NATIONAL ECONOMICS UNIVERSITY

SCHOOL OF ADVANCED EDUCATION PROGRAM

INDIVIDUAL ASSIGNMENT
Subject: Business Ethics

BUSSINESS CASE STUDY 7

Starbucks’ Mission: Social Responsibility and Brand Strength

Name: Nguyen Do Khanh Ha

Student ID: 11211896
Class: QTKDQT TT 63C
 A. Case summary
Starbucks Culture
Starbucks, founded in 1971, places great importance on its guiding principles and mission,
emphasizing treating employees with respect and dignity. Howard Schultz's personal background
and values have significantly shaped Starbucks' commitment to being a people-centric company.

Corporate Social Mission

Environment
Since 1992, Starbucks has been dedicated to environmental sustainability, implementing policies
to minimize its environmental footprint. Initiatives include recycling, energy conservation, and
support for shade-grown coffee.

Employees
Starbucks offers comprehensive benefits, including health, dental, and vision insurance, as well
as stock options, to its partners (employees). Its commitment to employee well-being contributes
to low turnover and high productivity.

Suppliers
Starbucks maintains positive relationships with small coffee suppliers and promotes ethical
sourcing through programs like C.A.F.E. Practices. The company supports social development
projects in coffee-growing communities.

Customers
Starbucks focuses on enhancing customer satisfaction and strengthening its brand. It offers free
Wi-Fi, encourages community discussions, and uses its cups for thought-provoking messages.

Communities
Starbucks strives to become a gathering spot in local communities and supports various causes,
including literacy programs and relief efforts through partnerships with organizations like
CARE.

Success and Challenges

Starbucks has experienced remarkable success and growth, becoming a global brand
synonymous with high-quality coffee. Its consistency and customer-oriented approach have
contributed to its widespread recognition.

While praised for its product quality and stakeholder concern, Starbucks has faced criticism for
its aggressive expansion strategy, which some believe has driven smaller coffee shops out of
business.

The company has addressed criticism by offering Fair Trade certified coffee and is gradually
increasing its Fair-Trade product share. However, it faced challenges during the 2008-2009
recession, leading to store closures and a refocusing on core products and customer loyalty.
Starbucks aims to strengthen its brand, enhance community involvement, and improve its overall
image during this slower phase of its history.

B. Questions

1. Why do you think Starbucks has been so concerned with social responsibility in its
overall corporate strategy?
Starbucks has prioritized social responsibility in its overall corporate strategy for a variety of
compelling reasons, rooted in its original mission and a commitment to its core stakeholders.

a. Preserving the Original Image and Mission

Starbucks' journey towards social responsibility can be traced back to its original mission
statement “people first and profits last”, which emphasized not only delivering high-quality
coffee but also creating a positive impact on the communities it served. This mission was
strengthened by its co-founder Howard Schultz, who envisioned Starbucks as a place where
people could come together over a cup of coffee.

Schultz's personal story plays a pivotal role in understanding his commitment to social
responsibility. He often recounts the story of his father, who lost his job due to health issues and
struggled to provide for the family. This experience left a deep impression on Schultz, motivating
him to build a company that would provide not just coffee but also opportunities for its
employees, demonstrating a genuine concern for their well-being. Schultz's personal connection
to social issues has greatly influenced Starbucks' dedication to social responsibility.

b. Appealing to Key Stakeholders

Social responsibility serves as a powerful means for Starbucks to connect with its three primary
stakeholders: customers, employees, and shareholders.

- Customers: Starbucks' customers are not just buying coffee; they are purchasing an experience
and a sense of social responsibility. Many customers today are socially conscious and appreciate
businesses that share their values. Starbucks' commitment to ethical sourcing, environmental
sustainability, and community involvement – which is demonstrated by the Shared Planet
website - resonates with these values, forging a deeper connection with its clientele.

- Employees: Starbucks recognizes that its employees are the backbone of its business. By
fostering a culture of social responsibility, the company demonstrates its commitment to creating
a positive and inclusive workplace. Initiatives such as comprehensive healthcare benefits, stock
options, and educational assistance programs underscore Starbucks' dedication to its employees'
well-being, resulting in higher job satisfaction and loyalty.

- Shareholders: While Starbucks' commitment to social responsibility may involve initial

investments, it pays off in the long term. Sustainable and socially responsible practices can help
reduce operational risks, enhance brand reputation, and drive customer loyalty—all of which
contribute to shareholder value. In today's market, shareholders increasingly appreciate
companies that prioritize long-term sustainability over short-term gains.

Strengthening the Starbucks brand through social responsibility involves not only appealing to
these primary stakeholders but also considering broader impacts:

- Community: Starbucks' community involvement initiatives, such as the Starbucks

Foundation's support for education and youth empowerment, demonstrate the company's
commitment to making a positive impact beyond its stores.

- Supply Chain: Ethical sourcing practices ensure the well-being of coffee farmers and promote
environmental sustainability, aligning with Starbucks' mission to provide high-quality coffee
while respecting the planet and its people.

2. Is Starbucks unique in being able to provide a high level of benefits to its employees?
Although it's not entirely unique in this regard, Starbucks is recognized for its high level of
employee benefits. While the company offers healthcare, stock options, and educational
assistance for both full-time and part-time workers, similar initiatives exist in other retail and
hospitality companies.

However, Starbucks stands out due to several factors:

- Benefits for Part-Time Employees: Starbucks extends benefits like healthcare and stock
options to part-time employees who work at least 20 hours per week, a rarity in its
industry.
- Education Opportunities: Its partnership with Arizona State University offers
employees the chance to earn a bachelor's degree with tuition assistance, emphasizing
employee development and education.
- Stock Ownership: Starbucks provides stock options (Bean Stock), allowing employees
to invest in the company and share in its success, aligning their interests with long-term
performance.
- Healthcare: Starbucks offers affordable healthcare plans for eligible employees, a
significant benefit in countries like the United States with high healthcare costs.
- Mental Health Support: The company addresses mental health concerns with resources
and support through programs like Headspace.

While Starbucks isn't entirely unique in providing employee benefits, its comprehensive
approach for both full-time and part-time employees, along with innovative education and stock
ownership programs, distinguishes it in the retail and service sectors, setting a notable standard
for employee welfare.

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?
Starbucks' rapid growth is a result of a dual strategy that combines ethical and socially
responsible initiatives with the delivery of desirable products and a welcoming atmosphere.
- Ethical and Social Responsibility: Starbucks' commitment to ethical sourcing,
sustainability, and community engagement appeals to socially conscious consumers.
These initiatives resonate with customers who seek brands that align with their values,
fostering a loyal following.
- Product Appeal: Starbucks consistently offers high-quality coffee and innovative
products, catering to a diverse range of preferences. Its expansive menu, featuring various
coffee beverages, teas, and snacks, attracts a broad customer base.
- Store Experience: Starbucks has crafted inviting store environments, creating a "third
place" for customers between work and home. With comfortable seating, free Wi-Fi, and
a warm ambiance, customers are encouraged to make Starbucks a part of their daily
routines.
- Global Expansion: Starbucks' rapid international growth, tailored to local tastes, has
solidified its status as a global brand.