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Key Topics
- Requirement
- Solution
- ABSTRACT
- INTRODUCTION
- ANALYSIS OF ORGANIZATIONAL STRATEGIES
- HOW WELL ARE THEY FOLLOWING THEIR SOCIAL RESPONSIBILITIES, AGENDAS AND VALUES?
- PRUDENCE IN CORPORATE REPORTING
- SITUATION HANDLING OF KFC AND MCDONALDS FOR TAX SAVING ACTIVITIES
- POSSIBLE ETHICAL TEST
- Conclusion
- REFERENCES
Requirement
compare contrast between Mcdonalds and KFC.its for 2000 words harvard style academic journal style
Solution
ABSTRACT
The following paper will talk about two giants of the fast food market, which have been serving millions and billions of people for years with their "Finger licking' Good" and "’ I’ m Lovin ‘It’" slogans i.e. KFC and McDonalds respectively. This paper will talk about their annual reports and discuss the report by using certain standards required for comparing the annual reports. The paper will also talk about the social responsibilities that these companies’ need to fulfil and certain other responsibilities related to the environment. The report will set a good example of how stakeholders get affected by Annual reports and the paper will discuss various loopholes in their annual reports and try to find possible solutions.
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INTRODUCTION
The annual report is one of the most important components of any business company or franchise. The annual report as the name suggests gives the stakeholders an idea about the progress of the company in a year. One of the most important things to keep in mind is that annual report is not an informal piece of information that can be published like advertisements. These annual reports have to follow certain protocols and regulations that are set by various governmental and non-governmental organizations, so that no company produces fake annual reports and deceive the stakeholders. The annual reports include various components that describe the progress of a company such as financial, managerial, human resource management and many others.
The annual report not only helps the stakeholders but it also helps in keeping track of a company's progress and everything is revealed in a proper manner. It is peculiar to notice that there have been certain instances where KFC and McDonalds have tried to cover up their huge amounts of profits in order to avoid taxations and hence, providing their stakeholders misleading numbers.Now, after understanding the basic idea related to the annual reports, it is important to analyze the background of these two companies. Firstly, we will talk about KFC then McDonalds.
KFC was founded in Kentucky, USA. KFC is a specialist in the fried chicken market and it was founded 86 years ago by Harland Sanders and as of 2012, KFC has more than18, 880 outlets in more than118 countries. It is known as the second largest food chain in the world after McDonalds. KFC is also known as one of the first food chains to expand internationally and its first outlets outside the USA were in Canada, UK, and Mexico. It is a subsidiary under the banner of Yum! Brands
McDonalds was consolidated in the year 1940 in San Bernardino, California in the USA. It is known as the largest fast-food chain in the world and it serves a staggering amount of customers each day exceeding 69 million in more than 119 countries with the help of 36,000 outlets. The franchise opened as a small barbecue restaurant in the USA and was started by Maurice and Richard McDonalds. Most of the revenue for the company comes from renting, fees given by the franchises, royalties, and revenue from the restraints operated by the company. One more exceedingly unique quality of McDonalds is that it is the second largest company after Wal-Mart for giving the largest number of employment and around 1.9 million people work in McDonalds.
ANALYSIS OF ORGANIZATIONAL STRATEGIES
a.) Vision/ mission of the company
Components/companies KFC (Guna, N.D.) McDonalds (McDonalds, 2010)
Vision To sell food to money and health conscious consumers and provide them a fast and friendly environment. To be a modern and progressive company giving burger services with top quality, great taste and providing great lifetime experience.
Mission Their mission is to improve stakeholder’s Value, profits and delivering sustainable growth every year To be the positive force for their customers, people, communities and our Earth
1. Organization’s values- “An organizational value is a belief that a particular kind of belief is preferred over a contrary or an opposite method of conduct” (1973, The Nature of Human Values).
Company/component KFC (KFC, 2015) McDonalds
Values Cleanliness , good hospitable ,taking accurate orders ,Maintaining the best standards,
high quality, Speedy Service Good food, good sources of food materials and other things, good planet by being environment-friendly, good people- providing everyone opportunity to grow.
b.) Sustainability/ social responsibilities
Components/company KFC McDonalds
Social responsibility Part of world hunger relief movement, volunteer for good and social causes, giving back to society by cause-related marketing efforts. Providing employments, promoting diversity, providing training, self-development programs, participated in climate pledge, sustainable beef production.
Environmental responsibility Using paper-based packaging, agreement on environment protection, water conservation, Waste recovery, greener buildings. Managing the energy consumption, reusing water, recycling the waste and efficient restaurants.
