Starbucks, one of the largest global beverage industry’s mission is “to inspire and nurture the human spirit- one person, one cup and one neighborhood at a time” (Our Mission). Be that as it may, without an upstanding ethical foundation, it would not have succeeded thus far. This paper will highlight Starbucks ethics and compliance within its financial environment, its procedures to ensure positive ethical behavior while explaining the workings of the United States financial markets.
Found within these pages will be the process used b Starbucks to comply with SEC regulations, an evaluation of its financial performance for the past two years, and any trends leading to the company’s health. In 2002, the passing of the Sarbanes Oxley Act narrow the gap of wrongdoing within organizational financial reporting. The purpose of the Act was to “safeguard the interests of the shareholders by providing greater protection against accounting fraud and financial misconduct” (Titman, Keown, & Martin, 2012, p. 11).
Ethics guides his or her moral decisions, but when it pertains to business, the path taken leads to long-term success or failure. Business ethics, an organization’s management tool, shares the values, obligations, virtuous ambitions of the company, and the way of doing things. At no time should undesirable ethical practices bolster personal interest, any decisions made should be of sound moral fiber and with the corporation’s interest in mind. For six consecutive years in a row, Starbucks ranks as one of the most ethical companies in the world (“2012 World’s Most Ethical Companies”, 2012).
This distinction went to organizations committed to ethical practices, portrayed through their governance indicating good financial performance. As stated by “Business Ethics and Compliance” (2012), “Starbucks believes that conducting business ethically and striving to do the right thing are vital to the success of the company” (para. 1). When reading through the pages of its bylaws and reports, a continual trend prevails. The corporation has an ethics and compliance program in place striving to achieve a culture with integrity.
Its candidness and transparency showcases the aligning of its corporate practices with local and global initiatives, environmental stewardship, along with the ugly side of its litigation track record. Effective ethics and compliance programs are key components to a healthy organization. In addition to establishing these behaviors, and regulating against noncompliance, these platforms aid in combating financial fraud and abuse. Every company concocts its own ‘secret recipe’ for an efficient ethics and compliance program, but the basis of each begins with the same foundation.
The five building blocks of a workable ethics and compliance model are 1. Explaining the risks of bad ethics and noncompliance 2. Proactively deterring ethical and compliance discontent 3. Identifying nonconformity 4. Aggressively addressing accusations and violations 5. Evaluating outcomes and find ways to improve on current standards (“Ethics And Compliance Risk Management”, 2007). Capturing this ideal, Starbucks begins by demonstrating step one through its Business and Compliance program that supports its mission, protects its culture, and provide information on ethical and compliant decisions in the workplace.
Next it deters unethical principles through its continued education on legal compliance, and ethics training. From there, Starbucks uses investigative techniques to detect potential conflicts of interests while allowing an open door policy for employees to voice concerns. Taking allegations seriously, the corporation implemented a specified reporting mechanism that tracks such trends, so that it can evaluate its competency within this area. Starbucks constant internal evaluation and response to its evaluations permits the organization to remain as one of the top most virtuous companies.
In place, Starbucks has an ethical decision-making framework to assist its members in both learning and maintaining correct behavior. This model identifies the ethical issues, list a solution as well as possible obstacles to the proposed resolution before determining the best approach. The unique quality to Starbucks framework lies in its empowerment of its employees; the company allows its employees to have autonomy alongside a voice. Resources are readily available for guidance to assist each person follow through on his or her decision.
In the United States there is a place where buyers and sellers unite to trade assets such as bonds, derivatives, and currencies. Financial markets can be anywhere that many and credit are exchanged. The stock market plays an instrumental part in the United States financial market. The United States financial markets “consists or commercial banks, finance companies, insurance companies, investment banks, and investment companies” (Titman, Keown, & Martin, 2012). In the United States traded companies that decide to go public must adhere to regulations based on the Securities Exchange Commission or SEC.
The SEC was created to govern the way Wall Street conducted business. “The mission of the U. S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation” (“How The Sec Protects Investors, Maintains Market Integrity, And Facilitates Capital Formation”, 2012). In order for Starbucks to maintain it must adhere to all the rules and regulations in every annual and quarterly filings that are announced to the public to be in compliance the SEC policy. The company goes under an audit which also makes sure the company is following SEC requirements.
Starbucks provide their quarterly and annual financial statements to ensure every facet of the statements are accurate and candid before it is sent to the SEC to authenticate. Starbucks openly shares its information with customers and future stock investors to promote a healthy and honest business environment and a prosperous establishment. The financial performance for Starbucks for the 2010, 2011 and 2012 fiscal years have increased. In the 2011 year, they had the reportable operating segments which are the United States, International and Global Consumer.
In percentage, Starbucks total net revenue for the fiscal year were United States 69%, International 22%, Global Consumer 7% and other was 2%. The total net revenue for the 2011 year was at 11. 7 billion while the 2012 year was increased by 14% to 13. 3 billion. By the end of the 2011 year, the return of equity was 29. 26% and the end of the 2010 year was 28. 87%. In the fiscal year of 2012, Starbucks had four reportable operating segments, which are the Americas, Middle East, Europe, Africa (EMEA), China/Asia Pacific (CAP) and Channel Development.
Each one of the operating segment is managed by an operating segment president. The total revenues increased by 14% driven by global comparable store sales growth of 7% and a 50% increase in channel development revenue. The total equity for 2010 was 3,682. 3 and 2011 was 4,387. 3. The business trend refers to the residual economic features of the trade. The magnitude of rivals exceptional focuses on whether the industry is fragmented into many small companies or if it is dominated by a few large companies (Gamble & Thompson, Jr. , 2011). The global countryside is a lot like the US countryside as far as business rivals.
The global market is considered to be fragmented with the top three firms having only 22. 9% of the total market, while the US market is considered to be trending towards consolidation with the top three firms having 59. 4% of the market volume (Datamonitor, 2010). to ebt ratio and Debt to net worth ratio of this company is established for mutually equal years and its low representing a high economic security. This designate business profile has decrease and moreover it is more than the production norm. Quick ratio and Current ratio helps in judging the liquidity of the company.
Its ratio has increased indicating improved liquidity of the organization. Net profit ratios have increased but it’s below industry average indicating inefficiency in the organization. Organization need to improve the efficiency of the organization. Asset turnover indicates the utilization of the assets. Starbucks’ fixed asset turnover has improved in 2010, indicating better fixed asset utilization. But its total asset turnover ratio has declined and it is less than the industry average of 1. 8 times. This is signaling that its asset utilization is inferior to the industry.
It needs to improve its asset utilization. Starbuck’s average collection is around 10 days in both the years which is less than the industry average of 5 days. This is signaling that its receivables utilization is inferior to the industry. Thus its efficiency to receivable management is inferior to the industry. Return ratios has improved in 2010 indicating that it is giving better returns on the assets and the shareholders.
Business Ethics and Compliance. (2012). Retrieved from http://www. starbucks. com Ethics and Compliance Risk Management . (2007). Retrieved from http://www. lrn. com How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation. (2012). Retrieved from http://www. sec. gov/about/whatwedo. shtml Our Starbucks Mission Statement. (2012). Retrieved from http://www. starbucks. com Titman, S. , Keown, A. J. , ; Martin, J. D. (2012). Financial management: Principles and applications (11th ed. ). Retrieved from The University of Phoenix eBook Collection database 2012 World’s Most Ethical Companies. (2012). Retrieved from http://www. ethisphere. com http://investing. businessweek. com/research http://investor. starbucks. com/phoenix. zhtml? c=99518&p=irol-irhome