Chiquita Brands Case

In: Business and Management

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Q1.) In 1994, Keith Linder has some problems. What are they? Ans: The European Union (EU) neared completion of its single market, it began to adopt series of import restrictions, which threatened Chiquita’s sales, market share slide significantly which combined with mounting annual losses. Chiquita’s cash balances had fallen to $179 million from $712 million. A staggering $.13 billion in value had been destroyed, an amount which represented 66% of firm’s 1991 net worth
Q2) Exactly what is the EU Policy? And how does it promise to affect Chiquita? Ans: in 1975, with the adoption of the ACP-EEC convention of Lome most members of the EC provided preferential access to banana imports from developing countries in the ACP region. These countries which were essentially the former colonies of Britain and France were granted tariff- free access to the EC market, while banana imports from other regions, including Latin America, faced a variety of restraints that differed widely across each of the countries in the community. Imports from EC territories (Martinique, Guadeloupe, the Canary Islands, Crete, and Madeira), like imports from ACP countries, were given duty-free access to all markets within the community. In 1993, The EU adopted new policy regarding import of bananas in Europe, Third-country imports would be taxed at rate of 30%, on excess of 2 million tons of import would be taxed over 250%, making it impossible for third country to export more than 2 million tons. Traditional ACP imports would not be taxed; Non- Traditional ACP imports would face tax of 222%. EC imports would be treated same as ACP
Q3) Why does the EU have this policy? What it is designed to do?
Ans: Germany lacked any banana producing former colony, it was a free market for bananas in the European community. Germany accorded duty-free access to imports from all source at the level of…...

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