Impact and Relevance of Social Networking to Starbucks

1 January 2017

This report elaborates about the impact and relevance of social networking to Starbucks and how to cope with the issues. The types of social networking that will be discussed in this report including social media, labor union, Fairtrade Foundation and Global Campaign for Climate Action (GCCA). Social media could be an opportunity to Starbucks to do some viral marketing, community marketing, and consumer-generated marketing. This kind of social networking helps Starbucks to enlarge its customer basis and retain them.

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Labor union is a social networking that concern about social justice to workers. Starbucks need to aware of the worker’s petition that had been made about fairly paid, working hours, health care, and independent voice at workplace. Fairtrade Foundation is a non-profit organization that supporting commodity farmers to get a better life by maintain the fair price of commodity and help farmers with technical support. Global Campaign for Climate Action pay attention to the environment issues such as global warming.

This non-profit organization created to invite people to their campaign about climate change and how to reduce the risk of global warming for better human life on earth. 1. Introduction Starbucks first opened in 1971, It served the world finest coffee to people in Seattle. In 1990, Starbucks expanded its market to United Stated and after that became worldwide. In 2000, Starbucks has more than 16,000 stores in 48 countries. Starbucks has principles: coffee, partners, customers, stores, neighborhoods, and shareholder. These principles attached in daily life of Starbucks.

This report tries to analyze and elaborate the impact of social networking to Starbucks. Social networking is a group of people who are connected through community such as schools, colleagues, or workplace. People who involved in social networking are shares the same interest about something they mutually like. The main part of this report will be discussing about social networking (social media, labor union, Fairtrade Foundation community, and Global Campaign Climate for Action community) and their impact to Starbucks. 2. Discussion A. Social Media

Social media is a part of social networking, the examples of social media are Facebook, Twitter, Myspace, and Linkedin. Social media used by people around the world to stay connected and share the same interest through online social networking. According to Boyd and Elliot (2007), the first social network site launched in 1997, SixDegrees. com. It helps people to create profile, connect and send message to others. Friendster existed in 2002 following by Linkedin and Myspace in 2003. On the other hand, Facebook and Twitter dominated the social media world for the last 6 years.

This figure below shows about the development of social media based on the launch date. Social media leads to some activities which a lot of information is shared by people and they exchange information rapidly. This exchange will enhanced the perceived value by consumers. Beside value from consumers, information exchange can build customer loyalty as well. As Anandya (2010) stated that the raising of internet gives space that called cyberspace for people to interact with each others. The information exchange may affect significantly to customer loyalty. Starbucks can use the social media to interact with its customers.

Social media now record for 23 percent of advertising (Tucker, 2010). Advertising through social media can be use to deliver some message from the company to customers. Social media commonly employ several types of word-of-mouth marketing include: viral marketing, referral program, and community marketing. Company can try to build customer experience by implementing viral marketing. The rapid growth of online users makes information spread quickly among customers. Besides viral marketing, Starbucks can use community marketing to form and support niche communities that are likely to share their interest about a brand.

Company can start to develop a space for customers to gain greater social distribution on social media. The pages can be placed in some social networking site such as Facebook and Twitter. Customers who have value to Starbucks brand can meet the other customer and sharing stories or they can invite their friends to the fan page in Facebook. Hunter (2009) stated that “Unlike Facebook, where social structure is among people who have agreed to become online friends, members of Twitter are nominally part of two networks; those who follow their updates and those whose updates they follow”.

Twitter use as a media to communicate and inform customers about new products, events, and recent campaign. A research shows that middle status member in a group who moderately connected to others member are often influenced by their friend’s purchase decision. “They tried to maintain their status by primarily making purchases as they fear that not doing so might undo their status” (Iyengar, Han, & Gupta, 2009). Another activity that beneficial to Starbucks is using social media as consumer-generated marketing strategy.

It is a growing part of the new customer dialogue by which customers themselves playing a bigger role in shaping their own brand experiences and those of others. This may happen through blog or video that had been made by customer itself (Kotler & Armstrong, 2012). Starbucks should pay attention and catch the opportunity. While the company sells the best espresso, they have to build good customer relationship with customers and grab the market share through social media activities. People who involved in an organization can use social networking to improve their performances through knowledge sharing.

