Executive Summary

OR

Corporate Philanthropy OR Marketing Strategy?

This report aims to discuss McDonald’s corporate social responsibility (CSR) efforts in general as well as in the local context. This report will feature McDonald’s background and history, its CSR initiatives in general and in Singapore, facts from relevant sources such as the McLibel case, our viewpoints on the McDonald’s CSR efforts and some photos and video footage at the Appendix and Bibliography.

Are McDonald’s CSR efforts purely corporate philanthropy or just a marketing strategy?

Introduction McDonald’s in a nutshell

McDonald’s is the largest and most well known global foodservice retailer with more than 30,000 restaurants in 121 countries that started its humble beginnings in Des Plaines, Illinois. It was founded in 1955 by Ray Kroc, a salesman, who invested his entire life savings to be the exclusive distributor in a

five-spindled milk shaker, known as the Multimixer. When Ray Kroc heard about the McDonald's hamburger stand in California running eight Multimixers at a time, he saw an opportunity. He packed up his car and headed West, to California. He was 52 years old.

One of McDonald’s aims is to strengthen their position as a leader in social responsibility. Their values and beliefs were based on Ray Kroc’s philosophy

“We have an obligation to give back to the communities that gave us so much.”

Ray Kroc, 1955

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McDonald’s CSR Initiatives

Overview

McDonald’s commitment to social responsibility focuses primarily on animal welfare, education, environment, people, quality and safety and Ronald McDonald House Charities (RMHC). McDonald’s CSR initiatives can be summarized in the list below.

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Education

McDonald’s endeavors to mould the future of the society and therefore, is committed to the education of the youths. Thus, in the areas of education, McDonald’s works in partnership withparents and educators to ensure that the school-age employees see education and schoolwork as their top priorities and also make sure that the McDonald’s job experience complements and supports their employees’ educational goals.

McDonald’s believes in the right to exist in a clean environment where the air, water and the earth are clean. In today's world,

a global business leader must be also be an environmental leader as well. Hence, McDonald’s is determined to analyze every aspect of their business on their impact on the environment, and as a result of the analysis, take actions beyond what is expected of them to maintain or even improve the environment.

McDonald’s want to leave future generations with an environmentally sound world.

PeopleEmployees are vital contributors to the success of a company. McDonald’s recognizes this importance as their employees are the driving force to their success. Hence, McDonald’s iscommitted to creating an environment that values and respects their employees, recognizes and rewards their performance, as well as providing them with meaningful growth opportunities.

McDonald's has been a leader in setting and strictly enforcing high- quality and safety standards – often exceeding those standards established by industry and governments. Simply, quality and safety are the most important items on McDonald’s menu of success, because they give customer confidence to McDonald's.

Ronald McDonald House Charities (RMHC)

McDonald’s supports Ronald McDonald House Charities (RMHC) by providing free goods and services, covering 100 percent of the management and general costs for RMHC's global office. Therein, RMHC works to improve the health and well- being of children by awarding grants to organizations and supporting 206 Ronald McDonald Houses worldwide.

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From the general overview of McDonald’s CSR activities, we can observe that they had done a great deal for the community. Fortune Magazine has even ranked McDonald’s as “one of the most admired socially responsible company”.

The Flipside

As the old saying goes, you cannot please everyone. Despite McDonald’s wide-spread CSRefforts, there were still people who were unhappy about them. The McLibel lawsuit surfaced in1990 after numerous years of growing opposition to McDonald’s because of a group of activists from London Greenpeace. London Greenpeace is an activists group which had been campaigning on a variety of environmental and social justice issues since the early 1970's. In 1978, Dave Morris, a local postman, joined London Greenpeace and caused them to be involved in a legal lawsuit against McDonald’s, resulting in the longest case in jurisdiction of British history.

