Thursday, March 29, 2012

Do Crises Have Long-Term Effects on Companies?

It depends on the company you’re talking about.

In some cases, like the case of former energy giant Enron, a crisis can destroy a reputation in a heartbeat. However, in other cases the effects do not seem as long-lasting.

Take Chiquita, harvester of bananas, avocados and all types
of delicious fruits and vegetables. In 2007, Chiquita admitted in federal court
to funding Colombian paramilitary organizations for a period of approximately
seven years. These paramilitary organizations were labeled as terrorist
organizations by the U.S. government.

So, why was Chiquita funding these Colombian terrorist
organizations? These organizations were used to squash unions and intimidate
union leaders, keeping the price of Chiquita products down in the U.S. The groups’ preferred methods? Massacres and targeted killings.

Chiquita was accused of wide-spread human rights violations and was sued in domestic courts under the Alien Tort Statute. If there was ever a crisis, this was it.

Fast-forward to 2012. Chiquita still controls over 40% of the U.S. banana market. It is still a major fruit company and makes billions of dollars every year.

We vilify companies such as Enron and Solyndra for financial and investment crimes, yet companies who do far worse are not held to the same standard. Companies are all affected by crises; however, the extent of the effect can vary significantly.


bdvideo said...

Good article. I had been wondering about this myself.

I still avoid Chiquita bananas.

Linda Dale said...

You just cant compare enron with chiquita. Chiquita was funding Colombian terrorist organizations for maintaining its market stand and also for keeping prices steady, while enron created was a scandal on a Richter scale. Enron manipulated there books and showed themselves as 100$ billion company which came to abrupt stop within months. I feel, it is the companies which use unfair means to make money show long-term effects, rather than the ones who use wrong ways to keep a check on the employees and unions.