Arcor: Global strategy and local turbulence

Confectionary industry: Confectionary industry is highly competitive industry. North America and Western Europe accounted for 2/3 of its sales, confectionary company are targeting the emerging market which is very attractive for chocolate and candy companies. Consumer-Largely teens and adults are consumer of chocolate and candy products. Substitute- substitutes of confectionery products are snacks, dairy and bakery products which is easily available in the market. Competitors- c4 ratio for chocolate is very high (86%). But c4 ratio for candy is very low (17%). It means chocolate market is very competitive as compared to candy. Supplier power- supplier power is low because most of the firm has its own supplier. Entry barrier: chocolate- high, high investment requires. Candy low. Arcor: Arcor, worlds 13th largest and Argentinas largest confectionary manufacturer is planning an international growth strategy at a time when Argentina is recovering from the worst financial crisis. Arcor has grown both volume and value to be a global player in the confectionary industry. Arcor value proposition 1. Self-sufficiency in producing product input. 2. Low cost, high in volume and offering wide variety of products. 3. Efficient production capability. (1) Arcor global strategy Latin America: Taste preferences and consumption of Latin America is pretty similar to Argentina. So Neighboring country had historically been center of

attraction of Arcor. They already had distribution capabilities, sales force, local offices and multiple factories. Arcor had faced difficulty in Mexico because it lacked a good distribution model and had not mastered local tastes. North America USA: Arcor faced difficulty when it entered into the US. 1/3 of total global consumption of confectionary market is consumed by the US people. Market is huge and top player were already entered into the market. USA consumer placed high value on brand and premium products and Arcor was known for good value at an affordable price. USA market is 100% based on brand and services. But Arcor strategy was different for the America; they cant play branding game because of the communication and distribution channel needed. So they started supply contract with large company to sell its products under his level. Arcor plan for Canada was to use similar strategy to the one it had employed in the USA. Without overlooking differences between each market they were selling 60% of their product in super market under private brand. (2) Which region Arcor to prioritize: While export is declining in South America and it is increasing in North America. Arcor should focus on sugar confectionery market in US because market is fragmented and growing rapidly. The second best confectionery market for Arcor is Europe. Here Arcor should acquire small confectionery because market is too fragmented and the branding cost is low. Distribution to other European market is very easy, can operate from their base location. The third largest market for Arcor is Asia. Arcor should learn about the country context, local market and consumer in details. Submitted by: Avinash Kumar Singh (12a3hp029) sec-B