2. Corporate social and environmental analysis
a) KFC’s environmental responsibility: They have been part of several projects such as the carbon disclosure project, certification from Carbon Trust and have been ranked KFC at 308 for sustainable working in the Newsweek green rankings.
b) KFC’s Social responsibilities: One of their best qualities has been the eagerness to be one of the major food donation companies to food banks and many other charitable organizations.
c) McDonald’s Environmental responsibility: McD has aimed to achieve an increment of 20% in the energy efficiency sector in all of its company-owned restaurants and increase the in-restaurant recycling up to 50%.
d) McDonald’s Social responsibilities: One of the prime responsibilities taken up by McD has been the motive for improving the lives of children through the Ronald McDonalds House charity and the need of education in every community and physical activities.
Thus, it can be said that they have differences in the way they approach environmental responsibilities because on one hand KFC looks for doing good to the external environment but on the other hand, McD has focused more on the in-restaurant improvements. Anyhow, they have some similarities also and some of them are energy efficiency, recycling the waste and helping the children and community.
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Place Your OrderHOW WELL ARE THEY FOLLOWING THEIR SOCIAL RESPONSIBILITIES, AGENDAS AND VALUES?
KFC
KFC possess a very high CSR value that can be understood from the discussion from the previous section but it is sad to say that even after having several policies and different programs for dealing with the suppliers, there were many loopholes in their network of the supply chain. Now, this definitely has lead to degradation of KFC’s reputation which has resulted in lowering their growth as well as sales. It is important for KFC to focus on having certain sustainability programs and for this it is essential that they launch programs which could help in auditing all its suppliers from a close range.
More than that, the employees should be given the privilege to validate any of the food items before they are been taken for serving the consumers. It is essential to teach them the difference between the stale and fresh food products. Yes, there is no doubt that the company has been doing really well in being philanthropic; but then it will of their own good if they come forward to help people, who have been affected by the natural calamities. KFC’s secret recipes have been successful in winning hearts of millions of people around the globe but then the company should focus on making a really strong position in the field of sustainability (Sahoo, 2016).
McDonalds
The CSR initiatives of McDonald’s have been really considerable. McD has been really effective in acknowledging the various interests of its stakeholder groups which include both the communities and the investors. But just like KFC, there CSR is also not 100% effective as they have not been successful or let us say have been partially successful in satisfying its employees and the customer interests and they are definitely one of the major stakeholders in their business. Hence, it would be really great if McD thinks over its CSR efforts and come up with something beneficial for the customers and its employees so that all of its stakeholders remain happy and content. Now just for an example, McDonald’s should focus on improving the strategy of giving compensation to its employees in order to satisfy them and promote the workers for working more efficiently. One other perspective that McD can cover is improvisation in the field of product innovation in order to produce healthier foods and it will definitely help them in satisfying the needs and concerns of their customers (Smithson, 2015).
PRUDENCE IN CORPORATE REPORTING
It is important to keep in mind that every accountant working for some big company shall have a sound professional judgment system wherein he can provide with an authentic, relevant and trustworthy financial report. It is important that none of the things is overestimated, underestimated or even missed from the final data as it can result into catastrophic differences on the final decision made by stakeholders.
As far as McDonalds is concerned, it is quite astonishing to analyze that the accountant most probably under the supervision of higher officials had quite smartly tried to cover up their international taxes by literally cutting down half of the billions of taxes from their Australian franchises (Tribune, 2015).
Whereas on the other hand, KFC also portrayed a much lower tax amount in their annual report to be paid when actually they were required to pay more than that in India.
SITUATION HANDLING OF KFC AND MCDONALDS FOR TAX SAVING ACTIVITIES
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It is really important to understand the example of Enron which was at a time, one of the top five companies in the US. It was no able to present the annual report in a proper manner and had various confusing financial statements, overvaluation of the balance sheet and many other unethical practices and it finally collapsed. This example tells the importance of having a proper and ethical annual report for a company in order to progress.
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Anyhow, it is human tendency to commit mistakes but then the companies should be smart enough to apologies and ask for pardon from all its stakeholders rather than backing the false decision which was not done by Enron (Economist, 2015).
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Now on comparing this with the KFC, it is really good to see that KFC decided not to back its mistake and had dually accepted their fault and paid more than half of the taxes and assured to pay the remaining taxes also in due time and stated technical reasons for not being able to pay the taxes earlier.
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While on the other hand, McD has been trying to cover up for its taxes and McD’s Australian spokesperson instead of accepting the fault, stated that they had paid in excess of $500 million for taxes in last five years. The company is getting chained up from several ends and they are facing scrutiny from several countries (Chung, 2015).
