KFC MALAYSIA FOOD TAMPERING CRISIS

QUAN LAM
COM 473
PROFESSOR ELIZABETH KERNS
JULY 17TH 2012

Table of contents:

Executive Summary
SWOT analysis
Potential Crisis Comparison
Case Study
Bibliography

Executive summary:

Kentucky Fried Chicken (KFC) is one of the largest fried chicken fast food
restaurants in all over the world. It is a global-chain restaurant and a big
competitor of other famous ones like Burger King, Wendys, and the biggest
rival: McDonalds. For the purpose of this project, which mentions about crisis
occurred in KFC Malaysia, I just do some researches and relate to reading
materials from the textbook to analyze KFC Malaysia franchise. The project
will cover the SWOT, potential crisis comparison and case study of KFC
Malaysia.
KFC Malaysia is a KFC franchise which has a long history of establishing.
Being in Malaysia for more than twenty years, KFC Malaysia becomes the
major fast food service in the Pearl of Orient. As its name is fried chicken,
KFC mainly serves chicken related food, but still offer the other sides like
French fried, onion rings, and fried fish fillets.
As people are trying to live healthier and consider fast food is bad, especially
in Malaysia, KFC Malaysia also produces a new combo of healthier food with
the mission of increasing satisfaction among customers. Their target
customers would be people in the age range between 5 and 50 years old. It
is necessary to mention that the healthy combo is not only applied for the
new products but also an update to all of the elder recipes.

It is nothing else to say if there was no big crisis occurred in 2011, when two
footage clips about KFC Malaysia making the food dirty prior cooking were
uploaded on YouTube. This disgusted a lot of KFC consumers and some of
them related that story to similar case that happened to Dominos Pizza a
few years ago.
KFC Malaysia did a great job by fast responding to the crisis. They made a
great CMP (Crisis Management Plan) with 8 steps. And with the supportive of
social media, the crisis was gone after a short time. It proved that KFC, as a
big restaurant, was really serious in preparing for crisis that may occur. In
addition, the quick response and clever solution showed the professional
management of one of the famous fast food restaurants in the world.

SWOT
Strengths:

The biggest chicken restaurant chain and 2nd biggest fast food

restaurant chain (after McDonalds)

Very well-known among people in all over the world.
Well-trained managers, motivated employees and franchises.
KFC is in everywhere, from the airport, outlets, shopping malls to some

local areas.
Long time experience.
KFC can gain experience in Southeast Asia.
Malaysian managers and employees can speak English.

Weaknesses:

KFC only serves chicken-related food to customers when the others like
McDonalds or Burger King serve beef and fish fillet. -> limited

productions
Some Malaysian customers are afraid of health issues from eating fast-

food.
Franchises are less controlled and thus may bring less profit.
Corporate with other corporation may cause culture problem for KFC
employees.

Opportunities:

They dont have a lot of competitors in Malaysia.

Create more options for eating outside choices.
Expand to other Asian countries, where the number of potential

customers is extremely large.

Gain interest from customers in other Asian countries (like Vietnam,

Thailand, etc)
Be more social responsible such as having some environmental
activities, sponsor for green events, fundraising to help poor children,
etc to create a good image of KFC Malaysia in particular and KFC

mother corporation in general.

Creating healthy combo to hook up more customers.

Threats:

Biggest rival (McDonalds) is doing business in the same country.

Other local restaurants can become potential competitors.
McDonalds is serving more than chicken products such as fish and

beef.
Poultry supply problems.
Political issues with local government
Market is different within other cities.

Analysis of SWOT
Strengths: KFC is the second biggest fast-food restaurant chain in the world,
after McDonalds. The other competitors like Burger King, Wendys and

