Organizational Analysis Paper (Any organization of your choice)

Introduction

In the last decade, the topic of business ethics has been subjected to immense discussion in the corporate world. In the classical era, the sole objective of business was thought to be profit maximization. However, a lot has changed since then. The corporate world has undergone a paradigm shift. Today, business ethics is more than just a set of moral guidelines, it is the foundation of success. Business leaders and managers understand the significance of ethics and corporate social responsibility in improving employee and stakeholder satisfaction, brand image and organizational performance. This paper presents a case study on Starbucks and examines its ethical side from the context of the existing literature. The company had received considerable media attention when it faced charges of racism regarding the behavior of one of its employees. As part of the assignment, this paper also sheds some light on the current Starbucks CEO and his actions. It investigates in detail the ethical and moral implications of the actions of CEO Kevin Johnson and whether the organizations can be considered ethical or not.

Starbucks is a multinational American coffee-house chain based in Seattle, Washington. The coffee chain first came into being in the year 1971 by Zev Siegl, J. Baldwin and G. Bowker (Lock, 2018). In the year 1987, Howard Schultz, a former executive of the company itself bought the company from its original founders. It was Shultz who took it upon himself to give the brand international recognition. He traveled to Italy to experience first-hand the existing Italian coffee bars and their in-house experience (Starbucks, 2019). As of 2019, the coffee chain has presence in over 75 countries. Globally it operates 29,865 stores, making it the largest coffee outlet in the world (Ritschel, 2019). Over the years, the company has become a global flagbearer for the international coffee lovers’ community. The company aims to reward its customers with more than just a coffeehouse experience. Its stores also offer teas, fine pastries, cookies and other treats that are sure to tickle the taste buds of any sincere visitor.

It was the leadership of Howard Schultz that helped Starbucks to reach its global position. Together with other investors, Mr. Schultz envisioned an organization that would achieve worldwide recognition. The leadership of Starbucks adopted an expansionary strategy and continued expanding their networks of stores worldwide to satisfy Schultz’s objectives and missions. As a business leader H. Schultz was extremely successful in establishing the brand’s global repute. After opening 4,000 stores worldwide, Schultz decided to take a break from the Starbucks boards as he believed that the organization needed a more entrepreneurial leadership to take care of the financial and operational side of the organization. Orin Smith became the CEO of the organization in the 2000s. Under his leadership the organization hired seasoned experts in the field of finance, supply chain management and law into the organization. Smith followed a transformational style of leadership, leading the organization towards a clear path. Starbuck’s leadership played an important role in using social media to build its image. Starbucks is known as one of the most ethical organizations in the food industry (Lemus, Feigenblatt, Orta, & Rivero, 2015). In 2017, Kevin Johnson became the CEO of the organization. John previously served as the COO of Starbucks. According to Ward (2017), Johnson instead of following the previous CEOs chose to be an authentic leader who is not afraid of making big decisions. Johnson has been successful in introducing big changes in the organizational structure. He prioritized the employees and made sure that they become part of the organizational growth. Being an engineer by training, Johnson understands the essentiality of technology in the corporate world and strengthened the company’s innovation by working closely with the technical teams of the company (Ward, 2017).

Starbucks has witnessed significant growth in the last decade. The company’s annual revenue almost tripled in the last ten years. As of 2018, the annual revenue of the company reached a record of $24.72 billion. Among these, beverages contributed nearly $14.46 billion of the revenue (Lock, 2018). The company has also been able to achieve constant growth in operating income in the last decade (except 2013). In 2018, Starbucks ' operating income stood at $3.88 billion. The net income of Starbucks also saw a steady rise since the past decade. In 2018, the company earned a net income of $4.52 billion (Lock, 2018). This makes the company the largest coffee brand in the United States. In the year 2015, the company’s revenue was nearly ten times more than its nearest opponent (Statista , 2018). Hence, can be concluded that the organization is highly successful in its field of operation.

The corporate world is ever-changing. The emergence of globalization has played a crucial role in closing the gaps across countries. This has enabled multinational companies to venture worldwide seeking to expand their market footprint. Today, organizations feature among the top, most powerful establishments, often rivaling national and local governments. Today, more and more people are becoming increasingly dependent on these organizations for their basic necessities that would have been otherwise fulfilled by government bodies and local institutions. In this context, corporate social responsibility has emerged as an important model that allows business institutions to carry out these responsibilities efficiently. According to Hopkins (2014), corporate Social responsibility or CSR can be defined as the ethical responsibilities and moral obligations of business institutions towards their stakeholders. This includes economic, financial and environmental responsibilities as well and the stakeholders can be from within or outside the business organization (Hopkins, 2014). Business ethics is an important part of corporate social responsibility. Business ethics is a set of moral rules and guidelines that distinguishes moral and immoral behavior in an organizational setup. It is concerned with the prevention of harmful behavior within the workspace and sets a common precedent to distinguish between right and wrong actions on the basis of morality (Letendre, 2015). Today, most businesses are financially driven with only one possible objective i.e. profit maximization. However, there exists a fine line that differentiates between moral and immoral activities. Traversing this line can cause adverse negative reputational damage to the organization (Phillips, 2019). According to Cindy Phillips (2019), some of the characteristics that must be possessed by an ethical organization are:

· Strong Organizational values and ethical leadership

· Clear Mission Statement

· Transparency and integrity

· Mutual respect

· Promote harmony among all stakeholders

· Apprehension for the environment and mankind

The Ethisphere Institute recognized Starbucks as the most ethical institution for the 12th consecutive time since 2007. The decision is made while taking a number of achievements into considerations. This includes organizational transparency, truthfulness, business ethics and compliance to legal regulation. The company has been instrumental in driving positive change in society (Starbucks, 2019). The leading coffee maker has been instrumental in setting up a precedent in terms of ethical leadership. The role of CEO Johnson is of immense importance in this regard. In 2017, the company faced a massive controversy when one Starbucks store manager called up the police waiting black leading to their arrest. This happened in a Starbucks store in Philadelphia. Post this incident CEO Johnson decided to close nearly half of the Starbucks stores to conduct a bias training for his employees (Reddick, 2018). The company reportedly lost $16 million in the face of protests post this racist incident (Avila, Parkin, & Galoostian, 2018). Johnson’s actions were particularly appreciated by communities worldwide, setting a new precedent for the corporate world. This is in accordance with the organizational mission. Starbucks is one such company that strives to create an ethical work environment and provide resources to its partner for ethical decision making.

References

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