...I. Time Context – 1997 II. Point of View – Fernando Aguirre, CEO III. Statement of the Problem Symptom: Chiquita Brands International was forced to make protection payments to paramilitary groups in Colombia to keep their workers safe from the group’s violence, which later were found illegal under U.S law. Problem: Chiquita workers are saved but the rest of the country is endangered. IV. Objectives 1. To rebuild the company’s image 2. To protect their employee’s lives and at the same time, to not harm the citizens of Colombia by providing funds for terrorism acts V. Areas of Consideration VI. Outline Alternative Courses of Action (ACA) * Exit the country and relocate their operations from Colombia to a nearby country with similar weather but less of a terrorism ridden culture. * Stay in Latin America but fix their public image through sustainable employment and environmental practices in order rebuild a positive image of the brand. * Draw out from Latin America and increase their market share by focusing in other products. VII. Recommendation Since they’ve already sold their Colombian farms, I think it’s time for them to leave Colombia and rebuild their business in another country that is free from terrorism acts that also offer similar weather conditions as Colombia. They should now pay attention on its Marketing Campaign in order to rebuild a positive image of the brand; Focusing on ethical treatment of workers, sustainable environmental...
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...Blood Bananas – Chiquita in Colombia Introduction: Banana is a serious and a complicated business when it comes to producing and delivering it to the consumers all around the world. As most of the banana production takes a place in the tropics, the largest consumers are the U.S., the European Union and Japan. Chiquita, Dole and Del Monte who are also known as “the big three” control 60 percent of the global banana trade. Dole was founded in Hawai in 1851 and had reported revenues of US $6.9 billion in 2007, being the largest producer and marketer of high-quality fresh fruits and vegetables. Del Monte is one of the largest and well known producers, distributors and marketers of premium quality, branded food and pert products for U.S. generating US $3.4 billion in net sales in 2007. Chiquita which has been the largest employer in Latin America for many years, was founded 1899 and is known for revolutionizing the banana trade by using refrigerated ships for the first time. In 2007, Chiquita was the leading distributor of bananas In the United States with annual revenues of US $4.7 billion. Chiquita and terrorist ties Chiquita has been known as a rapacious multinational corporation for a long time. Company has been blamed for having farmers work for long hours in dangerous conditions, contaminating water with agrochemicals and harming tropical forests for expansion. Its operations in Colombia have been the most controversial topic for a long time due to the instability...
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...Chiquita’s Core Values: “Our Core Values of Integrity, Respect, Opportunity and Responsibility form the basis of our business performance and guide our everyday activities, including our giving programs. As part of our Core Values, Chiquita maintains a solid commitment to conducting business ethically, morally and in accordance with the law.” Short-term: 1. Agree to pay the AUC until a long-term strategic plan can be developed a. However unethical, it is not illegal, as the AUC had not been designated a Foreign Terrorist Organization by the U.S. State Department b. Chiquita employees would receive protection c. Time frame: 2 months 2. Refuse to pay the AUC and start a widespread campaign highlighting the positive impact Banadex has on Columbia a. Display American diplomatic strategy by refusing to negotiate with terrorists and forcing the Columbian government to provide military assistance. b. Chiquita contributed 70 million annually to the Columbian economy, something the Columbian government should make a point to protect. A widespread campaign highlighting the negative impact of Chiquita leaving the country would garner public support for government intervention. c. Time frame: 3 months Long-term 1. Sell off the Banadex subsidiary in Columbia a. This would keep the company from being at legal risk b. Chiquita’s employees would still be employed by the acquiring company – who may or may not choose to do business with the AUC c. Time frame: 1 month 2. Create...
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...history in Colombia is more than a century old. Its roots grow out of the United Fruit Company, notorious in Latin America as a U.S. Army backed opponent to agrarian reform and agricultural workers' unions. Though later known as United Brands in 1970, and then Chiquita in 1989, business in Latin America has continued in similar veins. In 1928, several thousand workers of Colombia's banana plantations began a strike demanding written contracts, eight-hour days, six-day weeks and the elimination of food coupons. Military forces murdered thousands of United Fruit Company Workers who were protesting. [1] Throughout the 20th century, the company was infamous for using a combination of its financial clout, congressional influence and violent refusal to negotiate with striking workers to establish and maintain a colony of "banana republics" in Latin America. Often the CIA and the US Marines provided the company's muscle, as in the case of the overthrow of the populist Guatemalan president Jacobo Arbenz in 1953. [2] In 1975, a federal grand jury accused United Brands of bribing Honduran President Osvaldo Lopez Arellano with $1.25 million, with the promise of another $1.25 million later, in exchange for reducing taxes on banana exports. Lopez Arellano was removed from power, but later investigations revealed repeated bribes carried out by the company. [3] Subpoenas were also issued regarding possible payoffs in Italy, West Germany, Panama and Costa Rica. [4] In May of 1998, The...
