SCHOOL OF ADVANCED MANAGEMENT

Assignment Title:
This Assignment is submitted for the partial fulfillment of
Internal Assessment for the Course Paper titled
PGDM V C-2
Business Ethics and Corporate Social Responsibility

Batch: 2008-2010
Submitted to:
Prof. Gaurav Singh

Submitted by:

Dhaval
Choudhary
Neeraj Ramani`
Rajiv Ranjan
Ritesh Thombre
Rohit
 Chourasi
Saurabh Sohani

Introduction

The word ethics is derived from the Latin language where it denotes a moral
philosophy. In the English language, ethics is the study of values and
customs governing a given social group. Ethics requires a differentiation
between wrong and right, acknowledgment of responsibility and knowing
what is good or evil. Ethical norms assist human beings in the process of
judging rightful acts. Consequently, the concept can be applied in the
practices and policies used by large organizations. (Walton, 1992)

The company chosen for analysis is Kentucky Fried Chicken (KFC) fast food
restaurants. The company's headquarters are found at Kentucky in the US.
Additionally, it is one of the most well known restaurant chains in the world
especially with reference to chicken. It boasts of over eleven thousand
restaurants located in over eighty countries of the world. Examples here
include, UK, China, Thailand, Kuwait, Spain and Barbados, Puerto Rico,
Pakistan and many more. The company's major product is chicken. These are
served in various forms such a Chunky chicken hot pie, chicken fillets,
chicken sandwiches among others. On top of these, the company also serves
a variety of burgers and other non-chicken related foods. In total, there are
three hundred products that the company offers the public. KFC is part of a
global restaurant system known as Yum! This is the reason why the company
normally teams up with other restaurants under the Yum! Brand like Taco
Bell and Pizza Hut.

Ethics at KFC

Controversial aspects about KFC's activities

KFC ethical activities have been put to the test when some animal rights
activist challenged KFC' treatment of chicken. In the month of June 2008, the
People for the Ethical Treatment of Animals (PETA) together with Hollywood
actress Pamela Anderson sent written complains to the KFC managing
Director in the UK for unethical treatment of chicken. According to this
group, Kentucky Fried Chicken is not keen on the way their suppliers treat
their chicken in their farms. The group asserted that these suppliers make
the chicken grow too fast thus preventing them from walking. (AOL, 2008)

The latter activists also asserted that KFC'S suppliers normally mistreat
chicken in the slaughter houses. They claim that the chicken are chained by
metal shackles and placed in electric water baths. These groups also
complained about the way chicken are still alive during the process of de-
necking them. They believed that chicken's living and dying conditions
should be improved. These assertions were further justified by the latter
group when they claimed that KFC Canada followed suit by changing some of
their policies. According to the animal rights activists, the Canadian chain
opted to consider how chickens were bred before purchasing them from
suppliers. They even offered vegetarian alternatives for their respective
clientele. Consequently, the celebrity Pamela Anderson- who was speaking
on behalf of PETA asserted that she would stop consuming KFC ‘s products
until they complies with their suggestions.

Another closely linked media report was with regard to reports made by
undercover reporters working for PETA. The latter reporters had made video
cameras of the way KFC treats its animals. Some of them were quite
disturbing as they depict chickens being thrown against walls, being beaten
and being slaughtered mercilessly. The latter group also claimed that KFC
suppliers overcrowd their chickens and make the lives of those respective
animals very miserable. Some of these suppliers also engage in beak
trimming; which is the process of cutting off chicken's beaks. In response to
these allegations, KFC company asserted that they had formed a committee
to tackle the issue of animal rights. However, this committee was not
collaborating with any of the animal rights movements. Besides that, the
company was also quick to reply that some of their suppliers who engage in
beak trimming were only doing what normal chicken farmers are doing too.
Additionally, the company claimed that their suppliers were not mistreating
their animals either. (Howell, 2000)

