CORPORATE SOCIAL RESPONSIBILITY

CASE STUDY ON

STARBUCKS DEFINING THE TERRAIN

CASE DISCUSSION QUESTIONS 1. What do you think of the companys guiding principles? Describe how the companys guiding principles would influence how a barista at a local Starbucks store does his or her job. Describe how these principles would influence how one of the companys top executives does his or her job. Starbucks has a very unique and outstanding organizational culture as conveyed by the companys guiding principles. Teamwork is a crucial part of its daily operations and service quality an essential tool in the creating satisfied customers all of the time. What I love most from this company is that they take pride on what they do best and does not stop on pleasing their customers by serving them with the highest standard of excellence. A barista at a local Starbucks would normally render his services to the clients at a personal level. The company values its employees very much as they call and treat them as partners and also cares for the communities in the areas where they operate. Starbucks culture emphasizes keeping employees motivated and content for it has high regard for its people viewing them as the heart and soul of their success. A top company executive of Starbucks would always work to build harmonious relationships with the employees for they are critically important to the way the company develops its relationships with its customers and the way it is viewed by the public. 2. Do you think Howard Schultz views his role more from the omnipotent or from the symbolic perspective? Explain. The sound leadership of Howard Schultz as the Chairman of Starbucks has turned a once store in Seattles historic Pike Place Market district into a global company with revenues over $6 billion. As he championed a unique relationship with its employees (calling them as partners), his role is viewed more from a symbolic perspective. One thing thats been important to him from day one is the relationship that he has with his employees. He takes excellent care of both his internal and external customers. With Starbucks high regard to its employees, it probably shouldnt come as a surprise that Starbucks has the lowest level of employee attrition of any national retailer in the world.

3. What has made Starbucks culture what it is? How is that culture maintained? The distinct flavor of Starbucks culture has been the key ingredient to achieving the transformation of a small company into a business empire of its kind. The companys mission statement and the guiding principles it sets for every decisions and actions of company partners from top to bottom has made Starbucks what it is today, a company not just dedicated for making good coffee but one that has a strong commitment to its employees, society and environment. As one member of his board of directors has remarkably said about him, Howard is consumed with his vision of Starbucks, which means showing the good that a corporation can do for its workers, shareholders and customers. His work ethics, ideas and commitment in running a business have been called unconventional for he has shown tremendous passion and value for keeping both his internal and external customers extremely satisfied. 4. Does Starbucks encourage a customer responsive culture? An ethical culture? Explain. As a global company doing business in 36 countries outside of the US, Starbucks had long recognized that there are a lot of opportunities to either satisfy or disappoint the customer. The experiences customers have in their stores ultimately affect the companys relationships with its customers. In response to this, Starbucks created a unique relationship with its employees, one that sets them apart from its competitors. As it continues its global push, it is not only concerned with the product, but it also must address staffing issues as well. Starbucks executives also recognize they must be aware of the impact the environment has on their decisions and actions. In 2001, the company began issuing an annual corporate social responsibility report, which addresses the companys decisions and actions in relation to its products, society, the environment and the workplace. These reports are intended to stress the importance of doing business in a responsible way and to hold employees and managers accountable for their actions. It also takes its ethical commitments seriously by instituting effective tools and mechanisms for check and balance designed to preserve the stakeholders interests. 5. Describe some of the specific and general environmental components that are likely to impact Starbucks. As of May 2006 about 85 percent of Starbucks revenues still come from the US market and the great majority of its 115,000-plus employees worldwide are Americans. In an effort to protect the interests of its partners, it recently began lobbying legislators on issues including lowering trade barriers, health care costs and tax breaks. This is a

