Starbucks Responsibility and Sustainability

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StarbucksResponsibility and Sustainability


Tableof Contents

1.0 Introduction 3

1.1 Practices Overview 4

2.0 Stakeholder Analysis and Evaluation 4

2.1 Company Overview 4

2.2 Starbucks Stakeholders Analysis . 5

2.3 Stakeholder Mapping 6

3.0 Corporate Social Responsibility 7

3.1 Introduction 7

3.2 Carrols Pyramid (1991) 8

3.2.1 Economic 9

Increased Profitability 9

Employee Performance 10

Investors Returns 11

Suppliers Satisfaction 12

3.2.2 Ethical 12

Environment 13

Customers 14

Employees 14

3.3 Critical Approach (GRI) 15

4.0 Conclusion 16

4.1 Recommendation 17

Bibliography 19

Appendixes 24

StarbucksResponsibility and Sustainability

1.0 Introduction

Theglobal economy is currently facing numerous challenges, which aremainly because of the soaring population growth, overstretchedresources, worsening global warming conditions and volatile financialmarkets (Lagarde, 2014 Acevedo, 2015). Organizations all over theworld in both business and governments must confront these challengeseither through developing measures or through innovative ways thatcan bring sustainability to a new level. This will involve redefiningthe way in which organizations processes are undertaken in theirorganizational processes and supply chain systems. There is a needfor adopting totality in the way organizations design theirsustainability in their business models, across all products andservices. The currently fossilized approaches have already provenineffective and unreliable. Large corporations which include Starbuckthat are the largest contributors of global carbon footprint are nowowning these challenges and are inventing new ways in how they managetheir business processes (Freedman, 2010). There is increasedsensitivity towards issues of responsibility and sustainability(Hopwood et al., 2005). In this regards, the assessment examines keyresponsibility and sustainability issues in Starbucks looking intoits business ethics and CSR to critically analyze and evaluate itspractices.

1.1 StarbucksResponsibility and Sustainability Practices Overview

Starbucksis among the largest chains stores with presence all over the worldthat are reevaluating their sustainability in their governance andtheir boards being involved directly in managing and providingoversight and accountability on environmental and social issues aspart of their organization sustainability goals (Michelli, 2007).Starbucks has put in place robust regular dialogues with all itsstakeholders on changes that are needed to be made on sustainability,created open reporting on sustainability issues, goals, andstrategies (Starbucks, 2015 Flamholtz &amp Randle, 2013). Starbuckshas also put in place systematic performance monitoring to ensurethat the company together with all its stakeholders can achieve theset goals on environmental impacts issues and sustainability acrossits entire value chain, operations and supply chain of all productsand services. Starbucks is a strong supporter and of an advocate ofthe CSR movement and has put in place various programs for corporatesocial responsibility as part of its stakeholders managementapproaches (Thompson, 2015 Fontaine, 2013).

2.0 StakeholderAnalysis and Evaluation2.1 Company Overview

StarbucksCorporation is the largest retailer and roaster of specialty coffee.Created in 1971 in Seattle, the company has grown greatly to expandto more than 65 countries and 23,130 stores (Marques et al., 2015).The company uses automated espresso equipment for safety reasons andefficiency, which has allowed it to provide high quality and tastycoffee. Starbucks pioneers, Sev Siegel, Jerry Baldwin, and GordonBowker were motivated to sell quality coffee and machines by coffeeroaster, Alfred Peet. The pioneers set their first café from 1971 to1976 at 2000 Western Avenue but later moved the café to 1912 PikePlace. In its pioneer’s years, the company did not brew coffee butonly sold roasted coffee beans. Today, the company has expandedgreatly to sell other products such as tea, coffee, smoothies,pastries, caffe latte, and Frappuccino beverages. The company hasmore than US$10.75 billion in total assets, 191,000 employees, andUS$5.28 billion in total equity (Marques et al., 2015). In 2014, thecompany had US$3.1 billion of operating income and made a revenue ofUS$16.4 billion.

2.2Starbucks Stakeholders Analysis Starbucksuses its CSR strategy to account for all its stakeholders’ demandsand interests which make its main objective to ensure that it is seennot just as a business entity but also as a citizen of society.Starbucks strongest cooperate brand image is its efforts to involvestakeholders in every strategy and success plan (,2015).

