Starbucks And Conservation International 251t6j

Team 2 Raozhong Chen, Michael Koelbl, Saurav Shekhar, Jingyi Wu, Yingying Yu

Starbucks and Conservation International

02/27/2017

2. Executive Summary

3. Problem Statement

1. What do you think of Starbucks’ collaboration with Conservation International (CI) in Chiapas?  Very good idea o Aligns with corporate mission: “establish Starbucks as premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow. o Strong, mutual cooperation with CI to work in Mexico o Intense help and development programs for farmers (financing, training, …)  Take it serious o Small scale that allows being so careful o Good deal:  Low risk ($150,000 investment)  Good publicity (Although criticized by some for being hypocritical, just 76,000 pounds) o However, Mexico not among biggest exporters (leverage in Vietnam might be higher, because of the extreme low payments)

2. Wouldn’t it be simplier to just write a check and make a donation to CI instead of getting engaged with loans and people in the field and lots of complications?  Yes, it maybe would  But does not reflect corporate culture (would reveal them as a phony company)  Low investment should not be a problem  CI does most of the field, hands on work  Starbucks can just win: Any successful implementation would lead to new, sustainable coffee supply, which can be offered/sold as sustainable, fair trade

3. Why would coffee farmers agree to change their farming practices to these more environmentally friendly methods? Is Conservation International being exploited by Starbucks?  At first needs lot of persuasion (“farmers are great economists”) o Offer clear benefits (technical assistance, organizational assistance, prospect to sell increasing percentage to Starbucks for prices  Prospect of having an individual tailored work-plan for each farmer  Use one farm as best practice, demonstrate feasibility and benefits and hope for spillover effects Is CI being exploited by Starbucks       

CI has three full-time and several part-time “extensionists” who visit every farm CI provides training courses CI operates a training center CI sells subsidized organic fertilizer CI is doing quality controls CI set up a low-interest Conservation Enterprise Fund ($250,000) to farmers’ investments CI was used as a facilitator for other companies to get on track (Hyatt, United Airlines)

4. What do you think were the key factors that enabled alliance between CI and Starbucks?  Initial common ground between CEOs Peter Seligmann (CI) and Schultz (Starbucks)  CI reliant on financial  Identical mission statement (at least Starbucks pretends to)  Starbucks’ management (Sue Mecklenburg) overcomes concerns that CI might expose Starbucks’ practices 5. How does Starbucks’ relationship with CI compare to that of its relationship with the fair trade Movement organizations Global Exchange/TransFair?   

Good, mutual understanding (Starbucks even extended cooperation) Global Exchange started protesting Starbucks, because Starbucks does not sell any fair trade coffee Starbucks tried same approach as it did with CI o their business

    

o Provide financial assistance o Work together on projects TransFair was just interested in selling certification seals Global Exchange/TransFair pressured Starbucks to buy larger quantities TransFair does not show interest in improving quality among farmers (that is not their mission) Smith: NGOs produce change that is sometimes very useful It is not wrong to sometimes ignore them

6. What would you recommend to Starbucks regarding the future of its relationship with CI? What might you change?    

Continue cooperation Invest more money ($600,000 over three years are peanuts for Starbucks, given its benefits) Actively seek to further expand the program with other industry leaders Different: Focus not only on Mexico, but on countries that urgently need help (Vietnam, …)

7. What lessons can we draw from today’s case in of how to most effectively manage the interface with nonprofit organizations? Further research

4. Background

5. Methodology

6. Results 7. Conclusion and Recommendation

8. References