move Schultz didnt really want to do and engage with, but he recognizes that such efforts could be important to the companys future. As it continues to expand globally, the emerging markets that it wishes to penetrate could certainly bring environmental components like culture, heritage and untapped resources that are most likely to impact Starbucks in matters of management and operation. 6. How would you classify the uncertainty of the environment in which Starbucks operates? Explain. Much of the companys future growth is likely to be global. In recent years, Starbucks had already targeted four markets for major global expansion namely China, Brazil, India and Russia. Based on the experiences it had when it entered the Chinese market in 1999, the uncertainty of the environment in which it operates proved to be tough and too challenging. Aside from the fact that people in China are tea drinkers, it didnt go away with the experience of having been copied or imitated by a local business which is so rampant in China. The trademark protection victory in a Chinese court was an important one for Starbucks, an environmental uncertainty that has been conquered. 7. What stakeholders do you think Starbucks might be most concerned with? Why? What issue(s) might each of these stakeholders want Starbucks to address? While it is amazing how the internal forces of the company works for the success of the business as it continued to expand globally, Starbucks should focus and be most concerned with the external forces that are often alarming and unpredictable. As it continues its global push, it will need more inputs for the production of their products to match the growing demand and the competition for market share becomes tougher at the global level. Access for reliable sources of inputs is crucial especially when competing against the hyper competition effects brought by globalization. And this posed a major challenge for Starbucks as it continues to accomplish and fulfill its mission of establishing the business as the premier purveyor of the finest coffee in the world while maintaining its uncompromising principles that guide the decisions and actions of company partners from top to bottom. 8. Why do you think Howard Schultz is uncomfortable with the idea of legislative lobbying? Do you think his discomfort is appropriate? Why or Why not? The success story of Starbucks can be traced back from the original founders philosophies and Howard Schultzs unique beliefs about how a company should be run.

Their business philosophy was simple, Every company must stand for something; dont just give customers what they ask for or what they think they want; and assume that your customers are intelligent and seekers of knowledge. The original Starbucks was a company passionately committed to world-class coffee and dedicated to educating its customers about what great coffee can be. Great coffee is important to Starbucks, but equally important is doing good as Schultz unconventional business approach, beliefs and philosophies took the management and operations of this business in a highly different and outstanding level. Its superb organizational culture promulgated by Schultz served as the companys blueprint of success. When Starbuck began lobbying legislators on issues including lowering trade barriers, health care and tax break, Schultz seemed to be uncomfortable and didnt really want to do or engage with it probably because he believed a lot on achieving success out of a fair and honest competition saying we can be extremely profitable and competitive, with a highly regarded brand, and also be respected for treating our people well. He must have considered the integrity, values and uncompromising principles that Starbucks have believed in over the years, the very foundation of their superb culture which propelled them to achieve greater heights. 9. What types of global economic and legal-political issues might Starbucks face? In todays world, hyper competition effects of globalization has brought a lot of multinational companies in the reality of a price war competition. Economies of scale have been a tool to dominate market shares and manipulate price control. However, the most obvious and common problem with this is the problem of quality control. Since quality has provided Starbucks with its distinct reputation, the issue of cost over quality can be a dilemma for this company especially for those emerging markets that it seeks to penetrate. Laws and political systems differ from one country to another and could potentially be another source of challenging issues that the company might face. An example could be that some nations might have the same protectionist character like the US who may impose heavy tax duties on foreign products in order to protect its local industries. Political uncertainties like political instability, red tape and corruption can be some issues the company might face in the different areas where it currently operates. 10. Youre responsible for developing a global cultural awareness program for Starbucks executives who are leading the companys international expansion efforts. Describe what you think will be important for these executives to know. Since Starbucks is a coffee business, I would start to introduce the Philippines as a country of coffee-lovers. Drinking coffee for one has very much been embedded on

the Filipino culture for it brings the occasions for fellowship and camaraderie among Filipinos. It is a great part of the Filipino tradition since it is one of the important recipes of a sumptuous Filipino breakfast and as part of the great Filipino family tradition, the habit of drinking coffee of the entire family together in the morning has been constantly enjoyed in the Philippines. Finally, I will integrate my discussion of the Filipino cultures and tradition largely to the idea of how coffee plays a crucial role in the lives of the Filipinos, a topic that would certainly appeal for the Starbucks executives. 11. Go to the companys web site (www.starbucks.com) and find the latest Corporate Social Responsibility Annual Report. Choose one of the key areas in the report (or your professor may assign one of these areas). Describe and evaluate what the company has done in this key area. Starbucks Shared Planet goal of 1 million hours of community service per year by 2015 The Results Are In! One act of kindness can make a world of difference. In April 2011, nearly 60,000 Starbucks partners (employees), customers, community members and nonprofit organizations from across 30 countries on four continents joined together in their local neighborhoods to be a catalyst for change and make a positive impact in peoples lives. From gardening and painting projects, to building irrigation and rubbish management systems, to refurbishing schools and renovating parks, these passionate volunteers transformed communities in need and helped spark a sense of pride and ownership in all those involved. Education was an important component of this service and how it will be maintained over time. For example, volunteers in Shanghai helped educate residents on leading environmentally conscious lifestyles. In London, young people engaged in leadership training to help empower them to be change makers in their hometowns across the United Kingdom. These accomplishments are a powerful reminder of how we, at Starbucks, are committed to using our scale in more meaningful, innovative ways to help tackle social challenges and improve economic opportunities in communities where we do business. And partnerships with respected NGOs, such as UK Youth, Charyou in China, Volunteer Canada, and Hands On Network in the United States, create unique collaborations to drive and sustain change at the local level. More than 156,000 hours of service contributed in 30 days of April will go toward Starbucks Shared Planet goal of 1 million hours of community service per year by 2015.

