The nonmarket environment of McDonalds

Case Study: The Nonmarket Environment of McDonald’s

1. Characterize the Four I’s.
The author of the text, Business and its Environment, illustrate the characterization of nonmarket environments of a business firm by the analysis of the Four I’s which are identified as follows: issues, interests, institutions, and, information. In the case study, excerpts of some of the nonmarket environmental factors which faced the company were explained. By characterizing the Four I’s, a management analysis can be made to mitigate the impact of nonmarket environmental factors on the continued success of the company.
The first “I” is that of the issues and the analysis thereof. The case study gave details about McDonald’s having to deal with nonmarket environments such as obesity, animal treatment, and supplier employee practices. It was noted that a study conducted concluded that the average body mass index of Americans increased from 15 to 31 percent over a period of 20 years between 1980 and 2000. (Baron, p.20) The fact of the increase in body mass index was not the problem in itself; more so the increased costs and the rise in deaths which both could be attributed to obesity. McDonald’s, which had gained recognition as the world’s largest restaurant chain at the time of this case study, was faced with dealing with this nonmarket issue due to the perception of its contribution to the increase in obesity. Another issue identified in this case study was that of the treatment of animals which supplied the meat products for its menu. Although McDonald’s did not directly raise any livestock for its restaurants, this was still a nonmarket issue that fell within the scope of its management as the public view of animal cruelty by its suppliers could be directly correlated to the corporate social responsibility views of McDonald’s. Along with product supply, the treatment of the employees working for suppliers of McDonald’s was identified as a nonmarket issue for management to mitigate.
The second “I” relates to the public interest and the outside groups, agencies or individuals that have influence in demanding a course of action to either eliminate or implement processes to deal with the identified issues. The case study identified several outside factors which pursued a correctional course of actions to be taken against the nonmarket environmental issues. For example, the study detailed actions taken by trial lawyers after successes against the tobacco companies where lawsuits were filed against McDonald’s as to the company’s liability with respect to obesity. (Baron, p.20) The tort filed against McDonald’s alleged that even though the company may not have been solely responsible for recent increase in household obesity, the company should still have been held liable for its portion in contributory negligence and proliferation of a perceived growing health epidemic. Federal agencies such as the FDA and USDA also served as members of the “I” of interests with respect to the Mad Cow Disease outbreak which started in 2003, according to the case study. (Baron, p. 23) This study gave an extemporaneous overview of how the aforementioned agencies launched campaigns to reassure consumers that the products being sold by McDonald’s were safe for consumption. As a result, other agencies criticized the attempts of the FDA and USDA to minimize consumer concerns with respect to the outbreak of the disease. (Baron, p.23)