Analysis of Starbucks' Crisis Management and Media Communication Plan

This report provides a comprehensive analysis of Starbucks' crisis management and media communication plan. It begins by defining crisis management and its different types, followed by an overview of adopted strategies and the components of a crisis management plan (CMP). The report then explores Starbucks' crisis management, using the UK tax crisis as a case study, and examines the company's crisis checklist, including the designated crisis management team, activation processes, and communication strategies. The analysis extends to Starbucks' Mendelow's matrix, illustrating stakeholder power and interest. The second part focuses on the crisis communication plan, outlining the key approach, considerations, and critical publics. It also includes key messages and Q&A examples. The report highlights Starbucks' use of social media in crisis communication and its approach to reputation repair, offering insights into how the company manages its public image during challenging times.

Crisis management and media communication plan of Starbucks
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Table of Contents
First: Crisis management plan.....................................................................................................2
1.1 When is there a crisis?...........................................................................................................2
1.2 What type is it?......................................................................................................................2
1.3 Adopted strategies..................................................................................................................2
1.4 A crisis management plan (CMP)..........................................................................................3
1.5 Starbucks crisis management.................................................................................................3
1.6 Starbucks crisis checklist.......................................................................................................4
1.7 Starbucks Mendelow's matrix................................................................................................6
Second: Crisis communication plan.............................................................................................7
2.1 Issue/Crisis – assuming a problem has occurred...................................................................8
2.2 Key approach.........................................................................................................................8
2.3 Key considerations/concerns..................................................................................................8
2.4 Key/critical publics................................................................................................................8
2.5 Key message – the general comments we can make.............................................................9
2.6 Q&A.......................................................................................................................................9
References.....................................................................................................................................11

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First: Crisis management plan
1.1 When is there a crisis?
The crisis is described as an unpredictable event that has a negative impact on the organization
credibility, viability and reputation. People get the awareness of the crisis through the media
coverage when a whistle blow takes place or when it reaches the court (Ngugi 2014). The way of
delivering the crisis message by the media affects the organization, it can influence the public
opinion and in some cases, it affects the global opinion. The expanded model frameworks the
dynamic and multi-dimensional relationships that identifies the relationships that take place
during the crisis life cycle (Howell & Miller 2006).
1.2 What type is it?
There are different types of crises clusters, including the victim crisis, where the organization is
the victim. It consists of the natural disaster, where a natural damage takes place, rumors,
workplace violence or product tampering, where an external stakeholder damages the
organization. Another type is the accident cluster that represents an unintentional damage to the
organization that can take the form of technical error. The third type is the preventable cluster,
where the organization puts its people at intention risk by taking inappropriate or harmful actions
or violates the rules. It takes the form of human error accident or product error (Coombs 2007).
1.3 Adopted strategies
The unethical behavior of an organization in crisis situation forces the corporate crisis manager
to offer a public response. The symbolic approach to crisis management assumes that crises
threaten organizations’ images and their response strategies are used by the managers to repair

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their image. According to Coombs (1998), as cited in Huang (2006), each crisis situation has its
characteristics that require certain crisis communication strategies (CCSs) to be used to manage
the current situation and avoid the others.
1.4 A crisis management plan (CMP)
CMP is considered as a tool of reference that provides key information on what actions should
typically be done by the organization in a crisis. It contains certain forms required in
documenting the crisis response. According to Barton (2001) and Coombs (2007), as cited in
Institute for PR (2007), CMP enables organizations to respond to the crisis quickly by pre-
assignment of some tasks, pre-collection of information that assumes the existence of a
designated crisis team that takes the responsibility of doing tasks during the crisis.
1.5 Starbucks crisis management
Starbucks has faced many crises that affected its global image. It is considered a market leader in
coffee production that introduces the finest qualities of roaster coffee and other beverages and
snacks. In 1971 Starbucks commenced its business with a small coffee store located in
Washington that grew over the years to reach more than twenty thousand locations across the
world markets (Latif, Qurat-ul-ain & Gulzar 2014). Starbucks heavily uses social media channels
for communication that caused it to face many crises either small or big. An example of the
crises that Starbucks faced took place in Argentina in 2012, where the company had to publicly
apologize to its customers for supply shortage. It had to tweet saying that it used a non-branded
product of Argentina, which caused the tweet to generate across Argentina customers who felt
angry. Following this incident, Starbucks took positive actions towards using social media to
deal with sensitive issues, like the gun control, through communicating by using social media

