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, Wendy’s, 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
Domino’s 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 don’t 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 (McDonald’s) is doing business in the same country.

Other local restaurants can become potential competitors.

McDonald’s 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, Wendy’s 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 KFC’s 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
world’s 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 won’t blame a lot on the franchise but the way KFC
trained their managers. Thus, it’s 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, Wendy’s and Subway don’t have
franchise in Malaysia. KFC just focus on competing with McDonald’s. 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, KFC’s 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 organization’s 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 pocket-picking 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. It’s 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.
It’s 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 don’t 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 doesn’t 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 Malaysia’s 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 doesn’t 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 KFC’s income but on KFC’s
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 don’t 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 McDonald’s
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.