Business Ethics & Corporate Social Responsibility - McDonalds - Case Study Example

Business Ethics & Corporate Social Responsibility Number Department Contents List Introduction……………………………………………………………………………...….3 2. A brief description of the case made against the company and responses……………….…3 3. An overview of relevant academic literature………………………………………………..5 4. Explanations on Utilitarianism, the rationale for it and the case presented……………..…..8 5. An analysis of McDonald’s CSR Practices and Utilitarianism……………………………..10 6. Conclusion…………………………………………………………………………………. 12 1. Introduction Like all other organisations, McDonalds’ heavily depends on marketing strategies. However, there are several factors that govern the execution of marketing strategies. McDonalds’ is one such organisation that in the attempt to carry out its marketing strategies, has found itself facing moral or ethical controversies. In the attempt to market itself, McDonalds’ introduced the Happy Meal toys policy. This is a form of after-sales services which involved the extension of incentives to buyers, as a way of inculcating loyalty among them. In this case, McDonalds’ extended toys to child clients who ate from its joints as a way of solidifying their loyalty. However, Grunwalder (2008, 33) observes that there are concerns that this move by McDonalds’ is unethical on two grounds. One of the charges was that McDonalds’ engages in fast foods which have little or no nutritional value and that by encouraging children to partake of its products, McDonalds’ is encouraging unhealthy eating habits and is therefore helping proliferate an unhealthy generation. Another concern is that the extension of toys to child clients is tantamount to the exploitation of children’s pestering habits and their partially formed psychosocial beings. While McDonalds’ has made counterarguments against the accusations to defend itself, experts have equally come out to discuss the gravity of McDonalds’ marketing strategy and operations, as shall be seen in the discussion that ensues forthwith. 2. A Brief Description of the Case Made against The Company and Responses It Has Made Every organization has had problems with its marketing strategies, and McDonalds’ is not an exception. Charges are being leveled at McDonalds’, regarding the manner in which it promotes its Happy Meal in McDonalds’, to the effect that it encourages children to eat in unhealthy way. The second concern centers on the fact that healthcare professionals and governments cite fast food as one of the principal causes of obesity in children, yet McDonalds’ deals mainly in them. McDonalds’ is being accused of knowingly marketing what is against the good of the public, and advertising it as healthy food. The self-knowledge that McDonalds’ is marketing unhealthy eating for profit is underscored by the research it conducted in 2009. The research involved carrying out a survey on 1,500 health conscious respondents and asking them if they would eat at McDonalds’ restaurants. The first results showed that 92% of the respondents would not eat at McDonalds’ outlets. It is against this backdrop that the accusations of unethical practices being leveled against McDonalds’ prove worthy of credence (Schumann and Thorson, 2007, 65). Critics such as Palmer (2010, 22) maintain that it is the height of unethical corporate practice, for McDonalds’ to make advertisements without engaging its synergies to ensure that its products match the contents or quality that it claims to offer. Conversely, the same consider the measures that McDonalds’ has made to grace its menu with healthier alternatives as not being enough. According to Schumann and Thorson (2007, 66), immediately McDonalds’ found out that 92% of the 1,500 health conscious respondents declined the idea of eating at its joints, it included salads, apples, fruit and yoghurt parfaits and grilled chicken wraps into its menu. The move above is seen by critics as controversial, since had McDonalds’ incorporated healthier diets into its food item, then it need not have turned to other models of marketing such as giving toys to children who have been taken to McDonalds’. The import of this accusation is that McDonalds’ preys upon unhealthy eating habits, and that its extension of toys to children who have visited its outlets is akin to an inadvertent admission of a weakness in McDonalds’ products, since such an undertaking is tantamount to bribery (Schumann and Thorson, 2007, 66). The foregoing (accusation) is compounded by the fact that children are still not mentally mature enough to rise above manipulation, and that the extension of toys is a form of manipulation, geared at keeping children dependent on McDonalds’ products and foods. Because of this, once children are manipulated into developing preference for McDonalds’ food, McDonalds’ can easily gain from children’s weaknesses. The charge herein is that by so doing, McDonalds’ finds an escape route from quality products or services provision (Sage Publications, 2011, 22). Conversely, McDonalds’ argued that it has integrated its marketing strategy to the quality of its products and that the Happy Meal programme is merely a form of after-sales services. Salads, apples, fruit and yoghurt parfaits and grilled chicken wraps are some of the new quality products McDonalds’ points at, as a testament to its argument. 