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Starbucks is a renowned coffee shop in United State, which has been developed in 1982. Initially, this organization had developed 1500 coffee stores in Italy and later it had expanded to as retail coffee bar. Rapid growth of this organization has been found globally with opening of 20000 stores in almost 63 countries (Starbucks Coffee Company 2016). The record of this organization had shown that it had opened almost three stores per day with earnings of $13 billion in each year. Through the success of the business, Starbuck has become the third largest restaurant within US in the year of 2013 (Starbucks Coffee Company 2016).
Starbucks is able enough to operate their business both through tactically as well as ethically. Starbucks is highly concentrated on maintaining corporate social responsibility, which is the prime focus of this study. The study will discuss the concern for the organization towards the social responsibilities. The organization is extremely popular for their employee centric behavior. The study will be focused on describing the factors of providing unique benefits to their employees. Apart from that, the competitive advantage of this organization will also be described in this study through the concept of corporate social responsibility and providing unique products to the customers.
Social responsibility is extremely important for the organization, as it demonstrate to the media channels and customer group that the organization has been taken part in the social issues, which is nowhere related to its profitability (Schneider and Schmidpeter 2012). Social responsibilities are chosen by the organizations for supporting and recognizing the communities, environment and natural resources. Prominent evidence of social responsibilities can be found in Starbucks as it has great contribution towards the well-being of environment as well as community. Starbucks is a renowned coffee company in United State. Though the origin of this organization is in USA, it has now expanded its business in worldwide markets and recently operating over 23763 locations in all over the world.
The speech of the CEO Mr. Howard Schultz of this organization given at Notre Dame demonstrates that the organization is highly concentrated on people rather than its profits. Starbucks has been ranked as “World’s Most Ethical Company” in 2013 that was conducted by Ethisphere. With an intention to fulfill ethical consideration, the organization has launched Shared Planet Website, which has provided the scope of ethical sourcing, high level commitment towards the community and environmental protection. Through this website, the organization provides all the nutrition and other related information to the customers. According to Preuss (2013), Starbuck has successfully conjoint with non-profit organizations towards the wellbeing of the society. The organization is the highest buyer of Fair Trade Certified Coffeewith buying this coffee at 34.3 million pounds. On the other hand, Korschun, D., Bhattacharya and Swain (2014) opined that the organization has become the major buyer of organic coffee with purchasing in at 9.6 million pounds. Through this kind of coffee, the organization is keeping its concern about environmental sustainability and the health of the customers, as it is made up without any non-natural ingredients. The intention of this organization can be reflected in making ‘reusable food packaging’. Starbucks has made partnership with ‘paper recovery alliance’ and ‘Food Service packaging’ to make this kind of packaging, which minimizes wastage.
According to Aguinis and Glavas (2012), in order to develop the life of farmers they live Starbucks has helps them in several ways as possible. It is noted that the organization has given loans of amount $14.5 million to the poor farmers of overseas world. The organization has also promised to increase this amount up to $20 million by 2015. The social responsibility of this organization has not finished here only. It can be found that Starbucks has been taken participation in preventing deforestation due coffee agriculture for keeping the environmental balance. Cheng, Ioannou and Serafeim (2014) pointed out that in the year 1998; Conservational International has made partnership with Starbucks with an intention to make environmentally sustainable agriculture. Through this partnership, a new type of agriculture has been originated that is shade grown coffee. In this type of agriculture, no needs of cutting down trees are arisen due to plantation of coffee. In this way, the rate of deforestation has been minimized through confirming sustainability of the environment. Apart from that, the organization also offers premium price to the farmers for cultivating this kind of coffee for providing them a well-established life.
A donation policy has been introduced by Starbucks towards helping the AIDS affected persons in the world. Starbucks donates $1 in the international fund raised by RED in every check at Foursquare. It is the institution that fights for the rights of AIDS affected persons.
The Green Teams of the organization are focused with purchasing environmental guidelines to reduce waste and initiate recycling, reusing and save of energy. The winding energy systemoriginated by the organization has actually minimized the footprint of the organization and saved the energy. According to Mousavi et al. (2013), the organization has hosted ‘cup summit’in which different types of new thinkers has been summoned with apurpose to make traditional way of making cup that will be disposable. The proposal of plastic cup at $1 for different size is good to use 30 times. Through this, the organization has minimized billions of cups to be deposited towards global environment. Servaes and Tamayo (2013) pointed out that Starbucks always purchase C.A.F.E verifiedcoffee for ensuring premium price to the farmer for their better life as well as support them towards farming. In the other hand, Takkar (2015) opined that Starbuck has also initiated social development program by investing in the progress of schools and clinical organizations. Some development programs have also been developed by this organization for the expansion of ‘coffee growing community’.
