CORPORATE SOCIAL RESPONSIBILITY OF MCDONALD’S UK
I. Introduction
II. Corporate Social Responsibility: A Definition
III. Implication of Corporate Social Responsibility on the Company
A. Buying Behaviour
B. Financial Performance
C. Market Share
IV. The McDonald’s Experience: CSR case study
A. The supply chain
B. Information
C. People
D. Environmental practices
E. Ronald McDonald Children’s Charities
F. Football Programmes
V. Analysis of the McDonald’s Case
VI. Conclusion
I. Introduction
The sole intention of profit-seeking among organisations has now been increasingly superseded by the need to acquire the favour of customers: both existing and potential customers. Companies that intend to be at the top of their respective industries, or even survive, need the favour of the public. They could do this by presenting a positive image through marketing or they could touch a more profound aspect of their target market particularly those applicable to the morals and principles of the public. This need spawned what is termed as corporate social responsibility (CSR). It is an attempt of the company to address the more pressing issues regarding their role in society in general. However, there are lingering debates on why, regardless of the requirement of corporate social responsibility in legal or societal terms, there appears to be companies who seeks to circumvent this responsibility. This paper intends to talk about this area of responsibility among companies. First off, a theoretical discussion on the definition, need, and implications of the CSR on the company will be provided. The second part of the discussions will be an analysis of an existing organisation’s CSR. For this study, the focus will be the CSR of the leading fast food chain in the world, McDonald’s. After providing a discussion on the said case, an analysis will be provided with arguments and observations based on past and existing literature on the company’s CSR. In the end of the paper, a summation and conclusion based on the observations made by the writer will be provided.
II. Corporate Social Responsibility: A Definition
Corporate social responsibility (CSR) has definitely been a part of modern business culture. Numerous studies and books have been published in an attempt to document the requirements held by implementing such in a company. In the work of (2003, 4) he indicated that the lack of such responsibility among companies have triggered scandals and even downfall of large companies. Missteps in market trading and even deception on ways of disposing the company’s waste appear to be among the most discussed topics in the existing literature on CSR. Sims called the breach of this social responsibility among businesses as a “business ethic missteps.”(p4) This represents an omission of a company in considering the existing values and morals in a particular society. In this context, (2003) drew a couple of general claims. He stated that society has given keen interest on issues of corporate social responsibility in the last four decades. In the same way, he also indicated that having such an interest rested on such occurrences, headlines relating to these breaches tend to add-up as attention grabbing scandals. ()
As compared to the business environment in the earlier part of the 1900s, the stakeholders appear to be more involved in the workings of an organization. Earlier studies on corporate social responsibility indicated it as a means to battle the “social cost.” (1995) In the said study, they found a positive correlation between social responsibility and financial performance. Though it is not seen as a constant outcome, majority of the studied companies tend to display such.
Thus, for the purposes of this paper, the operational definition of corporate social responsibility would be based on the two indicated definitions above. It will be used to define measures that will keep companies from engaging in business ethical missteps and a means to deal with the social costs of the company. Thus, the following discussions will be presenting arguments why companies tend to implement more than that of what is legally required of them. This will be manifested on the case study of McDonald’s UK later on this paper.
III. Implication of Corporate Social Responsibility on the Company
Improving their image as a corporate citizen will entail certain strategies to adhere to accepted principles of social responsibility. The actions that these companies show reflect how they intend to treat their customers. The strategies used in luring people into buying their products do not clearly present malice on the part of the companies. If a glimmer of questionability appears on their midst, then companies should compensate it to other aspects such as the services offered or even how they deal with the environment when they discard their wastes. That does not make questionable marketing strategies more acceptable; however it does ensure that the public is getting their money’s worth. The following discussion will be indicating how CSR have positively affected the company in improving several aspects of its operations: the buying behaviour of the consumers; the financial performance of the company; and the overall market share.
