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McDonalds Case Study shout Controversy Group 9 SaurabhJanwalkar -75 Dhvani Parekh- 89 Karan Savardekar 103 Nikita Thakur 113 SwapneelVaidya 117 McDonalds Beef Fries Controversy McDonalds is the worlds largest chain of burgerfast provender restaurants, serving around 68 million customers daily in 119 countries. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by Richard and Maurice McDonald. In 1948 they reorganized their business as a hamburger stand using production line principles.McDonalds was started as a drive in restaurant by two brothers, Richard and Maurice McDonald, in California. The business was generating US $200000 per annum in 1940s. They introduced a new archetype called self help and designed their kitchen for mass production with assembly line procedures. Prices were kept low speed, service and cleanliness became the achievement factors for business. The original mascot of McDonalds was a man with a chefs hat on top of a hamburger shaped head whose name was Speedee. Speedee was eventually replaced with Ronald McDonald by 1967 when the company first filed a U.S. trademark on a clown shaped man having puffed out costume legs. As word of their success spread, franchises started showing interest. Ray Kroc finalized a deal with McDonald brothers in 1954. He established a franchising company the McDonald carcass Inc and appointed franchises. By the end of 1960s Kroc had established over 400 franchising outlets. In 1965 McDonalds went public. By the end of 1970s, McDonalds had over 5000 restaurants with sales exceeding three billion US dollars. By 1998, McDonald was operating(a) 25,000 restaurants in 116 countries, serving more than 15 billion customers annually.However controversies started erupting one after the other for the company. The biggest joust was the McDonalds Beef Fries leaning. The lawsuit which was filed in Seattle, US alleged that the company had, for a decade, duped vegetarian customers into ingest cut french fries that contained bitch extracts. This issue realized a great furoreamong the customers. Q1. Analyse the confused allegations levelled against McDonalds before the french fries controversy. What perpetual processes contributed to so much hostility and criticism despite McDonalds creation the image one fast food chain in the world?McDonalds has a long memorial of lawsuits being filed against it. It had been frequently accused of resorting to unfair and unethical business practices. Some of the allegations are as follows. * In the late 1990s the company had to settle over 700 incidents of scalding coffee burns. McDonalds kept the coffee at 185 F which is 20 F hotter than the standard temperature at other restaurants. An 81 year woman suffered third stop burns on her lower body that required skin grafts and hospitalization for a week. After McDonalds discount her request for compensation for medical bills she filed a lawsuit against the company. Another case was filed by a woman who was permanently scarred by an extremely hot pickle slice in a hamburger. * A customer who found the crushed head of a rat inside his hamburger excessively filed a lawsuit. * Nutrition It was alleged that Mc Donalds sell high-fat, low fibre food which can cause diseases such as cancer, heart problems, obesity and diabetes. But McDonalds refuted the allegation saying that scientific evidence has never been conclusive and that it had a right to sell junk food just like chocolate or ice-cream manufacturers did. Environment It has excessively been accused of destroying tropical forests to facilitate cattle ranching. * Advertising It was alleged that the heavy publicise by McDonalds was exerting a negative influence on children and exploiting them. * Employment McDonalds is accused of offering low requital and forcing local food outlets out of the business. Charges of discrimination, curtailing workers rights, understaffing, hardly a(p renominal) breaks, illegal hours, poor safety conditions, crushing unionization attempts, kitchens deluge with sewage and selling contaminated food were also leveled against the company. Animals McDonalds slaughters hundreds of thousands of cows, chickens, lambs and other animals per year. * ExpansionIt was alleged that McDonalds was creating a globalized system in which wealth is drained out of the local economies into the hands of a very few rich elite. This resulted in self sufficient and sustainable farming being replaced by cash crops and farming under control of multinationals. * Free speechIt has also been alleged that McDonalds uses its clout to influence media and legal powers to keep people into not speaking out against the company.These are the various allegations leveled against the company. Q2. Discuss the french Fries controversy and critically comment on the companys stand that it had never claimed the fries were vegetarian. Do you imagine the company handled the controversy effectively from the point of management of rumour? The cut fries controversy In May 2001, a class action lawsuit was filed against McDonalds in Seattle, US. The lawsuit alleged that McDonalds had duped vegetarian customers into eating French fries that contained squawk extracts.The French fries served at McDonalds were falsely promoted as being 100% vegetarian. The French fries controversy began in 2000 when a Hindu Jain software railroad engineer Hitesh Shah based in US happened to read a intelligence information article which mentioned that the French fries at McDonalds contained skreigh. Shah sent an email to the customer service dept of McDonalds regarding the contents to which they replied that McDonalds French fries suppliers use a miniscule amount of beef flavouring as an ingredient in the raw product.They also utter that they follow the Code of Federal Regulations and that beef was not listed as an