Organization Industry Countries

: KFC : Fast Foods : India

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

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 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." - Ingrid Newkirk, Director, PETA. "The chicken they serve is full of chemicals, and the birds are given hormones, antibiotics and arsenic chemicals to fatten them quickly." - 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." On the 61st anniversary of the 'Quit India' movement, 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. Founded in the US in 1980, with more than 800,000 members and offices in the US, England, Italy, Germany and Mumbai, PETA is the largest animal rights organization in the world. It focuses primarily on areas where the greatest numbers of animals suffer the most: in the food and leatheR

r industries, in laboratories and in the entertainment industry. PETA undertakes investigative work, public educati international media coverage for the protection and improvement of the quality of animal lives. PETA India, based in Mumbai, was launched in January 2000. "Tandoori vs. Kentucky Fried," Shakuntala Narasimhan, Multinational Monitor, January/February 1996.] Prof. Nanjundaswamy is the founder-leader of the Karnataka Rajya Ryota Sangha (KRRS). Apart from his campaign against KFC, he also organized a campaign in South India against global seed patenting provisions of the Uruguay Round ofthe General Agreement on Tariffs and Trade (GATT). Crippled Chicken Alleges Cruelty, Asks KFC to Quit India," www.newindpress.com, August 20, 2003. The Quit India Movement, which started on August 09, 1942, is an important milestone in the history of India 's struggle for freedom from British rule. With revenues of $17.1 bn in the fiscal year 2003, McDonald's is the world's largest food service company

with more than 30,000 restaurants in 100 countries, serving more than 46 million customers every day. McDonald's entered India in October 1996. It has restaurants in Mumbai, Delhi, Pune, Ahmedabad, Vadodara, Ludhiana, Jaipur, Noida, Faridabad, Doraha, Manesar and Gurgaon. The US- based Burger King is an international fast food chain founded by James W. McLamore and David Edgerton in Miami in 1954. It was renamed Burger King Corporation in 1972. In 2004, the company had more than 11,220 restaurants in 61 countries worldwide.

On receiving permission to open 30 new outlets across the country, KFC opened its first fast-food 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).

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

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...