Social networking provides a set of methods and measures to identify, visualize, and analyze the informal personal networks within and between organizations Thus, social network analysis provides a systematic method to identify, examine and support processes of knowledge sharing in social networks (Muller-Prothmann, 2006). Social networking can help an organization to identify personal expertise and knowledge. When a company tries to build a community within the employees, it can help improve communication process to enhance the performance of the company. B.

Labor Union Labor union is one of the social networking that exists to ensure the right of workers. They concern about work hours, wages, and benefits that given by the company. The different in culture, demographic, social-economic background have a strong impact on the development of labor union as a social networking. In Western Europe countries and US, labor union been institutionalized since long time ago while in countries like South Africa and Indonesia recently legalized and have growing members (Heins, 2004). Starbucks has some issues regarding the employees.

Starbucks workers made some petitions to company’s board which are: fairly paid, health care coverage, sufficient staff, safe working environment, and independent voice on the job. Starbucks workers stated that compare to $23 billion market value and growing business of Starbucks, most of them got low wage and fluctuating hours which affect their financial condition. Workers also complained about health care which they have to works 240 hours per quarter to qualified health care purchases through company while they do not have assurance in work hours. In addition, workers have to pay premium to participate in health care plan.

Starbucks as a global company has to pay attention of certain situation related to social networking between workers. Research in journal: The Role of Labor Unions in the Process towards Sustainable Consumption and Production, has evidence that the union movement has started to embrace the concept of sustainability of the company. As management started to hold the traditional approach between business interest and social interest is no longer clear, but blend (Heins, 2004). Ethical framework in business consists of sustainable business, ethics, and stakeholder theory (Wells, 2011). The term ‘sustainability’ propitiates value creation for firms, as well as for their stakeholders, in economic, social and environmental terms” (Kumar Sen, 2006). Workers as stakeholder of a company have important roles to Starbucks. The social networking of workers should be engage in company decision making. Most of the employees of Starbucks are part timer. As management of Starbucks always received complains about work hours, workers should be given fixed hours of work so that they have assurance according to hours and wages they get.

Research found that wages grow faster in economies that do integrate with the rest of the world, globalization may have negative impact on wages in the short run. That is a signal when Starbucks has to pay attention to wages paid to the employees. Company should adjust the payment to the growth of economics. The main threats to workers come from international capital movement and financial crisis (Rama, 2003). Figure below shows about growth wages percentage in non-globalized countries, rich countries, and globalized countries. Beside wages and guaranteed hours, company needs to be aware of bullying in the workplace.

Labor union of Starbucks has complained and sign petition about independency among workers. In journal Workplace Bullying and Ethical Leadership (Yamada, 2008) stated about the impact of bullying to workers. Workplace bullying is a profound violation of one’s personal dignity and the residual effect on organizational performance can be significant. Starbucks should commit to upholding a culture where diversity is valued and respected. Workers need health care and insurance as well, preventing the injury from hot beverage they could get when they work on shop floor as a barista.

A responsible company has to be aware of the livelihood of the employees itself. C. Fairtrade Foundation While a company gets benefit of social networking that existed in the company itself, they have opportunities to build a customer value through community around them. Some of fair trade issue had been emerge recently. For example, a non-profit organization called Fairtrade Foundation which has a vision to maintain justice and sustainable development of trade structures and practices. Fairtrade exist as a social networking of people that concern about welfare of people especially in developing country.

They also use social media (Facebook, Twitter, Youtube, Blog) to interact online. This community establish in 1992 with missions to deliver the proper life to farmer and worker. In developing country, there are some risks for agricultural export: technological advance, growing complexity of finished product, evolution of manufactured raw material, and the rising of agriculture productivity in industrial countries. The event of 11st September 2001 made the commodity price plummeted especially in the price of coffee, tea and other commodities from developing country (Mazumder 2008).

Figure below shows the decline of coffee price in September 2001. Importing Countries Retail Prices of Roasted Coffee (US cents per lb) The activities of Fairtrade Foundation supported by consumer who buy the groceries product with Fairtrade mark on it. This kind of social networking will affect Starbucks as a coffee purchaser. The company can grow social responsibility to be involved in this community and support the farmer by purchase Fairtrade commodity. Starbucks can do some effort to sync by offering some help in technique, equipment, and capital funding for farmers.

