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Chiquita Brands International: Case Study
Introduction
The Chiquita case is fraught with ethical intricacies and contradictions. This moral complexity has several root causes: the sociopolitical situation in Colombia, neglect of ethical standards and corporate social responsibility, as well as corporate greed. While it can be argued that the companys root cause was the desire to protect its personnel, other methods (necessitating even more financial resources) of doing so exist. Although the companys actions seem morally permissible from some perspectives, they neglect the principles of business ethics.
Political Contexts
To a considerable extent, Colombias political context had contributed to the creation of legal and ethical problems with which Chiquita dealt years later. After Colombia was decolonized, the country gradually became submerged into civil wars between its government and guerilla organizations. In the middle and second half of the last century, such organizations as FARC, ELN, and AUN claimed to fight the official governments oppression of the unprivileged lower working social classes. The fight was conducted by means of armed onslaught and resistance. Various guerilla organizations incorporated Marxist ideology, thus showing their alliance with the countrys poor. For the United States, the rise of communism in Colombia prompted Red Scare. The influence and dominance of guerilla organization in the region could not but affect the way Chiquita managed its affairs.
Industry Dynamics
The banana business has several peculiarities that shape the way it functions even presently. Banana-growing regions are not globally wide-spread and are chiefly located along the equator, complicating the fruits distribution. The problem is enhanced by the fact that bananas are extremely perishable. The demanding growing conditions, the climate zone, and the products perishability rendered the banana industry, in its international scope, inaccessible for locals due to high capital investment. Consequently, three giants covering the entire market and supplanting small local farmers emerged: Del Monte, Dole, and Chiquita. In addition, the industry requires a lot of low-skill human resources to prepare soils, grow, take care of, and pack the product. International companies took advantage of the regions socioeconomic situation to exploit cheap labor. It can be seen that the industry dynamics and peculiarities made it notably vulnerable to ethical dilemmas and scandals.
Ethical Concerns
The companys business practices at the time could be described as unethical. The primary ethical concern in the Chiquita case is sponsoring one of Colombias most dangerous paramilitary organizations terrorizing civilians AUN. The banana company excused its actions by painting a situation in which it had no other choice but to succumb to extortion. Additionally, Chiquita collaborated with the paramilitary organization, allowing it to transport cocaine to the United States. It also can be said that the company profited from the unstable political situation in the region to exploit its natural and human resources, purchasing lands at lower prices and underpaying its workers. Overall, the most pronounced ethical issues in the case include exploitation and financing terrorist groups.
Alternative Solutions
The two most evident choices available to Chiquita were paying the paramilitary groups or withdrawing its operations from the country altogether. Both choices have significant downsides: the first choice violates corporate social responsibility standards, while the second one entails large financial losses. Another option would have been to involve Colombias government, asking it for military protection. Nevertheless, according to the companys CEO at the time, the government was unwilling to help, lacking adequate military resources and internal stability. Hiring more private security contractors seems like another possible solution, which also has negative implications for the company, possibly creating ground for additional violence. It can be seen that Chiquitas options were filled with contradictions.
Basic Duties and Corporate Social Responsibility
From the perspective of a companys basic duties before its workers, Chiquitas actions, to an extent, could be justified. Providing employees with a safe working environment is a companys major responsibility, which Chiquita fulfilled by financing AUN, thus protecting personnel from their violence. On the other hand, the companys actions do not comply with corporate social responsibility norms. By paying AUN, the company directly contributed to the countrys internal war, aggravating further its political and social problems. Overall, Chiquitas actions are not fully consistent with the companys basic duties, considerably damaging the countrys in which it operated socioeconomic state.
Best Business Practices
The way Chiquita operated in the second half of the last century did not reflect best or the most ethical business practices. From the moral perspective, the best business practices are built on the principles of beneficence and non-maleficence. Additionally, such values as reputation, morality, integrity, and lawfulness define optimal business activities. Chiquitas financial support of AUN does not comply with beneficence and non-maleficence, which are at the core of ethical practices. Thus, to reflect best practices, a company should abide by the law, incorporate and respect human rights, practice benevolence and non-maleficence, and take morally correct decisions even if the pressure to do otherwise is high. Overall, Chiquitas business activities did not align with these norms.
Utilitarian Ethical Theory
The company used a utilitarian approach to the moral dilemma, focusing on the outcomes rather than the method of reaching them. From the utilitarian ethical theory perspective, an action is defined as morally permissible primarily based on its results. In Chiquitas case, one of the objectives was protection and wellbeing, including protection and wellbeing of its employees. Considering utilitarian ethics, this result can justify the means by which it was reached. Nevertheless, Chiquitas goal was not the greatest good overall, but the companys good, while utilitarianism emphasizes the former. By employing utilitarianism, the company succumbed to one pitfall of this theory.
Deontological Ethical Theory
Chiquita might have employed a deontological approach to the dilemma, focusing on following the law and moral rules rather than obtaining lucrative end results. While utilitarian theory might partially justify the companys actions, the deontological approach would have condemned them. From the standpoint of deontological thinkers, an effort is not defined by its consequences but should be measured based on clear rules and moral standards. If the companys management had applied this theory, they would have avoided some of the detrimental consequences, such as the ruined public image. Furthermore, thought process within the framework of the deontological theory could have yielded a solution other than paying terrorist groups both morally permissible and helpful in avoiding financial losses.
Chiquitas Alternative Actions
A more complex but at the same time, better solution would have been to engage the local community. This approachs premise is that such organizations as AUN, FARC, or ELN are not isolated from Colombias population (Baur et al., 2015). These paramilitary groups strongly rely on locals, which is corroborated by the fact that they incorporate communist ideology to gain popular support. Chiquita created workplaces and, to a degree, contributed to the social advancement of the territory where it operated. Losing the benefits that the company brought to the territory would have economically hurt the community, increasing Chiquitas utility for locals. Chiquita and its beneficial presence in the region could have gained popular support and protection and leveraged it against AUN (Baur et al., 2015). This approach is primarily political and non-violent in contrast to hiring private security contractors, making the proposed solution more advisable.
Restoration of Chiquitas Reputation and Competitiveness
The public image of Chiquita as of an unethical company tangibly damaged its reputability and financial performance. Restoring the companys reputation and competitiveness involves corrective action based on the image restoration theory. Given that currently sustainability is an influential trend, Chiquita should paint an image of an environmentally friendly company, practicing organic agriculture and pesticide-reduction, diminishing its carbon and water footprints as well as treating its employees fairly. Additionally, social media marketing would play an instrumental role in the image restoration process, since social platforms are efficient for company-customer communication. Such marketing strategies as fundraising events also could help Chiquita appear more philanthropic. Acknowledging and compensating families who suffered from AUNs violence is another essential step. Overall, acknowledging its mistakes, sustainability combined with appropriate digital marketing, and fundraising could improve the companys image.
Conclusion
The Chiquita case provides an array of valuable lessons regarding the role of ethics in business practices, social accountability, and brand image marketing. Although the industry dynamics and socio-political situation in Central and South America created thriving conditions for ethical dilemmas, the company in question could have avoided the humiliation and financial downfall. While not denying the moral complexity of the situation, it appears that by compromising business ethics standards, the companys management neglected more intricate but also potentially more effective solutions such as collective action.
Reference
Baur, D, Palazzo, G., & Rochat-Monnier, D. (2015). The corporate social responsibility story of Chiquita. Web.
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