The Importance of Corporate Social Responsibility:
A Case Study on Starbucks
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Abstract
This paper aims to explore the complexities of corporate social responsibility and its importance on business sustainability. Starbucks Coffee, Inc., a leading global brand in the coffee retail industry, is used as the case in this study. The specific objectives of this research include the thorough examination of the effect of implementing corporate social responsibility strategies in an organization, the exploration of the importance of CSR in developing a sustainable business in a competitive environment and the identification of the relationship between brand loyalty and CSR initiatives. This study focused on a survey in which 100 respondents replied from a lot size of approximately 500 people. The respondents, who were the stakeholders of Starbucks, were determined from a cross section between males and females and were clustered into different groups such as Starbucks’s partners, human resource and marketing personnel and customers who patronize the coffee firm’s products. The suggestions for further research include the incisive study on the expansion of Starbucks’s CSR directives to other aspects of mission-oriented marketing campaigns, the importance of ethical sourcing as its corporate social responsibility program and the correlation between Starbucks’s CSR strategies and the financial gains of the company.
Chapter 1
Introduction
History of Starbucks
Because of one eureka moment, Howard Schultz saw a great opportunity in what was to become a multi-billion dollar Starbucks business. Before this happened, in 1971, Jerry Baldwin, Zev Siegl, and Gordon Bowker, used to be the first owners of Starbucks, as mentioned on . The business was engaged in selling roasted, gourmet coffee beans and accessories for brewing and roasting them. Although the coffee firm was doing well, one of these first owners thought of leaving the others behind. However, Howard Schultz was to become Starbucks’ Ray Crock to Macdonald’s as he was a supportive plastic salesman to this coffee company who saw a huge opportunity waiting for its great product. Thus, Baldwin hired Schultz to be his key marketing official and sent him to Italy to attend an international housewares seminar (). Schultz became so excited of what he saw: Italians sipping a cup of coffee while enjoying the al fresco ambiance of elegant surroundings. Therefore, that eureka moment was turned into reality. By 1983, the newly hired marketing director pinned his hopes in changing Starbucks’s business nature into the coffee shop culture that he saw during his trip to Italy.
Hence, the era of growth for this innovative coffee business began to unfold that within the next few years, Starbucks opened up new stores from a base of 17 in 1987. The coffee enterprise then expanded exponentially in other locations: Vancouver, Portland, and Chicago. In the 1990’s, the business grew manifold as it captured other countries such as Singapore, Thailand, China, Kuwait, Malaysia and the Philippines. At the turn of the Millennium, Schultz transitioned from marketing director to Starbucks’s chief executive director. This time, the firm expanded to the Middle East by conquering Bahrain, Qatar and the United Arab Emirates together with Hong Kong and Australia.
Background of the Study
Today, Starbucks Coffee has more than 17,000 stores worldwide. Many people attribute the company’s success to its role in fostering corporate social responsibility as a strategic initiative to entice consumers to patronize its products and for the firm not to focus only on the bottom line profits. defines corporate social responsibility as a “company’s sense of responsibility towards the community and environment (both ecological and social) in which it operates. Companies express this citizenship (1) through their waste and pollution reduction processes, (2) by contributing educational and social programs, and (3) by earning adequate returns on the employed resources.” To put it simply, corporate social responsibility (CSR) is the principle shared by companies to act in a socially responsible manner. In today’s business world, corporate social responsibility has grown rapidly in the society and has become an important factor for organizations, especially global corporations, to continue their expansion projects. CSR provides a positive impact on the environment, consumers, employees, communities and other stakeholders who are affected by an enterprise’s initiatives. Thus, an effective CSR strategy, aligned with organizational strategy, can add value to a company and increase its brand’s public awareness.
In this consultancy project, Starbucks’ phenomenal success, in relation to its corporate social responsibility initiatives, is incisively examined. In the growing coffee industry, Starbucks has been a retail industry leader in green advocacy; therefore, a study on the complexities of Starbucks’s global reputation in terms of social responsibility should be investigated. Hence, this study delved into how Starbucks’s success in the business is linked to its corporate social responsibility directives, how this giant retail firm integrates CSR into its business operations thereby increasing its competitive advantage in the café industry. Also, this investigation explored how Starbucks established a mutually beneficial relationship with its stakeholders, employees, customers, suppliers, communities and the entire society at large in a way that enhances the quality of life.