“In the mid 1980's, London Greenpeace began a campaign focusing on McDonald's as a high profile organization, symbolizing everything they considered wrong with the prevailing corporate mentality. In 1985, they launched the “International Day of Action against McDonald’s”, which has been held on October 16th ever since. In 1986 they produced a 6-sided fact sheet called “What's Wrong With McDonald’s? Everything they don't want you to know”. The leaflet attacked almost all aspects of the corporation's business, accusing them of exploiting children with advertising, promoting an unhealthy diet, exploiting their staff and being responsible for environmental damage and ill treatment of animals.”

However, during this period, London Greenpeace also continued with other campaigns. In 1989, Helen Steel, a 21 year old gardener, joined the activists group and started to campaign with them.

Meanwhile, McDonald’s was busy suing everyone who criticized them, from media companies, union groups to student and activists groups. In 1989, the campaign against McDonald’s became more vicious. More and more groups around the world were defecting to London Greenpeace’s camp. Thus, in a bid to defend themselves, McDonald’s produced their own “McFact cards”, detailing their position on many of the accusations made by the activists group. They also decided to take extreme actions against London Greenpeace.

In 1990, McDonald’s served libel writs against the five activists who came up with the “What’s wrong with McDonald’s” leaflet. They were given a choice, to retract the allegations made in the leaflet and apologize or go to court. Three of the five activists took the former suggestion, while Dave and Helen chose the former. They decided that they will not allow themselves to be pushed over by McDonald’s.

“It just really stuck in the throat to apologize to McDonald's. I thought it was them that should have been apologizing to us - well not us specifically, but to society for the damage they do to society and the environment.” - Helen Steel

Dave Morris and Helen Steel V McDonald’s (March 1994)

Before the trial began proper in 1994, McDonald’s produced 300,000 copies of a leaflet to distribute to their customers via their burger outlets. The leaflet stated, “This action is not about

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freedom of speech; it is about the right to stop people telling lies.” The company also issued press releases in a similar way.

On 28th June 1994, the McLibel trial began. It was to be the longest case ever, breaking the initial entry in the Guinness Book of Records, the TichBorne Personation case which lasted 291 days. During the McLibel trial, many people took advantage of the situation and rode along with the hype. For instance, Macmillan published their hard cover book, “McLibel – Burger Culture on Trial”, written by John Vidal and many media companies did extensive coverage on the trial.

The last day of submission was on 13th December 1996. The verdict was announced on 19th June 1997, in favor of McDonald’s.

“The judge ruled that Helen and Dave had not proved the allegations against McDonald's on rainforest destruction, heart disease and cancer, food poisoning, starvation in the Third World and bad working conditions. However, they had proved that McDonald’s “exploited children"” with their

advertising, falsely advertise their food as nutritious, risk the health of their most regular, long-term customers, are "culpabably responsible" for cruelty to animals, are "strongly antipathetic" to unions and pay their workers low wages.” - Verdict by Justice Bell

Justice Bell ruled that Helen and Dave had libeled McDonald’s, but because they had proven many of the allegations true, they would only pay half of the claimed damages, that was £60,000. However, both Dave and Helen’s litigation fee and the damages they had to pay were donated by the public.

Afterthoughts

After reading through and analyzing the McLibel case, we found that they were many noteworthy areas. There was an uncanny pattern in the time the CSR activities were initiated by McDonald’s, not just in America, but around the world.

The time these CSR activities were instigated, coincide with the McLibel years at a time when the image of McDonald’s’ was at its worst. The “Anti-McDonald’s” campaigns and the McLibel trial spanned nine years and during these years, we realized that it was then that McDonald’s launched a “worldwide initiative” of CSR efforts. For instance, in the United Kingdom, where the McLibel case was tried, the Ronald McDonald House Charities (RMHC) was setup in 1989 and in the following years, more CSR activities were reported. Besides the UK, in other European countries like France and Sweden, the RMHC were setup in 1993 and 1987 respectively. Furthermore McDonald’s in these countries were actively involved in community service. In the Asia region, McDonald’s Singapore CSR efforts also followed the time pattern.

