Executive summary:
This report is about how ethically correct KFC and McDonald’s are in their business practices. They both are from the same industry which is food and beverage but still are two different companies. Basically Business ethics focuses on identifying the moral standards of right and wrong as they apply to behaviour within and across business institutions. In this report we evaluate and compare their business practices according to ethical aspects. Later on we discuss the 4 ethical theories for each of the company which are individualism, utilitarian, virtue ethics and Kantian theory and apply them to show how ethical the business practices of each company compared to the other company. We justify our report by giving authentic facts and figures for each company. Finally in the end giving a conclusion on the discussion done for both the companies.

TABLE OF CONTENTS:

* Background of the companies

* Comparison between business practices according to ethical aspects

* Constructive and commercial ethical aspects of both companies

* Discussing and applying the ethical theories according to the practices of the companies

* Conclusion * References

A BRIEF DISCRIPTION ON THE BACKGROUND INFORMATION ABOUT KFC AND MCDONALD’S’:
First we talk about KFC; it is one of the world's most popular fast food restaurant chains in the world founded by Colonel Harland Sanders in 1930. Every day, more than 12 million customers are served at KFC restaurants in 109 countries and territories around the world. KFC operates more than 15,000 restaurants around the world today. KFC rules the roost when it comes to serving chicken. One of the world's largest fast-food chains, the company owns and franchises more than 16,200 outlets in about 100 countries. (More than 5,100 locations are in the US.) The restaurants offer the Colonel's trademark fried chicken (in both Original Recipe and Extra Crispy varieties) along with chicken sandwiches, chicken pot pies, crispy chicken strips, mashed potatoes and gravy, and potato wedges. Its locations can be found operating as free-standing units and kiosks in high-traffic areas. More than 25% of the restaurants are company-operated. KFC is a unit of fast-food franchisor YUM Brands, which also operates Pizza Hut and Taco Bell.
The famous logo of KFC

Now we come to McDonald’s, since its founding in 1948, McDonald's has grown from a family burger stand to a global fast-food chain, with more than 30,000 locations in 118 countries. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by Richard and Maurice McDonald in 1948 they reorganized their business as a hamburger stand using production line principles. Businessman Ray Kroc joined the company as a franchise agent in 1955. He subsequently purchased the chain from the McDonald brothers and oversaw its worldwide growth. In 2012, McDonald's Corporation had annual revenues of $27.5 billion, and profits of $5.5 billion.
LOGO FOR McDonald’s

