Business Ethics and CSR of KFC

Submitted By:

Nitin Mittal (029)

Sahil Malhotra (059)

Business Ethics

Business Ethics can be defined as the critical, structured examination of how people& institutions should behave in the world of commerce.

In particular, it involves examining appropriate constraints on the pursuit of self-interest, or (for firms) profits, when the actions of individuals or firms affects others or it is a specialized study of moral right and wrong.

It concentrates on moral standards as they apply particularly to business policies, institutions, and behavior

Characteristics of Business Ethics

Some business ethics are imposed by law. Business ethics is the behavior that a business adheres to in its daily dealings with the world. The ethics of a particular business can be diverse. Good business ethics should be a part of every business. The important characteristics of business ethics are:-

• As a guide: - Business ethics constitutes the guiding principles of business functions with the help of this, businessmen can lean about the progress, situation, environment and conditions of the business.

Characteristics of Business Ethics• Goals and means: - Business ethics is that branch of the

business environment in which can study about the goals and means for the rational selection of sacred objects and their fulfillment

• Art and Science: - Business ethics is concerned with the principles of business behaviour, standards, moral values etc. With the study of business ethics, we can show the difference between good and bad

• Study Human Aspects: - Business ethics all those which are concerned with human aspect. It provides information to customers, government, society etc, on good or bad, right or wrong conducts of business

BACKGROUND OF KENTUCKY FRIED CHICKEN

• KFC is based in Louisville, Kentucky, and is the world’s most popular chicken restaurant chain.

• Founded by Colonel Harland Sanders in in the early 1930s by cooking & serving food for hungry travellers. In 1952 Sanders started franchising his chicken business & named it as Kentucky Fried Chicken

• KFC is part of Yum! Brands, Inc., the world's largest restaurant company in terms of system restaurants, with more than 36,000 locations around the world.

BACKGROUND OF KENTUCKY FRIED CHICKEN

• KFC operates more than 5,200 restaurants in the United States and more than15,000 units around the world. 109 countries and territories around the world.

• Every day, more than 12 million customers are served at KFC restaurants.

KFC’s Entry in INDIA

• KFC was the first fast food multinational to enter INDIA , after the economic liberalization policy of the Indian Govt. in early 1990s.

• KFC received permission to open 30 new outlets across the country & Opened first fast food outlet in Bangalore in June 1995 by targeting upper middle class population.

• PepsiCo planned to open 60 KFC and Pizza Hut outlets in next 7 yrs in the country.

Abstract

• The case highlights the ethical issues involved in Kentucky Fried Chicken's (KFC) business operations in India.

• KFC entered India in 1995 and has been in midst of controversies since then.

• The 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 flavor enhancing ingredient) as allowed by the Act.

Abstract….

• Since the late 1990s, KFC faced severe protests by People for Ethical Treatment of Animals (PETA), an animal rights protection organization.

• 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.

ISSUES

• Understand the significance of cultural, economic, regulatory and ecological issues while establishing business in a foreign country.

• Appreciate the need for protecting animal rights in developed and developing countries like India.

• Understand the importance of ethics in doing business

• Examine the reasons for protests of PETA (People for Ethical Treatment of Animals )

• Identify solutions for KFC's problems in India

Problems for KFC

• Protests by farmers led by the Karnataka Rajya Ryote Sangha (KRRS) & the farmers leader was Nanjundaswamy who used the term “junk food” against KFC.

• Protests by cultural & Economic activists.

• Protests by PETA in the late 1990s.

• Support of celebrities in against of KFC

SWOT ANALYSIS

Strengths

• Understand the Culture, Regulatory & Ecological issues.

• Understand the importance of Ethics in doing business

• Examine the reason for protests of PETA

• Identify Solutions for KFC‟S Problems in India

SWOT ANALYSIS

Weaknesses

• Non Ethical business practice• PETA Protest• KRRS Protest• MSG flavour in chicken

SWOT ANALYSIS

Opportunity

• Retail boom in India• Indians youth are adopting western culture• Indian Economy• Cosmopolitan Rapid Development

SWOT ANALYSIS

Threats

• MSG chicken flavour• PETA like organizations• Political parties Protesting for junk foods• Protest support from famous Personalities like

Anil Kumble, Aditi Govithrikar, John Abraham etc

Present condition of KFC in India

There's more to KFC than great food. Now KFC promote education, diversity and animal welfare in a number of positive ways.

YUM! Brands, Inc. ("Yum") is committed to conducting its business in an ethical, legal and socially responsible manner.

KFC is as committed to the environment as we are to our food and customers and committed to the humane treatment of animals.

Yum! Brands, parent company of KFC, formed the KFC Animal Welfare Advisory Council, which consists of highly regarded experts in the field.

The Council provides with information and advice based on relevant data and scientific research.

The Animal Welfare Advisory Council has been a key factor in formulating our animal welfare program.

Conclusion

• Finally, from this case it is understood that every business organization should understand the importance of ethics by understanding the culture, regulatory & ecological issues in different countries.

• KFC should implement a farm level guideline & audit program - a program which is industry-leading in the areas of poultry care and handling, mainly for their suppliers in the broiler industry

Conclusion

• Business ethics is the value of what should be done and what should not to be done from the business point of view.

• Organizations are coming to realize the bottom-line benefits of incorporating the sustainability into their DNA