Managing International Business Responsibly PDF

Preview

Summary

Got DI...

Description

STARBUCKS COFFEE COMPANY Stable of contents: I.

Introduction............................................................................................................2

II.

Overview of company.............................................................................................2

III.

Analysis and evaluation of the CSR work of company 1. CSR activities of company............................................................................2-3 1.1 Community...............................................................................................3-4 1.2 Ethical sourcing.......................................................................................4-5 1.3 Environment...............................................................................................5 2. Evaluate the CSR work of Starbucks 2.1 Stakeholders of company.......................................................................5-6 2.2 Carroll’s pyramid....................................................................................6-7

I.

IV.

Recommendation................................................................................................7-8

V.

Conclusion..............................................................................................................8

VI.

References.........................................................................................................8-10

Introduction

Today, not only assessing a good business is in value by annual profit, but also in the impact and Corporate Social Responsibility (CSR). In fact, the balance between the problem economics with limited negative impacts of businesses on the community, the environment is not a simple job. Enterprises are always affected by many sides. However, there are many businesses around the world that have had very good CSR activities that can balance corporate profits and social responsibility. The main purpose of this article is to analyse and

1

evaluate the CSR activities of Starbucks and make useful recommendations to help the company to improve CSR activities in the future. II.

Overview of company

Starbucks was known as the world-famous international coffee brand established in 1971 with the first store at Pike Place Market in Seattle, USA (Starbucks n.d.). Over the years of building and developing, Starbucks has not only limited itself in Seattle or the US, but even spread across the continent, bringing the art of enjoying modern Italian coffee to other countries like Japan. Ban, Hongkong and South Africa. However, at the end of 2008, Starbucks faced many difficulties due to the financial crisis leading to a decline in sales and the company's trading shares below $10 (Ritter 2014). In such a situation, Starbucks CEO Howard Schultz made the decision to change the strategy that the company will focus primarily on people, the environment and the community (Ritter 2014). Through that strategy, the company had more positive changes and financial stability. By 2019, Starbucks has a total of 30,000 stores around the world and is present in 80 markets with the goal of providing customers with a variety of delicious drinks and the best service quality (Starbucks n.d.). To achieve sustainable development, Starbucks is always aware of the balance between profit and social conscience. In addition, the success of the famous Starbucks brand thanks to the connection of the company and farmers to create a close relationship. Starbucks brand has made positive contributions such as preventing climate change, reducing hunger and creating job opportunities for many people (Starbucks n.d.). Such contributions have shown that Starbucks is a brand with very good CSR activities to develop the company's business model and at the same time ensure social responsibility. III.

Analysis and evaluation of the CSR work of company 1. The CSR activities of company

Corporate Social Responsibility (CSR) in businesses will have many different definitions. CSR is understood as a model where businesses want to show their responsibility through activities that benefit the society and the surrounding environment (Chapple & Moon 2005). Businesses are all turning to social activities to build their position in the eyes of their customers because they understand that customers expect more from quality products and services. More and more studies show that joining CSR makes more profits for companies. Businesses can derive profits from stakeholders and consumers through CSR. In this model, Starbucks is considered a successful company in CSR activities including the Community, Ethical Sourcing and Environment. 1.1 Community 2

Starbuck also has CSR activities that show interest in the community such as the Community Store Program initiative. In 2015, Starbuck built 15 stores in low-income urban communities to develop the economy and connect people in the community (Starbucks Stories & News 2015). Starbuck will select Community store locations based on unemployment, average income of the family, stability of population and places with difficult economies. After many years of operation, Starbucks has contributed and improved the living conditions of many people in the community. Specifically, Starbucks provided more than 300 jobs to the people, created more than $ 59.7 million in the economy and provided access to education for young people (Starbucks Stories & News 2020). With the success of the Community store in 2015, Starbucks plans to expand to more stores to address unemployment and boost the economy. In addition, after hiring the recruitment of 71,145 Opportunity Youth (people aged 16-24 years without a stable job) the company intends to expand the recruitment to 100,000 Opportunity Youth in 2020 with the purpose of creating career and educational opportunities (Starbucks 2018). Veterans & Military Spouses is one of the objects that Starbucks wants to work towards. In 2019, the company fulfilled its 2018 pledge to hire 25,000 military veterans & spouses. Starbucks always wants to bring positive benefits to its employees not only to secure jobs but also to provide educational opportunities. According to the Global social impact report of Starbucks 2018, the brand has opened more than 50 Starbucks Military Family Stores with the expectation that it will be the place to connect local veterans and their families. The company welcomes all people including unemployed, veterans & military spouses, even female representatives and minority representatives, thereby creating a diverse and fair working environment. As can be seen from Figure 1, 69% of the store partners and 43% of the senior leaders of Starbucks are women. However, in the minority representative chart, the coloured people in the company as Vice President (VPs) make up for only 33%. In addition, the success that Starbucks achieved was ensuring 100% pay equity for its human resources including men, women and other races. Most of Starbucks' CSR activities have a positive impact on the community reducing unemployment, eliminating illiteracy and balancing labour resources.

