eMcDonald’s CSR Analysis Overview McDonald’s (McD) operates over 33,000 restaurants worldwide, and employs more than 1. 5 million people. In Canada, around 1,400 McD restaurants are stationed with more than 77,000 people employed (Appendix A). In 1954, as a 52-year-old salesman, Ray Kroc came across the small hamburger stand of Dick and Mac McDonald in San Bernardino, California (McDonald’s). He immediately saw market potential with fast paced purchasing of hamburgers and french fries. Ray Kroc became Dick and Mac McDonald’s franchising agent and together they formed a company in 1955 under the name McD System, Inc.
This began the growth of the fast food giant we know today, McD. McD primarily sells hamburgers, cheeseburgers, chicken products, french fries, breakfast items, soft drinks, milkshakes, and desserts. In response to obesity trends in Western nations and criticism over the healthiness of its products, the company has modified its menu to include healthier alternatives such as salads, wraps, and fruits (McDonald’s). The Fast food industry is somewhat fragmented. The seven major competitors only account for 47% of total revenues; McD has 13% of The Fast Food Restaurant industry.
The Quick Service Restaurant and Fast Food Hamburger Restaurant category are extremely competitive because each Fast Food Hamburger Restaurant offers similar menus and prices (Appendix B). Analysis Desired Image/Strategy McD desired image is that of “a happy place. ” Although the company continues to achieve this image it has changed its vision from cheap and convenient to dedicating itself to quality, service, cleanliness, and a commitment to treating all customers with respect (Kiddon and Light).
In regards to corporate social responsibility McD strives to achieve their values each day and improve their environmental and social performances in an effort to obtain to a sustainable future (McDonald’s). In order to achieve their desired image and goals McD is utilizing a combination of strategies which involve increasing brand power by appealing to their consumers. The strategies being implemented are: The Plan to Win and The Five Action P’s (Appendix C).
Quality of Reporting The CSR reports of McD are very thorough, covering issues such as quality of food, relationships with employees and stakeholders, and environmental standards. McD has been able to achieve high ratings for its CSR reporting in the fast food industry, as well as in business overall. In 2008 The Roberts Environmental Center at Claremont McKenna College gave McD an A+ for the quality for their voluntary reporting on environmental and social issues (McDonald’s).
The company was also ranked fourteenth overall among Fortune’s Most Admired List in 2010. Despite the praise McD has received for its CSR there are some issues with its clarity. In the “Progress Snapshot” the company rates itself using: +, ++, +++, and met (lowest to highest), for its effort to achieve their various goals. Although this provides a general outlook on performance, the company fails to indicate the criteria for their rating technique, for example the CSR report does not specify what constitutes a +, ++, +++, and met (Appendix D).
Furthermore, the validation of McD CSR report is difficult to assess since there is no external auditor, with only a board of directors and independent public interest groups to overlook the reporting accuracy. This leads to possible bias and exclusion of critical information as the company will not be held accountable to an external body. This is exemplified by the fact that there is no indication of downfalls or negatives in McD CSR report; it is largely an assessment of the positives changes and progression. Consistency with Actual Behaviour and Reporting
McD reports it has created an effective global forestry policy which affects all of its products. Through use of a global Sustainable Land Management Commitment (SLMC), communication efficiency between McD and its suppliers, global internals, and NGO inputs have been improved and are effectively aligned with one another (McDonald’s). Also, by incorporating their Eco-filter 2. 0 packaging scorecard throughout their nine largest markets, McD has brought awareness of environmental concerns into their packaging processes (Appendix E).
Lastly, McD is in the initial stages of launching an online volunteer management tool, which hopes to encourage employees to pursue a wide range of opportunities to help and support their community (McDonald’s). McD progress with its other stated goals, however, has not been fully realized and still need improvement. After dealing with much criticism of their abusive advertisement towards children in the past (French and Story), McD still has not effectively drawn in the young consumer base with its healthier menu choices.
Progress in this field is slow but McD has recently added kids’ sized grilled chicken snack wrap to Australia’s Happy Meal entree items, introduced carrot veggie rolls in Portugal, and brought in new fruit beverages across Latin America and Australia (McDonald’s). The environmental goals of McD are also works in progress as efficiency in energy usage within McD restaurants still requires attention. A plan to address these energy usage issues is the implementation of the New High Density Universal Holding Cabinet, which is said to save 30% of energy per cell.
