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Practice of Business Ethics at STARBUCKS

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Starbucks Corporation is one the renowned American coffee shop and coffee chain. It was
established in 1971, Washington. In 2017, the company has 27,339 outlets worldwide.
Starbucks sells coffee, smoothies, tea, baked items and sandwiches. Kevin Johnson is CEO &
Howard Schultz is the executive board of Starbucks. Approximately 200,000 employees are
working under Starbucks. This corporation has a lot of collaboration with different
organizations like PepsiCo, Tata, Stanley team,, Disney X etc. They are also
collaborated with different NGOs & Governments
Starbucks has become a very popular coffee shop worldwide .They also believe that the
relationships with external stakeholders are very important & it can be implemented by
focusing on the commitments. As a large corporation they believe that it„s their duty to
improve the society, environment and the world. For instance, they always say that they are
working together with the farmers and suppliers to bring a more sustainable approach in case
of high-quality coffee production, contributing positively to local communities, minimizing
environmental hazards & protecting customers, partners & stakeholders rights.

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Practice of Business Ethics at STARBUCKS

  1. 1. 1 Group Project on Starbucks PHI401 Section: 11 Submitted to: Ridma Khan (RDN) Lecturer Department of History and Philosophy North South University Submitted By: MD. Tanzirul Amin 1611676030 A.B.M. Foysal Hossain 1320664030 Osama Sarwar Sayeef 1520261630 Avijit Rajbangshi 1320764030 Faysal Rahman 1420618030 Samnun Salehin 1420700030 Zahidul Islam Emon 1520902631 Date: 30th August 2018
  2. 2. 2 Letter of Transmittal 30th August 2018 Ridma Khan Lecturer North South University Dhaka, Bangladesh. Subject: Group report submission Dear Ma‟am, It is our one of the best opportunity to do report on Starbucks. We have studied on the view of Business ethics of this organization. We have tried our level best to study on that company by following instructions. We hope that you would like it and understand fact what we tried to explain. Sincerely, MD. Tanzirul Amin A.B.M. Foysal Hossain Osama Sarwar Sayeef Avijit Rajbangshi Faysal Rahman Samnun Salehin Zahidul Islam Emon
  3. 3. 3 Executive Summary Starbucks Corporation is one the renowned American coffee shop and coffee chain. It was established in 1971, Washington. In 2017, the company has 27,339 outlets worldwide. Starbucks sells coffee, smoothies, tea, baked items and sandwiches. Kevin Johnson is CEO & Howard Schultz is the executive board of Starbucks. Approximately 200,000 employees are working under Starbucks. This corporation has a lot of collaboration with different organizations like PepsiCo, Tata, Stanley team,, Disney X etc. They are also collaborated with different NGOs & Governments Starbucks has become a very popular coffee shop worldwide .They also believe that the relationships with external stakeholders are very important & it can be implemented by focusing on the commitments. As a large corporation they believe that it„s their duty to improve the society, environment and the world. For instance, they always say that they are working together with the farmers and suppliers to bring a more sustainable approach in case of high-quality coffee production, contributing positively to local communities, minimizing environmental hazards & protecting customers, partners & stakeholders rights.
  4. 4. 4 Table of Contents Overview of the Company:................................................................................................................ 5 The Company Logistics:.................................................................................................................... 5 Social Accounting Process................................................................................................................. 6 Effectiveness of Social Accounting Process………………………………………………………………………………………..8 Stakeholder Management: ............................................................................................................... 10 Application of Theories.................................................................................................................... 19 Conclusion:...................................................................................................................................... 24 References: ..................................................................................................................................... 25
  5. 5. 5 Overview of the Company: Establish: 1971 Mission: To inspire and nurture the human spirit- one person, one cup and one neighbourhood Stores: 24000 (approximately) Product: Coffee, handcrafted beverages, merchandise, fresh food, consumer product (coffee And tea, ready to drink) Brand portfolio: Starbucks coffee, Seatlle‟s Best Coffee, Teavana, Tazo, Evaluation fresh, la Boulange, Ethos Water, Torrefazione Italia The Company Logistics: Starbucks collects resources and ingredients from almost 1600+ suppliers for different part of the world. They always look for best quality in order to provide best products. Enabling them to reach more countries and expand the business. It needs intense coordination to ensure smooth operation in this huge supply chain. Starbucks has an effective centralized system where they have only six roasting centres to prepare their coffee beans. All of these roasting centres make sure that the beans are prepared quickly in a well-designed manufacturing process and packaged in the same manner as one other. After preparing the beans the delivery process starts. Adequate supply to each of the stores was ensured by an astonishing number of 70,000 deliveries a day.