3

Figure 1. Adapted from: Starbucks n.d. 1.2 Ethical Sourcing According to Starbucks global social impact report 2018, Starbucks confidently asserts that the brand has 99% of its coffee with ethical sourcing. According to Afzal (2009), the company has launched a new model of the shade growing coffee initiative with the environmental organization Conservation International to enhance business profits and social benefits. In particular, this program is organized to encourage farmers to apply ecocultivation models to avoid impacts on biodiversity in the environment. In addition, with cooperation Starbucks, the environmental organization Conservation International and Scientific Certifications Systems (SCS) created the Coffee and Farmer Equity (CAFE) program to produce high-quality coffee with financial incentives mainly for farmers on continents such as the Americas, Latin America and Asia (Afzal 2009). The C.A.F.E Practice model focuses on four key areas: economic responsibility, quality, social responsibility and environmental leadership (Starbucks n.d.). As for social responsibility, third parties will be responsible for protecting the rights of farmers to help ensure a safe workplace, standard wages and say no to child labour. Through C.A.F.E Practices, the company has helped 400,000 coffee farmers in 28 countries around the world to have better workplaces and 1 million hectares of land to put into practice for sustainable development (Starbucks n.d.). Economic transparency is also an important area of C.A.F.E. Practices require suppliers to send more relevant payments during the transaction between the two parties to confirm the exact price that the company must pay. As for quality, Starbucks requires to achieve the highest quality coffee standard before reaching customers.

4

1.3 Environment Environmental stewardship is one of the most successful CSR activities of Starbucks. To create a growing brand like today, Starbucks has implemented many activities to reduce the impact on the environment. Specifically, the company realized that its business had negative impacts on the environment and mostly came from disposable cups. In addition, feedback from customers indicates that they have a special interest in recycling. Therefore, Starbucks stores have begun offering a discount of 10 cents to customers if they use their own recycled or individual cups (Starbucks n.d.). In addition, Starbucks also launched many new initiatives to help the company's environmental management activities be significantly improved. With the goal of minimizing the environmental footprint of disposable cups, the company continually launches a greener cup that meets more eco-friendly criteria than the oldfashioned plastic cup. Evidence shows that in 2006, a paper beverage cup was U.S. The Food and Drug Administration recognizes and distributes widely in stores. Starbucks continues to make many other contributions to the environment as it pledges to remove plastic straws from 29,000 coffee shops by 2020 (Starbucks n.d.). Greener power is also one of Starbucks' environmental activities. The company's goal is to use clean energy sources to minimize environmental impact and provide green energy to the community. Specifically, according to Starbucks global social impact report 2018, there are more than 900 Starbucks coffee shops in the US that are provided with 100% renewable energy. In addition, Starbucks also announced that it will partner with other companies to provide 100% renewable energy to stores around the globe. In addition, water is also one of the important resources in the process of business of Starbucks. Therefore, the company has set a goal of reducing water consumption in the store by 25%. To achieve that goal, Starbucks set up a low faucet and applied a manual water system. Unexpected results, the company has reduced its water consumption by 20% after 3 years of applying the above two measures (Starbucks n.d.) 2. Evaluate the CSR work of company 2.1 Stakeholder of the company Stakeholders of a company are defined as individuals, groups or organizations that may affect or be affected by a project's decisions, activities or results (Banghart & Stohl 2019). Stakeholders are divided into two main groups: the primary stakeholder and the secondary stakeholder. The primary stakeholder often benefits directly from business activities such as customers, communities, suppliers, employees while the secondary stakeholder is understood as external stakeholders having an indirect relationship with the organization that may be

5

affected or affected by the company's actions including competitors, government, media (Sweeney & Coughlan 2008). Employees: Starbucks always has priority CSR activities for employees. The company has created a working culture that focuses on the spirit and working environment of employees, encourages them to build friendly relationships and always considers employees as important partners. In order to expand the company's CSR activities, Starbucks made a decision to grant scholarships to their employees. According to the Global social impact report of Starbucks (2018), the Starbucks Global Academy in partnership with Arizona State University has created opportunities for more than 7,200 employees to enrol in this training program. Suppliers: Starbucks suppliers include farmers. Stakeholders in the company expect to be able to increase coffee productivity to increase income. Starbucks has also come up with some useful strategies that can help farmers as well as the company receive more benefits. According to the global social impact report of Starbucks 2018, the company has invested $ 21.4 million to help farmers access loans to improve farm systems and crop quality. 2.2 Carroll’s pyramid There are many researchers who analyse corporate social responsibility (CSR) in various aspects of the content. These responsibilities require businesses to meet the requirements of the law. Enterprises can only grow sustainably if they apply CSR to their business operations right from the start. Among the theories regarding this problem, Carroll's pyramid model (1991) is the most comprehensive and widely used. This model partly helps businesses visualize the goals that the company aims to implement in CSR. Based on this Carroll pyramid scheme in Figure 2, CSR includes economic, legal, ethical and charitable responsibilities. The company's first responsibility is to improve business efficiency and make a profit to maintain economic responsibility (Safi 2013). A company's profit is essential because it is a source of capital to enable the company to reinvest, expand its business, and increase its competitiveness. It can be said that economic responsibility is a fundamental element and foundation of the remaining responsibilities. Next, Carrol and Archie (2016) state that liability means businesses must comply with the laws and society. Specifically, businesses will pursue economic goals based on standards and rules in the laws. Ethical is the third responsibility in the pyramid, it means the norms and rules in society that businesses need to follow (Fadun 2014). For example, good relations with customers, the regime for employees to work overtime and keep credibility with customers. However, the actual implementation of moral responsibility is up to the decision of the business. Finally, corporate philanthropy is a voluntary voluntary activity of the business through donations and 6

community charity events (Carrol & Archie 2016). If an enterprise does not implement CSR at this level, it is still expected to fulfil the social responsibility.

