Starbucks Case Assignment ‘C’
ETHICS QUESTIONS
Select one ethical issue related to, or impacted by, Schultz’s strategic decision-making in the case1.
- Define and explain why you believe this is an ethical issue.
To warrant the sustainability of the Starbucks business model, Schultz has been keen on ensuring that the company’s operations were not only geared towards generating as much revenue as it can for its stakeholders but also taking into account the ethical factors pertaining to the company’s operations (Schultz, 2014). It is based on this perspective that Schultz’s strategic decision-making has been keen on identifying all ethical concerns that may be raised. For example, there have been numerous complaints regarding how the coffee industry is run due to an increase in human rights violations and cases of the exploitation of coffee farmers by being paid below the average market price for their coffee beans (Schultz, 2014). As a means of ensuring that Starbucks does not contribute to such issues, Schultz has been very analytical and comprehensive in coming up with a variety of strategies through which all ethical concerns that may arise are addressed. Besides applying ethical decision-making as a tool for protecting the company from issues of law or public backlash that sometimes mushroom due to failing to adhere to ethical standards, Schultz contends that companies also have a public obligation, not just to the shareholders (Schultz, 2014).
- Identify the Ethical Principle(s) that Schultz appears to apply to the ethical issue, and explain their relevance
The ethical principle that Schultz seems to have applied to the ethical concern raised is that businesses have a moral obligation to society (Schultz, 2014). An analysis of modern management practices reveals that moral obligation plays a vital role in guaranteeing the sustainability of a business (Schultz, 2014). Unlike earlier times, when businesses would thrive based on the services they offer, globalization has been able to challenge the way business is conducted. For example, Schultz’s actions are inclined to the idea that businesses have a moral obligation to the community they serve and that fulfilling these moral obligations results in being in good standing with the target consumers. Developing a good rapport with the target consumer is particularly essential in the digital era since people are more informed about the activities that a business is engaged in and are likely to call for a boycott if they feel a business entity is overlooking basic moral and ethical standards (Schultz, 2014). By considering the moral obligation principle in making ethical considerations, Schultz provides the company with a competitive advantage since it is likely to attract more customers.
- Describe how Schultz’s interpretation of the ethical issue guided his strategic decision-making, and/or how Schultz’s strategic decision-making impacted the ethical situation.
An evaluation of the diverse decision made by Schultz reveals that they have all been based on his understanding of the ethical issue. The ethical issues that arise must ensure that the operational activities of the business aim to establish a solid relationship between the business and the different communities within the operational environment. An analysis of Schultz’s long-term ideas to the companies reveals that they are aimed at making Starbucks the biggest coffee shop in the world (Schultz, 2014). The only this could be attained by being in good terms with the society, something that can only be attained by putting into play all ethical and moral obligations businesses owe the society. Even though Starbucks was flourishing in North America, the need to expand was inevitable since it is only through expansion that the company could secure a global standing (Schultz, 2014). Schultz understood the role ethics would play in guaranteeing that Starbucks was received in the global market. Despite being established in North America, expansion meant that the company would be exposed to persons from different backgrounds, and it was essential that the company streamlined its operations to meet the unique needs of the new markets that would be explored (Schultz, 2014). Schultz establishes that the practical approach to achieve this is by considering the role ethics plays in enhancing and developing a stable business environment.
- Discuss the likely short-term and long-term impacts of Shultz’s decisions related to the ethical issue.
An analysis of the short-term and long-term implications of Shultz’s decisions related to the ethical issues reveals that the company is likely to have a significant competitive advantage over its competitors. Unlike earlier days where people were less informed about how the products they consumed were sourced and delivered to them, the current society has an adequate understanding of the diverse aspects pertaining to how the products and services they consume are generated (Schultz, 2014). This has been made possible primarily by the information age we live in, where all kinds of information are readily available. While some people may argue that businesses are only obligated to meeting their shareholders’ financial demands, this is not the case currently the case. Currently, businesses have a moral and ethical obligation to the society, a factor that supersedes the obligation business have to their shareholders (Schultz, 2014). The reason why the moral obligation to society comes first is that failure to develop a business culture that abides by society’s beliefs sets up a business for failure. Thus, Shultz’s decision related to the ethical issue is not only a short-term solution to the expansion strategy but a long-term solution to guaranteeing the sustainability of the business. While other business strategies may change, especially in terms of the incorporation of technology into business practices, one thing that will not change is the ethical consideration that Shultz has put into practice (Schultz, 2014).
