Globalization refers to the increasing interconnectedness of the world; this phenomenon manifests itself primarily in the business sector. Although globalization has facilitated exponential economic growth for most countries, it has also been arguably being responsible for the exploitation of disadvantaged workers, and an increasing income equality threatening to disrupt social cohesion.
The exploitation of workers has achieved high levels with the introduction of multinational corporations. Massive companies with colossal profit margins scour the globe to locate the cheapest resources, often with little regard to human rights. It is with this in mind that we investigate the multi-agglomerate Starbucks, a company known for its iconic logo and anti-competitive practices
Starbucks began in 1971 in Seattle, a single store at first Howard Schultz took over in 1982 and transformed the brand into that which can be seen on every street corner in NY. Starbucks today has over 17,000 retail stores in over 55 countries; its mission
statement claims they hope “to inspire and nurture the human spirit one person, one cup and one neighbourhood at a time”. However recent controversy has linked Starbucks with many other socially condemned MNC’s, inquiry into the company’s ethical sourcing, labour disputes and environmental stewardship programs suggest that Starbucks is not the ethical company it claims to be. As consumers in modern society we have an obligation to hold MNC’s socially responsible for unethical practices, please find out more about Starbucks practices before deciding whether to promote the company with your consumer sovereignty.
Starbucks fails to uphold their environmental sustainable image in the last decade and bring impact on the environment. They had been facing the wastage of the electricity, water and resources. In retrospect, Starbucks’ in the U.K. and the United States were targeted for wasting up to 23.4 million litres of water per day by continuously keeping a tap running in its 10,000 stores, seriously wasting and neglecting diminishing global water supplies. Moreover, environmental waste takes place during its packaging and retailing stages. Such as the Starbuck coffee’s cup require 90% new paper to be produced, the extensive manufacturing process during the assembly of Starbucks’ coffee cups requires 90% new paper to be produced. Due to the plastic lamination lining, Starbucks cups are unable to be recycled and will therefore end up in landfill. For a company producing over 2 billion paper cups per year, only 18% of Starbucks’ stores containing recycling facilities.
Starbuck proud that they had exceeded their goal of reduce water consumption from 25% to 26.5% in 2015. In addition to reducing their energy use, they also focused on advancing renewable energy sources through our purchasing practices. Moreover, they had also remained one of the Environmental Protection Agency’s top ten purchasers of renewable energy in the U.S in 2016. They also toward greater access to recycling for cups and other packaging—including driving demand for recycled materials in order to driving demands for recycle materials. Although they put much effort on recycling but their customers typically don’t see these recycling efforts in action. Moreover, reusable cups are also an important component of their overall waste reduction strategy. Starbuck had put much effort to uphold their environmental sustainable image while the society had concerned the environmental issues.
The several ways to makes them move better is giving customer awards if they recycle the resources that can be recycle in the Starbuck. For instances, an additional 10% discount given to them as Starbucks can earn another cup of drink to lead the sales increase. Moreover, water is a key ingredient in their beverages, Starbucks could make the reusable cups and water together to achieve their reduction strategy. For example, customers could bring their own tumbler with the water inside in order to get further price reduced. As the technology improve, Starbucks could also filter the water from the rain in order to achieve the goals of water saving.
UNION AND LABOUR DISPUTES
Starbucks failed to respects the rights of its employees during 2008.Baristas are faced with inferior working conditions and prevented from taking union action against their employer. Moreover, Starbucks also fails to pay a liveable wage and a secure work schedule .For instances, working hours fluctuating from week to week and earning a starting wages as $6.25 per hours.
In 2006, New York barista Daniel Gross was fired illegally for union activity and spoke out against Starbucks’ inferior working conditions. “Every single barista works part time. No one has a guaranteed number of working hours; one week you might have 35hours, the next you might have 14. The times you work also shift, making it difficult to budget for necessities, look after families or have second jobs.
However, Starbucks had attempted to promote ethical behaviour at the workplace by applying the concept of motivation by rewarding partners through fair wages and benefits, interpersonal communication with the resource partner of the Business Ethics and Compliance to assist in preventing and resolving problem and the most important is through setting up a structure standard code of behaviour to modify the behaviour of its partners nowadays. All these efforts had resulted in the company being awarded one of the most ethical companies by Ethisphere for the year 2007 to 2012
Furthermore, Starbucks can improve ethics in the company by providing ethics training workshops for all employees annually to supplement ethics codes. The managers that organise these training workshops should provide some real cases with ethical violations of Starbucks’ ethics code and let them think carefully and discuss among themselves about what they should do for those scenarios. After that, the managers should teach them the correct and best solutions to solve these kinds of ethical problems. Through these workshops, the employees will know what to do when they face these kinds of ethical issues in the future and the relationship between employees will be enhanced through the interaction in the workshop as well as build trust between each other. We also recommend Starbucks to strengthen the ethics, which are individual rights and distributive justice of the work unit by rewarding those employees with ethical behaviours equally, and punish those with unethical behaviours through work goals and performance appraisals. The managers should praise those employees that achieve the goals in an ethical way or even give them a certificate for being an ethical employee to encourage them. This will also act as a motivation for other employees. At the same time, they should give the same punishment to those employees with unethical behaviour by giving them a warning letter so that they will not do it again in the future. This can also act as an example for other employees so that they will not make the same mistake as these unethical employees. By doing this can avoid developing moral confusion in the company.
