1. Teaching faculty
Professor Gilbert Lenssen PhD MBA is President of the ABIS the global Academy of Business in Society with offices in New York, Brussels and Shanghai. ABIS is an association of 80 Business Schools and 30 Companies worldwide engaged in research, education and management development in Corporate Responsibility, Business Ethics, Corporate Governance and Sustainable Development.
Professor Lenssen is a professor of Strategy and has widely published in this field.
Prior to his academic career, he was a business executive in UK, USA, India, Spain, Germany in marketing, manufacturing, human resource management and general management. His last post was Global Vice President BP Solar International.
2. MODULE OVERVIEW
The course is about the strategic, managerial and governance dimensions of the relationship Business-Society. Expectations on responsibility and accountability of firms in the local and global context have risen substantially in the last 15 years. It is closely associated with the idea of ‘sustainability’: the interdependence between a business and its economic, political, social and ecological environment. It is about how that interdependency can be managed to enhance business performance.
The case for including a core component on the role of business in society in MBA and executive training programmes is based on a changing context which is making the management of that interdependency a greater concern for individual businesses and all their stakeholders.
The course includes economic, ecological, social, ethical, political and governance dimensions. Extensive use is made of practical case studies (see case readings for each session below). In analysing cases and issues involving all these dimensions, students will be encouraged to take a diversity of approaches: normative (e.g. ethical and stakeholder values and principles), instrumental (e.g. issue and risk management, stakeholder impact and power analysis) and a control approach (e.g. accounting, regulation and governance).
3. MODULE OBJECTIVES
To get students to think critically about Business Strategy and Governance: the role of business and any individual company in society and to develop knowledge and skills which will enable them to act and manage within their future work environment with due regard to wider political, social, cultural and environmental context of business.
4. MODULE OUTLINE
The course starts with exploring how a wide arry of issues complicate business strategies and how decision making around these issues is fraught with confusion on external and internal accountability, legitimacy and cultural constraints. Accountability issues are explored and dominant strategic approaches are analysed: stakeholder management and partnerships. The implications for business strategy and global governance are explored and finally, ethical dilemma’s are considered.
A selection of case studies from the following list will be worked through:
25 Executive Education Case studiesISSUES MANAGEMENTDecision making Mc Donalds Legitimacy Monsanto Culture-structure Shell
ACCOUNTABILITYAccountability vs responsibility Hooker Chemicals Organisational assurance Exxon Valdez Risk management BP Columbia
STAKEHOLDER MANAGEMENTStakeholder analysis Euroco Communications Johnson & Johnson Strategic management Novartis
STRATEGIC PARTNERSHIPSStakeholders Hiberdrola NGO’s Unilever-Oxfam Governments IBM in China
BUSINESS STRATEGYSupply chain management Illy Brand Management Betapharm International reach Novo Nordisk
GLOBAL GOVERNANCEPublic Policy Microsoft Co-regulation Shell Nigeria Industry sector governance Nike
BUSINESS ETHICAL DILEMMA’SMarket access Google in China Investment remuneration Merck Business in conflict areas Unocol
PERSONAL ETHICAL DILEMMA’S Insureres for Ltd Liability The harassing clientComplications in CapriotaSomething’s rotten in Hondo
5. TEACHING METHOD: THE HARVARD CASE STUDY AND GROUNDED THEORY METHOD:
The teaching method is highly interactive. There are few straight ‘right’ or ‘wrong’ answers when it comes this Field in management research so it is important that students question and debate them, with each other as well as with the tutor and build theory from these (grounded theory)
Students will be asked prepare individually the day before, work on cases in groups for short periods of time and then feedback their findings during whole class discussion. There will be periods of ‘lecture’ by the tutor, but always open to student question and debate.
STUDENTS ARE REQUIRED TO BRING THEIR LAPTOPS TO ALL THE COURSE SESSIONS
The assessment leading to the final grade will be made up of three parts:
Individual class contribution ……………………………….…… Group work …………..……………………………….……………. Individual after course assignment ………………………………
More than 50% will be based on the group work and class presentations
* Students will individually be assessed for the quality of their contribution to case studies and class discussions. * Groups will be assessed by the performance of the individual presenters and each member of the group will get the same grade, regardless of who makes the presentation. * Students will be given a written, individual assignment of their choice at the end of the course. This assignment needs to be returned to theprofessor within an agreed amount of time (as foreseen by the school’s regulations)
7. BIBLIOGRAPHY, READINGS & CASES
Textbook: Mainstreaming Corporate Responsibility, by Craig Smith and Gilbert Lenssen with articles and cases.
