Padmashree Dr. D. Y .

Patil Universitys Department of Business Management

Topic : Ethical and unethical companies Submitted to : Vinod sir Submitted by : Pratibha Sharma

KFCs Ugly Truth

Introduction
Kentucky Fried Chicken (KFC) Corporation, based in Louisville, Kentucky, is the world's most widespread chicken restaurant chain offering services to more than 12 million customers in 109 countries all around the world. KFC operates more than 5,200 restaurants in the United States and more than 15,000 units around the world. KFC was founded by Harland Sanders (Sanders) in the early 1930s. He started cooking and serving food for hungry travelers who stopped by his service station in Corbin, Kentucky, US. He did not own a restaurant then, but served people on his own dining table in the living quarters of his service station. His business expanded and by 1964, Sanders franchised more than 600 chicken outlets in the US and Canada. Now customers around the globe enjoy more than 300 other products from Kentucky Grilled Chicken in the United States to a salmon sandwich in Japan. KFC has been a brand and operating segment, of Yum Brands since 1997 when that company was acquired from PepsiCo as Tricon Global Restaurants Inc

Background of the Ethical Issue

Recently KFC faced accusation from non government organizations like PETA and Greenpeace regarding unethical practices from KFCs supply chain such as Pilgrims Pride and Cargill.KFC was accused of ill-treatment towards its chicken by PETA and Greenpeace blamed KFC for its role in the destruction of the Amazon rainforest. This case study discusses these ethical issues in detail and concludes with suggestions and recommendations from the case study team, on how similar issues could be avoided or tackled.

PETA Perspective
Every year more than 1 billion chickens are killed from the chicken farms, meant for KFC. The improper breeding of birds combined with improper working conditions of workers and lack of ethically efficient operation processes led to improper practices in

KFCs suppliers poultry farms. As a result KFC was accused of animal abuse by PETA, on the suppliers farm. The People for Treatment of Animals (PETA), an animal right protection organisation, accused KFC for its unethical treatment (behaviour) towards the chicken in KFCs supplier factory farms. Pilgrims Pride (PP) is one of KFCs award-winning supply operations and the second largest processor of chickens in the United States. PETAs investigations in Pilgrims Pride poultry farm brought to light the inappropriate practices that prevailed in KFCs supplier operations. PETA released a shocking video that clearly depicted the ill-treatment of chickens and the unhygienic behaviour in the Pilgrims Pride poultry farm. Experts commented the video to have depicted the worst cruelty towards chicken and the worst employee behavior. The release of the video led to widespread protest against KFC around the world. In India, on August 20, 2003, a fivefoot tall chicken complete with an ensemble of feathers and beak hobbled on a pair of crutches outside Kentucky Fried Chicken's (KFC) was kept in an Indian outlet in Bangalore. The chicken was brought by PETA activists, who carried play cards reading, "Quit India" and "Stop Playing Fowl". The chicken was placed at the center 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. As a result of widespread protest, in Canada PETAs new animal welfare plan was implemented in KFCs suppliers plants. According to the new plan, 100 percent of chicken purchases were to be done from suppliers that use controlled-atmosphere killing (CAK). PETAs protest is against the cruelty and ill-treatment towards KFC chicken. They do not intend to overhaul KFCs overall manufacturing process. Instead PETA urges KFC to adopt animal welfare program developed by the five members of its own (KFC) Animal Welfare Board and to adopt Controlled Atmosphere Killing (CAK). As per PETA, The Pilgrims Pride poultry farm did not adhere to any animal welfare standards. The chickens suffered intensely in the poultry farms before being slaughtered as highlighted below. 1. Overcrowded farm environment The chickens are stuffed by tens of thousands into overcrowded sheds where they hardly find space to move freely. To save space and avoid chicken hurting each other, the sensitive chicken beaks are cut off with hot blade without giving any painkillers. Overcrowding and poor litter quality in the farms also caused painful ammonia burns on the chickens. The injured chickens received no treatment and had to bear the pain throughout their life. 2. Improper breeding Birds are fed genetically modified feed in order to accelerate their growth rate. As a result they suffer from ailments such as extreme obesity and fatty livers and kidneys, heart attacks and other problems. 3. Cruelty in the slaughter house The chickens are slaughtered before they are 6 weeks old. At the slaughter house, chickens are hung upside down and transferred through conveyor belts to the killing room fully conscious. Too many chickens are dumped from the crates to the fast moving conveyor belt that caused the birds at the bottom to get suffocated. Unable to manage the large inflow of chickens, the workers threw away some chickens slamming them to the walls or floors. During the processing, to remove feathers, the live chickens are thrown into scalding-hot water. 4. Frustrated Workers Due to poor wages and working conditions, employees used the chickens as a means to vent frustrations and alleviate boredom. They twisted the birds heads off, spat

