Corporate Social Responsibility for Multinationals - McDonalds - Assignment Example

Professor’s Name] [Course Title] [Date Abstract This essay discusses the corporate social responsibility for multinational. It first explains the two statements given my Friedman and Kaler, respectively. The essay then goes on discussing these statements in regard to multinationals, while explaining through examples of multinationals. It considers the reports and journals to support the ideas. Examples considered are of McDonald’s. Its practices and social responsibilities have been used to explain what both writers meant, and evaluated their statements. Corporate Social Responsibility for Multinationals Corporate social responsibility (CSR) is an in-built part of business model. It is when a businesses considers law, stakeholders and profits when performing any actions, and balancing interests of all these areas. It is essential for multinationals to recognize the importance of corporate social responsibility. After all, an action taken by a multinational firm in one part of the world is bound to affect its operations in one way or the other, whether directly or indirectly. Additionally, businesses will encourage activities which are socially acceptable and discourage those will are socially unacceptable, or like to bring negative publicity, regardless of whether these activities were legal. Thus, public interest is given much importance when making decisions. According to Milton Friedman, “the discussions of the social responsibili­ties of business are notable for their analytical looseness and lack of rigor” (Friedman, 33). In other words, all businesses have social responsibilities. However, these responsibilities remain rather vague. That is, a corporate social responsibility for a firm in a free market would be to earn profits to satisfy the shareholders and employees. On the other hand, social responsibility also remains towards customers who are not to be exploited by charging higher prices. Secondly, it is possible that it is a welfare organization, and thus the social responsibility is to people in general, that is, the community. No matter what the objective is, the social responsibilities of a business are not clearly defined and may fluctuate regarding different objectives of stake holders. An individual, who runs a business, may have some responsibilities towards his family and community, such as providing charity and helping the poor. He may refuse a particular job because it may be socially unacceptable. These responsibilities maybe regarded as social. However, they are at his personal and individual expense. Corporate social responsibilities are those which concern the business, that is, whether the organization as an entity in itself is conforming to social responsibilities. These are not at individual expense either. Instead, it is at the expense of one or more stakeholders. Thus, social responsibilities are notable for lack of rigor and analytical looseness. Social responsibilities are never clearly defined, nor are they always in favor of all groups affected by business actions. That is, as stated above, one or more stakeholders are bound to pay when businesses are being socially responsible. That is, when firms decide to cut price during inflation or economic recession, this will cost shareholders who will get lesser dividends, higher dividends being their objective. Thus, firm is spending shareholder’s money in order to be socially responsible to the community. Further more, firm may need to purchase pollution permits, which may be required by law. However, this does affect business profits. Therefore, social responsibilities are rather vague. According to Kaler, “stakeholders are claimants towards whom businesses owe perfect or imperfect moral duties beyond those generally owed to people at large” (Kaler 91). This definition by Kaler falls in the category of claimant definitions as stakeholders have some sort of claim towards the business services. Perfect duties are those which there are corresponding rights, while no such thing exists for an imperfect duty. Thus, regarding perfect duties, stakeholder can ask for it. While imperfect duties are performed on ethical grounds and no stakeholder has a right to ask for it, and businesses have a right to decide whether or not they want to perform these imperfect duties. Hence, stakeholders can strongly demand what is considered ethical and/or legal, known as perfect duties. Whether these social responsibilities of stakeholders are perfect or imperfect, these are not enough to decide if the business should act upon these claims. The deciding factor remains validity of the claim, whether it is ethical or not and if it is role-specific. For example, shareholders demand for a consistent dividend can not be fulfilled as this may mean raising price and/or else lessening employees, thus unethical or immoral. The duty may be perfect and required by law however, firms can not always abide by it as laws too maybe immoral (Kaler 95). Thus, the demand must be legal and ethical/moral for it to be fulfilled by the organization. McDonald’s is a classic example of a socially responsible