According to Dhaliwal et al. (2012) Starbucks has ‘Farmer Supporter Centre’ that offers technical supports and training to the farmers towards growing premium quality coffee. On the other hand, Kim, Park and Wier (2012) opined that the foods of Starbucks always ensure food standards and the also ensure less than 500 calories foods. Two sodium reduction programs has been initiated by the organization for premium quality foods. According to Brammer, Jackson and Matten (2012), this organization has shown high level of social responsibility through helping the unprivileged students in developing their life. One of the Seattle store of this organization contributed $ 500000 for ‘Zion Preparatory Academy’, which is a school of ‘inner city youth’ in African America (Takkar 2015). It is the belief of the CEO of Starbucks that the life of unprivileged children can be improved only through providing literacy. Thus, the organization has taken part in providing huge amount of contribution to sponsor ‘non-profit literacy groups’ and ‘young writer program’. Social responsibility of this organization can also be evidenced though the program of ‘Opportunity Finance Network’ in which the has created jobs for the youth by reducing the percentage of unemployment in USA.
Employees are the most important assets of the organization and thus, they are the key for the success of the organization. Employers of the organization should be concerned about the fact a motivated and content employees can better contribute towards the success of the organization. Organizations that invest more for the personal and professional development of their employees gain competitive advantage over their rival organizations and become more committed towards their workforce development (Kitzmueller and Shimshack 2012). Therefore, the employees should be well treated by their employers so that they become engaged in the success of the organization. The employees should be provided with unique value in an intension of bringing high quality in the business process of the organization. The employers should keep in mind that the overall activities of the organization are actually done by the employees and therefore, they should be motivated so that they remain engaged in organizational work process. Keeping in mind all this things, Starbucks provides unique worth to the employees. The CEO of Starbucks believes that they should first concern for their employees then their profit. Therefore, it is evident that Starbucks is highly concerned about the wellbeing of their employees. The concept of this organization suggests that developing employee engagement would lead to long-term sustainability of the organization.
According to Flammer (2013), the workplace culture of Starbucks shows that it holds a shared view environment, where the opinion of each of the members are valued and if justified it is applied in the success of the organization. The employees can easily share their own opinion towards the organizational operation. No such discrimination can be found in the workplace culture of the organization for which the employees can be de-motivated. Low-level employees can easily interact with the high-level employees regarding their issues faced in the workplace so that those issues can be resolved immediately. On the other hand, Homburg, Stierl and Bornemann (2013) opined that Starbucks provides appropriate performance appraisal system for the low-level employees in accordance with the performance level of the employees. High performer employees get high recognitions and rewards from the organization so that they can intact to their high performance level. The CEO of this organization is a kind of modern thinker and thus, he believes that the employees should get appropriate benefits from the organization for keeping them highly engaged in the organizational success.
According to Deng, Kang and Low (2013), high concerned for the employees of this organization can be evidently found during the recession period. It has been found that even during recession period the health care cost of the employees had not been cut off by the organization and thereby, motivates the employees towards greater productivity. After this incident, the fairness of the organization has been prominently seen that shows that the organization provides unique value to their employees. On the other hand, Di Giuli and Kostovetsky (2014) opined that unique value provided to the employees has made this organization to gain competitive advantage over their rival organizations. The organization has been praised for providing rewards to their employees and encouraging them for their efficient performance.
Malik (2014) pointed out that Starbucks offers ‘comprehensive reward package’ to their employees, who’s working hours are more than 20 hours per week. This is also a clear evidence of unique employee benefits. The benefit packages that the organization offers to their employees are like ‘medical dentals’, ‘stock opinions’ and ‘vision benefits’. Apart from that, low-level employees of this organization can make direct interaction with high-level employees and thus, there is no scope of employee confliction. On the other hand, Jain and Jamali (2015) opined that for securing the health of the employees as well as their family, Starbucks provides health insurances. It has been found that Starbucks stopped 10% of their total stores for the continuation of giving health insurance to the employees. Starbucks has initiated a program namely “Thrive Wellness” towards the welfare of the employees through integrating entire wellness of their life (Bondy, Moon and Matten 2012). This program has provided the activities like smoke cessation, weight loss and exercise.
According to Morgeson et al. (2013), Starbucks has become the most successful player in the global fast food retail chain. This has become respectful just because of its product diversification strategy and corporate expansion. On the other hand, Asif et al. (2013) pointed out that Starbucks is one such fast food retail chain that has able to develop its business by ethical considerations such as keeping cordial relationships with investors and suppliers. It has been found that Starbucks has kept the most trustable and recognizable relationship with the suppliers. Crane, Matten and Spence (2013) pointed out that if an organization is able to keep the most cordial relationship according to timely manner with the suppliers, then more amount of discounts are achieved throughout the year. This has been the same condition for Starbucks. This has been found that Starbucks has able to retain more than 78 percent of its suppliers from the past, and therefore, it has achieved the best turnover each year.
