Ethical Practices in Business: A Case Study of Starbucks

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ORGANISATION ETHICS
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Executive Summary
The approach regarding the proper and effective approach used by the managers in enhancing
the ability has been discussed here in proper and effective manner. The assignment also deals
with approach made by the situation on getting maximum revenue totally affect the accuracy
in providing proper service. Based on the development of managing skills, effective image
regarding the specification of products has also been discussed. Various ethical approach
steps in enhancing its capability of management in almost all kind of situation have also been
discussed elaborately. In the final part of the proper conclusion and recommendation has
been made in this assignment.
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Table of Contents
Introduction................................................................................................................................4
Analysis......................................................................................................................................4
Regulators...............................................................................................................................4
Customers...............................................................................................................................5
Revenue..................................................................................................................................6
Manager..................................................................................................................................7
Conclusion..................................................................................................................................7
Recommendation........................................................................................................................8
Reference List............................................................................................................................9
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Introduction
Every business venture is a direct or indirect service to mankind. The success of a business in
the form of high profit turnover is dependent on the business product sold to the people.
Based on the feedback of one individual about of a product, the other entire individual
decides on purchasing the product. This is a specific form of advertisement spread through
the people. In such situation, the role of ethics for business purpose plays a significant
impact. Every ethical business person is confident about the moral value of the business, that
he is owner of. The following of ethical guidelines in a business ensures that the business is
fair, clean and beneficial for the surrounding society. Ethics are the rules of law that needs to
be abided by the organizations to ensure the fair practices followed in the organization.
The habit of being fair, ethical and honest of the part of an individual is termed to be one of
the most important basic human needs. This is reflected by the thought process of the
employees who prefers to work for a company practicing fair and ethics in all the company
affairs. It is also observed that a company influenced by moral values is respected in the
society irrespective of the knowledge of company business details. Since majority of the
people prefers to abide by the moral values, this moral values and ethics act as a binding
principle responsible for uniting the people. Another advantage of following ethical ground is
that ethics helps in the correct decision making process by unlocking the tendency to observe
the positive opportunities.
Furthermore, the companies whose preference is forever ethics are found to have been
profitable in the long run. On the contrary, they seem to have lost money in the short run for
not following the ethical grounds. However, in the following case scenario, it has been
observed that Starbucks has an ethical dilemma regarding tax evasion that has definitely
unaccepted for such a reputed business firm. In this relevance, following report has analysed
impacts of this ethical dilemma on various business domains of Starbucks.
Analysis
Regulators
The basic Ethical Business Regulation (EBR) states that to choose the right thing in all
situations irrespective of the scenarios as well as sharing of the relevant information for the
purpose of constant learning and the subsequent improving (Dutta & Banerjee, 2011:359).
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Such a company following such ethical values creates a positive impact on its employees who
gets habituated to follow ethical values in all aspects of life such as workplace, home, social
life and public life (Reddy & Rampersad, 2012:7410). The application of such ethical values
enhances the performances and the achievements of the company. In addition to this,
following of ethical values improves the relation between the company and its external
stakeholders such as customers, suppliers and the investors. The regulators are largely
responsible for the control of the business growth thereby regulating the market competition.
The necessary condition that needs to be abiding by on the part of the regulators is the
publication of the enforcement policies suggested by them. This has an added advantage that
a careful analysis of these policies gradually results in the revelation of a wide range of
approaches prevalent in the regulatory community (publishing.service.gov.uk, 2019).
People tend to obey the rules in the instances of the rule corresponding to the internal moral
value system in addition to the fact that the rule have been made using fair practice and the
rule is applied fairly for each and every individual (Goodman & Bryant, 2013:40). As a
support of abiding the rules, the businesses demonstrate constant evidences of commitment to
fair and ethical behavior that entrusts the regulators and the regulators. A blame culture is
preferred to be avoided as this restricts the growth of learning as well as ethical culture. In
this regard, the company must ensure to avoid any blame culture practice in their business
premises. In the cases, where the rule breaking instance is observed, people respond
accordingly (fljs.org, 2019).
This is evident in the given case study of Starbucks, a renowned coffee shop in UK, who got
involved in tax evasion in the name of loss running which is just the opposite of the reality
where the company’s profit turnover had been really high.
