Starbucks and lobbying
Large companies, whether they want to or not, end up trying to influence government policy through well-paid and highly-connected lobbyists. That point was illustrated in a recent Wall Street Journal article ("Cautiously, Starbucks Puts Lobbying on Corporate Menu", 4/12/05), which shows how coffee retailer Starbucks with reluctance engaged a Washington lobbyist to protect its business.
Starbucks gives an example, according to the article, of the "uneasy transition a group of cutting-edge entrepreneurs of the 1990s face as they take their first steps into Capitol Hill lobbying." The article also cites companies like Google and Red Hat that have recently hired lobbyists to, at the very least, fend off legislation that will help rivals and hurt them.
Starbucks, which has grown in a decade from around 700 stores to over 9,100, is exposed more than ever to federal tax, labor, health insurance, and trade policies, all being pushed one way or another by competing interest groups. As the article puts it:
But it's clear that much of the company's future growth will come from overseas. That makes lowering trade barriers with Central America and even far-flung places like Thailand critical issues for the coffee retailer. Double-digit spikes in health-care costs threaten the company's ability to offer medical coverage -- a signature employee benefit it extends to even part-time workers. And as the company dips its toe into more sensitive areas, such as coffee-flavored liquor sales, it faces greater regulation.
Given al that, Starbucks cannot afford to ignore what's happening in Washington. In the first big triumph of the lobbying effort, Starbucks managed to gets its coffee roasting operations defined as manufacturing rather than service in order to preserve a tax break it might otherwise have lost in a new bill.
As Starbucks plans to expand overseas, having nearly saturated the US market, issues of trade polity loom ever larger. This includes lowering tariff barriers to coffee beans and products in other SUI trading partners. While companies like Wal-Mart and Cargill are getting their desires represented at trade negotiations, Starbucks has to follow suit to remain profitable.
The point is that even companies who have heroically built themselves up through a combination of laissez-faire capitalism and hard work, soon see the need to manipulate government policy in their interest, and that's only something that big companies can afford to do.
