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In the duration of the essay explanations will be provided to what is meant by ethics and environmental considerations. Analysis will be conducted On ethical and environmental resistances involved in the marketing of Struck in an objective way as possible, presenting both sides of the argument, to minimize bias. In recent years the field of business ethics has become a widely debated topic as a result of numerous scandals and loss of confidence in businesses (Ferret et al, 2000).
Notable scandals across the world include the energy giant Enron, whose questionable accounting practices lead to the company filing for bankruptcy at the end of 2001 (TIME, 2002), and Italian based dairy and food corporation Parallax SPA which was officially declared insolvent in 003 and charged on accounts of financial fraud and money laundering (Gumball, 2004). Nikkei is yet another famous long-standing example of a company accused of poor business ethics.
Ever since the sass’s Nikkei has been accused of a range of non;ethical business practices such as operating sweatshops in low-cost countries and using child labor at some of its production sites (Exam, 1999). On the environmental side car manufacturers have been accused of poor environmental considerations with the high amount of pollution produced by their vehicles (NCSC, 2007).
Many other scandals and controversies involving ethics in accounting human resource management, sales, marketing, production, and intellectual property have occurred and continue to take place; stressing the importance of tackling this issue and ensuring that businesses adopt ethical and environmentally friendly business models that benefit humanity and the environment as a whole. There are different descriptions by various theorists and authors on what ethics is.
Taylor (1975) has defined it as an “inquiry into the nature and grounds of morality where the term morality is taken to mean moral segments, standards and rules Of conduct”. Ethics has also been called “the study and philosophy of human conduct, with an emphasis on the determination of right and wrong” (Ferret et al, 2000). It’s this concept of being “right and wrong” which it has come to be widely marked by, and which we base our judgment on when we try to establish how ethical a certain company is in its business practices.
However right and wrong in this case is not as simple as an action being lawful or unlawful but involves a deeper more sophisticated level. Morality is concerned with social practices of beefing right and wrong (B??chamel & Bowie, 2000; Pl ); these practices are beliefs, values, and customs who together constitute a particular culture (Doodle & Lowe, 2004). Therefore depending on what kind of surrounding and circumstances one grew up with our ethical viewpoints will differ, and different approaches to ethics will have to be applied.
For example, the values that a native Amazons Indian tribe puts on time or wealth can be highly different from those of a capitalist businessman from the bustling financial centre New York. Having established that there are different approaches to ethics, we need to identify the correct one which applies to the company concerning this text – Struck. As such the moral philosophy which Struck has adopted seems to be that of teleology. The teleological theory/approach states that the rightness of an action is not limited to solely that action but can only be judged by its consequences (Fisher & Lovely, 2003).
Moral philosophers often refer to this theory as consequentiality (Velasquez, 2002). There are two important teleological philosophies, egoism and utilitarianism (Fisher & Lovely, 2003), of which the latter is of direct importance to Struck. Utilitarian strategies can be described as those seeking to achieve the greatest good for the greatest number of people that are affected by a decision. Decision making regarding costs and benefits is done so that the best possible action, which has the greatest benefit to all parties involved, is implemented.
When discussing Struck’ case it should become clear why it is seen by many to be following a utilitarian approach. To further understand this complex topic of ethics one needs to have a good grasp of what is meant by “ethical responsibilities”. Ethical responsibilities are fined by Ferret et al (2000) as “behaviors and activities that are expected of business by society but are not codified in law”. Throughout this essay one needs to have in mind that the emphasis is on what we “expect” businesses to do rather than what they are obliged to do by law.
Reading about Struck’ various social and environmental projects, which are not obliged by law, will reinforce the belief that this company seems to be genuinely interested in protecting the environment and caring for the coffee-growing communities it works in; supporting the argument of them being regarded as utilitarian. In entrants to the utilitarian belief, Milton Friedman argues that the sole purpose of a corporation is “to make money for the stockholders” (B??chamel & Bowie, 2000; Peggy); the author of this paper however argues that not only does Struck have their stockholders in mind but also stakeholders and the environment.