Main Aim of the Study
The general objective of this study is to explore Starbucks’s successful business in relation to its corporate social responsibility strategy.
Specific Objectives of the Study
1. To understand the effect of implementing corporate social responsibility strategies in an organization.
2. To explore the importance of CSR to an organization in developing sustainable business in a competitive environment.
3. To identify the relationship between brand loyalty and CSR initiatives.
Research Questions
1. What are the effects of implementing corporate social responsibility strategies in an organization?
2. What is the importance of CSR initiatives to an organization in developing sustainable business in a competitive environment?
3. How is consumer brand loyalty impacted by corporate social responsibility strategies?
Theoretical Frameworks
In this paper, the succeeding selected frameworks and theories are used to examine the importance of CSR strategies in the coffee industry and to understand how Starbucks became successful in executing these initiatives:
Marketing Mix
The goal of the marketing mix is to have an internally consistent and mutually supportive plan. It consists of 4P’s and they are: product, price, place and promotion. These 4Ps are indeed highly valuable in the creation of the marketing strategies for without them, a company’s marketing plan will not have a reliable model that would support and justify its formulated strategies.
This study will review all elements of the marketing mix (4Ps) and analyze how Starbucks’s products or brands differ from its competitors in relation to the firm’s CSR strategies. Also, this paper will explore how each of the P’s plays an important role in satisfying Starbucks’s target customers and in creating a successful marketing mix to achieve its company goals.
SWOT Analysis
Underlying threats and opportunities could be unforeseen by marketers in the coffee industry. Therefore, there is a need for an analytical model that shows the various strengths, weaknesses, opportunities and threats surrounding any café brand. The SWOT Analysis would uncover hidden strengths and weaknesses by which marketing strategies could be developed. Threats that may hinder the brand awareness campaign may also be easily detected through this framework.
In this study, a deep look into the SWOT analysis of Starbucks and how its corporate social responsibility initiatives impact its strengths and weaknesses in its internal and external capabilities. Also, through this analytical tool, the external environments affecting the implementation of CSR strategies in the organization are identified.
PESTEL Analysis
PESTEL Analysis refers to the process of identifying and evaluating both the current and potential changes taking place in an industry’s external environment. The six segments of the PESTEL Analysis are: political, economic, social, technological, environmental and legal. Political segment incorporates all electoral processes, regulatory and judicial institutions that affect a country’s political landscape. Economic segment consists of the general set of economic conditions facing all industries. The social aspect of the PESTEL Analysis consists of the demographics, lifestyles, and social values while the technological segment includes the technological changes that shape the decisions of companies within the industry. Environmental segment includes the weather and climate change. Lastly, the legal factors consist of legal frameworks that affect a firm’s behavior. In this research, these aspects are all incorporated in the analyses of Starbucks’s strategic decisions in relation to corporate social responsibility.
Hypotheses
H1: The positive image of a company influences customer consumption and buying intention.
H2: Effective CSR strategies influence customer loyalty and rebuy.
H3: Customers are aware of and understand the importance of corporate social responsibility.
Chapter 2
Review of Related Literature
In the Starbucks Global Responsibility Report, Varma and Packard (2011), both executive vice presidents of Starbucks Corporation, conveyed their opening messages by summarizing the good deeds Starbucks has initiated to its various publics: “Throughout our more than 40-year journey, Starbucks has sought to find innovative and relevant solutions to the challenges we face as a company while respecting and bringing value to the communities we serve. Today we continue to strengthen and grow our business. Not only does our family of brands connect with people who visit our stores approximately 60 million times each week, but also with customers in the grocery aisle, at home, and in the digital world.” The message signifies how broadly the company has impacted the lives not only of its stakeholders but almost all individuals across the globe where Starbucks is located. Indeed, when it comes to environmental stewardship, community development, ethical sourcing, responsible coffee purchasing practices and farmer support, Starbucks has “blazed the path” of other enterprises to follow what it has begun.
