Corporate Social Responsibility in McDonalds - Essay Example

Corporate Social Responsibility: Mcdonalds Case Study Introduction Businesses the world over have continued to appreciate the role they play in the development and sustainability of the society through active engagement in various activities. In the past, the marriage of businesses and the society was an unthinkable concept due to the conflicting interests of the two entities. However, the emergence of corporate social responsibility has created a platform for organizations to have a fruitful engagement with the society through philanthropy. Major corporations in the United States that initially shunned philanthropic engagement with the society have continued to embrace corporate social responsibility, a demonstration of the growing influence of the principle (Blanding, 2014). One such organization that has embraced corporate social responsibility as a way of engaging and giving back to the society is McDonalds. McDonald’s corporation is the leading retail outlet in fast foods and hamburgers and has grown to be a major multinational in different parts of the world. Today, the company serves over 68 million customers in over 119 countries in different parts of the world including Asia, Africa, Europe and Latino America (Villa & Marquis, 2012). Corporate social responsibility and its principles Corporate social responsibility is defined as the relationship that exists between business entities and the society with an aim of giving back and empowering members of the society. Corporate social responsibility brings together business organizations, members of the society and government agencies in an enabling environment. Corporate social responsibility rises above the selfish interest of individual business owners who are motivated by the desire to increase profits at the expense of the society. Corporate social responsibilities engage the society in the process of achieving the missions and objectives of business organization. This is achieved through the engagement in a number of philanthropic exercises, conservation of the environment and upgrading the economic status of the members of the society (Blanding, 2014). The engagement of business in corporate social responsibility programs is guided by a number of principles aimed at created a leveled playing ground and ensuring that all members of the society benefits from the program. First, corporate social responsibility is controlled by the legal compliance principle, which requires business units to understand and follow both local and international laws which affects its operations in a certain industry. Following procedures such as environmental regulations and treaties signed by the home country of the business demonstrates a commitment to the society and the environment. Corporate social responsibility is also governed by the need to adhere to the customary international laws that govern the operation of various for profit institutions across the globe. Government agreements and declarations made are binding to all businesses and this must be done based on free will and an understanding of the sector of operation (Blanding, 2014). Corporate social responsibility is also governed by respect for stakeholders left, a principle that demands the acknowledgement and consideration of the majority stakeholders in an organization. Despite the insignificant role they play in the organization, the minority stakeholders must be appreciated from their contribution and commitment to the organization. Corporate social responsibility also follows the transparency principle which demands for clear and accurate maintenance of business records to reflect the activities and proceeds of the business. Finally, corporate social responsibility is governed by respect for human lefts principle, a statement that demands the formulation and implementation of policies, which abides to the universal declaration of human rights (Villa & Marquis, 2012). Role of government and legislation on CSR and the position of McDonalds The government plays a significant role in the development of policies and legislations, which define corporate social responsibility, and the level of engagement of public and private corporations. Just like the company laws, which are developed, to define the process of developing and managing a company, corporate social responsibility policies in the United States have ensured that organizations engage in the right activities as a way of giving back to the society. The development of company laws is aimed at protecting the rights and needs of the minority shareholders in the company to ensure that the CSR policies adopted consider their stands and attitude towards the entire process. In the United Kingdom, the labor government defined corporate social responsibility as a behavior that supersedes the legal requirements on a company. Organizations operating in the country like McDonalds must therefore appreciate the fact that their activities have a major impact on the society within which they operate (Villa & Marquis, 2012). Reasons for CSR in companies like McDonalds Corporate social responsibility is a common activity among organizations today and has had significant impact on the performance of organization and their relationship with the society. However, the motivating factor behind adopting corporate social responsibility remains a myth as analysts view CSR as a necessary devil that organizations must embrace for the sake of their relationship in the society. This begs the question; is CSR a philanthropic undertaking or do companies engage in it due to the pressure from the government and the society? At McDonalds, corporate social responsibility is viewed as a journey that the organization engages in with the members of the society with the aim of achieving a sustainable and fulfilling future (McDonald, 2013). The company puts its people, the processes and the practices first to ensure that the product that reaches the society is of high quality and safe for human consumption. This is aimed at satisfying the customers and ensuring that the society develops into a happier and healthier lot at all times despite the tough economic times. This demonstrates that the company has