You are on page 1of 11

Kelly Edwards 1

Mixed Emotions Over Starbucks Globalization Some may argue that Starbucks has had a positive influence on the economies of foreign countries, especially in lesser developed areas where it provides rural workers with jobs, however, the facts displayed by the company can be misleading. The globalization of Starbucks has led to the intrusion of American culture where it is not wanted as well as the mistreatment of farmers and coffee growers located in both Africa and Central American. Farmers and outsourced workers who are cultivating the trademarked Starbucks coffee would be highly concerned with how focused Starbucks is on globalizing so they can become more profitable along with the people whose cultures are affected by the introduction of Starbucks, and the management of Starbucks who want to capitalize on increasing the market. The stock holders who want Starbucks to thrive in as many areas as possible to make it a more profitable business would also be involved with how much Starbucks plans on expanding. By looking at the reactions of all the people who take sides in the debate it is clear that Starbucks should not continue to grow until they can get the reputation of having a unique coffee shop experience back, raise the standard of living for their coffee farmers, and become more involved in Fair Trade Coffee. One of the main reasons Starbucks should not continue to globalize regards the treatment of their coffee farmers. Starbucks has not met the standards that it said it would help the Ethiopian coffee farmers meet. Although Starbucks supports Fair Trade Coffee and aims to target their coffee drinking market to go for a more socially responsible blend, the fact is that most of their workers are underpaid coffee farmers in Ethiopia and Guatemala. Both the Coalition for for Justice for Coffee Workers (CJCW) and the Guatemala Labor Education Project (GLEP) were invested in holding Starbucks accountable for providing wages that would be able to give the coffee farmers a decent living and treating the workers with respect by not overworking them or not

This seems like a very socially responsible way to get coffee to consumers however Starbucks did not carry this Fair Trade Coffee in all their stores or make the brew available on a daily basis.30 and having the money go directly to the local growers rather than middle men who would in turn give the farmers a mere $0. They also argued that there is not enough supply of the Fair Trade Coffee to equip all the store locations with it. Fair Trade Coffee is said to also carry benefits such as helping out family owned farms to ensure that local economies can stay healthy as well as creating a minimum price that buyers can purchase their coffee from the farmers. Fair Trade Coffee was pushed more heavily onto Starbucks store locations. The organizations led protests and attempted to convince consumers of the wrongdoings being committed by Starbucks to their out-sourced coffee farmers. it was discovered that even though the coffee . Their reasoning behind this was that there was not enough demand for the product and driving up prices with this type of coffee could end up losing the company money as well as force consumers to look for their fix of coffee elsewhere. This is not exactly true though because according to the communications manager of TransFair USA.Kelly Edwards 2 giving them enough compensation (Lyons 2005). When a group of Starbucks employees went to visit some of the Ethiopian farmers harvesting the famous Starbucks branded coffee. They do this by setting setting the lowest possible per pound price at approximately $1. In order to continue globalizing.35 (Straus 2000). In a continued attempt to appease activists supporting equality for the coffee farmers. Farmers are only being paid a small fraction of what a pound of coffee sells for in the United States. in 1999 there was 60 million pounds of coffee available to be sold on the fair trade market but only half was actually sold through Fair Trade methods (Straus 2000). Starbucks should put more effort into increasing their supply of Fair Trade Coffee.

nearly 70% of the farmers employed by Starbucks do not meet the requirements given by the Coffee and Farmer Equity (CAFE) standards. This gives Starbucks more leeway in how they are allowed to treat their farmers. This proves to be another method of how Starbucks is intruding on other cultures and turning them into a more westernized population.57 in profit.000 locations in India but because their culture is so different. Starbucks will have to put a large amount of effort into altering their business model so they can reach this new market (Bhatnagar 2004). These standards work to ensure that all farmers are paid fairly so that they can maintain a certain lifestyle. This means they only get 2. Starbucks plans to turn the locals in India into coffee drinkers. One of the most controversial Starbucks locations was established in China in a museum known as the Forbidden City. Because of the severe lack of compensation. it was only in Starbucks self interest that they came close to meeting CAFE requirements. such as child labor and humane working conditions. While they will still add more tea options to their Indian menus. Starbucks may also be cutting corners on the standards because in some areas. The Forbidden City is a place where Chinese culture is displayed from all different periods of time.2% of what the coffee is being sold for (Davis 2008). the focus will be on marketing coffee to people.Kelly Edwards 3 sells for $26 a pound. they should not continue to globalize. the farmers were only receiving $0. When the main priority of a company is to make a profit they are only going to uphold their socially responsible standards enough to attract consumers rather than to help struggling coffee farmers. Places such as India do are not filled with coffee addicts. It . but have a market who would be more interested in products that Starbucks does not focus on such as tea. Until Starbucks can better meet what is expected of them by CAFE. Starbucks plans on opening up another 5. Global brands tend to distract from a diverse local culture. they are vaguely written (Davis 2008). In this case.

