Strategic Management- Chiquita's Banana Business in Columbia - Essay Example

Strategic Management- Chiquita's Banana Business in Columbia Introduction Multinational companies have experienced diverse challenges while conducting businesses abroad. These companies ought to put up with economic, social, legal and political predicaments within the host nations. This is evident in the Chiquita group of companies, which is involved in banana trade within Columbia. Over the past six decades, Columbia’s political unrest makes it problematic to conduct business, despite its promise of growth. Paramilitary groups control various business organizations, in their efforts to dominate the nation’s political and economic platforms. These revolutionary groups achieve this through extorting money from multinational companies, such as Chiquita Brands International, and threats of death and property destruction to the repudiators. ChiquitaBrands International complies with this but faces legal challenges fro its home country, the US. This manuscript mulls over Chiquiata’s predicaments, and mitigation measures towards repositioning itself in the competitive industry within the politically unsafe nation. Factors compelling Chiquita into its Actions Chiquita Brands International has been extremely profitable within the conflict prone Columbia. Sources indicate that the firm is the among the largest global traders in the banana industry. The company also benefitted the nation significantly, with the employment creation, tax payment and the general improvement of the inhabitants’ living standards. However, in its bid to protect itself from the challenges of the various paramilitary groups, the firm resorted to the funding of such groups through the extorted funds, including the AutodefensasUnidas de Colombia (AUC), an organization that the US considers asone of the most atrocious terror gangs (Munoz, 2013, p. 161). However, this had ethical, as well as legal implications, in that they were funding a terror association, involved in the kidnapping, murder, and forced taxes to innocent inhabitants. In their quest to justify their deeds, the management of the Chiquita firm in Columbia voluntarily admitted to the US judicial department to have funded the paramilitary organization (Suder, 2008, p. 128). They claimed their justification to be the fact that they were protecting their employees from murder and property destruction. However, the judiciary refuted this justification, claiming that the paramilitary group used such funds in the purchase of ammunition and other items that aided them in the accomplishment of illegal activities such as kidnappings, forceful extortions and murder of innocent victims who failed to comply to their rules. This also obliged the US judiciary department of employing personnel that looked into other such firms that conform to the terror groups’ demands. The legal suit found Chiquita firm guilty, and encountered various severe losses, including paying a fine of $25 millionand a probation of five years (Jennings, 2011, p. 656). Families of the victims of theAUC activities also filed suits against the firm, owing to its involvement in the funding of AUC. This has severe implications for the firm, since it tainted the image of the firm, thereby affecting its profitability. As such, the current management of Chiquita’s subsidiary group Banadexhavean enormous task, to improve its image, and reposition itself in the ever competitive industry. Though Chiquita’s management attempted unsuccessfully to rationalize their involvement in funding a terror gang, their act seems questionable (Gottschalk, 2010, p. 17). In my opinion, their claim to fund AUC, with the promise of security is ethically incorrect (Pohl, 2012, p. 68). They claim to protect their employees, without regarding the impacts their deeds have to other inhabitants of the nation (Hellriegel and John, 2008, p.31). As such, they ought to have sought protection from other legal organizations such as the authorized US security groups. They also display they self-centered behavior by continuing to fund the group despite an order from the US Judiciary department to halt their involvement with the terror gang. Mitigation Measures Chiquita’s connection with the AUC poses significant challenges to the firm. Theyhave already faced the legal battles, leaving them with severe losses and are yet to compensate the families of affected victims. This also has significant impacts on the profitability of the firm, since consumers decline to associate themselves to a firm that terror affiliations. As such, the management out mull over ways to restore their tainted image. The firm, being under probation, ought to terminate their dealings with the terror group, despite the consequence that may be meted to them by the terror group. This may seem unachievable, considering the delicate nature of peace prevalence in the country. However, it the firm may opt for security services from other legalized security firms within the region. They also ought to compensate the affected families, in their bid to change the perception of their consumers, following their involvement with the atrocious group. The firm should also involve themselves in various forms of charitable activities within the region, and help the region’s inhabitants in coping with the trauma resulting from the terror gang’s afflictions. With the paramilitary activities still in place,the firm face the challenge of transportation and distribution of its products in diverse markets globally. As such, it ought to invest in better and safer modes of distributing its products. Intense advertisement will also aid significantly in promoting the products to consumers unaware of their products. The firm also faces the challenge of availing its products to the market, since it is ever expanding. The firm may also consider regularizing its products, in order to beat its competitors, including Dole and Delmonte. The new management seems to reject compliance with the AUC. However, there may be other members within the management staff that consider conforming to the gang’s demands as an option. It is the duty of the firm to lay off such employees and reflect on employing new staff with no affiliations to the terror group. Conclusion Chiquita, a leading fruit company globally, faces the legal challenge of affiliating itself with a terror gang, AUC, with a promise of security I return to funding the terror group. The firm even justifies its deeds, claiming that it acted so, in a bid to protect its employees from murder, kidnappings or other atrocious deeds that may be meted to them by the group. However, they lose the lawsuit and have to incur several losses in the form of fines and compensation of the affected families. This also leaves them with the challenge of repositioning themselves, in order to maximize their profits in the competitive environment. Works cited Gottschalk, Petter. Investigation and prevention of financial crime knowledge management, intelligence strategy and executive leadership.Farnham Surrey, England: Gower Publication, 2010. Print. Hellriegel, Don, and John, Slocum.Organizational behavior. Mason, OH: Cengage Learning, 2008. Print. Jennings, Marriane. Business Ethics: Case Studies and Selected Readings: Case Studies and Selected Readings. Mason: Cengage Learning, 2011. Print. Munoz, Joseph .Handbook on the geopolitics of business. Cheltenham: Edward Elgar Publishers Ltd., 2013. Print. Pohl, Manfred. Responsible business how to manage a CSR strategy successfully.Chichester, U.K.: John Wiley & Sons Ltd., 2012. Print. Suder, Gabriele. International business under adversity: a role in corporate responsibility, conflict prevention, and peace. Cheltenham, UK: Edward Elgar, 2008. Print. Read More