tobacco into their eyes and mouths, spray-painted their faces, used them as footballs and squeezed their bodies so hard that the birds expelled faeces.

GREENPEACE Perspective
Another unethical issue raised against KFC is its link with the destruction of the Amazon Rainforest. In May, 2006 Greenpeace volunteers came up to enlighten the whole world about the mass deforestation in Amazon rainforest caused by KFC. Greenpeace has come up with a term for KFC as KFC Amazon Criminal. According to Greenpeace, KFC is fuelling the destruction of Amazon by selling cheap chicken fen on soya grown on deforested land. Greenpeace investigation clearly traced that large area of rainforest has been destroyed by direct sales of cheap soya via Cargill by KFC , in order to sell billions of chickens to its customer every year, at low cost. The demand of soya fed for its chicken by KFC to Cargill has led to this unethical activity, which is affecting the global climate. Rainforest that covered 14% of earths land area has reduced to 6% due to deforestation, which clearly shows the high overall impact of business practices. Greenpeace wants KFC and Cargill to ensure that animal feed they buy does not contribute to destruction of Amazon and that none of their soya products are genetically engineered.

Conclusion :
Being the biggest corporation doesnt always mean that it will compulsorily will follow the ethics. As said above for KFC , it is one of the biggest food chain all over the globe but still has 0 ethics in its culture. The group mainly focuses on the money making policy and they are not at all bothered by the unethical ways they are using for it .

ETHICAL COMPANY : CADBURY

Ethical behaviour and corporate social responsibility can bring significant benefits to a business :

Attract customers to the firm's products, thereby boosting sales and profits Make employees want to stay with the business, reduce labour turnover and therefore increase productivity Attract more employees wanting to work for the business, reduce recruitment costs and enable the company to get the most talented employees Attract investors and keep the company's share price high, thereby protecting the business from takeover. Ethics at work

The supply chain and distribution process This describes the way in which raw materials are sourced and transformed into final products and delivered to customers. Cadbury Schweppes has direct control over what happens in the transformation stage of its own process and can also influence the behaviour of suppliers and distributors. For example, it performs due diligence on potential suppliers by requesting them to complete a questionnaire prior to engagement. This enables Cadbury Schweppes to monitor a supplier and check they adhere to stringent standards in particular criteria. One criteria, for example, may be the environment and the questionnaire allows the supplier to express whether they carry out audits or have an environmental policy. a) Dealing with suppliers Cadbury Schweppes deals with tens of thousands of suppliers around the world and aims to work closely with them to ensure they receive fair treatment.

In the case of cocoa farmers for example, Cadbury Schweppes is a member of a global coalition, which is comprised of industry, governments, non-government organisations and special interest groups created to improve working practices on cocoa farms. b) Manufacturing As a major international company Cadbury Schweppes recognises its environmental responsibilities and the need to care for its workforce, local communities and all those who may be affected by its activities. For example, its environmental responsibilities include: treating waste water prior to disposal looking to improve its energy efficiency controlling the release of gases into the atmosphere. c) Distribution - to wholesalers and retailers The company aims to keep within acceptable limits the fuel consumption and air emissions that result from transporting its products. In the UK, for example, drivers are trained in the most efficient ways to operate their vehicles, which are also regularly maintained to keep them running at optimum efficiency. Ethics and employment policies : When recruiting staff, Cadbury Schweppes is eager to encourage diversity in the workplace. It therefore encourages applications from a wide range of people. Greater diversity in the workplace encourages different ways of looking at and solving problems and may lead to greater creativity. To achieve such diversity, the company provides equal opportunities for its recruits regardless of gender, age, marital status, sexual orientation, disability, race or religion. Vacancies are advertised worldwide via the company's websites and intranet so that employees can switch from one part of the organisation to another. Once employed, Cadbury Schweppes provides career opportunities to enable staff to develop personally and grow in terms of experience and skills. The company's performance appraisal system provides a regular opportunity to review an individual's strengths and progress and construct development plans for each person. By allowing each individual employee to develop, the company can develop as a whole.

