Busm4687 : Managing International Business Assessment Answers

This assignment is an opportunity for you to explore the CSR work of one international company in depth, and to evaluate this with reference to some of the core ideas, concepts and theories already presented in this course.

• Core concepts and theories from this course.
• The CSR literature (e.g. on the relevant sector or company)
• Reference to wider CSR initiatives
• Media reports, and critiques from various stakeholders (including NGOs and unions).

For example, you might use Crane et al.’s ‘Core characteristics of CSR’; Carroll’s pyramid; stakeholder theory; and/or the GRI reporting criteria to help you evaluate what is good about the approach taken by the company, and what is missing or what it could do better.

Does the company’s CSR work appear to address its core social and environmental impacts, and its key stakeholders?

Based on the analysis and evaluation you have done in part 4, you need to provide some recommendations as to how you think the company could improve its CSR work. You must clearly explain and justify your recommendations with reference to your evaluation in part 4.

Introduction: 

This report brings out the discussion of CSR (corporate social responsibility) of a company named Starbucks. Companies have the responsibility and obligation to practise CSR (corporate social responsibility) to make their operations sound by working for business and social environment. In this report, Starbucks has become successful in the corporate world of with its effective CSR Activities. Corporate social responsibility involves a code of conduct, which is defined to be achieved in the mission statement of the company to become profitable and obedience to the law, follow ethics and support the environment and society by contributing money. In recent era, the competition has no longer only limited to high financial performance but also extends to company`s CSR activity performance (Starbucks, 2010).

Employees and consumers are satisfied with well performing CSR of Starbucks. The annual reports of the company shows how actively the company has linked its combination of activities to the social, economic, and environmental perspective. Apart from identifying the CSR activities of the Starbucks, the report has also evaluated the CSR activities of the company through the core characteristics of CSR. The company has strategized the usage of innovative technology to reduce the cost without harming the environment. The report intends to find out how Starbucks deals with social responsibilities both in internal as well as external business environment. Mainly the company focuses on five principle areas based on value based services and core characteristics of the CSR (Spence, 2016).  

Overview of your chosen company

Starbucks Company is an American coffee organisation and chain of coffeehouses. Starbucks was founded in Settle, Washington in 1971 and is well known premier roaster, retailer, and marketer of special coffee all around the world. That time, the company was also the merchant of whole bean, ground coffee, spices, and tea. As of now, it operates 28218 retail cafes worldwide. After 2008, Starbucks continues to expand in Argentina, Brazil, Belgium, Portugal, Europe, Poland, Sweden, Netherlands, Bulgaria, and South Africa. It is also considered as “second wave coffee” which distinguishes it from other coffee servers due to its taste, customer experiences, and tastes (QSR, 2008).

The Company provides high quality coffee to the customers and focuses on product innovation, expansion of its retail stores to provide best quality service to customers. Starbucks has created its successful brand image by providing soothing and comfortable environment with high quality coffee to the customers. Currently, Starbucks is able to position its fame and has a leading position among all the brands of coffee (Fediuk, 2012). The company has wide variety of offerings such as beverages, fruit, breakfast, snacks plate, nutrition and bakery food but most importantly it offers brewed coffee. The company has three major operating segments and each segment indicates and generates a considerable percentage of revenue each year such as United States, International and global consumer product group. The long-term objective of Starbucks is to maintain a standing and most respected image of the brand. To maintain the brand image, Starbucks planned to continue disciplined global expansion of its stores and introduce relevant product in all the distribution channels (Nollet, Filis, and Mitrokostas, 2016).   

Analysis and evaluation of the CSR work of Starbucks. 

