03-12-2012, 06:01 PM
Business Ethics
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INTRODUCTION
Ethics in philosophy is the study and evaluation of human conduct in the light of moral principles or it is the inner-guiding moral principles, values, and beliefs that people use to analyze or interpret a situation and then decide what is the “right” or appropriate way to behave.
“Business Ethics” can be defined as the critical, structured examination of how people & institutions should behave in the world of commerce. In particular, it involves examining appropriate constraints on the pursuit of self-interest, or (for firms) profits, when the actions of individuals or firms affects others or it is a specialized study of moral right and wrong. It concentrates on moral standards as they apply particularly to business policies, institutions, and behavior.
"Business Ethics is the moral standards which guide the running and transactions of businesses". - Malcolm Evans
Characteristics of Business Ethics
Some business ethics are imposed by law. Business ethics is the behavior that a business adheres to in its daily dealings with the world. The ethics of a particular business can be diverse. They apply not only to how the business interacts with the world at large, but also to their one-on-one dealings with a single customer. Good business ethics should be a part of every business. The important characteristics of business ethics are:-
• As a guide: - Business ethics constitutes the guiding principles of business functions with the help of this, businessmen can lean about the progress, situation, environment and conditions of the business.
• Goals and means: - Business ethics is that branch of the business environment in which can study about the goals and means for the rational selection of sacred objects and their fulfillment.
• Art and Science: - Business ethics is concerned with the principles of business behaviour, standards, moral values etc. With the study of business ethics, we can show the difference between good and evil, proper and improve actions of business. For these activities in business, business ethics is known as an ideal science. It is an art because it emphasizes practical use of behavioural standards, techniques and principles.
• Study Human Aspects: -Business ethics all those which are concerned with human aspect. It provides information to customers, government, society etc, on good or bad, right or wrong conducts of business.
• Difference from Social Responsibility: -Social responsibility is concerned with functions, programmes and policies of an enterprise, whereas business ethics is related with the conduct and behaviour of businessmen. But social responsibility of business and its policies are influenced by ethics.
• Technology based: - The development of business ethics is possible on the basis of theological principles, such as service, human welfare, sincerity, good behaviour etc.
• Development Personal Dignity: -Personal dignity can develop with the principles of ethics.
• Unrelated to Emotions: -Business ethics is not concerned with emotions but is based on reality and social customs. As a matter of fact, business ethics is developed after testing the requirements of business environment, social customs and traditions.
• Universal Philosophy: - Business ethics is a universal philosophy. Ethical principles have relevance in every business.
Importance of Business Ethics
Importance of Business Ethics is now recognized that it is good business to be ethical. An ethical image for a company can build goodwill and loyalty among customers and clients.
• Have honest and fair business practices
• Protect the invests of the customers or investor
• Good ethics also means good business
• Retention of customers and generate loyalty
• Transparency in operations and to ensure that both potential and existing customers are treated as per
• Balance the needs and wishes of stakeholders
• Creating a positive public image comes from demonstrating appropriate values.
• It helps company to maintain his market leadership.
• It protects or improves reputation of the organization by creating an efficient and productive work environment.
• It protects the organization from significant risks, and to some degree help grow the business. Risks such as breaches of law, regulations or company standards, and damage to reputation were perceived to be significantly reduced.
• Prevention and Reduction of Criminal Penalties: a company must have "an effective program to detect and prevent violations of the law".
• Global challenges: Business must become aware of the ethical diversity of this world because of increasing globalization of the economy.
Objectives of Business Ethics
• Honest and transparent dealing with customers
• Protect client and customers from being exploited or cheated
• Level playing field among all participants.
• Healthy compition for the benefit of all customers
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.
BACKGROUND OF KENTUCKY FRIED CHICKEN
KFC is based in Louisville, Kentucky, and is the world’s most popular chicken restaurant chain.
Founded by Colonel Harland Sanders in in the early 1930s by cooking & serving food for hungry travellers.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, President and Chief Concept Officer
KFC’s Entry in INDIA
KFC was the first fast food multinational to enter INDIA , after the economic liberalization policy of the Indian Govt. in early 1990s.
KFC received permission to open 30 new outlets across the country & Opened first fast food outlet in Bangalore in June 1995 by targeting upper middle class population.
PepsiCo planned to open 60 KFC and Pizza Hut outlets in next 7 yrs in the country.
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(People for Ethical Treatment of Animals )
Identify solutions for KFC's problems in India
Problems for KFC
Protests by farmers led by the Karnataka Rajya Ryote Sangha(KRRS) & the farmers leader was Nanjundaswamy who used the term ‘junk food’ against KFC.
Protests by cultural & Economic activists.
Protests by PETA in the late 1990s.
Support of celebrities in against of KFC
SWOT ANALYSIS
Strengths
• Understand the Culture, Regulatory & Ecological issues.
• Understand the importance of Ethics in doing business
• Examine the reason for protests of PETA
• Identify Solutions for KFC’S Problems in India.
Weaknesses
• Non Ethical business practice.
• PETA Protest.
• KRRS Protest.
• MSG flavour in chicken.
Opportunity
• Retail boom in India.
• Indians youth are adopting western culture.
• Indian Economy.
• Cosmopolitan Rapid Development.
Threats
• MSG chicken flavour.
• PETA like organizations.
• Political parties Protesting for junk foods.
• Protest support from famous Personalities like Anil Kumble,Aditi Govithrikar,John Abraham etc.