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Sanjari international college

Business Ethics
M Mohaiminul I Chowdhury

Table of Contents
Introduction: .................................................................................................................................... 3 Task A: Ethical perspectives in business. ....................................................................................... 4 1.1 Background and development of theoretical ethical approaches ............................... 4 Background of Business Ethics: ...................................................................................... 4 1.2 Compare and contrast absolute and relative ethics .................................................... 6 1.3 Ethical issues which can affect the operational activities of a business .................... 8 Task 2: Business objectives from an ethical perspective .............................................................. 11 2.1 How business objectives are affected by ethical considerations ............................. 11 2.2 Evaluate the implications for a business and its stakeholders to operate ethically .. 12 Task 3: Ethics in workplace relationships. ................................................................................... 14 3.1 The role of the company acting as moral agent ....................................................... 15 3.2 Analyse the development of mechanisms for achieving employee involvement and empowerment ................................................................................................................. 17 Task 4: Current ethical issue in a business. .................................................................................. 18 4.1 Current ethical issue affecting McDonalds: ............................................................. 18 4.2 How to improve ethical issues in McDonalds: ........................................................ 21 4.3 Design a suitable ethical code .................................................................................. 23 Reference: ..................................................................................................................................... 25

Ethics concern an individual's moral judgments about right and wrong. Decisions taken within an organization may be made by individuals or groups, but whoever makes them will be influenced by the culture of the company. The decision to behave ethically is a moral one; employees must decide what they think is the right course of action. This may involve rejecting the route that would lead to the biggest short-term profit. Ethical behaviour and corporate social responsibility can bring significant benefits to a business. For example, they may:

attract customers to the firm's products, thereby boosting sales and profits make employees want to stay with the business, reduce labour turnover and therefore increase productivity

attract more employees wanting to work for the business, reduce recruitment costs and enable the company to get the most talented employees

Attract investors and keep the company's share price high, thereby protecting the business from takeover.

In order to study and understand business ethics, researcher has chosen McDonalds.

Task A: Ethical perspectives in business.

1.1 Background and development of theoretical ethical approaches Background of Business Ethics:
Business ethics is the attitude and ways in which a business is formed and the way in which a business deal with the world. Many businesses behave in divert or different ways depend on the way its formed by the owners of the business. Business ethics can be described as principle and standard that is guiding behaviour of people in the business. Many business have different reputation depends on the ways in which they are formed some business have bad reputation while some have bad reputation. Some businesses are formed for money making venture while some are formed because they want to make money and at the same time want to give its customers maximum satisfaction. The way in which a business is formed brings about ethical behaviour. Ethics is a set of moral principles that a business should follow and values that a business should embraced in order for a business to be successful. Most business should have a code of ethics in order for the business to have a principle guiding the business so that the business can be flourishing. Crane A and Matten D (2004) defined business ethics as the study of business activities and decisions where issues of wrong and right are addressed. DEVELOPMENT OF BUSINESS ETHICS: The Development of Ethics proves a rather misleading title for Terence Irwins latest book. He describes it more accurately as a selective historical and critical study in the Socratic tradition, with special attention to Aristotelian naturalism, its formation, elaboration, criticism, and

defence. Socratic refers to Irwins method: not merely describing a collective Socratic inquiry historically but also evaluating it and taking part in it. B. Schneewind, who think that a moral theory cannot be assessed timelessly, and there are no timelessly appropriate questions that different moral theories try to answer, Irwin declares that history reveals substantial agreement on the main principles of ethics. The historians task is to discover them. Small wonder, then, that Development does so little to illuminate how ethics changed over time. Availablefrom:<,>[Accessed 20 September 2013] Teleological ethics: Theories of this type are called teleological because they look at what happens (or will happen) following an action which has a moral dimension what the outcome (or end which is where telos comes from) is or will be. Typically, ones actions may then be good if the outcome is desirable. Of course, predicting what will happen if we take a particular course of action is not all that the theories are about. They are ethical in that they prescribe what sorts of consequences are good ones we ought to do; and what sorts are bad ones ought not do. on

Deontology: This is a Greek word which means deno, which mean duty and the logos, means science. It focuses on moral rules and duties. In order for us to make moral choice, we have to know our moral duties and how we can adjust to those duties. If we obey our duties we are doing morally things and if we fail to follow our duties we are doing immoral things. In deontology our duties, rules and obligation is according to God wishes. Utilitarianism Utilitarian ethics emphasizes the consequences of our acts. And for utilitarians, the important consequences are obvious: pleasure and suffering. From the utilitarian perspective, there is no mystery about ethics: the right act is simply the act that produces the greatest balance of pleasure over suffering. Though the formula is simple, the calculations may be complex. We must consider the consequences not just for ourselves, but for everyone; indeed, not just for all humans, but for any 5

being capable of pleasure or pain and not only immediate consequences, but also long-term effects.


