MASTER OF BUSINESS ADMINISTRATION (MBA)

JANUARY / 2019

BMOM 5203

ORGANISATION AND BUSINESS MANAGEMENT

MATRICULATION NO : CGS01862201
IDENTITY CARD NO. : 910521105733
TELEPHONE NO. : 601115052721
E-MAIL : ashchan2105@gmail.com
LEARNING CENTRE : ONLINE LEARNING INTERNATIONAL
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Part A: STARBUCKS COFFEE
I am selecting Starbucks as the organisation to conduct the study on the important
issues surrounding corporate social responsibility (CSR). Starbucks is an international
fine coffee enterprise and was established in 1971. The initial retail outlet was located in
Pike Place Market, Seattle in the United States of America, which today has more than
17400 outlets in 60 nations and continues to increase. Starbucks has extended its
production line to comprise numerous hot and cold brews, sandwiches as well as a wide
range of breakfast and coffee break menu selections. Starbucks’ products are also
obtainable in superstores and hypermarkets in addition to the famous retail stores [1]. Its
mission is “to inspire and nurture the human spirit – one person, one cup and one
neighbourhood at a time”. Starbucks has integrated this mission statement into its general
approach and is constantly determined in fulfilling it through its commitment in many
CSR actions [2].
Consumers are more appealed to a corporation if they implement CSR
programmes conscientiously and this is the motivation for Starbucks. One of the roles
and contributions of Starbucks towards CSR is by conducting the trade responsibly and
steering itself in the approaches which give confidence and respect from its consumers
and fellow citizens. This gives birth to a commitment made by Starbucks entitled the
“Shared planet” that highlights on the method of ethical procurement of raw materials,
ecological conservation and public participation [3]. It also trusts in creating a respectable
workstation for associates and employees, promising proper corporate practices and
upholding lawful and corporate agreement, and also incorporating community
programmes under the company’s policy.
Starbucks concentrates on caring for the surroundings and wishes others to do the
same in order to create a great industry for mankind. They have driven a goal by going
green to encourage the preservation of the environment. One example of this goal is by
committing to produce a greener cup and packaging through a new initiative called the
NextGen Cup Challenge. The objective of this initiative is to resolve the current
worldwide waste issues of fibre cups by implementing a sustainable design as well as
material and chemical improvement to resolve it. The outcome of this goal is to increase

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the existing recyclability and reusability of the Starbucks cups and packaging by two-fold
by 2022 [4].

Starbucks also concentrates on caring for the community and as such has driven a
goal by creating opportunities and increasing the employability of everyone equally
without any discrimination whatsoever. One example of this goal is by the employment
of opportunity youths, which are defined by youths who are not currently pursuing
education or either gainfully employed. The objective of this initiative is to support
young people in nurturing job and management qualities and serve as an intermediate
platform to link them to future job opportunities. The outcome of this goal is to increase
the existing employability of these disconnected youths to assist them in achieving their
visions and rising through the corporate ladder ranks without being left out due to
existing circumstances [4].
The third aspect that Starbucks concentrates on is by its sourcing commitment and
as such has driven a goal by obligating to a 100 percent ethically sourced coffee
everywhere in the world. One example of this goal is by becoming an originating affiliate
of the Sustainable Coffee Challenge, which intends to form coffee the planet’s foremost
sustainable agricultural product. The objective of this initiative is to harvest coffee by
means of sustainable methods to preserve the standard that are treasured in the physical
surroundings. The outcome of this goal is to synchronise trade accomplishment and
expectation, comprising a pledge to substitute old coffee trees with new trees [4].