For a company to be considered having a high degree of ethical responsibility it would require both the business and individuals conforming to sound moral principles (Ferret et al, 2000). With “individuals” it’s implied both employees working for the company and interactions with other individuals ho contribute in one way or another to the successful operation of the company; these can be suppliers, distributors, and agents. So what is an ethical way of conducting business?
Well, one can argue that it is such a model when a business has a sound profit-generating business plan which is balanced with the needs and desires of society (Terrine & Nelson, 2004); seemingly Struck fits well with this description as it’s a highly successful corporation and at the same time paying attention on solving or at the very least alleviating social and environmental problems. To maintain this balance Hough it is inevitable that compromises and tradeoffs will have to be made (Ferret et al, 2000).
Nevertheless Struck states in it’s CARS Report (2005) that it is willing to make these sacrifices, be they financial or other, because they see a better future through ethical and sustainable practices. In the end, those who ultimately approve or disapprove of a business’ ethical standards and principles are stakeholders such as investors, customers, interest groups, employees, the legal system, and the community. They are after all the ones who are affected by the business and who will judge it accordingly.
And judging by Stardust’s positive ratings in indexes dealing with ethical businesses or best companies to work for, as will be listed later on, the feedback is seemingly positive; this in turn facilitates Stardust’s marketing efforts as potential recruits would be looking to join a company which among other things has a positive image and consumers one which is talked positively of and which has sound business practices..
Another topic which is related to the topic of ethics, and which is gaining more and more coverage as of recent is the issue of “green business”, also offered to as environmentally friendly or sustainable businesses. Sustainable businesses operate in a socially responsible manner and protect the environment. Issues dealing with socially responsible manner could include those of human rights, fair compensation, and right to education whilst environmental can include those of renewable resources, preserving biodiversity and natural CEO-systems.
Sustainability is the term used to refer to the successful fusion of social and environmental responsibility into the running of a given company. Professor Rob Gray (2005), from the university f Glasgow, describes sustainability as involving “(I) the needs of present generations and the needs Of futz_Jeer generations and (ii) environmental and social justice”.
A theoretical field which in turn is closely related to sustainability is that of corporate social responsibility (CARS). The World Business Council for Sustainable Development (2007) defines corporate social responsibility as “the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”.
When it comes to CARS, Struck is in fact one of few companies who actually produces a specific CARS Report for its shareholders and other interested parties, even though they are not required to by law; however one can argue that they mostly highlight the positive sides of the company in such a report making it a biased source. For the time being the CARS Report seems to be a good marketing tactic, by mainly focusing on the positive accomplishments of the company and leaving out more troublesome areas.
Much improvement should be expected in the drafting of such documents; third party verifiers of such documents should make sure that everything which needs to covered in the document is actually present to provide a more holistic and realistic picture of the company’s activities for its stakeholders and others. To conceptualize how important the topic of sustainable business (I. E. Rene) is in the day and age which we live in, we only need to pay some attention to numerous articles describing how we are heading towards a grim future with the current production practices and consumption rates, especially by developed western countries. In a recent World Wide Fund for Nature (WFM) port it is stated that humans are striping nature at an unprecedented rate and will need planets’ worth of natural resources annually, to sustain current consumption trends, starting the year 2050 (Doyle, 2006).
With that in mind we will look at the initiatives Struck is taking in preserving the environment and in its pursuit Of being an ethical company and how this affects their corporate image; which its marketing efforts play a significant role in shaping. A major issue which has set out Struck from other rivals is its image of dedication and support of sustainable agriculture in the communities that row coffee. Improving the lives of farmers and protecting the environment is presented as being an integral part of Stardust’s mission.
