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Root and Cause of the Problem
Chiquita paid terrorist groups in Columbia from 1997 until 2004.
The industry problems in the case of Chiquita were connected to the increasing purchasing power of retailers, meaning that the company was in an inferior position and could not negotiate as effectively. Additionally, the sales of bananas from Latin America were compromised by Europes onerous tariff, and consumer preferences changed. All of these factors combined meant that Chiquita faced a lot of problems with selling its bananas, especially to the European markets, which made Chiquitas market position much more volatile than it was before.
The political context of the case is connected to the political instability in Columbia, the civil war, and the presence of major terrorist groups, which were particularly interested in the banana plantations. Hence, the overall political situation in Columbia at that time can be characterized as unstable. As Schotter and Teagarden (2019) note, Chiquita made some unfavorable choices that ruined the businesses reputation in an attempt to survive in a hostile political and economic environment. Mostly, the damaging environment and the scale of operations if Columbia did not allow Chiquita to focus on planting bananas in other states.
One should review the ethical considerations from two perspectives Chiquita paid terrorist groups, sustaining their existence. However, this was done to protect the employees of the company. The two terrorist groups, FARC and ELN, had more power than Columbias official government (Schotter & Teagarden, 2019). Moreover, the companys plantation in Columbia employs the most significant number of people when compared to others, being Chiquitas largest labor force source. Schotter and Teagarden (2019) note that one of the terrorist groups kidnapped and killed some of Chiquitas employees as a warning against not paying. Therefore, the dilemma faced by the executives was to ether refuse to cooperate with the terrorists and endanger the employees at the Columbian plantation or collaborate and maintain the business operations as usual.
Choices Available to Chiquita
Arguably, it is the duty of the Columbian government to ensure that businesses operating within the states territory are safe, and Chiquitas actions can be considered as damage control. As a result of cooperation with a paramilitary group in Columbia, Chiquita was fined for $25 million by the United States government, which means that the company would lose in either case (Schotter & Teagarden, 2019). However, considering the difficulty of the situation, one can argue that Chiquita did not have much choice, apart from resorting to a decision of paying the terrorists and continuing to work in Columbia.
Hence, the actions of Chiquitas executives were consistent with the companys duties they protected the employees, continuing to provide a safe workplace, and also ensured that the operations could be maintained outside Columbia. After all, Chiquita employed people in other states and had a responsibility before all of its employees to ensure that they can work and fulfill their duties. Alternatively, if the business were to withdraw operations in Columbia, arguably, Chiquita would have to reduce costs and possibly terminate any of its employees to remain afloat.
However, the approach taken by Chiquitas management does not reflect best practices. In this case, several options were available to Chiquita, for example, giving publicity to the threats and the inability of the Columbian government to protect foreign investments. However, this would indefinitely require Chiquita to seize operations in Columbia. Other options, such as cooperating with the United States government or openly talking about the threats, were also unavailable since the United States officials cannot affect the events, even concerning terrorists and risks, which occur under the jurisdiction of another state. The only issue is that the management of Chiquita did not withdraw operations in Columbia after it was warned by the United States officials, which was not the best choice leading to a fine and reputation damages.
Ethical Theories
In general, the following ethical theories can be used to explain the different options available to executives in cases similar to Chiquitas Consequentialism, Utilitarianism, Teleology, or Deontology. In this case, Chiquita followed the utilitarian approach, where the management prioritized collective welfare (Brooks & Dunn, 2018). Mainly, the well-being of the employees in Columbia, as well as the job security of others that depended on the ability to supply bananas from Columbia, was taken into consideration. If the management did not pay the terrorists, for example, by using virtue ethics because these actions are against a persons virtues (Brooks & Dunn, 2018). Hence, Chiquita decided to use the utilitarian approach, a branch o consequentialist ethics, where the ethics of an action are judged based on the benefit to the company and its employees mainly the safety and ability to work under stressful conditions of the external environment. However, Chiquita did not consider the long-term impact of its actions and the effect of them.
Chiquita should have used the teleology theory, especially after the companys management was warned about the unacceptability of working with terrorists or sponsoring them. This ethics theory implies that one should judge the action based on the outcome and considering the human virtues ( Virtue ethics, n.d.). In this case, the judgment should have regarded as a negative effect on the companys reputation and the financial damages that arose as a result of cooperating with a terrorist group. Undoubtedly, when cooperation with terrorists would be discovered, the company would be regarded as an unethical enterprise. This understanding arises from the essential human virtues and the nature of terrorism since the terrorist attack and harass people and organizations solely because they have power or access to weapons. It is against the human virtues to do so, and therefore, Chiquitas management should have used this way of judging the situation and refused to work in Columbia under these conditions.
Personal Perspective
Based on the reviewed ethical theories and context of the situation, if I were in charge of Chiquita at that time, I would recommend the management to contact international organizations and the government of the United States and report the threats. In addition, I would start developing a plan for transferring the banana plantation to a country with safer socio-economic conditions. This is because it is possible that even publicity and attention from the international organizations would not have any effect on the terrorists, and the government of Columbia has no power or authority to address these threats.
If I were taking over after this situation already occurred, I would have to focus on restoring the companys reputation. I would focus on developing a strong vision and a corporate social responsibility (CSR) strategy for Chiquita, which would demonstrate that the management learned the lesson and aims to invest resources in developing communities in states where terrorism is condemned. I would work on creating a strategy that would help communities in Latin America overcome poverty, for example, by allocating some profits to education initiatives or other social programs in the region.
References
Brooks, L.J., & Dunn, P. (2018). Business and professional ethics for directors, executives & accountants (8th ed.). Cengage Learning.
Schotter, A. & Teagarden, M. (2019). Blood bananas: Chiquita in Colombia. Thunderbirdb School of Global Management, 1-16.
Virtue ethics. (n.d.). 2020. Web.
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