Subway cannot surpass KFC in revenue and number of international

franchises. Thus, customers would probably prefer KFC when making choice
of fast-food.
When hiring managers, KFC trains them carefully. To become a
manager in KFC, people have to take the courses related to leadership
development, coaching skills, culture, interaction management, fire safety,
first aid training, food safety, human resources, workplace health & safety,
information systems, financial & operations accounting, and a lot more. In
addition, KFC local managers and employees in Malaysia can speak English
fluently. This shows the serious in building reputation of one of the biggest
restaurants.
With a lot of experience in managing international franchises (more
than 20 years in Malaysia), KFC understands the demand of people in each
area. By appearing in everywhere including airports, outlet malls, to some
other local areas, KFC build a perception to people that whenever they need
food, they will see KFC first.
Weaknesses:
One of KFCs biggest weaknesses is serving chicken-related food only
to customers. From chicken baskets and/or chicken nuggets to chicken
hamburgers, KFC is very monotonous in their dishes although the tastes from
each region are different. Moreover, the bird flu which killed many people in
2009 cause a fear of eating chicken among people. In addition, some

Malaysian customers are afraid of eating too much fast-food would cause
obese one of the worlds biggest issues.
Managing the franchises is another story. Opening more franchises is
equal being busier with controlling and training employees. If one small
franchise of KFC has problem, its reputation will be affected much. People
wont blame a lot on the franchise but the way KFC trained their managers.
Thus, its not wrong to say the strength of opening many franchises in all
over the world could also be the weakness. On the other side, corporate with
other corporation (KFC is a brand of Yum! Co) may cause some culture
problems for employees when there is a culture gap between Western and
Eastern countries.
Opportunities:
So far, KFC has a lot of potential opportunities when investing in
Malaysia, as like other Asian countries. First, their competitors like Burger
King, Wendys and Subway dont have franchise in Malaysia. KFC just focus
on competing with McDonalds. Second, gaining business experience from
small countries like Malaysia can help KFC expand more in other Asian
countries. Third, KFC has a chance create a good image by being social
responsible. The life condition is increasing which means people care more
about community activities. Holding a green event with cleaning up rivers or
sponsoring for a children soccer league, raising funds to give some hope to
poor families, etc could be applied thoroughly. Finally, understanding the

biggest concern of Malaysian people is being overweight; KFC can create a

healthy combo with other additional ingredients to hook up more customers.

Threats:
McDonalds, KFCs competitor, is doing business in almost the same
countries to KFC (except Vietnam). This may cause difficulty because they
are also making some healthier combos to attract more customers. Besides
serving chicken products, McDonalds also serve fish and beef. However,
McDonalds Malaysia seems not to be the biggest rival of KFC Malaysia. The
problem is Malaysia is a small country with the population around 28.3
million people (2010) which stand a lot of local restaurants. Those
restaurants can directly compete with KFC in sales.
On the other hands, poultry supply, local government and market
differences are the next challenges of KFC Malaysia. A small country like
Malaysia cannot produce enough chicken to serve in the restaurants so they
have to partly import from the other countries like China, Thailand or
Vietnam. This can be a big concern for customers because of the bird flu
disease in 2009 which killed many people. Besides that, KFC Malaysia has to
deal with some regulations of the local government about food safety and
the other potential laws which may limit the business. Malaysian people love
fresh meat. Thus, in some places, especially are rural areas where people
prefer their home chicken, using mutant chickens would not bring much

profit when the money used for investment is a lot. This can potentially
cause a big loss.

POTENTIAL CRISIS COMPARISION (LIKELYHOOD, IMPACT): KFC Malaysia

1.

Natural disasters: When an organization is damaged as a result of the weather or

acts of God.
Landslides 4 4
Acid rain 3 4
Flood 5 5
Tsunami 4 5
Epidemic 4 4
Wind storm 3 2
2. Malevolence: When some outside actor or opponent employs extreme tactics to express
anger toward the organization or to force the organization to change.
Bribery 1 0
Embezzlement 2 4
Explosion (Bombing) 1 4
Kidnapping 2 4
Robbery 2 3
3. Technical breakdowns: When the technology used or supplied by the organization fails or
breaks down.
Product failure 3 5
Transportation accident 2 3
Transportation failure 3 4
4. Human breakdowns: When human error causes disruption.
Contamination 2 5
Product failure (because of human error) 1 3
Transportation accident (because of human error) 1 2

