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

Moby Dick inspired the name, which evoked the romance of the high seas as well as the seafaring tradition of the early coffee traders.Howard Schultz Starbucks chairman, president, and CE

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Business Ethics Report Assignment

Case 2: Starbucks’ Mission: Social Responsibility and

Brand Strength

TABLE OF CONTENTS

I.Introduction 2

II.Summary 3

1.New Product Offerings 4

2.Starbucks Culture 4

3.Corporate Social Mission 5

3.1 Environment 5

3.2 Employees 6

3.3 Suppliers 6

3.4 Customers 6

3.5 Communities 7

4.Brand Evolution 7

5.Success And Challenges 7

III.Answer the questions 9

IV Conclusion 13

V Sources 14

The company began as a single store in Seattle's historic Pike Place Market Starbucks served some of the world's best fresh-roasted whole bean coffees from a small shopfront Moby Dick inspired the name, which evoked the romance of the high seas as well as the seafaring tradition of the early coffee traders

Howard Schultz (Starbucks chairman, president, and CEO) first walked into a Starbucks store in 1981 Howard was drawn into Starbucks by his first cup of Sumatra and joined a year later Howard visited Italy in 1983 and fell in love with Italian coffee shops and the romance of the coffee experience He had a dream of reintroducing the Italian

coffeehouse tradition to the United States A meeting place with a sense of community A middle ground between work and home Starbucks set out to be a different kind of company from the start Not only that, Starbucks is named one of the world's most ethical companies, and Howard Schultz is named one of the "world's greatest leaders" and ranks

in the top ten of an employee-rated executive survey Today, with more than 32,000 stores

in 80 countries, Starbucks is the premier roaster and retailer of specialty coffee in the world And with every cup, they strive to bring both our heritage and an exceptional experience to life

With the influence of Starbucks on the economy in general and the coffee market in particular, I decided to choose the case study "Starbucks' Mission: Social Responsibility and Brand Strength" as my research topic My report below is divided into two main parts: a brief summary of the article and an answer to the question

Starbucks’ Mission: Social Responsibility and Brand Strength

In 1982, Howard Schultz became the director of retail operations and marketing of Starbucks In 1985, the company decided to test the first downtown Seattle coffeehouse which served the first Starbucks café latte From that point in time, Starbucks started to grow up across the United States, now operating in 63 countries Despite cutting back on expansion in recent years, with the number of customers serving up to millions of customers a week, Starbucks has become the third largest restaurant chain in the United States

Howard Schulz's intention is to make Starbucks "the third place" for customers to visit after home and work, so he has not only placed Starbucks retail stores in high-traffic, high-visibility locations such as office buildings, bookstores, and university campuses, but he has also brought its stores to rural areas and off-highway to serve a broader range

of customers outside major metropolitan markets and further expand brand awareness In addition, to facilitate the access of many different types of customers, Starbucks developed drive-thru lanes and they have announced that 60 percent of all new stores built in the next five years will be drive-thrus Although very focused on the appearance

of Starbucks to customers, Howard Schulz also does not ignore the interior space as well

as the quality of the products to bring to the customers the best experience with the brand With the desire to expand their market, in addition to the retail market, customers can find other Starbucks’s products such as coffee and tea through other channels and its partner Take its Frappuccino coffee drinks, Starbucks doubleshot espresso drinks and VIA coffee as an example, they can be purchased in grocery stores and through retailers like Walmart and Target Furthermore, Starbucks collaborated with other brands to create

a variety of products, such as Courtesy Products, which released single-cup Starbucks packs marketed toward hotel rooms, and Green Mountain Roasters, which introduced tea pods The collaboration with Green Mountain Roasters was beneficial for both brands because of the target consumers who own Keurig single-cup brewing machines, the partnership generates new users of Keurig single-cup brewing machines attracted to the Starbucks name Starbucks and Green Mountain announced an extension of their strategic partnership with the goal of expanding Keurig machines beyond North America as soon

as the business had a chance to grow

In 2012, Starbucks introduced to customers who have to incline for homemade coffee a machine called Verismo 580 Brewer, which allows consumers to brew the same taste of Starbucks’s coffee cup by themselves The race to conquer the single-serve coffee is more intense when Green Mountain released another brewer called Rivo, but unlike the Verismo instead of using powdered milk pods, it uses fresh milk

