Starbucks and Conservation International

OPERATIONS STRATEGY - CASE

ANALYSIS

Submitted By Group 7
Bharath Arava - 13PGP010
Vanamamalai R - 13PGP058
Submitted To Gugan N - 13PGP080
Prof. Parikshit Charan Gautham Jayan - 13PGP123
 Overview
Starbucks
Founded in 1971 in Seattle selling dark-roasted coffees
and teas
Acquired by Howard Schultz in 1987 for USD 3.8
million
Went public in 1992
Revenue of USD 2.7 billion in 2001,
5,500 (4,000 in US) stores globally in 2002 and
expanding rapidly
 Overview
Chiapas Project
Promote shade-grown coffee production
Technical assistance to improve coffee quality
Organizational assistance to effectively market the coffee
Partnership extended in 2000 with a commitment of USD
600,000 over 3 years and 7.5 million over 3 years in 2008
Purchases of coffee increased to 1.5 million pounds in
2002 from 76,000 pounds in 1998
1. What lessons can be learned from the
Chiapas project?
Importance of Sustainability
Concern of biodiversity due to the intensive plantations as a
result of comoditisation of coffee
Understanding the strengths of the company and staying
focused on what its best at.
Mutual Trust and Understanding
The need to have common goal and involvement from both
parties when going into collaboration
Incorporating a monitoring and assessment framework
This also includes providing the necessary insights to the
plantation workers
The overwhelming response from both up and down the
supply chain shows relevance of the project
2. Was the approach replicable?
The Chiapas project is highly resource intensive
Encourage other parties to involve in the collaboration to
minimise the investment load on each party
Allow greater information sharing with the members
involved

Replication is possible if all the stakeholders understand,

trust each other and stick to their common goals
3. What should the ongoing strategy be for
Mexican Shade-grown coffee?
Mexican Shade-grown Strategies
Traditionally Grown
Decreased number of Intermediaries
Promoting the effects of large scale low quality coffee
Support from CI
Funding
Learning
Quality Control
Direct selling to roasters
Aiding in the replantation of rainforest and other affected
areas
Promotion of Environmental Safe Coffee Production
They should compare and contrast the different methods
of production
High quality Shade-Grown
Biodiversity
Balance of nutrients in the soil
Organic fertilizers
Social awareness of the farmers
Low Quality Large scale Produce
Agrochemicals
Deforestation
Environmental Imbalance
4. How might CI and Starbucks replicate the success of Mexican
shade-grown coffee in other biodiversity hotspots with less
commitment of their own staff time?
Primary Measures
 Finding a suitable partner who is willing to involve
themselves in the plantation / community
 Tie-up with NGO’s or other institutions with good social
influence

Sustaining the Program

 Periodic monetary reward schemes for adhering to the
guidelines
 Inviting other major players to join the program (eg;
Hyatt and United Airlines procured shade-grown coffee)
5. How should the new coffee – purchasing
guidelines be implemented
• To launch the guidelines, Starbucks will enlist the
support of coffee suppliers who are sustainability
advocates.
• Starbucks has instituted a flexible point system that
rewards performance in sustainable categories.
– Points will be accrued based on a supplier's ability to
meet the guidelines, and earning more points in the
program will ensure higher purchasing preference when
Starbucks purchases green coffee.
• Starbucks should also implement a verification
process for ensuring quality, environmental, social
and economic aspects.
6. How should Starbucks and CI approach the
roasters to adopt the sourcing guidelines
Starbucks and CI should approach only roasters who are
known to meet certain standards when it comes to
Environmental Requirements
Ethical Standards
Social Standards
Employee Standards
They should be eyeing for long-term relationships in order
for the program to be economically viable for all parties
Supplier Incentive
Starbucks’ certifications would make the supplier more
attractive to other potential buyers as well.
7. How might the Fair Trade coffee operations be related to
the Shade-grown conservation coffee operations
Major focus and differences between the two programs

Fair Trade
Focus on - small farmers or plantation workers, who are
meticulous about their business and highly attentive to their crop
It has been setup to help lift the working conditions and improve
the lives of millions of people that work in the coffee growing
dependent communities in the developing world

Shade-grown
Focus on - biodiversity and enabling coffee growing in harmony
with the environment
Encourages the preservation of trees native to the area or re-
planting of trees that once stood on the land to provide this
essential shade
Operations
In the shade grown process CI staff were in direct
involvement with the plantation
Programs for farmers
Sampling
Grading
Tracing
There was an element of trust between Starbucks and CI in
their collaboration with the shade grown plantations in
Chiapas.
In the fairtrade process the
8. How valuable has the Starbucks- CI alliance
been to both, and what should its future be ?
CI- Starbucks Alliance
Helped achieve CI’s Mission
Starbucks
Enormous coverage (Mention in USA Today)
New Market
Financial contribution received for the Chiapas Project
(Low-interest Funds from various organisations)
Positive Synergy between both the parties
Mutual Trust and Understanding
Overall – Project was a success from both CI’s as well as
Starbuck’s point of view.
Future
There should be more organisations coming up to support
such programs, the investments made by CI and Starbucks
alone will not be able to develop the initiatives in other
areas
Sustainability is only going to be accomplished by
expanding internationally – Repeat the success in Mexico
in other countries

Both the companies should continue the alliance

9. What were the benefits / risks for a corporation
that portrays itself as socially responsible?
Benefits
Good Public relationship – Socially aware / conscious customers
Creates Brand awareness
Customer’s perception of being environmentally friendly
Strengthens relationship with environmentalists and even foreign
supplier
More investors

Risks
The results may require huge investments
Inability to withdraw in some circumstances
Cynics and environmentalists constantly challenging every effort
Market doesn’t value CSR
THANK YOU