Ethics and Compliance Paper
Corporations and businesses rely heavily on ethics and compliance to become successful and endure within their respected industries. Being ethical a company like Starbucks can return a profit in the long-run and provide customers a great product. Starbucks has a code of ethics, and it changes somewhat in each country the company has a business. A good code of ethics shows the principles and laws that this company wants to run and every employee should abide[RS1]. Companies need a good strategy to understand where they are within their industry, and where the company stands in the future, and ethics along with compliance is a big part of that plan. No matter what kind of industry a company is in, knowledge from the markets and finances within that country will give an advantage to Starbucks as it globalizes[RS2]. Since Starbucks is a corporation it has to comply by SEC regulations. Continued growth and prosperity is determined on the ethics and compliance along with good strategy, understanding of the markets, and maintaining a close eye on the cash flow.
Starbucks has developed a heritage of balancing their profits with a social conscience, and they are committed to creating a value for their shareholders[RS3]. The company was considered to be one of the top five most ethical companies in the world by the Ethisphere, and they have had the distinction of making the list for all the five years the Ethisphere has made a list ranking companies (Royal, 2011). The core value of Starbucks is to comply with the law, and display ethical conduct, which the company has issued a standard of business conduct to uphold their longstanding commitment to their responsibility to customers, communities, suppliers, and shareholders[RS4]. The company empowers all its partners to make decisions that have an impact on the reputation of the entire organization, and their individual actions help shape how the world views Starbucks, which makes it very important to act ethically in all situations. The SEC (Security Exchange Commission) requires that all publicly traded companies, such as Starbucks must file annual financial reports are open for public viewing, and to help ensure that Starbucks fills these requirements they facilitate legal compliance and ethics training for all leaders within the organization. To provide a mechanism in which partners may voice any concerns about ethics or compliance of SEC regulations Starbucks has established a “24/7” business conduct helpline to answer any questions they may have, and the company does not tolerate any retaliation of a partner that may have any concern about potential violations. Business ethics and compliance is the core value of Starbucks, and they continue to promote ethical leadership and business practices actively in everything they do[RS5].
The Starbucks mission statement is to inspire and nurture the human spirit- one person, one cup, and one neighborhood at a time. To support their mission statement Starbucks has a Business Ethics and Compliance program that helps protect their culture and their reputation by providing resources that help partners make ethical decisions at work. The program provides awareness materials that include the Standards of Business Conduct. The Standards of Business Conduct contains the standards of ethical policy and legal standards that each employee is expected to follow every day. There are workplace ethical standards, how to treat customers, workplace diversity, health, safety, and security. Starbucks provides training in all these areas to ensure all the partners are educated and follow the set polices of expected behavior and conduct in the workplace[RS6]. Starbucks provides an ethical decision-making framework; identify the ethical problem, list possible solutions (what could you do?) and any obstacles to resolving the problem, seek input from others, if appropriate, determine the best approach (what should you do?), is it consistent with Our Starbucks Mission, the Standards of Business Conduct and any applicable law or regulation? Would ones approach embarrass you or Starbucks? Would one be comfortable with the example it sets for future decisions? Starbuck’s framework is offered to the partners as a guide to help them make ethical decisions about any situation. Starbucks not only offers the conduct materials they offer contact helpline to the partners for ethics and compliance.
Financial market is a term that describes a marketplace where sellers and buyers participate in the trade of assets such as currencies and bonds. Financial markets are defined by having transparent pricing, regulations on trading, and market forces that determine the price of securities that trade. Financial markets function by supply and demand, which means more sellers than buyers[RS7]. Sellers and buyers must be balanced in order for the market to function. Money can be used in different ways. If you have a saving account in the bank, it will help others to establish credit, such as buying a car or home. When making a loan with the bank, it is drawing on all the people who have money invested in the bank. The bank acts as a financial marketplace for money. Money can be used by individuals to make investments. When one invests in a company, they are lending the company money or you are buying a part of the company. A financial market is a place where companies enter into contracts to sell or buy a specific product. Buyers want to buy at the lowest price, and sellers want to sell at the highest price. There are different kinds of financial markets, depending on what you are buying or selling, but all financial markets employ professional and regulated people.
