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Burger King: Unethical Business Practices/scandals

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Introduction

Burger King was founded by a farmer known as Keith J. Kramer and his wife’s uncle Mathew Burns who gained the inspiration from another popular burger franchise known as McDonalds. As time passed James McLamore and David Edgerton, who were classmates of the Cornell University who invested in the franchise and it has reached where it is today, with about 13000 restaurants in 91 countries worldwide. (DASZKOWSKI, 2018)

Although Burger King has been able to survive all these years, the fast food franchise has also been involved in some unethical business practices/ scandals. Some of these scandals have really affected the business negatively especially when it comes to the business’s stakeholders which in the long run affects the performance of the business. The stakeholders of Burger King are laid out in order of importance made up of Customers, Employees, Communities, Investors. Business ethics are the principles that guide the way actions in an organization are executed, these things are put in place to make everyone in the business make the right decisions in every instance and avoid the bad ones. (Weiss, n.d.)

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How Scandals Affected Stakeholders of the Business

Customers

In Burger King they always put their customers as the first priority or at the peak when dealing with them because it’s from the customers that revenue is gained, because of this Burger Kings’ corporate social responsibility is to ensure that all products sent out for consumption are quality products and they always try to be lucid with their customers. (Young, 2017)

In 2013 Burger King was associated with a very serious scandal where the franchise was accused of using horsemeat in their burgers in the United Kingdom and Ireland which was very serious at the time because Burger King always told customers their patties were made up of 100 percent beef. Burger King later let go off Silvercrest which was the food processing plant in charge of receiving meat from a Polish distributor, they later released a statement were they apologized to customers and made a personal investigation into the matter. The was no authentic proof that Burger King sold the burgers tainted with horsemeat but they admitted that some of the branches might have unintentionally done so but major officials said that the horsemeat did not constitute any health risk to Customers. Some customers still felt it was not good because of some religious beliefs and norms, but the good thing burger did was to be transparent with their customers because of their corporate social responsibility and did not hide anything from their customers like some other corporations do. (Tepper, 2013)

Employees

Employees are the next highly prioritized stakeholders of burger coming after customers, without the employees of Burger King, the company cannot move forward in any way because they also play very important roles in the organization in terms of service quality, efficiency and productivity. (Young, 2017)

So, whenever there is a scandal or any unethical business practices it really affects the employees greatly like in 2014, where 89 franchised outlets contracts were terminated because of continued poor treatment of staff. This decision was about to affect 89 of the fast food chains and almost 700 German outlets and 3000 employees were in jeopardy, this decision was made after Yi-Ko failed to do something about the horrible working conditions that employees were working in and it was agreed in the contract for about 3000 restaurant staff. Some of the outlets were closed due to hygienic reasons consisting of obsolete products that were put on shelves as fresh ones and burgers being kept for long hours. When the scandal ended there were improvements in conditions but Yi-Ko held back the salaries of employees but they received it at a latter date. (Thelocal.de, 2014)

Communities

The Burger King franchise also classifies local communities as one of its stakeholders and treat them as importantly as the rest of its stakeholders. Burger King tries to give back to the communities by using their Burger King McLamore foundation which is a platform that was set up as a non-profit organization that offers funds for educational and related programs in the communities. (Young, 2017)

It was bad to hear that Burger King was involved with child labor practices, these incidents happened in the Burger King restaurants that were across Massachusetts. They were seen allowing minors that were 16- and 17-year old to work for unusual number of hours, some of the minors even worked till about 5 am and this was not the only one there were about 843 child labor violations in about 43 locations in the state. They were also not working with the proper documentation like work permits to carry out their duties, Burger King franchisee later paid roughly about $250000 for these law infringements. (Johnston, 2017)

Investors

The last stakeholder of Burger King is their investors, these are the people organizations that put money into financial schemes with the aim of gaining profit back from the business. (Young, 2017)

Burger King saw a great improvement in their financial aspect after a merger was done with Tim Hortons of Canada 2014 which made their profit spike significantly. When the scandal horribly hit them about the hygiene and bad treatment of staff there was a wild chase for a new investor after its German business. (Scheven, 2014)

Business Company Policies, Code of Ethics Provisions, and Existing Laws Regarding Any Unethical Business Practice