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channels, while other companies avoided dealing with such issues. Starbucks meant to initiate
such issues for public discussion through the social media (Jensen 2014).
1.6 Starbucks crisis checklist
Starbucks crisis management plan will be discussed with an application on the UK tax crisis,
according to Sisson & Bowen (2017), Gipson (2007) and Gîrboveanu & Pavel (2010) as follows:
 Designated crisis management team:
 Starbucks could gain a high reputation by utilizing the social media channels, which
makes the social media crisis a significant case that deserves to be studied. The company
has its 'Emergency Management Council', 'Core Crisis Team' and 'Local Response Team'.
 Activation processes:
 A public debate arose from the Public Accounts Committee report in 2012, which found
Starbucks to be guilty for not paying taxes after earning significant profits or paying a
minimal amount in the UK, the issue that lasted for three years.
 Starbucks reported that it did not generate any profits that is why it did not pay any
income tax despite achieving 1.2 billion pounds sales in the UK.
 Media reports revealed that while Starbucks claims it did not generate profits, the
investors said that the organization was profitable to them.
 Crisis management location:
 Public outrage was initiated and covered by the media, because of the crisis of tax
evasion was highly intense in 2012 in the UK.
 Roles and responsibilities:
 The crisis management team is responsible for general incident preparedness, including
protest preparation and response, boil water activities and severe weather. In the case of

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Starbucks UK tax crisis, the local team was responsible for protest preparation and
response.
 Contact list (key stakeholders):
 CFO
 Government regulatory bodies
 Media
 General public
 Pre-approved information
 This crisis is a man-made incident that lasted for three years. Starbucks usually conducts
annual communication test, annual tabletop exercises and benchmarking.
 The tax crisis of Starbucks was investigated by David Cameron, the British Prime
Minister who was newly appointed as the president of the Group of Eight (G-8).
 Public Accounts Committee’s report, obligated Starbucks to pay 10 million pounds as
extra tax per year for 2 years, which exceeds the required amount by the law. The
Managing Director of Starbucks UK, Kris Engskov, announced taking this corrective
action to enhance trust with its customers.
 Crisis communication:
 Starbucks communicates crises through, announcement, meetings, payroll information
and communication hotline for emergencies.
 Starbucks aimed to start a social media campaign in the holiday time in December 2012
that coincided with the tax crisis. The campaign took place outside of the London
Museum, where it used a large screen to display live tweets through the hashtag
"#spreadthecheer" in order to encourage the public to share their cheer.

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 This campaign gave Starbucks the prominence in the British newspapers, but the angry
opinions negatively tweeted about Starbucks tax practices with bad words that families
and children could see live on the screen.
 Designated spokesperson:
 John Kelly, is the senior vice president of Global Public Affairs & Social Impact and
Vivek Varma, is the executive vice president, Public Affairs at Starbucks. The company
does not have a crisis manager, although it used the apology strategy for reputation
repair.
 Categorization of crisis:
 Starbucks had to apologize for the “filtration system malfunction”. In a review of media
content, Starbucks UK’s tax crisis was indicated as a big crisis that could be classified as
a smoldering crisis. Starbucks could not prevent the crisis from the begging and caused it
to be prolonged with the media focus on the UK tax policies.
 This crisis is considered a financial scandal that generally captured the attention of the
media.
1.7 Starbucks Mendelow's matrix
Mendelow's matrix aims to analyze the impact of various stakeholder groups through mapping
them. Starbucks stakeholders could be categorized on (2-by-2) box diagram according to their
level of influence to the company decisions. The four quadrants of the matrix suggest
requirements for different support levels (Nicklin 2015). Starbucks stakeholders include
employees, customers, shareholders, business partners, suppliers, community members,
governments and others.
 The primary stakeholders include customers, investors, suppliers and employees.

