Case Study on Business Ethics.
Business ethics is crucial for the betterment of the organization and for analyzing whether their business decision is proceeding in a correct way or not. In addition to that, Hilson, (2012) mention that Corporate Social Responsibility is crucial for a better corporate benefits and public image that not only boosts the employee engagement, but it will also help attract and retain investors. It is also evident that Lee, (2013) 55% of the consumer willing to associate and pay more for socially responsible organizations. 65% of the Fortune 500 companies fulfill all the requirement of the CSR activities ("Starbucks – The Best Coffee and Espresso Drinks", 2016). Moreover, the number of product ranges, their promotion strategy and the proceeding for managing those products efficiently and support for innovation for the future betterment of the business is also crucial for an adequate survival in the market.
For this assignment, Starbucks Corporation is considered for analyzing their business ethics and CSR activities. The study also comprises of the brief summary of company’s history and its background along with their products and promotional strategy. Furthermore, their mission and the approach by which the concerned organization manages their products will also be discussed in the assignment. Ultimately, the business ethics and the corporate social responsibility of Starbucks will be illustrated in the study, which follows with the overall conclusion of the report.
Brief review of Starbucks
Starbucks Corporation is one of the leading foundations for coffee manufacturers and is an American coffee company founded by three people Jerry Baldwin, Zev Siegl and Gordon Bowker in the year 1971 of March 30 (Starbucks – The Best Coffee and Espresso Drinks", 2016).
They have a huge range of products for their customers so that they can select food and beverages according to their choice. They have a sandwich, Panini, bistro box and salad bowl in lunch items in affordable price range. Chua and Banerjee, (2013) depict that snack items are also available in $1.75 or lesser price. They also sell bottled water both hot and cold drinks that are supplied to them by Ethos Water. Starbucks have Espresso Beverages ranges including Cappucino, Iced Caffe Latte, Caffe Americano and Vanilla Latte and in Frappuccino beverages they have Espresso Frappuccino Blended Beverage, Caramel Frappuccino Blended Beverages and Java Chip Frappuccino Blended Beverages.
Mission of Starbucks
The major mission of Starbucks is to inspire the human spirit along with nurturing most of the human aspects that are related to the life ("Starbucks – The Best Coffee and Espresso Drinks", 2016). On the other hand, Starbucks are promised to keep the quality of the products in the high range for satisfying the customers. Starbucks are passionate about their ethical sources that can get the better quality of coffee beans as well as in these days, Starbucks mentioned that always keeping the information of the essential sources that are related to supply us higher quality of coffee beans is their one of the most highly significant mission as commented by Lee, (2013).
It is necessary to mention that, another mission of Starbucks is to provide excellent care of the coffee beans at the roasting time because if the roasting process is not done in a proper way that can be able to hinder the quality of the products of Starbucks as opined by Mahobia & Jain, (2015). Additionally, expanding the business into various regions along with satisfying their customers is also another major mission of Starbucks.
As stated by Brizek, (2014), As per the view of the mission of Starbucks, Starbucks is committed to understanding the environmental issues that are hindering the lifestyle of the human being for creating awareness among their business partners as well as within the society. On the other hand, Starbucks is also measured as well as monitor the progress of their various projects and continuing this aspect as per their organizational mission as revealed by Bowen & Sisson, (2013).
Employees of Starbucks
As published by Morais et al. (2014), Starbucks is the one of the largest as well as best coffeehouse organization in this globe. On the other hand, near about 21600 stores are there in near about 65 nations in the context of this earth ("Starbucks – The Best Coffee and Espresso Drinks", 2016). Near about 12300 stores are providing enhanced services to the consumers in the United States, near around 1800 stores in China, near around 900 stores in the United Kingdom as well as near around 1400 stores in Canada. It is necessary to mention that, near around 192000 employees are presently working with Starbucks within the various stores as opened by Harold, (2015). However, during the period of generating less revenue along with lower costs, Starbucks closed near about 900 stores in various nations as well as near around 34000 employees were terminated in the year of 2007-2008 as it was found by Jianfei, (2014).
