Usiness ethics group assignment group 6 ethical case study of kfc

NATIONAL ECONOMICS UNIVERSITY Advanced Educational Program -*** - BUSINESS ETHICS GROUP ASSIGNMENT GROUP ETHICAL CASE STUDY OF KFC Lecturer: Dr Nguyen Bich Ngoc Class: Advanced Accounting 63 Students: Cao Minh Huyen - 11219702 Dao Thi Phuong Lien - 11213042 Nguyen Phuong Nga - 11219239 Nguyen Phuong Mai - 11213683 Hanoi, 2023 TABLE OF CONTENTS I INTRODUCTION II ABOUT KFC History of KFC Core Values of KFC 3 KFC’s Ethical Responsibilities III CASE 1: KFC’S 2017 DILEMMA Background of The Dilemma KFC's Initial Action KFC's Final Decision Effect of The Decision on Major Stakeholders KFC's Two Options 10 KFC's Achievements 11 IV CASE 2: CHICKEN ABUSE 12 Chicken Welfare 12 Consequences 14 KFC's Efforts 14 V OTHER ISSUES 15 Unfair Labor Practices 15 Environmental Concerns 16 KFC's Business Ethics Issue in Vietnam 17 VI OUR POINT OF VIEWS 19 VII RECOMMENDATION 20 VIII CONCLUSION 22 IX REFERENCES 23 This is a preview Do you want full access? 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Log in I INTRODUCTION Kentucky Fried Chicken, commonly known as KFC, is a fast-food chain that was founded in 1952 by Colonel Harland Sanders KFC is known for its signature dish, fried chicken, and has since expanded its menu to include a variety of other fast-food items The company operates in over 140 countries worldwide, making it one of the largest fast-food chains in the world Despite its global reach and popularity, KFC has faced numerous ethical issues in recent years that have brought its business practices into question One of the most significant concerns is acting against animals KFC has also faced several dilemmas and other business ethics scandals These issues have led to public scrutiny and criticism of the company's business ethics, and have eroded customer trust in the brand Nevertheless, KFC has been and continues to adapt and innovate to address these concerns and maintain its position as a leading player in the fast-food industry This document discusses KFC, a company that provides an excellent case study for exploring the challenges and opportunities involved in promoting ethical conduct in business II ABOUT KFC History of KFC KFC (Kentucky Fried Chicken) was founded by Colonel Harland Sanders, an early developer of the fast food industry, in Corbin, Kentucky It is the world's fourth-largest restaurant chain after McDonald's, Subway, and Starbucks, with 26,934 KFC restaurants in over 145 countries and territories around the world (Yum! Brands company, 2021) KFC offers variable dishes such as fried chicken, fried potatop, sandwiches, hamburger, and other products marketed under various labels During the Great Depression, Harland Sanders started selling fried chicken from his roadside shack in Corbin, Kentucky In 1939, The Colonel created the 11-ingredient secret recipe for Kentucky Fried Chicken, and in 1952, he signed up his first franchisee By promoting chicken in the fast-food sector, KFC helped to diversify the market by starting a competition to the burger's dominance KFC is a private corporation with an estimated 800,000 workers In the United States, the corporation has a sizable market share in fast-food chicken franchises, accounting for 10.6% of total industry revenue (IBISWorld - Industry Market Research, Reports, & Statistics) According to the Yum! Brands 2021 annual report, KFC's annual revenue is $31.365 billion Core Values of KFC There are three key house rules at KFC: ● Be your best self ● Make a difference ● Have fun Service Values “At KFC, we have a passion for food and serve it with pride.” KFC makes sure to satisfy every customer and serve them as friends so that everyone leaves happy “Our food is always craveable We are the original fried chicken experts, and everything we celebrates our passion for serving fingerlickin’ good food.” KFC always takes pride in its food and recipes because of its uniqueness, which helps them stand out from other fast food chains They are committed to using high-quality chicken and food freshly prepared by skilled chefs KFC’s Ethical Responsibilities The special feature of the KFC Group is the way they deliver on their mission They make a sure promise that they will make an effort, and they definitely will Unlike the future vision, KFC wants and will many things for the people who influence their business, such as customers, partners, and employees Some of the missions that some KFC franchise companies around the world have launched are: • “To be the leader in western style quick service restaurants through friendly service, good quality food and clean atmosphere” • “To maximize profitability, improve shareholder value and deliver sustainable growth year after year” • “You keep employees longer, they are happier, and they work better for you” This is a preview Do you want full access? 