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...Summer 2013 Summer 2013 Case Report: Blood Bananas: Chiquita in Colombia BUSA 4980 Chiquita Brands international was founded in 1899 after the merger of United Fruit Company and the Boston Fruit Company. As bananas be came more of a staple in every home so do Chiquita Bananas. Bananas are know to mainly grown in tropical places like Central America, Africa and Southeast Asia. Chiquita decided to have operations out of Colombia. During this time there was turmoil in Colombia and different terror groups form “against the government” & other wealthy people in the country. Some of these groups settled in the areas where Chiquita had facilities. Chiquita run into problems with theses groups around 1997, mainly with FARC (Revolution Armed Forced of Columbia) and AUC. They began to kidnap and kill employees of this company. The terrorist groups began asking for money in turn they would stop harming their employees. For Chiquita this decision to pay the AUC seem to be an easy one because or the lack for government and the lack of laws in place. There are many key issues that lead Chiquita Banana’s decision to pay the terrorist groups the FARC & the AUC. One key issues the increasing demand for bananas in new countries like Russia, China and other countries in the Middle East. Chiquita felt as if it had pressure to obtain and grow in these markets. Along with those new markets, Chiquita had their current demand in established markets like the United States and...
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...Analysis Chiquita had been doing well since its inception and had created a place for itself as a leader in the banana industry. Confident about its political connections and standing, Chiquita believed it could fight the EU policy. The company launched an aggressive and costly lobbying campaign in Washington denouncing the EU policy. Chiquita spent time and money trying to regain their power rather than looking for alternatives. Given the unpredictable politics that drive trade disputes, and the uncertain influence of arbitration institutions like the WTO, betting on a legal battle can be highly risky. They failed to realize that sometimes it is smarter to maneuver around a barrier than to try to tear it down. Under pressure from the United States, the World Trade Organization ruled that the policy was discriminatory and ordered that it be dismantled .But the Europeans were slow to comply, and so “began the "banana war"-the worst transatlantic economic dispute since World War II. With a limited ability to export AGP bananas, Chiquita lost a third of its European Market share between 1992 and 1995” (Marcelo, 2005, 24).Determined to regain its position, Chiquita continued to fight the EU policy, increasing its debt as its hold in Europe kept slipping. Analysis of international challenges faced by Chiquita (4 C’s) Country risk/Political risk – Chiquita was facing major political risks after the introduction of the new banana trade policy. The new policy restricted access...
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...TB0245 Andreas Schotter Mary Teagarden Blood Bananas: Chiquita in Colombia No one laughs at the banana in its areas of origin. It is too serious a business, on which jobs and lives depend. Peter Chapman, Author of Jungle Capitalists. For Chiquita Brands International, a pioneer in the globalization of the banana industry, bananas are not only serious business, they represent an array of economic, social, environmental, political, and legal hassles. Since its founding more than a hundred years ago as United Fruit Company, Chiquita has been involved in paying bribes to Latin American government officials in exchange for preferential treatment, encouraging or supporting U.S. coups against smaller nations, putting in place dictatorships in Central America’s “banana republics,” exploiting local workers, creating an abusive monopoly, and now doing business with terrorists.1 For American multinationals, the rewards of doing business abroad are enormous, but so are the risks. Over the past decades, no place has been more hazardous than Colombia, a country that is just emerging from a deadly civil war and the effects of wide-ranging narco-terrorism. Chiquita found out the hard way. It made tens of millions in profit growing bananas in Colombia, only to emerge with its reputation splattered in blood.2 In 2004, Chiquita voluntarily admitted criminal responsibility to the U.S. Justice Department that one of its Colombian banana subsidiaries had made protection payments from 1997...
