Starbucks Case Solution
Decision Criteria for Top Management
Before understanding and devising the decisions for top management, there needs to be an understanding of the facts that have given rise to the partnership of companies like Starbucks with NGOs. For the last 15 years there has been a term coined as corporate social responsibility, which asks the business about their doing so for the wellbeing of the partners involved in their supply chain. This term gave rise to NGOs join hands with the players on the industry to align their goals in such a way that benefit both the environment and the company.
There are many reasons why corporate NGOs look for companies to create strategic alliances; however the key factor is the availability of resources and reach Moreover, the companies, on the other hand lack access to international market with a good citizen image, which could be attained with working in collaboration with NGOs. Therefore, this issue has given rise to the partnership practices.
Due to the partnership practices, many companies including Starbucks have to re-strategize their polices to work in collaboration with other partners for a longer period of time. There are many issues and problems; one of it is the difference in viewpoint of doing business. Therefore, there are some policies that Starbucks must maintain and develop in order to deal with the NGOs and non-traditional partners
- Before setting up any partnership, the top management must communicate their agendas, business strategies and practices clearly with the NGOS, and listen to their agendas. After this process, the management shall try to get in a common ground on which the NGOs and Starbucks could work together, such as Starbucks’ main focus is the quality of the coffee beans, while NGOs focus on the well-being of the farmers that rather produce low quality coffee, therefore the management has to develop a strategy that can raise the standards of coffee earns produced by these famers. In doing so, it can educate the farmers, and enroll them in some certification that can enhance the practices of farmers in farming.
- Staying well-being is the key agenda of the NGOs, which in case of Starbucks is 70% same as business strategy. The only difference is the viewpoint of by the two parties through which they see the business practices. The top management of Starbucks shall propose a strategy through which they can maintain the harmony of the suppliers as well as it can improve the living standards of the farmers, in doing so, Starbucks can develop communities that provide free education, health assistance. However, in order to match the quality of the beans produced these framers, it can offer training and solutions for producing better quality beans and then reward accordingly.
- Wages and standards of living are the basic issues to be maintained by NGOs and thus, these factors force Starbucks to do the same. In dealing with the key issue, the company can set up a standard and scale of productivity for farmers, as well as it can develop a reward and compensation system for farmers who match the standards. In this way both parties could work in best interest of each other. Furthermore, it will also motivate the farmers to produce good quality so to get rewarded.
- The top management shall devise a software that could give the farmers access to the market, and through which they identify the situation regarding the coffee beans and as to which buyer is offering the best price, so they could sell to them. This is also an agenda of the NGOs to offer free markets to the farmers so that they could select the buyer themselves and sell on the price they find better.
Lessons from Chiapas Project
There are three main lessons that are apparent in Chiapas project.
- Communication- Communication is the key of resolving any issue. It is due to effective communication and interpretation of interest that made the project successful and beneficial for Starbucks as well as the farmers, which was the aim of the NGO.
- Identification of mutual interest- Both parties (NGO and Starbucks) identified that the main aim of their organization was the same, which is the well-being of the farmers, and suppliers. It included enhancing the livelihood of the farmers, wages, practices and solution to enhance rainforest. The clear understanding of interest made both the parties work in effective collaboration without any resistance and resentments.
- Starbucks stayed focus on its business strategy of creating world’s best coffee beans, but it took the concerns of the CI in account and honored it with the implementation of such practices that farmers could use and gain profits whereas, it protected the environment and rainforest. The honor given by Starbucks to CI concerns made both parties work effectively for longer period of time, enhancing the image of Starbucks’ CSR………………………………………
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