You are the trusted advisor the Jane Martinez, the CEO of a Fortune 500 company. She has recently taken over as CEO and wants to emphasize a higher level of corporate social responsibility for her company. She has heard about the Starbucks-Conservation International partnership and she asks you, her trusted aide, for 3 pages memo that summarizes the partnership and identifies the more general lessons for corporate partnerships with NGOs including her company.
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Memo on Corporate Social Responsibility: Lessons for Strategic Partnerships with NGOs
TO: The Chief Executive Officer, Jane Martinez
FROM: Your name and position
RE: Corporate Social Responsibility: Lessons for Strategic Partnerships with NGOs
Date: February 5, 2015.
Corporate social responsibility (CSR) is a vital element in the success of contemporary companies. It plays an important role in ensuring that the goals of improving society are achieved through different projects. In achieving this objective, corporate entities frequently form relationships with non-governmental organizations (NGOs). This is done to ensure that the goals of CSR projects are achieved and that the resources committed in those projects are used efficiently in achieving the stated purpose. Starbucks’ partnership with Conservation International is one of the corporate efforts that have been made with the aim of achieving CSR goals (Austin, 2000). The partnership was directed towards enhancing the well-being of small coffee producers in the coffee-producing regions.
In addition to the above, the CSR project was also aimed at ensuring that coffee-growing communities’ wellbeing was promoted. Moreover, all sectors that were affected by the project were actively involved in the decision making process (Ostrower, 2005). In achieving higher levels of corporate social responsibility, corporate entities should promote the involvement of all the affected stakeholders, and this justifies the participation of NGOs. This ensures that the company achieves the aims of all its CSR projects with little negative effects. In addition to this, the move ensures that the recommendations made can be implemented effectively as the affected people’s views will be incorporated. Moreover, such an action ensures effectiveness in the implementation the project. Accountability is bound to be a crucial element, which can be greatly enhanced through partnerships between for-profit enterprises and NGOs.
The partnership with Conservation International was initiated in 1998 and was beneficial to both companies. Conservation International achieved the goal of improving social livelihood of coffee farmers while Starbucks profited by acquiring quality coffee.
Partnerships can therefore be profitable to corporate organizations like Fortune 500 Company as well as the non-profit organizations. Alignment of goals to meet corporate social responsibility demands is essential in achieving profitability as The interests of both companies can converge as they shares similar views about the future. (Gray, 1996)
Starbucks has set up various goals that have directed the organizational culture of the company since it was founded. The following are the goals that have led to Starbucks success in the coffee delivery industry:
- A great work environment: This environment motivates the employees to establish relationships based on respect for each other and efforts to ensure that every employee’s dignity is protected.
- Diversity: Starbucks draws employees from different regions and also acquires coffee from different producers across the world.
- High standards for its supply chain: The Company applies high standards in the purchase of coffee, roasting processes, and ultimate the delivery of various coffee products.
- Satisfying customers: Starbucks aims to deliver quality service that will ensure that all customers are satisfied. This has greatly helped to maintain the company’s position in the market.
- Positive contribution to community wellbeing: Starbucks is committed to improving the livelihoods of farmers while also promoting environmental conservation through educational programs targeted at these farmers.
- Profitability: Profits are vital in ensuring that the company runs effectively in the long run and that it is able to finance its day-to-day operations, strategic partnerships, and community engagement programs.
In the pursuit of these goals, the need for partnership with an NGO was identified. Starbucks’ partnership with Conservation International was initiated through a project in Chiapas, Mexico (Ostrower, 2005). This project was geared towards giving back to the communities that produce coffee for Starbucks’ use in the area. The trained officials went to Chiapas and carried out training programs and directed the growth of the shade grown coffee in all the stages. Moreover, these officials oversaw the marketing of the product and ensured that the farmers were well remunerated. The project was successful as there was adequacy use of resources and funding. (Ostrower, 2005). Moreover, absence of many logistical difficulties ensured that the project was carried out effectively therefore ensured its success. The Chiapas project had four main goals which included:
- Promoting conservation and farmers’ livelihoods: This was done by expanding the scope of work done and benefits realized by farmers. Through hands-on experience, the farmers were trained on improved farming methods which would yield better coffee results. This would also conserve the environment as the methods were environment-friendly. The action went a long way in increasing the amount of produce Starbucks acquired a year after initiating the project.
- Supporting the introduction of a new year-round product: The partnership with Conservation International also led to the introduction of the Shade Grown coffee. The product was grown under supervision of trained personnel who fully engaged the farmers. In so doing, the company achieved increased product yields one year after the initiation of the project. The product also led to a 40 percent increase in farmers’ earnings. Furthermore, the objective of maintain high standards of produce was attained (Austin &Reavis, 2005).
- Engaging leaders in the coffee business. The involvement of the government and the NGO ensured that the company could educate the farmers in the area effectively due to the presence of the element of trust. In addition to this, the involvement of Conservational International ensured that costs, particularly tariffs on importing farm implements, were minimized, leading to increased earnings for the coffee farmers.
- Developing coffee sourcing guidelines. The partnership ensured that the workers were fairly well remunerated. Consequently, Starbucks was guaranteed of attaining its goal of maintaining profits for a long-term period. Moreover, the efforts led to the achievement of company’s aim of community development owing to the emerging aspect of financial stability among farmers.