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Part B: LITERATURE REVIEW

CSR started to increase in importance in the 1950s which states industrialists have
a responsibility to take into justification the publics objectives and principles when
making choices. This elevated the level of consciousness and acknowledgement of
corporate responsibility towards the public. Nevertheless, no agreement has yet been
reached regarding an explanation of CSR as it differs according to the socioeconomic,
political, and environmental perspective. CSR is a concept in which companies integrate
social and environmental concerns into their business operations and their interaction
with stakeholders on a voluntary basis, based on the European Commission’s definition
[5].
The widest accepted explanation of CSR comprises business activities that are
intended at matters outside its economic, technical and legal necessities. Corporate social
responsibility is also termed as an optional distribution of business assets toward
improving public benefit that functions as a resource of increasing relations with main
shareholders. Corporate social responsibility is becoming an instrument for handling
many shareholders’ projections [6].
The theory of CSR has piqued attention over previous years for both economic
scholars and experts involved in industry. CSR has been comprehensively described by
various intellectuals since the commencement of the 19th century. Carrol termed CSR as
the responsibilities incorporated in the corporation including legal, ethic, economic and
philanthropic opportunities that the public anticipates from businesses, which is entitled
the CSR Pyramid. From the Carrol's perception of the CSR Pyramid, the economic
responsibility to the public is centred on the awareness that the public is projecting the
corporation to be capable to sustain it and, consequently, it is required to be money-
making and have assets to remain with its success [7].
Concerning the legal aspect, it is agreed as the legal foundation or guidelines that
the public has instituted for the businesses to function as well as the authorizations those
they may require in circumstance of infringement of the law. The ethical aspect concerns
the fulfilment of the corporation to actions and standards that are assumed from the
public but not directed or classified by the regulation, but expected nonetheless. Lastly,

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the philanthropic projection comprises an action that the corporation willingly carries out,
that is not compulsory by the regulation or anticipated from the industry, in an ethical
sense [7].
The idea of shareholders was suggested, which became important on the
execution of CSR by corporations. A shareholder is termed as a group or an individual
that may be taken into consideration in the purpose of an establishment but as someone
that can also be affected by them. Companies are required not only to oblige to the
benefits of stakeholders, but also have accountabilities concerning the public and the
administrator's role is to explore for equilibrium between the requirements and demands
of various shareholders. The European Community Commission specified in 2001 that
the deliberate incorporation of social and environmental compliances in a business's
everyday dealings and associations with shareholders can be termed as CSR [7].
The key resolution of a business is to generate value for its owners and
shareholders, while contributing to the benefit of the public. Some of the benefits which
are connected through CSR performance, such as greater business production, better
corporation worth and better consumer desirability as well as brand status. Furthermore,
research approves that one of the most important significances of growing a practical
CSR initiative is the rise in the company's status, which in turn grows a positive overall
level of awareness that the shareholders have on the corporation thus pushing to their
substantial rise in the confidence concerning the corporation comparative to other
corporations and their own projections [7].
CSR has turned out to be an important social commitment in numerous corporate
sectors lately. Consequently, a multitude of previous research has explored the
importance of CSR on business administration and performance. CSR actions are an
important obligation for the maintainability and tactical existence of organisations from
the administration viewpoint. For example, the importance of CSR done by suppliers in a
business organisation leads to a well-received consumer reaction such as greater amounts
of consumer trust. In addition, research has presented that consumer contentment should
be measured as a fundamental component in manipulating the market worth,
productivity, and achievement of organisations [8].

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Public based CSR actions permit establishments to construct an appearance and
charm to the community because individuals attempt to understand and observe the
activities of others centred on the qualities they demonstrate and noticeable conduct. The
altruistic contributions made by establishments and businesspersons let the public to
produce positive inferences about the natural ethical principles and philosophies of the
leaders of those establishments [9].
The community recognises and make assumptions of establishments centred on
their outward social qualities, missions and objectives, and from those observations, the
community formulates views about the establishments' capability to provide to the public.
Therefore, public based CSR affect community views in support of such establishments,
which in turn influence the society's inclination to connect with such establishments by
way of employment [9].
Corporate social responsibility is important in a business organisation because
businesses reap the assurance of backing from different shareholder groups, and develop
brand investment that aids to form economical benefit. For instance, major backing from
consumers of a socially responsible business is an encouraging outlook concerning the
business, which leads to optimistic product and service value opinions. An increasing
number of studies discover that some consumer subdivisions are exceedingly devoted to
products and services of socially responsible businesses, and readily pay high rates for
those. CSR is also a factor of consumer contentment in huge corporations, which in turn
raises the market worth of these companies. The growths in financial revenues
demonstrate that stakeholders also appreciate companies’ CSR initiatives in the form of
higher share acquisitions [10].
Consumers do not measure service excellence before they experience the service
rendered, but corporation brand and status frequently aid as indications, so a constructive
company brand and status over CSR actions become particularly essential, in the setting
of the service business. Natural indecision in buying service products can be a reason
consumers search for CSR initiatives to decrease their risk as such activities raise
confidence in the business entity. Corporations with greater status are observed to be a
safer choice than those with lesser status, even when their economic achievements are
alike [10].

