Nineteen seventy-one Starbucks opened in Seattle’s popular Pike Place Market. Joining the company in 1982, Howard Schultz proved the driving force behind the rapid success of the company by creating a retail coffee-bar culture. By 1985, Schultz’s confidence in his European inspired idea presented Starbuck’s first café latté in the new downtown location as well as introducing its Christmas Blend. This set the momentum resulting today in the organization operating close to 17,000 stores across 55 countries around the world and remains “the third largest chain restaurant in the Unites States” (Farrell, Fraedrich, and Ferrell 319).
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Fundamental to Starbucks’ experience and product proves placing store locations in “high-traffic, high-visibility locations “(Farrell, Fraedrich, and Ferrell 319). Intentionally flexible in format and size allows the organization placing stores in varieties of locations including bookstores, office buildings, university campuses, and recently in grocery store chains. “It can also situate retail stores in select rural and off-highway locations to serve a broader array of customers outside major metropolitan markets and to further expand brand awareness” (Farrell, Fraedrich, and Ferrell 319. This includes increasing development of drive-through lanes for non-pedestrian customers ((Farrell, Fraedrich, and Ferrell 319).
Its easily identifiable trademark emblem makes its coffee and tea products easily identifiable. Collaborating with grocery stores through retail outlets, Starbucks products include Frappuccino coffee drinks, super premium ice creams, VIA instant coffees as well as Starbucks Doubleshot drinks. The VIA marketing now shows a $200 million increase to annual revenues with the United Kingdom and Spain offering it as the official brew for “select JetBlue flights” (Farrell, Fraedrich, and Ferrell 319.
Corporate Focus on Ethics in Business
Howard Schultz ongoing transparency as an ethical founder and chair of Starbucks supporting increased awareness of business ethical practices advocating more public education, proved exemplary with his 2007 speech to an audience of Notre Dame students with his message on need for “balancing ‘profitability and social consciousness’” (Farrell, Fraedrich, and Ferrell 320). Industry research supports Schultz corporate culture emulating business ethics as evidence that “ethical companies do better in the long run” (Farrell, Fraedrich, and Ferrell 320). Analysis of an ethical aspect of a case study looks at how, “To understand what it means to think ethically ” (Pava 20).
Starbucks’ ethical practices gained global recognition as well. Allegra Strategies of the European Coffee Industry recognized Starbucks in both 2009 and 2010 as the “Most Ethical Company” (Farrell, Fraedrich, and Ferrell 320). This acknowledgement connects to Starbucks’ ethics extending to sustainability launching its Shared Planet website announcing three main goals. These include achieving ethical sourcing with goal number two maintaining environmental stewardship, and last to engage the community in greater involvement in sustainable practices providing customers with the means for learning about things aligned to Starbucks’ products including nutrition data (Farrell, Fraedrich, and Ferrell 320).
Ethical Analysis
Ethical analysis of Starbucks’ organizational culture connected to research proves it consistently exhibits sound business focus underpinned by sound ethical decisions. Examination of organizational culture ethical practices show company’s like Starbucks exhibiting a continued strong belief in its ability for influencing behavior of individuals, other institutions, and the community by its own transparency in ethical business practices. Behavior exhibited by upper, middle, and lower management emulating the company ethical practices fits the numerous implications and meanings of ethical organizational culture as Hartnell et al., explains as “shared among members existing at (numerous) levels (including) group and organizational (and) influencing employees’ attitudes and behaviors and consisting of collective values, beliefs, and assumptions” (qtd. in Barbera 28).
Further ethical analysis of Starbucks organizational culture practices reveals Schulz’s philosophical business ethics suggesting:
When your organization has no ethical foundation, or when you have lost touch with the one you have, you risk making decisions that can get your company into serious trouble. Strong leadership, based on clear values, is the key to making sure the organization does the right thing for the right reasons. Standing up for what's important establishing a code of ethical behavior as much as it applies to building empires, creating shareholder value, or dominating a market. To establish this code, we suggest creating a platform of integrity, based on a solid ethical foundation. (Johnson and Phillips 277)
Analyzing Starbuck’s ethical business practices therefore, relates directly to its company culture reflected in the behavior of its infrastructure processes. The longevity of the success of this organization of the employer to employee commitment reveals the quality of the relationship because of the efficacy of ethical behavior exhibited by its employees emulating its leadership structure (Sims 271).
Further exemplifying the commitment to ethical business practices by Starbucks this analysis looks at the organization’s behavior toward its social responsibilities to the consumer, the community, and to its employees with its proactive measures directed at the well-being, sustainable practices, and common good of these entities. The success of this company clearly connects to these ethical characteristics never wavering. The outcomes of the ethical business practices as proves the example of Starbucks instills trust (Sims 274-275).
Identify Organizational Stakeholders
Clearly, the organizational stakeholders connected to Starbucks remains customers, community – including its locales domestically and internationally as well as its valued human capital surrounding its employees. According to literature, Starbucks connection to the stakeholder theory by Freeman (1984) as well as other scholars defining the concept as generally accepting it is the organization’s (Starbucks) recognition of and response to “the
needs, interests, and influence of those affected by their policies and operations” (Rosenthal and Buchholz 151).