Customers
Every company has a tendency to involve the common people in its business for the purpose
of its product advertisement and the product selling. It has been observed that people tend to
buy the products based on the brand name (Bello, 2012:2). This reveals that the customers
trust on the brand and this trust must be gained through prolonged abiding of ethical values.
A company with a bad brand name losses its customers and subsequently incurs loss whereas
a company earning the customer trust becomes confident to launch a new experimental
product in the market incurring minimum loss (Anyanwu & Nweake, 2014:2).
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The tax is the stipulated amount collected from the active business running companies for the
several beneficial activities for the common people. Thus, the tax evasion is considered as
totally ethical. In reality, there is not much awareness prevalent about this tax payment
leading to several companies participating in the unethical practice of tax avoidance. In this
scenario, it is suggested that ethical beliefs needs to implement in such a way that it
ultimately improves the tax compliance. It is assumed that by the habitualisation of the tax
payment procedure, moral values is increased in the taxpayers who have otherwise lower
levels of moral development (Phatshwane, 2013:45). The taxpayers are encouraged to pay the
tax amount stipulated for them by explaining them the details of the previous tax amounts
that have been utilized for several benevolent activities such as construction of road, bridges
on the river and many others. Awareness once created helps in the encouragement for
taxpaying of the future non-taxpayer by the regular tax payer.
In this context, the present case study of Starbucks Company indulging in tax avoidance
reveals that the company itself is earning a bad name as well as having a negative impact on
the employees working in the company.
Revenue
Revenue is defined as the amount of money earned by an organization by doing business in
the whole year (Milosevic & Martinelli, 2016:25). The revenue generated can be very
beneficial in enhancing the working area of the organization in all aspects. On the other hand,
a good amount of revenue provides a good amount of salary for the employee. Revenue
generated from an organization totally depends on the quality of service or products issued by
it.
As per the view of Binder (2016:68), the revenue generated by the management of any
organization totally depends on the supported quality of the products as well as the proper
marketing skills of the management. In the case of Starbuck, the management has achieved a
very good response from its entire customer in all over the globe (Starbucks.co.uk, 2019).
The ethics of the revenue totally depends on the availability of proper and sufficient level of
service and quality of products in all kinds of situation. On the other hand, it can also be seen
that the proper and effective approach made by the situation on getting maximum revenue
totally affect the accuracy in providing proper service in all aspects. This provides a proper
and accurate level of efficiency in achieving target related to the growth of the company.
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In order to understand the various approaches for gaining the correct revenue in achieving the
target related to the growth of the organization, the role of management totally depends upon
the working ability to obtain high-quality products. Revenue generated in the year 2017 was
almost 22,387 million US dollars (Starbucks.co.uk, 2019). The profit earned by the
management of Starbucks is very huge. There must be a proper and accurate level of efficient
working condition in achieving target related to the development of trust between the local
government and the company (Akan et al. 2015:34)
Manager
It is the duty of the manager is to maintain the image of the organization in all aspects of
development (Board & Skrzypacz, 2016:297). The proper and effective approach used by the
managers in enhancing the ability in a very effective manner can help the organization to
achieve its goal in very less time. In the case of Starbucks, the managers are trained in such a
way that they can be able to provide the proper and accurate manner in enhancing the
production quality of various products. Several decisions based on the development of an
organization can easily enhance the capability of its employee. One such step was taken by
Starbucks is providing university education to its employee on a regular basis as an incentive
for their works. It has been seen that the management of Starbucks has used the same concept
in the US to provide almost more than eighteen thousands of staffs to get a good education as
an incentive (Bbc.com, 2019)
This step can be very ethical approach steps in enhancing its capability of management in
almost all kind of situation. On the other hand, the basic approach used by the management
can help in the development of trust regarding achieving on a regular basis. It can also be
observed that the necessity of managing power based on the development of trust can be very
effective in enhancing the role of development of basic issues. Proper tax related to the
business needs to be submitted in a good manner by all of the organization. Various types of
tax are made for the development of proper and effective. As per the viewpoint of Abrate &
Viglia (2016:168), assisting employees and managers on a regular basis can be very
beneficial in making trust between the organization and its employee.
