BAM101 “Mini”Assignment # 2: Starbucks and Corporate Social Responsibility
Starbucks Coffee is one of the top competitors in the retail coffee industry. They are known for their high quality products as well as their high level of social responsibility. Starbucks believes that success and social responsibility are not opposites, but rather go hand in hand.
One example of this company’s strong belief in social responsibility can be found in the low-cost pre–harvest financing assistance program they have fostered with Ecological Enterprise Ventures and Conservation International. These organizations are not-for-profit organizations that, through partnership with Starbucks, provide low cost financing for farmers in the Latin American coffee region. These loans are critical for farmers to stay in business – without them, many would be unable to pay their pickers who harvest the coffee crops. The problems for the farmers lie in two areas. One area is that due to the decreasing prices for coffee over recent years, coffee farmers are considered to be too high of a risk for many banks to provide them with affordable financing options. The second area is the timing of the payments they receive for their crops. The gap in time between harvest and sale of the coffee is where the problem lies. Pickers need to be paid once the crop has been harvested, but without financing, many farmers do not have the funds available to them until the coffee actually sells. Through the sponsorship of Starbucks, Ecological Enterprise Ventures and Conservation International provide these farmers with bridge loans enabling them to harvest and sell their crops. Starbucks does not view this assistance as charity. They like to view it as an “enlightened self-interest” that ensures a steady supply of coffee.
Another area that Starbucks has been involved in is supporting the introduction of “Fair Trade Coffee”. This program involves seventeen certification initiatives across North America, Europe and Japan administered by the Fair Trade Labelling Organizations International or “FLO”. Transfair USA is the certification organization for US fair-trade products. For certification by FLO, farmers much meet several criteria including belonging to a democratically run coop or grower’s association and implementation of crop management and environmental protection programs. Farmers in the program are given pricing incentives to work towards organic production and are guaranteed a fair price for their coffee, long-term relationships with importers, and pre-harvest financing and credit programs as was previously discussed.
The Fair-Trade program aligns well with the values and beliefs of the Starbucks organization. Although Starbucks believes that all of the products they offer are “traded fairly”, they do offer fair-trade certified products in their retail stores as well and feature a fair-trade certified coffee as “coffee of the day” at least once per month.
In order to stay in business, Starbucks must ensure not only that their farmer growers remain in business, but that the ecology is preserved in growing areas as well. To help reach this end, Starbucks partnered with Conservation International in 1998 to protect growing areas in Mexico. Conservation International provides Starbucks with information on the ecological impact made by growers to assist Starbucks in administering its “Preferred Supplier” program. “Shade-Grown Mexico” is a product that is a result of this effort.
In addition to assisting farmers and protecting the ecology directly, Starbucks also aids their suppliers by supporting growing areas indirectly. They achieve this end through such initiatives as sponsorship of schools and medical clinics that provide farmers and their families services they might not otherwise have access to. The financial success of Starbucks speaks to the relationship between social responsibility and organizational success – it appears they live out their claim that the two (social responsibility and success) are connected.
- Are success and social responsibility related (or is the case of Starbucks just a coincidence)? Does a company have to be socially responsible to be successful? Explain and support your answer. (4 marks)
- Does the level of social responsibility exhibited by Starbucks have any effect on how other coffee retailers like Tim Horton’s and Second Cup are viewed? Explain your answer. (3 marks)
- How does Starbucks responsibility to shareholders clash with their responsibility to society in THIS situation? (3 marks)
- What is sustainable development? How is Starbucks practicing this? (3 marks)
- Which approach or stance is Starbucks using with regard to social responsibility – an obstruction one? A defensive one? An accommodative one? Or a proactive one? Explain your answer demonstrating your understanding of this concept. (3 marks)
- What is triple-bottom line reporting? How would Starbucks score on the 3 measurements? Explain your answer. (4 marks)
Total Marks = 20 (2 marks will be deducted for any grammar, spelling errors, etc.)
Weighting = 10 % of your final course grade.