Contemporary Developments in Business and Management

Explore the external influences on Starbucks and the importance of corporate social responsibility. Analyze the effectiveness of Starbucks's CSR initiatives and provide suggestions for improvement.

Contemporary developments in business and management
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Table of Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................4
1.1 Introduction............................................................................................................................4
1.2 Primary external influences of Starbucks..............................................................................4
1.3 Importance of the external factors on Starbucks...................................................................5
1.3 Conclusion.............................................................................................................................9
Task 2.............................................................................................................................................10
2.1 Introduction..........................................................................................................................10
2.2 Relevance of corporate social responsibility to Starbucks..................................................10
2.3 Influences of corporate social responsibility as far as policies and decision making of
Starbucks is concerned..............................................................................................................10
2.4 Effectiveness of Starbucks’s response.................................................................................12
2.5 Suggestions for improvements in corporate social responsibility of Starbucks..................14
2.5 Conclusion...........................................................................................................................16
Conclusion.....................................................................................................................................17
Reference list.................................................................................................................................18
Appendices....................................................................................................................................20
Appendix 1.................................................................................................................................20
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Introduction
Starbucks Corporation is an American coffee company that entered European market through the
acquisition of 65 Seattle Coffee Company stores in the United Kingdom in the year 1998. It is a
global organisation and operates across 25,400 locations across the globe (starbucks.co.uk,
2018). Operations of an organisation depend on several factors both in its internal and external
environment. Internal factors within the organisation that impacts its operation include strengths,
weaknesses, opportunities and threats of the organisation. External factors include political
scenario of the place in which the organisation operates, environmental, social, economic,
technological advancements and legal factors that impact the operations of an organisation. The
study would delve into the external influences of Starbucks. Corporate social responsibilities and
impacts of it would be considered part of the study.
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Task 1
1.1 Introduction
Starbucks operates on a global scale and it has to deal with a wide spectrum of external factors.
The same depends upon the various locations in which the organisation operates. Starbucks is the
leading coffee house company and it continues to lead the industry as far as sustainable business
and innovation is concerned. A significant part of such endeavours are driven by Starbucks’s
ability to address to the external or the PESTLE factors.
1.2 Primary external influences of Starbucks
Attribute Factors
Political  Political stability of a country
 Regional market integration
 Enhancement of governmental support for infrastructure
Economic  Growth rate of developing countries
 Rise in labour cost
 Economic condition of a country
 Decline in unemployment rate of a country
Social  Affordability of the lower and middle class people
 Increase in health consciousness
 Growth of coffee culture amongst people
Technological  Technology transfer to the coffee farmers
 Adaptation of technologies like mobile phones and tablets
by people
 Availability of coffee machines and other advanced
technologies for home use
Legal  Product safety regulations
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 Fluctuations in employment regulations
 Genetically modified organisms regulations across different
countries
Environmental  Business sustainability trend
 Growing of popular support for environment friendly
products
 Awareness of responsible sourcing amongst people
Table 1: PESTLE factors of Starbucks
(Source: Martínez-Torres et al., 2015)
1.3 Importance of the external factors on Starbucks
Political stability refers to the discipline and proper administration of a country. It poses
significant impact on the operations of an organisation. Nan and Li (2017) suggested that
countries namely the United States of America, Canada, China and Japan are the biggest sellers
of Starbucks. The political situations of the countries are stable. Countries namely Egypt,
Greece, Columbia and other nations have unstable situations. The number of stores in them is
less and there are lesser prospects of them growing in the nations. Integration of market refers to
a situation when prices of products in different locations or related goods follow similar patterns
of price over an extended period of time. It should be noted that Starbucks has to compete with
local coffee brands of different nations. UK has several coffee brands apart from Starbucks. It
can be figured out from the statistics provided below.
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Figure 1: Coffee chains in the UK
(Source: White, 2016)
The companies can follow a similar pricing pattern that would be lesser that Starbucks for coffee,
sandwich, latte, mocha, cappuccino and other products. This would lead people to choose the
local brands over Starbucks. The possibility of the scenario looms around the corner.
Governments of different nations concentrate on enhancement of infrastructure of coffee chains
to ensure that they contribute towards GDP of the nation.
The developed countries namely the UK, USA, China, Spain and others are making steady
progress as far as ensuring the fact that development in them is sustainable. The countries turn
out to be potential prospect for Starbucks. However labour is essential to drive operations in the
nations. The UK after Brexit lost out on significant amount of cheap labour from European states
(Glowik, 2017). It made a contrasting effect on different industrial sectors across the UK. USA
has cut on the number of immigrants hence cheap labour is not available. Economic conditions
of the developed nations are good. However for developing and underdeveloped nations like the
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Chile, Peru the economic conditions are not good. Operations of Starbucks in these nations can
take a hit. It is essential on part of Starbucks to have a solid foundation in the nations in which it
has a firm base (Reinhard, 2015). It would ensure that fact that when operations in
underdeveloped nations dwindle the operations in the developed ones would help the cause.