3. An Overview of Academic Literature Relating To Utilitarianism and CSR There are several scholars who see McDonalds’ act of extending toys to child clients as a form of misleading advertising. This is because the act in itself, although not taking the form of blatant of contexts, yet still takes the form of a misleading statement. Particularly, Lamb (2008, 120) and Jones (1999, 176) observe that the act is tantamount to false advertising since it portrays a corporate entity which is committed to a form of corporate social responsibility (CSR), yet it is not. The issuance of toys to child clients herein depicts McDonalds’ as an organisation that cares about children’s welfare, while in real sense, the same is a marketing artifice to ensure that kids are glued to McDonalds’. Conversely, (Schumann and Thorson, 2007, 63) acknowledges the fact that McDonalds’ act of granting child clients toys alongside food is not a form of direct deceptive advertising since it lacks the aspect of press publication. Nevertheless, it remains a form of indirect deceptive self-publicity since the purported act of CSR is a design to persuade the very children into entering transactions with McDonalds’. This is because the act can motivate client-McDonalds’ transactions that could have been otherwise avoided. While acts of CSR are meant to scale an organisation’s public and corporate image upwards, and to ultimately catalyse the volume of sales and a wider market share, yet McDonalds’ case remains unique due to the involvement of children. In a closely related wavelength, appraisals can be done on McDonalds’ act of extending toys to children, based on scholars’ views, concerning matters that touch on advertising and acts of publicity that are aimed at children. Specifically, Kanner observes that advertising targeting kids (herein, McDonalds’ Happy Meal toys) leads to an inculcation of, and an epidemic of materialistic values among children. For this, Kanner would liken McDonalds’ granting of toys to children as the perpetuation of narcissistic injuring of children. This is because, with McDonalds’ act being carried on, children will be left incorrigibly convinced that without their large assortment of new products, they are useless (Clay, 2000, 51). Kanner observes that seldom do businesses engage in child advertising without the input of psychologists, since psychological knowledge is indispensible in such efforts. Kanner points that this may also amount to abuse of power and professional knowledge on the side of the psychologists since they are the ones who provide avaricious organisations with technical information on why 3-7-year-olds are attracted towards toys while 8-12-year-olds have a penchant for collecting things, and how to exploit this information. This is to mean that to Kanner, culpability does no only lie on McDonalds’, but also on the psychologist who divulged such information to McDonalds’. The gravity of this matter is exemplified by the instance when Kanner and 59 other psychiatrists and psychologists wrote a letter to the American Psychological Association (APA) in protest (Clay, 2000, 52). There are those who also observe that the use of marketing strategies on children stunts their psychosocial development. Blocher (2008, 340) particularly observes that after-sales services as a marketing strategy becomes a negative influence when used on children since it intimates to children that they can have the things they have, pronto. This gives rise to children who are bereft of importance virtues such as self-control, patient and self-discipline. In this effect, it is likely that McDonalds’ act of extending toys to children is bound to open them to the use of pestering culture. Blocher (2008, 341) contends that there is a correlation between the rise of advertisements that target kids and kids’ near-enslavement to material things. For this same reason, Blocher (2008, 341) observes that it is not fortuitous that presently, children have developed the culture of vehemently begging their parents for the brightest, newest and sleekest advertising specialty or objects; be these objects the newest Xbox and Wii gadgets. Boone and Kurtz (2012, 75) observes that the use of advertisement and marketing strategies that target children hampers children’s psychosocial development by subjecting children to low self-esteem. According to Boone and Kurtz (2012, 76), this is because, children have less cognition and experience to separate the ideals aired in marketing campaigns and tools, from life’s reality. Therefore, children end up pegging their self-esteem on objects of advertisement, in lieu of the inherent value of life and individuality that they possess. In the event that this situation is not addressed, a state is likely to experience a weak generation which cannot inhere values such as patriotism, loyalty, sacrifice and commitment. Any state in his predicament cannot stand. 