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The Impact of Globalization on Business Enterprises

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Running Head: The Impact of Globalization on Business Enterprises

Ryasat Taha

University of Arizona

MBA 501

September 25, 2006

Worlds biggest fast food company McDonald's, now facing the damage of losing its reputations and has become a focal point in international debate about rising obesity rates.

World's largest chain of fast food restaurant McDonald's, offers variations of meals, such as burgers, French fries, vegetarian food and some healthy menus like milk shakes and fruits are included. McDonald's commitment is to serving fast. The larger McDonald's grows, the more vulnerable it becomes to negative customer perceptions. In 2004, Morgan Spurlock's documentary film Super size me effaced its customers to not to buy food from McDonald and produced negative publicity for McDonald's, with allegations that McDonald's food was contributing heavily to the epidemic of obesity in American society, and failing to provide nutritional information about its food for its customers. However, the company also became involved in controversy when it was revealed that its U.S. French fries were flavored with non-kosher and non-halal beef extract, which greatly upset Muslim, Jewish, Hindu and vegetarian customers. In the beginning of 2006, McDonald's started printing nutrition facts on the packaging of their products after pressure from groups and individuals Andy McKenna, McDonald's chairman of the board, opened the meeting by citing the chain's increase in same-store sales for every month of the past three years. He credited current management, franchisees and suppliers for that record.

Developing countries face a number of risks associated with trade. Perhaps the best known is declining terms of trade, as the world prices of the primary commodities they export tend to fall over time relative to the price of the manufacturers they import. A related problem is the volatility of world prices for agricultural commodities they export. A new type of risk is emerging in the face of increasingly integrated global markets.

The advanced industrial nation of the West committed themselves after World War II to removing barriers to the free flow of goods, services, and capital between nations. This goal was valued in the General Agreement on Tariffs and Trade (GATT). The most recent round of negotiations, known as the Uruguay Round, was completed in December 1993. The Uruguay Round further reduced trade barriers; extended GATT to cover services as well as manufactured goods; provided enhanced protection for patents, trademarks, and copyrights; and established the World Trade Organization (WTO) to police the international trading system.

McDonald's purchasing power also provides the fast-food giant with the opportunity to play a meaningful role in correcting this human rights crisis. However, rather than follow Yum Brands' lead and work with the CIW and its suppliers in a genuine partnership for social responsibility, McDonald's has taken a path calculated both to undercut the wage gains won by farm workers in the Taco Bell Boycott and push workers back away from the table at which decisions are made that affect their lives.

In the face of mounting concern over human rights abuses in its supply chain, McDonald's chose to work exclusively with the leading lobbying group for Florida growers, the Florida Fruit and Vegetable Association, to develop a minimal set of supplier guidelines dubbed "Socially Accountable Farm Employers," or SAFE. Designed more to address McDonald's perceived public relations crisis than the real human rights crisis in the fields, SAFE totally sidesteps calls to improve farm worker wages and to respect farm workers' fundamental labor rights.

McDonald's clearly knows how to do better. The fast-food giant recently announced an agreement to purchase only fair-trade coffee for over 650 of its restaurants, paying a reasonable premium over market price so that the workers who pick their coffee can receive a fair wage and enjoy humane labor conditions. Yet McDonald's refuses to pay even a penny more per pound for its tomatoes so that



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