What Makes Starbucks Tick

Starbucks is not only one of the most expansive brands in the world, but it is also a company that values not only annual revenue from but also the well-being of, it’s employees and the environment. On its path to becoming the world’s largest coffee chain, Starbucks Coffee Inc. managed to essentially monopolize its market share of the industry while simultaneously facilitating outstanding working conditions for its employees, minding the continuity of the environment, and undeniably satisfying its customers.

Like other corporations that do so except to a lesser extent, Starbucks determined early on that as a business it would promote employee equality at all levels of employment throughout the organization. One article notes how Starbucks is one of the most empowering employers regarding the treatment of gay and lesbian individuals, stating that the company’s Senior Vice President of Finance, Matt Sikes, is gay (Weinstein, 2007). Furthermore, Starbucks encourages Sikes to remain active in the LGBT community, and he is also the executive sponsor for the organization’s LGBT rights group, wherein he facilitates communication between employees and management on a variety of related issues that range from transgender employee rights to corporate social responsibility. Additionally, the company also maintains equality in the realm of compensation.

A more concrete aspect of the treatment that Starbucks employees enjoy is in regard to their eligibility for various insurance benefits. While most organizations are reluctant to offer any kind of health insurance to full-time employees with less than a year on the payroll and much less to part-time employees, baristas at Starbucks enjoy the full spectrum of benefits under far less stringent requirements. At Starbucks, employees who consistently work 20 or more hours per week qualify to receive health, dental, and vision insurance after only two months of employment (Starbucks.com/employees, 2013). Since the sudden onset of health-related emergencies constitutes one of the most prevalent reasons for financial instability, Starbucks has not only managed to provide outstanding care for their employees, but such policies also help curb some of the consequences of harsh economic periods.

One of the many ways that Starbucks has helped its consumers in times of economic turmoil was by offering consistent discounts to loyal customers. One article states that using the brand’s Starbucks Gold Card, the most frequent purchasers of Starbucks related products earned ten percent discounts on nearly every purchase (Bruce, 2008). In addition to offering reward-racked credit cards to consumers, Starbucks also partnered with Costco to offer even more savings on java purchases, offering customers the opportunity to buy $100 in Starbucks gift cards for only $80 in Costco Supercenters (Bruce, 2008). While it may not seem like inordinate savings to some, corporations willing to eat 20% of $100 in goods are most certainly catering to the desires of their consumers.

Consumers also benefit from certain Starbucks policies concerning the quality of coffee beans used in their beverages. Not desiring to conduct business with enterprises that exploit the cheap labor in third world countries, Starbucks has officially set goals to exclusively purchase and distribute ethically sourced coffee. So while the price per pound may be steeper than competitor’s products, Starbucks customers can rest assured they are consuming only the finest, ethically sourced coffee. With a goal of ethically grown coffee representing 100% of their coffee purchases by 2015, Starbucks is already well on its way with ethically sourced coffee accounting for 93% of the company’s purchases in 2012 (Starbucks Coffee, 2013). Such accomplishments are due in large part to the organization’s creation of C.A.F.E, or Coffee and Farmer Equity, practices, which steer the organization towards affiliation with only the most reputable and ethical coffee producers. In evaluating farms and mills using the criteria from C.A.F.E. practices, consumers not only receive the finest grade of coffee but can also be confident in the knowledge that such policies work towards preserving the environment.

Starbucks remains an environmentally conscious organization in many respects, but perhaps no more clearly than in the company’s efforts to construct and renovate “green” coffee shops. In fact, in the last two fiscal years 2011 and 2012, roughly 72% of Starbuck's newly built stores achieved LEED certification (starbucks.com, 2013), a grade that is based on a rating system designed to help consumers understand which corporations are actively working to reduce their carbon footprint. LEED stands for Leadership in Energy and Environmental Design, and certifications are based on a number of factors during construction and in regards to future operations, including certain EPA guidelines. Additionally, Starbucks also works toward the preservation of the environment in its policies concerning water consumption.

The water consumption policies in effect for Starbucks coffee houses are quite substantial when considered in the aggregate. The debate surrounding the impending worldwide water shortage has gained traction in recent years, and Starbucks Coffee Inc. has taken steps to mitigate their contribution to any such dilemma. One article notes how more and more these days, farmers are experiencing drought-like conditions that threaten the health of their crops (Marks, 2013). As a result of such outcries, Starbucks has gone on the offensive and implemented a plan that by 2015 should reduce their 2008 levels of water consumption by 25% (starbucks.com, 2013). As of 2012, Starbuck's water consumption has been reduced, per store, by almost 18%, so it seems that a 25% reduction by 2015 is not entirely unfathomable. Taking into account the more than 14,000 locations across the globe, a 25% reduction in water consumption could save an additional 1.5 billion gallons of water annually. However, the cost implications of such implementations are not as simple as they might appear.