Pragmatic ethics involves an evolutionary-based teleological theoryalthough not wholly Darwinian in nature. 'Teleological' is often treated as a synonym for 'consequentialist', but it is important to make a distinction. Consequentialist ethics measures the goodness of an action in terms of its effects, relative to some value ('happiness' in classic utilitarianism). Consequently, it is really an outcomes-based ethic. It does not involve movement towards an end, but a maximization of a value. In teleological ethics, on the other hand, the goodness of an action is measured by how much it contributes to a certain end, function or purpose, and focuses on movement towards something in an on-going process. Classically, such teleologys are external, i.e., imposed from without-divinely, or by the order of things--or immanent, realized through an inherent nature.

1.2 Compare and contrast absolute and relative ethics

Relative ethics/relativism This theory states that there are no absolute truths, validity or generally acceptable principles of ethics and that what is morally right and wrong largely depend on individual and the prevailing societal views and cultures. The fact is that the relativist believed that the criteria for measuring right and wrong change over time and vary across cultures. Simply put, relative ethics is the denial of ethical absolutism. Relativism holds the view that morality is relative to the beliefs and norms of ones cultu re i.e. categorizing an action as right or wrong depends on the moral values hold by the society in which such action is practice. An action may be classified as morally right in one society but morally wrong in another. In the light of this, the relativist argues that there are no broad and 6

universally acceptable moral standards as these are dictated by what is being practice in the society. Summarily, what is right for one may not be right for another or as a saying goes When in Rome, do as the Romans do This is the idea behind the concept of relativism. Arguments against and for relativism One of the arguments against relative ethics is that some is the belief of some people that universal moral standards is possible to be adopted even if some moral norms and beliefs differ among cultures. Although, great attention can be given to cultural differences in moral practices and beliefs, some of these practices and beliefs that are morally wrong should be pointed out; for example, the practice of slavery before the civil war in various countries. Relative ethics fails to recognize the fact that the rationale behind certain societal practices may be governed by self interest. Since the moral rightness and wrongness of action depends on what is prevailing in the society according to relative ethics, it follows that one must obey the norms of a society irrespective of whether such norms are generally wrong or right because to diverge from them is to act immorally. Does it mean that if one is part of a society that embraces racial discrimination, one should accept and promote it? Also, it is possible that members of the same society hold different views and beliefs on a similar practice. How do one judge what is morally right or wrong in such situation? The concept of relativism does not address this situation. Despite the criticism above, the concept of relativism still has some acknowledgement for addressing societal issues which are important. Relative ethics points out the fact that different societies hold different beliefs and these beliefs are influenced by culture. It also encourages individuals to explore the rationale for differences in belief while also challenging them to examine reasons for beliefs and values they hold. Absolute ethics/absolutism The concept of absolutism explains that certain actions or decisions are absolutely right or wrong regardless of their outcomes or consequences as well as the rationale behind them. For example, eavesdropping to private matter might be considered to be always morally wrong even if the reason for doing such thing is good, and even if it leads to good result. 7

Simply put, ethical absolutism states that there is universal or one single moral code or standard that is absolute and which is equally applicable to everyone in the society at all times. From this fact, it is evident that absolute ethic is not dependent on individual views, existing cultures of the society etc. Arguments for and against absolutism While moral relativism is seen as only leading to problems and conflict in ones life and in society, it was argued that moral absolutism will lead to no or little confusion i.e. when moral standard is based on general principles. The other argument for absolutism is that it is true and to some extent, seen in our everyday lives. For example, we condemn or criticize wrong actions and praise good ones. This is an evidence that moral standard which is based on general views exist. Judging what is right and wrong on a universal moral standard is seen as criticizing other peoples culture. According to the relativist, this is intolerant as moral criticism of others is inappropriate. Another fundamental criticism of absolutism was its lack of human concern. Critics argued that trying to maintain order by forcing or frightening people into conformity by agreeing to a universal moral standard can destroy an individual potential for moral judgment. Many philosophers also argued to oppose the idea of absolutism in a situation of life and death. For example, suppose it is decided that it is absolutely wrong to lie under any situations, what if one is faced with the choice in which he/she must lie as a result of no other alternative.

