Need of Organization Monitoring
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Introduction to Monitoring System
Sustainability business can be defined as an organization that has no negative impact on global and local environment, community, society and economy. Along with this, sustainable business meets the triple bottom line and has advanced environmental and human rights policies. Including this, sustainability helps in managing different financial, social and environmental risks, obligations and opportunities (Armstrong, Blouin, Jagolinzer and Larcker, 2011). Tools, techniques and indicators of sustainability assist in developing a monitoring system of sustainability of an organization.
These have positive impact on profitability and people of the organization. Major dimensions of sustainability include society, economy and environment. Determining the level of sustainability is a very complex task but it can be measured by different quantitative tools and techniques. These tools include sustainability matrices, triple bottom line, etc. Tools, techniques and indicators of sustainability help in developing a monitoring system of sustainability of an organization. This system assist in analyzing the changes, progress of the organization towards sustainability, management of economic, social, institutional and environmental resources (Bebbington, 2007).
The current research report is based on monitoring system for sustainability of an organization. Regarding this, research will focus on Starbucks which is an American Coffee company and coffeehouse chain. It focuses on sustainability of the business because most of the raw material of this organization can affect the environment in a negative manner. So, it stresses on all three social, environmental and economic dimension of sustainability. Research will focus on development of monitoring system for sustainable development of Starbucks which will help in determining the level of sustainable business. Along with this, different indicators of this system will help in determining that weather organization is following all roles and responsibility in an effective manner or not. Indicators of sustainability aids in determining different types of issues associated with the sustainable development of the company (Nikolopoulou, Abraham and Mirbagheri, 2010). Major aim of sustainability indicators is to determine that weather an organization is working towards the defined goal or not. Study will describe the current stage of sustainability and required changes to improve.
Ayre and Callway, 2013 has concluded that “Sustainable monitoring system is a tool which provides appropriate guidance to monitor and report sustainable performance and improvement of the organization” (Ayre and Callway, 2013). As per the view of Bredeson, 2011, “A good monitoring system is required to include all indicators of sustainability such as environmental, social and economic indicators” (Bredeson, 2011). Similarly, “An effective monitoring system focuses on past, present and future sustainability actions of the company which will helps in analyzing the actual progress of sustainable development”. In contrast, Jucker and Mathar, 2011 has stated that “A good monitoring system must be relevant, easy to understand, reliable and able to access data of the company” (Jucker and Mathar, 2011). Major indicators of sustainability monitoring system are described as follows:
MONITORING SYSTEM COMPONENTS
The enterprise (Starbucks)
Starbucks is a coffeehouse chain which has started its coffee shop in the year 1971 and offered coffee, tea and spices with a single store. Now, it has been expanding its business at international level in more than 50 countries and 17000 locations. Mission statement of Starbucks is “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time”. Major products of this company are coffee, handcrafted beverages, merchandises, fresh food, consumer products (Coffee, tea, Ready to drink, ice-cream) and brand portfolio, etc. At present, share of Starbucks is listed on listed on NASDAQ, under the trading symbol SBUX. This organization focuses on being a responsible company by conducting ethical trading, responsible growing practices, reducing environmental footprint through energy and water conservation, recycling and green construction and increasing involvement of society (Abdullah and Valentine, 2009).
Stakeholder analysis of Starbucks has reflected that it is following appropriate responsibilities for satisfying needs and requirements of all stakeholders. Analysis of Corporate Social Responsibility of Starbucks towards its stakeholder is one of the important methods for analyzing sustainability of the organization. Major stakeholders of this company include partners, customers, employees, shareholders and investors, government, society, etc.
Maintaining fair business relationship with partners is one of the major responsibilities of Starbucks towards them. At present, organization is following this responsibility in an effective manner and provides appropriate respect and dignity to their partners. Company focuses on mutual understanding and mutual trust. It helps in developing a fair relationship with the partners.
Employees are also considered as very important stakeholder of the Starbucks. Organization shed lights on the health and safety of every employee. Along with this, company develops favorable policies and HR practices for satisfying their needs and requirements towards job. Further, it also focuses on providing appropriate salary, wages and incentives for increasing their level of motivation. Including this, company makes arrangement for training and development session which also shows that Starbucks is following effective CSR policies towards employees of the organization (Bueble, 2009).
CSR policies towards the customers of Starbucks focus on providing qualitative coffee, tea and other products for their purchase money. Further, organization provides products and services as per the needs and requirements of customers. It helps in increasing the level of satisfaction of customers.
Shareholders and investors require appropriate information about the financial position of organization. Starbucks makes appropriate communication with stakeholder about profitability and economic position of the organization. Including this, organization develops suitable dividend policy for providing suitable return to all stakeholders for their investment (Monitoring Sustainable Development, 2004).
