McDonald's Corporate Social Responsibility and Ethical Issues

This report analyzes the ethical issues surrounding McDonald's Hong Kong food scandal of 2014, where the company sold rotten meat to customers. The study utilizes the Babson Framework to examine the ethical dimensions of the case, focusing on corporate social responsibility (CSR) failures and violations of ethical decision-making principles. The report identifies the ethical problems, including the denial of wrongdoing and the misleading of food safety authorities. It explores the affected stakeholders, such as employees, customers, suppliers, trade unions, and the government, detailing the impact of the scandal on each group. The analysis applies deontological, utilitarianism, and virtue ethics to evaluate the company's actions, and proposes alternative solutions based on each ethical framework. The report emphasizes the importance of ethical leadership, transparency, and adherence to food safety regulations to prevent future occurrences and restore stakeholder trust.

Running head: Ethics and Corporate Responsibility
Ethics and Corporate Responsibility
Name of the Student:
Name of the University:
Author’s note:

2Ethics and Corporate Responsibility
Introduction
This study suggests about that McDonald’s food scandal in Hong Kong. McDonald was
found in 1955 with the objective of best quality of food and services. It is one of the largest
restaurant chain in the world today. In 2014, the company conducted an unethical business
practice in Hong Kong. The company delivered rotten meat to the customers and later on the
organization denied from where they had actually imported the food. The organization
deliberately hiding the fact. It is completely against the corporate social responsibility. This
study examine the school of ethics, following the Brisbane Framework and identify which ethical
issues had done by the organization. After analyzing the case, the study also says what are the
stakeholders being affected by the malpractice of the company and suggests some possible
solution regarding the issues.
Overview of the Company
McDonald’s Corporation, American based organization that was established in 1940. It is
a food chain, which Richard and Maurice McDonald has opened, in San Bernardino, California,
United States. They set up their venture as a hamburger court and afterwards they turned into
their business into a franchise with Golden Arches logo. In the year 1955, a businessperson
named as Roy Kroc who has joined the company as a franchise staff and later on, he purchased
the chain from the McDonald’s Brothers. The old headquarters was in Oak Brook, Illinois, but
after that, it moved to Chicago in the beginning of 2018. McDonald’s is the world is recognized
dinning chain as of 2018. Company’s core values are as follows: Progressiveness, Inclusiveness,
Local integration and Responsible Leadership
Overview of the Case

3Ethics and Corporate Responsibility
In the year 1975, McDonald has kept its first footstep in Hong Kong. Opened its
restaurant at Paterson Street, Causeway Bay. Since taking care of the customer is the first choice,
thus began its favorite place and way to eat. At present, it has 235 restaurant is there in the Hong
Kong, 15000 employees working over there. They are committed to serving excellent dining
experience to every customer.
The year 2014, a scandal was raised for McDonald’s, the Fast food giant highly
misguided to the food safety authority of Hong Kong by selling spoiled meat. The officers of the
food safety authority told that McDonald misled them during its investigation it was revealed
that the food giant sold rotten meat bought from the factory in Shanghai to Hong Kong people.
Dr Lee Siu-yuen, the assistant director of food surveillance and control as the head of the food
safety, told that that McDonald’s has said that they purchased stuff from Hebei plant, not from
shanghai plant of the Husi food company as the firm already in the center of a disconcert. They
have produced a fact to support the occurrence to the food safety officials that Mainland
authorities were examined reports that Shanghai plant usually reprocessed the rotten meat and
packaged with the false expiry dates repeatedly. Lee said the government inspectors visited
McDonald’s cold storage warehouse but found no expired food. Now, this was the scandal did
by McDonald’s. The center of food safety authority launched an investigation to find out the
reality of the matter. Whether McDonald intentionally sold potentially blown meat from the
Shanghai plant to the public. After investigations by the government officials, the food giant
McDonald was caught to lead a food scandal and government suspended to sale it is a famous
chicken nugget. Through the investigation, they have admitted, chicken and pork both they had
imported from the Shanghai plant. (Scmp, 2020)

