Stakeholder Analysis, September 2011

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Kaplan University MBA, Corporate Social Responsibility

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  • The Specialty Coffee market is estimated to be over $11 billion annually. Despite economic downturns in recent years the specialty coffee business has continued to grow.According to data from the National Coffee Association’s National Coffee Drinking Trends report for 2011 - 40% of people between 18 to 24 drink coffee each day. This percentage rose significantly from 31% in 2010 to reach the same levels as 2009. Among the age group of 25 to 39, 54% of people drink coffee each day. This number again rose from 44% in 2010 and is close to the 53% figure from 2009.The number of coffeehouses grew from only 500 stores in 1991 to 24,000 stores in 2006. Despite 2008 economic downturn, consumer consumption of specialty coffee drinks remained steady. Coffeehouses have become the “third place” for social consumption, but are also experiencing more competition as fast food restaurants include specialty coffee on their menusThe major coffee shops sell whole or ground coffee beans for home consumption; coffee or espresso-making equipment, grinders, mugs, and other accessories.Source:Ten 2011 Coffee Trends - Coffee Fest SeattleNational Coffee Drinking Trends
  • As in any business, a coffee house business’ market stakeholders are: Employees,Stockholders,Creditors,Suppliers,Customers,Distributors, Wholesalers, Retailers.For this analysis, I will focus on four primary stakeholders: Customers, Employees, Stockholders, and Suppliers. I will explore each stakeholders Nature of Interest and Power and how best to maintain loyalty to a coffee house business.Source: Lawrence & Weber
  • Source: Lawrence & WeberStarbucks Company, www.starbucks.com
  • Source: Lawrence & WeberStarbucks Company, www.starbucks.com
  • Source: Lawrence & WeberStarbucks Company, www.starbucks.com
  • Source: Lawrence & WeberStarbucks Company, www.starbucks.com
  • A Starbucks on every corner is not only a long standing joke but is also how this company has become so successful. They are a house hold name. Of course having great coffee and well-trained, friendly baristas is where they began and are continuing to go strong. Their largest target population is young adults age 18-24 years old who use Starbucks as a destination to socialize, study, unwind. With that in mind, their stores are continually evolving into comfortable and hip gathering places with most having Wi-Fi and mobile applications to keep up with technology. They have continued to grow by placing kiosks in grocery stores, airports, hotels, and just about anywhere you go in the U.S. Starbucks has expanded out into 35 other countries, including China, Japan, South Korea, and even the Middle East. They also have a complex U.S. and global corporate responsibility program focusing on community, environment, diversity and wellness.Adding breakfast pastries and hot sandwiches open them to compete with fast food restaurants - their two biggest competitors are McDonald's and Dunkin Donuts (They have increased food product development by offering gourmet sandwiches, salads, snack platters with cheese and fruit, yogurt and ice cream.Starbucks has turned their stores into gift shops by offering mugs, chocolate covered coffee beans, seasonal coffee blends, coffee presses, and more. They have also introduced their own line of music CDs compilations you can't find anywhere else.Source:Starbucks Company, www.starbucks.com
  • Starbucks Corporation (Starbucks) is the largest roaster and retailer of specialty coffee in the world, operating in more than 50 countries. Starbucks purchases and roasts whole bean coffees and sells them, along with handcrafted coffee and tea beverages and a variety of fresh food items, through Company-operated retail stores. It also sells coffee and tea products and license its trademarks through other channels, such as licensed retail stores and, through certain of its licensees and equity investees, the Company produces and sells a variety of ready-to-drink beverages.In addition to its flagship Starbucks brand, its portfolio includes brands, such as Tazo Tea, Seattle's Best Coffee, and Starbucks VIA Ready Brew. Recovering from fallen stock prices in 2008 and investing more in International sales, Starbucks profits increased more than eightfold in the second quarter of 2010, showing profits of $217.3 million.Starbucks has three operating segments: United States (US), International, and Global Consumer Products Group (CPG). In October 2010, the Company acquired Magic Johnson Enterprise's remaining 50% interest in Urban Coffee Opportunities.Source:Starbucks Company, www.starbucks.comNew York Times, March 2011
  • Starbucks believes in touching each aspect of their business on a very human level. Here are the principles of their mission:Source:Starbucks Company, www.starbucks.com