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Log in 3.1 Employee KFC establishes a higher minimum wage for its employees and ensures that all employees receive a competitive salary commensurate with the effort they put in to fulfill their assigned tasks and responsibilities KFC's culture is built on the spirit of "How we win together" to be successful and united to reach out This helps motivate all members to work together to build a growing company that satisfies customers and makes each member feel proud to work at KFC KFC believes in its employees and that each employee can make a difference, so the company always listens to and respects every member's contribution The company also helps its employees develop their careers and develop a working environment that makes it easier for employees to have a work-life balance Besides, KFC also regularly supports everyone to have the conditions to realize their full potential At KFC Vietnam; every job always starts with the question, "What to to achieve results?" Therefore, creative ideas are inspired by each individual who works with responsibility, ability, and enthusiasm to promote collective strength Incentive Policy For Employees Employees working at KFC are given a membership card for each person, when buying goods, they will receive a 10% discount at the coffee shop partnered with KFC and a 20% discount when buying food at the store • Participating in accident insurance 24/24 • A clear and open career path to becoming a restaurant manager • Working in a dynamic environment, helping employees develop communication, problem-solving, and work management skills 3.2 Ingredient and Suppliers All products and services throughout the supply chain are sourced ethically and through sustainable methods The company applies ethical labor practices to its supply chain partners, including using certified products that meet fair trade standards KFC puts quality first and commits: strictly complying with regulations on food hygiene The chicken ingredients used by this company are not raised with stimulants Especially during the "sensitive" time of avian flu, KFC has applied many positive measures, ensuring that when necessary, it will use reserved chicken to ensure the quality of the ingredients The type of oil used by KFC stores today is especially concerned with the health of customers So they changed soybean oils to reduce the risk of obesity as well as cardiovascular problems In addition, the stores also use specialized test paper to check the condition of metamorphosis in the oil KFC Vietnam only chooses reputable and quality raw material suppliers, affirming the quality of its products with quarantine certificates 3.3 Environment In addition to complying with basic environmental laws, the company is actively undertaking initiatives to reduce its carbon footprint and investing heavily in being environmentally conscious In December 2008, KFC's products were switched to modern microwave ovens and limited frying to create environmentally friendly products that are beneficial to consumers' health and improve the company's high reputation with customers 3.4 Related Parties All stakeholders, including suppliers, employees, and distributors, are treated with respect and fairness Despite being a franchise corporation, KFC still tries to manage and supervise all of its business partners All restaurants bearing the KFC name must be clear about their obligations, responsibilities, capabilities, motivations, and future The business philosophy is to show the way ahead, helping managers and employees understand each other's ways of working, and that they have the same goal, so that work goes smoothly, and misunderstandings are avoided Customer retention is another important goal of KFC, which is achieved by increasing the quality of products and services The company has put quality at the heart of its work, and its employees are trained to provide unsurpassed customer service Periodic surveys are held to solicit customer opinions, and the collected data is then used to further improve the quality of products and services according to customer expectations KFC focus on creating satisfaction, bringing beneficial values to all subjects that affect the company's operations, and wanting and desiring to be recognized Their responsibilities to the market and society are as follows: • Providing customers with fast and delicious food, served in a friendly environment, to attract smart, knowledgeable customers around the world • Maximize profits, increase shareholder value, and deliver steady company growth year after year • Recruit, develop, stimulate, reward, and retain employees with exceptional ability, providing them with favorable working conditions, and good leadership Performance and work-based pay, highly attractive benefits program, opportunities for advancement, and high levels of job security diabetes, and many, many others - are exacerbated by the consumption of products of animal origin, and can actually be avoided by creating more humane processes for utilizing animals in the food chain Consequences The problem affects the animals