Starbucks shows strong commitment towards fulfilling its corporate social responsibilities with an aim to create a positive image in the society. Starbucks has transparency especially while dealing with consumers and media through events. The company is well known for its well conduct of corporate social responsibilities, good governance, and ethical conduct. Starbucks has strived to form strategies which could increase the shareholder`s value. Starbucks focuses on maintaining the connection between stakeholders and the company (Wofford, MacDonald, and Rodehau, 2016). Starbucks made committable approach to its CSR activities, which enables it to create a differential image of Starbucks. As far as the stakeholders are concerned, the company pays the salary or the compensation to its employees based on the hours laws and regulations that means Starbucks take care of the other benefits fairly (Wang, 2012).

Starbucks strongly believes that all the partners should be treated as well as possible as every person has its self-esteem and honour without irritating, any biasness, and insulting. Moreover, Starbucks ensures that partners work in a friendly environment. The top-level management and the employees (partners) have cooperated and coordinated to each other to follow the safety regulations, training and practises to prevent and provide a safe environment for employees from accidents (Sethi, and Schepers, 2014).

The company has a list of sustainability initiatives, which Starbucks adopted-

Many Starbucks retail stores across the world undertook commercial recycling of waste such as milk jugs and cardboard. Starbucks promoted by taking initiatives towards local communities to make the recycling process easier. In 2009, the company provided recycling training to nearby homes in the key market in U.S (Ross, Pandey, and Ross, 2015). Starbucks has undertaken a number of initiatives to prevent the environment from the adverse effect of disposable cups. The company has also hosted a cup summit in which manager of value chain of paper cup strived to find a good recycling solution for cups. Starbucks has also offered a 10% cost reduction to people who brings back their used cups (Harbi et al., 2015).

Starbucks know that that the retail stores of the Starbucks in different countries constitute and create 80% of the carbon footprint. However, it is important to save the energy and increase the energy efficiency of these retail stores to reduce their contribution to climate changes. In 2012, around 20% of the total electrical energy is derived from renewable sources for the retailer stores in US and Canada. Starbucks has invested in various plants to make new, energy efficient lights and HVAC (heating, ventilation, and air conditioning) systems in retail stores (Nikolova, and Arsi?, 2017).

The above statistics reveals that GHG emissions of 1006954 metric tons in 2010 which reduced to 979963 metric tons in 2011. The company succeeded to reduce its GHG emissions by 2.7% in overall basis.

While understanding the social responsibilities, Starbucks has partnership with conservation International association to provide developing proper guidelines to address the ethical sourcing of coffee. These practises and set of guidelines through Coffee and Farmer Equity (CAFE) Practises have allowed the farmers to grow coffee beans in such a way that it is not only beneficial for the people around but also good for the planet. For example- there is an immense need to understand the importance of conserving the energy and maintain the quality of water to conserve the biodiversity (Katamba, and Akora, 2017). Starbucks found and discovered another way to improve the environment through their retail stores directly by “going green.” Starbucks took its first step in Manhattan to produce a green store. The company plans to renovate the retail store “Manhattan” which lead to replace the old equipment with more efficient ones. To educate the people about plaques, the store explains it the new green elements and their working. The new retail store conserves energy, material, water at Manhattan and undertakes to understand the importance of water. This time Starbucks decided to buy 100 percent responsible grown and traded coffee. The responsibly grown coffee plants will not only benefit the environment but also benefit the farmers as well. The main goal of the company is to engage in fair trade. Although, it results in more costly to the company but the environmental improvement is more important. Responsibly grown coffee plant can save energy and water in the farms (Hamidu, Haron, and Amran, 2018).  

The company created Ethos Water fund to help the people in raising awareness among people of the fact that more than one billion people in the world do not have access to clean water to drink. This fund known as “Ethos Water Fund” helped the children to access clean drinking water. Whenever, a person purchases a water bottle of Ethos Water from the store, a portion of purchase price goes into the account of the fund. Ethos water fund was able to collect more than $6 million dollars and helped 42000 people all around the world (Glowik, 2017).

