Reference no: EM132154878
CASE STUDY:
Starbucks’ Mission: Social Responsibility and Brand Strength
Before Starbucks came onto the scene, coffee was considered a stodgy product largely consumed by older people in the United States. It did not have the cool-factor or the cache that it does today. Starbucks’ entry in the market largely changed how Americans consumed coffee and what they thought about coffee shops. It all started in the cold, gray climate of Seattle—the perfect setting for launching a warm beverage with international appeal. The target market was upper-income, middle-class, white-collar, single or newly married men and women with no children. Many of Starbucks’ early target market had likely experienced the coffee shop cultures of Europe, and found U.S. equivalent appealing. Quality and service were excellent and location became a critical issue. Starbucks’ flagship store is in Pike Place Market—a destination for the worldly, young and hip in Seattle. With its small space requirements, low inventory, and fast turnover, Starbucks was able to leverage its local success to rapidly expand into new markets before competitors were able to catch up. Due to its ubiquity, many people have strong opinions on Starbucks. Some worry that the chain pushes out local competition and that they have led to the homogenization of the coffee market. However, the most recent economic recession and the closing of hundreds of Starbucks stores has, for the time being, quieted these complaints.
No matter what one thinks of Starbucks, it is more involved in social causes and the care of its workers than many comparable chains. Starbucks is committed to employee well-being, as one can see in their employee health care system. Founder Howard Schulz made employee healthcare a priority after watching his father struggle with injuries because he had no access to employee healthcare or worker’s compensation. In large part because of its commitment to providing good wages and healthcare, Starbucks ranked 24th on Fortune’s Best Companies to Work For list in 2009.
The company also has a history of giving to charities that affect its primary stakeholders. As part of its commitment to ethics and sustainability, the company launched its Shared Planet website, which communicates to interested stakeholders all of the company’s ethics and sustainability initiatives. The company is also a large buyer of Fair Trade Certified coffee (although no longer the largest by far) and has partnered with Project Red to raise money for HIV/AIDs research.
In spite of its professed commitment to caring for workers and for social causes, such a large company will always be subject to criticisms. From complaints that Starbucks pushes smaller competitors out of markets, to those that its coffee drinks are excessively fatty and caloric, Starbucks is seemingly always in the news for something. It has even become a target for several lawsuits regarding compensation and dispensation of tips. Also, Starbucks Corp. has agreed to settle allegations from the National Labor Relations Board that it improperly fired a Michigan employee for participating in union activities. Instructors may ask students whether large companies attract such litigation or if Starbucks is changing its values as it has grown larger.
Discussion
1. Why do you think Starbucks has been so concerned with social responsibility in its overall corporate strategy?
2. Is Starbucks unique in being able to provide a high level of benefits to its employees?
3. Do you think that Starbucks has grown rapidly because of its ethical and socially responsible activities or because it provides products and an environment that customers want?