Fin/370 Starbucks Ethics & Compliance

Topics: Generally Accepted Accounting Principles, Balance sheet, Asset Pages: 6 (1633 words) Published: August 12, 2011
Ethic and Compliance


Ethics and Compliance

Starbucks celebrates 40 years with 17,000 stores in more than 50 countries (Goals & Progress, 2010). Starbucks thrive on their values as a company to improve the lives of people who grow their coffee, neighborhoods where the company does business, and they care for the environment (Goals & Progress, 2010). Starbucks strives to incorporate good business practices and ethics across the globe not only for the enhancement of the company but also for the enhancement of the stakeholders and the communities the company impacts. Starbuck’s mission statement is “to inspire and nurture the human spirit. As said by Howard Schultz, Chairman, President and Chief Executive Officer, in the 2010 Starbucks Global Responsibility Report; “one person, one cup and one neighborhood at a time.”

Ethical Behavior

Ethical standards play an intricate role in safe guarding companies’ assets. To ensure that all employees understand what the company expects of them, Starbucks establishes procedures for the employees to follow. One of Starbucks’ procedures is to use “ethical trading and responsible growing practices” (Ethical Sourcing, 2011, para. 1). This procedure ensures that Starbucks’ product is the best on the market. Starbucks has also established Coffee and Farmed Equity (CAFE) Practices. The CAFE Practices are a set of measurable standards focused in four areas: Product Quality, Economic Accountability, Social Responsibility, and Environmental Leadership (Starbucks Corporation, 2011). The CAFE Practices are in place to ensure that all parties involved are conducting business ethically. Product Quality is essential to ensure repeat business. Economic Accountability is set in place to ensure that the company purchases products ethically. Starbucks has a third-party to evaluate Social Responsibility and Environmental Leadership (Starbucks Corporation, 2011). These two areas evaluated by a third-party, guarantees Starbucks is treating their employees and the environment ethically. Starbucks’ ethics have contributed to their many years of success.

SEC Regulations

The Securities and Exchange Commission (SEC) is a federal agency, which is responsible for enforcing federal security laws and regulations, the nation’s stock exchanges, and other electronic security markets (Keown, Martin, Petty, & Scott, 2005). Starbucks as well as other corporations must conform to the rules and regulations of the SEC. Starbucks make every effort to comply with the SEC regulations by providing the company’s financial state on the company’s website. Starbucks’ website provides annual reports, proxy filings, quarterly reports, 10-K’s, 10-Q’s, and Section 16 filings regarding insider trading (Starbucks Corporation, 2011). Starbucks must report all financial standings. If Starbucks fails to report the required information, the SEC has the authority to take legal action.

Financial Performance

The Financial performance of a company is the measuring (in monetary teams) of the firm’s polices and operations. These measurements consist of Current Ratio, Debt to Equity Ratio, Return on Assets, and Net Profit Margin. Measuring a company’s financial performance help the company know where they profits are and in what areas of any that the company may need to improve. These measurements can determine the success or failure of a company. In the December 2009, National Federation of Independent Business report shows that two thirds of businesses make no profit. This is not the case with Starbucks.

Current Ratio

The current ratio of a company examines the credit from a liquidity standpoint. To see how much short-term liabilities the business can pay off with short-term assets. The higher the number of this ratio represents how wisely the company manages their cash and pays their debts. If the number is lower it translates as poor cash flow and would mean that in the instance the company needed...

References: Goals & Progress. (2010). Starbucks Global Responsibility Report: Message from Howard Schutltz (para. 1). Retrieved from on July 23, 2011.
Goals & Progress (2010) Starbucks Global Responsibility Report: Year Review: Fiscal 2010. Retrieved from on July 23, 2011.
Keown, A., Martin, J., Petty, J., & Scott, D. (2005).Financial Management: Principles and Applications (10th ed.). Upper Saddle River, NJ: Prentice Hall, Inc.
National Federation of Independent Business. (2009). Financial Performance. Retrieved from on July 24, 2011.
Starbucks Corporation. (2009). Starbucks Investor Relations. Retrieved from
Starbucks Corporation. (2011). Ethical Sourcing. Retrieved from
Titman, S., Keown, A.J., Martin, J.D. (2011) Financial Management: Principles and Applications (11th ed.). Upper Saddle River, NJ: Prentice Hall, Inc.
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