BACHELOR IN ACCOUNTANCY

AC220 SEPT 2012 JAN 2013

1.0 Introduction
Going Green is very important with the situation that were facing nowadays. Our earth is
facing environmental destruction, and by going green is one of the initiatives to help save our earth.
McDonalds is one of the many companies who cares about our mother nature and implies green
initiatives and strategies. McDonalds owns several ethical and social responsibility values, and by
going green is one of them. By simple and little gestures, McDonalds is helping our earth a very long
way ahead. Although it may sound a simple task to be done, but McDonalds faces many obstacles to
get it done and making their customers to accept it.

1.1 Company Background

The story of McDonald started in 1954, when Dick and Mac McDonald owned a
hamburger stand in California which was discovered by Ray Kroc. The hamburger stand
was running multiple Multimixers at a time. Ray Kroc was attracted and impressed on
the way the limited menu offered allowed them to focus on their quality. Inspired, he
convinced and pitched in the idea to the McDonald brothers to open up several
restaurants, volunteering himself to handle the restaurants.

Des Plaines, Illinois opened its 1st McDonalds in 1955. Ray Kroc persuaded
franchises and suppliers in joining to expand the restaurant. He emphasizes in offering
consistently prepared quality food that tasted the same in every location, every time.
After 3 years McDonalds was born, it has sold its100 millionth burger in 1958.

In 1967, McDonald expanded and opened its 1st restaurant outside of the US state.
It continued to grow in becoming the largest restaurant organization in the world. Up to
today, McDonalds owns more than 33,000 restaurants in a total of 119 countries.
McDonalds corporation earns revenue as an investor in properties, a franchiser of
restaurants, and an operator of restaurants. Approximately, 15% of McDonalds
restaurants are owned and operated by McDonald Corporation directly. The remainders
are operated by others through a variety of franchise agreements and joint ventures.

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1.2 Nature of business

The main nature of the business of McDonald is fast food industry. They
provide counter service or dine-in service and drive through services, with indoor and
sometimes outdoor seating. McDonald's primary products include hamburgers,
cheeseburgers, French fries, soft drinks, breakfast items, and desserts. It has recently
added to its menu coffee, salads, wraps, and fruit. Beside, all of the products customers
buy as meals. But, any countries have their own food product based on the cultural of the
country. For example, in India, since India people had seen beef as a sacrifice, so that
McDonald in India did not serve of offered beef in their menu.

In order to expand their business, McDonald also enters the globalization market
by using business format franchising and strictly maintained corporate-level control of
the McDonalds concept, service and product. McDonald's earns revenue in several roles
as a franchiser of restaurants, operator of restaurants, and investor in properties. About 80
percent of the restaurants are run by franchisees or affiliates.

In all of its market, McDonald faces competition from other companies. Major
direct competitors in the (hamburger-based) fast food industry included Burger King,
Pizza Hut and Kentucky Fried Chicken(KFC)McDonalds has decades maintained an
extensive way on made their product and services are different from other fast food
restaurants. For example, McDonald offers three types of meals which are large meal,
medium meal, and happy meal for children. So that, customer can has more choices
when making their order. Besides that, McDonald's is aiming to serve all customers
within 3 minutes of placing their order and serving their customer with the best practices.

More importantly, McDonald have strongly support the green business activities
in order to protect the environment. For example, McDonalds strives to provide eco-
friendly workplaces and restaurants that reflect their sustainability goals and demonstrate
environmental stewardship in the workplace.

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1.3 McDonald Location

McDonalds has been serving their customers worldwide, ranging from children up to
the elderly. McDonalds can be found across 119 countries and serving up to 68 million
customers. Being available in almost every country, McDonalds persuades in satisfying their
customers catering to their religion and beliefs accordingly, especially in India and Malaysia.
Expanding McDonalds to India had been a challenge. Indians hold strong to their
beliefs that cow is sacred. McDonalds meals range on multiple choices of burgers. Getting a
beef burger served in a country where eating beef is taboo is a difficult obstacle to be faced.
But McDonalds is gradually finding its way in India. McDonalds has always offers a local
variant of a classic dish in their menu as a way to get better approach and acceptance by the
locals. As McDonalds find a way to get around the challenge of respecting Indians religion
and beliefs, McDonalds conquer the problem by including a vegetarian meal as one of their
menu. Salads and other vegetable based options are made available to cater the Indians
hearts. On a recent approach, McDonalds is set to stray from their basic burger-and-fries and
will be opening its first wholly vegetarian restaurant commencing some time in 2013. The
first two locations to be serving vegetarian meals as their menu will be in Amristar and
nearby Katra in India.
McDonalds Malaysia offers something reliably different. Since that Malaysia is one
of the Muslim countries, McDonalds needs to ensure that the product and meals offered are
halal and pork-free. Unlike other countries that McDonalds had expanded to, in Malaysia,
McDonalds is required to earn a certification of halal. Not all Malaysian are Muslims. Even
so, McDonalds doesnt face any difficulties in conquering their hearts. Despite different
religions and beliefs, Malaysian shares the same taste bud and taste for food. The specialty
offered in McDonalds Malaysia includes Bubur Ayam and Ayam Goreng. Halal doesnt
specifically mean menus offered in Malaysia are restricted and limited. Occasionally, the
menus offered are accordingly to the many festive seasons happening in Malaysia. This way,
McDonalds ensure it can continue to cater and win the heart of the Malaysians.

