STARBUCKS CSR ACTIVITY

INTRODUCTION:
You could not buy a cup of coffee at the first Starbucks store that opened in 1971. Starbucks
originally only sold coffee beans and equipment. CEO Howard Schultz began working for
Starbucks in 1982 and came to the realization it should be selling freshly brewed coffee
instead of just machines and beans. The owners of Starbucks at the time tried the idea in
downtown Seattle serving the very first Starbucks caffè latte. Due to a different vision for
success Schultz left the company in 1985 and began his own chain, Il Giornale. In 1987,
Schultz returned to purchase Starbucks with the help of investors. His goal was to bring the
Italian coffee shop back to America. Schultz envisioned a place for conversation and a sense
of community.

Mission Statement:
• “To inspire and nurture the human spirit – one person, one cup and one neighbourhood at a
time.”
• This is done through their commitment to the following principles:
1) Coffee
2) Partners
3) Customers
4) Stores
5) Neighbourhoods
6) Shareholders (Starbucks Mission, 2012)

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Starbucks staff are called ‘partners’ Partners enjoy excellent benefits and share in our
financial success through our signature programs that we proudly offer to part-time and full-
time partners, including:

• Comprehensive health coverage (medical, dental and vision).

• A stock equity reward program – in fact, Starbucks continues to be one of the only retailers
to offer a stock program that includes part-time retail hourly partners.

• Partners are offered education benefits, tuition assistance and free coffee, paid vacation, and
more.

Starbucks’s logo is inspired by the sea featuring a twin-tailed siren from Greek mythology.
•Coffee: Believes in serving the best coffee possible - goal is to grow our coffee
under the highest standards of quality using ethical sourcing practices- our coffee buyers
personally travel to coffee farms in Latin America, Africa and Asia to select the highest
quality arabica beans.
•Stores: Perfect place for meeting friends and family or enjoying a quiet moment
alone with a book.
•Partners: Our employees, who we call partners, are at the heart of the Starbucks
Experience- our store partners are committed to coffee knowledge, product expertise and
customer service.
• Products:
1) Coffee: More than 30 blends and single-origin premium Arabica coffees.
2) Handcrafted beverages: Fresh-brewed coffee, hot and iced espresso beverages,
coffee and non-coffee blended beverages, Vivanno smoothies and Tazo teas.
3) Merchandise: Coffee and tea brewing equipment, mugs and accessories, packaged
goods, music, books and gift items.
4) Fresh Food: Baked-pastries, sandwiches, salad, oatmeal, fruit-cups. Organizational
Structure.

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Basic Structure:
Around the country, district managers oversee regional groupings of stores who report
directly to the Starbucks Corporation. At each store, a store manager acts as the chief and
under him are a collection of shift supervisors who act as managers on duty when the store
manager is out. Below the shift supervisors are the rest of the employees, referred to as
baristas.
• Licensed Stores: Starbucks does not operate under a franchise system but they do license
storefronts. Licensed stores are common in grocery stores, bookstores or any other site where
the Starbucks is not a standalone building and are still controlled by Starbucks Corporation
and must adhere to the same guidelines. All items sold at licensed stores, including foods,
must be approved by Starbucks corporate offices. Starbucks maintains this control in an
attempt to protect the company name and ensure that it remains one that is associated with
quality.
Partners:
While Starbucks workers also have more specific titles, including barista and shift supervisor,
the Starbucks corporation has long referred to their workers as "partners." This term is
intended to make clear how integral Starbucks employees are to the company's success.

Responsibility:
Starbucks aims to work ethically with all of its suppliers, offering the providers of their fine
Arabica coffees fair value for the beans they work so hard to grow. The company also
practices environmental friendliness, choosing eco-friendly options whenever possible.
Organizational Culture
• We strive to create a culture that values and respect diversity and inclusion.
• We expect to be a leader in diversity and inclusion, from our partners in the field to our
senior leadership teams.
• We expect that all leaders within Starbucks practice a behaviour that demonstrates
inclusion.
• The goals of the Diversity and Inclusion team include building a diverse workforce,
increasing cultural competencies, shaping a culture of inclusion and developing a diverse
network of suppliers.

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Work Ethics
• Starbucks believes that conducting business ethically and striving to do the right thing are
vital to the success of the company.
• Business Ethics and Compliance: Program that supports Our Starbucks Mission and helps
protect our culture and our reputation by providing resources that help partners make ethical
decisions at work.