A. Buying Behaviour
Numerous studies have been made indicating the effect of CSR on the buying behaviour of the target market of the company. A recent addition is the study of (2001). In their discussions, they indicated that for buying behaviour and CSR to have a positive correlation, several criteria has to be met. The consumers have to become aware of the “level of social responsibility” held by the company. () This means that the making the public know what the company is doing comprise of a huge bundle of how it could positively affect the purchasing behaviour of the public. Effective marketing and advertising comes to play on this category. The employment of mass media or any other tools would be the key in informing the public of their activities.
(2001) called this activity as “cause-related marketing.” It is in indicating the need for awareness that they presented the factor as a major inhibitor of responsiveness among the target market of the organisation. Another criteria indicated in the study would be “consumer appreciation.” () This means that it is not enough that the consumers are aware of the activities held by the company. The consumers must also realise the importance and implications of such activities in society in general.
On another study, it appears that “corporate reputation” similarly has its indicated to have an effect on the buying behaviour of the consumers. (2005) Nevertheless, the said study indicated that during the periods when a consumer is shopping for a particular commodity, whether the CSR of the company is reputable is not a major part of its decision making factors. Brand image and consumer fairness still appears to be at the top of the consumer’s priorities. However, this could possibly change with proper marketing. According to the studies of (2006) and (1991) television commercials has been the main tool of marketers to promote their food. Constant exposure to such advertisement could lead to retention of information and thus consequently persuading a person that such products are great. ( 2006)
All in all, the ability of the company to provide information on the activities that they hold in accordance to their CSR highly represents capability of the company to actually influence consumer behaviour. In this end, not only does the company need to present the public that they are doing their share in society as good companies. They have to present that they are also willing to provide extra effort in making the world a better place to live in. Though it appears that doing such activities and programmes do entail added expenditures on cause-related marketing and, of course, with the actual CSR project itself, companies now realise that the return of investment on these activities are highly lucrative. This even comes to the point where the marketing of these activities are subject to abuse of unscrupulous marketers using unethical means of marketing. ()
B. Financial Performance
As stated in the earlier parts of the paper, the work of (2003) indicated that financial performance does have a positive correlation with the company’s CSR. However, recent studies indicate that the problem with this claim is that the return of investment held on these activities is merely represented in terms of social ROI. (2005) This means that regardless of how effective or grandeur the project a company makes, immediate financial returns may not be readily observed.
According to the said study, inherently there are several factors that drive companies in implementing CSR programmes. These include “managing risk and reputation; protecting human capital assets; responding to consumer demands; and avoiding regulation.” (Doane, 2005, 215) Seen at this level, the implementation of such programmes is indeed lucrative. It represents an investment worthy of the risk.
The problem, according to the study, of this emerging trend is that the use of CSR becomes more driven by business as that of actually promoting the betterment of society. (2005) “Business-driven” CSR represents everything that is imperfect in the realm of business. All is driven by the all mighty pound. Everything has to have a price, even good deeds made to society.
As (2005) this trend has triggered companies and commercial organisations to make CSR programmes based on economic decisions. Improvements that these programmes tend to create manifests only in areas where actual profit could be made. To illustrate, (2005) pointed out the case of the tobacco companies, the big dog of sin products. In considering the said case, the CSR initiatives held by tobacco companies tend to improve the Dow Jones Sustainability Index of their shareholders, not as much as to improve the wellbeing of the major consumers. A similar case is seen in the creation of supermarkets by Tesco. (2005) The study claimed that the major societal implications of such companies would be greater traffic and possibly liquidation of local businesses. It claimed that the CSR programme of providing computers for schools is a considerably distant cry from the actual improvement needed by society from that company.
Fortunately for such companies, as stated in the earlier part, this aspect of social responsibility is not at the top of the priorities of the consumers. There will be less people thinking of the major inconveniences provided by the company like a more congested neighbourhood. As long as companies have an arsenal of marketing tools to use, they could always find a way to spin this on their favour.