McD has a goal of 3% overall energy reduction per restaurant (Appendix F). These numbers, however, cannot be verified until McD follows through with the plans some time during 2010 (Environmental Leader). Finally, McD is still in the process of incorporating their new Leadership Development Framework, a description of leadership on five different levels within an organization which McD hopes to implement throughout its company in 2010 (McDonald’s). External Perception Health risks of food: With the concerning about “healthy eating habits”, McD is often the target of criticism for its unhealthy products.
In 2004, Morgan Spurlock directed and starred in the film “Super Size Me” which attacks McD use of donated toys and other means to influence children to eat their products, with an overall goal of bringing public awareness towards the nutritional content of McD food (ABC NEWS) (Appendix G). In 2007, Prince Charles also suggested to ban McD food (London Evening Standard). Whether forced or voluntary, McD started to convey a balanced lifestyle and began labelling their products with nutritional information to encourage healthier eating habits.
Animal Welfare: McD refers to itself as an industry leader in animal welfare, especially after making basic animal welfare improvements with the launch of the McCruelty campaign by PETA in 2000 (PETA Takes On McDonald’s). In the 2009 CSR report, McD claims they are committed to and continue to work with the humane. However, according to the latest news, the Oscar-nominated actor Ryan Gosling fired off a letter on PETA’s behalf to McD suggesting they move away from using animal cruelty with their products (Ryan Gosling to McDonald’s: Save the Birds! ) (Appendix H). Summary Strengths
Brand Power: McD strength lies in its brand recognition. Children at the age of five were unable to recognize George Washington and Jesus, but did not have any problems recognizing Ronald McDonald (“Super Size Me”). With “Brand recognition” comes the ability of influence. Due to McD’s brand power, it has the ability to set industry standards, and does set the standards. CERES guidance and co-ordination ;amp; active CSR: Uses the Global Reporting Initiative framework to prioritize key issues in the 2009 CSR report, and works with environmental organizations to strengthen the CSR reporting performance (McDonald’s 4).
Nutritional information on packaging: McD USA announced specific pledges to use advertising and marketing resources to promote children’s well-being; McD Canada signed on as a charter member to a Canadian initiative in which participants agree to devote at least “50% of their advertisements directed to children under 12 to the promotion of healthy dietary choices and/or active living messages” (McDonald’s 36). Weaknesses Promote unhealthy food: High fat, low fibre diets are linked to serious diseases such as cancer, heart disease, obesity and diabetes (What’s Wrong with McDonald’s 1).
The oil used for fried products is a mixture of vegetable, canola, soya, corn, hydrogenated soybean oil and citric acid, for freshness. McD has labelled nutrition content in its menu; however it still offers the same items they’ve always had. Child-focused advertisements: McD is a leader in child-focused food advertising. Companies know that children are more susceptible to marketing than are adults. Children do not have the capacity to make their own food-conscious decisions and due to this they do not understand the health implications of consuming McD.
Contributor to Environmental Decline: McD can try to minimize the waste produced by its restaurants by improving recycling or reducing packaging, but in the end the ratio of waste to savings is high. This is largely due to the fact that McD is in the fast food industry where beef is their core product. Waste is generated from serving hamburgers, drinks, and french fries, which are then accompanied by paper and plastics products (McDonald’s is Guilty of Real Estate Theft and Environment Degradation). This generates a positive correlation between fast food and global warming, leaving a negative externality on the environment.
No external auditor: Comes with the assumption that the CSR report is biased and not credible. Suggestions for areas of improvement Promote unhealthy food: * Increase marketing budget proportion for Saladplus menu * Increase selection of the healthy menu * Use healthier oil to cook product Difficult to find and retain employees * Increase wages to set example for the rest of the fast food industry No external auditor * Getting one would make McD’s CSR report more credible Advertisement techniques * Advertise product to parents, instead of directing advertisements to kids * Advertisements promoting recycling and active lifestyles.
Contributor to Environmental Decline * Have recycling bins for recycling plastic caps used for soft drinks, one for paper disposal and one for plastic disposal! * Have recyclable cups. * Monitor carbon levels produced not just directly with their supplier, but with those that produce the RAW material (Moffat) Appendix A Source: http://www. nationmaster. com/red/graph/foo_mcd_res_percap-food-mcdonalds-restaurants-per-capita;amp;b_map=1 Appendix B Source: “IBISWorld Industry Report – Fast Food Restaurants in the US. ” Page 4/45. 22 Dec, 2009. IBISWorld. Web. 28 March, 2010. http://www. sfu. ca/~hsc7/303%20team%20paper/FFI%20finances.
