Ethics is an extremely significant area for society and business. Ethics can be seen as morality as well. According to Crane and Matten business ethics is the right or wrong by morality in relation to business activities. Sometimes to maintain ethics, law interrupts to practices it; such as; UK's pre-Civil war slavery laws. Therefore, ethical issues are really is determined by the morality of current situation. Sometimes managers face the conflict between right versus right rather than wrong versus right. If so, they make an effort to satisfy the most effective stakeholders in this category.
Starbucks is a major company in retail food industry. Health insurance and safety of customers and workers is a major factor of ethical factors. Its reputation is majorly will depend on medical and safety of customers. Health and safety is the legal dependence on the federal government as well. It includes suppliers from many countries as well. To co-operate human rights organizations, they are really monitoring the human rights of the suppliers' staff and their own employees as well. In here we will have an in depth go through the ethical issues of Starbucks.
Ethical vision and practices of Starbucks
Quality of products
From the start of Starbucks, the management believed that, better quality isn't just good for the clients, but also good the long-term prospect of business. Starbucks says that better quality is also good for formers and good farming is wonderful for the planet as well (Starbucks website). Starbucks is also helping farmers to grow quality and environmentally friendly coffee. In 2004 Starbucks had opened Farmer Support Centre to provide expert help to keep coffee quality and good pricing.
FairTrade certificate holder
The organization, FairTrade ensures reasonable prices of products and fair wages and environment of workers. In most of the developing countries, the suppliers try to take the good thing about the necessity of workers or farmers. FairTrade monitor the actions of suppliers and present certificate to people suppliers who are conducting business in ethical way. Currently, Starbucks is collecting 70% with their recycleables by certified FairTrade suppliers and by 2015 they'll achieve to get 100% of these suppliers to possess FairTrade certificates.
Using recycled cups
By 2015, Starbucks is looking to use 100% of its cups to reusable. They are actually looking to control their waste as well. They are aiming most of the waste to be recycled.
Using more green energy
Change of climate has effects on coffee farming a lot. By firmly taking directly into account of climate change, Starbucks is researching more to farming coffee by using less resource from nature. They also use more and more environmental friendly or greener source of energy. By this season, are looking to certified by 'green' for the support of using natural energy. By the help of Conservation international Starbucks is protecting the rainforest across the coffee farm as well.
Inspiring all once and for all environment
Starbucks is not acting for good environment but also inspiring their customers, employees, and supplier to have a good care of the environment. They suggest their customers to reuse their mugs as much as possible. The employees are recommended use less electrical energy at the store as well. The employees therefore make an effort to use freezer, lights and thermostat less.
Starbucks is gathering their customers, local people and management to help the local community. By 2015 they desire to give 1 million hours to improve the city services. By Literacy Trust as well as the Prince's Trust, Starbucks is helping thousands of children around the city to get literate and ensure better future in their life. Starbucks is also inspiring young entrepreneurs to solve the challenge of their local surroundings.
Loans to poor farmers
For a few of the farmers, coffee farming becomes expensive. To grow best quality coffee or tea, Starbucks is giving affordable loans to farmers. They are expecting to provide loan maximum $15 million every year to help the farmers.
Serving healthy food
Starbucks is ignoring high fat food and inspiring the customers to eat. They have got reduced the amount of pastries in the store and ensure no food is more than 500 calories. They have got ignored the artificial ingredients from food as well. Starbucks also recommend the clients and their workers to have a balances life-style.
Support to employees
Not only regular employees, but also part time employees are receiving health care advantages from Starbucks. Starbucks see employees as their partner. For wellness with their partner, they introduced thrive program, which will help the employees to lose excess weight, stop smoking, and other fitness events.
Keep the customers informed
Starbucks has added the calories of food information in their food menu. Every day a large number of customers type in to the Starbucks website to get the meals nutrition information. For this reason they have finally introduced calories meter to gauge the energy of food they consumed. Stanford University have recently done considerable research on tagging the meals nutrition information and changes of food choices. They have got found that, customers now can choose foods without being confused about the result of the food.
Starbucks's the majority of the store is environment friendly as well. Most of the furniture is made by wood or recycled materials. USGBC is giving certificate to Starbucks for the green environment. A continuing check is performed to all those green stores to makes sure it ensures customers and employers health insurance and safety. The Following procedures are done to ensure the green environment:
Saving energy by letting the air-condition's temperature 75'c rather than 72'c
Preserving water via taps to purified jugs instead of continuous flow of water.
Using low power valves in the complete store
Setting recyclable tiles in floor
Attempt to reduce the use of light
Using paints with less harmful chemicals
Using wood built products.
Ethics and corporate governments
In corporate governance, the management not only have to gratify the shareholders, but also have to meet other stakeholders. The financial objective of a company is to maximize shareholders wealth; i. e. maximize profit. To keep ethics, it is sometimes very expensive and attracts only a segment of customers. Even sometimes some group ask question like, whether maximizing profit is ethical or not. For example, profit maximizing of your cigarette company might not exactly be ethical for medical concern of the merchandise.
To comprehend the energy and relationship stakeholders Mendelow did a lot of wide study on it. He defined influence by function of power and influence.
Influence = Power x Interest
He described from the equation that, the influence acts as the mixture of power and interest of stakeholders. For instance, when a stakeholder has less power, but bigger interest still they can influence company strategies.
Figure: Business approach for stakeholders.
We can say the most crucial stakeholders are 'key players', which have great interest and power as well. From then on, we can say that the group with high power and low interest rate appears to be the second most significant group. The organization should just keep them satisfied may be by fulfilling minimum requirements only. The third stakeholder group we can identify is with minimum power and maximum interest. The business should give all the related information to people stakeholders, and just why or the way the organization is running to keep issues.
