Facts
This company was started as a partnership in 1971 by three people. Howard Shultz helped start the first store in Seattle in 1985. The starbuck company has been on a rapid expansion ever since. In the United USA the company has opened and operates eight thousand stores.(Ben Siltman and Melanie Drever). In the rest of the countries abroad Starbuck operates over 3200 hundred stores in different countries. Its rapid expansion and growth has seen it open five stores daily on average in the USA. On top of this the company serves on average 30 million customers in one week. This rapid expansion has elevated the company as the world’s leading coffee house. It has expanded into countries like England and Australia. As part of its business description Starbuck is involved in buying of coffee beans that is then roasted to get high quality coffee from it. Starbuck sells a wide range of beverages that include coffee, hot chocolate and espresso among other beverages..(Ben Siltman and Melanie Drever).In addition, it also sells coffee merchandise, and home brewing equipments. So as to diversify its business Starbuck licenses its trademark to various channels through its equity investors through out the world. For instance, the company has licensed various locations like grocery stores major food service companies, University campuses, hospitals, and theme parks.
As worldwide, institution the company has developed an objective which is to establish Starbuck as the most recognized and respected brand in the world. The company offers it s employees’ better working conditions and benefits in fact it has been ranked as one of the best companies that employees can work for. It is one of the places where the employees get health insurance for working just 20 hours in one week. On top of this the employees receive a progressive compensation package, health care benefits and retirement savings.
This company has had its own fair share of problems the company has had to deal with negative publicity from the media. In October the Sun paper reported that the was blasted by the environmental experts because it had discovered that the coffee chain had a policy of keeping tap running. This policy had led to company wasting a lot of water that was estimated to be 23.4 million liters per day. It was argued that this water that was going to waste could be enough for a country’s population that was hit by drought. ( Veronica Lorraine and Brian Flynn 2008). It was reported that the company was harming the environment by frittering away a vital natural resource.
The story about the sacking of Daniel who had worked for the company for over three years proved to be a thorny issue. He was being terminated for showing solidarity with his co workers. It was argued that the company was suppressing the rights of the workers to free association. (2006). In 2007 the company’s chief financial officer reported that the country was hitting 20 month low on stocks. This was because the company was facing rising costs of dairy products. The stocks had dropped from 40 in 2006 to hit below 26 in 2007. (Market Watch).The price stock was falling because the company was raising prices to offset increased dairy prices and pay rises. The company’s profit was also being hurt by the fact that its competitors such as rival coffee farms and fast food operators had positioned themselves strategically to Starbuck’s customers.
Although the company has been successful in their rapid expansion they have faced some major setbacks. For instance they suffered from the 2008 economic slowdown. The company was adversely affected as it had to cut down on its expansion in retail market.( Christy Linn, 2008). In addition it had to lay off some staff. Starbuck has also been criticized for killing other smaller local coffee shops there by leading to their exit from the business world. Killing smaller businesses simply implies that the clustering of the star bucks’ branches saturates the market, this can lead to unfair competition. The customers themselves have been complaining because in a way this institution is selfish as it does not give back to the society. This criticism however, led to the company’s initiative of giving back to the community through cooperate social responsibility. I t has offered some grants to the work charity.
Challenges
One of the major challenges facing this institution is globalization. Many people who are anti globalization have viewed the company as globalization. This has indeed proven to be a major challenge to the company. There have even been planned mass protests against this company (Democracy Now 2000). The main reason for this protest was that the people against globalization were saying that the institution was actually mistreating the farmers. The coffee farmers were being subjected to unfair treatment by this multinational cooperation. In fact the company had not started the fair trade that had started in Europe earlier. It had been passed as matter of policy that the farmers to be given $1.26a pound. It had been estimated that this would be equal to the living wage of farmers who come from coffee producing countries. Of which the Starbucks Company had not yet started implementing. This was intended to eliminate the intermediary. It was also supposed to guarantee low income credit to coffee producers. By ignoring this policy Starbuck was not practicing what is otherwise known as fair coffee trade. This was unethical as it created the perception that the company was oppressing the poor coffee farmers. In globalization the market is liberalized thereby leaving the coffee farmers exposed to the mistreatment from the multinational companies when it comes to pricing and earning profits. Without practice of fair trade it is not possible to protect the farmers from low wages when working in the coffee plantations or their respective individual farms. Through this policy the coffee buyers buy coffee from the small scale farmers who will benefit fully from the trade thus making the maximum profit that they deserve. It was not fair therefore for the corporation to take advantage of the farmers and continue making huge amounts of profits while the producer who toils to bring that coffee to the world stage continues to languish in poverty. A case in point is when the company was accused of exploiting cheap foreign labour. The company for instance, was accused of getting its coffee beans from an export house that paid workers below the living daily wage. It is not the responsibility of the company to improve the conditions of the labor force abroad but it was not expected that this same company that was highly valued could actually get its coffee beans from exporters who are taking advantage of the poor farmer.
Apart from being seen as globalization the Starbuck has often been accused of many other injustices in the global coffee trade. As mentioned earlier they have been known to use a strategy referred to as clustering strategy which kills the small coffee retail coffee ventures.The CEO of this company Howard Schultz has been associated with financial dealings with the Israeli government.. This in fact is not a good image for the company as it puts the credibility of the management of that institution to test.