3 additional articles by Simon Zadek, Ian Davis and Michael Porter.
A number of additional cases which follow.
History(from David Baron, ‘Business and its environment’)
At the beginning of the 1990s, the McDonald’s Corporation had over 11,000 restaurants (8,500 in the United States), serving over 22 million customers a day. Because of its success in its market environment, McDonald’s was a focal point for a variety of nonmarket issues. Two of the most important derived from growing concerns about health and the environment. McDonald’s was one of the country’s largest solid-waste polluters. Also, McDonald’s menu items were being attacked by health and nutrition activists. McDonald’s nonmarket issue agenda was both immediate and serious.
McDonald’s faced criticism for its use of styrofoam in coffee cups and sandwich containers because some of the plastic was foamed with CFCs. CFCs were being replaced in the foaming process, but McDonald’s, which used 50,000 tons of foam packaging each year, remained under attack because of the solid waste problem and the dwindling availability of landfill space. It was under pressure to use plastic and paper containers that could be recycled. McDonald’s had initiated a recycling project for the polystyrene used in styrofoam packaging, but environmental interest and activist groups had attacked the recycling plans because they wanted Polystyrene to be eliminated entirely.
McDonald’s had begun to experiment with on-site incineration, but that experiment had been criticized by the Environmental Defence Fund (EDF), an environmental interest group.
McDonald’s was also under pressure for the volume of paper it used and the timber cut as a consequence. It had begun using recycled paper for its napkins and its Happy Meal boxes, and its 1989 annual report was printed on recycled paper. The company also took out full-page advertisements pledging to purchase $100 million of recycled materials.
McDonald’s environmental strategy changed when the head of EDF invited its president to a meeting to discuss waste disposal and environmental protection issues. McDonald’s decided to enter into a working arrangement with EDF to study how the use of packaging materials could be reduced and recycled materials increased. (See extract from Malcolm McIntosh et al below.) In spite of its efforts, criticism and pressure continued. Ralph Nader said, “Grassroots environmental groups aren’t convinced that McDonald’s is serious about creating a better environment.”
On the nutrition front McDonald’s and other fast-food chains had been criticized for the nutritional content of their food. For several years McDonald’s had made available in its restaurants a 56-page booklet providing nutritional information on its menu items. Under continuing pressure, it decided to provide nutritional information on its tray liners and on 3-foot-by-3-foot “Did You Know” displays in its restaurants. The tray liners used in the mornings and afternoons correspond to the food available at those times.
McDonald’s also was criticized on the grounds that its food was actually harmful to the health of its customers. Criticism centred on the fat and cholesterol content. McDonald’s promoted its McNuggets by emphasizing that, ‘they’re low in calories, they’re 100% tender, delicious, chicken thigh and breast meat cooked in 100% cholesterol-free vegetable oil.” Philip Sokolof, a Nebraska businessman, however, took out full-page advertisements in major newspapers charging McDonald’s with the “Poisoning of America” because of the fat content of content of its hamburgers. McDonald’s said the advertisements were inaccurate and that it used only lean beef.
A spokesperson for the Centre for Science in the Public Interest, one of the groups in the Ralph Nader network, commented: “To me, the important part is that the general thrust of the ad was correct. Many of the foods served by McDonald’s are loaded with saturated fat and cholesterol.”
McDonald’s and other fast-food companies also faced criticism by minority groups because of the company’s emphasis on sales in inner city areas. Inner city residents tend to be more frequent customers of fast-food restaurants than residents of other areas and they tend to spend more per visit. In response, fast-food companies had been increasing their advertising targeted to inner city residents. McDonald’s “‘as one of the top advertisers on the two television programs most watched by African-Americans during the first half of 1990. Some critics argued that McDonald’s and other fast-food companies were targeting minorities and endangering their health because of the fat, salt, and cholesterol in their menu items.
From Malcolm McIntosh et al, ‘Corporate Citizenship’
In mid-1989 McDonald’s Vice-President, Shelby Yastrow appeared opposite Fred Krupp, Executive Director of the New York-based Environmental Defence Fund (EDF), in a cable television program. Krupp and Yastrow decided to work together, to the relief of McDonald’s, who had previously found it difficult to find a partner willing to work with them apart from the World Wide Fund for Nature (WWF – USA) with whom they had produced a leaflet on rainforest issues.
