STATEMENT OF THE PROBLEM

1. Why do you think Starbucks has been so concerned with

social responsibility in its overall corporate strategy?
Two reasons Starbucks has been so concerned with social
responsibility are the negative impact on the company if
they aren’t and the financial and nonfinancial rewards
because they are. According to our textbook, Starbucks
has been engaged in responsible business practices
almost from day one of operation.

Because of their substantial growth over two decades, they

have spent a considerable amount of time defending their
image. Their “clustering” strategy put many small coffee
shops out of business and many consumers began to
wonder if there really was a need …show more content…
It’s extremely costly to hire new staff. The money saved by
keeping the staff you currently have reflects in the
company’s profits.

2. Is Starbucks unique in being able to provide a high level

of benefits to its employees?
I believe so. I worked at Wal-Mart about eight or nine years
ago. For a company that size and worth millions, one would
think they offered a decent health insurance plan. They
didn’t. Also, their health plan was only offered to those
working 32 hours or more per week. For Starbucks to offer
part time employees stock options and health insurance
complete with dental and vision is fantastic. It’s extremely
rare for companies to offer part time employees benefits of
any kind except those which are mandatory. I would
consider working at Starbucks. Even though I’m not a
coffee drinker, I would learn to drink something they
offered.

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?
I believe their growth is the result of both practices. First
Starbucks offers a product the consumers want, and they
offer an atmosphere unlike any other. As a result of the
recession, they looked at more affordable offerings to keep
the customer base they already have. I feel this is one
reason the company has continued to being profitable
during this last recession. If I was a Starbucks customer, I
would still continue

Starbucks Mission: Social Responsibility and Brand

Strength
Starbucks Mission: Social Responsibility and
Brand Strength
Introduction
Starbucks Coffee Company was founded in 1971 in Seattle and has operations in more
than 50 countries of the world with more than 16000 stores. The main backbone of the
overall business of Starbucks is its retail stores that are operated by its own self. The
mission of the company is to inspire as well as nurture the spirit of human with one
person, one cup and one neighbourhood at a time (Starbucks Company Profile 2012).
The company is known for coffee and other products of high quality that are available at
accessible locations and affordable prices with a high coffee drinking experience and
variety of choices. The company is also known for its good business practices with strong
value of ethics. In 2010, the company was voted as one of the most ethical businesses for
the 4th consecutive year by the Ethisphere magazine (Ferrell et al 2009).
Starbucks has attained amazing level of growth since its establishment with creation of
financial success for stakeholders. The company responds well to changes in the
environment by adopting strategies that suits the changing business environment. For
instance, slowdown of global expansion and operations after economic crisis of 2008-09,
and focusing more on quality of coffee with introduction of drinks and other products for
budget conscious people, etc, show strategic decisions taken according to the need of the
environment (Ferrell et al 2009).
The essay discusses the brand strength of Starbucks with its activities related to the social
responsibility and sustainability so as to gain insights on concern of social responsibility
in corporate strategy of Starbucks, and brand strength of the company regarding
employee benefits and customer service.

It works for the company to defend its image of a socially responsible organization. The
launch of Shared Planet website has the goal of achieving greater involvement of
communities, environmental stewardship, and achieving ethical sourcing. It keeps
customers aware of latest developments and initiatives taken by the company in social
responsibility initiatives, thus maintaining its image among customers.
The company does so as to create an impressive image and positive impact on its
customers as it feels that customers are concerned about how a company carries on its
operations and what reputation it holds in the market (Peng 2009).
Along-with defending and maintaining its image of socially responsible company which
it has maintained from its inception, the other reason for the concern is financial and non-
financial rewards. As ethical and socially responsible companies do better in the long
terms business operations, the company strives to maintain its clean image. Through
involvement of employees and suppliers in its social responsibility initiatives and
dedication towards their betterment has earned the company their loyalty. The employees
feel proud to work for the company and it is seen in the low turnover of employees in
Starbucks (Fellner 2008).
When customers who come to stores see happy employees in long-term, it gives them a
reason to come back to the store with the presence of inviting and positive atmosphere of
the company and experiencing great quality of coffee. It is the non-financial reward for
Starbucks that it gets through its social responsible attitude. In terms of financial reward,
as customers see the company as a socially responsible company following the guidelines
of their corporate strategy and mission statement, customers show their loyalty to the
company and promote the company and its products to family, friends and co-workers,
thus helping in increasing the growth and revenue of the company through continuously
increasing and loyal customer base (Bussing-Burks 2009).
The approach of the company to give due importance to building up of an enduring and a
great company that keeps an absolute balance between the profitability and a socially
responsible attitude keeps its concern towards being a responsible company with
inclusion of such considerations in overall corporate strategy of the company (Epstein
2007).
The Starbucks Company strives to makes its mark on the global coffee industry platform
through giving benefits to local community, surroundings, suppliers, employees and
customers. The way in which a company conducts itself motivates the buyer to buy the
product or the service of the company. The global coffee industry is huge with
involvement of 15 billion pounds of coffee every year. In this big industry, Starbucks
buys only approximately 1% of the total coffee.