which are subjected to cruel treatment during the process of breeding for being consumed for food production at KFC It also affects advocates of animal rights movements who are perturbed by the cruel conditions to which these animals are exposed Customers of KFC are also impacted directly by the problem because the harmful effects of consumption of this source of food on human health are incurred by these consumers Since the case of animal abuse was explored to the world, KFC faced the toughest challenge where it heated up public awareness towards animal welfare Animal abuse cases occurred and a huge ruckus by the public has caused the corporation to lose its reputations, turnover, and profit because of the law stated by PETA The case also affected the business all over the world since after the incident, stakeholders’ expectations and demands regarding the standardized guidelines of animal treatment also increased Animal welfare is no longer an abstract issue and now more than ever people understand the importance of improving the lives of chickens,” said Tracey Jones, global director of food business at Compassion in World Farming KFC's Efforts KFC has developed a series of plans to overcome the problems 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 the 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 14 for Canada CAK is a method of slaughtering poultry where chickens not suffer when being removed from the crates, upside down, shackled, bled, and scalded in de-feathering tanks which leads to struggle, stress, and broken wings This process even provides better results when workers not need to struggle with flapping, scratching, vomiting, and defecating chickens, lights can be kept bright throughout the process and the air maintains its cleanliness level As stated clearly on KFC’s main website, all suppliers must comply with KFC’s 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 In 2020, KFC says it wants to transition more of its 34 suppliers to slower-growing breeds, which are less prone to disease and injury, helping to reduce the need for antibiotics The fast food company also wants to reduce stocking density on its supplier farms Lower densities can reduce a number of animal health and welfare problems, including footpad dermatitis as well as a diminished capacity to exhibit natural behaviors KFC has now signed up for the NGO-led Better Chicken Commitment (BCC) to improve animal welfare standards for birds V OTHER ISSUES Unfair Labor Practices 15 KFC has been accused of several unfair labor practices over the years, including wage theft, discrimination, and poor working conditions One of the most common allegations against KFC is that the company has engaged in wage theft, which is a practice where employers illegally withhold wages from their workers In 2016, KFC was sued by employees who claimed that they were not paid for all the hours they worked, was denied breaks, and were not reimbursed for work-related expenses These actions violate the Fair Labor Standards Act (FLSA), which sets standards for minimum wage, overtime pay, and other employment practices in the United States The case was settled for an undisclosed amount KFC has also faced criticism for its treatment of workers in other countries In 2017, the company was sued by a former employee who claimed that she was fired because of her pregnancy The case was settled for $30,000 In 2019, a report by The Guardian found that migrant workers employed by a KFC supplier in Malaysia were working in slave-like conditions, including being forced to work long hours, being subjected to physical and verbal abuse, and having their passports confiscated KFC launched an investigation into the matter and ended its relationship with the supplier KFC has taken steps to address these issues, such as implementing new policies to prevent wage theft and improving training programs for its franchisees, increasing wages: KFC has committed to increasing wages for its hourly workers in the United States However, labor advocates argue that more needs to be done to ensure that KFC workers are treated fairly and receive the wages and benefits they deserve Environmental Concerns KFC has faced several environmental ethics scandals over the years, including accusations of contributing to deforestation and climate change, as well as water pollution and waste management issues One of the most significant environmental ethics scandals surrounding KFC has been its impact on deforestation The company has been accused of sourcing its paper packaging from unsustainable sources, including suppliers that engage in clearcutting, which can contribute to deforestation 16 This is a preview Do you want full access? 