The EDF was founded in 1967 on a grant from a Rachel Carson memorial fund. In 1984 it appointed Fred Krupp, a Harvard lawyer, as Executive Director who improved ED F’s technical and scientific capabilities, turning it into an expert group, and moved it towards “third-wave environmentalism” where it embraced market-base solutions to business problems. As Krupp said at the time:
“We’re not ideologues in environmental issues . . . I think environmentalists would become more powerful, more forceful and achieve greater results if we deployed more tools in our tool kit. We should continue to aggressively lobby, aggressively litigate, aggressively criticize corporate malfeasance and promote stricter regulation. We also should be able to problem-solve with corporations.”
The guidelines for The Waste Reduction Task Force was that:* it should evaluate the company’s materials use and solid-waste stream and develop a policy * no money would change hands* either side could terminate the project if it was unhappy * both sides would continue their current activities and EDF reserved its right to criticize McDonald’s; McDonald’s requested that EDF’s task-force members work in a restaurant for one day each; the task force should not look at any other issues, such as global warming, rainforest destruction and food consumption.
The Task Force subsequently arrived at a policy which was endorsed by the company. The company should:* take a “total lifecycle” approach to managing solid waste * reduce waste and volume of packaging* make maximum use of reusable and recyclable materials where possible * conserve and protect natural resources through increased efficiency and conservation * encourage environmental values and practices in local communities by providing educational materials * ensure accountability procedures
* maintain productive, on-going dialogue with all stakeholders.
Since the policy agreement, McDonald’s has made substantial savings in waste and uses significant amounts of recycled material, all of which are monitored by the EDF. There are those who have criticized the partnership, arguing that it merely provided excellent PR for McDonald’s and prostitutedthe EDF One thing that is clear, this partnership has set a standard for other agreements around the world and is a model for organizations in all sectors.
As an endnote, it is worth commenting that despite the fact that McDonald’s says it dictates environmental policy to its subsidiaries, the plastic clam shell is still used in more than 25 per cent of McDonald’s restaurants round the world. The fact is that the clam shell keeps the burgers hotter longer.
Some Recent Website articleswww.mcspotlight.orgMcDonald’s make a lot of people angry for a lot of different reasons. NUTRITIONNutritionists, for example, argue that the type of high fat, low fibre diet promoted by McDonald’s is linked to serious diseases such as cancer, heart disease, obesity and diabetes. The sort of diseases that are now responsible for nearly three-quarters of premature deaths in the western world.
McDonald’s respond that the scientific evidence is not conclusive and that their food can be a valuable part of a balanced diet. Some people say McDonald’s are entitled to sell junk food in exactly the same way that chocolate or cream cake manufacturers do: if people want to buy it that’s their decision. But should McDonald’s be allowed to advertise their products as nutritious? Why do they sponsor sports events when they sell unhealthy products? And what on earth are they doing opening restaurants in hospitals? ENVIRONMENT
Conservationists have often focussed on McDonald’s as an industry leader promoting business practices detrimental to the environment. And yet the company spends a fortune promoting itself as environmentally friendly. What’s the story? One of the most well-known and sensitive questions about McDonald’s is: are they responsible for the destruction of tropical forests to make way for cattle ranching? McDonald’s say no.
Many people say yes. So McDonald’s sue them. Not so many people say yes anymore, but does this mean McDonald’s aren’t responsible? They annually produce over a million tons of packaging, used for just a few minutes before being discarded.
What environmental effect does the production and disposal of all this have? Is their record on recycling and recycled products as green as they make out? Are they responsible for litter on the streets, or is that the fault of the customer who drops it? Can any multinational company operating on McDonald’s scale not contribute to global warming, ozone destruction, depletion of mineral resources and the destruction of natural habitats? ADVERTISING
McDonald’s spend over two billion dollars each year on advertising: the Golden Arches are now more recognised than the Christian Cross. Using collectable toys, television adverts, promotional schemes in schools and figures such as Ronald McDonald the company bombards their main target group: children. Many parents object strongly to the influence this has over their own children.
