Ethical Issues of McDonalds - Case Study Example

Ethical Issues and McDonald’s Introduction This report examines ethical criticisms that have been made against McDonald’s in Europe in recent years, including accusations of unfair labour practises, false advertising, inappropriately targeting children in its advertising, and generally representing the evils of globalisation by unfairly competing against local businesses. Although these criticisms have been directed at McDonald’s, there are aspects of them that generally apply to the fast-food industry, and to some extent, any large international enterprise. In this report, the responses of McDonald’s to these criticisms will be analysed in the context of social responsibility and ethical theory and practise, and recommendations as to how the company could avoid similar problems in the future will be offered. Criticisms Exposed in the ‘McLibel’ Trial The significance of the lengthy ‘McLibel Trial’ detailed in the case study is that the final outcome was a finding by the court that Steel and Morris, the couple McDonald’s had charged with libel, had substantially proven their claims that McDonald’s exploited children with their advertising, was responsible for cruelty to animals, was apathetic to labour unions and paid its workers low wages, falsely advertised its food as nutritious, and risked the health of its regular customers. The ruling of the court changed these criticisms from mere accusations or opinions into actual wrong actions that McDonald’s had taken, making the company’s response to them not just a matter of responding to public perceptions, but steps towards correcting some bad practises. The effect of the ruling, and what makes the issues generally applicable to the fast-food industry and other businesses, was to impose or at least strongly suggest that McDonald’s adopt a more communitarian business ideology (Lodge, 1990 in Velasquez, 1992: 139-140); in other words, that the company should expect that what defines its social responsibility will be decided by society as a whole – and in extreme cases, the courts acting on behalf of society – and conduct its business accordingly. Issue #1: Targeting Advertising at Children The case study does not specify the nature of the advertising, but notes that the court ruling in the ‘McLibel’ case determined that the advertising ‘exploits children,’ implying that McDonald’s was taking advantage of young people’s immaturity in decision-making to encourage them to eat McDonald’s food, even though McDonald’s food was unhealthy. McDonald’s response to the issue was to distribute information to households explaining its new, healthier menu options for children, launch an exercise initiative intended to educate young people about the benefits of exercise and a balanced diet, and partner with football associations to support training for coaches. The key part of McDonald’s actions here was making a complete change in their message – through advertising or other means – to young customers, from one, inferring from the case study, in which McDonald’s generally-unhealthy menu of burgers, sodas, and fries could be consumed without negative health consequences to one in which a healthy diet and lifestyle is promoted. McDonald’s response was clearly a reaction to a specific criticism, even though the company characterised it as part of long-term strategic planning. The overall objective for the company was to minimise the damage for its stakeholders caused by its reputation, with the focus being on the two most important stakeholders: its customers and shareholders. In this it was following a practical pattern of stakeholder development. The new menu choices, change in message, and new, participatory, “healthy” initiatives were presented as building value for stakeholders, amoralising the problem in the process (Crane & Matten, 2007: 154); in other words, McDonald’s presented its actions not as fixing a fault but as new and valuable features and benefits for its patrons (Steuer, Langer, Conrad & Martinuzzi, 2005: 272-273; Milne, Tregidga & Walton, 2009: 1233). What should McDonald’s do differently in the future? Under the circumstances, McDonald’s had little choice but to react to an unfavourable decision, but could prevent a similar situation in the future by changing its perspective about what its role is in society. As a large, multi-national corporation, McDonald’s is regarded as a ‘corporate citizen’: According to the contemporary view of corporate citizenship, its activities should support and guide the communities in which it operates; because it operates across many different political and social environments, McDonald’s should be a model business (Carvalho, 2001: 65; Matten & Crane, 2005: 171-173). Although the case study did not go into detail concerning the complaints against McDonald’s regarding its labour practises and the company’s being the target of the ‘anti-globalisation’ protests in France, what is implied in these cases is that McDonald’s was regarded as exploitative of the communities where they