Ethical Issues in McDonalds

Historical Background

McDonalds is the worlds first and largest multinational chain of fast food restaurants located in over 118 countries, where its 31,000 restaurants serve over 60 million customers daily. Its initial positioning is an innovative business model in the fast food industry. The corporation is known globally for its burgers and French fries (Leslie, 2015). The history of McDonalds establishment dates back to 1940, when two brothers, Maurice and Richard McDonald, opened a restaurant in California. In 1948, they introduced the speeded service system, which served as a model of the future fast food restaurants. In 1955, Ray Kroc opened a franchised restaurant in Illinois, and when he visited the restaurant of McDonalds brothers, he was impressed with its operation. He then purchased the equity of McDonalds brothers and helped the company gain success and popularity worldwide.

 

The first McDonald's restaurant was established in Des Plains, Illinois, in 1955. On the first day, it achieved $366 worth of sales. By the end of its third operating year, the restaurant had sold more than 100 million hamburgers. A decade later, McDonalds established more than 700 restaurants in the United States. In 1967, McDonalds spread its services internationally and started to open restaurants in Puerto Rico and Canada (Leder, 2012).

Presently, McDonalds boasts 31,000 global restaurants in 118 countries. Besides, the company employs more than 1.7 million people worldwide with more than 75% franchise restaurants globally. The rapid expansion of the corporation has made it a symbol of globalization that spreads the American culture across the world. At the same time, McDonalds has become a subject of debate concerning obesity, diabetes, corporate ethics, and employee welfare, thus leading to the closure of 350 of its restaurants in the US and China in 2014. After several months of protest by McDonalds workers concerning salaries, the restaurant decided to raise the hourly pay from $9.01 to $9.90 (Leslie, 2015).

The Nature of Unethical Questions and their Effect on the Company

Working Conditions and Human Rights

McDonalds pays its workers low wages and treats them in an illegal manner. As a result, the employees were reported to go on a rampage with an aim to demand increment of their payments. In November 2012, in New York, about 200 workers of the McDonalds industry staged a strike demanding hourly wages of $ 15 and the right to form a union. The strikes and protests spread to 33 countries and 150 cities only in America. Food and hospitality workers in Brazil demonstrated against McDonald's mistreatment of pregnant workers, wage theft, and low pay. Fast food workers in Japan protested at 30 locations of McDonalds, demanding an hourly wage of ?1,500. These incidents show that MacDonalds underpays and abuses its workers all over the globe. By violating the rights of employees on the international scale, McDonalds lacks ethical aspects. The corporations mistreatment of workers has led to a great loss of its highly qualified staff. Therefore, the company experiences a high level of staff turnover.

Environmental Ethics

McDonald's has faced numerous accusations for the negative impact of its activities on the environment. The organization has built more than 200 factories around the world, whose production activities lead to air pollution and contamination of the environment. McDonald's also uses plastic utensils and cutlery, such as plastic forks and paper plates, which do not easily decompose when dumped. This unethical practice has led to environmental conservatisms, lodging court cases against McDonalds. Moreover, McDonalds slaughters more than 10 million cows a year, which is far above the acceptable number.

Legal and Regulatory Compliance

McDonalds has come under sharp criticism for their use of ingredients that do not comply with health standards. A Chinese food supplier used to take expired poultry, re-process it, and serve it to customers. McDonalds then used these ingredients to prepare McNuggets. In July 2014, McDonalds branch of Hong Kong withdrew the 'Chicken McNuggets' from their food menu to comply with health regulations (Big Macs and a three-legged stool, 2014). McDonalds has recently paid hefty fines for the non-compliance of food preparation procedures. The most recent fine was $700,000 paid to members of the Muslim community for falsely claiming that the food was prepared according to Islam dietary rules. In 2009, Morgan Spurlock decided to conduct an experiment on some of McDonald's products in order to reveal to the consumers the chemicals and toxins the food contained. He took McDonalds burgers and French fries and compared them with regular burgers and fries with an aim to identify which food will go bad sooner. McDonalds French fries had not decayed after ten weeks, which suggested the ingredients were not natural. When he revealed this report to the public, the customers questioned McDonalds compliance to the health standards.

