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McDonalds Case Study Beef 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 hamburgerfast forage balanceaurants, dowry around 68 million customers daily in 119 countries. Headquartered in the linked States, the come with began in 1940 as a barbecue restaurant operated by Richard and Maurice McDonald. In 1948 they reorganized their business as a hamburger raise using production line principles.McDonalds was started as a jab in restaurant by dickens brothers, Richard and Maurice McDonald, in California. The business was generating US $200000 per annum in 1940s. They introduced a new concept c totallyed self aid and knowing their kitchen for mass production with assembly line procedures. Prices were kept low speed, service and cleanliness became the success factors for business. The original mascot of McDonalds was a man with a chefs h at on top of a hamburger shaped head whose name was Speedee. Speedee was last replaced with Ronald McDonald by 1967 when the familiarity 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 equal the McDonald System 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 trio billion US dollars. By 1998, McDonald was operating 25,000 restaurants in 116 countries, serving more than than 15 billion customers annually.However controversies started erupting one after the other for the company. The biggest disceptation was the McDonalds Beef Fries controversy. The example which was filed in Seattle, US aver that the company had, for a decade, d uped vegetarian customers into eating cut hot up that contained recoil extracts. This issue caused a great furoreamong the customers. Q1. Analyse the various allegations levelled against McDonalds before the french chips controversy. What perpetual processes contributed to so much hostility and criticism despite McDonalds being the number one fast food chain in the world?McDonalds has a long history of lawsuits being filed against it. It had been often 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 chocolate burns. McDonalds kept the coffee at 185 F which is 20 F hotter than the bar temperature at other restaurants. An 81 year woman suffered third form burns on her lower body that required skin grafts and hospitalization insurance for a week. After McDonalds dismissed her request for compensation for medical bills she filed a lawsuit again st the company. Another case was filed by a woman who was for good scarred by an extremely hot pickle slice in a hamburger. * A customer who found the crushed head of a rat inside his hamburger as well filed a lawsuit. * Nutrition It was alleged that Mc Donalds sell high-fat, low fibre food which washbowl 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 on to sell junk food just like chocolate or ice-cream manufacturers did. Environment It has in addition been accused of destroying tropical forests to facilitate cattle ranching. * denote It was alleged that the heavy advertising by McDonalds was exerting a negative incline on children and exploiting them. * Employment McDonalds is accused of offering low wages and forcing topical anesthetic food outlets out of the business. Charges of discrimination, curtailing workers rights, understaffi ng, few breaks, illegal hours, poor safety conditions, inhibition unionization attempts, kitchens flooded with sewage and selling contaminated food were to a fault 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 truly few rich elite. This resulted in self sufficient and sustainable kitchen- tending being replaced by cash crops and agribusiness under control of multinationals. * bountiful speechIt has also been alleged that McDonalds uses its clout to influence media and legal powers to scare people into not speaking out against the company.These are the various allegations leveled against the company. Q2. argue the French Fries controversy and critically observe on the companys stand that it had never claimed the fries were vegetarian. Do you thi nk the company handled the controversy effectively from the point of management of rumour? The French 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 scream 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 engineer Hitesh Shah based in US happened to read a news article which mentioned that the French fries at McDonalds contained beef. 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 flavourer as an ingredient in the raw product.They also verbalise that they follow the Code of Federal Regulations and that beef was not listed as an ingredient because normally the ingredients in natural flavo rs are not broken down. Then a popular Indian-American newspaper publisher, West India, carried Shahs story and the news created widespread set on 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 axenic vegetable oil and the company never stated that the fries were enchant for vegetarians.They also said that it was upto the customer to ask nigh the flavor and its source. later on the activists found a letter sent by the companys corporate headquarters to a consumer in response to an inquiry about vegetarian identity card items. The mail clearly bundled French fries along with garden salads, whole grain cereal and English muffins as a all told vegetarian item. Further it was reported that many McDonalds employees repeatedly told customers that in that respect was absolutely no meat product in the fries.The beef fries controversy attained a greater dimension in India as 85% of the countrys population was vegetarian and the non-vegetarians also did not consume beef usually because Hindus consider cows to be holy and sacred. Meanwhile in June 2001, other class action lawsuit was filed in the District court of justice in Travis County, Austin, Texas on behalf of all Hindus in Texas, alleging that Hindu moral and religious principles had been violated by their unintentional consumption of French fries that were flavoured with beef.Later two more lawsuits were filed in Illinois and New Jersey, taking the number of cases to cinque. Our views We do not think that McDonalds handled the controversy effectively as * They did not harmonize their mis check in the start and McDonalds said that they had never title French fries to be appropriate for vegetarians while their employees repeatedly told customers that there was absolutely no meat product in the fries. * excessively they hellish their mistake on the cus tomers by saying that the customers should have asked about the flavors and its source.This anger 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 terms of disclosing their ingredients, but they should have gone beyond the law and should have paid attention to consumers who avoid certain food product for religious, ethical and health reasons. McDonalds paid 10 million US$ to vegetarian ,religious groups & various groups devoted 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 McDona lds decided to convene an informatory board 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 provide be able to come out of this uninjured.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 kosher 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 informatory board to advice on vegetarian matters. * They apologized for their mistakes in the newspapers. McDonalds acknowledged that after shift key over to vegetable oil in the 1990s for the purpose of simplification cholesterol, mistakes were made in communicating 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 veritable(a) 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 still in the process of growing the appropriate potatoes and needed another 2 yrs to begin supply, therefore the French fries were being sourced from the US. The chump & 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 implemented some positive policies which will help them regain their brand image. * They set up an advisory board to declare oneself 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 deep-fried French fries as they did not meet quality standards. Suggestions * freighter come up with pure veg. restaurants. * No beef oil should be used in the frying process. * Separate veg. kitchens from non-veg. restaurants. * Should maintain the quality standards * unwrap details about the menu i. e. ingredients on the companys website. Employees should also be made aware about the ingredients in food.