In the same report, the socially responsible firm rolled out its achievements in escalating its CSR directives. One of Schultz’s (2011) goals, being one of its founding leaders, was to “develop comprehensive recycling solutions for our paper and plastic cups by 2012.” As a result, in 2011, Starbucks brought “front-of-store recycling machines to more than 1,000 company-owned stores in the . and Canada and is currently “working to bring these solutions to scale globally.” In terms of reducing the number of cups used by customers, Starbucks published its goal of serving 5% of its beverages in these buyers’ personal tumblers thereby reducing usage of paper cups that should be recycled. In this regard, it appears that Starbucks has made its point clear: “In 2011, customers used personal tumblers more than 34 million times – nearly 2% of all beverages served in global company-owned stores.”
Nevertheless, the challenge lies in reducing and recycling 4 billion cups which are being used by Starbucks customers globally. Thus, the organization’s key officials thought of joining the Cup Summits in the past three consecutive years to formalize comprehensive recycling strategies in mitigating this environmental problem. With the cooperation of other foodservice companies, Starbucks implemented its front-of-store and back-of-store recycling methods through the formation of Paper Recovery Alliance (PRA) which is a collaboration of businesses in the foodservice and packaging industries. Moreover, the company embarked on reducing waste by encouraging customers to use personal tumblers which they bring in the stores or to use “for here” serve-wares which Starbucks provide for them.
Another area of corporate social responsibility which Starbucks pioneered into is community involvement. Its goal was to lead its employees and customers “to contribute 1 million hours of community service per year by 2015” and to mobilize “a total of 50,000 young people to innovate and take action in their communities by 2015.” These objectives, culled from Starbucks’s Global Responsibility Report, may seem to be overly ambitious to be achieved. Yet, in 2011 alone, several organizations such as Hands-On Network, and UK Youth rallied behind the coffee company and hosted a Global Month of Service where close to 60,000 volunteers from 30 countries participated. In celebration of Starbucks 40th year anniversary, these volunteers contributed to the society by giving 442,000 hours of community service in projects ranging from gardening, painting, repairing schools and refurbishing parks.
Since the business is heavily reliant on coffee farmers to continuously succeed, aside from buying high-quality coffee, Starbucks implemented responsible coffee purchasing practices that further solidified its social responsibility adherence. The organization invested on farmers’ from whom they source their ingredients or raw materials and in the communities where they live and work. The progress on these initiatives is very impressive: According to , 86% of the coffee it purchased was ethically sourced under Coffee and Farmer Equity (.) Practices in 2011, up from 84% in 2010. Also, based on the same web-site, the company committed nearly $ million worth of loans to its current loan partners in 2011which means this directive will benefit farmers as it tries to achieve its goal of granting farmer loans to $20 million by 2015.
Recognizing that energy and water use can be a pivotal point of promoting environmentalism, based on the same Global Responsibility Report, Starbucks envisioned itself to reduce energy consumption by 25% in the year 2015. As a result, LED lighting was used in its company-owned stores replacing the incandescent and halogen lights it used in the past years. LED installations were also made in store locations other than those in the United States. Thus, Starbucks has made progress in energy reduction in its more than 7,000 branches in China, Germany, Canada and United Kingdom through 2011. Aside from advocating renewable energy use, the multi-national coffee firm also promoted water conservation strategies by successfully rolling out its hand-metered water system and by working closely with farmers to protect rivers and streams where its raw materials, especially coffee beans, source their water needs.
In summary, these are the corporate social responsibility strategies that Starbucks Corporation implemented. Others are of similar intent such as green building with the help of the . Green Building Council, youth empowerment through the Youth Action Grants and charitable donations by means of the Starbucks Foundation, among others. Nevertheless, there are still endless arrays of threats to the organization’s exponential growth and critics who declare the shortcomings of what is purported to be Starbucks’s mission-oriented marketing approach.