This will ensure the quality of the coffee and increase the value of the product. D. Global Campaign for Climate Action (GCCA) Nowadays, more people concern about global climate change. They have done some campaign to save the environment. Global warming cause glass house effect that made the temperature rising. Social networking between people who care about this planet leads to some organizations to fight this environment issue. Global Campaign for Climate Action (GCCA) was form in 2008 and started the campaign at 2009.

The history begins from discussion between internationally-respected campaigners and advocates who concern about environmental. These climate activists concluded in 2006 that the fight against climate change needed a boost. By uniting together across organizations to create public campaigns particularly in countries where additional mobilizing capacity was needed, they felt they had a better chance of becoming more than the sum of the parts. GCCA consists of 270 non-profit organizations around the world.

The mission of GCCA is to encourage people to maintain a safe global climate for next generation, to reduce the carbon emission and to influenced the community that already affected by climate change. The issue of global warming is a societal and environmental driver for Starbucks. The social networking of people who concern about this planet has an impact to Starbucks as a coffee retailer. Starbucks need to contribute to support the environment and gives some effort that can help the planet from climate change. Using paper glass or ceramic glass is better than plastic glass.

Plastic glass need to be recycled and can harm the environment. Good waste management and protection of water quality is necessary for company. The other way Starbucks can help to save the earth is using degradable brown paper bag as reducing the use of plastic bag. Starbucks need to delivers some message to the customer about the necessary of being eco-friendly and company can do some go-green campaign to encourage customer. 3. Conclusion Social networking is a broad term that can develop through relationship between people in workplace, schools, and online.

In summary, this report elaborates the types of social networking: social media, labor union, Fairtrade Foundation community, and Global Campaign for Climate Action community and its impact to Starbucks. Starbucks can use social media to deliver the value of the brand through word-of-mouth marketing and consumer-generated marketing. Viral marketing is a good way to send a signal from a company related to new product, events, or campaign. Community marketing give customers a place to others customer to share about their experience to Starbucks.

Labor union is a driver to Starbucks to enhance the livelihood of the workers. To ensure the welfare of the workers is one of the ethical frameworks of a company because workers as stakeholder have important rules in company sustainability. Fairtrade Foundation is a non-profit organization to support farmer especially in developing countries. Coffee farmers are supplier for Starbucks, company need show the corporate social responsibility by supporting farmers to help them providing a better living condition. Global climate change is a recent issue that more people concern about.

An organization named Global Campaign for Climate Action is a social networking between people where they try to communicating the importance for being care about earth. 4. Recommendation and Implementation Social networking has some impacts and relevance to Starbucks. Research from a journal: Societal, Environmental and Stakeholder Drivers of Competitive Advantage in International Firms found that the good characteristic from a company align their activities with the principles of sustainable development and social expectations.

The societal, environmental, and stakeholders could be managed to create value for the company. Kumar Sen (2006), in his research figured a diagram about societal, environmental, and stakeholder as external drivers for the company. In a competitive environment, the ability of companies to meaningfully engage with critical stakeholders propels a company to innovate and respond to changing external demands more effectively (Kumar Sen, 2006). It means that Starbucks has to pay attention to some issues regarding the social networks around the company.

Some issues that come from social networking such as social media, labor union, non-profit organization as Fairtrade Foundation and Global Campaign for Climate Action are belong to external driver. Starbucks has to cope with this issue by getting involved in their activities. Company should pay attention to the worker and give them guaranteed work hours, pay their wages fairly, give them health care plan and protect them from bullying at the workplace. Fairtrade Foundation can be a media to connect Starbucks with coffee farmer, buy coffee from them and help them technically to produce high quality coffee.

Go-green campaign can help to save the planet and give customer information and value about the product of Starbucks. For example discount given if customer choose to bring their own tumbler or using ceramic glass instead of paper or plastic glass. These activities can be organized by Starbucks through social media (Facebook, Twitter, Blogs) to gather customers and share the value of the company, give experience and to customer and build a good customer relationship.

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