operate, rather than being supportive. Thus McDonald’s should follow a sustaincentric paradigm of sustainability in its planning, focusing on the connectivity of factors from a managerialist perspective (Gladwin, Kennelly & Krause, 1995: 894-895). To use the issue of the criticism of its advertising to children and McDonald’s subsequent reaction as an example, it is in the best interests of McDonald’s stakeholders that the company promotes healthy lifestyles amongst its youngest customers because that increases the chances they will be customers for a much longer period of time (Milne, Tregidga & Walton, 2004: 5). If the same criticism as that aired in the ‘McLibel’ case were to be raised again in the future, the best response from the company would be to address it honestly (assuming, of course, the company is not actually presenting misleading advertising to youngsters) and acknowledge that the current strategy has an economic benefit for the company, as well as benefitting the consumer stakeholders by giving them information to make their own prudent choices, encouraging them to make choices that will give them happy, healthy lives, and offering a range of menu selections to meet those choices. Issue #2: McDonald’s Unhealthy Menu The biggest criticism of McDonald’s as described in the case study is that McDonald’s food – the company’s core product – is inherently unhealthy, and the company is accused of contributing to public health problems, such as increasing rates of obesity. McDonald’s solution to this problem, as the case study explains, was to add more healthy options to its menu and provide detailed nutritional information about all its food products. What should McDonald’s do differently in the future? As the case study explains, these changes have met with some criticism because the products McDonald’s is best known for and which are still preferred by most of its customers – high-calorie and high fat content burgers and fries – did not necessarily become any “healthier.” Rather than make significant changes in its basic products, McDonald’s simply added new choices. The implication is that the criticism of McDonald’s food as being basically unhealthy will indeed be an issue the company will continue to have to address. This is not an easy problem to solve, because it creates a conflict between the communitarian ideology of McDonald’s as a corporate citizen, and the company’s perspective described by stakeholder theory. On the one hand, the expectation is that McDonald’s will exercise social responsibility as defined by society, in the context of its influence as a global corporate citizen (Velasquez, 1992: 140; Carvalho, 2001: 65-66; Matten & Crane, 2005: 171-172). On the other hand, stakeholder theory dictates that the interests of all stakeholders are of equal value, and that no stakeholder or group of stakeholders should be preferred over any others (Donaldson & Preston, 1995: 67); evidently, within McDonald’s customer stakeholders there is a significant sub-group that patronises McDonald’s restaurants for its ‘unhealthy’ food offerings. The former perspective implies that McDonald’s is in a position to guide consumer choices to what is best for them, and should use that position to prevent people from making unhealthy choices. The latter perspective implies that McDonald’s should provide choices for all its consumers, whether those choices are healthy or unhealthy, according to demand, and assume that the consumers are knowledgeable about the consequences of their choices. Regardless of which direction the company takes, then, some of its stakeholders will not benefit, which is a greater problem McDonald’s should try to avoid. The best solution for future criticisms that “McDonald’s food is unhealthy” is very similar to what the company is already doing: Provide alternatives for customers who wish to make “healthier” choices, and provide the information needed by customers as to the ingredients and nutritional value of all its food products so that they can make informed choices. What is missing now, however, is an explanation of what the nutritional information actually means. It is one thing for McDonald’s to provide data on how many calories and grams of fat and sodium a hamburger contains; whether or not the average consumer actually understands the implications of that information, however, is another matter entirely. Therefore, McDonald’s should apply the same managerialist perspective as it does to the issue of the health of young consumers, as described in the previous section (Gladwin, Kennelly & Krause, 1995: 895). Apart from providing healthy menu items and nutritional information on all menu items, McDonald’s should provide further educational information to place the nutritional data in context. What does the number of calories in a hamburger actually mean for a person’s health? How many grams of fat can a person safely consume without risking a negative effect on his well-being? Of course, providing the additional “context” information imposes a significant condition on McDonald’s: If there