Although Burger King was wrong in serving the burgers that contained horsemeat the full blame cannot go on them because it was their supplies that provided the beef patties that had traces of horsemeat in them, that doesn’t mean that Burger King was not wrong but they should have done a thorough inspection of their meat that suppliers gave to them before serving it to the public, which the public didn’t take lightly with them because one policy that Burger King always stresses about the fact that their burgers are fully made of 100% beef and nothing else, so later when people found out that this was not true and it was only cheap talk it was bad for Burger King, even on their website there is a particular section that states that they make all their beef patties with 100% beef with no fillers, n type of preservatives added, no additives and no nonsense. If this is boldly written on your website for the public to see and later you don’t live up to it, by all means people would not take it lightly. This scandal happened in The United Kingdom and on the 16th of January 2013 the Food Standards Agency (FSA) declared that the Food Safety Authority of Ireland (FSAI) had discovered horse and pig DNA in a scope of hamburger items marked down at a few grocery stores including Tesco, Aldi, Lidl, Iceland and Dunnes Stores. This has started broad testing of hamburger items over the EU uncovering further frequencies of tainting. These stores were incorrectly labeling these items incorrectly as normal beef so consumers thought they were consuming normal beef but they were rather taking in horsemeat. Although it was also reported by the House of Common Environment and food and rural affairs committee’s that there was contamination of Beef products, they were unable to provide an adequate response to the situation, they stated that horse meat can be arranged and sold in the UK on the off chance that it meets the general necessities for moving and naming meat for mass consumption. There are three abattoirs working in the UK that are authorized with proper documentation and licenses to butcher horses and produce their meat for human utilization. It is likewise lawful to send out live horses from the UK for butcher in the event that they have the vital printed material, for example a steed identification normally called a horse passport, trade permit known as an export license and wellbeing affirmation more or less like a health certification, be that as it may, this isn’t a regular practice but in France and Belgium horse meat is a popular delicacy consumed by humans. All horses that are born after 2009 are required by the European law too have a passport that would be used for identification purposes, also when they are transported, they must be declared as whether or not it is to be used for human consumption purposes. The implementation of the rules, laws and regulations concerning meat products, identification, labelling including horse meat is done by a vast amount of government organizations namely the Meat Hygiene Service, Local authorities trading standards and the Veterinary Medicines directorate. (Ares and Downing, 2013)

Due to the fact that these types of countries are multinational countries it even worsened the case because of religious beliefs, norms and ethics that these people follow. Religious leaders showed high levels of anxiety when they heard that frozen beef burgers that were sold on the market contained DNA from horses and pigs. Jewish pioneers cautioned such occurrences must not occur once more, while the Muslim Council of Britain said it was stressed by the entire issue of misleading the public about the food. John Benjamin the CEO of the Board of Deputies of British Jews, stated a lot of Jews would just eat specific sorts of meat and still after all that the really pay attention to if the creature had been murdered as per the laws of Kosher food production. He said those that may be less perceptive and might eat beef that isn’t entirely fit to the kosher laws would even now stay away from pork and horsemeat, and we trust that botches in meat preparing are not rehashed. Keeping to a legitimate eating kosher diet routine would typically maintain a strategic distance from the dangers of such sullying. Shuja Shafi who was the deputy secretary general of the Muslim council of Britain said that as someone who consumes a lot of products the misleading elucidation of these items were not openly welcomed by most people but from a faith perspective Shuja Shafi said that he doesn’t think it was a bother to the Muslim community. From normal beliefs, ethics and norms of Muslims and Jews they frown on some type of food products especially Muslims who do not take products made up of pork and horse because they believe it is termed as “Halal” which is an Arabic word that means authorized or permitted. (Meikle, 2019)

Moving to the child labor issue that occurred in Massachusetts (USA) which was also not good from the part of Burger King and they were finned heavily for it, child labor is the illegal employment of children that are underage especially when it is exploitative. The Department of Labor is the sole government organization that screens tyke work and upholds kid work laws. The most clearing government law that limits the business and maltreatment of tyke specialists is the Fair Labor Standards Act (FLSA). Kid work arrangements under FLSA are intended to secure the instructive chances of youth and preclude their work in employments that are inconvenient to their wellbeing and wellbeing. FLSA confines the hours that adolescent under 16 years old can work and records unsafe occupations unreasonably risky for youthful specialists to perform. Implementation of the FLSA’s kid work arrangements is dealt with by the Department’s Wage and Hour Division. The Office of Disability Employment Policy (ODEP) offers various assets for youth. ODEP’s emphasis on youth approach is gone for enhancing change results of youth and youthful grown-ups with handicaps toward effective work and adulthood. The tasks of the departments bureau of International Labor affairs(ILAB) Office of Child Labor, Forced labor and human trafficking are namely finding and reporting on international child labor issues, labor that is forced on children as if they don’t have choices and human trafficking which is popular in the 21st century where humans are illegally trafficked for sex, slavery etc. these projects are heavily funded to expose and eliminate child labor in the USA. (Dol.gov, n.d.)

Alternative Courses of Action That the Company Should Have Taken to Deal with Unethical Business Practices/Scandals

Burger King could have prevented a lot of scandals that occurred during that time if proper care was taken into consideration, by the theory of deontology that was used to differentiate between the bad things from the good things which was developed by the famous philosopher Immanuel Kant who believed that our actions follow normal morals. One of the theories that Burger King could have used was the ethics of care which focuses attention to the fact that you don’t have to always think about yourself when doing things you should always think of your neighbors too, if Burger King took this into consideration they would have properly checked their supply of meat that had taints of horse and pork which was agreed that it was not a risk to health but then it was against some religious beliefs.

