Mgmt 301 - Business Case

MGMT 301

Provide typed answers to each of the following questions.

1. Discuss the social responsibility of Starbucks to the Ethiopian coffee growers looking at it from both the shareholder model and the stakeholder model. Identify the stakeholders in this situation. (Chpt 4)

Social responsibility of Starbucks concerned with business decisions that benefit and affect the society.

Shareholder model: which concerned at most to maximize the profits, to maximize shareholder wealth and satisfaction to increase the value of stock owned by shareholders. At the beginning Starbucks and other consumers in the market were concerned about getting coffee with cheap prices to maximize their revenue, satisfy their customers, getting talented workers and maximize their investments funds. Starbucks was directing their efforts to divert time, money, and attention to maximize their profits. If Starbucks direct their efforts to benefit society without much concern to their products customers might be finding their products less desirable which will cause profits to fall then Starbucks will not be able to attract investment funds that could be used to fund long-term growth. According to stakeholder model approach that directing Starbucks money, time and resources to social causes hurt customers, shareholders and employees. From this approach, Starbucks didn't hold any social responsibility toward Ethiopian coffee sector employees concerns such as low payment, their child education, their health concerns and living standards in general. As I have see in the video, farmers surprised when the new the amount of money paid for each cup of coffee.

Stakeholder model:

Under this theory long-term survival is the most important responsibility for management, this achieved by satisfying the interests of multiple corporate stakeholder. According to this model Starbucks should make revenue, less costs for their products and less costs to the society. The stakeholders in this situation are the government, coffee companies, donor, supplier and customers. Starbucks social responsibility according to this approach is the growth and sustainability of the Ethiopian coffee sector. Starbucks and government of Ethiopia work together to satisfy the coffee growers by increasing their income, increasing purchases from Ethiopia, improving quality, yields and prices received through staffing agronomist to help farmers. Expanding micro-credit facilities to help farmers invest in their farms, in addition to the strategies that Starbucks works on in order to improve the lives of Ethiopian coffee farmers.

2. Companies can choose to respond to situations in a variety of ways. Imagine you are the CEO of Starbucks and considering your options. Using the Social Responsiveness model , Chpt 4, give examples of the actions Starbucks could take for each strategy: reactive strategy, a defensive strategy, an accommodative strategy, or a proactive strategy.

The strategies that Starbucks CEO would address for responding to social responsibility problem would be as follow:

1) Reactive Strategy: In this strategy Starbucks CEO would do less than society expects.