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 Secondary stakeholders include media, activists, corporate relationships, NGOs, local
communities and Government.
Figure (1): Starbucks Mendelow's matrix
Power
High
Government
Media
Customers
Investors
Suppliers
Employees
Low
local communities
Corporate relationships
Activists
NGOs
Low High
Interest
Figure (1) shows that most of the stakeholders have high power and high interest.
Both of the government and media have high power but lower interest. The customers, investors,
suppliers and employees have both high interest and power. Subjects represented by activists
and NGO's represent the high interest, but low power. Finally, the local communities and
corporate relationships represent low interest and low power (Slabá 2014).
Second: Crisis communication plan
Starbucks crisis communication plan simulates the expected situation based on this plan.
Starbucks crisis communication team uses social media in crisis communication more than other
companies. The crisis communication manual of Starbucks deals with two categories of media
channels; first: the most popular channels, like Facebook, Twitter and YouTube and second,
blogs and website and email. Starbucks crisis communication manual indicates two categories;
internal and external key publics. The internal key publics include executives and employees and

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suppliers. The external key publics, include news media outlets, government agencies and
competing companies (Kim 2013).
2.1 Issue/Crisis – assuming a problem has occurred
A public debate arose from the Public Accounts Committee report in 2012, which found
Starbucks to be guilty for not paying taxes after earning significant profits or paying a minimal
amount in the UK, the issue that lasted for three years.
2.2 Key approach
Developing a sound CMP is the best approach to achieving a favorable outcome in a crisis
(Gîrboveanu & Pavel 2010). Based on the type of crises and its degree of severity, the crisis
communication plans can be prepared and implemented. According to the Situational crisis
communication theory (SCCT), there should be a systematic method for threats evaluation of the
organization's reputation in a pre-crisis stage and as a response to the crisis. The responsibility of
the crisis, its history and relational reputation should be included in the risk assessment. The
power and interest of the stakeholders should also be considered in assessing the crisis depending
on two factors of its history and the relational reputation before the crisis that indicate how
stakeholders perceived the previous similar cases (Kim 2013).
2.3 Key considerations/concerns
Starbucks tax crisis in the UK required focusing on the external communication and following a
reactive damaging control. The strong reliance on the CMP was the major way of crisis
management. Although the company failed to communicate it to the public in an appropriate
way, when it did not filter the messages tweeted live for the families and their children that

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contained harmful expressions. The failure to manage the crisis through social media negatively
affected the company reputation and prolonged its time (Heide & Simonsson 2014).
2.4 Key/critical publics
 Government bodies
 New media channels
 Media traditional
 Customers
 The general public in the UK and outside the UK
 Employees
2.5 Key message – the general comments we can make
Starbucks #spreadthecheer" in 2012 December holidays, showed a quick response from the
company spokesman who apologized for the inappropriate tweet. He said "The tweet filtering
system for its feed display was not operating. Being a family-friendly, company responsible for
its commitments for the public and abuse filters are in continual operation".
2.6 Q&A
Question 1: What is your justification for the media claims about using your offshore licensing
that routes profits away from the UK?
Answer: We have to be good taxpayers and act as a role model through the payment of
our fair share of taxes. We are obligated to comply with the tax code that we did not write
(The Guardian 2012).
Question 2: Is there any speculation the tax avoidance was an inside job – is this the case?

