International operating company

Starbucks is an international operating company with more than 15.740 stores either company-operated or licensed in 44 different countries.

Starbucks stores offer a choice of regular and decaffeinated coffee beverages, Italian-style espresso beverages, cold blended beverages, a selection of teas and distinctively packaged roasted whole bean coffees. Its stores also offer a selection of fresh pastries and other food items, sodas, juices, coffee-making equipment and accessories, a selection of compact discs, games and seasonal novelty items.Each Starbucks store varies its product mix depending upon the size of the store and its location. Larger stores carry a broad selection of the company’s whole bean coffees in various sizes and types of packaging, as well as an assortment of coffee and espresso-making equipment and accessories such as coffee grinders, coffee makers, espresso machines, coffee filters, storage containers, travel tumblers and mugs.Starbucks retail stores quietly display brochures that read “Social Responsibility: How is My Starbucks doing its part?”Those little brochures summarize all sorts of compelling figures from the company’s corporate social responsibility (CSR) annual report, touching on improvements in sustainable farming, community involvement, environmental stewardship, and employee equity and diversity.

The company has a long history of doing business in ways that are socially, environmentally, and economically responsible. The company says “It’s deeply valued by our partners (employees) and customers alike, and we believe it also makes great business sense. It hasn’t always been easy; however, we’ve learned from our mistakes and persevered as a pioneer of innovation across the industry”.According to Starbucks “In 2008 we set bold new goals in the areas where we can have the greatest impact: ethical sourcing, environmental stewardship, and community involvement.

Together, we call these priorities Starbucks Shared Planet” (Starbucks.com). Starbucks(tm) Shared Planet(tm) means focusing on the core areas where they have the biggest influence – ethical sourcing, environmental stewardship and community involvement. Above all, Starbucks believes in engaging, collaborating and openly communicating with their stakeholders. Since 2001, one way they have done this is by producing a Global Responsibility Report that details their efforts to do business responsibly.

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Ethical Sourcing: According to Starbucks CSR report “Starbucks has always believed in buying, roasting, and serving the highest quality coffee in the world. By promoting responsible growing practices, we’re able to serve a great cup of coffee while helping to improve the lives of farmers and protect the environment. We’re also applying the knowledge we’ve gained through our work with coffee farmers to other areas of our supply chain”.Fair Trade: Starbucks believes that by implementing a long-term, sustainable strategy we will be able to improve conditions for farmers. We’ve formalized our practices into a holistic approach that is focused on helping farmers earn more, protecting the environment and ensuring Starbucks demand for high-quality coffee continues to be met. Our approach includes the following measures:In 2007 Starbucks had a total net revenue of $9,411bn, a demand of more than 136 million kg coffee and paid an average price of $1.42 per pound of green unroasted coffee. The average price includes coffee purchased from approved suppliers through their own set of social and environmental guidelines for producing, processing and buying coffee (C.

A.F.E.

Practices) and Fair Trade cooperatives. The market price for coffee on the New York Boardof Trade was within a price range of $1.00 to $1.35 per pound. Therefore, Starbucks paid on average a 10% premium to the market price in 2007(International coffee Organization). Starbucks, which was pressurised already in 1994 by a coalition of NGOs that focused particularly on labour conditions in Guatemalan coffee production. This resulted, in 1995, in the adoption of a code that aimed to improve the situation of coffee producers.

At the time, it was non-binding and without sanctions, instruments the company considered to be as not yet appropriate in view of lack of information about for example wage standards (Schrage, 2004).As the first coffee company that undertook such specific CSR action, Starbucks continued to be targeted by NGOs which requested stricter compliance and a move towards buying certified fair trade coffee (coffee that guarantees a minimum price to its producers). In 2000, the company announced it would start offering fair trade coffee in 2000 of its shops (James, 2000 D. James, Justice and java. Coffee in a fair trade market, NAFTA Report on the Americas 34 (2000) (2), pp.

11-14.James, 2000), and the amount has increased since then, also outside the US (Schrage, 2004). Overall, however, its accounts for only 1% to 2% of Starbucks’ total coffee purchases (Maitland, 2004). Of the approximately 136,000 metric tons (300 million pounds) of coffee Starbucks purchased in 2006, about 6 percent was certified as fair trade.Starbucks and Fairtrade formed an alliance. Firstly Starbucks began to sale Fairtrade coffee as a weekly special.

In 2007 Starbucks has already bought approximately 10% of the worldwide supplied Fairtrade coffee (Starbucks.com). Within that alliance both parties developed a Social Responsible Strategy. The purchase practise of Fairtrade coffee is a very important factor as it enhances the coffee market environment.That is unison with the stakeholder approach, where the development of all people and companies related to the business are considered.

Another very important point is the environment, the health as well as work place conditions of the employees and coffee farmers. In terms of significant impact on Starbucks the already mentioned points have a strong influence on the companies’ future strategy. Significant factors such as the availability and protection of resources have an impact as well. Stakeholder engagement, corporate governance, environmental practises and local community engagement are considered further on.They have become the largest buyer of Certified Fair Trade coffee in North America (10% of the global market).

