This report was produced to analyze the business ethics of Kentucky Fried Chicken (KFC). First, the report started with a brief description on the company background. Next, it is continued with identification of the ethical dilemmas - poor quality products, animal abuse and poor working condition of KFC, provided from stakeholder analysis and examples from their history. After that, the report moved on to the importance of the mentioned ethical dilemmas and how KFC is dealing with it. The actions taken are product quality improvement, animal welfare issues and establish union.
This included the application of the various ethical theories. Then, it is continued with the good side of KFC when the analysis was done on KFC best practices and values that KFC are practicing. It included Corporate Social Value (CSR) where they offered ‘Projek Penyayang KFC’ in Malaysia and Colonel’s Scholar Program, practicing the value of hope and love; and established supplier code of conduct by practicing the value of justice. Further, the author put on suitable recommendations for KFC such as Go for Organic, with the hope that the plan recommended can help KFC in expanding their business towards a brighter future.
Lastly, this report was closed up with a conclusion justifying the essentialness of business ethics. KFC, founded and also known as Kentucky Fried Chicken, is a chain of fast food restaurants based in Louisville, Kentucky and is now one of the well-known fast food restaurants which operates in more than 11,000 branches in more than 80 nations and territories throughout the world. Examples are UK, China, Thailand, Malaysia, Kuwait, Spain and Barbados, Puerto Rico, Pakistan and many more.
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KFC started with Colonel Harland Sanders who grew up to become a personage the world known as Colonel Sanders throughout the years, discovered his penchant for cooking when he was only 9 years old. KFC is now regarded as the most chicken restaurant chain providing a special mouth watering taste fried chicken that cannot be replaced with chicken's natural juices sealed-in; leaving KFC with pride as a fast-food restaurant that provide customers with a selection of home-styled side dishes and desserts such as coleslaw and ice-creams to make a wholesome, complete and satisfying meal despite only serving great tasting chicken. According to Lee Flamand (eHow, 2011), “an ethical dilemma is a situation wherein moral precepts or ethical obligations conflict in such a way that any possible resolution to the dilemma is morally intolerable. In other words, an ethical dilemma is any situation in which guiding moral principles cannot determine which course of action is right or wrong. ”The competition between fast food restaurants is increasing where KFC have to come out with more choices of selection to meet the demand of their patrons.
At the same time, they have to think of ways to make more sales, cut costs, and basically maximize the profits of the firms and faced many ethical dilemmas concerning their products and consumers during the process. The ethical dilemmas include poor quality products, animal abuse and poor working conditions. David Ludwig (2009), director of a Boston children’s hospital said that “fast-food consumption has been shown to increase calorie intake, promote weight gain, and elevate risk for diabetes” .
Fast Food is usually unhealthy, and can often lead to loyal consumers having weight problems. This matter got worst to KFC where in year 2006, KFC was being sued for frying its chicken with cooking oils that contain Trans-fats, which can contribute to heart disease and diabetes. According to Mayo Clinic, trans fat is also called trans-fatty acids and assumed by some doctors to be the worst type of fat which both raises "bad" (LDL) cholesterol and lowers "good" (HDL) cholesterol. A high LDL cholesterol level in combination with a low HDL cholesterol level increases the risk of getting heart disease . Trans fat is bad that it boosts the risk of coronary disease and people should only consume no more than 2 g per day. However, KFC claimed its products "meet or exceed all government regulations. " But as the Center for Science in the Public Interest, the activist group behind the lawsuit, points out, a three-piece extra-crispy combo meal, which is called ‘dinner-plate’ in Malaysia, contains 15 g of trans fat which is more than a person should ingest (Time magazine, 2006).
In China, some of the outlets in Xianyang city were being accused for using the same frying oil to fry chickens up to 10 days and this can cause cancer . Furthermore, other examples such as: customers cut her tongue and mouth after plastic was been found when she consumed coleslaw, bloody bandage found under KFC baked beans, worms discover in sandwiches, children became sick after eating KFC in Colorado, proved that KFC poor quality products issue has achieving a very dangerous level . Added on, some KFC outlets were even forced to pay compensation for injuries.
