Kolb Model - McDonalds Controversy - Case Study Example

Kolb Model Essay on McDonald’s Controversy Introduction McDonald was started in 1937 by two brothers, Richard McDonald and Maurice McDonald in US. It was a small restaurant at that time but the business was running like a fire and the annual income in 1940s was $200,000. The McDonald’s concept was different from the other food chains. Their concept was of self service which proved the emergence of revolution in the restraint segment. The McDonald’s structure is to have the kitchen for mass production only and it is assisted with the assembly lines. The McDonald also kept the prices of their product low or we can say that fully comparable to other players in the market at that time. The main aspect of McDonald’s is speed, good service and cleanliness in the production and providing to the end consumers. (Inroduction, website) By the end of 1960s, McDonald began leasing and buying the potential stores sites and subleased the on the basis of franchisees initially at 20% markup and later they make it 40% markup. By the end of 1970s, McDonald had over 5000 restaurants in all over the world. By the end of 1990s, the McDonald starts facing the problems due to changing the customer perception, their taste and preferences and increasing the completion form the other global players in the same market. As now customers give emphasis to the healthy aspect of the food and they become very much health conscious all over the world. The customers now preferred to eat the other fast food chains rather than the discounts offered by them due to health aspect. (Introduction, website) The case here is the McDonald’s controversy for accused of wrongfully selling its French fries as 100% vegetarian food products while they contained a beef flavoring oil for the production purpose. There was a lawsuit from the various groups in the world on McDonald’s. The case will also describe the company’s reaction, settlement of the dispute by paying the damages to the vegetarian groups all across the world. Concrete Experience The controversy examines the global fast food major company McDonald’s which was alleged for the selling of the French Fries with the beef flavor all across the world not disclosing the people. In May, 2001, an action of lawsuit was filed against the McDonald’s world’s fast food chain in Seattle, US. The lawsuit alleged that company duping vegetarian customers into the eating French Fries which contained beef extracts from a long time. The lawsuit was based on the fact that McDonald’s had not put the transparent picture of their production system in front of people. They are playing with the people by making the image of 100% vegetarian food for the customers. The French Fries they produced are manufactured in the beef flavored oil which had hurted the emotions of the religious groups in all across the world. (Warren, 2000) The lawsuit also followed by the media reporter all across the world that how French Fries falsely promoted by the McDonald’s at the 100% vegetarian segment of the people. Although McDonald initially declined that they are not using the beef extract oil for the French Fries, and company issued a apology letter which was conditional and admitting the using beef flavoring fries which served to the customers. The McDonald’s management thinks that the controversy is over but the terror got increased when the customers make the issue after they admitted the things. It shows that McDonald’s was making the fool all the customers and they are supplying beef extracts products to the people. The real horror comes when the McDonald’s restaurants in India got closed. All the active members of regional parties had come front and asked government to shut down McDonald’s all stores in India. Activists of Hindu fundamentals groups like Shiv Sena, VHP i.e. the Vishwa Hindu Parishad and the Bajrang Dal protested the government or closing all the stores of McDonald in India. They also submitted the memorandum to the government for India for closing all the McDonald’s outlets. The religion groups of India also staged the protestations in front of McDonald’s restaurants in Mumbai. They also broke the glass panes etc over there and tried to make the situation more severe and even they made it severe. The religion groups just need a issue to show their presence or to show their care about the people. (Jones, 1992) As India is separated by the religions, so it very easy to make any issue which will be raised by the religion groups in India. About more than 30 people were arrested by the police over there. The McDonald’s Indian officials record a loss of Rs. 2 million at that outlet by the people. After the incident happened, the top officials of McDonald’s in India make clear the people that the they are serving the 100% vegetarian products to the people. The products do not contain any kind of beef oil extract using in the production process. The matter seems to be cool down but there are some more issues raised which given the fire to this matter again. (Stuthler & Mulej, 1997) There are some cases were filed against McDonald’s in different countries in the world. These countries were California, US and Canada. This issue becomes critical at that time when Indian people heard about the cases from all these nations about the McDonald’s controversy. The issue was same in the other countries also. Here the McDonald’s hurt the group of Vegetarian people which suffers a lot from this fact. The McDonald’s issue now becomes the world issue. The company has to spend a lot of dollars to settle down this matter. For settling the action against the lawsuit company had given the 1 million dollars to US based Hindus and 15 million dollars for the all other countries including India also. (Ismail, 2007) The McDonald’s not only hurt the feeling of the regional people but also the people do not have any religion feeling but they are made fooled by providing the wrong information regarding its 100% vegetarian food. Observations and Reflections The observations and reflections from the concrete experience from the case of McDonald’s are given below: It is very much important to have the respect for the culture and the social values of every nation. The cultural values are the mirror image of the moral things which exist in the people could be easily notified. In the case of McDonald’s, as the fast food chain was working very well in India, in fact in the very part of the world, but still they put their selves into the controversies just because of the misunderstanding of the people which make it the world issue. But the main thing that comes out that why McDonald’s make the apologies to the customers and why they have paid the huge amount of money to the regional groups in India and even in the whole world. The main issue was the corporate responsibilities of the people which make the amendments to the brand image of the people. Here the corporate responsibility is the only factors of the survival of the McDonald’s controversy in India. These values