  • Coffee - Ethically source the finest coffee beans, roasting them with great care, and improving the lives of people who grow them. Customers – Be fully engaged with customers.Stores – Provide sense of belonging, a haven, a break from the worries outside, a place where customers can meet with friends. Our Neighborhood – Take responsibility to be good neighbors seriously. Force for positive action; bring together partners, customers, and the community to contribute every day. Our Shareholders - Enjoy the kind of success that rewards shareholders. Commitment to wellnessFrom coffee, tea, smoothies and skinny lattes to fresh fruit, salads, whole grains and reduced fat pastries, Starbucks offers a variety of delicious options to meet our customer’s needs. And you can feel good knowing that all of our foods are no more than 500 calories and free from unnecessary ingredients like high fructose corn syrup, artificial flavors, dyes, and artificial trans fats.Some of our favorite balanced options include: Delicious Drinks Under 200 Calories; Favorite Foods Under 360 Calories; Foods with 10g Fat or Less; Foods with 600 mg Sodium or Less.Source:Starbucks Company, www.starbucks.com
  • Employee benefits package includes base salary, health care benefits, stock option planOur PartnersEmployees called partners; embrace diversity;treat each other with respect and dignity; hold each other to that standard.AwardsRecognition given for a variety of achievementsPartner (Starbucks Employee) Wellness Starbucks commitment to wellness extends to our own Partners (employees). Thrive Wellness has been in place since 2004. The Thrive program provides partners with a variety of tools, resources and benefits aimed at helping all our partners incorporate wellness into their daily routine. From fitness tools, to weight loss and smoking cessation resources, it’s covered under Thrive. Source:Starbucks Company, www.starbucks.com
  • Fully accountable to achievement and innovation to move the company forward and continuing to growThrough the BuyDirect Plan, which is sponsored and administered by BNY Mellon Shareowner Services, current stockholders and new investors have the ability to purchase and sell shares of Starbucks common stockStarbucks pays a dividend on its Common Stock and the current quarterly rate is 13 cents per share. Future dividends will be subject to Board approval, but are currently anticipating paying a dividend on a quarterly basis. Source: Starbucks Company, www.starbucks.com
  • Committed to buying and serving the highest-quality, responsibly grown, ethically traded coffee to help create a better future for farmers.Fair Trade Certified™ coffee empowers small-scale farmers organized in cooperatives to invest in their farms and communities, protect the environment, and develop the business skills necessary to compete in the global marketplace. Starbucks began purchasing Fair Trade Certified™ coffee in 2000, helping grow the market for Fair Trade Certified coffee in the U.S. Economic Accountability Transparency is required. Suppliers must submit evidence of payments made throughout the coffee supply chain to demonstrate how much of the price Starbucks pays for green (unroasted) coffee gets to the farmer. Social Responsibility Measures in place that concern safe, fair and humane working conditions. These include protecting the rights of workers and providing adequate living conditions. Compliance with the indicators for minimum-wage requirements and addressing child labor/forced labor and discrimination is mandatory. Source: Starbucks Company, www.starbucks.com
  • Non-market or Secondary StakeholdersSource:Starbucks Company, www.starbucks.com
  • Starbucks Standards of Business ConductThe Standards of Business Conduct booklet is a resource distributed to all partners to help them make appropriate decisions at work.The Standards are a brief statement of some of the company’s expectations of how all employees are to conduct Starbucks business, consistent with the Guiding Principles. Business Ethics and ComplianceStarbucks believes that conducting business ethically and striving to do the right thing are vital to the success of the company. Business Ethics and Compliance is a program that supports Starbucks Mission and helps protect the culture and reputation by providing resources that help partners make ethical decisions at work.Policy & Advocacy Find new ways to provide nutritious foods and beverages for customers; advocate for policies that support the health of communities and offer programs for Partners that support an active, balanced lifestyle. Starbucks advocated for a national labeling standard that was signed into law as part of the Patient Protection and Affordable Care Act (H.R. 3590) on March 23, 2010.In addition to posting calories, Starbucks continues to look for innovative ways to share information with consumers. Sustainability grown coffeeInitiated C.A.F.E. (Coffee and Farmer Equity) Practices to evaluate, recognize, and reward producers of high-quality sustainably grown coffeeEvaluates the economic, social and environmental aspects of coffee production against a defined set of criteriaStarbucks defines sustainability as an economically viable model that addresses the social and environmental needs of all the participants in the supply chain from farmer to consumer. Conservation International has worked with Starbucks for more than a decade to promote coffee production practices that conserve biodiversity, maintain healthy ecosystems and support economic and social development in coffee production landscapes as embodied in the company’s commitment to ethical sourcing.Source: Starbucks Company, www.starbucks.com
