Ethics and Sustainability of Starbucks for Sustainable Business

Question: Discuss about theEthics and Sustainability of Starbucks for Sustainable Business. Answer: Overview of organization Company Starbucks started its operations in 1971 and now it is operating in more than 50 countries along with 16000 stores in all over the world. Main base of the business of Starbucks is its retail stores. The description of the company in terms of structure, mission, vision, culture and ethical practices are described below: Mission- Mission statement of Starbucks is to motivate and inspire the human spirit i.e. one person, one cup and one neighborhood at a time. Vision- According to the companys website, vision statement of Starbucks is to establish itself as the market leader in terms of good quality coffee in all over the world along with managing the principles to grow in the market. Structure- The most important characteristics of the organizational structure of Starbucks are that it includes decentralized decision making process. There are three separate districts of the organization so that various operations can be done effectively and keep the customers satisfied in the market. Starbucks has matrix organizational structure including various channels of communications. This type of structure is very effective to utilize all the communication channels. The matrix organizational structure of the company is helpful in serving the customers in better way. The matrix organizational structure focuses on the particular region and managers to oversee each and every region. Along with this, the current organizational structure of Starbucks is hybrid also. It includes horizontal structure, functional and geographical structure (Leinward Davidson, 2016). Culture- The organizational culture of Starbucks is based on the principles and values of the business. It should be noted that the culture of Starbucks is powerful as it is basically connected with the distinctive capabilities of the company. The culture of the company includes value of the employees and their contributions, establish strong bond with the employees, culture of inclusion and diversity and exceptional customer service. Company is focused on providing staff training to the employees so that customers can be served in the better way (Dudovskiy, 2017). Ethical practices- Starbucks Company is working directly with the farmers to make sure that there is full supply of quality coffee in the market. The company ensures that various ethical principles are followed in the coffee growing communities. The company is focused on implementing various measures to ensure the welfare of the farmers, employees and customers. Along with this, company has also established social, economic, environment and quality principles that are considered as the foundation of ethical sourcing. There are four key ethical coffee sourcing principles including product quality, environmental leadership, social responsibility and economic accountability (Kaptein, 2008). Ethical business strategies Starbucks is the leading coffee company in all over the company. The success of the company depends upon the strong ethical corporate culture. Company has implemented business ethics and compliance program in order to help the partners to make ethical decisions in the business. Along with this, the program is also helpful in facilitating legal compliance, providing ethical training and providing mechanism for the stakeholders. Further, Starbucks is also maintaining an audit line for the third parties like investors, vendors and customers to deal with the irregularities. In terms of ethical business strategies, Starbucks has implemented business ethics and compliance. The Starbucks business ethics and compliance includes Starbucks policy office is the program which support the mission of the company. This program is helpful in protecting the culture and reputation of the company by providing resources to the stakeholders so that they can make ethical decisions in the business operatio ns. Starbucks developed Coffee and Farmer Equity (CAF) and COCOA practices to ensure the long-term supply of high quality and ethically sourced coffee (Erwin, 2011). Starbucks is considered as one of the most ethical company in all over the world. The company makes efforts to become a responsible company and conducts the business in an ethical manner. At the national and international level, company is operating its business in the ethical way by community, environment, sourcing, diversity and wellness. The company openly reveals its commitment to being ethically responsible so that the customers know about the business operations of the company. By analyzing the company and its commitment to ethical responsibility, it is observed that company is able to achieve the profitable growth and improved the stakeholders value by conducting the business in the ethical manner (Ruiz-Palomino, Mart?nez-Canas Fontrodona, 2013). Importance of ethical practices- Ethical practices are important for Starbucks to achieve the organizational goals and objectives. The ethical behavior and corporate social responsibility brings significant benefits to the business as well as stakeholders. The ethical practices of the Starbucks provide comfortable environment for the employees and customers which is the key objective of the company. The ethical services of the company are helpful in providing satisfaction to the customers. For the employees, company does not cut their healthcare cost and various benefits at the time of recession. Along with this, company has positive relationship with the customers and suppliers and provides technical support to provide higher quality of coffee. So, business ethics practices are important for Starbucks as company may lead more productive workplace and promote the economy of the company (Segon Booth, 2015). Offensive or defensive strategy In the business