PDF Appendix C Brand Power Our goal is to increase the value of a brand by increasing the power of the brand in the mind of the consumers. A powerful brand is built on four elements: * Identity— That particular set of ownable characteristics by which your brand is known * Familiarity— Customer perception that they have enough knowledge about a brand to have an opinion about it * Specialness— Perception of relevance and differentiation * Authority— A reputation as a quality, leading, trustworthy source To be a powerful brand, your brand goal must be to become the most familiar, highest quality, leading, most rustworthy source of a relevant and differentiated promised experience. Brand Power * Identity * Familiarity * Specialness * Authority| The Five Action Ps What are the actions we will take to achieve the measurable milestones? This brings us to the five action P’s: People, Product, Place, Price, and Promotion. The five action Ps define how we plan to achieve the bottom-line goals of more customers, more often, more brand loyalty, and more profit.
How we expect to deliver our promise across each of the five action P’s (people, product, place, price, and promotion) is articulated in the Plan to Win. Three Pillars of the Plan to Win * Brand direction * Freedom within a framework * Measurable milestones| The Plan to Win is designed to guide brand thinking, the setting of priorities, and the development of a viable and feasible action plan. It is a business concept, crossing functions and geographies and organizational boundaries. It is the most powerful tool in Source: Light, Larry, and Kiddon, Joan. Background to the Turnaround. ” Six Rules for Brand Revitalization. Pearson Ed. , 2009. 9 March 2010. ;lt;http://proquest. safaribooksonline. com. proxy. lib. sfu. ca/9780137005833/copyrightpg#X2ludGVybmFsX0ZsYXNoUmVhZGVyP3htbGlkPTk3ODAxMzcwMDU4MzMvcHJlZjAzJmltYWdlcGFnZT0;gt; Appendix D Source: “Worldwide Corporate Responsibility Online Report. ” McDonald’s Corporation 2009. ;lt;http://www. aboutmcdonalds. com/mcd/csr/report/environmental_responsibility. -RightParaContentTout-43872-ReportsLinkList-17520-File1. tmp/mcd052_2009report_v6. pdf;gt;Appendix E Source: “Worldwide Corporate Responsibility Online Report. ” McDonald’s Corporation 2009. ;lt;http://www. aboutmcdonalds. com/mcd/csr/report/environmental_responsibility. -RightParaContentTout-43872-ReportsLinkList-17520-File1. tmp/mcd052_2009report_v6. pdf;gt; Appendix F Source: “Worldwide Corporate Responsibility Online Report. ” McDonald’s Corporation 2009. ;lt;http://www. aboutmcdonalds. com/mcd/csr/report/environmental_responsibility. -RightParaContentTout-43872-ReportsLinkList-17520-File1. tmp/mcd052_2009report_v6. pdf;gt; Appendix G
While examining the influence of the fast food industry, Morgan Spurlock personally explores the consequences on his health of a diet of solely McDonald’s food for one month. Source: Spurlock, Morgan: Super Size Me. Google Videos. 28 March, 2010. Appendix H Source: Gosling, Ryan. “Ryan Goslin to McDonald’s”. March, 2010. PETA Organization. Web. 28 March, 2010. (http://blog. peta. org/archives/RyanGoslingtoMcDonalds_EDITED_TB. pdf )
Works Cited 1. “McDonald’s 2009 Corporate Responsibility Report. ” McDonald’s. Web. 28 March, 2010. http://www. boutmcdonalds. com/mcd/csr/report. html 2. French, Simone & Story, Mary. “Food Advertising and Marketing Directed at Children and Adolescents in the US. ” International Journal of Behavioral Nutrition and Physical Activity. Web. 28 March, 2010. http://www. ijbnpa. org/content/1/1/3 3. “McDonald’s Seeks 3% Energy Reduction per Location, Kind Of. ” Environmental Leader. Web. 28 March, 2010. http://www. environmentalleader. com/2010/01/27/mcdonalds-seeks-3-energy-reduction-per-location/ 4. “Q+A: ‘Super Size Me’. ” 28 June, 2004. ABC News.