Significance of Ethics and Social Responsibility - Research Paper Example

? Ethics and Social Responsibility Significance of Ethics and Social Responsibility A business does not operate in a vacuum and if it wants to survive and prosper in the current global scenario of heightened awareness among general public about ethical standards and social responsibility that should be exhibited by a business enterprise, it must be prepared to satisfy not only shareholders but other non-shareholder stakeholders as well. Those non-shareholder stakeholders include, employees, creditors, suppliers, customers and the general community in which the company is located (Bendixen, Abratt, & Jones, 2007). Hence, of late, management decisions by multinational companies are increasingly being examined through the prism of corporate ethics and social responsibility. It should be proper to indicate at this stage that corporate ethics and social responsibility are not something that a multinational company should adhere to simply because it is fashionable to do so. Rather, it makes sound business sense to do so as it would ensure bolstering of goodwill and projecting the right image of the organization that would almost automatically garner social approval and consequently long term profits (Reynolds, Schultz, & Hekman, 2006). Any company that fails to project itself in a proper light tends to attract social opprobrium and a general apathy from community. This is bound to translate into consumer rejection and reduction of turnover. With a robust media and a highly energetic community of internet users, every corporate body should be aware that any wrong move on their part or any action that is perceived as unethical or socially irresponsible would most certainly receive a huge amount of negative publicity and would induce huge armies of potentially customers to look for more ethical and socially responsible producers. Some time ago the huge outrage caused when it came to light that a highly successful footwear company had actually employed child labor in sweat shops of Far East to manufacture their high priced products should be a pointer to all companies that operate across frontiers and continents. They must maintain a clean image and actively promote socially responsible and ethical behavior. Any attempt to cover up lapses on these issues might garner short term profit but would sooner rather than later come out in the open and cause immense and irreversible harm to corporate goodwill. Thesis statement This paper tries to establish that Facebook and McDonalds, both multinational giants, have not been able to properly discharge their social responsibilities as corporate citizens. Neither have they been able to maintain corporate ethics while conducting their businesses. Brief History of Facebook Mark Zuckerberg was then a nineteen year old student at Harvard University when he felt the need of a common platform where all fellow Harvard students could meet their friends, interact on an informal basis, exchange personal information and also voice their opinions and discuss about issues they felt would be of interest to their friends. There have been controversies about who had actually thought up the concept and lawsuits are still pending about the parenthood of Facebook but we would not delve into those as Facebook as a business entity rather than its origin is the subject matter of this paper (Krivak, 2008). Zuckerberg imagined this platform would be a place where members could congregate not only to fulfill their social needs of keeping in touch with the community but also to create and influence community opinion if need be. As it would not be possible for students to physically meet very often, given their tight schedules and back breaking workload, Zuckerberg felt a virtual meeting place would serve the purpose and he set up facebook.com in 2004 (CrunchBase, 2010). What had begun as a meeting place for Harvard students caused a silent revolution in social networking via the internet. Social networking and setting up communities never remained the same. Facebook announced in July 2010 that it had more than 500 million users around the world. This phenomenal growth of Facebook catapulted Mark Zuckerberg into the league of most influential opinion makers of the world in the very short span of six years (The New York Times, 2011). Facebook has become the leader in social networking and increasingly people of all age groups are flocking towards it to say something about anything they feel is worth talking about. It has thrown a very serious challenge to Google by offering a platform which people visited on account of their community loyalty and personal friendships rather than to take advantage of complicated mathematical search algorithms. This concept of personal touch has put Facebook in an almost unassailable position. Recent tumultuous events in Cairo got their sustenance from Facebook communities as agitators used this platform to motivate and gather more and more people to their cause by using the facilities provided by Facebook. So, an initiative had begun as an unobtrusive docile platform for inconsequential social networking has now metamorphosed into a powerful and potent medium of exhorting people for a social change (The New York Times, 2011). It is no wonder then that this social muscle would be converted into financial power and that was evident when Goldman Sachs valued the company at $50 billion and invested $500 million in January 2011. Though the company is tightly controlled by Mark Zuckerberg, after the Goldman money came in, Zuckerberg has informed that Facebook will start publishing its financial results from April 2012 (The New York Times, 2011). Brief History of McDonalds It all began in 1940 when Maurice and Dick McDonald opened the first McDonald’s outlet at San Bernardino in California. After running their business for seven years the brothers realized that their fastest selling items were hamburgers and hence decided to do away with the existing carhop format with self-service and also introduced a simpler menu that consisted of only nine items with the pride of place being occupied by a fifteen cent hamburger. The next year saw the arrival of French Fries that replaced potato chips and thick milkshakes. The real change occurred when Ray Kroc, a Multimixer salesman