Running Head: Chiquita Case Study

Blood Bananas: Chiquita in Colombia

Eduardo Dos Santos

Limestone College
Chiquita Case Study 2

Blood Bananas: Chiquita in Colombia

Chiquita Brands International was one of the most important companies to start of the global

trade of bananas during the 20th century. With Chiquita, there were other two American companies

that were extremely important in this fairly new industry: Dole Food Company, Inc. and Del Monte

Foods. All these companies together were known as “the big three.” The banana industry presents

many challenges for American companies. Due to weather, operations in this industry need to be

held internationally. In that case, the banana business faces issues related to political relations,

socio-economical, and environmental aspects. Even with these confronts, “the big three,” found

their way to become successful and dominant within the industry (Schotter & Teagarden, 2010).

However, in order to achieve it, the companies got involved with ethical dilemmas that will be

discussed through out the analysis.

Chiquita had its banana’s operations in Colombia. Since the early 80s, Colombia was going

through a civil war, which complicated the banana business operations for American companies in

that soil. The civil war had participation of different groups: Revolutionary Armed Forces of

Colombia (FARC), National Liberation Army (ELN), and United Self Defense Forces of

Columbia (AUC). Those groups were independent from the Colombian government. At some point

during the war, each of these groups was responsible for specific territories in Colombia, where they

would dictate the law and order of the region (Schotter & Teagarden, 2010).

For e better understanding of the Chiquita’s situation, it is important to understand the

external forces in the industry in which the firms operate. Between the periods of 2002-2006, the

European Union was responsible for the highest demand on banana importation, with 39%.

Followed by the US, with 26% of the total Global demand. That translates to roughly 27 pounds of

banana consumed by an American every year, while a European consumes roughly 35 pounds
Chiquita Case Study 3

during the same period (Schotter & Teagarden, 2010). As the case study points out, the Industry

faced many challenges. It all started with trade barriers and tariffs between countries that would

export and import products. It also included the consumer taste, which was switching towards a

healthier and convenient eating habits, “giving preferences to prepackage salads, sliced fruits,” etc.

(Schotter & Teagarden, 2010). That was leading the industry and Chiquita to have a considerable

volatily, which was considered the company’s number one enemy at the time. Beyond that, the

industry also had a huge social responsibility. The economic health of third world region, such as

Colombia, would depend on banana production and distribution (Schotter & Teagarden, 2010).

That placed a lot of responsibility on Chiquita, as its operations was located in a place that

demanded a lot of social, political, and economical attention due the civil war.

“The big three” companies were up to anything to stay profitable and running its business.

With all the civil war issues in Colombia, Chiquita started to have problems with its operations. The

AUC group started to control the Colombian region where Chiquita operated in 1997. The company

claimed that AUC was threatening the employees’ life, and in order to keep everyone safe, Chiquita

agreed to make payments to the armed group. This organization was not reliable, there was no

guarantee of protection for Chiquita’s employees coming from a group that was fighting in a war.

At the time, this type of payment was not considered illegal, however it can be debatable if it was

ethically correct (Schotter & Teagarden, 2010). The fact that AUC was an armed group involved

on a civil war, leads to a believe that Chiquita was financing a war, and that money could have been

used for weapons and munition. In 2001, the Secretary of State, Colin Powell, determined that AUC

was a terrorist organization, and it became illegal for any American company to make any type of

payment to them. Somehow, Chiquita’s executives claim that this information did not get to their

knowledge. The company kept making payments to AUC until February of 2003, when the
Chiquita Case Study 4

Chiquita’s executives finally got the information about the illegality of doing business with AUC

(Schotter & Teagarden, 2010).

This decision to do business with AUC did not meet the Core Values presented by Chiquita.