1.3 The ethical issues which can affect the operational activities of a business

Ethics refers to a prescribed or accepted code of conduct. Ethical issues are a set of moral values that need to be addressed while carrying out business. Businesses operate in a society that is structured around moral values. Therefore, when conducting its operations, a business has certain responsibilities which are to provide the society with quality goods and services that will improve the peoples living standards. In order to survive, a business needs to maintain its customers. Product packaging is one way of ensuring a business maintains its existing customers and also acquire new customers. Some

companies are known to allow underweight packaging of products which are then highly priced and this is a rude way of increasing profits. However this negative trend will affect the business in the long run as customers will eventually come to learn that they are being swindled. In the long run, wrong dealings and corruption will tarnish the image of the business and have a negative effect on sales. Business people ought to comply with the law requirements and observe laid down principles of morality in their dealings. They should seriously consider expectations of the community they serve. Values in business activities: Ethics refers to a prescribed or accepted code of conduct. Ethical issues are a set of moral values that need to be addressed while carrying out business. Businesses operate in a society that is structured around moral values. Therefore, when conducting its operations, a business has certain responsibilities which are to provide the society with quality goods and services that will improve the people's living standards. In order to survive, a business needs to maintain its customers. Product packaging is one way of ensuring a business maintains its existing customers and also acquire new customers. Some companies are known to allow underweight packaging of products which are then highly priced and this is a rude way of increasing profits. However this negative trend will affect the business in the long run as customers will eventually come to learn that they are being swindled.

In an attempt to boost sales, some businessmen adapt promotional methods that mislead customers as the message conveyed may not give the exact details of the product. Businesses should desist from increasing prices without valid reasons. In doing so, they will be taking advantage of the customer and this is unethical. Businessmen should also desist from taking part in corrupt practices such as selling low standard goods while bribing government officials in order to continue operating. Entrepreneurs should consider the effects of their activities on the society they serve. Ethics on employee workplace and human rights: Policies most frequently exist because some employees are untrustworthy. For example, many in HR debate the effectiveness of a paid time off (PTO) policy versus time off policies that divide 9

available days between personal, sick days, and vacation time off. The only reason these policies exist at all, to define the relationship between employer and employees, is because a few employees took advantage of the employers attempts to offer sympathetic time off for legitimate life reasons. Consequently, employers limited management discretion and decision making about individual employee situations and instituted policies to govern the many. You can build a similar case for most organizational policies. The failure of some employees to practice principled workplace ethical decision making results in policies that cover all employees. Codes of conduct or business ethics exist to guide the expected behavior of honorable employees, but much of their origination occurred for the same reason as policies. Some employees conducted themselves in ways that were unacceptable to the business. In todays workplace, potential charges of unfair treatment, discrimination, favoritism, andhostile work environment replace much management discretion. The many suffer for the few and sometimes, your best employees get caught in the equal treatment trap. At best, time off policies, to use just one example, require organization time and energy hundreds of hours of tracking and accounting. Ethics in corporate governance: Ethical Corporate Governance refers to the processes and policies that a company has in place to deal with issues concerning how it is administered and conducts day to day business. It is important to remember that companies exist primary to create a product or service, which is used to generate profit. However that intention must be balanced with controls that ensure a company pursues profit without crossing over the line into the realms of unethical behaviour. Stakeholders may only be concerned with a companys performance and earnings, but bad corporate governance can be symptomatic of greater problems with the company. For example, before the collapse of Enron, the company and its associated traders are believed to have artificially inflated the price of energy in certain US states, thus increasing their profit margins. While this action alone was not enough to cause the company to collapse it was a clear indication that internal controls had failed, which of course meant that other much larger abuses were possible, which eventually lead to the downfall of the company. ( 10

Task 2: Business objectives from an ethical perspective

How ethical problems are resolved in the context of the business or corporate and individual conduct
An organisation's core ethical values and standards should underpin everything that it does and the way its employees conduct their everyday business. Business ethics is about "doing things ethically". How an organisation approaches the social and environmental impacts of its business operations and its voluntary contribution to the wellbeing of the global and local communities in which it operates, is often known as Corporate Social Responsibility (CSR); it is often about "doing ethical things". The IBE believes that an organisation cannot be genuinely responsible without an embedded and inherent culture that is based on ethical values such as trust, openness, respect and integrity. This is why the IBE prefers to talk about Corporate Responsibility (CR) as a wider, concern, rather than using the more limiting 'social' tag.

