social responsibility and brand strength

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Starbucks Mission: Social Responsibility and Brand Strength


Contents

Introduction ..................................................................................................................................... 4

Social responsibility in overall corporate strategy of Starbucks..................................................... 5

Uniqueness in giving high level of benefits to employees ............................................................. 8

Reason for rapid growth of the company...................................................................................... 10

Conclusion .................................................................................................................................... 13

References ..................................................................................................................................... 15


Introduction

Starbucks Coffee Company was founded in 1971 in Seattle and has operations in more

than 50 countries of the world with more than 16000 stores. The main backbone of the overall

business of Starbucks is its retail stores that are operated by its own self. The mission of the

company is to inspire as well as nurture the spirit of human with one person, one cup and one

neighbourhood at a time (Starbucks Company Profile 2012).

The company is known for coffee and other products of high quality that are available at

accessible locations and affordable prices with a high coffee drinking experience and variety of

choices. The company is also known for its good business practices with strong value of ethics.

In 2010, the company was voted as one of the most ethical businesses for the 4th consecutive

year by the Ethisphere magazine (Ferrell et al 2009).

Starbucks has attained amazing level of growth since its establishment with creation of

financial success for stakeholders. The company responds well to changes in the environment by

adopting strategies that suits the changing business environment. For instance, slowdown of

global expansion and operations after economic crisis of 2008-09, and focusing more on quality

of coffee with introduction of drinks and other products for budget conscious people, etc, show

strategic decisions taken according to the need of the environment (Ferrell et al 2009).

The essay discusses the brand strength of Starbucks with its activities related to the social

responsibility and sustainability so as to gain insights on concern of social responsibility in

corporate strategy of Starbucks, and brand strength of the company regarding employee benefits

and customer service.


Social responsibility in overall corporate strategy of Starbucks

Social responsibility has become one of the most significant and followed business trends

for the past decade. Many global organizations are making their way to consider and understand

the importance of social responsibility. Starbucks has included social responsibility as a part of

its overall corporate strategy and functions accordingly. The initiatives of the company such as

green team for educating partners of the company, reduction of waste through the process of

recycling and having focus on conservations of energy, as can be seen in offering of recyclable

tissues in their stores to customers, etc. (Being a Responsible Company 2012)

The company is concerned about the social responsibility initiatives as part of their

overall corporate strategy as they want to defend their image, and the financial as well as non-

financial rewards that they get by following this strategy and achieving growth and

differentiation in terms of how the company operates in the industry.

The company is indulged in social responsibility activities from day one of its

establishment. Besides the corporate social responsibility, the company also tries to instill a

sense of personal social responsibility as a result of the partners of the company are also involved

in following this strategy. ‘Make your Mark’ is the program launched by Starbucks wherein the

company makes a contribution to the non-profit activity if the supplier contributes his bit and

volunteers for the activity. For every one hour volunteering of suppliers, the company

contributes $10 to that non-profit (Starbucks Corporation Serving More Than Coffee 2012).

It works for the company to defend its image of a socially responsible organization. The

launch of Shared Planet website has the goal of achieving greater involvement of communities,

environmental stewardship, and achieving ethical sourcing. It keeps customers aware of latest


developments and initiatives taken by the company in social responsibility initiatives, thus

maintaining its image among customers.

The company does so as to create an impressive image and positive impact on its

customers as it feels that customers are concerned about how a company carries on its operations

and what reputation it holds in the market (Peng 2009).

Along-with defending and maintaining its image of socially responsible company which

it has maintained from its inception, the other reason for the concern is financial and non-

financial rewards. As ethical and socially responsible companies do better in the long terms

business operations, the company strives to maintain its clean image. Through involvement of

employees and suppliers in its social responsibility initiatives and dedication towards their

betterment has earned the company their loyalty. The employees feel proud to work for the

company and it is seen in the low turnover of employees in Starbucks (Fellner 2008).

When customers who come to stores see happy employees in long-term, it gives them a

reason to come back to the store with the presence of inviting and positive atmosphere of the

company and experiencing great quality of coffee. It is the non-financial reward for Starbucks

that it gets through its social responsible attitude. In terms of financial reward, as customers see

the company as a socially responsible company following the guidelines of their corporate

strategy and mission statement, customers show their loyalty to the company and promote the

company and its products to family, friends and co-workers, thus helping in increasing the

growth and revenue of the company through continuously increasing and loyal customer base

(Bussing-Burks 2009).


The approach of the company to give due importance to building up of an enduring and a

great company that keeps an absolute balance between the profitability and a socially responsible

attitude keeps its concern towards being a responsible company with inclusion of such

considerations in overall corporate strategy of the company (Epstein 2007).

The Starbucks Company strives to makes its mark on the global coffee industry platform

through giving benefits to local community, surroundings, suppliers, employees and customers.

