Edouard Beaude Shanghaï, November 2015

Global Strategy: Arcor global strategy, Local turbulence
Executive Summary: The following analysis will focus on studying the international development of Arcor, an Argentinian company producing chocolate and candies. The confectionary industry is a competitive industry with some major actors sharing the market on very specific market segment . Arcor’s has adopted a low-cost leadership strategy providing “Good quality at an affordable price”. Their main strengths are their complete vertical integration (See exhibit 2), their efficient distribution channels and their production capacities.
Arcor is growing at a strong pace and is expanding fast. However, the questions of which market and which distribution channels has quickly arisen. In order to provide more insights about the best market to penetrate, the historical strategy will be studied along with their competitive advantage. The consumers’ habits will be reviewed and the geographical specificities will be identified to highlight the key factors that will drive the expansion.

Issues / Problems: The international expansion of Arcor has highlighted some weaknesses of his model. The first and major problem is the transportation costs that are very high ending up being higher than the local standards. A second issue comes from the absence of marketing which create a strong barrier when they want to penetrate market where the customers value the brand. A third issue is a lack of strategic planning and the use of assumption as basis of the expansion’s strategy. All those issues combined with a very spread geographical positioning need to be improved in order to efficiently expand further.

Question 1: How would you characterize Arcor’s international strategy historically? What were its sources of competitive advantage, and how, if it all, did they vary