Issues and Crisis Management in Starbucks: A Case Study

This case study focuses on the management issue faced by Starbucks due to racism and biased attitude towards customers and employees. The study provides steps for issue management plan and strategic decisions to overcome the situation.

Running head: ISSUES AND CRISIS MANAGEMENT
Issues and Crisis Management
Name of the Student
Name of the University
Author’s Note

1ISSUES AND CRISIS MANAGEMENT
Table of Contents
Step 1: Monitoring...........................................................................................................................2
Step 2: Identification........................................................................................................................3
Step 3: Prioritization........................................................................................................................4
Step 4: Analysis...............................................................................................................................5
Step 5: Strategy decision.................................................................................................................7
Reference List:.................................................................................................................................9

2ISSUES AND CRISIS MANAGEMENT
Issue management plan
Step 1: Monitoring
This particular study has focused to identify a severe management issue faced by a well
reputed organization due to which organizational image and reputation is highly affected.
Starbucks is an US coffee service chain occupying international fame due to their superior
quality of services. From the initial journey of their business the organization has targeted
premium customers by making the price range high. However, recently it is observed that
Starbucks has become in the limelight of their news due to management issues1. The service
providers and managers are very much biased towards racism. People belonging to indigenous
background do not get proper treatment from the management of Starbucks.
Recently one incident has made the organization in the peak of limelight based on which
Starbucks’ international glory is immensely affected. It is an allegation from the customers’ end
that the service providers tag a racial slur on Latino customer's drinks. In an occasion a person
placed an order of chocolate mocha and an iced caramel macchiato. When the barista brought the
drink it was tagged as “Beaner” which is a derogatory terms applied for Mexicans of US2.
However, this kind of biased and racism attitude on half of the management of Starbucks was
firmly protected by numerous social media channels as well as electronic and print media
channels. This kind of major management issue has seriously left sever impact on the overall
image and reputation of the organization3. Not only customers the management system of
1 Stark, John. "Product lifecycle management." Product Lifecycle Management (Volume 1). Springer, Cham, 2015.
1-29.
2 Edition.cnn.com, (2018). Available at: https://edition.cnn.com/2018/05/17/us/california-starbucks-racial-slur-trnd/
index.html
3 Apnews.com (2018). Available at: https://apnews.com/45547c3ae5324b679e982c4847ee1378

3ISSUES AND CRISIS MANAGEMENT
Starbucks is very much biased towards while people. Human resource managers while recruiting
the employees prefer to select candidates as per cultural and religious backgrounds rather than
focusing on skills and competency.
Step 2: Identification
Among all the management system associated with Starbucks the business experts have
faced challenges in human resource management issues. Human resource managers tend to show
their biased attitude towards those people who have indigenous backgrounds or racial
backgrounds4. The workplace never intends to follow diversity management within organization.
The employees are restricted to white people. In case of treating customers the service providers
tend to show their biased attitude towards racism. Black people never get equal priority and
response from the customer service providers. They get delayed services with complete
reluctance on behalf of the barista.
This particular issue has drawn the attention of international customers. The number of
service users has been enormously declined due to which the profit margin the organization is
highly affected5. People belonging to other cultural backgrounds and attitudes have strictly
denied using the services of Starbucks due to their biased managerial set up. In addition, people
from other religious backgrounds have stopped applying for the post of human resource
management. Eventually, the organization lacks talented and skilful people who would be
successfully able to retain organizational image6. The overall business growth of Starbucks in the
realm of beverage industry has received immense negative outcome.
4 Theguardian.com, (2018). Available at: https://www.theguardian.com/world/2018/may/28/coffee-shop-racism-
starbucks-arrest
5 Weiss, Joseph W. Business ethics: A stakeholder and issues management approach. Berrett-Koehler Publishers,
2014.
6 Kerzner, Harold, and Harold R. Kerzner. Project management: a systems approach to planning, scheduling, and
controlling. John Wiley & Sons, 2017.