  • Focused on the long-term sustainability of coffee-growing communities. Through innovative programs with an emphasis on continuous improvement, the company is taking action to address concerns about climate change and the impact it will have on the long-term supply of coffee. In 2010, Starbucks collaborated with representatives from across their value chain to address the challenges faced together and advanced a number of meaningful initiatives.At the store level, green building and energy and water conservation strategiescontinue to be key priorities with potential to significantly minimize our environmental footprint.In 2010 the company reached some significant new milestones to make cups and other packaging more broadly recyclable. Expand focus from materials and design to the improvement of local recycling infrastructures.In 2010 expanded efforts to protect carbon-absorbing tropical forests in a number of coffee-growing communities. Continued work asfounding member of a coalition called Business for Innovative Climate and Energy Policy (BICEP), joining with other responsible companies to advocate for stronger climate change and clean energy policy. Source: Starbucks Company, www.starbucks.com
  • Stakeholder Analysis, September 2011

    1. 1. Stakeholder AnalysisSTARBUCKS COFFEE GB590 Corporate Social Responsibility Catherine Tedrick Kaplan University September 20, 2011
    2. 2. INTRODUCTIONCoffee House IndustryClick to add heading $11 Billion Industry • Specialty coffee consumption grew more than 48% from 2001 to 2006 • Number of coffeehouses grew from only 500 stores in 1991 to over 40,000 in 2011 • Business has stayed strong even in current economic downturn Top five businesses in the industry: • Starbucks • Caribou Coffee • Tully’s • Coffee Bean & Tea Leaf • Peet’s Coffee Competitive Environment • Demand driven by consumer income, personal tastes, social outlet • Success depends on prime location of stores, ease of accessibility, quality of coffee, and variety of other specialty products • Increased competition with fast food restaurants serving breakfast • Include accessories and other specialty items in store and online
    3. 3. Market StakeholdersClick to add heading Employees Stockholders Distributors, Wholesalers, Retailers Business Customers Creditors Suppliers
    4. 4. COFFEE SHOP STAKEHOLDERSCustomersClick to add heading Customers Nature of Interest • Receive fair exchange - value and quality for money spent • Receive safe and reliable products Customers Nature of and Power • Purchasing goods from competitors • Boycotting companies whose products are unsatisfactory or whose policies are unacceptable Coffee shop customer loyalty achieved through: • Quality coffee • Friendly employees • Good location that is easy to access • Good customer service
    5. 5. COFFEE SHOP STAKEHOLDERSEmployeesClick to add heading Employees Nature of Interest • Maintain stable employment in firm • Receive fair pay for work • Work safe, comfortable environment Employees Nature of Power • Union bargaining power • Work actions or strikes • Publicity Coffee shop employee loyalty achieved through: • Treat employees with respect • Good pay and benefits package; discount on products • Provide a safe and friendly environment • Career growth opportunity
    6. 6. COFFEE SHOP STAKEHOLDERSStockholdersClick to add heading Stockholders Nature of Interest • Receive a satisfactory return on investments (dividends) • Realize appreciation in stock value over time Stockholders Nature of Power • Exercising voting rights based on share ownership • Exercising rights to inspect company books and records Coffee shop stockholder loyalty achieved through: • Generate profits • Pay dividends • Strong code of ethics • Social responsibility to coffee farmers and environment
    7. 7. COFFEE SHOP STAKEHOLDERSSuppliersClick to add heading Suppliers Nature of Interest • Receive regular orders for goods • Be paid promptly for supplies delivered Suppliers Nature of Power • Purchasing goods from competitors • Boycotting companies whose products are unsatisfactory or whose policies are unacceptable Coffee shop customer loyalty achieved through: • Pay on time • Pay fair rates • Practice fair trade with farmers
    8. 8. STARBUCKS COFFEE c c
    9. 9. STARBUCKS COFFEECompany OverviewClick to add heading World’s largest roaster and retailer of specialty coffee • Over 17,000 stores in more than 50 countries around the world. • In five years, Starbucks nearly tripled the number of stores worldwide, from 5,886 in 2002 to 15,011 in 2007. • Company-operated stores; does not sell franchise • Owns other brands: Tazo Tea, Seattle’s Best Coffee Has three operating segments: • United States, International, and Global Consumer Products Group • Recently acquired Urban Coffee Opportunities Bounced back after stocks dropped 50% in 2008 • Stronger focus on International sales • Profits increased eightfold in second quarter of 2010 to $217.3 million
    10. 10. STAR BUCKS COFFEEMission StatementClick to add heading Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.
