In every business industry, it is important to consider the current political, social, legal, and economic situation. Moreover, a successful company is associated with social responsibility and adherence to its core values. Chiquita Brands International is one of the examples of how disregarding moral and legal principles in a challenging ethical situation destroyed the company’s reputation. This case study will focus on Chiquita’s ethical dilemma and identify its roots and possible solutions.
Chiquita is an international distributor of bananas and other foods based in America. The company’s business sector can be described as one of the most critical for the global economy. Indeed, as one of the most common fruits on supermarket shelves, bananas have always been in high demand, bringing substantial profit to banana-producing companies. At the same time, in the 2000s, the role of supermarkets and retail chains in the banana trade increased (Schotter & Teagarden, 2020). Moreover, in certain periods of its business activity, Chiquita experienced challenges connected with financial volatility and the customers’ changing preferences. Therefore, the overall dynamics of the banana-producing industry could be characterized as unstable, with increasing competition in the market.
In terms of the political context, it is important to understand that Colombia was a large producer of bananas for Chiquita. Since the 1940s, the country experienced serious political tensions, leading to the creation of terrorist armed forces (Schotter & Teagarden, 2020). Drug trading, an unstable economy, and poverty were only some of the existing problems that the government could not solve. As a result, by operating in dangerous areas, Chiquita put the life and safety of its workers at threat.
Chiquita’s business activity is often criticized from the point of its ethics. First, the agricultural runoff threatened the environment, and forests were destroyed for the expansion of production. Secondly, Chiquita’s employees had to work long hours in dangerous conditions. Both problems were solved by integrating sustainable technologies and improving the employment standards. However, the company’s largest ethical dilemma was connected with a threat from Columbian paramilitary groups, who threatened to kill its employees if the company did not pay a certain amount of money. Chiquita’s legal and ethical solution was the relocation of their production to a different region with a more stable political environment.
Another choice was not to cease operation in Columbia and continue paying to the terrorist forces, violating The Foreign Corrupt Practices Act. As a result, Chiquita paid $1.7 million to Colombian terrorist groups in a ten-year period to protect its employees (Schotter & Teagarden, 2020). This action triggered multiple discussions on whether Chiquita’s decision corresponded to the principles of ethics.
It is possible to say that the company’s actions were partially consistent with its duties. Its priorities included “continuous growth and development,” which could be achieved by further production in Columbia (Schotter & Teagarden, 2020, p. 10). However, the company violated its own duty of conducting business lawfully and openly. Moreover, employees continued working under the threat of paramilitary forces, which meant that their lives remained in danger. Therefore, Chiquita’s decision was not the most appropriate practice, since by focusing on improving its business performance, the company ignored the principles of ethics and legitimacy.
According to the company’s intentions, it is possible to say that it applied the ethical theory of utilitarianism. Within this framework, the morally correct option is the one that leads to the best outcome (Arnold et al., 2019). In this case, Chiquita’s choice can be justified, as the company intended to protect the lives of its workers by conducting payments to the paramilitary group. At the same time, the company could have used the individualist theory, focusing on the maximization of profit through legal methods.
By relocating its production to a safer region, the company could have secured the lives of employees. This solution also seems ethical from the virtuous perspective, based on the social benefit (Arnold et al., 2019). By closing its operations in the dangerous area of Columbia, the company would have demonstrated that the safety of its workers and adherence to the law are its top priority. In both cases, Chiquita’s appreciation of moral and legal principles would have positively influenced its reputation.
It is impossible to deny that profit maximization is an essential concern of any company and is a necessary condition for the satisfaction of employees. However, if I were the leader of Chiquita at the time of the conflict, I would have followed the principles of legitimacy and ethics. Bribing terrorist groups is not only against the law but also cannot guarantee the workers’ safety. As it was proved later, the company’s deals with terrorists resulted in consequent torturing and killing of some of the workers (Schotter & Teagarden, 2020).
Therefore, I consider the relocation of business the most appropriate solution despite the possible loss in profit. If I were the leader taking over Chiquita after this incident, I would try to create an image of the company where employee’s well-being comes before the organization’s success. By reconsidering workers’ insurance, closing operations in potentially dangerous regions, and launching green marketing campaigns, I would present Chiquita as a socially and environmentally responsible company acting according to its values.
The case described above is only one of the examples of an ethical dilemma in business. It demonstrates that Chiquita’s inadequate reaction to political tensions and an establishment of wrong priorities led to significant financial losses and a tainted reputation. Therefore, every business decision may lead to both benefits and losses, and the company’s responsibility is to decide which solution would contribute more to its success and the community’s well-being.
Arnold, D.G., Beauchamp, T.L., & Bowie, N.E. (2019). Ethical theory and business (10th ed.). Cambridge University Press.
Schotter, A., & Teagarden, M. (2020). Blood bananas: Chiquita in Colombia. Thunderbird School of Global Management.