Unit 6

Ethical & Legal Considerations

Small Business Operations

Social responsibility is the concern a business has about the consequences of its actions on others.

Entrepreneurs must be willing to pay attention to society’s needs to determine how their businesses can help address those needs.

Social Responsibility

Frameworks 6.2Source: Marketing, 3e, page 47

Corporate Social Responsibility at Starbucks

Frameworks 6.2

Corporate social responsibility (CSR) or corporate citizenship entails companies behaving in a socially responsible manner, and dealing with other business parties who do the same. With growing public awareness and demand for socially responsible businesses, it is little wonder that companies of today take corporate social responsibility into account when planning future socially responsible business operations. This case study examines one such example of corporate social responsibility exemplified by Starbucks.

Starbucks is an international coffee and coffeehouse chain based in Seattle, Washington, United States. It is famous for its skinny lattes, espressos, mochas and frappes. According to the Starbucks website, Starbucks’ take on corporate social responsibility is by being responsible, acting ethically and doing things that are good for the planet and each other.

Source: www.social-corporate-responsibility.suite101.com

Corporate Social Responsibility at Starbucks

Frameworks 6.2

Use of Fair Trade IngredientsProcurement of Fair Trade ingredients has been adopted by various

socially responsible businesses who exemplify corporate citizenship. This is part of its wider Framework for Corporate Social Responsibility. Fair Trade products such as fair trade coffee, fair trade clothes and fair trade chocolate are meant to remedy some of the problems associated with regulating factory and workplace conditions of companies that produce goods and services in foreign countries and import their products into their home countries. Fair Trade standards ensure that employees have safe working conditions, work reasonable hours and are paid a fair amount for their work.

According to the Starbucks website, in order to purchase Fair Trade Certified™ coffee as part of its supply chain strategy, Starbucks pays a minimum of $1.26 (U.S.) per pound ($2.77 per kilogram) for Fair Trade certified ingredients such as non-organic green Arabica coffee and $1.41 per pound ($3.10 per kilogram) for organic green Arabica coffee, which are substantially over and above the prevailing commodity-grade coffee price.

Source: www.social-corporate-responsibility.suite101.com

Corporate Social Responsibility at Starbucks

Frameworks 6.2

Engaging the Community through Community-based ProjectsOne approach to engaging in corporate social responsibility is through

community-based development projects. Community-based and community-driven development projects have become an important form of development assistance among global socially responsible companies. An economic relationship implies a strategy of engaging the wider community into the core business activity of the company so that communities become embedded in corporate supply chain strategy to create a sustainable business. An example of this approach can be seen in the development project CARE International and Starbucks started in 2007 in Ethiopia in the Gewgew Dingete villages in West Harrarghe, Ethiopia. The project aims to provide farmers and their families with better food, safe drinking water and greater income, as well as diversified income opportunities. Through the project, community warehouse facilities were built, a haricot bean loan scheme and vegetable seed bank were initiated and farmers were trained in crop husbandry and marketing. These would thus help the farm become a more sustainable business for each farmer in the village.

Source: www.social-corporate-responsibility.suite101.com

Social ResponsibilityThe Rainforest Alliance Certified seal

is a guarantee that coffee is grown on farms where forests are protected, rivers, soils and wildlife conserved; workers are treated with respect, paid decent wages, properly equipped and given access to education and medical care.

These farms are on a path toward true sustainability. Forested coffee farms are critically important to serve as migration stopovers for birds traveling from as far away as Canada and Alaska. In areas where deforestation is rampant, these coffee farms may be the only habitat available to provide shelter and food for wary birds.

Frameworks 6.2Source: www.rainforest-alliance.org

Improving Ethics

Ethics are moral principles or values based on honesty and fairness.

A code of ethics is a set of standards or rules that guide ethical business behavior.

