Friday, October 23, 2009

Bananas


I read Bananas: How United Fruit Company Shaped the World by Peter Chapman to discover what strategies multinational companies use to grow and how those strategies fail. Here's an interesting list of how tos:


  • Marry into the government.  One of the original founders of UF, Minor Keith, married a daughter of the former president of Costa Rica where he was establishing banana fields as a side business to putting in a railroad for the country.
  •  Invade the country with a company army. Ex. Sam the Banana Man invaded Honduras and overthrew the government.
  •  Control all the resources that others could use to compete with you.  In this case, buying up all the land in South America that would be good for growing bananas.
  • Monopolize infrastructure critical to country growth. In United Fruit's case it was primarily railroads.


UF had the resources that the country lacked such as cash, jobs, know-how. Countries become dependent on large companies. 

This book is particularly interesting given the current focus on globalization. In fact, Chapman compares the current globalisation trend to jungle capitalism practiced by “market states”. He also reveals different governments' motivations for supporting or withdrawing support from United Fruit depending on the tolerance of constituents.  He also shows the link between United Fruits' business in Cuba and the Bay of Pigs invasion.   

Quite an enlightening read on strategy.

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