International Business in Focus - MacDonalds - Case Study Example

International Business in Focus Student Name Course name Date Introduction Corporate Social Responsibility can generally be understood to be a way through which firms incorporate social, economic as well as the environmental concerns within a given firm’s values, strategies, cultures, decision making and operations in a more transparent and responsible manner, as a result setting up better practices within the firm which create wealth in addition to improving the society. The concept has turned out to be increasingly of great significance to many corporations in the past twenty or so years. This particular essay therefore seeks to analyze how and why this concept has occurred. In addition, it will be able to examine the effects that this concept has had on MacDonald’s, a leading fast food chain in the United Kingdom. How Corporate Social Responsibility has become increasingly important over the last twenty or so years According to Industry Canada (2010), businesses are starting to acknowledge the fact that corporate reputation is directly linked to how they think about the impacts of their activities on those they are interacting with. Consequently, reputation to a number of firms is invaluable as compared to largely intangible firm asset that have to be carefully managed. Firms therefore normally employ a corporate social responsibility approach in their operations than just economic grounds. In many cases, it is as a result of moral principles and a belief that it is the correct thing to do in addition to concern for the current and future generations’ welfare that stimulates the firm to reflect on its responsibilities. A corporate social responsibility approach that has become more widely acknowledged is corporations or firm’s involvement in community development.1 In this approach, firms work along with the local communities in order to better themselves. Another common approach of corporate social responsibility is charity which involves monetary donations to a number of local organizations as well as impoverished communities particularly in the developing nations. Some firms however do not prefer this approach as they have a feeling that it does not exploit the skills of the local community, while community-based development in general results into significant developments (Dash, 2005). Acquiring an increasing corporate social responsibility interest has also been another approach employed by a number of corporations. This is based on the idea that corporate success and social wellbeing is mutually dependant. A business requires a healthy, skilled labour force, sustainable resources as well as a proficient government in order to operate effectively. On the other hand, for a society to prosper, profitable and aggressive businesses have to be developed and sustained in order to generate income, tax revenues, wealth as well as opportunities for charity. A number of these approaches to corporate social responsibility pit many businesses against the society, stressing the costs as well as the limitations of conformity with externally imposed social and environmental standards. In general corporate responsibility recognizes the trade-offs between short-range profitability and social and environmental goals, but centers more on opportunities for competitive advantage coming out through the building of social value plans into corporate strategy .2 Why Corporate Social Responsibility has become increasingly important over the last twenty or so years Corporate social responsibility encourages the vision of business responsibility towards various stakeholders. Major areas of concern are normally environmental conservation and the welfare of employees, civil society and the community in general, both at present and in the years to come. The corporate social responsibility is encouraged by the fact that firms can currently no longer operate as isolated economic bodies detaching themselves from the broader society. Long-established views regarding competitiveness, continued existence and profitability are being ignored.3 Various factors have resulted into the increasing attention devoted to corporate social responsibility. Some of the major drivers pushing many businesses towards corporate social responsibility include the following: Increasing Market Competition Corporate social responsibility is increasingly acquiring great significance as many businesses get increasingly competitive. Firms seeking to be socially responsible normally incorporate various processes within their business practices in order to respond to social, economical, ethical and environmental issues. Even though their actions may be different as seen in their commitment levels, majority of the firms reveal their focus on societal demands. Most firms compete either on the prices or the quality level of their services as their competitive advantage. Non-Profit organizations on the other hand, often employ efficiency, values of their service or societal gains to acquire their competitive advantage. Present consumers, governments, shareholders and employees have turned out to be more complicated and even more informed about good corporate behaviors, or lack of it. A firm’s reputation has therefore turned out to be one of its most important assets in this new business environment. In this case, corporate social responsibility has developed into one of the most important components of the corporate reputation.4 Demands for greater Disclosure Corporate social responsibility has also developed its significance in the recent years, often through public scandals and unprofessional conduct. A number of serious and sophisticated violations of corporate ethics have led to increased public mistrust of various firms highlighting the urgent need for enhanced corporate governance, answerability in addition to ethical standards. This has implied increased demands from various customers, statutory bodies, employees and the general public for full information regarding a firm or organization’s ethical standards. This implies that there is an increasing demand for corporate disclosure coming from various stakeholders that consist of clients, suppliers, investors, workers, communities as well as activist organizations. As a result, a number of firms are increasingly forced to take account as regards the impact of their various actions on the society. In this case, a given “firm’s brand” has turned out to be a significant way of adding value though also more susceptible to scrutiny and suspicion. Bad publicity gets communicated faster through various channels of communication that are normally out of the firm’s control for instance the internet. Corporate social responsibility is therefore an issue in which all firms have a stake and through which their present actions has a great impact on the generation to come for instance, an attempt to protect the environment. Being proactive about corporate social responsibility will progressively more offer various firms a competitive advantage both externally by protecting the firm’s reputation as well as the accompanying publicity, and internally by employees’ involvement. Various firms have therefore realized that need for businesses to acknowledge the fact that they do not just survive in a vacuum but they function within a wider community that impacts a lot on theirs as well as others’ futures. When corporate social responsibility is well carried out, it implies a precious trust in a firm or organization. Successful corporate social responsibility is able to bring about benefits for instance a distinctive position in a given marketplace, protecting employer brand, as well as developing reliability and trust with present and potential customers. It is also able to help considerably with recruitment, engagement as well as retention of the firm’s employees. In addition, business situation for corporate social responsibility currently revolves around the reality that those firms that do not engage various parties with whom the firm’s activities affect is able to put at risk their ability generate wealth for themselves as well as the society. 