embraced corporate social responsibility from a completely new level before engaging members of the society in other sustainability exercises (Crowther & Aras, 2008). The company has also embraced clean and renewable energy alternative to ensure that that it has a major input in the efforts to conserve energy and sustain the environment. to this end, the company uses low energy LED bulbs and other equipment with low energy consumption while maintaining its high product quality. By recycling the wrapping papers, McDonalds has also demonstrated that the environment can be sustained by reducing the level of waste on the environment. This demonstrates that the company is not adopting corporate social responsibility due to the pressures associated by the society, but rather as a philanthropic gesture aimed at improving the livelihood of members of the society and sustaining the immediate environment (Klein, 2012). Impact of CSR on reputation Corporate social responsibility acts as glue that brings together members of the society and the organization by ensuring that the operations of the business positively influence the society. However, the question of the impact of corporate social responsibility on the performance and reputation of companies has remained central to the discussions on the relevance of the practice. In the past, the attitude and attention of members of the society on the operations of businesses was limited and this affected the progress of corporate social responsibility (McDonald, 2013). However, current studies show that the number of people concerned with the impact of business operations on the environment and members of the society is on an increase. Most people are becoming concerned on how business operations positively or negatively affect the society, a development that places the reputation of companies at stake. According to a study conducted by the Carbon Trust in the United Kingdom, 50% of the respondents develop strong brand loyalty and respect to companies that have demonstrated commitment to environmental conservation. Adopting the right corporate social responsibility policies can provide an opportunity for marketers to improve the reputation of their brands in the market. A positive reputation developed by an organization based on its corporate social responsibility strategies enhances the performance of the organization in the market and improve overall productivity (Crowther & Aras, 2008). At McDonalds, the company has emerged as a major contributor to the welfare of the society by engaging in activities aimed at enhancing the sustainability of the environment and reducing waste (McDonald, 2010). In countries like the United Kingdom, McDonald was accepted despites its strong American practices due to the great reputation that the company had gained through its corporate social responsibility. the consumption behaviors of the united kingdom and the united states differed considerably, a situation that pundits believed will affect the success of the company in a European market (Klein, 2012). Carroll CSR pyramid The acceptance of corporate social responsibility of an organization must be based on the range of CSR activities that an organization embraces and how they affect the society. Total corporate social responsibility in an organization is constituted by four key elements, which include the economic, legal, ethical and the philanthropic arm. According to Carroll, the four aspects of corporate social responsibility can be depicted into a pyramid based on their dominance and relevance to the society (Carroll & Shabana, 2010). Organizations are developed to operate as economic entities with the sole purpose of providing goods and services for economic empowerment of the society. As a result, the drive behind businesses is the need to make profit through the exchange of the goods and services with the monetary value. This demonstrates that organizations have an economic value to the society through the provision of essential goods and services to the members of the society (Carroll & Shabana, 2010). While businesses are allowed to operate and pursue their profit motives, the society also demands that such businesses operate within the established legal requirements. This is viewed as a fulfillment of the contract that an organization makes with the society before it begins operation and moving towards the maximization of its profits. Legal responsibilities are aimed at creating an environment where the operation of the businesses can be controlled to ensure that the desire to maximize the profits does not go beyond their ethical responsibilities to the society (McDonald, 2013). Economic and legal responsibilities all capture the ethical role of businesses to a certain degree, ethical responsibility is a doctrine that is aimed to shape the behavior of organizations and ensure that beneficial impacts are shared by all shareholders and stakeholders. Within the ethical responsibility framework, an organization is required to follow specific norms and standards, which will enhance the quality of services offered and the relationship between the business and the society. Ethical responsibilities border on the legal and economic requirements and are aimed at sanitizing the business operations environment to improve the chances of success for the organization. Philanthropy is the final requirement captured under Carroll pyramid and it involves the corporate actions that are aimed at improving the state of members of the society (Carroll & Shabana, 2010). McDonald Company has embraced a number of these responsibilities under the Carroll pyramid and this demonstrates its commitment to corporate social responsibility. McDonalds has demonstrated its commitment to its legal and economic responsibilities by working within the established legal frameworks. This has enhanced its performance even in new environments that have strict and different legal requirements from the United States. The behavior of the company has also abided by the ethical responsibility arm of Carroll pyramid as demonstrated by its commitment to respond to any ethical issues raised by the consumers. For example, when the government and environmental agencies complained over the packaging material