The Banana Wars Case
1. If you were a member of the Organization of American States and its Permanent Council, with which one would you side? First of all, it depends on your vision of the problem. As for me, I can see two different approaches to this problem: * Economics; * Social. If you will take first approach into consideration, you have to choose Latin American countries, because they were discriminated by EU during long period of time. They had a quota of 2. 2 million tons with a tariff for all banana ($1,150 per ton) and former colonies had a preferential access to the EU market.
Moreover, the unit-cost of production in the Caribbean is nearly 2. 5 times what it is for Latin American producers, so their product is much cheaper and easily to produce. As for social approach to this problem, you should choose the Caribbean countries, because banana exports are the mainstay of their economies, so they won’t win the competition of Latin American countries and their economies will fall down. Economics falls will affect lives of people in these countries, so in social approach you have to choose their side. 2. Given the WTO’s decision, what are the alternatives for the EU and the Caribbean banana growers?
As for EU, they will have cheaper price for banana in their countries. But if there is a local producer inside the country, he won’t survive in this competition with Latin American countries. Taking into consideration Caribbean banana growers, their future is not very optimistic, because their banana export will continue to decline due to Latin American competition, so their workforce will seek for a new job. But mainly all of those who will lose a job won’t find a new one, because in Caribbean countries banana exports are the mainstay of their economies.
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So they should concentrate more on tourism, rather than banana’s export, because, as it was said in the case, the minister of tourism estimated that every acre of land used for tourism is three times as profitable as one used for growing bananas. These steps will create more jobs for native people and will improve economic situation in these countries. 3. What types of strategic moves will an international marketing manager of Latin American banana exporter make? Well, first of all, he should improve export to EU after WTO’s agreement, because they have fewer tariffs, so they can compete with Caribbean countries.
So, he should make some advertising in EU countries in order to win the competition and decide what amount of bananas he should exports to EU markets. Moreover, he should find out about European’s attitude to bananas from Latin American countries. If it is not good enough, he should make some things in order to improve this attitude, such as: * He should show the good quality of his product; * He should show that during the process of gathering and delivering bananas, they follow health-code standards; * He should promote this product in EU markets; * And so on.
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