We can say that, except the minimal effort group stakeholders, the organization should really manage those 3 groups, although it's not more ethical issue than business issue. Now the biggest problem is; every one of the groups might not have same objective.
Public interest versus company interest
If a business is fully transparent to public, it might not exactly keep secret about the strategies of its business. But it is absolutely difficult to understand the motive of managers of conveying information or keeping secrets. Keeping valuable information secret from the competitor is also important. The managers often face dilemma about conveying information, even though professionalism is always to acting in the public interest.
Public interest versus human rights
Practicing human rights is actually ethical. Human rights mostly indicate the interest of public as well. Therefore, maintaining human rights would be seen as doing work for public. However, human right is really an issue of relativity. For example, excluding the blind job people for typing job may well not be unethical or against human rights.
Government interest versus company interest
This is the most frequent type of conflict between shareholders. Tax system of any country is the most arguable factor in business ethics. Businesses always look for opportunities to provide minimum tax for maximizing profit. Alternatively, tax is perfect for social welfare of the people of the country. But, some countries even don't impose tax such as United Arab Emirates. Some countries like UK are largely dependent on the tax collection, so they need to impose huge tax to businesses.
Threat of ethics
Self-interest threat: This occurs when the manager is actually eager to show his / her performance to the management. If so, the manager forgets about ethics and concerned about individual achievements. Based on the code of ethics, the auditor should not have any interest towards success and failure of the company.
Self-review threat: Self-review threat happens when the business review its job and find no mistakes in it. In that case external auditor should be appointed and the external auditors should make their own judgement by using their own knowledge. Self-review threat happens when the business give same job again and against to the same departments and perhaps, same employees as well.
Intimidation threat: Intimidation happens if the company or the stakeholder is very powerful no command on each other. This is the most frequent form of threat. This kind of threat can happen with the company and supplier or the supplier and their worker or the employee and the company. This is the most challenging threat to overcome as well. In such case, the staff or employees should make unions. The average person group can also report to local administration authority to resolve the trouble.
Controlling ethics in business
Only very good corporate governance practice can ensure ethics running a business. The board of directors available should be independent to work with the interest of most stakeholders. To get this done, the majority of the board of directors should be independent. Independent directors should recommend the auditor who'll ensure if the company is doing work for greater interest or not. The audit firm should be external from the business and should have no sort of relation with the company. The external auditor must have good track record, better knowledge of the company and have to have understanding of local rules and regulations. The external auditor should are accountable to the chairman or audit committee run by independent directors rather than CEO of the business. The auditor should always report to those significant issues which might change your choice making of the stakeholders. The federal government should impose rules to companies to gain trust from the general public by getting opinions from external entities or auditors.
Consequences of unethical behaviour
If it is found that, the business is practicing unethical behaviour, the company's future become uncertain. Firstly, the company will eventually lose the trust of public and put their reputation on the line. The business will become unstable if they lose the trust of public. Secondly, anyone may well not want to aid that organization when it's in peril. They might not exactly find any investors as their long-term sustainability is uncertain. Finally, the worse thing can occur recover company is that, it may have to close the business enterprise forever. The impact of unethical behaviour may well not only affect that company, but also affect the whole industry as well. The public or government may choose to know whether its rivals are doing similar practice or not. The management of that company may face public persecution as well. External auditors are also known as at that situation to test the reliability of the audit report.
Focus of ethics on customers, quality of product and market share
Ethics and business profit almost all of the time has inverse relationship (Bowie 1998). Maintaining ethics in the business is always expensive. The business can sometimes impose the extra cost of maintaining ethics on customers by increasing price of the product. Some customers only look for the least expensive product and also have no concern within the ethical issue or the reach quality of the product. For the recent recession most of the customers are actually switching to value product rather than quality product. Ethics could work as trustworthiness of the company, if their ethical activities are really focused for the general public. If so, ethics could work as a competitive advantage of the business. When the client is not sure about the quality of the merchandise, they have a tendency to evaluate the reputation of the company and then take decision. That feeling of reputation and quality is determined by five different aspects (Parasuraman, Zeithaml and Berry, 1988).
The promises the company made to the customers.
Whether the company is persuasive to the satisfaction of the customers.
Whether the company is with the capacity of making the commitments.
Whether the company see the client satisfaction as their opportunity.
Whether the company see visible results for giving best client satisfaction.
Benefit and challenges of likely to control companies
Willis (2006) said that, we ought to have a target and arrange for the following reason:
Planning saves time: Planning saves time and sometimes waste time as well. By planning or step by step process, we don't need to think following the decision making. But, taking the decision if the company should go for the plan or not takes a lot of time. Therefore, we have to go for the instinct rather than taking time for your choice to do the right thing at the right time.
Planning is the framework of decision making: By planning we can be ready for exactly what will happen whenever we do something in case we do something, what can go wrong. By because of this we view from the very best that, where our company is. If we take the all your choice at the start, there is less chance that the project gives no result. If we work by our instinct rather than not thinking about the consequence of our action, sometimes we must fall in the positioning where we ought to not be there.
Planning is necessary for resource management: We ought to always have it beforehand what we need to have in future. This will save time and ensure the availability of the resource. To have the resource raising fund is important as well. To raise fund, we must do budgeting to check out the perfect way to obtain fund to gather the money in a least cost.
Planning helps to achieve goal towards vision of the business: Planning is like watching the business from the top. By planning a good monitoring can be done and we can always understand where we could.
Planning helps to set priorities and critical time of the project: In planning there must be a lot of different stages plus some stages rely upon one another to complete. Therefore, by planning, lag time can be reduced to minimum and we can understand enough time frame of the each stage. By planning, we can also understand we stage are in critical position and which stage is in flexible position to implement.