Firstly, based on the article by Suzanne Goldenberg (2011) in , one of United Kingdom’s online news media, there is a threat to Starbuck’s global supply of raw ingredients due to the worsening climate change conditions in many parts of the world. Stronger than the usual hurricanes, resistant insects that destroy crop yields such as coffee and other environmental concerns pose as warnings to the company’s expansion trajectory in the next 10 to 20 years. Jim Hanna, Starbucks’s sustainability director, in an interview with The Guardian, the newspaper counterpart of the online news web-site, stated that their Arabica coffee beans, one of the main coffee supplies of the business, are being threatened by the effects of the changing climate such that as early as now, the company is already preparing for possible serious scenarios and is already collaborating with government agencies and other business enterprises in order to prevent them from happening. Hanna seems to resonate the dire conditions of the future, not only of Starbucks, but other global corporations as well. According to the article, a research conducted by the International Center for Tropical Agriculture showed that it would be too hot to grow crops especially Arabica coffee beans in Ghana where Starbucks mainly receive its coffee supplies. Other environmental impacts that may hinder crop yields include mudslides, erosion of plantation soil and sharp changes in dry to rainy seasons. Hanna believes that these concerns must be addressed now before they get worse 10 to 30 years down the road.
Secondly, Starbucks’s altruistic mission has achieved critical mass that some cynics say that its advocacy for corporate social responsibility is due to fail. David Vogel (2011), the author behind the article entitled, “CSR Doesn't Pay,” stated that there is a “market for virtue” but the rewards for this is rather limited and it is essentially not growing. Vogel (2011) said that “there are at least as many examples of firms with good CSR records that have not done well and firms with poor CSR reputations that rewarded their shareholders.” In other words, the belief that corporate responsibility follows financial rewards does not hold true and records show that it may even be misleading the public. Corporate social responsibility, according to Vogel (2011), is “largely irrelevant” to the financial performance of most organizations.
Yet, despite all the cynicism on corporate social responsibility, Starbucks still continued to forge ahead and publicized its efforts to promote cause-oriented marketing campaigns for environmental sustainability and community improvement. As expounded by Reis (2009) in her study entitled, “Starbucks and the Spotlight Effect: Corporate Social Responsibility and Reputation Risk,” certain groups were bound to tarnish the firm’s brand image and reputation in order to pressure their own self-interests. These groups were NGOs (non-governmental organizations) and other entities that were critical of Starbucks’s seeming unprecedented success in the industry.
It can thus be said that the corporate social responsibility efforts of companies even those unrelated to Starbucks’s coffee industry have changed the rules of branding and reputation management. This societal marketing concept has brought peoples and organizations alike into a virtual frenzy and debate as to what extent it has and will impact the society in general. One paper, written by Vallaster, Lindgreen and Maol (2012), discussed this concept in-depth and suggested the means on how to reconcile the varying perspectives on corporate social responsibility. In their research named, “Strategically Leveraging Corporate Social Responsibility: A Corporate Branding Perspective,” the authors offered a “framework for companies to address CSR and their brands strategically, whether as entrepreneurs, performers, vocal converts, or quietly conscientious stakeholders.” Another such study explored by Carroll and Shabana (2010), documents the underlying arguments and critical analyses of CSR and the discussions on why business enterprises should accept and advance its cause. In their research entitled, “The Business Case for Corporate Social Responsibility: A Review of Concepts, Research and Practice,” the primary intent was to determine and synthesize the case of corporate social responsibility, its evolution and its current definitions. The paper concluded that the main objective of this management concept is for companies to look for rewards, both financial and reputational, so that other organizations will follow suit and propagate the same “selfless” and society-uplifting pursuit. Hence, according to this research, “the broad view of the business case for CSR enables the firm to enhance its competitive advantage and create win–win relationships with its stakeholders, in addition to realizing gains from cost and risk reduction and legitimacy and reputation benefits.”