  6. 6. 6 Social Accounting Process The Social Accounting Process is dissimilar for every single organization and so there is no universal layout that all organization should follow or obey with. In addition to this Starbucks Follows a very basic process of social accounting, which is, 1) Identify ethical problems and states its mission, aims and activities and also inspire its partners to share in their mission. 2) List out possible solution to those problems such that it is obedience with Starbucks mission and the standard of business behaviour. 3) Go through an external confirmation before the publication of report 4) In an official construction Starbucks reports its social influence but justifying its goals and achievements, and making the report crystal clear to its stakeholders. Ethical Mission Statement Starbucks is devoted to a role of environmental leadership in all features of their business. Starbucks achieve this mission by being commitment to: • Understanding environmental issues and sharing information with their partners. • Developing innovative and flexible answers to those issues. • Determined to buy, sell and use environmentally friendly products • Knowing that fiscal responsibility is essential to our environment in future. • Managing environmental accountability as a corporate value. • Measuring and nursing their progress for each project. Starbucks environmental and social impacts Starbucks has been a top performer in terms of ethical sourcing of coffee because of its- Sustainable coffee: In the year 2013 Starbucks bought about 95 per cent of its coffee through Coffee and Farmer Equity (C.A.F.E.) Practices, which is a Starbucks program for sustainable Coffee and has a goal of buying 100 per cent of coffee from C.A.F.E. by 2015. Paying higher prices: Starbucks is very concern about the quality of their product so the Organization purchases only high-quality Arabica coffee beans therefore giving higher prices for a best quality product and by this process they are also supporting the farmers by paying fair prices. In addition Starbucks also deliver the farmers access to ―farmer loans. Starbucks is also a leader in environmental responsibility
  7. 7. 7 Conserving energy and water: Starbucks has a goal of reducing water usage by 25% in all of their supplies by the year 2015. Green building: Starbucks also joins in green building standards into their all future building constructions in order to attain LEED certificate. Recycling & Reducing Waste: The goal of Starbucks is to reprocessing all materials that needs to be recycled in the stores and control waste collection including useable cups by 25% in 2015. Creates opportunities: Starbucks has an important contribution to local economic growth by creating new jobs for youth and also for immigrants across the world. Customer attitudes: A survey was conducted on customers and the results were 86 per cent said that they would certainly recommend Starbucks to their friends and families which means Starbucks is able to generate a positive image over them. Community investments: Starbucks has a significant influence to local communities in the U.S. and republics around the world, through in-kind and cash donations, including partner volunteerism and company matched gifts etc. Compliance with Laws and Regulations Starbucks has a reputation of being fully stand by the law of the country were they are operating in. Working Environment Starbucks continuously attempts to promote equal opportunity in labour management. They also have a purpose to treat each other in the work respectfully and with dignity. They actively promote a work environment free of harassment, bullying and discrimination. Before Starbucks publishes its reports to its investors it goes through a number of external confirmations to maintain the standard of the report and make it more accurate and reliable to public, therefore there is a need for- Stakeholder voices: Starbuck always includes the unedited stakeholder‟s comments to confirm they have a voice in the company. Global Reporting Initiative (GRI): A citation of GRI G3 indicators and details of how Starbucks applied the GRI principles is included in the report.