On closer examination, the CSR initiatives of McDonald’s seem to focus mainly on the areas in which they were accused. For example, on allegations of rainforest deforestation, McDonald’s response was CSR initiatives in the field of environment. “McDonald’s believes in the right to exist in a clean environment where the air, water and the earth are clean”. Where they were being accused of bad working conditions, they responded by stating that “McDonald's has been a leader in setting and strictly enforcing high-quality and safety standards – often exceeding those standards established by industry and governments’ and contributing to this cause.

Many of McDonald’s CSR efforts around the world were most active or visible during these nine years, the McLibel years as we would call it. Our team questions if this could have been a desperate bid on McDonald’s part to salvage their badly affected reputation? Were their active CSR initiatives during the McLibel years, part of their strategy to influence the public, as well as the decision of the jury and the judge? What was the real motive behind it?

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To get the picture clearer, let us take a look at the CSR efforts in Singapore.

McDonald’s Singapore

McDonald’s Restaurant Pte Ltd was established in 1978, a joint venture between McDonald’s Corporation (headquarters in Oaks Brook) and Mr. Robert Kwan. Till date, McDonald’s Singapore has 125 restaurants and employs about 6,000 employees. The first McDonald’s outlet was opened at Liat Towers on 27th October 1979. On its opening day, it sold the world’s highest volume of hamburgers! McDonald’s Singapore contributed a great deal in the community arena.The contributions were stemmed towards children-related activities. Some of their milestone contributions were with the KK Women’s and Children’s Hospitable, Ronald McDonald Children Charities, McCare and the NUH/Ronald McDonald Child Dialysis Program. These initiatives were launched in 1997 and 1988 respectively.

All this social philanthropy done by McDonald’s is recognized by the public and the overall public perception of McDonald’s IS good. McDonald’s is perceived by the public as a socially responsible company, an advocator of education for the children and an international icon for food and of course, fun for the kids. McDonald’s does at present have a squeaky clean image, at least from the outside.

However, let us now look deeper into these initiatives, scrutinise the reasons behind these charitable deeds and see if these community initiatives of McDonald’s Singapore were launched out of pure sincerity? Are there any ulterior motives behind the curtains of philanthropy? Could it all be a façade for a carefully planned marketing strategy as can be observed through the CSR efforts and the blatant advertising stratagem to target children?

We now take you behind the scenes to examine more closely McDonald’s CSR initiatives inSingapore.

CSR in Singapore

There are three areas in which McDonald’s Singapore focus on in their CSR initiatives. Firstly, in the area of education, McDonald’s usually gives financial aid to schools or sponsor school equipments. The second area of concentration is in the area of environment and conservation. Their efforts are focused in developing recycling programs and sponsoring campaigns that protect plant and animal ecology. In this aspect, McDonald’s has been highly participative too, achieving the largest user of recycled paper title and phasing out CFCs refrigerants. Finally, in the health arena, McDonald’s contributes to hospitals. They help in planning health programs to cater to needy children. Among other things, they have decorated children facilities in the NUH and KKH.

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Ronald McDonald House Charity/ Ronald McDonald Children’s Charity

In Singapore, the cornerstone of McDonald's community relations program is the Ronald McDonald Children's Charity (RMCC). It was set up in October 1989, with the support of the Nation Council of Social Service (NCSS). To date, RMCC has helped more than 200 ill children from financial distressed families with grants totalling close to US$1 million in the areas of medical, rehabilitative and surgical treatments. Funds for RMCC are raised from the sale of McDonald's Happy Meals (five-cents from each Happy Meal sold), contributions from the McDonald's family, suppliers and occasionally, personal donations from the public.

Involvement with National University Hospital (NUH) andKandang Kerbau Hospital (KKH)

In October 1988, the NUH/Ronald McDonald’s dialysis machine was launched with the intention of helping children with kidney failure so that they could receive free treatment.