• The program develops and distributes awareness materials, facilitates legal compliance and
ethics training, investigates sensitive issues such as potential conflicts of interest and provides
additional channels for partners to voice concerns.

Challenges:
• Blending in the Indian Culture: CCD and Barrista have imbibed the culture in their regular
offerings. For e.g., they offer seasonal drinks like Aam Panna, Mango shake etc in the
summer season.
• Price Sensitivity: Indian consumers by nature are very price sensitive. A regular simple
small coffee costs the consumer as much as Rs. 45/- and the more popular coffee like
Cappuccino and Latte would require the consumers to shell out almost Rs. 90/- for a small
cup.
• Competitive Rivalry: Starbucks will be facing tough competition from other brands like
CCD, Barrista Lavazza and Costa Coffee. All of them have been in the industry for almost 5-
6 yrs.

Growth of the Brand:

In 1987, when Schultz merged the Il Giornale and Starbucks locations, the company owned
17 stores. When it went public in 1992, Starbucks had 165 total locations. In 1996, with
1,015 total stores, Starbucks opened its first international location in Japan. As of 2015,
Starbucks operates over 22,500 stores, under several brands, around the globe. Store growth
on an annualized basis since its IPO has been close to 24%.

Starbucks has transformed its offerings since the first caffè latte. In 1996, the company began
bottling and selling its Frappuccino. It has acquired brands such as Seattle’s Best Coffee,
Teavana, La Boulange, Evolution Fresh and Tazo Tea. Starbucks customers can choose from

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bakery items, sandwiches, teas, juices, coffees and coffee accessories in the store. Through
grocers, consumers not willing to pay the cafe price can purchase products, such as ground
coffee, to enjoy at home. Within a short period of time, Starbucks has entered and captured a
significant share of the at-home coffee market.

Who are they?

As most of us know, Starbucks is an international coffee company, with over 20,000 stores in
over 60 countries to date. But just five years ago, the company was doing poorly. This was
partially as a result of the financial crisis and internal restructuring; but, generally, the
company’s future was “bleak.” As a result of this slump, Starbucks CEO Howard Schultz
launched a “Transformation Agenda,” aimed at investing in the company’s people. The series
of initiatives launched under the agenda were centered on people, the environment, and the
community. As a result of these initiatives, which we’ll dive into in a minute, Starbucks
recovered financially, and even exceeded its prior revenue, by 2013.

Starbucks CSR: Corporate Social Responsibility

“One person, one cup and one neighbourhood at a time.” This is the mind of Starbucks
against Social Responsibility. It believed that it should have a positive impact on the
communities, so too has its commitment to corporate citizenship. It is aimed to be innovators,
leaders and contributors to a society and a healthy environment so that society can thrive.

 Starbucks shows a commitment to social responsibility. They are classified four

categories; Community, Ethical Sourcing, Environment, and Global Responsibility
Report.

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  In addition, it is soliciting suggestions about the contribution to the community in
special site. And, it posted the report about how to ensure the quality of bottled water.

Starbucks is committed to helping communities thrive when it does business. It bringing

people together, inspiring change and making a difference in people's lives while balancing
profitability and a social conscience. The chief community officer gives a hint about
commitment through a WEB movie. You can find a local service project in U.S. and Canada,
and then can understand about Starbucks global responsibility goals and progress.
Community At the page of the community, you can learn more about local contribution
activities of Starbucks.
For example, Community Service tap into a passionate network of people eager to be
catalysts in their local neighbourhoods. Community Stores are helping support
neighbourhood revitalization efforts. The Starbucks Foundation develop youth leadership by
investing in the leadership skills required for the changing global economy.
It also invests in farming communities to develop responsible growing methods, and to
ensure a sustainable supply of these crops. Community Aside from exceptional coffee, it
made a business out of human connections, community involvement and the celebration of
cultures. Starbucks Foundation supports programs that contribute to our communities in
meaningful ways.
"Create Jobs for USA" supports job creation across the country, and gives a job opportunity
to customers, partners and businesses. Naturally, its dedication to community service and
environmental stewardship extends to its hometown.

Ethical Sourcing:
Whether it’s coffee, tea, cocoa or manufactured goods, Starbucks is committed on offering
the highest quality, ethically purchased and responsibly produced products. For example,
expert in soil management and crop production helps farmers in Costa Rica protect the
environment. It succeed to support the farmers and suppliers who grow and produce our
products.

