...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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...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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...Question 1 The level of market concentration is quite high which is 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...
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...Lindner has some problems. What are they ? A1] Chiquita brand was the leading company in the banana sector which had capture the global market. Chiquita was under a mist of serious and unprecedented downturn there income became less and there shares too in 1991 its was 40$ and in 1994 it came down to 13.63$ the reason was that the EU started a series of import restriction and EU completion of its single market and member states also adopted and this topple Chiquita from its leading position in the banana market and the EU import was effective on the 1993 july 1 and ended in 1994 by then the Chiquita market shares in the Europe slided significantly. Q2] exactly what is the EU policy ? A2] in the 1975 with the adoption of the APC-EEC convention of Lome most member of the EC provided preferential access to banana imports from developing countries in the APC region (Africa, Caribbean, and the pacific), which were essentially the former colonies of britain and france were granted tariff-free access to the EC market, while banana imports from other regions including latin America, faced a variety of restraints that differed widely across each of the countries in the community. Imports from EC territories like ( Martinique, Guadeloupe, canary islands, crete and madeira ) like imports from ACP countries were given duty-free access to all the markets with the community. Q3] and how does it promise to affected Chiquita ? A3] Chiquita had watched the formation of the EU’s common import...
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...Alternative Courses of Action 1. Concentrate on the Americas 2. Diversify Production 3. Expand to Europe More Aggressively 4. Diversify Product Line 1.Concentrate on the Americas Based on our analysis of Chiquita Banana’s financial struggles we have a number of possible solutions for improving the company. Chiquita Bananas had no way of predicting that the European Union would favour its former colonies over Chiquita’s locations in Latin America. After the European Union put quotas and tariffs on Chiquita’s products, Chiquita should have re-evaluated whether or not to continue to export to Europe. Although they would lose a significant amount of business if they stopped exporting to Europe, the reason they were in debt in the first place was because Europe restricted import of their products and this was a problem since Europe was Chiquita’s main market. If the company had concentrated within the Americas then they would not have been forced into so much debt. 2. Diversify Production In order to limit the amount they were affected by natural disasters, the company could have grown bananas in other parts of the world. This would be better for the company because if natural disasters did strike in an area where they grow their products then it would not be such a financial blow as they would have more sources to receive...
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... | | |Semester: Fall 2013 | | |Class Location: Washington DC Center | | | | Case Study #3: Blood Bananas: Chiquita in Columbia Andreas Schotter http://hbr.org/product/blood-bananas-chiquita-in-colombia/an/TB0245-PDF-ENG Due Date: Wednesday, November 6th, 2013, 11.59pm. Submit your paper via Blackboard. Task for Students Use just the information contained in the case study and what you have learned in class to complete this assignment. 1. Make a list of the top five (5) opportunities and five (5) threats facing the Chiquita Brands International company. 2. Use the information in...
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...Chiquita's 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...
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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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...There were several reasons visible from the Balance Sheets & Income Statements that reflect errors in judgement from the management. Most notable reasons are: 1. Lack of Product Diversification Compared to its competitors, Chiquita had close to 60% of sales linked to bananas as compared to other companies with exposures closer to 40%. The chart below illustrates this: While trying to save its banana business, it should have hedged its risks and diversified in different businesses. Despite a company strategy devised in the 1980’s to convert some banana fields to other crops, Chiquita did not adhere to that policy and invested in more banana fields in 1991. Instead it should also have bolstered its presence in European markets by acquiring controlling stake in European suppliers and gaining control of traditional suppliers in EU or by partnerships with ACP region producers. 2. Lack of Market Diversification As mentioned, EU accounted for close to 40% of Chiquita’s sales. This meant that it exposed a significant chunk (25%) of Chiquita’s sales to vagaries in just one region. Chiquita did not put any effort to develop other markets. The US & EU were Chiquita’s main markets. Unfortunately, the regulated EU market pushed a lot of the unused banana supply to the US market rendering it unattractive. Even though Asia was an attractive market, Chiquita’s presence there was negligible. Other markets in Soviet Union and Eastern Europe were significantly under developed. Even Chiquita’s...
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...imports were subject to one of two two-tier tariff rate quota systems based on their country of origin. ACP bananas received duty-free entry up to a ceiling of 8577000 metric tons, allocated to each of the banana-producing countries on the basis of their historic exports to the EU. ACP imports in excess of this amount paid 750 ECUs per metric ton. Non-ACP bananas were subject to a duty of ECU 100 per metric ton on imports up to 2 million metric tons, and ECU 850 on imports above that amount. Thirty-three and a half percent of the 2 million tons of non-ACP bananas subject to the lower duty of ECU 100 was reserved for European marketing firms, most of which historically had marketed only ACP bananas. Implications on Chiquita Sales Following World War II, Chiquita became Europe’s main banana provider, exporting to Germany (its principal European market), as well as to Great Britain and other countries. While Germany permitted free inflow of Latin American bananas, Great Britain and France gave preference to bananas from their former colonies in Africa, the Caribbean, and the Pacific (the ACP...
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...1. Should Chiquita have agreed to make the payments to the terrorist group to protect its employees? What ethical principles support your opinion. A. Chiquita was asked to make the payements to the terrorist group in 1995 when it was unaware of the actions of the paramaillitary group. It was only human for Chiquita to first think of its employees and protect them. However Chiquita failed to look at the bigger and failed to estimate what the terrorist organization actually did with the money. I believe it was ethically wrong for Chiquita to have involved in this activity, not disclosing it to the US government and also hiding it in its accounting. The best thing to do would have been to withdraw from these markets inspite of its good intensions. 2. Is there anything that Chiquita could have done to protect its employees adequately without paying the terrorists? A. Chiquita should have contacted the US Department of justice earlier and asked for help stating its good intensions to continue its business and also protect its employees. If sufficient help wasn’t available from the government it should have withdrawn from the market. 3. Using the four methods of ethical reasoning see figure 4.6 was it ethical or not for Chiquita to pay the terrorist organization? A. People in business can analyze ethics dilemmas by using four major types of ethics reasoning virtues ethics, utilitarian reasoning, rights reasoning and justice reasoning. The values and character...
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...[Name] | International Marketing Cases | October 20, 2013 [Name] | International Marketing Cases | October 20, 2013 Chiquita Banana Chiquita Banana Contents Chiquita Banana Overview 2 PESTEL analysis for the European Union 2 Political: 2 Economic: 3 Sociocultural Factors: 3 Technological: 4 Legal: 4 Environmental: 5 Marketing Mix 6 Product: 6 Price: 6 Place: 7 Promotion: 7 SWOT Analysis 8 Strengths: 8 Weaknesses: 8 Opportunities: 9 Threats: 9 Internationalization Strategy and Viability 10 Chance: 11 Incoterm 12 Possible incoterms for the company 12 Solution 12 Appendix A 14 Works Cited 15 Chiquita Banana Overview Chiquita Brands International, Inc. is one of the most important international marketers and distributors of food products derived from bananas, as well as other fruits and healthy snack products. Chiquita Banana revenues for about $3 billion dollars a year and employs more than 21,000 people and operates in about 70 countries worldwide. Chiquita Banana together with Dole, Del Monte and Fyffes control about 80% of the global banana market. In 1993 the EU created the Common Organization of the Market in Bananas (COMB) to deal with the harsh competition between these companies. They would allow duty free access to the EU but subject to quotas to bananas from the Africa’s, Caribbean and Pacific, while bananas from Latin America were subject to an import tax of 176 Euros per ton and a quota of 2533...
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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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...Theory predicts that protectionism creates a 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...
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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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