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CSR initiatives reinforce product brand and status as well as can lessen the
previously great risks associated to the functioning of service corporations. CSR
initiatives also clearly influence company status by providing a source of variation for
organizations causing an economical benefit. In an economically dominated trade such as
the restaurant business, where many companies rival each other with only a slight product
variation and through little requirements to admission, a variance approach centered on
non-payment elements, such as CSR, can be essential for businesses to outpace rivals in
the extended period of time [10].

Part C: THE LEVEL OF CSR

As a requirement to fulfil this study’s objective, I designed 10 questionnaire items
as a primary source of data to collect information needed to obtain the level of CSR of
Starbucks. This study uses the judgmental sampling method, which is based on a non-
probability sampling method. The selection criterion of the sampling method in this study
is the questionnaires are only sent out to the middle to top level management of
Starbucks. Data collection was carried out by walking into the Starbucks outlet nearest to
me on February 2019 to hand out the questionnaires.
Before distributing the questionnaires, the respondents were informed about the
study's main purpose and the voluntary and anonymous nature of their participation in
this research. A total of 28 respondents were surveyed. All respondents were required to
answer the questionnaire items based on a 5-point Likert scales ranging from strongly
agree to strongly disagree that rated the perceived corporate social responsibility of
Starbucks. Each sample question along with the response percentage is presented in the
list of appendices.
The level of corporate social responsibility that has been achieved by Starbucks is
high. I will support my answer with relevant evidence and justifications from the
response obtained in the questionnaire. The results will be analysed on a per question
basis for better understanding. Firstly, for question 1, 53.57 percent of the total
respondents surveyed agree that Starbucks places an important consideration on its CSR
programmes. Similarly, for question 2, 57.14 percent of the total respondents surveyed

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agree that Starbucks have a responsibility to ensure their supply chain does not harm the
environment.
For question 3, 46.43 percent of the total respondents surveyed agree that
Starbucks operates effectively as a corporate culture that meets its CSR obligations.
Similarly, for question 4, 66.67 percent of the total respondents surveyed agree that
Starbucks should emphasize on strategic CSR for increasing their competitiveness by
integrating overall corporate strategies. As for question 5, 48.15 percent of the total
respondents surveyed agree that the current level of Starbucks CSR programme is
conducted in a transparent and professionally accountable manner.

For question 6, 44.00 percent of the total respondents surveyed agree that the
senior and management staffs of Starbucks are fully familiar with the ways Starbucks
conducts its CSR programme. Similarly, for question 7, 44.00 percent of the total
respondents surveyed strongly agree that the CSR methods used by Starbucks should be
frequently reviewed and revised to keep pace with the changing business environment.
As for question 8, 56.00 percent of the total respondents surveyed agree that
Starbucks gains advantage from its implementation of CSR programmes. For question 9,
56.00 percent of the total respondents surveyed agree that Starbucks places utmost
importance in its implementation of CSR programmes. Lastly, for question 10, 58.33
percent of the total respondents surveyed agree that Starbucks CSR programme helps
enhance ethics in its organisation.
This study investigates whether the CSR initiatives of Starbucks significantly
affects corporate reputation through customer attitude and satisfaction. The findings from
the answers on the questionnaire enable an understanding of the significant connections
between levels of CSR initiatives of Starbucks and corporate reputation. It can be
concluded that Starbucks has successfully incorporated CSR initiatives as its objective
from the perceived level of accomplishment obtained from the questionnaire answers.