Asa multinational corporation and a market leader in coffee retail androasting, Starbucks handles many different publics in diverse regionsof the world (Thompson, 2015 Spring, 2014). To maintain itscompetitive advantage and market leadership, Starbucks needs toconnect with employees, customers, investors, franchisees, suppliersamong other organizations like the government and otherorganizations. In this regards, Starbucks primary stakeholder includeshareholders, employees, clients, farmers, suppliers, businesspartners, and local communities while secondary stakeholders includegovernments, competitors, environmentalist groups, and media outlets.

Employees:Starbucks has put high value on all its employees and involves themin its CSR projects. Employees in Starbucks demand better salaries,good working conditions, and job security (Burks, 2009). Starbucksorganizational culture is based on putting its employee first. Thecompany remuneration strategy is far beyond the minimum wagesprovided by the government (Gilbert, 2008).&nbspThe company offersincentives such as scholarships in partnerships with its otherstakeholders such as universities (Thompson, 2015 Gill, 2007).

Customers:Starbucks customers are considered its backbone and the mainmotivation that keeps the company growth steady. The interests ofcustomers in Starbucks are mainly high-quality service and products(Gaudio, 2007). Starbucks has heavily invested in many ways to ensureit provides the best coffee in all its shops globally. Starbucksextends its organizational culture to its customers making them partof its community (Thompson, 2015 Giovannucci &amp Ponte, 2005).

Suppliers:Starbucks suppliers include wholesale supply firms and coffee farmersin various countries that farm coffee. The main interest of thesuppliers is competitive compensation and growth in demand for theirproducts (Starbucks, 2015 Bitzer et al., 2008). Starbucks only buysfrom suppliers whose firms have complied with the Coffee and FarmerEquity (CAFÉ) program to ensure that its suppliers are paid well(Thompson, 2015).

Investors:Investors are also key Starbucks’ stakeholders. Investors demand ahigh return on their investments and highly depend on the firm’sfinancial performance (CEO, 2004). Starbucks strategy ensures thatthe company can remain profitable even during tough economic times.Other important Starbucks stakeholders include governments due to thecompany’s global presence. Starbucks has ensured that it complieswith all countries laws and tax commitments (Thompson, 2015,, 2015).

2.3 StakeholderMapping

Table1: Stakeholder mapping table




Willingness to engage


Necessity of involvement


High: Knowledge in XY issue of value to the company

High: Directly affected by the company’s activity

High: Proactive group that is already engaging

Low: Relatively unknown group

Low: Not an outspoken stakeholder

























Importanceof its usefulness of Stakeholders analysis model Stakeholder’stheory is an effective way of analyzing the influence that differentstakeholders have in the company and the specific needs that thecompany should satisfy to ensure positive relationship. The approachidentifies every stakeholder that a company has and groups themregarding their relevance in regards to their influence in decisionand policymaking.

3.0 Corporate SocialResponsibility3.1 Introduction

Toanalyze fully organizations’ efforts in their responsibility andsustainability efforts, it is critical to look into its CooperateSocial Responsibility (CSR) framework (Fontaine, 2013). CooperateSocial Responsibility (CSR) is a business philosophy that is designedto put pressure on organizations to include the need to act asmembers of the societies they operate in (Confino, 2014). Thisinvolves behaving like good citizens, following rules and regulationsand preventing environment pollution. CSR is an ethical frameworkthat suggests that every individual in any community has a duty andresponsibility to perform as a contribution towards ensuring abalance between economy and the ecosystem (Williams,2014).Organizations develop CSR policies to ensure that they arefunctioning within the stipulated regulations, ethical standards andbusiness norms in national and international business platforms. CSRexceed just compliance and enables the organization to engage inactivities for the social good (McDermont, 2012). Starbucks hasvarious CSR activities that are incorporated in its organizationalpolicies that demonstrate its dedication and efforts in taking partin issues affecting the society and contribute towards the solutionsneeded (Fontaine, 2013). Models such as the Carrols Pyramid (1991)can be used to analyze the effectiveness of an organization’s CSRstrategy to analyze various issues that CSR is intended to address.

