Business and Society Case #3 McDonalds PDF

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McDonald’s - The Coffee Spill Heard Around The World CASE STUDY ANALYSIS Following each case are discussion questions that should be answered as part of any complete case analysis. The heart of the case analysis is the recommendation made based upon a solid logical foundation. The questions dealing with Problem and Issue Identification and Analysis and Evaluation should be used to define and then defend recommendations made in the final recommendation step. GUIDELINES FOR ANALYZING CASES Problem and Issue Identification 1. What are the central facts of the case? What assumptions are you making about these facts? Stella Liebeck was getting taken to the airport, but they stop at McDonald’s before they got to the airport and she got herself coffee the lid to the coffee wasn’t coming off at first, so Stella had to pull harder. The cap soon came off, but the 170-degree coffee spilled all over her legs almost immediately causing 2 nd degree burns, then shortly after leading to 3rd degree burns. She ended up losing 20 pounds and had a bill of $2000 and McDonalds only offered her $800. Stella Liebeck later sued McDonald’s for “gross negligence”, “unreasonably dangerous” and “defective manufactured.” Liebeck wanted a settlement for $100,000 or more, but McDonald’s rejected it. McDonald's blamed Liebeck for being careless as to how she was opening her coffee. McDonald's did end up reaching and out of court settlement with Stella Liebeck, but the terms were not disclosed because they made a confidential agreement. 2. What is the major overriding issue in the case? What major question or issues does this case address? There was one major overriding issue in this case and that’s McDonalds refusing to turn down the temperature of the coffee. McDonalds saying that they weren’t going to turn down the temperature of the coffee over 700 complaints over ten years. This just showed that McDonald's only cares about their sales and that the coffee has a good smell for the customers. As long as the cup says “Caution: Contents Hot”, the company doesn’t care about the customers that burn themselves. 3. What sub-issues or related issues are present in the case that merit consideration now? There were many sub-issues in this case study. One was about the Woman who suffered second degree burns from a worker with a disability spilled coffee on her lap. The burns could have been avoided by lowering the coffee temperature. In 2000 British solicitors had 26 spill complaints all on the very hot coffee McDonalds sells. The final sub-issue that occurred in this case study had to do with a pickle. A Woman sued

McDonalds for getting burned by a pickle that fell from her sandwich while she was trying to eat it.

Analyzing and Evaluation 1. Who are the stakeholders in the case and what are their stakes (i.e. issues and/or interest)? What challenges, threats, or opportunities are posed by these stakeholders? One of the main stakeholders in this McDonalds case are the customers. The customers have a stake in this case, because they expect a quality and safe product from McDonald's. The customers can be a threat to McDonalds if they are harmed by the product (hot coffee) and sue McDonald's for harm done. Employees are another stakeholder in this case. In this case McDonald's was selling a “unsafe” product as decided in court. Since McDonald's was selling a unsafe product people may not want to work at McDonalds and support a company that endangers its customers. Also, if the product McDonald's is selling is unsafe then the employees will also be at risk while handling the product. 2. What economic, legal, ethical, and philanthropic responsibilities does the company have, and what is the nature and extent of these responsibilities? McDonald's has the economic responsibility to provide a product for a reasonable price for its consumers, and have a profitable company for its investors. McDonald's has an ethical responsibility to provide safe products to its consumers. McDonald's has the ethical responsibility to serve food that is cooked correctly with ingredients that are not contaminated. McDonald's could serve food that is not properly cooked, but they have the ethical responsibility to serve a safe product. If customers have a problem with what they are served, McDonalds should fill the customer's needs to correct the issue. McDonald's has the philanthropic responsibility to give back to the community and help the less fortunate. McDonald's is a large company and can give back to the community to help their image and to help the world be a better place. 3. If the case involves company actions, evaluate what the company did or did not do in handling the issue affecting it. In this McDonalds case, McDonald's did not handle the case very well. At first the victim of the hot coffee spill wanted a small amount of money to cover medical costs. McDonald's only offered $800 to the victim. McDonald's was then sued for the incident. This hurt McDonald's image for selling a unsafe product and not helping out the person

the coffee hospitalized. In court McDonalds was on track to lose the case and pay a much larger sum of money to the victim. There was an out of court agreement among McDonalds and the victim to end the conflict. By not paying the person before the court case hurt McDonald's image and cost them a lot more money. Recommendations 1. What recommendations do you have for the case? If a company’s strategies or actions are involved, should the company have acted as it did? What action should the company take now? Why? Be a specific as possible. List several options as well as the pros and cons of each alternative. Be prepared to discuss why you eliminated those options you discarded and defend your chosen alternative. Mention and discuss any important implementation considerations. The last step is crucial because recommendations that can’t be implemented are worthless. We recommend that McDonald’s turn down the temperature of their coffee. We believe that turning down the temperature would please more people because they wouldn’t have to wait so long to drink their coffee after receiving it, and if it were to spill on another person the person wouldn’t suffer severe burns and McDonald’s wouldn’t have to keep paying out larger amounts of money to those burn victims. We also recommend that McDonald’s begin to put large warning labels on their products and instruct their employees to tell customers that their food is hot.

