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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 109countries all around
the world. KFC operates more than 5,200restaurants in the United States and more than 15,000 units
around the world. KFC was founded by Harland Sanders (Sanders) in the early1930s. 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.
KFC Malaysia is the famous fast food restaurant in Malaysia; products it sells include chicken,burger,
nugget, sandwich, wedges, drinks, fries, coleslaw and many more. It has captured 44%of market shares
in Malaysia. Its first restaurant was opened in 1973 on Jalan Tunku AbdulRahman, now it has more than
539 restaurants throughout Malaysia and growing. Among all, their secret recipe chicken is the KFC most
famous dish, it has great taste and trulyenjoyed by Malaysian ever since. Kentucky Nuggets was
conceived in Malaysia, and found its way to KFC worldwide today. Meals on Wheels, was also
developed in Malaysia, creating andbringing opportunity for people to taste where KFC might not
available. KFC Kids Chicky Club was also developed to suite for kids. Chicky and Friends, the character in
the KFC, bringpleasure and fun to all children, a good example would be television program sponsored,
TheChicky Hour, which broadcast on every Saturday morning at TV3.Some other activities developed by
KFC Malaysia include Projek Penyayang KFC, Tabung Penyayang KFC, Tabung Penyayang KFC Collection
Boxes, and 4 of KFC restaurant areoperated by speech and hearing-impaired staffs. These 4 restaurants
are located in Peninsular and East Malaysia. First in Sentul Raya, Kuala Lumpur, second is at Saujana,
Sarawak, third isat Tanjung Aru, Sabah and fourth is at Johor.








PRODUCT
KFC's core product offering is pressure fried on-the-bone chicken pieces seasoned with the "Original
Recipe". The product is typically available in either two or three piece individual servings, or in a family
size cardboard bucket, typically holding between 6 and 16 chicken pieces. Poultry is divided into 9
different cuts (2 drumsticks, 2 thighs, 2 wings, 1 keel, and a backbone based breast cut divided into 2
pieces. The product is hand-breaded at individual KFC outlets with wheat flour mixed with seasoning in a
two to four minute process. It is then pressure fried for a maximum of seven minutes at 185 degrees
Celsius. Following this, the chicken is left to stand for 5 minutes in order for it to sufficiently cool before
it is placed in the warming oven. It is KFC policy to discard chicken if it has not been sold within 90
minutes, in order to ensure freshness. The frying oil varies regionally, and versions used include
sunflower, soybean, rapeseed and palm oil. A KFC executive stated that the taste of the chicken will
vary between regions depending on the oil variety used, and whether the chicken has been corn-fed or
wheat-fed.
As well as its core chicken on the bone offering, KFC's major products include chicken burgers. KFC
adapts its menu internationally to suit regional tastes, and there are over three hundred KFC menu
items worldwide. Some locations, such as the UK and the US, sell grilled chicken. In predominantly
Islamic countries, the chicken served is halal. In Asia there is a preference for spicy foods, such as the
Zinger chicken burger.
Issue
1. Overcrowded farm environment
The chickens are stuffed by tens of thousands into over-crowded 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.
Issues Concerned with the Case
This case can be solely related with both market stakeholders and non-stakeholders of KFCs
environment.

No. Stakeholder Description
1. Stockholders KFC is one of the brands among the Yum brands, which
have been operating in various cornersof the world. The
activities practiced by the KFC and its suppliers have larger
impact on thestockholders. The protest initiated by various
organizations has effect on operations and if thecompany
fails to solve the current issues, the company would may be
solely responsible formissing out to take advantage of
opportunities that lies, ahead in future. The stockholders
haveinvested in the company and if the company closes
down, their investment would be at risk.
2. Customers Consumers continue to return to KFC because of the quality
and good prices of their foodproducts. KFC has many fans
and continues to grow to provide better customer service.
Fromresearch we learned that KFCs suppliers have
beenbreeding unhygienic, drugged birds thatcould possibly
have negative impact on the customers health. KFC should
investigate thesuppliers breedingand poultry process so
that proper quality of their chicken are maintained
3. Suppliers KFC has numerous suppliers among which, Perdue Farms,
Tyson Food and PilgrimsPridesupplies the major chicken to
KFC, and those chickens are further processed to be served
intotheir chain of restaurant all over the world. Proper
steps and methods should be applied toevaluate the
suppliers and their products as suppliers largely affect the
overall operation andbusiness of KFC. Suppliers should
focus on their improvement as when KFC is affected; they
arealso likely to be affected, as KFC is the suppliers main
buyer of their chickens in huge mass.
4. Media Mass media is also highly affected, as most of the protest
made all around the world initiated bynon- government
organizations, were made from the channels of the media.
Media made people,organization and business firms, to be
more aware about their activity, and draw the line
betweenthe right and wrong. Through information gained
from media, people have changed theirdecision and
demonstrated their activities against the KFC
5. Non-Government
Organization (NGO)
NGO such as PETA and Greenpeace are highly influenced by
the supplier poor management forbirds handling by the
workers. PETA has been involved into protest to make
people aware aboutthe activities of KFC suppliers, mainly
PilgrimsPride, and they have also mentioned
somecorrective course of action that can improve the life
of birds. Likewise Green Peace organization,made the
whole world aware about the Cargill, one of the supplier of
KFC for soya fed forchicken, who was highly responsible for
Amazon rainforest deforestation.
6. Rules and Process Due to poor implementation and execution of rules and
process of chicken handling, transportingand slaughtering
has led to this scenario. PETA has explained in their article
that KFC shouldbound their supplier to work on animal
welfare program, to ensure that birds are taken
careproperly because, these birds are sent to restaurant all
over the world. What supplier breeds, areconsumed by the
final consumer, so organization should be aware about the
rules and process tohandle birds. Greenpeace is highly
concerned with the destruction of Amazon rainforest,
theyclaim to KFC to not seek cheap soya that are feed to
birds back in their suppliers farm. KFCshould be sound and
responsible for the effect on the environment and should
take correctiveaction to minimize the impact on
theworldsenvironment.