visited the brothers and returned with the permission to set up McDonald’s franchisees all across the world (Travel Through Time With Us, 2011). In 1962 McDonald’s unveiled its now ubiquitous golden arches logo and just a year later Ronald McDonald, an eternal favorite with children, made its first appearance. In 1968 the world got its first taste of now legendary Big Mac and there have been numerous alterations and additions in McDonald’s menu since then as the restaurant chain spread all across the world spanning diverse cultures and eating habits. One of the best features of McDonald’s marketing strategy has been adaptation to local tastes and preferences without a single thought. This flexibility has made it acceptable to people from all corners of the world be it the highly orthodox Hindus of India or the xenophobic Chinese on the other side of the Great Wall (Travel Through Time With Us, 2011). McDonald’s was aware of its social responsibility, and as a concerned corporate citizen who is eager to give back something to the society from where it had gained so much, it opened its first Ronald McDonald House in Philadelphia to provide temporary shelter to parents of children who were admitted in nearby hospitals (Travel Through Time With Us, 2011). As fast food industry continued to expand at a furious pace pressure from competitors began to mount but McDonald’s emerged unscathed from the bitter battle and continued its saga of continuous growth. It did not restrict itself within the USA and by the middle of the last decade of twentieth century it had already had a sizeable presence in nearly sixty countries of the world. An example of managerial flexibility of McDonald’s was evident in mid 1980s when it faced shortage of teenage employees. Instead of trying to poach employees from rivals or offer higher incentives to lure more teenagers in its workforce, McDonald’s opted for the novel route of inducing retired persons to join its ranks. The move was an astounding success and the company could solve one of its long-standing bottlenecks once and for all (Travel Through Time With Us, 2011). After a few downsides and almost similar number of incredible growth stories, McDonald’s has now reached a position where nearly sixty two million customers across the world patronize McDonald’s restaurants every day. Its sales for the year ended 2010 was $24 billion which represented a mind boggling 6% increase over the previous year. Being a corporation that was alive to shareholders’ requirements it ensured that earnings per share went up by 11% to reach $4.58 and it returned $5.1 billion to shareholders either through dividend payouts or through share repurchases. These figures surely paint a very impressive picture of this global fast food giant and it has become an unofficial ambassador of American culture and taste across the world (McDonald's Corporation, 2011). Ethics and Social Responsibility of Facebook and McDonald’s A comparative analysis of ethical behavior and social responsibility evinced by these two multinational giants can be done with respect to several criterions. But it must be remembered that as these two companies operate in different sectors and offer different types of goods and services, it might not be possible to compare them on exactly similar grounds. There could be criterions where one company could be criticized and there could be other criterions where the same company cannot be evaluated as it does not provide any service or goods that can be evaluated under that norm. Principle of Utilitarian Benefits: This principle essentially postulates that a company should always strive to engage in activities that would maximize benefits to maximum number of people. This concept of greater common good should be the guiding principle while taking any corporate decision. McDonald’s has been held guilty on this count numerous times by individuals and communities as being a purveyor of unhealthy foods. The company has been held responsible by these groups and communities as being the main reason for increasing levels of obesity in United States. A chemical analysis of its flagship ‘Big Mac’ and medium fries reveals that together they contain ‘1010 calories, as well as 46g of fat, 13g of which are saturated’ (Collins, 2008) which is more than half of the recommended calorie intake of an adult American female. It has been medically established that a diet having high contents of fat, saturate fat, salt and sugar not only results in obesity but also is one of the main reasons for diabetes, high blood pressure and heart disease. McDonald surely cannot deny its role in furthering these diseases as it laughs all the way to the bank. It is an undeniable fact that more than ninety percent of US children visit McDonald’s and the company has a devised a unique means to attract children through the toys it distributes free in its ‘Happy Meals’ programs. Critics blame McDonald’s for rising levels of obesity among American children. These critics are especially livid about the company’s use of Ronald, the clown to attract children as they feel it is a ploy by the company to lure them by portraying McDonald’s outlet is a fun place to be in. It must be stated that as Facebook is not involved with any sort of food products this allegation cannot be brought against the company. McDonald’s has also been blamed for environmental destruction and degradation. It has been alleged that the company has destroyed hundreds of acres of rain forest in Brazil to make way for its cattle ranches. It is hardly worth reiterating that such wide scale destruction causes irreversible harm to global environment. There is also the issue of generation of enormous amounts of packaging waste by the company. Most of food products served by McDonald’s are consumed almost immediately, so the packages in which McDonald’s burgers and fries and milk shakes are served hardly last for more than five minutes but the company generates tons of packaging wastes. It was estimated about fifteen years ago that each US outlet of McDonald’s daily produces 238 lbs. of waste while each US regional distribution center daily produces 900 lbs. of packaging waste (Svoboda & Hart, 1995 ). That was the condition fifteen years ago; one can very well imagine how far the situation has deteriorated now. Again it must be mentioned that