KFC IN INDIA : ETHICAL ISSUES

Historical background :
Way back in 1930s Colonel Harland Sanders got some distinguished Kentucky folks lickin their fingers. Its been in fashion since then!

Colonel Harland Sanders started cooking and serving food for hungry travellers who stopped by
his service station in Corbin, Kentucky, US. 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 than 15,000 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 Bachelder, the President and Chief Concept Officer
His legacy lives on with KFC restaurants all over the world. KFC now stretches worldwide with more than 13,000 restaurants in more than 80 countries and territories around the world serving up the Colonels Original Recipe.

His legacy lives on with KFC restaurants all over the world. KFC now stretches worldwide with more than 13,000 restaurants in more than 80 countries and territories around the world serving up the Colonels Original Recipe.

KFC IN INDIA :
KFC is the largest brand of Yum Restaurants, a company that owns other leading brands like Pizza Hut, Taco Bell, A&W and Long John Silver. Renowned worldwide for its finger licking good food, KFC offers its signature products in India too! KFC has introduced many offerings for its growing customer base in India while staying rooted in the taste legacy of Colonel Harland Sanders secret recipe. Its signature dishes include the crispy outside, juicy inside Hot and Crispy Chicken, flavorful and juicy Original Recipe chicken, the spicy, juicy & crunchy Zinger Burger, Toasted Twister, Chicken Bucket and a host of beverages and desserts. For the vegetarians in India, KFC also has great tasting vegetarian offerings that include the Veg Zinger and Veggie Snacker . In India, KFC is growing rapidly and today has presence in 21 cities with close to 107 restaurants.

ISSUES TO BE DISCUSSED : 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 Identify solutions for KFC's problems in India

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.

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 Identify solutions for KFC's problems in India

ANS 1. Understanding the significance of cultural, economic, regulatory and ecological issues

while establishing a business in a foreign country is of the utmost importance. The business culture of India is a reflection of the various norms and standards followed by its people. It is important that a person wanting to start a business in India has an idea of the business culture, ethics and customs followed there.

IMPORTANCE OF ETHICS IN DOING BUSINESS : Ethics refers to the study and process of human conduct, as a part of the society or an institution, in the light of moral principles. There is a strong belief in corporate social responsibility in India. Indian management style differs from that in the West in that decisions are made by the person at the top, not in a participatory way. This is typically a caste system by education. In this era of hyper-competition and result-oriented nature of businesses, it is difficult to run huge empires on ethical grounds and standards but there are some points you can take into account.


Be sure to source all your materials and supplies in an ethical way, using local suppliers and paying them the going rate for their products

Appreciate the need for protecting human rights in developing countries such as India, particularly with regards to working hours and benefits Develop strong relationships with any craftspeople, local suppliers and customers you have Be sure to pay the correct salary for the job. In general, wages may be low in India but this is no reason to underpay staff. You are more likely to attract and hold on to the quality of staff you require if you ensure they have the salary, benefits and working environment they are entitled to.

The current ethical infrastructure in India perpetuates not only the divide between the rich and poor, but also creates companies that are not equipped to expand and compete within the global marketplace. Many Indian companies face enormous pressure to grow in the challenging global economy which is where having solid ethical governance policies and procedures come into their own. Opening a business in India can involve a long and tedious process of registration with various bureaucratic agencies as well as a lot of time flying to India from your own country and back. But, there is untapped profit potential in this burgeoning economy and the rewards of having an ethical company in a place like India will see you not only reaping these rewards but being able to influence, shape and benefit the local community around it. This is particularly the case if you wish to set up an NGO in India. If you are determined, then you have a chance to make a very real and positive contribution to the future of a developing country.

"Each bird whom KFC puts into a box or a bucket had a miserable life and a frightening death. People would be shocked to see our footage of a KFC supplier's employee who walks through a barn, carelessly lighting lamps and letting flames fall on the terrified birds. The air inside these filthy barns reeks of ammonia fumes, making it difficult for the birds to breathe. No one with a grain of compassion should set foot in KFC." 1 - Ingrid Newkirk, Director, PETA.2 "The chicken they serve is full of chemicals, and the birds are given hormones, antibiotics and arsenic chemicals to fatten them quickly." 3 - Nanjundaswamy

Protest Against KFC

On August 20, 2003, a five-foot tall chicken complete with an ensemble of feathers and beak hobbled on a pair of crutches outside Kentucky Fried Chicken's (KFC) Indian outlet in Bangalore.

The chicken was brought by PETA (People for Ethical Treatment of Animals) activists, who carried placards reading, "Quit India" and "Stop Playing Fowl" (a pun on "Foul"). The chicken

was placed at the centre and a peaceful protest was held against the alleged ill treatment of birds in KFC's poultry farms. Media persons were called to give the demonstration a wide coverage (Refer Exhibit I for a visual on the protest by PETA activists). Explaining the rationale behind the protest, Bijal Vachcharajani, special projects coordinator of PETA, said, "Ours is the land of Gandhi. Just as 61 years back our leaders gave a call for colonizers to quit India, we too are saying we will not tolerate cruel multinationals."5
On the 61st anniversary of the 'Quit India' movement,6 PETA India wrote a letter to the Managing Director of Tricon Restaurant International, the parent company of KFC, asking them to close their sole KFC outlet in India.

