Simon Marketing Fraud Essay

Phar-Mor, Inc was a thriving discount grocery store in the late 1980’s. Phar-Mor was moving product quickly but profit margins were not significant enough to pay the bills. By the early 1990’s, Phar-Mor declared bankruptcy due to fraudulent financial reporting and misappropriation of assets, making it one of the largest frauds in U.S. history. Below, we will use auditing standard AU 316.85 Appendix A in conjunction with the video “How to Steal $500 million” to analyze how incentives/pressures, opportunities, and attitudes/rationalizations allowed for fraud to start and continue at Phar-Mor.

Liebeck v. McDonald’s, also known as the McDonald’s Coffee Case, is a 1994 product liability lawsuit. This lawsuit became one of the most famous in the US history because after the court’s awarded Stella Liebeck $2.9 million, after she was severely burned by the coffee she brought from McDonald, there were debates over tort reform in the US.

It also declares an “unfair method for the sake of competition that affects commerce, and also being involved in the deceptive acts which affect commerce, are declared unlawful.” The Don’s restaurant is rather famous and has great market value. This means that there must be competitors in the market for Don’s restaurant to participate in various acts. The truth will be known once the investigations have been made. Injustice and deception for the consumers symbolizes two separate areas of the FTC authority and enforcement. The FTC has the authority to overtake all the unfair techniques of the competition between the businesses (Macaulay, 1979).

The Sarbanes-Oxley Act of 2002 (SOX), also known as the Public Company Accounting Reform and Investor Protection Act and the Auditing Accountability and Responsibility Act, was signed into law on July 30, 2002, by President George W. Bush as a direct response to the corporate financial scandals of Enron, WorldCom, and Tyco International (Arens & Elders, 2006; King & Case, 2014;Rezaee & Crumbley, 2007). Fraudulent financial activities and substantial audit failures like those of Arthur Andersen and Ernst and Young had destroyed public trust and investor confidence in the accounting profession. The debilitating consequences of these perpetrators and their crimes summoned a massive effort by the government and the accounting profession to fight all forms of corruption through regulatory, legal, auditing, and accounting changes.

On February 27, 1992, Stella Liebeck, aged 79 at the time, bought a coffee from the drive-thru of a McDonald’s in Albuquerque, New Mexico. She spilled the coffee on herself and received third-degree (full thickness) burns. She sued McDonald’s and was originally awarded almost $3 million in damages. This case is a perfect example of frivolous litigation and is one of the reasons some Americans think there needs to be civil justice reform.

Section 2: Key points. The McDonald's story begins with Morgan Spurlock. Morgan is an independent filmmaker, who conducted an experiment where he consumed nothing but McDonald's for 30 days. He traveled across the United States, speaking with various community groups about the hazards of eating fast food, all while setting himself up as a human guinea pig. He submitted himself to a full medical examination and was determined to be physically fit. After 30 days of nothing but McDonald's, he gained 25 pounds, his liver rivaled that of an alcoholic and his cholesterol level had risen from 168 to 230. He documented his personal journey,

REFERENCES•www.mcdonalds.com, accessed on 18 July, 2008•www.mcdonldsindia.net, accessed on 18 July, 2008•en.wikipedia.org/wiki/McDonald's, accessed on 19 July, 2008•http://www.associatedcontent.com/article/263943/mcdonalds_strategic_marketing_mix.html?cat=4, accessed on 19 July, 2008•www.kfc.com, accessed on 25 August, 2008

In this assignment I am going to evaluate the concepts and principles applied to the marketing of products by McDonalds and make recommendations.

The deal was that McDonald's would sell franchises for the low price of $950. In exchange, Kroc would keep 1.4 percent of all sales and give .5 percent back to the brothers. This arrangement was far more favorable to the McDonald's brothers then to Kroc, but it was the act of a desperate man since his milkshake company was ready to go belly up.

McDonalds is very focused on the standards of the legal aspects. This is the case because McDonalds has dealt with many lawsuits since the corporation has been created. For example, in the famous coffee case,

Much like a smile, the “Golden Arches” can be understood in any language. The McDonalds brand is the most well-known, internationally embraced fast food empire. McDonalds operates over 31,000 franchises throughout the world, with the United States leading the way with a whopping 13,381outlets as of May 2009 [1]. McDonalds has the fast food market cornered, offering an increasing variety of food of beverages, marketed to people of all ages to eat at any time of the day. However, being a corporate giant has its issues. McDonalds has faced a lot of criticism for its high-fat, high-sugar, potentially addictive menu. While the corporation is not likely to outright admit responsible for its actions, McDonalds has seen some changes to address

All in all, the case has shown that although McDonald’s needed to adopt to certain industry changes in

In addition, McDonald’s has been facing a series of lawsuits and defamations. An example of such

Since McDonald’s is the most well know fast food chain in the world with a market cap of 69.35 billion, brand recognition is their biggest strength. The secret of McDonald’s success is its willingness to innovate and maintain consistency in the operation of its many outlets. In recent years McDonald’s has introduced Premium Salads, Snack Wraps, fresh Apple Dippers in the United States, and Corn Cups in China. Also, McDonald 's products are priced so low that economic conditions are almost insignificant.

The plaintiff, Monet Parham, a California mother of two, sued McDonald’s overly exploiting children market on Oct 2010 (Dan, 2011).She claimed that McDonald’s gave out alluring toys that come with the meals in order to lure kids into unhealthy diet. The mother also stated that “McDonald’s make it so much harder to say no to her kids when they are really want those toys” (York, 2010). The CSPI (Center for Science in the Public Interest) confirmed that “kids do not have the cognitive maturity to understand the persuasive intent of advertising” (York, 2010). Later on, the ban of serving Happy Meals