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Starbucks Case Study

“Starbucks has been telling investors the


business was profitable, even as it consistently reported losses.”

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2nd largest $40 billion
restaurant chain globally after in market capitalization
McDonald’s

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Starbucks in the United Kingdom
3 Steps to Corporate Tax Avoidance
1. Loan payments
2. Royalty & licensing fees
3. Third-party bean procurement

How?
Starbucks attempted to transfer revenues
and profits from countries with higher tax
rates to those with lower tax rates, retaining
more net income for shareholders and
managers while ignoring corporate taxes.
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Management & Leadership
● working with a group of people to ● set direction for firm, align people to
accomplish a desired goal or objective focus on organization’s vision, and
in an efficient & effective manner motivate & inspire people

“Every store is part of a community, and we take our responsibility


to be good neighbours seriously.”

FAIL FAIL
Loopholes Neighbours

Section 1-2: Management & Leadership (pg.7 in textbook) 4


ADMIT
How should CFO ●

Leadership Action
Corporate Social Responsibility
Troy Alstead Testify? ● Brand footprint
● Ethical responsibility

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Stakeholder Theory
● Stakeholder: any group or individual who can affect,
or is affected by the achievement of an organization’s
purpose
● Influences & benefits from a firm’s decisions

Starbucks Neglected Stakeholders:

❖ Government (UK)
❖ Local Community
❖ Advocacy Groups (UK Uncut)
❖ Media
➢ 90% of Facebook & twitter posts contained
references the reference to ‘tax’
Section 1-5: Stakeholder Approach (pg.16-19 in textbook) Figure 1.8 in textbook 6
Minimize Public Outcry
Actions Speak Louder Than Words

Partner with and/or Address the public Brand Recognition


acknowledge the properly and Google, Amazon, Vodafone all
organization, UK Uncut. appropriately. committed similar acts, yet did
not receive as much backlash
as Starbucks

“Crisis Continues to Brew at


Starbucks” - Mark Ritson

Costa Coffee - Competitor

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Responsibilities
ECONOMIC: refer to a
business’s duty to make a
profit and increase
shareholder value

LEGAL: to society are to obey


the state and federal laws
pertaining to business activity

ETHICAL: behaviors the


general population expects; Contextual intelligence: ability to understand the impact
stakeholders’ expectations of environmental factors on a firm
● develop appreciation/awareness of history

Section 1-5: Stakeholder Approach (pg.16-19 in textbook) 8


Corporate Social Responsibility
CSR: a business’s obligation to pursue the policies, decisions, and actions that align with the
objectives and values of society.
- Businesses rely on consumers to buy their products, and consumers rely on businesses to
provide goods that will sustain their well-being

NOW:
● Community - youth, community service, college
● Environment - reduce waste, environment, climate
● Ethical Sourcing - coffee, tea, manufacturing

Chapter 3: Section 3-4; Corporate and Social Responsibility (pg. 74 in textbook) 9


Conflict of interest Distributive Justice Redevelop brand
Short term profit → Pay back money owed to footprint, follow
Long term goal UK government, donate mission statement
to charities

Avoid Think Follow Expand Reshape


Hypocrisy Ethically Legality Economically Business

10 years as the villain, Adopt the stakeholder


give back to that approach, value the
community company accurately

Section 3-3: Moral Dilemmas (pg. in textbook) 10


- Management and
Leadership Failures
- Corporate Social

Impact
Responsiveness

- Neglected
Stakeholders
XX% sales increase - Brand Footprint

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References
● Barford, Vanessa, and Gerry Holt. "Google, Amazon, Starbucks: The Rise of 'tax
Shaming' - BBC News." BBC News. BBC News, 21 May 2013. Web. 26 Jan.
2016.
● "Corporate Social Responsibility |Starbucks Mission Statement." Starbucks Coffee Company.
Starbucks Coffee Company, 2016. Web. 26 Jan. 2016.
○ http://www.starbucks.com/responsibility
● Davies, Rob. "Starbucks Pays UK Corporation Tax of £8.1m." The Guardian. The Guardian,
15 Dec. 2015. Web. 24 Jan. 2016.
● "Mark Ritson: CRISIS CONTINUES TO BREW AT STARBUCKS." Marketing Week 35.52
(2012): 60. Business Source Complete. Web. 25 Jan. 2016.
● "Starbucks Pays UK Corporation Tax for First Time since 2009 - BBC News." BBC News.
BBC News, 23 June 2013. Web. 24 Jan. 2016.
● Conn, Brian, and James Melville-Ross. "When Your Taxes Are Everybody's Business." FTI Journal. FTI
Consulting, Nov. 2013. Web. 26 Jan. 2016.

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