4. Explanations on Utilitarianism, The Rationale for It and the Case Presented One of the ethical theories which explains the essence and import of McDonalds’ marketing strategies (of extending toys to children) is utilitarianism. Utilitarianism postulates that an action is morally right if the results emanating from such action amounts to the greatest extent of good, for the greatest number of people who have been affected by it. In this light, McDonalds’ action of extending toys to child-clients will not still be excusable because such an act will not amount to meaningful or the greatest gain to the society. Instead, the action will translate into McDonalds’ gain or increased volumes of sales, since it will have used the toys as the stimuli to invoke children’s pester-power. Children’s pester-power in turn becomes a useful instrument to coax parents, guardians or caretakers into buying McDonalds’ food. Because of this, it is only McDonalds’ which will have benefited, at the expense of the greater public. According to Jeurissen (2007, 66) and Lamb (2011, 55), the loss that the larger public will have incurred is underscored by the fact that the use of marketing strategies on children is akin to operant conditioning. The operant conditioning in this case entails the extension of toys to children who visit McDonalds’ to have them come back. Thus, the negativity of this operant conditioning is seen in the fact that it teaches and raises children to become materialists and consumerists. Ultimately, the entire society will be negatively impacted since children are any state or nation’s future. Thus, McDonalds’ Happy Meal policy is counterproductive because it shortchanges an entire state or nation, solely for its profit (Drotner and Livingstone, 2008, 16). In another wavelength, besides McDonalds’ marketing strategy, the very product that McDonalds’ deals in and attempts to promote, is not concomitant to the yardstick that utilitarians cite as qualifying moral right. Specifically, the food products that McDonalds’ is attempting to popularise and sell to children and the public is junk food and is therefore unhealthy. That a considerable number of children will yield to McDonalds’ marketing strategy and consume these foods, is a matter that will still cost the entire society since the same society will have a future generation that is not healthy. This is because junk foods contain higher concentration of sugar, salt and fats, and very little nutritional value, if any. Resultantly, junk food readily co-occurs with health complications such as diabetes, heart diseases and eventual failure, high blood pressure, arthritis, weak bones and bone complications, tooth decay and gum diseases and alteration and weakening of brain functions. A nation or a state which will have its majority charaterised by these conditions cannot be productive militarily, economically, academically or intellectually since health and general wellbeing suffuse all spheres of human development and civilisation. In this case, the marketing strategy that McDonalds’ is using on children to endear them to fast food is not morally right since it benefits only McDonalds’ at the expense of the larger society or country (Gunning and Holm, 2006, 45). In a separate vein, scholars like Shimp (2010, 29) and Pride and Ferrell (2011, 22) posit that it is important to consider the fact that should McDonalds’ ambitions go through, the larger society is bound to suffer harm, financially, while McDonalds’, a single society makes profit. This is because, McDonalds’ profit margins is to be indirectly proportional to the larger society’s financial wellbeing. The indirect proportionality of McDonalds’ profits to the society’s strength is seen in the fact that McDonalds’ profitability relies on its volume of sales, yet McDonalds’ high volume of sales is directly proportionate to the consumption of McDonalds’ food by the public. Given that McDonalds’ deals in junk foods, it is given that such a society will succumb to health-related drawbacks such as heart diseases and eventual failure, diabetes, high blood pressure, arthritis, weak bones and bone complications, tooth decay and gum diseases and alteration and weakening of brain functions. Because of this, while McDonalds’ reads higher profit accruals at the end of its fiscal year, the public and the government will be incurring a lot of financial resources in healthcare services. In light of the foregoing, it becomes clear that McDonalds’ marketing strategies and operations are not morally right since they do not benefit the greatest number of those who are affected by McDonalds’ actions. The inevitability of this verdict is only reversible when McDonalds’ revises its marketing strategies to relieve children out of it and when it changes its products to embrace healthier foods and eating habits. 5. An Analysis of McDonald’s CSR Practices and Utilitarianism It is obvious that there is an issue involved in light of utilitarianism, with the issue herein taking a twofold nature. One of these two issues is McDonalds’ use of publicity to target children, by giving child clients toys. As already mentioned, this approach is illegitimate in the eyes of utilitarians since it shortchanges the greater number which is affected by McDonalds’ actions, while benefiting McDonalds’ and its stakeholders only. This is because, it is already clear that targeting children in advertising stunts and negatively affects children’s psychosocial development. This is to the effect that in future, the rest of the nation in entirety will be left grappling with the misfortunes arising from the leadership of an unstable generation, with unbridled consumerist culture, lower levels of self control and the triumph of materialism serving as some of these misfortunes (Lee and Johnson, 2005, 30). Schwartz (2010, 125) and