As per Struck 2005 Annual Report (peg. 1 8) the company continued to “improve the lives of coffee farmers through C. A. F. E. (Coffee and Farmer Equity) Practices, [and] socially responsible coffee-buying guidelines”. The C. A. F. E. Practices concern comprehensive standards for fair, ethical, and sustainable coffee purchasing, which Struck incorporates into its business function. In 2005, 24. 6% of Struck’ total coffee purchases were carried out under C. A. F. E practices (Struck CARS Report, 2005).
Having set out specific guidelines for sustainable coffee-production which are not required by law, but which contribute positively to the preservation of our environment, and rewarding farmers generously in comparison to some other companies shows that Struck shares a considerable degree of ethical responsibility and has environmentally friendly methods in the running of its business. In the same year (2005) 3. 7% of total coffee purchases consisted of fair trade produce (Struck CARS Report, 2005).
This however, is not a large figure considering he image the company gives off through its marketing campaign; the ethical relevance will be addressed further on in the text. Additionally the company builds strong and mutually beneficial relationships with coffee farmers who meet their standards and criteria by paying them premium prices, providing them access to credit, and collaborating on improved farming techniques that can assist them.
An important issue is that Struck acts as a consistent buyer year after year for farmers, and with world coffee prices being prone to fluctuations this relationship helps secure farmers with a stable income. Further making a point about sound ethical practices that Struck carries out is their support for local educational programs in communities they are involved in. In the environmental sphere the company is involved with the Rainforest’s Alliance in preserving wildlife and the ecosystems (Struck CARS Report, 2005; Rainforest’s Alliance, 2004).
Through the rainforest’s alliance Struck helps promote environmentally friendly practices amongst farmers, which will save the worlds few rainforest’s from destruction. Struck states that their approach to buying coffee takes into account rammers concerns, such as the need to sustain their livelihoods and acknowledges the fact that they [the farmers] are vital to the sustainability of their business; again alluding to that the company is not profit-minimization fixated but that it is concerned about more than that.
This reinforces the utilitarian approach they’ve adopted; stressing the solution which would have the greatest benefit to both parties. In doing so Struck helps farmers and their families which in turn provides the company with a long-term supply of high-quality coffee used in its products. But not only do Struck’ apparent costive business philosophy stop there, but employees benefit from it as well through comprehensive healthcare benefits and competitive wages. Women have a strong presence at the Struck workforce (65%) and especially in executive positions where they make up 34% (Struck CARS Report, 2005).
The same goes with minorities who also have a strong presence in their workforce. This supports Struck’ case that they do not condone nor practice racial or sexual discrimination; which reflects positively upon their company ethics. The above are also used by the company’s marketing efforts o attract competent new recruits. The company tries to give back to the community in many ways as well. In 2005 $30. 3 million was donated as charitable contributions; amongst which charities dealing with relief and reconstruction of those affected by the South Asia Tsunami and Hurricane Strain.
Also in 2005, 299,000 hours of volunteer work was carried out by its partners and customers in the U. S. And Canada (Struck CARS Report, 2005). No law requires Struck to be a philanthropic establishment; a company distributing aid for humanitarian and environmental purposes, nevertheless the company has chosen to pursue Hess causes because they are ethical causes, environmentally friendly causes, and lastly but perhaps not the least because it reflects positively on their corporate image.
These activities add to the strong corporate image Stardust’s has created and facilitates their marketing efforts by stressing their ethical and environmental work, which appeals to consumers. Looking more at the environmental impact that the company has we can see that there has been an increase in electrical output, water usage, and paper usage in the past years (Struck CARS Report, 2005); but taking into inconsideration that Struck has throughout this time been expanding its operations it doesn’t really come as a surprise as it would only be natural for these figures to increase if no radically new means are introduced.
In 2004 the company conducted a baseline climate inventory of green house gas emissions for 2003, which totaled 376,000 metric tons of CO equivalents. This is quite a large figure. Since this inventory was taken the company has decided not to conduct inventories like these which signals that they are aware of the negative impact such figures have on their public image and racketing efforts; instead it seems, they have chosen to pursue different venues to solve this problem.
