Business operations rely on the consideration by which they are able to contend with the responsibilities they are expected to complete for their stakeholders. It should be noted though that it is the balance in relation to these considerations that would impose on the manner by which a business entity survives challenges while remaining responsible to their stakeholders. Three particular organizations shall be given attention to in this documentation in relation to the said matter of issue. Starbucks, the Delaware administration and GRI or the Global Reporting Initiative.
The operation of Starbucks Company has long been realized to have a great impact on establishing a sense of character in relation to the coffee name that the organization entails to create. From the point of its emergence in the market, Starbucks has created a new culture and a new character to coffee and an identifiable mark among coffee drinkers. Through time, the expansion of the company’s business has affected the worldwide coffee industry. Starbucks however is not exempted from particular controversies that its industry is involved with.
For instance, as part of the basic pyramid that the coffee industry is based on, the coffee makers [practically at the bottom level of the pyramid] are among the base laborers of the industry. From them comes the possibility of ever bringing about a sense of planting and harvesting the coffee seeds needed for commercial release of companies such as Starbucks. However, even though they are supposedly hailed as the most important members of the coffee industry, coffee growers or farmers are often paid the least in the pyramid. Working harder every year, coffee growers receive a lower cut of pricing compared to larger organizations like Starbucks which sell ‘signature’ coffee to the market in a more direct manner. This particular situation raises a certain ethical matter that puts the reputation of Starbucks in line.
The stakeholders of the company could be categorized into three particular types. The internal stakeholders [their direct employees], the external stakeholders [their customers in the market] and the connected stakeholders [the ones who are connected to the company due to the strings of the industry, such as the coffee growers and farmers]. It should be realized that even though the position of the coffee makers stand as mere connected stakeholders to the operational function of Starbucks in the market, its issues and the matters that it deals with has a great impact on how the company is able to establish an acceptable reputation to their external and internal stakeholders.
This is the reason why Starbucks made it a point that its administrators would not go silent about the issue that coffee makers worldwide are in need of dealing with. For instance, the company has joined the Transfair in 2001 to make sure that the coffee farmers get at least $1.26 per pound payment for high quality beans that are delivered to them in each trading schedule. The company hopes that this particular move would not only affect their direct connection to the growers but would also allow them to impact the position of other companies in the industry to join in the hike of helping coffee farmers lead better lives through getting higher pay for a hard day’s work.
Branding is still questioned by some activists though. A huge payment for the coffee that Starbucks sells in the market is marked because of the patent that the company has over the coffee recipes that they use to serve the desires of their clients all over the globe. Making sure that they provide absolute tasting coffee choices for their customers, the company makes sure that their recipes are always top of the line. It should be realized then that when one buys coffee from Starbucks, not only would he be paying for the coffee beans, but also for the patent on the recipe of coffee choice that comes with the serving. Not only that, the labor of the servers in each shop is also paid for. Hence, the money that comes out from a customer’s pocket whenever any Starbucks coffee is bought goes a long way beyond just the pocket of the owners of the company.
Competition in the market has heightened the manner by which Starbucks is labeled by the customers in relation to the issue noted herein. For instance, Green Mountain Coffee, a relative competition of Starbucks in the international market took the matter at a more serious cost. In fact, the company ranked the first among the 100 Best Corporate Citizens of 2006 and 2007. This notes that not only did the company intend to make a campaign for the betterment of the lives of the coffee growers, they actually adjusted their operations to fit the needs of the members of the coffee industry that they would like to address. Unlike Starbucks, Green Mountain seems to have gone an extra mile in making sure that the coffee growers are paid what they are due through the way they campaign for the utilization of coffee beans released through the Fair Trade purchase activities. The said company made a more direct move towards assuring that the actual growers of the beans are able to get what they are due from the operations of the industry. This was a very bold move for the administrators of Green Mountain as they took the chance of going direct from the farmers rather than to actually have the middle men deliver the coffee beans to them, something that Starbucks has not completely considered yet.
Observably, it was easier for Green Mountain to consider such a bold move especially that it is coming in as a challenger to the operations of Starbucks in the market, which has a more established system of function. Worldwide, Starbucks tends to follow a uniform pattern of operation among its franchises to make sure that its recipes are served well under the provisional guidelines of the marking ‘brand’ that it tries to protect. The value of its business in relation to the operational procedures that the company hopes to embrace is more than just a condition of seeing how the beans are collected or purchased. This specifically means that adjusting to a much bolder move than to simply create a massive campaign towards supporting the condition of the coffee makers would create a strong impact on the overall worldwide operation of the company.
Another company, AMT has been closed due to lower rate of profit because of simply making sure of the fact that the coffee growers are paid effectively and properly through promoting the produce of the fair trade coffee purchases. Relatively, although the company wanted to make sure that they are able to provide attention to their responsibility over their connected stakeholder, the coffee growers, the motivated movement was not able to save their business from going off the grid. Even though the organization meant well, the market did not completely see their cause and were then less likely appreciative of the condition of operations that the organization embraced. This perhaps is what Starbucks wants to avoid.
Being an international organization, the administrators of Starbucks need to make sure that they are able to contend to the needs of all their three target stakeholders, their own employees, their connected allies in the industry and of course their customers. Seeing how all these three primary receivers of their service would react to their operations keeps the condition of business of Starbucks in balance. Notably, no one can please everyone. This thought remains true especially in the field of modern competitive business, an industry where Starbucks is enjoined in. Undoubtedly, the company recognizes the fact that to be able to survive in the industry, it has to know how to balance the entities of operation it decides to consider important for its operation’s success in the worldwide scene. There are particular systems in the industry that cannot be fully manipulated.
Another case to consider is of the GRI’s operation in the field of providing a distinct condition by which it is able to correlatively unite different members and organizations in the society for a single desire of supporting the ideals of United Nations. Making sure that the corporations around the globe [enjoined within their organized group] are able to contend with their social responsibilities, GRI establishes policies that are best able to define the condition of development that several corporations aim to incur. SAI or Social Accountability International follows the same pattern of operation as GRI. These organizations tend to make sure that organizations like Starbucks actually are able to have a great sense of realization on the responsibility they have towards the society.
The system of the Delaware administration follows the same trend in assuring the position of the corporations within their territories. In a way, GRI, SAI and Delaware administration represent the different elements in the society that affect and should influence the operation of business corporations represented by Starbucks. This suggests that apart from the desire of business organizations to earn from their operations, they have the responsibility to take note of the way they are able to respond to the requirements of the government in relation to how they contribute to the growth and the development of other elemental factors in the society they are operating in.
The law and the legal matters that protect the rights of the coffee growers is one thing that should be given attention to, however, Starbucks administrators consider the fact that they do not have the power to completely control this matter. Hence, they choose to ‘do what they can’ to be able to support the needs of the coffee growers. Nevertheless, they cannot abandon the fact that there are also some needs of their internal stakeholders such as their board members and their employees that should be properly responded to. This could only be given attention to if the customers are properly given attention to and the profit that could be taken from them would be properly managed. This could only happen if the company would recognize the fact that they are in need of deciding which elements to keep and which elements to forego for the sake of keeping the company’s growth in par with its desire to serve the people and stakeholders that they ought to serve.
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Chapter 8: Societal Issues and Case Studies. Starbucks/ISO 26000/Federalization .