New Age of Globalization and Global Village - Essay Example

R.PREETI 9/5/2008 CASE STUDY: KFC IN INDIA EXECUTIVE SUMMARY Today's fast paced modern world offers a lot more than was previously imaginable! Every aspect of our lives is influenced not just by local, but also national and international factors, that govern our lives today. The enhancement and growth of communication channels, the spreading of production and consumption across the world and the changing lifestyles due to the influence and merging of cultures have become the order of the day. This is known as the New Age of Globalization, wherein the whole world is perceived as a Global Village. This paper talks about this Globalization that has taken over the entire 'village' by storm and the how it has brought about a remarked revolution in our lives! Globalization is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology. This process has effects on the environment, on culture, on political systems, on economic development and prosperity, and on human physical well-being in societies around the world. (Website: http://www.globalization101.org/What_is_Globalization.html Globalization makes use of modern technological advancements and also focuses on the quick transfer of technology, to keep with the changing world. Therefore, Globalization is a phenomenon that charges towards progress and engulfs the whole world, in this process. The development in technology has led to the process of Cloning and other artificial forms of life. Today, we have hybrid varieties of fruits and vegetables being imported from various parts of the world; which truly symbolises globalization. The widespread Globalization has led to the free movement and transfer of goods, capital, technology and people, from one hemisphere to the other. Therefore, there is an influx of numerous commodities across the globe. One of the entrants in the last decade, into the Indian market, is the KFC chain. The entry has been welcomed with both, expectations and controversy. Kentucky Fried Chicken, popularly known as KFC made its entry into India in 1995, by setting up an outlet in Bangalore. This was the time when the Indian market w as opening up to the international one, with MNCs and other international organizations coming into play. This was also the time when KFC was in the expansion mode and found the Indian market ideal to target. While the operations flagged off with success, KFC has come under the hammer for a few reasons. Firstly, it was the high level of monosodium glutamate content present in the food served. The high levels of the MSG content, in fact, were about three times higher than the prescribed limit. Next, the PETA or the People For Ethical Treatment of Animals organisation had problems with the manner in which the KFC processed its food and used animal livestock. In addition to this, farmers from the Karnataka Rajya Ryota Sangha (KRRS) landed at the doorstep of the first Bangalore outlet, to protest against the expansion of the fast-food joint into India. This paper attempts to analyse the entry of KFC into India, the problems that have been leveled against it and the various protests and the ethical implications associated. REASONS FOR PROTESTS The KFC chain has been subject to protests from a number of quarters. On the very first day, farmers marched onto the restaurant opening and protested against the 'junk food' served by the KFC opening. The group of angry farmers, led by the Karnataka Rajya Ryota Sangha and leader Nanjundaswamy, stormed to the opening of the restaurant and opined that the serving of such junk food was greatly unethical in a poor country like India. They were of the opinion that in a country like India, were malnutrition was a feature, serving such junk food was completely unethical and add to India's malnutrition problems. In addition to this, the leader Nanjundaswamy felt that the entry of a number of international fast-food joints was certainly not called for. This was because, it would lead to the depletion of the livestock in India and render a number of Indian farmers and livestock owners unemployed. The group also felt that it would affect the agricultural primary sector that constituted a major portion of the Indian economy, and the environment adversely. It was commonly felt that once the Indian farmers felt that the entry of non-vegetarian food was affecting their options adversely, they would choose to move towards the more lucrative varieties like animal feed and meat. This would lead to the shifting of the economy and also make it difficult for the poor to procure a two-square meal per day. The group protested vociferously against the concept of westernization of the Indian agricultural sector and the changing food culture of the country. It would not only have great economic implications, but also cultural and social aftermaths. This was widely felt by the farmers and other socio-economic groups that raised their voice against the opening of the KFC chain in India. The emergence of food multinationals, as a result of the widespread globalization and the liberalization and opening up of the economy, was perceived as a threat to the culture of the country, and an economic deterrent. CRUELTY TOWARDS ANIMALS Various organizations have been formed to safeguard and protect the rights of the animals. Varied criteria are set, that constitute 'cruelty towards animals'. KFC is one multinational food company, that ahs been targeted by the PETA worldwide. This is because, it f alls under the criteria set by the organization, for constituting cruelty towards animals. According to the PETA, KFC chicken is subject to extreme cruelty, before it reaches the palate and tempts the taste buds of consumers. According to Ingrid Newkirk, Director, PETA, "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." - This qualifies under the cruelty towards animals. Unethical conditions of breeding, torturous killing of animals and cruel handling is extremely prevalent in the KFC chain of restaurants and outlets. In the words of the Nanjundaswamy, "the chicken they serve is full of chemicals, and the birds are given hormones, antibiotics and arsenic chemicals to fatten them quickly." The PETA released a video showcasing the treatment meted out to the chickens, by the KFC chain. Protests took place outside a number of outlets, including one at Ludhiana, besides the one at Bangalore. Activists of the PFA and PETA staged a protest outside Kentucky Fried Chicken (KFC) outlet in the city to "sensitize people about the cruelty being done to birds in hatcheries supplying birds to the outlet." Led by Dr Sandeep K. Jain of the PFA and Ms Sneha Singh and Roshni D'Silva of PETA, activists distributed pamphlets carrying pictures of various stages a chicken goes through before being slaughtered. Dr Jain said that they were all peace loving organisations and did not want to create any law and order problem. But they had to start the campaign against the outlet after the reports of cruelty. "We are not raising any slogans or staging a dharna. It is a peaceful way of making our point by conveying our message through placards," he said. I personally feel that the initiative taken by PETA is extremely justified, considering the extreme conditions of cruelty exercised by the KFC group, in the process of catering to the customers. They have crossed the ethics of handling animals, in the process of doing business and in their quest for profit. KFC'S REACTION Mr Arvind Mediratta, a spokesperson of the KFC, said that their outlet does not own, raise, transport or process poultry. Their unit was committed to the well being and humane treatment of chickens. They had tied up with the suppliers that followed an internationally benchmarked mechanised procedure for meat processing. He added that in India, KFC sources processed chicken for all its restaurants from Venkateshwara Hatcheries Limited (Venky's), which is the largest and the most reputed organised company in the Indian poultry industry. Venky's supplies chicken to several well-known hotels and restaurant chains in the country and is also the largest exporter of poultry products from India. Venky's has won numerous awards and acclaim for their high standards and best practices. Mr Mediratta added: "We value our customers and have highest regards for their health and safety. We serve quality food at our restaurants prepared with the freshest ingredients and benchmarked procedures. The high standards of hygiene and quality demanded by the KFC stipulate that meat be processed untouched by human hand." He further said that they ensured that all the suppliers followed specific, quantifiable guidelines developed in consultation with Animal Welfare Advisory Council, which consists of leading scientists and academics in the field of animal welfare and failure to comply with their guidelines could result in the termination of the suppliers contract. [Website: www.tribuneindia.com] Due to the intensity of protests form a number of quarters, the KFC had to shut down all of its outlets in India, except one. Later, the KFC came back to India and initiated its operations in 2003, with altered code fo ethics. It kept in mind the Indian conditions of living and food habits of the Indians, before commencing its activities. ETHICS IN BUSINESS Ethics is generally concerned with an individual's activities and perception about morality, alongside his differentiation between right and wrong. Very often, one's perception on ethics various from that of the others', due to personal experiences, mentality, background and the influence of near and dear ones. When we perform actions and take steps in life, we often do sit back and reflect on the ethical value of our actions. In other words, we do analyse if we are being ethical in leading our lives and sticking to what is morally right. In today's world, organisations and workplaces have become extremely diversified and have adopted varied stance s in terms of job processes and the general outlook. What is striking in such a scenario, is the prevalence of organizational or work ethics. Ethics has evolved to become an important aspect of organizational functioning, since it deals with the self-esteem and the very importance attached to employees in an organisation. One of the most significant aspects of globalised organisations, is the process of off-shoring. Off-shoring refers to the process of transfer of business processes from one country; and this has particularly come to the forefront as a result of the widespread Globalization. Off-shoring has not only led to the flow and transfer of technology and man power from one country to another, but it has also facilitated the physical movement of companies and organisations into the other countries. For instance, India has become a leading player in the process of off-shoring of technology, services and manpower. Off-shoring has led to the development of developing and underdeveloped countries, more so because of the economic cost advantage, that they possess. Developed countries, too, can avail cheap labour and reduce costs. Off-shoring is, for this reason, catching up like wild fire with most countries of the world, who have opened up their economies for this phenomena. International trading has been the result of gaining from the resources of the other countries, in return for something. Off-shoring too, carries forward the same principle and establishes a mutual give and take of resources of any form. Most importantly, off-shoring refers to the transfer of human resources and this simply means that the equations of comparative advantage of one country over the others can keep changing and shifting with man-made changes. This phenomenon has been called the "kaleidoscopic comparative advantage", by economist Jagdish Baghwati. It is due to this, that most non-tradable possessions are becoming tradable, thanks to the opening up of newer venues and opportunities owing to sheer human intellect. For instance, in the earlier days trade was more or less facilitated by natural endowments. However, the current age has changed this ratio and man has emerged above the strength of natural resources. This is one of the prime reasons for the growth of off-shoring as a segment of international trade, that has literally and figuratively crossed borders! Off-shoring and Global organizations, in turn, do entail ethical behavior and norms, in their operations. While different individuals from varied cultures have their own viewpoints, sexual harassment is something that is a common idea. What is striking in an international expansion programme, is the Cultural Difference and Incompatibility one is bound to face. Numerous theories have been put forth, with regards to this. One such theory, is Geert Hofstede's 'Cultural Dimensions Theory'. Hofstede believes that management is not something that is related solely to business, but also extends in other aspects of life. (Website: http://www.valuebasedmanagement.net/methods_hofstede.html). He