2.0 McDonalds Green Effort

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2.3 Criteria of McDonald Successful Green Business

McDonald had possessed many criteria to be a successful green business. They
applying the environmental steps (3Rs), ensuring long-term commitment in business
operations, and replacing the non-sustainable items with environmentally friendly products.

2.3.1 McDonald applied three important environmental steps

3Rs- Reduce, Reuse and Recycle which integrate environmental
sustainability into all of the business practices. Generally, reduce means reducing
waste by purchasing in bulk and buy items with less packaging. McDonald take a step
by reducing the weight of the packaging, use the thinner and lighter form of
packaging, new technologies adoption and using alternatives materials which
environmentally preferable. Next step is reuse that defined as using items that have
reusable qualities. Any reusable materials that feasible in McDonalds operations and
distribution systems will reuse the items as long as not against the environmental or
safety concern and do not compromise sanitation standards. Last step is recycling
which the process of purchase and use recycled materials to create something new.
McDonald decided to maximize in using the recycled materials in the construction,
equipping and operations. For instance, McDonald applying a tray liners, Happy Meal
boxes, carryout bags and carryout trays.

2.3.2 McDonald ensures their operations apply long term commitment toward the
environmental approaches.

Their environmental affairs officer has a responsibility to ensure corroboration

to environmental approaches throughout their system. He also responsible to report
on any progress made toward specific environmental initiatives to the board of
directors. In maintaining a productive business, making an ongoing dialogue with all
stakeholders will lead them to learn a new thing such as preserve and protect the
environment.

2.3.3 McDonald replacing the non-sustainable items with environmentally friendly

products.

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McDonald takes aggressive measures to minimize energy and resource

consumption. McDonald adopts the environmental best-practice innovations such as
changes in packaging style. They able to lessen the amount of wastage and focus on
the impact on packaging style they used in operation.

2.4 McDonald green initiatives

As a globalization business and their product are recognizable around the world,
McDonald committed to do the right things each and every day in the every aspect of
their business operations. It is not just about the food that they serve, but how they bring
it to the table. They were really support and always trying to improve the environmental
performance of their business. There are four main green initiatives that McDonald
possessed.

2.2.1 Anti Littering

Anti-Littering are practiced in McDonalds Australia. Their primary

focused is leading the way toward cleaner streets in Australia for more than 20
years. Since the Australian customers are highly concerned on the litter issued,
therefore McDonald in Australia train their staff, employees and customers to
control the impacts of litter around existing restaurants across the country as a
regular part of their work day. Besides, McDonald also have organised a
nationwide Clean Streets program to keep restaurant grounds and nearby streets
clear of litter. By doing the program such as message on packaging, tray mats,
trash bins and parking lots signage can help in remind customer not to litter.

2.2.2 Greening the restaurants

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In order to enhance on their environmental performance, McDonald also

build and open restaurants that feature environmental attributes. Their main focus
is on innovation and efficiency in the design and construction of their restaurants
by reduction of energy and water used in equipment and operations, incorporation
of green decor option in the restaurant and practices that enhance indoor air
quality and promote natural lighting. For example, McDonalds Jurong Central
Park in Singapore had conceptualised as a green building from the beginning.
The restaurant contains a number of innovative energy and water saving
features incorporated into its design. One of the green features that are provided
at this restaurant is green roof that can reduce solar heat load and improves
thermal performance. Besides, they also have rain water harvesting system that
can collect rain water for use in plant irrigation. Apart from that, heat recovery is
used to heat water from dishwashing. It used the heat that generated by the air and
are recovers by heat pump. Last but not least, LED Technology can help to
reduce energy consumption for lightning and signage. This restaurant has the
photovoltaic lamp post that can consume less energy and have longer lives.