- Assess Schultz’s overall approach to the ethical issue:
An assessment of Schultz’s overall approach to the ethical issue reveals that he has a unique understanding of what it takes to do business in a highly competitive business environment. An evaluation of current business practices shows that taking into account the ethical issues regarding a business’s operations is vital to its success (Schultz, 2014). Thus I agree with his approach and would have done more or less the same thing. Even though Schultz is keen on ensuring that Starbucks operations are carried out in the most ethical manner possible, one cannot overlook the fact that little effort is being put into enlightening the target consumers about the initiatives that Starbucks is taking in guaranteeing that all ethical issues pertaining to its operations are being addressed. If I were Schultz, I would positively respond to the need to inform the society on the diverse strategies that the company is putting into guaranteeing the sustainability of the industry in which Starbucks operates. While some people may argue that using ethical issues for public relations is malicious, this is not entirely true. Thus, Schultz needs to ensure that all ethical considerations contribute to the company’s overall goal of providing the best coffee in the world while respecting its financial commitment to shareholders.
SOCIAL RESPONSIBILITY QUESTIONS
- Define and explain the social responsibility issue as you see it.
Social responsibility, just like ethical and moral obligations, has come to be embraced as essential aspects of running a sustainable business. According to Schultz, “profit motives may be balanced with a social conscience” (Schultz, 2014). Even though one of the primary objectives of a business entity is to generate profits for its owner/shareholders, one cannot overlook the fact that businesses have an obligation to the societies in which they operate. The need for businesses to have a social conscience as Schultz’s put is because business cannot generate revenue at the expense of the communities where their operations are run (Schultz, 2014). It is based on this realization, that business entities such as Starbucks under the oversight of Schultz have been inclined towards taking up strategies aimed at incorporating strategies aimed at guaranteeing their sustainability by integrating social responsibility programs (Schultz, 2014).
According to Schultz, social responsibility is essential in ensuring that Starbucks continues producing some of the best coffees in the world. As the company strives to perfect its craftsmanship by opening some of the best cafes in the world, it must serve the best coffee while incorporating ethical and moral standards to attract and maintain its target customers (Schultz, 2014). The critical aspect here is to keep the business from huge debts, and the excellent approach for this is to maintain the supply chain. Schultz’s best way to do it is by raising awareness in society (Schultz, 2014).
- Discuss how Schultz addresses / approaches the social responsibility issue, and/or how Schultz’s strategic decision-making impacts the social responsibility issue.
Social responsibility is put into practice by improving the treatment offered to its key stakeholders. One of the social responsibility strategies incorporated is offering healthcare insurance and stock to staff members who put in more than 20 hours of work each year. The need to provide health care to employees is affected because employees tend to focus on employers where their interests are most important (Schultz, 2014). By providing staff members with health coverage, they become motivated and more efficient since they are aware that their employers are not only interested in the services they have to offer but are also concerned with their overall wellbeing. Providing health coverage has also been noted to reduce the number of time spent on off-days due to illness since with an insurance cover, staff members can address health issues before they worsen compared to instances where employees have no insurance and only respond to health issues when they are severe (Schultz, 2014). Giving staff members the chance to get in on the company by stock prices is also a crucial step in promoting social responsibility since employees are reassured that they can own a share of the business and benefit from its success. These two factors act towards pushing the company’s social responsibility aspect of the business since it allows employees among other external shareholders to be part of the team (Schultz, 2014).