Evaluating the Starbuck`s through core characteristics of CSR and stakeholder approach

While studying the global interest in the CSR standard, some important global CSR initiatives such as UNGC (United Nations Global Compact) and GRI (Global Reporting Initiative) were discovered and unveiled in 2000 (Ortas, Álvarez, and Garayar, 2015). The UN Global Compact is both a practical framework as well as policy platform for the companies that lead to sustainable commitment and responsible practises of business. GRI (Global Reporting Initiative) is another network-based organisation that released its set of CSR guidelines in 2000 (Camilleri, 2015).

GRI invited the corporations to describe and elaborate how certain companies fulfilled shareholders expectation in form of a report. After the popularity, which the concept of CSR has received, GRI newly released news, reports motived the organisation to perform their CSR activities well. The increasing interest about the concept CSR is seen in the special issue of Time magazines. Whether the company started focusing on which incorporating ethical practises into their operations (Wen, and Song, 2017).  In 2009, the report revealed that Starbucks has strived to purchase its coffee through fir trade coffee by 2015. Moreover, the company was able to manage and control its carbon emission by 20% from 2003-2008 (Fassin, 2009).

The core characteristics of CSR are the important features, which tend to be visible in CSR practises. The major characteristics are-

Voluntary- CSR includes all the related set of corporate initiatives, which extends beyond what is prescribed in the law. Many companies in developing countries have become familiar and more willing to accomplish the social obligations, which are beyond legal minimum. Moreover, development of self-regulatory CSR initiatives on the behalf of the corporate houses is seen as a way to avoid additional rules and regulations by the law compliance (Hawkins and Emel, 2014). While associating this core characteristic with Starbucks, the company is concerned with committing improvement in environment. Starbucks planned to renovate its twelve retail stores to make each store a Leader in Energy and Environmental Design (LEED). LEED improves the performance by saving energy, increasing the water efficiency, and reducing the carbon emission. As per the Starbucks, going green may overweighs the upfront cost (Azar, Schmalz, and Tecu, 2018).  

The above diagram reveals that the average water usage per square foot and month has reduced in operated stores in US and Canada. During 2014, the company managed to save 23% to the baseline levels set in 2008. LEED stores contributed a lot to take saving water initiatives.

Managing both internal and external environment- External environment in CSR refers to all those factors, which has direct effect on the stakeholder rights. Environmental degradation is regarded as an external because production process may negatively affect the public. CSR and legal regulation can lead to internalise the cost of externalities by imposing pollution fines on corporates. Moreover, CSR has always remain a viable discretionary approach to manage the externality by taking safety measures and reducing the pollution by going green (Boone, 2017). Many CSR activities deals with workers’ rights and managing good stakeholder relationship. Associating Starbucks CSR activities indicates that it has used Stakeholder approach defines that the company is not only responsible to its owners but also has the obligation to fulfil its responsibility towards various stakeholders such as employees, business partners, customers, and government (Aqueveque, Rodrigo, and Duran, 2018).

Maximisation of shareholder`s value is the supreme deed which helps the organisation to make decision-making. A decision making process to increase the shareholder`s value should be within the limitation of law. The central aim of stakeholder management is to identify the orientation of which is based on three attributes defining power, urgency, and legitimacy of the claim. Starbucks has committed to shareholder needs by giving them large portion of earning as dividends. Stakeholders are always very concerned about the dividends, which they will receive from the company. Starbucks pay higher dividends, which ascertains about the financial well-being of the company. Moreover, Starbucks plan to purchase 15 million more of shares of stock that will attract investors. Stakeholders also includes business partners or employees (Aminu, Harashid, and Azlan, 2015).