C. Market Share
As seen in the discussions prior to this part of the paper, the CSR does have an impact on the overall performance of the company. It is thus unsurprising that it would have a positive effect on the market share of the company. Even in earlier studies on social responsibility, this has been seen as a fact. (1993)
In the said study, it is indicated that managers see the implementation of CSR as a basic ends in favour of their interests as well as the company’s. (1993) This means that a socially responsible company would have a greater capacity to acquire a much larger market share than those who are perceived to be otherwise.
IV. The McDonald’s Experience: CSR case study
The company to be looked at in this paper will be one of the leading fast-food chains in UK, McDonald’s. The presented case would be based on the annual CSR report of McDonald’s UK acquired in their website. Specifically, the discussions will be divided into several parts. Each part will be discussing the performance made by the company concerning the required social responsibility they have. These include the supply chain; information; people; environmental practices; Ronald McDonald Children’s Charities; and the Football Programmes.
A. The supply chain
The company have acquired their supplies from over 17,000 farmers in UK. The supplies range from beef, eggs, chicken, onions, potatoes, rapeseed oil, and milk. The report also indicated that the company works closely with the Red Meat Industry Forum and the NFU in seeking high quality supplies for the individual branches all over UK. Moreover, the standards held by the company are based on the McDonald’s Agricultural Assurance Programme (MAAP) which specifically indicates the level of quality needed from the suppliers of the company.
B. Information
In the context of information, the company reported that it has provided leaflets indicating the nutritional information of the menu offered by the organisation. They have also exploited other mediums as complex as the internet and as simple as the back of their trayliners. Other informational products include the publishing of leaflets concerning their salads and Happy Meal combinations along with a promotional leaflet encouraging parents to feed their kids five portions of fruits and vegetables daily.
C. People
In the context of their employees, the report indicated that they have given them the chance to develop through training and development. In this initiative, the company have helped most of its unskilled personnel to acquire higher capabilities for the company. On the other hand, the report also indicated that they continue to adhere to a diverse workforce.
D. Environmental practices
On a more pressing level, specifically the environmental element, the company has reported to have worked closely with the Department of Environment, Food and Rural Affairs, the Local Government Association, and Tidy Britain Group. They have similarly started the “just bin it” campaign throughout UK. It is a clean up campaign seeking to establish a more sanitary environment.
E. Ronald McDonald Children’s Charities
The said programme is focused primarily on giving children with hospitalisation assistance, particularly on the case of accommodation of the families of a hospitalized child. The funds acquired come from the donations of the public and from fund drives held by the company.
F. Football Programmes
This project intends to encourage children to do sports. In the case of McDonald’s UK, it encourages physical fitness among the youth by encouraging the top game played in the country, football.
V. Analysis of the McDonald’s Case
The company is apparently doing its share in improving the social state of UK. It is providing its consumers with quality food supplies coming from the top suppliers in the country. This shows not only does the company ensure the quality of the food offered; it also helps the local agricultural industry in the process. Moreover, it provides the information that the customers needed regarding the nutritional content of the menu. In this manner, the customers are given the opportunity to exercise due diligence in their consumption. In the same manner, they have given the consumers the encouragement to seek healthy foods like fruits and vegetables through their CSR initiative. The most notable indication that McDonald’s is becoming socially responsible is shown in the support of physical activities among children. The issue of obesity and unhealthy foodstuff has been the bane of the company’s existence. In this context, the company is apparently doing its share in providing opportunities for kids to become physically fit.
VI. Conclusion
The fast food industry is one of the leading industries in the world. Aside from the delectable menus offered by the players operating in the fast food industry, these companies have acquired specific marketing strategies such that they could acquire majority of the existing market share. Thus, the fight among the players of this industry is not limited to the provision of an innovative set of menu or service, the means in which the target market is reached accounts most of the reason why companies like McDonald’s are among the most notable brand names in the industry.
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