The way in which a company conducts itself motivates the buyer to buy the product or the

service of the company. The global coffee industry is huge with involvement of 15 billion

pounds of coffee every year. In this big industry, Starbucks buys only approximately 1% of the

total coffee. Therefore, being remaining as the small player in the overall market, the company

has managed itself to make a big player in terms of the impact it has on its customers through the

great coffee experience delivered to customers and making them visit the store again by having

the socially responsible attitude that is shown in its stores as well when one visits any of the

stores of the company (Starbucks Corporation Serving More Than Coffee 2012).

Initiatives, such as making the cups of Starbucks more eco-friendly by switching from

polyethylene to polypropylene, which is more eco-friendly and the aim of achieving 100 percent

reusability and recyclability by the end of year 2015, keeps it connected to customers and other

stakeholders of the company as image of the company is maintained, and it stands apart from its

competitors through this strategy. As the company believes in continually relating its decisions

back to the guiding principles it set during its establishment, it is concerned about being socially

responsible which one of the guiding principles of the company is (Benabou & Tirole 2010).


Uniqueness in giving high level of benefits to employees

The founder of Starbucks, Howard Schultz has always given due consideration to the

creation of the good and endearing work environment. The company offers one of the best health

care programs in the coffee shop industry. The low employee turnover and presence of high

productivity in the company shows how important employees are for Starbucks. As the company

believes that it is in the business of people serving coffee, it gives due importance to personal

interaction (Starbucks Company Profile 2012).

The uniqueness of the company in giving health benefits to its employees took the toll

over the overall investments made on the raw materials that are required to brew the coffee. The

insurance costs have doubled in digits for some consecutive years for the Starbucks Corporation,

reflecting company’s concern to give high level of benefits to its employees (Werther et al 2010).

Benefits package given by Starbucks Corporation is one of the key reasons for low

employee turnover in the company and employees aligned towards giving high level of

productivity. The company has created its organization around its employees and they are one of

the most important assets as well as a source of competitive advantage for the company. The

stock ownership programs for employees have helped in creating a workforce that takes pride in

doing its work and is treated with company (Year in Review: Fiscal 2011 2011).

The total pay package of the Starbucks’ employee makes the company unique in

providing high level of benefits to its employees. Workers, whether working full time or part

time are considered as partners and are entitles to receive benefits related to health and medicine

along-with dental and vision benefits. Employees working for the company for more than 20

hours a week are entitled to receive stock options, known as Bean Stock. Workers have the


options of participating in a variety of programs run by the company for them in accordance to

their need or interests. The total pay package of the partner includes benefits, stock options,

savings plan, employee stock purchase plan and partner perks that are designed exclusively for

people working for Starbucks (Werther et al 2010).

They are also allowed to purchase stocks of the company at a discounted price on a semi-

annual or a quarterly basis. Besides the pay benefit programs, the other unique benefit that the

employee of Starbucks gets is conducive working environment where diversity is respected. It is

the part of the value system of Starbucks. People with disabilities are hired to be put in a variety

of jobs pool. The diversity training programs that are designed and offered to employees gives

the employees the benefit of understanding role of every employee in creating a health work

atmosphere along-with awareness of diverse needs and requirements of the co-workers as well as

customers (Facts About Starbucks and Our Partners (Employees) 2009).

Moreover, the workplace policies ensure giving equal employment opportunity to

employees and there is strict prohibition of discrimination on any basis that is prohibited by law.

Another high level of benefit provided to employees is empowering them to give feedback to the

management through various channels. Starbucks also provide flexible working hours to its

employees which is unique benefit. Optimal Scheduling is the program launched by the company

in 2008 under which more working hours are provided to those partners who are available for the

work so as to provide them the benefit of more predictable and consistent weekly schedules. It

also provides the chance to build a cordial relationship with customers who also want see their

favourite baristas on a regular basis (Facts About Starbucks and Our Partners (Employees)

2009).


The staff turnover of Starbucks is 120% lower than the average turnover. According to

the Motivational Patterns Theory of Katz and Kahn, rewards and attainment of instrumental

satisfaction can help in bringing upon essential behaviours at the workplace. These rewards and

instrumental satisfaction includes incentives on pay, promotions on job performance and getting

social appreciation from the company itself. Starbucks strives to provide all these rewards and

institutional satisfaction, as a result of which satisfaction rate of the employees in the company is

high and unique in comparison to average rates (David 2009).

However, continuously rising cost of health benefits provided by the company, and which

is considered as one of the best health benefits offered in the industry, is an issue for the

company as it is challenge for it to continue having good relationship with employees and

ensuring that their decisions are guided by principles and values established long back by

founder of the company. As long as the company holds on to its guiding principles and values, it

will remain able to provide unique high level benefits to its employees as the mission of the

company states giving due importance to people working for the company and give them all

respect and dignity they deserve, so that they can remain satisfied and provide best of them

towards attaining goals and objectives of the company (Wilk 2006).