Environment:
Starbucks is committed to minimizing our environmental footprint and inspiring others to do
the same. It reduce its operating costs and increase shareholder value through energy and

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 water efficiency, then encourage and work with others to share the commitment to the
environment. For example, it produce napkin from cup through the Cup Recycling.
Starbucks is trying to reduce the environmental footprint of its operations. Building Greener
Stores are conserving the energy and water and purchasing renewable energy credits. It
provides recycling in the stores and ensures the recyclability of our cups by the recycling and
reducing waste. Further it is constantly looking to innovate and collaborate with likeminded
organizations to reduce the cup and the packaging waste. Furthermore it helps farmers
mitigate the impact of climate change on their farms since 2004.

Starbucks Supporting Local Communities:

 Starbucks employees and customers have contributed more than 3 million hours of
community service over the past seven years.
 Within the scope of Global Month of Service 1,163 employee-led projects in April 2015
alone.
 Starbucks Community Store program aims to assist local non-profit organizations in their
efforts to provide education and training to achieve poverty eradication for the young
segment of population. The company has risen more than USD 900,000 since its launch in
2011.
 Starbucks has cooperated with non-profit organizations, community leaders and
organizational stakeholders to provide more than 520,000 hours of volunteering service
around the globe.

Starbucks Educating and Empowering Workers

 Almost half of Starbucks employees are younger than 24 years old
 Starbucks College Achievement Plan is an education program that allows employees to
obtain online degrees from Arizona State University.
 The company aims to hire 10,000 veterans and military spouses by 2018 and 2000 new
employees from this segment of population was hired in 2014.
 It has been noted that “at the height of the global financial crisis, when other companies
were cutting HR costs wherever they could, Starbucks invested in staff training, including
coffee tastings and courses that ultimately qualified for credit at higher education
institutions”.

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 Starbucks and Gender Equality and Minorities
 At present about 40% of Starbucks US employees are minorities and 65% are women.
 Among vice presidents, 48% are women and 15% are minorities.
 Within the top leadership team, comprising senior vice presidents and higher executives
18% are minorities and 29% are women.

Energy Consumption by Starbucks

 Starbucks has more than 800 LEED® certified store, including the LEED® Platinum
Starbucks® Reserve Roastery and Tasting Room in Seattle.
 The company increased its purchases of renewable energy from 20% in 2008 to 100% for
global company operates stores in 2015
 Despite significant increase in the size and mix of the business since the base year 2008, the
company achieved a net energy reduction of 25% from 6,8 kwH to 5,10 kwH per square
foot a month in company-operated stores in the US and Canada
 Starbucks opened its 500th LEED-certified store in 2014, more than any other retailer in the
world. LEED has been implemented in 19 counties and 98% of new company-operated
stores in Americas are built according to LEED standards.
 New Energy Management System is installed in about 4000 stores to optimize heating and
cooling. In 2014, energy performance improved only 4.6% compared to the baseline levels.
Water Consumption by Starbucks
 In 2015 Starbucks exceeded its water conservation goal, reducing consumption more than
26% over 2008 – from 24 gallons of water per square foot of retail space to fewer than 18
gallons

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 As it is illustrated in figure below, the company has been gradually decreasing its water
consumption in company-operated stores and in 2015 it achieved 26.5% reduction in water
consumption compared to base year 2008

Average water use per square foot/store/month U.S. and Canada company-operated
stores
 In 2014, Starbucks achieved water savings of more than 23% compared to baseline levels
set in 2008. LEED certified stores made immense contribution to water saving initiatives

Waste Reduction and Recycling by Starbucks

 During the past five years Starbucks Japan has turned tons of spent coffee grounds into
compost and feed for cows
 Front-of-store recycling has been implemented in 59% of company-operated stores in the
USA and Canada
 In 2014, customer-facing recycling was added to more than 760 stores. In total customer-
faced recycling is integrated in 3849 or 47% of all company-operated stores in the US and
Canada
 Starbucks encourages and rewards customers to bring their own tumblers and mugs to
stores. In 2014, customers did that 47.6 million times, up from 46.9 million in 2013.

