The main ethical issue Starbucks is faced with, is their strategy of expanding their company. Known as clustering, Starbucks attempts to open as many locations around the globe as possible, often leading to many locations on one street. This method has many ethical issues, the main one concerning smaller coffee shops. Locally owned coffee shops tend to go out of business and bankrupt because of the many Starbucks locations in the vicinity.
Starbucks main policy is customer service. With prospective customers in mind, Starbucks introduced a healthy and cheap breakfast or oatmeal and coffee. This meal appealed to the people who were trying to eat healthy and cheap. Starbucks also introduced the Pike Place Blend, and while trying to make it perfect they hired 1000 people and took 1500 hours of testing. They also gave free samples to people who asked. Paired with Conservation International, and made sure the beans were sustainably harvested.
To try and keep customers returning, Starbucks introduced a loyalty card which would be filled when purchases were made. As a result, millions of people are returning to Starbucks with this incentive. Starbucks also keeps their mission statement and high regard. Starbucks distributes the mission statement and comment cards for feedback at orientation with new employees, taking their thoughts and comments into account. This allows Starbucks to continually relate decisions back to the guiding principle or principles they support. The company has formed a “Mission Review” system so any partner can comment or action relative to its consistency with one of the six principles.
Starbucks has been criticized on issues such as fair-trade coffee, as well as genetically modified milk, and the accusations of running small coffee shops out of business. The corporation demonstrated social responsibility through Starbucks founder and chair Howard Schultz, who has been an advocate for increased awareness of ethics in business. In a 2007 speech, he spoke to an audience about the importance of balancing “profitability and social consciousness.” And he believes that ethical companies do better in the long run, which is proven by research. Schultz is committed to helping improve the lives of poor farmers by buying their beans. It is better for a company to take some short term losses than to lose sight of its core values in the long term. By helping the poor farmers make a living, their income of the farmers have nearly doubled their income with the help of Starbucks.
In responses to stakehold issues, Starbucks launched the Shared Planet website. Three goals: to achieve ethical sourcing, environmental stewardship, and greater community involvement. The website is supposed to keep customers and other people up to date on initiatives within the company, and describes how well Starbucks is doing on achieving its social responsibility goals. Starbucks has one of the best health-care programs in the industry, workers who work more than twenty hours a week receive benefits, as well as stock options. Starbucks tries to create an environment where employees feel they’re part of something larger. The corporation has been consistent with this issue, often spending more on health insurance for its employees than on raw materials needed to brew coffee. Starbucks’ ethical culture comes from the attempts to emulate a culture similar to that of coffee bars in Italy.
The foundation of Starbucks culture is the emphasis on the guiding principles and underlying values of the company. This has become the cornerstone of a very strong culture of predominantly young and educated workers who are extremely proud to work for Starbucks. Their pride comes from working for a famous and successful company that tries to act in accordance with the values they share. Starbucks tries to embrace employee diversity, 31% of employees are minorities, while 67% are women. Starbucks’ ethical culture comes from their suppliers. Starbucks tries to help less fortunate farmers, buy buying their coffee beans. As a result, these farmers make enough money to help them make profits as well as support their families.
The main ethical challenge Starbucks face is upholding the values and beliefs they have today. It will be difficult to continue having a good relationship with their employees, and having an even better relationship with their suppliers. Starbucks will also have to rethink their expansion strategy, as in the future they will want to look to minimizing the amount of local coffee shops they put out of business.