Saturation of the market
Starbucks lockout competition through a series of exclusive lease agreements, cluster bombing of stores and competitor buy outs at below market price, which if not accepted the company threatens to open nearby stores. For instances, Starbucks employees loaded with free samples standing in front of independent stores to draw customers away. This anti-competitive behaviour is in direct violation of the Trade Practices Act, by using its market share to reduce fair competition Starbucks is creating negative ramifications for customers. Moreover, Starbucks has compromised the needs of its consumers. However, Starbucks still maintains “that it sees very little cannibalization of existing business when a new store opens”. Furthermore, from an economic standpoint, the saturation of Starbucks stores evident in major cities, coined by Starbucks as ‘infill’ can be seen as wasteful duplication. The positioning of two stores across the street from each other is an absurd waste of economic resources, and is unnecessary. The equity analyst John Owens maintains that at this stage there are no signs that there is anywhere near the limits to their expansion. According to the report concluded by BMO Capital Market Starbucks’ stores have begun eating into each other’s business. Starbucks will continue to expand its stores in the search for profit, regardless of the economic impact and destruction of small businesses. Ever
The government of the countries such as Malaysia, China, United States and so forth, should strengthen the rules and regulation towards the investments of Starbucks in order to stop or slow down the expanding of the stores to its own country. One of the reason is because help to protects the local small business to grow and the grow of the economics of the country .International brands could bring the feeling of sophistication however national brand is more important to the country it is because more of that money would stay in the community. In fact, one Chicago study found that for every $100 spent at a local business, $68 remained in the city while only $43 of each $100 spent at a chain retailer. Not only that, there are wealth gap in every country if Starbucks monopolise the market, the lower income group would not be able to afford a cup of coffee. However, local brands could also bring our community some puniness, for instances having breakfast in the local coffee shop every morning in the diner down of the street is one of the kind.
As the view of the CEO I would giving the solution to conduct marketing research and stop expanding new stores. For instances, to examine the variables of the products, services, location, stores and so forth to examine if these bring significant impact to the income of the company .By doing this to achieve the market needs correctly based on the survey that conducted .Moreover, boost up then reputation and the uniqueness of the company by doing well in service and quality of the product is also the another solution to it. Not only that , Starbuck should also need to investigate that the stores that near each other is still needed .In the view of the financial , we would encourage it to expand if there are the customers’ needs and wants no matter just near each other’s . If there are least income generated, it should be closed .It is no point to keep expanding blindly.
Coffee Harvesting Ethically
On the other hand, Starbucks claims that their coffee is fair trade. Fair trade means that the Starbucks is working with traders and producers in underdeveloped countries and paying them equally for their work and time. Moreover, Starbucks tea is received from the Ethical Tea Partnership (ETP). Similarly to Fair Trade, the ETP is used to promote growth is underdeveloped countries and to allow the producers to receive fair compensation for their products. Starbucks gives credit to where each product is from and sup orts farmers as much as they can. Starbucks is not just a greedy commercial company, although they do receive a lot of money from their sales. Starbucks really makes sure that they product that they are advertising is the product that their customers are receiving. Starbucks wants to make sure that ethical producing of their coffee and tea is enforced and is constantly looking for ways to help underdeveloped countries grow and expand economically by producing their product.
People like the idea of ethical farming programs because it gives them a sense of helping out the world. However, it could also be argued that not everyone is aware of these programs and just buys Starbucks for the label. Starbucks could make a campaign to promote about their ethical farming programs in order to kills two birds in one stone . For instance, it helps to gain public awareness of Starbucks ethical behaviour and change the ideas of the customer of Starbucks. Moreover, the effective way to gain brand awareness is to give customer wow experiences .The more you WOW others, the less we need to promote. It is because people would do promoting to us. For the common example, Starbucks could put effort on promotion strategy such as “buy one, get another half price.
It is undeniable that Starbuck has a competitive advantage when it comes to quality, especially when compared to other generic coffee commodity. However, in terms of convenience, despite arduous efforts to establish Starbuck at every corner, there are still more supermarkets that there are Starbucks bars. Realizing the potential for this convenience sector of the coffee market, Starbuck should actively pursuing substitutes that compete in these areas, for example a pre-packaged drinks or offer tea in its shops as a pre-emptive measure to fight off any teahouse looking to steal away the coffee drinkers .
Outsiders can mistakenly see sometimes Asia as one culture. It can be true somehow, yet to be successful in the region. The countries in Asia are very different when it comes to culture, value, region, taste etc. . . . Manny Asians prefer for tea especially in China, a county of devoted tea drinkers who do not take readily to the taste of coffee .It is recommended that Starbuck should take effort to set different strategies, positioning and marketing for each market to make Starbucks’s experience to be part of the culture.
Starbucks is one of the most ethical companies in the world. Starbucks was proud of it ethical ways such as community, sourcing, environment, diversity and wellness in doing their business. It has openly display its commitment to being social responsibility. The program of Business Ethics and Compliance is to support their mission and help to protect their culture and reputation. Starbucks has emphasis their employees into three sectors, which is global human rights, equal employment opportunity and health care.
In Starbucks, they are using three principles in workplace ethics. First is utilitarianism, it can divide into two types, which are act-utilitarianism and rule-utilitarianism. Second is distributive justice who means sharing of the benefits and burdens of our lives among people. Third, are rights, rights played a central role in ethics and it is important to ensure that the freedom and well-being of each individual will be protected when others threaten that freedom or well-being.
Ethics are important for managing a sustainable business mainly because of the serious consequences that can result from decisions made with a lack of regard to ethics. A lack of ethics leads to a wealth of problems for a business to make their sourcing and manufacturing both ethical and responsible. These companies not only boosted the reputation of their brands, but also ensured that workers on their supply chains were being treated well. Here is a look four companies who earned outstanding reputations and found international success by going the extra mile to achieve ethical sourcing and manufacturing.