Name: Mirwais HaidariBND Business Studies Year 2 Group 1Unit 38 – P1Lecturer: Rose Ajani Task 1a). I am going to identify and describe the ethical issues McDonald’s needs to consider in its operational activities [P1] Definitions Ethics could be defined as moral principles that underpin decision-making. Ethics is what is deemed to be morally acceptable. Business ethics: are a set of principles or a code of behaviour that influences business behaviour. Business ethics is therefore the application of ethical values to business behaviour. Ethical activities: refers to a broad agenda and focuses on making a positive contribution to the community. For some businesses ethics become a main priority as profitability and survival. But it depends on how ethical a business wants to operate. Ethical values of business: this refers to the standards that are set by a business or individual that controls their behaviour. Professional ethics: This relates to how people behave to their selected careers e.g. bankers, doctors and teachers. Individual ethical behaviour: This gives the individual within the organisation corporate image. Identify Business activity (its basic operations)Describe the general ethical issues or concerns of the businessMcDonalds is the world's largest chain of fast food restaurants, serving nearly 47 million customers daily. McDonalds primarily sells hamburgers, cheeseburgers, chicken products, French fries, breakfast items, soft drinks, milkshakes and desserts. More recently, it has begun to offer salads, wraps and fruit. It is a large global company which operates all around the world. Its revenues grew 27% over the three years ending in 2007 to $22.8 billion, and 9% growth in operating income to $3.9 billion. McDonald’s corporate governance states that McDonald’s success is built on a foundation of personal and professional integrity. They earn people’s trust everyday by serving safe food, respecting our customers and employees and delivering outstanding Quality, Service, Cleanliness and Value. They build on this trust by being ethical, truthful and dependable.As the world’s largest fast food company, McDonalds proudly serve more than 46
million customers in 59 different countries and have more than 30,000 different locations internationally. McDonald’s has always maintained an extensive advertising campaign. In addition to the usual media (television, radio, and newspaper), the company makes significant use of billboards and signage, sponsors sporting events ranging from Little League to the Olympic Games, spending millions of pounds a year. Animal rights and trading fairly McDonalds claim that it is the best company in meeting the animal rights. The company declared that every farm that supplies its eggs must raise the hens more humanely and kindly. They gave farmers less than 18 ...
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million customers in 59 different countries and have more than 30,000 different locations internationally. McDonald’s has always maintained an extensive advertising campaign. In addition to the usual media (television, radio, and newspaper), the company makes significant use of billboards and signage, sponsors sporting events ranging from Little League to the Olympic Games, spending millions of pounds a year. Animal rights and trading fairly McDonalds claim that it is the best company in meeting the animal rights. The company declared that every farm that supplies its eggs must raise the hens more humanely and kindly. They gave farmers less than 18 months to comply which according to McDonalds they did. McDonalds also claims that the company is communicating effectively with farmers from around the world to treat the animals more kindly. McDonalds offer its consumers products that are trustworthy and of satisfactory quality. They trade fairly and allow competition to take place in the market. Competitors such as Burger King and Sam’s equally compete with McDonalds.Being environmentally responsible and carrying out duties towards the wider environment: McDonalds has always claimed that they are very environmental friendly, however critics say otherwise. Participating Human Rights such as legal and regulatory compliance with consumer lawsCompliance with protecting employees and employee working conditionsPoor nutrition: Many nutritionists argue that the type of high fat, low fibre diet promoted by McDonald's is linked to serious diseases such as cancer, heart disease, obesity and diabetes. The sort of diseases that are now responsible for nearly three-quarters of premature deaths in the western world. McDonald’s promote its food as nutritious while in fact it is classified as junk food. It is claimed by anti-McDonald websites that McDonald’s food also contains many chemical additives, some of which may cause ill-health and hyperactivity in children. Poor nutrition has always been linked with McDonald’s products. Such a bad publicity has actually damaged the company’s reputation as well as their overall profitability and customer base. People are currently moving towards healthy-eating and they would pay higher prices for healthier foods, therefore, poor nutrition is one serious ethical issue that McDonald’s needs to address and provide solution for; if they want to survive and remain profitable for a long time in the future. Corporate governance: Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. Critics claim that McDonald’s senior management are far away from considering what is ethically right. They use marketing tactics such as the promise of toys and other gimmicks which causes children to lure in and drag their parents behind them. The management is using such selling tactics to increase its customer base and makes more profit; they do not think about those children’s health and whether their food harms their future health. The management also does not have an appropriate