The developed countries have a consider amount of population that belong from the upper
middle and upper class. The mentioned social attribute is an obvious reason why Starbucks
have managed to make a firm base in them. Unless the countries suffer from economic recession
or people suffering from low income, business of Starbucks would thrive in them. The politically
unstable nations and the underdeveloped nations have danger of economic downfall and higher
number of lower class people respectively. The number of stores in them is a clear indication of
the same. South Africa has 7 stores, Bolivia 4 stores, Slovakia 4 stores, Cambodia 4 stores are
examples of such nations (Orta et al., 2015).
Figure 2: Countries with the largest consumer of coffee
(Source: White, 2016)
The statistics show the countries that consume the largest amount of coffee. It can be seen that
Starbucks have prospects of enhancing their business in Finland, Sweden, Germany, Denmark
and others since the countries are the largest consumers of coffee in the world.
Starbucks uses different categories of coffee namely medium roasted Indian estates blend,
Medium roasted whole bean Kenya, Dark roasted whole bean Italian roast, Dark roast Sumatra,
Medium roast Columbia and other for its stores (starbucks.com, 2018). Starbucks conducts
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intensive market research to obtain the categories of coffee so that it earns a competitive edge in
the technological department. Marketing is another aspect of Starbucks that has helped it attain
a competitive edge. It uses social media to market its products. In 2010 it earned the most
popular social media brand by the followers of Fame count, an online statistics and analytics
provider. Starbucks has its own mobile applications besides its website to facilitate consumers as
far as viewing their products is concerned (Glowik, 2017). The application facilitates purchasing
of Starbucks products. It is available on Blackberry, Android and iPhone. Coffee machines are
an integral part of a coffee store and Starbucks is no exception of it.
Haskova (2015) put forward that Starbucks believes in the importance of caring for earth. It
encourages others to achieve the same. It uses environment friendly cups for its stores. It
constantly works on its recycling program to reduce the amount of waste generated. It uses
renewable sources of energy to reduce environmental impact. It constantly works towards
minimizing utility of energy consumption. It uses less water for its operations. It concentrates on
making its stores green by virtue of using responsible building materials and energy efficient
techniques to contribute towards environmental footprint. The government of diffident nations
have become aware of environmental damages and have started to take active measures as far as
mitigating them is concerned. Starbucks by virtue of its activities that contribute towards
environmental sustainability is assured of grabbing the attention of governments across several
nations of the world.
As far as the legal aspect is concerned, Starbucks’s success has always been dependent on the
farmers and suppliers who contribute towards growth and production of the products like tea,
coffee, cocoa and other manufactured services and goods. It is committed towards providing
ethically and responsibly purchased products that are of the highest quality. Since 2006, it started
the Starbucks annual Supplier Summit in China. It congregates stakeholders and focuses on
improving working conditions in areas where its products are sourced. It offers technical training
to support suppliers and factories in the efforts to ethically source superior quality products (Nan
and Li, 2017).
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1.3 Conclusion
It can be reflected from the above account that the external factors have their fair share of pros
and cons for Starbucks. It should be meticulous in its approach to make use of the positive
aspects and work on the disadvantages to enhance its performance.
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Task 2
2.1 Introduction
Corporate social responsibility is a business tactic undertaken by organisations in order to
contribute towards sustainable development. It achieves the same by delivering social, economic
and environmental benefits to all its stakeholders. It helps a company earn brand reputation.
Many organisations undertake such activities to earn recognition (Pedersen, 2015). Corporate
social responsibility of Starbucks, its influence on the company, effectiveness of the approaches
and areas of improvement would be elucidated.
2.2 Relevance of corporate social responsibility to Starbucks
Starbucks believes that it should have an impact on the communities it services. It follows the
policy ‘one person, one cup and one neighbourhood at a time’. Starbucks is spread across 75
countries. It operates in more than 25,000 stores. They consider it part of the duty to elevate
customers, partners, suppliers and neighbours so that it contributes towards a positive change. It
aspires to be innovators, leaders and contributors to an inclusive society and a healthy
environment (Kang and Namkung, 2017). The same would enable Starbucks along with others to
endure and thrive.
