Memo to Chiquita Brands International

Topics: European Union, Chiquita Brands International, United Fruit Company Pages: 5 (1746 words) Published: April 25, 2012
To: Chiquita Brands International

Introduction: For the subject choosing a strategy to overcome effects of EU’s banana policy, I have gone through the whole issue of EU’s banana policy and its effects on the banana business of Latin America in general and Chiquita Brands International in particular. I have also analyzed the way the whole issue has been approached by the company and tried to formulate a plan that may prove successful for the company. Since the present problem is a serious nature threatening the existence of a big player in the banana market, I have tried to go back to history of the company of highly political nature of the international policy making in this trade. I have tried to understand the role of protectionism in the global banana market as it has created a lot of problems for players like Chiquita Brands International. After a careful evaluation of the whole issue threatening the existence of our company, I have tried to find the way out.

Politics and Chiquita Brand International
It appears that Chiquita Brands International and politics have been intertwined with the birth of the company. The history of the company that dates back to 1870 has seen involvement of the company in trades to far off places. Right from the very first sale to North American markets the company seemed to move farther and farther to cater to newer markets and make big profits. Doing business in a foreign country brings in certain degree of uncertainty as the business has to work foreign legal framework governing business there. The company enjoyed a position of unchallenged power in Latin American region where it produced banana crops on its own land. Through banana trade, the company virtually controlled economies of the nations in Latin America. The company owned not only vast expanses of land in these countries but also owned roads, rail tracks, transportation networks as these were very crucial in banana business. The sheer size of business operations of the company in the region brought company owners closer to the governments of these banana producing nations, and further led to company’s control over politics of the region. Even the US government ensured business interests of the company in unstable areas by sending marines to safeguard company’s assets. The company not only enjoyed the ultimate power in its production base of Latin America but also ruled the European markets by taking over a 45% share.

The present crisis of the company has a lot to do with politics as the European nations want to restrict US companies and give protection to their former colonies as regards banana trade is concerned. Although the company tried to solve the issue through political channels, the company must look into its overall functioning to assess the reasons for its downfall.

The restrictive and discriminatory conditions imposed by EU are common for all the players in the market but other players are not under similar adverse conditions of financial crisis. This proves that although politics has played a role for good as well as bad for the company, the problem lies somewhere else. The fact that the European market has given preferential treatment to ACP region as against Latin American and other non-preferred regions right from 1975 and still United Fruits Company managed to increase its volumes, its profits and its grip over the world. The EU’s new banana regime seems to be unfavorable for the company but the fact that EU managed to break Latin American region by signing a framework agreement to give preferential treatment to certain nations and weaken GATT petition shows that Lindner’s political management is much poorer than the people who were managing United Fruit Company.

In fact, Lindner understands the importance of politics in running such a big business empire and that is why has indulged in political funding and taking help of politicians and legal framework like section 301 of USTR. He has...
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