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Arcor: Global Strategy and Local Turbulence LIU Zhongqing Arcor Group, Argentine confectionery manufacturer, founded in 1951. After 50 years’ development and expansion, it has become one of the leading confectionery manufacturers of the world. In 1999 financial crisis hit Argentina. Although Arcor had survived from the financial crisis, but inevitably worried its financial and market loss in Argentina. Meanwhile its international revenues had an increase in that period. This stopped Arcor’s global expansion step, and made it to rethink company’s international strategy. Arcor have to face a lot of challenges cause by this financial crises. Meanwhile, it has to make adjustment on several aspects of company’s operations: •

Product and Procurement: - Change packaging to reflect new price points - Reduce cost by changing the quantity and mix of inputs

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Production: - Resizing and reformulation of products was costly

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Channels and Distribution: - Shorten payment term - Tighten restrictions fro retailors around payment

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Marketing and Product Development:   - Cut down advertising cost and product expenditure - Focus more on consumer value    

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development

Governmental Relationships   - Require tax on export - Self-financing required to pay up front  

  Combined mentioned situation and its competitive advantages, Arcor adopted a multi-domestic strategy, tailored products and services to local market. It made a plan for international expansion according to

different regions: •

Latin America Arcor was the largest confectionery manufacturer in Latin America. It has a leading place in Brazil and Chile markets. After crisis, Arcor pay significant attention to the Mexican market, which was twice as large as the Argentina’s. In order to cater Mexico market, Arcor attended to build local distribution model and master local tastes.

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North America The United States and Canada are also large markets. Considering the high transportation costs and diversity of distribution channels, Arcor launched “alliance strategy”. Arcor signed a supply contract with Wal-Mart, to sell its products under “Whisper” and “Sweet Enticement” Canadian markets resembled U.S strategy.

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Europe Compared with U.S, transportation costs less in Europe. However, Argentine exports to European Union faced tariffs of about 35%. In addition, European markets were considered as competitive as the U.S markets, Arcor began to plan a expansion on it.

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Asia Asia is anther target for Arcor after crisis because of its enormous size of market. Arcor first entered the market using a Chinese importer called Sims. But it realized the market would eventually need local production and exclusive distribution network. As a result, Arcor planned to open sales office in Hongkong and to develop other Asian markets.