Facebook cannot be faulted on this ground. Principle of Individual Rights: This principle postulates that an organization should never take a decision or indulge in any form of activity that infringes upon other persons’ agreed upon rights. Facebook has been repeatedly held guilty of infringing privacy rights of its members and users. It is an accepted fact that Facebook has emerged as the most potent medium of social networking where users can interact with numerous others having same interests or just can enter a new group by clicking on some of its easy to use features. The simplicity and user friendliness of the design of its website and the almost unimaginably large user base makes it an extremely attractive destination for people belonging to every age group and every conceivable areas of interest. In such a vastly populated milieu it is very much possible that persons of unscrupulous nature and having dubious intentions can try and break into this huge database of personal information. Any unsuspecting user of Facebook assumes that whatever information that they upload on their profile would be accessible to only those that they are meant for and any unauthorized person should not be able to get hold of any part of this intensely personal data. Advertisers are also thronging the Facebook, eager to hawk their wares to such a huge congregation of prospective customers. They would also be more than eager to contact individually all these potential customers and if by any chance they could get hold of personal details of these users they would strike a gold mine as it were. In such a situation, privacy and security of personal data is of paramount importance if Facebook wishes to retain its unrivalled position in this particular zone. Wall Street Journal report on data leakage had sent alarm bells ringing in the vast Facebook user community and in spite of Mark Zuckerberg’s declaration in May, 2010 that the website has fixed all the loopholes the issue of privacy surfaced again in late October, 2010. It could very well be that Facebook is so focused on growing bigger and bigger that it does not have the time to really care about unexpected problems that its members might face or it could also be that it deliberately does not want to make it foolproof as it would deny it from the lucrative option of selective sharing of data with marketers having deep pockets (SFGate.com, 2010). McDonald’s, however, does not face any allegations of this kind. Principle of Distributive Justice: This principle postulates that a corporate body should never take any decision that harms the least fortunate or resourceful in any way. The best example of such less resourceful would be the employees that work in a huge multinational company as an individual’s might simply cannot be counted against the gigantic power of a multinational corporation. In this regard, allegations have been raised against both McDonald’s and Facebook. While McDonald’s has been pilloried with allegations that while it employs more than one and half million people all across the world, the teenagers that work in its outlets are never paid adult minimum wages that are mandatory as per government stipulations. Moreover, working conditions in McDonald’s outlets are not up to the desired level and there have been many instances of discriminatory behavior at workplace at McDonald’s (Transport and General Workers Union, 2004). These are very serious issues and McDonald’s should not be allowed to go scot free simply because there are no trade unions in that company. Facebook also faces allegations of similar nature where they are accused of earning millions from advertisement revenue by displaying content provided free by its users. The company should, if it is ethical, share a portion of this revenue with those that have provided these contents. Though it can very well argue that it did not solicit these contents and users had uploaded the details for their own benefit, it still cannot escape from the fact that it professes to be a free networking and not a camouflaged usurper of data of providers that are completely ignored while the coffers of the company start to overflow (Carr, 2011). Conclusion The thesis that this paper purported to prove is both Facebook and McDonald’s have failed to properly discharge their social responsibilities and have not conducted their operations in an ethical manner. By applying various principles of ethical behavior it has been discussed in detail how Facebook and McDonald’s have failed in passing these ethical thresholds. While both Facebook and McDonald’s have failed to satisfy the tenets of the principle of distributive justice, McDonald’s could not give a positive account of itself when examined through the prism of the principle of utilitarian benefits. Facebook, on the other hand, portrayed itself in poor light when queried against the backdrop of principle of individual rights. Thus it can be concluded that both these giants have not been behaving in the manner in which society expects them to. References Bendixen, M., Abratt, R., & Jones, P. (2007). Ethics and Social Responsibility in Supplier-Customer Relationships. Journal of Applied Management and Entrepreneurship , 3-9. Carr, D. (2011, February 13). At Media Companies, a Nation of Serfs. 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Journal of Business Ethics, 64(3) , 285-301. SFGate.com. (2010, October 19). Facebook and privacy issues. Retrieved February 20, 2011, from SFGate.com: http://articles.sfgate.com/2010-10-19/opinion/24141616_1_mafia-wars-facebook-privacy-rules Svoboda, S., & Hart, S. (1995 ). Case A: A McDonald’s Environmental Strategy . Pollution Prevention in Corporate Strategy, March . The New York Times. (2011, January 18). Facebook. Retrieved February 20, 2011, from The New York Times: http://topics.nytimes.com/top/news/business/companies/facebook_inc/index.html Transport and General Workers Union. (2004). Government lets McDonald’s get away with low pay shame. Retrieved February 20, 2011, from Transport and General Workers Union: http://www.tgwu.org.uk/Templates/News.asp?NodeID=90633&int1stParentNodeID=42438&int2ndParentNodeID=89397&Action=Display Travel Through Time With Us. (2011). Retrieved February 20, 2011, from Our Company: McDonald's: http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html Read More