Alternatives (Propositions)
To deal with the issue of customers’ view that the company is selfish the company should set aside a small amount of its financial budget to go to the corporate social responsibility. This should be through offering of grants to the charities. To back up their support the company should annually come up with a report to account for its activities in the society. To deal with groups of protesters activists that are rallying against the organization the company should befriend their advisers. Through this move they will prepare themselves for any attack that may come their way. They should collaborate with the leaders of these movements so that they can be aware of the activities that are being planned against them. In order to give back to the community the company should join hands with other companies to help the communities who are in dire need of human aid or assistance. For instance the company can join hand with pharmaceutical company to give malarial drugs to those that have been adversely affected by malaria. This company deals with agricultural produce and therefore it is important for it to engage in environmental programs. This is especially so since they need to deal with the issue of sustainable development which is a major challenge of 21st century. In fact they should partner with international organizations that are not out to make profit so that they can help promote biodiversity. The company has been heavily accused of its rapid expansion that is killing the local coffee industries. As mentioned earlier this expansion has led to clustering of so many branches of starbuck in one area thereby leading to the collapse of the local retail outlets for coffee. To be able to deal with this problem the organization should carry out a task that will undertake the identification of the outlets owned by starbuck that are not so profitable for closure. This will give an opportunity for local coffee outlets to compete fairly with the multinational. To deal with the issue of fair trade Starbuck must implement and promote the fair trade policy. This will prevent the company from getting negative publicity on the issue of globalization. As such they will participate in the liberal trade without exploiting the coffee farmer. Fair trade means that prices are fixed for producers irrespective of the fluctuating market prices worldwide. The multinational will get its fair share of profit but the farmers should also benefit from the same trade. In terms of environmental conservation the company can create some kind of an awareness programme that can be used to educate the farmers on technologically sound farming practices that are aimed at conserving the environment.
Ethical theories
Kantian ethics
Proponent of this philosophy is referred to as Immanuel Kant. To this philosopher the motive is what counts when it comes to determining what is ethical or not ethical. Moral action is based on the question what am I required to do. He further points out that emotions of pity and compassion should never be considered relevant when it comes to morality or what ought to be done or ought not to be done. Applying Kantian ethics to the Starbuck’s company and criticisms directed towards it we find that what the company did is completely moral. People were criticizing the organization because of the pity they were feeling for the farmers who were coffee producers that they were being mistreated. In fact Kant emphasizes that in morality is all about the question what Am I ought to do. Starbuck as accompany is required to get coffee, process it and come up with various products so as to continue staying in the business. Therefore considering the Kantian ethics what the company was doing was ethical.
Teleological ethics
This ethical theory is a theory on morality. This theory deals with what is the moral obligation; that which is right from wrong. In man the end result of his actions is what matters.( Theological Studies.org, 2004). Ethics tend to nurture virtue and excellence in the human being as the end of all actions. In the case of the Starbuck Company in light of the teleological theory what they did was wrong for the end result of their actions should be aiming at doing that which is good to man. The company was supposed to ethically carry out their business with the plight of the poor farmer in mind. They were supposed to ensure that the farmer is given consideration. The coffee producers must benefit from the produce that they are working so hard to produce. Therefore applying teleotological theories in this circumstance what Starbuck did was completely unethical for they are to make sure that all the coffee players in the coffee industry are satisfied after transaction.
Theory of Justice
The proponent of this theory is known as John Rawls. This theory argues for balance between liberty and equality. To Rawls, desires should be advanced through what he calls cooperation with other people through mutually acceptable conditions. Parties choose mutually acceptable doctrines of justice. Considering what the company did is ethical, nothing wrong with what happened. The humans have come up with the principle of liberal trade that gives people and multinationals to undertake business venture freely locally or internationally provided it is legal. Sturbuck’s company therefore was right in its position of buying coffee from export houses that are considered to suppress the farmers for they were just participating in free trade and they were not responsible for directly oppressing the farmers. It is safe to say that what the company did was ethical. Justice theory looks at what the company did whether it was legal or not. Considering that what the Starbucks did was nothing against the law they were right and justified to do whatever they did.
Decision and recommendation
On the matter of environmental sustainability Starbuck as a matter of policy should develop some environmental mission that should ensure that the company participates fully in matters of environment. A team to develop environmentally sound policies that are in line with the interests of the Starbucks coffee company should be set up. The company deals with coffee and coffee is all about farming therefore there should be some promotion of biodiversity to conserve the environment while still pursuing the interests of the company.
The company should be involved in corporate social responsibility and this can only be through working with several other companies and non profit making organizations to give back to the society. For example, they can work with an NGO to feed the poor or help funding initiatives to alleviate diseases.
To avoid negative criticism starbuck must always ensure that they adopt policies that do not oppress the producer of coffee products.
References
Anna Shepherd. Coffee shops: a load of old froth? 2006. Web.
Ben Siltman and Melanie Drever. University of Wyoming. Starbucks Mission: Responsibility and Growth.
Christy Linn. Starbucks Increases Number of U.S. Company-Operated Store Closures as Part of Transformation Strategy. 2008. Web.
Jon Entine. Corporate Governance. Corporate Ethics and Accountability. 2008. Web.
Starbucks Global chain of coffee shops. 2008. Web.
Theological Studies. Kantian Ethics. 2004. Web.
What we are all about Starbucks Corporation 2008. Web.
A theory of Justice. 2008. Web.
Teleological ethics. 2008. Web.
Veronica Lorraine and Brian Flynn.The great drain robbery, 2008. Web.
Take Action: Iww Starbucks Union Co-Founder Daniel Gross Facing Termination Pending “Investigation”. 2008. Web.