Chang Lao's Blog

Every system requires a check to maintain a balance. As for businesses, although the main goal is to maximize profits, they must have limitations to how they can achieve their goal of profit maximization. I agree with Freeman’s Stakeholder Theory; all the related stakeholders must be taken in account before one can truly maximize their long term profits.

A Chinese farmer collecting eggs at a farm located in eastern China. (STR/AFP/Getty Images)

An example of a company displaying poor business ethics are the KFC stores in China. The fast-food chain restaurant has faced numerous scandals; China Central Television network has released several reports stating that the company sold chickens fattened by illegal drugs and that their ice cubes had 13 times more bacteria than toilet water. Although profit maximization is the primary goal to a business, one must factor in the social impact this will have on society. The community is not asking KFC to suddenly become a philanthropic company promoting world peace and a greener environment.

A KFC store in Beijing, China. (image from www.armstrong.edu)

Businesses need to understand how to follow the most fundamental rules, the law. They are violating basic moral values by feeding the people, including our next generation, these highly toxic foods. As industries in China slowly become more stable and advanced, KFC will lose the trust of their consumers with their current actions resulting in a decline for their company.

Reference
Brady, Diane. “KFC’s China Recovery at Risk of Being Flushed Away.” Bloomberg Business Week. Bloomberg, 23 July 2013. Web. 09 Sept. 2014. <http://www.businessweek.com/articles/2013-07-23/kfcs-china-recovery-at-risk-of-being-flushed-away>.