Ethical Dilemmas in Business: KFC Company's Case | Free Essay Example

Ethical Dilemmas in Business: KFC Company’s Case

Words: 1957
Topic: Business & Economics
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Introduction

The ethical decision-making process in business is associated with resolving ethical dilemmas; i.e., situations in which a choice needs to be made among several options, each of which is unethical in a way (Crane and Matten 7). In such situations, it is crucial for an organization to predict all the possible consequences of available options and make a decision that will be the least harmful and will violate business ethics to the minimum possible extent. KFC, an international corporation operating a fast food restaurant chain famous for its fried chicken, recently faced a dilemma concerning the presence of medically important antibiotics in its products (“KFC in Ethical Dilemma”). To analyze the case, it is possible to factually summarize the dilemma, examine the organization’s response to it and the effect of the response on stakeholders, share an opinion, and explore alternative responses and the changes in the organization caused by making the decision it made.

A Factual Summary of the Ethical Dilemma

KFC faced the need to engage in a particular ethical decision-making process after the standard of the fast food industry changed in 2015 (“KFC in Ethical Dilemma”). That year, McDonald’s, one of the competitors of the addressed company, declared that it would no longer serve chickens raised with the use of human antibiotics. The reason for McDonald’s to make this decision had been the growing pressure from various organizations and groups engaged in environmental issues as well as from the medical community. The concern shared by these organizations was that medically important antibiotics—i.e., antibiotics that are used to treat human patients (World Health Organization)—should not be used in raising food animals. KFC initially refused to disclose any information about the company’s suppliers’ use of antibiotics (“KFC in Ethical Dilemma”). At that time, the organization’s dilemma was either to support the trend or to ignore it, and both options were potentially unethical and harmful.

The reason for the concern is that food producers use human antibiotics when raising food animals for “production purposes” (“FDA’s Strategy on Antimicrobial Resistance”)—that is, to enhance animals’ growth or make them gain more weight upon consuming less food—and this practice can be dangerous. When these substances are transmitted to people who consume food produced according to this practice, there is a risk that those people will develop resistance to certain antibiotics; i.e., it will be impossible to use these antibiotics to treat those people in case such treatment is needed. The development of resistance remains a debatable subject, but nowadays, the World Health Organization and the United States Food and Drug Administration (“FDA’s Strategy on Antimicrobial Resistance”) suggest avoiding the use of antibiotics in raising food animals. KFC could either commit to these requirements, thus failing its suppliers and jeopardizing its operation, or refrain from the change, thus adhering to a practice that is potentially harmful to its customers’ health.

The Organization’s Reaction

As it was mentioned, KFC initially refused to comment on its suppliers’ use of medically important antibiotics. When the news about McDonald’s decision appeared, the organization’s representatives were either unavailable for comments or refused to explain anything. Moreover, the statistics on who KFC buys chickens from and how much it buys annually was not disclosed. There was only one statement made by the company that owns KFC: “The chicken served in our U.S. restaurants is USDA high quality, and free of antibiotics” (“KFC in Ethical Dilemma”). However, as it was later explained, this statement referred to the absence of antibiotics in served food products and not to the practice of using antibiotics for production purposes in general. It can be assumed that KFC’s suppliers still used antibiotics for such purposes, and the company did not want to lose them (which would have been a major shock for KFC’s operation) due to the pressure coming from the advocates of terminating the use of human antibiotics in raising food animals.

However, later response was different. It is noteworthy that, despite the FDA’s efforts aimed at “[phasing] out the use of medically important antimicrobials in food animals for production purposes” (“FDA Strategy on Antimicrobial Resistance”), many restaurant chains still use the meat of animals raised with antibiotics. However, by 2017, KFC improved and currently “says it is committed to serving chicken raised without antibiotics” (“Antibiotics in Our Meat”). At the same time, McDonald’s received a worse score than KFC in this regard (the scoring was carried out by Consumer Reports in 2017) because, while chicken served at McDonald’s is antibiotic-free, its beef and pork are not (“Antibiotics in Our Meat”). Therefore, KFC managed to follow the trend toward reducing the amount of antibiotics in its products and to gain a better reputational benefit than even the company that initially posed the dilemma for KFC—McDonald’s.

The Reaction’s Effect on Major Stakeholders

To assess the results of the decision made by KFC, it is necessary to identify the stakeholders and evaluate the effect on them. Apart from KFC itself, including its employees and decision makers, the stakeholders include Yum Brands Inc. (the corporation that owns KFC, Taco Bell, and Pizza Hut restaurant chains), KFC’s suppliers, the advocates of terminating the use of antibiotics in meat production, and the customers. Concerning KFC itself and its owner, the refusal to buy chickens from suppliers who used antibiotics would have been a major shock and could have cost the company millions of dollars that would have needed to be spent on modifying the supply chain. However, the ultimately made decision to commit to the requirement on serving antibiotic-free meat without refusing altogether to cooperate with suppliers who still used the practice allowed KFC to avoid negative effects and additional burdens on its operation without damaging its reputation seriously.