Understanding the monetary impact of such morally praiseworthy policies necessitates a number of considerations. For example, such liberal policies surrounding employee eligibility of health benefits would certainly result in excessive healthcare-related expenses, whereas the widespread acceptance and integration of gay and lesbian employees into the hierarchical structure implies virtually no cost at all. In fact, publicity concerning the organization’s equitable treatment of employees is certain to prove beneficial to the company’s sales and revenue. Certain of the environmental policies, however, might result in corresponding economic impacts ranging somewhere between incremental losses, no net impact, and incremental gains. For example, while additional expenses might be necessary to procure ethically sourced coffee beans, the additional sales that arise as a result of consumer’s demand for such products might, more or less, cancel out one another. Still, policies that aim towards more “green” retail locations and reduced water consumption have the potential to significantly reduce annual energy costs, though the initial expense of implementing such systems may not be recouped for some years. Nevertheless, as a going concern, the sum of all such ethically responsible related policies appears to be in favor of a bottom line that is slightly greater than it would have amounted to otherwise. Still, as inspiring as the Starbucks Corporation already is, there is always room for improvement.

The overarching area that seems most in need of improvement for Starbucks Coffee Inc. is in relation to the organization’s participation in educating its customer base. Specifically, with regards to the effects of caffeine, Starbucks has the opportunity to demonstrate to the entirety of its customer base that it truly values the health of its consumers over the income derived from their weekly, or daily, coffee expenditures. Despite the company’s strict adherence to policies of ethically sourced coffee, a more proactive campaign to educate people on the dangers of caffeine addiction would serve to enhance the public’s image of a company that cares for its customers. Obviously, Starbucks cannot resort to promoting the negative aspects of its primary product in-store necessarily, but what it can do is promote awareness as to some of the side effects of caffeine addiction. Alternatively, the company could also look into expanding its decaffeinated selection of beverages. Doing so would still leave the ambiance of the “coffee shop” unmolested—as a relaxing place to enjoy a tasty drink—but could exponentially benefit the health of regular consumers of caffeinated drinks. Whether this entails the placement of small mementos around the coffee shop that spark the imagination, or little insignias, or logos, on the side of every cup is still unclear. At any rate, more explicitly participating in the consumers’ education of the effects of caffeine seems to be of pivotal importance.

One of the only other areas in the Starbucks Corporation that might benefit from improvement is the implementation of more mobile-based commerce. While the existing Starbucks app allows the user to pay for drinks via a quick scan of the mobile phone’s screen, there is much room for improvement in this arena. For example, it is not difficult to imagine the steady stream of income that would result from a more automated service through mobile applications. Rather than simply paying for drinks, if customers could order drinks from their computers or mobile devices, pick them up at the desired location, and then pay for them, with a cell phone or other method, all without the need to wait—in line or for the beverage’s preparation—the process of procuring one’s daily fix would be greatly streamlined. Additionally, this might also represent other opportunities to educate consumers on caffeine consumption, with mobile reminders that pop up on-screen after purchases. With or without the advertisements, however, more accelerated mobile integration would greatly enhance the business model of Starbucks.

In the aggregate, there is no arguing that Starbucks Coffee Inc. represents one of the finest, most respectable corporations in the world. The environmentally conscious aspects of its operations, as well as the company’s policies towards ethical business practices, are two methodologies via which it has managed to distinguish itself among other worldwide enterprises. Furthermore, the opportunities afforded to its employees are indicative of a company that not only employs a great number of people, but also one that understands some of the hardships that often arise at various stages throughout life. And despite certain aspects of the business that warrant an upgrade, it is clear that Starbucks is a corporation that will most certainly find success in the future.

References

Bruce, H. (2008). Starbucks' plan for the holidays: Give you a way to save. USA Today.

Marks, P. (2013). Fly-bys warn of water shortages. New Scientist, 218(2921), 22-23.

Starbucks Coffee Company (2013). Responsibly Grown and Fair Trade Coffee. [online] Retrieved from: http://www.starbucks.com/responsibility/sourcing/coffee [Accessed: 6 Dec 2013].

Starbucks.com (2013). Starbucks Global Responsibility Report – Goals and Progress 2012. [online] Retrieved from: http://globalassets.starbucks.com/assets/581d72979ef0486682a5190eca573fef.pdf [Accessed: 6 Dec 2013].

Starbucks.com/employees (2013). Untitled. [online] Retrieved from: http://assets.starbucks.com/assets/c6a87a50830842fb8d68f93f1cf9287b.pdf [Accessed: 6 Dec 2013].

Weinstein, S. (2007). Putting their best foot forward. Advocate, (987), 68-70.