Corporate Social Responsibility: Starbucks and 21st Century Marketing

What is social responsibility? Corporate social responsibility is the idea that corporations will function, not only as profit-making enterprises, but as members of the community.  With this in mind, social responsibility is a means to guide corporations to make decisions that take the total well-being of the communities in which they operate into consideration.

What are the three concepts of social responsibility in the text? The three concepts of social responsibility are shareholder responsibility, stakeholder responsibility and societal responsibility.  The first, shareholder responsibility, holds that the firm’s concern is to return a profit to its shareholders. The second, stakeholder responsibility, holds that the firm’s concern includes the impact of a firm’s business activities on the total community.  As such stakeholders can include, the firm itself, consumers, residents of the community where the business operates, and the firm’s employees, including maintaining their retention. The final concept, societal responsibility, includes the concept of the global good in the firm’s business model.  This global good includes such issues as environmental preservation and the general public. 

What is sustainable development? Sustainable development is a model of economic development that considers the impact that modern industrial practices have on the environment.  Traditional business practices create a lot of waste and there is a disposable mentality to the consumption of resources.  Sustainable management of resources emphasizes the use of recycling and energy conservation.  

What role does sustainable development play in Starbucks’ approach to social responsibility?  Starbucks uses the principle of sustainable development in the production of its coffee. For instance, it pays a fair price to coffee famers and ensures that the product has been grown in a manner that is environmentally sound

How does Starbucks’ approach to social responsibility relate to the three concepts of social responsibility described in the text? In terms of shareholder responsibility, Starbucks includes profitability as among its guiding principles.  Although listed last in these guidelines, it is not the least important.  Rather the financial performance of the firm is predicated on observing the other guidelines. In terms of stakeholder responsibility, the firm strives to reflect the diversity of the communities in which it serves. Its workforce is monitored on a quarterly basis to make sure recruitment diversity objectives have been met. The firm also emphasizes supplier diversity and partners with women and minority-owned businesses.  The firm has engaged in a number of volunteer efforts. It has also made financial donations across an array of social, environmental and economic causes through its “Make Your Mark” program.  Finally, under societal responsibility Starbucks has instituted energy and water conservation programs as well as waste reduction, recycling and reuse programs in all of its outlets. The firm is also a supporter of CARE, a non-governmental organization dedicated to eradicating poverty around the world. 

Finally, all of this social responsibility work does not come without some caveats. First, many firms have issued codes of conduct to establish they support corporate social responsibility.  But some reports have shown that in many instances this is all a firm does.  Issuing a code of conduct actually costs little to the firm and it can be used to bolster its reputation as a socially responsible business without taking any other action. It is helpful to remember these codes of conduct are voluntary (“Codes of conduct,” n.d.). Second, social auditing has been shown to have problems.  Managers where sites are to be audited have been known to have advance notice of an audit so that violations can be moved out of the view of auditors.  Audits are typically done by third-party non-governmental organizations who obtain much of their budgets from the firms they audit (Bernstein & Roberts, 2000; Kernaghan, 2001).   This creates a conflict of interest.  Lastly, many firms are purposely outsourcing their production to countries with weak regulatory structures so they can avoid the oversight and labor protections afforded by governments in North America and the European Union. To then expect to see strong enforcement of US or European style regulatory policies in such countries is going to be very problematic.  

References

Bernstein, A. &, Roberts, D. (2000). Inside a Chinese sweatshop: A life of fines and beating.  Business Week, Oct. 2. 

Codes of conduct. (n.d). Itcilo.org. Retrieved from http://actrav.itcilo.org/actrav-english/telearn/global/ilo/code/main.htm. 

Kernaghan, C. (2001). Toys of misery: A report on toys made in China. Retrieved from http://www.nlcnet.org/campaigns/china/chinatoys01.pdf.