Starbucks and Conservation International

OPERATIONS STRATEGY - CASE

ANALYSIS

Submitted To
Prof. Parikshit Charan

Submitted By Group 7
Bharath Arava - 13PGP010
Vanamamalai R - 13PGP058
Gugan N
- 13PGP080
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 NGOs 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

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

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 CIs 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 CIs as

well as Starbucks 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
Customers 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

THANK YOU