4Ethics and Corporate Responsibility
Ethical Issue/Problem in the Case
In Hong Kong, The food giant McDonald has made a scandal by selling rotten meat to
the public for four days. They deliberately denied the truth and said the organization bought food
from Hebei plant not from Shanghai plant as they came to know after some investigation that
Shanghai plant provide tainted food. They usually reprocessed the putrid meat and tag the items
with false dates. Since, real fact is opposite. They actually imported fetid chicken and pork from
the Shanghai plant. This was the central point of turning head from the truth, and they made a big
scandal. McDonald has initially disobeyed that the using of any products from the shanghai
plant, but after banning the import and export of Husi product by the Hong Kong Government,
the turned out from their position and revealed its first sorry for confusing to the consumers.
Before highlighting the ethical issues in this case, it is required to know the types of problems.
The problems that conducted by McDonald’s regarding the misuse of Corporate Social
Responsibility (CSR) and ethical decision-making.
Corporate Social Responsibility is a mechanical concept of entity that emphasis an
organization to recognize socially, its stakeholders and the public. By implementing the
corporate social responsibility, companies have to take care of the positive influence in all
aspects of the society including social, economic and environmental.
To involve in CSR activity implies that the business is operating in such ways that
expand the society and the environment not to deliver the negative impact on them. Corporate
Social Responsibility consists of four types that is philanthropic efforts, environment
conservation, diversity and labor practices and volunteerism. (Tong, et al., 2019)

5Ethics and Corporate Responsibility
By working with different types of charities, this food chain has relatively a large number
of CSR. To involve themselves with the communities and charities, it makes involvement with
their customer.
The issue raised from McDonald’s business activity was the charity of Ronald McDonald
House. Ronald McDonald was a fake example, which was represented to the McDonald’s
enterprise. Now, this charity has lost its accountability due to the misery. To enhance their
demographic and their CSR model, company needs to increase the amount of social
responsibility regarding work, which could mean donating and referring more on charities work.
(McDonalds 2020)
Ethical decision-making is a process and practice of evaluating and selecting among the
limited alternatives in a manner of consistent with ethical practice. It is a technique of trace out
and deliver solution regarding the issues in the concern of business. Involving the ethics in the
business, it needs conversance relating to ethical issues that provide a solution to the relevant
problems. For cushioning the moderate evaluation of the problems, there are some basic number
of questions that have to be measured. This process can be implemented in a concern and it can
be modified based on the suitable fit to the company’s profile. (McDonald, 2014)
There are three primary schools of ethics in the Babson Framework for Ethical Decision,
as follows:
Deontological Ethics:
This theory is based on the normative action whether to check action that has taken is
right or wrong. It does not follow the consequences. (Chakrabarty & Bass 2015)
Utilitarianism Ethics:

6Ethics and Corporate Responsibility
This theory suggest that what action has already taken that is not a matter of concern,
rather concerning what is outcomes of it. So it is based on the result. This theory tells that the
particular action is moral based or not. This ethics reflects an analysis of economic situation,
which is focusing on humanity, and the resulting outcome from the course of action is right or
wrong. (DesJardins & McCall 2014)
Virtue Ethics:
In the concern of normative ethics, Virtue ethics is presently one of the major approaches.
Initially, this ethics emphasizes value of mind, characteristic and sense of honesty. It discusses
the nature of virtues and other relevant problems, which usually focuses on the result of action.
(Fernando and Moore 2015)
Considering the above-discussed theories, the case study suggests that the food giant
McDonald’s has conducted some ethical problem in their business concern. They did not follow
Deontological Ethics and Virtue Ethics both. As discussed above McDonald’s did not concern
about the duty, they actually malpractices to their moral ethics, which did not carry the
Deontological Ethics and simultaneously the lack their sense of honesty towards their values and
customers, so they did not even follow the Virtue Ethics as well.
Affected Stakeholders In the Case
After conducting the food scandal in Hong Kong, McDonald’s were affected in various
aspects. One of the major aspect was their investors. Investors are those people who was
involved with a situation of business. In this case, the affected stakeholders involve:

7Ethics and Corporate Responsibility
Staff and Employee:
Staff and Employee is who are working in the organization and directly or indirectly
involved with the business activities. Who tirelessly working to deliver better quality of service
and product to their customer.
Customers:
The customers simply meant by the external factor, though they were not employed in the
franchise, but still they purchase their stuff and include themselves in all company events. The
interest of the customers was the offering of McDonald’s product. The customers always keeps
in their mind that what company performing for their business operation and expansion.
Suppliers:
The suppliers are also internal stakeholders, as they are working with the company and
deliver various essential products and ingredients for the McDonald’s business operations.
Without supplier, this food giant would not provide any products for their customers.
Trade Union
Trade unions are also outside holders because they work outside in the business. These
people are taking responsibility for their working conditions, working process and salary whether
they all are suitable for the business or not. The interest of the trade unions is that each franchise
will pay their portion to the unions or not thus, they earns a lot out of it.
Government:
The Government also called external stakeholders who is involved with McDonald’s
influence. This is because company offer a many job for the unemployed to create a job, due to

8Ethics and Corporate Responsibility
the sound number of global franchises. The Government also issue new regulations that could
affect the McDonald’s activity. If the company did not accountable with the law, the business
could suffer excess level of malfunction.
Communities are also external stakeholders, and they are broadly involved with the
organization. They are concerned while the shops are organizing to build near to them and what
kind of job the company will offer (McDonalds, 2020).
Possible Alternatives
The company could deal with the ethical issues what made by McDonald’s in Hong Kong are
noted below:
Alternative by Deontological Ethics:
Following the definition of the deontological ethics, the company needs to change their
ingredients. They need more healthy and hygienic substance. They could deliver high quality and
nutritious food to avoid losing large customer base and market reputation. They could first
investigate properly about their supplier and select fair trade supplier who are not involved with
the supply of rotten food.
Alternatives by Utilitarianism Ethics:
As the Utilitarianism theory suggests, the food giant McDonald’s could follow the basic
food law in Hong Kong, which is laid down in Part V of the Public Health and Municipal
services Ordinance (Cap. 132). Which follows the protection for food purchaser, offences
involved with unit food and adulterated food, food hygiene. (Scott 2015) Another food law in
Hong Kong, the Food Safety Ordinance (Cap. 612). It also provides new measure of food safety

9Ethics and Corporate Responsibility
control including a registration of food importers and food distributors. It also enhance the food
supply traceability. This law empowers the authorities to tighten up the regulations of import
control on specific food types and to make an order to provide or supply problem food (Wu et al
2014).
They could abide by the law regarding food safety and control act. Which is clearly
mentioned under the ordinance such as “Imported Game, Meat, Poultry, and Eggs Regulations.”
(Cap. 132 AK)
Alternative by Virtue Ethics:
Referring the definition of Virtue Ethics it would suggest that the chair of the organization
should be strict on the staff or purchase department who are directly engaged with purchase of
raw materials. Should not moral down the basic company ethics and vision towards the
customers. They could release the explanation of their occurrence not to just issue a several copy
of apology. The company again issued apology but they refused to answer the question on rotten
meat scandal. In the press conference the McDonald’s managing director in Hong Kong, Randy
Lai Wai- sze said company had not communicated well. Instead of briefing the stance and
problem, he just said in a very diplomatic way.
The management should tactfully handle the legal advisory department. To provide valid
and more transparent information about the food imported stuff.
Consequences of each alternatives to the relevant stakeholders:
By comparing the three alternatives, the study suggests that both Deontological Ethics
and Virtue Ethics satisfy the stakeholders on the other hand utilitarianism theory might not meet
the requirements of the trade unions and for the community. After evaluating all the information

