Case Study Report Final 1v5ki

The case study illustrates us how the CSR manager of McDonald’s Austria explains the efforts taken by McDonald’s to maintain their corporate social responsibility and also explains the customer’s view of McDonald’s corporate social responsibility. The Case study report specifies that the customers did not perceive McDonalds as a social responsible company. In this report, we are coming up with some recommendations including marketing strategies to make the reach of CSR activities of McDonalds to its customers.

History of McDonald’s McDonald’s was first started in 1940, When Dick Richard McDonald and his elder brother Mac Maurice opened a little restaurant in San Bernardino, California. In the beginning it was called as “car – hop restaurant”, where the food was delivered to the customer’s car outside the restaurant. Then in the late 1940’s both the brothers developed a new business in order to improve their operation. In this, they reduced the product range, decreased the prices and replaced the car – hop system by self - service at the counter. In 1954, a 52 years-old salesmen named Ray Kroc, entered the McDonald’s brother’s restaurant. He was impressed by the way the brother’s managed to run the restaurant due to which he wanted to become a part of it. He entered the business with the view of expanding the concept all over US, later he ended in becoming the exclusive franchise agent of McDonald’s and founded the McDonald’s System Inc. In 1961 Ray Kroc started to run the business on his own, while the McDonald brother’s activities were restricted to their one restaurant in St. Bernardino. Since the brothers were not interested in expanding the business, Ray Kroc bought them for a cost of 2.7 million. Then lately McDonald’s continued to grow. Having captured almost the entire US market, McDonald’s planned to expand overseas. In 1967, the first restaurant outside US was opened in Richmond B.C., Canada. After that they also opened restaurants in ,

England, , Australia and Japan. The first restaurant in Austria was opened in 1977 at Schwarzenbergplatz in Vienna. Now, McDonald’s is the clear market leader in the fast food industry. They are operated in approximately 117 countries having more than 32,000 restaurants and serve about 60 million customers a day.

Corporate

Social

Responsibility

Efforts-Company’s

Perspective Christopher Meyer the CSR manager of McDonald’s, Austria explains the current CSR policies that are been employed in company. The CSR efforts can be divided into several categories, such as,     

Environmental Commitment Customer Commitment Suppliers Commitment Employees Commitment Sports Commitment

Environmental Commitment: The

most

important

aspect

in



of

McDonald’s

environmental

commitment is the company’s sustainable waste management. It is based on three main principles such as waste avoidance, waste reduction and recycling. In the event of reducing the amount of waste produced, they started using eco-friendly packages and plastic spoons were replaced by wooden spoons. Together with the other anti-littering measures has made Austria to reduce their waste by more than 10% every year since 1993. They solemnly rely on their recycling concept which helps them to recycle up to 95% of the total waste generated. In some restaurants, customers who bring back empty packages are being rewarded with free soft drinks thereby encouraging the customers to go eco-friendly. In addition to the waste management, energy management is also one of the important component of

McDonald’s

environmental

program.

Where

by

using

the

latest

technologies the company continuously aims at reducing the consumption of electricity and water.

Customer Commitment: McDonald’s are very much concerned about the customer commitment, which can be evidently seen in the low prices and the superior quality of food being offered. The high level of food quality is been ensured by regular quality checks. Mostly McDonald’s tires to make use of the local products. In Austria few products are AMA-certified which indicates that they are being purchased from local suppliers. The products that are being imported should meet MAAP-standard in order to assure that the products are of superior quality. McDonald’s constantly adapt their product range by introducing healthier products such as wraps, different salads and chicken menus. Sometimes they also hire mystery shoppers in order to test the cleanness of the restaurant, the friendliness of the staffs and the quality of the food.

Supplier’s Commitment: McDonald’s relationship with the customer’s is purely based on mutual trust, reflected in long term and sustainable business relation. The code of conduct indicates the heart of this relationship. Code of conduct is the agreement between McDonald’s and their suppliers which ensures a superior product quality and fair working condition for the employees. In turn, McDonald’s offers their suppliers fair prices, regular purchases and big order volumes.

Employees Commitment: McDonald’s consider their employees as the company’s most valuable resource. In addition to the secure work places and fair wages, it offers their work force flexible work options and part time models. Teenagers are being motivated by offering apprenticeship to them, which may serve as the basis for a later career at McDonald’s. The workforce also have an option of participating in the education program known as MCampus at the heart of

this program there is management education program called MAP which prepares employees for the position of restaurant manager. Another opportunity offered to the employees is called Mort program, which allows them to work in other McDonald’s restaurants across Europe. Additionally, McDonald’s Austria has introduced the McStart program which focuses to give disabled people the chance to find an appropriate job within McDonald’s.