Figure 2. Reproduced from:Dudovskiy 2012 In the case of Starbucks, the company has shown that it has followed Carroll's pyramid correctly when it has fulfilled its economic, ethical and charitable responsibilities. Starbucks is a multinational company and has branches all over the world even in developing countries like Vietnam. This is considered an ethically responsible action that the company has taken. In addition, Starbucks has also shown itself to be a responsible corporate philanthropist when leading charitable activities through the Starbucks Foundation. However, the company has yet to meet its legal responsibilities and there is evidence that Starbucks has been denounced. The company has been given a social license and suspended due to tax evasion. According to Christians (2013), Starbuck had to pay £ 20 million in taxes to restore the license. IV.

Recommendation

Through analysis and evaluation, Starbucks has successfully completed the CSR activities required of a business. In particular, the company has created the best conditions for the parties involved and also adheres to economic, ethical and charitable responsibilities. However, it can be seen that the company mainly focuses on building relationships with suppliers, the environment, the community and customers. To better operate Starbucks' CSR, they need to improve employee policies and liability. Firstly, for employees, although the company has tried to create an equal and diverse working environment but not fair in some

7

cases. Transgender, immigrants and black barista staff have been discriminated against by others at Starbucks (Cramer 2020). It is important to balance the percentage of black people in the company system because this will be an opportunity to connect employees' relationships with each other as well as reduce the stigma for black people. For example, companies can improve benefits for blacks such as providing insurance and fair wages. In addition, the company should also provide anti-discrimination training as well as incorporate anti-racial provisions into the agreement between employees and Starbucks to create a fair work environment. Second, the legal issues that the company violates in the UK are unacceptable. The best solution is that the company should consult and find out details about legal issues through experts to avoid this situation. In addition, the company should do its best in future projects to rebuild the image of a reputable brand in the eyes of customers and partners. V.

Conclusion

In short, Starbucks is a company with many coffee shops spread all over the world. The company has a large customer base because Starbucks offers quality coffee with the best service attitude. In addition, Starbucks also participates in CSR activities that are meaningful to the community, the environment and provide ethical sourcing. The company wants to build Starbucks as a brand with successful business operations but also a trusted brand of the community. Therefore, the process of being responsible for society is considered to be the most effective strategy to maintain the sustainable development of Starbucks as well as help the company successfully carry out the work of balancing the economic benefits and ensuring ethics in the organization. The company has also tried to meet all the requirements of stakeholders such as employees and suppliers. However, the company needs to pay more attention to its staff and legal responsibility to improve the company's CSR activities getting better and better. VI.

References

Afzal, S & Thiengnoi, P 2009, A COMPARATIVE ANALYSIS OF CSR STRATEGIES, IMPLEMENTATION AND OUTCOMES: A Qualitative Case Study of IKEA, Starbucks and H&M. Banghart, S & Stohl, C 2019, Managing corporate social responsibility stakeholders in the age of social media, 1 edn, Routledge. Carroll, AB 2016, 'Carroll’s pyramid of CSR: taking another look', International journal of corporate social responsibility, vol. 1, no. 1, p. 3.

8

Chapple, W & Moon, J 2005, 'Corporate social responsibility (CSR) in Asia: A seven-country study of CSR web site reporting', Business & society, vol. 44, no. 4, pp. 415-441. Christians, A 2013, 'How Starbucks lost its social license—And paid£ 20 million to get it back', Tax Notes International, vol. 71, no. 7. Dudovskiy, J 2012, ‘Carroll’s CSR Pyramid and its applications to small and medium sized businesses’, image, Research Methodology, viewed 26 April 2020,< https://researchmethodology.net/carrolls-csr-pyramid-and-its-applications-to-small-and-medium-sizedbusinesses/>. Fadun, SO 2014, 'Corporate social responsibility (CSR) practices and stakeholders expectations: the Nigerian perspectives', Research in Business and Management, vol. 1, no. 2, pp. 13-31. Ritter, D 2014, ‘3 reasons it's hard to hate Starbucks’, USA TODAY, viewed 25 April 2020,. Safi, A 2013, 'Corporate social responsibility and consumer behavior: A study from Pakistan', Information Management and Business Review, vol. 5, no. 4, pp. 194-202. Starbucks 2018, Global Social Impact Report, company report, Starbucks, viewed 27 April2020,. Starbucks n.d., ‘Diversity at Starbucks’, chart, Starbucks, viewed 26 April 2020,< https://...