2.1 How business objectives are affected by ethical considerations

Many of the decisions that a manager needs to take can be considered ethical decisions. Improving efficiency can be seen as an ethical decision taken in the interests of the society as a whole, applying service objectives universally and fairly can be seen as an ethically justified decision, and a consideration of the relative benefits of different groups from services is an ethically justifiable process as long as it is undertaken to ensure the most ethical distribution of resources (New, 1996).

ETHICAL ISSUES THAT CAN AFFECT THE OPERATIONAL ACTIVITIES OF TODAYS BUSINESS An ethical issue can be described as a problem, situation or opportunity which requires individuals, group or an organisation to choose among several actions those which must be evaluated as right or wrong, ethical or unethical. Hence, an ethical issue from business of point of view is a subject matter which raises questions about the standards of conduct or behaviours which are being adhered to by the company separate from the financial motives. 11

Business objectives as shareholders value: Business cannot be ethical, only the managers and corporate strategists can

implement ethics within the framework of the business strategy.Corporate ethics and shareholder desires for profitability are not always aligned, and it is the responsibility of executive management to ensure ethics supersede profitability. In its simplest form, corporate ethics is a legal matter. Abiding by laws protecting workers' rights and appropriate compensations is a top priority for management. Corporate governance and ethics becomes more difficult with the indirect implications of particular practices, making it important to assess the way in which certain operations may adversely affect the community at large.Managers are the primary decision-makers, and therefore must hold themselves accountable for the way in which a business operates and affects stakeholders, shareholders, employees, and the community at large. Business objectives as CSR: Global climate change is rapidly becoming the defining issue of our time (Kirk 2008). The need for the human race (and by implication for corporations) to deal with the challenges of corporate social responsibility (CSR) in order to avoid an impending ecological collapse, is succinctly articulated in the following statement: If we insist on ruining the planet, we have to stop claiming we are a superior species (Berliant 2009). Ethical decision-making could facilitate strong corporate performance and produce competitive advantage, whereas unethical decision-making may result in very different outcomes, including tarnished brands and crippled bottom lines (Allen 2009). Allen (2009) argues that ethical behaviour can appreciate over time to provide lasting value, providing an exponential return on ethics. Stakeholders usually invest their trust in corporations long before investing their dollars (or Rands), resulting in trust ranking higher than goodwill on the balance sheet. It should be remembered that the corporate ethical approach adopted will affect the nature, effectiveness and result of any CSR and corporate governance interventions

2.2 Evaluate the implications for a business and its stakeholders to operate ethically


Implications of Businesses Operating Ethically All businesses have a number of stakeholder groups, each with different interests in what the business does. Business owners - perhaps the key stakeholders - want good financial performance from their investments. Business managers know that it is their first responsibility to deliver good financial results.

However, while it was always acknowledged that businesses exist in a diverse social, economic and political environment, today it is also accepted that a business should be managed with the interests of all stakeholders in mind. Stakeholders of a business:

Shareholders Employees Customers, Suppliers and Competitors Citizens Bankers, Stock Markets and Financial Commentators

Businesses today have to balance the aims of a number of stakeholders. This is sometimes difficult because the interests of stakeholder groups can conflict with each other. E.g. shareholders have a financial interest in the business and want their shares to increase in value, whereas environmentalists look to protect the natural environment. If a business successfully launches a new product and all is going well, the shareholders will be very pleased that their cash investment looks like returning a healthy profit.

