MC Donald’s first restaurant in Beijing/ Peking
Did McDonalds follow the moral universalism, ethnocentric approach, or ethical relativism approach?
Moral universalism addresses “the need for a moral standard that is accepted by all cultures” (Deresky, 2011, p. 51). Some believe that moral universalism is preferable to the other two approaches, others think that it can be insensitive to the needs and values of the host country. Ethnocentrism refers to the belief that the management techniques used in one’s own country are best no matter where or with whom they are applied (Deresky, p. 51). On the other side Ethical Relativism is an approach to social responsibility in which a country adopts the moral code of its host country (Deresky, p. 51). With this approach companies sometimes run into value conflicts, as the host country, for example China, violates the human right laws.
Considering those three approaches one can say that McDonald applied the ethnocentric approach. The company obviously tried to manage the case in an American way taking the Beijing City Government to court although this was strongly against Chinese values. They did not consider that China is a communist country, where the state is superior to every kind of criticism.
What issues of Risk Management were involved?
International companies must be aware that different risks face them if working in different countries. These risks include political, economic, legal environment and technological risks. Therefore, the firm should conduct risk assessments before entering a new region of the world and constantly thereafter. This allows them to manage these risks and to minimize financial losses that might occur through the lack of knowledge of the way the foreign country operates (Deresky, 2011, p. 34).
When talking about political risk, they talk about the form of the government structure, political stability, change in government policy and business laws, corruption, foreign policy,...