COMPARISON OF BUSINESS PRACTICES IN THE ETHICAL ASPECTS BETWEEN KFC AND McDonald’s: * Constructive aspects of ethics at KFC:
Kentucky Fried Chicken is very keen about ethical standards both within and without the company as asserted by their company representatives. For instance the company is strict about is vendor engagements. Before a supplier can secure a contract with Kentucky Fried Chicken, they have to comply to similar ethical standards as KFC. This means that the supplier must not utilise under age labour to producer their commodities, they must pay fair wages and must also avoid placing harmful chemicals in their commodities. These concepts have governed the way KFC chooses other business partners too, they include contractors and manufacturers. By doing, this, the company is protecting human rights. The company also looks out for the health and safety of their workers. Since KFC is a fast food chain, then its workers are very busy, the company's representatives affirm that they are always trying to protect their respective employees from detrimental hazards in the workplace. In line with this, KFC always ensures that their employees work for them voluntarily. This means that the company detests forced labour. Kentucky Fried Chicken employment practices are also ethical. This is due to the fact that the company does not discriminate against individuals on the basis of race, gender, disability or any other factor. The company's recruitment practices largely focus on the capabilities of the potential candidate rather than on their respective race, cultural backgrounds etc. In line with these practices, the company usually offers overtime for employees who decide to work beyond the normal working hours. Besides that, the company has created shift arrangements so that it can avoid overworking employees at any given time. The issue of wages is also top on KFC's list. The company believes that workers should be paid according to their efforts. Consequently, there is an element of fairness when it comes to the way the company treats its employees. The company depicts this attitude in some of its restaurant outlets such as the ones here in the UK and also in Canada. The company has exceeded minimum wage by close to eight pounds per hour. Also, in the Canadian outlets, the company pays most of workers a favourable amount and has even allowed for unionisation of employees. All the latter deeds go to show that KFC is committed to providing its employees with good working conditions. * Controversial aspects about KFC's activities ethically:
KFC ethical activities have been put to the test when some animal rights activist challenged KFC' treatment of chicken. In the month of June 2008, the People for the Ethical Treatment of Animals (PETA) together with Hollywood actress Pamela Anderson sent written complains to the KFC managing Director in the UK for unethical treatment of chicken. According to this group, Kentucky Fried Chicken is not keen on the way their suppliers treat their chicken in their farms. The group asserted that these suppliers make the chicken grow too fast thus preventing them from walking. The latter activists also asserted that KFC'S suppliers normally mistreat chicken in the slaughter houses. They claim that the chicken are chained by metal shackles and placed in electric water baths. These groups also complained about the way chicken are still alive during the process of de-necking them. They believed that chicken's living and dying conditions should be improved. These assertions were further justified by the latter group when they claimed that KFC Canada followed suit by changing some of their policies. According to the animal rights activists, the Canadian chain opted to consider how chickens were bred before purchasing them from suppliers. Consequently, the celebrity Pamela Anderson- who was speaking on behalf of PETA asserted that she would stop consuming KFC ‘s products until they complies with their suggestions. Another closely linked media report of the year 2008 was with regard to reports made by undercover reporters. The reporters had made video cameras of the way KFC treats its animals. Some of them were quite disturbing as they depict chickens being thrown against walls, being beaten and being slaughtered mercilessly.KFC has also been in the news for their poor environmental policies. According to some activists, KFC has not demonstrated good corporate responsibility because of the type of suppliers who provide them with SOY (which is a part of their chicken ingredient).
Another issue that the company is currently grappling with is firmly tied to the nature of the industry that the company operates in; fast food restaurant. According to health experts and other nutritionists, the type of fats utilised when cooking foods highly affects the nutritional and health value of the food. One particular type of fat that has received so much attention from the corresponding individuals is Trans fats. Trans fats are those types of fats that are emanated from oil during the hardening process. The purpose of these trans fats is to prolong shelf life and to make commodities prepared through baking last longer. Despite these good qualities, trans fats can bring about complicated health diseases that many people in the UK are fighting, these include; * Obesity * Diabetes * Coronary heart disease * Other disorders
After examining these issues, one can say that KFC have demonstrated unethical behaviour in some selected parts.
Now coming to the McDonald’s:
• Constructive aspects of ethics at McDonald’s:
McDonald’s for over 30 years has initiated energy conservation measures. In 1990 they established their own Global Environmental Commitment and forged a ground-breaking alliance with the Environmental Defence Fund. During the 1990s alone have eliminated 300 million pounds of product packaging by redesigning and reducing materials. They have been thinking of many ways of going green. A few ways are by conserve energy, produce less waste, and minimize resources used by suppliers, and use less and spend less. At the restaurant level, they are focused on these three areas: * Energy conservation – Find further ways to increase energy efficiency in our restaurants in order to save money and reduce our environmental impacts. * Sustainable packaging and waste management – Continue exploring ways to reduce the environmental impacts of our consumer packaging and waste in our restaurant operations. * Green building design – Enhance our strict building standards to incorporate further opportunities for environmental efficiencies and innovation in the design and construction of our restaurants.

ABOVE PICTURE SHOWS THAT McDonald's is launching a CSR-focused marketing strategy with an "A-Z of the company" featuring a series of McDonald's-related ethical initiatives