Any successful company needs to have a sound business plan to perform at their best. The initiative behind such business plans is to create policies to help ensure the prosperity and success of the company. Like any other successful companies, Starbucks has its own initiative plan for the coffee shops to chart the company’s course into the future[RS8]. However, any of these initiatives can have either a positive or a negative effect on Starbucks financial future. This is because there are two very important conditions that need to be constantly considered that will have an impact on the business. These considerations are sales and costs (Small Business, 2013).
Starbucks revealed five new initiatives in 2008 for renovating and reinvigorating the Starbucks experiences. At a shareholder’s conference with more than 6000 shareholders in attendance, Starbucks president and CEO Howard Schultz presented his vision for the future of Starbucks. His ideas spelled out how to create better success for the company with higher sales and by lowering costs (Best of SUCCESS, 2013[RS9]).
The first part of Howard Schultz’s plan is to incorporate an innovative new Clover brewing system into each Starbucks. This would result in a better tasting coffee with a richer flavor, keeping the Starbucks brand unique on the market. A second part to Schultz’s plan is to bring back the original concept of Starbucks’ brewed coffee. “The original concept for Starbucks was to put an American twist on the traditional Italian coffee emporium experience with Starbucks own special blend, roast, and grind of coffee” (Small Business, 2013).
In addition, Howard Shultz wants to introduce a brand new system for making espresso. This would lead to a slight increase in operating costs but would prove profitable with increased sales. Another idea in his plan is to begin a Starbucks Card Rewards program. This initiative would be designed to maintain customer loyalty by rewarding faithful customers with incentives.
In addition, by taking advantage of modern technology and the online social media trend Howard Schultz has idea for launching MyStarbucksIdea.com. This website would allow customers to have the opportunity to improve Starbucks with his or her personal thoughts and ideas. As a final thought at the conference, Howard Shultz plans to expand the existing bond with Conservation International. This improvement would further entrench Starbucks’ commitment to ethically sourcing the whole World for the best quality of coffees.
Overall, of Starbucks’ initiative, the company plans to remain the leading provider of the international coffee house experience, with an all-American twist as well as the world[RS10]. As Schultz demonstrated at the shareholders conference, he has many great ideas as well as continues to create new initiatives to keep Starbucks successful by increasing sales and lowering costs (Small Business, 2013).
The Starbucks organization has a stable and firm financial position; this organization has been productive and profitable around the globe in many different markets. Every financial ratio analyzed within the Starbucks annual reports has a positive outcome, even with some ratios being left undetermined because of the sound financial actions Starbucks took over the past few years. The current ratio for Starbucks could not be analyzed in detail due to the lack of short-term or current liabilities the organization possessed. Starbucks had not generated any current liabilities over the past few years, but did increase their assets in 2011 from $7,360.4 (in millions) to $8219.2 (millions) in 2012 (Starbucks, 2013). Increasing the assets and income over the past few years is part of a financial success for Starbucks, but having high amounts of current assets and no current liabilities make the company excessively liquid. The organization also has minimal total liabilities to account for within the past few years, which brings the debt of the firm to a more than reasonable amount. Total liabilities for Starbucks only included the long-term liabilities that the firm had generated over the years; the debt ratio for 2011 was 7.4% and 6.6% for 2012. Starbucks did decrease the amount of total liabilities from $549.5 (millions) in 2011 to $544.6 (millions) in 2012 (Starbucks, 2013). A minimal amount of debt is a key component to increasing revenue and attracting investors or creditors to the Starbucks organization. The financial planning and actions of the Starbucks organization has resulted in higher equity returns for the stakeholders with the firm. Return on equity has increased over the past few years, and in 2011 the return was 27% and rose to 28.4% in 2012, due to an increase of net income over the two years (Starbucks, 2013). The financial health of the Starbucks organization is solid and thriving, and this type of financial success provides a promising future for the firm and attracts the positive publicity needed for future growth and success[RS11].
[RS1]Good point
[RS2]This is true
[RS3]This has shown over the past years
[RS4]This is important
[RS5]Keeping in compliance with SEC is critical for them
[RS6]This is a good policy
[RS7]This is true
[RS8]Good point
[RS9]This was a good move for them
[RS10]This is a reachable goal for them
[RS11]Nice detail on the financials