organization. This firm practices perfect and imperfects duties towards its stakeholders, who are claimants of the businesses services. Setting up three decades ago, McDonald’s has moved every step while maintaining corporate social responsibilities. The social responsibility report of McDonald’s explains how the restaurant has continually provided to the ever changing needs of the world. According to the 2008 report of social responsibility of McDonalds, the organization is responsible in various aspects of its practices. Some of these practices, such as providing a ‘sustainable supply chain’, can be regarded as a perfect duty. That is, it is a right of the customers and all other stakeholders to know if every step of the supply chain reflects quality, safety and availability. Furthermore, the ingredients used in the final products too need to be of high quality, and the assurance of this quality needs to be provided to the claimants of the restaurant. In the 2006 report of McDonald’s, it said how the firm had supported sustainable fisheries. As many fishes world wide are in trouble, McDonald’s being a big restaurant feels the need to take a step. Hence, working with Conservation International, McDonald’s is helping fishes all around the world. McDonald’s sustainable supply chain vision includes ethical responsibility, environmental responsibility and economic responsibility. Ethical responsibility is to purchase from suppliers who ensure safe and healthy treatment of animals and treats employs with care and equality. Thus, McDonald’s fulfills perfect duties towards its claimants such as customers and shareholders who have ethical concerns regarding the organization. Environmental responsibility ensures that packaging and manufacture of its products is safe and healthy. For example, the tea sold at McDonald’s has ‘Caution! It is hot’ written on the cups. This can be regarded as perfect moral duty as customers have legal rights to be aware of whether it is hot. If they get burnt and were not previously informed, customers have a right to sue the firm. Further more, moral rights too apply as the customers are trusting McDonalds to provide them with safe products. Regarding economic responsibilities, McDonalds ensures affordable food delivered, yet healthy enough to minimize diseases. This may not fall in perfect responsibility. However, social responsibility in this regard remains vague. That is, it is moral to deliver affordable and healthy food, but it will be a rather weak demand to lower the prices. Nutrition and wellbeing is another social responsibility practiced by McDonald’s. Obesity rates have been rising for a while, and at McDonald’s have felt it to be their responsibility to offer a balanced diet. This is not a perfect duty, but the distinction again remains vague, as it indeed is a moral duty. To fulfill customer expectations, McDonald’s is working in three categories. These are high quality choices, responsible communication, and consumer friendly nutrition information. McDonald’s provides a menu of diverse choices of high quality meals. This give customers a chance to choose a meal which best suits their needs. Secondly, the firm believes in communications this information to its valued customer through different means. These can be websites and brochures. Consumer friendly nutrition information enables customers to choose the right meal with the help of employees by gaining easier access to nutrition information. In order to satisfy this social responsibility of nutrition and wellbeing, McDonald’s introduced the option of fruit bags in happy meals. Furthermore, there is a choice of taking Milo instead of a drink with a happy meal. This may be regarded as an imperfect duty. However, it is an essential duty to gain customer trust. Global Environment Commitment, established in 1990, is another of the social responsibilities carried out by McDonald’s to date. A recent example of this would be the ‘Best of Green’ in 2009. This is again not a perfect duty, but the demand for this duty is a legitimate and ethical one. The employment experience at McDonald’s is a mixture of perfect and imperfect moral duties. That is, employment laws are considered in all markets where the organization functions. Underage employment and minimum wage rates are some examples. Hence, basic human rights are a part of McDonald’s global commitment and practice. These practices are required by law, legitimate and ethical. Thus, demanded by employees in the right sense. However, other demands too are fulfilled, which may be categorized as weak demands. These are respect, commitments and skilled management. All employees deserve to be respected and given commitment, and therefore McDonald’s gives them a chance to give suggestions and consider their personal problems. The examples given above from McDonald’s2006 and 2008 report, and the socially responsible objectives of the organization all help explain Kayler’s statement regarding perfect and imperfect moral duties. Further more, it also explains how the discussion of social responsibilities is vague and lacks rigor. That is, whether McDonald’s is being socially responsible by doing charity work or is