[Type text] [Type text] [Type text] Arshad Mohammed 1264734
Bachelor of Business
Business in Context
13 May, 2013, 12noon
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31. Introduction Ã¯Â¿Â½
32. Discussion: Ã¯Â¿Â½
32.1 Relevant aspects of the business environment Ã¯Â¿Â½
42.2 Stakeholder interests Ã¯Â¿Â½
52.3 Ethical business decision making Ã¯Â¿Â½
73. Conclusion Ã¯Â¿Â½
74. Recommendations Ã¯Â¿Â½
8Appendix (Reflection) Ã¯Â¿Â½
Fast food, there is no doubt that this industry has rapidly commercialised and become expanded to the point that there is one outlet around every corner.
Restaurant Brands (NZ) Ltd is one of the examples of this expansion by adding Carl's Jr to their list. Carl's Jr is a fast food chain that serves big on meat for cheap. However our client has faced criticisms on their current business model with accusations that they are targeting low-income earners with their high calorie meals. The purpose of this report is to solve the dilemma on whether Carl's Jr are truly the targeting the lower socio-economic. We will employ the use of ethical theories and stakeholder analysis, to help us analyse the issue and provide a better solution for Carl's Jr and the stakeholders.
2.1 Relevant aspects of the business environment
A business environment is all factors both internal and external that can potentially influence a business's operations, which can affect the performance of a business immensely (Samson, Catley, Cathro, & Daft, 2011). The two major factors in the fast food industry are the political and the socio-cultural. Firstly, the latter plays a larger factor in this industry. This is because it displays the behaviour of consumers (Samson et al., 2011). Carl's Jr has opened up stores in the poorest regions in Auckland (Gibson, 2012). People with low income are restricted in spending their money, they earn less therefore they spend less. When a restaurant like Carl's Jr provides fast meals at low price, this will attract people with low incomes. Western ethnic groups are rather conscious about what they eat and eat balanced meals. Whereas most groups that live in these poor regions consume a lot of food. Targeting these groups make Carl's Jr's business model profitable. However the downside to this business plan is shocking. Fast food causes serious health issues. Obesity rates at these regions of Auckland spiked up to thirty-eight per cent from thirty-three in 2005 (Johnston, 2013).
The second aspect that can potentially have an impact on the business environment is the political factor. Businesses have to be aware of this as it legally intervenes with business operations (Samson et al., 2011). Factors like food labelling laws and fat tax can cause subsequent problems for Carl's Jr. Food labelling laws currently do not require labelling if the food is made and packaged in front of the customer (Ministry for Primary Industries). Therefore the nutritional information given on the company's website is adequate. However, future regulations like menu labelling could pose a threat. Even though having nutritional information printed would not solve obesity problems, it will gain customer confidence. The more confident the customers are, the more he will prefer that product to its competitors. Having such labelling laws, customers will be able to choose what they eat by clearly seeing the contents of the product. Fat tax, for Carl's Jr this would pose a serious threat, as most of the menu is made up of high calorie products. So if tax increases the price of burgers, then this would cause them to lose customers because the lower socio-economic groups are price sensitive and they would seek out other cheaper alternatives (Mason, 2012).
2.2 Stakeholder interests
A stakeholder is any party that has an interest in the business. This can either have positive or negative impact and be affected by the decisions made by the business (Freeman, 1984).
Carl's Jr is owned by Restaurant Brands, which own other fast food chains like Pizza Hut in New Zealand. The owners are internal stakeholders and the primary stakeholders. As owners, Restaurant Brands have high power and legitimacy over their decisions, which affect other stakeholders involved. They have the power to choose what they sell and whom they sell it to. They are focused on their main interest, which is to have a successful business and growth in profits. The growth in profits not only benefits the owners but also the employees and the government generates tax from these earnings.
The second primary stakeholders are the customers. The customers have a moderate power and legitimacy over the business. This means that they are kept happy and informed. It is important that businesses meet their customer's needs, by providing what they need or else business would fail to make a profit. Carl's Jr has understood the needs of their customers and has delivered. Individuals with low incomes need food that will fit their budgets, so cheap fast food is perfect for them. This satisfies the customers needs and provides an easy alternative to cooking for people with those lifestyles.