Sports Commitment: For almost 25 years, McDonald’s has been sponsoring various sports events all over the globe, such as the UEFA European Football Championship, the Olympic Games and the FIFA World Cup. In addition to their commitment towards sports, they also try to serve the community in various other ways, such as they have an important role in stimulating the local economy. Another important aspect is the non-profit organization Ronald McDonald House Charities. They are located near hospitals and provide parents of heavy ill children with temporary place to stay while their kids are in hospital. Currently there are four Roland McDonald Houses in Austria.

People’s Perspective of McDonalds CSR Activities  Promoting Unhealthy Food McDonald's promote their food as 'nutritious', but the reality is that it is junk food - high in fat, sugar and salt, and low in fibre and vitamins. A diet of this type is linked with a greater risk of heart disease, cancer, diabetes and other diseases. Their food also contains many chemical additives, some of which may cause ill-health, and hyperactivity in children. People also feel that McDonalds foods are creating dangerous health problems such as Heart diseases, obesity, Dangerous increase of Cholesterol level in the blood, Diabetes and similar symptoms. They are also referencing

the documentary”Super Size me” in which Director Morgon Spurlock conducted a social experiment in fast food gastronomy. He attempted to consume only the food items available on the McDonalds menu including water and came up with the disastrous results. He gained 25 pounds which resulted severe depression, headaches and lost much of his energy. This created the bad image about McDonalds among the customers and public.

 EXPLOITING WORKERS Customers also believe that workers in the fast food industry are paid low wages. McDonald's do not pay overtime rates even when employees work very long hours. Pressure to keep profits high and wage costs low results in understaffing, so staff have to work harder and faster. As a consequence, accidents (particularly burns) are common. The majority of employees are people who have few job options and so are forced to accept this exploitation, and they're compelled to 'smile' too! Not surprisingly staff turnover at McDonald's is high, making it virtually impossible to unionise and fight for a better deal, which suits McDonald's who have always been opposed to Unions.

 DAMAGING THE ENVIRONMENT Although McDonalds is taking serious initiatives to promote the sustainable environment but majority of the customers are not aware of this fact and understand that McDonald’s have at last been forced to it to using beef reared on ex-rainforest land, preventing its regeneration. Also, the use of farmland by multinationals and their suppliers forces local people to move on to other areas and cut down further trees. McDonald's are the world's largest of beef. Methane emitted by cattle reared for the beef industry is a major contributor to the 'global warming' crisis. Modern intensive agriculture

is based on the heavy use of chemicals which are damaging to the environment. Every year McDonald's use thousands of tons of unnecessary packaging, most of which ends up littering our streets or polluting the land buried in landfill sites.

SWOT Analysis: Strengths  McDonald is very concerned about providing low cost and superior quality foods to the customers and it also forms the important aspect of the McDonalds Business Strategy.  Now a days, McDonalds has started printing nutritional information on the packaging and it promotes the good image among the public.  Resulting from its high sales, McDonalds can invest its profit into the existing CSR programs.

Weakness  Promotion of unhealthy foods which affects the brand image of McDonalds.  Poor marketing of CSR activities make the customers itself not aware of it

Opportunities  McDonalds has the positive and strong commitment towards the society and the environment. Through Improvisation of its current strategy, it can develop an honest and real brand image.

 Since people are aware of the dietary foods and healthy lifestyle. McDonalds has the lot of opportunities to increase sales and positive image by promoting healthy and organic foods across its Stores.

Threats  Growing awareness among the medical and scientific community and documentary Supersize Me causes a great pose of threat to McDonalds brand image.  Stronger competition from healthier counterparts such as subway also creates a great threat McDonalds.

Recommendations  Promotion of healthy diet, such as fresh fruit packs, baby carrots, vegetable nuggets, milk, fruit juices and organic foods will create a 

good image among the public. McDonald’s ments

seems

to

be

emphasizing

their

ment and caring targeting more on children instead of adults. Hence, new campaigns can be organized to promote healthy eating and exercise habits.  Currently there are four Ronald’s house charity in Austria, by increasing the number of Charity houses and also conducting fund raising events in public areas can cause a positive influence on people about the corporate social responsibility of McDonald.  Advertising about the social responsibility activities of McDonald in media’s. It can be indicated as a good communication strategy for the promotion of thei0r CSR activity.

MKT 40970 – MARKETING MANAGEMENT Case Study Report McDonalds CSR Challenge

Group Philip Samson Francis

14203448

Shriram Sridhar

14201505

Snigdha Nath

14203757