Reference no: EM132377356

Question:

You've read what Chiquita has done and how the courts have ruled (to date), but is there anything that Chiquita could have done differently to protect its employees adequately without paying the terrorists? In other words, what might a far-sighted top executive team have decided to do differently before the first payment was ever made?

Case Description:

Chiquita, a world leading American based produce supplier, is a multibillion dollar international company. Chiquita was founded in 1870 by Captain Lorenzo Dow Baker, merged with Fresh Express brand in 2005, and is immediately recognized by "Miss Chiquita" found as the focal point of their logo. Chiquita proclaims themselves to be a leader in social and environmental responsibility in the produce market, joining with the Rainforest Alliance to preserve biodiversity, and to make money, with core values of integrity, respect, opportunity, and responsibility. Despite these more recent efforts to put a positive light on the company, Chiquita has gotten into trouble after admitting before the U.S. Dept of Justice that they had paid money to the tune of $1.7 million over the course of 7 years to private militia groups in Columbia. Chiquita paid this money to appease these groups, believing that if they hadn't, more money would have to be paid out to make up for loss of product, damage to property, and possible injury to employed personnel. Upon further investigation into the case by the Justice Department, this same group whom Chiquita was paying money, then used the money to fund the alleged torture and killing of several hundred Columbians, causing huge uproar by those involved towards Chiquita. A formal suit was brought before Chiquita in a Florida District Court in 2007. Chiquita plead guilty to charges of funding these groups in Columbia, and paid the resulting fines and restitution settlements of $25 million.

The Stakeholders:

The stakeholders involved are all people employed by Chiquita, their immediate families, suppliers of Chiquita, retailers of Chiquita products, consumers of Chiquita retailers, all affiliates of Chiquita, and all of the citizens of Columbia attacked by the groups who received funding from Chiquita.

Individualist Perspective:

The individualist theory focuses on profit maximization by any legal means possible. From the Individualist/Friedman perspective, Chiquita acted in an unethical manner when choosing to pay money to local militia groups. Paying this group at the threat of retaliation from the group if Chiquita refused to pay is illegal within the country of Columbia where the particular plantation was located. The decision to be made from this perspective would be to open a plantation within a nation that maximizes profit, and is absent of such militia groups and such powerful extortionists. If it was legal for these groups to require money from landowners within their region of operation, this would not have been unethical according to the Individualist Theory of Economics.

Utilitarian Perspective:

The Utilitarian Theory of business ethics considers levels of happiness of all those involved in the business transaction under consideration. Profit maximization is an important part of the theory, as the desire to make money in business is understandable, however different from the Individualist Theory, it is not the first priority. It is also accepted that there may not be a solution that maximizes the happiness of all everyone involved, in which case the highest possible level of happiness is the choice that should be made. From a Utilitarian perspective, Chiquita's choice to build plantations in these environments was not an ethical one. The happiness of employees under constant threat of attack by volatile militant groups is not a maximum when compared to those employees in other prospective nations. The happiness of the employees who did eventually find out about the incident was also not maximized, and in most cases was minimized, losing the support of some consumers for life. The happiness of the natives within Columbia is also minimized. This is caused by the furthering of power of these groups, because the majority of the country is at their mercy, since now they can buy more munitions and armaments to commit atrocities with. If Chiquita had never set up an operation in this kind of environment, there would have been no legal case, and no bad publicity. The damage and loss of life would have been smaller, as well as greater happiness in the stakeholders.