Ethical issue in Starbucks
Starbucks, an American coffeehouse chain based in Seattle, Washington, is the world largest coffee retailer chain in the world having more than 21,000 stores in 65 countries (Starbucks website, n.d.). In United States, Starbucks owned 12,973 stores (Starbucks Company Statistics, 2014), which is more than 73% of the market shares of the United States coffeehouse industry. Hence, Starbucks possesses monopoly power in the specialty coffee market. Enjoying monopoly position, Starbucks plan to completely dominate the market by eliminating competition. Starbucks engages in a range of anti-competitive activities.
Starbucks anti-competitive business practices include making lease payments higher than market value in exchange
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It will generate a significant social cost and thus is seen as illegal. Therefore, government regulator needs to examine closely and review it competition law to prevent any of such anti-competitive practices from occurring.
Ethical Principles
The actions of Starbucks are deemed to be unethical or ethical from the utilitarian benefits and self-interest theories.
Utilitarian Benefits
According to the utilitarian benefits theory, Starbucks’ actions are unethical as the actions of Starbucks result in greater harm than good for the society.
Small coffee retailers are providing more to the people of the towns that they are located than Starbucks does as those small local coffee retailers offer reasonable priced for their coffee. People would prefer to have a reasonable priced coffee to Starbucks’ overpriced coffee. Even though, there might be some people who would be happy to have Starbucks instead of their small coffee retailer but the majority of the people still enjoy their local coffee (Katie , 2013). Small coffee retailers provide more happiness to the local people than Starbucks
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In order to drive other coffee retailers out of business, Starbucks will resort to buying over the coffee retailers and flooding the neighborhoods with new Starbucks outlets to a degree that the sales from existing Starbucks outlets were cannibalized (Katie , 2013). This action does not serve any interest to Starbucks.
However, Starbucks can be considered to be ethical as the actions that they have adopted, are to increase market share, to be the leading leader in the industry. This helps Starbucks to stand firm in the industry. It is the long-term self-interest of Starbucks.
Conclusion
In conclusion, Starbucks only concern and goal is to generate profit. Thus, to achieve their goal, Starbucks is selfishly putting the small coffee retailers out of business to gain more profit and disregarding the effect that it could cause to the various stakeholders. These actions are not the right thing to be done from a business viewpoint. Therefore, Starbucks is seemed as extremely unethical and
This situation creates an identity of the company as being fake and acting against the community. The company is going against the theory of Utilitarianism which is concerned with making decisions that promote human welfare. The Company’s bad consequences were more than good consequences making it an unethical decision which resulted in a fine of $7 million. The company was charging more price for the specific range which contained the same active ingredient breaching the theory of justice and fairness which supports the idea of fairest overall distribution of
¬¬-Corporate ethics comes at a price- one that either businesses have to absorb or consumers have to pay for. Too often consumers complain about big business, but then shop at Walmart because the small, family owned stores are more expensive. However, people still drink it. Not only do businesses need to be held responsible, consumers do as well. If there was not a demand, Coke would discontinue the supply.
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Ultimately, Starbucks innovation aimed to achieve a
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