Coordinators of Starbucks – Subsidiaries
Various branches are there who are helping Starbucks for manufacturing their products as well as to maintain the higher quality of the products to attract new consumers as well as to satisfy the existing customers as opined by Herbert, Olligs & Overesch, (2015). Few of the subsidiaries are listed below with their significant responsibilities.
Ethos Water: Ethos Water is the primary resource which is supplying the water to Starbucks.
Ethos Water is the primary resource which is providing the water to Starbucks as commented by Nguyen & Rugman, (2014).
Evolution Fresh is the primary resources which are supplying fresh fruit juice, smoothies, salads as well as gourmet soups of for manufacturing various mesmerizing products.
Pascal Rigo is one of the most highly important subsidiaries who are supplying all of the bakery products that are highly necessity for producing the baking related food as well as beverage products of Starbucks as opined by Cavaliere & Lombardi, (2015).
Seattle’s Best Coffee
Seattle’s Best Coffee is the most important subsidiaries of Starbucks because this retail organization is supplying best quality of coffee for maintaining the quality of the coffee related products of Starbucks as fetched from ("Starbucks – The Best Coffee and Espresso Drinks", 2016).
Existing Market Condition of Starbucks
As commented by Reinhard, (2015), massive numbers of rivals are there who are spontaneously competing with Starbucks along with their products. In addition, currently, Starbucks is taking various highly significant aspects related to demand, supply as well as equilibrium pricing strategies for creating impact on the consumers as well as to maintain the official competition with the rivals. Therefore, the present economic aspects are also increasing as per the sales of their better quality of products as well as the sales id dictating that decreasing the demand can be able to raise the reason for dropping the prices as it is commented by Butuner, (2016). However, as per the mission statement of Starbucks, they frequently observe their market standings based on their organizational sales figures as well as the feedback from the consumers end.
On the other hand, various issues as well as opportunities are there that can come to the front of Starbucks while they are going to sell the alcohol in Starbucks foundations as commented by Latif et al. (2014). Most of the stores of Starbucks needs to access as well as determine the highly significant abilities as well as strategies for overcome the serious barriers that are hindering the organizational activities of Starbucks. It is necessary to mention that, as per the annual report of World Trade Organization (WTO), Starbucks in one of the top coffee product selling organization among the top five worldwide coffee product selling organizations as stated by Qian & Xing, (2016).
Products of Starbucks
Starbucks offers various mesmerizing products. As commented by McVicar, Clark & Manning, (2016), Starbucks are always producing their products by maintaining the hygienic aspect as well as to keep the human body healthy as well as fit. Few modern products are mentioned below along with their proper description.
- Starbucks Coffee Frappuccino: Starbucks Coffee Frappuccino is prepared with nonfat milk as well as ice for making a sip from the light side. In this particular product, the total amount of carbohydrates is 8 percent along with 10 percent of Calcium ("Starbucks – The Best Coffee and Espresso Drinks", 2016). It is necessary to mention that, in this particular product, Starbucks excludes the Fat, Cholesterol as well as Iron for making the human health fit.
- Cookie Crumble Creme Frappuccino: Cookie Crumble Creme Frappuccino is prepared with vanilla syrup, milk as well as ice along with whipped crème and chocolate cookie crumbles for blending the mocha. In this particular product, the total amount of carbohydrates is 22 percent along with 20 percent of Calcium, 12 percent dietary fat as well as 25 percent Iron ("Starbucks – The Best Coffee and Espresso Drinks", 2016). It is necessary to mention that, in this particular product, Starbucks excludes the Vitamin C for providing the customers a sweet chocolaty ice drink.
- Iced Espresso Classics - Vanilla Latte: Iced Espresso Classics - Vanilla Latte is prepared with vanilla syrup, coffee as well milk along with ice cubes. In this particular product, the total amount of carbohydrates is 7 percent along with 15 percent of Calcium, 3 percent Cholesterol as well as 3 percent Sodium ("Starbucks – The Best Coffee and Espresso Drinks", 2016). It is necessary to mention that, in this particular product, Starbucks excludes the Vitamin C, Trans Fat, Dietary fat for making the human health fit.
