Background
Successful modern business marketing lays emphasis on meeting the needs of the customers. This focus is a departure in the opposite direction from the traditional business whose major concern was selling its products or services. Corporate Social Responsibility (CSR) is one way of meeting not only the direct customers’ desires but also the needs and expectations of all the stakeholders of a business (Ortenblad 2016). Unethical profiteering practices of large companies and customer awareness due to free flow of information have forced many companies to make CSR a key strategic focus in their conduct of business. Besides enabling a company to meet the existing legal requirements, effective CSR is a perfect vehicle for building and enhancing a company’s brand (Time 2012). This paper examines the successful deployment of CSR by coffee company Starbucks to the extent of making it one of its differentiating strengths in a highly competitive market.
Starbucks is a coffee restaurant chain established in 1971 with over 20,000 stores in 60 countries as at 2016 (Hines 2007). It experienced steady growth up to 2008 when it suffered a decline with the economic depression of that year. To revamp itself, the company embarked on a major re-engineering process under the newly-returned CEO Howard Schultz (Taylor 2011). Schultz called the reengineering program the Transformation Agenda, a disruptive strategy that included CSR as the main drivers for the turn-around he envisioned (Hussain, Khan and Mirza 2014).
Starbucks’ CSR Strategy
Starbucks’ CSR strategy includes three major aspects: community, ethical sourcing and environment. The community aspect of Starbucks CSR approach recognizes that the company can only succeed if they satisfy the needs of the people who make up its stakeholders (Starbucks 2008). Top on the list is the company’s employees (Vandeveld 2015). The company raised the remuneration of its employees above the minimum wage requirements at a time when its financial performance was lowest. It enrolled all its employees in a stock ownership plan to make them true “partners” as it prefers to call them. In the College Achievement Plan, Starbucks entered into an agreement with Arizona State University to provide its employees with the opportunity to acquire degrees with the company reimbursing full tuition. To improve the customer experience, the coffee chain was among the pioneers in providing free Wi-Fi to its customers. It went further and introduced wireless charging mats where clients can charge their mobile devices while taking their favorite beverage in a Starbucks store. It improves the lives of the communities with which and in which it works by establishing community stores where a percentage of every transaction goes to a local charity. In its policy of diversity and inclusion, the company pledged to have more than 10,000 veterans and military discharges in its employment by 2018. Starbucks Foundation targets to train the youths in the communities it operates.
The ethical sourcing pillar of Starbucks’ CSR strategy provides that the company will only procure its beverages and manufactured products from responsible and ethical suppliers (Starbucks 2009). The pillar requires that suppliers pay farmers sufficiently as the latter are the mainstay of its business. It also has farmer support programs in Rwanda, Tanzania and Ethiopia among others to ensure that the production of coffee meets minimum standards (SCS 2016). Furthermore, the program provides interest-free loans to farmers whose crop is affected by disease or other environmental and weather catastrophies through its farmer support centers (Starbucks 2007).
The company makes the environment its major partner in business by engaging in programs for its conservation. Starbucks new stores are LEED certified and it pursues climate change programs (Mad Workshop 2012). It runs projects in recycling of waste and water and energy conservation.
Competitive Strategy
The vision of the coffee house is “to establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.” In the definition, “premier purveyor” means the company aims to become the leader in providing the best beverages, especially coffee. The ‘uncompromising principles” includes the ethical conduct of its business, focus on its publics and community and the environment. The mission of Starbucks is “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” The statement encompasses the person (one person), the beverage it sells (one cup) and the community (neighborhood).
The purpose of business strategy is to attain a competitive advantage over other players in the industry (Porter and Kramer (2006). The vision and mission of a business are the foundation on which a company’s strategy is based (Haskova 2015). A quick comparison with the Starbucks’ CSR strategy reveals a close alignment with the overall corporate strategy (Fontaine 2013). Both indicate a focus on the people, ethical practices, the environment and the community. The CSR strategy of Starbucks is informed by the business corporate strategy. Therefore, it can be concluded that it is designed to offer a competitive advantage to the company. After implementing the Transformation Agenda in 2008, Starbucks has posted increasingly impressive revenues and profits. The company’s stock price has risen to $58 at the beginning 0f 2017 (Nadasq 2017) from a low of $7.7 in December 2008 (Dobosz 2012). It is thus logical to conclude that Starbucks uses its CSR strategy as a competitive advantage.
Brand Identity
Brand identity refers to the visible representation of a company’s values, beliefs and principles (Wheeler 2013). It can be perceived by the human senses of sight, hearing, touch, taste and smell (Sicard 2013). The elements of a brand identity include the logo, the colors, the packaging, the brand personality, the typography and the typefaces among others (Kapferer 2012).
The logo is a key component of a brand’s identity (Airey 2015). The Starbuck logo is a mermaid enclosed by its tail on both sides (Duarte 2014). The crown on the head of the mermaid indicates that it is a queen. This evokes the leadership position of Starbucks in the beverage industry. The body and tails enveloping the mermaid are drawn in wavy lines that resemble the visual representation of heat. Consequently, a viewer sees the value of warmth in Starbucks’ interactions with customers. The warming effect of a cup of coffee is also conveyed. The care and concern for the community is also well-captured in this in this image of a mermaid wrapped in the warmth of a Starbuck coffee.
