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Starbucks’ Ethical Accusations Essay
Exclusively available on IvyPanda Updated: Aug 5th, 2021 Table of Contents 1. Introduction
2. Starbucks’ Unethical Practices
3. Incident Leading to the Accusations against Starbucks 4. Recommendations 5. Conclusion 6. References Introduction
Several multinational organizations, including Wal-Mart, BP, Volkswagen, and
NIKE, among others, have been charged with unethical behaviors. However, this
study focuses on Starbucks. This international corporation, which operates in the
fast-food industry, was linked to a diversity-related ethical issue that adversely
affected its image and performance. As it wil be revealed in this paper, Starbucks
was accused of racial y discriminating against its customers amid the existence of
legal provisions requiring companies to treat stakeholders equal y, regardless of
their backgrounds. Hence, it is crucial to identify Starbucks’ practices that led to
such al egations of unethical behaviors.
Starbucks’ Unethical Practices
Diversity in the contemporary business world is one of the key factors that
contribute to the success of many industry participants. According to an article by
Byrne (2018), Starbucks al egedly engaged in unethical practices that negatively
interfered with its image and performance. In particular, it was accused of
improperly treating customers from the African-American background among other
minorities in the U.S. (Byrne, 2018). The extension of such unethical practices in
other stores beyond America has the potential of significantly harming the image
of the entire company. Disreputable engagements such as racial discrimination
considerably undermine the realization of equality in the business setting. This
situation affects the performance of an organization on a global scale. In the
current context, the observed racist occurrences challenged Starbucks’ values and
profitability because customers ended up seeking services and products of other companies.
The racial bias incident against two innocent businesspersons damaged
Starbucks’ reputation following the intensified accusations against this coffee
company. According to Morais et al. (2014), remarkable customer service is one
of the factors that not only reinforce a company’s brand image but also foster its
ethical operations. In particular, customer service excel ence requires an
organization to provide products and services that meet customers’ needs and
expectations. However, Shamah, Mason, Moretti, and Raggiotto (2018) argue that
showing favoritism to clients based on their racial grounds is unethical and
counterproductive because it undermines the realization of quality customer
experiences. In the current case, Starbucks faced public criticism that indicated
the degree to which tribal bigotry influenced clients’ perceptions of its services in
the U.S. and beyond. According to Byrne (2018), Starbucks recorded its lowest
customer perception score since November 2015 after the racial bias instance.
Therefore, this company compromised the need for promoting equality and
diversity in the workplace setting. Treating clients fairly is crucial toward creating
positive perceptions among customers with a view to boosting an organization’s success.
Unethical practices, including racism and the lack of diversity in an organization,
may affect a company’s market share. As Byrne (2018) reveals, the Philadelphia
incident may have influenced some of Starbucks’ customers to skip their regular
cup of coffee to protest against this injustice. The racial bias incident may have
undermined the competitiveness of this coffee chain giant, hence portraying the
extent to which diversity influences the global performance of a company. As
Morais et al. (2014) underline, customers who encounter poor experiences such
as racial biases may consider shifting to other companies that uphold ethical
behaviors characterized by the embracement of diversity and equality.
Consequently, the potential loss of customers arising from racial prejudices may
challenge Starbucks’ market share in the world, thereby providing an opportunity
for rivals such as McDonald’s to expand their customer base.
Incident Leading to the Accusations against Starbucks
In April 2018, employees at a Philadelphia-based Starbucks outlet facilitated the
arrest of two innocent black businesspersons. This situation led to a public outcry.
These two victims of the unethical behavior committed by Starbucks’ employees
considered filing a legal suit against the company. Furthermore, protests in the
streets of Philadelphia fol owing the incident highlighted not only the seriousness
of such an unprincipled practice but also its impact on Starbucks’ competitiveness.
The public protest had a global impact since this company’s image is recognized
international y. This race-based discrimination influenced the behavior of
Starbucks’ key stakeholders, including customers, producers, the company’s
management, and employees, since ethical standards guide contemporary businesses’ interactions.
Starbucks lost considerable revenue due to the racist occurrence at its
Philadelphia-based store. Estimates reveal that each outlet achieves sales that
generate average returns of $3,750 (Byrne, 2018). This amount is bound to decline
in case instances of racial bias reoccur at the company. In this respect, retaining
a diverse pool of employees at Starbucks has been a chal enge that is currently
ruining the company’s profitability. This company targets customers from different
backgrounds to realize competitiveness in the global fast-food industry. Therefore,
it is important for it to continual y encourage its employees to observe values that
support diversity as wel as equality for the sake of bolstering its performance in the industry.