The company’s 2006 goal in regards to reduction Of greenhouse gas emissions was to “purchase renewable energy certificates for 20% of the energy for their U. S. And Canada company- operated stores” (Struck CARS Report, 2005); the impact on the environment can be compared to the elimination of tens of thousands of cars from the roads (Socio, 2005) . This is a move in the right direction, as it would help lessen the impact of climate change; which is a very current and important problem (UNEVEN, 2007).
In regards to the company’s water usage, “Project Green BELT” is being implemented which will test energy and water conservation measures across Struck stores (Struck CARS Report, 2005), again helping tackle the huge problem the world faces with fresh-water scarcity (Freshwater Society, 2007). The largest criticism against the company is aimed at its low purchase of fair trade coffee, which as stated before consisted in 2005 Of only 3. 7%.
Why would a company who wants to be seen as a fair and ethical coffee buyer have such a seemingly miniscule figure of its coffee representing fair trade produce? In an interesting work published by Murray et al (2003) it is quoted: “It is not clear what the objectives of these large companies are, if they are truly interested in helping the small farmers in the long term or only want to improve their public image by buying small quantities of Fair Trade coffee and publicizing their participation as if it were standard commercial policy’. This would be a fair question to make.
In rebuttal though Struck could argue that their first relationship with a Fair Trade licensing organization began in April 2000. Since then the amount of Fair Trade coffee that they have bought as been significantly increasing reaffirming their support for this kind of produce; from 2003-2005 Struck’ fair-trade coffee purchases went up from 2. 1 million pounds to 1 1. 5 million pounds. They are also the largest buyer of Certified Fair Trade coffee in North America accounting for 21% of fair trade certified coffee imported into the U. S. N 2005, and 10% of the global market (Struck CARS Report, 2005) In defending Stardust’s ethical standards it can further be argued that what is holding them back from going 100% fair trade is customer demand. Fair trade products are widely seen as being more expensive and although people generally favor better social and environmental practices they would still have a difficult time accepting the higher prices (De Policymakers & Janssen, 2006; Nicholls, 2004). Therefore the alternative to introduce fair trade coffee to their customers incrementally, slowly trying to establish a market, is seen as a more viable strategy.
However buying fair trade products doesn’t always have to mean higher prices as witnessed in the case of a coffee house on the University of Californians campus, which is supplied by the 100% fair trade coffee company “Purr Vida”, ND whose prices are the same as non-certified coffee (Francis-Lyon et al, 2005). Yet another criticism launched at Struck is that they pursue unfair competition. This particular case is an ethical dilemma, in that two morally justified values are in conflict (Chrysalises & Kale, 1 996) – one being profit minimization and the other conducting fair business .
Naomi Klein in her recently acclaimed book “No Logo” argued that “Struck operates by ‘clustering’ – saturating areas with branches, forcing local businesses to close down” (Organic Consumers Association, 2005). Although the figures point to n improvement towards adopting more fair trade produce it tells otherwise when it comes to expanding the business. Struck is pursuing an aggressive expansion policy which is threatening the livelihoods of small businesses.
In the area of respecting other businesses, especially small local ones, there is little to defend Stardust’s unfair practices; fairness in the sense of relating to the moral attributes of being just, equitable, and impartial (Ferret et al, 2005). Naturally Struck critics and anti-globalization activists condemn the company for these kind of practices. All in all though, Struck has been able create and maintain a positive brand image, thanks to the ethical and “green” practices which it does implement to certain degrees; which on the other hand, its critics would argue have been exaggerated.
It has ranked highly in the last seven years in the Fortune Magazine (2007) – Best Company’s to Work For” and at the same time has been listed in Business Ethics Magazine’s (2007) “1 00 Best Corporate Citizens of the year’ list. Its very appealing marketing campaign is aimed at conveying an image of a socially responsible company trying to provide its customers with a “community gathering spot, music, innovation, and an artistic atmosphere” (Annual Report, 2005). Despite the positive aura that the company has successfully created for itself there are still vocal critics, who arguably are justified in their concerns.