The Key Principles of Corporate Social Responsibility in Starbucks - Case Study Example

Corporate Social Responsibility: Starbucks Introduction The term corporate social responsibility is a term used to refer to the philosophy of concept as well as the aspect of doing business (Karnani, 2010). The word is applied by companies, business community and individual businesspersons who aim at a sustainable development and the preservation of resources for the future generations (Karnani, 2010). This paper seeks to evaluate the key principles of Corporate Social Responsibility and explain their importance for stakeholders (Karnani, 2010). In addition, the paper will show how the Starbucks Company uses the principles to remain accountable (Karnani, 2010). Key principles of Corporate Social Responsibility and their importance for stakeholders Corporate social responsibility works based on the following principles; Offering quality services and products to consumers Creating decent jobs, devoting in development of human resource and production Firm compliance with the set business laws, May it be tax, environmental labour or otherwise; Honesty and mutuality in relationships with all stakeholders Effective doing of business to create economic value added as well as enhance national competitiveness for the benefit of shareholders and the society at large Incorporating public expectations as well as generally accepted ethics into business practice Contributing to the evolution of civil society through partnerships and social developmental projects (Hood, 1998) The importance of the key CSR principles for the stakeholders is that they advocate that they be treated with straightforwardness and a constructive dialogue about the requirements of the corporate governance, which guide the conduct of the business (Hood, 1998). Companies should ensure proper information transparency and openness (Branco& Rodrigues, 2007). Based on the personnel and unions, the principles endorse that employers consistently conform to the national legislation labour-wise. In addition, they ought to fully carry out their duties under any labour contracts, whether individual or collective (Branco& Rodrigues, 2007).The principles work on the assumption that employers work on ensuring their relationships with employees is reciprocally beneficial, respect as well as promote social partnerships fabricated at their businesses and within the society in general (Wood, 1994). Moreover, the principles necessitates that the State and local authorities express the society's united stand point in their contemporary plans as well as development strategies (Branco& Rodrigues, 2007). The top managers' community shares the common goals of the national social and economic policy and supports any economic, social or cultural developmental initiatives evolving wherever business plants are located (Hood, 1998). According to the principles, the consumers should only be offered quality products and services. For this reason, businesses and companies should on adopt up-to-date production technologies and their best to be conformant to international quality standards and responsive to the society's expectations when developing new products or services (Branco& Rodrigues, 2007). Furthermore, businesses should find it indispensable to comply with consumer protection laws without fail (Wood, 1994). Besides as indicated by the top community managers, the business partners should be treated under the principles of transparency, equity and impartiality, all in compliance with the ethics of business conduct (Branco& Rodrigues, 2007). Starbucks and Corporate Social responsibility According to Starbucks, corporate social responsibility is the act of conducting their business in ways that ensure the creation of environmental, social and economic benefits to the communities surrounding their area of operation (Fellner, 2008). In the end, corporate social responsibility to the company means being responsible to their stakeholders (Hood, 1998). Evidently, the recognition of the need to be corporate accountable has grown tremendously. The customers are demanding for more than just a product from their preferred brands (Fridell, 2007). Employees on the other hand are choosing to work only for the companies that have strong values. In addition, shareholders are more persuaded to invest in businesses that are in possession of outstanding corporate reputations (Hood, 1998). Being socially responsible is not only the right thing to do as it also distinguishes a firm from its competitors within the industry. It is apparent that there are quite a number of benefits that come with a company being socially responsible (Idowu and Filho, 2009). Given that Starbucks understands this, it believes that it makes sense to view our actions in terms of investments (Hines, 2007). Starbucks has invested in sustainable business practices. Besides, it has encourages a continued supply of quality coffee to the countries that supply their coffee to them. Starbucks is also known for investing in the local organizations to enhance the quality of life within the communities where they carry out their business (Mullerat and Brennan, 2010). Through the continued investment in their partners, by offering competitive wages as well as benefit structures and opportunity for stock ownership, Starbucks has been able to attract and maintain qualified as well as productive employees (Hood, 1998). As a result of this, the company has been able to reduce its hiring, training as well as turnover costs (Mullerat and Brennan, 2010). Traditionally, Starbucks purchased its coffees at premiums over the globe’s market prices for the commodity (Hines, 2007). The premiums paid by the company vary by the type of coffee and the general quality of that specific coffee, relative to the quality of New York C commodity-grade (Hines, 2007). Over the past year, a universal surplus of coffee largely reduced the wholesale prices. Typically, this drop in the coffee prices affects all the growers, predominantly those with small family farms, which produce almost three-fourths of the globe’s coffee supply (Idowu and Filho, 2009). Starbucks buy their coffee from a majority of these small, multigenerational farms, by paying premium prices, which enable the farmers to provide for their families as well as maintain their family farms (Banerjee, 2007). Starbucks believes that as their business expands, so should their need for the coffee their farmers grow (Hood, 1998). Starbucks only buys about one percent of the world’s coffee supply. Starbucks only purchases the highest