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Log in and loss of biodiversity This has led to criticism from environmental advocates, who have called on KFC to take stronger action to address its environmental impact KFC has also faced criticism for its waste management practices The company generates a significant amount of waste from its restaurants, including packaging, food waste, and other materials Some environmental advocates have argued that KFC has not done enough to reduce its waste footprint and improve its recycling and composting programs In addition, KFC has been accused of contributing to water pollution in some areas For example, in 2016, KFC was fined $8.3 million by Chinese authorities for violating water pollution regulations The company was accused of discharging waste in the river KFC's environmental ethics scandals have led to calls for the company to take stronger action to address its environmental impact KFC has taken some steps to address these concerns For example, in 2018, the company committed to sourcing 100% of its fiber-based packaging from certified or recycled sources by 2020 KFC has also announced plans to phase out all plastic packaging by 2025 KFC's Business Ethics Issue in Vietnam KFC has faced a significant business ethics scandal in Vietnam, where the company has been accused of a range of unethical practices, including tax evasion, bribery, and operating without proper licenses One of the most high-profile accusations against KFC in Vietnam involves tax evasion In 2012, KFC Vietnam was accused of evading nearly $4 million in taxes by declaring losses and manipulating its financial records The Vietnamese government 17 launched an investigation into the company's tax practices, which ultimately resulted in KFC Vietnam being ordered to pay back taxes and penalties KFC Vietnam has also been accused of engaging in bribery and corruption In 2013, the company was fined for bribing a local official to expedite the process of obtaining permits for its restaurants The company was also accused of offering bribes to local officials to avoid paying fines for violating food safety regulations In addition, KFC Vietnam has been criticized for operating without proper licenses In 2017, the company was fined for operating four restaurants without the required licenses, which led to calls for the company to be more transparent and accountable 18 VI OUR POINT OF VIEWS There are several reasons why ethical problems occur in this business 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 and KFC has 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 face many ethical dilemmas concerning their products and consumers during the process The ethical dilemmas include poor-quality products, animal abuse, and poor working conditions Pressure on Profits Maximizing profit is the first thing when it comes to business Businesses are often driven by the desire to maximize profits, which can lead to unethical practices such as cutting corners on safety, exploiting workers, or engaging in fraud According to TCB and Associates, companies with lower profits are more likely to commit illegal acts Conflicts of Interest When individuals or organizations have competing interests, it can be difficult to make ethical decisions For example, a company may prioritize its own profits over the welfare of its customers or the environment 19 This is a preview Do you want full access? 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Log in VII RECOMMENDATION Immediately Terminating The Contract With Unethical Supply Chains They should create a more specific supplier code of conduct in the contract to ensure that their supply chain strictly follows all the requirements of labor standards, environmental impact, and other ethical issues In addition, KFC also needs to set up a separate monitoring department to monitor, check up on, and evaluate supplier production regularly Improving Chicken Quality They need to invest in research to use more natural agents and different cooking methods to enhance the quality of their chicken instead of using chemical injections They should not have used monosodium glutamate in excessive amounts Creating A Better Working Environment KFC should increase the minimum wage and offer more benefits such as a comfortable workspace, health insurance, childcare benefits, and incentive travel programs It is also important to encourage employees to share their ideas and offer opportunities for growth and development Moreover, KFC should develop strict ethical standards for its employees Expanding The Menu to Include More Vegetarian or Healthier Options 20 This is a preview Do you want full access? 