• Controversial aspects about McDonald’s activities ethically:
McDonald’s Corporation has been growing and spreading internationally for the past three decades. Although McDonald’s seems convenient, cheap and so called clean there are many negative aspects of the business. In addition to paying their employees low wages and
Negatively impacting other cultures and they also use to allow animals to be beaten and abused before being killed. McDonald’s promotes its positive image and products with greasy fries and a clown named Ronald McDonald. The unethical practices of this large fast food corporation are known but it doesn’t seem to cause anyone to look the other way. I now have read many stories and articles about how unethical McDonald’s has been in the past. And thinking about these things now makes me sick that I ate there when I was younger but, I didn’t really know any better. But I know that most of the things I found that were unethical the McDonald’s Corporation has been trying to improve on. I guess the thing that really hit home was how McDonald’s has let their slaughter houses beat the animals and let them suffer before they would eventually die. I couldn’t believe that they would let such a thing happen. I am an animal lover and it just really blew my mind that nothing was done for a long length of time. One of the main ethical criticisms consistently faced by McDonald's over the last 30 years relates to the food offered in its stores. Critics claim that McDonald's is a major contributing factor to the ever-increasing levels of obesity in the U.S. and other developed countries.
The impact of a McDonald's diet on children is also a major ethical concern, as an increasing number of children are faced with obesity problems. McDonald's has been criticised for exploiting children with advertising. They have traditionally aimed themselves towards children with collectable toys in 'Happy Meals', as well as colourful advertising campaigns and promotions in schools. Most criticized is the use of the Ronald McDonald clown character, which has been seen as a 'cynical exploitation of children to use a clown to drum up business. These marketing tactics contribute to the increasing unhealthy diet of many children.
McDonald's also experiences internal ethical issues related to the working conditions and treatment of employees. 'McDonald's employs over 1 and a half million people worldwide, over half of them under 21 years old McDonald's has adopted 'age differentials between adult and younger workers, meaning that they pay most of their employees less than the normal adult minimum wage. For example, McDonald's pays some 16-year olds as little as $6.80 an hour. McDonald's employees also experience poor working conditions with discrimination, illegal working hours, and poor safety conditions. There is little that can be done about this due to the absence of trade unions, within McDonald's, to represent staff.
As I mentioned earlier McDonald's has been criticized for the way it treats animals before they are killed and turned into fast food. The corporation is the world's largest promoter of meat-based products, the largest user of beef and the second largest user of chicken and thus is faced with the usual claims aimed at slaughterhouses.
APPLYING THE ETHICAL THEORIES: * First we talk about McDonald’s:
The following theories: individualism, utilitarian, Kantian, and virtue theory examine if the McDonald's Corporation is acting ethically or not and why. For each theory McDonald's has acted ethically, the only theory that breaches ethical decisions is Kantian but overall the corporation has acted ethical thus far. According to Friedman’s theory of individualism the company is acting ethical. The company's main goal is to maximize profit for the owner and stockholders. McDonald's is purposely marketing children because they are able to persuade their parents to purchase their products. Children are unable to drive or buy the food but their parents are. By having children go with a parent or adult, it doubles profit. If one adult goes, that is one burger, but if a child and an adult go, it’s two, hence increasing the sales.
Utilitarian theory states that happiness should be maximized while pain should be minimized. Again, according to the Utilitarian theory McDonald's is acting ethical. All the stakeholders are happy considering the situation, the stakeholders are the customers, which include the parents and children, the employees of McDonald's and the McDonald's corporation.
Kantian theory states that one should do things for the right reasons, that people are not just numbers but should be respected and one should aid in rational decisions of the people and the company. McDonald's provides all the nutritional facts for consumers in all their establishments, it is up to the consumer to decide if they want to purchase the products or not.
Lastly, the virtue theory, which states that one, should express good character, which includes courage, honesty, temperance, and justice. McDonald's acted ethically in reference to their marketing techniques and practices. McDonald's have good ideas, good products,
And fairness to their consumers, McDonald's is honest with their food nutrition, and variety of products that satisfy different consumer’s needs. Consumers know that McDonald's provides fast food for cheap prices; they fulfil their function as a food provider.

* Now we apply the same theories on business practices of KFC:
Same as the other companies the main aim of KFC is to maximize profits and according to Friedman’s theory of individualism that’s what the company is doing hence the practices of the company are ethical and Friedman would agree with their practices because it has and will continue to create maximum profit. Lastly by looking at the revenue KFC generates in a year it is clear that it fulfil the requirements of this theory.
Again, according to the Utilitarian theory KFC is acting ethical. The children are happy with their toys, and playgrounds. Mostly parents are willing to listen to their children's wishes because their children are entertained by the toys and are busy playing, most parents will stop and get the food because it’s fast and easy and it makes their children happy, hence the name Happy Meal.
Kantian theory also says the company should be motivated by good will. KFC began the marketing techniques to children out of self-interest to maximize profits, but overtime the techniques have become a part of the McDonald's face. Everyone knows what they do and it is our choice to buy or not. KFC was not motivated to just provide a toy because it's the right thing to do, but to attract them to come back. In that sense, KFC is unethical but overall KFC have used their marketing techniques that satisfy most of the Kantian theory.
As I stated earlier virtue theory emphasis on one’s good character. KFC has marketed or advertised its products with honesty most of the times and when they say a meal is for e.g.: RM10 you actually get it for that price there are no hidden charges, which means that they are being honest to their customers and that is the reason that the customers are also loyal to them which clearly tells us that it is practicing ethically correct according to this theory.

CONCLUSION:
As a restaurant operating under the fast food industry, there are some ethical issues that come into play when considering the nature of the industry itself. This is especially since the Health Ministry in the region announced a battle against obesity .KFC and McDonalds has to deal with different ethical issues in their capacity as a business corporation. Any company worth its salt should have a code of ethics and must be prepared to stick by it. They have breached a substantial number of their ethics codes. However, one must not assume that the ethical issues facing KFC and McDonald’s are one sided. Most times, individuals tend to focus on the negative aspects of ethics and fail to look at things from another angle.