Chapter 3
Research Methodology
Research Strategy
This research used case study “as a strategy for doing research which involves an empirical investigation of a particular contemporary phenomenon…using multiple sources of evidence” (Robson, 2002). It involves a single case, Starbucks Coffee, Inc. which represents a unique case of business success in terms of its achievements not solely on profits but also in its efforts to improve the social and environmental conditions of the various communities where it operates.
Data Collection Methods
The primary data collection method used in this research is the administration of the
questionnaires for the survey respondents via e-mail and phone. The questionnaire is divided into 5 parts. Moreover, secondary data were retrieved from books, documents, journals, articles, and websites. These sources of information provided useful theories which were needed for this research. Combined with primary data, the information collected from the interview, and the secondary data, the theories from books, documents, and other sources, created a better understanding on the complexities of this investigation.
Questionnaire Design
In the survey, the wording of each question was carefully considered to ensure that the responses were valid. Furthermore, the order and flow of the questions were taken into account during the construction of the questionnaire. The layout was intentionally made to be attractive in order to encourage the respondent to fill it and return it, while not appearing too long. The questionnaire was also accompanied by a covering letter which explained the purpose of the survey. It consisted of an introduction which explained clearly and concisely why the survey needed to be completed. At the end of the questionnaire was the closing part that allowed the researcher to express gratitude for the respondents’ time in completing them. In addition, the study underwent pilot testing. The aim of this is to test the questionnaire on a few respondents and then adapt the questions to the questionnaire based on whether these questions were understood or not and if the type of information needed, in relation to the objectives of the study, was retrieved.
Sampling Method and Size
Cluster sampling method was also used in this investigation. Cluster sampling, is on the surface, similar to stratified sampling as one needs to divide the population into discrete groups prior to sampling (Henry 1990). The clusters were divided into four groups, of which, each group consisted of 25 survey respondents. These groups are from internal and external stakeholders of Starbucks Coffee, Inc. Hence, a total of 100 respondents participated in the survey conducted from a lot size of approximately 500 people. They are Starbucks’s partners, human resource and marketing staff members and customers who patronize the company’s product offerings. Also, the samples were taken from a cross-section between males and females.
Research Credibility
Alternative form approach to reliability was done to check the questions in the survey questionnaire. Content validity was made to prove adequate coverage of the investigative questions. Secondary data were also keenly scrutinized for their reliability based on their accurate sources and how recently they were published. Their potential errors and biases were then definitely minimized if not totally eradicated. Suitability of these secondary data was evaluated for analyses and they were found to be capable of answering the research questions and meeting the research objectives. Judgements were made in using the data based on the assessment of costs and benefits in comparison to other sources which may provide credible information. Thus, through these layers of screening and testing primary and secondary sources, the validity and reliability of this research were established.
Chapter 4
Analysis and Findings
Presentation of Results
The presentation of the results of the survey research is summarized in tabulated forms. It includes the participants’ responses for each question, the frequency of the answers symbolized by the letter “F” in the second column of each table and its percentage, symbolized by “%,” in relation to the total number of participants. Below are the summarized tables for the survey research:
Demographic Information
Table 1
Gender
F
%
Male
50
50%
Female
50
50%
TOTAL
100
100%
Target Research Scope
Table 2
Category
F
%
Partners
25
25%
Human Resource Staff
25
25%
Marketing Staff
25
25%
Customers
25
25%
TOTAL
100
100%
Target Research Awareness of CSR Initiatives
Table 3
Response
F
%
Yes
100
100%
No
0
0%
TOTAL
100
100%
Target Research Awareness on the Specific Type of CSR Initiative
Table 4
CSR Initiative
F
%
Environmental stewardship
84
%
Community development
62
%
Ethical sourcing
37
%
Responsible coffee purchasing practices
23
%
Farmer support
19
%
TOTAL
225
%
Note: Total responses may exceed 100 due to multiple answers.