Conclusion
It can be concluded from the assignment that the various types of rules and regulation are
very necessary for obtaining high-quality service from its employee. In the case of Starbucks,
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the management has provided advantageous assistance to its employee for obtaining a college
degree free of cost. It can be very free of cost as the fee will be paid by the management of
Starbucks. In order to enhance its public relation, the role of management is very important.
However, the accurate use of public relation and media coverage has provided the
management of Starbucks very effective in understanding the proper choice of customers.
The use of regulations by the government of the local country has provided accurate and
efficient methods for obtaining a good amount of tax. It can also be concluded from the
assignment that the proper revenue generated from the business operation can be very
beneficial in enhancing the skills of the employee.
Recommendation
It can be recommended based on the report that the management of Starbucks needs to focus
on the rules and regulation of the local country. Expectations regarding the brands of
Starbucks can only be achieved by following the local regulation. On the same time, the
revenue gain by the management can be used for opening new branches in various countries.
In order to enhance the role of contribution regarding the development of trust, various steps
need to be taken. It can also be recommended that the management must take the avoidance
of tax seriously.
If there is a small scam in the tax gets verified against any organization, it can easily affect
their public image. The management of the faulty organization can be penalized, which can
cause huge financial loss to the management. In order to avoid such kinds of problem, the
management needs to focus on government rules and regulation. It can also be recommended
that proper media coverage is also very important for getting attention in the public domain.
Proper media coverage can be obtained both invading celebrities in the promotional or annual
events. Promotion of products can also be done by offering coupons with a fixed discount in
the public place.
It can be advised to the management of Starbucks that the effective use of regulation and
policies can be very beneficial in enhancing the skills of an individual in all aspects of
development. Proper training must give to the managers of Starbucks on a regular basis to be
updated with the latest technology and trends in the market. Based on the development of
managing skills, effective image regarding the specification of products has always been very
beneficial in maintaining the good image of Starbucks. Moreover, suitable recommendations
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can be provided following which business firms like wise Starbucks will be able to avoid the
crucial situations such as ethical dilemma within the expanded business context of it.
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Reference List
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management. Tourism Management, 55, 123-132.
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screening. Journal of Economic Theory, 159, 728-774.
Anyanwu, S. A., & Nweake, L. I. (2014). Ethical challenges in international business
operations. Journal of Business and Retail Management Research, 8(2).
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https://www.bbc.com/news/education-47773592 [Accessed on: 25 March 2019]
Bello, S. M. (2012). Impact of ethical leadership on employee job performance. International
Journal of Business and Social Science, 3(11).
Binder, J. (2016). Global project management: communication, collaboration and
management across borders. Routledge.
Board, S., & Skrzypacz, A. (2016). Revenue management with forward-looking
buyers. Journal of Political Economy, 124(4), 1046-1087.
Dutta, S., & Banerjee, S. (2011). Ethical Practices towards Employees in Small Enterprises:
A Quantitative Index. International Journal of Business Management & Economic
Research, 2(3).
fljs.org . 2019. Ethical Business Regulation.
https://www.fljs.org/sites/www.fljs.org/files/publications/Ethical%20Business
%20Regulation.pdf
Goodman, M. K., & Bryant, R. (2013). Placing the practices of alternative economic
geographies: Alternative retail, the spaces of intention and ethical ambiguities. Environment,
politics and development working paper series, 7-50.
https://www.theguardian.com/business/2016/jul/13/starbucks-customers-coffee-prices-go-up
Milosevic, D. Z., & Martinelli, R. J. (2016). Project management toolbox: tools and
techniques for the practising project manager. John Wiley & Sons.
Othman, Z., & Rahman, R. A. (2014). Attributes of ethical leadership in leading good
governance. International Journal of Business and Society, 15(2), 359.
Phatshwane, P. M. (2013). Ethical perceptions of managers: A preliminary study of small and
medium enterprises in Botswana. American International Journal of Contemporary
Research, 3(2), 41-49.
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publishing.service.gov.uk. 2019. Ethical Business Regulation:
Reddy, K., & Rampersad, R. (2012). Ethical business practices: The consumer protection act
and socio-economic transformation in South Africa. African Journal of Business
Management, 6(25), 7403-7413.
Starbucks.co.uk (2019) About, Available at: https://www.starbucks.co.uk/ [Accessed on: 25
March 2019]
Understanding the Evidence.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/
attachment_data/file/497539/16-113-ethical-business-regulation.pdf
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