Chiquitas Global Turnaround Essay

executive director SummaryThis report details several external management problems that Chiquita has been faced with all over the past devil decades. Many of these problems ar to do with the orders previously poor image when it came to Corporate and loving function. Over the age Chiquita faced many accusations round the conditions workers were faced with at many of their facilities in Latin America and gravel also had their environmental policies questioned many times in the press. The corporation has made prominent strides in recent years in improving their frequent image with regards to incarnate and accessible responsibility. In particular Chiquitas commitment to the Better Bananas Project has helped improve their open image along with the continue work they are doing with the South American communities who farm their bananas. The Company also faced a world-shaking legal and regulation of look at problem when the EUs 1993 integration program truism tariffs on th e guild aftermaths to Europe greatly increased and their market share halved almost overnight. This report recommends that instead of passing play through a costly legal battle to gain re-entry to the European Banana market the family instead focuses on newer emerging markets such as Asia.IntroductionChiquita Brands International is a multinational producer, distributor and marketer of bananas, sourcing many of its produce from developing countries in Latin America. Banana industries work long been tarnished as having unethical avocation standards forcing companies such as Chiquita to ascertain on Corporate Social Responsibility (CSR). CSR has been an substantive element for Chiquita to take into consideration for a global turnaround. Vital aspects Chiquita had to consider were commitment to legal, ethical, environmental and social standards. These factors are at the most forefront to resolving CSR trim backs. A nonher key issue affecting the nerve was its struggles with access to a free market in the EU. The trade regulations the company faced through quotas and tariffs not only cut the companys market share by over 50 pct but also negatively affected their ability to compete in the EU. These issues are seen as exact for the firm as it weakened its competitive edge considerably. Chiquita has taken actions against these issues in the past several years however at that place are severalsolutions that could strengthen the company even further so that they bide the worlds leading supplier of bananas.Key IssuesIssue 1 Corporate Social ResponsiblyAfter analysing the subject area in full depth it has come to our knowledge that incorporate social responsibility (CSR) is a major international business issue affecting Chiquita. CSR is becoming a huge business venture in to sidereal days corporate world. People are becoming to a greater extent aware of business ethical motive and practices that dont coincide with what they agree is mor on the wholey se t and right. (Anglo American, 2012) Business practices have therefore locomote from being profit maximisation focused to having social, cultural, technological and political focal points or a quartette bottom line speak to in order to create a company that is socially correct with a positive image. (LGAM, 2013) In 2003 Chiquita had 19,000 workers in its banana division with over 100 farms across Latin America. These countries are typically developing countries that have struggled with poverty, literacy and access to health care. The banana industry has long been for its actualize of child labour, unsafe working conditions, sexual discrimination and low wages leading to Human rights groups organising campaigns against all banana companies to improve social conditions on their plantations. (Luthans, F., & P. Doh, J. 2012). CSR is stated as the continuing commitment by business to behave ethically and contribute to economic development temporary hookup improving the quality of life of the hands and their families as well as of the local community and society at large. (Business Respects, no date) thereof Chiquitas image in the 1990s of being a company that was cold, uncaring, and indifferent, frustrated with mediocre returns, a lack of innovation, and a demoralized workforce lead to the company becoming considerably unpopular with the public and business partners, which contributed to a decrease in growth rates. For example, in 1998 Chiquita fell a victim of an hole-and-corner(prenominal) investigation into dangerous and illegal business practices. The Cincinnati Enquirer, a paper based in Kentucky, accused the company guilty of labour, human rights, environmental and political invasions in central America, leaving an unsavoury impression of our company according to Jeff Zalla, current corporate responsibility officer at Chiquita.