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Part D: SUMMARY
The advantage of corporate social responsibility towards Starbucks is
enhancement in the brand appearance of the establishment. The benefit that Starbucks
acquires by executing CSR programmes is that of an improved reputation worth. The
purpose of this is primarily, individuals want to purchase the product that Starbucks is
marketing because of its respectable and spotless brand appearance. Furthermore, other
establishments want to trade and be linked with Starbucks. This grows Starbucks
reputation to such an extraordinary position that its label becomes equal with
trustworthiness and quality. Individuals continuously want to be linked with the greatest
and the most widespread brand, so in that regard, Starbucks increases in reputation and
becomes a significant competitor in its trade.
Another advantage of corporate social responsibility towards Starbucks is an
improved desirability and retaining of its employees. Starbucks, having a firm CSR
obligation in place, discovers it simpler to recruit and retain staffs. Individuals want to be
employed for Starbucks which are concerned about the welfare of their workers and offer
respectable working settings. Considerate outlook concerning staffs is greatly preferred
by fresh trainees and experienced executives equally. Performance assessments,
monetary support in periods of necessity, and thoughtfulness given to individual
accomplishments make workers want to stay with the establishment.
This is a massive benefit when there is a strict employment market condition. This
will decrease the budget of training fresh trainees and permit staff benefits for current
workers. Staff benefits encourage effective labour out from workers. In conclusion, if
Starbucks’ employees are contented, the business gets more revenues owing to improved
effectiveness in production.
The disadvantage of corporate social responsibility towards Starbucks is CSR
changes the emphasis of the business from the aim that formed it into a commercial unit
in the initial situation which is revenue creation. One of Starbucks’ responsibilities
concerning its stakeholders is that they have to make revenues for them. Starbucks
participate in CSR initiatives and expends capitals for public wellbeing. Starbucks is
influencing an expenditure of capital which can again be used to invest into the company
for profit making.

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Another disadvantage of corporate social responsibility towards Starbucks is a

rise in cost of production. CSR initiatives rises the spending of the business. This larger
cash outflow is replicated in the higher costs of the product for which, eventually, the
consumers have to compensate. Enormous companies like Starbucks cushions this larger
cash outflow and not raise their products’ costs.
CSR helps to enhance ethics in an organisation by promoting leadership ethics.
Ethical accountability is not exercised by the establishment itself, but quite by its singular
employees. The ethical personality of the individuals holding management spots
consequently impact the magnitude to which comprehensive business ethical principles
are established. The board, as a standard, is obligated to deliver successful and ethical
direction.
The CEO and the panel of administrators create the principles that advise the
business philosophy and judgement creating procedures, reinforcing the approach for
company risk controlling and for attaining corporate prosperity. Ethical business conduct
correspondingly is originated by the panel and administrative management. Workers are
inclined to imitate administration conduct. It is consequently progressively acknowledged
that ethical administrative conduct could completely enhance employee ethics, which in
turn enhances ethics in an organisation as a whole.

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References:
[1] Our Heritage. Retrieved February 20, 2019, from
http://www.starbucks.com.my/about-us/our-heritage
[2] Mission Statement. Retrieved February 20, 2019, from
http://www.starbucks.com.my/about-us/company-information/mission-statement
[3] Shared Planet. Retrieved February 20, 2019, from
https://www.starbucks.ca/responsibility/learn-more/starbucks-shared-planet
[4] Global Responsibility Report Goals & Progress 2014. Retrieved February 21, 2019,
from https://www.starbucks.com/responsibility/global-report
[5] Galvão, A., Mendes, L., Marques, C., & Mascarenhas, C. (2019). Factors influencing
students’ corporate social responsibility orientation in higher education. Journal of
Cleaner Production, 215, 290-304. doi:10.1016/j.jclepro.2019.01.059
[6] Galvão, A., Mendes, L., Marques, C., & Mascarenhas, C. (2019). Factors influencing
students’ corporate social responsibility orientation in higher education. Journal of
Cleaner Production, 215, 290-304. doi:10.1016/j.jclepro.2019.01.059
[7] López-González, E., Martínez-Ferrero, J., & García-Meca, E. (2019). Corporate
social responsibility in family firms: A contingency approach. Journal of Cleaner
Production, 211, 1044-1064. doi:10.1016/j.jclepro.2018.11.251
[8] Park, E. (2019). Corporate social responsibility as a determinant of corporate
reputation in the airline industry. Journal of Retailing and Consumer Services, 47, 215-
221. doi:10.1016/j.jretconser.2018.11.013
[9] Appiah, J. K. (2019). Community-based corporate social responsibility activities and
employee job satisfaction in the U.S. hotel industry: An explanatory study. Journal of
Hospitality and Tourism Management, 38, 140-148. doi:10.1016/j.jhtm.2019.01.002
[10] Rhou, Y., Singal, M., & Koh, Y. (2016). CSR and financial performance: The role of
CSR awareness in the restaurant industry. International Journal of Hospitality
Management, 57, 30-39. doi:10.1016/j.ijhm.2016.05.007

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Appendices:

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