The government is not a primary stakeholder, but the decisions made by the government will have a direct impact on businesses. The government makes laws that regulate what businesses can do. The current New Zealand government has moderate power and legitimacy over businesses. Being a neoliberal party, it interferes less with the markets and lets businesses grow. The government's main interest is that a successful business creates a successful economy; they can generate money from taxes and create employment opportunities. However a government is also responsible for its citizens. High calorie food would eventually pose a major health risk, which the government would have to pay for. Government is in charge for facilitating health care, spending millions of tax dollars each year to combat diseases (obesity and diabetes) that are caused mainly by fast food.
2.3 Ethical business decision making
Ethics in business is important as it helps create a positive and better image for the company and gains the trust of customers. Businesses that are ethical, focus on doing what is right, not what brings in more profits: by doing right businesses can exercise corporate social responsibility. This is when businesses show duty to the society than just to make profits (Bovee & Thill, 2013).
Kantian ethics in business put emphasis on the fact that organisational decisions are made by individuals. After all it is them who make up a business and who create products and services for other individuals (Sansbury, Shaw, & Barry, 2009). Could Carl's Jr be held responsible for being associative with obesity? They create high calorie burgers and target the poor areas of Auckland. Kant's golden rule is "Do unto others as you would have them do unto you". It is clear from Carl's Jr's business model that they do not follow this rule. An example of this would be racially profiling the lower earning groups for business. They have figured out that poorer people would buy their products on a regular basis, than people who are reasonably well off. The rich would not like it if they were always robbed or seen as a pot of gold, then why is that businesses see the vulnerable as a pot of gold and rob them of both their health and wealth. Targeting the poor just as a means to make a profit, this clearly violates Kant's rule that individuals should not be seen as means to an end. People could advocate against such companies that target the lower class. Government could help to implement labelling laws and fat tax. Labelling laws would alert customers about what does in their food. Fat tax could have a positive impact as it will raise the price of fatty food and subsidise fruit and vegetables instead. This will have a negative impact on Carl's Jr as tax will cause prices to rise. If governments could educate citizens on healthy meal choices and also protect people from such profiling, this would greatly help the government save money.
Carroll's Broad view explains how a business can act socially responsible. Businesses need to firstly be economically responsible and be profitable. Secondly, obey the laws set. Thirdly, be ethically responsible and the last one is to be philanthropically responsible (Carroll, 1991). The first two elements are fully fulfilled by Carl's Jr, as they are profitable and also obey the laws. They however lack ethical responsibility, which became evident when Carl's Jr's boss Andy Puzder said that they are not the food police and that people can eat whatever they want. He mentioned that their business model does not target the lower socio-economic but admits that they offer services for a certain socio-economic group (Adams, 2013). However, the downside is that in the pursuit of chasing that profit companies might damage their reputation, Carl's Jr have been criticized for using racy adverts that objectify women to lure in "hungry young men". They should promote their healthy menu instead; this would give them a cleaner and healthier image. As far as being philanthropic, they could open up a charity house, like McDonalds. They could sponsor a sports team from local communities, or donate sports equipment to schools. At least this would be a start to show that they care.
The purpose of this report was to find out whether Carl's Jr was targeting the lower socio-economic for profit, after analysing the stakeholder interests and applying relevant ethical theories it has become quite evident that Carl's Jr may have targeted the poor for their financial growth. It is also evident that Carl's Jr does not act ethically or shows responsibility towards the wider society.
As an independent consultant I would recommend Carl's Jr to:
Show more transparency with their business model, by showing who they target
Introduce more healthy items on the menu
Show a sense of duty toward customers and have nutritional information on packaging
Be more socially responsible - get involved with the community
Redesign their image and have mild advertisements
These changes could change people's current perception toward the company and also make them more ethical and socially responsible.
