Write an analytical business report on what ethical consumerism means for businesses?
This business report an analysisof what ethical consumerism means for businesses (Jay, 2008). In the first part, the report talks about what ethical consumerism is and how it is growing in the United Kingdom. Further, it points out what being an ethical consumer means and lists the various products that fall into the category of ethical category. Further, the report puts forward how ethical consumerism is a good strategy for businesses to adopt.
The second part of the report consists of a detailed review of Starbucks that claims to operate ethically. Various approaches that have been used by Starbucks UK to become a more socially conscious business have then been identified and analysedby linking this with their ethics as well as values.
The third part of the report consists of the results of a short opinion survey on what it is that influences consumer buying behaviour. The survey was carried out from a small sample of 10-15 students at GSM London and a primary research was steered for conducting the survey.
The conclusion part includes critical evaluation of ethical consumerism with respect to Starbucks UK and the last part consists of a set of recommendations pointing out how Starbucks UK could become more ethical in nature.
A brief overview and analysis of ethical consumerism
Ethical consumerism refers to the personal consumption and investment, or simply the personal allocation of funds, where the choice has been informed by a particular issue, be it social justice, human rights, animal welfare or the environment (Auchmutey, 2009). In simple words, ethical consumerism implies more consumers are opting to buy good that are ethically sourced, ethically produced and ethically distributed.
In the United Kingdom, the businesses or companies (retailers or producers) that have been consistent in converting to Fairtrade and to selling of sustainable products during the downturn are helping to maintain ethical sales growth in the country.
Fig 1: Ethical Spending in UK
Source: Gray, 2014
Over the years, the expenditure on various ethical products has grown manifolds. For example, in 2014, the expenditure on ethical food as well as drinks increases by 6% to reach £7bn (Grande, 2014).
Ethical consumer is the one who buys products and services that are produced ethically and don’t harm environment, animals, people in any sense. Examples of ethical products used widely are fair trade goods, energy-efficient products, recycled goods, organic produce, etc. Hence, buying green houses, ethical food and drink, eco-travel and transport, ethical personal products, all are part of ethical consumerism. Ethical consumption is a powerful tool for the welfare of the entire world (Gayle, 2010).
The range of product areas which come under the ethical category includes:
- Banking and finance
- Food and drinks
- Travel and tourism
In the United Kingdom, the ethical consume market grew by almost 15% with the sector worth £60 billion (Taylor, 2007). Ethical consumerism is definitely a very good strategy for businesses to adopt. Ethics are considered crucial to determine the success and failure of any organisation. These impact the reputation of the organisation and help devise a business model which can help the organisation to sustain in tough times. Strong, as well as appropriate ethical policies, for example adopting ethical consumerism strategy, can add great value to a brand, while on the other hand, failure to do the right thing could result in environmental, economic, and social damage and thereby undermining an organisation’s long-term prospects or visions in the process (Mazar, 2010).
Today, the demand for ethically produced products is increasing day by day. Carefully examining how well it is meeting the growing ethical expectations of its target consumers, a business can manage to be profitable yet sustainable even during the time of a downturn. Numerous bottom-line benefits can be availed by demonstrating high ethical standards and adopting an ethical approach in doing the business (Monbiot, 2010).
A detailed review of one company claiming to operate ethically
Starbucks has around 12, 000 coffee shops in more than 35 countries around the world. Starbucks UK vends coffee drinks as well as beans, and numerous other food products and beverages (Speth, 2008). In addition to this, Starbucks also sells mugs, coffee grinders, coffee makers, as well as storage containers at various stores. It also sells its coffee beans to over 5, 000 businesses, restaurants, airlines, and hotels (Borden, 2010). Starbucks UK incurs very high revenues and employs thousands of people every year.
Many approaches have been used by Starbucks UK to become a more socially conscious business. The company firmly believes that the businesses should have a positive effect on the people or communities they work for. So, the company has always dedicated itself at being responsible, as well as considerate, and doing things which can prove to be good for the planet and each other. Some of the approaches adopted by Starbucks UK in order to be a socially responsible business have been summarised below (Banting, 2010).
Starbucks UK gets highly involved with indigenous efforts attempting to get people together and have positive change whenever it can. The company supports and invests in local neighbourhoods as well as in global communities through strategic partnerships to deepen its ties in the communities where it carries out business (Corrales, 2013).
The company has been looking up ways to reduce its environmental footprint and motivate everyone in doing so. The environmental ethics adopted by the company include making use of environment friendly cups, minimising its energy consumption, using responsible building materials and efficient designs to reduce its environmental footprint, reducing water use and many more (Dawson, 2013).
