16march2013_kfc in india_ethical issues_arun trikha
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KFC Controversy - Ethics ProjectTRANSCRIPT
Ethical Issues: KFC in India
Submitted by Arun Trikha
4706/1016 March 2013
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KFC – Background
Founded by Harland Sanders in early 1930s in Corbin Kentucky,
the US
In 1935, Sanders was awarded with
the name of Kentucky Colonel
by the State Governor, for his
contribution to state’s cuisine
In 1952, Sanders started franchising
his chicken business and
called it as Kentucky Fried
Chicken
By 1964, Sanders franchised more
than 600 outlets in the US and
Canada and sold his interest in the
company in the US for USD 2 MM to
the group of investors
In 1966, Company was listed on New
York’s stock exchange
In 1971, company was acquired by Heublein Inc.for USD 285 MM
In 1982, Heublein Inc. was acquired
by Reynolds Industries and In
1986, the company was
further acquired by PepsiCo for USD
840 MM
By 2004, KFC emerged as world’s most
popular chicken restaurant chains
with 11,000 restaurants in over
80 countries
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KFC – At Present
One of the largest food chain serving chicken
Part of global restaurant system known as Yum!
Company’s headquarters are found at Louisville, Kentucky in the US
Roger Eaton, Chairman and CEO of KFC
Operating 5200+ restaurants in the US and over 15,000 units around the world
Earned a revenue of USD 15 Bn in 2011
Offering services to over 12 MM customers in 120 countries around the world
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KFC – India
First fast food multinational food chain to enter India after the economic liberalization policy of the Indian government, in early 1990s
Received permission to open 30 new outlets across the country from the Indian government
Opened first fast-food outlet in Bangalore as it had a substantial upper middle class population
Planned to open 60 KFC and Pizza Hut outlets in the country in the next 7 years
Faced opposition and entangled in various controversies due to opposition from farmers, nationalists, and economists
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KFC – Problems Faced in India
Protest by angry farmers led by the Karnataka Rajya Ryota Sangha (KRRS). Farmer leader Nanjundaswamy led the protest and condemned KFC’s entry to India
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Protest by cultural and economic activists2
Protest by PETA in the late 1990s3
Support of celebrities in against of KFC4
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Suppliers have to adhere to the ethical policies of KFC which includes paying fair wages to the labor, not employing under age labour, and avoid placing harmful chemicals in their commodities
Strict Vendor Engagement
Policies
Health and Safety of Workers
The company also looks out for the health and safety of their workers. KFC always ensures that their employees work for them voluntarily. Company detests forced labour and ensures that their employees work for them voluntarily
Ethical Employment
Policies
Kentucky Fried Chicken employment practices are also ethical. This is due to the fact that the company does not discriminate against individuals on the basis of race, gender, disability or any other factor
Fare Wages The issue of wages is also top on KFC's list. The company believes that workers should be paid
according to their efforts. Consequently, there is an element of fairness when it comes to the way the company treats its employees
KFC – Ethical Issues
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Regulatory authorities found that KFC's chickens did not adhere to the Prevention of Food Adulteration Act, 1954. Chickens contained nearly three times more monosodium glutamate(popularly known as MSG, a flavour enhancing ingredient) as allowed by the Act
Non-Conformity with Food Product
Regulations
Ill-Treatment of Bird’s in KFC
PETA asserted that KFC'S suppliers normally mistreat chicken in the slaughter houses. They claimed that the chicken are chained by metal shackles and placed in electric water baths
Improper Breeding
Birds were fed genetically modified feed in order to accelerate their growth rate
o As a result they suffer from ailments such as extreme obesity and fatty livers and kidneys, heart attacks and other health problems
KFC – Ethical Issues (Negative)
Overcrowded Farm Chickens were stuffed by tens of thousands into over crowded sheds where they hardly find
space to move freely
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PETA – People for the Ethical Treatment of Animals
American animal rights organization based in Norfolk, Virginia
A non-profit corporation with 300 employees and 2 MM members and supporters
Claims to be the largest animal rights group in the world
Slogan says "animals are not to eat, wear, experiment on, or use forentertainment”
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Campaigns by PETA (1/3)
Launched Extensive Program
Introduced Mass Education Program
In late 1990s, PETA started a protest against KFC in India. PETA had been protesting for a long time against KFC at international level. PETA highlighted that KFC was extremely cruel toward chickens and did not keep the birds in hygienic conditions. The various steps taken by PETA are as follows:
PETA India launched an extensive protest program against KFC’s Indian outlet. PETA urged the Indian public to not to go to KFC’s restaurants and demanded outlets closure in India
PETA started mass education program to educate people about the chickens condition at KFC poultry farms. PETA distributed pamphlets with a graphic description of cruelty done to the chickens. PETA used a slogan “KFC stands for cruelty” for the protest
Released Video Documentation
PETA also released a video portraying the daily suffering of thousands of the chickens in a factory farm
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Campaigns by PETA (2/3)
"Each bird whom KFC puts into a box or a bucket had a miserable life and a frightening death. People would be shocked to see our footage of a KFC supplier's employee who walks through a barn, carelessly lighting lamps and letting flames fall on the terrified birds. The air inside these filthy barns reeks of ammonia fumes, making it difficult for the birds to breathe. No one with a grain of compassion should set foot in KFC.” – Ingrid Newkirk, Director, PETA
"The chicken they serve is full of chemicals, and the birds are given hormones, antibiotics and arsenic chemicals to fatten them quickly." – Nanjundaswamy
In 2004, PETA accused KFC of cruelty towards chickens and released a video tape showing the ill-treatment of birds in KFC's poultry farms. However, undeterred by the protests by PETA and other
animal rights organizations, KFC planned a massive expansion program in India
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Campaigns by PETA (3/3)
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SWOT Analysis
Delicious and well-liked recipes
First mover advantage/ global penetration
Widely recognized brand image
Strong cash flow generation
Loyal customer
Large number of outlets at prime locations
Brand recognition
Close substitutes
Franchising strategy is not culture sensitive
Product innovations at long gaps
Inconsistent services across the outlets
Usage of added flavors such as MSG
Retail boom in India
Growing Indian economy
Adoption of western culture
Increasing trends to have meals outside home
Economy of scale
New entrants
Health issues
Change in customer demand
Organizations working for animal rights
Spread of diseases such as bird flu
Str
engt
hsO
ppor
tuni
ties
Weaknesses
Threats
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Conclusion
KFC has to deal with different ethical issues in their capacity as a business corporation. Any company worth its salt should have a code of ethics and must be prepared to stick by it KKC has breached a substantial number of their ethics codes
The purpose of this study was to provide an in-depth analysis of the fast food industry through two contrary ideas; the moral and legal obligations that KFC has adhered to and also the ethical misgivings that the company has engaged in too
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Sources
http://www.articlesbase.com/ethics-articles/ethics-at-kfc-1924425.html
http://money.cnn.com/2004/07/20/news/fortune500/kfc/index.htm
http://www.andhrauniversity.info/sde/case%20studies%20mba/044%20KFC%20in%20India%20-%20Ethical%20.pdf
http://www.icmrindia.org/PDF/Business%20Ethics.PDF
http://multinationalmonitor.org/hyper/mm0196.03.html
http://www.nytimes.com/2003/01/06/us/group-says-it-will-begin-a-boycott-against-kfc.html
http://www.kentuckyfriedcruelty.com/h-campaign.asp
http://www.peta.org/
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Questions ?