  8. 8. 8 Effectiveness of the Social Accounting Process The issues that form the base for the Social Accounting Process are listed below in context with the report of Starbucks to understand the efficiency of the process- Inclusivity: Starbucks describes their investors and explain the steps they take to include them and to get their appraisals. The report also explains how they are dealing with the concerns of the investors. Comparability: Starbucks compare their reports with reports of previous year. They provide observation information of the rules that were developed in the past. They also measure their own performance and include this information in the report to help the stakeholders compare the performance of the company. Completeness: Starbucks give appropriate and dependable information about their actions in the report where they mention their limitations, opportunities and activities. With each year they try to make their report more detailed and inclusive to give the readers a more precise understanding about the company. Clarity: Starbucks has improved the design and made the report more suitable for reading. They made their reports more precise and easy to understand for the readers. Starbucks started providing more information online and reduced the amount covered in their published report. Materiality: A materiality test is done by Starbucks to choose which information to include in their report and which information is of highest importance to stakeholders. The report shows that the influence of Starbucks on economic, environmental and social areas have an impact on the decision making process of the stakeholders. Sustainability context: Starbucks believe it is important to let the stakeholder‟s recognize about their CSR activities and they mention this information in the start of their report. Balance: Starbucks not only deliver information of their present year but they also include data of a number of years with assessments of their performance done by themselves. Stakeholder‟s comments and case studies are recorded in the report too which gives the reader a clear image of Starbucks. Accuracy: Data on the report of Starbucks are studied by a number of experts and leaders of that matter. An external verification is also done by an independent accounting and consulting firm known as Moss Adams LLP.
  9. 9. 9 Timeliness: Starbucks release their CSR report at the end of their financial year. The date of the submission of the report is not fixed but they typically provide it within six months after the financial year ends. Reliability: The 12th biggest Seattle-based accounting and consulting firm known as Moss Adams LLP was hired for the verification of the CSR reports of Starbucks. This made the firm full the requirements of a high quality firm which was not possible in the past.
  10. 10. 10 Stakeholder management Shareholder management: Howard Schultz, John Culver, Mellody L Hobson, Clifford Burrows are the 4 main shareholders of this corporation. Globally Starbucks has over 24,000 company operated and licensed stores. The company has earning as per share of $1.97per share in fiscal 2017 & this information indicates that shareholders are making profit. But some major issues is like fat cat salaries; insider trading has become a concern for last few years.  Fat Cat Salaries : Their executives and MNCs the CEO of Starbucks get unreasonably handsome salaries and compensation. Their top most executives also get retirement plans, bonuses and pensions also beside that their extra bonuses and compensations not similar to other general employees. In 2017 Fiscal year this given chart shows the excessively high income of the top executive of Starbucks. Whereas, according to a survey, Starbucks baristas get within $6/hour to $13/hour.
  11. 11. 11  Shareholder Return : There is no major occurrence happened in the shareholders return. Most of the shareholders are more or less satisfied with the return. In the next 5 years Starbucks has a plan to launch 12,000 new stores internationally. Moreover the corporation is also emphasizing on returns on capital for offering shareholders more dividends and share repurchases opportunities. Though all the efforts might not bring fortune, shareholders can rely on the returns in the long term, as long as they can handle the occasional minor crisis.  Insider trading: During in the 2017 the practice of insider trading has been increased recently and the stocks of Starbucks were traded 10 times by the insiders and insider was a seller. In 2016 Schultz Howard the Executive Chairman of Starbucks sold 56,757 shares of the stock at a price of $55.85 which is worth $3,169,878. In 2017, Culver John, group president, Sold 64776 shares of the company at $53.54/stock. So, we can see Starbucks is playing a role making the US market more risky. Employee management: The company always addresses their employees as partners & is continuously trying to build a direct & open relationship with them in a positive & friendly workplace. Approximately 200,000 employees are working under Starbucks. The company is listed more than 10 times on Fortune„s 100 best companies to work for. Here we will focus on the discrimination, privacy, due process, Working conditions whistle blowing, fair wages, and equal opportunity program of Starbucks employees.  Discrimination: Most of the employees are satisfied with their job here .But recently they was accused of doing with their employees. Few years ago, Starbucks was sued by a former network engineer for allowing racist comments and harassment in the workplace. The company settled for $120,000 to avoid further litigation fees. The Tribunal found in her favor, stating that Starbucks had failed to make reasonable adjustments for her disability. The company had also discriminated against a dyslexic employee named Meseret Kumulchew, who worked as a supervisor in the Starbucks Clapham branch, accused her for falsifying data & insulted her in
