Ivey Publishing: Starbucks Corporation: A Bittersweet Reputation Recovery (Case 8B20M172)

Available on Ivey Publishing

The Starbucks case revolves around diversity and inclusion, reputational damage to an organization, leadership, and human resource management.

Starbucks Corp:

Following an in-store incident on April 12th, 2018, that resulted in the arrest of two black men, Starbucks Corp faced the most severe public relations crisis in its recent history. A video of the incident, posted on Twitter, quickly generated widespread attention, online criticism, and in-person protests from people who accused the coffee giant for having exhibited racial bias.

Assume that this event happened on March 12th, 2021, so that you can reflect on the more current conversations about diversity and inclusion.

Within a few days, Starbucks shared a series of press releases that featured the CEO personally apologizing and taking responsibility for the incident. Taking the company’s response a step further then the response of other large scale corporations facing a similar crisis, the CEO announced that more than 8000 US Starbucks stores would close for the afternoon in may while the company conducted racial bias training and education. Although many PR experts and customers commended Starbucks for its elaborate response, other individuals still criticized Starbucks, claiming that its response was in genuine. Instead, they suggested that the response was merely an attempt to protect the organizations reputation and avoid losing business. Further while the training may have yielded a positive education and learning for employees, it might not have been enough to prevent similar incidents from occurring in the future. What must Starbucks due to demonstrate its intentions were genuine? How could it correct its mistake and address the root cause of the incident, keeping customers trust, and thrive as the world’s largest coffee retailer?

Learning objectives

•          Demonstrate best practices for responses to public relations crises

•          Analyze the role of corporate reputation and customers reaction to business mishaps

•          Recognize implicit bias

•          Describe the role of human resource management in corporate culture and delivering the customer experience

•          Outline the importance of diversity and inclusion in corporate settings

Research questions

1.         Reflecting on Starbucks corporate strategy, do you think the company’s response was a genuine apology or a necessary public relations move intended to protect its reputation? Provide supporting evidence for all questions.

2.         What role does organizational reputation play in the different reactions to the incident, both before and after Starbucks is response?

3.         How can Starbucks prevent such incidents from occurring in the future?

4.         How can companies build a culture where allyship, meaning support for diversity and inclusion initiatives, is genuinely ingrained? Can an increase in self-awareness through exercises such as the implicit Association test lead to actionable change?

Helpful hints:

•          Remember, this is a management report, so you need to be succinct with your text, use visuals to support your points, create headers and sub-headers to organize your thoughts. Formatting is important.

•          Double and triple check your work. Errors can have severe consequences; spelling mistakes look sloppy and demonstrate poor attention to detail and these leaders are used to getting professional reports.

•          Do not separate the sections and work in isolation. The result will be an internally consistent document.

•          Organize your ideas/thoughts together before you start writing.

•          When you are doing a management report, managers very rarely (if ever) break down their assessment of your report into weighted sections. They review the whole document in its entirety and form judgements of the quality of the report based on the whole report. As such, your report will not be broken into weighted sections.

•           Use evidence to support your points, so reference the textbook and additional academic sources when/as required.

You might find these articles useful:

“Race IAT,” (implicit association test for “race”), Project Implicit, 2011, accessed April 4, 2019, https://implicit.harvard.edu/implicit/takeatest.html.

Maurice E. Schweitzer, Alison Wood Brooks, and Adam Galinsky, “The Organizational Apology,” Harvard Business Review, September 2015, 44–52. Available from Ivey Publishing, product no. R1509B.

Grahame Dowling and Peter Moran, “Corporate Reputations: Built In or Bolted On?,” California Management Review 54, no. 2 (2012): 25–42. Available from Ivey Publishing, product no. CMR500.

Textbook: Wickham, L & Wilcock, J., Management Consulting Delivering an Effective Project, 5/E, Pearson Education Canada.

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