Reason for rapid growth of the company

Starbucks has seen rapid growth since its establishment and this success can be attributed

to the strong brand image that the company has built over several years. Initially, consumers can

buy the products due to the high quality of the product and service, and environment of the café

stores of Starbucks, but in the end, the image of the company as being socially and ethically

responsible has worked for rapid growth of the company (Pahl 2009).


Satisfied and highly motivated staff of the company creates a positive working

environment which also helps in building cordial relationship with customers.

However, the quality of the product and offering of product and environment are key factors in

making the company successful and see rapid growth. Customer service holds great importance

to Starbucks and after the global economic crisis, the company rethought of its strategy leading

to shutting down of stores, introduction of new food and drinks for budget conscious people, and

refocusing on the core product of the company. The overall Starbucks experience that the

customer gains by visiting the stores of the company including pleasing environment and great

customer service further push the customer to visit the store again and even pay the high price

for the products they are consuming due to the quality of the product (Carroll & Buchholtz

2011).

The company has faced several criticisms for some of its policies and programs including

clustering strategy that is aimed at opening of more and more stores in the same vicinity, and

making many small businesses of coffee shops running out of work, use of genetically modified

milk and fair-trade coffee (Ferrell et al 2009). However, the company has always focused its

activities to be socially and ethically responsible.

The quality of product that the customer gets is due to the reason that Starbucks has clear

and strong focus on its products’ quality as health and safety of customers are significant for the

business. It is under the social policy of the company to ensure that processes are hygienic and

clean, with inclusion of good facilities and service in the Starbucks stores (Being a Responsible

Company 2012).


The socially and ethically responsible attitude adopted by Starbucks for its suppliers

ensure long-term relationship with suppliers as well as sellers which paves way for rapid growth

of the company. Payment of premium prices by the company to coffee farmers helps them to

make good profits so that they can strongly support their families (Pride & Ferrell 2011).

Through ethical sourcing, the company acquires responsible purchasing practices,

supports loans for farmers and contributes to forest conservation programs. It not only helps in

improving life of farmers, but also helps in creation and ensuring of long-term supply of coffee

beans that are of high quality which the company has been taking care of in terms of blending,

roasting and packaging for over 40 years. Therefore, the high quality product that the company

offers is due to supporting of the source of the coffee product i.e. farmers, which is the part of

social and ethical responsibilities of Starbucks (Lee & Lee 2007).

Furthermore, the concern of the company for its employees as a part of its social

responsibility has resulted in loyalty of its employees as a result of which the recruitment and

training costs are lower for Starbucks in comparison to other businesses in the same coffee

industry. The company also looks at its environmental costs being a socially responsible

company. Conservation of resources and reduction of waste leads to eco efficiency, and if the

company reduces waste in any of the major materials it uses, it leads to reduction of costs of the

company (Griffin 2008).


Presence of retail partners in the form of Green Team ensure that stores are operated in an

environmental friendly manner. It means that if the use of resources is reduced, the expenses can

also be reduced which is ultimately good for the business as it can focus on improving its

products with bringing in more superior quality with no extremely high prices, ultimately

ensuring growth and expansion of operations of the company.

Furthermore, a socially responsible company is the one which the people choose to

experience its products and services. When customers choose company by themselves, it results

into more sales and generation of more revenues (Liu & Liu 2009).

Therefore, it can be said that the success and growth of Starbucks is due to its social and

ethical responsibilities which it has promoted since its inception. Offering of products and

services according to what customer wants is also the factor responsible for Starbucks’ success,

but it is secondary in relation to the first factor.

Conclusion

Starbucks is a successful company in the coffee industry and is running successful

business over decades. It is able to differentiate itself from other competitors in the industry due

to the impact it makes on customers and other stakeholders of the company. The company has


integrated social responsibility in its overall corporate strategy for the reason of defending its

image and getting financial and non-financial rewards in the form of intangible benefits such as

loyal employee and customer base.

Starbucks is unique in providing high level benefits to its employee as employees are one

of the resources of the company to create sustainable advantage over long-run. Provision of best

health benefits which cost the company even more than the cost born by it for purchase of raw

materials, provision of flexi-timings, and excellent training programs for employees has helped

the company in creation of loyal and satisfied workforce.

The socially responsible and ethical behavior of the company has helped in its rapid

growth and success. Although, it has been criticized for some of its policies that cannot be said to

be ethical, the company has always foster its social and ethical activities that has resulted in

creation of a good image, strong brand and positive financial results as well over years due to

benefits accrued by these activities, which holds primary place in comparison to provision of

products and environment that customers want.


References

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