* Did the social responsibility strategy contribute to Starbucks success? * Has the strategy been used to defeat more resourceful competitors? * Are there any faults in the strategy?
One of the main areas of corporate social responsibility (CSR) has been the ability for an organization to better the people and the community in which its business is located. In Starbucks CSR strategy, the focus has not been entirely on the shareholders but has encompassed the contractual stakeholders (employees, suppliers) and non-contractual stakeholders (community). The strategy Starbucks took was to treat all the stakeholders involved with Starbucks equally. With its employees, Starbucks offered medical-aid for part-time employees, Dental and vision care, Life insurance as well as a 401K retirement saving plan- in which the company matched savings from 25% - 150% based on length of service on employees contribution. It also offered its employees stock options plan, for the employees to invest in Starbucks if they wished to. Starbucks also ranked amongst one of the best companies to work for in the USA. Starbucks being a high quality coffee brand as mentioned before has motivated coffee producers (Suppliers) to produce good quality coffee by rewarding them generously for producing good quality coffee beans. In a letter communicating to the Starbucks partners, Howard Schlutz made a remarkable distinction; “Starbucks is in the people business serving coffee, not in the coffee business serving people.” This has always been his objective and an area with which to evaluate his social responsibility strategy. From this statement one can see that the strategy was adopted in the early days of company formation. The social responsibility strategy has always been a strategy in which Starbucks first and foremost aim was to gel well with the community, help the community and be part of the community. Proving that it their Social responsibility is just not a facade to create a good public image. According to Psychological studies, one of the tell-tale signs which signal non-sincerity is making a product so complex in order for people not to understand the intricacies it (i.e. pyramid schemes). Starbucks has portrayed sincerity through an open, simplified approach to explaining its core business and product offering. Starbucks in my opinion has also created the one of the best Social responsibility strategies, which is sincere and which ties well with its business.
7. What is your assessment of Starbucks’ financial performance during fiscal years 2005 – 2009?
The evaluation of Starbucks financial performance can best be revealed by graphs (extracted using Microsoft excel) detailing the different aspects contributing to Starbucks financial performance over the years 2005 – 2009. The most important thing to note about the years 2005 – 2009 is the mixed financial cycles that took place within these years. From 2005, people spent more as there was a boom in economic spending, however in 2008, the global financial crisis affected a lot of consumers in the US more than in the international arena. Looking at the first graph the operating income from US stores as well as international stores rose during the years 2005 through 2006 and peaked in 2007 at $1005.2 Billion before taking a heavy hit in 2008 dipping by more than $500 Billion to stabilize at $454.2 billion and start rising again in 2009. The hit internationally was not as hard however operating income did decline during the years 2008 and 2009. This is also seen in the graph depicting the Net revenues for the US...