10Ethics and Corporate Responsibility
virtue ethics would be the suitable solution since it fulfills the interest of the stakeholders. As the
theory is a concern of moral value of mind, character and sense of honesty. The influence of this
ethics would be implacable because adopting of this the employee and staff would be very
productive and efficient. Suppliers also become very loyal to provide quality. Customers will be
satisfied and they will get potential benefit. A healthy working environment would be built up.
Final decision with justification
After evaluation of all the proposed alternatives of this case issue, it can be suggested that
the company could follow the Virtue Ethics. As these ethics, support the sense of honesty in the
context of business practices. McDonald has imported fully rotten meat from Shanghai Plant and
it served for consecutively four days. After exposing the problem, they denied regarding the
Shanghai Plant where they have purchased. Instead, they said a big lie to the public that all the
foods were imported from the Hebei Plant. This misled the government and confused the
customers as well. Therefore, the company had a ‘lack of clarity’ and ‘dishonest practice’.
Therefore, it justifies not obeying the primary norms of Virtue Ethics.
Conclusion
McDonald’s, the world’s largest fast-food chain, comprising with 37,855 outlets across
all over the world, conducted business malpractice and involved with a food scandal in Hong
Kong. This food giant who is popularly known for its hamburgers, cheeseburgers, chicken
nuggets and French fries, served rotten meat to its customers during the four consecutive days.
They have imported foods from Shanghai plant, which actually involved with tainted food,
reprocessed the rotten meats and repackaged with false expiry dates. But after caught by the
government officials, they completely denied the real fact and said they purchased meat from

11Ethics and Corporate Responsibility
Hebei plant. After suspended its famous chicken nuggets by the Government, they have admitted
the truth of import substance. The company badly played with their ethical issue and became
vulnerable for the Corporate Social Responsibility, which was not acceptable. Their reputation
was fall due to the unethical practice in the business and dishonest behavior towards their
consumer. Afterwards, they have issued their apology to the customer consecutively two to three
times for being confused to the customer by saying there was a lack of clarity.

12Ethics and Corporate Responsibility
Reference
Chakrabarty, S., & Bass, A.E. (2015). Comparing virtue, consequentialist, and deontological
ethics-based corporate social responsibility: Mitigating microfinance risk in institutional
voids. Journal of Business Ethics, 126(3), pp.487-512.
DesJardins, J.R. & McCall, J.J., (2014). Contemporary issues in business ethics. Cengage
Learning.
Fernando, M. & Moore, G., (2015). MacIntyrean virtue ethics in business: A cross-cultural
comparison. Journal of Business Ethics, 132(1), pp.185-202.
McDonald, G., (2014). Business Ethics. Cambridge University Press.
McDonalds, "Ethics Of Mcdonalds", Ethics Of Mcdonalds (Webpage, 2020)
<https://mcdonaldsethics.weebly.com/>
Scott, I. (2015). Chapter ten Governance and Corruption Prevention in Hong Kong. In The Quest
for Good Urban Governance (pp. 185-204). Springer VS, Wiesbaden.
South China Morning Post (2020). McDonald’s misled Hong Kong food safety authority about
rotten meat, says official. [online] South China Morning Post. Available at:
https://www.scmp.com/news/hong-kong/article/1561221/mcdonalds-misled-hong-kong-
food-safety-authority-about-rotten-meat [Accessed 9 Jan. 2020].
Tong, C., Wong, A.T.T. & Cheng, T. (2019). Do Corporate Social Responsibility and Safety of
Food Affect Reputation? A Study of Fast-food Restaurants Industry in Hong
Kong. Journal of Economics, Management and Trade, pp.1-18.

13Ethics and Corporate Responsibility
Wu, X., Ye, Y., Hu, D., Liu, Z. & Cao, J. (2014). Food safety assurance systems in Hong
Kong. Food Control, 37, pp.141-145.