U37- P2/M1
Introduction
This report will explain identify and explain 6 stakeholders of McDonalds. I will identify what their
interest is in McDonalds and discuss the impact of McDonalds operating ethically on them. I will also
state and explain any conflicting interests between stakeholder groups.
Stakeholders
A stakeholder is an individual and group of people that are interested in a business, who may be
affected by or affect the business. The typical primary stakeholders are the owners/ shareholders,
employees, competitors, trade unions, customers and suppliers. With increasing attention on social
responsibility for businesses, society, governments, pressure groups are also stakeholders now.
An important stakeholder is the employees. McDonalds is one of the largest UK employers, with
129,000 employees. They ensure each franchised restaurant runs well each day. All employees have
different roles and operate together to keep the business going effectively and efficiently.
McDonalds employees want good, flexible working hours, good working conditions, job security and
fair wages. McDonalds works to be ethical for their employees by ensuring their working experience
is good and giving them the voice to be able to report any misconduct, without any fear of
retaliation. They have an ethics code that implements equal treatment and diversity. McDonalds
offers different contracts for their employees so they may choose what suits them best. They have
fixed or flexible contracts and minimum guaranteed hours offered as a choice to all employees from
2017. Most employees remained in their flexible contracts as it allowed them to work around other
commitments, but some chose fixed for access to financial products- phone contracts and car loans
etc. Employees may conflict with shareholders as employees would want god wages from the
company, however shareholders would want most of the profit made. They would receive less
return on their investments if employees wages were raised and this would not please them.
Therefore, both parties interests class with one another.
Customers are another important stakeholder. Customers pay McDonalds for their food and services
and are the reason McDonalds can keep running. They serve nearly 4 million customers each day,
generating lots of profit for McDonalds, which allows them to keep expanding. McDonalds
customers want a good and fast ordering experience, good food at low costs, well-kept restaurants
and good customer service. Customers would also want McDonalds to be an ethical business, with
food that is ethically sourced. This makes them feel better about buying from the business as they
are not promoting unethical behaviour. McDonalds operating ethically is extremely important to
create a trust with the customers as they will consider what the customers want. McDonalds have
made and are making some efforts in being more ethical that would affect customers. One of their
primary areas of focus is supporting development of national multi-stakeholder beef sustainability
programs. They plan to continue working with farmers, ranchers, NGOs, scientists, industry groups
and suppliers to reduce beef production impacts. McDonalds want the beef production to be
sustainable as this is something that is in the interests of customers. this way of production reduces
greenhouse gases and protects soil formation. This will allow customers to feel better about
purchasing from them. The business work to ensure their food is of high quality so they can keep
customers satisfied and improve sales. There is a common conflict between customers and suppliers.
This is because while customers want high quality products for low prices, suppliers want to be
making good profit. However, they must work to ensure their products are of high quality but
cannot sell for high prices as this would effect their sales. Therefore, they are losing out on profit.
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Another stakeholder for McDonalds is the government. They affect McDonalds as they would need
planning permission from the government for their new restaurant buildings and any expansion of
their old stores. McDonalds also pays taxes and VAT to the government, which affects the business.
the government expects McDonalds to pay their taxes on time and for them to ensure they are
following legal regulations within their business. They also want McDonalds to reduce
unemployment within the UK as this reduces issues for the government to deal with, including
poverty and providing benefits etc. McDonalds must be ethical with the government and make sure
they pay their taxes right. In 2019, McDonalds was accused of acting unethically by not paying the
right amount of tax. The filings showed they paid £75 million in UK corporation tax. This was not
enough, and they responded by saying, “we pay substantial amounts of corporation tax in the UK.”
Avoiding tax is unethical because taxes go to public services such as healthcare, education, and
infrastructure. There is a common conflict between the government and McDonalds shareholders.
While government want their taxes paid, shareholders want all the profit they can get. The company
also must abide by laws such as the national minimum wage. This also means shareholders get less
return as employees must be paid a good amount.
Shareholders are another stakeholder as they provide the finance for McDonalds to run, for a return
in their investments and good profit. McDonalds investors hold a majority ownership of Some of
McDonalds stakeholders are the Vanguard Group Inc. (with 8.28% stake), S SgA Funds Management
Inc (4.84% stake) and BlackRock Fund Advisors (4.76% stake) etc. Stakeholders want a good return
on their investments, they would not want to suffer a financial loss. They do not want any issues as
they have limited liability of the business. McDonalds being ethical affects shareholders as it can lead
to a decrease in their return from investments. For example, when McDonalds has a minimum wage
law to abide by, they must pay their employees a good amount and this leads to less profits going to
the shareholders. However, it can increase their profits if McDonalds makes sustainable decisions
that makes customers happy. This would lead to sales increasing and so shareholders would receive
a bigger return. This has happened when McDonalds started working on making their food
production more sustainable. There are conflicting factors between shareholders and employees
where the shareholders are thinking about dividends and employees think about their salaries. The
employees want higher wages, and this would increase costs, meaning shareholders receive less
profit.
Furthermore, suppliers are important to McDonalds as they provide the stores with the products
they need. If they did not have suppliers, they would have nothing to sell. McDonalds suppliers
include McCain and OSI. Suppliers want regular and reliable customers, with repeat orders so they
have stability. They want to be paid on time and be given plenty of notice from beforehand.
McDonalds being ethical affects suppliers as it means the suppliers must produce the food in ethical
ways. For example, McDonalds made sure their suppliers’ beef production was more sustainable.
This would affect the suppliers production cost as they grow, harvest, produce their supplies in the
way McDonalds want them to. An example of McDonalds affecting their suppliers is when they
announced plans to reduce the use of antibiotics in their global beef supply. The use of antibiotics is
unethical because it is a risk to human health. It can also lead to the contamination in meat and
poultry. There is a common conflict between suppliers and customers because customers want
cheap prices and high quality and for suppliers to provide high quality produce, their costs must go
up. Therefore, McDonalds selling at low prices means they get paid less for their high-quality
supplies.
Society is a stakeholder as they would be affected by McDonalds decisions in expanding. They can
affect McDonalds if they are displeased. They can be displeased by any noise pollution or traffic and