Fatality (if caused by accident) 1 2

Violence 2 5
5. Challenges: When the organization is confronted by discontented stakeholders. The
stakeholders challenge the organization because they believe it is operating in an
inappropriate manner or it does not meet their expectations.
Boycott 3 5
Lawsuits 3 5
Layoffs 3 3
Negative legislation 2 4
Strikes 1 4
Takeover 1 3
Acquisition 1 2
6. Mega-damage: When an accident creates significant environmental damage.
Chemical spill or leak 1 5
Contamination 2 5
Explosion 1 5
Fire 2 5
Toxic waste 2 5
7. Organizational misdeeds: When management takes actions it knows will harm or place
stakeholders at risk for harm without adequate precautions. These acts serve to discredit
or disgrace the organization in some way.
Bankruptcy 1 4
Bribery 1 3
Embezzlement 2 3
8. Workplace violence: When an employee or former employee commits violence against
other employees on organizational grounds.
Murder 1 3
Racial issues 1 5
Sexual discrimination 1 3
Sexual harassment 1 3
Suicide 1 4
Workplace violence 1 5
Age discrimination 1 4
9. Rumors: When false information is spread about an organization or its products. The
false information hurts the organizations reputation by putting the organization in an
unfavorable light.
Food hygienic 3 5
Chicken slaughtering 3 5

Potential Crisis Comparison analysis:

Natural disaster: Malaysia is contiguous with South China Sea and it is the
second country which has to deal with many natural disasters per year, after
Philippine. Statistically, from 1980 to 2010, natural disasters in Malaysia had
killed 1,239 people, which mean an average of 40 people per year. 22.2% of
killed people were caused by storms, 43.4% were killed by epidemic, 15.7%
were killed by flood and the remains were killed by landslides. Flood is
number one of disasters in Malaysia that happens almost every year and
affected 17,614 people in the past 30 years. Landslides, acid rain, tsunami,
epidemic and windstorm are after flood about destruction. The numbers
show that every kind of disaster can cause a big loss for KFC Malaysia. When
knowing the flood is coming, people will store food and find ways to survive.
All stores must be closed and the damage after flooding is immeasurable.

Malevolence: Malaysian society is not very complicated. According to

Malaysian government website, violent crime cases are very rare. As like
every country in the world, Malaysia also has residential burglaries or pocketpicking thieves. It seems like there is extremely rare, or no occurrence of
kidnapping, briber, embezzlement or explosion. This may cause a subjective
thinking among tourists. Regularly, criminals aim foreigners to steal because
they are less carefully and have much money. Its the reason why the
likelihood for each side of malevolence is low but the impacts are high.
Technical breakdowns: In general, the machines used by KFC, as well as
other fast-food restaurants are fryers, electronic cash register and other
lightning or air conditioning systems. In addition, the transportations which
are used for food delivery are primarily motorbikes or bikes. Its not a big
problem for slow food delivery but it is truly a big deal for giving the wrong
ones to the customers. People order fast-food which means they dont want
to wait for such a long time including correcting mistakes. In addition, the
reputation of KFC would be hurt if that happens more often.
Human breakdowns: KFC Malaysia is the most famous KFC franchise which
has many scandals related to food hygienic. From the footage video post on
YouTube about food tampering in the past few years to contaminate the
chicken patties before cooking just for fun, all four KFC franchises in Malaysia
used to be boycotted by the customers. Lately, in February 6th 2012, another
video recording an employee from KFC Malaysia punched one customer to

the face. Blogs, Facebook pages and personal websites were created and
called for boycotting among customers. It doesnt happen regularly but the
time gap between the food tampering video and violence video was too
short. They are both crisis and could hurt KFC Malaysias reputation the
most.
Challenges: Again, as stated above, the main challenges of KFC Malaysia are
being boycotted and filed a lawsuit. In fact, customers may sue KFC Malaysia
for making their food dirty, which affect directly to their health. In addition,
using violence by punching customer is extremely unacceptable. It is
unprofessional or actions of the thugs, not an employee of one of the biggest
restaurants. Thus, those two are the most concerns of KFC Malaysia because
they were widely spread on YouTube with hundred thousands of views. The
other things which are not primary and do not affect KFC a lot.
Mega-damage: There was no article or post about chemical leak, explosion,
fire, or toxic wasted in KFC Malaysia. However, it doesnt mean that those
things never happen. They rarely occur but once they are, it is a big problem
for KFC Malaysia because they may cause food poisoning and/or may kill the
customers. Thus, the effectiveness of those factors is worth a grade 5 out of
5. Sometimes, when natural disaster happens such as earthquake or storm,
electrical leakage could happen and cause fire. It is unavoidable but need to
be well prepared to reduce damage.

