CASE STUDY #2

Starbucks Mission: Social Responsibility and Brand

Strength
Starbucks Coffee Company, the third largest chain restaurant in the United States was founded in
1971, the first retail store opened in Seattles Pike Place Market in the United States. The
company name was named after the first mate in Herman Melvilles Moby Dick novel that
evoked the romance of the high seas and the seafaring tradition of early coffee traders.
Many may be committed patrons or customers who view Starbucks as

a socially

responsible company committed to green practices and free-trade coffee. Others might dislike
Starbucks as it is a large chain that pushes out smaller local competitors. Another possible reason
for disinterested customers may be opposed to Starbucks are its prices, which are higher than
many of its competitors. Starbucks seems to be able to justify its higher prices because the
company sells more than just coffee, it sells an experience. Starbucks customers can order
specialty drinks and hang out in what founder Howard Schultz envisioned to be the third place
to be after home and work. Love it or hate it, Starbucks has been very successful at branding.
Starbucks has had a profound influence on the United States coffee market. Before
Starbucks came onto the scene, people perceived coffee as an uninteresting product largely
consumed by older people in the United States. It did not have the cool factor or a cache that it
does today. Starbucks entry in the market largely change how Americans consumed coffee and
what they thought about coffee shops. It all started in the cold, gray climate of Seattle, the perfect
setting for launching an appealing, warm, international beverage. Starbucks emphasize quality
while service and location became a critical issue.

In spite of its popularity, Starbucks faltered during the most recent recession, when many
customers cut back on discretionary purchases. This prompted the return of founder Howard
Schultz as CEO. Schultz implemented a restructuring process at Starbucks and closed hundreds
of stores. He sought a return to the value that initially made Starbucks a great company quality.
Today Starbucks is once again thriving, and even expanding into the consumer packaged goods
market.
No matters what one thinks of Starbucks, it is more involved in social causes and the care
of its workers than many comparable chains. Starbucks is committed to employee well-being, as
one can see in its employee health care system. Howard Schultz made employee health care a
priority after watching his father struggle with injuries because he had no access to employee
health care or workers compensation. In large part because of its commitment to providing good
wages and health care, Starbucks often ranks on Fortunes Best Companies to Work for.
The company also has a history of giving charities that affect its primary stakeholders. As
part of its commitment to ethics and sustainability, the company launched its Shared Planet
website, which communicates to interested stakeholders all of the companys ethics and
sustainability initiatives. The company is a large purchaser of Fair Trade Certified coffee and
their partnership with Project Red raises money for HIV/AIDs research in Africa.
In spite of its professed commitment to caring for workers and for social causes, such a
large company always will be subject to criticism. From complaints that Starbucks pushes
smaller competitors out of markets, to criticisms that some of its coffee drinks are excessively
fatty and caloric, Starbucks is facing many challenges. For instance, disposable cups pose a
problem as the company strikes to become more eco-friendly.

QUESTIONS
1. Why do you think Starbucks has been so concerned with social responsibility in its overall
corporate strategy?
Following from Starbucks history it is obvious that Schultz, the founder was concerned with
social responsibility from the beginning. Because he made it an original core value of the
company and it has remained a deeply ingrained part of the Starbucks culture. Schultz
reiterated that he believed that ethical companies which emphasize on Corporate Social
Responsibility would perform better in the long run even though it incurs more capital or
investment at the beginning. Being socially responsible is not only the right thing but it can
distinguish the company from its peers. In year 1999, Starbucks created a Corporate Social
Responsibility department as known as Global Responsibility Department that tasked to plan,
create and run the program throughout its stores around the world. An annual report was
released every year through the Shared Planet website in order to allow stakeholders and
shareholders to keep update of its performance regarding their social responsibility activities
have been done which concerning about the environment, its employees, suppliers, customers
and its communities. Starbucks also recognizes the benefits of customers perceiving
Starbucks as a socially responsible company. Employees who receive health care are likely
more satisfied because they feel that the company truly cares for them in a time when many
organizations are scaling back on employee benefits. Consumers may be inclined to like
Starbucks because of its many community and environmental initiatives. Starbucks mission
create strong values that drive customer by of providing a good environmental workplace and
treating partners with respect, various elements of business, highest standard of delivery
coffee, engaging communities and environment, active to make customer satisfaction and