McDonald’s argue that their advertising is no worse than anyone else’s and that they adhere to all the advertising codes in each country. But others argue it still amounts to cynical exploitation of children – some consumer organisations are calling for a ban on advertising to children. Why do McDonald’s sponsor so many school events and learning programmes? Are their Children’s Charities genuine philanthropy or is there a more explicit publicity and profit motive? EMPLOYMENT
The Corporation has pioneered a global, highly standardised and fast production-line system, geared to maximum turnover of products and profits. McDonald’s now employ more than a million mostly young people around the world: some say a million people who might otherwise be out of work, others however consider that they are in fact a net destroyer of jobs by using low wages and the huge size of their business to undercut local food outlets and thereby force them out of business.
Is McDonald’s a great job opportunity or are they taking advantage of high unemployment to exploit the most vulnerable people in society, working them very hard for very little money? Complaints from employees range from discrimination and lack of rights, to understaffing, few breaks and illegal hours, to poor safety conditions and kitchens flooded with sewage, and the sale of food that has been dropped on the floor.
This type of low-paid work has even been termed ‘McJobs’. Trade Unionists don’t like McDonald’s either. The company is notorious for the vehemence with which they try to crush any unionisation attempt. They argue that all their workers are happy and that any problems can be worked out directly without the need for interference from a third party, but are they in fact just desperate to prevent any efforts by the workers to improve wages and conditions? ANIMALS
Vegetarians and animal welfare campaigners aren’t too keen on McDonald’s – for obvious reasons. As the world’s largest user of beef they are responsible for the slaughter of hundreds of thousands of cows per year. In Europe alone they use half a million chickens every week, all from windowless factory farms.
All such animals suffer great cruelty during their unnatural, painful and short lives, many being kept inside with no access to fresh air and sunshine, and no freedom of movement – how can such cruelty be measured? Is it acceptable for the food industry to exploit animals at all? Again, McDonald’s argue that they stick to the letter of the law and if there are any problems it is a matter for government. They also claim to be concerned with animal welfare. EXPANSION
In 1996 McDonald’s opened in India for the first time: a country where the majority of the population is vegetarian and the cow is sacred. Just one example of the inexorable spread of western multinationals into every corner of the globe. A spread which is creating a globalised system in which wealth is drained out of local economies into the hands of a very few, very rich elite. Can people challenge the undermining of long-lived and stable cultures, and regional diversity? Self-sufficient and sustainable farming is replaced by cash crops and agribusiness under control of multinationals – but how are people fighting back? FREE SPEECH
So, it seems as though lots of people are opposed to the way McDonald’s go about their business. So there is a big global debate going on about them right? Wrong. McDonald’s know full well how important their public image is and how damaging it would be to them if any of the allegations started becoming well-known amongst their customers. So they use their financial clout to influence the media, and legal powers to intimidate people into not speaking out, directly threatening free speech.
The list of media organisations who have been sued in the past is daunting, and the number of publications suppressed or pulped is frightening. But what are the lessons of the successful and ever-growing anti-McDonald’s campaign for those also determined to challenge those institutions which currently dominate society? CAPITALISM
Nobody is arguing that the huge and growing global environmental and social crisis is entirely the fault of one high-profile burger chain, or even just the whole food industry. McDonald’s are of course simply a particularly arrogant, shiny and self-important example of a system which values profits at the expense of anything else. Even if McDonald’s were to close down tomorrow someone else would simply slip straight into their position.
There is a much more fundamental problem than Big Macs and French Fries: capitalism. But what about anti-capitalist beliefs like socialism and anarchism? Is it possible to create a world run by ordinary people themselves, without multinationals and governments – a world based on sharing, freedom and respect for all life?
The UK arm of McDonald’s is planning a campaign to have the dictionary definition of a McJob changed. The Oxford English Dictionary says it is: “An unstimulating, low-paid job with few prospects, esp. one created by the expansion of the service sector.” But Lorraine Homer from McDonald’s said the firm felt the definition was “out of date and inaccurate”. The fast food chain is planning a public petition to try to get the definition changed.
The word McJob was first used in the US in the 1980s and was popularised by Douglas Coupland’s 1991 book Generation X. It first appeared in the online version of the Oxford English Dictionary in March 2001. McDonald’s tried to improve the image of its employment opportunities last year with the slogan: “McProspects – over half of our executive team started in our restaurants. Not bad for a McJob.” Greenpeace 25 July 2006
In an historic deal that has impacts far beyond the golden arches and into the global agricultural market, McDonald’s is now the leading company in the campaign to halt deforestation for the expansion of soya farming in the Amazon. Thanks to enormous pressure from the thousands of emails and letters sent to their European headquarters by you, our supporters, McDonald’s has agreed to stop selling chicken fed on soya grown in newly deforested areas of the Amazon rainforest. In recent years, the seemingly unstoppable expansion of soya farming in the Amazon had become one of the main threats to the world’s largest rainforest.