- Discuss the likely short-term and long-term impacts from Shultz’s decisions related to the issue.
Schultz’s performance evaluation, in this case, shows that he understands what it takes to run a successful business. Even though social responsibility strategies are primarily aimed at addressing societal needs, staff members mustn’t be overlooked. It is based on this realization that Schultz put significant effort into guaranteeing that its employees are not overlooked in its social responsibility strategies (Schultz, 2014). The decision to provide employees who meet certain criteria with health insurance and the option of buying into the company is something commendable that is likely to work towards the company’s long-term and short-term goals. One of the most significant ways that these decisions are likely to affect the company’s operations positively is by guaranteeing that employees stay motivated (Schultz, 2014). Companies can apply various approaches in ensuring they are in line with their social responsibility, and an excellent strategy for this is to incorporate the efforts of each employee and make them an integral part of the stakeholders. Significant shareholders in this context refer to individuals who have an actual share in the business and are eligible for voting rights and dividends (Schultz, 2014). In addition to the social benefits that the company offers directly to employees, the social responsibility of ensuring the transparency of the company’s activities must also have a positive impact on long-term and short-term objectives (Schultz, 2014). The long-term and positive long-term effects of corporate social responsibility on maintaining a culture of responsibility are reflected in the fact that most communities prefer that companies be clear about their activities (Schultz, 2014). Transparency has been identified as an essential responsibility that businesses need to practice since it goes a long way in reassuring the public that no malicious activities are being undertaken that may undermine the public’s interest.
- Assess Schultz’s overall approach to the social responsibility issue:
An assessment of Schultz’s overall approach towards the social responsibility issues reveals that he has a unique understanding of how social responsibility ought to be undertaken, an approach I strongly concur with. Starbucks being a multinational company, has significant competitors around the world that are looking to beat it in being ranked as the best coffee shop in the world (Schultz, 2014). Although the coffee shop should be rated better, mainly because of the coffee it serves and the design of its premises, it should be noted that the way the business changes is so dynamic. Among the approaches in which businesses have changed, as highlighted through this research study, is the idea that businesses are ranked based on numerous factors (Schultz, 2014). For example, businesses are not considered the best not only based on the services or products offered but also their adherence to moral and ethical considerations and incorporation of social responsibility. It is based on this realization that Schultz based his approach on social responsibility since he understands that it is paramount to the success of his business (Schultz, 2014).
An alternative viewpoint regarding the approach to social responsibility would be by investing in research and development aimed at improving the coffee production process from the cultivation process. Even though Starbucks has put significant emphasis on highlighting how it ensures that its suppliers from the farmers to the distributors are treated in the best way possible, there lacks an adequate understanding of the direct initiatives that are being put into it (Schultz, 2014). The best strategy in this instance would be incorporating research and development as part of the social responsibility efforts aimed at improving the coffee production process. While there is no debate that there has been substantial progress in the way coffee is produced, there is a need to undertake more research in addressing challenges that are still being encountered in the production process. By taking up adequate measures in ensuring that these challenges are addressed, it will be possible to attain the overall impact that the company hopes to achieve through the incorporation of social reasonability strategies.
Despite the impact, the proposed alternative would have in guaranteeing that the company is adequately addressing its social responsibility obligation, if I were Schultz, I would not have positively responded to the alternative viewpoint. The reason behind this is that Starbucks is a coffee shop chain store and not a coffee manufacturing company. Thus, even though investing in research and development to improve the coffee production process would have a positive impact on furthering the company’s social responsibility efforts, such a strategy is best reserved for companies that are involved in the processing and manufacturing of coffee. In addition to this, Starbucks is already undertaken research and developed aimed at promoting the company’s expansion into more locations around the world. Nonetheless, Starbucks is committed to supporting any strategies by third parties that are geared towards improving the wellbeing of all entities engaged in the cultivation, processing, and manufacturing of coffee.
References
Schultz, H. (2014). Starbucks coffee company: Transformation and renewal. Harvard Business School.