If, however, an environmental group mounts a big campaign to prevent this business operating in the way it does, these two stakeholders are in conflict. Success for environmentalists may mean a loss for shareholders. Implication of ethical trading: 13

It is about being prepared to look beyond economic objectives to consider the wider implications of business decisions. From an international perspective, it is becoming increasingly more important, so if trading overseas (importing and/or exporting), it's important to bear this in mind. Treat an ethical trading policy as essential, not as a luxury. Business will be ahead of many others by considering the need for an ethical trading policy early on. Implication of ethical policy: Draw up a map or chart of the ethical and ecologically sustainable issues for business will be focused on. Some examples include:

Fair Trade practices, goods, and services Sourcing office and sales products from sustainable sources Using forest products that have been certified by the Forest Stewardship Council (FSC) Looking after the welfare of all staff in the supply chain Keeping customers well informed of business practices Not using bribery or supporting corruption in business dealings overseas Ensuring animal welfare, against animal testing or vivisection Having a willingness to help suppliers improve the quality control of their produce and to improve their own practices (through knowledge transfer)

Making health and safety of all staff and suppliers a top priority Respecting the environment.

Task 3: Ethics in Workplace Relationships.


3.1 The role of the company acting as moral agent

A moral agent is anyone capable of making ethical decisions and putting them into action. The idea that an organization has moral agency stems in part from U.S. Supreme Court decisions declaring that a corporation is a person in the eyes of the law. That makes an organization accountable for the predictable results of its actions. In practical terms, this means businesses have a responsibility to the public to act ethically.

Stakeholder as moral agent: Ethical values enter management decision-making; it is often suggested, through the gate of stakeholder analysis. But the suggestion that introducing "stakeholder analysis" into business decisions is the same as introducing ethics into those decisions is questionable. The first reply does question the morality (vs. immorality) of strategic reasoning as the ultimate principle behind stakeholder analysis. It acknowledges that strategy, when placed in a highly effective legal and regulatory environment and given a time-horizon that is relatively long term, may well avoid significant forms of anti-social behavior. But it asserts that as an operating principle for managers under time pressure in an imperfect legal and regulatory environment, strategic analysis is insufficient. In the Poletown case, certain stakeholders (e.g., the citizens of Detroit or the residents of Poletown) may have merited more ethical consideration than the strategic approach would have allowed. Some critics charged that GM only considered these stakeholders to the extent that serving their interests also served GM's interests, and that as a result, their interests were undermined. Moral obligations: While most companies are equipped to deal with a changing business environment, there is a stark difference between organic change and that stemming from heavy-handed regulation. To act blatantly against community interests increases the risk that the rules of the game are reformed for business, rather than reformed by business.


Where we tend to struggle is when we have to balance issues of economic growth, jobs and political interests with activities that impose significant, longer-term costs on community. The tobacco industry was a case in point, where the rubber band between the two interests was stretched far enough to invoke a harsh regulatory response. The stoush between the vested interests of the gaming industry and legislators is a flash point that highlights the tension between gaming profits and the social cost of gambling addiction. It is a complex issue and one the gaming industry would prefer to have avoided; it may be asking itself if it could have pro-actively managed a better outcome. For business, it is a commercial issue that has moral dimensions. Likewise, emitting carbon is not so much the "greatest moral issue of our time; it is the business issue of our time. Responsibility versus Accountability of business as moral agent: The roles taken on by public relations practitioners imply a responsibility to perform certain functions associated with those roles. Business historian Vincent E. Barry has defined the term responsibility, when used in business affairs, as referring to a sphere of duty or obligation assigned to a person by the nature of that persons position, function, or work.1 Responsibility could thus be viewed as a bundle of obligations associated with a job or function. Narrowly defined, role refers to a job description, which, in turn, encompasses, but is not limited to, function. For instance, a practitioners role may be that of media relations. Function would refer to the specifics of the job, including press release writing and dissemination, as well as the maintenance of good media relations. In this sense, responsibility refers to more than just the primary function of a role; it refers to the multiple facets of that functionboth processes and outcomes (and the consequences of the acts performed as part of that bundle of obligations). A responsible actor may be seen as one whose job involves a predetermined set of obligations that must be met in order for the job to be accomplished. For example, the primary functional obligation of someone involved in media relations is the same as cited in the foregoing sentence: to maintain a good working relationship with the media in order to respond to queries and to successfully work with them to get out the message.