3.2 Carrols Pyramid(1991)

Carroll’sCSR Pyramid describes the conducts that businesses should adapt toremain profitable in their operations. The concepts suggest that fora business to be socially responsible, first they have to prioritizetheir profitability and law-abidingness in their ethics and how theysupport the society surrounding them through engaging in beneficialactivities that the society would appreciate. Among the four stagesof the pyramid, the most critical ones are the EconomicResponsibility and Ethical Responsibility parts of the Pyramid(Dudosvskiy, 2012). These two also represent a platform in which toanalyze Starbucks CSR efforts.

3.2.1Economic IncreasedProfitability

Theeconomic responsibility part of the pyramid represents theresponsibility that a business has in producing goods and servicesthat have value to the society and that the business can sell thoseproducts at an affordable price to the customers. Customers arehighly selective in the products they use. Organizations that relatewell to their customers especially through creating a positive publicrelationship through involvement in programs that support the societyget more positive publicity (Robins, 2006).

Starbuckshas managed to remain to remain profitable in all the regions itoperates in. Many of Starbuck customers relate to the company’sproducts due to its known efforts in supporting environmentalproblems, especially in underdeveloped regions. Starbucks has usedits CSR position across the globe to establish a strong relationshipwith its customers as a strong supporter towards mitigating climatechanges. This has given its brand a wider acceptance in the globalmarket increasing its profitability (Thompson, 2015).

Employee Performance

Employeesare the most important resources in any organization. Their wellbeingregarding compensation directly translates to their morale.Organizations always strive to ensure that they collaborate withtheir employees and include them in every decision making for issuesthat affect them. CSR is one way that organizations are using toinvolve employees not only on work related issues but also onpersonal development to ensure their growth (Robins, 2006). This ispossible through including employee’s interests in the companyobjectives making them part of the organization`s larger plan.

Starbucksdoes more than just employing people but instead collaborates withits employees. Starbucks does not refer to its workforce as employeesbut as internal partners. Starbucks has heavily invested in itsteams. The company offers equity-based incentives for non-executivepartners. These include healthcare benefits, tuition reimbursementsfor all its full time and part-time workers (Mandina et al., 2014). Starbucks employees are well compensated, and their wages are wayabove what governments recommend as minimum wages in differentcountries. The company CSR prioritizes its employees first and hascreated and employee first culture (Thompson, 2015). This has madeStarbucks employees highly motivated hence giving the maximum outputto the company at all levels. Encouraging its workers to considerthemselves as part of Starbucks most importance community has helpedto reduce employee turnover. This has helped the company to cut onhiring and training costs. Having a more dedicated workforce in allits branches has ensured the delivery of quality customer care at alltimes. With minimal customer complaints, Starbucks enjoys highprofitability from a large satisfied customer base that alwaysprefers to get their coffee from Starbucks restaurants (Ritter,2014).

Investors Returns

Investor’smain interest in an organization is to earn higher returns on theirinvestments. They also demand that the company run profitably andmaintain continuous growth. This, in return, encourages them toinvest more in the company or attract investors into the companythus, helps in enhancing the company’s performance (Thompson,2015). There are many kinds of investors who are highly selective onthe type of policies and values an organization has, before theyinvest in the company. CSR provides the best opportunity for anorganization to demonstrate that it is involved in social activitiesand is contributing to mitigate various challenges in the society itoperates in. This gives investors’ confidence that they areinvesting their wealth in positive ways that will contribute to theirsocieties development (Robins, 2015).

Investorsin Starbucks for many years have always enjoyed high dividends andreturns on their investments. A good brand name in the stocks marketwith competitive stock rates has ensured that all investors continueto earn more returns every financial year as stock prices havemaintained to be stable even during harsh economic times. Starbucksstock prices recovered after a tragic plunge in 2008 and now back inthe market trading at $77 per share. It is to this fact thatStarbucks has managed to attract capable investors and franchisingpartners who are willing to invest large amounts into opening moreshops in many places across the globe. This has ensured sustainableprofitability and growth in sales and market dominance (Dehn, 2015).


Suppliersform the larger part of organizations external customers.Organizations are increasingly including suppliers in their CSRTstrategies. This is through involving them in projects that directlybenefit them or their society. For instance, organizations that dealwith large companies can collaborate to provide incentives that thesuppliers can benefit from. This helps suppliers to maintain lowprices that are competitive in the market and still profitable tothem. It directly translates to an organizations reduction in costs,as it can raw materials at reduced prices. This will enable thecompany to produce low priced products to its customers increasingits competitiveness in the market (Fenn, 2015).

