Essay on Starbucks: Green with Envy

External Environmental Analysis of Starbucks and the Coffee Industry Harold Brown Strategic Management March 3, 2011

Why do you think Starbucks has been so concerned with social responsibility in its overall corporate strategy?

Starbucks partnered with Conservation International in 1999 to work on having one hundred percent ethically sourced coffee. With that, in 2004 Starbucks created Coffee and Farmer Equity (C.A.F.E.) and purchased 43 million pounds of green coffee in the first year. C.A.F.E. was expanded to include agricultural methods that focus on areas such as reducing emissions. Starbucks also strives to grow coffee in countries with evolving economies and create an impact with loans and investments. Those investments include investments in farmer loans, which have grown from $150,000 in 2000 to $3 million in 2014. Our company is devoted to decreasing our environmental footprint with purposeful and sustained change. In 2014 the 500th LEED-certified Starbucks store opened and our company continues to integrate environmental building strategies into stores.

Paper for Starbucks is typically grown in colder climates such as Canada and is used to produce the non-reusable paper cups that the coffee is being carried in. However, Starbucks plans on reducing their waste by creating a reusable cup, which is made out of #5 plastic. Ironically, #5 plastic cannot be recycled, as it is not accepted by most recyclers (Root 1), however the “reusable” cup is meant to be semi-permanent meaning it only lasts for about a month or so if not properly cleaned. Nonetheless, the probable marketing gimmick may thoroughly replace the paper cup, which would change the commodity chain from the cups being produced in Canada to China. China is famous for its cheap labor, and it’s something that Canada—who used to be a main producer for cups for Starbucks but now may

World views do not arise from a lot of propositions, but rather emerge like a narrative. “That makes us individuality and provides a theoretical account for our convictions which serve as the foundation for our ethics and values”. (Wilkens, S. and M. Sanford 2009)

Starbucks’s has been able to surpass its rivals and continue being one of the premier roaster and retailers of specialty coffee in the world since its inception in 1985. Such an accomplishment has been sustainable due to a concrete company strategy. When Starbucks’s first debuted back in 1985 it was the first coffee shop to bring specialty coffees to the mass market in the United States. Along with only purchasing and roasting top quality coffee beans they designed their strategy in a way which gave the customer the ability to customize their drinks to meet each person’s individual preference. They also included free Wi-Fi in all of their stores, which in turn increased an already competitive advantage even more by not only offering customers

In today’s business world, companies have changed. Companies are looking to adjust to their business and community expectations by making changes in the technological machinery and devices they use to reduce the company’s negative environmental impact. In order to sustain economic businesses, companies should not only concern about the financial benefits, but also ethic firms have to care about people, society, and the environment as well (Elkington 72). A portion of their profits goes to programs in charge of reducing any negative effects and promoting sustainable and social development. This social responsibility has been implemented with the purpose of satisfying the company’s and the community’s necessities in order to create a good and long-term win-win relationship. Corporate Social Responsibility (CSR) is becoming essential for today’s company’s success. Corporations have the obligation of developing strategies that will benefit employees, customers, and the community. Today we will focus on how Starbucks has made use of its corporate social responsibility to succeed in the business world and how Dunkin Donuts is still trying to stay in the market. After oil, coffee is the second most valuable commodity in the world. More than 50 percent of Americans drink coffee everyday — three to fourcups each, more than 330 million cups a day and counting (Neal).

Since the number of paper cups that Starbucks goes through on an annual basis is in the billions, a reduction of these cups would have a great positive impact on the environment. Walk into any Starbucks store and a wide variety of reusable cups are available for sale. They vary in size, shape, price, and design, but all encourage the same thing – recycling. Starbucks even offers a discount of ten cents when a customer brings in their own cup, which they display in print on their menu reader board. In early 2013, a Whittier Daily News article announced the roll out of a new Starbucks reusable plastic cup priced at only a dollar. Starbucks is trying to reduce the amount of paper cups that end up in a landfill every year. The plastic reusable cup can withstand about thirty washings in the dishwasher and then once it’s no longer usable, the cup can be recycled, as well. Starbucks kept the cup the traditional white and green themed design to emulate their standard cup, attempting to reinforce customer’s continued loyalty to the brand (Scauzillo, 2013). Currently, Starbucks is offering a white and red holiday themed plastic reusable cup for $2.00.

