Custom «Environmental Factors affecting the Starbucks Corporation» Essay Paper

Introduction

Starbucks is a multinational corporation based in Seattle, Washington in the USA. Starbucks Corporation is the largest coffee chain house in the world with a presence in 49 countries and about 16635 retail outlets (Starbucks, 2010). The corporation is involved in the purchase, roasting and sale of whole bean speciality coffee in its retail coffee outlets.  . Basically all business entities are affected by external and internal environmental factors. However multinational companies operate within larger frameworks which are greatly affected by environmental factors. Therefore companies must take into account environmental conditions because they affect marketing decisions.

Interdependence

Global brands usually face the same kind of challenges especially when it comes to creating interdependence between their subsidiary branches (Eduardo, 2010). Even after developing a universal brand mission and brand strategy it is likely that some regions may perform below expectations. To create interdependence it is important that everybody working for the corporation understands the marketing paradigms and realities at the local and international levels (Eduardo, 2010).  It is important that the company’s teams at the local level understand their contribution to the company’s overall performance.

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 Initially Starbuck’s employees at the local level in the US did not understand the role they played in markets outside the US. Therefore the company strived to educate them on their global contributions. Effective brands have a universal insight of the company’s universal objectives, goals and strategies. In order to remain focused Starbuck’s company consolidates several distinct brand plans in different regions into a single calendar (Eduardo, 2010). Global brand success can be achieved by maintaining brand consistency in all local markets where the company has been established.

Demographics

In the United States alone sale of coffee and its products is a billion dollar industry. The coffee industry exceeds 70 billion US dollars annually. Globally, coffee is the second most traded commodity after oil. Starbucks has taken advantage of this situation and has adopted high technology coffee equipments and machines. The company has also set up a large number of coffee retail outlets which have aided in reaching out to customers. The coffee chain has also adopted new distribution channels which have allowed the corporation to access different categories of people in their work environment such as hospitals and companies. Currently Starbucks has 16, 635 stores in 49 countries and has enhanced customer loyalty leading to increased sales and market share (Starbucks,2011). In 2007 Starbucks estimated that they received about 33 million customers a week and about 4.7 Million customers visiting their outlets every day (Eduardo, 2010). The number of customers visiting Starbucks has increased with increase in number of retail outlets. Currently the company has also embarked on a program to increase its number of global outlets to 40 thousand stores which will attract more customers. Starbucks increased the level of loyalty among customers by effective use of social networking where they receive opinions from customers as well as inform their customers on new products and available services in different regions. The company has also set up an online community on its official website whereby customers are able to share ideas amongst themselves as well as with Starbucks employees. My Starbucks’ idea is a social networking platform developed by the company on its official website for its customers and employees. In November 2010 the company reported more than 100 thousand postings from regular customers on this social network (Starbucks, 2010). This can be attributed to the fact that most coffee customers are concerned and passionate about the quality of products which they purchase. Starbucks has also developed a loyalties program which includes use of a privilege card and rewards program

Ethical and legal aspects

Multinational companies are expected to demonstrate ethical and legal responsibilities in everything they do. The Starbucks Corporation has developed an effective code of ethics for its employees (Starbucks, 2010). However, the company in the past had been accused for use of unethical practices with a goal of edging out its competitors. These practices included saturating its cafe’s in one region thereby taking business away from its competitors and unethically acquiring other smaller coffee outlets. However, the company has managed to educate its employees on the importance of adhering to the legal and ethical principles that have been set up.  Legal requirements and laws could also influence the performance of the company in international markets. The USA developed the passed the Foreign Court Practices Act (FCPA) which prohibits corporations from engaging in domestic or foreign corrupt practices both locally and internationally (Rosen, 2010). In addition to this, the FCPA also requires that companies that have their securities listed in the US meet the set accounting provisions (Rosen, 2010). Therefore companies that violate the Act either through acts of bribery or fraudulent accounting practices could face prosecution. In addition to this, the act draws a clear line between facilitation and bribery.

Countries may establish different barriers such as quotas in order to protect their local companies however interested investors should not breach these regulations. In order to penetrate such markets Starbucks developed partnerships with local companies. Companies must carry out their practices with regard to the FCPA act of 1977 because violation of the regulation could jeopardise the company’s presence in the domestic market. Usually the laws and regulations differ with countries therefore companies must take time and understand them (Rosen, 2010).

Ethics and morals do not differ significantly because generally consumers prefer companies that fulfil their moral and ethical obligations. In fact customers are prepared to pay more for companies that demonstrate ethical and moral responsibility (Eduardo, 2010). Starbucks has been sourcing its coffee ethically without exploiting farmers, most of who hail from developing countries. In addition the Starbucks idea of a shared planet has enabled the company carry out environmentally friendly practices (Starbucks, 2010). However, the company has had its fair share of controversies ranging from exploitation of farmers, employees and environmentally unfriendly practices. In response to these allegations the company has attempted to solve majority of these claims early enough before causing significant damages.

Influence of technology

Starbucks has embraced the use of technology in sourcing and brewing of coffee based products in an effort to increase efficiency as well as improve product quality. In June 2010 the company announced that it was going to partner with AT&T to provide wireless internet services at its outlets in the USA (Schimdt, 2010). This move which allows customers to access unlimited internet as they enjoy their coffee is likely to resonate with increased returns. In 2009 the company introduced cashless brewing machines which allowed users in office settings use their debit or credit cards to purchase a cup of coffee (Bacheldor, 2009). The company has also introduced more efficient coffee brewing machines that have seen increased efficiency at its retail outlets. Use of technology can be challenged especially where it may lead to downsizing of the company’s workforce. Therefore care and diligence must be demonstrated while introducing new technology such as automatic machines. Usually technology is very beneficial to the employer but this might not be the case with the employees.

Conclusion

Global marketing is generally influenced by the internal and external environment of a company. Therefore the company must strike an amicable balance between the different aspects of the environment in order to carryout business optimally. Starbucks has strived and established an ethically responsible brand and has become the largest coffee house chain in the world. Starbucks employees who are referred to as partners and are guided by a code of ethics that has enabled them develop an amicable business environment. The interdependence among the different Starbuck coffee chain retail outlets in the world is unparalleled. The success of the Starbucks Corporation can be attributed to the strong ethical and moral principles that the corporation has demonstrated in various parts of the world.