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Log in A massive 66% of the global population is paying more attention to their overall health now than before COVID-19 (Mindshare's Global Tracker, 2022) Therefore, KFC should consider offering more meat-free options for vegetarians, grilled or baked options instead of fried chicken, as well as more salads and vegetable-based sides By providing healthier options, KFC could attract new customers and retain existing ones who are concerned about their health Additionally, KFC could provide more detailed nutritional information, such as calorie counts and ingredient lists, so that customers will know more about what they are eating Encouraging Sustainability According to the Global Sustainability Study 2021, more than a third of global consumers are willing to pay more for sustainability as demand grows for environmentally-friendly alternatives Consumers are increasingly concerned about the environmental impact of the food they eat KFC should use more environmentally-friendly packaging, such as recyclable or biodegradable materials In addition, KFC could use ingredients from more sustainable sources or support local farmers when possible 21 This is a preview Do you want full access? 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Log in VIII CONCLUSION With a global brand, it's hard not to make mistakes Regardless of the mistakes KFC has made in the past, it has learned its lesson and taken several actions to make up for the unethical issues As the leading fast food company, it is well known that the standards for food safety vary from country to country, and it costs a lot, so multinational corporations like KFC may violate corporate social responsibility, especially ethical issues, to maximize the benefits It is not difficult to see that corporate ethical responsibility is crucial to the company's image and development On the one hand, KFC has taken positive responsibility in some aspects, but there are also deficiencies in some aspects that need to be improved KFC has not actively responded to the national call for environmental protection by adopting biodegradable food packaging and tableware, which still needs to be improved In terms of food safety, we should strengthen the prevention and control of product quality to avoid the impact on people's health Business organizations must understand the importance of corporate ethical responsibility to ensure long-term survival By focusing on ethics, KFC has successfully improved its brand image in the minds of stakeholders By taking initiatives for the environment, social welfare, and benefit of broader stakeholders, KFC has gained positive media coverage, which has strengthened its positioning in a competitive marketplace As consumers become more conscious of ethical and sustainability issues, it is critical for companies like KFC to prioritize responsible business practices and take action to address any ethical concerns By doing so, KFC can not only maintain its position as a leading player in the fast-food industry but also demonstrate its commitment to sustainability and ethical conduct, which can ultimately lead to long-term success and profitability Customers feel satisfied when they purchase a product from a company that helps the community Employees also take pride in getting associated with a socially responsible organization, and winning the investor's and shareholders’ trust over business operations also becomes easier when the business demonstrates its ability to meet the expectations of all stakeholders without compromising on economic objectives While living in a globally interconnected world, it is important for businesses to collaborate with all stakeholders and take care of each other's needs, which could eventually benefit themselves 22 This is a preview Do you want full access? Go Premium and unlock all 24 pages Access to all documents Get Unlimited Downloads Improve your grades Upload Share your documents to unlock Free Trial Get 30 days of free Premium Already Premium? Log in IX REFERENCES Buxton, A (2022, April 14) KFC’s “Utterly Misleading” High-Welfare Claims Exposed By Activist-Led Vegan Chicken Brand Green Queen Media Harvey, M (2022, July 19) Corporate Social Responsibility of KFC EssayPandas IBISWorld - Industry Market Research, Reports, & Statistics (n.d.) Retrieved from KFC Corporation - Company Profile Report: https://www.ibisworld.com/us/company/kfc-corporation/429473/ Kanowsky, H (2022) KFC Accused of Being ‘Disingenuous’ in Marketing After Footage Shows Horrible Conditions at Poultry Farm One Green Planet KFC in ethical dilemma after McDonald’s no-no to chicken raised with antibiotics (2015, March 12) Healthcare Asia Daily News Landers, Timothy F., et al “A Review of Antibiotic Use in Food Animals: Perspective, Policy, and Potential.” Public Health Reports, vol 127, no 1, 2012, pp 4-22 Levitt, T (2020, July 30) KFC admits a third of its chickens suffer painful inflammation The Guardian Mindshare's Global Tracker (2022) Mindshare’s Wellness Revolution Report: People Care More for Their Well Being Than Ever Before Murphy, C B (2022, May 31) Why Social Responsibility Matters to Businesses Investopedia 10 Phan, D (2019) VĂN HĨA TỔ CHỨC CỦA CƠNG TY KFC 11 Runnan Zhang, C W (2020) Corporate Social Responsibility (CSR) 12 Simon-Kucher & Partners (2021) Global Sustainability Study 2021 13 UKEssays (November 2018) KFC's Ethical Policies Retrieved from https://www.ukessays.com/essays/general-studies/the-kfc-corporation.php?vref=1 14 Yum! Brands Company (2021) YUM! BRANDS 2021 ANNUAL REPORT 23