POSSIBLE ETHICAL TEST
KFC
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Deontological: right thing for them should be to look into the acquisitions carefully and pay the taxes and punish the ones who are guilty.
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Virtue: stakeholders will feel that the company is only concerned about saving money.
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Libertarianism: Stakeholders can make a fairer decision themselves.
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Utilitarianism: Possible consequences after this issue could have been downfall in growth
McDonalds
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Deontological: They should have cross-checked their records before coming out with explicit and stern statements when more than one country was accusing them.
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Virtue: people may take it as arrogance.
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Libertarianism: Stakeholders can decide on their own about their interests.
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Utilitarianism: Probably this can lead to loss in good share price and degradation of the good will.
Conclusion
It can be concluded that both the companies have faced similar kind of accusations and they had not been able to display the accurate amount of taxes in their reports which may be negligence or intentional. Hence, the importance of a proper and ethical annual corporate report is really essential and it can be understood from the case of the famous company, Enron and they had o declare themselves as bankrupt. KFC and McDonalds also have been progressing vaguely and away from their own agendas and have failed to provide correct information in their annual report.
A Company’s annual report showcases its performance of a particular year. The stakeholders are able to take vital decisions but if these reports are not correct, then it can be said that the company is playing with the trust of all its stakeholders. It can also be concluded that they are doing unethical business and it can make them lose credibility within a short span of time.
REFERENCES
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1) CHUNG, F. (2015) McDonald’s dodging half a billion in Aussie tax, report says. Available at: http://www.news.com.au/finance/business/retail/mcdonalds-sending-profits-to-singapore-to-dodge-497-million-in-tax-according-to-report/news-story/6916a16b47f7486592292d8262efce65 (Accessed: 14 April 2016).
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2) Guan, P. (no date) Vission mission of Kick. Available at: https://www.scribd.com/doc/46390361/Vission-Mission-of-Kfc (Accessed: 14 April 2016).
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3) Hornby, L. (no date) McDonald’s and KFC hit by china food safety scandal. Available at: http://www.ft.com/cms/s/0/c84e2dfa-10ac-11e4-b116-00144feabdc0.html#axzz45mtbaJPV (Accessed: 14 April 2016).
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4) KFC (2015) Organization resource management of KFC. Available at: https://www.ukessays.com/essays/marketing/organization-resource-management-of-kfc-marketing-essay.php (Accessed: 14 April 2016).
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5) McD (no date) Recognition and rankings. Available at: http://www.yumcsr.com/environment/recognition-rankings.asp (Accessed: 14 April 2016).
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6) McDonald’s (2010) Planet: AboutMcDonalds.com. Available at: http://www.aboutmcdonalds.com/mcd/sustainability/planet.html (Accessed: 14 April 2016).
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7) McDonald’s (2010) Planet: AboutMcDonalds.com. Available at: http://www.aboutmcdonalds.com/mcd/sustainability/planet.html (Accessed: 14 April 2016).
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8) McDonald’s (2010) Planet: AboutMcDonalds.com. Available at: http://www.aboutmcdonalds.com/mcd/sustainability/planet.html (Accessed: 14 April 2016).
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9) McDonald’s (2010) Values in action: McDonalds.com. Available at: http://www.mcdonalds.com/us/en/our_story/values_in_action.html (Accessed: 14 April 2016).
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10) McDonald’s (2015) 2014 annual report. Available at: http://www.aboutmcdonalds.com/content/dam/AboutMcDonalds/Investors/McDonald%27s%202014%20Annual%20Report.PDF (Accessed: 14 April 2016).
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11) Sahoo, P. (2016) ‘A report on the corporate social responsibility of KFC. We invest to deliver a better tomorrow’,
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12) Sahoo, P. (2016) ‘A report on the corporate social responsibility of KFC. We invest to deliver a better tomorrow’,
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13) Sahoo, P. (2016) ‘A report on the corporate social responsibility of KFC. We invest to deliver a better tomorrow’
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14) Smithson, N. (2015) McDonald’s Stakeholders: A CSR analysis - Panmore institute. Available at: http://panmore.com/mcdonalds-stakeholders-csr-analysis (Accessed: 14 April 2016).
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15) Tribune, T. (2015) Available at: http://www.tribuneindia.com/news/punjab/kfc-slapped-rs-40-lakh-fine-for-vat-evasion/98389.htmlhttp://www.tribuneindia.com/news/punjab/kfc-slapped-rs-40-lakh-fine-for-vat-evasion/98389.html (Accessed: 14 April 2016).
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16) Yum! Brands CSR report (no date) Available at: http://www.yumcsr.com/community/local-engagement.asp (Accessed: 14 April 2016).
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