Starbucks and Sustainable Sourcing

 In 2015, 99% of coffee sourced by Starbucks was certified as ethically sourced by A.F.E.
Practices, Fair-trade, or another externally audited system.
 The company has 8 Farmer Support Centres in Latin America, Asia and Africa
 Starbucks purchase of coffee from the Eastern Democratic Republic of Congo helped more
than 4,500 small-holder farmers to more than triple their incomes.
 6% of coffees purchased are Fair-trade and 1% is organic.
 Starbucks investment in farmer loans with Root Capital has grown from USD150,000 in
2000 to USD12 million today, including a USD3 million investment in 2014.

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Commitment to the Environment

The first way Starbucks has shown corporate social responsibility is through their
commitment to the environment. In order to improve the environment, with a little push from
the NGO, Starbucks first main goal was to provide more Fair Trade Coffee. What this means
is that Starbucks will aim to only buy 100 percent responsibly grown and traded coffee. Not
only does responsibly grown coffee help the environment, it benefits the farmers as well.
Responsibly grown coffee means preserving energy and water at the farms. In turn, this costs
more for the company overall, but the environmental improvements are worth it. Starbucks
and the environment benefits from this decision because it helps continue to portray a clean
image.

Another way to improve the environment directly through their stores is by “going green”.
Their first attempt to produce a green store was in Manhattan. Starbucks made that decision
to renovate a 15 year old store. This renovation included replacing old equipment with more
energy efficient ones. To educate the community, they placed plaques throughout the store
explaining their new green elements and how they work. This new Manhattan store now
conserves energy, water, materials, and uses recycled/recyclable products. Twelve stores total
plan to be renovated and Starbucks has promised to make each new store LEED, meaning
a Leader in Energy and Environmental Design. LEED improves performance regarding
energy savings, water efficiency, and emission reduction. Many people don’t look into
environmentally friendly appliances because the upfront cost is always more. According to
Starbucks, going green over time outweighs the upfront cost by a long shot. Hopefully, these
new design elements will help the environment and get Starbucks ahead of their market.

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Commitment to Consumers

The second way Starbucks has shown corporate social responsibility is through their
commitment to consumers. The best way to get the customers what they want is to
understand their demographic groups. By doing research on Starbucks consumer
demographics, they realized that people with disabilities are very important.

The company is trying to turn stores into a more adequate environment for customers with
disabilities. A few changes include: lowering counter height to improve easy of ordering for
people in wheelchairs, adding at least one handicap accessible entrance, adding disability
etiquette to employee handbooks, training employees to educate them on disabilities, and by
joining the National Business Disability Council. By joining the National Business Disability
Council, Starbucks gains access to resumes of people with disabilities.

Another way Starbucks has shown commitment to the consumers is by cutting costs and
retaining loyal customers. For frequent, loyal customers, Starbucks decided to provide a
loyalty card. Once a customer has obtained this card, they are given incentives and
promotions for continuing to frequent their stores. Promotions include discounted drinks and
free flavor shots to repeat visitors. Also, with the economy being at an all time low, Starbucks
realized that cheaper prices were a necessity. By simplifying their business practices, they
were able to provide lower prices for their customers. For example, they use only one recipe
for banana bread, rather than eleven.

It doesn’t end there either! Starbucks recognized that health is part of social responsibility. To
promote healthier living, they introduced “skinny” versions of most drinks, while keeping the
delicious flavor. For example, the skinny vanilla latte has 90 calories compared to the original
with 190 calories.

Since Starbucks doesn’t just sell beverages now, they introduced low calorie snacks. Along
with the snacks and beverages, nutrition facts were available for each item. Also one big way
to cut costs was outsourcing payroll and Human Resources administration. By creating a
global platform for their administration system, Starbucks is able to provide more employees
with benefits. Plus, they are able to spend more money on pleasing customers, rather than on
a benefits system.

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Also one big way to cut costs was outsourcing payroll and Human Resources administration.
By creating a global platform for their administration system, Starbucks is able to provide
more employees with benefits. Plus, they are able to spend more money on pleasing
customers, rather than on a benefits system.

Commitment and Response to Shareholders

One way Starbucks has demonstrated their commitment and response to shareholder needs is
by giving them large portions. By large portions, Starbucks is implying that they plan pay
dividends equal to 35% or higher of net income to. For the shareholders, paying high
dividends means certainty about the company’s financial well-being. Along with that, they
plan to purchase 15 million more shares of stock, and hopefully this will attract investors who
focus on stocks with good results.