ingredient because normally the ingredients in raw(a) flav ors are not broken down. Then a popular Indian-American newspaper, West India, carried Shahs story and the news created widespread outrage among Hindus and vegetarians in the US. McDonalds immediately released a statement saying that they never claimed that the French fries were 100% vegetarian. They said that the fries were cooked in pure vegetable oil and the company never stated that the fries were appropriate for vegetarians.They also said that it was upto the customer to ask about the flavor and its source. afterward the activists found a letter sent by the companys corporate headquarters to a consumer in response to an inquiry about vegetarian menu items. The mail clearly bundled French fries along with garden salads, whole grain cereal and English muffins as a on the whole vegetarian item. Further it was describe that many McDonalds employees repeatedly told customers that there was absolutely no meat product in the fries.The beef fries controversy attained a greater dimen sion in India as 85% of the areas population was vegetarian and the non-vegetarians also did not consume beef usually because Hindus consider cows to be holy and sacred. Mean spell in June 2001, another class action lawsuit was filed in the District judgeship in Travis County, Austin, Texas on behalf of all Hindus in Texas, alleging that Hindu moral and religious principles had been violated by their unwilled consumption of French fries that were flavoured with beef.Later two more lawsuits were filed in Illinois and New Jersey, winning the number of cases to five. Our views We do not depend that McDonalds handled the controversy effectively as * They did not accept their fall away in the start and McDonalds said that they had never proclaimed French fries to be appropriate for vegetarians while their employees repeatedly told customers that there was absolutely no meat product in the fries. * Also they blamed their mis micturate on the customers by saying that the customers sh ould have asked about the flavors and its source.This enraged the vegetarian customers further. * As the public outrage intensified, McDonalds released its conditional apology on its website admitting that the recipe for the fries used a miniscule trace of beef flavoring. However they did not accept that they misled the customers and they were not truly apologetic of their actions. * They said that they were complying with the law in toll of disclosing their ingredients, but they should have gone beyond the law and should have paid attention to consumers who avoid legitimate food product for religious, ethical and health reasons. McDonalds paid 10 million US$ to vegetarian ,religious groups & various groups utilize to Hindus , Sikhs & children nutrition which the Indian attorney Harish Bharti thought was insufficient in monetary terms. * They gave an unconditional apology on the company website, newspaper & various other publications. * Also McDonalds decided to convene an adviso ry get on to advice on vegetarian matters. Q3. Discuss the steps taken by McDonalds to play down the French fries controversy and critically comment whether the company will be able to semen out of this unscathed.The French fries controversy impacted the image of the McDonalds badly because of this McDonalds was facing losses & protests from various groups. Steps taken by Mc Donalds to play down the French fries controversy * In March 2002, McDonalds announced to pay 10 million US dollars to the religious groups in a proposed settlement. Around 60% of this payment went to vegetarian organizations and the rest to various groups devoted to Hindus and Sikhs, childrens nutrition and clean dietary practices. * It also decided to pay 4000 US $ each to the 12 plaintiffs in the five lawsuits. They also gave a detailed apology on the company website, newspapers and in various other publications. * McDonalds also decided to convene an advisory board to advice on vegetarian matters. * They apologized for their mistakes in the newspapers. McDonalds acknowledged that after chemise over to vegetable oil in the 1990s for the purpose of reducing cholesterol, mistakes were made in communication to the customers about the ingredients in French fries. They apologized for the miscommunication and the hardships caused to the customers. Our viewsNo, we do not think that McDonalds would come out completely unscathed because * The Company would lose the customers base whose sentiments have been hurt because of this controversy. * People will now think twice before going to McDonalds even after the companies claim not to use beef oil in the fries because McDonalds had made false promises earlier as well. * Also it was revealed that McCain Foods was notwithstanding in the process of growing the appropriate potatoes and needed another 2 yrs to begin generate, therefore the French fries were being sourced from the US. The brand & ethics of the company have been dented because of this controversy which McDonalds would take a long time to build back their image. But with all this McDonalds also implement some positive policies which will help them regain their brand image. * They set up an advisory board to advise on vegetarian matters * McDonalds also developed a special menu for Indian customers taking into consideration Indian culture and religious sentiments. They maintained quality standards by rejecting Lamb Westons supply of partially fried French fries as they did not meet quality standards. Suggestions * Can come up with pure veg. restaurants. * No beef oil should be used in the frying process. * signalize veg. kitchens from non-veg. restaurants. * Should maintain the quality standards * Give details about the menu i. e. ingredients on the companys website. Employees should also be made aware about the ingredients in food.