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Chiquitas Historical Approach to Global Management

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on 12 November 2013

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Transcript of Chiquitas Historical Approach to Global Management

What Particular Challenge does Chiquita face as the purchaser, producer, and supplier of a commodity?
Competitive banana industry
Downward trend in prices
EU imposed quotas
Labor union relations
Low margin market view of bananas
Chiquita's Historical Approach to Global Management
Multinational producer, distributor, and marketer of bananas and other fresh produce
2003 60% of revenue was bananas (2.6 Billion)
2004 Hired new CEO Fernando Aguirre
2005 Acquired Fresh Express

Chiquita's Global Turnaround
Case 7

Negative Management Background
Predecessor company United Fruit caused most of the damage
1920's Labor Right suppression in Columbia
1954 Use of company ships in the US government-backed overthrow of Guatemalan government
1975 Bribery scandal in Honduras
1980-90's Defensive/Protective international management style
1998 Illegal business exposed by undercover investigation
Positive Management Background
Overshadowed positive initiatives
provided housing for local farmers
provided basic services such as electricity, water and medical facilities
Competitive Banana Industry and Low Margin Commodity
Several banana suppliers
little differentiation between products
most emphasis placed on price
Labor Union Relations

child labor
unsafe working conditions
sexual discrimination
low wages
brutality against union workers
Banana Link and US/labor Education in the Americas
EU Restrictive Trade Quotas
1993 - imposed quotas that favored imports from former European Colonies
22% of world banana market share before imposed EU quota
11% after quota enforced
$200 million in lost earnings per year
Does Chiquita's Global Corporate Responsibility create a conflict between shareholders and other stakeholders?
Corporate Responsibility program became competitive advantage for Chiquita
5% increase in northern European sales
Reduced production spending by $100 million
4 consecutive years on SB 20
Sales increased by $1 billion in 2003 to $2.6 billion, one year after filing for bankruptcy
$4.6 billion in sales in 2006
Chiquita has been profitable every year since filing for bankruptcy
Do you believe Chiquita would have changed its policies without the presence of damaging stories in the media?
Your Thoughts?
What we thought
Management Perspective
We felt that Chiquita's management was very reactive rather than proactive
Chiquita fought the wrong fight


Analysis
Improved relationship between shareholders and stakeholders


Creates factor of differentiation among banana suppliers
"
dangerous and illegal business practices
"
NO!
Who are Chiquita's main stakeholders around the world and how are they affected by CR program?
Employees

Labor Unions

Consumers

Shareholders

Environment

Competitors

The Cincinnati Enquirer
1998-Exposed information that Chiquita was guilty of "labor human rights, environmental and political violations in Central America"
Newspaper later forced to remove the series after it was discovered that the information was illegally documented
Corporate Image was further damaged when Chiquita managers emphasized the violations instead of addressing the problems
Maintaining Ethical Programs
keep up to date with global codes of conduct, standards, and labor practices

Marketing /Sales
Marketing the Message
Maintain emphasis on differentiation and value added production
Organizational Management
continue to push CR change down through each organizational level
Maintain Transparency throughout entire organization
Recommendations for Chiquita's new CEO
Maintain strong relationships with Unions and Organizations
continue to fund and maintain close relationships with labor unions
International Union of Food and Labor
Coalition of Latin American Banana Workers' Unions
Keep open door policy and open dialogue with groups to maintain transparency
What Challenges does Chiquita's new CEO face in continuing to turn the company around and balance the interest of competing stakeholders
Expand Internal Committees
Expand Corporate Responsibility Steering Committee's to a individual company level
Strategic Management group should focus on how to implement long term practices
Maintain a proactive management approach for the future
Continue to look for problems in the organizational structure and address issues as soon as they are reported
Marketing Goals
Maintain educating leading opinion makers and critics
continue to build brand loyalty through competitive advantage
Questions?
Employees
Better working conditions


Improved relationship between company and its employees


Company pride
Labor Unions
Awarded 2004 Corporate Citizen of the Americas Award for project in Honduras
Reached agreement with International Union of Food Workers and Coalition of Latin American Banana Workers' Unions
First to ever earn SA8000 certification in Costa Rica, Columbia, and Panama
Shareholders
$100 million in savings

Increased revenues

4 consecutive years on SB 20 list
Environment
As of 2006, 100% of banana farms in Latin America are in accordance with Rainforest Alliance
2004 Ethic Award from AGEPE Editorial Group for ethics and environmental protection
2003 Award for Outstanding Sustainability Reporting
2006 won Costa Rica's Contribution to the Community Award
Consumers
Improved image of Chiquita
Competitors
Set standard for Corporate Responsibility


First multinational in agricultural sector to sign worker rights agreement
Present Leadership
Transparent


Accountable


Proactive
Company Reputation
Company culture defined by those at the top

Can affect status in the financial marketplace

Customer loyalty

Stakeholder support
Past Leadership
Secretive


Defensive


Reactive


Unaccountable
Respect
Integrity
Opportunity
Responsibility
Full transcript