Starbucks recognizing its stakeholders globally as the customer, the community, and its employees means the organization understands how its “actions, decisions, policies, practices, or goals (therefore, connect to) the interests and concerns of these various groups and individuals” (Rosenthal and Buchholz 150).
Starbucks’ ethical treatment of its stakeholders assumes a moral and central significance connected to the intentions of conducting business in a socially responsible manner. At the same time, outside of perhaps its customers as stakeholders, Starbuck’s other stakeholders “are understood as people who are affected by the corporation but "not integral to its basic identify" (Rosenthal and Buchholz 151). Where the customer fits outside this part of Freeman’s (and others’) definition of the stakeholder theory, relates to Starbucks as a coffee bar culture identified by and with its customers. In its ethical business practices, Starbucks relentlessly acknowledges the expansion of the universe in connection to stakeholders as anyone “touched by their organization: employees, customers, competitors, suppliers, community leaders and citizens, governments, NGOs, and alliance partners” (Papke 242).
Again, in reference to Starbucks’ owner philosophy the success of this organization connection to stakeholders according to experts looks at the importance of putting stakeholders’ interests first. With customers it is quality in service and products as well as providing locations and ambience that makes doing business together pleasurable. “More than ever, companies must reach outside the confines of their own operations to embrace all of their stakeholders” (Papke 242). The global community as Starbuck’s stakeholder the attention to sustainability, collaboration for quality of life through wellness practices, and the organization’s ongoing effort to assure its attention continues addressing community interests and needs remains a given.
The ethics of business practices ideally and pragmatically, nonetheless continue focusing on profits for sustaining the business itself. “Profits and value now depend on attracting and retaining the most talented workers, enhancing the well-being of communities, creating respectful partnerships with suppliers, thrilling customers with more than a great product and a responsive customer care center, cooperating with regulators, and collaborating with domestic and foreign governments” (Papke 242).
The Decision Making Process
Historically, Starbucks’ longevity looks at the organization decision-making process of knowing when to expand and when to cutback operations even to the extent of closing some of the store locations as proven in its actions. Among its decision making process, Starbuck’s pragmatic approach to dealing with criticisms about its business practices looks at the ethical manner it responded by continuing focusing on the positive aspects of its success because of quality of product and service.
Its promotion of employee welfare in benefits, in security, creating a non-discriminatory workplace no matter, gender, race, generation, ethnicity, or culture remains a tenet of Starbucks not only legally but also, ethically. Decisions made by Starbucks show the organization leadership sets an example for all stakeholders as “part of social and ethical values which promote the common good” (Ryan 197).
The decision process in connection to the pertinent leadership exhibited consistently by Starbucks relates to leadership theoretical underpinnings for ethical behavior connected in part, to the demographics existing about those led. Starbucks’ decision-making process reveals ethics lending to creative as well as productive actions connected to its organizational environment reflecting its leadership qualities. Starbucks’ leadership qualities show learning-oriented characteristics exhibiting proactive problem solving prodded by confidence. This sets a positive example other members of its organization.
Starbucks continually shows the importance of commitment to ongoing learning about best practices business decision-making than sticking to a particular solution to a problem. By his own example advocating transparency in ethical business practices as already pointed out in this case study overview, his decision-making abilities as a leader allows facing the greater complexities aligned to the process by engendering a focus of relying on the input of customers, community, and employees globally. This increases solutions for decision-making. Consequently, according to Schein (2009) “we have overwhelming evidence that new solutions will likely be adopted if the members of the organization have been involved in the learning process” (qtd by Schein 367). [Sic]
Business Ethics Resolutions & Implementation Plan
Addressing the issues and challenges especially connected to the global economic recession and the cultural resistance in Europe to Starbucks’ expansion and gaining the trust and patronage of the community, Starbucks looked at the values of the community ethically and thus implemented an ethical plan gaining the support of the European community. “Interests arise from values. Values are the fundamental motivations of an organization, give rise to, and justify interests. Values reflect the vision of the organization and express its highest aspirations. An organization is able to change its goals or interests easily in response to external circumstances or internal conditions, whereas a change in values signifies a shift in identity. (Stern and Hicks 20)
Conclusion
Understanding the process of business ethics using a case study provides varieties of insights into the positive and negatives of what having and not having a company culture proves. In the analysis presented in this scholastic endeavor of the business ethics practices of Starbucks there was nothing but ongoing positive ethical behavior reflecting a firm and transparent company organizational culture based on sound moral and business ethics.
The attention to the customer, community, and employees as the foremost of the stakeholders deserving ongoing focus of Starbucks’ ethical behavior shows a consistency in acknowledging this. The fundamental ethics of Schultz as a person overflows into the way he runs his company by the way his continues serving a proactive role model of his organizational company culture and social responsibility.
Works Cited
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Johnson, L., and Phillips, B. (2003). Absolute Honesty: Building a Corporate Culture That Values Straight Talk and Rewards Integrity. New York: AMACOM
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Pava, Moses L. The Search for Meaning in Organizations: Seven Practical Questions for Ethical Managers. Westport, CT: Quorum, 1999 Book
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Sims, R.R. (2003). Ethics and corporate social responsibility: Why giants fall. Praeger. Westport, CT. Pg 271, 274-275.
Schein, E. H. (2010). Organizational Culture and Leadership. Copyright © 2010 by John
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Stern, Alissa J., and Tim Hicks. The Process of Business/Environmental Collaborations:
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