However, ethical experts would agree that KFC has breached its own ethical
policies. The company believes that all their suppliers should not engage in
any sort of malpractice. Nonetheless, according to UK law, beak trimming is
allowed for only thirty percent of the bird population in order to stop them
from hurting one another using their beaks. It is very clear that KFC ‘s
suppliers have breached this law as they trim almost all their chicken.
Besides that, the suppliers have also exceeded the maximum allowable bird
density for chickens as stipulated by the Department for Environment. They
recommend a maximum of thirty chickens per meter squared. Again, these
are all laws that have been ignored by KFC suppliers. In addition, the twelve
thousand demonstrations that have been conducted against KFC's suppliers
also indicate that the company is going about the issue in an unethical
manner. KFC's other outlets should follow the example made by KFC Canada
who only contract suppliers using controlled atmosphere killing. The outlet
also looks out for the welfare of chicken in their respective farms. (AOL,
2008)

KFC has faced a lot of moral discord for their wage conditions. The latter is a
characteristic that is synonymous with most fast food restaurants within the
country and the rest of the world. The company has been accused of
employing a substantial number of young employees who receive above
minimum wage. Although the company pays its employees slightly above
minimum wages, the company's huge profits are not reflected in the
incentives offered to its employees. As if this is not enough, a substantial
number of KFC employees have not been unionized. This gives the company
undue advantage because they have the capacity to change what
employees earn without getting any resentment from them. These poor
employment practices have been concentrated in some particular outlets
such as New Zealand and Canada. In New Zealand, the Company offered
different rates for youths compared to the rest of the employee base. This
caused a strike in the year 2003 after which the company agreed to reduce
their levels of employee treatment. In this regard, they asserted that they
would eliminate those youth rates but they never did. (The New Zealand
Herald, 2005)

After examining these issues, one can assert that KFC have demonstrated
unethical behavior in some selected outlets. The company even expects its
suppliers to have good working conditions but they have not managed to
clean up their house in all their outlets around the world. (Cragg, 2002)

KFC has also been in the news for their poor environmental policies.
According to some activists, KFC has not demonstrated good corporate
responsibility because of the type of suppliers who provide them with soy.
Soy is part of their chicken ingredients; a company known as Cargill supplies
it. According to the environmental activists, most of this soy is sourced in an
illegal manner according to large number of the reporters. Some of these
claims were as a result of investigations made by the environmental group
Green peace organization. In response to these allegations, KFC asserted
that they source their soy from Brazil and not from the illegal operations of
Cargill. However, the environmentalists still insists that that is not the case,
their soy comes from the Amazon forest and KFC is demonstrating that they
are not committed towards creating sustainable environment. There is no
way of knowing for sure whether these accusations are true, however, one
cannot ignore the fact that the environmental group did their own
investigations and found that there were some problems with the illegal
logging. (Brazil Magazine, 2006)

KFC has also been accused of utilizing the founder's names for a substantial
number of their commodities even when the founder did not approve those
commodities. KFC's founder was known as Sanders and he is one of the
individuals who came up with a unique recipe for creating KFC' chicken. At
that time, the founder was in charge of only a small portion of the restaurant
chain. However, with time, the company began expanding and he lost
ownership to other groups. The new owners have been using Sanders' name
in most of their commodities even when their recipes were not created by
the latter individual. It is therefore necessary for the group to come up with
honest advertisements and assertions about who was the true chef behind
some of their commodities. Otherwise, this is misleading advertising and
marketing. They are not adhering to the ethical rules of marketing. (Howell,
2000)

Another issue that the company is currently grappling with is firmly tied to
the nature of the industry that the company operates in; fast food
restaurant. According to health experts and other nutritionists, the type of
fats utilized when cooking foods highly affects the nutritional and health
value of the food. One particular type of fat that has received so much
attention from the corresponding individuals is Tran’s fats. Tran’s fats are
those types of fats that are emanated from oil during the hardening process.
The purpose of these Trans fats is to prolong shelf life and to make
commodities prepared through baking last longer. Despite these good
qualities, trans fats can bring about complicated health diseases that many
people in the UK are fighting, these include;

