Corporate Scandals & Clean Cuts

2013's Worst & Best Companies: Starbucks vs Smithfield Foods

Created By Sidra & Oshe !

Overview

Our world will always contain two kinds of businesses: the ethical and unethical. It's simply how the world functions. International business will result in certain company's leaving positive impacts on society while others create harm resulting in negative impacts within a society. Within this poster we will be highlighting companies who all can be categorized as either "good" or "bad". In addition, we will also be outlining a specific code of ethics in which businesses can use to enhance their corporate social responsibility.

Content

Starbucks: The Journey

Starbucks is an American global coffee company and coffeehouse chain, which purchases and roasts high-quality whole bean coffees and sells them along with fresh, rich-brewed, Italian style espresso beverages, a variety of pastries and confections, and coffee-related equipments primarily through its company-operated retail stores. The first Starbucks opened in Seattle, Washington, on March 30, 1971 by three partners who met while attending the University of San Francisco. The creative minds of English teacher Jerry Baldwin, history teacher Zev Siegl, and writer Gordon Bowker, resulted in the phenomenal business we have today.



Company Facts:

· World’s top coffee retailer with over 19,500 stores in 58 countries

· There are currently over 87,000 drink possibilities

· They currently employ over 137,000 employees and serve 40 million customers a week

· The first international Starbucks location to open was at the Seabus Skytrain Station in Vancouver, Canada on March 1, 1987.



Starbucks is known for their excellent corporate social responsibility. Here is a list briefly discussing how they have impacted our society:

· Cautious impacts on the environment through recycling, and the efficient use of energy

· Working with communities globally to build strong relations and support the people

· Ethically sourcing their primary ingredients to positively impact their suppliers

· Providing employees with extraordinary treatment to create an open and inclusive environment



"Starbucks represents something beyond a cup of coffee."

- Howard Schultz,

President and CEO of Starbucks


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Starbucks is the Largest Purchaser of Fair Trade Coffee

The video below highlights Starbucks involvement in implementing the fair trade of coffee. As a result of their efforts, the global economy has seen significant improvements.


Did You Know?

· Starbucks is the biggest buyer of fair trade coffee in the world

· They carry various 100% fair trade certified coffee

· Example: Café Estima

Starbucks is the Largest Purchaser of Fair Trade Coffee

Best Sellers

Starbucks Impacts

Over the years, Starbucks has improved the global economy through various initiatives. The company’s goals include a commitment to diversity; excellence in purchasing, roasting and delivering coffee; keeping customers satisfied; contributing to communities and the environment; and, of course, achieving profitability. Below we will discuss the company’s impacts on the environment, employees, and the business world.


Environment

Starbucks continues to have an enormous impact on the environment. Addressing climate change, recycling and composting, and ethical sourcing are only a few ways Starbucks is improving their environmental consciousness.


1. Changes in Daily Operations

Starbucks aims to bring about environmental changes that can impact the functionality of their daily operations. Even minor contributions that are cautious of environmental impacts can make a difference.


2. Recycling and Composting

Recycling and composting initiatives are being implemented in as many restaurant locations where available. This differentiates Starbucks from other businesses, as they generally put minimum importance towards these practices.


3. Climate Change

Addressing climate change is a priority for Starbucks. Starbucks has been implementing a climate change strategy since 2004, focusing on renewable energy, energy conservation, and climate adaptation and mitigation efforts. They are also committed to championing progressive climate change policy in partnership with other businesses and organizations.


4. Ethical Sourcing

Starbucks has taken a holistic approach to ethically sourcing their products – from the coffee they serve their customers to the green aprons worn by the baristas. The company strives to cultivate lasting relationships with the people who grow their products and create their manufactured goods as they work together to produce high-quality, ethically sourced products.


Facts and Support:


1. Several ongoing efforts have been put forth to ‘green’ Starbucks stores, including a mix of design elements such as:

· Using recycled flooring tiles

· Conserving energy by allowing air-conditioned stores to reach 75°F instead of 72°F on warm days

· Saving water by using high-blast nozzles to clean pitchers instead of running water

· Electricity consumption decreased by 6.5% for 2012 and they are aiming to reach 25% by 2015.


