Sustainable Competitive Advantage

As our industries continue to develop, more businesses are starting up thus making competition within markets even more aggressive than ever. Most corporations pursue ways to enhance their competitive edge in their respective markets. For many years, business and companies have realized that having exceptional reputations can give them a very important competitive edge in the industry.

Many businesses and company corporations see corporate social responsibility (CSR) as “the intentional inclusion of public interest into corporate decision-making.”(Hsu, 2010) CSR is important because businesses are constructed around trust and foresight. Creating and keeping trust with clients, customers, communities and regulators are not simple and can be damaged or lost easily. For companies to be successful in the long run, companies need to think beyond what is affecting them today to what is going to happen tomorrow. This is not merely about addressing changes to technology or the needs and wants of customers, but also taking into account modifications in social, political and environmental issues. The best example to illustrate the outcome of this strategy is through the case study of McDonald’s Corporation.

McDonald’s Corporation is one of the world’s leading fast food retailers, with “more than 33,000 restaurants serving nearly 68 million people in more than 119 countries every day.” (McDonald’s, 2012) In August 2008, McDonald’s USA opened its first corporate-owned pilot green restaurant in Philadelphia and received Leadership in Energy and Environmental Design (LEED) Gold certification in April 2009.

A particular obstacle McDonald’s had been facing in the recent decades is the punitive environmental criticisms from Special Interest Group, which leads to the many conflicting issue with its Stakeholders. In response to the issues, McDonald’s has set themselves to focus on “five major areas: nutrition and wellbeing, sustainable supply chain, environmental responsibility, employee experience, and community” (McDonald’s, 2012) primarily to improve the corporation’s reputation and to sustain their competitive advantage.

Their vision came to a reality when McDonald’s opened its chain of green restaurants in Germany, Unites States and Jurong Central Park in Singapore. Some of the green attributes of the Jurong Central Park restaurant include energy-efficiency equipment and lighting, high efficiency plumbing fixtures, and permeable pavement and rainwater collection for irrigation. McDonald’s are using this “green building lab” to help refine their green building strategy. The corporation has been awarded a Green Mark by the Building Construction Authority.

The Extended Essay hence aims to explore the effectiveness of the implementation of the Green Movement as a sustainable competitive advantage with the focus on the Singapore green restaurant and therefore answer the research question “To what extent has McDonald’s green movement in Singapore enabled the company to gain a Sustainable Competitive Advantage?” Method of obtaining Data

To measure the effectiveness of McDonald’s Green movement in terms of its improvement with the Corporate Social Responsibility behavior, I will be conducting my investigation using secondary research by collecting McDonald’s Annual CSR report and newspaper articles. Online reviews from critics will also be collected to help me with the understanding effects of the green movement implementation. I will also be using some business tools such as the Stakeholder conflict, Cost Benefit Analysis and Marketing Mix Elements to find out the some analysis to show the data that I collected. These approached will help me to understand the general question when conducting the personal interview and survey with the managers and customers. Then, it will be analyzed using Financial Ratios. Then the data will be analyzed using business techniques, which were taught to us in class.

The key areas I will be researching on are: Has or is the Jurong and the other green restaurant in Singapore attracting more customers as compared to the other McDonalds restaurants in Singapore? Is the investment in the green restaurant actually paying off for McDonalds? I will also conduct an in-depth study on McDonalds mission and vision statement, stakeholder’s conflict, the negative rumors against McDonalds of their non-environmentally friendly ways, and what are the various social causes and environmentally friendly causes McDonalds has associated itself with and wheatear this translates into a competitive advantage for McDonalds?

Initial Review and Stakeholder Conflict

McDonald’s is one of the world’s leading fast food retailers, which serve an average of 109 customers each peak hour in every one of their restaurants across the world. However, since the late 1980s, McDonald’s had been heavily slammed with criticism from the public for its environmental policies and antics. Even though with their widely publicized Annual CRS and Financial Reports, McDonald’s still faces with one of the most frequently asked questions and critics about the business: Are they responsible for the destruction of the tropical rainforests to make more land for cattle ranching?

Critics from The Concordian claim, “McDonald’s every customer is responsible for producing an average of 56.7 gram of rubbish. Consequently, an estimate 6.35 kilogram of trash is generated from food sale alone each peak hour. Thus across the world, at lease 196,821 kg of garbage are being generated every hour.” (The Concordian, 2007) Most Critics argue that McDonald’s contribution to this destruction is mainly through the effects of cattle ranching (as the world’s foremost promoter of a beef-based diet and the largest user of beef), through the growing and transportation of cash crops, and through the production and disposal of thousands of tonnes of packaging materials.

In 1997, McDonald’s UK became embroiled in the McLibel court case (ran for two and a half years and became the longest trial in British history) in which the McDonald’s Restaurants and McDonald’s Cooperation sued Helen Steel and Dave Morris, a former postman and gardener, for libel after they publish a six sided factsheet leaflet titled ‘What’s Wrong with McDonald’s? – Everything they don’t want you to know’.

The leaflet criticized all aspect of the corporation, condemning them of promoting unhealthy diet, exploitation of young children with false advertisement, exploiting their employees and being responsible for environmental damage and ill treatment of animals. The verdict was devastating for McDonald’s as Judge Justice Bell, whom overlooked the entire case, decided that although Steel and Morris had failed to prove their accusation, that McDonald’s destroyed rainforests, caused starvation in the third world or disease and cancer in developed countries. Judge Justice Bell also agreed that the company exploited children, falsely advertised their food as nutritious, indirectly sponsored cruelty to animals and paid their workers low wages: a major blow to the brand in an age of increasing consumer-consciousness.

Since then, McDonald’s Cooperation across the world has committed to a number of initiatives to improve its corporate social image by running an environmentally improved marketing campaign to enabled the company to clean up its act and gain a sustainable competitive advantage, hence, the implementation of the McDonald’s Green Movement Strategy amongst many other strategies. Mission and Vision Statements In every business, the Mission and vision statement are formulated to “declare the organization’s overall purpose and form long term aspiration” (Hoang, 2009) This aids the organization to form the foundation for setting the objectives of their business. Bellow are the Mission and Vision Statement quoted from the Official McDonald’s website:

Mission Statement “McDonald’s brand mission is to be our customers’ favorite place and favorite way to eat. Our worldwide operations are aligned around a global strategy called the Plan to Win, which is centered on an exceptional customer experience – People, Products, Place, Price and Promotion. We are committed to continuously improving our operations and enhancing our customers’ experience.” (McDonalds, 2012)