Organization misdeeds: If KFC Malaysia let the related stories to the food
tampering or violence at work happen more often without any sanction, it
would lead to the close for those franchises. Closing franchises in one
country would not affect much on KFCs income but on KFCs reputation and
it could be dismissed from the second place. Bribery or embezzlement is not
likely to happen or at least, there was no story related to those problems in
the past ten years. Moreover, the fact is customers just care about the
quality of their favorite food with an acceptable price (the price that they pay
regularly) and dont mind a lot about inside stories of KFC.
Workplace violence: This is another story of KFC Malaysia. KFC is
internationally and one of the main languages in Malaysia is English. Thus,
there was no reason for racial issues or discriminations to occur. Moreover,
workplace, working environment, community and market place are in KFC
Malaysia Corporate Social Responsibility annual reports so it can be sure that
the least likely of murder, suicide or age discrimination would occur.
Rumor: No company did not involve in rumors. Domino was struggling with
the footage video about the employee contaminate food. McDonalds and KFC
had to deal with video on YouTube about chicken serial killing in a cruel way
and dirty factory. Rumor about KFC Malaysia was easy to find on Google. The
power of social media like blogs, Facebook, Twitter and YouTube is really
strong. In fact, KFC Malaysia has a big amount of hated people who always
call for boycotting fried chicken.

Case study: KFC Malaysia with food tampering scandal.

Crisis background: On June 25th 2011, internet community tumult because of
two video posted on YouTube showing that KFC Malaysia employee did some
disgusting things to the chicken before cooking them. This became a hot
topic because there was footage about McDonalds chicken serial killing in
2010. People became more and more afraid of their food quality when eating
at fast food restaurants.
Bloggers, Facebook and YouTube users were shocked while watching those
unacceptable actions. One of the two video was deleted by the user but
the other one name Kentucky Fried Chicken Malaysia Staff with Stupid
Behavior is still on YouTube. One video shows two employees were
squeezing the rags which were used for cleaning to the cooking bowl and
laughing. The other one shows a man swiping a piece of chicken against the
sole of his shoe.
KFC customers show their anger and disgust about what they have watched.
KFC promised the customer with quality assurance. After watching the video
from YouTube, I don't think that KFC keeps their promises. I'm a regular
customer of KFC and now, I don't think I will stop by KFC for my breakfast or
lunch anymore. It's disgusting seeing it and it's sickening after imagining me
eating the dirty chicken. Where is the quality? Personal cleanliness, well, I
don't see it. I really do hope that the management of KFC search these guys
and sack them out of this F&B field. I also do hope to hear from the

management of KFC, said CTinellw, a member on

www.complaintsboard.com.
I will not go to KFC, i will tell my family members to tell their friends and
relatives about this video and don't ever go to KFC and i will tell my friends
and let them spread the news to their friends, family members and relatives
that KFC is nothing but serving low quality and low hygiene of food. The
video in YouTube will be shared worldwide. Unless KFC do something for it
because KFC mistake is: They hired staffs that have tarnished their own
reputation, said haruko_kaede on www.complaintsboard.com
I don't want to eat chicken with shoe flavor. Please investigate this.
Thanks! - said m3ea from Complaintsboard.com
Information from the internet is spread with the speed of light. For shocking
news, it goes faster. Thus, after a day of posting, there were millions of
people watched and commented. Most of them are negative comments. KFC
customers also create a Facebook page calling for boycotting KFC in
Malaysia. Bloggers wrote many side stories related to their bad experience
with KFC. The others complain about KFC Malaysia customer services were
below average because some of them had to wait from 45 minutes to 1 hour
to get their food.
KFC Malaysia manager announced that they had reported this problem to the
local police and asked for help. In addition, they did some investigations
among the employees but there was no result. However, on July 11th 2011,

TV news broadcast in Malaysia stating that KFC Malaysia managers received

the video in June 2010 but they did not response until it went viral in June
2011.