My development over the last semester has expanded quite well. At first my attitude towards this paper was not serious at all. Just because it was a level five I though it would be a walk in the park like some of the other papers I did last year. It was quite obvious from the first lecture that this paper was not easy.
This paper involves a lot of critical thinking, which at first seemed very difficult. I believe my critical thinking has broadened by doing the weekly-required reading and the annotated bibliographies. I was able to think faster and knew exactly was going on in the lectures and tutorials. I admit some days due to poor time management I could not get my readings done, but having an annotated bibliography due every week gave me the self-motivation to get my reading done, so I could know what to write. Learning ethical theories gave knowledge a new dimension; it made me think rationally and also made me act that way. It has made me confident to reflect on some current global situations, as to why it is happening and how I should react to these changes. Now that I know where I stand ethically, it has become easier to communicate with others, share my ideas, to absorb and to critically think where they stand. This came in use when we were put in groups at the beginning of the semester. At first I did not know much about my teammates, just their name and what school they went to. There was very little communication amongst us; we only spoke when someone needed something or when we had a group activity. As we got to know each other mainly through the group activities it gave me some idea of what their ideologies were. Most of us were on the same page with where we stood ethically. I do think that I should have been more involved with the group. I sometimes held back from saying things, just because I thought that it did not sound right. Overall, I think I was a useful team member, I contributed equally as everyone in our team did. Responsibilities were evenly spilt and everyone had a say. I think as an effective communicator, I was all right. Our group presentation went well and we managed to score 4/5. Oral presentations have always been hard for me. The lecturer's feedback, did apply to me; I was one of those who did not make enough eye contact with the audience. This may have cause me to lose connection with the audience, to be more effective I must keep the audience connected and also be well prepared, just in case they ask me questions.
I think I have developed in areas that help me think a lot clearly. In terms of my future development, I have to focus on interacting and communicating with team members more and also get my ideas across. I will also have to work at my oral communication skills, as a university student who will later enter the work force; I will have to do oral presentations. So learning to be an effective communicator will certainly benefit me a great deal.
Adams, C. (2013, March 1). We're not food police, says Carl's Jnr boss. (APN Holdings NZ Limited) Retrieved May 12, 2013 from New Zealand Herald: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10868476
Bovee, C., & Thill, J. (2013). Business in action. Upper Saddle River, New Jersey: Pearson Education
Carroll, A. B. (1991). The pyramid of corporate social responsibility: toward the moral management of organizational stakeholders. Business horizons, 34(4), pp. 39-48.
Friedman, M. (1970). The social responsibility of business is to increase its profits. The New York Times Magazine, September 13, pp. 122-126.
Gibson, A. (2012, Feburary 15). Fast food 'targets (Auckland's) poor'. (APN Holdings NZ Limited) Retrieved May 11, 2013 from New Zealand Herald: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10785524
Johnston, M. (2013, April 24). South Auckland obesity sparks healthy-eating call. (APN Holdings NZ Limited) Retrieved May 11, 2013 from New Zealand Herald: http://www.nzherald.co.nz/lifestyle/news/article.cfm?c_id=6&objectid=10879441
Mason, C. (2012, December 12). Fat tax would benefit Kiwis - study. (APN Holdings NZ Limited) Retrieved May 11, 2013 from New Zealand Herald: http://www.nzherald.co.nz/lifestyle/news/article.cfm?c_id=6&objectid=10853536
Ministry for Primary Industries. (n.d.). Understanding food labels. (New Zealand Government) Retrieved May 11, 2013 from Food Smart: http://www.foodsmart.govt.nz/whats-in-our-food/food-labelling/understanding-food-labels/
Samson, D., Catley, B., Cathro, V., & Daft, R. (2011). The environment and corporate culture: Management in New Zealand. South Melbourne, Victoria: Cengage Learning.
Sansbury, G., Shaw, W., & Barry, V. (2009). Normative theories of ethics. In G. Sansbury, W. Shaw, & V. Barry, Moral issues in business (pp. 71-78). South Melbourne, Victoria: Cengage Learning.
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