Appropriate financial reporting of organization is one of the major requirements of government of the nation. Starbucks is a public listed company so; it includes all the financial statements in financial reporting. Along with this, company follows all rules, regulations and legislation of government which shows that company is following all responsibility towards the government.
Society is also one of the important stakeholders for Starbucks and organization focuses on development of whole society and environment. Along with this, company also provides appropriate employment opportunity to different individuals of society. So, Starbucks follows appropriate CSR policies towards society and environment.
As per the above discussion, CSR policies are very important aspect of sustainable development and Starbucks has followed all responsibility towards stakeholders in an effective manner.
It is the prime responsibility of organizations to create sustainable business strategy to operate business activities which generate minimal pressure on environmental resources, public and economical resources. The following point features brief explanation of relevance of sustainability dimensions that are applied in Starbuck’s operational strategies. The current and future phases of these dimensions are elaborated in the following headings.
Environmental dimension of Starbucks
Starbucks considers planet as the most important business partner as the company rely largely on the agricultural products. In order to formulate sustainable business strategies, Starbucks takes environmental dimensions into consideration. These are as follows:
• Water and Energy Conservation Strategy: Starbucks has been making robust efforts since 2008 to reduce the consumption of water by 25 percent in the firm by the end of the current year (Water and Energy Conservation, 2015). The strategy is extended to conserve water in streams and rivers in the coffee growing countries. The current phase demonstrates that Starbucks focuses on reducing water in coffee processing.
• Climate Strategy: Since 2004, Starbucks has been employing a climate change strategy to focus on renewable energy for operating its business worldwide (Climate Change, 2015). The company is successful to a certain extent in executing this strategy but it has to go long way to make sustainable environmental operations.
• Waste Management and Recycling Strategy: Starbucks has set a goal to reuse or recycle 100 percent of coffee cups by the year 2015 (Recycling and Reducing Waste, 2015).
• LEED Certified stores: Currently, Starbucks is trying to LEED (Leadership in Energy and Environmental Design) certify all its company operated stores (LEED® Certified Stores, 2015). The stores are designed to encourage use of recycled materials and energy efficient lighting to save energy.
Socio-culture dimension of Starbucks:
These dimensions play major role in building a sustainable business organization. The social sustainability indicators that are applicable for Starbucks include rate of complaints by customers, number of corruption charges and record of human rights and child labor grievances. The company is required to formulate strategies to address major issues related to child labor complaints which were reported lately. However, Starbucks do not employ child labor but the suppliers of coffee have been allegedly reported to use child labor for coffee farming. This is very fatal for sustainability of the Starbucks business. Lately, there were number of corruption charges on the firm against online trading fraud. It is very crucial to follow ethical business practices to gain stakeholders confidence. The current phase of complaints by customers of Starbucks is very low.
Economic dimension of Starbucks
Starbucks has performed well on the grounds of economic sustainability indicators. Starbucks has been able to reduce operational cost of its business activities in a very effective manner. The current phase of economic dimension of Starbucks is quiet satisfactory. Currently, the company is making efforts in meeting the expectations of its key stakeholders in terms of their economic interests. Starbucks products have recorded growth in a sustainable way. The company has pioneered a new concept of “Ethical Sourcing” with a focus to ensure long term supply of premium quality coffee for its valued customers (What is the Role and Responsibility of a For-Profit Public Company?, 2015). In addition to this, it is also making cumbersome efforts to benefit lives of coffee farmers. The future phase of economic dimension of Starbucks indicates that the company will ethically source 100 percent of high quality coffee through Fair trade, CAFE Practices and externally monitored systems.
Specific sustainability area
The specific sustainability area for Starbucks is change in the strategies regarding Socio cultural dimension. Starbucks is required to make strategies to increase the customer satisfaction level to grow its business in a sustainable manner. The number of corruption charges against company regarding online trading fraud scam can negatively impact brand image of Starbucks. The firm needs to make sound promotional strategies to attract customers to increase sales and profitability. Similarly, Starbucks needs to check the child labor practices by the coffee suppliers to abide the child labor laws set by the legislation and legal bodies of the coffee growing countries. Further, the biggest challenge before Starbucks is to set its pricing strategies to maintain a reasonable cost of its products (Starbucks global responsibility report, 2013). The increasing cost of coffee production and distribution cost makes it difficult to keep the prices of its products low. This may raise concern for consumers affecting their satisfaction levels.
CONCLUSION AND RECOMMENDATIONS
Sustainability monitoring system includes different indicators of environmental, social and economic sustainability. Starbucks has maintained sustainable development of the organization in an effective manner. The current research report has focused on social culture sustainability of the organization. There are some indicators which have reflected that company has fulfilled all the aspects of sustainable development but it needs to focus on some changes such as reducing the level of corruption, child labor, etc. So, for improving overall, sustainability organization is required to focus on taking appropriate actions for managing these challenges.
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