Let´s continue with revenge strategy examples.
When we turn around the page to the 20th century, revenge wars or threats of war did not stop.

There are several sources of information in relation to the banana wars. And these conflicts have a simple root. Trade of a fruit which was nonexistent in the United States of America by the end of the 19th century. Guess which fruit are we talking about? It is about bananas. A company called UFCo or United Fruit Company decided to plant, produce and transport bananas from more than 12 countries in Central America and the Caribbean. And several conflicts emerged when they were operating in the region.

Tracking the origins of the United Fruit Company

In 1870 there was a Captain Lorenzo Dow Baker who bought bananas in Jamaica and sold them in Jersey City. A simple trade as such was a success. Baker decided to knock the door of a Bostonian entrepreneur Andrew Preston and both created the Boston Fruit Company. Preston was the owner of the large fleet of steamships, a crucial part of the logistics much needed to import bananas in volume to feed the Americans.

Thirty years later, another Bostonian entrepreneur who was living in Costa Rica, Minor C. Keith, approached Preston and Baker business and proposed to merge. Keith already had built railways in Central America and Colombia, owned lands in those countries, and was also involved in the banana export business. Keith, Preston, and Baker agreed to join efforts on March 30th, 1899. Complementary synergies triggered the deal, and the United Fruit Company was born. Since the demand for fresh imported fruit in the US was not fulfilled by its domestic market, the bananas business flourished. The mission of the United Fruit Company was to assure the efficiency of the banana value chain from production, logistics, distribution, and delivery, all-year-round at affordable prices during the 20th century.

The United Fruit Company developed in less than 30 years a production and distribution network between the countries in Central America, Colombia and the main tropical Caribbean islands to the United States and Britain. The presence of the United Fruit Company permitted the development of infrastructure much needed for their business (railways, ports, communication such as telegraph lines, warehouses, and transportation ships). The company became fully vertically integrated (backward and forward). It had ownership and control of its own inputs, by working in more than 500,000 acres of land and producing the bananas. At the same time, UFCo was the major shareholder of the shipping companies and fruit dispatch transportation-distribution entities, not only in the US but also in the British market. UFCo innovations were focused to produce resistant bananas, appropriate packaging and the facilitation of long-distance transportation of the fruit.

What was the issue with the banana industry in Latin America and the Caribbean?
The banana industry was led by a foreign corporation which immediately took advantage of these countries institutional and legal weaknesses, for their own benefit. When you read Gabriel García Márquez books, the history of these countries is a mirror of the context in which the UFCo operated.

When foreign corporations wish to work and settle in foreign lands, they look for easy business conditions or what they call business-friendly countries. The stakes of UFCo in our region were organized hand by hand with the governments of that time (the majority were dictators or military generals which were set up to facilitate UFCo´s operations). These governments gave generous concessions to their infrastructure logistic oeuvres in terms of land grants, tax incentives, port operations, reduction of labor unionism and military protection. “In some of the countries in which United Fruit operated it was the major employer and the largest investor in infrastructure”. Countries such as Guatemala, Costa Rica Panama, and Honduras relied on bananas for more than 60 percent of their total exports.

The operations of United Fruit in Central America and the Caribbean have been highly controversial. The enormous control the company had on these small banana republic economies, its labor conflicts in several countries, and its involvement in local politics (the company has been accused of conspiring against governments that were not on the company’s side), have led many scholars and fiction writers to inspire their books. As I mentioned previously, examples of these writers are Gabriel García Márquez (Colombia) and Miguel Angel Asturias (Guatemala). Gabriel García Marquez exposes this reality with delicacy at his novel “One Hundred Years of Solitude”. An article from the New York Times by Daniel Kurtz-Phelan describes it: “When the Banana Company arrives in Macondo, the jungle town in Gabriel García Márquez’s it brings with it first modernity and then doom. “Endowed with means that had been reserved for Divine Providence in former times,” García Márquez writes, the company “changed the pattern of the rains, accelerated the cycle of harvests and moved the river from where it had always been.” It imported “dictatorial foreigners” and “hired assassins with machetes” to run the town; it unleashed a “wave of bullets” on striking workers in the plaza. When the Banana Company leaves, Macondo is “in ruins.”

After World War II the United Fruit Company was forced to restructuring. It went from production to a marketing-sales company. Why? The rise of nationalistic governments and stronger labor unionism in Latin America made the company leaders to fell down by slipping over their own banana skins. In 1954 Guatemalan president Jacobo Arbenz (1913–1971) attempted to expropriate some of the company’s lands, the Honduran banana workers went on the biggest strike in the country’s history, and the U.S. government sued the company for failing to comply with antitrust legislation. According to some reliable sources, the government of the USA through its agencies were fully involved to protect the economic interests of UFCo. These events made United Fruit’s shareholders think that land ownership in Latin America increased the company’s risks, so in the 1960s the company gradually got rid of its plantations and railroads. It concentrated its efforts in the international logistics, distribution, sales, and marketing of bananas.

As time passed by, the United Fruit Company diversified its operations into processed food. “This transformation went further when the company merged with AMK Corporation and created a food conglomerate in 1970 called United Brands Company. In 1989 this conglomerate changed its name to Chiquita Brands International”. After Berlin´s wall collapse, the continuance of another banana trade war started. This happened later, in the context of Bill Clinton US Presidency. This new trade war will be described in my next publication, in conjunction with the strategic analysis, reflections and lessons learned.

I will stop here. But I will post twice this week. Let me return back with more on Friday. See you then. Thank you and blessings.

Source References utilized to write this article: Will be posted at the end of the next publication. Thank you.

Disclaimer: Illustrations in Watercolor are painted by Eleonora Escalante. All the presentation slides shown on this blog are prepared by Eleonora Escalante. Nevertheless, all the pictures or videos shown on this blog are not mine.  I do not own any of the lovely photos or images posted unless otherwise stated.  

Published by eleonoraescalantestrategy

Corporate Strategy Artist, San Salvador, El Salvador View all posts by eleonoraescalantestrategy