Market Value, A Case Study Of Starbucks

1.1 Introduction - The Rise of Corporate Social Responsibility in Modern Business

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There has been an increase in interest in sustainability for years. They are becoming more aware of the long-term impact their actions and behaviours have on the environment.

Businesses are considering more than just their own bottom line, and they're also considering the interests of other parties. As a result of this rising understanding of the long-term repercussions, firms have implemented a corporate social responsibility strategy. Corporations are held to a higher standard of corporate social responsibility when they go above the requirements of the law and participate in actions that appear to be beneficial to society. Globalization and easier access to information highlight the growing significance of corporate social responsibility (CSR). Companies are being held accountable for their conduct by governments, campaigners, and the media as a result of a growing demand for transparency (Tamvada, 2020). As an example, huge corporations around the world have seen an increase in scrutiny from investors. Large corporations are frequently criticised by its stakeholders due to a number of scandals (fraud, bribery, scams, etc.).

1.2. Background of the study

Starbucks, as a globally recognized brand, is a great example of a firm putting its CSR plan into action. In order to ensure that their operations have "a beneficial influence on the communities they serve," they have taken numerous steps. 1. Starbucks has divided their CSR approach into three parts: ethical sourcing, environmental stewardship, and community involvement. These three parts are crucial to Starbucks' CSR strategy's success. The health care programme that Starbucks offers to its partners is an excellent example of the company's community participation (Campbell and Helleloid, 2016). You may "do business" with Starbucks with a tranquil mind because no farmers or employees are exploited, and the coffee is manufactured in a way that has no negative environmental impact. Customers appreciate these aspects, which has resulted in increased levels of consumer satisfaction.

Starbucks has been effective in implementing a CSR strategy, however not every firm is as successful as Starbucks when it comes to CSR implementation. Several authors have studied the impact of a CSR strategy on customer satisfaction. Using a CSR approach can have both positive and negative effects on customer perceptions, according to the researchers (Chaudhary et al., 2016). Luo and Bhattacharya (2006) found that customer satisfaction is an indicator of the company's market value going up or down, based on their research (down). A CSR strategy's impact on customer satisfaction and market value may be influenced by the sort of CSR measure chosen, according to their research.

1.3. Problem Statement

Considering that there is no clear-cut relationship between a corporate social responsibility strategy and consumer satisfaction and market value, it is vital to investigate how different CSR activities affect market value.

So, the problem statement for this research can be depicted as follows - When it comes to market value, what is the impact of different sorts of corporate social responsibility activities, and what part does consumer happiness play in this equation?

1.4. Research Questions-

In order to respond to the problem statement, it is essential to start with a first answer that will also pursue the research motive and objectives as well as the problem statement.

the following research questions are being considered:

1. What distinct types of corporate social responsibility (CSR) can be differentiated by consumers?
2. How will customers react to various forms of corporate social responsibility?
3. To what extent will customer satisfaction predict the reactions of investors?
4. What are the criteria that investors use to evaluate corporate social responsibility, and how do these criteria affect market value?

Justification: Since this research is investigating the impact of corporate social responsibility on customer satisfaction, we discriminate between different CSR metrics from the perspective of the customer. Following that, a relationship between customer satisfaction and market value will be established will be established. Customers' reactions to certain products and services will have an impact on their level of satisfaction.

1.5. Academic Relevance

CSR is a central concern that has caught the attention of both management and customers. Despite this good attitude toward CSR in general, customers and investors remain sceptical of a company's CSR plan (Zhang and Hanks, 2017). Investors are known to follow the lead of customers when it comes to making decisions about a business's strategy. A lack of defined CSR measurements, on the other hand, has always been the subject of current research. Those who have investigated alternative routes to establish a relationship between CSR and market value have come up with contradictory results (Daszynska-Zygadlo et al., 2016).

1.6. Managerial relevance

Considering that a CSR strategy can have both positive and negative effects on a firm, it is important to evaluate whether or not a planned CSR strategy will achieve the desired outcomes. It may appear to a manager that implementing a CSR strategy is always a good idea, however as previously said, CSR does not always produce positive benefits in terms of customer happiness and market value. CSR plan implementation requires the ability of a management to forecast the outcomes of the actions he intends to take (Haan, 2012).

1.7. Overview of the subsequent chapters

The next chapter (Literature Review) will examine Starbucks' CSR strategy from a broader perspective. To summarise, consumers make judgments on excellent and bad corporate social responsibility based on three factors: consumer trust, communication strategy, and the degree to which CSR policy aligns with a company's identity. Consumer trust, communication strategy and CSR policy's compatibility with a brand's identity will be discussed in this chapter as well. The Literature review will also attempt to highlight client reactions in relation to customer satisfaction. The next chapter will take up the research methodology including research design, research approach, research philosophy along with the data collection method and ethical responsibilities. Since the research will be primarily based on secondary resources, the research findings and discussion on the subsequent chapters will consist of qualitative analysis based on past reviews, journals and reports.

1.8 Expected result

A firm's business plan can incorporate CSR initiatives, according to the findings of the study. CSR may be a business opportunity as well as a social good for a firm that takes social responsibility seriously. It indicates that a company's CSR operations can yield financial rewards that can be used to fund and sustain their responsible actions.