Starbucks was able to survive the 2007-2009 economic recession through the leadership of CEO Howard Schultz. Rather than cut costs, Schultz launched a new coffee blend and continued expanding stores. Starbucks' key stakeholders included investors, employees, media, business partners, and local communities. To address risks like declining revenue, Schultz engaged in continued product development, research on store locations, and reinforcing partnerships. Starbucks used media relations through social media, its corporate website, and press coverage to communicate its efforts to stakeholders and rebuild its brand during the recession.

1. Crisis of Economics: Starbucks’ Survival Plan For the 2007-2009 Economic Recession
Aramis X. Ramirez
National University
COM 620
Dr. Gillian Silver
August 1, 2015

2. 2
Crisis of Economics: Starbucks’ Survival Plan For the 2007-2009 Economic
Recession
INTRODUCTION
Older generations of people remember the 1930s as a time in which the economy
was in shambles, job opportunities were scarce, and many lost their financial livelihoods.
While the nation crept out of what has since been called The Great Depression, history, it
would seem, was destined to repeat itself. The nation suffered another large-scale
recession from 2007-2009. Smith, Meeker and Sharma (2011) attributed the recession to
poor mortgage investments by large financial institutions such that the “bursting of the
housing bubble led to a steep deterioration in bank balance sheets” (par. 2).
The economic crisis presented an opportunity for a company like Starbucks.
Gertner (2012) points out the criticism Starbucks faced when economic commentators
noted that the company’s offerings were ideal commodities consumers should give up in
the wake of the crisis (par. 15). Rather than sit down and let the company fold, CEO
Howard Schultz led a response to the recession that involved launching a new blend of
coffee and continued store development (Gertner, 2012, par. 3-7). The focus of the
discussion will be to outline how Starbucks’ crisis response kept the company from going
under by analyzing the company’s stakeholders, assessing risk involved, and providing
an outline for a crisis communication plan.
THE ORGANIZATION
According to its website, Starbucks opened in 1971 with a small storefront in the
historic Pike Place Market of Seattle, Washington. Starbucks’ current CEO, Schultz, was
brought on in 1981 and purchased Starbucks through a group of investors in 1987. His

3. 3
time with the company included traveling around the world, specifically stopping in Italy,
to learn more about the coffeehouse experience. His vision was “to bring the Italian
coffeehouse tradition back to the United States. A place for conversation and a sense of
community. A third place between work and home.” Schultz left the company in 2000
when Jim Donald took over and returned to replace Donald in 2008. Gertner profiled
Starbucks for fastcompany.com’s Most Innovative Companies 2012 series, specifically
noting Starbucks’ ability to navigate the shaky economic waters.
THE MISSION
To inspire and nurture the human spirit – one person, one cup and one
neighborhood at a time.
VALUES
 Creating a culture of warmth and belonging, where everyone is welcome.
 Acting with courage, challenging the status quo and finding new ways to
grow our company and each other.
 Being present, connecting with transparency, dignity and respect.
 Delivering our very best in all we do, holding ourselves accountable for
results.
STAKEHOLDERS
Ulmer, Sellnow and Seeger (2015) offer that effective communicators take the
time to not only understand the diversity of audiences, but also knowing where each falls
with regards to the primary and secondary stakeholders of an organization (p. 42). For a
company like Starbucks during the economic recession, those stakeholders can be broken
down by the following:
A. Primary

