Rhea Culbertson, Stephen Gilliam, Amanda Hartnett, and Amanda Winchip

Collaborating with Activists:How Starbucks Works with

NGOs

CASE OVERVIEW: The FactsSTARBUCKS:

Leading Global Coffee Retailer

Socially Responsible Company

COFFEE INDUSTRY:In 2000, $80 billion

industrySecond most

commonly traded global commodity (second only to oil)

GLOBAL EXCHANGE:Non-Governmental

Organization (NGO)Promoter of Fair Trade

CoffeeCriticizes Starbucks

for Failure to Buy and Sell Fair Trade CoffeeDisrupts Starbucks

Annual Shareholder Conference

Threatens Public Boycotts

CASE OVERVIEW: StarbucksMission Statement:

Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.

Guiding Principles: (Emphasis Added)Provide a great work environment and treat each other

respect and dignityEmbrace diversity as an essential component in the way we do

businessApply the highest standards of excellence to the purchasing,

roasting, and fresh delivery of our coffeeDevelop enthusiastically satisfied customers all of the timeContribute positively to our communities and our

environmentRecognize that profitability is essential to our future success

CASE OVERVIEW: StarbucksSocial Responsibility“Our Commitment to Ethical Coffee Sourcing”

CASE OVERVIEW: NGOsRepresentatives of independent citizen

organizations, known as non-governmental organizations or NGOs, are often the most effective voices for the concerns of ordinary people. NGOs include the most outspoken advocates of human rights, the environment, social programs, and more.

- United Nations

NGOs originally evolved to influence governmentNow, NGOs focus their efforts on corporations,

investors, and customers. Corporations and NGOs now control much of the

agenda formerly dictated by government

CASE OVERVIEW: NGOsIndividuals tend to have a higher degree of trust

in NGOs as they perceive their objectives as altruistic rather than merely profit drivenCapitalize on high levels of distrust in corporations

Why are NGOs so influential?Unique ability to focus on single, specific issues

“Category Killers”Ability to act swiftly

Capitalize on existing tools (Ex: Media and Internet) to communicate their message

The number of NGOs has increased drastically over the past decade.

CASE OVERVIEW: NGOsNGO Approaches:

Developing Campaigns Against Business – Focus on single issues and well-known organizations or brands.

Attempting to Build Market Intelligence - Influence how organizations conduct business

Engaging Businesses – Involve the targeted organization(s)

Making Market Mechanisms More Intelligent -Attempt to change an entire industry.

Disrupting MarketsThe NGOs tactics determine its potential threat

to business

CASE OVERVIEW: Global ExchangeOur Vision

We envision a people centered globalization that values the rights of workers and the health of the planet; that prioritizes international collaboration as central to ensuring peace; and that aims to create a local, green economy designed to embrace the diversity of our communities. In a world where the economics of quantity fuels corporate power and political greed, the elite are reaping profits while working people and the planet are left to pay the price. In response to the global degradation caused by this system of elite globalization, Global Exchange envisions an alternative economics of quality centered upon protecting international human rights to ensure that the cost of globalization does not come at the expense of us all.

CASE OVERVIEW: Global ExchangeMission Statement

As an education and action resource center, we advance our vision by working to ensure our members and constituents are empowered locally and connected globally to create a just and sustainable world. Global Exchange takes a holistic approach to creating change. With 20 years working for international human rights, we realize that in order to advance social, environmental and economic justice we must transform the global economy from profit centered to people centered, from currency to community.

CASE OVERVIEW: Global Exchange and Fair Trade

Global Exchange implements the principles of socially and economically responsible business by operating according to Fair Trade Criteria.

EVALUATE: WHAT IF ANALYSIS: Starbucks does buy/sell Fair Trade Coffee.

PROS:Reduces threat of

public boycotts.Maintains image of

social responsibility.

CONS:Potentially negative

impact on coffee quality.

Potentially negative impact on existing suppliers.

No demand for Fair Trade Coffee from existing customers.

May reduce profit.

EVALUATE: WHAT IF ANALYSIS:Starbucks does not buy/sell Fair Trade Coffee

PROS:Maintain high

standard of quality coffee

Maintain existing suppliers

Maintain steady profits

Maintain customer satisfaction

CONS:Potentially tarnishes

public perception on Starbucks dedication to social responsibility

Increases likelihood of potential public boycotts

Problems in the Mission StatementProvide a great work environment and

treat each other with respect and dignity

Starbucks took a narrow interpretation to the work place: their stores

Global Exchange took a broad interpretation to the work place: the farmers and the fields where Starbucks’ coffee is grown

Problems in the Mission Statement

Contribute positively to our communities and our environment

Starbucks meant they would hold themselves to a higher standard

Global Exchange decided they would hold Starbucks to a higher standard

DISCUSSION QUESTIONWho gets to set the standards of CSR (the company, the NGOs, a third party)? Do consumers really have that much control over these issues?

