MGT16

Good Governance and Social Responsibility

Corporate Social Responsibility

Submitted to:
Mrs.

Submitted by:
Albis, Mary Grace D.
Dinglasan, Joana Marie V.
Lavilla, Joshua Faye
Planos, Lovely Lorelie D.
"What is McDonald's corporate social responsibility (CSR) policy?"

“We take our social responsibilities very seriously. For example, we're always looking for ways

to reduce, reuse and recycle in our restaurants and across our whole business. For example,

we use low energy LED light bulbs, energy saving equipment and waterless urinals, and recycle

used cooking oil into biodiesel to fuel more than half of our delivery trucks. We also recycle the

cardboard boxes used in more than 89% of our restaurants, and more than 85% of our

packaging is made from renewable resources. We know that every little bit helps.”

McDonald’s released the Framework in conjunction with the Company’s 2012-2013 CSR &

Sustainability Report. In creating the framework, McDonald’s continued its historically

collaborative approach by consulting with suppliers, franchisees, customers and more than a

dozen sustainability experts, NGOs and socially responsible investment organizations.

McDonald’s 2020 CSR & Sustainability Framework aspirational goals include:

 Supporting sustainable beef production by collaborating to develop global principles and

criteria, and committing to begin purchasing a portion of beef from verified sustainable

sources in 2016

 Sourcing 100 percent of coffee, palm oil and fish that is verified to support sustainable

production

 Procuring 100 percent of fiber-based packaging from certified or recycled sources

 Serving 100 percent more fruit, vegetables, low-fat dairy or whole grains in nine of its top

markets

 Increasing in-restaurant recycling to 50 percent and minimizing waste in nine of its top

markets
  Increasing energy efficiency in company-owned restaurants by 20 percent in seven of

its top markets

“In our new framework, we are focusing on the areas that are core to our business and that can

make a real difference,” said J.C. Gonzalez-Mendez, senior vice president of McDonald’s

Global Corporate Social Responsibility, Sustainability and Philanthropy. “For instance, we are

breaking new ground with our collaborative effort to source sustainable beef. We will continue

to work with multiple stakeholders to develop practical solutions to increase recycling in our

restaurants and across the industry. We will continue to meet our customers’ needs for choice

and balanced menu options, including fruits and vegetables.”

“McDonald’s is a company with the power to help transform the global food marketplace and to

lead its industry towards sustainability,” said Suzanne Apple, SVP, Private Sector Engagement,

World Wildlife Fund. “While this is a journey and requires a long-term vision, these sustainability

goals are a great step forward in addressing issues that are key to McDonald’s business and

value chain.”

“We’re on our way to mainstreaming sustainability,” said Bob Langert, McDonald’s vice

president of Corporate Social Responsibility & Sustainability. “Sustainability doesn’t fully

happen until the consumer is engaged and connected. In addition to catapulting momentum on

key social and environmental issues, the difference McDonald’s can make is bringing

sustainability to the masses, making it part of our everyday business life and the lives of our

customers.”

The theme of the 2012-2013 CSR & Sustainability Report is, “Our Journey Together. For Good.”

Highlights from the report include:

Generation to make nutritious choices and nutrition education a bigger part of the

McDonald’s experience

 Offering fruits, vegetables, or low-fat dairy in Happy Meals in more than 95% of our

restaurants around the world

 Sourcing 100% of whitefish from fisheries that are verified sustainable

 Installing approximately 300,000 pieces of more energy efficient kitchen and building

equipment in restaurants worldwide since 2010

 Of the more than 34,000 restaurants surveyed in 2013, about 90% reported recycling

used cooking oil and about 77% reported recycling corrugated cardboard.

McDonald’s stakeholders affect the firm, especially by way of consumer perception. The

company has a variety of corporate social responsibility (CSR) programs to address its

stakeholders’ interests. In theory, stakeholders affect business and are affected by business.

This condition points to the importance of McDonald’s corporate social responsibility efforts as

a way of optimizing the company’s position relative to its stakeholders. As the leading firm in

the global fast food restaurant industry, McDonald’s has developed corporate social

responsibility strategies to minimize the negative effects of stakeholders while satisfying their

interests. McDonald’s success is partly based on its corporate social responsibility efforts.

McDonald’s corporate social responsibility policy and programs address most stakeholders to

ensure prudent relationships with them. The company includes stakeholders’ interests in its

CSR efforts, especially in programs for investors and communities.

McDonald’s top stakeholders are its employees and customers. However, the firm’s corporate

social responsibility status is also subject to the influence of other stakeholders. The following

are McDonald’s main stakeholder groups, arranged according to significance:

1. Employees

2. Customers

3. Investors

4. Communities

Employees. McDonald’s prioritizes employees as its top stakeholder group. The interests

of these stakeholders include career development and fair compensation. McDonald’s

addresses these interests through a number of training and development programs. For

example, the company maintains Hamburger University, which is a training facility for its

personnel. McDonald’s also has a global mobility policy that supports leadership

development. However, the company pays low wages that are almost down to the level of

the legal minimum wage, even when employees keep demanding for higher wages. Thus,

McDonald’s corporate social responsibility efforts only partially satisfy the interests of

employees as a stakeholder group.

Customers. McDonald’s Corporation views its customers as its second-priority stakeholder

group. The interests of these stakeholders include affordable and healthful food choices.