Starbucks made their commitment to shareholders obvious by speaking directly to the media
about it. In 2004, Starbucks won a great tax break, but unfortunately the media saw them as
“money grubbing”. Their CEO, Howard Shultz, made the decision to get into politics and
speak to Washington about expanding health care and the importance of this to the company.
Not only does he want his shareholders to see his commitment, but he wants all of America to
be able to reap this benefits.

In order to compete with McDonalds and keeping payout to their shareholders high,
Starbucks needed a serious turnaround. They did decide to halt growth in North America but
not in Japan. Shultz found that drinking coffee is becoming extremely popular for the
Japanese. To show shareholders there is a silver lining, he announced they plan to open
“thousands of stores” in Japan and Vietnamese markets.

Commitment to Employees

The first and biggest way Starbucks shows their commitment to employees is by just taking
care of their workers. For example, they know how important health care, stock options,
and compensation are to people in this economy. The Starbucks policy states that as long as
you work 20 hours a week you get benefits and stock options. These benefits include health
insurance and contributions to employee’s 401k plan. Starbucks doesn’t exclude part time
workers, because they feel they are just as valuable as full time workers. Since Starbucks

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doesn’t have typical business hours like an office job, the part time workers help working the
odd shifts.

Another way Starbucks shows their commitment to employees is by treating them like
individuals, not just number 500 out of 26,000 employees. Howard Shultz, CEO, always tries
to keep humanity and compassion in mind. When he first started at Starbucks, he
remembered how much he liked it that people cared about him, so he decided to continue this
consideration for employees.

Shultz feels that a first impression is very important. On an employee’s first day, he lets each
new employee know how happy he is to have them as part of their business, whether it is in
person or through a video. His theory is that making a good first impression on a new hire is
similar to teaching a child good values. Through their growth, he feels each employee will
keep in mind that the company does care about them. Shultz wants people to know what he
and the company stand for, and what they are trying to accomplish.

Ethical/Unethical Business Behavior

The last way Starbucks demonstrates corporate social responsibility is through ethical
behavior and the occasional unethical behavior. The first ethically positive thing Starbucks
involves them self in is the NGO and Fair Trade coffee. Even though purchasing mostly Fair
Trade coffee seriously affected their profits, Starbucks knew it was the right thing to do. They
also knew that if they did it the right way, everyone would benefit, from farmers, to the
environment, to their public image.

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In the fall of 2010, Starbucks chose to team up with Jumpstart, a program that gives children
a head start on their education. By donating to literacy organizations and volunteering with
Jumpstart, Starbucks has made an impact on the children in America, in a very positive way.

Of course there are negatives that come along with the positives. Starbucks isn’t the “perfect”
company like it may seem. In 2008, Starbucks made the decision to close 616 stores because
they were not performing very well. In order for Starbucks to close this many stores in one
year, they had to battle many landlords due to the chain breaking lease agreements. Starbucks
tried pushing for rent cuts but some stores did have to break their agreements. On top of
breaching lease agreements, Starbucks was not able to grow as much as planned, resulting
their future landlords were hurting as well. To fix these problems, tenants typically will offer
a buyout or find a replacement tenant, but landlords are in no way forced to go with any of
these options. These efforts became extremely time consuming and costly, causing Starbucks
to give up on many lease agreements.

As for Starbucks ethical behavior is a different story when forced into the media light. In
2008, a big media uproar arose due to them wanting to re-release their old logo for their 35th
anniversary. The old coffee cup logo was basically a topless mermaid, which in Starbucks’

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opinion is just a mythological creature, not a sex symbol. Media critics fought that someone
needed to protect the creature’s modesty. Starbucks found this outrageous. In order to end the
drama and please the critics, they chose to make the image more modest by lengthening her
hair to cover her body and soften her facial expression. Rather than ignoring the media
concerns, Starbucks met in the middle to celebrate their 35th anniversary.

CONCLUSION:

The new growth platform of Starbucks Corporation is by supporting company’s ethical

values and branding organizational demand. Starbucks is a global company that meets the
demand for innovation at a global level. As a result, Starbucks continues to accelerate its
international presence. In essence, it continues to be one of the top leaders in the coffee
industry and a customer oriented organization. Starbucks possesses the intellectual creativity
needed to meet the company’s goals and objectives. For example, its successes rely on
principles and practices by surpassing challenges in the local and global markets. Starbucks
has 141 coffee shops across Malaysia and more than 700 coffee shops around the Southeast
Asian region, including the following countries: Indonesia, the Philippines, Singapore,
Thailand, and, most recently, Vietnam.

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