In May 2018, in the wake of a global uproar after two black men in a Philadelphia Starbucks were arrested while awaiting a friend, Starbucks closed its approximately eight thousand U.S. stores to conduct racial bias training (Figure 3.1).1 The company also officially changed its policy to allow people to visit its stores and restrooms without making a purchase, hoping to avoid more incidents like this one (sparked by a white employee calling 9-1-1 when the men did not buy anything). The two men who were arrested eventually settled with Starbucks for an undisclosed sum.

As one of the largest beverage retailers in the world, Starbucks directly affects countless stakeholders: food and drink distributors; coffee and tea growers; milk producers; urban and suburban communities; local, state, and national governments; more than 300,000 employees and 1,600 institutional investors; and millions of customers.2 The company’s decision to close its U.S. stores for half a day was financially costly, and the training session could never fully solve the problem of conscious or unconscious bias. But the firm believed it was the right thing to do. Why does it matter to its stakeholders what Starbucks does? What role do stakeholders play in a company’s decisions about its ethical behavior, and why. Discuss why Starbucks took the action in did in response to this incident.. In your answer, be certain to frame your discussion using the concepts presented in the chapter. (Recommended length 300 words.)


Watch Professor Stout’s views of the role and obligations of corporations, and read Milton Friedman’s classic essay ( . What are the essential points of Friedman and Stout and how do they differ? Which do you find more persuasive and why. (Recommended length 300 words.)


Answer 1:

Stakeholders are groups or individuals who have an interest or investment in the operations and outcomes of a company. Starbucks has a wide range of stakeholders, including customers, employees, investors, suppliers, and the wider community. Each stakeholder has a particular set of expectations and concerns about the company’s actions, and these interests can sometimes conflict.

The incident at the Philadelphia Starbucks demonstrated the impact that a company’s actions can have on its stakeholders. When two black men were arrested for waiting in the store, it sparked outrage among many stakeholders who saw it as an example of racial bias. Starbucks recognized the need to address the issue and took significant steps to respond. By closing its stores for a day of racial bias training and changing its policy to allow non-paying customers to use its facilities, the company demonstrated a commitment to ethical behavior and social responsibility.

The decision to take these actions was not only a response to the immediate incident but also a recognition of the importance of building trust and goodwill with all stakeholders. By addressing the concerns of its customers, employees, and wider community, Starbucks aimed to maintain its reputation as a socially responsible company and avoid further harm to its brand.

The incident at the Philadelphia Starbucks highlights the critical role that stakeholders play in shaping a company’s ethical behavior. Companies must consider the interests and concerns of all stakeholders when making decisions and taking actions. Failure to do so can result in significant harm to the company’s reputation and bottom line.

Answer 2:

Milton Friedman and Lynn Stout hold different views about the role and obligations of corporations. Friedman argues that the sole responsibility of corporations is to maximize profits for shareholders, and that any other social responsibility is a misuse of corporate resources. He suggests that government, not corporations, should be responsible for addressing social problems.

In contrast, Stout argues that corporations have a broader set of responsibilities, including to their employees, customers, and society as a whole. She suggests that corporations have a duty to consider the impact of their actions on all stakeholders, not just shareholders, and that this broader perspective can actually lead to long-term financial success.

The essential point of Friedman’s argument is that corporations have no social responsibility other than to make profits. He believes that any social responsibility that corporations take on is a misuse of resources and a threat to the free market system.

In contrast, Stout’s argument is that corporations have a broad set of responsibilities, including social and environmental responsibilities, and that these responsibilities are critical to long-term financial success. She suggests that corporations must balance the interests of all stakeholders, including employees, customers, and society as a whole.

Personally, I find Stout’s argument more persuasive. While maximizing profits is undoubtedly an essential goal for corporations, it cannot be the only goal. Corporations have a significant impact on society and the environment, and they must take responsibility for that impact. Focusing solely on short-term profits can lead to long-term harm to the company, its stakeholders, and society as a whole. By considering the interests of all stakeholders, corporations can create a more sustainable and equitable world.

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