Problems in the Mission StatementStarbucks’ vulnerabilities:

Size of the companyUbiquitous locationsHigh VisibilityHigh ideals in the mission statementBased in the United StatesPure-play in the coffee industry

Solution: better to act on high ideals than to state them

How much is enough?Starbucks dedicated

resources in commitment to communities and environmentHired Director of

Environmental Affairs (1994)

Created Senior Vice President for Corporate Social Responsibility (1999)

Worked with several NGOs

Numerous accolades for social responsibility

Paid above-market prices for coffee

DISCUSSION QUESTIONOther corporations such as The Gap and Shell, have also been subject to continuous criticism from NGOs despite their attempts to position themselves as socially responsible companies. Can a company ever be socially responsible enough? When a company openly sets a mission to be socially responsible, is it just setting itself up to be a NGO target?

How much CSR is enough?

At what point do you say no?

How much is enough?Incorrectly perceived immunity from

criticism and interference over social responsibility from:

Customers

Media

Other NGOs

Living Up to the Mission StatementLocal & World-wide programs:

Local: Latitude given to store managers for donations to local charities and causes

Corporate: Cumulative $1.8 million donated to CARE by 2001 for use in coffee-growing countries

Living up to high social responsibility ideals by reasonable standards

Everyone does not use reasonable standards

Threat AssessmentNike (HQ in

Oregon) attacked by Global Exchange in the 1990s for repeated failure to meet labor standards in developing countries.

Starbucks (Washington) determined not to become “Nike of the coffee industry” by adopting Fair Trade standards & practices.

DISCUSSION QUESTIONWhat impact do NGOs have on your (a consumer’s) buying decision? Ex: Nike, Wal-Mart, conflict diamonds, etc…..- Have we become desensitized?

NEXT STEPS: StarbucksMotivating FactorsBuy the FarmsJoin NGO’sStreamline the Supply

ChainCollaborateOpenness

NEXT STEPS: StarbucksMOTIVATING

FACTORS BUY THE FARMSResearch how the

profits of fair trade coffee are broken down.Does Global

Exchange or TransFair have ulterior motives?

If so, Starbucks could refute NGO’s credibility.

Allows Starbucks to control their supply and quality of beans

Could decrease external pressures from NGO’s

NEXT STEPS: StarbucksJOIN THE NGOs STREAMLINE THE

SUPPLY CHAIN

Provide suppliers the proper licensing to become fair trade certifiedAllows Starbucks to

keep its suppliersContinue selling high

quality coffee

Cut the number of middlemen

Decrease in “coyotes” means….Increase profits for

small farmers

NEXT STEPS: Starbucks

COLLABORATE OPENESS

Communicate with NGO’s

Collaborate on efforts to better the coffee industry

Be proactive

Keep an open ear and open mind

DON’T ignore criticism or accusations from NGO’s

DISCUSSION QUESTION“Many organizations have found that, through carefully developed partnerships, each party can move beyond their respective organizational restraints to achieve results that exceed what each can accomplish individually.”

Would Global Exchange have been more successful with an initial collaborative approach?

Starbucks: The Star CandidateStarbucks boasted it’s socially responsible

practices in many ways and included a statement of this devotion in their mission statement, which would pigeon-hole them into cooperation.

It was a large company with a strong brand image, which could change the industry.

It was based in the U.S. with free-standing stores, which would make demonstrations easy.

 

Lessons from the case1. Realize that socially responsible companies are likely targets

but also attractive candidates for collaboration.

2. Don’t wait for a crisis to collaborate.

3. Think strategically about relationships with NGOs.

4. Recognize that collaboration involves some compromise.

5. Appreciate the value of NGOs independence.

6. Understand that building relationships with NGOs takes time

and effort.

7. Think more like an NGO by using communication strategically.

LESSONS LEARNED• Objectively assess the landscape.

• You will be judged according to your stated goals.

• Risk associated with Pure Play.

• Collaborate with detractors.

DISCUSSION QUESTIONCompare the ethical implications of Starbucks decisions to that of Pfizer?

DISSCUSSION QUESTIONWhat is the tobacco industry’s

obligation to society?Do different industries have differing levels of social responsibility?

Thank you.

QUESTIONS OR COMMENTS