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Ethical Consumerism (A Case Of Food And Drinks Business) Add in library

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Question:

Identify the whether the ethical consumerism has changed the companies tactics and consumer buying behvaiour?
 
 

Answer:

Executive Summary

The major purpose of this study is to identify the whether the ethical consumerism has changed the companies tactics and consumer buying behvaiour.  Ethical consumerism is word that does not only defines the honesty and fair trade in fact it is more related to the quality of food and pricing of the products etc. the chosen company here is McDonalds who over the years has come up with new ideas and ventures to support its ethical view. Company follows the utilitarian approaches where the company has been able to gain the large customer base.

Apart from that, McDonalds uses halal food, positive form of advertising and value pricing are some of the major ingredients of ethical consumerism which helps the McDonalds to stay at the top positions. Besides that, with the of secondary research it has been found that, company is strictly using the ethical form of the pricing called value pricing. On the other hand company fails to improvise its advertisement which is deceiving in past. However, with the help of quantitative data analysis, it has been found that, company is able to reach large customer base because of value pricing, and quality of offer. Most of the respondents within the primary research are not happy with company services which are poor.

 

Introduction

In the current contemporary business scenario, ethical consumerism is one of the most important part which affect the organizations strongly. There were times when ethical consumerism was a philanthropic word but currently the ethical consumerism is removing the concept of stereotype of selling of products as per the personal choice.  Currently ethical consumerism is defined as consumer personal choice for consumption based on the ethical issues like human rights, social justice and animal welfare (Borzaga and Becchetti, 2010).  The study will deal with various aspects of issues in food drinks of the McDonalds. There has been numerous examples the food chain companies were not used to ethical consumerism within their business. The researcher will also go through the various figures and tables which show that ethical consumerism in food and drinks industry is growing since 2006 (Carroll, 2009).

Apart from that, the study will also focuses on the moral principles and standard have been followed within the  food chain company or not. UK is one of the largest food markets where the study will take places (Crane et al. 2007).  With the help of various opinion and survey the study will try to focus on the consumer behaviour towards the food items. Consumer international is one of the regulators of the ethical consumerism.

 

Ethical Consumerism

The term ethical consumerism is being used by the UK magazine in 1989 which suggest that fair trade.  Ethical consumerism is one of the major global moralities based ethical system where purchasing decision is made based on the moral choice (De Cremer and Trenbrunsel, 2011).  Ethical consumerism is not only limited charity, donations or to fair trade activities but is also related to the price, quality and payment techniques are other factors that is related to the ethical consumerism of the food industry (Maignan and Ferrell, 2008).

As per the UK food statistics 2013, total agric food sector contributes more than £97.1 billion which approximately 7.5 of national GDP.  The food prices in the recent times have been risen by 12% since 2007. Most of the retail food chain companies like McDonalds and Subway has major chain of food worldwide. Since the 1999 to 2009, ethical consumerism in the food and drinks market is growing (Mcdonalds.com, 2015).

Ethical consumerism in the food and drinks industry has been changes as per ethical consumption of the customers.  Food industry was involved in the several law suit and other legal cases in the course 70 years of the business (Dillard and Dujon, 2008).

Ethical consumerism in food industry is been growing as the most of the fast food companies and restaurants are trying to use the recyclable products which will lead in the path of sustainability.

Ethical food and Drink

1999 £m

2008 £m

Organic

390

1980

Fair trade

22

635

Rain forest

-

369

Farmers markets

131

220

Free range eggs

452

768

Freedom foods

173

415

Sustainable fish

189

174

Tuna fish

172

51

Freedom food 

37

128

Total

1566

4371


Graph 1: Ethical consumerism in Food chain industry

(Source: Garsten and Hernes, 2008, pp-344)

Company review

McDonalds is one of the largest food chain in the world with revenue worth of 28 billion and with 500,000 employees in worldwide.  McDonalds and other fast food industry like subway and the KFC and burger king are known of the giants of the world who follows the ethical form of consumerism in order to gain the confidence of the consumers (Griseri and Seppala, 2010).

Utilitarian Approach: Most of the companies are strictly following the utilitarian approach which will lead to greatest good for the large number of populations.  One of the major examples is McDonalds has increases the wages of the employee every years in the form of designation and salary (Hartman and Werhane, 2009).  Apart from that, company uses participative form of leadership and gives fair chances for every one opinion from customer to workers regarding any change (Langlois and Schlegelmilch, 2009).

Some of the of the ethical consumerism approaches used by the McDonalds

Value based Pricing: McDonalds follows value based pricing methods pricing for the products and service sold by the company to their consumers (Furunes and Mykletun, 2009).  