    11. 11. STARBUCK’S STAKEHOLDERSCustomersClick to add heading Quality specialty coffee • Ethically sourced coffee beans • Careful roasting • Fair trade and organic Customer service • Give sense of belonging • Employees fully engaged with customer • Fair trade and organic Commitment to wellness through healthy food • Low calorie options • Reduced fat breads and pastries Value added through additional products • Gift cards and other gift items • Coffee beans and brewing equipment • Starbucks cups, mugs and other products with logo
    12. 12. STARBUCK’S STAKEHOLDERSEmployeesClick to add heading Employees are called “Partners” Recognition Awards Employee Benefits Package: • Base salary • Health care benefits • Stock options • Employee trainings/career development  Star Skills  Coffee Master Program  Servant Leadership Workshop  Career Power and Career Power for Coaches Workshop Thrive Wellness
    13. 13. STARBUCK’S STAKEHOLDERSShareholdersClick to add heading Committed to enjoying the kind of success that rewards shareholders Buy Direct Plan • Allows current stockholders and new investors to purchase and sell shares of Starbucks common stock Dividends • Starbucks pays a dividend on its Common Stock and the current quarterly rate is 13 cents per share. • Future dividends will be subject to Board approval, but are currently anticipating paying a dividend on a quarterly basis.
    14. 14. STARBUCK’S STAKEHOLDERSSuppliersClick to add heading Ethically traded • Fair Trade Certified coffee empowers farmers • Protects environment • Develop business skills Economic accountability • Transparency is required – suppliers must show proof of payment Third-party verifiers • Safety measures in place for fair and human working conditions • Protection of workers rights • Compliance with minimum-wage requirements • Addresses child labor and discrimination
    15. 15. CORPORATE SOCIAL RESPONSIBILITY c c
    16. 16. NON-MARKET STAKEHOLDERSEthical PracticesClick to add heading Standards of Business Code • Booklet to guide partners • Company’s expectations on how to conduct business World’s Most Ethical Companies • For the fifth year in a row, Ethisphere Magazine has named Starbucks to the list. Policy and Advocacy for Healthy Foods • Advocate for healthy communities • National labeling standards Responsible Growing Practices • C.A.F.E. Practices • Conservational International (CI)
    17. 17. NON-MARKET STAKEHOLDERSEnvironmental ResponsibilityClick to add heading Reduce environmental impact • Climate change and long-term supply of coffee Advanced initiatives and developed key priorities at the store level • Green Building • Energy and water conservation • Recycling Business for Innovative Climate and Energy Policy • Advocate for stronger climate change and clean energy policy
    18. 18. STAKEHOLDER ANALYSISReferencesClick to add heading Bolton, D. (2010) Ten 2011 Coffee Trends - Coffee Fest Seattle. Specialty Coffee Retailers. Retrieved from http://www.specialty- coffee.com/ME2/Audiences/Default.asp?AudID=464620AE3F20454894C8CB7CEF72A 481 Lawrence, A. and Weber, J. (2011). Business and Society Stakeholders, Ethics, Public Policy. 13th ed. McGraw-Hill Companies, Inc., New York, New York National Coffee Drinking Trends. (2011) National Association of Coffee. Starbucks Coffee Company. Retrieved from www.starbucks.com

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