The company’s core values are based on:

I. Integrity

II. Respect

III. Opportunity

IV. Responsibility
(Schotter & Teagarden, 2010).

Making the payments to AUC is ethically questionable, and after 2001, it became unlawful. That

already shows conflict to the first and most important factor of Chiquita’s core values. The Respect

and Opportunity points on the core values are also questionable. Those factors are very specific to

employees (Schotter & Teagarden, 2010). However, at the moment that Chiquita decided to have a

deal with AUC, they place all their employees in possible danger for being related to an armed

group during a civil war. The last part of the company’s core value states “Responsibility.” Chiquita

was extremely irresponsible on its decision, ignoring the Colombian community and the workers.

They were basically forced to work for a company related to a terrorist organization, without any

guarantee of safety or stability.

Chiquita’s goal was to use the Utilitarian approach on their decision. Utilitarianism is based

on decisions that will result on the greater good (Johnson, 2016). According to Chiquita’s CEO,

Fernando Aguirre, the company was making the payments to the AUC to protect the thousands of

Chiquita’s employees that were working in Colombia (T., 2014). That shows somewhat that the

company was trying to achieve the greater good. However, there could be another interpretation of

the situation, which makes the company’s decision based on an Egoistic approach. Egoism is based
Chiquita Case Study 5

on the end result that will be favorable for the decision maker itself, ignoring any other impact to the

community (Johnson, 2016). It is possible to understand that Chiquita was being very profitable

with its operations in Colombia, so it was not on the company’s interest to make any changes on

how the business was functioning. From this prospective, the company was making payments to

keep its business profitable, without thinking of the consequences of being responsible for founding

a narco-terrorist group, such as AUC.

Based on the situation, Chiquita should have used the Kantian method on its decision. The

categorical imperative approach, by Kant, defends the fact that decisions should be made based on

what is morally right, without taking in consideration the outcome (Johnson, 2016). Following this

approach, Chiquita would have not agreed on doing business with AUC. There were a few other

options to Chiquita. As a leader of the company, at that moment it would be great to move out of

Colombia, and find another place to operate the banana business. The millions of dollars paid to

AUC within 7 years, could be used to stop business in Colombia and restart it on a different

location, in South America or the in Caribbean. It would be a costly process to relocate the business,

however it would prevent the company’s image to be related to an armed group that later on was

labeled as a terrorist organization.

Even though Chiquita was in a though situation, making payments to AUC was not the only

option they had. As soon as the armed organization started requesting money, Chiquita could refuse

to pay. Since AUC was not a government agency, they should not be responsible to charge

international companies for tariffs. However, that could be a huge threat to company’s property and

employees in Colombia. Because of the risk of death and huge damages, this option was not viable.

After everything that occurred, the new leader of Chiquita should step back and apologize

for all the unethical and illegal actions the company made on the past. However, the past can not be
Chiquita Case Study 6

changed, so it would be ideal to make sure that the future actions would follow what the core values

of Chiquita states: Integrity, Respect, Opportunity, and Responsibility. That would include take the

responsibility for everything that was done. Anything that would be decided in court, Chiquita

would have to follow. After dealing with the mess from the past, it would be time for a new restart.

Chiquita is known for innovation, and for a very successful application of economies of scale on its

operations (Schotter & Teagarden, 2010). The challenge would be to recovery that in order to

bring back the company to where it once was before. Once the business operation would be

stabilized, the company could start social projects that help the population of countries in situations

similar to what Colombia had.

Chiquita Case Study 7

CERTIFICATION OF AUTHORSHIP: I certify that I am the author of this paper and that

any assistance received is acknowledged and disclosed in the paper. I have also cited any sources

from which I used data, ideas, or words, either quoted directly or paraphrased. I also certify that

this paper was prepared specifically for this course and has not been used for another course

either in whole or substantial part.

Name and Date: Eduardo Dos Santos (09/30/2017)

Chiquita Case Study 8

References

Johnson, C. E. (2016). Organizational ethics: a practical approach. Los Angeles: SAGE.

Schotter, A., & Teagarden, M. (2010). Blood Bananas: Chiquita in Colombia. Thunderbird:

School of Global Management, 1-16.

T. (2014, May 14). Chiquita Banana 60 minutes. Retrieved September 29, 2017, from

https://www.youtube.com/watch?v=_jxJzbrcoG4&t=329s