having profitable business. Many organizations argue that companies engaged in CSR can
obtain increased sales and market share, reduce costs and increased interest from investors,
improved employees motivation, improved brand awareness and image of the company.
However, Starbucks think that its CSR investments will affect the companys performance
positively as customers value CSR activities. Moreover, nowadays customers are starting to
demand that companies take their social responsibility. It is the reason why the Starbucks has
succeeded in business world by CSR. Thus, social responsibility for Starbucks is translating
into good business.
2. Is Starbucks unique in being able to provide a high level of benefits to its employees?
Even though Starbucks does provide very good benefits to most of its employees, this is not
exactly unique as it also being implemented by many other top companies in the word to
retain best employees and make them loyal to the company. May be the package varies from
one company to another company and Starbucks has proven that their package is attractive as
the company turnover is remarkably low and employee productivity is high. While lauding
Starbucks is fine, it is true that many comparable sized chains do not treat their workers as
well as Starbucks. For instance many chains do not provide any benefits to part-time
employees. Howard Schultz, the CEO of Starbucks wants the company treats its employees
as a partner, this has make them feel valued and treat them with respect and dignity.
Starbucks also created mission statement in 1990 that laid out the guiding principles for the
company which it summarize as people first and profit last where the company will
provide a great work environment and treat each well. This mission statement are proven
based on report in 2005 where Starbucks spent more on health insurance for its employees
than on the raw material required to brew its coffee and faced double digit increases in

insurance costs. Other than that, Starbucks has paid the salary and compensation for partners
(employees) based on hours laws and regulations, treated them with esteem and honour
without insulting, bias, unfairness, irritation and so on. On the other hand, they are working
in the company under friendly working environment. Therefore, those benefits package
provide by Starbucks is a key reason that company has remarkably low employee turnover
and high productivity.

3. Do you think that Starbucks has grown rapidly because of its ethical and socially
responsible activities or because it provides products and an environment that customers
want?
Many customers likely go to Starbucks, not because of its social mission, but because they
like the coffee or the coffee shop atmosphere. Many customers likely began frequenting
Starbucks because the locations are convenient and continue to go as long as Starbucks
remain a readily available option. On the other hand, its record in responsibility has been a
major selling point for consumers who care where products come from and under what
conditions. These people may choose Starbucks because they offer Fair Trade coffee and
organic snack products when other coffee shops do not. Most people probably will agree that,
at least to a point, Starbucks responsible activities have become a part of the total Starbucks
product, a product for which many are willing to pay a premium price. In other words, both
answer could be correct as Starbucks has also grown rapidly and succeeds in business
world is because of their main strategy to run business by CSR strategy and being Ethic
Company. Starbucks operates business by taking the environment into consideration. The
company has used innovations and technologies to reduce cost and has launched reusable cup

campaign to decrease using cups by discounting ten percent of the prices for the customers
who used reusable cups. In terms of business, Starbucks has operated businesses by
emphasizing high quality of products and services in order to make customers satisfaction.
For high quality products, Starbucks has always collaborated with farmers who are one of
suppliers by contributing education, knowledge and training to improve the quality of
products for customers and company has never overstated with customer.Communities also
under Starbucks priority by donated and done a lot activities for social project in every
community that they enter and operate businesses. Starbucks Foundation was established to
support communities in many ways all over the world. In terms of competition, Starbucks
believes in fair markets by agreement with competitors to do not control the markets in order
to be free competition and talk about products and prices too under following laws of each
countries where Starbucks has run business.