According to Hilson (2012), Starbucks has managed to ensure the most trustable relationship with its existing employees. On the other hand, Anitha (2014) pointed out that Starbucks is one such organization, which has the best turnover each year, which aids in ensuring more fringe benefits for its employees. Therefore, it can be said that the organization has able to maintain the most trustable and long lasting relationship with its employees. Thus, it can be said that the organization has able to manage ethical considerations in considering the macro environmental factors.
According to Cheng, Ioannou and Serafeim (2014), Starbucks in the past has created many negative reputations in the market such as not maintaining Fair Trade, dominant market player and unfair pricing to occupy the market. Preuss (2013) added that Starbucks has ruled out the market in the year 2002 by placing the most minimal pricing for its products, which resulted in closing many fast food restaurants in Ireland and the UK. Therefore, it can be said that the organization did not follow Fair Trade initially. This has been argued by Aguinis and Glavas (2012) as it has been found that Starbucks has revised its trade policy by maintaining Fair Trade from the year 2005 where the Starbucks Espresso was sold with 100 percent certified Fair Trade. Still, this percentage is not true for the whole of UK.
According to Schneider and Schmidpeter (2012), Howard Shultz has been found to be linked with alleged financial activities in the past, which has created the worst negative reputation of Starbucks in the past. On the other hand, Aguinis and Glavas (2012) pointed out that in the year 2008, Howard Shultz has able to recover himself and prove his position in the market. This has raised the brand image of the organization in the past. Therefore, it can be said that the organization has faced a lot of discrepancies in the past, but still it has always tried to rectify itself.
According to Servaes and Tamayo (2013), during the time of global recession from the year 2008, the price of products considerably increased. Most of the consumers were trying to save more but the amount of supply in the market was very less. The demand being quite higher, the manufacturers tried to raise the price of products to maintain the same amount of revenue. Brammer, Jackson and Matten (2012) pointed out that Starbucks stood as the exceptional organization to keep minimal price of its products by not expanding its market globally. The organization was found to be constantly engaged with earning buyer’s trust, customer loyalty and sustainable image in the society. The organization tried to save more by reducing the amount of global expansion, which aided in gaining more consumer trust. Therefore, it can be said that Starbucks has always tried to gain the consumer loyalty, which can be termed as ethical business.
According to Takkar (2015), Starbucks is trying to expand its business in China recently and for that, it has opened more than 200 stores. On the other hand, Hilson (2012) pointed out that Starbucks has able to retain its employees at the time of global recession by paying them properly and allow minimal fringe benefits. This has resulted in keeping great relationship with its stakeholders. Finally, the organization is trying to gain consumer trust by hiring local salesperson from China, so that local flavor and culture is maintained. From here it can be said that the organization is able to keep socially responsible business by keeping a balance between its stakeholders and revenue.
According to Anitha (2014), Starbucks is trying to become more socially responsible organization by thinking of environmental sustainability. It has been found that more than 3 billion disposable cups are thrown in the landfills each year, which pollutes the environment. Bondy, Moon and Matten (2012) pointed out that Starbucks is trying to reduce the pollutant as it has produced recycling eco friendly cups. Starbucks has switched its polyethylene No. 1 to more ecofriendly polyethylene No. 5 cups. On the other hand, Malik (2014) pointed out that though the organization has already thought of such ecofriendly cups, still only 5 percent of the total retail outlets in the UK has maintained this. Therefore, it can be said that the organization has tried to maintain environmentally sustainable business from the past but still it has not yet reached to the global perspective level.
Finally, from the critical analysis it can be said that the organization is expanding more because of its environmental sustainable business and ethical consideration. This is because the vital points that can be jotted down are cordial relationship with employees, suppliers and consumers, Fair Trade Practice, customer loyalty, ethical business and environmentally sustainable business. All such points will help the organization in developing better business in future.
While concluding, it can be said that Starbucks has able to develop its business by corporate sustainability and ethical considerations. The critical analysis provided certain factors for the organization such as ethical business, relationship with consumers, sustained relationship with suppliers and great employee benefits. Apart from that, stabilization of the business of Starbucks is maintained through diversification of products and corporate social responsibilities. It can be said that Starbucks has high prospectus in retail sectors though providing high quality coffee and that too providing it at competitive price. The customers of this organization are highly attracted to the standard and low calorie foods. Starbucks has been also found to provide high employee benefits in the past at the time of global recession as it had reduced its expansion strategy. This indicates that the organization is extremely consumer and employee centric, which proved to achieve such a great height. At last, it can be said that the organization has kept its competitive advantage through ethical consideration that includes ethical sourcing, leadership and code of conducts.
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