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...loss to consumer surplus. This loss to consumer surplus is evident in the Chiquita case. With this restrictions on imports outlined in the EU Banana Import Regime, Chiquita had lost 20-50% of their market share in Europe. Under the new laws, Chiquita could only sell up to 2 million metric tons of bananas as imports. If Chiquita were to sell more than their quota they would be dutiable at 850 ECU as a tariff tax, which would be difficult to afford. The new policy had created an artificial shortage of bananas within the EU which drove up prices. The intent of this new policy was to support former EU colonies and territories that were not originally able to compete with the large corporations. The geographical restrictions created by this policy made fulfilling demand difficult for Chiquita. Chiquita driven down their cost and subsequently increased revenues by creating efficient logistics by integrating their supply chain vertically in order to fulfill demand of customers from their plantations in Latin America. With the new impositions by the EU, Chiquita was at a loss of efficiency. Chiquita would have to produce their bananas outside of Latin America to avoid the tariff. This provides a disruption to the cost effective integration that Chiquita had built which would result in higher cost for the company thus passed onto the consumer. European consumers were not only experiencing a shortage in bananas but also increased prices. It is important to note that although the EU experienced...
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...Bananas were the first tropical fruit to be internationally traded. They were brought the tropics to North America and Europe. They grow best in tropical regions such as Central America and the Caribbean. Of the 300 different varieties of bananas worldwide, 20 are grown commercially in Africa, Asia, and Latin America. In 2010, bananas were ranked third on the list of foods eaten routinely in the world. Founded in 1989, Chiquita was the successor of the United Fruit Company. For many years, Chiquita was the largest employer to be located in Latin America. They are known for revolutionizing the banana trade by using refrigerated ships for the first time. Bananas represent a collection of economic, environmental, social, political, and legal hassles. The rewards of doing business abroad are huge, but the risk can be massive. This case study questions the ethics and morals of Chiquita while doing business abroad. For more than a hundred years, the company now known as Chiquita has been paying bribes to Latin American government officials to receive preferential treatment, building an abusive monopoly, encouraging or supporting U.S. coups against smaller nations, exploiting local workers, putting in place dictatorships in Central America’s, and now doing business with terrorists. Doing business in Columbia has proven to be a major hazard since the country is just emerging from a deadly civil war and dealing with the effects of narco-terrorism. From 1997 to 2004, Chiquita...
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...britain ’s bruisin g banana wars Why ch threat eap bananas Policy en farmers’ report future s A Fairtrade Foundation Report February 2014 When I sell a box of bananas it’s a product with quality, with incredible taste, so it should be fair that you pay a fair price for it. Horatio Hernandez Coobafrio Co-operative, Magdalena, Colombia January 2014 contents 1 Introduction 4 2 6 Executive Summary Britain’s Bruising Banana Wars 16 16 20 21 4 The banana value chain 4.1 The UK banana market 4.2 The retail price of bananas in Britain 4.3 UK banana imports 2002 – 2013 4.4 Changes in banana supply chain operations 4.5 The impact of supermarket price wars on producers 4.6 Producer prices vs costs of sustainable production 22 22 23 5 The market environment for bananas 5.1 Evolution of the global banana trade 5.2 Consolidation of retailer power and UK price wars 5.3 The impact of competition law on banana prices 38 6 Fairtrade’s alternative approach 6.1 General background to the Fairtrade system 6.2 Fairtrade bananas – scope and scale 6.3 airtrade: the benefits and F constraints for farmers and workers 2 3 About this report 3.1 Fairtrade’s involvement in bananas 3.2 Research objectives and approach 3.3 Methodological note 7 Achieving a sustainable banana industry 7.1 inclusive market An ...
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...proved using the HHI as shown below. (Considering the banana sales of 1994 as given in the case) Brand Banana Sales Market Share % Chiquita 2,377,032 48 Dole 960,400 19 Fyffes 563,324 11 Geest 528,719 11 Noboa 280,000 6 Del Monte Produce 240,000 5 TOTAL 4,949,475 100 Because there are few players in the industry, comparatively less competition and high concentration in the market, we consider the banana industry to be an Oligopoly market, which has high barriers to entry. The barriers to entry are: • High start up cost: A new firm entering the banana market will need to have huge capital to make banana production feasible. Banana production requires vast amounts of lands to grow the banana trees. Bananas are also a perishable item which increases their maintenance cost. • Economies of scale: Banana Industries have significant economies of scale where minimum efficient scales occur at high input levels. Thus a new entrant must produce high volume to reduce the cost and make profits. If a new entrant with vast land produces fewer bananas then it will be very costly to maintain the banana production. • Licenses: The government regulations may be very stringent requiring various licenses to trade banana in the world market. The licenses would be very expensive to own which is a barrier to new entrants. • Distribution channels: It is required to have a strong distribution system globally to distribute bananas in the world market. This is developed through years...