Example: KFC in Plymouth has been fined $13,000 for selling raw chicken to their customers . In year 2009, KFC in central London faced food hygiene charges with the cases where countless sighting of cockroaches, mice, rats and flies flying ahead was found when an investigation was done in the city. The owner has been fined ? 20,000 and was asked for temporary shop closed down.
Since the late 1990s, KFC faced severe protests by People for Ethical Treatment of Animals (PETA), an animal rights protection organization. The improper breeding of birds combined with improper working conditions of workers and lack of ethically efficient operation processes led to improper practices in KFC’s supplier’s poultry farms. According to Donald G. McNeil Jr. who published his article in New York Times in 2004, “an animal rights group involved in a long legal dispute with KFC released a videotape showing slaughterhouse workers for one supplier jumping up and down on live chickens, drop-kicking them like footballs and slamming them into walls, apparently for fun”.
Furthermore, other acts of cruelty which include suffocating a chicken by tying a latex glove over its head, workers tearing beaks off, spitting tobacco juice into birds' mouths, ripping a bird's head off to write graffiti in blood, plucking feathers to "make it snow," and squeezing birds like water balloons to spray feces over other birds were all saw by an under investigator who works for the company . KFC suppliers even cram birds into huge waste-filled factories, breed and drug them to grow so large until the chicken could not even walk, and often break their wings and legs. The chickens’ throats were slit and they were dropped into tanks of scalding-hot water often while they were still conscious during slaughtering process . As a result KFC was accused of animal abuse by PETA, on the supplier’s farm.
Poor working conditions is always an issue for KFC especially for the branches located in big countries such US, India and China. In US, workers in Pilgrim’s Pride Poultry farm did animal abused action just to alleviate boredom or vent frustrations especially when so many chickens were coming in that they would have to work late . On the other hand, according to the city government of Guangzhou, China; effective from January 1 year 2006, the minimum wage for part-time labor set by local regulations is at 7. 5 Yuan per hour in big cities such as Guangzhou but KFC only paid them with 5. 5 Yuan. KFC were bombarded for this contract as it had violated the legal rights of employees. KFC allegedly force part-time employees to work the same hours as full-time staff but fail to pay them any of the benefits to which full-time staff are entitled.
Adding on, employees who work more than five hours a day and 30 hours a week should be treated as full-time staff and receive the same fringe benefits according to the mainland laws. However, the Guangdong labor authority's clarification indicates that part-time working students are not protected by the law, which is a relief for the employers involved. It was extremely unfair for those part-timers (China Business, 2006).
According to De George, R. T. who has written in his book entitled ‘Business Ethics (5th Edition) in year 1999, he declares that an ethical dilemma occurs when the choice is defined unclearly between alternative actions with moral content. Whether a specific behavior is right or wrong, ethical or unethical is often determined by the concerned stakeholders and an individual’s personal ethics. As a result, values, judgments, and complex situations all play a critical role in ethical decision making.
The reason KFC using trans oil at first because the food produced is much tastier. Trans oil which is introduced in 1990’s, claims that it is suitable to substitute natural oil and healthy. It has better performances under high heat, longer shelf life and also it is cheaper . For example: The crispy fried chicken is resulted crispier when frying with trans oil. Here, it is very clear that KFC has a bad judgment in choosing the types of oil to be used and caused them being sued on their judgment.
KFC also react as activist stakeholder where by using trans oil which is cheaper, they believe their investment will giving them a good return in profit. In these new era with full of busyness and stressful lifestyle, so as dual-working families where both parents are forced to work to increase the income of a family, more and more people are fully dependent on quick meal solutions and most will opt for fast food. Fast food such as KFC is not only a fast food restaurant, but the brand- KFC and their products have highly encounter a place in everyone’s life as it really helps in saving a meal-preparation time.
