Case studies
Case: Starbucks

Background
Starbucks began in 1971, and has grown into a leading coffee location around the world and one of the most admired companies.
 
Mission
Starbucks’ mission is:
To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow.
 
The guiding principles are:
  • Provide a great work environment and treat each other with 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.
These guiding principles are direct links to social responsibility and define the stakeholders as the employees, the partners, and being a good citizen in its communities. From day one, Starbucks was built with these guiding principles. For example, in 1991, when Starbucks went public, Howard Schultz shared the options with every employee who worked over 20 hours a week – including those who worked behind the counter at local Starbucks stores.
 
Programs
Looking beyond the bottom line, in opening stores, harvesting coffee, and conducting business, Starbucks’ social responsibility is evident:
  1. With employees;
  2. With suppliers – working with NPOs;
  3. With communities;
  4. And more recently with causes or campaign drives;
Starbucks’ actions have had significant influence over the industry as a whole.
 
WITH EMPLOYEES
With its decision to offer health-care benefits to all employees who work 20 hours a week or more, Starbucks went well beyond the call of duty. A strong business case could have been made that such benefits were not necessary. While retention problems did plague the fast-food industry, many analysts believed that Starbucks went further than it needed to hold on to employees.
 
Indirectly, the company’s decision to offer health-care coverage to “part-timers” put pressure on other companies to provide similar coverage.
 
WITH SUPPLIERS
There is a discretionary decision to be made here find the lowest cost solution in the world – free trade or elevate your suppliers. Starbucks has chosen the latter.
 
For example, Starbucks recently unveiled guidelines that will pay farmers a premium price if they meet certain environmental, labor, and quality standards. Last year, the company joined TransFair, an organization that guarantees that farmers will receive most of the $1.26 per pound that coffee roasters pay for high-quality beans.
 
Starbucks’ decision to elevate its suppliers is being carried out in stages as capabilities are built. Its target is to hit 70 percent of the pounds purchased by the end of 2007. Green Mountain takes this program further and pays fair trade prices for all coffee beans.
 
It is worth noting that the fair trade movement in Europe  where the market for fair trade certified products is three times larger in dollar sales than it is in the U.S. is now persuading mainstream companies to get on board.
 
Starbucks also developed Coffee and Farmer Equity (CAFÉ) practices in 2004 in conjunction with the environmental charity Conservation International – an NGO. Starbucks did not stop there. It has committed to working closely with suppliers, helping them convert to sustainable practices and offering them long-term contracts as an incentive to do so. This approach helps the company meet the needs of the fair trade industry, as well as increase the quality of the product bought and resold.
 
WITH COMMUNITIES
Starbucks' program called “Starbucks Make Your Mark” recruits volunteers for assistance with local community and non-profit projects such as cleanup of trails and parks. This campaign has an element of cause promotion (i.e., recruiting customers in their stores to sign up for projects by visiting Starbucks.com.) It also has a community volunteer component, as staff in the Starbucks’ partner stores are also encouraged to show up for the event. It is worth noting that several “chain-adverse” communities have welcomed Starbucks.
 
WITH CAUSES
Each year, Starbucks sets high standards for attracting a diverse base of contractors and product providers. One such effort launched an innovative business partnership between Starbucks and Johnson Development Corporation called Urban Coffee Opportunities (UCO) – a 50/50 joint venture to provide employment opportunities, training, and quality products in economically disadvantaged metropolitan communities. Today they are providing more than 2,100 jobs in 102 UCO stores.
 
Processes
Annually, Starbucks management does a qualitative assessment to review the significance of its programs to Starbucks and Significance to external stakeholders – see Figure 1. In 2006, the company created a CSR Executive Committee to review programs and report to the board.
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Benefits
While the quantitative impact is not tracked, the sense at Starbucks is that these programs provide clear benefits. Such benefits include attracting and retaining partners, customer loyalty, lower costs, stronger supply chains, and a license to operate.
 
Challenges
Starbucks is questioning how to best share practices with retailers around the world.
Another key consideration is whether policies will be considered given such that the company loses its discretionary power.
 
Lessons
If you build it responsibly, they will come. Even at a huge enterprise, social responsibility can be contagious.
 
Summary
The respect Starbucks has for individuals that work in their stores is evident to the customer. The investment in suppliers and longer-term relationships supports the high quality coffee served. Starbucks continually receives recognition for outstanding customer satisfaction. That is the bottom line.
 
©Druckerinpractice

Posted on 10/4/2007