They got no reply. PETA activists decided to protest against KFC by carrying crippled chicken, which represented the birds suffering in the KFC's farms. PETA claimed that after two years of intensive campaigning to increase animal welfare standards in poultry farms, other foreign fast food restaurants operating in India like McDonald's7 and Burger King8 had improved the treatment of animals specially raised and slaughtered for food. Only KFC had not acted. Though PETA had organized other protests earlier, the crippled chicken campaign became the precursor for more intensive protests. PETA's was one of the many shows of protest against KFC's Indian outlet. They got no reply. PETA activists decided to protest against KFC by carrying crippled chicken, which represented the birds suffering in the KFC's farms. PETA claimed that after two years of intensive campaigning to increase animal welfare standards in poultry farms, other foreign fast food restaurants operating in India like McDonald's7 and Burger King8 had improved the treatment of animals specially raised and slaughtered for food. Only KFC had not acted. Though PETA had organized other protests earlier, the crippled chicken campaign became the precursor for more intensive protests. PETA's was one of the many shows of protest against KFC's Indian outlet.
Foreign fast food companies were allowed to enter India during the early 1990s due to the economic liberalization policy of the Indian Government. KFC was among the first fast food multinationals to enter India.

On receiving permission to open 30 new outlets across the country, KFC opened its first fastfood outlet in Bangalore in June 1995. Bangalore was chosen as the launch pad because it had a substantial upper middle class population, with a trend of families eating out. It was considered India's fastest growing metropolis in the 1990s. Apart from Bangalore, PepsiCo planned to open 60 KFC and Pizza Hut outlets in the country in the next seven years. However, KFC got embroiled in various controversies even before it started full- fledged business in India. When the issue of granting permission to multinational food giants to set up business in the country came up for discussion in the Indian parliament, some members from the opposition parties were vocal in their displeasure...

Problems for KFC

From the very first day of opening its restaurant, KFC faced problems in the form of protests by angry farmers led by the Karnataka Rajya Ryota Sangha (KRRS). The farmers leader, Nanjundaswamy, who led these protests, vehemently condemned KFC's entry into India, saying that it was unethical to promote highly processed 'junk food' in a poor country like India with severe malnutrition problems. Nanjundaswamy expressed concern that the growing number of foreign fast food chains would deplete India's livestock, which would adversely affect its agriculture and the environment. He argued that non-vegetarian fast-food restaurants like KFC would encourage Indian farmers to shift from production of basic crops to more lucrative varieties like animal feed and meat, leaving poorer sections of society with no affordable food. KRRS held a convention on November 01, 1995 to protest the entry of fast food multinationals and the Westernization of local agriculture...

The Aftermath
By late 2003, PETA further intensified its campaign against the cruel treatment meted out to chickens by KFC through protests at regular intervals. Celebrities like Anoushka Shankar, daughter of the legendary sitar maestro Ravi Shankar, directly supported the cause of PETA.

Anoushka, a sitarist herself, wrote a letter to the top management of PepsiCo condemning the continued cruelty of KFC in spite of repeated requests of PETA. The organization also had the support of other celebrities like the famous cricket player Anil Kumble (based in Bangalore), popular Indian models like Aditi Govitrikar, the late Nafisa Joseph and John Abraham, who promoted vegetarianism. Film actresses like Raveena Tandon and Ameesha Patel also took up the cause of animal abuse. Undeterred by the continued protests, KFC added three more outlets to its existing one at Bangalore. KFC also announced a major expansion programme for 2005. Sharanita Keswani (Keswani), KFC's Marketing Director, said that as the retail business was poised for a boom in India, they considered it the right time for expansion...

Feeling positive about the flourishing malls in all big cities, Keswani revealed that this time KFC planned to have a presence in prime locations or in a mall where turnout would be assured. The company aimed at targeting cosmopolitan cities like Chandigarh, Pune, Kolkata, Chennai and Hyderabad, where mall culture was fast developing. PepsiCo also decided to concentrate on the expansion of KFC since its other brand, "Pizza Hut", had successfully established a strong foothold in India. Vegetarianism was predominant and was a way of life in India. Many people ate non-vegetarian food only occasionally and avoided it during festivals or religious occasions... Exhibit I: Protests by PETA Activists Exhibit II: Definition of Adulterated Food

Exhibit Exhibit Exhibit Exhibit

III: KFC's Cruelity, Camera Shots IV: PETA'S Fact Sheet of KFC's Cruelty V: Relevant Provision of the Animal Welfare Legislation VI: KFC's Poultry Welfare Guidelines