3.2 Analyse the development of mechanisms for achieving employee involvement and empowerment
Empowerment is the process of enabling or authorizing an individual to think, behaves, take action, and control work and decision making in autonomous ways. It is the state of feeling selfempowered to take control of one's own destiny. When thinking about empowerment in human relations terms, its better avoid thinking of it as something that one individual does for another. This is one of the problems organizations have experienced with the concept of empowerment. People think that someone, usually the manager, has to bestow empowerment on the people who report to him. Empowerment in organization: Empowerment is the process of enabling or authorizing an individual to think, behave, take action and control work and decision making in autonomous ways. It is the state of feeling selfempowered to take control of one's own destiny. When thinking about empowerment in human relations terms, try to avoid thinking of it as something that one individual does for another. This is one of the problems organizations have experienced with the concept of empowerment. People think that someone, usually the manager, has to bestow empowerment on the people who report to him. Consequently, the reporting staff members wait for the bestowing of empowerment, and the manager asks why people won't act in empowered ways. This led to a general unhappiness, mostly undeserved, with the concept of empowerment in many organizations. Employee ownership: Consult your employees and determine what decisions they face on a daily basis that they do not feel empowered to make. Give them specific boundaries of what they can and cannot manage without oversight and then share with them the logic of how these decisions should be made. If you want cashiers to manage discounts, educate them on pricing strategy and overall business finance, showing them how discounts can affect overall business performance. Being transparent about how your business is run and your goals and concerns helps employees understand how the decisions they make impacts the entire business. 17

Empowerment does not happen overnight and a set of new rules will not be enough to transform your place of business. First and foremost, you must truly see the value of empowerment, be willing to change the way you operate as a business owner. Take the time to listen to your employees and find out what sort of empowerment they need to do their job better. Second, you will set appropriate boundaries and give employees the tools they need through training and development. Finally, make empowerment an ongoing vision of your company and continually look for ways to develop ownership in each and every person that you hire.

Task 4: Current ethical issue in a business.

4.1 C ethical issue affecting McDonalds:
McDonalds being the world's largest hamburger chain fast food restaurant owes the environment a lot in terms of its Corporate Social Responsibility. The environment in this case implies its customers, business partners as well as the public at large. The firm has played a large role in the past towards conserving the environment. McDonald's core values are all aimed at promoting the Corporate Social Responsibility of the firm. This is achieved through giving value to the customers, the supply chain as well as the other business partners with whom McDonalds does business. McDonalds indeed acknowledges the fact that its customers are the reason behind its success and existence. Therefore, the customers are very much valued within the company. The company thus strives to create a warm and welcoming environment for its customers. Secondly, McDonalds values its employees and states that it is committed towards the career growth and development of its employees through a comprehensive training plan. This is perhaps the greatest CSR that McDonalds has. McDonalds believes in empowering and valuing the employees for increased commitment from them and their continued success. Current Ethical Issues: One of the main ethical criticisms consistently faced by McDonald's over the last 30 years relates to the food offered in its stores. Critics claim that McDonald's is a major contributing factor to the ever-increasing levels of obesity in the U.S. and other developed countries. Medical studies show that 'waistlines are expanding faster in the UK than in any other European country...with 1 18

in 5 adults dangerously overweight' (Walsh, 2003), while in 2001 it was reported that 300,000 deaths a year in the U.S. are related to obesity compared to 400,000 through cigarette smoking' (McMans Depression and Bipolar Weekly, 2004). McDonald's contribution is a result of the unhealthy nature of fast food. Stakeholders in a corporation may not only be human because animals are also seen as an important part of society and deserve the same treatment as humans. McDonald's has been criticized for the way it treats animals before they are killed and turned into fast food. 'The corporation is the world's largest promoter of meat-based products, the largest user of beef and the second largest user of chicken' ( McDonald's and Animals, 2005), and thus is faced with the usual claims aimed at slaughterhouses. It is claimed that 'chickens were crammed into sheds with less than one square foot of space per bird and no daylight' (Inside the McLibel trial, 1995). McDonald's also 'annually produces over a million tons of packaging used for just a few minutes before being discarded' ( Environment, 2005). Traditionally a number of ozone depleting gasses were used in polystyrene foam packaging. In the 21st century, McDonald's uses almost all recycled packaging. However, the company still faces criticism due to the amount of waste it produces. The range of ethical criticisms leveled at McDonald's throughout the world has been wellpublicized. However, many of these issues were first raised in the 1970's before tighter regulation was imposed and unethical behavior became a hot topic. After 30 years of criticism, it is important to look at what measures McDonald's has taken to improve its ethical conduct and how far this has been successful. Community responsibility For ages, McDonalds has been supporting the Olympic Games through feeding program aimed at feeding the athletics. McDonalds is also involved in various charities and also supports education in the developing countries where it has its franchises and fast food restaurants. As part of its bid to return back to the society, McDonalds has sponsored several children programs involving eradication of illiteracy and poverty.