Starbucks UK is aimed at buying and providing the highest quality, responsible and consciously cultivated, and ethically sold coffee so as to help the farmers in the country and elsewhere by creating a better future for them.
By seeking help of Conservation International, the company has been successful in developing ethical sourcing strategies which enable it purchase products which are responsibly grown and ethically traded. In addition to this, whenever Starbucks UK buys products for its various stores, itassesses its suppliers for their guarantee to social responsibility, as well (Farell, 2013).
Introducing Fair-trade Access Fund
The Starbucks coffee is not only of the finest quality but its Fair Trade certification ensures that small-holder farmers get a reasonable price, and guarantees investment in economic as well as environment developmental projects that are beneficial for the entirecommunity. The company has put in a large amount of its money into the Fair-trade Access Fund which is a new fund for small holder farmers. The Fair-trade Access Fundprovidesfarmers with the associationsand cooperatives,the long-term credits they require in order to renew their fieldsor use new technologies and equipment. It also offers a completely new facility that gives farmers access to all kinds of business information on Fair-trade practices, crop cycling and information about the localised marketthrough their mobile phone (Frieshner, 2014).
The company welcomes a diversity of people as well as ideas to its business. Starbucks UK creates more and better opportunities for learning and success that can prove beneficial for all its customers, partners and suppliers. The company is committed to upholding a culture where the diversity is valued and respected (Geereddy, 2012). Starbucks UK dedicates itself towards creating and developing a workplace wherein the people or employees from diverse backgrounds are welcome and motivate them to perform their level best. It honours the unique blend of skills, experiences as well as perspectives of each partner or stakeholder.
The results of a short opinion survey
This section is concerned with primary research. In order to examine the factors influencing buying behaviour of the consumers at Starbucks UK, a short survey is carried out among a sample space of 10-15 students at GSM London. By definition, buying behaviour refers to the process of taking decisions by consumers. Consumer attitudes towards buying different goods depend upon plethora of factors such as cultural, social, personal and psychological.
As per the opinion survey, it was found out that out of 15 students, the majority of students claimed that superior quality and taste of the products offered by Starbucks UK are the factors that influences them to buy coffee from the company. On being asked about the factors that make Starbucks UK a coffee leader, majority of the students considered superior quality and ambience of the stores as key factors. Among 15 students, 12 claimed that before going to Starbucks UK, they preferred going to Costa Coffee. Though both coffee chains have been established in UK since decades but the superior quality and taste provided by Starbucks in unmatched.
To conclude, the coffee giant has tried to clean up its image by adopting fair trade practices and making sure that the raw materials are of superior quality. Reports suggest that there have been recent scandal over its tax avoidance issue. As of now, the company is making best efforts to address various ethical issues concerning people, environment, animals and politics. Starbucks UK work very closely with military troops. The company has been questioned many a times by workers for changing their contracts without notices and sacking workers without valid reasons (Hoy, 2005). Hence, the ethical consumer rating received by the company is worse. As per the Ethical Consumer Rating, the company has received a middle rating for its environmental report. This is due to the fact that there are plenty of environmental issues pending against the company. In spite of these concerns, Starbucks UK has made contributions for the welfare of struggling coffee farmers. This is done by increasing the purchase of Fair Trade Certified coffee. The company has run many campaigns, such as Supporting Fair Trade and Global Exchange Starbucks campaign to ensure that the company is ethically sound. Moreover, the company has adopted CAFE guidelines i.e. Coffee and Farmer Equity to enable farmers grow coffee in a way which is good for people and our planet.
Since the company needs to focus on ethical consumerism more carefully, some of the recommendations are:
Focus on implementing policies instead of shareholder: It is known that focusing on the interest of shareholders is primary aim of Starbucks but it is recommended that the company focuses more on implementing ethical consumer policies and encourage fair-trade coffee. Ruth Rosselon, Managing Director of Ethical consumer magazine suggest that the consumers should go for coffee chains that encourage fair-trade coffee (Lyon, 1999).
Manufacturing healthy food: Starbucks UK is not manufacturing healthy food since portions are too big and drinks contain a lot of calories and fats (Singer, 2000). Hence, there is an urgent need to manufacture healthy foods and drinks.
These are some of the recommendations to focus on ethical consumerism. Starbucks UK has the potential to help third world economy by giving portion money in charity which has been earned by selling products. This will, definitely, upgrade the reputation of the company in consumers’ minds. People will buy a cup of coffee from Starbucks thinking that their one cup of coffee can contribute for the welfare of needy people.
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