BanIva: Going Bananas for Diversification

A banana producer from Cote d’Ivoire exported the bulk of what they produced to the EU, selling the rest in African countries. They upgraded their production technologies to benefit from more efficient operations and achieve the quality demanded in the European markets where, as an ACP country exporter, they received preferential treatment. Their profit margins began to decline when that protection from the more efficient producers in Latin America diminished and competition increased at home. They contemplated what they should do. They could sell more in Europe but they needed to expand their farms; raising the required was not an option, given their low profit margins. Their options were to diversify to other crops, such as rubber, plantain, and teak or sell more in Africa, where they would be competitive because of their large capacity, proximity to the market, and technological advantages over other producers. A case to contemplate corporate strategy, particularly relating to producing behind protection and becoming competitive.