Journal Entry - Where are companies from

Refer to the content in the lecture, more details of the two theory- stakeholders and shareholders
theory is taught. In this journal, I would like to contrast the two and show implementation of the
two ideas with my chosen company- Mcdonald in the food industry.

For the stakeholder theory, the company should take care of social good and all parties mainly as
creditors, employees and consumers but not only responsible for the shareholders. For the
shareholder theory, it concludes that companies should only aim at profit-maximization and will
take care of neither social responsibility nor environmental impact of business. It also mentioned
that it’s the government's responsibility for social good.
The two theories arouse great debate and discourse about whether companies should adopt which
approach. As different stakeholders have different interests and concerns, consensus cannot be
archived. It’s often thought that the two theories are completely opposite ideas or even
confrontational in nature. However, in my opinion, taking up social responsibility doesn’t
necessarily mean profit will be the opportunity cost of this action. Companies can achieve
profit-maximization in a long term manner even when they implement and use the stakeholder
theory.

For mcdonald, my chosen company, I do think that it is achieving the two goals at the same time.
With regards to McDonald’s 2020 CSR & Sustainability Framework, they set goals in increasing
recycling ratio, energy efficiency and percentage of ingredients from source/ suppliers that are
verified to be sustainable. In addition, Mcdonald's was the first restaurant company setting goals
to reduce carbon emission. It’s working across its supply chain, shops and office by
implementing various measures including LED lighting, sustainable packaging, restaurant
recycling,etc. The above shows that Mcdoanld’s is actually actively taking up responsibility of
improving the society on it’s shoulder and is willing to take the initiative to lead the industry in
promoting sustainability and green life.
The above green policies require large costs in research and development. But personally, I think
Mcdonalds is still archiving profit-maximising. From the company’s perspective,
profit-maximising can be viewed as short-term and long-term wise. Although promoting social
responsibility according to the stakeholder theory may sacrifice short term profit as there may be
an increase in cost, however, such an initiative promotes Mcdonald’s goodwill. Customers may
have a more positive view towards Mcdonalds and its products. Moreover, employees will feel
secure and motivated as influenced by the healthy image built up. Investors will have more
confidence in Mcdonald’s shares due to the good corporate image. By sustaining customers or
employees and attracting investors, Mcdonld’s will earn a higher profit in the long run, and a
larger dividend can be distributed to its shareholders.

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 To conclude, in my opinion not only Mcdonald's can strive a balance between the two theories,
they can be commonly used together in various companies and result in win-win situations.
There can be no contradiction between the theories when companies use resources wisely in
promoting policies that help society and at the same time promote their goodwill.

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