ThroughSCR strategy, Starbucks has been able to work closely with itssuppliers especially the small coffee farms. This way they are alsoable to reach out to a wider scope of customers. The company’sshareholders also demand a high return on their investment andsustainable growth in value for it. The organization`s employees onthe other hand also need to be well paid promptly and be given theincentives they desire to improve their morale to give their bestperformance for higher returns. When a company remains profitable,the job security of its employees is ensured, and suppliers are alsopaid in time. CSR is also one-way organizations can use to attractmore valuable investors (Thompson, 2015).

3.2.2 Ethical

Anorganization`s commitment to its success goes beyond abiding by theletter of the law. It is important that an organization takeresponsibility in managing the environment through properly managingits waste, recycling material and controlling its consumption ofresources (Cross and Miller, 2009).&nbspIn many cases, governmentauthorities regulate issues such as the environment and wastemanagement however, it is now becoming common for companies to beinvolved in undertaking these services as part of their SCRcommitments. Acting ethically involves organizations approaches toinstitute policies that are geared towards sustaining the environmentfor the future generations and acting responsively in regards to howit engages in the society (Ferrell &amp Fraedrich, 2014). There arealso other ethical responsibilities such as advertising, beingtruthful to customers and the way the organization treats itsemployees and suppliers (Harrison et al., 2005).


Ethicsapplies to how organizations actions affect the environment and theirrole in preventing degradation and pollution. Companies require largevolumes of raw material mostly harvested from natural resources. Withincreasing demand, there is likeliness of overexploiting theenvironment (Baskin, 2013). There are large volumes of wastes thatcome from these raw materials, which companies need to dispose to theenvironment as well. It takes uprights morals and good ethical valuesto ensure a balance on how to manage these two factors (Larsen,2004). First, organizations must take full responsibility in how theytake in raw materials and how they dispose of wastes back to theenvironment. Through CSR policies, organizations can collaborate withlocal and federal government authorities to find safer and effectiveways of protecting the environment from over-exploitation and overpollution (Callejon, 2012).

Starbucksis one of the largest buyers of coffee from farmers in manyunderdeveloped countries (Spring, 2014). It has a big responsibilityof ensuring that these farmers undertake good agricultural practicesstarting from how they apply fertilizer and how they manage theirfarms. Starbucks also has a comprehensive recycling plan in all theregions it operates in. Starbucks paper and plastic wrappingmaterials and cups are all recyclable. In the U.S. and Canada, thecompany has set up large recycling plants and is striving to attain100 percent recycling capacity on all its wastes (Strabucks, 2015Wu, 2007).


Customersin every market expect companies to give true and honest informationabout their products. This should be included in all advertisingmedia and branding materials. Customers should be able to get thecorrect information about the company and the products including theingredients used (Black, 2013 Hartmann, 2011). Any false advertisingor misleading information in the public can cost the public companyreputation (Hong&amp Yang, 2009).It is, however, the responsibility of the company to ensure that itis truthful and honest in all the information that it gives to themedia regarding its products, services, and practices (Callejon,2012 Laszlo, 2003).

Starbuckshas maintained a high moral standard in all its advertisements takinginto consideration diversities in its markets (Hendrix et al., 2012).The company is highly sensitive to issues touching on culture,religion and health in every society it sells its products. Providingaccurate information is one of the commitments that Starbucks hasmaintained for many years as its ethical values (Grunig, 2013Baskin, 2013).


Employeesdeserve to be treated well for them to provide the requiredperformance of their duties. This, however, depends on their moraleand satisfaction of their jobs. Companies have an ethicalresponsibility to ensure that employees are motivated in their work.This is through providing competitive wages and other compensations(Hong, Yang &amp Rim, 2010). It also requires that organizationstreat their employee with dignity and respect at all level anddemonstrate that the employees are valued as part of theorganization. Companies also have an ethical responsibility to ensurethat they have provided their employees with a safe and clean workingenvironment (Callejon, 2012 Taylor, 2011).