In 1996, McDonald's redesigned and refurbished the paediatric X-ray room at NUH and renamed it Ronald McDonald's Secret Garden. The design theme and features in the brightly decorated playroom provide a cheerful environment for children waiting to be X-rayed.

Between March to May 1997, McDonald’s contributed in various ways to KK Hospital. Drawings done by children were used as backdrop for walls that serves to brighten the children’s stay in

the hospital. McDonald’s also managed to transform the Day Therapy and Diagnostic Imaging Departments into semblances of a forest and zoo and named them the “Ronald McDonald Enchanted Forest” and “Ronald McDonald Zoo Adventure” respectively. This made the places more conducive to children so that it will attract children instead of frightening them away. In May of that year, special admission kits with McDonald’s branded goodies were introduced specifically at the children ward at KK Hospital so that children being admitted will feel more eased and loved by thehospital.

To mark its 20th anniversary milestone of existence in Singapore in 1999, McDonald's Singapore pledged $1 million to KKH as part of its RMCC program.

McCareUnder the McCare program, McDonald's staff and crew organise regular visits to various children's wards in hospitals. Games and activities are organised to entertain the children. Ronald McDonald further enhances McCare with visits to the hospitals, twice a month. This program basically tries to involve the employees in community service.

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McDonald’s efforts in Education

McDonald's "When I Grow Up" Programme was also initiated, with support from the Ministry of Education with the intention of motivating children towards their choice of ambition.

The Ministry of Education "Careers-in-Industry" Programme was targeted at children at 13 years of age in order to inspire them that a career in the McDonald’s is very rewarding and challenging.

Ronald McDonald Shows in Schools were also conducted regularly in primary schools to teach students in terns of a lot of aspects. For instance, being environmental-friendly, and the aspects of road safety.

Our team went to Qifa Primary school to observe one of these shows and captured the joy of the children. It was certainly an entertaining show which brought a lot of laughter to the students. Ronald McDonald was there with two helpers from McDonald’s’ as well as a well-dressed lady from Leo Bennett advertising agency.

CSR Efforts to the Envionment

Being serving to the community, McDonald’s has also adopted the style of being environmental- friendly to the environment by the use of paper containers rather than the use of formacel which contain CFC (chlorofluorocarbons) which are harmful to the ozone layers. Annual cleanup efforts were initiated at the East Coast Park sponsored by McDonald’s for the Go-Green Efforts.

McDonald’s is always challenging itself as well as to its suppliers about the issues of being environmental-friendly as McDonald’s’s realize the importance of good corporate citizen and also being socially responsible towards the community as a whole.

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Discussion

There is no doubt McDonald’s has benefited the community in Singapore tremendously through its corporate social responsibility. This we have seen by the immense donations they have made (over US1 million dollars), the large number of ill children who have benefited (over 200) and even from witnessing the overjoyed students watching the Ronald McDonald show at Qifa Primary School. Any reasonable person by now would conclude safely that McDonald’s CSR initiatives across the board are highly commendable and this is something our team does not dispute with. The website shows it, the efforts prove it and the joy of the beneficiaries concludes it. A safe ending for our team, one may say and our story is over. Not quite.

It realized something slightly a miss.

Why McDonald is’s so heavily involved in the community in Singapore? why are they so concerned at all about our community? Are not profits the ultimate objective?

To counter bad publicity

It has noted that McDonald’s CSR initiatives in Singapore mainly coincided during times when the company was getting bad press. The year that the RMCC was set up in Singapore – 1989. This was at the time when McDonald’s was facing relentless anti-McDonald’s campaigns in Europe. Negative publicity was spreading throughout the world and harming the image of the company immensely as accusations against it arose. In 1989, the RMCC was also established in the United Kingdom, a notable coincidence.

From the late 1980s, through to the 1990s, McDonald’s worldwide has been beefing up its CSR efforts. This is a strategy which has helped them immensely in retaining customers and preventing what would have been a catastrophic public relations disaster.

