Governance and Business Ethics

Executive Summary of Ethical Dilemma in Organisations

The purpose of this report is to provide a detailed analysis on the ethical dilemmas, which organisations have been facing and still face in today’s world. This paper argues that the ethical principles of Starbucks have not been very successful and it can be seen in its various processes, which also include its leadership issues, which it faced under Jim Donald, where the company had to face huge losses and a fall in its profits. The findings of this paper suggest that organisations must include proper ethical and sustainability solutions for the problems, which they face, such as doing the right thing, taking proper steps, provide emphasis on their customers as well as their employees, and many more. Therefore, it can be said that ethical dilemmas are prevalent in organisations, which must be taken care of in a proper manner, without creating a negative effect on the organisations. It would be recommended for the businesses to keep their ethical and sustainability issues in check and take proper steps to overcome them.

Table of Contents



Issues faced by Starbucks.


Ethical decision-making approaches.


Reference List

Introduction to Ethical Dilemma in Organisations

An ethical dilemma can be said to be a paradox in the decision-making of an organization or employees regarding two possible solutions, where neither of the solutions are acceptable. There are various organizations that face ethical dilemma and the managers of the organisation have to think about both the ethical as well as the business environment while making a decision. Few managers have stated that they prefer to signify the economic reasons in their thought process and provide reasons for the presence of no moral decision in the organisation. Other managers state that, moral considerations are also significant in a business environment (Nijhof and Fisscher, 1997). There are leaders who have stated that morals, improve the organisational presentation, which eventually is the lowermost streak. Others have stated that businesses should be just, truthful, receptive, answerable, dependable, and liable, irrespective of whether it aids the establishment’s concern or not (Barnes, 2006). The aim of this paper is to highlight the ethical dilemmas based on the global environment and its knowledge of the cultural and philosophical traditions, which affect the behaviour of the employees, as well as the organisation. For this purpose, this paper will provide a detailed analysis on the complex management problems that are related to ethics and social responsibility, followed by the concluding paragraph.

Every organisation can be said to be governed by its own set of rules and regulations which are related to the behaviour of the employees. They can also be called as the Conduct, Discipline and Appeal (CDA) rules. When the employee breaches any of the rules mentioned, his/her employment is terminated. In the 1950s, the wealth as well as the power of the organisations and corporations led to the creation of domestic oligopolies before the international competition. In the 1960s, the conglomerates were on a rise, which were created without keeping the consumers’ needs in mind. In the 1990s, downsizing, executive compensation as well as changes in the labour were of major concern. Charles Conrad (2003) stated that the recent meltdown was the consequence of ‘massive financial and status-related incentives’ which were related to the falling external restraints, along with the creation of a scam encouraging system. Redding (1982) further stated that there was no interest of the organisations in maintaining ethics. The author further explained that he had noticed that the organisation owners were increasingly talking about the ethical dimensions of the organisational life, but the author was unsure whether the ethical talk was backed by ethical action. Most of the ethical dilemmas have different solutions and rules, such as the rule of maximum justice, duty as well as rule of proportionality. The ethical dilemmas are dependent on whether they are connected with the reasons or actions, which have been taken which leads to the results and reasons being different (Figar and Dordevic, 2016).


Workplace ethics is one of the most significant aspects of a business as it is the responsibility of the leaders of the organisation to maintain the highest standards of ethical behaviour. Starbucks is coffee-chain business based out of Seattle, Washington, United States, and can be said to be the largest coffee-chain globally, with 16120 stores in 49 countries (Starbucks, 2020a). It was established in 1971 and expanded its business operations globally in 1992, and grew ten times by 1997, with its operations in countries such as Japan, Singapore and many more (Kanta, 2017). The products which are offered by the organisation are brewed coffee, espresso-based hot drinks, snacks, various hot and cold drinks, as well as items such as coffee mugs and coffee beans. Starbucks is known as one of the most ethically sound companies. The company also takes significant steps to maintain and run its business in an ethical manner. The various aspects in which the company is ethically sound are community, security, well-being of its customers as well as maintaining diversity and its environment. There is a program in the organisation called the Business Ethics and Compliance, which provides support to its mission of inspiring and nurturing the human spirit (Starbucks, 2020b).