Starbucksemployees are highly compensated regarding salaries and allowances.Starbucks has included an ethical compliance strategy in itsstrategies plans, and it is among its main organizational objectives(Rainey, 2012). The company has put in place a Business EthicsCompliance program that is meant to show the company support to itsmission and support to its culture and reputation (Sebhatu andEnquist, 2014). The company has provided material that help toincrease awareness including a Standard of Business Conduct. This hasfacilitated legal compliance training on ethics issues. Starbucksencourages all partners to reports all issues and concerns to theprogram through a variety of communication channels that are providedincluding the social media platform, direct emailing, and even directaccess to the program committee (Perez-Aleman and Sandilands, 2008).

3.3Critical Approach (GRI)

Thecontent of this report has critically analyzed various materials thatdescribe specific topics as outlined in every part. The content hasbeen sourced from literature from a variety of sources, which includethe company website, financial analysts statistics published online,discussions in journals and news presentation reported online. Theinformation provided has described in detail the companyresponsibility and sustainability approaches providing specificdetails on every subject under discussion. All the references usedare accessible and reliable as they are from the most currentpublications. They present the true picture of Starbucks and providea true picture of the company position in regards to the topic underdiscussion. The report has used a stakeholder’s analysismethodology to describe the roles, strengths and powers of the eachstakeholder grouping them according to the level of influence theyhave to the organization. This has provided a comprehensive outlineof all the stakeholders within Starbucks and their specific functionsand interests. The paper has elaborated specific factors that must beconsidered in every sustainability strategy.

Starbuckshas a well-structured approach to its responsibility andsustainability strategy, and it has a working Corporate SocialResponsibility strategy that is aligned with its organizationalobjectives. Starbucks CSR is focused on its impact on theenvironment, the communities and societies it operates in. Starbuckshas put its workforce at the center of its strategy making itsemployees more of its internal partners. The Company Compensationstrategy is highly regarded by its employees, and the company hasheavily invested in it. The company has maintained to be profitablewith a steady growth in all its markets to ensure that itsstakeholders are always getting high return value for theirinvestments. The report has also provided the company’s weaknessesin areas that the company has not done much and may need to improveon. The reports and statistics that have been used in the report arefrom reputable institutions that are independents. The approach takenin this report can be used to analyze the same sustainability issuesin other fast foods companies to provide similar statistics foranalysis.


Organizationsare redefining their competitiveness nowadays through their CSRapproaches in their markets. To win government and customers trustand appreciation, organizations like Starbucks are heavily investingtheir resources, which include time and money for their CSR projects.To show that they are taking full responsibility for theircontribution to global warming and socioeconomic challenges globally,their CSR is now structured in a way to include these challenges andtheir solutions in their plans. To demonstrate transparency andcommitment, Starbucks CSR has been developed to provide solutions andcontributions to sustainability issues affecting all itsstakeholders. Starbucks stakeholders provide the main drive of thechoices the company makes in the CSR policies it has. This paper hasprovided an insight of Starbucks Corporate Social Responsibility,using the Carroll’s Pyramid to analyze the company’ CSR Economicand Ethical aspects. The discussions indicate that Starbucks CSRstrategy is comprehensive and has catered for the needs andexpectations of its stakeholder in various ways. It is evident thatCSR is one of Starbucks winning strategy in the highly competitivemarket it is operating in. This has been supported by various reportsand analyzes published in some media online that have provided usefulinsight for this research. It is, however, important that the Companyundertake regular survey of its CSR strategy to ensure that changingneeds of its stakeholders are always addressed.


Moreis needed to be done in regards to employee satisfaction especiallyin emerging markets where economies are still unstable. As much asthe company has managed to provide better working conditions,employees in these areas still face challenges in adopting thecompany’s culture. More training and sensitization is needed in itshuman resource to ensure that all employees across the board feel thesame way about the company efforts to make them competitive.

Starbucksis still facing challenges in its products with increasing campaignson the ban of genetic recombinant Bovine Growth Hormone in its dairysupply chain. Increasing complaints and its reluctance to taking thenecessary steps to address this issue is putting the company globalimage ethical values at stake.

Taxevasion is a major problem in Starbucks in some developing countries.The company is taking too long to pay due taxes hence, jeopardizingthe economies of the countries it is operating in. This departs fromthe CSR objectives in its strategy. The company should find betterways to prevent these incidences to keep in balance its ethical andeconomic responsibility.


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Fig.1: illustrates increasing number of Starbucks stores locally andglobally

Fig2: Shows Starbucks EPS and Dividends

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