Corruption

The senior management of McDonalds has been severally associated with corrupt practices. An example is the Hong Kong branch of restaurant chain. In April 2009, the independent anticorruption commission of Hong Kong reported that the senior executive of McDonalds received more money for his parties. In Thailand, McDonalds senior manager received $2.5 million from a corn supplier based in Thailand to influence the award of tenders in his favor (Leslie, 2015). These cases demonstrate gross violation of the standards of conduct within the McDonalds ranks.

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Sustainability

McDonalds has been selling to the customers unsustainable beef, which is used for making burgers. In January 2014, McDonalds announced that it will begin to purchase verified sustainable beef starting from 2016. However, the company has not defined its version of sustainable beef or provided any information concerning pricing of the new commodity. In particular, McDonalds has not provided any defined information regarding the sources of the beef or its quantity. The consumers continue eating unsustainable meat before McDonalds begins to sell high-quality one (Leslie, 2015). The effects of these unethical practices today are a heavy investment in restoring the image of the company. The costs include re-labeling of products, launching new advertisement campaigns, and dropping of supersize options.

Fair-Trade McDonalds claims to purchase certified and verified coffeefromRainforest Alliance certified farms in the US, Europe, and New Zealand. It was indicated on McDonalds website that it invested $6 million in farmer training through provision of technical assistance programs in order to enable sustainable production. McDonalds also claims to buy coffee from Columbia, Brazil, Guatemala, Columbia, Costa Rica, and Brazil. However, the corporation does not use coffee ingredients from these countries in the production of their beverages. The misstatement on their website is an ethical issue. McDonalds should make improvements in order to increase the use of coffee from the countries where it claims to purchase it from. This will boost the companys reputation and ethical morality (Big Macs and a three-legged stool, 2014).

Child Exploitation

In most advertisements, McDonalds Company uses children for promotion of their products. Nonetheless, at the same time, the company adversely influences childrens eating habits. This promotion exploited children by encouraging bad nutritional habits and consumption of unhealthy products, which has a direct influence on the adoption of unhealthy eating habits. Thus, consumption of fast food has a devastating effect on the health state and nutrition of children. It can also cause mental and physical complications, such as obesity, mood swings, and high cholesterol (Adams, 2007). This unethical habit has led to various lawsuits against McDonalds. The most recent lawsuit was the McLibel defamation case in the UK, where McDonalds spent more than 10 million euros. The court acquitted McDonalds of being guilty of child exploitation.

Effects of Unethical Activities on the Well-Being of the Society and the Economy

Poor Health

McDonalds promotes unhealthy food directly to children, meaning that they encourage the younger generation to consume unhealthy products, which decrease childrens health and nutrition rate, leading them to other physical and mental issues. Such an unhealthy diet is associated with cardiovascular diseases, diabetes, and cancers in the wider customer base. In 2004, Morgan Spurlock, a movie director, observed an exclusive McDonalds diet for a one-month period. He ate MacDonalds food three times a day. At the end of the one month, he had gained 11 kilograms, which constituted a 13% increase in body mass. He also experienced sexual dysfunction, higher cholesterol level, and severe mood swings. It took him 14 months of following a vegan diet in order to lose weight he had gained (Adams, 2007).

Economic Sabotage

Poor working conditions, such as long working hours, have adverse effects on the employees health rates. The underpayment of workers weakens their purchasing power and makes necessities unaffordable to them. The exploited workers seek to join trade unions to get their grievances addressed. They make regular monthly payments to trade unions in order to obtain their support. The subscription to the trade unions from the employees meager income further reduces their disposable income.

