Starbucks: Ethics And Compliance Essay

1632 words - 7 pages

Thirty years ago Starbucks was a single store in Seattle's Pike Place Market selling premium roasted coffee. Today Starbucks is a global roaster and retailer of coffee with over 7,000 stores worldwide. Starbucks set out on its current course in the 1980s when the director of marketing came back from Italy enchanted with the Italian coffee house experience - the Starbucks experience was born. The company stresses providing superior customer service. The company's formula met with spectacular success in the U.S., where Starbucks went from a relative unknown to one of the best known brands in the country. This paper will discuss the role of ethics and compliance within the Starbucks financial environment. It will also evaluate the company's financial performance over the past two years using several financial ratios.Assessing the Role of Ethics and ComplianceThere is a "balance between profitability and social consciousness; companies that are authentic and ethical will do better in the long run than companies simply out to make an immediate profit. Success is not an entitlement - it must be earned" (McClelland, 2007).These profound statements are from Starbucks founder and chairman, Howard Schultz. Starbucks did not become a leader in the industry and a corporate icon by just selling great coffee, but by how Schultz takes ethics and compliance very seriously in the daily running of the company.According to the official website of the Securities and Exchange Commission (SEC), their main goal is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation (SEC, 2008). After the stock market crash, Congress created the SEC in order to protect investors from the devastation the crash caused, and to supply them with more information to make better investing decisions. The law states that companies in the U.S. that publicly offer securities for investment dollars, must tell the public the truth about their businesses, the securities they are selling, and the risks involved in investing.Starbucks, like any other corporation, must follow the laws and regulations of the SEC. Doing so is very important to the reputation of the company and provides protection to investors and employees. According to the official Starbucks website, the company has made a conscience effort to comply with the laws and regulations by publicly and correctly stating the company's financial state. Starbucks has made the company's accounting practices public knowledge by posting annual reports, proxy filings, quarterly reports, 10-K's, 10-Q's, and Section 16 filings regarding insider trading. Once Starbucks has filed the required forms, the Division of Corporation Finance reviews the forms to ensure that everything meets regulations. Starbucks must report all numbers, including not so great numbers. Should the company choose to not do so, the SEC has the right to take legal action against the company. Starbucks has proven over the years that...

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