the employees of the store have the mindset that eventually the Chinese will come around and accept it as part of their new westernized culture (Smith 2000). it seemed as if western culture was intruding on the area’s goal of protecting and valuing their own culture. Starbucks locations are so close that they steal business from each other. the company overstepped its boundaries by expanding into an area held sacred by the people. Starbucks tends to drive out local businesses domestically and globally which can hurt the livelihood of the common business man. killing. robbing. When consumers make an effort to support local businesses they find it difficult because Starbucks has driven out many local shops (Thompson 2004). When the Starbucks was built there. most locals believed it was best that the Starbucks should close down. Rather than accept that there are some places that Starbucks simply should not globalize at. The severe negative reactions of Chinese people prove that Starbucks should cut back on the amount of its expansion. Some coffee consumers have been known . Many Chinese view Starbucks as just another fast food chain and for that reason believed it added no value to the Forbidden City.Kelly Edwards 4 exemplifies the pride the citizens of China have in their country as well as demonstrates their commitment to their culture. The hostility towards this western brand did not stop there. In some areas. Even in the United States. the Starbucks brand is not leaving room for other competitors to try and gain business. This effect could also occur on a global scale as more and more Starbucks locations appear. In order to show respect for the culture of the Forbidden City. The intrusion of the Starbucks was even compared to the invasions of the Eight-Powered Allied Forces and the “burning. and plundering in the Old Summer Palace exercised by the British and French Allied Forces” (Han 2009). Many people have the common opinion that big businesses should not take over in other countries and drive out local competitors. Although there are many other Starbucks coffee shops throughout China.

Starbucks plans on making in global markets hold an even higher percentage of its stores. Starbucks is rapidly becoming one of the most well known brand names in China. In this case going global would not be the most profitable option. Brazil. The reason for this is that land in areas such as the Middle East. This provides another reason for it to slow down on its global expansion. and India. People want to opt for local choices rather than Starbucks because of how personalized other coffee shops feel. it could be considered a nuisance in these other countries. but the company projects that in the coming years that number will jump to 40% (Matlack 2008). 30% of Starbucks were outside of the United States. More negative effects to the expansion of Starbucks could even go so far as to include customers being driven away by the fact that it has become one of the most commercialized and branded names in the world. Just in the way it negatively affected the Forbidden City in China. and even India have lower real-estate prices which allow Starbucks to grow faster and at a less expensive cost. Where Starbucks just gives a consumer a generic meeting place. Starbucks appears to be boring to certain consumers so it could be in the best interest of the company to scale back and focus on targeting the consumers who want a different type of experience. . In 2008. and the company plans on expanding that to other countries such as Russia. it could get in the way of local cultures who are not necessarily even coffee drinkers. Although this could increase profitable of Starbucks and help the American economy. other coffee shops can offer their own unique touch (Thompson 2004). Latin American.Kelly Edwards 5 to boycott Starbucks and specifically not go there because of the harm in causes to local stores (Simon 2011).

they have made small adaptations to accommodate and respect certain cultures (Bhatnagar 2004). The rising profitability of Starbucks becoming more and more involved in international business benefits the stockholders which helps our domestic economy. Although this is good for America’s economy. Globalization forced Starbucks to be more accommodating to its new markets in Asia by adding more culturally friendly options to their menu. there are some powerful reasons why Starbucks can be seen to have a more positive impact. Because of increasing their global locations. the revenue of the company increased its global store sales by an astounding 8%. Even thought the main goal of Starbucks is to turn the masses of Asia into coffee drinkers. the company’s stock was up more than 24% which did not disappoint American investors (Fontevecchia 2011). By bringing in foreign markets and making profit from other consumers. The globalization of Starbucks has had a positive effect on Americans who are invested in the company. Because of the growth in sales. on a global scale it is difficult to determine whether furthering their investment in globalizing will have benefits that will outweigh the negatives of Starbucks imposing on other countries. These alterations appear to be more culturally inclusive than they actually mainly because coffee shops are not like the local eateries found in Asian countries. by the end of 2011 there will be over 500 new Starbucks locations worldwide (Fontevecchia 2011). the value of stock in Starbucks is rising rapidly. These changes including making more types of tea available on the menu as well as changing the usually pastries and muffins to traditional Indian or other Asian snack foods. . Just in 2011 alone.Kelly Edwards 6 Although there are many arguments pointing towards the negative aspects of the international affair of Starbucks.

the evidence still suggest that more of their products could carry the Fair Trade label. It’s the way we do business every day” (Davis 2008). However. The selling of Fair Trade Coffee gives farmers the benefits of working that they deserve and also makes any companies who sell the products more socially progressive because of how it improves the livelihoods of others and the economic environment (Linton.Kelly Edwards 7 Starbucks claims to have corporate social responsibility which was proven by their eventual adoption of selling fair trade coffee beans. provided there is a demand for them. If Starbucks increased the amounts of Fair Trade Coffee they sold. Starbucks is also the largest seller of Fair Trade Coffee which shows its dedication to its cause of supporting coffee farmers. 2004). Their commitment to helping be socially responsible can be seen in their 2006 CSR report stating that “For us. They are using the idea of fair trade coffee as a way to promote their image as a socially responsible brand. they are supporting a better lifestyle for farmers and helping economies of the lesser developed countries. Fair Trade Coffee only makes up 6% of the Starbucks’ total coffee purchases (Davis 2008). By using fair trade coffee. they could provide more benefits for the lesser developed coffee growing countries and be able to advertise to their consumers about how they are trying to have even more of a positive impact on the world. They also have the ability to help local coffee growers more than many other coffee sellers be- . If Starbucks continues to make Corporate Social Responsibility a normal part of their business model they can attract customers who are satisfied with how they run their company and be able to best serve their consumers on a global scale. corporate social responsibility is not just a program or a donation or a press release. Starbucks knows that they can only expand if their consumers support their goals.

