DMS ISBM ANSWER SHEETS – The case highlights the ethical issues involved in Kentucky Fried Chicken’s (KFC) business operations in India
DMS ISBM ANSWER SHEETS – The case highlights the ethical issues involved in Kentucky Fried Chicken’s (KFC) business operations in India
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Business Ethics
Case 1: KFC (Marks 20)
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. 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.
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 the early 1930s by cooking & serving food for hungry travelers. 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. Yum! Brands is run by David Novak, Chairman & CEO. 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 Division is run by Cheryl Bach elder, President and Chief Concept Officer.
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.
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 farmer’s 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.
Weaknesses
Non Ethical business practice.
PETA Protest. · KRRS Protest.
MSG flavour in chicken.
Opportunity
Retail boom in India.
Indians youth are adopting western culture.
Indian Economy.
Cosmopolitan Rapid Development.
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.
Questions:
Since its entry in India in 1995, KFC has been facing protests by cultural & Economic activists and farmers. What are the reasons for these protests?
Do you think in the light of fierce competition, it is justified for business organizations not to give importance to ethical values at the cost of making profits? Why or Why not
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