Monthly Archives: September 2014

Starbucks (SBUX) has recently announced an addition to its beverage menu for its customers. Currently, Starbucks sells Frappuccinos in a variety of flavours and sizes. The smallest size available is a tall, which is equivalent to 12 ounces. This size contain 270 calories and 17% of your daily fat needs. Moving forward, Starbucks plans to add another size to their Frappuccino offering. Specifically, they plan to introduce the 10 ounce mini-Frappuccino.

From a marketing perspective, the mini Frappuccinos offer a healthier and cheaper alternative compared to the 12 ounce size. The 10 ounce Frappuccino contains 50 less calories and is 30 cents cheaper than the tall size. I believe in today’s health conscious world, Starbucks will strike a cord with the consumers with this new initiative.

“Starbucks”

However, it is clear that Starbucks has an ulterior motive. Currently, the Frappuccino sales bring in $2 billion in annual sales to this public company. Starbucks is hopeful that their new Frappuccino offering will provide the impetus for increased sales of the product.

Therefore, this is a good example of marketing meeting accounting. If successful, I believe that Starbucks, among others, will employ this strategy for the betterment of both the consumer and the bottom line of the corporation.

Work Cited:

http://www.businessweek.com/articles/2014-09-17/starbucks-tests-a-slightly-smaller-frappuccino?campaign_id=yhoo

“Starbucks Kicks off Summer with New Caramel Ribbon Crunch Frappuccino® Blended Beverage and Offers More Than 36,000 Different Frappuccino® Combinations.” Starbucks Kicks off Summer with New Caramel Ribbon Crunch Frappuccino® Blended Beverage and Offers More Than 36,000 Different Frappuccino® Combinations. N.p., n.d. Web. 21 Sept. 2014.

Within Milton Freidman’s text, The Social Responsibility of Business Is to Increase Its Profits, it is clear that the author believes in a number of fundamental principles to accommodate the long term success, profitability and to maximize benefit to all stakeholders in one’s business model. These include, but are not limited to, maximizing profit, conforming to the changing environment of society, maintaining the laws of the land and demonstrating ethical conduct.

To the latter point, I make note of the recent case in which a mining company named Southwestern Resources clearly crossed the line of ethical conduct. Southwestern Resources is a public company headed by John Paterson, it’s former CEO. Mr. Patterson released fraudulent data regarding the test results of a gold mine located in China. As a result, it is estimated that investors lost more than $260 million due to his unethical conduct. The company’s stock increased to more than $40 per share from 15 cents after issuing deceptive results.

From my perspective, the damage caused as a result of this dishonest conduct exemplifies a number of wrongs to many stakeholders who are innocently associated with the company. Firstly, the shareholders who lost money. Secondly, employees who potentially lost their jobs and their personal reputations by their association with Southwestern Resources. Thirdly, it speaks to the core of one’s confidence in public companies. Incidents like this injure ethical companies from conducting business and raising capital in the public forum.

http://www.cbc.ca/news/canada/british-columbia/former-mining-exec-gets-6-years-in-jail-for-faking-test-results-1.1401431

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