Figure 1: Values based Pricing strategies used by McDonalds

(Source: Kline, 2010, pp-12)

Companies

McDonalds $

Burger king $

Big Mac burger

3.99

5.50

Cheese burger meal

5

6.20

Chicken meal

5.59

6.19

Bacon burger meal

4.49

5

Family chicken meal

12.36

15.10


Graph 2: Value pricing used McDonald in compare to other companies

(Source:

McDonalds value pricing

Value addition %

Price

11.1%

Variable cost

7.8%

Volume

3.3%

 Fixed cost

2.3%


Halal food: McDonalds uses halal meat at its fast food centers outlets. Halal meat is slaughter by halal method which is religious slaughter. In nearly more than 100 outlets of the McDonalds around the UK are serve the halal approved chicken (Kotler and Lee, 2006).  The sandwich served in stores has been contained halal meat since 2007. British Muslims population is been growing from 3% to 7% in 2013.  Feedback from the consumer are being one of the major indicators which shows that, consumer are willing to purchase halal food.  As per the Food standard agency report of 2012, 975 of cattle and 965 of poultry  slaughter using the halal method  in UK because of the demand of fast food chain companies. EU union is carrying out the study to examine the feasibility of introducing the labeling on meat to specify  how animal is killed which has been offered by the various stores at McDonalds (Mcdonalds.com, 2015).

Ethical advertising: Ethical advertising comprise of the honesty, social consciousness and the environmental consciousness. McDonalds has been very much controversy for its advertising but company has recently change its policy  of using the social and environmental  consciousness advertising (Lawton and Lasthuizen, 2011). McDonald uses solid, permanent and constructive ethical programmes which will help the company for years to come.  For instance in 2003, McDonalds started  a nationwide advertising campaign in UK to promote healthy leaving and eating which includes removal of super size option , changing fires and sola with milk and mixed fruit juice in a happy meal (Birch and Moon, 2008).

Recently, McDonalds healthy salads with chicken have also been introduced with lose fat menu option in their advertising. McDonalds has stopped using the children, patriotism and other military person from their advertisement in order to promote the product ethically (Braley, 2008).

Fast food chain

Ethical advertising

McDonalds

15.35%

Burger King

7.45%

KFC

13%

Subway

9%

Pizza hut

11.2%


Graph 3: Ethical Advertising of the fast-food chain company

(Source: Dev et al. 2009, pp-213)

However, there has been serious allegation has been made against the McDonald in recent years for Instance: McLibel UK in 1990, environmental campaigner held and Dave has allegedly kept the defamation case against the McDonalds (Coughlan, 2009). The trail ran for more than two and half years and has become one of the longest trails of English era. McDonalds exploit the children advertising by exploiting the children with their misleading advertising.

Apart from that, several cases against the KFC and McDonald are being given in the court which against the selling their burger with fat free note which is unethical consumerism. This has increased the obesity problems in worldwide (Collins and Schultz, 2008). 

 

Opinion Survey

While conducting the opinion survey 10-15 respondents are taken from the GSM London. The opinion survey will be used on the primary and quantitative form of questionnaire in order to understand the actual thoughts of consumer on McDonalds (Carey, 2006).

1.How often do you buy from the McDonalds?

Options

No of respondents

Total respondents

Response %

Once in a week

5

15

33%

Twice in a week

4

15

27%

Once in a month

3

15

20%

Twice in a month

2

15

13%

More than twice month

1

15

7%


Graph 4: Purchasing from McDonalds

Findings and Analysis

From the above , it has been found that most of the consumer are  purchasing the  McDonalds products more than twice a week with 27%. This  shows that demand of burger of McDonalds’ is been rising with every  years although there has been strong competition in the market (Braley, 2008).

  1. How far do you agree that McDonald’s charges value pricings?

Options

No of respondents

Total respondents

Response %

Strongly Agree

6

15

40%

Agree

4

15

26%

Neutral

3

15

20%

Disagree

1

15

7%

Strongly Disagree

1

15

7%


Graph 5: Pricing of McDonalds

Findings and Analysis

Around 40% of the respondents believes that McDonalds ahs value pricings.  Since 2007, company has changed its pricings strategies from penetration to value pricing in order to create universal appeal for their customers. This has increase the customer base for the company from 11.07% in 2008 to 2013% (Dodds and Joppe, 2006).

  1. How far do you agree that advertising campaign of McDonalds’ is ethical?

Options

No of Respondents

Total respondents

Response %

Strongly Agree

3

15

20%

Agree

5

15

34%

Neutral

4

15

26%

Disagree

2

15

13%

Strongly Disagree

1

15

7%

 

Graph 6: Advertising campaign of McDonalds

Findings and Analysis

From the above, it has been found that, around 34% of the respondent agree that advertising campaign of the company is more ethical but more than 13% of respondent still believes that McDonald does not uses the ethical advertising. Company has uses clown to promote and mark its brand value.

  1. How far do you agree that McDonald’s products meet their ethical standard?

Options

No of respondents

Total respondents

Response %

Strongly Agree

2

15

13%

Agree

5

15

34%

Neutral

4

15

26%

Disagree

1

15

7%

Strongly Disagree

3

15

20%


Graph 7: Meeting the Ethical standard

Findings and Analysis

Around 34%  agrees that, McDonalds produce the products which meet the ethical standard (Fox, 2007). Some of the products like use of Halal meat and value pricing shows that compnay is able to meet the standard of ethical consumerism.

5.Which factors needs more emphasis for better ethical value of products? 