Although people start to be more health conscious of having good health and body figures, fast food especially KFC may cause obesity according to research. Health Organizations in most development countries such as U. S, and U. K, have started to encourage their citizens to concern more about their having healthy life by having nutritious meal. Since KFC started their operations and expanded their business globally, the ‘chicken-meal’ they offered, only gains a bad image and reputation of a fast food that provides greasy unhealthy food.
Fast food has the potential to impact directly and visibly on people's well-being like obesity. With this case, KFC practice the theory of utilitarianism which is also called ‘the greatest happiness principle’ where they have taken an action which results greatest amount of people receiving the greatest amount of good. So, KFC came out with Kentucky Grilled Chicken which is marinated with savory blend of secret herbs and slow-grilled to juicy perfection. This new product has fewer fat grams, fewer calories, and less sodium than original recipe chicken.
Besides, all KFC chicken products practice Zero Grams Trans Fat per serving where they have found the perfect recipe by incorporating the Colonel’s 11 herbs and spices with a new cooking oil that contains zero grams of trans fat. Beside fried chicken, many others favorite KFC side dishes such as mashed potatoes and wages are now served with zero grams of trans fat \. KFC’s new products and Zero Grams Trans Fat plans have help them to push up their brand where they tend to promote happiness through serving customers with nutrient food and it is also a better option for health-conscious customers.
According to Brooks and Dunn (2009), ‘The ethically correct action is the one that will produce the greatest amount of pleasure or the least amount of pain. ’ Since the case of animal abuse being explored to the world, KFC faced the toughest challenge in where it heated up the public awareness towards the animal welfare. People all around the world started to be concerned about this issue as KFC has their branches worldwide. Animal abuse case occurred huge ruckus by the public has caused the corporation to lose their image and their reputations are highly damaged because of the law stated by PETA.
After the incident, stakeholder’s expectations and demands regarding the standardized guidelines of animal treatment were also increased. The case not only affected the business all over the world, but also its brand (KFC) reputation, turnover and profit as KFC has their branches in most of the countries and hence, caused the significant impacts on the relationship between contemporary organization such as McDonald, Burger King, Wendy and Safe-way as they also afraid that KFC might drag them down, their shareholders such as the owners of each KFC branch restaurants and finally public opinion.
Just like other fast food chain, KFC seems trying to minimize their budget and hence maximize their profits without considering their suppliers and customers instead they should put on priority on the importance of ethics. Suppliers just did what requested by KFC without thinking their negative impacts when requisition for chicken’s meat increased. Here, KFC react brilliantly where they did not run away from reality as several actions had been taken to overcome the problems and tried to make the issue - a ‘learning’ history for all.
KFC took an immediate responds and developed a series of plan to overcome the problems and this action has become a trend for KFC in the future. When receiving a little pressure from PETA, KFC Canada agreed to a historic new animal welfare plan that they became the first major restaurant chain ever in whole world to purchase all of its meat exclusively from controlled-atmosphere killing (CAK) slaughterhouses and dramatically the lives and deaths of millions of chickens for Canada. CAK is a method of slaughtering poultry where chickens do not suffer when being removed from the crates, hung upside down, shackled, bled, and scalded in defeathering tanks which leads to struggling, stress, and broken wings. The processes work the oxygen in the transport cages is replaced with other gasses such as carbon dioxide, argon or nitrogen to gently put them into ‘sleeping mode’.
The birds die from the lack of oxygen, and are dead before they are ever handled by slaughterhouse workers . Besides, there are no chances for workers to abuse the chicken as they never have to chance to handle live chickens in CAK. This process even provide with better results when workers do not need to struggle with flapping, scratching, vomiting, and defecating chickens, lights can be kept bright throughout the process and the air maintain at its cleanliness level .
