Ethics and Compliance in Starbucks

Topics: Ethics, U.S. Securities and Exchange Commission, Financial ratios Pages: 6 (1545 words) Published: December 8, 2012
Ethics and Compliance in Starbucks

Avia Thompson, Joi Edwards, Martina Saines, and Dwayne Blount


November 21, 2012

Arnold Harvey

Ethics and Compliance in Starbucks

Starbucks, one of the largest global beverage industry’s mission is “to inspire and nurture the human spirit- one person, one cup and one neighborhood at a time” (Our Mission). Be that as it may, without an upstanding ethical foundation, it would not have succeeded thus far. This paper will highlight Starbucks ethics and compliance within its financial environment, its procedures to ensure positive ethical behavior while explaining the workings of the United States financial markets. Found within these pages will be the process used b Starbucks to comply with SEC regulations, an evaluation of its financial performance for the past two years, and any trends leading to the company’s health.

In 2002, the passing of the Sarbanes Oxley Act narrow the gap of wrongdoing within organizational financial reporting. The purpose of the Act was to “safeguard the interests of the shareholders by providing greater protection against accounting fraud and financial misconduct” (Titman, Keown, & Martin, 2012, p. 11). Ethics guides his or her moral decisions, but when it pertains to business, the path taken leads to long-term success or failure. Business ethics, an organization’s management tool, shares the values, obligations, virtuous ambitions of the company, and the way of doing things. At no time should undesirable ethical practices bolster personal interest, any decisions made should be of sound moral fiber and with the corporation’s interest in mind.

For six consecutive years in a row, Starbucks ranks as one of the most ethical companies in the world (“2012 World’s Most Ethical Companies”, 2012). This distinction went to organizations committed to ethical practices, portrayed through their governance indicating good financial performance. As stated by “Business Ethics and Compliance” (2012), “Starbucks believes that conducting business ethically and striving to do the right thing are vital to the success of the company” (para. 1). When reading through the pages of its bylaws and reports, a continual trend prevails. The corporation has an ethics and compliance program in place striving to achieve a culture with integrity. Its candidness and transparency showcases the aligning of its corporate practices with local and global initiatives, environmental stewardship, along with the ugly side of its litigation track record.

Effective ethics and compliance programs are key components to a healthy organization. In addition to establishing these behaviors, and regulating against noncompliance, these platforms aid in combating financial fraud and abuse. Every company concocts its own ‘secret recipe’ for an efficient ethics and compliance program, but the basis of each begins with the same foundation. The five building blocks of a workable ethics and compliance model are

1. Explaining the risks of bad ethics and noncompliance

2. Proactively deterring ethical and compliance discontent

3. Identifying nonconformity

4. Aggressively addressing accusations and violations

5. Evaluating outcomes and find ways to improve on current standards (“Ethics And Compliance Risk Management”, 2007).

Capturing this ideal, Starbucks begins by demonstrating step one through its Business

and Compliance program that supports its mission, protects its culture, and provide information on ethical and compliant decisions in the workplace. Next it deters unethical principles through its continued education on legal compliance, and ethics training. From there, Starbucks uses investigative techniques to detect potential conflicts of interests while allowing an open door policy for employees to voice concerns. Taking allegations seriously, the corporation implemented...
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