Case: Blood Bananas
Name: Muhammad Umair Sami
ID: 13E00132
Section: A
Chiquita brand was one of the leading producer of high quality marketer and distributor of fruit products in the world. Chiquita Brands have been working in Colombia for the past 100 years under their subsidiary Banadex, operating extensive fruit plantations and providing employment opportunities to over 12,000 workers. Colombia had in recent years become a very violent country due to rise of narcotics trade and formation of paramilitary groups. The company was approached by one of the paramilitary groups United Self Defense Forces of Columbia (AUC) for protection money disguised as security services for operating in the company. The company faced a dilemma of paying the protection money or risks the smooth operations and safety of their employees.
AUC is not currently listed as a terrorist organization by the US State Department, so the company had the option of doing business with AUC. AUC had a reputation of functioning as a death squad and did not hesitate to murder or extortion. The company was faced with three problems to do business with AUC: 1) Agree to Pay
They will be supporting a terrorist organization and will face dilemma of being blackmailed by other drug cartels and will indirectly supporting terrorist activities in Columbia. Secondly they will be risking their corporate reputation by engaging in unethical business practices. 2) Refuse to Pay
If they refuse to pay they would have to hire their own security force that will be a very expensive solution for the company. Secondly they will be securitized by the Colombian government for hiring a large mercenary force. 3) Exit the country
This would risk the company losing their investment in the plantations, unemployment for the workforce and loss of revenue for the Colombian government. The company also risks loss of supply affecting the profitability of the company and supply chain.
All three options have their own set of problems and future business implications. In the light of the three available options, the company should focus on in the short run “agree to pay” and in the long run “exit the country”.
In the short run the company is faced with the risk of losing all their investment in the plantations and loss of supply from the operations. The company will not be able to handle the operations of loss of sudden supply from these plantations. State Department has not declared the AUC as a terrorist organization, so the company in the short run has the option of paying the AUC without losing the brand reputation.
In the long run the ethical concerns are more important as operations of one subsidiary might affect overall operations of the whole group. In the long run the company can diversify their product sourcing from other countries and inform the stakeholders about the reasons for the pullout from the country due to the presence of AUC. The negative brand image of the company can’t be repaired if the company keeps on engaging business with the AUC. The products can be sourced from other companies but the brand image takes years to build and can be destroyed due to a single mistake.
The greatest loss will be suffered by the local employees of the company that will lose their job due to the lack of protection provided from the Colombian Government to the foreign investors.