McDonald’s corporate social responsibility initiatives ensure affordability of products through

standardization and supply chain streamlining. However, the company is widely criticized

for the health effects of its foods. In this regard, McDonald’s corporate social responsibility

efforts only partially satisfy the interests of customers as a major stakeholder group.
Investors. McDonald’s strives to fulfill the demands of investors as a major stakeholder

group in the business. The interests of these stakeholders include profitability and growing

revenues. McDonald’s addresses these concerns through stable business operations. The

company currently has a low but stable growth rate. The introduction of new products, such

as through McCafé, also helps address such interests. Thus, McDonald’s corporate social

responsibility efforts effectively satisfy the interests of investors as a major stakeholder

group.

Communities. McDonald’s supports communities as one of its main stakeholder groups.

The interests of these stakeholders include community development support and

environmental programs. McDonald’s has sustainability and support programs for this

stakeholder group. The Ronald McDonald House Charities provides financial support for

families in need. The firm’s sourcing policy prioritizes sustainable production, such as in

farms. Also, the McDonald’s Global Best of Green recognizes and rewards innovative

environmental ideas and contributions. Thus, the company has a wide variety of corporate

social responsibility programs to support these stakeholders. McDonald’s effectively

satisfies the interests of communities as a stakeholder group.

McDonald’s CSR Performance in Addressing Stakeholders’ Interests

McDonald’s corporate social responsibility initiatives are considerable. They are effective in

addressing the interests of the stakeholder groups of investors and communities. However,

McDonald’s only partially satisfies the interests of employees and customers as major

stakeholders in the business. Thus, it would be better for the company to improve its

corporate social responsibility efforts. For example, McDonald’s can improve its

compensation strategy to satisfy employees’ concerns about their wages. Product

customers.

History of McDonald’s

The McDonald family moved from Manchester, New Hampshire to Hollywood, California in the

late 1930s, where brothers Richard and Maurice McDonald began working as set movers and

handymen at Motion-Picture studios. In 1937, their father Patrick McDonald opened "The

Airdrome", a food stand, on Huntington Drive (Route 66) near the Monrovia Airport in the Los

Angeles County city of Monrovia, California with hot dogs being one of the first items sold.

Hamburgers were later added to the menu at a cost of ten cents with all-you-can-drink orange

juice at five cents. In 1940, Maurice and Richard ("Mac" and "Dick") moved the entire building

40 miles (64 km) east, to West 14th and 1398 North E Streets in San Bernardino, California.

The restaurant was renamed "McDonald's Bar-B-Que" and had 25 menu items, mostly

barbecue.

THE RAY KROC STORY

Origins

In 1917, 15-year-old Ray Kroc lied about his age to join the Red Cross as an ambulance

driver, but the war ended before he completed his training. He then worked as a piano player,

a paper cup salesman and a Multimixer salesman.

In 1954, he visited a restaurant in San Bernardino, California that had purchased several

Multimixers. There he found a small but successful restaurant run by brothers Dick and Mac

McDonald, and was stunned by the effectiveness of their operation. They produced a limited

menu, concentrating on just a few items – burgers, fries and beverages – which allowed them

to focus on quality and quick service.

founded McDonald’s System, Inc., a predecessor of the McDonald’s Corporation, and six

years later bought the exclusive rights to the McDonald’s name and operating system. By

1958, McDonald’s had sold its 100 millionth hamburger.

A Unique Philosophy

Ray Kroc wanted to build a restaurant system that would be famous for providing food of

consistently high quality and uniform methods of preparation. He wanted to serve burgers,

fries and beverages that tasted just the same in Alaska as they did in Alabama.

To achieve this, he chose a unique path: persuading both franchisees and suppliers to buy

into his vision, working not for

McDonald’s but for themselves, together with McDonald’s. He promoted the slogan, “In

business for yourself, but not by yourself.” His philosophy was based on the simple principle

of a 3-legged stool: one leg was McDonald’s franchisees; the second, McDonald’s suppliers;

and the third, McDonald’s employees. The stool was only as strong as the three legs that

formed its foundation.

“If I had a brick for every time I’ve repeated the phrase Quality, Service, Cleanliness and

Value, I think I’d probably be able to bridge the Atlantic Ocean with them.” – Ray Kroc

The Roots of Quality

McDonald’s passion for quality meant that every single ingredient was tested, tasted and

perfected to fit the operating system. Kroc shared his vision of McDonald’s future, selling his

early suppliers on future volumes. They believed in him and the restaurant boomed.

Again, Ray Kroc was looking for a partnership, and he managed to create the most integrated,

efficient and innovative supply system in the food service industry. These supplier
relationships have flourished over the decades. In fact, many McDonald’s suppliers operating

today first started business with a handshake from Ray Kroc.

The Legend Lives On

Right up until he died on January 14, 1984, Ray Kroc never stopped working for McDonald’s.

His legacy continues to this day, providing McDonald’s customers with great tasting,

affordable food; crew and franchisees with opportunities for growth; and suppliers with a

shared commitment to provide the highest quality ingredients and products.

From his passion for innovation and efficiency, to his relentless pursuit of quality, to his many

charitable contributions, Ray Kroc’s legacy continues to be an inspirational and integral part

of McDonald’s – today and into the future.