¶ … growth for Chiquita, the 90s brought about serious challenges for the company, where they refer to difficult international trade regulations and a strenuous situation with its main market, the European one, or simply an approach that did not pay off in many situations. The report below will detail the issues that the company is facing, alternative solutions that it may adopt, as well as the optimal solution and ways of implementing it.
Current Problems
As we have seen from the case study, the beginning of the 90s meant a serious decline in stock price from $40 to $13.63, as well as three consecutive years of losses subsequent to 1991. These financial problems had reasonable explanations.
Perhaps the most important one is related to the creation of the Common Market in Europe, through the Maastricht Treaty, to which all 12 countries members of the European Union at that time adhered. On July 1, 1993, the European Union (at that time the European Community), adopted regulations that imposed a new banana import regime. This had a straightforward expression in the form of Community quotas, especially on import from Latin America.
There were several major regions on the globe that produced and exported bananas. The most important of this was Latin America, with 75% of the total global volume of shipments, followed by the Philippines (10%) and Africa, the Caribbean and the Pacific (ACP-10%). Because many of the countries in the ACP group had been former English, French, Spanish or Portuguese colonies, the European Community had every intention and every reason to favor them against Latin America, even if this would have brought about a commercial conflict with American companies, many of which...
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