While the mentioned aspects hold true the purpose of achieve progress in business and earning a
reputation in the market cannot be ignored. Starbucks is the leading coffee chain in the world and
it aims to stay so. It aspires to grow each day. Contributing towards the society helps the
organisation attain the purpose. It leaves a positive impression on the people and motivates them
to avail for the services from Starbucks.
2.3 Influences of corporate social responsibility as far as policies and decision making of
Starbucks is concerned
Starbucks owes its success to the success of the farmers and suppliers who are responsible for
growing and producing the products. It helps people thrive and ensure long term sustainability
and premium products that it provides. It is dedicated towards helping farmers overcome
challenges faced by coffee communities. They are committed towards providing 100 % ethically
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sourced coffee in partnership with Conservation International. It shares its researches and
resources through Farmer Support Centres in coffee producing countries to enhance
productivity and sustainability. They donate millions of disease-resistant trees to farmers to help
them fight threats like coffee leaf rust. It’s Global Farmer Fund Program it has invested $ 50
million dollar towards financing farmers and allowing them to renovate their farms and take up
sustainable practices. Till date the organisation has invested $ 100 to support the coffee
communities (Honack and Waikar, 2017).
Starbucks depends on farmers for its supply of tea. It purchases tea namely black, oolong, green
and white teas from farmers who have technical expertise and equipment. Starbucks have
contributed towards the welfare of the farmers who supply them tea. For 10 years it has
partnered with the Ethical Tea Partnership (ETP) to ensure that the tea products are produced
adhering to sustainable practices. For 13 years it has supported Mercy Corps Community
Health and Advancement Initiative (CHAI). It has provided vocational training, water access
and health service improvements to 100,000 people across 39 rural communities in Assam and
Darjeeling in India and Guatemalan Cardamom growing villages (Snell et al., 2017).
Starbucks provides opportunities to youths and provides them career and education
opportunities. In 2015 Starbucks committed to hire 10,000 Opportunity Youth by 2018. They
have conducted it to a considerable extent. It believes that the group would represent future
workforce and customers. The young people are untapped talent and would serve as an
opportunity of productivity and creativity. In 2017 it had already hired 40,000 people and they
desires to build on it. The people it aims to hire or have hired are the unprivileged people who
have faced problems as far as attaining education is concerned. They have faced obstacles in life
and are forced to be disconnected from institutions, individuals and experiences. Starbucks in
turn have catered to the requirement of the talented, resilient adults who aspires to be successful
in life (starbucks.com, 2018).
The Starbucks Foundation was built as part of their commitment to strengthen communities. It
started in 1997 by funding literacy programs in Canada and the United States. Presently it runs
across the globe. In 2015 the Foundation gave $ 6.9 million making 128 grants to non-profit
organisations. It comprised of $ 3 million for Starbucks Opportunity for Youth Grants. As far as
social development grants are concerned it comprised of a remarkable $ 1.5 million. The
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foundations support partner’s engagement in the local community through Community Service
Grants and Partner Match. It provides matching grants to non-profits where partners contribute
towards time and monetary fields (starbucks.com, 2018).
Starbucks Global Farmer Fund comprise of a $ 50 million commitment towards providing
financial aid to coffee farmers. The amount would help the organisation to repay loans and be
able to support restoration, agronomy and infrastructure improvements. The particular endeavour
of Starbuck began in 2000. It has helped cooperatives to deal with risks and enhance their
business. As of 2017 its loan commitment was $ 23 million (Boone, 2017).
Catering towards environment should be integral towards operation of any organisation.
Starbucks commits to the same by different ways. Starbucks follows recycling of cups and otter
packaging materials. In 2006, in North America, it started to offer cups with 10 % post-consumer
recycled paper fibre (starbucks.com, 2018). Reusable cups are an essential aspect towards its
overall waste reduction. Since 1985 it has started rewarding customers who bring their own
tumblers. In 2013 it launched $ 2 reusable cups in Canada and the USA and 1 Pound cup in the
UK (Boone, 2017). However, such initiatives taken by a single company has failed to attain
results on a wide scale. It contributed towards environmental sustainability in a limited way.
Same initiative undertaken by other organisations would promote environmental sustainability
on a significant scale.
2.4 Effectiveness of Starbucks’s response
Corporate social responsibility serves two core purposes at a single time. It contributes towards
welfare of the society, community and in turn help the company earn a brand reputation. By
virtue of ensuring care towards farmers and suppliers they have helped them to a significant
amount. The farmers are not often financially secure and do not receive rewards for the hard
work they put in. Starbucks had the acumen to think of the aspect and have funds ready for them.
