In today’s business world, modern organizations are “increasingly [realizing] that they need to communicate with their stakeholders to develop and protect their reputations” (Cornelissen, 2017, p. 62). This is important for organizations to consider because stakeholders can often have many different levels of influence on a company (Cornelissen, 2017, p. 61-83). For example, some stakeholders have enough power to remove top executives from their positions (Cornelissen, 2017, p. 69). Because of this, I believe that companies must build strong relationships with at least a few key stakeholders in order to survive.
One example that illustrates the influence that stakeholders can have on an organization is the example of Starbucks and the crisis problems they faced. When Starbucks was first founded, Howard Schultz (the CEO) developed a strategy for managing his stakeholders. His strategy was to “exceed the trust of [his customers],” to treat his employees as partners, and to develop strong relationships within the various communities where his stores were located. This occurred as Schultz used a dialogue approach to consistently communicate with everyone about his intentions. However, Schultz was not always faithful to this goal (Cornelissen, 2017, p. 75-81).
In 2007, Starbucks blocked Ethiopia’s efforts to trademark a few types of coffee beans. This action angered almost 70,000 people because many felt that Starbucks was threatening the livelihood of Ethiopian farmers. Then, in 2012, Starbucks made another mistake by avoiding UK property taxes. This angered even more customers because they felt that Starbucks wasn’t remaining true to its “pledge to care about the communities and societies in which it [was operating]” (Cornelissen, 2017, p. 79-81).
While Starbucks did eventually resolve these issues, I think they put their reputation in a bad position by making such poor and selfish decisions without considering their stakeholder’s needs. In the case of the trademark issue, Starbucks could have consulted with stakeholders beforehand on how to make the situation a win-win for everyone. This could have been done by holding a conference meeting with key stakeholders to get advice on the matter. In the case of the tax evasion issue, Starbucks should have remembered their moral obligation to contribute to the societies where their stores were located. If Starbucks had made these choices beforehand, I believe they would have spared themselves the ding on their reputation and the embarrassment that came with it (Cornelissen, 2017, p. 61-83).
Finally, I think part of Starbucks’ problem came from the fact that they tried to engage with too many stakeholders at once. This caused them to become imbalanced and to lose focus on some other areas of managing their business. I believe Starbucks should have mainly developed its closest relationships with its strongest stakeholders and stayed in contact with them regularly for advice on how to manage company affairs. I think this strategy would have made it much easier for Starbucks to balance the needs of its various stakeholders and to avoid issues of crisis.
References:
Cornelissen, J. P. (2017). Corporate Communication: A Guide to Theory and Practice. London, GB: SAGE Publications.