McDonalds is the leading fast food restaurant in the world. It has established ventures in more than 200 countries worldwide. In the rankings conducted in 2013, McDonalds occupied the top position among the most unethical companies. This negative reputation significantly reduced the number of customers and revenue. Consequently, the tax that McDonalds submits to these governments has reduced. The reduction in revenue also means that McDonalds does not have the ability to employ more people and reduce the unemployment rate. The low wages that McDonalds offer its employees on a global scale indicate that the workers have low standards of living. Low consumption from such a workforce indicates low investments and supports the vicious cycle of poverty.

Corruption within the senior management of McDonalds is extremely dangerous to the workers, customers, and the economy. A senior manager awarding himself $2 million robs the company of the resources that could be used in a more optimal way. The financial impropriety of the management robs the coffers of the business, leaving few resources to pay workers. This might be the reason leading to the low wages for workers and, consequently, poor living standards. Bribing the senior managers to influence the award of tenders also denies genuine suppliers an opportunity to find a market for their products. This will discourage the production of quality products and upcoming entrepreneurs.

Environmental Degradation

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The adverse effects of McDonalds activities on the environment are numerous. First, McDonalds has established numerous factories in all its operations in the world. The factories cause pollution by emitting non-degradable substances into the atmosphere. Waste products from the food leftovers and plastic packing materials contaminate the environment. The factories also consume massive amounts of energy and power in the process of production. This destroys the natural rainforests through excessive logging. McDonalds purchases meat from privatized farms. The farms are vast, since McDonalds demand for beef is high. These privatized farmlands are established on land previously occupied by rainforests. These practices indicate that McDonalds performs activities that pollute the air and destroy forest reserves. Amazon Rainforests are one of the forests that have been threatened by McDonalds activities. The trees that clean the air are felled to clear the way for the building of ranches in order to meet McDonalds demand for cows. Thus, McDonalds contributes to the destruction of homes for forest animals (Leder, 2012).

Proposed Principles and Strategies to Create Ethical Business Practices

The participation of children in most advertisements makes them consume unhealthy food. To avoid this kind of child exploitation, McDonalds should widen its advertisement demographic. For example, they can hire adult actors to participate in their television advertisements. The strategy will demonstrate that McDonald's targets at both adults and children. McDonalds should also observe the human rights law that criminalizes child exploitation and forced labor. It should also observe the employment laws which allow the employees to associate with legitimate groups of their interest. Particularly, McDonalds should allow its employees to join trade unions in order for them to have their grievance addressed. Most ingredients used by McDonalds are criticized for non-compliance to the health standards. Therefore, the company should change its ingredients in favor of healthier substances in order to restore its image of a healthy and nutritious company. McDonalds should refuse from the current suppliers and take their ingredients from healthier sources. Concerning the sustainable beef, McDonalds should provide sufficient information to consumers regarding the source of the beef and its expected quality. It should also expedite the process of making the beef available for customers in order to avoid further health complications from the consumption of unsustainable beef. By adopting this strategy, McDonalds will avoid losing customers who perceive McDonalds as an unethical business. The widening demographic that will result from changing ingredients will lead to increased sales for McDonalds. New customers will include people who believe that the company abandoned the use of unhealthy ingredients.

McDonalds can take bold steps towards reducing corruption within the senior management positions. They should conduct a lifestyle audit among the senior management to ensure their net worth is commensurate to their salaries. In the award of tenders, McDonalds should avoid single sourcing and subject the tendering process to a rigorous examination by managers from different departments.

McDonalds should treat its workers with respect, dignity, and fairness. It should provide a working environment free from intimidation, harassment, and abuse. The management should devise a policy criminalizing these acts. The policy should define harassment to cover physical abuse, offensive remarks as well as the other physical and verbal conducts. The company should also raise salaries to their employees to tally with the industry cap. It should also allow the employees to rest during public holidays or pay them overtime if they decide to sacrifice their leisure time to attend work.

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