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 Arcors global expansion step, and made it to rethink
companys 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
companys operations:

Product and Procurement:

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

Production:
- Resizing and reformulation of products was costly

Channels and Distribution:

- Shorten payment term
- Tighten restrictions fro retailors around payment

Marketing and Product Development:

- Cut down advertising cost and product
expenditure
- Focus more on consumer value

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 Argentinas. In order to cater
Mexico market, Arcor attended to build local distribution model
and master local tastes.

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.

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.

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.