5 Taking into consideration the interest as well as the contributions of those with whom various firm interacts is in real sense, the foundation for ethical behaviour and good governance. Corporate social responsibility is basically a tactical approach for various firms to expect as well as address issues related to their interactions with their stakeholders and, out of those interactions, succeed in their business activities. Growing Investor Pressure Current investors have different ways regarding how they assess an organization or firm’s performance; as a result they make decisions based on certain criteria including ethical concerns. The Social Investment Forum for instance reports that during the year 1999, there were over $2 trillion worth of assets that were invested on portfolios that involved the use of screens linked to the environment as well as social responsibility.6 A different survey carried out by Environics International confirmed that over a quarter of America share owners were much interested in ethical considerations when they are buying or selling stocks. In this case, growing investor pressure justifies the reason for the increasing significance of corporate social responsibility. These legal concerns have rendered business corporate social responsibility commitments extremely essential. Compared to many years ago, many investors today are more willing to give support to companies that give much value to environmental and social protection. As a result, almost all corporations are today adopting corporate social responsibility conducts not just to act as a philanthropic supplement, but as their necessary corporate value (Yan, 2010). The Shrinking Role of Government Many years ago various governments have been dependent upon legislation and regulations in order to deliver both social as well as environmental objectives within the business sector. Dwindling government resources, together with mistrust of regulations has resulted in many firms or organizations exploring the voluntary as well as the non-regulatory initiatives in the place of the government. There is therefore an increasing awareness by various firms of the government limits on legislative as well as regulatory initiative to efficiently attain all the issues corporate social responsibility deal with. More over, a number of firms that were in the past managed by the state were privatized. The consequence of this has been standards along with the decisions that were initially carried out by the states are currently in the hands of various corporations. As a result, corporations have more choices setting their own standards on social as well as environmental matters in the current world where state frontiers have rolled backwards intentionally or otherwise. This has forced many corporations to make decisions on social responsibility issues which they did not do 20 years.7 Competitive Labour Markets Current employees gradually more are looking for more than just paychecks and benefits offered by various employers and are therefore looking for employers who have philosophies as well as operating practices that go along with their personal principles. For firms to hire as well as retain skillful employees, firms are being forced to improve their working conditions. Increased Customer Interest There are quite a number of evidences that companies’ ethical conduct exerts an increasing influence on customers’ purchasing decisions. A recent survey carried out by Environics International more than one out of every five consumers testified as having either rewarded or punished various firms depending on their observed social performance. Businesses are also acknowledging the fact that adopting effective approaches to corporate social responsibility towards their customers is able to cut risks of business interferences, set up new opportunities as well as enhancing brand and firm reputation (Singapore Compact, 2005) Advancements in Communications Technology Advancements in communication technology appears as another significant factor explaining why corporate Social Responsibility has become increasingly important over the last twenty or so years. The advancements in technology include the Internet, mobile phones as well as personal digital assistants which have made it much easier to track various corporate activities and eventually disseminate the information about all their operations. Non-governmental organizations are presently commonly drawn attention through their various websites especially to business practices they perceive as problematic. There is no doubt therefore that the advancements in communication technology has been a significant explaining why corporate Social Responsibility has become increasingly important over the years.8 Implications of Corporate Social Responsibilities on MacDonald’s in the United Kingdom The concept of corporate social responsibility has without doubt been part of the contemporary business culture. According to Feedburner (2009), the absence of such responsibilities among many firms has been able to trigger various scandals and even more, the breakdown of large firms or organizations. Feedburner (2009) states further that the society has presently been keen on issues relating to corporate social responsibility in the past four decades. This is different from the earlier 1900s when various stakeholders appeared to be more interested in the working of a given organization. The MacDonald’s, a leading fast food chain in the United Kingdom for instance has had a positive experience as far as its corporate social responsibility is concerned. The first food industry being among the leading industries globally, many companies have employed various marketing strategies to acquire the available market share. This therefore means that the fight seen among the key players of the food industry are not only limited to the provision of innovative services, but the means through the target markets can be reached. And this tells the reason why MacDonald’s has notable brand names in the food industry. As part of its corporate social responsibility strategy, MacDonald’s has been involved in number of projects within the UK.9 This asserts that