Starbucks has spent millions of dollars in creating their unique brand that they believe would have the power to stand out against any other coffee shop. People are willing to pay more and therefore Starbucks can afford to pay the coffee growers more as well. The business model of Starbucks is that they want to create an experience for the consumers. You might as well be in New York. When looking at many different Starbucks locations around the world it can be noted that they all seem the same and it is difficult to differentiate them from one country to another. No matter what country a Starbucks is in. Wherever they are Starbucks makes a conscious effort to provide the same experience. Even though Starbucks has the ability to pay their growers more. when a new location is estab- . Starbucks will retain their excess earning and put it towards opening up new stores or putting more money into their branding instead of increasing wages of farmers.Kelly Edwards 8 cause the coffee they sell is marketed as being high quality and a premium brand. Having Starbucks franchises in other countries is a way to stimulate local economies with well known brands. you might as well be in Chicago” (Thompson 2004).. Because of this. More often then not. All Starbucks are set up to accomplish a similar goal: provide their customers with an experience where they can interact with other people in a setting that is familiar to them without having to be in a domestic or work place. One Starbucks fan says that “it looks exactly the same. they do not always capitalize on that opportunity. Putting money into their brand name creates consumer loyalty and name recognition that will allow it to reach a wide variety of mass markets (Thompson 2004). their goal is to create a comfortable environment for people to socialize in rather than to create a disruption in the local culture.. They provide consumers with the same type of classy atmosphere which is created though the use of somewhat generic but aesthetically pleasing artwork and sophisticated background music (Thompson 2004).

it can be assumed that the store will be successful and attract business to that area. competition. either globally or domestically. The major expansion of Starbucks into other countries was not universally accepted. When big name companies enter into new markets. it seems that Starbucks is a brand that does not positively effect certain areas. The best route for Starbucks to take to satisfy their consumers would be to scale back their globalization and recreate an image for themselves as a coffee shop that supports a local economy and family owned farms. and the local economy. For that reason it can give people of that country job opportunities as well as a reason to spend money. The question over whether or not the franchising of Starbucks into other countries is beneficial to those places is not easily answered. a Starbucks on every street corner. they can upset the balance of culture. they can take away business from the other store and create unprofitable businesses. This idea would only work if the Starbucks locations were in areas where there were a large amount of coffee drinkers and also if there are not any other Starbucks nearby. . When there is for example. Some of their business practices such as the wages they pay workers could even be considered unethical. This additional spending helps keep economies healthy and provide an income for local people. When taking into account the harmful effects on culture and the living conditions of the laborers in the coffee industry.Kelly Edwards 9 lished in another country.

P. 3(410). Nov 1). Forbes.Kelly Edwards 10 References Bhatnagar. Retrieved from http://www. CNN. 35(4). 154-163. (2004. Margins. Starbucks: A Passage to India.cnn. . (2011. Targets China. (2009) Starbucks is forbidden in the Forbidden City: Blog. A. Davis. July). Growth. Raises Guidance. Fontevecchia. afontevecchia/2011/07/28/starbucks-gets-everything-right-sales-margins-profit-growthraised-guidance-targets-china/ Han. Public Relations Review. Starbucks Gets Everything Right: Sales. New Internationalist. The People vs. Retrieved from http:// money. R. Starbucks. circuit of culture and informal public relations campaign in China.forbes.

.com/globalbiz/content/jul2008/ gb2008072_462789. Globalization Puts a Starbucks Into the Forbidden City in Beijing. OCA & Global Exchange on Fair Trade Coffee. Lyons. Act Globally. C. Matlack. Cultural Studies.html Simon. Nov 30). (2000.Kelly Edwards 11 395-410. C. (2004) A Taste of Trade Justice: marketing global social responsibility via Fair Trade coffee. B. Starbucks. Organic Consumers Association. Retrieved from http://www.cfm. Linton. 31. C. Journal of Consumer Culture. J. 19(1). (2004) The Starbucks Brandscape and Consumers’ (Anticorporate) Experiences of Glocalization. Not going to Starbucks: Boycotts and the out-sourcing of politics in the branded world. 1(2). Will Global Growth Help Starbucks?.htm. July 2). The New York Times. (2011). T. 631-642. Nov 25). Retrieved fromhttp:// www. 11(2). & Globalization. globalization-puts-a-starbucks-into-the-forbidden-city-in-beijing. A. 223-246. Smith. Bloomberg Businessweek. Globalizations. (2005) Think Seattle.organicconsumers. (2000. (2008.businessweek. Straus. Retreived from http://www. Journal of Consumer Research. Thompson.