Starbucks - Corporate Affairs


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Starbucks - Corporate Affairs

  1. 1. Collaborating with Activists: How Starbucks Works with NGOs Rhea Culbertson, Stephen Gilliam, Amanda Hartnett, and Amanda Winchip
  2. 2. CASE OVERVIEW: The Facts  STARBUCKS:  GLOBAL EXCHANGE:  Leading Global Coffee  Non-Governmental Retailer Organization (NGO)  Socially Responsible  Promoter of Fair Trade Company Coffee  Criticizes Starbucks for  COFFEE INDUSTRY: Failure to Buy and Sell Fair Trade Coffee  In 2000, $80 billion  Disrupts Starbucks industry Annual Shareholder  Second most commonly Conference traded global commodity  Threatens Public (second only to oil) Boycotts
  3. 3. CASE OVERVIEW: Starbucks  Mission Statement: Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.  Guiding Principles: (Emphasis Added)  Provide a great work environment and treat each other respect and dignity  Embrace diversity as an essential component in the way we do business  Apply the highest standards of excellence to the purchasing, roasting, and fresh delivery of our coffee  Develop enthusiastically satisfied customers all of the time  Contribute positively to our communities and our environment  Recognize that profitability is essential to our future success
  4. 4. CASE OVERVIEW: Starbucks Social Responsibility “Our Commitment to Ethical Coffee Sourcing”
  5. 5. CASE OVERVIEW: NGOs  Representatives of independent citizen organizations, known as non-governmental organizations or NGOs, are often the most effective voices for the concerns of ordinary people. NGOs include the most outspoken advocates of human rights, the environment, social programs, and more. - United Nations  NGOs originally evolved to influence government  Now, NGOs focus their efforts on corporations, investors, and customers.  Corporations and NGOs now control much of the agenda formerly dictated by government
  6. 6. CASE OVERVIEW: NGOs  Individuals tend to have a higher degree of trust in NGOs as they perceive their objectives as altruistic rather than merely profit driven  Capitalize on high levels of distrust in corporations  Why are NGOs so influential?  Unique ability to focus on single, specific issues  “Category Killers”  Ability to act swiftly  Capitalize on existing tools (Ex: Media and Internet) to communicate their message  The number of NGOs has increased drastically over the past decade.
  7. 7. CASE OVERVIEW: NGOs  NGO Approaches:  Developing Campaigns Against Business – Focus on single issues and well-known organizations or brands.  Attempting to Build Market Intelligence - Influence how organizations conduct business  Engaging Businesses – Involve the targeted organization(s)  Making Market Mechanisms More Intelligent -Attempt to change an entire industry.  Disrupting Markets  The NGOs tactics determine its potential threat to business
  8. 8. CASE OVERVIEW: Global Exchange  Our Vision We envision a people centered globalization that values the rights of workers and the health of the planet; that prioritizes international collaboration as central to ensuring peace; and that aims to create a local, green economy designed to embrace the diversity of our communities. In a world where the economics of quantity fuels corporate power and political greed, the elite are reaping profits while working people and the planet are left to pay the price. In response to the global degradation caused by this system of elite globalization, Global Exchange envisions an alternative economics of quality centered upon protecting international human rights to ensure that the cost of globalization does not come at the expense of us all.
  9. 9. CASE OVERVIEW: Global Exchange  Mission Statement As an education and action resource center, we advance our vision by working to ensure our members and constituents are empowered locally and connected globally to create a just and sustainable world. Global Exchange takes a holistic approach to creating change. With 20 years working for international human rights, we realize that in order to advance social, environmental and economic justice we must transform the global economy from profit centered to people centered, from currency to community.
  10. 10. CASE OVERVIEW: Global Exchange and Fair Trade  Global Exchange implements the principles of socially and economically responsible business by operating according to Fair Trade Criteria.
  11. 11. EVALUATE: WHAT IF ANALYSIS: Starbucks does buy/sell Fair Trade Coffee.  PROS:  CONS:  Reduces threat of public  Potentially negative impact boycotts. on coffee quality.  Maintains image of social  Potentially negative impact responsibility. on existing suppliers.  No demand for Fair Trade Coffee from existing customers.  May reduce profit.
  12. 12. EVALUATE: WHAT IF ANALYSIS: Starbucks does not buy/sell Fair Trade Coffee  PROS:  CONS:  Maintain high standard of  Potentially tarnishes public quality coffee perception on Starbucks  Maintain existing dedication to social suppliers responsibility  Maintain steady profits  Increases likelihood of  Maintain customer potential public boycotts satisfaction
  13. 13. Problems in the Mission Statement  Provide a great work environment and treat each other with respect and dignity  Starbucks took a narrow interpretation to the work place: their stores  Global Exchange took a broad interpretation to the work place: the farmers and the fields where Starbucks’ coffee is grown
  14. 14. Problems in the Mission Statement  Contribute positively to our communities and our environment  Starbucks meant they would hold themselves to a higher standard  Global Exchange decided they would hold Starbucks to a higher standard
  15. 15. DISCUSSION QUESTION Who gets to set the standards of CSR (the company, the NGOs, a third party)? Do consumers really have that much control over these issues?
