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The CEO of Starbucks and the Practice of Ethical Leadership

One year after becoming CEO of Starbucks, Kevin Johnson faced a leadership test when two black men were arrested in a Philadelphia Starbucks. The men were waiting to meet a business associate, but they didn’t purchase anything while they were waiting. The store manager asked them to leave, and they refused, explaining that they were there to meet someone. The manager called the police because the men refused to leave, and the police arrested them.

Another patron at Starbucks recorded the arrest on her cell phone, and it quickly went viral. In an interview after the arrest, the woman who took the video mentions that she had been sitting there for a while, and she wasn’t asked to leave even though she didn’t order anything. Additionally, the video shows the business associate of the black men show up during the arrest, and he asks the manager and the police what the men had done wrong.

The general public and those who witnessed the arrest labelled it as discriminatory and racist.

This happened on a Thursday and the following Monday, Johnson said that the manager no longer worked at the store. The arrests led to protests and sit ins at the Philadelphia Starbucks the days following the event.

In his apology statement and follow up video release shortly after the arrests, Johnson said, “The video shot by customers is very hard to watch and the actions in it are not representative of our Starbucks Mission and Values. Creating an environment that is both safe and welcoming for everyone is paramount for every store. Regretfully, our practices and training led to a bad outcome—the basis for the call to the Philadelphia police department was wrong.”

Before the incident, Starbucks had no companywide policy about asking customers to leave, and the decision was left to the discretion of each store manager. Because of this flexible policy, Starbucks had become a community hub–a place where anyone could sit without being required to spend money. Johnson mentioned this community in his apology when he said Starbucks works to create an environment that is “both safe and welcoming for
everyone.”

Also in his apology, Johnson outlined the investigation he and the company would undertake. The apology detailed actionable steps Starbucks leadership would follow to learn from the situation, including meeting with community stakeholders to learn what they could have done better. Johnson took full responsibility for the actions of his employees, and he acknowledged that Starbucks customers were hurt by the arrests. Johnson acknowledged that employees needed more training, including about when to call authorities, and that the company needed to conduct a thorough analysis of the practices that lead to this incident.

After issuing his apology, Johnson went to Philadelphia and met with the two men face to face to involve them in dialogue on what Starbucks needed to do differently.

The week following the arrests, Starbucks announced it would temporarily close 8,000 stores to conduct unconscious bias training, which they did on May 29, 2018. A month after the arrests, Starbucks released a new “Use of Third Place Policy,” which 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. Additionally, the policy says that Starbucks seeks to create “a culture of warmth and belonging where everyone is welcome.

This policy is intended to help maintain the third-place environment in alignment with our mission ‘to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time.’”

(a) Discuss in detail the above case study in the context of Kantian Theory principles

Question 2

(a) Describe what is virtue ethics and explain a clear example to illustrate the theory being applied in real life.

(b) A US major manufacturer, GA, has outsourced its 8,000-worker production plant to a lower cost country in order to boost profit margin and improve shareholders’ dividends.

Many of the workers were made redundant as a result. Since the manufacturer no longer has a production facility in US, its suppliers who used to provide raw materials, machinery and other support services also suffered major losses and started retrenching their workers.

The local government also collected fewer taxes since there were fewer employed workers and lowered business activities. Describe utilitarian theory and apply it to determine if GA’s decision to outsource its production is considered ethical or not.

Question 3

(a) Identify and describe the corporate responsibility view that was advocated by Milton Friedman.

(b) Entrepreneurs like Mark Zuckerberg of Facebook and Elon Musk of Space X have taken risks to build to their businesses and been successful at it. The fundamental premise for their success mostly hinges on the ownership of private property and free market forces.

For billionaires like them who have made their wealth mostly based on their own effort and perseverance, would it be fair to impose high income tax on them to redistribute their wealth to help the poor?

Question 4

(a) Describe the terms ‘sweat shop’ and ‘child labour’.

(b) Overfishing in countries like Japan has led to near distinction of some fishes due to the common believe that the supply of fishes is ‘free and unlimited’. Identify and describe this incorrect assumption about nature and suggest a solution to overfishing.

Question 5

(a) Distinguish between bribery and kick back with ONE example each to illustrate these unethical behaviours.

(b) On average, female in US earn about 20% less than male in similar jobs requiring identical qualifications and experiences. Identity and describe the program that aims to close this gender pay gap.

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