Ethical Leadership and Starbucks: A Financial Crisis Analysis

This assignment analyzes the application of ethical leadership in the context of economic and financial crises, using Starbucks as a case study. The presentation begins by defining ethical leadership and its importance, emphasizing values like honesty, trust, and fairness. It then describes economic and financial crises, outlining their causes and potential consequences, such as GDP decline, inflation, and social tensions. The core of the presentation examines how Starbucks, a global coffee company, navigated the 2008 financial crisis. The analysis highlights the advantages of ethical leadership, such as reducing complexity, managing financial risks, and fostering business awareness. Conversely, it acknowledges potential disadvantages, such as high product prices. The assignment concludes with recommendations for Starbucks, including strategies to compete with competitors and strengthen consumer relationships, underscoring the role of ethical leadership in overcoming crises.

ETHICAL LEADERSHIP
FOR ECONOMIC &
FINANCIAL CRISIS

• Ethical leadership is govern by the ethical
values and beliefs for the dignity & rights
of another's individual.
• This leadership topic can be related to
honesty, trust, and, fairness between the
employees (Shapiro, 2016).
• Ethics is concerned with those values and
morals which society finds appropriate.
WHAT IS ETHICAL LEADERSHIP?

• Ethical leadership helps in identifying the
difference between right and wrong.
• Ethical leadership helps in uplifting the
organizational environment and employee’s
beliefs to a bigger stage of ethical behavior..
• Ethical leadership helps the company in
developing a high stage of integrity which
result in a trustworthiness.
• This leadership also helps in encouraging
subordinates to accept and follow the vision
of the company.

• Financial crisis consists of so many situations
in which many of the financial assets
instantly loss a huge part of their nominal
value.
• Financial crisis straight result in a lose of
paper wealth but do not compulsory result in
big changes in the economy.
• An economy crisis is a condition in which the
economy of a country feels a sudden fall
brought by a financial crisis.
ECONOMICAL &
FINANCIAL CRISIS

• Due to inflation/deflation, an economy
facing an economic crises will experience a
fall in GDP, and a rise/fall in prices.
• An economic crises may cause a recession
and depression in society.
• The financial and economic crises result in
restriction of growth and development in
the organization.
• Ethical leadership can help in coping up
with the problem of such organization
crises.

• It is an American global coffee organization
situated in Seattle, Washington.
• This is called as the largest coffee house
company.
• The company consists of ethical behavior ,
wide diversity and high venue.
• The mission line of the company is “To inspire
and nurture the human spirit one person, one
cup and one neighborhood at a time.”
STARBUCKS
COMPANY

It has been believed by Starbucks company
that for success it is important to conduct
business ethically.
But it has been seen that Starbucks, pulled
itself out in the financial crises in 2008.
The case of Starbucks in relation to
financial and economic crises can be seen
in the article issued by the Shrezay
Husain, Feroz Khan and Waqas Mirza in
Business today (husain, et al., 2014).
CASE OF FINANCIAL AND
ECONOMIC CRISES

• Credit bubble
• Leverage
• Conflict of interest
• Increased complexity arising from
innovation.
• Unintended consequences of deregulation.
• Failures of rating agencies in pricing risk
correctly.
CAUSES OF FINANCIAL AND
ECONOMIC CRISES

• Inflation
• Results in inequality
• Social tension
• Political stability
• Pressure for economic change
• Risk of hysteresis
• Legacy of debt
• Protectionism
POTENTIAL CONSEQUENCES
OF FINANCIAL AND
ECONOMIC CRISIS

• With the help of Ethical leadership help,
Starbucks can overcome the problem of
the economical and financial crisis in the
company.
• An ethical leader always helps in
generating a high level of integrity with
help in the generation of the
trustworthiness between the employees.
ADVANTAGE OF
ETHICAL
LEADERSHIP

• An ethical leader in the organization helps in
reducing the complexity arise due to the
innovative process.
• An ethical leader can manage the financial
risk effectively which help the rating
companies to deal with pricing risk effectively.
• Ethical leadership in the organization helps in
generating higher revenues and demand.
• This leadership also helps with business
awareness and recognition.

• In the case of the financial or economic
crisis, every person does not stand on the
same stage, while ethical leadership
requires comprehensive support to
become effective.
• In the case of the crisis, there is not
necessary that the leader works with the
consistency, and if the leader will not
have consistency then ethical leadership
style will fail.
DISADVANTAGE OF
ETHICAL LEADERSHIP

The price of their product is very high by
which only a few individual able to offer
that. The company should cut out its price
and should keep their price structure in
such a way, that it can be afforded by all
persons. This was the main reason why
the organization took the hit in an
economic pressure as consumers choose
for the cheaper products.
RECOMMENDATION 1

The company should implement
various strategies and plans
which can help Starbucks in
competing with the competitors,
as this was also one of the
reasons for the fall back of the
companies growth.
RECOMMENDATION 2

The company should develop its
relationship with the consumer to
provide a convenient process for
the person at large. As this was
also one of the problems
associated with Starbucks that it
has losses its fidelity.
RECOMMENDATION 3

• From the above analysis, it can be
concluded that ethical leadership can
overcome the problem of financial and
economic crisis.
• Starbucks was badly impacted by the
economic and financial crisis that resulted
in many shops have to shut down but this
can be managed by the implication of the
ethical leadership in the organization.
CONCLUSION

Husain, S., Khan, F. & Mirza, W., 2014. Brewing
innovation. [Online]
Available at:
https://www.businesstoday.in/magazine/lbs-case-
study/how-starbucks-survived-the-financial-
meltdown-of-2008/story/210059.html
[Accessed 13 JUNE 2019].
Shapiro, J. a. S. J., 2016. Ethical leadership and
decision making in education: Applying theoretical
perspectives to complex dilemmas. s.l.:Routledge..
BIBLIOGRAPHY