Throughout the 1990s and 2000s, many people criticized Starbucks' "clustering" strategy, which resulted in the company having a location literally on every corner in some cases, forcing many smaller coffee shops out of business Taking advantage of the recent global recession, Starbucks closed hundreds of stores across the United States and shifted its focus to international markets

1.New Product Offerings

In order to retain its competitive advantage in the market, in 2008 Starbucks returned with the introduction of its Pike Place Blend, which is hoped to bring back its distinctive roots To ensure and enhance the quality of the perfect flavor, Starbucks joined forces with Conservation International to make the beans sustainably harvested Moreover, Starbucks collected customers’ feedback about a lighter blend to present the Blonde Roast blend in 2011

A key competitive advantage of Starbucks’ brand is focus on the customer experience, therefore, they decided to enhance the experience in the European coffee shop by replacing their old machines with new, high-tech ones and some changing over to Clover Brand single-cup brewing machines To reduce errors and increase product quality, they also need to manage the drink-making operation which mandated baristas can make no more than two drinks at once

In a successful business, we can not miss out on the customers’ loyalty and Starbucks is not an exception, they accomplish that through the Starbucks Card which was introduced

in 2001 Starbucks had a collaboration with Square - a mobile payments company to release the Square Wallet that allows customers to store their debit, credit, Starbucks card information or Starbucks Card eGifts sent to friends through the Internet

With the penetrability of customers’ insight about health, in 2013 Starbucks labeled calorie information on its menu boards in its U.S stores, they also sold wholesome salad bowls with less than 450 calories during the summer time

2.Starbucks Culture

Starbucks' senior executive team created a mission statement in 1990 that specified the guiding principles for the company to help their employees determine the appropriateness

of future decisions and actions After drafting and gathering feedback on the document, the final statement, "people first and profit last," more clearly states that the company's goal is to create a great and respectable work environment for its partners Starbucks has done three things to keep the mission of becoming the cornerstone of a strong ethical culture alive over the years First, it distributes the mission statement and comment cards for feedback to all new partners during orientation Second, Starbucks consistently links decisions to the guiding principle or principles that it supports Finally, the company

established a "Mission Review" system in which partners can provide feedback on a decision or action in relation to its consistency with one of the six principles

Howard Schultz demonstrated his support for business ethics in a 2007 speech at Notre Dame, speaking to students about the importance of balancing "profit and social consciousness." Schultz believes that ethical businesses perform better in the long run, and that while it can be difficult at times, it is better for a company to take short-term losses than lose sight of its core values Starbucks has been ranked one of Fortune's "100 Best Companies to Work For" based on its strong corporate culture, and the company ranked 73rd out of 100 companies in 2012 The evidence is Starbucks offers all employees who work more than 20 hours per week a comprehensive benefits package that includes stock options as well as medical, dental and vision benefits

In order to ensure an ethical business, Starbucks must address concerns about its commitment to ethics and sustainability, which is why they launched the Shared Planet website Shared Planet has three main objectives: ethical sourcing, environmental stewardship, and increased community involvement It describes how well Starbucks performs in terms of meeting its social responsibility goals, and it allows customers to learn about things like the nutrition data of Starbucks' offerings and other concerns about Starbucks products In 2011, Starbucks was one of the biggest consumers of Fair Trade Certified coffee at 34,3 million pounds Starbucks, which consumes a large amount of product, also collaborated with the Foodservice Packaging Institute/Paper Recovery Alliance to address the issue of responsible foodservice packaging in terms of use, recovery, and processing Furthermore, Starbucks makes $14.5 million in loans to poor farmers worldwide, with plans to increase that figure to $20 million in 2015

Starbucks partnered with Conservation International in 1981 to spread the positive impact

on agriculture, specifically shade-grown coffee, and to help prevent deforestation in vulnerable areas around the world In Chiapas, Mexico, for example, shade-grown coffee acreage increased by more than 220 percent, while farmers received a price premium above the market price In addition, for every store check-in on Foursquare, Starbucks donates $1 to Global Fun for RED Starbucks' efforts at transparency, employee treatment, and dozens of philanthropic commitments demonstrate how sincere the company is in its mission to be an ethical and socially responsible company