Level of Importance of Starbucks’s CSR Initiatives
Table 5
Frequency and Percentage
Extremely Important
Very Important
Quite Important
No so Important
TOTAL
F
27
38
21
8
100
%
27%
38%
21%
8%
100%
Level of Starbucks’s CSR Effectiveness
Table 6
Frequency and Percentage
Extremely Effective
Very Effective
Quite Effective
Not So Effective
TOTAL
F
24
35
23
18
100
%
24%
35%
23%
18%
100%
Societal Benefits of Starbucks’s CSR Initiatives
Table 7
Response
F
%
They improve the society.
45
45%
They make people aware of environmental and social ills.
21
21%
They help preserve and conserve our environmental resources
29
29%
They encourage leaders/government officials to enforce laws that would benefit the society.
5
5%
TOTAL
100
100%
Correlation between CSR and Brand Loyalty
Table 8
Response
F
%
Yes
78
78%
No
22
22%
TOTAL
100%
100%
Correlation between CSR and Consumers’ Buying Intentions
Table 9
Response
F
%
Yes
83
83%
No
17
17%
TOTAL
100
100%
Factors Affecting Consumers’ Consumption and Buying Intention
Table 10
Response
F
%
Company’s positive image
41
41%
Company’s advertising efforts
13
13%
Company leaders’ reputation
22
22%
Customers’ feedback on company’s product offerings
24
24%
TOTAL
100
100%
Factors Affecting Customer Loyalty and Repeat Buy
Table 11
Response
F
%
Effective public relations efforts
33
33%
Effective CSR strategies
39
39%
Effective pricing schemes
21
21%
Effective management practices
7
7%
TOTAL
100
100%
Strengths of Starbucks’s CSR Initiatives
Table 12
Response
F
%
They impact the profitability of Starbucks.
20
20%
They encourage other companies to develop their own CSR initiatives.
23
23%
They provide a positive image for Starbucks.
44
44%
They provide solutions to
global concerns.
13
13%
TOTAL
100
100%
Weaknesses of Starbucks’s CSR Initiatives
Table 13
Response
F
%
People become doubtful of Starbucks’s real intentions with its CSR strategies.
35
35%
Ineffectiveness of Starbucks’s CSR initiatives.
26
26%
They divert Starbucks’s focus on making profits.
23
23%
Heavy spending on CSR directives.
16
16%
TOTAL
100
100%
Most Important Component of Starbucks’s Success
Table 14
Category
F
%
Product
37
37%
Price
21
21%
Place/Distribution
17
17%
Promotion
25
25%
TOTAL
100
100%
Segment of Macro-Environment that Affects Starbucks’s CSR Directives
Table 15
Segments of the Macro-environment
F
%
Political
4
4%
Economic
9
9%
Social
31
31%
Technological
10
10%
Environmental
38
38%
Legal
8
8%
TOTAL
100
100%
Discussion of the Results
Since the respondents are clustered together into groups, the results indicate that 50% of them are males and another 50% are females. Regarding the clusters on the respondents’ stakeholder categories, each of the clusters, from the partners to the human resource and marketing staffs to the customers who patronize Starbucks’s stores, has 25% of the total respondents. Moreover, 100% of these participants replied that they are aware of the corporate social responsibility initiatives of the organization in question. Being internal or external stakeholders of a global brand, it is highly expected that these participants are aware of Starbucks’s CSR efforts.
% of these survey participants said that they were aware of the environmental stewardship campaign of the company, % replied that they were aware of its programs for community development and % said that they know that Starbucks also engages in ethical sourcing practices. The responses on this question are expected to be high since many of the stakeholders involved in the survey process were Starbucks’s employees and partners. Of the total 100 participants, 38% said these corporate social responsibility programs were very important, 27% said they were extremely important and 21% considered them to be quite important. The importance of corporate social responsibility may have been overly emphasized by various forms of media. Television, radio, the Internet and print media have all praised its role in business and in the community such that the responses above may already be a reflection of how far mass media have contributed to the participants’ opinions on the matter. However, the survey did not specifically focus on finding out whether this is indeed conclusive or not.