  12. 12. 12 such a way that she tried to suicide. These are the recent events for which Starbucks gets so many criticisms for their discriminating behavior.  Privacy: The corporation permits the employees to keep their personal activities outside of the workplace Confidential, but asks them not to do anything which can bring bad reputation to Starbucks as they are the representative of Starbucks. There is no major controversy against Starbucks in case of employee monitoring.  Due process: Starbucks is maintaining their due process policy very strategically & in a well-planned way from the beginning. As a result there is no major acquisition against Starbucks in case of due process.  Working condition : Starbucks always concerned about their employees safety and environment of the working place for their valuable employees. They always try to keep their environment friendly and fresh. But an article of Business Insider revealed that More than a dozen of current and former Starbucks workers said that serious adjustments needed on changes are fixing staffing issues, improving worker pay if the company wants to grow sales and maintain its positive, progressive reputation.  Whistle blowing: Starbucks Ethics & Compliance makes sure to protect the reputation by practicing the culture that is committed to ethical leadership and conducting business with moral values. And it helps the employees & partners to make ethical decisions. This process is done by advising and enabling leaders to perform ethical business practices and encouraging employees to speak up if they have any inquiries or concerns.  Fair wages: Currently the employees are not satisfied with the employee wages policy. According to them Starbucks pay is not competitive. Moreover, in the pay system internally, employees (partners) who„ve been working with Starbucks for 2-4 years or longer are getting almost the same amount of money per hour as brand new hires. But this year Starbucks will raise the salary of employees in April by investing $120 million in rising pay "accelerated" by the new tax law.
  13. 13. 13  Equal opportunity: Starbucks offer an equal employment opportunity to individually for all qualified. All employees & applicants will be given fair opportunity, without regard to race, color, religion, gender, age, physical or mental disability, marital status or any other factor that is protected by law Employees who involve in prohibited discrimination or harassment will get punishment & appropriate disciplinary action. But still there are some minor controversies against them regarding equal opportunity. Customer Management: Starbucks was not simply about coffee, Starbucks became popular in the early 1990s. Their following factors are Geography, Quality Coffee, and Customer Service& Satisfaction. There are some issue rise customer relationship, product policy and marketing strategy and pricing.  Customer relationship controversy: Regular customers are satisfied because they get lots of discount and also promotional offer and also the membership offer .There are around 27400 Starbucks shop around the world .Day by day they are becoming larger and famous for coffee and they are taking place regularly because their customer demands. They are very much concerned about their customer‟s right and demand. If customer feels any types of fault then they complain directly and Starbucks take their customers complain seriously and try to solve their problems.  Product policy controversies: Starbucks concerned about manufacturing the coffee beans to according to encourage deforestation. In 2013, Starbucks announced that they would collect 100% of its palm oil from certified sustainable suppliers by 2015 but till now they have not taken that much proper steps and it comes from palm oil and their major factor is that of deforestation South America and Southeast and parts of Africa.  Marketing strategy controversies: In 2015 Starbucks has got so many criticisms from USA because of ―Red Cup Controversy‖ that led to a backlash of its holiday cup design on social media. Starbucks became popular because of their annual holiday cup which has featured winter and Christmas themes such as
  14. 14. 14 snowflakes and ornaments in the past . They introduced a simple cup without the symbols. Many Christian believed that that it is an affront against the Christian faith & Starbucks was taking a stance against Christmas.  Pricing controversy: Many of people complain that whether that the coffee of Starbucks is the worth the price customers paying or not. $7 per cup of normal coffee . So, the question is even stronger than before. Is it worth the price or is it just too overpriced? Many believe that the price is too high because of its brand value or maybe it„s just a―status symbol‖ for them to be sitting at a Starbucks. Civil Society Collaboration with civil society: Starbucks have always tried to improve the quality of their products and always tried to putting a good impact on the society with their activities. Some of their collaboration programs are listed below: Product based collaboration: Starbucks and PepsiCo Partnership: Starbucks and PepsiCo made this collaboration 20 years ago. It was the most successful collaboration program for Starbucks. Starbuck and PepsiCo introduced the ready to drink coffee category. Starbucks and Stanly team: Starbucks and Stanly team made this collaboration to make insulated products such as; travel coffee press, thermal bottle and thermal tumbler. Starbucks and Disney X Collaboration: Starbucks and Disney X made this collaboration to promote each other. Disney print Starbuck cups are available in the Disney Land and Disney World. Starbucks and Tata partnership: They have multiple joint venture initiatives which aim to develop these brands. Starbucks and Collaboration: Their collaboration consists of eight piece-collection featuring summer prints.
