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Carleton University

Sprott School of Business

Assignment: PART A: Case Solution for “Starbucks and Ethical Leadership “

Assignment: Part B: Case Solution for “Firing a hero?”

Submitted by,

Shuvo Raj Bhatta

Carleton ID :101286817

Submitted to,

Rodney Nelson

Date of Submission: 13th October 2022

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Table of contents Page number

Case A: Starbucks and Ethical Leadership 3-8

Executive Summary 3

Introduction 3

Situation Analysis & Interpretations 3-6

Conclusion 6

Exhibit 1: Decision making framework 7

Case B: Firing a hero? 8-10

Executive Summary & Introduction 8

Situation Analysis & Interpretations 8-9

Alternative decisions 9

Recommendations & Conclusion 9-10

References 11
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Case A: Starbucks and Ethical Leadership

Executive Summary:

Starbucks as a renowned coffee shop in the world faced a hard backlash from the

public and stakeholders due to improper behavior by one of its managers. Through

personal judgment and analytical thinking different decisions of Starbucks' executives

have been assessed in this case analysis. A concept such as absolute rule, ethical

considerations, reputation management issues, biases in decision-making, cultural

intelligence, and decision-making framework has been taken into consideration to

discuss this case.

Introduction:

In the case "Starbucks and Ethical Leadership ", the company had faced a situation

where its reputation in the food & beverage industry was threatened. Due to an incident

where visible minority men were arrested by police for the prejudiced action of the

manager, a negative public outrage soon escalated. Senior management had to take

quick actions to handle the issue. This attack on Starbucks' brand image could be due

to reasons, such as managers/employees not being trained on trade concepts such as

prejudice and biases in decision-making, cultural intelligence, and ethics in everyday

business considerations.

Situation analysis and interpretation:

Below is the description of how the case different aspects of the business such as

human resources, policies, strategy statements, brand image:

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 Human Resources

As the two black men were waiting in the Starbucks café for a business meeting, they

were encountered by either intentional prejudice, unconscious bias, or a total negligible

action from the manager. Although a big makeover was necessary for the Starbucks

business model after the incident, the first important question that can be discussed

internally by the C-suite / senior management: Was the manager aware of cultural

intelligence? Cultural intelligence is the ability to function effectively in different cultural

contexts (2015). And, if the manager lacked cultural intelligence, he was not aware that

his action is prone to be listed as racial-based discrimination. He did not know how

action towards visible minorities can be interpreted as something discriminatory and the

business could receive blowback from stakeholders. If this was the case, it is important,

that employees of Starbucks went through a cultural intelligence education. The

manager could also depict unconscious bias towards the two men. Unconscious bias is

defined as the assumptions, beliefs, attitudes, and stereotypes that human beings have

towards different groups (Unconscious biases, n.d.) So, unconscious bias training is

also mandatory, which CEO Johnson executed. Also, temporarily closing 8,000 stores

to conduct the training was effective; this would emotionally convince people that

Starbucks was serious about how they take care of their customers. The decision to

dismiss the manager from the store was made quickly and that was indeed a good

decision to avoid potential outrage in front of the store.

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 Policy and strategy statement

The implementation of: the "Use of third Place Policy" , was a smart move by Starbucks.

It helped Starbucks to be ed as an ethical business amongst regulators such as the

better business bureau, and other government regulations that monitor ethical business

practices of various corporations. The new policy states that: " anyone can use

Starbucks and its facilities without making a purchase; it also explains what managers

should do if a customer becomes disruptive " – this was a robust guideline for the

employees of Starbucks to avoid such bad incidents in the future permanently. The

policy also strengthened the mission statement of Starbucks: "to inspire and nurture the

human spirit – one person, one cup, and one neighborhood at a time." According to the

mission statement of Starbucks, it promotes a welcoming environment for everyone;

and it creates a community-like atmosphere. But the incident attacked the mission

statement of the company; however, the new policies helped to regain it. Before the

incident, the company had no "absolute rule "about asking customers to leave, and the

decision was left to the discretion of each store manager. So, managers or employees

may have to rely on personal judgment, which is prone to bad decisions through biases

or a lack of cross-cultural knowledge.

 Public relations and brand management

The CEO: Kevin Johnson was adept to maintain relations with stakeholders and

manage Starbucks management adequately after the incident. As the public protests

began to spur, Johnson threw an apology statement very quickly. This actually acted in

favor of the company and can be taken as mass communication to reach all its
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stakeholders. During incidents like this, People were more likely to calm down when

they heard emotional words from the company. In addition, the CEO also showed

accountability by informing that Starbucks employees would receive training about

handling incidents like this and the company would do an in-depth analysis of the

practices that lead to this incident. The CEO also met two men face to face, which

further depicted to the mass public that Starbucks organization was the one which

strives to be ethical to all its stakeholders. From all these actions by the CEO of

Starbucks and also the company, it can be inferred that the business was excellent in

managing its reputation at the time of turmoil.