Starbucks has been around for more than four decades, and from the very beginning it has worked hard to operate in an ethical manner. Starbucks ranked as Fortune Magazine’s fifth most socially responsible company in 2012. There are a number of good reasons for the high ranking. The company looks for better ways to develop sustainable production of its coffee. It has set in place some guidelines it calls C.A.F.E Practices, ensuring environmental leadership, economic accountability, and product quality. Starbucks also supports Ethos Water, which provides clean water to more than a billion people

Imaging if there was no more coffee in this world, how would you feel? Nowadays, coffee becomes an important part of people’s life. People who often work overtime, they drink coffee because caffeine can make you awake; people who have to wake up early in the morning, they drink coffee because instead of making breakfast, coffee is more convenient; people drink coffee during the free time, because it also tastes good.

Starbucks answers this demand for social responsibility through what they call a “global responsibility” report which addresses what the role and responsibility of a public for-profit company should be (Starbucks.com, Global Responsibility). It is structured in a point by point 20 page report detailing their stance on issues at home and abroad. Some of the pages in the report links to some of their other web pages that explain the topic in question in more detail. Their report follows GRI standards relatively well. Aspects such as strategy/analysis, organizational profile, report parameters, and governance/commitments/engagements are well covered. Their economic, human rights, society, and environmental performance

Perhaps the most telling of the core differences between Wal-Mart and Starbucks’ sustainability agendas relates to their motivation for sustainability measures to begin with. Wal-Mart seems to pursue sustainability measures for purely selfish reasons, utilizing sustainability measures more as a tool for their Public Relations department than out of any real attempt at social responsibility. Starbucks however shows by the company’s actions that they are in fact genuinely concerned with operating sustainably. Starbucks makes realistic sustainability goals, then actively strives to meet them, publicly reporting on their progress annually (Timm 2005).

Please answer all the following questions as they relate to the case. Please utilize as much outside resources as you deem necessary to reinforce your answers—especially the last question. Remember that this case is over 10 years old and Starbucks has changed since then.

Starbucks is renowned for its morality due to their innovative sustainability and environmental policies and operations. They strive to go beyond mandated regulations by implementing ethics as part of their core practices. However, no matter how flawless their code of ethics is; they, too, face ethical issues and commit unethical acts. First, they are responsible for putting small, local coffee shops out of business which creates a uniform retail culture throughout cities. Second, they advertise to provide 100% fair trade coffee when it is not truly 100% fairly traded. Third, they use hormone added milk that is detrimental to the human body as well as the environment. Fourth, they set unrealistic, unattainable recycling goals, so they were unachievable; in turn, their trustworthiness is hindered and their reputation is tarnished. Lastly, it was revealed that Starbucks discovered ways to avoid paying taxes in the UK. To this day, Starbucks continues to be recognized as an ethical company. Although sometimes controversial, they are innovatively striving to positively change the ways of society and business operations.

According to Starbucks (2013), Starbucks had solidified net revenue of $13. 3 billion, an approximately 14 percent growth, (Appendix B) shows the financial returns are consistently increasing over the years, Starbucks (2013). This net increase shows the good economic performance of Starbucks. Solely economic performance is not sustainable, Starbuck understood the importance of emphasize on corporate social responsibility. Starbucks Global Responsibility business strategy are synthesize with their culture and overall strategy. They focus on ethical sourcing that they see these plants as an agricultural sustainability, whereby C.A.F.E (Coffee And Farmer Equity) are practiced for continuous improvement on productivity, social and environmental aspects, Starbucks (2013). Other than positive corporate image, Starbucks is exposed to more business opportunity, for example one of the world largest populations, India. Recently, Starbucks and Tata Coffee invested in a new plant in India, whereby the company sees it as an