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Starbucks’ Corporate Social Responsibility

2350 words (9 pages) Essay in Marketing

27/04/17 Marketing Reference this

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I. Background information

The main idea of Corporate Social Responsibility (CSR) is that companies doing businesses are not only committed to their shareholders but also their stakeholders.

Broadly defined, CSR is the commitment of businesses to contribute to sustainable economic development by running business responsibly while maintaining the preservation of the environment and working with the employees, their families, the local community and society at large to improve their lives in ways that are good for business and for development.

Within the business sector, CSR has become one of the major main beliefs promoted within recent years in the business plan to achieve business success. One of the companies that adopt CSR is Starbucks.

Starbucks is committed to being a truly responsible company in the communities. Its focus is on ethically sourcing high-quality coffee, reducing its environmental impacts, and contributing positively to communities. As part of the CSR program, the company in collaboration with Conservation International developed C.A.F.E. (Coffee and Farmer Equity) Practices in 1998.

C.A.F.E. Practices is a voluntary supply chain program that provides purchasing preference to coffee suppliers who supply coffee beans that are grown, processed, and traded in an economically, socially, and environmentally responsible manner. Those coffee farmers who adhere to best environmental and social practices will be rewarded with higher prices.

There are four main areas of focus in C.A.F.E. Practices.

Product quality

All coffee must meet Starbucks standards of high quality.

Economic accountability

Suppliers must submit evidence of payments made throughout coffee supply chain to show how much of the price Starbucks pays for unroasted coffee gets to the farmer.

Social responsibility

The rights of workers are protected. Third-party verifiers help the company to make sure their working and living conditions are safe and adequate.

Environmental leadership

Verifiers will measures in place to manage waste, protect water quality, conserve water and energy, preserve biodiversity and reduce agrochemical use.

By 2015, Starbucks targets to buy 100% responsibly grown and ethically traded coffee. In order to achieve this goal, it is essential to observe the alignment of this C.A.F.E. Practices with generic corporate strategy.

A generic strategy is a core idea about how a firm can best compete in its current marketplace (Pearce & Robinson, 2007). As defined by Michael Porter, there are three generic strategies: cost leadership, differentiation, and focus. Cost leadership means the pursuit of cost reduction in every aspect. The differentiation strategy involves the creation of something that is perceived by the industry as being unique. The generic strategy of focus targets a particular group or specific geographic market.

II. Problem definition

Based on the information above, understanding corporate competitive strategy is crucial. Every decision should be linked to the generic strategy. A company that fails to integrate its social responsibility strategy with its generic strategy will most likely face a problem in a long run. Therefore, it is so important to make sure that strategy and company’s programs are aligned so as the organisation can achieve its goals productively. This research will analyse the connection between Starbucks’ generic strategy and its Corporate Social Strategy, especially its C.A.F.E. practices program.

Research questions

The main questions need to be answered in this case are as follows.

Is Starbucks doing most good for their stakeholders in this case coffee farmers in Indonesia by implementing CSR?

Do the farmers really get their fair price Starbucks is promising?

Are the coffee Starbucks bought responsibly grown and ethically traded?

Are C.A.F.E. practices beneficial to coffee growers?

What influence does the generic strategy give to the company?

What are the differences of nowadays competitive strategy and previous generic strategy?

What are the fundamental reasons a company should align its CSR practices with its corporate strategy?

Research objectives

This research paper is firstly aimed to understand the concept of Corporate Social Responsibility and the fundamental value of integrating CSR and generic strategy.

The second aim is to demonstrate the knowledge that the author has gained during the study.

The third aim is to compare the theories mentioned in textbooks with what really happen in the real life. The author will soon enter a real life, i.e. working full time in the real business environment; therefore it is important to get a glimpse of it. It is expected that the author will be ready to face everything by the time the author gets into competitive business environment.

III. Research methodology

Data gathering methods

The data used in the dissertation will be collected using the primary and secondary (desk) research. Primary research will be carried out by interviewing some people related to the topic. This can be categorized as a qualitative research.

Methodology

Motivation

Sources

1. Secondary (desk) research

To gather data about Starbucks’ Corporate Social Responsibility

To gather data about C.A.F.E. practice guidelines

To collect information about competitive and corporate strategy

To find info about C.A.F.E. verifiers in Indonesia and their practices

To find info about coffee farmers and distributors in Indonesia

Starbucks website and annual reports

Articles and published journals from EBSCOhost [1] and internet

Books

Previous research reports

Forum

2. Primary research

To find info about implementation of C.A.F.E. verification in Indonesia

To get data about coffee growing method

To find info about coffee growers and distributors

Interviewing C.A.F.E. verifiers/ certification body

Interviewing coffee growers in Indonesia

Theoretical framework

This case study will be based on literature collection, such as:

Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause by Philip Kotler and Nancy Lee, 2004

Corporation, Be Good! By William C Frederick, 2006

Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time by Howard Schultz and Dori Jones Yang, 1999

Exploring Corporate Strategy: 8th edition by Gerry Johnson, 2008

Crafting and Executing Strategy, by Arthur A. Thompson, A. J. Strickland, John E. Gamble

Data analysis

Exploratory research

Contact the object of the research

Literature review

Proposal approved

Develop proposal

Reveal the corporate strategy

Develop interview questions

Reveal the Company’s CSR practices

Analyse the practice and strategy

If it is align

If it is not align

Reveal the inconsistency

Conclusion & recommendation

The analysis will be performed by gathering secondary and primary data.