quality Arabica coffee beans grown in the world (Mullerat and Brennan, 2010). Because Starbucks only buys exceptionally high standards quality coffee, one of their main critical needs is to ensure a long-term supply of unroasted green coffee from the farmers we know and trust (Hines, 2007). Moreover, Starbucks believes that the sustainability of their suppliers’ farms is inherently linked to their success. Starbucks realizes the importance ensuring that coffee farmers have a sustainable livelihood (Mullerat and Brennan, 2010). For Starbucks to solve this problem, it has moved away from the New York C based formula pricing. They have done this by focusing a number of strategies, which include: Aggregating the amount of coffee bought directly from cooperatives and farms Helping coffee farmers to gaining access to reasonable credit Presenting new guidelines for sourcing coffee which reward the farmers for using sustainable growing practices Providing financial support to educational and health projects that directly benefit the farmers as well as their communities (Idowu and Filho, 2009) It is apparent that Starbucks assists its farmers enhance their living standards while ensuring a sustainable supply of high-quality coffee by buying at outright prices, buying directly from the farms and cooperatives as well as signing long-term contracts (Idowuand Filho, 2009). For the coffee Starbucks purchased in fiscal 2001 and the contracts that Starbucks has negotiated for coffee purchases in fiscal 2002, Starbucks pays an average price of $1.20 per pound, excluding freight, for green coffee purchased in these ways (Banerjee, 2007). By so doing, both the producers and Starbucks benefit largely. Farmers are assured attractive prices for a number of crop years. Starbucks on the other hand, is able to secure future coffee supplies at predictable costs (Mulleratand Brennan, 2010). Starbucks also operates on the guiding principle that it will contribute positively to its communities and the environment (Idowu and Filho, 2009). The company is committed to addressing the environmental and social issues affect the places and people who produce their coffee (Idowu and Filho, 2009). Apparently, Starbucks collaborates with the organizations and organizations that share their concerns so as they can be able to make a difference in the coffee origin countries (Aras et al, 2010). Together, Starbucks and its partners have long-term investments in these communities for instance building health clinics, schools as well as coffee processing facilities so as to improve the living standards of the families in the coffee farming communities’ (William et al, 2010). In conclusion, Starbucks stresses an inclusive workplace, which has a range of openings for partners to share concerns and ideas with the senior management. Occasionally, Starbucks management and other Starbucks leaders conduct Open Forums for partners to share ideas or ask questions (Mullerat and Brennan, 2010). In addition, the company’s regional markets also perform their own local meetings between the management and partners’ (Idowu and Filho, 2009). All submissions to Mission Review are assessed and they receive follow-up responses (Aras et al, 2010). Conclusion The paper has encompassed an evaluation of the principles of corporate social responsibility and their importance to the stakeholders. To show how they are applied, the paper has used the example of the Starbucks Company. It is clear from the paper that corporate social responsibility is applied by companies, business community and individual businessmen who aim at a sustainable development and the preservation of resources for the future generations in a number of principles. Evident from the paper also is the fact that companies that apply corporate social responsible benefit in a number of ways. It is apparent from the paper that corporate social responsibility to the company means being responsible to their stakeholders. Starbucks has invested in sustainable business practices. Besides, it has encourages a continued supply of quality coffee to the countries that supply their coffee to them. Starbucks is also known for investing in the local organizations to enhance the quality of life within the communities where they carry out their business. Through the continued investment in their partners, by offering competitive wages as well as benefit structures and opportunity for stock ownership, Starbucks has been able to attract and maintain qualified as well as productive employees. As a result of this, the company has been able to reduce its hiring, training as well as turnover costs. References Aras, G., Aybars, A., and Kutlu, O. 2010. Managing corporate performance.Investigating the relationship between corporate social responsibility and financial performance in emerging markets. International Journal of Productivity and Performance Management, vol. 59, no. 3, pp. 229-229-254. Banerjee, S., B. 2007. Corporate social responsibility: the good, the bad and the ugly. London: Edward Elgar Publishing Branco, M.C., & Rodrigues, L.L. 2007. Positioning stakeholder theory within the debate on corporate social responsibility. Electronic Journal of Business Ethics and Organization Studies, vol. 12, no. 1, pp. 5- 15. Fellner, K. 2008. Wrestling with Starbucks: conscience, capital, and cappuccino. London: Rutgers University Press Fridell, G. 2007. Fair trade coffee: the prospects and pitfalls of market-driven social justice. Toronto: University of Toronto Press Hines, A. 2007. How Responsible is Starbucks' CSR Program? Accessed on March 14, 2012, http://www.cbsnews.com/8301-505125_162-28040257/how-responsible-is-starbucks-csr-program/ Hood, J. 1998. Do corporations have social responsibilities? Free enterprise creates unique problem-solving opportunities. Freeman, vol. 48, issue 11, viewed 28 February 2012, http://www.thefreemanonline.org/featured/do-corporations-have-social-responsibilities Idowu, S., O., and Filho, W., L. 2009. Professionals' Perspectives of Corporate Social Responsibility. London: Springer Karnani, A. 2010. The case against corporate social responsibility, viewed 28 February 2012, http://sloanreview.mit.edu/executive-adviser/2010-3/5231/the-case-against-corporate-social-responsibility Mullerat, R. and Brennan, D. 2010. Corporate social responsibility: the corporate governance of the 21st century. Kluwer: Kluwer Law International William B. Werther, Jr. and Chandler, D. 2010. Strategic Corporate Social Responsibility: Stakeholders in a Global Environment. New York: SAGE Wood, D. 1994. Business and Society. New York: Harper Collins. Read More