Transfair USA, the only third-party certifier of Fair Trade Certified coffee in the United States, has noted the impact Starbucks has made in the area of Fair Trade and coffee farmer’s lives. Ethiopia’s coffee sector wanted to trademark their most valuable coffee brands (www.sbs.ox.ac.uk/starbucks).

Ethiopia is one of the coffee producing countries where several of the best Arabica coffee beans grow worldwide. Starbucks receives a main part of their total coffee supply from Ethiopia because of the high quality and the advertising effect of Ethiopian coffee. Referring to the article “Brand Hypocrisy at Starbucks” by Douglas B. Hold, a professor at Said Business School from the University of Oxford, Starbucks fears a domino effect that not only Ethiopia will trademark their coffee. Countries like Kenya, Indonesia or Costa Rica have comparable coffee rarities and therefore will demand trademarks for their coffees as well.Instead of offering the farmers a better price and accepting their Intellectual Property Rights, Starbucks’ management worked with its industry lobbyists to pressure the US Patent and Trademark Office to turn down Ethiopia’s trademark applications (sbs.

ox.ac.uk/starbucks). NGO’s (Non Governmental Organisations) such as Oxfam started campaigns against the proceedings of Starbucks. Starbucks totally underestimated this public campaign effect, which lead to a negative reputation as well as decreased sales. In the end, Starbucks received more than 96,000 letters by American customers who called for a public statement (oxfamamerica.

org). According to the economist, a growing number of coffee drinkers seem to prefer their “grande skinny latte” without a foul-tasting double-shot of social injustice (economist.com). The case of Starbucks in Ethiopia has shown that the customers are demanding fair traded products. The customers clearly had the bargaining power to force Starbucks to adapt the strategy to the customers’ needs. Reasons for that power are the low switching costs within the coffee industry, as the customer can choose between several substitutes.It seems that Starbucks specifically prefers some growers over others. From their website: “The guidelines define what we believe to be the critical social, environmental, economic and quality aspects of growing, processing and selling coffee for Starbucks.

To become a C.A.F.E. Practices supplier, coffee farmers, processors and exporters must meet minimum requirements and demonstrate best practices, which are subject to independent verification under the guidelines”.

Recycling ; Reducing Waste: ”Starbucks is committed to significantly reducing the waste our stores generate – especially when it comes to recycling” (Starbucks.com). The U.S. Food and Drug Administration granted the first-ever approval to use recycled content in food packaging for Starbucks coffee cups. In 2005 Starbucks received the National Recycling Coalition Recycling Works Award (Starbucks.

com) Consumers are taking notice of the foodservice industry’s growing inconvenient truth, pushing for more green alternatives to traditional packaging. The solution seems easy: Prevent the cups from going into landfills and cut back green house emissions equivalent to removing about half a million cars from the road.But the solution is anything but easy, Starbucks is finding.

In an attempt to divert its cups from landfills and perhaps save the planet along the way, Starbucks, which pumps about three billion cups into the global consumer stream each year, is recruiting the recycling and packaging industries to help make 100 percent of its cups recyclable by 2012. According to Starbucks”What you’ve seen in the past is somebody will call a product recyclable based on the materiality of that product and not necessarily whether or not it’s actually able to get recycled”. “So for our cups, for us to actually call our cups recyclable, they have to be recyclable in the communities where we operate our stores.”There have been efforts to make cups more recyclable and eco-friendly before within the company. In 2006, Starbucks introduced a paper cup that contained 10 percent post-consumer recycled fibre, and last year it switched from the standard PET cold cups to polypropylene cold cups, which use significantly less plastic and reduce greenhouse gas emissions during manufacturing by 45 percent. But today Starbucks is thinking even bigger.

The new initiative to make its cups recyclable goes beyond just what the cup is made of; it takes into account the entire life of the cup.In 2009, Starbucks hosted a Cup Summit in Seattle, bringing together all facets of their paper and plastic cup value chain to find agreement on criteria for a comprehensive recyclable cup solution (Starbucks.com). They gathered experts from every facet of the cup supply chain, including raw material providers, cup manufacturers, cup converters, environmental NGOs, waste management companies, Starbucks’ peer companies, academics, and municipalities.The overall aim for Starbucks, is to get all retailers, including Starbucks’ competitors, using similarly designed, completely recyclable products. In addition, it’s looking to create an infrastructure that can deliver those products successfully to recycling facilities. After the Cup Summit, Starbuks released a plan for a protocol to certify paper food packaging as recyclable with corrugated cardboard, If food packaging like Starbucks’ cups can be recycled into corrugated cardboard, it can essentially get a free ride to the recycle mill and be a cost-neutral program.

“Corrugated cardboard is the most recycled material in the U.S.The majority Starbucks stores do not have recycling bins; only 1/3 of company-owned stores recycled any materials in 2007, however recent improvements have been made and recycling bins are popping up in more stores (the only thing hindering Starbucks’ ability to have bins in every store is the lack of facilties for storage and collection of recycling in certain areas.

) Allen Hershkowitz of the Natural Resources Defense Council says that Starbucks claimed they were using only 10% recycled material partly because the recycled material costs more. Starbucks gives customers a 10-cent discount when they bring their own reusable cup, and it now uses corrugated cup sleeves made from 60 percent post-consumer recycled fiber.

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