Therefore, being remaining as the small player in the overall market, the company has
managed itself to make a big player in terms of the impact it has on its customers through
the great coffee experience delivered to customers and making them visit the store again
by having the socially responsible attitude that is shown in its stores as well when one
visits any of the stores of the company (Starbucks Corporation Serving More Than
Coffee 2012).
Initiatives, such as making the cups of Starbucks more eco-friendly by switching from
polyethylene to polypropylene, which is more eco-friendly and the aim of achieving 100
percent reusability and recyclability by the end of year 2015, keeps it connected to
customers and other stakeholders of the company as image of the company is maintained,
and it stands apart from its competitors through this strategy. As the company believes in
continually relating its decisions back to the guiding principles it set during its
establishment, it is concerned about being socially responsible which one of the guiding
principles of the company is (Benabou & Tirole 2010).
Uniqueness in giving high level of benefits to employees
The founder of Starbucks, Howard Schultz has always given due consideration to the
creation of the good and endearing work environment. The company offers one of the
best health care programs in the coffee shop industry. The low employee turnover and
presence of high productivity in the company shows how important employees are for
Starbucks. As the company believes that it is in the business of people serving coffee, it
gives due importance to personal interaction (Starbucks Company Profile 2012).
The uniqueness of the company in giving health benefits to its employees took the toll
over the overall investments made on the raw materials that are required to brew the
coffee. The insurance costs have doubled in digits for some consecutive years for the
Starbucks Corporation, reflecting company’s concern to give high level of benefits to its
employees (Werther et al 2010).
Benefits package given by Starbucks Corporation is one of the key reasons for low
employee turnover in the company and employees aligned towards giving high level of
productivity. The company has created its organization around its employees and they are
one of the most important assets as well as a source of competitive advantage for the
company. The stock ownership programs for employees have helped in creating a
workforce that takes pride in doing its work and is treated with company (Year in
Review: Fiscal 2011 2011).

The total pay package of the Starbucks’ employee makes the company unique in
providing high level of benefits to its employees. Workers, whether working full time or
part time are considered as partners and are entitles to receive benefits related to health
and medicine along-with dental and vision benefits. Employees working for the company
for more than 20 hours a week are entitled to receive stock options, known as Bean
Stock. Workers have the options of participating in a variety of programs run by the
company for them in accordance to their need or interests. The total pay package of the
partner includes benefits, stock options, savings plan, employee stock purchase plan and
partner perks that are designed exclusively for people working for Starbucks (Werther et
al 2010).
They are also allowed to purchase stocks of the company at a discounted price on a semi-
annual or a quarterly basis. Besides the pay benefit programs, the other unique benefit
that the employee of Starbucks gets is conducive working environment where diversity is
respected. It is the part of the value system of Starbucks. People with disabilities are hired
to be put in a variety of jobs pool. The diversity training programs that are designed and
offered to employees gives the employees the benefit of understanding role of every
employee in creating a health work atmosphere along-with awareness of diverse needs
and requirements of the co-workers as well as customers (Facts About Starbucks and Our
Partners (Employees) 2009).
Moreover, the workplace policies ensure giving equal employment opportunity to
employees and there is strict prohibition of discrimination on any basis that is prohibited
by law. Another high level of benefit provided to employees is empowering them to give
feedback to the management through various channels. Starbucks also provide flexible
working hours to its employees which is unique benefit.
Optimal Scheduling is the program launched by the company in 2008 under which more
working hours are provided to those partners who are available for the work so as to
provide them the benefit of more predictable and consistent weekly schedules. It also
provides the chance to build a cordial relationship with customers who also want see their
favourite baristas on a regular basis (Facts About Starbucks and Our Partners
(Employees) 2009).

