Analysis of Starbucks' Unethical Behavior and Business Implications

This report examines the unethical behavior of Starbucks, specifically focusing on its tax avoidance practices in the UK and the resulting implications. The analysis delves into how these actions have affected various stakeholders, including shareholders, customers, the industry, and regulators. The report highlights the negative impact on Starbucks' brand image, customer trust, and relationships with other businesses, while also addressing the company's failure to be transparent about its financial performance. The conclusion emphasizes the importance of ethical conduct in maintaining a positive corporate culture, and the recommendations suggest steps Starbucks can take to improve its practices, such as greater financial transparency and implementing strategies to address tax obligations. The report underscores the importance of ethical behavior for long-term business success.

Academic English and
Skills

Table of Contents
INTRODUCTION ..........................................................................................................................1
ANALYSIS .....................................................................................................................................1
Examine the impact of unethical behaviour which is outlined in case study. ............................1
CONCLUSION ...............................................................................................................................4
RECOMMENDATION ..................................................................................................................5
Suggest some steps which can be apply within Starbucks business issues. ...............................5
REFERNCES ..................................................................................................................................6
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INTRODUCTION
In an organisation, ethics plays a vital role as it direct influence its productivity and
profitability as well as its brand image among competitive industry. However, moral philosophy
is a set of procedures or policy that directs the company in its program, rules and decision for
business. Moreover, an ethical discipline within organisation uses to enrich firm can change its
position within industry, proficiency and bottom line of business in marketplace. Furthermore,
unethical behaviour in the enterprise is also developed when there is a deficiency of
accountability for supposed activity by those in high level positions (Chughtai, Byrne and Flood,
2015). Furthermore, leaders and workforce maintaining a code of ethics creates or generates a
healthy and ethical organisational culture which assist them to maintain its brand value among
competitors as well as in mind of customers.
Although, there are varying degrees of unethical behaviours like violating government
policies, lying to employees and customers, abusive behaviour and many more whose
consequences damages or spoils organisation brand image not only from legal point of view but
also to its culture and brand image. For this report, Starbucks Case study is considered which
signifies its unethical code of conduct in terms of not paying taxation amount to government. In
this study, it covers unethical behaviour of organisation and its impact over firm's proficiency as
well as recommending valuable suggestion in order to overcome shortcomings to survive within
an industry is also mentioned here.
ANALYSIS
Examine the impact of unethical behaviour which is outlined in case study.
In order to survive for longer period of time in an dynamic industry as well as to cope up
with all business challenges or threat in an impressive or productive manner, pursuing ethical
code of conduct within firm premises plays a significant role. Therefore, it is crucial to realise
that maintaining moral value in the workplace can impact positively manpower demeanour that
lead to company's development, just as wrong conduct or activity encourage prejudicious
headlines which lead to establishment ending in a drastic manner (Shaw, McMaster and
Newholm, 2016). Nowadays, it is very integral for all firm in the world to understand which
actions are ethical or unethical for customer and also to organisation proficiency ratio. In regard
of Starbucks, which is one of the leading American coffee company and coffee house chain
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which is established in the year of 1971. Its headquartered at Seattle, Washington and they
operates over 30,000 locations worldwide. Although, it is the third largest food restaurants chains
by their number of positioning in world but it has been fall victim for an unethical behaviour as
per the report of London( Reuters) i.e. avoiding tax payment and not showing or reporting their
profit to government from the past three years . However, In UK market, it is viewed as a highly
profitable company and also Starbucks is the biggest threat for other competitors within an UK
industry from past decades. But unfortunately, Starbucks managers were not transparent towards
their customer in terms of providing all detailed information regarding profit margin or sales
growth that directly influence its productivity and profitable ratio.
In modern economies, taxes are considered as most significant source of governmental
revenue as it is different from other mode of revenue generation in which it implies that they are
compulsory levies and unrequited (F. Burke, Eckert and Davis, 2014). Due to this, it helps firm
to ascertain their financial position effectively and also to make corrective course of action for
grasping all possible opportunity in an innovative and creative style without any hindrances or
obstacles. Hence, Starbucks fails to report their financial statement i.e. gain or loss during their
business trade within UK market which impacted heavily over its brand image (Starbucks’
European unit paid 2.8% UK tax last year, 2019). Moreover, due to its unethical practices it has
analysed or examined that firm action influence various parties or relations which is connected to
Starbucks profitability are described below:
Shareholders: They are regarded as one of the main role for organisation growth and
development as they refer as an individuals or person who holds a minimum of one share in
firm's stock of particular organisation in order to make them a partial owner. Moreover, they
receive their profit in terms of dividends which enlarge organisation growth or profit margin. In
context of Starbucks, it never reported or revealed their financial position to its shareholders
which restrict them to invest in company's shares which lead firm to enlarge their market size in
an impressive way. Moreover, they are very essential stakeholders for Starbucks growth because
they put money into business and bring capital to enterprise and demand share in organization
profits (Engelbrecht, Wolmarans and Mahembe, 2017). Due to this activity of Starbucks, they
lack in getting or acquiring productive decision making which shareholder provides to them after
analysing the financial statement of firm for particular year in order to cope up with all current
