Ethics and Compliance of Starbucks

Ethics and Compliance of Starbucks

Starbucks is a friendly neighbor across local communities and around the globe with outstanding customer service and pride itself as a company that conduct ethical and striving to do the right thing. This is vital to the success of our company according to Schultz, CEO. Business ethics and Compliance is a program that support our Starbucks Mission and helps protect our culture and our reputation by providing resources that help partners make ethical decisions Ethics and Compliance, financials of Starbucks and other important issues facing a neighborhood coffee shop in which people gather for a quality cup of coffee and conversations.

The Role of Ethics and Compliance at Starbucks

The role of ethics and compliance in organization’s financial environment is best reflected by the organization’s book keepers who should take into account the preliminary conditions and primary principles such as the GAAP financial reporting principle. First, ethics demands for use of integrity when preparing the report. A book keeper should be sincere, honest, and correct in his or her duty. Secondly, the expert book keeper should be guided by principle of objectivity that requires book keepers to be impartial and not to admit outside influences. In addition the leaders of the organization should be honest and realistic in matters regarding their financial objectives and interest for them to give the best to the organization.

From the 2007/08 Starbuck financial highlights, the company recorded 11.1% increase in the number of new stores worldwide. Although revenue growth rate declined from 21% to 10% in 2008, revenues rose from $ 9.4 to $10.4 billion. However, due to decline in revenue growth and hence profit return on equity reduced to settle at $ 315 million down from $ 673 million the previous year (Starbuck, 2008). In 2007/08 the world’s market experienced economic meltdown that reduced consumer spending power. Many companies registered a decline in sales volumes.

From the Starbuck financial report we can see that the company experienced a decline in its revenue turnover a clear indication that book keepers in the company exercised integrity, objectivity, honest figures, clear reflection of the financial position and operating results of Starbucks. The company reported a decline in comparable store sales in 2008 primarily because of lower consumer traffic caused by the difficulties that were being experienced in the global economies that had negatively affected consumer spending.

Procedures that Starbucks Has Put in Place to Ensure Ethical Behavior

In order for the Starbuck’s corporation to run an efficient and ethical business the management team must instill certain characteristics in each employee. The trusted system of procedures that the Starbuck’s corporation is incorporating into the training and character of each employee will within them drive a desire to perform at their maximum ethical level at all times regardless of the temptations around them. Ethics begins with treating the customer and ensuring that their coffee or products they are purchasing are fresh to the utmost standards. One of Starbucks main goals are to make every customer’s experience joyful and fulfilling by never harassing or discriminating against them. Another highlight of Starbucks award winning coffee is the procedure for storing and handling the coffee. Therefore, by following the six-step guiding principles Starbucks ensures that the employees, customers, and shareholders will be satisfied. The six-steps are respect and dignity; embrace diversity as an essential component in the way we do business; apply the highest standards of excellence to the purchasing; roasting and fresh delivery of our coffee; develop enthusiastically satisfied customers; contribute positively to our communities and our environment; and recognize that profitability is essential to our future success” (Starbucks.com, 2004)

The Processes Starbucks Uses to Comply With SEC Regulations

The Securities and Exchange Commission has several requirements relating to public company financial reporting for instance disclosure of non–GAAP financial information. Under this act all publicly traded enterprises are required to publicly disclose non GAAP financial information. Second, the commission has adopted what is commonly referred to as Final Rule as a measure to secure auditor’s independence.

To ensure that it complies with the SEC regulations, Starbuck conforms to accounting principles generally accepted in the US (i.e.) GAAP when preparing financial statements. Sometime these principles allows for assumption that affect assets, liabilities, revenues, and expense to be made. These principles ensure that a company reports the true financial position and operating results at the time when the financial statements are prepared. Second, the company allows external independent auditors to audit their financial reports. Independent registered auditors have the responsibility to express an opinion on the financial statement of the company based on their audits. It is a requirement by the SEC that all publicly companies invite independent auditors to investigate their statements (Starbucks, 2004).

In matters of disclosure, Starbucks has established disclosure control procedure. This procedure ensures that material information that is required to be disclosed in the company’s periodic reports under the security exchange act is recorded, summarized and reported within the time specified in the SEC rules (Starbuck, 2008).

Current Ratio

The current ratio is mainly used to give an idea of the company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. It is calculated by dividing current assets by current liabilities.

Data Retrieved from fiscal 2008 annual report. Retrieved February 6, 2010 from http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-reportsAnnual

Fiscal Year Ended

Sept, 28 2008

Sept, 30 2007

Current Assets

1748

1696.5

Current Liabilities

2189.7

2155.6

Current Ratio

79.83%

78.70%