3.Corporate Social Mission

3.1 Environment

Starbucks established the Environment Starbucks Coffee Company Affairs in 1992 with the goal of developing environmentally responsible policies and reducing the company's

"footprint." The "Green Team'' of the company followed a set of guidelines to reduce waste by recycling, conserving energy, and educating partners Concerned stakeholders can now monitor the company's progress via its Shared Planet website, which clearly

outlines Starbucks' environmental goals and how the company performs in meeting those goals In recent years, Starbucks hosted a series of Cup Summit to develop a new way to decompose Starbucks disposable cups As a result, Starbucks charged $1 for each plastic cup purchased, which is good for a recommended 30 uses; this new policy assisted Starbucks in reducing the 4 billion cups used globally

3.2 Employees

Living in poverty with a father whose life was nearly ruined by an unsympathetic employer who did not offer health benefits, Howard Schultz is always striving to create a positive work environment for his employees As a result, one of the best health care programs in the coffee shop industry has emerged Recognizing the importance of employees, Shultz is the first to admit that his company revolves around personal interactions: "We are not in the coffee business serving people, but in the people serving business" During the recession, Starbucks decided to close 10% of its stores in order to continue providing health insurance to its employees Starbucks established a program for employees to incorporate wellness into their lives in order to improve employee health The program also provides resources such as smoking cessation, weight loss, and exercise

3.3 Suppliers

Starbucks is not only responsible with their employees, but they also have a good reputation among the international coffee growers It cultivates positive relationships with small coffee suppliers in Costa Rica, Rwanda, Tanzania, South America, and China, as well as with governments and nonprofits in the countries where it operates They pay premium prices to coffee farmers in order to help them make a profit and support their families Furthermore, Starbucks uses Coffee and Farmer Equity Practices (C.A.F.E.) to conserve resources, and approximately 87 percent of total coffee purchases are C.A.F.E verified Beside other projects that benefit coffee-growing communities, Starbucks is also involved in social development programs, investing in programs to build schools and health clinics Starbucks has donated approximately $70 million for loans and farmers support programs In 2013 the firm bought its first coffee farm, located in Costa Rica and employing 70 people In 1991, Starbucks began contributing to CARE, a worldwide relief and development foundation, to help with …

3.4 Customers

Starbucks had to rethink its strategy after the global economic crisis They began to refocus the brand by upgrading its coffee-brewing machines and introducing new food and drink items for health Recognizing the public's concern about obesity, Starbucks claims that all of their menu items are under 500 calories and that they adhere to two sodium reduction programs in New York and the United Kingdom Furthermore, the company focuses on the quality of the coffee and the atmosphere of the coffee shops

rather than expanding the number of stores and products As a result, Starbucks has made improving the customer experience in its stores a top priority

3.5 Communities

In the journey to become a “place that draws people together” wherever they locate, Starbucks encouraged store managers to donate to improve local issues Take the Seattle Store as an example, they donated more than $500,000 to Zion Preparatory Academy, an African American school in order to promote literacy Even Howard Schultz the founder and chair of Starbucks used the advance and ongoing royalties from his book to create the Starbucks Foundation which grants for nonprofit literacy groups, sponsors young writers' programs and partners with Jumpstart Moreover, Starbucks is one of the factors that has helped to address a portion of America's high unemployment rate; the company collaborated with the Opportunity Finance Network to establish a program called Create Jobs for the USA The company contributed $5 million to this initiative program, which funds small businesses, community centers, and housing projects

4.Brand Evolution

Following the change of the world everyday, the company realizes that they need to modify its brand to suit the shifting demands of their target markets In the past, Starbucks in the eyes of consumers was associated with premium coffee beverages, but nowadays, the coffee market is more competitive and they recognized the need to expand its brand and against the risks of relying solely on coffee Finally, Starbucks discovered that the best way to expand is to add more products such as coffee accessories, teas, muffins, CDs, water, grab-and-go items, and upscale food items These products increased Starbucks' revenue by 20% Starbucks announced in 2011 that it would remove the words “Starbucks coffee" from its logo and enlarge the mermaid to represent its shift into the consumer packaged goods business This change has the potential to signal to customers that Starbucks is more than just a coffee shop