Options

No of respondents

Total respondents

Response %

Quality of food

4

15

26%

Organic products

5

15

34%

Advertising

3

15

20%

Recyclable packaging

2

15

13%

Payment options

1

15

7%

 

Graph 8: Factors needed to give more emphasis for McDonalds

From the above, around 26% and 34% respondents totally agree that quality of food and advertising campaign  products are some of the major factors that needed to give more emphasis for the products.

 

Conclusion

With the help of the  secondary form of research , it has been found that McDonalds is able to register their name in ethical form of consumerism by introducing the halal meat , value pricing and positive advertisement that has able to gain the large customer base. Although company has been criticized for several advertisement  and use of child within their advertisement campaign but company has recently has come up with new form of advertisement campaign such as salads and fruit makes healthy and reduce the obesity. Apart from that, primary research has helps to understand the actual thought of the customers regarding products.

As most of the consumer are agree that company is able to generate value pricing products and also has been able to meet the ethical standard as promised by the company. However, most of them has also feel that advertising is one of the major controversial area which still ha not be improved. Company uses utilitarian approaches while following the ethical consumerism. There been ample evidence which shows that, company is looking to generate the large customer base via introducing new ethical and sustainable products and packaging like paper packaging etc. During the time of primary form of research, some of code of conduct has been flowed which include maintaining the anonymity   of the respondents.

 

Reference List

Books

Borzaga, C, and Becchetti, L. (2010) The Economics of Social Responsibility. 6th ed. New York: Routledge.

Carroll, A. (2009) Business Ethics: Brief Readings on Vital Topics, 3rd ed. London: Routledge.

Crane, A. et al (2007) CSR: Readings and Cases in a Global Context, 6th ed. Sydney: Routledge

De Cremer, D. and Trenbrunsel, D. (2011) Behavioural Business Ethics: Ideas on an Emerging Field, 4th ed. New York: Routledge

Dillard, J. and Dujon, V. (2008) Understanding the Social Dimension of Sustainability. 6th ed. London: Routledge.

Garsten, C. and Hernes, T. (2008) Ethical Dilemmas in management, 7th ed. London: Routledge.

Griseri, P. and Seppala, N. (2010) Business Ethics and CSR. 4th ed. New York: Wiley

Hartman, C. and Werhane, P. (2009) The Global Corporation: Sustainable, Effective, Ethical Business Practices, 3rd ed. New York: Routledge

Kline, J. (2010) Ethics for International Decision-Making in a Global Political Economy. 6th ed. London: Routledge.

Kotler, P. and Lee, N. (2006) Doing the most Good for Your Company. 5th ed. Canada: Wiley

Lawton, A. and Lasthuizen, K. (2011) Ethics and Management in the Public Sector, 6th ed. Berlin: Routledge.

Journals

Birch, D. and Moon, J. (2008) Introduction; JCC theme issue: corporate social responsibility in Asia. Journal of Corporate Citizenship 13: 18-23

Braley, S. J. F. (2008). Ethics incorporated: Department managers set and enforce guidelines. Meetings & Conventions. 36(1), 58-66.

Bucaro, R. C. (2007). Tackling the ethics question in business. Club Industry. 17(1), 14.

Campbell, J. L. (2006) Institutional Analysis and the Paradox of Corporate Social Responsibility. American Behavioral Scientist 49(7): 925-938

Carey, R. (2006). Prominent players weigh in on the big issues. Successful Meetings. 50(1), 47-50, 55-56.

Carroll, A.B. (2008) The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders. Business Horizons 34(4): 39-49

Collins, A. and Schultz, N. (2008) “A Review of Ethics for Competitive Intelligence Activities,” Competitive Intelligence Review, vol. 7, no. 2, pp. 56-66.

Coughlan, R. (2009). An analysis of professional codes of ethics in the hospitality industry. International Journal of Hospitality Management. 20(2), 147-162.

Dev, C. S., Brown, J. R. and Lee, D. (2009). Managing marketing relationships: Making sure everyone plays on the team. Cornell Hotel & Restaurant Administration Quarterly. 41(2), 10-20. (topic 5)

Dodds, R. and Joppe, M. (2006) CSR in the Tourism Industry: The Status of and Potential for Certification, Codes of Conduct and Guidelines. Study prepared for the CSR practice, Foreign Investment Advisory Service Investment Climate Department. 52- 63.

Fox, J. (2007). Approaching managerial ethical standards in Croatia's hotel industry. International Journal of Contemporary Hospitality Management. 12(1), 70-74.

Furunes, T. and Mykletun R.J. (2009) Age Management in Norwegian Hospitality Business. Scandinavian Journal of Hospitality and Tourism 5(2): 116-134

Langlois, C. and Schlegelmilch, B.B (2009) Do Corporate Codes of Ethics Reflect National Character? Evidence form Europe and the United States. Journal of International Business Studies 21(4): 519-539

Maignan, I. and Ferrell, O.C. (2008) Measuring Corporate Citizenship in Two Countries: The Case if the Unites States and France Journal of Business Ethics 23(3): 283-297

Websites

Mcdonalds.com, (2015). Home :: McDonalds.com. [online] Available at: https://www.mcdonalds.com/us/en/home.html [Accessed 25 Feb. 2015].

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