2. In 2012, 24% of company-owned stores in the United States and Canada offered front-of-store recycling. Of these locations, 94% were able to recycle or compost the hot cup. Locations in Germany and the United Kingdom have effective recycling solutions in place, even if they do not include front-of-store recycling canisters. In addition, customers used personal tumblers more than 35 million times, saving more than 1.6 million pounds of paper from landfills.


3. In 2012, Starbucks conducted an inventory of their greenhouse gas (GHG) emissions and evaluated the major emissions from their global retail stores and roasting operations. From the results, they focused their efforts on energy conservation and the purchase of renewable energy. They succeeded in decreasing GHG emissions from electricity consumed by the company per dollar of revenue by 7.3%, per partner by 1.9%, and per store by 0.8%.


4. In 2012, 93% of their coffee was ethically sourced, including 90% through C.A.F.E. Practices. In addition, 44.4 million pounds (8.1%) of their coffee purchases were Fairtrade certified. They also purchased 8.7 million pounds (1.6%) of certified organic coffee in 2012. The goal is that by 2015, 100% of their coffee will be sourced this way.



Did You Know?


· In 2012, the availability of front-of-store recycling increased by an additional 453 stores in the U.S. and Canada.


· Starbucks offers a 10-cent discount in the company operated stores to encourage customers to use their own reusable mugs or tumblers for their beverages.


· In 2012 they introduced the EarthSleeve™, a new hot-cup sleeve that requires fewer raw materials to make, while increasing the amount of post-consumer content. These adjustments correlate to savings of nearly 100,000 trees a year.



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Employees

Starbucks is known for putting its employees first. Since Starbucks began with a single store in 1971, its overriding philosophy has been this: "Leave no one behind." With that in mind, they offer several benefits to employees working for such a company. With that belief comes an abundance of benefits and perk of being an employee of the top coffeehouse chain in the world.


1. Health-Care Benefits

Providing a great work environment and treating employees with respect is number one on Starbucks’ six-point mission statement. The company provides their workers with terrific benefits.


2. Investment Opportunities

Employees also have the opportunity to be involved in business operations. In the Montreal Gazette, they discus one of their unique benefits is stock options for employees.


3. Retirement Plans and EAP

Starbucks seeks to create a long lasting journey with their employees. Along this adventure, they ensure to provide their workers with excellent support through desirable retirement plans and specialized assistance programs. The purpose of these programs is to stress the importance of mental health and overall well-being.


Facts and Support:


1. Full health-care benefits (medical, dental, vision and alternative services) are offered to all employees, including part-timers who work at least 240 hours per calendar quarter. At $300 million, Starbucks spends more on healthcare insurance for its employees than on coffee beans. In addition, employees also take advantage of discounts on merchandise,


2. In the Montreal Gazette, they discus one of their unique benefits of having stock options for employees. Employees share in the company’s growth via "Bean Stock" (stock options) of up to 14 percent of their gross pay, and a stock-investment plan allows them to buy shares of Starbucks common stock at a discount (85 percent of fair market value) through payroll deductions.


3. The company matches employees’ contributions to their "Future Roast" 401(k) plans, adding from 25 to 150 percent of the first 4 percent of pay, depending on length of service. The Employee Assistance Program (EAP) serves as a beneficial source for many employees seeking counselling services from over 700 mental health professionals who are available 24/7.


Additional Perks

Employees take advantage of…

· Discounts on merchandise

· FREE Coffee

· Stock Awards

· Tuition reimbursement program


Did You Know?

· The Seattle-based coffee empire was among the top 10 on Fortune’s most recent "America’s Most Admired Companies" list

· Starbucks employees have an 82 percent job-satisfaction rate, according to a Hewitt Associates Starbucks Partner View Survey

· On average, two new Starbucks have opened every day since 1987


Why is the Employee to Employer Relationship Terrific?

The answer is simple. Not only does Starbucks provide quality treatment to its workers but the employees also have a lively, optimistic attitude that they pass on to customers. It’s a wonderful cycle.