  15. 15. 15 Some NGO based collaboration: Global Green USA (Since 2007) National Recycling Coalition (Since 2011) Save the Children (Since 2005) PETA (Since 2015) American Red Cross (Since 2001) Business for Innovative Climate and Energy Policy (Since 2008) Sustainable Food Lab (Since 2008) United States Green Building Council (2000) Association of the Postconsumer Plastic Recycler (Since 2010) Type of stakeholder collaboration: Starbucks frequently tried to improve its corporate social responsibilities [CSR] in order to satisfy their stakeholders. The types of collaborations with the stakeholders are: Farmer: Starbucks has their collaborative farmers program include Coffee And Farmer Equity (CAFE) practices, Farmer support Center, Farmers Loans and Forest Carbon Project, Sustainable Coffee Challenge to support and help their farmers. Customer: Starbucks made a collaboration with A&T to provide free WiFi internet service to their customers. Starbucks also collaborated with Apple where the customers of Starbucks can freely download songs from i-tunes. By doing that they can attract the users of Apple products to their stores.
  16. 16. 16 Franchises: Starbucks has domestic and international collaboration with their franchises. Domestic collaboration comes from business, retail industries, college-university, air travel etc. and Starbucks doesn‟t operate the store management and operation of these stores. The international collaboration where the licensed regional franchise establishes a local Starbucks store and they operate the store management according on their own Society: Starbucks made collaboration with Food Donation Connection where Starbucks donate their leftover pastries in the US. They have a plan to sell 100 per cent of their unsold food from across the 7600 stores operated in the US through this food donation bank within 5 years. Employees: Starbucks collaborated with the Arizona State University (ASU), based on that agreement, Starbucks pays 56% of the tuition fees of the student employees who are in their junior or senior year in the Arizona State University (ASU). Government: Type of relationship with government: As of 2016 Starbucks operates in 6 continents, 75 countries and territories. Every country has different rules and regulations, so Starbucks needs to satisfy all the rules and regulations of each country where they are doing business. Starbucks always supported the developing countries where they get their materials. Starbucks and government of China’s collaboration: In order to support local farmers to promote responsible coffee growing practices and development of local coffee, Starbucks coffee co. has linked with Yunnan Academy of Agricultural Science (YAAS) and People‟s Government of Pu`er city Yunnan province in China through a Memorandum of Understanding (MOU). Starbucks partnership with USAID:
  17. 17. 17 Starbucks have a collaboration programs with US government working through United States Agency for International Development (USAID). By making this collaboration Starbucks and US government has been able to increase Colombian coffee yields and by providing technical support and assistance they increase the livelihood of Colombian farmers. Starbucks and US government have done another project where they supported and helped the Maxican farmers. They created a Conservational Coffee Alliance with Conservational International (CI) in order to improve the livelihood of small scale coffee farmers of Maxico. Starbucks and Rwandan government collaboration: Starbuck coffee co.‟s president, chairman and CEO Howard Schultz made a collaboration with the Rwandan‟s government and its president to increase the number of farmers of the country who will produce raw materials to Starbucks and follow the guideline of Starbucks. Starbucks invested in East Africa in order to improve their coffee communities. Lobbying with the government: In order to facilitate its entry in the Indian market, Starbucks has lobbied with the lawmaker and government officials in US. Starbucks has spent nearly 5 hundred thousand dollars on different lobbying issues which is shown in the Starbucks lobbying disclosure report. Controversies or corruption cases: Controversy with Ethiopian government: Ethiopia was the main supplier of coffee for Starbucks and Starbucks committed to the Ethiopian government to support its suppliers of coffee. Oxfam, a confederation of 20 NGOs, alleged that they confirmed from several sources that Starbucks has unethically tried to stop the registering of coffee names by Ethiopian government when Ethiopian government wanted to register its famous coffee names. If Ethiopian government did that then the Ethiopian coffee farmers would be able to earn a potential income of $94.22 million. Israel Controversy: Many sources say that Starbucks send a part of its profit to Israel military. This controversy took place as the Jewish CEO, chairman and president supported Israel‟s right to exist.
