Arcor: Global Strategy and Local Turbulence

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The paper begins with an overview of the confectionery industry and its substantial competitiveness among other industries in the market and states that Western Europe and North America contributed to two-thirds of its sales. Consumers of this industry comprised mostly of teens and adults, who bought chocolates and candy products in very high quantities. Among chocolate and candy, statistics show that 86 percent of overall consumption is due to chocolate, whereas 17 percent is due to candy, which shows significant profit to be belonging to chocolates. According to statistical details obtained, the leading confectionary producers and exporters were renowned chocolate companies like Nestle, Kraft, Hershey, and in this list, Arcor ranked 13th. Amongst the confectionary market, companies have varying categories of chocolate and candy based on their quality, shelf-life and taste (in turn depending on the way cocoa beans were picked and mixed.). The production process was complex, and due to transportation constraints, firms chose to be located near the suppliers for efficiency of time and capital and convenience of employees. Channels for distributing these confectionary goods were mostly supermarkets and self-supporting retailers. But distribution could be a frenzied task, as competition existed therein and creating awareness regarding the product’s reimbursement was necessary. Marketing was mainly via television advertisements. The article then pointed out Arcor and its origin and its journey of success under the sovereignty of Luis Pagani and the 300 percent rise in sales was proof of his efforts. The company’s goal was affordability in terms of prices, popular products in variety, and uncompromised quality of confectionary, and the company strived for these and achieved their desired goals to a huge extent. This brought Arcor corporation, the market, popularity and success it deserved and it spread as far as Brazil and Latin America and moving further overseas. Arcor was smart and diligent enough to develop supply chains of its own and preserved effective production facilities by spending adequate capital on improved technology for production. However, for Argentina, 2003 was the year of disaster. It suffered devaluation of currency, esteemed corporations shutting down and a massive financial crisis. In these times, the Arcor Group, which was one of the more fortunate enterprises to remain financially stable, underwent a change of plans. Arcor planned to put into operation a novel international strategy that would globalize the corporation with respect to distribution networks and facilitation in products. But for Arcor’s produce to spread far and wide across the world, it was primarily necessary for the corporation to have a firm ground at its country of origin, Argentina. Arcor being a stable corporation during the times, contributed in eradicating the adverse effects by increasing worker wages and giving out food necessities. They attempted to build symbiotic relationship with government as an attempt to develop transnational strategy which will act as a tradeoff. They reduced prices of their most popular products by altering the ratios of ingredients, in an attempt to keep sales continued and worked to bring in more revenue from exports by cost effective process of production. Arcor’s plans for globalization included expansion upto countries such as Latin America, North America, Europe, and Asia.

This article is an amalgamation of quite important lessons with respect to business because with its help, I could learn crisis management which is essential in business because there are ups and downs all the time, sometimes within the firm, and sometimes in the world outside too and for businesses to flourish, employees and enterprise owners need to be prepared to face anything. We also get the lesson that the key to important decision making in the face of uncertain times is dependent on the analysis of pros and cons and a long term thought process of the consequences of the decisions. Moreover, the article provides an insight into globalization practices and how to formulate effective strategies to accomplish those for the success of the enterprise.

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