Growth for Chiquita, the 90s Term Paper

Pages: 4 (1121 words)  ·  Bibliography Sources: ≈ 2  ·  File: .docx  ·  Level: College Senior  ·  Topic: Literature - Latin-American

SAMPLE EXCERPT . . .
So, the first cause of the financial problems that the company faced was related to the restrictions the European Community imposed on banana imports from Latin America and to the changes the company needed to make in order to adapt to this. The second cause of the problem was the way Chiquita thought to react.

Indeed, while it filed Section 301 Petition in order to protect its interests, it also sought Senator Bob Dole's help. The way he did this was neither moral nor very ethical and it implied pressures, not necessarily on the European Union, too big and powerful to fall to blackmail, but to smaller countries in the Latin America area that had signed agreements with the European Union. These included threats to cut off financial aids to Columbia or Costa Rica, for example. As such, as the case study mentions, negative attention was brought on the company, a company that was more and more seen by the public as an economic player that brought little or no benefit to the United States.

Alternative Solutions

The alternative solutions that the company may use in order to regain parts of the lost market share and boost up its profits are quite restrictive. Because the main problem relates to the presence on the European market, the first alternative solution would imply gaining more both of the import quotas and of the number of licenses that that Europe gives out.

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Chiquita's competitors thought and applied several different methods in this sense (unfortunately, Chiquita was busy lobbying its cause instead of taking full action). The first one related to buying several small EC distributors, with the distinct goal of having more import licenses at hand. The second would imply a shift towards the advantaged ACP region. However, this second method had a significant disadvantage in Chiquita's case: the company had invested heavily in infrastructure and equipment in Latin America and a change of policy towards other countries could have had high operational costs.

Term Paper on Growth for Chiquita, the 90s Assignment

The second alternative solution implies a shift in the output market. North America and Asia, as well as Eastern Europe and Russia, provided less regulated and restricted markets, but the problem was that the purchasing power was lower in these areas and that the markets (with the exception of North America) were less developed to absorb Chiquita production.

Optimal Solution and Implementation

In my opinion, diversification should be a key strategic word for Chiquita. Diversification would refer in this sense, both to the production markets and to the output markets. Indeed, the fact that Latin America is almost the sole producers of Chiquita bananas was an extremely risky act in the first place and a gradual, smooth relocation is more than necessary. This would not necessarily mean abandoning Latin America production altogether, but finding different alternative centers of production, especially in the ACP markets.

Finding an alternative to the difficult European business environment is also necessary. Chiquita is relying too much on a single large market for its products. In many ways, the company showed no understanding of the hedging concept or the fact that diversification reduces business risk.

Bibliography

1. Shah, Anup. The Banana Trade War. On the Internet at http://www.globalissues.org/TradeRelated/Bananas.asp

2. Ransom, David.… [END OF PREVIEW] . . . READ MORE

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