Beruflich Dokumente
Kultur Dokumente
Submitted by:
REA A. DIVINAGRACIA
MICHAEL P. OMAMBAT
Submitted to:
DR. STEPHEN A. ANTIG, CPA, MBM
Standard Fruit Company started in 1899 when a small New Orleans partnership began
importing bananas from Honduras. By 1904, it owned plantations and had received concessions
from Honduras to build more than 300 kilometers of railroads and to open river mouths to
transport bananas more efficiently. It expanded into Nicaragua in 1922, Mexico in 1923,
Nicaragua is the largest Central American republic with 148,000 square kilometers. It is
about the same size as England and Wales. Mountainous upland in its center divides the
Atlantic from the Pacific lowlands. The Pacific coastal region had over 20 active volcanoes
whose ash enriched the soil in agriculturally active Leon and Chinandega.
Standard Fruit establish its first Nicaraguan banana operations on the Atlantic coast in
1922. In return for a government concession of 50,000 acres, Standard invested more than $13
million in fixed assets, including more than 80 miles of railroad development, a wharf, port,
hospital, worker housing, and offices. During its lifetime, Standard Fruit was the largest
American enterprise ever established in Nicaragua and by 1932 bananas accounted for 49% of
Nicaragua’s exports.
Also, it formed uniformed limited partnerships with each of its growers: the landowner
held an 80% share and standard held the rest. It was stipulated in the agreement that the
company was to secure sources of financing for the heavy equipment in infrastructure and
would guarantee the partnerships’ loans. Until debts were paid off (five to seven years later),
How should Standard Fruit Company continue its operation in Nicaragua considering all the
factors that affect the company?
C. OBJECTIVES
1. To ascertain and evaluate the internal and external forces that affect the operations of
the company;
2. To evaluate the effectiveness of existing policies and agreement that were put in place
C. AREAS OF CONSIDERATION
SWOT ANALYSIS
1. Several natural hazards such as drought, chill, flood from hurricane or seasonal rains etc.
2. Widespread of diseases in the plantation
3. Nicaragua’s uncertain political future
4. Scarcity of water in Chinandega
5. Labor market was extremely tight during the cotton harvest
6. Unions vied for control of the farmers’ workers
7. Upcoming revolution
8. Workers lifestyle
9. National strikes
10. Inflation and foreign exchange
INTERNAL ANALYSIS
Ratin Weighted
Strengths Weight
g Score
1 North American market leader in 1973 with 40% share 0.04 4 0.16
2 Largest single contributor to Castle & Cooke’s earnings in
0.06 4
1973, 1975, 1976 & 1980 0.24
3 Previous experience in Nicaragua 0.05 3 0.15
4 Unique structure of new organization 0.05 3 0.15
5 Quality of its management group 0.05 3 0.15
6 Incentives for foreign investment including duty-free imports
and partial exemption from municipal taxes 0.04 3
0.12
7 Refusal to pay any bribes to public officials 0.03 3 0.09
8 Decreased worker turnover because of free housing 0.05 3 0.15
9 Largest American enterprise ever established in Nicaragua 0.07 4 0.28
1 Banana production is considered to be extremely important
0.04 3
0 because it is unseasonal 0.12
Ratin Weighted
Weaknesses Weight
g Score
1 Bananas are susceptible to diseases (i.e. Black Sigatoka) 0.06 1 0.06
2 Chinandega is very inhospitable area in which to grow a
good-quality banana 0.06 1
0.06
3 Unexpected costs 0.03 2 0.06
4 Worker turnover was enormous 0.03 2 0.06
5 Seasonal employment often left banana farms 0.05 1 0.05
6 Lost 15-20% of production through deficient agricultural
practices and worker efficiency 0.06 1
0.06
7 The fruit can be easily replaced at an equal or lower cost 0.05 1 0.05
8 Government poorly understood the industry’s economics 0.08 1 0.08
9 Banana’s delicacy and perishability present unique demands in
cultivation and handling 0.05 2
0.10
1 Banana industry needs a large, dependable labor supply
0 and major capital investment in infrastructure. 0.05 1
0.05
Total IFE Score 1.00 2.24
According to the analysis of IFE, Standard Fruit Company has a score of 2.24. The company
has an average internal position. Also, it shows that the company is internally strong and good
enough. Thus, the company can overcome its weaknesses by using its strengths effectively.
EXTERNAL ANALYSIS
According to the analysis of EFE, Standard Fruit Company has a score of 3.06. The company
has a high external position. The company should take advantage the opportunities to address
Based on the internal and external factors evaluation, the results show that Standard Fruit
Company should focus on GROW and BUILD region. This means that the company should use
Intensive (Market Penetration, Market Development and Product Development) or Integrative
(Backward Integration, Forward Integration, and Horizontal Integration) strategies which ever is
most appropriate.
1. Strengthen and upgrade the role and level of involvement of Nicaragua’s new
government in terms of providing support to the banana sector in general and the
banana sector
3. The government will have the time to understand the industry’s economics.
5. Fair trade
Cons:
Pros:
Cons:
Pros:
1. To avoid impending problem in politics and its effect in the economy and the
business’ operations.
2. To meet the demand in some other countries in Central America
Cons:
1. Decrease in revenue
2. It needs additional manpower
3. Increase in unemployment rate
4. Breach-of-contract
F. CONCLUSION
In order to address the objectives stated above, it is necessary for Standard Fruit
Company to do the alternative courses of action 1 and 2 as these will give the company the
opportunity to continue its operations and build positive relationships in Nicaragua and to
improve its market share. Though the company experienced a lot of difficulties therein, it is not
the best strategy to simply terminate its operation because they already have established its
core and it only needs for some improvements. Thus, the best strategy in order to address the
issues faced by the company is to strengthen and upgrade the role and level of involvement of
Nicaragua’s new government in terms of providing support to the banana sector in general and
the export of bananas in particular. And also, by modernizing agriculture to optimize productivity
within limited resources, improve quality of logistics and communication, offer product at
G. RECOMMENDATION
To further the improvements of the Standard Fruit Company, we suggest the following:
1. Invest in upgrading access roads and post-harvest handling systems and infrastructure to
3. Improve agricultural extension systems to promote increased technical efficiency and greater
productivity.
4. Invest in research to combat diseases such as Black Sigatoka and in irrigation to improve
productivity.
5. Secure risk management tools, including insurance to mitigate the risk that the company will
7. Optimize the utilization of resources to create better framework conditions for the production