Business World

Over the years, Starbucks has tremendously impacted the business world, and particularly the restaurant industry. Their revenues, stock prices, and dividend yield percentages are a few indicators of their achievements.


1. Revenues

Starbucks plays a large role in the success of the restaurant industry since they are the largest coffee house company in the world. By generating tremendously high revenues and constantly growing each year, they are able to meet their expected performance.


2. Stock Prices

One of the largest ways a corporation can engage themselves into the business world is by becoming a publicly traded corporation. Starbucks officially went public on June 26, 1992 at a price of $17 per share. From then till now, their success results have been phenomenal.


3. Dividend Yield %

With the purchase of stocks come dividend yield percentages. Similar to their stock price success, Starbucks has seen a rapid growth in this percentage. Its growth is extremely important when trying to bring in new investors while keeping the current ones pleased.


Facts and Support:


1. According to their 2013 Annual Report, the company has generated $13.3 billion in revenues. They were able to increase the value by $3 billion from 2008 to 2012 (refer to Financial Highlights below). The production of high revenues through healthy competitions allow for consumers to benefit from top quality and priced goods and services. Their goal of reaching $15 billion by 2015 seems secured with the success they have already achieved.


2. Over the course of 2013, Starbucks has seen a continuous increase in their stock prices. From their original stock price of $17, they have now jumped to a much larger price of $77.6 per share. Their peak priced reached an excellent rate of $82.5 per share. Investors interest in the company allow for continuous progress in reaching ultimate success. Despite a few falls, the overall value of their stock continues to increase (refer to Stock Price Graph below).


3. In 2013, the company’s dividend yield percentage reached 1.4% after jumping from 0.8% in 2008. Their ability to match the industry average in such a short period of time signifies how quickly they are able to grow and improve. Their active role in CSR helped to significantly improve their public image and contributed to the increase in several other ratios along with the dividend yield %. By actively competing against other businesses in their industry they are allowing a healthy competition that is beneficial to consumers, businesses, and especially shareholders.


Why Does This Matter?

· Starbuck’s ability to have such a large impact in the business world is what is helping the continuous growth of our global economy!


Did You Know?

· The average Starbucks customer visits the store 6 times per month while a loyal 20% of customers go to the stores 16 times per month

· Starbucks is named after the first mate in Herman Melville's Moby Dick


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Starbucks 2013 Stock Price Graph

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Bonus: Starbucks Café Music

Jack Johnson- Banana Pancakes
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Vertical Integration & Control of Supply is Critical for Cutsomers

The above table depicts the largest U.S retailers who regularly purchase Smithfield Food (more specifically their pork).


Vertical Integration is referring to the many hostile takeovers within the hog and meat production industry that Smithfield has built.


Negative impact on the entire hog industry with specific emphasis on small farm owners being wiped out along with larger competitors through Smithfield's blatant oligopoly/close monopoly.


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Smithfield Foods: The Early Beginnings

“Opportunistic acquisitions…

are fundamentally part of

how we do business.”

– C. Larry Pope,

Smithfield President and CEO


In 1936, Joseph W. Luter and his son founded a small meat-packing company, The Smithfield Packing Company, in Smithfield Virginia.


A staggering 60 years later, the “Genuine Smithfield Ham” they introduced brought them worldwide acclaim and revolutionized the pork industry.


From then on the company has been expanding through acquisition after takeover and merger after joint venture. Various acquisitions include:


  • Lykes Meat Group
  • North Side Foods
  • RMH Foods
  • Vall Inc &
  • Alliance Farms


In October 2003, Smithfield made one of its largest acquisitions: It won Farmland Foods, the sixth-largest U.S. pork processor & in the year of 2007 Smithfield Food’s made a fiscal profit of $12 billion.


As of 2013 at least 1 or 3 pigs butchered in America are killed in Smithfield slaughterhouses


IMPACTS

Group accuses Smithfield Foods of abuse

The Smithfield Foods Catastrophe


Environmental Impact


Surface water pollution, air pollution, contamination of aquifers and the spread of resistant pathogens: are all just a few of Smithfield’s negative impacts on the environment.