Concerning the level of effectiveness of Starbucks’s CSR strategies, 35% said these directives are very effective, 24% replied that they are extremely effective and 23% opined that these corporate social responsibility strategies are quite effective. It is noteworthy to mention that those who replied “very effective” are higher than those who said “extremely effective.” This may be due to the fact that there are still certain sectors of the society who say that Starbucks has relatively failed in its effort to contribute to the sustainability and liveability of the society. On the other hand, when it comes to the effects of Starbucks’s CSR programs to the society at large, the answers are very encouraging: 45% said, “They improve the society,” 29% replied that “they make people aware of environmental and social ills,” and 21% mentioned that “they help preserve and conserve our environmental resources.”
When the respondents were asked, “Do you think consumers’ brand loyalty to Starbucks is affected by its corporate social responsibility strategies?” 78% answered “yes” while only 22% replied “no.” Basing the responses of these participants to the previous questions, it may be construed that they mean Starbucks’s CSR strategies affect the company in a positive manner. It may mean that Starbucks’s CSR directives bring about brand loyalty to the company which in turn increases its products’ repeat buy. On the other hand, when the question “Do you think Starbucks’s corporate social responsibility efforts influence its consumers’ buying intentions?” was asked, the survey participants answered the following: “yes” with 83% and “no” with 17%. Again, this goes to show that the influence of Starbucks’s CSR to its customers’ purchase intentions should be viewed in the positive light since the previous replies of the respondents in the study suggest that Starbucks’s initiatives have beneficial effects to the society. This may mean that the cause-oriented marketing efforts of the organization have achieved its desired goals.
Regarding the question on the factors that affect consumer purchase decisions, the following were some of the respondents’ answers: “company’s positive image” with 41%, “customers’ feedback on the company’s product offerings” with 24%, and “company leaders’ reputation” with 22%. Relating these replies to the query on whether the brand loyalty of Starbucks’s customers is affected by its corporate social responsibility directives, it may thus be surmised that the coffee firm’s positive image, having the highest response in the survey, has an impact to its customers’ loyalty for them to be encouraged to purchase at its stores. Thus, Starbucks’s CSR directives bring about customers’ preference to buy Starbucks’s products instead of its competitors.
Furthermore, Table 11 shows the factors that influence customers’ loyalty and repeat purchase. According to the respondents, “effective CSR strategies” with 39% affect customers’ loyalty and rebuy the most followed by “effective public relations efforts” with 33% and “effective pricing schemes” with 21%. Therefore, Starbucks’s loyal customers are impacted by its CSR programs. Also, Table 12 above indicates the strengths of Starbucks’s CSR directives. Based on the respondents’ answers, 44% of them said that the CSR initiatives “provide a positive image for Starbucks” followed by 23% who said that “they encourage other companies to develop their own CSR initiatives” and 20% who replied that the CSR programs “impact the profitability of Starbucks” with 20%. Concerning the weaknesses of Starbucks’ CSR strategies, the participants have this to say: “People become doubtful of Starbucks’s real intentions with its CSR strategies” with 35%, while 26% said that the “ineffectiveness of Starbucks’s CSR initiatives” is its greatest weakness. Lastly, 23% of them replied that the CSR programs “divert Starbucks’s focus on making profits.”
In addition, Table 14 shows the most important component of Starbucks’s success among the marketing mix provided in the survey. According to the respondents, “product” is the most important component with 37% followed by “promotion” with 25% and “price” 21%. It may be concluded then that Starbucks’s quality coffee products are still the most essential factor to the success of the company. Finally, Table 15 indicates the segment of macro-environment that affects Starbucks’s CSR directives the most. Based on the participants’ responses, the “environmental” aspect affects the organization’s CSR programs the most with 38%. Other answers were: “social” segment with 31% and technological segment with 10%. This goes to show that Starbucks’s CSR strategies are known to impact the environmental and social spheres of the society as evidenced by the replies of the participants from the various stakeholders of the coffee company.