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Answer: Our legal team and the board of executives are investigating the company financial
processes during the last three years with a special focus on the UK operations. We do have
homegrown coffee shops operating in the UK market. The offshore entities have to pay their
taxes, the headquarter of the company is not responsible for paying taxes on their behalf, they
have to pay in full on what they earn in the UK (The Guardian 2012).
Question 3: Do you think that the industry heavily affects your financial operations?
Answer: Coffee beans represent the major input in the industry value chain, the volatile
prices of coffee beans determines the cost and profitability making. We do not pretend to
have zero profits, but the industry conditions directly affect our operations, prices,
demand and profits (Geereddy 2012)
Question 4: To what extent shall the UK tax avoidance incident will affect your customer
relationship management (CRM)?
Answer: Our CRM policy will not change, we have one of the most successful CRM
represented in the mobile app. Customers could pay at Starbucks through the app and the
company could successfully handle 20 million transactions within a year. Also, social
media is a vital part of our CRM and we will continue to strengthen this presence
(Haskova 2015).
Question 5: Why have you risked your reputation through unfiltered tweets?
Answer: We are committed to providing our customers with the appropriate content that
suites the family members and can be published publicly. Our information filtration
system was accidentally stopped, but we work for maintaining it to work properly
(Starbucks Corporation 2017).

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References
Coombs, T 2007, 'Protecting organization reputations during a crisis: The development and
application of situational crisis communication theory, 10, 1-14.', Corporate Reputation Review,
vol 10, pp. 1-14.
Geereddy, N 2012, Strategic analysis of Starbucks Corporation, viewed 03 Nov. 2018,
<http://scholar.harvard.edu/files/nithingeereddy/files/starbucks_case_analysis.pdf>.
Gipson, R 2007, 'Emergency response in multi-unit retail stores', Starbucks Coffee Company,
USA.
Gîrboveanu, S & Pavel, S 2010, 'How to manage a public relations crisis', University of Craiova,
Romania.
Haskova, K 2015, 'Starbucks marketing analysis', CRIS Bulletin, vol 10, pp. 11-29.
Heide, M & Simonsson, C 2014, 'Developing internal crisis communication: New roles and
practices of communication professionals', Corporate Communications: An International
Journal, vol 19, no. 2, pp. 128-146.
Howell, G & Miller, R 2006, 'How the relationship between the crisis lifecycle and mass media
content can better inform crisis communication', PRism, vol 4, no. 1, pp. 1-14.
Huang, Y 2006, 'Crisis communication strategies and media coverage: A multicase study
revisiting the communicative response model', Communication Research, vol 33, pp. 180-205.
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<https://instituteforpr.org/crisis-management-and-communications/>.
Jensen, K 2014, 'Crisis communication on social media', Aalborg University, Denmark.

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Kim, E 2013, 'The role of social media in crisis communication - A case study of Starbucks',
Texas State University, USA.
Latif, M, Qurat-ul-ain, H & Gulzar, H 2014, 'Starbucks sustained during economic crisis',
International Journal of Accounting and Financial Reporting, vol 4, no. 1, pp. 307-321.
Ngugi, P 2014, 'Trends in corporate crisis communication management', Journal of Mass
Communicat Journalism, vol 5, no. 1, pp. 1-7.
Nicklin, T 2015, 'Cambridge marketing handbook: Stakeholder marketing', Cambridge
Marketing Press, UK.
Sisson, D & Bowen, S 2017, 'Reputation management and authenticity: A case study of
Starbucks’ UK tax crisis and “#SpreadTheCheer” campaign', Journal of Communication
Management, vol 21, no. 3, pp. 287-302.
Slabá, M 2014, 'Stakeholder power-interest matrix and stakeholder-responsibility matrix in
corporate social responsibility', The 8th International Days of Statistics and Economics, Prague.
Starbucks Corporation 2017, 'Annual report', Starbucks Corporation, Washington.
The Guardian 2012, Starbucks avoiding tax has a knock-on effect on homegrown business,
viewed 4 Nov. 2018, <https://www.theguardian.com/commentisfree/2012/oct/16/starbucks-tax-
british-business>.

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