The project resulted in increase in environmental awareness among the farmers and the residents in the farming regions. In addition to this, the farmers developed their knowledge on farming practices and the selling of produce (Andreasen, 1995). The Chiapas project therefore achieved the goals of the partnership by fostering improvement of the livelihood of local residents. Initiating a project for Fortune 500 Company would also be a good way of achieving CSR goals. The project should be hands on as this will ensure that the desired results are achieved.
Corporate entities form partnerships with non- governmental organizations for various reasons. Non-profit organizations benefit by using for-profit companies’ marketing strategies. On the other hand, corporate entities use the partnerships as an excellent avenue showcasing the NGOs projects, leading to a mutually beneficial relationship. Similarly, companies benefit from the partnerships by riding on the NGOs’ reputable public image. The NGOs’ reputation greatly contributes the companies’ sales increase and brand recognition hence, Fortune 500 Company can develop its market share through being in an alliance with an NGO.
Cause-related marketing alliance is the main form of partnership that is normally between NGOs and for-profit organizations (Austin, 2000). A case in point is the strategic partnership between Starbucks and Conservation International. Both the company and the NGO can benefit from a cause related marketing alliance. There are three forms of alliances:
- Transaction based promotion: This is the most common form of alliance.
- Joint issue promotion alliance: This alliance is geared towards addressing a social problem through distribution of materials and advertising. The union between Starbucks and Conservation International acts as an example of this alliance. Other Fortune 500 companies could also pursue such an alliance with CSR and community engagement as the main driving factors.
- Licensing names and logos of non- profit organizations to the corporate organizations: This alliance is aimed at improving corporate organization’s brand while also advertising the NGO.
- Reduced wastage of resources: A partnership between Fortune 500 Company and an NGO should aim to efficiently use resources (Austin, 2000).
- Reduced donations. NGOs depend on donations from various facilities as well as individuals. A partnership with a company may lead to reduction in available donations as the donors may not support the organizational culture of the corporate company. Fortune 500 companies should therefore access the NGOs to know whether available resources may reduce as a result of the partnership (Andreasen, 1995).
- Tainted partners. The role of a partnership is at times to use the image of the NGO In some cases however, the corporate organization may have a tainted name. A partnership with such an organization in achieving a project may affect the NGO. When selecting an NGO it is vital that Fortune 500 companies research on the partnerships that affected the name of the NGO as this will influence the success of the project (Ostrower, 2005).
- Structural atrophy: This is also a potential problem that NGOs may face by being in partnerships with corporate companies. Reliance in corporate funding may affect the NGO as the corporate companies may move to other companies and other projects in the future. (Austin &Reavis, 2005). Companies should select an NGO which has shown flexibility in the past to ensure stability even after the goals of the partnership are achieved.
- Varying needs and conflicting goals: the partnership paradigm does not work the way individual partners want it to work (Ostrower, 2005). Thus, it is highly that in the end no one may be satisfied.
- Diminished realism about the benefits and limitations of partnering: Some NGOs continue with their pursuit of strategic partnerships with corporate entities even when it is evident that their previous partnerships did not achieve the intended goals.
- Neglect of companies’ stated goals: In some partnership, some for unanticipated goals may be achieved, leading to the neglect of the goals that a company set out to achieve at the beginning of the partnership.
- Differences in the way success is judged: partners may not have a common framework for determining the success of a project (Gray, 1996). This may occur if one of the partners does not fully appreciate the problem being addressed, possibly due to preoccupation with potentially conflicting organizational goals.
Based on the analysis of the Starbucks-Conservation International partnership, I make the following recommendations:
- Organizations that plan to venture into a partnership should first undertake an extensive assessment of potential strengths and weaknesses of the partnership
- Fortune 500 companies should identify their potential partners and strategically investigate them. This will help them to identify matching CSR objectives and similarity in organizational structure and strategic goals. Starbucks places a high premium on employees and farmers’ livelihoods, and this is what contributed to the success of the partnership with the NGO (Gray, 1996).
- To ensure that disagreements on how success is judged does not arise, stakeholders in a strategic partnership should exchange information regarding their respective expectations and visions on how best to address an issue or problem.
Corporate social responsibility is an important part of any industry. The achievement of CSR projects is much easier when a business enterprise partnership into a partnership with a NGO. Non- profit organizations contribute greatly in ensuring that the goals of the CSR project are attained as they tend to orientate towards serving local communities (Gray, 1996). Thus, venturing into a partnership with a non-profit organization would be profitable for a Fortune 500 company. Such a partnership easily leads to better implementation of community engagement projects and optimal benefits in terms of positive social impact. Nevertheless, companies need to be wary of potential problems that may arise in such partnerships, such as conflicting goals, and neglect of the stated goals in preferences of unanticipated ones.
Andreasen, A. (1996). Profits for nonprofits: Find a corporate partner. Harvard Business Review, November-December 1996, 47-59.
Austin, J. &Reavis, C. (2005). Starbucks and Conservation International. Boston, MA: Harvard Business School Press.
Austin, J. (2000). Strategic collaboration between nonprofits and business. Nonprofit and Voluntary Sector Quarterly, 29, 69-97.
Gray, B. (1996). “Cross-sectoral partners: Collaborative alliances among business, government, and communities”. In Chris Huxham (Ed.) Creating Collaborative Advantage. London: Sage Publications.
Ostrower, F. (2005). The Reality underneath the Buzz of Partnerships. Stanford Social Innovation Review, 3(1), 36-41.
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