McDonald’s Greed for Profit

McDonald’s greed for profit!

The following report is focussing on the managerial misbehaviour of the global fast food brand McDonald’s. It focuses on two major offences, which have been critiqued in the public space in the last couple years. In section one the company is being introduced. In section two I will explore two for the report relevant organizational theories. Section three outlines the companies’ moral misbehaviour in two different areas, admitted by the companies’ management. In section four I will show the implications of the organisational theories for the company and deduce recommendations for the management. Section five concludes my findings.

McDonald’s began its operations in the 1940 with a restaurant opening by the brothers Richard and Maurice McDonald in California. Seven years later the restaurant system was purchased by McDonald’s franchise agent Ray Kroc.^[1] Ever since then McDonald’s has grown from a local burger stand to a global fast-food restaurant with over 36,000 locations in over 100 countries with its head office located in Illinois, Brooke’s. It serves over 70 Mio customers every day. Its product line includes a variety of burgers, sandwiches, fries, desserts, breakfast, soft drinks and beverages. The key to McDonald’s long-term success has been it’s strategic alignment to franchise. More than 80 percent of McDonald’s fast food restaurants are owned by franchisees. Over the last two years the revenue has decreased annually hitting 25,4 billion U.S. dollars in 2015 and fell by 10 percent compared to 2013.^[2] 

This report considers the perspectives of two Organisational Theories. On the one side the Stakeholders Theory and on the other side the Organizational Culture.

Stakeholders Theory is a theory of organizational management and business ethics. It looks at the relationship between an organisation and others in its internal and external environment. Further the theory considers how this connections influence the business activities. Examples of stakeholders are customers, employees, non-profit groups or the local community.

One of the most relevant contributors to the Stakeholders Theory is R. Edward Freeman.

The main idea of the theory is that organizations should create as much value as possible for their stakeholders in order to be successful and to stay sustainable over time.^[3] The theory moreover faces the question of what the role of an organisation in a capitalistic society is.

According to the Financial Times Lexicon Organizational culture is a set of shared values, beliefs and norms that are characteristic for an organization.^[4] It affects the performance of an organization, provides guidelines on customer care and service, product quality and concern for the environment. It can affect the way an organisation operates, can set high ideals and meaningful goals. It guides employees attention on certain priorities and supports them in decision-making.  

Ethics with regards to employees

McDonalds identifies its employees as the most important resource for defining the company’s success. They are giving them priority over all other things. McDonalds clearly claims that they are committed to their people and employees. Thus McDonalds supports the human rights, which is part of their global business conduct: „Each of our employees throughout the world deserves to be treated with fairness, respect and dignity”^[5] 

The reality proofs that in order to increase the sales revenues McDonalds employees has been exploited not just in non-developed countries. Recent articles and blogs illustrate the exploitative and unlawful conditions that workers face throughout fast foods restaurants in the States.^[6] In May 2014 the Guardian published an article with the title: “You want fries with your poverty wages and exploited McDonald’s workers?^[7]” The central message of this article was that McDonalds treats their employees in an illegal way due to low wages, long working hours (up to three shifts in a raw) and unstable employment. It opened up reports of mistreatment of pregnant workers.

Against the statement of McDonalds’s CEO Don Thompson who insists that McDonalds pays good wages and offers real career opportunity hundreds of McDonalds workers and activists demonstrated for minimum wages and better working conditions on May 2014 in New York. As a reaction to this Thompson stated in the fast-food giant’s annual meeting: "I think that McDonald’s provides more opportunity than any other company … We continue to believe that we pay fair and competitive wages,”^[8] he said.  

When dealing with this issue there comes the question up if it is sufficient to believe as a CEO of a global recognised fast food brand to just fulfil the basic requirements. Is it Ok to award oneself even with poor standards by being better than the competitors? Shouldn’t a global brand strive to achieve the highest standards for its employees and people. Such as those claimed in their Business Conduct. And if yes how can this business conduct be activated and ensured?

McDonald’s business conduct further claims that supervisors “must ensure that the employees who report to them understand and follow the standards and complete all required compliance and ethics training”.^[9] But before claiming what the requirements of employees are shouldn’t McDonalds ensure first that their selected supervisors and or franchisees obtain ethical and moral business standards?

Marketing to Children

McDonalds clearly defines its corporate social responsibility that comes with being a leader in the food retail business. The company has committed itself to various charities and community work. Particularly involved itself strongly in children programs. This engaged attitude becomes very questionable when it comes to McDonalds purposeful advertisement for kids. McDonald’s spends 40% of its multi billion dollar-marketing budget on marketing directly to children.^[10] The company appeals very strongly within the education system as this is a place of learning and a where a high level of trust is build up in young ages.

In 2014 McDonald’s mascot Ronald McDonald which has been more than 50 years the symbol of the fast food brand was banned as a reaction of many upcoming voices against child obesity. McDonalds wanted no longer to be perceived in “public” as an encourager to eat unhealthy food.^[11] At the company’s annual shareholders meeting McDonald’s CEO Donald Thompson explained, “We are not predators.” He continued: “We have been marketing responsibly. … You don’t see Ronald McDonald eating food. And we don’t put Ronald out in schools.”^[12] But with the banning of McDonalds mascot the company has not yet stopped targeting children at all. Contrary they started getting they products in front of children with new programmes.