make the McDonald’s again acceptance in the India. The Corporate responsibilities of the having the energy conservations, sustainable packaging and effective waste management, go green building designs which shows the environmental responsibilities of McDonald’s over all across the world. Apart from this there is strong base of McDonald’s in all countries in the world. This was the ultimate reason for the survival of the organization in the world after such issues. (Waston, 2006) The main reason for the success of the McDonald’s is their business practices. The business practices of the McDonald’s are very strong and customer oriented. The main purpose to make the business practices to give the better service to their customers. The strong supply chain management of the McDonald’s makes it best in comparison to all other food chains in the world. The sustainable practices of McDonald in supply chain management were given below: The McDonald’s have the good relationship with their supplier both direct and indirect suppliers. In 2008, more than 98% fish was sourced from the fisheries and sustainable sources to serve their customers better as McDonald’s do not produce fish and chicken all. McDonald’s other suppliers of beef, pork; bakery products are with environmental scorecard by the 2009 as they are tested in the laboratory first before supplying to the any store in any country. (Jones, 1992) The controversy makes the McDonald’s more sustainable in the world. According to my point of view, McDonald’s should do the full analysis for the market in India itself. There are so many touch points in the regional and cultural aspect in India itself. People respect their culture and religion a lot in India. The main refection of the case comes from the social factors that affect this case a lot. The reason behind the controversy was the social class, their values, beliefs etc got hurted through this incident. So, it becomes very much important to study about the everything about the culture of any country before putting the steps into the premises for the business. (Chidester, 2005) The Hindus and all vegetarian groups in the world feel shocked and betrayed by this action of McDonald’s. India has the majority of Hindus in Indian population near about 80% which revere the cows and near about 170 million of Indian Muslims also do not eat the pork, beef etc in the food. The Indian market is different from the other markets in the world. India has more than 5000 ethnic communities having diverse population. There are food traditions in India in its each region. Some regional fast foods such as samosa, kabas, chole bhature are still famous in Indian market. So the reason behind mentioning these facts that these are the touch points of the people in India which could make any company a good brand in the market. (Mansvelt, 2005) One more factor which can be draw from the observation is that there are impacts if the external factors on the people and McDonald’s. The external factors include the government of India still they supported the fast food chain and the second one is the issue of McDonald’s in the other countries simultaneously at the same time. There becomes the criticism for the McDonald’s from all worlds regarding this issue so it makes the situation more tragic. It was the only reason after lab testing the products as they results were no usages of the beef oil extract in French Fries in India, still the McDonald’s management have to pay a lot. This was all about the observations and reflections from the McDonald’s controversies and from the company perspective also. Formation of Abstract Concepts and Generalizations For the abstract and making the generalizations for the McDonald’s Indian controversies includes the following theories which are based on the external environmental factors which affects the most a company’s operations in other country as given below: Labor Theory of Value: It is also called LTV. The labor theory of value is defines as the economic values or values of commodities which are directly related to the labors for their wages and reimbursements of the expenses. McDonald’s is following vary bad practices at that time when controversy came into play with their labors. There were some issues are already buring that McDonald’s go for child labor also or the people less than 18 years. The reason behind that it is easy to have such kind of labor and even on the cheaper rates for their operations. The main reason behind this their strategy of making the child more efficient for their operations in a particular country from the beginning. It also comes into the picture that McDonald’s is paying fewer wages to their workers which are working day and night over there but are not satisfied with the wages. (Joseph,2003) The structure of the McDonald’s is decentralized, thus the human resource policies are made by the people in top management in a particular region according to the wages over there. It is less exposed to reputational damage of the company in the market or they can lose their employees. There can be some generalizations on this issue as the McDonald’s is very good at its corporate social responsibility in all across the world. This aspect lends their image down in the society and it will make the more controversies for them to face again. The main reason behind this to have the cheap labor so that they can offer the better prices to the customers coming over there in McDonald’s, this was the ultimate generalization. Social Learning Theory: The social learning theory plays an important role in any organization’s successful operations in any country. It is defined as people always learn the new things or the existing organizational values in a particular country through the study of their social factors in that environment. If the employees would be able to understand the positive outcomes of the particular cultural values it would be easier for organization to do the good business in that country. McDonald’s is following this theory because it will make the close contacts with the customers and within internally in employees also. This theory helps to make the replication of the superiors in the market already as it is easy to carry out the process as McDonald’s did. The main importance of this theory is to understand the cultural values of particular region and apply them in the organizational style of working. (Joseph, 2003) As McDonald’s have studied the Indian culture first before enter the Indian market regarding their tastes and preferences towards the food items. The purchasing power of Indian consumers is high on the food items. They are attracted towards the brands very easily. There is a rise in the living standards of the people in the India but they still lacked and put themselves in the controversies. Mass Society Theory: The mass society theories give emphasis on the social movements of the organizations which are made up of the individuals, groups in the large societies who feel the significant social movements and the organization has to