Conclusion Cadbury Schweppes aims to lead the way with its ethical approach in business. Its core underlying values influence all its decisions throughout the value chain. Its stance on issues is clearly communicated both internally and externally to ensure its position is fully understood and to invite its stakeholders to share in it. This approach has contributed to the success of the business and has enabled it to become the world's leading confectionery company and third largest soft drinks company.

ETHICAL COMPANY : GENERAL MILLS :

Our Ethics & Compliance group, led by our chief compliance and risk officer, is committed to continuing General Mills long-standing culture of integrity by ensuring that employees know what it means to behave ethically and to act in compliance with our Code of Conduct and policies.We achieve these goals by regularly communicating and training.We also leverage our senior leaderships commitment to integrity. For example, we host an annual Ethics in Action event; our 2010 event theme was small things matter. In the weeks leading up to the conference, posters and articles on our company intranet site highlighted the positive ethical decisions made by employees. One poster explained how an employee forfeited a US$30,000 prize after making a hole-in-one at a charity golf game hosted by one of our customers. At a minimum, accepting the prize could create the appearance of a conflict of interest. General Mills global reputation as an ethical company depends on each employee always acting consistent with the law, our policies and our values.General Mills employees receive a Code of Conduct that outlines our ethical expectations and provides practical tips and examples for how to act with integrity in every decision, every action, every day.

Communications and training

We communicate our expectations through training opportunities and educational modules on our company intranet.Employees participate in live and online scenariobased training to illustrate ethical decision-making in daily business activities.

UNETHICAL COMPANY : PHILIP MORRIS INTERNATIONAL

Posters highlighting key messages from our Code of Conduct are posted in m Philip Morris International (PMI) is an international cigarette and tobacco company, with products sold in over 160 countries with 15.6% of the international cigarette market outside the United States. Because tobacco, the main constituent of cigarettes, is considered restrictive legislation from governments concerned about the health impacts of its products. Until a spin-off in March 2008, Philip Morris International was an operating company of Altria Group. Altria explained the spin-off, arguing PMI would have more "freedom" outside the constraints of US corporate ownership in terms of potential litigation and legislative restrictions to "pursue sales growth in emerging markets." The shareholders in Altria at the time were given shares in PMI, which was listed on the London Stock Exchange and other markets. The company is headquartered in New York City, but operates through its operational headquarters in Switzerland and does not operate in the United States, with Philip Morris brands there still owned by PMI's former owner Altria Philip Morris, one of the world's leading cigarette manufacturers, ranked fifthworst in the Covalence survey. Earlier this month, the company reportedly attempted to persuade the government to abandon its ten-year-old lawsuit against the tobacco industry for allegedly concealing the dangers of cigarettes.

In June 2011, Phillip Morris International announced it was using ISDS provisions in the Australia-Hong Kong Biliateral Investment treaty (BIT) to demand compensation for Australia's plain cigarette packaging anti-smoking legislation, despite the fact the legislation is non-discriminatory and addresses a significant public health problem.A Reuters report published in the Sydney Morning Herald cited legal opinion that the case would fail "...as intellectual property rights agreements give governments the right to pass laws to protect public health." The company has also lobbied against Uruguay's strong anti-smoking laws. Philip Morris International has announced an overhaul of its human rights protections of tobacco workers in Kazakhstan and 30 other countries after critical reports.