5.Success And Challenges

In over 10 years, Starbucks has been becoming the most prominent brand of high-end coffee in the world and synonymous with that it is impossible to walk more than a few blocks without seeing the familiar mermaid logo in most big cities By the product quality, stakeholder concern and a balanced approach to all its business activities, Starbucks has achieved a massive growth of reputation and financial Although they had

to face numerous criticisms for removing other coffee shops from the market and establishing a uniform retail culture in many cities The company continues to stand out

in terms of employee benefits and has become a role model for the fast-food industry Despite Starbucks' efforts to increase sustainability and uphold high ethical standards, the company has previously received criticism for issues such as a lack of fair trade coffee,

hormone-added milk, and Howard Schultz's alleged financial ties to the Isarel

government Starbucks began offering Fair Trade Certified coffee in some countries in response to these criticisms, though this is not yet the case in the United States Due to the global recession, Starbucks had to scale back its global expansion plans in late 2008, and instead refocused on strengthening its brand, satisfying customers, and building customer loyalty

After recovering from the effects of the recession, the company is looking forward to the future of international markets, which will bring new opportunities as well as challenges For example, because coffee culture in Italy differs from that in the United States, the company must adapt in order to target Italian coffee drinkers Unfortunately, Starbucks had a serious conflict in the United Kingdom market, so the company began to remodel its stores to appeal more locally Starbucks was embroiled in a wave of boycotts at the end of 2012 due to allegations of tax evasion for the previous 14 of the 15 years the company was established in the United Kingdom

Another example for the challenges, Starbucks developed very fast in China with more than 700 stores and intended for China to become its biggest market but, in 2007, they was forced to close a retail operation in the Forbidden City because it was viewed as an oddity near such an important Chinese cultural location Moverover, there is a big problem: how to reduce the 4 billion disposable Starbucks cups thrown into landfills each year Although the company has taken initiatives to make the cups more eco-friendly by changing the polypropylene, the cup represents a serious waste issue for Starbucks Next, the company encourages consumers to bring in reusable for a 10-cent rabate, yet these account for less than 2 percent of drinks served In 2010 Starbucks held a two-day “Cup Summit” inviting people to create a more sustainable cup

Overcoming the obstacle, the future looks bright for Starbucks when the company expands in many other countries such as India, Costa Rica and Vietnam These days, Starbucks has been and will to face problems buts the company must continue to apply the balanced stakeholder orientation so crucial to its success,

III.Answer the questions

1 Why do you think Starbucks has been so concerned with social responsibility

in its overall corporate strategy?

Starbucks has prioritized social responsibility in its overall corporate strategy for two reasons: business ethics can help the company operate in the long run, and it is compatible with the stakeholders' integrity Howard Schultz has been the CEO and Chairman of Starbucks since 1982 Throughout his childhood, he witnessed his father working in an unfriendly environment that did not provide employees with health benefits Until he took over Starbucks, he always prioritized the creation of a positive work environment, believing that being responsible to your employees is also being responsible to society He realized that these people are not only the heart and soul of the company, but also the face it presents to the general public, so he attracted qualified people who were willing to convey their passion for coffee by paying a higher salary than the average in restaurants and retail stores He apprehended that, while it may cost a company a lot of money to retain employees today, it can save money on employee turnover

Social responsibility brings many values which help companies run in the long term For the whole two decades, Starbucks has been involved in many programs which addressed issues of the local and society Those dedication gained trust and loyalty of customers, partners, and shareholders and from that point Starbucks could generate more revenue Take the waste problem as an example, in more than 10 years Starbucks still sold take-away coffee in paper cups and plastic lid but for espresso they have to use two cups to reduce the heat when held - this is clearly a waste of materials against their

environmental principles In response to these concerns, Starbucks established the Environmental Committee, a team senior level responsible for finding solutions to reduce, reuse, and recycle waste, as well as join hands with the community's

environmental activities As a result, they found a paper cup holder which will only cost half of the materials needed and in addition to this, there is recycled paper in the composition of this paper ring Therefore, many environmentalists support Starbucks because they have a feeling that buying a cup of Starbucks is like they are protecting the environment So that the company will reach more people in the long term Even though the process of finding a solution and setting themselves to a higher standard is costly and time consuming, but they still continue due to the business ethic in the long run Starbucks encountered a wave of protests about increasing wages for workers in coffee plantations, even though they buy less than 1/20 of 1 percent of the world's coffee, and