divides the cultural dimensions into four different dimensions, and later on went on to add a fifth dimension. The first dimension that he talks about is Individualism, wherein he highlights the extent of individual handling of projects, and the degree of group or team work that is existent in a management scenario. The second dimension is that of power distance, wherein he talks about the partisan politics. He delves into areas like inequality in management, biased outlook of those in superior positions and the like. The third, is that of certainty, which is nothing but the risk factor that is prevalent in businesses that expand beyond cultural borders. The fourth dimension is that of achievement or masculinity, which is the difference s in the task management between the sexes. The fifth dimension, that was later proposed by him, is Long term vs. Short term orientation, which talks about the time period of existent of the business unit in the extra-cultural scenario. Therefore, his theory states that management not only requires a business to look into the business operations, but to also look into other operations that govern an individual involved with the business. This is where culture and ethical operations come into the perspective in business expansion. Let is discuss one such company, where cultural dimensions and other international conditions of business and ethics play a major role. International Business has gained immense importance today, thanks to the development of foreign policies, foreign relations and globalization. Foreign Trade has received great impetus due to these factors and companies looking towards expanding their organisations are employing norms and policies to facilitate proper monitoring and maintenance of their employees. Due to growth in commerce and management, strategy planning and execution has become an integral part of organisation. Due to this, International Business has come to the forefront. International Human Resources Management seeks to lay down common rules, solutions to problems and personnel management systems to help this new phase of global expansion transform into a success story and to help organisations adapt and procure better results. Working in a country that one is not familiar with, is a great challenge in itself. More so, when it involves the establishment of a branch office of one's company or deals with the successful initiation of an extension of the company, in a scenario completely different from the one, one are familiar with. Heading these operations that delve into international horizons and expansion plans build up more responsibility that needs to be fulfilled, on one's part. Therefore, a great amount of thought-processing and execution must go down into such plans, before embarking on a conclusion. This write-up attempts to analyse the cultural conflicts that exist in an international workplace set-up, which is Nike in this scenario. Even though Nike is a U.S-based product brand, it has expanded into a number of countries, especially the developing or the Third World Countries. In this process, the company has set up offices and workplaces in these countries. One of these countries, is Vietnam. The very fact that a multinational or transnational company works with local nationals, is a complication. This is simply because of the fact that there exists a great deal of difference in the cultural set-up and the scenario of work. Firstly, one of the major problems arose from that fact that Nike has been accused of manufacturing shoes and apparel in "sweatshop" conditions. The allegations center on the notion that young workers are paid low wages to work long hours in unpleasant and unhealthy conditions. Reports have circulated of physical abuse and of exposure to toxic substances. (www.nike.com) Secondly, stakeholder conflict is one of the problems that had bogged down Nike, owing to the entire controversy created. In addition to this, there have been issues regarding the ethical ways of working at workplaces. Business ethics are an important part of workplace culture and it is imperative to understand the fat that it does differ from one culturally distinct country to another. These conflicts have occurred due to a more profit-oriented approach. The reason behind Nike capitalizing no t he third world market, is because of the fact that the labour available is cheap and in plenty. However, there do exists great differences in the treatment of Asian employees, as compared to the others in the developed countries the website says. The company si looking to bridge this gap and come with a global uniform ethical code of conduct; and also minimize employee discontentment. It is clear that every company does face problems in adapting to the cultural demands of a new host-country and it is imperative to adapt and rise to the needs of the situation. Therefore, it is evident that ethics play an important role in business. A business venture cannot solely rely on profit-making and forgo ethical mores and norms. KFC is just an example of the aspect of international operations, cultural diversity and ethical functioning of business, in business. Thus, business and profits are not necessarily beyond these issues and it is imperative that business ventures do adhere to these norms, for a progressive and flourishing venture, most importantly with all-round support from all quarters. REFERENCES Website: http://www.managementparadise.com/forums/archive/index.php/t-25193.html Website: www.tribuneindia.com Website: www.icmrindia.org Website: http://www.valuebasedmanagement.net/methods_hofstede.html Website: http://www.globalization101.org/What_is_Globalization.html Managing for Ethical Conduct, p 208-209. Developing a Globally Competitive Corporate Culture', website: http://spectrum.troy.edu/vorism/670_hrm.htm Rodrigues, C, '1996, 'International Management', West. 'Repatriation', website: http://www.intercultural-training.co.uk/repatriation.asp Linen, Margaret , 'Repatriation: The frequently forgotten phase of an international assignment'. Evans, Paul; Pucik, Vladimir; 2002 'The Global Challenge: Frameworks for International Human Resource Management', 1st edition, McGraw-Hill/Irwin. Mathis, Robert L.; Jackson, John; 2006, 'Human Resource Management', Thomson South-Western. Website: http://www.ebooks.com/ebooks/book_display.aspIID=231840 Bohlander, George; Snell, Scott; 'Managing Human Resources'. Guion, Robert M., 1998 'Assessment, measurement, and prediction for personnel decisions'. Read More