Arcor Case

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Arcor: Global Strategy and Local Turbulence

Globally the confectionary industry is a highly competitive industry and attractive in the emerging and developed markets. While North America and Western Europe accounted for over two-thirds of sales, the newer markets in less developed countries are still looked at as high profile targets by chocolate and candy companies. Confectionary companies are looking to expand more into emerging markets because of the fact they believe the life cycle of their product has begun to mature and plateau in the developed countries, meaning there will be fierce competition and not as much market share, while they can go to emerging markets and flourish. For emerging markets the consumers are more price conscious because of there are many low income households in these budding countries, while the US and U.K. were more brand sensitive. For these emerging markets the ingredients of the product were usually slightly less quality because the companies would be able to sell the chocolate or candy for cheaper. The chocolate industry is more concentrated than the candy market with the top four companies taking up 86% of the market share while the top four companies in candy only took up 17% of the market. Arcor was 13th on for worldwide confectionary sales.

The confectionary industry has many constraints due to consumer’s different tastes and preferences. Chocolate is described as an appealing snack for industrialized countries where it is a luxury for others. The brand for chocolate is more important than it is for candy. This is because there are luxury chocolate manufacturers like Godiva while for candy it isn’t looked at as a high quality good. For Americans their preference for candy and chocolate is to have a saltier taste, while Mexicans want a spicier taste, and Europeans want a sweeter taste.

In terms of suppliers the confectionary industry had traditionally long term contracts. For chocolate, inputs included milk,...
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