In the research questions, one of the areas of inquiries asked what the effects of implementing corporate social responsibility strategies are in an organization. In line with this, the study proved the hypothesis that the positive image of a company influences customer consumption and buying intention. It can thus be opined that one of the effects of implementing CSR strategies is that it promotes positive image for the company which in turn influences customer consumption and buying intention. Also, one of the research questions likewise asked about the importance of CSR initiatives to an organization in developing sustainable business. Correlating this to the results of the paper, it can be surmised that effective CSR strategies influence customer loyalty and rebuy which means that these CSR efforts are crucial to an organization in developing a sustainable business. Finally, one of the research inquiries delved on the impact of consumer brand loyalty through corporate social responsibility strategies. In the preceding results, it can be concluded that customers are aware and understand the importance of corporate social responsibility. This means that brand loyalty depends largely on how these customers consider the importance of CSR efforts and how effective they are in pursuing societal development. In summary, the hypotheses mentioned above have a direct link to the significance of implementing CSR strategies especially in building a sustainable business amidst a highly competitive environment.
Chapter 5
Conclusion and Recommendations
Conclusion
This study delved on the direct relationship among its general aim, the specific objectives set forth herein, its research questions, the theories which provided the direction for the study and the hypotheses which predicted the possible outcomes of this research. Clearly, the importance of corporate social responsibility is sufficiently explored. This paper explained how Starbucks’s successful business was able to achieve optimal growth through its implementation of corporate social responsibility strategies. Its effects are shown in the quantitative analysis above stating that the survey respondents across the different stakeholders of Starbucks believe that its corporate social responsibility initiatives benefit the society at large and that it is crucial in developing a sustainable business to compete in the volatile business environment. In the study, the relationship between brand loyalty and corporate social responsibility is also established. This paper showed that majority of the survey participants believe that corporate social responsibility has an effect to Starbucks customers’ brand loyalty. Also, the links among the theories to the variables that were investigated in this study were adequately discussed. The strengths and weaknesses of Starbucks’s corporate social responsibility efforts and the importance of the company’s marketing mix were analysed herein. The direct relationship between the macro-economic segments and Starbucks’s corporate social responsibility strategies were likewise established. Therefore, it can thus be concluded that the corporate social responsibility efforts of a company, not just of Starbucks, have an impact on its sustainability and on the society which it serves.
Limitations of the Study
This research focused on the importance of corporate social responsibility and used Starbucks Coffee, Inc. as its case in order to explore deeply the said variables. Due to limitations in time and financial capability, this study dealt solely on quantitative analysis through the survey with the stakeholders of the firm. The research did not include other respondents from other countries or interviewees from other branches of Starbucks which would have provided more in-depth and critical analysis in the chosen topic. Due to time constraints, other literature materials and related studies on corporate social responsibility were not utilized in this study. Also, classified documents and other information which are deemed confidential were not included. Since corporate social responsibility is a relatively new concept in management, literature materials on the topic are hard to find. There are some studies related to corporate social responsibility, but they are most commonly confined to other case studies and are thus beyond the boundaries of this research.
Suggestions for Further Research
Further research should be incisively studied in the following areas of inquiry:
Expansion of Starbucks’s CSR directives to other aspects of mission-oriented marketing campaigns.
The ethical treatment of farm animals, promotion of farmers’ rights and fund raising for research on the other beneficial effects of coffee are some areas which Starbucks needs to capitalize on. Since the organization has been effective in formulating CSR strategies that translate into bottom-line profits, further research has to be done on other aspects of enhancement which Starbucks may explore.
The Importance of Ethical Sourcing as a Corporate Social Responsibility Program of Starbucks
In this study, what is adequately explored is the importance of Starbucks’s CSR initiatives in general. However, further research should be made on specific CSR strategies of Starbucks which remain unexplored especially ethical sourcing of raw materials. This will be highly significant in the near future as more coffee companies will compete for and will be in great need of sources of coffee beans due to climate change.
The correlation between Starbucks’s CSR strategies and the financial gains of the company.
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While many studies have pointed to the impact of Starbucks’s strategies to its financial growth, there is limited research which specifically seeks to quantify the ratios between profits gained versus the CSR initiatives that were implemented. These studies will provide the “rule of thumb” approaches to gauge whether Starbucks’s CSR strategies or other organizations for that matter directly affect their bottom-line figures.