Starbucks proved its commitment by taking care of its employees and workers. The company undertook health care policy, compensation and stock options as an important part of people`s life. Starbucks introduced policy that states that once an employee work for 20 hours a week they get benefits and incentives including health insurance benefits on the behalf of the company. The company do not exclude benefits for its part-time workers. They treat their all the workers equally. Starbucks does not have typical working hours as office job. Along with this, the part time workers may also work in odd shifts. Starbucks also showed that treating its employees well is important part to maintain dignity of the individuals (Petrenko et al., 2016). The CEO keeps humanity and compassion at its superior. While analysing Starbucks corporate website, it can be determined that Starbucks differentiates CSR communication and adapts it to address the decision of diverse stakeholders. The CSR mission statement of the company targets ethical sourcing, environmental stewardship targeting at suppliers, investors, relators, NGOs, regulators (Wofford, MacDonald, and Rodehau, 2016).

Recommendation:

Although, the company engages and maintains its business ethics very well but there is still a possibility that Starbucks work with the law to operate its business. CSR can lead to increased sales volume and improved financial performance. The recommendation calls for future research on Perception of customers towards fulfilling CSR, whether the suppliers are interested to operate with a company who bears cost just to fulfil CSR activities and finding the setbacks of the companies in which the company has not participated till now.

Usually Starbucks provides high priced premium coffee, although it considers good environmental concerns, facilities, and a good image. Moreover, the competitors are not far behind in the execution of CSR activities. For example- Dunkin donuts and Mc Donald provides the same facilities, which Starbucks do. Starbucks has the advantage of performing well among its competitors. Raising the cost of the coffee is no way solution to solve environmental issues. Other companies have the price strategy to attract customers. Starbucks even do not provide discount policies. Therefore, this point of policymaking demands flexibility in business strategy.  

Conclusion:

The main objective of this report is to analysis and investigate how Starbucks succeeds in its business by performing its CSR obligations. Especially, while going through mission statement of the company, the statement talks about the business, which uses several components to build a good relationship with its partners, employees, stakeholders, suppliers.

The other interesting step to improve its CSR activities is its interesting code of conduct. The code shows how Starbucks collaborated with farmers to gain high quality coffee beans, which can improve farmer’s life as well as the environment. Moreover, Starbucks regulates and run its business by using CSR (corporate social responsibility) tool, which includes every sector of the business. Starbucks is really very much concerned about the environmental protection.

The company introduced new technology and equipment in the retail store of Manhattan to improve the effectiveness of its operations and reduce cost and at the same time preserving environment was equally considered. The company has efficient social strategies to bind and cooperate with its employees, suppliers and stakeholders. The company has also undertaken a number of activities to encourage society and create long-term relationships with stakeholders. Starbucks not only perform its business activities but also strive to keep its stakeholders happy.  

References:

Aminu, H. A., Harashid, H. M. and Azlan, A. (2015) Corporate Social Responsibility: A Review on definitions, core characteristics and theoretical perspectives. [online] Available on: https://mpra.ub.uni-muenchen.de/75040/1/MPRA_paper_75040.pdf [Accessed on 13/09/18]

Aqueveque, C., Rodrigo, P. and Duran, I. J., (2018) Be bad but (still) look good: Can controversial industries enhance corporate reputation through CSR initiatives?. Business Ethics: A European Review, 27(3), pp. 222-237.

Azar, J., Schmalz, M. C. and Tecu, I., (2018) Anticompetitive effects of common ownership. The Journal of Finance, 73(4), pp. 1513-1565.

Boone, C. (2017) In the News: An Exploration of Starbucks and the Media. [online] Available on: https://trace.tennessee.edu/cgi/viewcontent.cgi?referer=https://scholar.google.co.in/&httpsredir=1&article=3101&context=utk_chanhonoproj [Accessed on 13/09/18]

Camilleri, M. A., (2015) Valuing stakeholder engagement and sustainability reporting. Corporate Reputation Review, 18(3), pp. 210-222.

Dudovskiy, J (2017) Starbucks CSR: Corporate Social Responsibility. [online] Available on: https://research-methodology.net/starbucks-csr-corporate-social-responsibility/#_ftn1 [Accessed on 14/09/18]

Fassin, Y. (2009) the Stakeholder Model Refined. Journal of business ethics, 84(1), pp. 113–135.