4. 4
a. Investors – because the crisis was economic in nature, support of the
investors vital for Schultz to continue building a new blend of coffee,
the Blonde Roast, during the recession
b. Employees – specifically storefront operators, or baristas. They are
the frontline when it comes to consumer relations and selling the
products so their support is equally important. According to Gertner,
Starbucks was being pressured to downsize and cut insurance costs for
employees and as such the employees themselves fell into the primary
category for stakeholders
B. Secondary
a. Media – a healthy relationship with the media communicated to all
why Schultz’s decisions were important to keeping the company afloat
and not resorting to downsizing or cutting employee insurances.
b. Business Partners – Schultz needed the support of all its producers,
coffee farmers and manufacturers to keep operating and making
decisions that he saw would help the company.
c. Communities – a community can rally around its Starbucks store
because of the company’s commitment to open stores that are
absorbed into its surrounding area.
TACKLING THE RISK
Ulmer, Sellnow and Seeger (2015) cite the National Research Council definition
of risk communication as “an interactive process of exchange of information among
individuals, groups and institutions” (p. 197). They further explain that good risk

5. 5
communication can empower one with the ability to avert or diminish the impact of a
crisis event (p. 199). Gertner’s profile of Starbucks demonstrated Schultz did just that
when he refused to rest on the company’s laurels and decided that it was worth the risk to
try something new like introducing a new blend. He said:
If Frappuccino is a hot category and you introduce a new flavor, and
it moves the needle a lot, the organization comes to believe, 'That was a great
thing we did.' And it imprints a feeling of, 'That was innovation.' But that's
not innovation. In fact, it's laziness.
(Gertner, 2012, par. 14)
Identifying Hazards Risk Associated with
Hazards
Appropriate Response
 Consumer “cost-
cutting” mentality
 Business partners
failing
 Investments failing
 Investors
withdrawing
 Overextension in
development
 Loss of Revenue
 Employee Dismissal
 Benefit Cuts
 Store Closures
 Partnership Closures
(farmers,
manufacturers, etc.)
 Continued product
development
 Research storefront
design in
communities
 Reinforce
partnership
commitments
 Offer products
emphasizing
demand, not
expansion
Figure (1)
Figure (1) extracts elements of Gertner’s media profile of Schultz and Starbucks
in 2012 and applies them to a risk assessment diagram. The result is a breakdown of the
hazards the company faced, the risks they posed and the actions taken to alleviate or
combat them. Communicating these risks and acting accordingly displays a level of
mindfulness that is key to avoiding or diminishing crises when identifying risks (Ulmer,
Sellnow and Seeger, 2015, p. 200). For Starbucks, it was not simply a mentality of “the
economy is pitiful, let’s spend more,” rather, it was a step-by-step research process that
resulted in smart spending. For example, from an outsider’s perspective it is likely that

6. 6
seeing a new Starbucks store opening during a recession would not make sense. But
Schultz insisted on thoroughly researching not only the store itself and its offerings, but
also the community in which it resides. From the art on the walls featuring local artists, to
the design of the store itself within the community, these are among the reasons Gertz
(2012) noted were key to Starbucks’ innovation (par. 19-20).
BUILDING AND USING MEDIA RELATIONS
Internal and external media agencies were vital in helping Starbucks navigate the
shaky economic waters. A Business Today article noted that upon returning to the
company in 2008 in the midst of the recession, Schultz began communicating his
intentions almost immediately. An email he sent to employees stated:
"The company must shift its focus away from bureaucracy and back to
customers. Reigniting the emotional attachment with customers. The previous
leadership had blamed the economy and the higher cost of dairy products for the
slump in business. They had also stated this as a reason to hike prices. The
company shouldn't just blame the economy; Starbucks's heavy spending to
accommodate its expansion has created a bureaucracy that masked its problems."
(Husain, Khan and Mirza, 2014, par. 5-6).
It was from this commitment Starbucks rolled out a new communications
initiative that involved internal communicators, employees and customers called My
Starbucks Idea. This initiative provides a unique way to communicate back and forth
between a brand, its employees and the community. According to Business Today, more
than 93,000 ideas were shared after the initiative rolled out (Husain, Khan and Mirza,
2014, par. 8). Successful media relations with not only traditional media outlets, but also
newer community-based ones, lend themselves to the success of these types of
relationship-building initiatives. Each tier of communications plays a role:

7. 7
 Social Media – the community team for Starbucks deployed the program,
speaking not only to media channels, but influencers, bloggers and general
customers that follow the company on its social channels like Twitter,
Instagram, and Facebook
 Corporate Website – internal communicators captured consumer insights,
compiling the data and reporting it to Schultz. This allowed him the
opportunity to make decisions that would change the company’s direction
and move beyond the economic recession
 Press Coverage – the core of any media relations initiative, press members
from various agencies, print and broadcast, communicated the company’s
efforts which brought more visibility on Starbucks’ progress and
commitment. Those included:
o Financial media (CNN Business, Financial Times, Wall Street
Journal)
o General media (Associated Press, NPR etc.)
 Internal Net (Intranet) – the company portal for its employees in which
internal communications specialists can deliver company messages and
capture employee responses in the same way the external outlets did
THE CRISIS COMMUNICATIONS PLAN
Bernstein (2013) offers ten steps in developing a successful communications plan. For
the scope of this discussion, this paper will only focus on a few of the steps that are most
important.
Anticipating Crisis

8. 8
Crisis is not avoidable; it can and will happen. Schultz’ quote earlier about Starbucks’
previous leadership blaming the economy on the company’s problems and not self-
analyzing the company’s decisions speaks to that fact. Had Donald, the CEO from 2000-
2007 anticipated that continued rapid expansion would inevitably hurt the company, he
likely would have implemented the same programs Schultz did when he resumed his
CEO position in 2008.
Identify the Response Team
 EXECUTIVE TEAM
o CEO – Leadership is often sought in crisis events because a leader’s
experience, expertise and position offer credibility and authority to any
messaging being communicated to stakeholders. Huff (2015) offers their
primary role in making initial statements reflects the company’s values in
communicating corporate social responsibility (par. 7).
o CFO –The CFO’s expertise will be needed to effectively communicate the
impact of the recession, decisions made to face it, and the financial
ramifications to stakeholders, during and after the crisis.
 COMMUNICATIONS TEAM
o Communications Director – the leader of the communications team
charged with management of all external communications with public
stakeholders. Under his or her purview are the corporate messaging,
frequency, and identification of channels to which messages will be
communicated.
o PR Manager – media agencies tend to require a more dedicated voice in
press coverage for any crisis event. The communications director will
often have both external and internal audiences to manage, so the PR
manager can take the helm for media relations.
o Social Media/Online Content Manager – charged with management of
communications on social channels as well as the company's corporate
web properties. They will ensure messages are communicated and capture
responses and report them back to the communications director. They will
also ensure any customer service concerns are appropriately addressed
during the crisis.
 CUSTOMER SERVICE TEAM
o This team will consist of the following:
 eBusiness Response Manager (email)
 Social Channel Manager (social media)
 Hotline Manager (phone)

9. 9
o Three different channels with the same function of managing customer
response in various channels, addressing them, and communicating them
upward to the communications team.
 OPERATIONS TEAM
o Legal Advisor/Counsel – for any crisis situation, a large company will of
course seek out legal counsel to ensure operations remain legal, but more
importantly, ethical.
o Operations Manager – Huff’s (2015) suggestion of placing this person on
the team to manage team communications is important because if a crisis
affects a business, employees and their work may be impacted as well
(par. 9). Essentially they will act as a liaison between the employees and
the rest of the crisis management team.
o IT Manager – it is important to ensure the manager of the web properties'
technical functions are able to support the company during a time of crisis
(which tends to result in a spike in web traffic). For example, if the
website goes down due to high traffic as the result of a crisis situation, the
IT manager will need to respond to ensure the platforms for
communication are functioning properly.
These are the major categories of response team members. What can also be
included are data analysts, marketing analysts, consumer insight specialists and anyone
charged with interpreting the data collected in the entire process. Frequent meetings and
training sessions as noted by Bernstein will ensure everyone is on the same page about
who is responsible for what response and knowing key messages.
Identify Monitoring and Notification Tools
Knowing how to communicate during a crisis is the core of any team. Not just
having one system, but several is important. Bernstein exemplifies the Virginia Tech
crisis where only using email to communicate made the situation worse (step 5). For
Starbucks that meant using all channels during the crisis, especially when it rolled out its
“My Starbucks Idea” program in response. Social media, the corporate website, news
alerts, intranets and even the traditional hotline can offer a variety of channels to
communicate and capture company intentions, reactions, and consumer responses.
Assess the Crisis Situation