  18. 18. 18 European Tax Avoidance: By an investigation it was found that Starbucks have not pay any tax for their 1.3 billion pounds of sales in UK.
  19. 19. 19 Application of Theories We applied the ethical theories to analyse the controversies in the following manner. 1. Fat cat salary issue of the top employee: Fat cat issue is an issue which is arises because of higher amount of salary paid for the high level employee. This issue is hugely affect profitability of the company. Starbucks also have this issue within their organization as well. Starbucks Executive Chairman gets around $18 million whereas Starbucks baristas only get $6 per hour. In any organization this kind of difference is hugely create ethical problem in the organization. This kind of issue is unfair and unjustified among the employee of Starbucks and they have hostile feeling for their manager as well. It is a problem of the justice in the company. Employees do not get justice. So theory of justice is applicable for this situation. Theory of Justice: This theory state that every action needs to have two criteria to be called just. One criterion is we have to ensure freedom for everyone and our action will not violate anyone‟s freedom. Second criterion assumes that in real world we cannot avoid inequalities. But, it requires two conditions to be fulfilled: an arrangement where the one who profits the least from it is still better off than they would be without it and where everyone gets fair chance of climbing to the top of corporate ladder. Application & Recommendation: If we use this theory on the Starbucks, first Starbuck shave to ensure basic freedom of on their workplace. Many factor such as freedom of speech, religion, press etc. should be ensure for every employee. By doing all these things employee right will be saved and it will be very difficult to discrimination. If we follow the second principal because of corporate hierarchy there will be inequalities in the salary structure of the Starbucks. Starbucks need to increase the salary of the employee in order to keep match with the manager salary. They need to improve the situation of the employee. In this situation higher salary of the manager is only justified because higher salary helps to improve the overall performance of the business. This better result can improve organization profitability more than what they spend for the salary of manager. To match the second condition we need to ensure proper career growth of ethical conduct in Starbucks. Employee need to get the equal opportunity to become the manager regardless of the age, race or gender of the employee.
  20. 20. 20 . 2. Insider Trading Issue: Insider trading is one of the huge issues which is face by the Starbucks. This issue rise when illegal trading of stock happens in order to give benefit to anyone with company confidential information. Recently executive of the Starbucks have been accused of insider trading and they also sold large number of share. It is very huge problem for reputation of Starbucks. This negative act hugely impact on the stockholder of the company. Large number of investors‟ money is in danger because of that insider trading. Investor will lose trust on the market and the company as well. By using Utilitarianism theory we can rationalize the problem because a social consequence of this action is very huge. Utilitarianism Theory: This theory states that any action is right if we can do greater good to greatest amount of the people. Application & Recommendation: If they maintain this ethical theory Starbucks will not do any insider trading. Because the result of insider trading is very less rather than its results. By doing cost benefit analysis Starbucks should not do inside trading any more. Pleasure Pain Fairness in the market will exist. Starbucks executives would have to give up unethical income. The market will remain efficient. They have lesser amount of benefit for their manager. General investors won„t get deceived. Existing shareholder„s equity will remain safe. Confidential information of the company won„t be misused. Ethical Conduct in Starbucks 3. Employment Issues:
  21. 21. 21 Starbucks has some serious employment issue like poor working condition, poor pay policy and also poor working condition. Few years back Starbuck has a very serious issue on racism then one of their employees has sued Starbucks. Management of the Starbucks failed to assess the situation. They have also some allegations like reduced weekends, manipulating work sheet, violating labour law etc. All of the issue above is mainly concern with human dignity and rights. So Ethics of Rights and justice would be best decision because this theory mainly discusses natural rights. Ethics of Rights and justice: This theory discuss that natural rights of the people have to be protected and also respected. All the individual have to be treated fairly where fairness can be ensure by two ways procedural