Because the vast multi avenue enterprise, is in fact so large in facility size and country/state occupation it’s unhealthy and economically unfriendly practices endanger the many ecosystems it’s currently set down root in.



Smithfield, unfortunately, does not have a clean environmental record. In 1995, a spill from one pig lagoon in North Carolina killed a billion fish in the Neuse River. In 1998, Smithfield was fined $12.6 million for 6,900 violations of the U.S. Clean Water Act. Waste is stored in enormous lagoons that can overflow, polluting water and land.


In North Carolina, millions of gallons of waste from Smithfield’s lagoons have contaminated rivers and creeks. The lagoons are pink and contain pig waste, dead pigs, and everything else injected and fed to the pigs.


Smithfield’s North Carolina facility also emits 300 tons of nitrogen into the air every day as ammonia gas, which falls back to earth and takes away the oxygen from the surrounding water masses thus killing innocent fish.


Fun Fact: The 500,000 hogs at one Smithfield subsidiary in Utah create eight times more waste than the Salt Lake City metro area, the state’s biggest city.



Factual Support/Examples:


1. Nearby residents believe that the farms, operated by Granjas Carroll, a brand owned by Smithfield Foods, polluted the atmosphere and local water bodies, which in turn led to the disease outbreak.


2. $11 million awarded to plaintiffs suffering from horrendous odors emanating from hog factories in Berlin, Missouri. The case, filed in 2002 against Premium Standard Farms, a subsidiary of Smithfield Foods, stated that factory conditions prevented residents from venturing outdoors. The compound has 80 buildings confining 1,000 hogs at a time & fattens 200,000 pigs with a generated 83 million gallons of waste. (Roughly 250 additional plaintiffs have cases pending against the Smithfield subsidiary)


3. Environmentalists and farmers are claiming Smithfield's cruel pork factories in North Carolina are operating illegally: without proper permits under the Clean Water Act and by disposing of hog waste on fields spreading pollution. Judge Howard declared that every industrial hog factory must have a Clean Water Act permit and it is illegal for hog factories to spray hog waste on fields without a permit. Smithfield faces significant civil and criminal liabilities as a result.



Human Impact


Impacts range beyond stench and clouds of flies to eye and skin infections, respiratory infections and dysentery to irreversible pulmonary and brain damage. Lagoons and spray fields are major emitters of hydrogen sulfide. There is evidence of widespread lethal neurological damage from this particular gas.


Factual Support/Examples:



1. US-owned Smithfield Foods Inc. shut down Constar, its major Polish meatpacking plant, for 11 days because the national media recently revealed its system of scraping mold off of expired sausages and sending them back to its retailers.


2. People who breathe the air emanating from the swine farms suffer from bronchitis, asthma, heart palpitations, headaches, diarrhea, nosebleeds and brain damage.


3. Workers stated: “They have the same mentality towards the workers as they do the hogs” “You’re covered with blood, feces, urine… it’s easy to get hurt down there”

“Basically you’re treated as a human machine & that’s where all the injuries come from”


In fact there were nearly 463 injuries reported at Tar Heel plant from January – July 2006: Worker injuries were crudely described as – carpal tunnel syndrome, contusions, blunt trauma fro wet slippery floors, cuts, open wounds, punctures, infections, fingernails peeling of fingers, amputations, burns, hernias, rashes and swelling - all only a prelude to what these high pressure Smithfield foods facilities were like and still are.



