Starbucks Coffee Corporation is a world renowned Fortune 500 company headquarter in Seattle, Washington USA. It was founded in 1971 with the sole mission to bring the unique Italian coffee experience to the masses. Its CEO Howard Shultz has successfully created a company brand where customers identify its coffee to a distinctive and premium experience. Starbucks Coffee currently has over 18,000 stores worldwide across 60 countries on six continents, and with a market capitalization of over $USD 50 billion. Ranked in American Express/SAP survey as 49 of the Top 100 global retailers, and consistently on the list as one of the best global corporations to work in Forbes magazine, the Starbucks brand is synonymous with success (Starbucks: Global Coffee Giant Has New Growth Plans. 2013). Starbucks Coffee Corporation’s Stewardship in how it conduct Business Starbucks leadership knew that its frontline workforce, or its retail store workers such as baristas, shift managers, and store managers are at the heart to success for the company. Treating the frontline workers well will ensure happy employees who will in turn safeguard the image and values that the company stand for, which keep customers loyal to the brand. Working in the retail sector typically comprise of poor benefits, non-existent or poor healthcare, and low pay.
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However, Starbucks is one of the very few retail companies that provide health benefits to all its employees referred to ‘partners’ at the full time and part time level. Its partners are offered competitive base pay, equity in the company in the form of Bean Stock, 401(K) saving plan with employer matching, tuition reimbursement, paid vacation, short-term disability, and product discounts. In the current sluggish economy, companies that used to offer benefits to part time employees have pared back such as Walmart (7 Companies Offering Health Care to Part-Time Workers. 2011), while Starbucks remain committed to its employees and continue to provide benefits to all its workers.
Taking care of its employees or partners isn’t its only practice of stewardship. It exist across the entire corporation from business practices, supply chain, and investments. Starbucks’ company mission statement explain what it is all about: Our mission: to inspire and nurture the human spirit-one person, one cup and one neighborhood at a time.
Social responsibility is at the core of its mission statement and touches:
1. Environmental considerations and recommendations (planet)
2. Ethical leadership considerations and recommendations (people) 3. Organizational viability considerations and recommendations (profitability) Starbucks Corporation already has a well-executed strategy for social responsibility, in this paper I will discuss its current strategy and introduce a new direction, and to make it better through transformation.
Starbuck’s current social responsibility strategy is based on the following themes:
2) Ethical Sourcing
In this section I will explain how each of the three focus are associated to the three social responsibilities of a) planet b) people c) profitability.
What Starbucks is Currently Doing
Starbucks has a close involvement with the communities that its retail coffee stores are located. Starbucks leadership is committed to helping out the communities that its stores are located. It established an initiative to get its employees involved with making their communities better. A month out of every year it conducts a program called the Global Month of Service initiative, where Starbucks employees lead community service projects focus on the individual needs of the neighborhood where they live and work. Since the program’s inception in 2011, volunteer hours have increased 40% more than the year before, with a goal of 1 million hours in 2015.
What It Should Do Next
Hitting 1 million volunteer hours in one month by 2015 seems quite a feat, however when you factor the total Starbucks 150,000 global employees, the contribution of hours is not so significant. That equates to roughly 6.7 hours per employee in a month timeframe. Starbucks leaders should make volunteering mandatory for all its employees and a criteria in the employee’s annual performance review. By linking the program to an employee’s annual performance it would be more of an incentive for people to give more hours, than to think that it is purely voluntary. If during the Global Month of Service every employee can volunteer 2 hours every week for a total of 8 hours per month, at an employee base of 150,000 that means 1.2 million hours can be given.
Starbuck’s Ethical Sourcing
What Starbucks is Currently Doing
Starbucks’ is known for fair practices in everything that carry its brand. It spans from the merchandising of items carried in its retail stores, furniture used by its customers, to the coffee beans it uses in its lattes. Starbucks has integrated into its core business practices social responsibility known as ethical sourcing. Ethical sourcing is being concerned for the well-being of every worker from the top to bottom supply chain that produce any product that has the Starbucks logo. It is to insure that all companies sourced by Starbucks involved with creating its products, provide to their workers a fair-livable wage, sustainable work hours, and adhere to the highest standards of labor practices set forth by Starbucks. The sourcing of its product has a direct impact to Starbucks’ bottom line and profits. However profit margins does not take precedence over social responsibility, compromised or side stepped in the constant pursuits for corporate profits. Case in Point: In 2012 Starbucks assessed 128 factories and found that 36 of them failed its zero-tolerance standards. Even though its approach was to work with suppliers to correct the issues, it halted business until adequate resolution were implemented. While it was able to implement improvement plans with almost half of these factories, it stopped working with 15 factories that didn’t rectify the issues. Since the program started in 2006, it engaged with more than 500 factory assessments and worked with more than 70 factories on programs to improve standards.
Aside from internal practices, Starbucks is a member of the Global Social Compliance Program, and promoting externally the social responsibility of ethical sourcing best practices to other corporations. To lead and facilitate business-driven efforts to improve environmental and working conditions in the global supply chain of companies. To set itself has a model for other corporations to follow.
Source: http://www.gscpnet.com/structure-a-governance/task-force.html What It Should Do Next
Starbucks has implemented the practice of ethical sourcing. It is showing to other corporations the morality of how to be responsible, however the Global Social Compliance program is voluntary. My suggestion is for Starbucks to take the idea of Global Social Compliance to the next level in two stages, with the ultimate goal to create a global consortium that has one set standard to enforce ethical policies across all global industries:
1) Control Low Level global supply chain entities
Many global corporations utilize the same entities or sources for manufacturing and raw resources. The first strategy is to onboard these entities by granting them financial incentives, subsidies, and longer contracts if they join the Global Social Compliance Program. The caveat is they must use the money to re-invest in themselves by improving in technology or attributes to gain competitive advantage against its competition.