it merely to get positive points with customers who are ethically alert and responsible. Secondly, regarding obesity, McDonald’s has only started to provide a high quality variety, but did not change the ingredients. It has only started to inform, and communicate, as the report suggests, the nutrients of the meals. It still adds to the health problems as, for example. Oily fries are one of the most eaten foods at McDonald’s. This has been said by Paul Hawken in 2002 (McDonald’s Report: More Corporate Social Irresponsibility) ‘The Report states that ''being a socially responsible leader [its self-characterization] begins a process that involves more awareness on the issues that will make a difference''. McDonald's has known for decades that the food it serves harms people, promotes obesity, heart disease, and has detrimental effects on land and water, yet it has done little to modify its menu. In the arena of social equity, McDonald's has resisted from its inception all attempts to organize its workers, and through industry trade organizations has consistently and intensely lobbied against increases in the minimum wage. To say McDonald's has actively worked to crush trade unions is an understatement.” The employment social responsibility at McDonald’s exists because it is legally required. This is probably because of law and not social responsibilities. As Friedman said, it does lack vigor and analytical looseness. It also true that McDonald’s has only been to employ trained labor, which means that unskilled population of third world countries do not get a chance to train them selves and take advantage of multinational firms. Furthermore, it does help the other local events. However, the law are global and do not alter regarding local conditions. The statements given by Friedman and Kayler are application and true in its own sense. McDonald’s example, as explained above, suggests how social responsibilities are never clearly defined. It is not necessary that ethical stands taken by organizations must always be to aid the people, community and stakeholders. Social responsibilities which firms adopt are mostly because they are required by the law and/or forced by the most influential stakeholders. This means that a firm will not incur any costs until and unless it is to bring profits or reduce costs. For example, treating labor with care and providing wage rates above the minimum required by law is a practice of McDonald’s. This may be because if the firm does not abide by these laws, they would incur costs in the shape of taxes and fines. Further more, if they employ underage staff even in those countries where there are no strict laws, McDonald’s would suffer from bad publicity and it would consequently affect sales all around the world. The social responsibilities practiced by McDonald’s are clearly stated on the website. However, very rarely in the report is it mentioned what these practices do for the stakeholders. For example, it does not state whether these practices advantage those directly associated with the restaurant. Providing information regarding nutrients, for example, does inform customers. However, it does not benefit by providing low fat meals. Paul Hawken also stated in his report that, ‘This is certainly the case with McDonald's. For years it has promoted and demanded the least expensive standardized food for its chains. In so doing it has created powerful incentives for the centralization of food processing, agribusiness, and long supply lines, all of which reduce American food security. For McDonald's to announce that it now wants to have antibiotic-free chickens is a slap in the face of the thousands of small poultry farmers who could not compete and were forced out of business by the agro-corporations that introduced the very industrial chicken raising practices that required antibiotics to avoid massive die-off of their flocks’ Although this statement was made in 2002, it does suggest that McDonald’s is being socially responsible only where it earns a profit or saves itself from losses. Such actions taken by McDonald’s suggest how much loss these small farmers will incur. However, it still does not help them as it would cost McDonald’s without any returns. Conclusion The discussion above explains the statements given by both the writers. In conclusion, it can be said that corporate social responsibilities of multinationals are not for the welfare, but own advantage. It was also very visible in the case of McDonald’s, as its actions too suggest that welfare is only done in order to gain personal benefit. References Friedman, M (2002) ‘The social responsibility of business is to increase its profits” in Donaldson, T., Werhane, P., & Cording, M. (2002) Ethical Issues in Business: A Philosophical Approach, New Jersey: Pearson Education. McDonald’s (2006) World wide Corporate Responsibility Report McDonald’s Official Website Kaler, J. (2002) ‘Morality and Strategy in Stakeholder identification’ Journal of Business Ethics Vol. 39 pp91-99 Kolstad Ivar, 2007. Corporate Social Responsibility of Multinational Corporations Paul Hawken (2002) article: McDonald’s Report: More Corporate Social Irresponsibility. Read More