2.2.3 Optimizing Oil Recycling

McDonald primary focused is to find ways to recycle its used cooking oil
for operational purposes. For example, palm oil is used in the frying process and
in many of McDonald's menu items. The clear-cutting and burning of forest
necessary to produce palm oil became a disaster for the environment. Therefore,
McDonald has committed to sourcing only sustainable palm oil by 2015. For
example, McDonalds Jurong Central Park in Singapore used low oil volume
fryers (LOV) in order to reduce wastage by using 40% less oil. It also can
improves cooking efficiency, simplifies filtering and cleaning. Besides,
McDonalds UK was recycling 100% of its cooking oil for biodiesel to fuel
delivery trucks in the market. This brings to an emission savings of more than
3,500 tons of carbon dioxide (CO2, which is equivalent to 1,500 family cars
.being removed from the road each year.
2.2.4 Environmental Training For Employees
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McDonalds employees are one of the key factors to applying the best
environmental practices. Therefore, McDonalds practice this environmental
training to their selected employees to ensure that they know about McDonalds
environment policies and are aware of the best practices the company follows and
become the environment coordinator. Environment coordinator job is to take care
of all environmental issues associated with each restaurant and they will compile
all of the environmental records of the restaurant. Apart from that, they also
provided an advanced training for environmental coordinator to give basic
training to new employees. For example, McDonald in Spain, the environment
coordinator will gives a basic environmental training module when a new
employees start working at the restaurant.

3.0 Success Story of McDonald

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From the green initiatives above, we can see that these best practices of environmental
activities illustrate that McDonalds are committed to continuously improving their sustainability
performance. Not surprisingly, McDonald have achieved a great successful in their effort on
maintain and improved the environment.

3.3 BCA Platinium Green Mark for Restaurant

McDonald Jurong Centre Park (JCP) became one of McDonalds first Green
certified restaurants in Asia and be the first restaurant in Singapore to be awarded the
Building and Construction Authority(BCA) Platinium Green Mark Award in category
restaurant on 12 September 2011. Besides that, two other McDonalds restaurants which
are Springleaf Tower and Bishan Park were also awarded the BCA GoldGreen Mark
Award.

3.4 Environmental Protection Agencys(EPA) annual Green Power Leadership Award

McDonalds USA was one of the 16 companies that receive the Environmental
Protection Agencys annual Green Leadership Award on 24 September 2012. According
to the EPA, this restaurant current green power purchase of 306 million kWh in order to
saving more carbon dioxide (CO2), which is equivalent to more than 41,000 passenger
vehicle per year.

4.0 Challenges faced by McDonald

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McDonald has faced many challenges in implementing the green business in their daily
operation. Three challenges that will be discussed is recycling, highly cost in greening the restaurant
and environmental training on employees.

4.1 Recycling
Recycling is the biggest challenges not only for McDonalds but also other foods industry. It
is because the oil recycling is not really accepted by manufacturer, means that McDonalds need to
find more supportive manufacturer in their green initiatives. This is because manufacturer will incur
high cost in recycling cooking oil into biodiesel.

4.2 Highly Cost in Greening a Restaurant

The problems that faced by McDonalds in implementing greening the restaurant is highly in
cost in build or renovate the restaurant into green restaurant. For examples, they have to incur cost of
the materials such as materials to make or buy green roof, rain water harvesting system, heat
recovery and LED Technology.

4.3 Ensure the environmental training were to the highest standards

Besides, others challenges that faced by McDonalds is to ensure the environmental training
on employees were to the highest standards. Since the employees are the one of the key success in
implementing environmental practices, McDonald has to provide employees who have a depth
information and real understanding about the environment to be the environmental coordinator that
can lead the employees into the environment practices. But, McDonald had faced a problem in
determining the employees who have a real and depth knowledge about the environment. If this
happen, they will not achieve the highest standards of their training if the employees do not have any
knowledge and awareness on the environment. Besides, McDonald also will face highly cost and
consumes a bug time to train new employees. With having current employees resigning or quitting,
these costs will occur again.

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5.0 Conclusion and Recommendation

5.3 Conclusion
As a conclusion, preserving the environment is a priority for the entire McDonalds
system. They make enhancement in all aspects of their operation to minimize environmental
impacts. Together with their suppliers, independent franchisees and outside experts,
McDonalds employees work hard to deliver their products in the most environmental
responsible way they can. Until today, McDonald have become one of the companies that are
fully supported the environmental effort and always conducted in their best practices on the
environment.

5.4 Recommendation
As a globalization company and are known in the entire world, McDonald can
make a great impact in influencing their customer and staff in environmental protection.
Therefore, McDonald can invest more in research and development on the acceptation
on any environmental practices in every country in order to maintaining and increasing
their best practices in environmental.
Besides that, in order to reduce the cost of built and renovated the restaurant into
green restaurant, McDonald can make collaboration with their suppliers who are also
support the environmental efforts. So that, they can deal to reduce the cost of the
materials needed in green restaurant.
Last but not least, in order to achieve highest standard on environmental training
to employees, McDonald can use challenging question about environment before
training their employees. This challenging question can determine who have the most
depth knowledge among the employees and can be appoint as an environmental
coordinator. Therefore, McDonald can increase their standards on environmental training
to their employees.

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