The staff turnover of Starbucks is 120% lower than the average turnover. According to
the Motivational Patterns Theory of Katz and Kahn, rewards and attainment of
instrumental satisfaction can help in bringing upon essential behaviours at the workplace.
These rewards and instrumental satisfaction includes incentives on pay, promotions on
job performance and getting social appreciation from the company itself. Starbucks
strives to provide all these rewards and institutional satisfaction, as a result of which
satisfaction rate of the employees in the company is high and unique in comparison to
average rates (David 2009).
However, continuously rising cost of health benefits provided by the company, and which
is considered as one of the best health benefits offered in the industry, is an issue for the
company as it is challenge for it to continue having good relationship with employees and
ensuring that their decisions are guided by principles and values established long back by
founder of the company. As long as the company holds on to its guiding principles and
values, it will remain able to provide unique high level benefits to its employees as the
mission of the company states giving due importance to people working for the company
and give them all respect and dignity they deserve, so that they can remain satisfied and
provide best of them towards attaining goals and objectives of the company (Wilk 2006).
Reason for rapid growth of the company
Starbucks has seen rapid growth since its establishment and this success can be attributed
to the strong brand image that the company has built over several years. Initially,
consumers can buy the products due to the high quality of the product and service, and
environment of the café stores of Starbucks, but in the end, the image of the company as
being socially and ethically responsible has worked for rapid growth of the company
(Pahl 2009).
Satisfied and highly motivated staff of the company creates a positive working
environment which also helps in building cordial relationship with customers.
However, the quality of the product and offering of product and environment are key
factors in making the company successful and see rapid growth. Customer service holds
great importance to Starbucks and after the global economic crisis, the company
rethought of its strategy leading to shutting down of stores, introduction of new food and
drinks for budget conscious people, and refocusing on the core product of the company.
The overall Starbucks experience that the customer gains by visiting the stores of the
company including pleasing environment and great customer service further push the
customer to visit the store again and even pay the high price for the products they are
consuming due to the quality of the product (Carroll & Buchholtz 2011).

The company has faced several criticisms for some of its policies and programs including
clustering strategy that is aimed at opening of more and more stores in the same vicinity,
and making many small businesses of coffee shops running out of work, use of
genetically modified milk and fair-trade coffee (Ferrell et al 2009). However, the
company has always focused its activities to be socially and ethically responsible.
The quality of product that the customer gets is due to the reason that Starbucks has clear
and strong focus on its products’ quality as health and safety of customers are significant
for the business. It is under the social policy of the company to ensure that processes are
hygienic and clean, with inclusion of good facilities and service in the Starbucks stores
(Being a Responsible Company 2012).
The socially and ethically responsible attitude adopted by Starbucks for its suppliers
ensure long-term relationship with suppliers as well as sellers which paves way for rapid
growth of the company. Payment of premium prices by the company to coffee farmers
helps them to make good profits so that they can strongly support their families (Pride &
Ferrell 2011).
Through ethical sourcing, the company acquires responsible purchasing practices,
supports loans for farmers and contributes to forest conservation programs. It not only
helps in improving life of farmers, but also helps in creation and ensuring of long-term
supply of coffee beans that are of high quality which the company has been taking care of
in terms of blending, roasting and packaging for over 40 years. Therefore, the high
quality product that the company offers is due to supporting of the source of the coffee
product i.e. farmers, which is the part of social and ethical responsibilities of Starbucks
(Lee & Lee 2007).
Furthermore, the concern of the company for its employees as a part of its social
responsibility has resulted in loyalty of its employees as a result of which the recruitment
and training costs are lower for Starbucks in comparison to other businesses in the same
coffee industry. The company also looks at its environmental costs being a socially
responsible company. Conservation of resources and reduction of waste leads to eco
efficiency, and if the company reduces waste in any of the major materials it uses, it leads
to reduction of costs of the company (Griffin 2008).

Presence of retail partners in the form of Green Team ensure that stores are operated in an
environmental friendly manner. It means that if the use of resources is reduced, the
expenses can also be reduced which is ultimately good for the business as it can focus on
improving its products with bringing in more superior quality with no extremely high
prices, ultimately ensuring growth and expansion of operations of the company.
Furthermore, a socially responsible company is the one which the people choose to
experience its products and services. When customers choose company by themselves, it
results into more sales and generation of more revenues (Liu & Liu 2009).
Therefore, it can be said that the success and growth of Starbucks is due to its social and
ethical responsibilities which it has promoted since its inception. Offering of products
and services according to what customer wants is also the factor responsible for
Starbucks’ success, but it is secondary in relation to the first factor.
Conclusion
Starbucks is a successful company in the coffee industry and is running successful
business over decades. It is able to differentiate itself from other competitors in the
industry due to the impact it makes on customers and other stakeholders of the company.
The company has integrated social responsibility in its overall corporate strategy for the
reason of defending its image and getting financial and non-financial rewards in the form
of intangible benefits such as loyal employee and customer base.
Starbucks is unique in providing high level benefits to its employee as employees are one
of the resources of the company to create sustainable advantage over long-run. Provision
of best health benefits which cost the company even more than the cost born by it for
purchase of raw materials, provision of flexi-timings, and excellent training programs for
employees has helped the company in creation of loyal and satisfied workforce.
The socially responsible and ethical behavior of the company has helped in its rapid
growth and success. Although, it has been criticized for some of its policies that cannot
be said to be ethical, the company has always foster its social and ethical activities that
has resulted in creation of a good image, strong brand and positive financial results as
well over years due to benefits accrued by these activities, which holds primary place in
comparison to provision of products and environment that customers want.

As per the success of Starbucks, we can say that Starbucks is being successful
because of its Ethical and Social responsible activities as well as its products and
culture that customers want

We can say Starbucks is successful by being Ethical and Social respn