Week 2 Business Law and Corporate Ethics Homework Assignment
Many people view Starbucks as a socially responsible company committed to green practices and free-trade coffee. Others might dislike Starbucks because it is a large chain that pushes out smaller local competitors or because of their prices, which are higher than many of its competitors. Starbucks seems to be able to justify its higher prices because the company sells more than just coffee—it sells an experience. Starbucks patrons can order specialty drinks and hang out in what founder Howard Schultz envisioned to be the “third place” to be after home and work. Love it or hate it, Starbucks has been very successful at branding.
Starbucks has had a profound influence on the U.S. coffee market. Before Starbucks came onto the scene, coffee was perceived as an uninteresting product largely consumed by older people in the United States. It did not have the “cool” factor or the cache that it does today. Starbucks’ entry in the market largely changed how Americans consumed coffee—and what they thought about coffee shops. It all started in the cold, gray climate of Seattle—the perfect setting for launching a warm beverage with international appeal. Starbucks emphasized quality and service and location became a critical issue.
In spite of its popularity, Starbucks faltered during the most recent recession, when many customers cut back on discretionary purchases. This prompted the return of founder Howard Schultz as CEO. Schultz implemented a restructuring process at Starbucks and closed hundreds of stores. He sought a return to the value that had initially made Starbucks a great company: quality. Today Starbucks is once again thriving and is even expanding into the consumer packaged goods market.
No matter what one thinks of Starbucks, it is more involved in social causes and the care of its workers than many comparable chains. Starbucks is committed to employee well-being, as one can see in its employee health care system. Howard Schultz made employee health care a priority after watching his father struggle with injuries because he had no access to employee health care or worker’s compensation. In large part because of its commitment to providing good wages and health care, Starbucks ranked No. 98 onFortune’s“Best Companies to Work For” list in 2011.
The company also has a history of giving to charities that affect its primary stakeholders. As part of its commitment to ethics and sustainability, the company launched its Shared Planet website, which communicates to interested stakeholders all of the company’s ethics and sustainability initiatives. The company also is a large purchaser of Fair Trade Certified coffee and has partnered with Project Red to raise money for HIV/AIDs research in Africa.
In spite of its professed commitment to caring for workers and for social causes, such a large company always will be subject to criticism. From complaints that Starbucks pushes smaller competitors out of markets, to criticisms that some of its coffee drinks are excessively fatty and caloric, Starbucks is facing many challenges. For instance, disposable cups pose a problem as the company strives to become more eco-friendly. An estimated 3 billion Starbucks cups are thrown into landfills each year. At the end of the day, we are left trying to decide if Starbucks deserves its image as a socially responsible brand.
Do some research about Starbucks’ business and their corporate social responsibility and prepare an essay answering the following questions:
- Why do you think Starbucks has been so concerned with social responsibility in its overall corporate strategy?
- Do you think that Starbucks has grown rapidly because of its ethical and socially responsible activities, or because it provides products and an environment that customers want?