Issues Faced by Starbucks

Starbucks, led by its CEO Howard Schultz, has created various steps, to communicate with its employees as well as customers. The company has also sketched its mission statement, ‘To inspire and nurture the human spirit- one person, one cup, and one neighbourhood at a time.’ This statement of the company, in ethical terms, can be divided into four key principles. First principle is ethical sourcing of coffee, which includes involving a holistic approach, where a proper manner is introduced to maintain the high standards of its products, through blending, roasting and packing fresh products. The second principle pertains to its partners, which include its employees where they must be treated with respect and dignity. The third principle is the ethical environment stewardship, which includes the company being dedicated to the protection of the environment and its resources (Starbucks, 2019).

There are various problems which were faced by Starbucks regarding its ethical approaches. When Howard Schultz passed on the position of CEO to Jim Donald, Starbucks faced the most serious business operation crisis in 2008, where its stock price fell down 40%, as well as its profits fell down 28%, when compared in the same year when Howard Schultz was the CEO. This affected the image of the company, where the customers lost interest in the company’s products. Although the number of stores expanded, the amount of profit which they earned was not enough and the returns were low. Many customers also stated that the company had lost its original intention of keeping the customers happy, and mainly focussed on earning money (Husain, Khan and Mirza, 2014).

There were quality issues which the company faced, where they received feedback that the quality of their products was low and was on a degrading position and the taste was not as good as before. Further, the selling price of the product was not worth the product and did not provide good value for it. When the store lay-outs were changed to introduce CDs and books in store, the customer satisfaction also reduced (Husain, Khan and Mirza, 2014). This proves that there were leadership issues, in the company, which affected the profits and sales of the company. The central ethical issues in the company can be related to the code of conduct as well as the assurance of its associates to deliver superior quality products and facilities to their customers, provide a positive place of work for the employees, as well as provide importance to the protection of the environment.

Starbucks has met with criticism regarding the company’s interference in an Ethiopian effort to register its brand of the coffee, Fairtrade. This step taken by the company led to a loss of more than $47 million in a year (Holt, 2008). There have been various efforts by the Ethiopian coffee sector to trademark its coffee brands, but every effort by them has been stopped by the Starbucks Corporation. The company has worked with the industry lobbyists to pressurize the US Patent and Trademark Office to decline all the trademark applications by Ethiopia. This shows the brand symbolism which Starbucks has, and the ways in which the company misuses it. Further, there are lesser markets in the coffee industry, which function smoothly. The Ethiopian farmers mainly live under the survival levels and they are facing problems in staying alive. The images, which are provided by the Starbucks marketing aspects are unreal and are not close to what the company depicts (Holt, 2008).

Further, the ecological and the tracking arguments of Starbucks, were accountable for the company’s downfall. A survey by The Times in 2010 stated that customers consider going to those coffee shops, which undertake adequate steps for the social and environmental problems. The percentage of customers has fallen down by 4%, from a record of 16%. (Richmond, 2010) The sustainability issue, which Starbucks has been facing, is the creation of wastage. Along with finding the solution to waste production, the company is also trying to find the solution to ethical sourcing, which can only be solved by the process of ‘free trade’. This process can be said to have detrimental impact on the future sales of the company (Hamman, et al., 2014).


The argument is that the Starbucks has not abided by its ethical principles as it has various issues and these are reflected in its processes, as well as its code of conduct. The leadership issues at Starbucks has caused various problems, which led to loss for the company and reduced its profits.

Ethical Decision-Making Approaches

The Ethical decision making process is the method of evaluating and making a choice among the different alternatives which are available in a consistent manner along with the ethics. Ethical decision making deals with the moral issues of an individual or an organisation (Selart, and Johansen, 2011). There are different approaches to the ethical decision-making process, which include the Utilitarian approach, the Common Good approach, the Egoistic approach, the Duty-Based approach, the Rights approach, the Fairness or Justice approach, the Divine Command approach and many others. Further, there are three frameworks on the basis of which good ethical decisions are taken, which are; the Consequentialist framework, the Duty Framework and the Virtue framework.

The ethical decision-making approaches, which have been used in this paper, are the Common Good approach, the Duty-based approach and the Rights approach.