CASE ANALYSIS QUESTIONS 1. What are the major issues in the Liebeck case and in the following incidents? Was the lawsuit “frivolous” as some people thought, or serious business? The major issues of the Liebeck case and the following incidents are: the catastrophic burn injuries as a result of McDonald’s hot coffee, the twisted outlook of McDonald’s caring more about statistics and money rather than its customers, whether the incidents were the customer's fault or McDonalds, and the lack of action on McDonald's part to take care of its customers. The burn injuries were no doubt a result of hot coffee being spilt on customers, but the case presented why did McDonald not take action to protect customers and was it the customer's negligence of McDonalds? Liebeck was at fault in the aspect that she was not careful, but the majority of the blame lies on McDonalds because they cared more about not admitting any fault and staggering statistics than customers. Mcdonald's did not take any action when there was evidence that many complaints had been made about the temperature of their coffee. Our group felt that the Liebeck case was not frivolous because it addressed serious problems that needed to brought into the light. One problem it helped was enlightened the temperature being 170 degrees for McDonald coffee, which is higher than other stores. This high temperature

gabe third-degree burn to Liebeck, leaving her in the hospital and costing her money. Another problem addressed by the case was the coffee cup leads to spills, because Liebeck had such a hard time opening the cup she had to put it in her lap. Lastly, the Liebeck case warned McDonalds and force them to care more about its customers safety. 2. What are McDonald’s social (economic, legal, and ethical) responsibilities toward consumers in the Liebeck case and the other cases? What are consumers’ responsibilities when they buy a product such as hot coffee or hot hamburgers? How does a company give consumers what they want and yet protect them at the same time? McDonald’s social economic, legal, and ethical responsibility towards its consumers interlink and overlap. McDonald’s should be legally responsible, by accepting the settlement affording in mediation, admitting their mistake, and taking fault publicly for their mistakes. The economic responsibilities McDonald's should have taken are admitting their faults in the case and fixing the problem so others will continue to buy and support the McDonald’s brand. Lastly, the ethical responsibilities of McDonald’s were to pay for the victims, make steps to changing the coffee temperature, and make a bigger warning of the coffee temperature. Customers also have a responsibility to be more careful when handling hot drinks, and think wisely before doing something foolish or reckless. Customers should think before they act and have common sense when drinking or eating something hot. Companies should not only concern themselves with responsibility, but also with satisfaction of their customers. Companies should alway put the customers first and satisfy what they desire. On the other hand, companies should put warning signs on their products and make sure they are doing everything in their ability to give the safest products to customers. 3. What are the arguments supporting McDonald’s position in the Liebeck case? What are the arguments supporting Liebeck’s position? The arguments supporting the McDonald’s positions are that Liebeck was at fault for the coffee spilling on her and that customers like the coffee extremely hot. Arguments supporting Liebeck are that the burns were very severe, the warning label on the cup is very small, and that she is not the only person that has gotten burned by McDonald’s coffee. 4. If you had been a juror in the Liebeck case, which position would you most likely have supported? Why? What if you had been a juror in the pickle burn case? We think we would have taken Liebeck’s position because of the fact McDonald's seems to not care that many people are getting burned by the coffee and because of the severity of the burns. If we were jurors in the pickle burn case we would have

probably sided with McDonalds because we have eaten many of their burgers and we have never encountered a pickle that was even warm. Another reason we would have sided with McDonald's was the fact that her husband was suing as well seemed a little fishy. 5. What are the similarities and differences between the coffee burn cases and the pickle burn case? Does one represent a more serious threat to consumer harm? What should McDonald’s, and other fast food restaurants, do about hot food, such as hamburgers, when consumers are injured? The similarities between the two cases are that someone was injured by a McDonald's product. The main differences were that in the coffee burn case there was significant evidence as to the severity of the injury. We believe that the coffee represents a more serious threat because coffee is typically served much hotter than hamburgers so there is more potential for accidents to happen. We think that McDonald’s and other fast food restaurants should clearly label their food as hot to avoid any confusion and maybe have their employees give a warning to customers when handing them their food. This would make it so customers are aware that it is hot and if they receive any form of injury McDonald’s can say that they warned them. 6. What is your assessment of the “Stella Awards”? Is this making light of a serious problem? Stella awards are awards given to the most outrageous and frivolous lawsuits. I think the Stella Awards are causing more problems than helping. They create a negative connotation of the case itself and the victim and are stating that these cases have no serious person. The case is treated as a joke instead of what is suppose to be a serious matter, this woman was still seriously burned from a product sold by McDonald's. It may be making light of the serious problem in outsiders eyes, but the victim took this lawsuit to court and should be treated with the same dignity as any other case. 7. What are the implications of these cases for future product-related lawsuits? Do we now live in a society where businesses are responsible for customers’ accidents or carelessness in using products? We live in a society that is growing older. Does this fact place a special responsibility on merchants who sell products to senior citizens? The implications of this case for future product-related lawsuits have brought more awareness to customers and their safety. I do not feel businesses are responsible for all customers’ accidents or carelessness, but I do feel it's a business duty to provide satisfactory and safety to the customer. As a business, they should we accounting for all risk and prevention related issues. Customers must also buy at their own risk and take responsibility for their actions, this accounts for spilling or dropping their own food. As our society gets older, businesses should be aware of senior citizens and give them the courtesy of our elders. Not giving senior citizens special privileges, but looking out for

them....