Frameworks 6.3Source: Marketing, 3e, page 50

Code of Ethics for CEO and Finance Leaders

To the best of my knowledge and ability, in executing my job responsibilities:

1. I act with honesty and integrity, avoiding actual or apparent conflicts of interest.2. I provide internal and external constituents with appropriate and objectiveinformation that is full, fair, accurate, timely and understandable.3. I comply with all applicable governmental laws, rules and regulations, and other appropriate private and public regulatory agencies’ requirements.4. I act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing my independent judgment to be compromised.5. I respect the confidentiality of information acquired in the course of my work except when authorized or otherwise legally obligated to disclose. I will not use confidential information acquired in the course of my work for personal advantage.6. I proactively promote ethical behavior as a responsible partner among others in my work environment. I understand my accountability for adhering to this code and my responsibility to report violations of this code to the corporate compliance officer or other appropriate individuals in accordance with Starbucks Standards of Business Conduct.7. I exercise responsible stewardship over company assets and resources and maintain appropriate internal controls. Frameworks 6.3

Source: www.starbucks.com

Develop a Code of Ethics

It should be positive. It should be brief. It should focus on integrity, respect, fairness,

and honesty. It should include safety as a key element. It should emphasize customer service . It should show a commitment to innovation. It should include environmental stewardship

Frameworks 6.3.1

Health Regulations

The county Sanitarian is responsible for inspecting restaurants and food preparation areas to ensure the safety and good health of the public.

The Sanitarian is a licensed professional employed by the Arkansas Department of Health.

Frameworks 6.4

The Sanitarian will check the holding temperature of food items to ensure that they are being held at a temperature that will prohibit the growth of bacteria.

Source: www.healthyarkansas.com

Health Department Regulations

3 chamber sink with soap water, rinse water, and sanitizing water. Hand washing for 20 seconds after handling any non-food items

and before handling food items. Dry hands with paper towel and use towel to turn off water.

Refrigerators must have thermometer indicating 40 degrees or lower.

Ice scoop in a lidded container. Coffee filters in container or wrapped in plastic. Stir sticks standing up-right, not laying down. Paper towels provided at hand washing sink. All food containers must be labeled with contents.

The following slides have an abbreviated list of items that the Sanitarian will look for. The complete list of rules and regulations for retail food establishments can be found at www.healthyarkansas.com.

Frameworks 6.4Source: www.healthyarkansas.com

Three Chamber Sink

washrinse

sanitize

Hand Wash Sink

Wash hands with soap for 20

seconds then rinse. Use paper

towel to dry hands and turn off facet.

Refrigerators Must Have Thermometers

Coffee Filters Must be Wrapped

Ice Scoop Must be in Container

Food Containers Must be Labeled

Stir Sticks and Wrapped Straws

The Americans With Disabilities Act

The Americans with Disabilities Act of 1990 prohibits private employers, state and local governments, employment agencies and labor unions from discriminating against qualified individuals with disabilities in job application procedures, hiring, firing, advancement, compensation, job training, and other terms, conditions, and privileges of employment.

The ADA covers employers with 15 or more employees, including state and local governments.

Frameworks 6.5.1Source: www.ada.gov

An individual with a disability is a person who: Has a physical or mental impairment that substantially limits one or more major life activities; Has a record of such an impairment; or Is regarded as having such an impairment.

A qualified employee or applicant with a disability is an individual who, with or without reasonable accommodation, can perform the essential functions of the job in question. Reasonable accommodation may include, but is not limited to:

Making existing facilities used by employees readily accessible to and usable by persons with disabilities. Job restructuring, modifying work schedules, reassignment to a vacant position; Acquiring or modifying equipment or devices, adjusting or modifying examinations, training materials, or

policies, and providing qualified readers or interpreters. An employer is required to make a reasonable accommodation to the known disability of a qualified applicant

or employee if it would not impose an “undue hardship” on the operation of the employer’s business. Reasonable accommodations are adjustments or modifications provided by an employer to enable people with disabilities to enjoy equal employment opportunities. Accommodations vary depending upon the needs of the individual applicant or employee. Not all people with disabilities (or even all people with the same disability) will require the same accommodation. For example:

A deaf applicant may need a sign language interpreter during the job interview. An employee with diabetes may need regularly scheduled breaks during the workday to eat properly and

monitor blood sugar and insulin levels. A blind employee may need someone to read information posted on a bulletin board. An employee with cancer may need leave to have radiation or chemotherapy treatments.