- Starbucks Double Shot Energy White Chocolate Drink: Starbucks Double Shot Energy White Chocolate Drink is prepared with espresso blend along with white chocolate as well as natural milk proteins for energized the human body. In this particular product, the total amount of carbohydrates is 10 percent along with 40 percent of Calcium, 5 percent Cholesterol as well as 7 percent Sodium ("Starbucks – The Best Coffee and Espresso Drinks", 2016). It is necessary to mention that, in this particular product is producing by Starbucks for making the human health fit as well as energized.
Starbucks adopts sales promotion strategy and personal selling for making other people aware about the products they already have and the products they have newly introduced to attract more customers. Tu et al., (2012) illustrate that the concerned organization provides attractive offer to the communal as they sell breakfast sandwich in $2 if that person already purchases a regular cup of coffee. Moreover, in other states like Miami and Chicago, Starbuck implemented an offer that anyone who buys breakfast from their organization they will able to purchase any cold drink at $2. Evert, (2014) mention that another promotional strategy that Starbuck has implemented is the Sampling technique. In this method, Starbuck sells a free sample of their new launched products for promoting their products.
Some of the other techniques for promotion is “Happy Hour" where the goods like coffee and other beverages are available in the half of the printed price. Buy 1 get one free and offering gift coupons on the next purchase are other promotional methodology theta Starbucks has implemented for attracted a huge number of communal (Sam & Cai, 2015). Brooks, (2012) portray that “Duetto Cards” are also one of a gift card for loyal customers initiated by the concerned organization in which the purchaser can obtain points with every purchase and become more loyal. They also target the consumer nature for the promotion of their products like Starbucks offer free coffee at 4 pm and 8 am to their customer in London.
Starbuck’s procedure for product management
According to Kayak et al., (2013), Product Management is a business process for planning, forecasting, marketing the products.
Planning – Omran et al., (2015) depict that Starbucks first emphasizes on the planning of their products according to the requirement of the communal of their product items like beverages, food items and other packages products. Exampling a scenario, Starbucks has targeted to open their shop in countries like the US, UK and France as these are world’s largest coffee consumers. They have also selected the price of their products reasonable so that all people can purchase their products irrespective of their income range.
Forecasting – Curtis et al., (2014) mentioned that Starbuck proceeds with a strategy where they can serve their best to the customer for attaining maximum profitability by selling their products. Starbucks introduces beverages like cold coffee; Starbucks Refreshers Beverages, chocolate beverages and bottled drinks have incurred more profit than any other food products like sandwiches, chocolate chip cookie and packaged single serve coffee and tea. In the year 2015, Starbucks have attained annual revenue of $11.12 billion U.S. where only $3.09 billion, $2.62 billion and $2.34 billion dollars is obtained by the sale of food products, packaged coffee and tea products and others respectively (“Starbucks: revenue worldwide 2015 | Statistic", 2016).
Product marketing – They managed the result of their organization according to the culture of the country where they are high demand of their products. The lifestyle and the social class of the people also affect their planning strategy of the products. The degree of loyalty and occurrence of occasions also support their product marketing. Wen, (2016) illustrate that person of 18-45years of age consumes more beverages than other age groups. Moreover, people who love to attend the gathering in society and official meetings, drinking coffee together has become a habit, and Starbuck can target these people based on their demographic requirements.
Ethics at Starbucks
Coffee- The concerned organization ethically sources its finest quality of coffee by trading them ethically with proper documentation. In addition to that, the procedure of the manufacturing of the coffee powder from the coffee bean is also preceded with ethical consideration.
Partners- Starbuck emphasizes on embracing the diversity together collaboratively and values them like the asset of the organizations. The concerned organization behaves with proper respect and dignity so that everyone can serve their best for a better business.
Subsidiaries - Ethos Water, Evolution Fresh, Seattle’s Best Coffee, Tazo, Bakery and Hear Music are some of their subsidiaries. Starbucks consider everyone ethically and take imitative to rewards their shareholders according to their effort.