(Luthans, F., & P. Doh, J. 2012). The centre of the debate about the CSR is the character and extent of corporate obligations t hat extend beyond the economic and legal responsibilities of the firm. The idea of social responsibilities supposes that the corporation has not only economic and legal obligations, but also certain responsibilities to society which extend beyond these obligations (McGuire, 1963 144). The issue is therefore critical for the firm as it is in the businesss long-term self-interest to be socially responsible. If Chiquita wants to have a healthy climate in which to function in the future, it must take actions now to ensure its long-term viability. Ultimately it will benefit the company by winning the public because the public believe firms should take on social responsibility. Issue 2 obligation Regulations from the EU some other(prenominal) international business issue that had a significant outlet on Chiquitas day to day operations was the European Unions (EU) decision to impose significantly higher tariffs and quotas on Chiquitas imports from Latin American countries, in favour of t heir former colonies in the Caribbean and Africa, beginning in 1993. These new Tariffs not only cut the companys market share by over 50 percent but also significantly affected their ability to compete in the EUs $6.7 Billion USD banana market. (Luthans, & P. Doh, 2012). This was a massive regulation of trade issue for Chiquita as they believed the EUs decision to grant their former colonies preferential tariff rates was in direct violation of the fair trade principles specified in the WTO. These principles stated that countries must not discriminate against one another in their trade relations. (Luthans, & P. Doh, 2012). One of the key sub-issues that caused this issue for Chiquita was the EUs 1992 integration program which saw the 12 member nations of the EU do away with their previously separate banana import governances and implement one uniform set of tariffs for the whole EU. (Patterson, 2001) This important change in international law saw Chiquita go from only having some qu otas to deal with when exporting to the EU to now having to present an extra 33% tariff than their rival importers from ACP countries. (Patterson, 2001) Although the EUs new administrationn was immediately protested by the U.S.A and many Latin American countries this presented another significant legal international management problem for Chiquita. notonly had their market share been halved, drastically cutting into their profits, but they also now faced the opportunity of a lengthy and expensive legal battle to be able to once again import their bananas to Europe at a fair rate. (Luthans, & P. Doh, 2012).Strategic optionsCorporate Social responsibilityChiquita began to initiate corporate social responsibility projects in 1992 but initiated projects aimed at implementing its CSR efforts on a global scale in 1998, (Luthans, & P. Doh, 2012). By 1999 Chiquita had adopted four key values, integrity, respect, opportunity and responsibility, which now guide all business decision-maki ng worldwide, (Luthans, & P. Doh, 2012). In 2000 Chiquita appointed a full time officer responsible for all aspects of Chiquitas CSR. This implementation as well as the four totality values has helped drive a responsible change passim the entire company, (Chiquita Social Responsibility Is How We make do Business, 2013). It has meant all business decisions have had to be evaluated through the corporate responsibility policies, (Luthans, & P. Doh, 2012). Chiquitas development of social responsibility efforts has developed significantly by expanding on the businesses cypher of manner to outline the responsibilities and practices of the organisation, as well as adopting legal agreements to establish business standards, (Luthans, & P. Doh, 2012). Chiquitas have resolved social conditions on all their plantations by using both these strategies. They expanded their code of conduct in 2000 to include Social Accountability 8000, followed by signing a worker rights agreement in 2001, (L uthans, & P. Doh, 2012). This covered areas such as food safety, labour standards, employee health and safety, environmental protection, and legal compliance, all which have been a long tarnished image in the banana industry. It has been proven to be a very useful tool for measuring and improving business practices to punter serve the communities and individual consumers, (Chiquita Social Responsibility Is How We Conduct Business, 2013). In order to adhere to the organizations core values, Chiquita routinely performs audits, to plan corrective and future actions using the firms core values and code of conduct as decision-making guides. This implementation has contributed significantly to allow Chiquitas to maintainbetter CSR practices. An alternative solution for Chiquita is to contribute to local communities in an interactive way. Chiquitas could set up programs to arouse healthy living, particularly that educate children on nutrition and encourage them to lead healthier lives. Chiquita employees could do this by visiting local schools, burdens or other business firms in the community. To promote healthier living to volume they could give out produce to the community to encourage eating