10. 10
Bernstein (2013) offers this is the only step in a crisis response plan that cannot be
done in advance (step 8). However, if the other steps are done in advance, such as
knowing who will be included on the response team, and how people will communicate
with each other, it will alleviate delayed response times.
Identify and Develop Key Messages
Starbucks’ key message throughout the economic crisis was exemplified by
Schultz’s aforementioned message to his employees via email. The company’s heavy
spending to accommodate its expansion has created a bureaucracy that masked its
problems. This acknowledgement of the company’s failures in the public eye allowed
Schultz and the company as a whole to retain good faith by stakeholders at every level by
reinforcing a commitment to change things for the better.
Post-crisis Analysis
This final step in any plan asks the perennial question, “What did we learn from
this?” The entirety of the team evaluates what was done wrong, what was done right, and
identifies room for improvement in the processes.
CONCLUSION
The focus of the discussion was to demonstrate how Starbucks’ crisis response
kept the company from going under by exploring the company’s stakeholders, assessing
likely risks involved, and providing an outline for a crisis communication plan. Dividing
the company’s stakeholders between primary (investors and employees) and secondary
(media, consumers and business partners) enabled the company to focus its efforts in
rebounding during the economic recession. The response plan identifies key response
team members empowered to act in CEO Schultz’s vision as he spoke openly about the

11. 11
company’s faults. The response team includes more than just communicators, but key
players in all facets of the company that relate to previously identified stakeholders.
Schultz’s commitment to bring products that met the demands of customers, revealed
through the My Starbucks Idea initiative, helped the company succeed when many had
presumed it was on a downward spiral. Overall, responding to a crisis through a thorough
risk assessment, engaging key players and spokespersons, and being open about the
situation display great mindfulness of a company committed to its stakeholders at every
level.

12. 12
References
Bernstein, J. (2013). The 10 steps of crisis communications.
Bernsteincrisismanagement.com. Accessed August 1, 2015 from
http://bernsteincrisismanagement.com/the-10-steps-of-crisis-communications/
Gertner, J. (2012, February 7). Most Innovative Companies 2012: 24_Starbucks.
Retrieved December 14, 2014, from http://www.fastcompany.com/3017375/most-
innovative-companies-2012/24starbucks
Huff, A. (2015). Building your team for crisis communications. Disaster resource guide.
Accessed July 29, 2015 from http://www.disaster-
resource.com/index.php?option=com_content&view=article&id=320%3Abuildin
g-your-team-for-crisis-communications-&Itemid=15
Husain, S., Khan, F., and Mirza, W. (2014, September 8). Brewing innovation. Business
Today. Accessed July 31, 2015 from http://businesstoday.intoday.in/story/how-
starbucks-survived-the-financial-meltdown-of-2008/1/210059.html
Smith, R. C., Meeker, M., & Sharma, P. (2011) 2007-09 Financial Crisis. Slaying the
Dragon of Debt: Fiscal Politics & Policy from the 1970s to the Present. Retrieved
July 31, 2015 from
http://bancroft.berkeley.edu/ROHO/projects/debt/financialcrisis.html
Starbucks.com (2015). Company information. Accessed August 1, 2015 from
http://www.starbucks.com/about-us/company-information
Ulmer, R. R., Sellnow, T. L., & Seeger, M. W. (2015). Effective crisis communication:
moving from crisis to opportunity (3rd ed.) Thousand Oaks, CA: Sage
Publications