MacDonald’s has several corporate social responsibilities. A more vital level of their corporate social responsibility lies on the environmental element where the company where the company has for a long time been working along with the Environment Department, Food and Rural Affairs, Tidy Britain Group and the Local Government. They have in the same ways initiated the “just bin” campaign all over the United Kingdom, a campaign in quest of a sanitary environment. Other than the environmental element, MacDonald’s has a number of programs such as the Ronald McDonald Children’s charities, a programme aimed at providing children with hospitalization assistance, mostly accommodation of the hospitalized child’s family. They also have football programs which are projects that intended to promote sports among the children. For MacDonald’s in UK, this enhances physical fitness among many youths as well as promoting the popular sport in the country, soccer. Corporate social responsibility has been able to affect MacDonald’s in a number of aspects of its operations. These include: Market Share Corporate social responsibility has had a positive impact on MacDonald’s overall performance. It is therefore not surprising has these has been able to impact positively on its market share. According to Feedburner (2009), managers at MacDonald’s view their implementation of corporate social responsibility as a significant ends that will eventually favor their individual interests and even that of the company.10 This asserts that MacDonald as a socially responsible company in the UK has a chance of acquiring a larger market share compared to the other companies perceived to be so. Buying Behavior MacDonald’s corporate social responsibility has also been able to affect the buying behavior of their target markets. According to Feedburner (2009), the buying behaviour and corporate social responsibility have a constructive correlation as consumers nowadays tend to acknowledge the level of social responsibility offered by particular firms. What MacDonald’s has been doing in UK as far as corporate social responsibility is concerned as been able to affect the public’s purchasing power. Consumers tend to aware of the significance of how such activities of various companies’ impact upon the society. In particular, the ability of MacDonald’s to make available information on the various programs they hold in line with their corporate social responsibility has been able to highly signify its capability to really influence the consumer behaviour. Through this, MacDonald’s has been able to portray itself as a company doing their share to the society as a good company while also presenting the idea that they are also willing to go an extra mile in making the world a better place. Although it can be seen that such activities involve extra expenditures on marketing when corporate social responsibility projects are included, many companies have now realized the investment returns of these activities as being highly profitable.11 Financial performance has a constructive correlation with a company’s corporate social responsibility. However, regardless of how big or effective the projects undertaken by a company undertakes, instant financial returns are in most cases not readily observed. Freedburner (2003) however argues that a company like Mac Donald’s has always been driven into implementing the corporate social responsibility programmes due to factors such as managing its risk and reputation; responding to their consumers’ demands; protecting their human capital assets; and keeping away from regulation. Viewed from this level by MacDonald’s, their executions of such projects are more often than not profitable and normally represent investments that are worth taking risk. This trend has been able to cause MacDonald’s as well as other business organizations to come up with corporate social programs based on various economic decisions. Improvements created by these projects are only manifested in cases where the actual profit can be made. Nonetheless; companies always have developed marketing tools they employ to find a way that favours them.12 Human and Intellectual Capital According to Feedburner (2009), MacDonald’s has always given people a chance to develop themselves through training. Through this initiative, the company has been able to help a number of its unskilled staff to attain higher capabilities for the organization. More over, MacDonald’s has been able to hang on diverse workforce. A firm’s human in addition to the intellectual capital acts as one of the most important assets. Such good working conditions as well as relations has helped MacDonald’s a lot in terms of retaining and developing human capital, keeping operations as well as the staff morale high. In addition their community involvement is believed to have played a complementary role as far as developing new skills, encouraging participation, sharing in addition to team work at the place of work.13 Conclusion The one and only intention of seeking profits naturally observed with many organizations has presently been progressively more displaced by the need to get hold of the customers’ favor. Both the existing and the potential customers. Companies intending to get to the top or survive within their respective industries are therefore in great need of public favor. They do this by presenting a good image that could touch a reflective aspect of their target markets especially those related to the morals and principals of the public. In general, the corporate social responsibility practiced by many companies in the contemporary society has impacted positively improving various aspects of business operations. References Dash, K, MacDonald’s in India, Thunderbird, The Garvin School of International Management, 2005, Pg 6. Freedburner, Corporate Social Responsibility of MacDonald’s in UK, 2009, Retrieved on December 3 from http://ivythesis.typepad.com/term_paper_topics/2009/10/corporate-social-responsibility-of-mcdonalds-uk.html Heal, G & Stewart, D, When Principles Pay: Corporate Social Responsibility and the Bottom Line: Global Policy Innovations, 2008, Retrieved on December 3 from http://www.carnegiecouncil.org/resources/transcripts/0044.html# Industry Canada, An Overview of Corporate Social Responsibility, 2010, Retrieved on December 3 from http://www.ic.gc.ca/eic/site/csr-rse.nsf/eng/rs00129.html Rob, H, Corporate Social Responsibility and the Consumer Movement, Journal of Consumer Affairs, 2003, Retrieved on December 3 from http://www.allbusiness.com/human-resources/employee-development-employee-ethics/985640-1.html Singapore Compact, Corporate Social Responsibility, 2005, Retrieved on December 3 from http://www.csrsingapore.org/whatiscsr.php Webb, D, The Effects of Corporate Social Responsibility and Price on Consumer Responses, Journal of Consumer Affairs, 2005, Retrieved on December 3 from http://www.allbusiness.com/sector-92-public-administration/administration/1183444-1.html Yan, C, Corporate Social Responsibility in Today's Globalized World, 2010, Retrieved on December 3 from http://www.businesstoday.org/online-journal/corporate-social-responsibility-todays-globalized-world Read More