• Obesity
• Diabetes
• Coronary heart disease
• Other disorders
Consequently, companies that take their social responsibility seriously
should look for cooking oil that is either very low in Trans fats or has no
Tran’s fats at all. (Zwillich, 2006)If this alternative is not possible, then
companies ought to tell their consumers clearly that they are using Trans
fats so that consumers maker conscious choices. The company under study;
KFC has tried adhering to these ethical norms in some outlets but in others,
the company still continues cooking its commodities with these trans fats
and has not looked for alternatives. It should be noted that the UK
government has been particularly interested in fighting obesity.
Consequently, the government has set up some regulations that are aimed
at reducing this problem. Given the interest that trans fats has generated
from the public and the governor, it is KFC's duty to comply so as to
demonstrate good corporate citizenry and adherence to ethical principles.
The company needs to improve; the simplest way it can do this is by
revealing the amount of fat contained in their products.

There is serious cause for alarm in with regard to the trans fat issue because
there are hundreds of thousands of people who die annually as result of fast
food related complications. Consequently, KFC is contributing towards poor
health in the UK. If they are not careful, the company could keep losing a
substantial number of their consumers thus loosing business in the end. The
company should realize that the western world has been taken over by the
fast food culture. Individuals are so committed to their work places that they
have little time to cook at home. They are therefore depending on fast food
restaurants to feed them. Such an enormous responsibility for fast food
restaurants comes with enormous sacrifice. KFC as one such company ought
to give precedence to the health needs of their clients otherwise the
company will be operating in a selfish manner. (Sternberg, 2000)
Conclusion

As a restaurant operating under the fast food industry, there are some
ethical issues that come into play when considering the nature of the
industry itself. This is especially since the Health Ministry in the region
announced a battle against obesity. Also, KFC also 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. However, one must
not assume that the ethical issues facing KFC are one sided. Most times,
individuals tend to focus on the negative aspects of ethics and fail to look at
things from another angle. The purpose of the essay 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.

1. Fast food has a very high energy density. About 65 percent higher than a
typical diet and twice as high as recommended healthy diets which make us
eat more than we otherwise would. Energy density refers to the amount of
calories an item of food contains in relation to its weight. Foods with a high
energy density confuse the brain's control systems for appetite, which are
based solely on portion size.

2. British researchers from the Medical Research Council Human Nutrition

Center and the London School of Hygiene and Tropical Medicine have
determined that repeated eating at McDonald's or KFC or Burger King,
people are more likely to gain weight and become obese. This is because
fast food not only contains many more calories than traditional food, but also
is more likely to undermine normal appetite control systems.

3. By eating a Big Mac and fries, the body consumes almost twice as many
calories as you would if you ate the same weight of pasta and salad. Fast
Food restaurants feed the obesity epidemic by getting people to eat many
more calories than they need through persistent advertising.

4. McDonald's, KFC, and Burger King Menu items using nutritional data from
the fast food restaurants' Web sites, found that when we eat high energy
density foods, we don't reduce the portion size so we get a lot more calories
than we need. Our current society possesses a weak innate ability to
recognize foods with a high energy density. Food intake is assessed by the
size of the portion, yet a fast food meal contains many more calories than a
similar sized portion of a healthy meal. The conclusion is we are all being
fooled into eating too much food.

5. People get fat eating regular portion sizes, but since the food has a high
energy density, people gain weight. In evolutionary terms, the human
appetite was designed for low energy density foods. In other parts of the
world where these foods are still the dietary staples, obesity is virtually
nonexistent Our bodies were never designed to cope with the high energy
dense foods consumed in the West. That is a major reason why fast food in
contributing to the major rise in obesity.

6. Another fact is that fast food may speed up people's risk of clogged
arteries that can lead to heart attacks. Researchers at the Veterans
Administration Medical Center in San Francisco have demonstrated that a
certain type of fat, called oxidized fat, can accelerate the buildup of plaque
in arteries. And many types of fast food such as hamburgers, pizza and
French fries are loaded with oxidized fat. The conclusion is fast food meals
are high in saturated fat and low quality carbohydrates, white bread and lots
of soda. Our bodies require fiber and more healthful types of fats. Fast food
represents a dietary pattern that is the opposite of what is recommended for
a healthy body.