IV. Time and costs estimation

Month

Activities

Cost

Up to

August 2009

Generate ideas

Find literatures

Start collecting data from internet

Making the proposal

€ 50 (on books)

€ 0.30 (on printing)

1st week of

September 2009

Hand in the proposal

Consult with dissertation supervisor, Mr Hans Zahn

2nd to 4th week of

September 2009

Collect data about CSR and C.A.F.E. practices

Hand in revised proposal and consult with Mr Zahn

Revise interview questions

Perform interviews in Indonesia

€ 900 (plane ticket)

€ 10 (phone)

1st and 2nd week of

October 2009

Write chapter I: introduction (background information, research objectives, overview of research method)

3rd and 4th week of

October 2009

Discuss with supervisor on the progress

Write chapter II: literature review/ theoretical framework (generic strategy Porter, CSR, the connection between CSR and generic strategy)

Gather more secondary data

1st week of November 2009

Discuss with supervisor

Re-write literature review

Write chapter III: research method

2nd week of November 2009

Discuss with supervisor

Start writing chapter IV: analysis of result (company profile, analysis on the interview result)

3rd and 4th week of November 2009

Discuss with supervisor

Continue writing chapter IV

Brainstorm and start writing chapter V: conclusion and recommendation

1st week of December 2009

Discuss with supervisor

Continue writing chapter V

Check what missing on the report, grammar

2nd week of December 2009

Write executive summary

Write bibliography

December 2009

(targeted before Christmas)

Final consultation

Edit the report

Hand in the report

€ 25 (on printing)

January 2010 (targeted before 20th of January)

Oral defence

Total cost estimation is approximately €1000.

V. Limitations

Starbucks is unable to give informational interviews for school projects due to the high volume of request. Therefore, the author will rely mostly on secondary data.

VI. Report outline

Executive summary

Table of contents

Acknowledgement

Chapter I: Introduction

Chapter I will consist of summary of the dissertation especially from chapter II and III. Background information, research objectives, benefits of the research, and limitation will also be included in this chapter.

Chapter II: Theoretical framework

In this chapter, the theories on which the research is based will be presented. There are several concepts and theories related to this dissertation, such as:

Corporate Social Responsibility;

C.A.F.E. Practices program;

Porter’s generic strategy; and

Competitive strategy.

This chapter also covers past research and articles from journals, books, and other different sources.

Chapter III: Research methodology

This part is about description and evaluation of the method used in the research, including data sources and collection methods, as well as the research analysis method.

In this dissertation, data are gathered more likely from secondary research rather than primary research. Some interviews will be taken as an additional analytical data.

Chapter IV: Findings and analysis

This chapter will provide Starbucks company profile, empirical findings, and analysis of findings.

Chapter V: Conclusions and recommendation

This chapter will include conclusion and suggestion for further research.

Bibliography

The Harvard referencing system will be used as a guide to write this part as well as the citation and quotation in the main report.

Appendices

The dissertation proposal will be included in this part.

Appendix 1

Interview questions (for the coffee farmers)

For what price you sell your coffee?

Who are your coffee buyers, retailer, or distributors?

What is the coffee production monthly?

Do you use some sort of sustainable coffee growing?

Do you sell your coffee to Starbucks?

(if yes please answer q6 till q10, if not answer q11 and q12)

Who is your previous buyer before Starbucks? (if any)

What is the reason you change buyer?

Do you have a special contract/joint venture with Starbucks? Or is it market price?

Does Starbucks promote eco-friendly ways of growing coffee?

Is selling to Starbucks beneficial to you? In what way (improve quality of life, condition/wealth etc.)?

What is your image of Starbucks?

Would you sell your coffee to Starbucks?

Appendix 2

Interview questions (for C.A.F.E. verifiers)

What is the company value and strategy?

How does the company intend to achieve the objectives?

What is CSR in your opinion?

What is C.A.F.E. practices program in your point of view?

How is the implementation of the program in Indonesia?

Is there any adjustment during the implementation of C.A.F.E. guidelines?

What are the benefits of this program for coffee farmers and distributors especially in Indonesia?

What are the benefits of this program for your company?

According to you, is C.A.F.E. practice program can directly be linked to your company strategy?

etc.

Appendix 3

Consumer buying behaviour related to C.A.F.E. practices (fair trade coffee)

This part is still need to be further discussed:

whether or not it will be included in this dissertation

If yes, will it be included as a main research or in a appendix

Ethical consumption is the purchase of a product that concerns a specific ethical issue (human rights, labour conditions, animal well-being, environment, etc.) and is chosen freely by an individual consumer. Some forms of ethical consumption benefit the natural environment (e.g., environmentally friendly products, legally logged wood, animal well-being), while others benefit people (e.g., products free from child labour, fair-trade products).

Research questions:

What is the link between C.A.F.E. practices with customer behaviour?

What aspects are influencing customers to buy fair trade coffee?

What are the impacts of CSR on COB?

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