used by McDonald, the company moved with speed to embrace a new environmentally safe material (Carroll & Shabana, 2010). Comparative analysis of CSR in Russia, the United States and the united Arabs emirates Different countries across the globe have adopted varying laws to govern corporate social responsibility and inform the behavior of companies towards the society. As a result, the operation of multinationals such as McDonalds in such environments is affected by the difference in legal and ethical policies from the United States. In this section, corporate social responsibility in Russia, the united Arabs emirates and the United States will be comparatively analyzed to highlight the environmental differences that exist and how they influence the operations of multinationals. Though corporate social responsibility is an emerging concept in Russia, most organizations have ignored to consider the impacts of their actions on the society and the immediate surroundings. As a result, the actions of most businesses in Russia do not reflect the traditional corporate social responsibility approaches adopted in the United States. Though the Russian government has established laws and regulations governing the actions of members of the corporate world, there is little effort by government institutions to ensure the organizations live to the expectations placed on them by the society. However, the entry of multinationals such as McDonald into the country has ushered in a new competitive environment buoyed by the response to the societal needs (McDonald, 2010). McDonald entered the Russian market in 1990 and has since grown to have major operations in different parts of the country. The success of the company in the Russian markets has been attributed to the company’s approach to corporate social responsibility in an environment where CSR is viewed as a new and foreign business practice. Just like Russia, the united Arabs emirates are undergoing a transformation of the business environment to introduce the principle of corporate social responsibility. The presence of companies such as McDonald with strong American mentality has enhanced the process of embracing CSR in the united Arabs emirates though the level is still lower than witnessed in the United States. A comparison of Russia, the United States and the united Arabs emirates demonstrates that the United States has a more complex and engaging corporate social responsibility environment as compared to the other countries. Advantages and disadvantages of CSR to companies Engaging in corporate social responsibilities has specific merits and demerits to business organizations such as McDonalds as shall be discussed in this section. Through corporate social responsibilities, companies such as McDonald has gained entry into new markets and increased their brand reputation in their traditional markets. With a stronger brand image, the company has continued to remain one of the leading fast food stores in the world despite the emerging strong competitive forces. Corporate social responsibility also enhance customer and employee retention as the safe and healthy work environment protect the employees and enhance the satisfaction of the consumers. With a good corporate social responsibility framework, an organization stands out from its competitors and develops a strong niche for itself in a competitive market (D’Amato, Sybil & Florence, 2009). Adopting corporate social responsibility has significant financial burden on the company as a great portion of the profits and proceeds from its operations are engaged in philanthropic activities. This denies the organization an opportunity to invest in other available openings thus reducing its influence and competitiveness in the market. Corporate social responsibility is also viewed as an exercise in futility which produces minimal impacts on the performance on an organization irrespective of the capital invested on its. Others also argue that companies are established to offer goods and services to meet the demands of the market and not to save the world and its people. Advantages and disadvantages of CSR to the society Corporate social responsibility has significant impacts on the lives of members of the society as it creates room for enhancing the sustainability of the society. With corporate social responsibility of companies such as McDonald, communities in remote areas have been promoted and provided with a stable supply of water and other social amenities. Schools and health facilities have also been constructed in different parts of the world due to the efforts of companies engaged in corporate social responsibility. corporate social responsibility also improves the sustainability of the environment through the adoption of environment conservation practices aimed at reducing pollution and global warming (Carroll & Shabana, 2010). Most of the projects initiated by companies in the society as part of their CSR strategies do not remain viable for a long period. Changes in consumer taste and preference at the expense of the company engaged in corporate social responsibility leads to a decline in such activities, thus affecting the livelihood of members of the society. Companies also engage in CSR to enhance their market presence and not majorly to improve the sustainability of the society, which makes their projects non-sustaining in the end. Corporate social responsibility can only benefit the society if adopted with the society in mind and not company reputation as the driving factor, as has been the case in many instances (Carroll & Shabana, 2010). Aristotle and corporate social responsibility According to the ideologies of Aristotle, the community comes first due to the nature of the organization followed by entities aimed at making profits and benefiting from our economic abilities. Though most folklore have argued that the individual comes first because we must be self-sustaining and self-defining, Aristotle believed in the power of the society and community as a whole. in a corporate world, it is the people within these organizations that work together to ensure that the functionalities of the organization are achieved at any specific time. People, as compared to functions have personalities, which