operations, Starbucks is using defensive strategy to stay competitive in the market. In current time, there are two strong competitors of Starbucks i.e. McDonalds and Dunkin Donuts. The services of McDonalds are very easy and fast. By the defensive strategy, Starbucks is focusing on differentiating products and services. Along with this, company can take advantage of the weak point of the competitors and can make up for its vanished spot. Starbucks can maximize its efforts on surpassing the competitors. The defensive strategy is helpful for the company to build up corporate image among the customers (Kapinos Rollins, 2013). Further, there is the cultural shift in Starbucks as the demands and needs of the customers are continuously changing. So, company is focused on attracting the customers by understanding their cultures. In different countries, customers are different cultures and norms so, it is important for the company to provide the products which suit to the culture of the customers. It includes major commitment and strong leadership in the company (Giberson, Resick Dickson, 2009). Effectiveness of TBL It is difficult to talk about ethical practices without triple bottom line of the company. This is an interactive thinking which takes into consideration environmental social and economic factors. These three considerations are described in the figure. Figure 1: Triple Bottom Line (Source: Haglund, 2010) Economic- In the business, economics has impact in the positive and negative manner. Starbucks in The business sector is focused on the profit and benefits. In order to sustain the economic business, Starbucks is not only concerned about the benefits of the financial forms but also care about people, society and environment as well. Along with this, company has involved in the competitive business by providing good quality coffee products in order to make the customers satisfy. These processes try to reduce the impact of negative impact on the environment. To develop the economic sustainability, company has to rely on the ethical business practices and this can be done without the responsible stakeholder i.e. customers, staffs and societies to enhance the profit and revenue. Social- The social accounting focuses on understanding people who have affected to the company. This area includes training, community relations, employment, product safety, donation and education. Starbucks is responsible for the communities both insides and outside by providing good environmental workplace, welfare, human rights and training skills. Along with this, company make good relationships with the community by various activities like donating money to the society and improving the society to become better life etc (Novelskait Markunait, 2015). Environment- Starbucks is operating in various countries and in those countries; there are various rules for the companies for their environmental performance. In order to protect the environment, company is focused on reducing the use of natural resources as some resources can be renewed again by the use of technological replacement. Along with this, company protects the environment by treating waste process effectively. This shows that the environment is important for Starbucks while operating business in various countries (Hough, Green Plumle, 2016). Impact of foreign social norms and standards There are different social norms and standards in every country which the companies have to follow while doing the business. Starbucks has to follow those rules and regulations in various countries for doing successful business. There are rights and laws related to labor in the countries which are imposed by the governments. Those labor rights are described below: Child labor- Every country and government is focused on reducing the issue of child labor. Because of the differences in the industry and various demands of the workers, there is similar but slightly different standard related to child labor in the beverage industry as compared to other bus8iness industry. There are codes of condemn for the use of child labor and they defined that the acceptable age anywhere for working between 14 and 18 year of age. Although there is no particular statement about child labor but countries are imposing rules and laws to reduce child labor. In UK, the set minimum age for the labor is 15 and this is legal minimum age. Starbucks also specifies that minors between the ages of 14 and 16 may only be employed at that time when they are not required to attend the school. Along with this, policy of Starbucks is that children should not be unlawfully employed as labors. The company also sells Fair Trade Certified coffee which is certified by licensing organization under th e Fair Trade Labeling Organization based on their standards. FLO has established the minimum age of 15 for most of the work but higher age of 18 for the work (The World Bank Group, 2003). Wages, benefits, and terms of employment- There are some codes in every country related to wages of salaries of the employees and the level of compensation for minimum and overtime depends upon the country of manufacture. There are some monitory guidelines and local laws in every country which has to follow by Starbucks. All the codes in some country state that minimum wages must be at least equal to the local minimum wages. On the other hand, most of the countries state that it must be greater of local minimum wage or industry standard. Starbucks follows The Fair Trade Standards i.e. salaries should be in line with regional average and official minimum wages for the similar works but level of salary can be increased. Along with this, Fair Trade Standards is also focused on reducing the wages differences and employment conditions among the permanent, seasonal and casual workers. Starbucks has confirmed with local laws and applicable international conventions regarding the rights and benefits