4ISSUES AND CRISIS MANAGEMENT
Lifecycle flow is constituted with four major stages which include introduction, growth,
maturity and decline. After facing this particular situation the organization has gone to the stage
of decline7. On one hand, the organization has lost their international glory; on the other hand,
the business experts have faced immense challenges running entire business process due to the
lack of sufficient profitability. Employees associated with the services are unable to get proper
remuneration at the right time due to this business turmoil. The management has faced
difficulties to maintain their business sustainability.
Step 3: Prioritization
The product sector of Starbucks is completely safe and secured as they deliver superior
quality of products to the customers. In addition, due to their superior quality of products they
have already grabbed the attention of international customers. However, the issue that Starbucks
have faced in dealing with the customers includes their service quality. After this incident
Starbucks had to face its major impact on their business reputation, products, organizational
profitability8. The rate of sale volume has been decreased immensely. The target customers have
become selected. Black people have strictly denied availing the services of Starbucks.
Eventually, the organizational profit margin has been decreased due to the lack sales margin.
This kind of major management issue has seriously left sever impact on the overall image
and reputation of the organization. Not only customers the management system of Starbucks is
very much biased towards while people9. People belonging to other cultural backgrounds and
attitudes have strictly denied using the services of Starbucks due to their biased managerial set
7 Lientz, Bennet, and Kathryn Rea. Breakthrough technology project management. Routledge, 2016.
8 Oladapo, Victor. "The impact of talent management on retention." Journal of business studies quarterly 5.3 (2014):
19.
9 Ghiani, Gianpaolo, et al. "Operations research in solid waste management: A survey of strategic and tactical
issues." Computers & Operations Research 44 (2014): 22-32.

5ISSUES AND CRISIS MANAGEMENT
up10. In addition, people from other religious backgrounds have stopped applying for the post of
human resource management. Employees associated with the services are unable to get proper
remuneration at the right time due to this business turmoil11. After this kind of immediate issue
some of the major consequences have been raised in the workplace of Starbucks.
 The customers have showed their reluctance in using the services of Starbucks. They have
showed their preferences in availing services of other beverage service providers rather than
using Starbucks and its services
 The employees have faced immense difficulties in getting their remuneration within
stipulated time. The organization failed to afford additional benefits and facilities to the
employees.
 The customer service providers associated with Starbucks are comfortable in business
official language. As a result, the people belonging to other cultural backgrounds and
attitudes could not get effective response from the service providers due to lack of multi-
lingual competency.
However, this very specific study has focused to make in-depth overview on how
Starbucks had to face immense challenges in running their brand image and identity after large
number of stores got shut down.
Step 4: Analysis
Before analysing this kind of issue an effective SWOT analysis is conducted for
evaluating the strengths, weakness, opportunities and strengths of the organization.
10 Cherry, Barbara, and Susan R. Jacob. Contemporary nursing: Issues, trends, & management. Elsevier Health
Sciences, 2016.
11 Nicholas, John M., and Herman Steyn. Project management for engineering, business and technology. Routledge,
2017.

6ISSUES AND CRISIS MANAGEMENT
Strengths
 Product quality is the primary strength
of Starbucks
 The employees associated with the
business organization are very much
professional and well trained
 They have efficiency in management
skill and technological competency
Weakness
 Starbucks’ service process is not effective
enough in fulfilling the needs and demands
of every customers belonging to various
cultural backgrounds and attitudes
 The primary weakness of Starbucks is
racism. They are very much biased in racial
discrimination. As a result, the number of
target customers are very low
Opportunity
 After gaining international image and
reputation the organization can expand
their entire business process in different
geographical backgrounds
 By overcoming the negative impression the
business experts can render service
innovation as well as product
diversification
Threats
 Competitors market threat is a serious
concern for Starbucks
 Starbucks may have to face international
threats as well due to the emergence of
innumerable prestigious coffee delivery
centres
However, after the entire evaluation about this situation, it can be analyzed that this kind
of major management issue has seriously left sever impact on the overall image and reputation of
the organization12. Not only customers the management system of Starbucks is very much biased
12 Madsen, Jesper, et al. "Implementation of the first adaptive management plan for a European migratory waterbird
population: The case of the Svalbard pink-footed goose Anser brachyrhynchus." Ambio 46.2 (2017): 275-289.