healthier foods and give tips to men, women and particularly children about nutrition enforcing the idea of healthy living. Chiquita could also allow schools to visit their farms on an education basis. This gives the opportunity for Chiquita employees to assume involved in supporting the community and has the added benefit of portraying a great social responsibility effort for Chiquita. Furthermore on the idea of allowing people to visit their farms, Chiquita could alternatively charge people a small donation, where a percentage of the profit could be given to charity or an ongoing event in the community. Tariff Regulations from the EUFrom the time that the new regime was put in place in 1993, Chiquita, along with the coupled States, filed complaints to both the General Agreement of Trade and Tariffs (GATT) and the World Trade Organization (WTO) implying that there were violations of free trade from the EU (Doh & Luthans, 2012). There were two complaints made to GATT the first gear, issued in February 1993, outlined that the new regime (Mark II) was protectionist, discriminatory and restrictive. While the second was initiated by tailfin Latin American plaintiffs on the first of July, 1993 (Read, 2005). While the GATT gameboard ruled that the Mark II regime violated GATT commitments, the EU refused to adapt the ruling made by GATT. In May 1997, the WTO ruled that the EUs Mark II regime violated WTO obligations under the GATT on trade and services and the agreement on import licensing procedures (Doh & Luthans, 2012). Some of these licensing procedures include Operator categories, activity functions, export certificates and hurricane licenses (Read, 2001). The EU was then required by the WTO, to bring its banana regime compliance by January 1999 . This was brought about by the various amounts of import licenses that the EU used in which the WTO panel found that these licenses breached the GATT and the General Agreement on Trade inServices as it prevented competition in the EU (Read, 2005). However, the EU did not comply and so, the United States was allowed to enforce regulatory tariffs onto specific EU imports as a response towards the EUs failure to implement the WTO rulings as well as the violations of the GATT trade rules (Read, 2005) It was not until April, 2001 that the United States and the EU announced that they had resolved their dispute but reaching an agreement. The agreement took effect on the first of July, 2001 during which the United States suspended retaliatory sanctions and the import of bananas from Latin America returned to the levels it was at forwards the 1993 regime change (Doh & Luthans, 2012).Final RecommendationAn alternate option that Chiquita could have undertaken is that rather than focusing on regaining the European market, they could have looked towards expanding to a new regional market such as Asia. grounds from the Chiquitas website shows that they have yet to expand to the Asian market (Chiquita Homepage, 2013). Four out of the top five countries for banana consumption in the world come from Asia these countries being India, China, Indonesia and the Philippines (WolframAlpha Banana Consumption, 2007). Upon entering the Asian market, Chiquita should approach with either a polycentric or regiocentric predisposition. Polycentric and regiocentric predisposition is, respectively a philosophy of management whereby strategic decisions are tailored to suit the cultures of the countries where the multinational corporation operates and the philosophy of management whereby the firm tries to blend its own interests with those of its subsidiaries on a regional basis (Doh & Luthans, 2012). These two approaches would be good for entering into the Asian market as Asian cultures ten d to be high context cultures in which negotiations are slow and ritualistic whereas for and American-based company such as Chiquita, are used to low context cultures where negotiations are made efficiently as possible (Cavusgil, Freeman, Knight, Ranmal & Risenberger, 2012). These two approaches will allow for Chiquita to become more compatible with the Asian market. Implications of this however, is that the time and bullion spent on developing and researching strategies on entering the Asian market could cost either the same, or more than the legal costs that Chiquita faced whileregaining the rights to exporting to the EU. However, if Chiquita looked towards expanding into the Asian market while dealing with legal issues regarding the EU quotas and everything went well, Chiquita would then be exporting to both Europe and Asia which would bring them more profit than if they were just shipping to one or the other.ReferencesAnglo American, (2012), Business Ethics and Corporate Social Responsibility, Retrieved from http//businesscasestudies.co.uk/anglo-american/business-ethics-and-corporate-social-responsibility/introduction.htmlaxzz2cMnSxmvE, Accessed 17/9/13 Business Respect, (no date), Corporate Social Responsibility- what does it mean? 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