...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 Cincinnati Enquirer published a series of articles that exposed Chiquita's still-questionable business practices. The articles, written by Mike Gallagher and Cameron McWhirter, reported cases in which the company used tactics...
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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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...October 24, 2002 G302 Breakout Session 9: International: Chiquita Banana Case Goal of this session: To appreciate the importance of government trade policy to a company’s profits, and thus the importance to the company of trying to figure out why protectionism happens and how to counteract it. Handouts for students: none. Handouts for TA's: Nov. 29, 2001, Seattle Times article "Chiquita Files for Chapter 11". Overheads: Exhibit 1, income statement. Chiquita Brands Case Write-up Questions: 1. What is the European Union's past and present policy on banana imports? How would you defend their 1993 policy? 2. What problems does Chiquita have in this case? Look carefully at the numbers in the exhibits. 3. What did Mr. Lindner do about the EU's banana policy? What should he have done? The Chiquita case teaching notes are quite good. All of the questions I have below are important. Chiquita’s appropriate response is perhaps the least important, since it isn’t clear there is much they could do. Be sure and save time for your wrap-up at the end. (5 minutes) Administration We will post the midterm scores on Oncourse when they are available. That could be as early as Friday, but since they are machine-graded, there is always a chance of a glitch. (20 mins) Chiquita's Problems Q. In 1994, Keith Lindner has lots of problem. What are they? A. Here you want to put a list up on the board. The Harvard teaching note has a good...
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...imported bananas was enacted in 1993. Prior to 1992 each of the 12 EU member states had its own banana import regime. Germany operated on a free market system and had no import restrictions. The other 11 members imposed a 20% tariff, and 6 members (France, Italy, Portugal, Spain, Greece, and the UK) also applied quotas on bananas produced in Central and South America. These latter restrictions were designed to protect the EU market for bananas produced in former EU territories and in the ACP countries (developing countries in Africa, the Caribbean and the Pacific. As part of its 1992 integration program the EU established, effective July 1, 1993, an EU-wide banana trade regime. Under this complex system banana 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...
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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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...1) Antitrust: Commission fines banana suppliers € 60.3 million for running price cartel, EC IP/08/1509, October 2008, http://europa.eu/rapid/press-release_IP-08-1509_en.htm 2) COMMISSION DECISION of 15 X 2008 relating to a proceeding under Article 81 of the EC Treaty Case COMP/39188 – Bananas, COMMISSION OF THE EUROPEAN COMMUNITIES, Brussels, 15 X 2008, http://ec.europa.eu/competition/antitrust/cases/dec_docs/39188/39188_2291_2.pdf In 2008, the European Commission, found that the banana importers Dole, Chiquita, Weichert and Del Monte involved in a cartel between 2000 and 2002. The allegation was on the basis of secret bilateral pre-pricing communications. The cartel affected the North European region specifically Austria, Belgium, Denmark, Finland, Germany, Luxembourg, Netherlands and Sweden with banana consumption estimated to 1.6 million tones and a shared retail value of sales amounted to €2.5 billion in 2002. How was the collusion achieved? The banana business is organised in weekly cycles. During the relevant period the importers of leading brands of bananas into the eight European countries served by North European ports set and then announced every Thursday morning their reference price (their “quotation price”) for the following week. On numerous occasions over the three year period there were bilateral phone calls among the companies, usually the day before they set their price. During these calls the companies discussed or disclosed their pricing intentions: how...
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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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...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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...Firms and Industries Chiquita and Fyffes merger Master in Management Thomas Diwo Rick Geurten Ma. Camila Gutiérrez Philipp Seifert Armand Taherí Table of content 1. Banana market 3 1.1 Chiquita Brands 3 1.2 Fyffes 3 1.3 The Cutrale Group 4 1.4 The Safra Group 4 2. Merger Chiquita and Fyffes 5 3. Benefits of the merger Chiquita and Fyffes 7 3.1 The perfect match 7 3.2 Vertical integration 8 3.3 Horizontal integration 8 4. Future markets 11 5. Recommendations and conclusions 12 5.1 Recommendations 12 5.2 Conclusions 12 6. References 13 7. Appendix 16 1. Banana market 1.1 Chiquita Brands Chiquita, incorporated 1899 and based in the United States of America, is an international marketer and distributor of bananas and other fresh products, sold in 70 countries. It is the main banana distributor in the U.S. The company operates in three business segments: Bananas, Salads and Healthy Snacks, and other fresh fruits and vegetables. Bananas include the sourcing (purchase and production), transportation, marketing and distribution of bananas. Salads and Healthy Snacks include ready-to-eat, packaged salads, such as healthy snacking products, fresh vegetable and Chiquita-branded fruit smoothies in Europe. Banana sales amounted to 64% of its consolidated net sales in 2011. In North America, it often sells bananas and related services under one-year contracts to national and regional grocery retailers. In Europe and the Mediterranean...
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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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...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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...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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... 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 their product. The only problem with this...
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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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...Blood Bananas Case Introduction Chiquita Brands International is a successful company with a long history that began in 1899 as the United Fruit Company. The company has endured over time through changes in leadership, acquisitions, and process changes to become one of “the big three” banana distributors in the world. While they have become successful; their past has been tarnished by paying bribes to government officials, supporting U.S. coups against smaller nations and exploiting local workers. The company that originally revolutionized the banana trade by using refrigerated ships was now faced with the decision of whether to continue to pay a terrorist organization in Colombia, South America to ensure the safety of their employees, stop payment and face the consequences or sell the business and exit the country. Background The issue at hand is partly the result of the industry itself. Bananas grow best in tropical regions, such as the Caribbean, Central America, Asia and Africa. They are critical cash crop for many of the lesser-developed countries. The banana producing country in question here is Colombia, South America which has a population of over 45M people, the second largest in South America. It has the 4th largest economy in Latin America although the income inequality is prevalent due to very uneven wealth distribution. It is in this environment that paramilitary organizations such as the AUC thrive. According to Fernando Aguirre, a former Chiquita CEO...
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