2) Once competitive advantage is attained, the overall cost of the goods or services will be lower compared to competitors. This makes it highly attrative to multinationals seeking lower priced sources. This will lead to an influx of business by multinationals towards these entities and possibly the demise of competitors, resulting in the overall reduction of players in the sector. Over time the multinationals will be so ingrained to these entities because of the lower cost associated with production and the lack of choices in pursuing other suppliers, that disjoining from them will adversely affect business. At that point, Starbucks can dictate to the entities that all multinationals that work with these entities to join a global consortium that adhere to Global Social Compliance and its policies, led and defined by Starbucks.
To keep the multinationals in the consortium, business advantage strategies can be implemented such as all members openly share in the cost of development of new technologies, which can be used by all or any members to gain competitive advantage in their respective industries against competitors outside of the consortium. Or as a consortium to collectively bargain for better rates of goods or services from entities outside the consortium.
Over time many companies will see the benefits of becoming a member of the consortium, than fighting against companies within the consortium. The consortium will wield substantial influence and political power as major corporations in the network span across national boundaries, and collectively use its clout to push positive global agendas.
What Starbucks is Currently Doing
Starbucks is heavily involved in helping care for our planet. It lead by example by reducing its operating costs and increase shareholder value through energy and water efficiency, while encouraging other corporations to do the same. As a company that relies on an agricultural product (coffee beans) as its core business, and the potential to effect geological conditions in the land used to grow the product, Starbucks is committed to strategies that safeguard against land erosion and deforestation through its involvement in the Conservation International (CI) project. Starbucks’ contribution to CI is to work with farmers in major coffee growing regions of the world, to provide monetary incentives if their direct action(s) lead to the reduction of carbon and protection of the environment. Source: http://www.starbucks.com/responsibility/environment/climate-change
What It Should Do Next
Starbucks is helping to save planet Earth a small step at a time. However it need to elevate the effort by doing the following:
1) Establish and join forces with the Bill and Melinda Gates Foundation Starbucks and the Bill and Melinda Gates Foundation are both based in Seattle Washington, less than 10 miles away from each other. Both organizations have different ideas on how to solve global issues, but share in the view that the planet is not sustainable without change. The Gates Foundation’s main driver to tackling global issues are through reducing extreme poverty and improving healthcare. The Gates foundation is the philanthropic arm of Microsoft Corporation’s co-founder Bill Gates, who is the world’s richest person. Bill Gates has endowed $USD 38.3 billion dollars to the foundation to fund global initiatives. Starbucks’ strategy to tackle global issues seem to be at the micro level compared to the Gates foundation; working with farmers and non-governmental organizations (NGOs), while the Gates foundation is funding initiatives at a macro or global level.
In the area of Global Health the Gates foundation’s annual funding of the program approaches the total annual budget of the United Nations World Health Organization (WHO). The Gates foundation has the political connection, prestige, and financial resources which Starbucks should leverage to further its Earth protection agendas. If Starbucks want to become a bigger player in solving the planet’s problems it need to align itself with an organization that does it full time, has the ear of the United Nation, and that is the Bill & Melinda Gates foundation. Joining forces with a powerhouse such as the Gates foundation, instead of providing incentives to farmers to promote ecological friendly programs in coffee growth areas, it can develop and give to all farmers technologies that can yield better crop output and use less water and land resources.
Source: http://en.wikipedia.org/wiki/Bill_%26_Melinda_Gates_Foundation 4.
Legal and regulatory considerations and recommendations
The suggestions outlined in this paper, to transform Starbucks’ social responsibility program it need to be within the legal framework for all the countries that the program applies to.
The creation of a global consortium to further its ethical sourcing objectives should be a program welcomed by many workers in third world countries who work for companies known for exploitation of its workers. Governments of these countries would welcome multinationals such as Starbucks to financially provide support to stop the exploitation. Regarding furthering its present community initiative, the compulsory of its employees to volunteer shouldn’t be outside the framework of existing laws either since many corporations also have similar practices. Lastly to increase the awareness of helping the planet, joining forces with the Bill & Melinda Gates foundation is a corporation to organization relationship which is legal in any country.
Citation Resource Page:
Loeb,W.(2013).Starbucks: Global Coffee Giant Has New Growth Plans. Retrieved February 16, 2014, from http://www.forbes.com/sites/walterloeb/2013/01/31/starbucks-globalcoffee-giant-has-new-growth-plans/ Kim,S (2011). 7 Companies Offering Health Care to Part-Time Workers. Retrieved February 18, 2014, from http://abcnews.go.com/Business/companies-offering-health-care-benefitsperks-part-time/story?id=14805107
Starbucks Corporation Social Responsibility. (2013). Retrieved February 20, 2014, from http://www.starbucks.com/responsibility
Global Social Compliance Programme. (2013). Retrieved February 20, 2014, from http://www.gscpnet.com/structure-a-governance/task-force.html
Starbucks Corporation Climate Change Strategy. (2013). Retrieved February 21, 2014, from http://www.starbucks.com/responsibility/environment/climate-change
About Bill & Melinda Gates Foundation. (2013). Retrieved February 23, 2014, from http://en.wikipedia.org/wiki/Bill_%26_Melinda_Gates_Foundation