During the time these scandals hit them the theory they could have used was the utilitarian theory which was first augmented in the 18th century, this theory states that in any occurrence there should be some type of balance of good over the bad stuff. The fact that child labor was a very serious case and they had to be fined over it they should have apologized for the mistakes they made towards these people and maybe further taken the initiative of maybe sponsoring their education further or given them some kind of compensation so that they would be able to make up for time they wasted there even until 5am on school nights also. There are a few different ways to think about who and what are partners in both an association and an association’s activities. The ‘investor hypothesis,’ placed in the mid twentieth century by financial specialist Milton Friedman, says that an organization is obliged just to investors – that is, the organization must make a benefit for its investors. Partner hypothesis was first portrayed by Dr. F. Edward Freeman, a teacher at the University of Virginia, in his milestone book, ‘Key Management: A Stakeholder Approach.’ It proposes that investors are only one of numerous partners in an organization. The partner biological system, this hypothesis says, includes anybody put and associated with, or influenced by, the organization: workers, tree huggers close to the organization’s plants, sellers, administrative offices, and that’s just the beginning. Freeman’s hypothesis recommends that an organization’s genuine achievement lies in fulfilling every one of its partners, not simply the individuals who may benefit from its stock. Further explaining burger should not only like to satisfy the needs of its shareholders it should try and also think about its stakeholders that’s what they should think about whenever they want to make decisions.

Conclusion

From this research I learnt a lot of stuff about the corporate world. In the end of everything it is important to act ethically when decisions are to made, sometimes things you overlook can also personally affect the overall organization. Burger King failed to act ethically and didn’t check their suppliers.

References

  • BBC News. (2013). Why are the British revolted by the idea of horsemeat?. [online] Available at: https://www.bbc.com/news/magazine-21043368 [Accessed 23 Jan. 2019].
  • DASZKOWSKI, D. (2019). Burger King and Its Storied Past and Evolution. [online] The Balance Small Business. Available at: https://www.thebalancesmb.com/history-of-burger-king-1350968 [Accessed 22 Dec. 2018].
  • Dol.gov. (n.d.). Youth & Labour | U.S. Department of Labour. [online] Available at: https://www.dol.gov/general/topic/youthlabor [Accessed 21 Jan. 2019].
  • Fsai.ie. (2013). [online] Available at: https://www.fsai.ie/details.aspx?id=11878 [Accessed 20 Jan. 2019].
  • Islamic Council of Victoria (ICV). (2016). What is Halal? A Guide for Non-Muslims | Islamic Council of Victoria (ICV). [online] Available at: https://www.icv.org.au/about/about-islam-overview/what-is-halal-a-guide-for-non-muslims/ [Accessed 22 Jan. 2019].
  • Johnston, K. (2017). Burger King franchisee cited for 843 child labour violations in Massachusetts – The Boston Globe. [online] BostonGlobe.com. Available at: https://www.bostonglobe.com/business/2017/12/19/burger-king-franchisee-cited-for-child-labor-violations-massachusetts/pQf8d62l8tme8Qrvh7TbkL/story.html [Accessed 10 Jan. 2019].
  • Meikle, J. (2013). Horsemeat-in-burgers scandal prompts food hygiene fears. [online] the Guardian. Available at: https://www.theguardian.com/world/2013/jan/16/horsemeat-burgers-scandal-food-hygiene [Accessed 13 Jan. 2019].
  • Meikle, J. (2019). Horsemeat-in-burgers scandal prompts food hygiene fears. [online] the Guardian. Available at: https://www.theguardian.com/world/2013/jan/16/horsemeat-burgers-scandal-food-hygiene [Accessed 25 Jan. 2019].
  • Meikle, J., Lawrence, F. and Buckley, J. (2019). Burger King reveals its burgers were contaminated in horsemeat scandal. [online] the Guardian. Available at: https://www.theguardian.com/business/2013/jan/31/burger-king-horsemeat [Accessed 3 Jan. 2019] Scheven, F. (2014). Investor wanted: Burger King Reorders After Scandal. [online] Handelsblatt.com. Available at: https://www.handelsblatt.com/today/companies/investor-wanted-burger-king-reorders-after-scandal-/23616144.html?ticket=ST-2178494-q1JGz4qr9zce45U4bEzd-ap2 [Accessed 7 Jan. 2019].
  • lTepper, r. (2013). Burger King Admits Burgers Were Possibly Tainted With Horsemeat. [online] HuffPost UK. Available at: https://www.huffingtonpost.com/2013/01/31/burger-king-horsemeat-admits-tainted_n_2593538.html [Accessed 2 Jan. 2019].
  • Thelocal.de. (2014). Burger King axes 89 franchises over scandals. [online] Available at: https://www.thelocal.de/20141120/burger-king-axes-89-franchises-after-scandals-hygiene [Accessed 5 Jan. 2019].
  • Weiss, J. (2016). Business ethics: A stakeholder and Issues Management Approach. 4th ed. Canada: webcom limited, pp.7-9.
  • Yagalla, M. (2019). A few fun facts about Burger King. The Motley fool. [online] Available at: https://www.fool.com/investing/general/2013/11/24/a-few-fun-facts-about-burger-king.aspx [Accessed 30 Jan. 2019].
  • Young, j. (2017). Burger King’s Stakeholders: A CSR Analysis – Panmore Institute. [online] Panmore Institute. Available at: http://panmore.com/burger-king-stakeholders-csr-analysis [Accessed 30 Dec. 2018].

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