HUMAN RESOURCES







Corporate governance statement
The Board of Directors (the Board) of QSr Brands Bhd (QSr or the Company) has adopted and
subscribed to the Malaysian Code on Corporate Governance (revised 2007) (the Code) as a minimum
basis for QSrs practices on corporate governance. The Board further recognizes that the principles of
integrity, transparency and professionalism are key components for the Groups continued growth and
success. These will not only safeguard and enhance shareholders value but will at the same time ensure
that the interests of other stakeholders are protected. The Board is pleased to report to the
shareholders in particular and other stakeholders in general on the manner the Company hasapplied the
principles of corporate governance.
The board of directors
Composition, Size and effectiveness of the Board
The Board is led and managed by an experienced and effective Board with a wide range of knowledge
and expertise. The Board is primarily assigned for charting the strategic direction of the Group. On 1
January 2010, the Companys Board composition was further strengthened with the new appointment
of an Independent non-executive Director who is also the Managing Director of KPJ Healthcare Berhad,
Datin Paduka Siti Sadiah binti Sheikh Bakir. With the changes, the Board currently has 8 members
comprising the Chairman, Tan Sri Dato Muhammad Ali bin Hashim (Non-Independent Non-Executive
Director), Deputy Chairman, Ahamad bin Mohamad (Non-Independent Non-Executive Director), the
Managing Director, Jamaludin bin Md Ali, 3 Independent non-executive Directors being Dato Drridzuan
bin Mohd Akil, YaM Dato Seri Syed Amir Abidin Jamalullail Ibni Almarhum Tuanku Syed Putra Jamalullail
and KuaHwee Sim and 1 other Non-Independent Non-Executive Director being Sheik Sharufuddin bin
Sheik Mohd. The Company is incompliance with the Bursa Malaysia Securities
Berhadslistingrequirements which require at least two directors or one-thirdof the total number of
Directors, whichever is higher, to be Independent Directors. The Board retains full and effective
controlof the Company.
The Managing Director has direct responsibilities for business operations whilst non-executive directors
havethe necessary skill and experience to bring independent judgments to bear on the issues relating to
strategy, performanceand resources. Key matters, such as approval of annual and interim results,
acquisitions and disposals, material agreements,major capital expenditures, budgets and long term
plans would require the Boards approval. The Board views that the number and composition of the
current Board members are sufficient and well-balanced for the company to carry out its duties
effectively, whilst providing assurance that no individual or small group of individuals can dominate the
Boards decision making.to ensure that there is balance of power and authority, the roles of the
Chairman/Deputy Chairman and Managing Directorare separated and clearly defined. The
Chairman/Deputy Chairman is primarily responsible for the orderly conduct andeffectiveness of the
Board, including, but not limited to, organizing information necessary for the Board to deal with
theagenda of meetings, whilst the Managing Directors primary task is to report, communicate and
recommend key strategic andoperational matters and proposals to the Board for decision making
purposes as well as to implement policies and decisionsapproved by the Board. The Independent
Directors and Non-Independent Non-executive Directors are from varied businessand professional
backgrounds and bring with them a wealth of experience that is broughttobear favor ablyin board
decisionsand policy formations. Together, the Directors bring a wide range of business and financial
experience relevant to the direction of the expanding group. Other than the Chairman and the
Managing Director, the shareholders or stakeholders may convey any concerns that theymay have to
the Chairperson of theaudit Committee who is also an Independent Non-executive Director.
Training and development
At KFC, all employees receive extensive training provided through using blended learning techniques (e-
learning, on-the-job and formal classroom). The Company employs over 3500 Team Members, 450
Managers and 75 Shift Supervisors, located in 122 restaurants.
All Team Members receive comprehensive training in the following areas:
All Shift Supervisors/Managers participate in our KFC Global Training curriculum (40 core competencies).
The training is designed and facilitated by accredited professionals (internal and external) to ensure all
Shift Supervisors/Managers gain the skills, knowledge and experience to operate our successful
restaurants.
In addition, the company provides comprehensive training in the following areas:
1) Leadership Development
2) Coaching Skills
3) Culture
4) Interaction Management
5) Fire Safety
6) First Aid training
7) Food Safety
8) Human Resources, Workplace Health & Safety
9) Information Systems
10) Financial & Operations Accounting

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