Employees – Starbucks take effective steps in an ethical business proceeding like sharing new technologies so that they want to introduce with the organization so that the working personnel can think them as a valuable asset. The human resource also makes them understand the organization's regulations and procedures right from their initial days of working. Morais, (2014) illustrate that this company values the cultural diversity of their employees.
Customers - Starbucks maintains a good ethical relationship with their customers to attain maximum customer loyalty. Starbucks follows an honest behavior towards their customers by providing them exact billing amount and does not overpromise their customer regarding any products and its quality (Lemus et al., 2015). Furthermore, consistent performance in their servicing and maintain transparency in the business procedure will convince the customer to be associated with the organization.
CSR in Starbucks
Starbucks take numerous initiatives for promoting corporate social responsibility in their business. These are making investing in high-quality raw products from their supplier; create opportunities for communal through effective training, education and proving employment, taking an appropriate step for minimizing the forest resource and ultimately encouraging the voluntary services in the society.
Investing in high quality raw products- Drake and Rhodes, (2015) portray that in addition to the high quality products, Starbucks take effective measures for long-term sustainability of the high quality products for selecting their raw materials like coffee beans, tea and cocoa from Africa and other countries. Ethical tea sourcing on a global scale improves their CSR activities as they are giving a chance to the tea and coffee farmers a chance for progressing themselves.
Creating opportunities- Morais et al., (2014.) depict that with the development of an organization, there is a chance of growth within the organization. Providing opportunities to others will help the concerned organization to prosper in the market. Starbucks creates the opportunity of employment for youth like Starbucks Work Placement Program in Canada. Starbuck also introduces apprenticeship program for youth likes transferable skills in their near future in a retail business like the one they initiated in the United Kingdom Barista Mastery and Customer Service (Sebhatu & Enquist, 2014). To promote effective CSR, Starbucks values NGO and entrepreneurs to get associated with their organization so that they can also provide them an opportunity by which they can develop their life. Starbucks College Achievement Plan is initiated by Starbucks to help the student employee, who possess a dream to obtain a degree in college for their higher studies.
Promoting Green Retail - Starbucks take appropriate steps for promoting business approaches for a greener world by less utilizing the natural resources. They have 23,736 stores across the world, and they are building LEED certified stores to build energy and electricity efficient buildings (Corbaci et al., 2014). They also take initiatives for recycling and reusing the paper cups and beverages packets so that no forest resources can be affected. Moreover, () depicted that to mitigate the challenge of the climate change Pelsor, (2013) mentions that Starbucks take initiatives for growing more coffee and tea plantations along with the other plants in the society. Adopting water and energy conservation is another effective measure towards reducing the environmental footprint.
Encouraging voluntary approach – Unlike other industries, Starbucks have 14,932 voluntary projects for helping the needy person and at present they have 87,569 volunteers for doing CSR activities like plantation trees in the society, helps people affected by the natural calamity like earthquake and flood, providing funds in the old age homes and orphanage and provide them regularly required products (Du & Basch, 2015). Proceeding in this way, Starbucks attain a good reputation in the society.
Business ethics is crucial for the betterment of the organization and for analyzing the correct procedure of the firm decision. Companies are also becoming more concerned about the business preceding that will less affect the nature and encourage their stakeholders for better business activity. Starbucks Corporation is one of the leading foundations for coffee manufacturers and is established in the year 1971. The annual revenue of Starbuck across the world is $19.16 billion dollars in the year 2015 and $16.45 billion dollars in 2014 by selling a wide range of products in 23,768 stores.
The major mission of Starbucks is to inspire the human spirit along with nurturing most of the human aspects that are related to the life. Starbucks have adopted the strategy for promoting their products by providing an attractive offer, presenting gift coupons, implementation of Happy Hour, Buy 1 get one free offer, Duetto Cardsto their consumer and introducing selling free sample of their new launched products. The assignment also ethics in Starbucks that comprise of their raw material like coffee and water, Stakeholders that comprises of partners, subsidiaries, employees and customers. Furthermore, the assignment also discusses about CSR that is about investing in high quality raw products, creating opportunities, encouraging voluntary approach and promoting Green Retailing so that the business can sustain in the market.
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