McDonalds also sponsors a number of events worldwide including the Olympic Games and walks. Over the past calamities, McDonalds has been involved in disaster response where it has supported the victims of such disasters. Just recently during the Haiti disaster, McDonalds moved in to donate a handsome amount towards the rebuilding of the destroyed country. According to Morris, Willey and Sachdev (p.54), McDonalds has also supported various community based programs such as sponsoring the education of poor children in India and Asia. Diversity: A manager should develop a competency to understand the cultural diversity and deal with it. Psychological maturity and Self-awareness are 2 competencies that a manager has to essentially develop to face the circumstances in the present environment (Harris & Kumra, 2000). Many researchers have suggested ways in which a culturally diverse workforce should be dealt. Conejo (2001) has suggested steps to dealing with problems faced by managers due to culturally diverse workforce. They are to determine the diversity, explore the patterns, identify the characteristics, establish a sequence of action & share the ideas. Rijamampianina & Maxwell (2002) have designed a little more sophisticated 4 step process to manage a culturally diverse work force. The steps are motivational process, interaction process, visioning process and learning process. Toledos (2008) rules to solve a conflict without allowing the cultural disparity to come into the frame of action are to solve the problems as quickly as possible, avoid taking emotional decisions, talk only to people who are involved, listen, plan & do not give charge to anyone else; Solve it yourself. But there are quite a few backlashes to this kind of approach though it might look very promising. Sometimes if the conflict is very aggressive, it should be given some cool down time; an attempt to solve it as soon as possible might only aggrevate it. Sometimes line managers tend to take the decisions by themselves without furthuring the issue to the higher authority, and they often take wrong decision due to a lack of understanding of the cultural background. Environmentalism:


There are a variety of aspects about the corporation of McDonalds that have resulted in negative impacts on society. These impacts span from a wide variety of health risks, exploitation of foreign and domestic labor markets, environmental drawbacks, and the issues with globalization.

McDonalds promotes their food as nutritious; however, it is far from being healthy food. The reality is that it McDonalds food has many negative effects on the human body because it is contains ingredients that are high in fat, sugar and salt, and low in fiber and vitamins. Despite their efforts to include nutritious substitutes on their menu the problem still persists. A diet of this type is linked with a greater risk of heart disease, cancer, and diabetes. McDonalds contains many chemical additives, some of which may cause ill health, and hyperactivity in children. Labour Issue: Throughout the corporation there are large problems with labor exploitation and the low wages that are paid to their labor force, these low wages counteract with the rising cost of living throughout the world. McDonald's franchises often times do not pay overtime rates even when employees work very long hours. This usually results in a lowered incentive to work. McDonalds tends to be understaffed because there is pressure to keep profits high and wage costs low. This results in their workers to work harder and faster for less money. 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 remain happy. Not surprisingly, staff turnover at McDonald's is high, making it virtually impossible to unionize and fight for better deals, which suits McDonald's who have always been opposed to Unions.

4.2 How to improve ethical issues in McDonalds:

McDonalds has been able to achieve high success through its identification of the elements that make it succeed most. These elements include its employees, customers and the suppliers. McDonalds values its employees and has various training programs to support their bid towards an excellent service provision. The company draws its success mostly from its employees. McDonalds also hires quality and highly valuable employee's thus ensuring continued success for the company.