makes them responsible to certain quarters or even the entire society (Solomon, 2004). The Aristotle perception of corporations demonstrates his view towards activities such as corporate social responsibility and the commitment of organizations to the societies they operate in. As units whose functions are influenced by the behavior of people that make them up, corporations must be able to give back to the systems that support them, which in this case is the society (Solomon, 2004). McDonalds has lived and operated as unit described by Aristotle in his early perception and view of businesses and corporations across the globe. Based on his argument, corporations have inbuilt responsibility to give back to the society as it is made up of the key elements of the community. McDonald appreciates the contribution of the communities within which it operates and this demonstrates its commitment to serving and giving back to the systems through corporate social responsibility. The products of the company meet the needs of the market and address all the issues that emerge as a result of lack of proper understanding of the market (Solomon, 2004). Woods and CSR at McDonald Wood (1991) embraces an approach to CSR that is identical to the notions of Aristotle, though he accepts the importance of businesses within the society. Woods argument presents a situation that is common with McDonald fast food Corporation who’s CSR has remained beyond reproach when compared with other companies. The company holds the stakeholders and the society at high esteem and this is demonstrated by the level of engagement that it has with the society. The development of corporate social responsibility program by the company has enabled it to maintain a positive relationship and culture with its stakeholders, the society and the employees as a whole. The advancement and market growth of Samsung continues to affect the performance of the company’s products and this explains their investment in corporate social responsibility to improve the relationship with the stakeholders. As opposed to the approaches adopted by McDonald that emphasized the need to introduce innovative technology into the market and not splashing cash in charities and societal activities, Cooks has announced a number of plans aimed at improving the relationship of the company with the stakeholders. The corporate charity-matching program developed by the company seeks to introduce a dollar for a dollar match for the employees. Through this move, the company intends to raise over $10,000 every year and invest the money within the societies across the globe. This move is seen as a new message from the CEO to the stakeholders and the customers that the company is moving towards embracing their contribution and investing in the society as compared to the previous leadership at the company. Comparing the views of Wood and Aristotle Aristotle is believed to have affected positively on the development of corporate social responsibility, as we know it today. According to his arguments, businesses must embrace a socially moral face, which is considerate of the society. Being the first economist, he presented various arguments against the actions of business entities with the aim of improving their interaction with the society (Wood, 1991). To Aristotle, the ethics of exchange must be embraced for an organization is considered socially responsible and engaging in environmental sustainability. He is the first business ethicist who streamlined the action of businesses and contributed to the development of a society that relates positively with the business organizations. According to Aristotle, businesses that were driven by the desire to increase profits were parasites and the different type of businesses were exploitative in nature if driven by the desire to increase the profit levels (Wood, 1991). The development of corporate social responsibility before Aristotle must be based on the belief that individuals and the society are indistinguishable units, which must operate in unison. A businessperson that has a relationship with the society cannot be engaged in actions, which are generally immoral before the society. Though some of these impacts may be negative, the organizations must develop approaches of responding to the negative impacts through the development of proper CSR policies. Such policies will incorporate the economic, social, environment and human rights consequences of the activities of organizations like McDonalds in the society (Wood, 1991). McDonalds must achieve benefits and maximize its sales while engaging various stakeholders in the society in various aspects of its activities. Engagement may include the inclusion of members of the society in the formulation of social policies as a way of ensuring that the needs of the organization and those of the society are met (Wood, 1991). Conclusion A number of factors including its relationship with the employees, the stakeholders and the society within which it operates, influence the success of an organization. To maintain a positive working relationship with the society, organizations develop corporate social responsibility programs that aim to offer various free services and facilities to the adjacent societies. Corporate social responsibility is activities that are developed by organizations to improve their overall relationship to the stakeholders by offering free or subsidized services and facilities to the society. However, McDonald has continued to improve its performance and grow in different parts of Europe with its Americanized image due to the great reputation that is has built from its corporate social responsibility. Reducing the level of salt, conserving energy and water and ensuring that environmental sustainability is achieved has pushed the company to new heights and demonstrated that corporate social responsibility can be used as marketing tool to enhance brand reputation. References Blanding, M 2014, The surprising link between language and corporate social responsibility, forbes. Available at: http://www.forbes.com/sites/hbsworkingknowledge/2014/03/24/the-surprising-link-between-language-and-corporate-social-responsibility/. 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