BUSA 4980
10/24/12
Case analysis
Blood Bananas: Chiquita in Columbia
As learned in class, the advantages of international business are great, but so are the risks. Some of the risks involve ethical issues as the ones Chiquita faced doing business in Columbia. Chiquita was the first to successfully internationalize banana trade; Chiquita did so by paying special attention to retail development and followed industry trends. Their competitive advantage was acquired when the company revolutionalized the banana trade by using refrigerated ships for the first time.
Chiquita was involved in paying bribes to Latin American government officials in exchange for preferential treatment, encouraging US coups against smaller nations, putting in
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Before a company decides to internationalize, many researches should be done on culture, political situation and so much more. Knowing other countries’ laws and regulations will prevent such lawsuit against your company. Codes of conducts, ethics hotlines should be provided to employees and that has to come from the top management. Companies should look at long-term goals versus short-term goals; companies whose culture is to just make profits at any cost faces these type of situation Chiquita faced often. Even though outsourcing is a great way to cut back on costs, companies should be very careful which countries they select to outsource in to prevent them from having a bad reputation. For example if a company chose to outsource in let’s say Nigeria, things are very corrupt and doing business, outsourcing from there could be very profitable but in a very un ethical way. How you want to represent your firm depends on the character of you as a CEO. Either you make unethical decisions and get profitable very fast and get shares doubled in the wall street at any cost, or you have ethics and you rather do things right and slowly get to profits. Strategic planning is extremely important in doing business abroad, abiding by your core values and helping the community, making sure the public recognizes your firm in a positive always attract customers which generate more revenues. The current CFO Fernando Aguirre believes
If you are ready to start doing business on an international level, there are some considerations to keep in mind. These five tips will help to ensure a successful business venture in the global market.
There are many opportunities available for companies willing to venture into new, international markets. Reaching more customers and therefore, turning a larger profit are two fairly obvious reasons for companies to consider global expansion. However, the potential benefits do no end there. Expanding to international markets can hold less obvious, yet extremely beneficial appeals such as access to new and different talent pools, grander output requires great advances in efficiency, and international expansion can, in some cases, aid in “future proofing” the company.
At the time of development of globalization there were many concerns about its benefits. However, it has brought significant changes in all segments of human life and International business is one area in which it contributed heavily (Reich, 1998). Companies all over the world are currently formulating their business strategies mainly after considering the trends in global market instead of domestic market. Outsourcing and offshoring are some of the new business principles emerged in this world after the implementation of globalization (Samimi and Jentabad, 2014). The core of these new business concepts is to exploit the business opportunities in overseas countries as much as possible (Samimi and Jentabad, 2014).
The business environment that influences companies' activity determines them to search for new development strategies intended to help them increase their business. In most cases, companies expand their business on international level. This is because the numerous growth opportunities provided by markets they have not addressed before can help them reduce their costs by outsourcing some of their processes and activities to cheaper destinations, or to increase their incomes by addressing new markets and new customer segments. The number of companies that outsource their production process to countries in Asia, Africa, Eastern Europe that are able to provide skilled workforce at lower costs is increasing. The scope of this international operation can be observed in the significant price reductions in product categories like electronics, clothing, and numerous types of services.
Expansion of a company is never easy, especially if the company were to expand overseas to a foreign country. The products or service the company offers or sells must fit into the culture and environment of the country. Ignorance to these factors can lead to a major downfall
Companies must educate not only there employees but the public when it comes to the subject of outsourcing. There are a variety of subject that the employees of a company should be aware of when business is being conducted abroad. Customs and culture are one of the biggest items that must be addressed in conducting business.
In the global capabilities of companies, the process of penetrating and developing an international market is seen as the most difficult. This happens because companies usually have little information about the new market as well as marketing infrastructure to penetrate it. However, companies treat entry into foreign markets as an extension of their business, which adds incremental revenue for their products and services. Additionally, firms pursue foreign business opportunities to minimize risk and investment thereby increasing their total sales and profits. For Tyson Foods to enter the Portuguese market, it would attain growth and expansion through diversification.
Many companies today want to expand their business to the international business, which can bring cost down and profits up. Taking a business internationally means knowing the rules and regulations of the countries you are entering. There can be many issues with going global which include cultural barriers, diversity issues, multicultural issues, political issues, and economical issues. It is very important to know how important expansion is to the company and what implications will come from going global.
Chiquita faced legal challenges by doing business in a politically unstable foreign environment. A lesson learned from this case is to keep up with and always abide by the laws set in the foreign country, as well as one’s own country. Following the laws and making sure one knows the laws is good advice for any firm starting a business in a similarly volatile
The firm, using international strategy, will develop products or services in their home country and subsequently introduce them to the international market. The company establishes manufacturing and marketing functions in local country, but the head office tight control over it. International strategy transfer distinctive competences to foreign market. However, it lack of local responsiveness.
Six firms dominated the banana industry in the early 1990’s, three from Europe and three from the United States. In 1994, the three United States producers, Chiquita, Dole, and Del Monte, accounted for approximately 72.4% of world banana sales. Chiquita accounted for 48% of worldwide banana sales and 66.4% of banana sales of the three U.S. producers.
The world consists of many different cultures and nationalities. International business is thriving and companies need to be
3. The challenges involved in exporting are the same of any other international operation; there are commercial risks, political risks, cultural risks and currency risks. In order to be prepared to face these risks the company would indeed need to invest and create an export team, hiring and training employees in international operations. The team will require skills in areas such as product development, logistics, finance, currency management, foreign languages and cross-cultural skills.
According to the works of Chaney & Martin (2011) and Harris & Moran (2000), they agree that international management skills are in need for the increasing scope of international trades and investments. A large number of multinational companies have expanded their businesses through both developed and developing countries. Some of the business invest directly and others are partnership arrangements and strategic alliances with domestic operations. Their studies show that independent entrepreneurs and small businesses have started investing and competing in the world marketplace. Thus, to acquire corporations’ objectives, there is exceedingly a necessity for the development of strategic framework for cross-cultural management and communication in the current competitive global market. Chaney & Martin (2011) also noted that, cultural awareness and cultural differences are strongly important to the multinational corporations’ success. A good understanding of the culture where business is implemented can make international managers productive and effective.
Increase Sales: - if a business succeeds in the US, going international will likely improve the overall revenue. Approximately 96% of the world’s population lives outside of the United State and 90% of the world’s population do not speak English, that suggest that customer is global and if a business has to look beyond the end of the domestic market, you have real upside potentials