This great Corporate Social Responsibility project of Starbucks, the Starbucks Shared Planet goal of 1 million hours of community service per year by 2015, amazes me in many ways since as a young Rotarian and the Community Service Director of the Rotary Club of Downtown Calapan I absolutely share the same burning passion for community service. I adore the companys genuineness in supporting the communities who are definitely in need and encouraging people to be part of their noble programs. The theme of their community service, One act of kindness can make a world of difference, epitomizes the true meaning of genuine service and volunteerism. The results of this aggressive campaign drive were truly enormous and the impact that it brings will surely be remembered for long. 12. What do you think the companys use of the term partners instead of employees implies? Whats your reaction to this? Do it matters what companies call their employees? (For instance, Wal-Mart calls its employees associates.) Why or why not? I think its a good business strategy that Starbucks have called its employees their partners but beyond that I admired them for their exemplary work of giving their partners bean stock or options to buy the companys stock. A superb strategy that sets them apart and gives them higher-quality employee, an employee that cares more. This in reality makes their employees as true business partners of the company. Calling them as partners gives the employees an extra boost of self-respect and dignity and a positive mind-set that propels them to consistently be motivated to accomplish their jobs with excellent results. I think it really matters when a company calls their employees with partners or associates for it uplifts their morale and determination to work hard for the company and I see it as a necessary ingredient in earning the commitment and loyalty of the employees. 13. What does Starbucks terrain look like and how is the company adapting to that terrain? Awareness of the terrain or the broad environment is a crucial aspect of business survival and business success. The characteristics and nature of this terrain will influence what managers and other employees do and how they do it. And more importantly, it will affect how managers influence and persuade the work of other people so that goals can be accomplished. The visionary soul behind Starbucks, Howard Schultz, created a solid culture that makes every partner from top to bottom equally responsible and caring for the management and operation of the business. In recognizing that proper awareness must be given to the impact of the companys decisions and actions in relation to its products, society, the environment and the workplace, the company began issuing an annual corporate social responsibility report stressing the importance

of doing business in a responsible way and to hold employees and managers accountable for their actions. Starbucks takes the commitment seriously. Its website states, Corporate Social Responsibility, its the way we do business. Contributing positively to our communities and environment is so important to Starbucks that its a guiding principle of our mission statement. We jointly fulfill this commitment with partners (employees), at all levels of the company, by getting involved together to help build stronger communities and conserve natural resources. This is how Starbucks terrain looks like and as to how it adapts to this terrain is constantly magnified by the message it consistently conveys to the people and the environment around them. 14. How effective is Starbucks at recognizing and managing its terrain? Explain. I think the best secret kept behind the genuine success of Starbucks is its big heart for the people who work for them and the environment where they operate. I have never seen or have come to know of any company that will come close to the superb organizational culture that Starbucks have maintained over the years. The passion of Schultz and the magnanimity of his intentions in doing and handling business in a responsible way were truly incredible and one-of-a-kind. As he noted, The most important thing I ever did was give our partners (employees) bean stock (options to buy the companys stock). Thats what sets us apart and gives us a higher-quality employee, an employee that cares more. He simply does care much about the employees and genuinely offered them to become stockholders and feel a great sense of co-ownership of the company. This company policy I think would beat all odds and would surely help Starbucks effectively manage its terrain.