It has helped people farmers repay loans and enable them to afford raw materials and other
essentialities. It has made sure that farmers remain in good terms with Starbucks and produces
the best materials for them (starbucks.co.uk, 2018).
Response of Starbucks and its effectiveness
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In the view of Boone (2017) there are not many organisations across the globe that pay heed to
humanity along with making steady progress in business. Starbucks has contributed towards
humanity and business in equal measures. Providing employment to Opportunity Youth is an
effort towards humanity. Starbucks has taken notice of underprivileged people and went on to
offer them work. Little are people aware that such people possess talent that can be harnessed.
Starbucks has employed 40,000 such people and has gone on to harness their talent. It provided
the people with means to live.
Key performance indicator is a measurable value which demonstrates the effectiveness of a
company as far as achieving business objectives are concerned. The same would be reflected as
far as Starbucks CSR activities are concerned.
Key performance indicator Measure of achievement
Environmental sustainability Achieved by virtue of customer benefits and using reusable
cups
Creating awareness Opportunity Youth
Community help  Global Farmer Fund Program
 Ethical Tea Partnership
 Mercy Corps Community Health and Advancement
Initiative
Collaboration Starbucks Foundation
Table 2: KPI of Starbucks CSR activities
(Source: Created by author)
Harrington et al. (2017) put forward that the amount of non-biodegradable wastes of earth has
reached beyond alarming levels. Most organisations on earth do not pay heed to the attribute and
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go on contributing towards it. Starbucks has emerged different from them. Its initiative of
making cups with recycled paper is an important measure towards environmental sustainability.
Providing benefit to customers who bring their own tumblers and seeling reusable cups have
ensured that amount of wastes generated is reduced. It has stood up as an example towards other
organisations as far as ensuring environmental sustainability is concerned.
Mason et al. (2017) opined that Starbucks operates on a global scale and it has to compete with
eminent names namely Coffee Beanery, Dunkin Doughnuts, McCafe, Costa Coffee, Tully’s
Coffee, Lavazza Coffee, Bewley’s and others. It has to compete with local brands of the different
countries. It is essential for Starbucks to stay ahead of the competitors. For the mentioned reason,
it has to undertake corporate social responsibility endeavours to ensure that it attains a
competitive edge. It helps the organisation to earn a brand reputation. It makes an impression in
the mind of the people. Consumers are driven to choose Starbucks over other companies. It
enhances customer loyalty. It helps companies to face challenging situations.
Employees enjoy working in an environment that comprises of learning opportunities. Executing
different types of tasks reduces monotony and assists professional and personal development.
Starbucks attains the purpose of incorporating new skills to the staffs in the form of corporate
social responsibility. It makes the employees feel passionate. It enriches their perspectives. It
encourages employees to attain growth and support.
Ellision (2017) put forward in his article that corporate social responsibility helps Starbucks hire
efficient staffs. It helps them reduce cost on advertisements and manage risks and liabilities.
Starbucks have sponsored several events across the globe. It sponsored the Pride Parade in UK
on 8th July 2017. Starbucks brought its sponsorship in the event. They served Frappuccino topped
with rainbow coloured heart sprinkles in its stores across the route of the parade. The event took
place across two days. In addition to the innovative measure, 240 Starbucks employee joined the
parade. The activities have invited several business opportunities for Starbucks. Undertaking
similar ventures would enhance business prospects for Starbucks. In June 2018 Starbucks
undertook sponsoring bottled Frappuccino to people for the festival of colour run across
Manchester and Brighton. It drove more people to choose Starbucks over other companies. The
Starbucks Foundation helps in providing matching grants to non-profits where partners create
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awareness and contribute towards time and monetary fields. Moreover, Starbucks Global
Farmer Fund helps in committing towards providing financial aid to coffee farmers.
Undertaking corporate social responsibility has enabled Starbucks to think of long term business.
With constant contribution towards corporate social responsibility, it earns market reputation and
a significant customer base. The same are integral towards driving business for a long time.
2.5 Suggestions for improvements in corporate social responsibility of Starbucks
Starbucks Corporation is one of the famous coffee companies in America. It has made its own
position in the global market for its product quality and consumer satisfaction (Angeloni et al.,
2016).
Corporate Social Responsibility is a tool nowadays that is used by several companies to make
welfare of the society and as well to gain a goodwill for the company. Starbucks Corporation
will follow the following steps to maintain its CSR activities and gain sustainability for the
organization:
 Practice Transparency: Internet is a very common and essential medium to reach to all the
section of the world. If any organization’s information is disseminated in the internet then
there no hope that its information can be hidden from public. Starbucks Corporation should
embrace its social responsibility as the organizational practice. This will remit the whole
world the message that the company has the social responsibility will also create a high value
about the company in the minds of customers. This will increase Starbucks Corporation’s
sustainability in the global market (Ozierański et al.,2018).