The Common Good approach has been selected because, the company, Starbucks, works for the common good of the society. It takes into consideration the environmental aspects, as well as its maintenance and protection. The Starbucks employees are always motivated to work because they know that their work helps the environment, although there have been various issues which the company has faced in the past (Kanta, 2017).

The Duty-Based approach has been selected because it is the duty of the company, Starbucks, or any other organisation to provide the best products and services to their customers. The Duty-Based approach was connected to the philosopher, Immanuel Kant (1724-1804), who said that doing a deed, which is right, is not regarding the results of an individual’s actions, but having proper intentions in laying out the action (Selart and Johansen, 2011). The duty-based approach focuses on and provided importance to the value of every individual, provides a basis for the basic human rights of the people, as well as provided equal representation and respect to everyone (BBC, 2014).

The Rights approach has been selected because it guards the moral rights of the individuals who have been distressed by the actions taken by other individuals or organisations. This approach is also based on Kant’s duty-based approach and stems most of its information from the specific approach. This specific approach provides importance to the fact that every individual has a right to maintain his/her self-respect (BBC, 2014). 

Conclusion on Ethical Dilemma in Organisations

The aim of this paper was to highlight the ethical dilemmas based on the global environment and its knowledge of the cultural and philosophical traditions, which affect the behaviour of the employees, as well as the organisation. For this purpose, this paper has provided a detailed analysis on the complex management problems that are related to ethics and social responsibility in an organisation and has mainly focussed on Starbucks and the issues, which it has faced, followed by the various approaches selected for this paper. It has been seen that although Starbucks faced various leadership issues in the past, the company overcame those through different processes and by following the ethical and sustainability processes as well. It has been found that sustainability and ethical issues are two problems which organisations mainly face in today’s world, where the solutions have to be found for the proper running of the businesses.

Reference List for Ethical Dilemma in Organisations

Barnes, P. 2006. Ethical Challenges and Dilemmas in Organizations: A case study approach, Case Studies in Organizational Communication. 

BBC. 2014. Duty-based Ethics. [Online] Available at: <> [Accessed on: 1 September, 2020].

Conrad, C. 2003. The corporate meltdown. Management Communication Quarterly, 17(1), 5–19.

Figar, N. and Dordevic, B. 2016. Managing an Ethical Dilemma. Economic Themes, 54(2), pp.345-362

Hamman, L., Luschnat, K., Neimuth, S., Smolarz, P. and Golombek, S. 2014. CSR in the coffee industry: Sustainability issues at Nestle-Nespresso and Starbucks. Journal of European management & Public Affairs Studies, 2(1), pp.31-35.

Holt, D. B. 2008. Brand Hypocrisy at Starbucks. In SAID Business School (pp. 1-7). Oxford: University of Oxford.

Husain, S., Khan, F. and Mirza, W. 2014. Brewing Innovation. [Online] Business Today. Available at: <> [Accessed on: 1 September, 2020].

Kanta, M. A. 2017. Corporate Governance Problem (STARBUCKS). [pdf]. Available at: <> [Accessed on: 1 September, 2020]

Nijhof, A and Fisscher, O. 1997. Dealing with Ethical Dilemmas in Organizational Change Processes. International Journal Value-Based Management, 10(2), pp.173-192.

Redding, C. W. 1982. Ethics and the study of organizational communication: When will we wake up? Lecture presented to The Center for the Study of Ethics in Society. Kalamazoo: Western Michigan University.

Richmond, S. 2010. Survey of Starbucks. [Online] Available at: <> [Accessed on: 1 September, 2020]

Selart, M. and Johansen, S. T. 2011. Ethical Decision making in Organizations: The role of Leadership stress. Journal of Business Ethics, 99(2), pp.129-143.

Starbucks. 2019. Our Starbucks Mission Statement. [Online]. Available at: <> [Accessed on 1 September, 2020].

Starbucks. 2020a. Company Information. [Online]. Available at: <> [Accessed on 1 September, 2020]. 

Starbucks. 2020b. Ethics & Compliance. [Online]. Available at: <> [Accessed on 1 September, 2020]

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Business Ethics Assignment Help

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