McDonalds also draws its success from its highly valued customers. The company provides the customers with nutrition information thus ensuring that the customer makes informed decision. Moreover, the firm develops well balanced diets that meet the dynamic requirements of each fast food market. Indeed, customers have enabled the firm to develop strongly with most customers referring others to the fast food giant. The customers also benefit from the advice of the international nutritionists as well as the nutrition experts that are dissipated to McDonalds on a regular basis (Daft and Marcic, p.11). Code of Ethics: Contribution of environment: McDonalds should support for the environment has ensured that its CSR continues to grow. The firm has many ways of giving back to the community. McDonalds supports various sponsorship programs, the most profound being that which supports the education of children (Carter and Clegg, p.48). McDonalds also feeds the athletes at the Olympic Games. Poverty eradication has also been a priority for the company as it seeks to improve the standards of living. Contribution to employees McDonalds has a policy within all its subsidiaries and fast food restaurants worldwide of giving its employees a priority over all other things. The firm indeed identifies that employees are core in the company's success. McDonalds has in the past devised training programs aimed at employee development. Moreover, the firm empowers its employees to take up new challenges in the fast food market. Furthermore, McDonalds supports human rights which forms part of it global business conduct. Respect to life and the preservation of human dignity has enabled the company to excel in its core relationship with its employees as well as customers and business partners. This has enabled McDonalds to grow through its appreciation of human life and dignity, an area where many other companies have failed. Recommendation


McDonalds should make us of solar energy, which is a renewable form of energy. This will go a long way towards ensuring that there is less carbon emission. The EPA would thus be pleased with the efforts propagated by McDonalds. McDonalds should also run advertisements in the media to promote its balanced healthy diet. The advertisements should also contain nutrition advice on various ways of eating healthy fast food diets. The firm should also diversify its diets to ensure that it meets the requirements of different ages.

4.3 Design a suitable ethical code

A code of ethics is a collection of principles and practices that a business believes in and aims to live by. A code of business ethics usually doesn't stand alone, it works in conjunction with a company's mission statement and more specific policies about conduct to give employees, partners, vendors, and outsiders an idea of what the company stands for and how it's members should conduct themselves. The key in distinguishing a code of ethics from these other documents is to hit the right level of specificity. It should address both the particular nuances of the company's industry as well as its broader goals for social responsibility and should be concrete enough to serve as a guide for employees in a quandary without laying out rules for every situation that could arise. Policies can include issues such as a company's commitment to not work with vendors who use child labor or are environmentally harmful, not discriminating in their hiring, and not taking bribes. "A code of ethics is about corporate culture," says Michael Connor, the editor and publisher of the online magazine Business Ethics. "[Many small- to medium-sized businesses] have a code of ethics; it's probably not written down in many cases but it wouldn't hurt if it was." Connor believes that there's no such thing as a business being too small to benefit from a code of ethics. Having a code is "often viewed as a luxury or something that is an added cost," he says. "The reality these days is that the business that does not have a code of ethics subjects itself to a much greater risk in its day-to-day operations and if there is an unfortunate incident, they expose themselves to much greater risk from regulatory and prosecutorial authorities." Suitable ethical code could be as follows: 23

Foster the highest ethical standards amongst MacDonald personnel. Be effective in preventing, detecting and appropriately reporting and addressing any allegation of misconduct and violations of law by MacDonald personnel. Comply with government procurement laws and regulations. Standards of Federal Business Ethics and Conduct apply to MacDonald employees, as well as third parties, acting on MacDonald behalf in support of the US Federal business. Set forth the standards and practices that MacDonald suppliers are required to uphold. For instance, ensuring environmental certificate, non use of child labor, compliance in HR management etc. Provision for health and medical support to the employee of MacDonald. Support education of child, poverty reduction and charitable health care agencies globally for their health awareness program related to food habit. Set forth the policies and make sure that MacDonalds personnel are non smoker and non alcoholic.

Environmental responsibility According to Kotler and Lee (p.19), McDonalds has won the Energy Star Partner of the Year award which is usually awarded by the Environmental Protection Agency (EPA). McDonalds has been recognized for its massive efforts in reducing greenhouse emissions. The firm is sensitive to the environment and concerned more about the global warming. This has promoted the firm to save on energy and thus avert carbon emissions. McDonalds should take its social responsibility concerning the environment seriously. The firm established its very own Global Environment Commitment (Houk and Williams, p.134). The company has continued to focus on improving its commitment towards the environment. As far as McDonalds CSR regarding the environment is concerned, the fast food giant has in the past and present focused on three main areas namely; energy efficiency, sustainable packaging and waste management as well as green restaurant design. McDonalds has sort to use more energy efficient strategies such as the use of natural gas in the fast food restaurants. McDonalds continues to seek ways of increasing energy efficiency. Furthermore, the fast food giant also seeks to reduce the impact of its operations on the environmental impact.


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Ethical corporate governance, Accessed on 28 September 2013