justice and distributive justice. Application and Recommendations: If Starbucks applied this issue on their business first they need to protect the natural rights and dignity of employees regardless of their race, gender etc. They have followed strict policy for protection of the human rights in their business. For any kind human rights issue Starbucks should deal with very strict manner. To ensure justice and fair treatment to everybody procedural and distributive justice shall be used. Procedural justice means whether everyone has been free to achieve rewards, and distributive justice means whether the consequences are distributed in a justified manner according to a principle. According to this fair wage system will be implemented on the Starbucks. Here employee will get competitive payment. Starbucks also need to structure their wage system according to seniority and performance. 4. Problems with managing the customers: Product policy, marketing strategy, and pricing policy are the major customer related issues Starbucks has to deal with. Although these problems are not related to fairness or social consequences, and these are no rights or entitlements of individuals are violated. Since, these actions of Starbucks are generally related to the emotions and sentiments of the customers, thus it will be rational to apply Post-modern Ethics theory.
  22. 22. 22 Post-modern Ethics: This theory sees morality as a moral impulse towards others separating morality from the limitations of rationality only; encouraging individuals to follow their “gut feelings and inner conviction” to think and decide what is morally right or wrong in a particular situation. Application and Recommendation: If this theory is applied, at first the management of Starbucks would try to communicate with their customers through surveys, public relation campaigns, and social media engagements to create a form of judgment and moral impulse about what to feel about these issues. Starbucks is committed to social welfare and their customer„s emotions, and well-being. Since, these issues hurt the customers‟ emotions and sentiments, thus the company should restrain from controversial practices that may ruin their brand image and goodwill to their customers (the most important stakeholder of their company). When this theory is adopted, Starbucks should reform their pricing, product, and marketing policies as most of their customers are dissatisfied with these policies. They should be more cautious about the needs and demands of the customers and allow them to have some influence autonomously on the business decisions. 5. Issues regarding government relations: There are serious allegations against Starbucks for lobbying the U.S. government agency to deprive the coffee farmers (their suppliers), paying to the Israeli government unethically, and giving bribes to the U.K. government agencies to avoid taxation. All of these issues indicate that Starbucks is not ethically carrying out their duties to the society and their stakeholders. In this case, application of Ethics of Duties theory would be suitable since Starbucks is using their suppliers and the local governments as means to achieve short-term profits. Ethics of Duties: The theory is based on three maxims which together are known as categorical imperative.
  23. 23. 23 i. First maxim: an action is morally right if it can be performed and followed by everyone. ii. Second maxim: every human has dignity and deserves respect which should not be ignored. iii. Third maxim: an action has to be acceptable to every human being to be considered as morally right universally. Application and Recommendation: If we apply this theory to the issues mentioned above, according to the First maxim, Starbucks should not deprive the Ethiopian coffee farmers and suppliers. Also, they should not illegally pay the Israel government and bribe anyone to avoid taxation because all these are immoral practices. If these practices are performed by anyone then that will lead to an unstable and chaotic society. Based on the Second maxim, they should restrain from illegal practices of using their suppliers and governments to attain for their own profit. Moreover they are also respecting the laws and rights of their stakeholders. As per the Third maxim, Starbucks has stop these misconducts because these activities are not acceptable to universal endorsement as these are serious immoral activities. The society and the people across the world label: bribing, unfair lobbying, and unethical transactions as serious crimes Thus, when this theory is applied, Starbucks should make arrangements so that the suppliers receive what they deserve and provide support to the initiatives to register the coffee names. All the illegal transactions with other foreign governments for their benefits must be stopped. Moreover, the company must pay taxes properly and respect laws of every country where their business operations are run.