7ISSUES AND CRISIS MANAGEMENT
towards while people. People belonging to other cultural backgrounds and attitudes have strictly
denied using the services of Starbucks due to their biased managerial set up. In addition, people
from other religious backgrounds have stopped applying for the post of human resource
management13. Employees associated with the services are unable to get proper remuneration at
the right time due to this business turmoil. People belonging to other cultural backgrounds and
attitudes have strictly denied using the services of Starbucks due to their biased managerial set
up. In addition, people from other religious backgrounds have stopped applying for the post of
human resource management.
The rate of sale volume has been decreased immensely. The target customers have
become selected. Black people have strictly denied availing the services of Starbucks.
Eventually, the organizational profit margin has been decreased due to the lack sales margin.
The organization failed to afford additional benefits and facilities to the employees. The
customer service providers associated with Starbucks are comfortable in business official
language14. As a result, the people belonging to other cultural backgrounds and attitudes could
not get effective response from the service providers due to lack of multi-lingual competency15.
However, in order to overcome this kind of situation, the business experts of Starbucks would
have to decide in taking effective strategic decision in the next part.
Step 5: Strategy decision
The strategic decisions that should be taken in order to overcome this static situation are
as follow:
13 Pritchard, Carl L., and PMI-RMP PMP. Risk management: concepts and guidance. Auerbach Publications, 2014.
14 Berry, Anthony J., Jane Broadbent, and David T. Otley, eds. Management control: theories, issues and practices.
Macmillan International Higher Education, 2016.
15 Brown, Greg, and Marketta Kyttä. "Key issues and research priorities for public participation GIS (PPGIS): A
synthesis based on empirical research." Applied Geography 46 (2014): 122-136.

8ISSUES AND CRISIS MANAGEMENT
 The business experts would have to identify the target customers which belong to various
cultural backgrounds and attitudes
 Implement more resources to satisfy the needs and demands of various customers. Customers
service providers should have multi-lingual flexibility
 The organization would have to render their product diversity to attract the people of various
cultural backgrounds and psychological attitudes
 Make a communication plan and strategy for interacting with the target customers

9ISSUES AND CRISIS MANAGEMENT
Reference List:
Apnews.com (2018). Available at: https://apnews.com/45547c3ae5324b679e982c4847ee1378
Berry, Anthony J., Jane Broadbent, and David T. Otley, eds. Management control: theories,
issues and practices. Macmillan International Higher Education, 2016.
Brown, Greg, and Marketta Kyttä. "Key issues and research priorities for public participation
GIS (PPGIS): A synthesis based on empirical research." Applied Geography 46 (2014): 122-136.
Cherry, Barbara, and Susan R. Jacob. Contemporary nursing: Issues, trends, & management.
Elsevier Health Sciences, 2016.
Edition.cnn.com, (2018). Available at: https://edition.cnn.com/2018/05/17/us/california-
starbucks-racial-slur-trnd/index.html
Ghiani, Gianpaolo, et al. "Operations research in solid waste management: A survey of strategic
and tactical issues." Computers & Operations Research 44 (2014): 22-32.
Kerzner, Harold, and Harold R. Kerzner. Project management: a systems approach to planning,
scheduling, and controlling. John Wiley & Sons, 2017.
Lientz, Bennet, and Kathryn Rea. Breakthrough technology project management. Routledge,
2016.

10ISSUES AND CRISIS MANAGEMENT
Madsen, Jesper, et al. "Implementation of the first adaptive management plan for a European
migratory waterbird population: The case of the Svalbard pink-footed goose Anser
brachyrhynchus." Ambio 46.2 (2017): 275-289.
Nicholas, John M., and Herman Steyn. Project management for engineering, business and
technology. Routledge, 2017.
Oladapo, Victor. "The impact of talent management on retention." Journal of business studies
quarterly 5.3 (2014): 19.
Pritchard, Carl L., and PMI-RMP PMP. Risk management: concepts and guidance. Auerbach
Publications, 2014.
Stark, John. "Product lifecycle management." Product Lifecycle Management (Volume 1).
Springer, Cham, 2015. 1-29.
Theguardian.com, (2018). Available at:
https://www.theguardian.com/world/2018/may/28/coffee-shop-racism-starbucks-arrest
Weiss, Joseph W. Business ethics: A stakeholder and issues management approach. Berrett-
Koehler Publishers, 2014.