recycling process in place. Every year McDonald’s use thousands of tons of unnecessary packaging, most of which ends up littering the streets or polluting the land buried in landfill sites. Corporate Social Responsibility (CSR): McDonald’s has long been claiming that the company is a socially responsible organisation who takes into account and monitors its adherence to law, ethical standards and international norms. Critics say otherwise, McDonald’s junk food has been always linked to causing obesity and making an individual put on 2 stone (12.7 kilos) in a matter of a few months. Customers has suffered stomach pains, mood swings, vomiting, a reduced sex drive, headaches, palpitations and liver problems after consuming McDonald’s food. This has had an impact on the business profitability and has also affected the shareholders through decreased dividends. McDonald’s also use its size and power in its favour and uses its globalisation to go into areas that is not their home and extracting money from the locals while at the same time taking business away from local establishments and causing them to suffer. False advertisements: Many customers have been complaining about McDonalds advertising one thing and doing something quite different. Many customers has been to a McDonald store only to find out different prices than the ones on the advertisements. For instance, sweat tea has been advertised for £1 but is sold for £1. 40 in the stores. McDonald’s has also made many false advertisements about its products and how they are classed as healthy, nutritious food. Recently, A California non-profit organisation filed a lawsuit against McDonalds for false advertising regarding its announcement they would implement a change to new cooking oil with 48% less trans fat and that the change would be completed by February 2009. They have lied about this change and to this date have not complied by the announcement. A claim from Ethical Treatment of Animals (PETA) which is an animal rights pressure group; states that McDonalds has done nothing since 1997 to improve the life of even one animal. Animals are kept and grown in appalling conditions; just to keep costs down. This shows clearly that McDonald’s does not abide by the animal rights and recently PETA launched a protest in 250 McDonald’s restaurants around the globe to make customers aware of the McDonald’s cruelty towards animals. This has slightly damaged McDonald’s reputation as an ethically responsible company. McDonald’s has been unable to trade fairly in third world countries. Vast areas of land in poor countries are used for cattle ranching or to grow grain to provide raw material to McDonald restaurants. This is at the expense of local food needs. McDonald’s promote the use of meat products therefore wasting more and more food resources. 7 million tons of grain fed to livestock produces only 1 million tons of meat. This has meant that McDonalds is not trading fairly and is causing people in third world countries such as India, Indonesia and Africa to struggle with their basic food needs. Abuse of environment: Forests throughout the world vital for all life are being destroyed at a high rate by McDonalds. The company has admitted to using beef reared on ex-rainforest land, preventing its regeneration and growth. This is a major contributor towards “global warming” crisis. Farmers and suppliers are also forcing people to cut down further trees in an attempt to satisfy demand. Violating human rights and consumer laws:Human rights include discrimination. When a business is discriminating against an individual, they are in fact violating human rights. McDonalds are always opposed to trade unions and may not want its employees to join any as they think they are treating their employees right. McDonalds is said to be discriminating among its employees on basis of their age. Most people aged over 40 are discriminated against as it is very unlikely for them to get a job in a McDonalds’ restaurant. This is because McDonalds claim that it needs fresh, energetic, young employees to be able to cope with the constant hard work. McDonalds has also been caught on violations regarding unsafe working conditions, forced overtime, sub-subsistence wage and failure to pay legal benefits. Their factories are not open to independent monitoring by local non-government human and labour rights organisations to verify if they comply with fundamental human rights. McDonalds is linked to 4 pence-an-Hour Sweatshop in Vietnam, where seventeen year-old women are forced to work 9 to 10 hours a day, seven days a week, earning as little as 4 pence an hour in the Keyhinge factory in Vietnam making giveaway promotional toys--especially Disney characters--for McDonald's. After working a 70-hour week, some of the teenage women earn just £3 At the end of February, 200 of the workers fell ill, 25 collapsed and three were hospitalized as a result of acute exposure to acetone. The human and labour rights of these workers are being violated by the company. Exploitation of employees: Workers working in the fast food industry has long been exploited and are paid low wages. McDonald’s do not pay overtime rates even when an employee works very long hours. Staffs working in the company restaurants have to work harder and faster therefore the working environment is never free of accidents such as burns. Majority of employees working for McDonalds are people who have fewer job options so they are subjected to exploitation. The company have always been opposed to trade unions. I have used the following websites and book to do my assignment. 4. Bibliography BTEC National Business Book 1 by Roger Lewis & Roger Trevitt 2007 (2nd Edition) Websites http://www.bsix.ac.uk http://www.google.co.uk/ http://dictionary.cambridge.org/ http://encyclopedia.thefreedictionary.com http://aboutmcdonalds.com/mcd/investors/corporate_governance.html