As stated clearly in KFC main website, all suppliers must comply with the KFC policy which is they are strictly not allowed to use hormones and steroids for any purposes, including improving growth in chickens due to the genetically engineered for faster growth and antibiotics are strictly prohibited. To show their sincerity in transformation, KFC even formed the KFC Animal Welfare Advisory Council, which consists of highly regarded experts in the field who will provide information and advice based on relevant data and scientific research which has been a key factor in formulating their animal welfare program.
To rebuild the public confidence towards KFC, the company allowed PETA to review its animal welfare audit forms every six months. Employees play one of the most important characters in the whole process. Without these people, KFC might not have such a huge success in their business until today. After the incident of underpaying their part-time workers in Guangzhou, they set up trade union branches across the province.
This incident has highly touched up people awareness to protect human rights especially in China when media from Shanghai, Taiyuan, Tianjin, Fuzhou and Beijing reported similar findings and have caused uproar across China. Furthermore, the unfair treatment to employees increased when labor officials in Shanghai claimed that they have not found any regulations in KFC outlets as the rules in Shanghai do not apply to part-time or to student.
The unclear stipulations on the rights and benefits of part-time or student employees enable KFC to make use of the legal loopholes as all fast-food restaurants are profit-making enterprises that wish to earn more profits by taking advantage on their part-time employees. KFC practice the theory of egoism here as the company only care about themselves rather than considering about its’ employees profits. "Cheating part-time workers is also a common practice in the US because companies take advantage of the fact that most part-timers are young, inexperienced and lack representation.
These businesses should be required to adhere to the rules and regulations of the host country," said TangXiaojing to China Daily in year 2007. This whole case also tells China and the world that people have to be aware of the unequal situation for laborers in China, and to wonder why the legislation is always so vulnerableIn return, KFC claimed that they would took things seriously by looking forward into the situations and will approached the local trade union of the city for guidance of set up the trade union.
KFC has applied the theories of fairness here where everyone has been free to receive rewards for their efforts, which is also known as procedural justice (Beauchamp ;amp; Bowie, 1997). The president of Yum Brands Inc promised that KFC will accept every statements ruling Chinese government makes over its alleged illegal exploitation of part-time staffs in China. And they would do whatever is requested by the trade union after they have concluded their investigations into the employment of KFC’s part-time workers.
Besides, trade union in several cities in China will work together with local labor and social security departments to investigate the entire fast food restaurants in China which were suspected to have similar unlawful behavior to protect the rights of employees. With the cooperation between KFC and members of All China Federation of Trade Union to establish KFC own union, the author believes the cases of unfair treatment to employees will be lowered and KFC branches in China will be the model for other KFC in other countries .
The brand KFC has been carved in people’s heart as one of the best fried chicken restaurant and in return, KFC participated themselves in CSR as CSR is all about how a company manages the business processes to produce an overall positive impact on society. KFC takes its CSR priority faithfully and makes a dedicated effort to fulfill its tasks in every area including the community, education, diversity, market place, workplace, and animal welfare which is also benefiting to all including its stakeholders.
CSR which is also claimed to be a marketing purpose is logically captured in the new definition of marketing answered by the American Marketing Association (2004) which stated “marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders”. KFC practiced the value of Hope and Love. In Malaysia, KFC Malaysia has set up ‘Projek Penyayang’ as appreciation for greatly support by the Malaysian. Project Penyayang’ which was founded in 1995, was purposely developed to provide food to a total of 80 homes every quarter to enable thousands of orphans and underprivileged to enjoy KFC meals. With a heart of caring, KFC fulfill the hope of orphans who wished to have KFC. ‘Tabung Penyayang KFC’ which is a unique fund representing a percentage of revenue generated from sales of KFC’s Kids’ Fun Meals was set as a charity fund to help children and needy through various CSR Program. Adding on, all the programs also included donation, charity, and organize open house dinner particularly to those less fortunate, elderly and orphaned .
