Starbucks quickly righted a perceived wrong in one of its UK market by agreeing to pay “20 million pounds in tax over the following two years”. “Since its entry in the UK 14 years ago, the company has only paid 8.5 million pounds in taxes.” Although it has been operating within the bounds of the law, the people have felt this is far too small a sum for such a large company especially with the current economic climate. Starbucks’ twitter account was even infiltrated and image-harming messages were posted. Joe Ip argues in his post “Starbucks Repercussions for tax ‘evasion’: hacked social media” that repaying money will restore its public image for the company, and he is absolutely accurate.
People tend to have a “what have you done for me lately” mode of thinking. Starbucks has not contributed significantly to the UK in its taxes; however, that was not apparent until the recession. In order to restore its image to its former glory as a humanitarian, sustainable, caring company, Starbucks offered to pay millions more in taxes. Because people were temporarily upset with the company and simply voiced their displeasure, the company responded. This has happened throughout history; public relation issues, and when solved quickly and address the problem, results in a restoration of the brand.
A “forgive and forget,” or at least “forgive”, attitude is adopted. For example, when a Tim Horton’s employee was let-go after giving toddler a Timbit, people did not hold the entire organization at fault or boycott it. Tim Horton’s management acknowledged the mistake and attempted to fix it to the best of its ability. Conversely, most people still have negative notions towards British Petroleum due to the Gulf of Mexico spill. Luckily for that company, a “forget” attitude was more-or-less adopted because it is not commonly discussed, yet the effects were (and are) devastating.
Consequently, this small blunder for Starbucks (even though still operating within the bounds of the law) will just be a small blip, having no long-term effects. The company addressed the problem and has gone out of its way to make amends. Public relation issues can solidify a company’s image, either positively or negatively. By promising to pay funds when it was not forced to, Starbucks is ensuring people think of it in a positive light.
Articles:
http://www.marketingweek.co.uk/news/starbucks-twitter-campaign-hijacked/4005161.article
http://www.marketingweek.co.uk/news/starbucks-tax-move-a-wake-up-call-for-other-brands/4005112.article
https://blogs.ubc.ca/joeip/