change their ways of working with the cultural changes. (Joseph, 2003) The Pluralism theory is also called political theory for the organizations. This theory gives the full picture about the politics and the decision making which are mostly located in the heart of the government of any state or country. But the main issue is that various non-governmental groups use the power of the government by the wrong means and make the issues for the others. The main issues for this theory are that how the power is fully centralized and distributed in such hands which use in by wrong means. (Roy, 2008) As in the case of McDonald’s the political factors impact a lot for its operations. The political factors make the sustainability of any organization vary tuff in particular environment. The international operations of McDonald’s are very much influenced by the policies of each government in every country. As there are some groups in the Europe and US which are focusing on the health conscious food for the people and in such a environment McDonald’s need to restructure it menu according to the customer choices and preferences. McDonald’s operations in India are controlled by individual policies and regulations from the government also. As the political factors are the only reason which given the fire to this controversy in the India, so there is need to work upon it for the organizations. For instance, there were legal dispute in McDonald’s franchise in India just due to the violations of the laws and due to contents of the food they are using for the manufacturing. In the nutshell, the cultural factors play an important role in this controversy. The other factors are apart from it as if something is accepted by the culture, it will definitely get its image in that particular region but if cultural will reject something it is impossible for that organization to survive in the market for too long. Active Experimentation The conclusion from the above controversy of the McDonald’s is given below: The McDonald’s have to pay the a million dollars for making this controversy clear and also apologies from the various political parties in India. The most significant contribution of the generation is due to globalization and internalization in the business sector. The developments that are coming in the internalization have an effect on the particular factors in the operations of any organization. Alterations could take place in every business wither it is small or on a large scale, as the alterations make the effect on the entire structure of the organization. As the arguments made by the other groups in this case, it could make the organization more flexible and sustainable in the market in any business. The level of flexibility is due to acceptance of the internal and external environment of the company. The flexibility will give the strength to the organization to bear the comments or controversies made by the people in any region. Even McDonald’s may deemed in the fast food business in the international scenario, as revealed its process which would give extra advantage edge to the company over the other players in the market. The slight changes that can take place in the market have the effect on the operations of the McDonald’s. As due to this controversy, the operations of the McDonald have got effected in every country. It shows that having the information on the effects of these allegations on the McDonald’s effects of these alterations swiftly provides these fast food industry players to take the actions on their acts and still preserve the market position of the player. In any business in spite of the brand name of the sizes of its reserves could not afford any failures in the markets of the different countries. The recommendations for the future actions are given below: Since it is very clear that company is expanding continuously, so it would be better to deal with the concern authorities in the respective markets so that if there could be any discrepancies it would be make solutions for that problem. It is advisable that company should take the help of government into which they are going to penetrate. There is need to accomplish the all the activities and satisfy the fundamentals criteria for doing the business first. The company should be clear about the laws and their responsibilities towards that particular nation.  Before penetrating the nay market the company must do the proper market research for the every aspect related to economic environment first, as if the economic environment is not so stable in any country then it would not be possible for the organization to sustain there for a long time. The organization should take the relevant information for the target audience for the individual customers or the groups. To give the franchise it must need a proper market research for the retail opportunities for that particular brand. As the cultural makes a lot of difference for the sustainability of the organization to do the business in any country, if any organization is acceptable by the culture any other factor would not play a lot of difference but if culture would not allow any company to do the business due to the ethical values of the organization. The organization should also try to find out the ways to shift in the consumer behaviors as it is very much important for the updating of any organization. It is the key condition for the execution of the maintain the proper customer relationship. Due to change in the technologies now days, it becomes very much important to give the cost effective and real time communications to find the suppliers and also the communicating the customers for the future schemes and promos. The organization must look into the matter to enhance the use of information technology to have the real time record of stock and logistics.     References W.J. Keegan,2000, Global Marketing, Pearson Education Ismail M. N.,2007, The globalisation debate: a case of barking up the wrong tree, University of Malaya Press, 2007 Stuhler A. E& Mulej M.,1997,Environmental problem solving: from cases and experiments to concepts, knowledge, tools and motivation : proceedings of the 12th International Conference on Case Method Research and Case Method [sic] Application ,Rainer Hampp Verlag Kendall D., 2007, Sociology in Our Times, Edition7, Cengage Learning, 2007 Chidester D.,2005, Authentic fakes: religion and American popular culture, University of California Press Watson L.J.,2006, Golden arches east: McDonald's in East Asia,Edition 2, revised, Stanford University Press, 2006 Mansvelt J.,2005, Geographies of consumption, SAGE Joseph J.,2003, Social theory: conflict, cohesion and consent,Edinburgh University Press Roy A.,2008, Calcutta Requiem: Gender and the Politics of Poverty, Pearson Education India, Jones W.K.,1992, Religious controversy in British India: dialogues in South Asian languages SUNY series in religious studies, SUNY Press Phatak,2006, International Management, Tata McGraw-Hill Website: Introduction www.mcdonaldsindia.com/ Accessed on 1/10/10 Read More