  16. 16. Problems in the Mission Statement  Starbucks’ vulnerabilities:  Size of the company  Ubiquitous locations  High Visibility  High ideals in the mission statement  Based in the United States  Pure-play in the coffee industry  Solution: better to act on high ideals than to state them
  17. 17. How much is enough?  Starbucks dedicated  Worked with several resources in commitment NGOs to communities and  Numerous accolades environment for social responsibility  Hired Director of  Paid above-market Environmental Affairs prices for coffee (1994)  Created Senior Vice President for Corporate Social Responsibility (1999)
  18. 18. DISCUSSION QUESTION Other corporations such as The Gap and Shell, have also been subject to continuous criticism from NGOs despite their attempts to position themselves as socially responsible companies. Can a company ever be socially responsible enough? When a company openly sets a mission to be socially responsible, is it just setting itself up to be a NGO target? How much CSR is enough? At what point do you say no?
  19. 19. How much is enough?  Incorrectly perceived immunity from criticism and interference over social responsibility from:  Customers  Media  Other NGOs
  20. 20. Living Up to the Mission Statement  Local & World-wide programs:  Local: Latitude given to store managers for donations to local charities and causes  Corporate: Cumulative $1.8 million donated to CARE by 2001 for use in coffee-growing countries  Living up to high social responsibility ideals by reasonable standards  Everyone does not use reasonable standards
  21. 21. Threat Assessment  Nike (HQ in Oregon)  Starbucks (Washington) attacked by Global determined not to Exchange in the 1990s become “Nike of the for repeated failure to coffee industry” by meet labor standards in adopting Fair Trade developing countries. standards & practices.
  22. 22. DISCUSSION QUESTION What impact do NGOs have on your (a consumer’s) buying decision? Ex: Nike, Wal- Mart, conflict diamonds, etc…..- Have we become desensitized?
  23. 23. NEXT STEPS: Starbucks  Motivating Factors  Buy the Farms  Join NGO’s  Streamline the Supply Chain  Collaborate  Openness
  24. 24. NEXT STEPS: Starbucks MOTIVATING FACTORS BUY THE FARMS  Research how the profits  Allows Starbucks to of fair trade coffee are control their supply and broken down. quality of beans  Does Global Exchange  Could decrease external or TransFair have pressures from NGO’s ulterior motives?  If so, Starbucks could refute NGO’s credibility.
  25. 25. NEXT STEPS: Starbucks JOIN THE NGOs STREAMLINE THE SUPPLY CHAIN  Provide suppliers the  Cut the number of proper licensing to become middlemen fair trade certified  Decrease in “coyotes”  Allows Starbucks to means…. keep its suppliers  Increase profits for small  Continue selling high farmers quality coffee
  26. 26. NEXT STEPS: Starbucks COLLABORATE OPENESS  Communicate with  Keep an open ear and NGO’s open mind  Collaborate on efforts to  DON’T ignore criticism better the coffee industry or accusations from  Be proactive NGO’s
  27. 27. DISCUSSION QUESTION “Many organizations have found that, through carefully developed partnerships, each party can move beyond their respective organizational restraints to achieve results that exceed what each can accomplish individually.” Would Global Exchange have been more successful with an initial collaborative approach?
  28. 28. Starbucks: The Star Candidate  Starbucks boasted it’s socially responsible practices in many ways and included a statement of this devotion in their mission statement, which would pigeon-hole them into cooperation.  It was a large company with a strong brand image, which could change the industry.  It was based in the U.S. with free-standing stores, which would make demonstrations easy.  
  29. 29. Lessons from the case 1. Realize that socially responsible companies are likely targets but also attractive candidates for collaboration. 2. Don’t wait for a crisis to collaborate. 3. Think strategically about relationships with NGOs. 4. Recognize that collaboration involves some compromise. 5. Appreciate the value of NGOs independence. 6. Understand that building relationships with NGOs takes time and effort. 7. Think more like an NGO by using communication strategically.
  30. 30. LESSONS LEARNED • Objectively assess the landscape. • You will be judged according to your stated goals. • Risk associated with Pure Play. • Collaborate with detractors.
  31. 31. DISCUSSION QUESTION Compare the ethical implications of Starbucks decisions to that of Pfizer?
  32. 32. DISSCUSSION QUESTION  What is the tobacco industry’s obligation to society? Do different industries have differing levels of social responsibility?
  33. 33. QUESTIONS OR COMMENTS Thank you.