Concerning KFC’s suppliers, they may still be accused of jeopardizing people’s health because they do not give up the practice of using antibiotics. If the industry’s largest players, including KFC, refused to buy from them, the suppliers would most likely be forced to stop using antibiotics for production purposes altogether. Now, they may continue their cooperation with KFC although there was a chance that such cooperation would be stopped. Concerning the advocates of terminating the practice, they have succeeded in promoting their agenda, and the KFC’s response showed that they can continue to change the standards in the food industry. Concerning the customers, they may feel safer now knowing that KFC adheres to the antibiotic-free-chicken policy; however, some of them may be still disappointed that KFC failed to condemn the practice of using antibiotics in food production.

My Opinion on the Reaction

There are several key aspects of the presented ethical dilemma that I would like to discuss. First of all, the use of antibiotics in agriculture and farm animals can be a factor in the development of antibiotic resistance (Landers et al. 4). Therefore, this practice is a health risk because it undermines the effectiveness of antibiotic therapies in treating people who consume food produced with human antibiotics. However, KFC claims that the chicken it serves is antibiotic-free even though the company’s suppliers most likely use antibiotics in raising those chickens (“KFC in Ethical Dilemma”). Therefore, the meat needs to be processed in a specific way or other measures need to be taken by KFC to ensure that the final product contains no medically important antibiotics. It helps the company comply with the requirements technically, but the practice of using antibiotics continues.

On the one hand, I can say that KFC made a wise decision because it was a compromise: the company preserved its supplier relations but, at the same time, managed to meet the requirements issued by the FDA, to respond to the claims made by the opponents of antibiotic use, and to comfort KFC’s customers by stating that they should not worry about antibiotic resistance. On the other hand, the fact that KFC did not condemn the practice of antibiotic use altogether and did not refuse to work with suppliers who adhered to the practice means that the practice will be continued and, one way or another, a lot of meat that contains human antibiotics will be produced and consumed. In this context, the KFC’s decision is ethically questionable. However, there are no universally correct solutions to ethical dilemmas (Crane and Matten 87). I still think that KFC made a reasonable decision that allowed it to reach a compromise between protecting its operation and meeting customer needs.

Alternative Responses

In analyzing an ethical dilemma, it is important to review all the possible responses to it available to an organization and evaluate their consequences. KFC could have alternatively refused to work with suppliers who employed antibiotics in raising food animals and could have made a statement on this decision to the public. It would have attracted praise from the opponents of antibiotic use in food production, and it can also be assumed that KCF would have gained a competitive advantage in terms of its reputation and image among the members of its target audience. It would have been a strong statement on how much the company cared about the health of its customers. However, the company could have suffered serious losses due to the need to create new supply chains. The current supplier would have been harmed, and the new ones might have been hard to find.

Another alternative decision would have been to continue the initial response and refuse to make comments concerning the use of antibiotics at all. It is a widespread practice, as many companies try to hide their mistakes or improper practices by misrepresenting or concealing facts. However, it has been repeatedly demonstrated that transparency and honesty (Crane and Matten 460) are more effective strategies. KFC’s attempt to conceal the presence of human antibiotics in its products and to ignore the topic could have resulted in lowered customer trust, and the company would have suffered serious reputational losses. The compromise reached by KFC helped the company avoid the negative outcomes of these two alternative scenarios.

How the Relationship between the Organization and Its Stakeholders Changed

In its approach to resolving the described ethical dilemma, KFC tried to maintain the balance in the relationships among stakeholders. It can be argued that the relationships with suppliers have been strengthened because the company has confirmed its determination to cooperate with them and protect this cooperation even under the pressure of the advocates of terminating the practice of antibiotic use in raising food animals. However, certain negative effects on the relationships with customers as a category of stakeholders can be expected. Some customers may develop a perception that KFC is not as strongly committed to protecting their health as it should be. While technically complying with safety requirements and avoiding serving chicken with human antibiotics in it, the company fails to condemn antibiotic use in farm animals in general, and this can be seen by some customers as an unethical and inappropriate position. Therefore, a certain decrease in demand can be expected.

Conclusion

KFC encountered a dilemma in which it could either refuse to work with its current suppliers or face allegations of neglecting the health of its customers. On the one hand, the company wanted to continue cooperating with its current suppliers in order to avoid significant losses caused by the need to create new supply chains. On the other hand, the company did not want to be thought of as a restaurant chain that served potentially harmful food. KFC opted for a compromise and managed to comply with safety requirements technically while preserving the cooperation with suppliers. Although the ethical aspects of this decision can be questioned (like any solution to any ethical dilemma), it can be argued that KFC responded reasonably and maintained the balance in the relationships with both suppliers and customers.

Works Cited

“Antibiotics in Our Meat: Restaurant Scorecard.” WEAR. 2017, Web.

Crane, Andrew, and Dirk Matten. Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization. 4th ed., Oxford University Press, 2016.

“FDA’s Strategy on Antimicrobial Resistance – Questions and Answers.” U.S. Food & Drug Administration. 2017, Web.

“KFC in Ethical Dilemma after McDonald’s No-No to Chicken Raised with Antibiotics.” Health Care Asia Daily. 2015, Web.

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.

World Health Organization. WHO Guidelines on Use of Medically Important Antimicrobials in Food-Producing Animals. 2017, Web.