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Chiquita's global turnaround
- 1. Chiquita’s Global Turnaround Group 7: Ebru Ozdemir, Honglin Wang, Ian Tan Xin Yuan, Sandra Schilling Nielsen, Ruhi Pitre
- 2. Case Overview ● Multinational producer, distributor, marketer of bananas and other fresh produce ● Explores Chiquita’s human resource management (HRM) strategies ○ Goal of increased corporate social responsibility.
- 3. Table of Contents 1. Introduction to Chiquita 2. Historical Approach to HRM 3. Chiquita’s Global Corporate Responsibility ○ Effect on Stakeholders ○ Possible Conflicts 4. Challenges of HRM in the Global Supply Chain 5. Future Challenges
- 5. Historical Approach to HRM ● Legacy of United Fruit Company ○ Child labour, unsafe conditions, sexual discrimination, low wages, and accusations of brutality against unionizing workers. ○ Alleged participation in labour rights suppression in Columbia in 1920s ○ Involvement in Honduras bribery scandal in 1975. ● 1980s and 1990s ○ Cold, uncaring, indifferent ○ Task-focused (at expense of employees or ethics) ○ Defensive and protective culture ○ Closed-door impression of its policies and politics.
- 6. Chiquita’s Global Corporate Responsibility New approaches in HRM and global supply chain management. ● Four key values ○ Integrity: focus on ethics and legality. ○ Respect: towards employees and their different backgrounds and cultures. ○ Opportunity: the importance of giving employees the opportunity to learn and evolve in their fields ○ Responsibility: focus on the environment, product quality and customer satisfaction
- 7. Chiquita’s Global Corporate Responsibility ● Actions: ○ Partnerships with bodies such as Rainforest Alliance and Better Banana Project ○ 2001: agreement with the International Union of Food Workers and COLSIBA ○ 2006 corporate responsibility report: 100% farms certified by ■ Rainforest Alliance: Environment ■ SA 8000: Employee working condition standards ■ EurepGAP : Food safety standards
- 8. Effects of CSR on Chiquita Stakeholders ● Workers: Benefit from better working conditions ○ Improved relations with unions ● Investors: Sustainable monetary growth. ○ Good reputation can boost sales ○ 2003, estimated reduction of production spending by $100 million following $20 million CSR commitment to reduce agrochemical use.. ● Environmental groups: Various causes furthered by Chiquita’s initiatives ● Customers: Can buy their bananas with a clear conscience ● Suppliers: Getting a favourable sale, and consistent partnership
- 9. CSR Conflicts between Owners/Stakeholders ● Conflict between worker safety and legal issues ○ 2007 fine for payments to Colombian paramilitary groups (considered terrorists) to keep workers safe ● Some CSR efforts may not be profitable ○ Stakeholder interests may be mutually exclusive ○ Certain stakeholders benefit (e.g. Green Activists, Workers) ○ But shareholders lose out (Lower company bottom line)
- 10. Human Resource Management Challenges ● 19,000 employees working on more than 100 banana farms (Latin America) As Purchaser As Producer/Supplier ● Banana industry has long supported child labour, unsafe conditions, etc. ● Avoid sourcing from these places to prevent bad reputation ● Relationships between suppliers and workers’ unions are critical for success. ● Chiquita has to provide basic services (e.g. electricity, water) and ensure good conditions for their workers.
- 11. Future Challenges for Chiquita ● Intense competition in the industry leads to low margins. ○ Differentiating themselves from their competitors ○ Performing CSR while still staying profitable ● Heavily dependant on banana prices and consumer demand ● Production easily affected by epidemics / crop diseases
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