The Americans With Disabilities Act

Frameworks 6.5.1Source: www.ada.gov

The SBE Must Meet ADA Guidelines

• Adequate handicapped parking must be provided and all entry doors must be accessible for the disabled.

• Counter tops must be no more than 36 inches from the ground.

• Door openings and passageways must have at least 32 inches of clear opening space.

• Enough turn around space must be provided for a wheelchair.

• Water facets must be operable by the disabled.Frameworks 6.5.1Source: www.ada.gov

Counter Height Less Than 36 Inches From Floor

Equal Employment Opportunity Commission

The U.S. Equal Employment Opportunity Commission (EEOC) is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person's race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability or genetic information.

Most employers with at least 15 employees are covered by EEOC laws (20 employees in age discrimination cases).

The laws apply to all types of work situations, including hiring, firing, promotions, harassment, training, wages, and benefits.

Frameworks 6.5.2Source: www.eeoc.gov

Many employers will display a poster similar to this one. Most businesses will also include a statement such as “equal opportunity employer” along with job posting and on their official business stationary.

Frameworks 6.5.2Source: www.eeoc.gov

OSHA

The Occupational Safety and Health Act (OSHA) regulates safety and health conditions in most businesses. Business Principles and Management, 12e, page 630.

Employers have a duty to provide their employees with a workplace free from unsafe working conditions and other hazards.

Frameworks 6.5.3Source: www.osha.gov

OSHA Requirements for Most Businesses

Employees must be made aware of any hazardous chemicals they will be exposed to.

An emergency action plan that informs employees of what to do during a fire or other emergency.

Most businesses should have a fire prevention plan.

Exits routes should be clearly marked. Employers should provide medical and

first-aid personnel and supplies commensurate with the hazards of the workplace.

Frameworks 6.5.3Source: www.osha.gov

Environmental Protection Agency

The Environmental Protection Agency (EPA) was created by the federal government in 1974 to control and reduce pollution in the areas of air, water, solid waste, pesticides, noise, and radiation.– New laws have been passed that

require cars to be more fuel efficient and create less pollution.

– Small business owners must consider the business’s impact on the environment as regulated by the EPA.

Source: Business Principles and Management, 12e, page 39 Frameworks 6.5.4

Green Marketing

Green marketing consists of marketing activities designed to satisfy customer needs without negatively impacting the environment.

Frameworks 6.6

Starbucks recently announced that 50

percent of each store’s energy will be derived

from renewable sources, and that stores will be 25

percent more energy efficient. All stores’

incandescent bulbs will be switched to energy

efficient LED bulbs.

Source: Marketing, 3e, page 47

Recycling

Recycling is reusing products and packaging whenever possible. Business Principles and Management, 12e, page 38.

The main motives for recycling have been the increasing scarcity and cost of natural resources (including oil, gas, coal, mineral ores, and trees) and the pollution of air, water, and land by waste materials.

Frameworks 6.6

Can the SBE initiate a recycling program? How and what would be recycled?

Source: www.answers.com/topic/recycling

Sustainability

Sustainability is the attempt to meet the needs of the present without compromising the ability of future generations to meet their own needs.

Frameworks 6.6

Starbucks redesigned their Pike Street location (not far from the original Seattle location) to include wood cabinets made of fallen Seattle trees, a community table re-purposed from a old ship and preserved columns, floors and ceiling.

Source: www.insidetheaisle.com/2009/07/starbucks-tries-sustainability-to-win-back-interest/

Biodegradable Flatware

End of Unit 6

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login. Use your first name (or anything you can remember!) as

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cdorman and find Mr. Dorman’s dashboard. Open the Subjects folder “Small Business Operations.” Study the flashcards. Use the test feature and use the scatter feature.