  24. 24. 24 Conclusion Against Starbucks there are several controversies on different issues; though it is believed that they are more committed towards the society, environment compared to most large corporation. Starbucks has the ability to do business with 100% ethically sourced coffee & make coffee as sustainable commodity as they are a big corporation and international café- chain. There remain great potentials to work with farmers, employees, shareholders, suppliers, customers, and like-minded organizations to make the industry more sustainable & ethical. By collaborating with ethical organizations across every sector, it is possible for Starbucks to resolve the controversies & execute innovative solutions for local, national, and worldwide problems at present.
  25. 25. 25 Reference  Crane, A., & Matten, D. (2007). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford, etc.: Oxford University Press.  (n.d.). STARBUCKS CORP Executive Salaries & Other Compensation. Retrieved April 17, 2018, from  Coleman, C. (2016, February 09). Starbucks employee wins dyslexia discrimination case. Retrieved April 17, 2018, from 35521061  Policies. (n.d.). Retrieved April 17, 2018, from  Stack, L. (2017, November 20). Starbucks Is Criticized for Its Holiday Cups. Yes, Again. Retrieved April 17, 2018, from  Starbucks Facing Increased Consumer Pressure to Go Deforestation-Free. (n.d.). Retrieved April 17, 2018, from nah _furlong/starbucks_facing_increased_consumer_pressu  Prins, N. (2015, May 19). The Spotify-Starbucks Partnership Is Digital Co- Branding Genius . Retrieved April 18, 2018, from partnership-is-digital-co-branding-genius/#56812be84a7a  Upton, L. (n.d.). Starbucks commits $10M to solving their cup problem; continues research into bio-liner solution. Retrieved April 18, 2018, from cup-problem-continues-research-into-bio-liner-solution
  26. 26. 26  Wohl., J., Wohl, J., & J. (2015, November 09). Seeing Red: Starbucks Stirs Up a Little Controversy with 2015 Cups. Retrieved April 18, 2018, from cups/301278/  D. (2014, November 29). 5 Darkest Starbucks Secrets. Retrieved April 18, 2018, from  Starbucks and Rwandan government discuss continued partnership. (2009, June 28). Retrieved April 18, 2018, from and-rwandan-government-discuss-continued-partnership/  Starbucks joins forces with government of China to boost coffee industry in Yunnan Province. (n.d.). Retrieved April 18, 2018, from china-yunnan  A New Partnership to Support Colombia's Coffee Farmers | USAID Impact. (n.d.). Retrieved April 18, 2018, from partnership-to-support-colombias-coffee-farmers/  Editors, G. (2004, September 28). Starbucks Teams with Aid Agencies to Support Sustainable-Coffee Farmers. Retrieved April 18, 2018, from sustainable-coffee-farmers  Boyer, K. (n.d.). Behind the Scenes at Starbucks Supply Chain Operations it's Plan, Source, and Make & Deliver - Supply Chain 24/7. Retrieved April 18, 2018, from n_ operations Thank you!
  • RamanBrar25

    Feb. 7, 2021
  • QixiangYu2

    Sep. 24, 2019

Starbucks Corporation is one the renowned American coffee shop and coffee chain. It was established in 1971, Washington. In 2017, the company has 27,339 outlets worldwide. Starbucks sells coffee, smoothies, tea, baked items and sandwiches. Kevin Johnson is CEO & Howard Schultz is the executive board of Starbucks. Approximately 200,000 employees are working under Starbucks. This corporation has a lot of collaboration with different organizations like PepsiCo, Tata, Stanley team,, Disney X etc. They are also collaborated with different NGOs & Governments Starbucks has become a very popular coffee shop worldwide .They also believe that the relationships with external stakeholders are very important & it can be implemented by focusing on the commitments. As a large corporation they believe that it„s their duty to improve the society, environment and the world. For instance, they always say that they are working together with the farmers and suppliers to bring a more sustainable approach in case of high-quality coffee production, contributing positively to local communities, minimizing environmental hazards & protecting customers, partners & stakeholders rights.


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