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...Chinas banana Industry Analysis of Chinas banana Industry Marketing strategy of a foreign Company in China Marketing Strategy Prof. Shui This essay describes the current situation of the banana Industry in China, as well as the factors which influences the change of the National and International market situation based on latest examples. As the Chinese Market supplied an enormous amount of bananas every year, numerous importers need to comply with the demand. How the situation in China has changed in recent years, what role plays Chiquita in this strongly growing industry and which marketing strategies are being implemented. All of the mentioned before will be analysed and evaluated on the following pages. Bananas are the most traded fruit worldwide and the fifth most traded agricultural product. In China bananas are the fourth fruit listed as the most important in the tropical corps industry. The Banana is a perennial plant that replaces itself. Bananas do not grow from a seed but from a bulb or rhizome. The time between planting a banana plant and the harvest of the banana bunch is from 9 to 12 months. The flower appears in the sixth or seventh month. Bananas are available throughout the year, they do not have a growing season. Bananas are grown in tropical regions where the average temperature is 80 F and the yearly rainfall is between 78 and 98 inches. In fact , most bananas exported are grown within 30 degrees either side of the equator. ...
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...Blood Bananas: Chiquita in Columbia Blood Bananas: Chiquita In Columbia is a difficult case that touches on fundamental questions of ethics and morality while operating a business abroad. It is a case that depicts the challenges faced by a company trying to maintain production and protect its employees while navigating between two very different cultures in a hostile situation. the lines of the ethics and morality are not as straight forward as they seem on the surface, and Chiquita’s management struggles to make decisions that will transcend both cultures’ view of right versus wrong. was one of the largest and growing fruit company in America who faced a dramatic problem in the 90’s with the AUC, a Colombian paramilitary organization that promoted violence act and considered to be terrorist, what happened was they inquired the fruit company to pay them specific amount of money monthly that was required for their security services as they claimed! The situation was straightforward, either Chiquita pays for the terrorist Chiquita Brands International and its leaders learned a very hard lesson about paying off terrorist groups to protect their employees. Over the past 25 years, no place has been more perilous for companies than Colombia, a country that is finally beginning to emerge from the effects of civil war and narco-terrorism. In 2004, Chiquita voluntarily revealed to the U.S. Justice Department that one of its Colombian banana subsidiaries had made protection payments...
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...Joshua Cortez Blood Bananas Chiquita is a brand that has been through major turmoil, scandal and success. Through it all they have had to deal with significant labor relation issues that go far beyond your typical corporate labor relations issues. From being accused of supporting terrorism and drug trafficking to contributing to the economic collapse of Columbia, Chiquita has had to endure many self-inflicted wounds. Chiquita is one biggest and most powerful food marketing and distributing companies in the world, and one of the world's largest banana producers. The company shows annual revenues of approximately $4.5 billion and about 25,000 employees operating in more than 70 countries. The banana market, worth about $5 billion a year in 2001, is the most important global fruit export. The majority of the 14 million tons of bananas exported every year come from Latin America. Between 1997 and 2004 Chiquita was faced with a terrible situation in Columbia. The United Self-Defense Forces of Columbia (AUC) was known to terrorize the locals. Chiquita had a large plant in Columbia and was a premier employer of the Columbian people. The AUC knew that if they could intimidate Chiquita it would be a profitable endeavor. The AUC used kidnapping, torture, disappearance, rape, murder, beatings, extortion and drug trafficking as was of intimidating employees. Chiquita the brand was very invested in Columbia and because of the profits and climate they tried to turn a blind eye to employee...
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...International business is wrought with ethical issues. The Chiquita Banana documentary, “The Price of Bananas,” made this point ever more apparent. I fully believe, as stated in the documentary that Chiquita Bananas was complicit and was willing to accept death to keep the banana operation running. Anyone involved in this decision should be prosecuted to the fullest extent of the law. My first thoughts about this situation and putting myself in the position of Chiquita CEO, I would utilize the Weber model of organizational ethics and/or the Army-Baylor 7 step method for decision making. The first question or principle in the Weber method is the organizational interests take precedence over individual self-interest. I would say the CEO rationalized his decision and thought he was doing this. And given the situation, I do not necessarily think the CEO was making a decision to pay the AUC in a motivation of self-interest. The second principle is individual rights take precedence over organizational interests. This can get a little sticky given Chiquita decided to pay para-military troops millions of dollars. If individual rights were of great concern to the CEO, he probably should have made sure his workers and the working conditions were safe, secure, and healthy. Instead, farming bananas in Columbia is one of the most profitable means because of low income earning. The third principle is community good takes precedence over organizational interests. If the...
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