According to Byrne (2018), the racial discrimination incident prompted Starbucks
to close at least 8,000 coffee shops in the United States to carry out anti-racial bias
training for more than 175,000 employees. It is crucial to point out that the
observed racial predisposition incident affected Starbucks’ business significantly.
The resulting decline in sales prompted the company to plan and implement a
costly training program that aimed at ensuring that al workers, among other
stakeholders, understand the contribution of a diverse workforce to a company’s
productivity and performance levels. Starbucks had to forego its business days to
carry out this exercise, implying that it recorded a significant decline in sales. As
Byrne (2018) reveals, Starbucks chains incurred losses ranging from $6 mil ion to
$30 mil ion due to the closure of its stores to facilitate this training program. These
losses could be higher because protests and the shift of customers to other
competitors may have caused a further drop in sales.
Indeed, conducting racial bias training programs is one of the appropriate
responses initiated by Starbucks’ management to address this diversity-related
issue. Such initiatives foster the instal ation of necessary skil s as wel as
knowledge regarding key issues in the workplace setting. In the current context,
the anti-racial bias classroom instruction offered to at least 175,000 workers played
an important role in reinforcing values that represented Starbucks’ organizational
culture (Morais et al., 2014). As Sharma and Wu (2015) assert, training sessions
that emphasize cultural differences al ow employees to understand their implicit
biases, thus encouraging them to uphold values, which promote equality and
diversity in the workplace setting. Therefore, for Starbucks, such interventions can
provide an opportunity for employees to comprehend their role in mitigating
diversity biases such as racial discrimination. Recommendations
Starbucks needs to observe ethical standards in its workplace environment. In
particular, this company should reinforce its code of ethics to ensure that
employees treat customers without any form of discrimination based on their race,
sexual orientations, and religions, among other factors. This approach is crucial in
not only enhancing workers’ professionalism but also boosting their productivity.
Adhering to the laid-down moral standards is a critical step toward safeguarding
Starbucks from engaging in unethical practices that may negatively affect its global reputation.
Starbucks should consider implementing continuous training programs that
address the importance of diversity among its employees. The intervention is
appropriate since it ensures that workers constantly serve customers fairly to
enhance their experiences. Maintaining customers’ positive perceptions of a
company’s products and services is an ethical practice that boosts performance
and productivity levels. Clients who are contented with a particular organization’s
manner of doing business are likely to write positive reviews that end up attracting
new and diverse customers, hence boosting the overal sales volume (Richard,
Stewart, McKay, & Sackett, 2017). The suggested training initiative al ows
employees to understand the extent to which implicit biases amount to unethical
behaviors. Furthermore, Starbucks should create a workplace environment that
motivates workers to embrace diversity since training is not the only intervention
for mitigating racial favoritism. This enthusiasm should also develop a sense of
psychological safety that encourages employees to learn and reflect on diversity
in the workplace environment, hence pro moting ethical operations. Conclusion
Building trust in organizational settings requires companies to observe the laid-
down ethical standards. Nonetheless, moral dilemmas arise in the business
environment because different organizations have varying perceptions of what is
ethical or unprincipled. As a result, the corporate world uses contractual
agreements to facilitate institutions’ adherence to ethical standards. However,
amid the existence of such contractual accords, companies may fail to honor
various established binding arrangements, a situation that results in legal suits
chal enging particular unethical practices of a given party. This paper has focused
on Starbucks that was accused of discriminating against customers based on their
racial orientations. To avoid such instances, this company should create an
atmosphere whereby employees handle all clients fairly to not only retain them but also attract new others. References
Byrne, J. (2018). Starbucks revenue takes hit over racial bias backlash. New York Post. Web.
Morais, U. P., Pena, J., Shacket, K., Sintilus, L., Ruiz, R., Rivera, Y., & Mujtaba,
B. G. (2014). Managing diverse employees at Starbucks: Focusing on ethics and
inclusion. International Journal of Learning and Development, 4(3), 35-50.
Richard, O. C., Stewart, M. M., McKay, P. F., & Sackett, T. W. (2017). The impact
of store-unit–community racial diversity congruence on store-unit sales
performance. Journal of Management, 43(7), 2386-2403.
Shamah, R. A., Mason, M. C., Moretti, A., & Raggiotto, F. (2018). Investigating the
antecedents of African fast food customers’ loyalty: A self-congruity
perspective. Journal of Business Research, 86, 446-456.
Sharma, P., & Wu, Z. (2015). Consumer ethnocentrism vs. intercultural
competence as moderators in intercultural service encounters. Journal of Services Marketing, 29(2), 93-102