Caring is about wanting another person to succeed and do well in life and their career. With a heart of caring, KFC cares about students education. KFC create a fund – Colonel’s Scholars, offering scholarships for entrepreneurial drive and strong perseverance high school seniors who need financial helps to support their school fees in their study career. Students who are selected will received up to $ 20,000 to receive a bachelor degree program in the university the students have chosen inside their cities only . KFC practice the value of justice where they protect the rights and punish the wrongs. Supplier code of conduct is established by KFC U. S. which is committed to protect all U. S. suppliers’ employees’ rights by conducting its business towards legal, ethical and socially responsible manner. All KFC suppliers are required to follow and abide by all applicable laws, codes or regulations which includes not limited to any local, state or federal laws regarding wages and benefits, employees’ compensation, working hours, equal opportunity, worker and product safety.
All suppliers are expected to confirm their practices to the published standards for their industry in order to get the contract to supply goods to KFC. Staffs of suppliers are protected in many areas where they must have safe and healthy working conditions and working schedules, non-discrimination occurs in industry, child labor issue where employees below 14 years old are strictly prohibited from working, forced and indentured labor and lastly notification to employees where notices of policies can be clearly explained to them.
With addition, suppliers who are failed to follow the Code may cause them to disciplinary action which might include the termination of the Supplier relationship with KFC. KFC pay full respect to all the employees as they work for suppliers who supply chicken meats and goods for KFC who claimed to be working indirectly for KFC. Marketing strategy used to be very important in a business as a well-planned marketing strategy helps a business to earn more profitability, well-known brand mark and loyalty from customers.
As time goes by, marketing strategy cannot be dependent on just meeting the needs and demands of all stakeholders. KFC should now by right focus on how to deliver a better service and products’ quality to customers as the brand – KFC has already been recognized by everyone in the world. Emphasizes should be done on consumer health, products’ quality and social responsibility initiatives as people start conscious about having good health and enough nutrients. When people start going for organic, KFC should go for it too!
Organic products and other ingredients are grown without the use of pesticides, synthetic fertilizers, sewage sludge, genetically modified organisms, or ionizing radiation. Organic meat, poultry, eggs, and dairy products are come from animals such as chickens and cows that do not take antibiotics or growth hormones. Going for organic food products will increase the modal of production and it needs a long period of time for this huge transformation as there are few steps that have to be followed.
According to USDA National Organic Program (NOP), a Government-approved certifier will inspect the farm where the food is grown to make sure the farmer is following all the rules necessary to meet USDA organic standards before a product can be labeled "organic,". Companies that handle or process organic food before it gets to your local supermarket or restaurant must be certified, too’.
On the other hand, it will be the hardest decision for KFC as they have to do surveys and further consideration whether the program is suitable for every KFC branches in the whole world as KFC have to reconsider about looking for new trustable suppliers that can continuously provide organic food and it is tough. KFC can always start slowly from the beginning by providing several choices from organic food such as organic salad, organic soya bean drink instead of carbonated flavored drinks, and mashed potatoes made from organic potatoes.
If the program run with success, KFC will become the first ever fast food chain that provides organic food products and the author strongly believes that the strategic planning will surely increase the sales of KFC and gaining more profit although KFC products will be sell at higher prices due to highly increased modal.
Conclusion, ethics is definitely necessary for a business to grow successfully, become more significant and more organized. A business can highly impact on the people’s lives and circumstances through providing jobs, life organization, creating wealth and inspiring others to grow their own business.
Therefore, the business maybe ruined and leaves it with a bad reputation if an organization is not having a proper understanding on business ethics. From bad to good, KFC has gone through every hard time and now moving towards a better future when they finally overcome most of its ethical issues. People do make mistakes and learn from mistakes so as KFC. KFC will learn from their mistakes and make the mistakes to the power of change. The author strongly believe that KFC will do their best in meeting everyone’s need and KFC will become the first priority for every human when they thinking of nice and tasty fried chicken.
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