Schlegelmilch (1998, 53) divulge that the issue above is inescapable since the extension of after-sales-services such as toys to children is bound to inculcate among children, the false sense of self-entitlement and the notion that pester-power is the way to achieve life’s goals. The problem with a highly consumerist society is that it is less patriotic, since members of that society come to believe that it has to be given, in order to be loyal. Likewise, seldom can one find loyalty and patriotism in a country or from a generation that has not been molded to be self-controlling or to appreciate such values. Parry and Sato (2007, 19) postulate that to neutralise this threat, McDonalds’ needs to reverse its marketing strategy so that it can stop extending toys to child clients. If McDonalds’ must extend its after-sales-services to children, then the tokens should take other forms such as stationery. This recommendation is in line with McDonalds’ plan to replace its Happy Meal toys programme with books, by partnering with Dorling Kindersley and WHSmith. That this plan is nobler and McDonalds’ should follow it through, is underscored by the fact that the arrangement is intended to help ensure that 15 million books are distributed to children within the next 2 years. Again, the need for the plan to be carried through is necessitated by the fact that it will instill a reading culture among children from a very nascent stage (Bagley and Savage, 2009, 12). Another issue that McDonalds’ may be concerned with is the type of food it deals in. Particularly, that McDonalds’ has tried to parry away a public backlash against its fast foods due to health concerns by incorporating healthier foods such as salads, apples, fruit and yoghurt parfaits and grilled chicken wraps, is a matter that does not suffice justification by utilitarians. This is because, even after the incorporation of these foods into its menu, McDonalds’ still largely deals in fast foods, with the phrase fast foods being merely a euphemism for junk food (Boone and Kurtz, 2011, 23 and Jones, 1999, 156). The foregoing remains a matter of concern to utilitarians since by dabbling in junk food, the long-term benefits of McDonalds’ to the public will be discounted, as the public will develop health complications that emanate from the culture of consuming junk food. Secondly, the health complications that the public will sustain from eating McDonalds’ food is inevitably bound to translate into huge spending on healthcare services and medical attention. The government is also bound to incur extra expenses as it seeks to ensure that the accessibility of medical attention remains a reality to all, as a form of public good. In summation, it is only McDonalds’ and its stakeholders which will benefit from its marketing strategy and the product it sells to the market, by accruing wider profit margins. On the converse, the public and the government will incur losses in form of health complications, sicknesses and extra financial burdens of seeking medical attention and treatment. In this respect, McDonalds’ Happy Meal toys policy and its dealing in fast foods may not pass utilitarians’ prerequisites for moral rightness (Yeshin, 2006, 33 and Weiss, 2008, 75). Again, Michman and Mazze (1998, 46) propose that McDonalds’ can extend its marketing strategy to include the improvement of product quality, in order to win the preference of repeat clients, instead of targeting children with toys. This may have McDonalds’ changing its product quality to incorporate healthier foods and healthier eating culture so that not only children, but the entire nation can benefit from McDonalds’ cuisine. This will help alleviate the risks that the public may incur from McDonalds’ operations. 6. Conclusion The foregoing clearly shows the extent to which McDonalds’ marketing strategies is considered serious. To McDonalds’, it is clear that the matter may have been simply to wade through the enchanted waters of market competition by cultivating customer loyalty, in order to make profit. However, it is clear that there are several matters that must be brought into consideration, in order that marketing strategies remain morally right. Particularly, the moral rightness of McDonalds’ marketing behaviour is not to be taken as a matter that is subject to personal interpretation and whims, since what an organisation considers right may be wrong in the court of public opinion, and vise versa. It is most probable that to McDonalds’, the Happy Meal toys policy was a benevolent idea since it would help child clients while also helping the organisation maintain its market share. In fact, it is not in doubt that McDonalds’ may have considered its Happy Meal toys practice as a form of CSR. Nevertheless, it is important that such actions should have been judged in light of the principles or frameworks laid down by utilitarians. McDonalds’ should have considered the implications that the Happy Meal toys practice could have visited on child clients’ psychosocial development and how this was bound to affect the future of the society. Secondly, it is equally important that McDonalds’ considers the health implication of the society in which it exists and operates, if its actions are to be considered morally or ethically right by utilitarians and the society in general. 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