 Risk Management

The company was quick-witted to take a huge decision to restructure some parts of its

business model. Otherwise, there was a huge risk that public rage would escalate, and

Starbucks would face lawsuits, and other punitive and tangible damages. The CEO and

Starbucks executives followed an effective decision-making model to mitigate the

increasing risks to the company's reputation at that time. Exhibit 1 shows a framework

that fits the decisions taken by CEO and the execs after the incident. During stressful

situations, if a company did not follow proper frameworks to take decisions, the risk of

bad outcomes rises.

Conclusion:

The CEO dealt with the incident in a professional manner, although some aspects of

training such as cultural intelligence were not included. Overall, I would conclude that all

the actions taken by Starbucks were best suited to protect its brand. If the actions were
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not taken, the company would have been represented to the world as immoral to not

treat customers from different ethnicity equally.

Exhibit 1:

Framework Actions taken by Starbucks

Identify the issues and examine the facts Starbucks executives identified the threat

to its reputation quickly by observing the

bad reaction from public

Situational response To calm down public rage, CEO

apologized to the public and explained

upcoming actions that would be taken .

All the actions that would be taken or

already been taken were advertised to

public

Evaluate possible resolutions Starbucks found out that employee

training was a must to prevent such

scenarios in the future; and a compliance

guideline was required for the employees

to follow

Implement actions Starbucks started training employees on

unconscious bias and executed a new

policy
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Case B: Firing a hero?

Executive Summary:

In this case, analysis, where a bank's reputation was vulnerable due to an act by an

employee has been evaluated according to absolute rules and moral judgments.

Introduction:

In this case, a bank teller was fired because he breached the code of conduct of the

bank he was working for. As the bank was attacked by a thug, Jim the teller stopped the

teller from stealing the coffer and handed him to the police. He was applauded by his

colleagues, but his boss fired him for taking a such risk and breaking the policy of the

bank that was applicable during the incident.

Situation analysis & interpretation:

It can be implied, accordingly, Jim acted on impulse during the event. He knew the bank

policy during theft/robbery; but he acted upon his habits: as he did these kinds of

actions before to in retail stores. He had habitual instincts in such a situation which

needs to be worked on. Some points are mentioned below to analyze the situation in-

depth, with recommendations:

 Bank and government policy 

From the statement of the bank’s spokeswoman Anne, it can be deduced that the bank

policy is in place for this kind of situation. Anne justified the firing of Jim, mentioning the

bank had rules which put public safety first. All the money in the bank is insured, so it
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can be recovered. Jim broke the rules of the bank and as well as the whole industry.

Police & FBI also denied such action as ethical. They mentioned that in such a situation,

the law tells citizens to comply with the offender’s demands unless their own life is in

danger. jeopardy. They said that citizens can help the authorities to bring the offenders

to book, but not necessarily fight them during the incident, which may risk others' lives.

 Interpretation of the decision to dismiss Jim 

After the incident, Jim was fired. This decision was necessary to protect the company

from a future destructive situation. According to an article by Ottawa police: “Retail

robbery prevention “, employees should follow the instructions of the robber/s during the

theft. This rule ae strongly assumed to be the same from all the anti-crime units of the

world. Hence, the bank did a great job to fire the “hero”! Otherwise, if this kind of action

were repeated in the future by other employees in the bank or in the other industry

serious loss of people’s lives might occur. All the major police departments advise

strongly to comply with the robber/s demand for this reason.

Alternative decisions:

It can be argued that Jim should not be fired, or he may be suspended for a short term.

However, such decisions would look nice in the short term, but in the long term, more

employees would decide to fight with robbers – breaking police laws as well as the code

of the business. Hence, the bank's decision to fire Jim was the best option.

Recommendations:

To mitigate such risky behaviors of employees in the future, they should be trained on

the policies of the institutions and police, and the ability to take the correct decisions

during high-stress situations, such as bank robbery. Training such as verbal judo can
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make employees mentally tough to make effective decisions during highly worrying

situations.

Conclusion:

It can be concluded that Jim acted on impulse, and everything went in favor of the bank,

employees, and other citizens in that situation. But it was pure chance, there would be a

high chance for the incident to turn into a violent and dangerous situation to happen.

Therefore, the bank’s decision to fire Jim can be justified to be right.

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References:

School, I. E. S. E. B. (2022, October 12). Why you need cultural intelligence (and how to
develop it). Forbes. Retrieved October 12, 2022, from
https://www.forbes.com/sites/iese/2015/03/24/why-you-need-cultural-intelligence-and-how-to-
develop-it/?sh=51c8930117d6

Unconscious biases. University of Victoria. (n.d.). Retrieved October 12, 2022, from
https://www.uvic.ca/equity/employment-equity/bias/index.php

Retail robbery prevention. Ottawa Police Service. (n.d.). Retrieved October 13, 2022, from
https://www.ottawapolice.ca/en/safety-and-crime-prevention/retail-robbery-prevention.aspx