Industry Impact



Mergers with Smithfield's own major competitors creates economic monopolies in which small farmers are confronted by crashing hog prices caused by corporate overproduction and manipulation of the market. (Also see Vertical Integration blurb)



Animal Impact


Castrations and other painful medical procedures are performed on pigs without anesthesia, and that the footage shows "pristine housing conditions" for pigs that do not reflect typical conditions


Factual Support/Evidence :



  1. 2004 report to US commission on security and cooperation in Europe found that Smithfield’s pollution was damaging Poland’s ecosystems and that farmers workers under contract were without permits pumping liquid waste into watersheds that seeped into the Baltic Sea
  2. In 2006 a UK based commission in world farming performed an underground investigation of 2 Smithfield polish operations and found hundreds upon hundreds of injured and sick animals squeezed in barns and dead carcasses left to rot on the ground. Their investigation also found a cocktail of hog antibiotics in the pigs that for the most part have been extremely controversial in terms of use and in some cases banned in US states


In 2005 smithfield shut down one of it’s many packing plant after a Poland local tv channel hid cameras in the facility anf exposed footage of workers caught scrapping off the mold of sausages and sending it back to it’s big name retailers (McDonalds and Walmart being a few)



Fun fact: According to Time News Magazine McDonald’s Mc Rib sandwich (Smithfield being the rib supplier) the sandwich includes ingredients such as azodicarbonamide, “a flour-bleaching agent that is most commonly used in the manufacture of foamed plastics like in gym mats and the soles of shoes”



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Undercover at Smithfield Foods (2012 Webby Award Winner)

Code of Ethics

It is important for all businesses to have a certain code of ethics to which they follow. Below you will find a unique guideline that businesses can use to assure they meet these standards.


1. Companies must be aware of the environmental impacts they have on the global economy. Not only can careless actions lead to severe environmental damages but they will also result in serious consequences. Aside from the harms they can oppose, businesses should also aim to improve the environment. Green initiatives such as water conservation, recycling, and preserving energy are an ideal start.



2. It is extremely important that businesses provide their employees with fair treatment. All employers should ensure safe working conditions along with reasonable wages. In addition, employers should aim to improve the living conditions of these workers by providing bonuses and rewards as incentives to improve their work efforts. These types of actions will be beneficial to both the business and their employees.



3. Companies must ensure to have ethical trading and responsible growing practices. Businesses in the food industry can contribute by directly working with farmers to develop responsible growing methods and also invest in their communities to ensure a sustainable supply of goods. It's also important they contribute to the communities from which these goods are sourced.



4. It's important for companies to avoid being self-indulgent by supporting communities worldwide through donations and initiatives that can bring about positive change. Relief efforts are an effective method of helping within communities that have been faced with a destructive natural disaster. Incorporating youth involvement into these initiatives would be an intelligent way to approach these tasks. In addition, general community services encouraged and brought about by the company can also be of great help.



5. Company employees must be allowed the proper formation of labor unions and worker safety guilds. This is an aspect that is evident in most ethical corporations and works efficiently in the company environment. It allows workers to have a voice and share opinions. Ideas, valuable to the company, are generated through such guilds and unions and it is an important factor when making various business decisions. These unions will make sure to reinforce safe labor conditions, fix any current internal issues and regain back fundamental trust.


6. Safety and Health Inspections must be done on a bi-weekly bases at various plants and factories of that particular corporation. It is paramount for visiting days and scheduled inspections to not be disclosed to the workers or managers. inspections should be completed by an independently acting firm as not to allow any possible colluding to take place. These inspections will either continue secure, effective and friendly workplace practices of in the case of companies like Smithfield - develop these safe practices for the near future.


7. Not only should a company have corporate social responsibilities set in place on their websites and informational/promotional videos but it must also be seen and take place in: the hiring of employees, training sessions & conferences, various meetings and discussions and, finally, within the offices of the firm's corporate elite. This will allow a system of values to not only be advertised and made public but to also commit to personally and have the entire company follow internally.



8. A particular firms integrity must be securely set in place. This will advocate wholeness and consistency at all aspects and levels of the company. This dictates making a valued commitment to elevated moral standards that will (as a direct result) increase the levels of internal labor trust and security as well as the external - consumers



Sidra = (1-4)


Oshe = (5-8)


Starbucks Store Growth Graph

In 2001, Starbucks began to implement ways to improve their corporate social responsibility and in the same year they began to release their Corporate Social Responsibility Annual Report. Consequently, their popularity significantly rose and they began to see a large increase in the number of stores opening.


The graph below shows the growth in the number of Starbucks stores between 1971 and 2011.

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