and emergent trend of company's financial position. Furthermore, it impact Starbucks brand
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image among UK population because the organisation shareholders were not aware about their
profit or loss statement from past three years which holds them back from investment and sale in
order to move share price and entice media attention towards Starbucks issues which they faces
in UK business from past few years.
Customers: There is an ethical conflict among Starbucks and its customers even after
company is considered as one of the most honourable retailer in UK market. As per the statement
of Reuters (London), Starbucks is ranked among practising unethical behaviour because there is
a highly intervention of government within company operation or function from last three years
which greatly impact UK population attitude towards firm brand image. Lately, Starbucks were
minimising their corporate tax in the UK market as it not all paid to government. In the past 14
years, company has cashed less than 1% corporate tax for their £3 billion sales in UK as well as
Starbucks transcribed the gross revenue of £398 million and they compensated no taxes at all.
And in 2011, firm showed a loss on report of £33 million, but they conveyed their stockholder
and customers that the concern in UK is very gainful or increasing their proficiency which effect
customer trust or loyalty towards brand value. Due to this full tax avoidance operation effect in a
lot of brand damage for Starbucks UK and multitude were calling on Twitter to boycott company
for its non payment of tax to government (Guerci and et.al 2015).
Industry : According to the Reuters investigation who has been insist that Starbucks has
payed only £8.6m in UK corporation tax since propulsion here in 1998 and has cashed none from
2009. The newswire asserted that instead of create £1.2bn revenue in the UK over past three
years, Starbucks proclaimed no income here, which signifies that they are not entitled to wage
business firm tax which create negative impression over estabilishment brand image within an
industry (Yusuf and et.al 2014). However, in UK coffee shop industry, there is high level of
competition among companies like Costa, Coffee Cafe Day and many more and in which ethical
practice plays a crucial role to sustain within industry for a longer period of time. Along with
this, if company fails to keep up with their moral values as Starbucks did by not mentioning their
exact financial condition and also not paying the tax amount to government, it lead them to
decrease their sales growth and also force them to raise their product price in order to clear off
their tax amount. Furthermore, because of Starbucks activity, it effect them in breaking the
relationship among various companies which decreases its brand value as well as they will not be
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aware about current or emerging trends among UK population in order to acquire best
positioning in existing marketplace in an impressive style.
Regulators: They are those group of individuals or organisation who are appointed by a
government to regulate or monitor the entire business function or operation in order to
accomplish organisational goal in a better manner. The Reuters reports that Seattle firm has paid
no income tax or corporate tax in the last three years contempt reporting sales of £1.2bn and
telling investors that its UK arm is proficiency which misguides several firm profitability ratio.
Additional, Starbucks is the second largest global restaurant or cafe chain behind Mc Donald
with a market capitalisation of of $ 40bn and its main competitors are also paying multimillion
pound tax bills to Treasury. But Starbucks has been using wholly legal tax avoidance schemes to
states no profits as well as they escape from recompense UK tax (Newman, Kiazad, Miao and
Cooper, 2014). However, due to Starbucks action it influence or restrict regulators in
implementing best strategic decision related to ethical behaviour which directly effect over its
profitability and productivity ratio.
However, the preceding explained factors or aspects which has been viewed after
analysing Starbucks case study has a great influence over enterprise proficiency and profit
margin. Henceforth, Starbucks should maintain their long lasting relationship with customers,
shareholders,and to industry s well as follow all ethical practices in order to gain competitive
advantage without any hindrances within their business function.
CONCLUSION
It has been concluded from the above stated report that error in workplace ethics arise
every day, in majority of the business which effect organisation reputation as well as its brand
image among challenging industry. However, effective leaders that model moral behaviour and
set clear policies can justify the risk of an ethical dilemma damaging its company's status.
Moreover, a positive and better corporate culture enhance the morale among individual in firm ,
which may enhance productivity and employee retention, this in turn has fiscal benefit for
company to sustain within marketplace for longer period of time. Along with this, to foster
economic growth and development government need sustainable sources of funding for social
programs and public investment. Henceforth, ethical conduct in company encourages mangers or
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leader to adhere to all government legislation or regulation which enhances their accountability
and transparency when pursuit any business decisions.
RECOMMENDATION
Suggest some steps which can be apply within Starbucks business issues.
There are various ways which Starbucks should imply towards their business operation in
order to enhance their market share or size in a better manner. Some of them are explained
below:
 Starbucks must reveal their financial condition to their shareholders because they
consistently want to understand a larger return on their investment and paying fewer
taxes gives them this higher profitability. Meaning that, if Starbucks does not take any
initiative to set up these system, their good value would increase which decreases
customer buying behaviour and it effect its proficiency ratio.
 Starbucks can apply offshore licensing, movement pricing that route earnings to
Switzerland and intra group funding to bring down their UK profits and also to pay off
their corporate tax in an effective and efficient manner which lead them to enlarge their
brand value within competitive industry.
 In order to survive within competitive marketplace in a productive style, Starbucks must
treat their customer in a transparent manner by providing all relevant information related
to product as well as the financial scenario. So that customers can be aware about existing
or upcoming trends and it benefit company by making a corrective course of actions in
order to enlarge their market size in an innovative and creative style.
Henceforth, application of these recommendation by Starbucks business function helps
them to enlarge their proficiency as well as can gain best positioning within competitive industry
in an impressive and productive manner.
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REFERNCES
Books and Journals
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