Glowik, M., (2017) 4.7 Case study: Starbucks. Global Strategy in the Service Industries: Dynamics, Analysis, Growth, p. 156.

Hamidu, A. A., Haron, M. H. and Amran, A., (2018) Profit Motive, Stakeholder Needs and Economic Dimension of Corporate Social Responsibility: Analysis on The Moderating Role of Religiosity. Indonesian Journal of Sustainability Accounting and Management, 2(1), pp.1-14.

Harbi, S., Margni, M., Loerincik, Y. and Dettling, J., (2015) Life cycle management as a way to operationalize sustainability within organizations. In Life cycle management (pp. 23-33). Netherlands: Springer.

Hawkins, R. and Emel, J. (2014) Paradoxes of ethically branded bottled water: constituting the solution to the world water crisis. cultural geographies, 21(4), pp.727-743.

Katamba, D. and Akora, M. E., (2017) Corporate Social Responsibility Implementation-Lessons from Uganda. Makerere Business Journal, 13(1), pp. 47-69.

Nikolova, V. and Arsi?, S. (2017) THE STAKEHOLDER APPROACH IN CORPORATE SOCIAL RESPONSIBILITY, Engineering management, 3 (1) pp. 24-35.

Nollet, J., Filis, G. and Mitrokostas, E., (2016) corporate social responsibility and financial performance: A non-linear and disaggregated approach. Economic Modelling, 52, pp. 400-407.

Ortas, E., Álvarez, I. and Garayar, A., (2015) the environmental, social, governance, and financial performance effects on companies that adopt the United Nations Global Compact. Sustainability, 7(2), pp. 1932-1956.

Petrenko, O.V., Aime, F., Ridge, J. and Hill, A., (2016) Corporate social responsibility or CEO narcissism? CSR motivations and organizational performance. Strategic Management Journal, 37(2), pp. 262-279.

QSR, (2008) Starbucks Makes Corporate Social Responsibility Report Public. [online] Available on: https://www.qsrmagazine.com/news/starbucks-makes-corporate-social-responsibility-report-public [Accessed on 13/09/18]

Ross, R. B., Pandey, V. and Ross, K. L., (2015) Sustainability and strategy in US agri-food firms: An assessment of current practices. International Food and Agribusiness Management Review, 18(1), pp.17-48.

Sethi, S. P. and Schepers, D. H., (2014) United Nations global compact: The promise–performance gap. Journal of Business Ethics, 122(2), pp.193-208.

Spence, L. J., (2016) Small business social responsibility: Expanding core CSR theory. Business & Society, 55(1), pp. 23-55.

Starbucks corporation, (2018) Climate Change. [online] Available on: https://www.starbucks.com/responsibility/environment/climate-change [Accessed on 14/09/18]

Starbucks, (2010) Our Starbucks Mission. [online] Available: https://www.starbucks.com/aboutus/company-information/mission-statement [Accessed on 13/09/18]Fediuk, T. A. (2012) Corporate Social Responsibility & Starbucks. [online] Available on: https://www.sustainicum.at/files/projects/315/en/additional/Corporate%20Social%20Responsibility%20%20A%20case%20study%20of%20Starbucks%20CSR%20communication%20through%20its%20corporate%20website.pdf [Accessed on 13/09/18]

Wang, W. (2012) TOP TEN SUSTAINABILITY INITIATIVES OF STARBUCKS CORPORATION. [online] Available on: https://cleantechies.com/2012/02/20/top-ten-sustainability-initiatives-of-starbucks-corporation/ [Accessed on 13/09/18]

Wen, J. and Song, B., (2017) Corporate ethical branding on YouTube: CSR communication strategies and brand anthropomorphism. Journal of Interactive Advertising, 17(1), pp.28-40.

Wofford, D., MacDonald, S. and Rodehau, C. (2016) A call to action on women’s health: putting corporate CSR standards for workplace health on the global health agenda. Globalization and health, 12(1), p. 68.