The colors of a brand have a psychological effect on the perception of a viewer (Doherty and Harvard 2010). The key colors in the mood boards of Starbuck are green, brown and dark grey in the background. The brown color summons to mind the coffee that is the business of the restaurant chain (Chiaravale and Schenk 2011). Besides, the cap worn by the staff is the color of a ripe coffee fruit. This is important to focus the mind of the viewer on the key business of the company (Hiam 2014). The green color represents the earth (Holston 2015). A key pillar of Starbucks’ CSR strategy is the environment. The major concern of Starbuck with regard to the environment is conservation of the planet to reverse or minimize climate change for future generations (Louche, Idowu and Leal 2010). Green pervades the logo as it forms the background on which the white mermaid is drawn. The color of the aprons worn by Starbucks waiting staff is green with the white mermaid. White represents purity (McQuarrie and Phillips 2016) to reflect the ethical nature of Starbucks business practices and the ethical sourcing policy of its CSR. The dark grey color is one of neutrality (Delong and Martinson 2013) that reflects the equal opportunity employment policy of Starbucks. These colors are pervasive in all the social media pages of Starbucks and the company’s website. The consistency is to help associate them with the company to enable instant recognition on sight.
Promoting CSR Activity at Starbucks
Promotion of CSR activities is a delicate affair. On the one hand, the informed consumer is skeptical about the motives of CSR, being inclined to dismiss it as a self-serving exercise designed to earn the company more profits (Caroll 2013). On the hand, the same consumer is very unforgiving to businesses that do not involve themselves in CSR. These latter companies are considered selfish by watching consumers and they (the consumers) are likely to shun the enterprise and its products (Tench, Sun and Jones 2014). The manner and timing of CSR activities is particularly important in determining the resultant perception of the consumers. CSR activities initiated after a scandal portray the business as reactive with the sole aim of maintaining its bottom-line (Lyons 2013). In many cases, the ordinary consumer and public is not a direct beneficiary of a company’s CSR initiatives (Bueble 2009). The company has to promote its activities to inform the public about what it is doing. The dilemma is the amount of information to give regarding a firm’s CSR.
Starbucks produces an annual Global Responsibility Report that details its activities that are aimed at benefiting the society and its stakeholders (QSR 2008). The 2015 Global Responsibility Report indicated that the company’s ethical sourcing of coffee rose to 99% and 800 stores met the LEED standards (Craves 2015). The company increased community project activity with the introduction of the Global Month of Service in which partners gave millions of hours to community service (Lewitt 2016). The annual report is available in eight languages to reach as wide an audience as possible.
Starbucks advertises its activities in social media through its Facebook page, Twitter and Instagram accounts. These media are the best mode of communicating with the typical Starbucks customer who is tech-savvy, especially the younger generation.
Starbucks sponsors several activities as part of its CSR promotion. The Little Big Show is an annual event that brings together several artistes and entertainers to a concert whose proceeds go to different charities (Starbucks 2013). The concerts offer a platform for informing the public of the initiatives of CSR that Starbucks is engaged in. In collaboration with radio stations, the initiatives get advertisement to promote the causes of the various initiatives of the company CSR (Brown 2013).
Reactions
So far, there is no evidence that the public has received Starbucks’ promotion of its CSR initiatives negatively. On the contrary, media reports show that there is a pervasive positive conception of the company’s CSR activities. Ritter (2014) reported in USA Today that Starbucks’ CSR made it difficult to ignore the company. Forbes endorsed Starbucks’ collaborative CSR activities as the drivers of trends in 2016 (McPherson 2016). An unidentified member of the public is reported to have been so elated to be able to use Starbucks’ free Wi-Fi to watch a Trump rally last November (Last Refuge 2016).
Starbucks’ promise to commit itself to ethical sourcing has hit some headwinds recently. The palm oil used by Starbucks originates from Indonesia, a region where there is so much conflict directly related to this important raw material (Froth 2014). A consumer community called SumOFUs has launched a campaign to push Starbuck to discontinue sourcing for the oil from this region due to incompatibility with its “ethical sourcing” policy of CSR. It feels that Starbucks is dishonest in presenting itself that it only procures its materials in ethical ways and trades with organizations that observe ethics (Thomas 2015). There seems to be a disconnect between the promise and the actual practice of the coffee giant. Furthermore, SumOFUs alleges that Starbucks has not been committal enough with regard to sourcing raw materials from farms or farmers that do not engage in deforestation. Instead, the company gave a superficial statement that deals only with its farms. It does not address the important matter of buying from producers who cut down forests to plant coffee or palm oil yet these provide the bulk of the supply.
According to Fernholtz, Starbucks’ College Achievement Plan is far less beneficial to the employees than the company would like the public to believe. It cites the requirement that students must complete at least 21 units of study to qualify for reimbursements. The university demands that students pay for the initial costs upfront, forcing them to seek loans and financial aid from the government. The financial aid is pegged on the earnings of the workers and this in itself makes it difficult for the employees to access it. Furthermore, analyses reveal that Starbucks’ contribution to the education program is minimal compared to the government. In details, the government pays U$24 million per 1000 students to cover their educational costs while Starbucks contributes a meagre US$11 million. There is an element of exaggeration on the part of Starbucks concerning its CSR program.
The Organic Consumers Association has accused Starbucks of showing no interest in encouraging organic food. It accuses Starbucks of lacking a policy on organic foods. It gives statistics on the non-use of organic foods in the stores. OCA finds this state of affairs as a demonstration of lack of interest in the welfare of the consumers.
Last, Starbucks has been accused of tax evasion in its offshore operations. The company is accused opening accounts in tax havens with the express intention of evading tax. The British tax scandal in particular led to a major row between the public nd the government.
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