of the workers for the continual improvement over the time (Forbes, 2016). Cradle to grave process The Cradle to grave Life Cycle analysis is used for the Starbucks product disposable coffee cups. The cradle-to-grave life cycle analysis includes various steps of products arbitrary life cycle; from the initial stage to end of the life of product. This includes various life stages but is basically involved in the material processing and manufacturing, extraction of raw material, usage, distribution, maintenance and disposal. In the life cycle analysis of disposable coffee cups, there are various processes including material choice, material extraction, material processing and manufacturing and then disposal. The reusable cups are environmental friendly as they are 100% recyclable. So, three key life stages for disposable coffee cups are raw material extraction, processing and manufacturing and disposal (Hocking Martin, 2012). Recommendations For the sustainability of the disposable coffee cups, there are some recommendations which must be used by Starbucks. Company should focus on the implementation of an environmental fee or tax on the cups as that fee can be used to properly recycle the cups. This tax should be used to raise the awareness among the people to use paper and cups when they are not in use. Company should focus on reducing the waste not to provide sleeves for heat. Customers should be provided the opportunity to purchase the reusable sleeves while purchasing the products. Company should focus on motivating the customers by providing at-the-till repayment. By this, company will be able to encourage the customers for saving money that easily adds up over their daily coffees (Reisch, Eberle Lorek, 2013). Legal responsibilities Starbucks is not only selling coffee, it also sells hot food and beverage products. It means there are various regulations and laws related to health and safety standards. Company has to insure that the food products are safe and fit for the purpose. Further, it is important for all the Starbucks coffee houses to apply for the permit from the health board to remain in the business. Starbucks uses compliance with the regulations to ensure that coffee house ahs high standard of cleanliness, employees are using appropriate tools and do their job safely quality of coffee and food reach at the set guidelines. Starbucks has responsibility towards product quality, social accountability, economic sustainability and environmental leadership (Enquist and Edvardsson, 2009). Ethical issues Starbucks is operating globally and there can be some issues for the company in terms of ethical compliance. Some of those issues are as follows: One of the major issues is that Starbucks had a lawsuit filed against the company for using anti-competitive tactics to deal with the competitors. The workers of the Starbucks went outside the local coffee shops and provided the sample of Starbucks coffee. So, Starbucks was sued as this tactic was illegal (Iqbal Selamat, 2016). According to the Kantianism theory, the actions of Starbucks are unethical as the company is disregarding small businesses to gain more customers and profits. Along with this, the expansion techniques of the company are not coming from the goodwill and employees are not rightfully motivated (Pimentel, 2004). Business ethics strategy of organization From the above discussion, it can be summarized that Starbucks is operating at the global level and to achieve the success in each country, company has to follow the environmental and legal rules and regulations imposed by various governments. Based on the analysis, it is observed that Company has implemented business ethics and compliance program in order to help the partners to make ethical decisions in the business. Along with this, the ethical practices of the Starbucks provide comfortable environment for the employees and customers which is the key objective of the company. In terms of TBL, it is analyzed that Starbucks is focusing on the three key factors i.e. social, economic and environmental factors. Starbucks is not only concerned about the benefits of the financial forms but also care about people, society and environment as well. Starbucks is responsible for the communities both insides and outside by providing good environmental workplace, welfare, human rights and train ing skills. In terms of product life assessment, Starbucks is using reusable coffee cups which are big initiative of the company to sustain the environment. So, it can be said that the ethical business strategies of Starbucks are very effective for the company to operate the business in the ethical manner (Schwartz, 2007). Improvement of organizations strategies There are some ways by which Starbucks can improve its organizational strategies in the business. Those strategies are as follows: Company can make the customers educated regarding the ethical extraction of the coffee by the seminars. There is no enough time for coffee education and most of the customers never experience a tasting inside the stores. Company can focus on spreading enthusiasm for the whole bean coffee with the customers. Along with this, company can follow the salary and wages standards to reduce the differences between the employees. Company can follow local laws and applicable international conventions regarding the rights and benefits of the workers for the continual improvement over the time. There are various companies in the world that are operating the business ethically. Two of the companies among those companies are Dell Inc. and Pepsico. Starbucks can learn by the ethical practices of Pepsico. Both of the companies believe in acting ethically and responsibly including respect for employees in the workplace, integrity in the marketplace, ethics in the business activities and performing responsibly with the shareholders. 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