are menu items that are not nutritionally “safe” for a person to eat under any circumstances, then they will have to be changed. For example, if a McDonald’s hamburger contains too many grams of fat than is healthy for a person to consume in a day, then the amount of fat will have to be reduced. Assuming that McDonald’s increases the amount of practical nutritional information it provides about its menu items and makes adjustments to the ingredients of them where needed, then any future criticism that its menu is “unhealthy” can be firmly and credibly refuted. McDonald’s will be able to make three important points: First, its menu contains a full range of options to satisfy any choice its customers make. Second, McDonald’s makes all the information available to allow customers to make an informed choice, including the information about the health implications of their choices. And third, none of the menu items will be unavoidably “unhealthy”. Positioning itself in this manner will accomplish several beneficial objectives for McDonald’s, its stakeholders, and the communities in which it operates. The initiative demonstrates good corporate citizenship according to the contemporary perspective that companies should provide social guidance to their communities (Matten & Crane, 2005: 173); customers will be encouraged to make the best choices to balance their own tastes and health, because McDonald’s provides all the information and products necessary for consumers to be able to do so. Consumers may still make unhealthy choices, but no one will be able to say that McDonald’s is misleading them into doing so. The initiative also satisfies the conditions of stakeholder theory, because the interests of all stakeholders are considered equally (Donaldson & Preston, 1995: 67). The different tastes of consumers – those who would rather eat a burger and fries, and those who prefer to eat “healthier” fare like salads – are met with the range of choices on McDonald’s menu, and the information provided about the food items allows the consumers to make fully-informed choices. These features provided additional value to McDonald’s customer stakeholders, which in turn provides financial benefits to McDonald’s other stakeholders, its workforce and shareholders, because it increases the company’s market reach. And it provides benefit to McDonald’s internal stakeholders in another respect, in that it pre-empts many of the criticisms that might otherwise be levelled against the company, saving the costs associated with McDonald’s having to defend its reputation. Conclusion This report has analysed two of the key criticisms made against McDonald’s in Europe in recent years, and has presented recommendations for addressing the two issues to which McDonald’s has already responded, its marketing message to young consumers and the criticism that its menu is unhealthy. There are of course other issues, such as the charge that McDonald’s engages in unfair labour practises, but the response of the company to this is not within the scope of the case study. In addressing the possibility of future complaints related to the main issues, however, it seems that McDonald’s is generally on the right path to both correct any legitimate flaws and provide the best value for all its stakeholders. With a slightly expanded focus and a willingness to provide more information about its products and activities, McDonald’s should be able to avoid serious crises like the ‘McLibel’ case in the future. References Carvalho, G.O. (2001). Sustainable Development: Is It Achievable within the Existing International Political Economy Context? Sustainable Development, 9(3): 61-73. Crane, A., and Matten, D. (2007). Business Ethics, 2nd Ed. Oxford: Oxford University Press. Donaldson, T., and Preston, L. (1995). The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications. Academy of Management Review, 20(1): 65-91. Gladwin, T. N., Kennelly, J. J., & Krause, T.-S. (1995). Shifting Paradigms for Sustainable Development: Implications for Management Theory and Research. Academy of Management Review, 20(4): 874-907. Matten, D., and Crane, A. (2005). Corporate Citizenship: Toward an Extended Theoretical Conceptualization. Academy of Management Review, 30(1): 166-179. Milne, M. J. Tregidga, H. and Walton, S. (2004). Playing with Magic Lanterns: The New Zealand Business Council for Sustainable Development and Corporate Triple Bottom Line Reporting. Proceedings of Asia-Pacific Interdisciplinary Research in Accounting Conference, Singapore, 4-6 July 2004. . Milne, M.J., Tregidga, H., and Walton, S. (2009). Words not actions! The ideological role of sustainable development reporting. Accounting, Auditing & Accountability Journal, 22(8): 1211-1257. Steuer, R., Langer, M.E., Konrad, A., and Martinuzzi, A. (2005). Corporations, Stakeholders and Sustainable Development I: A Theoretical Exploration of Business–Society Relations. Journal of Business Ethics, 61: 263-281. Velasquez, M.D. (1992). Business Ethics: Concepts and Cases. Englewood Cliffs, New Jersey: Prentice-Hall. Read More