come to a conclusion that all the partners have the right to comment on any decision or action through “Mission Review system These guiding ideals and values have established the ”foundation of a strong ethical culture among employees who are mainly young and educated

- Howard, the founder and CEO of Starbucks, has long been a vocal supporter of greater public understanding of corporate ethics In 2007 in Notre Dame he made a speech to the public about profitability and social consciousness which are two “ ”crucial factors that need to be balance in b iness In some research and Howard ushimself believed tha ethical companies could do better long term, even ough t th it is not easy to do the right thing at that moment For nearly a decade Starbucks stayed in the list in one of Fortune’s “100 Best Companies to work for Even though the ” rank of Starbucks was fall behind, they still being praised for keep paying health insurance for workers In 2013 Starbucks was being vote for World“ ’s Most Ethical Company in the Ethis” phere for seven years A website called Share Planet was launched to become a medium of communication between the company to showed the company commitment to ethics and sustainability There are three things that Starbucks want to focused on: to achieve ethical sourcing,

environmental stewardship, and greater community involvement The website was born in order for customers to enterprise within the company

- Starbucks had done lots of collaboration with nonprofits organization around the world In 2011, Fair Trade Certifi announced that Starbucks was one of the edlargest buyers with 34.3 million pounds of coffee Starbucks had done lots of partnership with different associations and finally loaned $14.5 million to poor farmers in worldwide, hoping to increased it to $20 million in 2015

- To improve the environment and help the farmers, in 1998, Conservation International joined with Starbucks to stimulate the agricultural to be more stable around the world For instance, in Mexico, they had to cut down on tree to have more space to plant coffee and the fee to grow it increase to over 220 percent, at the same time farmers could received profit higher than the market price Another example for what Starbucks had done is that through Foursquare when every customer check-in on it, Starbucks will donate $1 to the Global Fun for RED –which work to fight for AIDS To sum up, Starbucks ha collab with lots of d organization shown that Starbucks is really sincerly on the way become an ethical and socially responsible company

IV CORPORATE SOCIAL MISSION

- Starbucks has supported ethical business practices almost from the beginning, but as the firm has grown, so has the significance of upholding its reputation

Starbucks Global Responsibility Department also known as C porate Social ’ orResponsibility (CSR) department which was created in the end of 1999 An annual report will be update to shareholders in order to keep track of its performance could be seen on Share Planet website There are five issues that Starbucks concerne about which are environment, employees, suppliers, customers, communities

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1 Environment

- To protect the environment is one of the main concern that every company want to deal and Starbucks is also one of it In 1992, before green became a tre“ ” ndStarbucks decided to create an environmental mission statement to announced that the environment will be the goal and top priority to deal with The company had deicided to reduce waste by recycling and energy conservation to minimize the company’s “footprint Starbucks also organized a series of Cup Summits to ” encourage people come up with new way to turn traditional disposable cup into decomposable After that, each plastic cup in each size will be offer to pay $1 more as a result 4 billion cups was reduce ,

2 Employees

- The influence of Howard s father made him considered that a good working ’environment need to put on top of everything When Starbucks is still improving step by step, Howard want his company to provided the best chance for workers that his father never got By doing that, Starbucks has become one of the company which had the best health care programm for employees in the coffee shop industry However, keep supplying workers what the best for them cost a fortune to do that, based on the guiding principle people first, profits last , Starbucks “ ”decided to shut down 10 percent of stores so that they could keep provide employees with health care programm and that show how much Howard respect and appreciate their workers Howard also announced a new programm called “Thrive Wellness in order to help their employees to have a goal to achieve ”wellness to their lives

3 Suppliers

- Starbucks always keep a good relationship with the community of coffee growers even if it is one of the largest coffee brands in the wor Starbucks also engages in ldmany practise’s with organizations in order to help farmers get premium prices to gain profit About 87 percent of total coffee purchases are C.A.F.E verified The company also contributed to social development programs such as building schools, health clinics and other kind of project could bring advantages to the coffee-growing communities Some coffee farms were located in Costa Rica, Rwanda, Tanzania which they did a collaboration with Starbucks through Farmer Support Centers, $70 million was being donated from Starbucks for loans and farmer support project Through the time in 2013 and 2015, Starbucks had achieve the goal of increasing its ethically sourced coffee to 100 percent In 1991,

Starbucks began contributing to CARE to help with clean water systems, health and sanitation cleaning and literacy efforts and after a long relationship with CARE, Pike Place Blend is the first CARE-certified brew

4 Customers

- The global economic crisis had made the company to come up with a new policy to strengthen its brand and custormer satisfaction In order to impro ve, the brand focused on upgrading the brewing machine launching new product suitable for , people health concerned Moreover, the company focuses on how to improve the qualit of the coffee, how to change the atmosphere in the shop for customers to y feel comfortable and the most important is to boost customer experience while sitting in the store

5 Communities

- Starbucks also known as instant gathering spot“ ”, “place that draws people together and ” “third place people go to after homes and office and to enhance the ”

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local, community-oriented feel of Starbucks shops, store managers are encouraged to donate to local cause That is when Starbucks Foundation was born in order to support nonprofit literacy groups and sponsors young writers programs an p tner ’ arwith Junpstart The rate of unemployment keep rising which allow Starbuck to take a proactive action to partnered with the Opportunity Finance Network to launched a new program named Create Jobs for the USA By doing th , Community isDevelopment Financial Institutions recieve lots of funds

- Not only the products that Starbucks had change but the logo also had a new look to symbolize this shift into the consumer packaged goods business The logo used to have a mermaid with word Starbucks Coffee being circled But in 2011, “ ”Starbucks declared that the word Starbucks Coffee will be removed and the “ ”

image will be zoomed in to show that Starbucks is a brand that sell more than just coffee

VI SUCCESS AND CHALLENGES

- For over a few decades, Starbucks has become a defining brand of our time when it is the most prominent brand of high-end coffee in the world The level of growth had increase amazingly, creating financial success for the shareholders The reputation was built on the quality of product and a balanced approach to all of its business activities But every problem got two sides, opposite with the famous that Starbucks created there are some criticism show up but most of them are about Starbucks made small coffee business had to shut down and created their own uniform retail culture in many cities In addition, in an age of shifts in supply chain power, Starbucks is concerned about its suppliers and meeting their needs as it is asabout any other primary stakeholder

- Eventhough we all know Starbucks for the quality of coffee but in the past, the company receive h sh criticism for lack of fair trade coffee, hormone-added milk, arand Howard Schultz s alleged financial links to the Israeli government In order to ’solve the problem, in 2002, Fair Trade Certified coffee was bein offered g permanent and also in Ireland, the UK all Starbucks Espresso is 100 percent Fair Trade certified

- After that, in the late 2008, Starbucks had to faced a new problem when a global recession caused the market to bottom out for pensive coffee drinks But the ex company decided to slow its global growth plan after years of expanding instead s of trying to focused on strengthening its brand again which made Howard to returned as a CEO and try to save the company Luckily, the company rebounded from the effects of recession and it also comes u with chances and challenging p