CSR initiatives here were a marketing strategy aimed at boosting their public relations. Now at this juncture, sympathizers may say that this is a natural reaction of companies to counter bad press by doing something good, which in McDonald’s case was to contribute to the very areas in which they were accused of unethical behavior.

Had this entire anti-McDonald’s opposition not grown out of control in the late 80s and 90s, would McDonald’s still be the corporate social leader it is now?

Target Audience- Children

The focus of contributing to children is clearly another strategic move made by McDonald’s because their target groups of customers are children and setting a good impression would be important in

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gaining their patronizations. Children are easily impressionable, a trait which McDonald’s has clearly “exploited”. Children are the future, and McDonald’s has recognised that they are an important target for the company. No doubt the children do benefit from the contributions, but clearly it seems more like a business decision than one driven purely out of sincere philanthropy.

McDonald’s visits to schools are not just educational and entertaining sessions for children, but it was observed at Qifa Primary School, there marketing going on; The kids had fun, there was no selling of McDonald’s products or food. There was no “come to McDonald’s” push.

Ronald McDonald, the ever-lovable clown and prime promotion tool of McDonald’s, was present and seemed sincere about teaching the children about fire safety. Even the students were impressed and stated they learnt something. Ronald was happily giving out his McDonald crayons to the kids, to colour their McDonald colouring books, and other McDonald goodies.

Ronald was escorted by a smartly dressed lady from Leo Burnett advertising agency. According to her, she follows McDonald’s on all his School Shows and is his show manager. Why are McDonald’s advertising company incharge of the Ronald McDonald shows? Is this creative advertising on the part of Leo Burnett?

Attitude of top management towards CSR

One of the ways we can see the sincerity of an organization towards giving to the community is by observing the attitude displayed by their leaders. We had no access to the directors but from the information we dug up about Mr Robert Kwan, Managing Director of McDonald’s Singapore, we found that he acts as a mentor in The Youth Challenge, a charitable youth organization which “works tirelessly to provide stimulating programs for young people.” He has also been supportive of the Fun- O-Rama, a fund-raising drive organized by Anglo-Chinese Junior College and even declared it open on 12th February 2000. Another director at McDonald’s, Mr Mirza Namazie, is actively involved with the Darul Ihsan children’s orphanage and various other Muslim children’s charities.

No doubt we can assume that these two men are clearly supportive in their attitudes towards the community (in particular children). However, whether their passion for helping the community and their values are spread through the company is something we were not able to find out.

Employee’s attitude towards CSR

Our contact person at McDonald’s Singapore, Ms Dorine Lai, was very tight lipped about her company’s involvement with the community and refused to give us any more information than was stated on the website stating confidentiality as a reason. Also, she refused us the right to interview her or any of the staff at McDonald’s about McDonald’s community involvement. Her reasoning was that the staff may not be able to answer our questions. This secrecy confounded us.

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In conclusion, our team has gotten the vibes that McDonald’s entire CSR efforts in Singapore are simply a part of the company’s overall marketing strategy.

The question that begs to be answered now is, “What’s wrong with this?

After all, McDonald’s Singapore is not a charity. It is a business, and business is about creating wealth. We feel that McDonald’s Singapore, in contributing to the community, has certainly done a lot of good to the community. So why should we be concerned about the reasons?

Corporate social responsibility is the idea that businesses are accountable for the effects of their actions and should seek socially beneficial results as well as economically beneficial results.

The public felt that businesses should not only be concerned about their profits but also be accountable for any of its actions that might have a negative externality on people, their communities and the environment. Thus over the years, companies worldwide have adopted CSR initiatives, if only to show the “soft side” of their company.

However, in McDonald’s case, it seems that they are using their CSR initiatives not only to show the “soft side” of them, but more likely it seems, they are doing this to pursue their own marketing agenda.

Our report is best summed up by quoting what McDonald’s has said:

“We believe in contributing to the environments in which we operate in” simply because it ensures “Enduring, profitable growth.”

Money, at the end of the day, is the driving force.