 Making sustainable purchasing decision: Sustainability is such a thing which depends on
the consumers’ consideration how the company is socially responsible to its society. From a
big product to a small one, the reputation of a company depends on how the company
behaves with its society in which he serves his products and services. In this sense, Starbucks
Corporation has to think over about the responsibilities to its partners, customers etc. so that
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those stakeholders may give the company the right return for its position (Azadnia Azadnia et
al.,2015).
 Playing more actively in the community: Maintaining corporate social responsibility is
also making a good decision in the global market. Maintaining corporate social responsibility
is the other name of involving the local community as much as possible. The more the local
community will be involved in the CSR programs, the more the name of the business will
spread over the market. So, it is the responsibility of Starbucks Corporation to involve the
local community in the CSR program at least in a quarterly program and give the local
community a chance to participate in it. Thus, Starbucks Corporation can gain sustainability
through strong image in the global market.
 Local community’s support: Starbucks Corporation should give support to the local
community in the various ways. It should support the local community, It should purchase
the raw-materials or other thing from the local suppliers where it is possible, Starbucks
corporation should provide the opportunities to the local community as much as possible in
the local events especially in the case where the company is promoting its local business (Lee
et al.,2018).
 Innovation: Starbucks Corporation has to make innovation in the field of its coffee and other
products and allow its employees to participate in it. This will increase the sense of
responsibility of the company in the minds of its employees. Through such participation, the
company has to make the employees understand that maintaining social responsibility is not
only a part of making public relation but a part of daily business activity also. Thus
maintaining CSR activities by Starbucks Corporation will bring business sustainability
through performance culture in the organization (Drucker, 2014. ).
 Suppliers’ relations: When a company maintains good corporate social responsibilities then
the stakeholders such as he customers, investors, creditors etc. get a rich idea about the
company and it helps the company to gain its sustainability (Baylis et al.,2017).
There are some other points that have to be realized by Starbucks for gaining sustainability of it.
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1) If Starbucks Corporation cultivate the maintaining of CSR activities in the company, then a
sense of responsibility will automatically grow in the minds of its employees and the will
automatically produce better. Thus the company will sustain long.
2) It is the responsibility of Starbucks Corporation to make the corporate social responsibility a
compulsory duty in every layer of its management so that a sense of the same may be created
among the employees of the company. It is also a means of attaining the sustainability.
3) Starbucks should develop the social activities through various programs and it should be sure
that it is investing in right place from where it can make a profit. Thus Starbucks Corporation
will be sure that it will have a positive impact on its business through these CSR activities.
4) Starbucks Corporation should promote the healthcare activities, sanitation activities and make
the drinking water available in the local area through local community programs.
5) Starbucks Corporation will, on the one hand should make its employees trained and skilled
and on the other hand, should increase employees’ salaries and other benefits. This is also a
responsibility of Starbucks Corporation to it employee. It will also bring the company the
sustainability.
6) Starbucks Corporation should include education and sports in various CSR programs so that
there will be a social development through the development of education and sports.
7) Nowadays, the environment is being polluted through several types of pollution like air
pollution, water pollution, and soil erosion and so on. Starbucks Corporation should take some
initiatives to make some environmental program to mitigate the evil effects of such
environmental pollutions. The company will have to take some direct steps to recycle some
products for example the packing mode of the products etc. The public will be educated aware of
the evil effects of the pollution (Yoshizumi, 2016.).
2.5 Conclusion
From the above account it can be inferred that Starbucks caters to social responsibility and
business endeavours in equal measures. They have undertaken several notable measures as far as
corporate social responsibility is concerned. It drives them towards accomplishing several
objectives. The same would be integral towards driving efficient business in the future.
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Conclusion
Corporate social responsibility is a thing which helps a company a lot to gain its logn-term
sustainability in the market. Corporate social responsibilities can be maintained through various
types of activities like making programs, donating in the schools, colleges, hospitals etc.,
following some pollution-free production procedures etc. Here, in this context, the coffee
company of America “Starbucks Corporation” has been taken for example and it have been
shown what are the procedures that should be followed for attaining the sustainability of
Starbucks Corporation through various CSR activities. The learner will have a detailed idea
about the Corporate Social Responsibility and sustenance of accompany.
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Appendices
Appendix 1
Profile of Starbucks
Industry: Coffee
Founder: Jerry Baldwin
Area served: Worldwide
Employees: 24,000
Revenue: $ 2.885 billion (2017)
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