The soya wasn’t being used to feed the world. Instead it was used to feed farm animals destined for fast food and supermarket chains across Europe.
In April we launched our campaign exposing the food retailer’s role in rainforest destruction. Our report, Eating Up the Amazon, detailed how McDonald’s and other companies were implicated in deforestation, land-grabbing, slavery and violence. Since then there has been a sea change in attitude among the food industry towards the problem.
The result is that McDonald’s and other big food retailers, including Marks & Spencer, Waitrose, ASDA and Sainbury’s, are working with us to develop a zero deforestation plan. The plan will also help bring an end to the land-grabbing and social injustice that is rife in the Amazon. By committing to the plan, the companies’ massive buying power has created a huge demand for soya that hasn’t been grown in the ashes of the rainforest.
This put pressure on the ‘big five’ soya traders – Cargill, ADM, Bunge, Dreyfus and Amaggi – to come to the negotiating table with the future of large areas of the Amazon rainforest at stake. In response to the pressure, the soya traders committed to a limited two year moratorium of buying soya from deforested areas. The two-year time frame of the soya traders moratorium risks being no more than a token gesture, unless the traders deliver real change to protect the Amazon.
“We do hold the view that multinationals are responsible for much of the environmental degradation blighting our planet. But when business is ready to seriously tackle a crisis, we are ready join forces.” Greenpeace is demanding that the moratorium stays until proper procedures for legality and governance are in place and until there is an agreement with the Brazilian Government and key stakeholders on long term protection for the Amazon rainforest. A working group will be established, made up of soya traders, producers, NGOs, and government to put in place an action plan.
“When we were first alerted to this issue by Greenpeace,” said Karen van Bergen, vice president of McDonald’s Europe, “we immediately reached out to our suppliers, other NGOs and other companies to resolve this issue and take action. We are determined to do the right thing together with our suppliers and the Brazilian government, to protect the Amazon from further destruction.
“The two-year time frame set for the initiative is, we hope, indicative of the sense of urgency with which the soya traders wish to implement the governance programme and all of its conditions. We expect that should some of the measures take longer than the stated two years to implement, the moratorium would remain in existence until all commitments have been fulfilled.” There are some companies, however, who refuse to play ball. KFC have point-blank refused to discuss their role in Amazon destruction and so we need to show them how isolated they’re becoming.
UK Channel 4 TV News 9 Sept 2007
Buildings such as hospitals and theatres will be powered by rubbish from McDonald’s restaurants in a new pilot scheme. Eleven fast-food restaurants in Sheffield, Rotherham and Barnsley, South Yorkshire, will take part in the initiative, which will turn waste into electricity and heating for 130 buildings in the area. The scheme will save each restaurant from sending 100 tonnes of refuse to landfill each year and could be rolled out across the country if successful. The restaurants will become the first in the UK to send no waste to landfill. Instead, any rubbish will be collected, treated at a state-of-the-art energy recovery facility and converted into electricity and heat.
Buildings in Sheffield to benefit from the new recycled energy include Ponds Forge International Sports Centre, Park Hill flats, the Lyceum Theatre, Millennium Galleries, Weston Park Hospital and Sheffield City Hall. The 11 restaurants will also trial a range of environmentally-friendly technologies and processes, including solar panels, wind power, energy-efficient lighting and a recycling scheme for cardboard. Steve Easterbrook, president and chief executive officer of McDonald’s UK, said: “At the moment, it is difficult for companies like McDonald’s to recycle waste.
Many recycling contractors refuse to take our waste because we cannot remove food from it completely. As a result, we have to send it to landfill. “This trial is an exciting opportunity to look at an alternative method of disposal with real benefits for the environmental and local community.” David Pratt, carbon management account manager at the Carbon Trust, which is working with McDonald’s to evaluate the projects, added: “We look forward to assessing the CO2 savings of this initiative on McDonald’s carbon footprint. “We welcome the steps that McDonald’s are taking to reduce their emissions as part of UK business efforts to fight climate change.”
The three top issues identified by McDonald’s Stakeholder Group (see 2006 Worldwide Corporate Responsibility) 1. What are we doing to help address current trends in obesity 2. How are we using our purchasing power to influence the upstream supply chain 3. How are we addressing the System’s impact on climate change| |