Porter Model Analysis of International Companies of Argentina

7/30/2019 Porter Model Analysis of International Companies of Argentina

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INSTITUTE OF EDUCATIONAL EDUCATION

AND RESEACH

TRIM -3

2011-2013

INTERNATIONAL BUSINESS ENVIORNMENT

Assignment -1

Porter Model Analysis of International Companies of

Argentina

Submitted By-

AdityaPratap Singh

AnujMehrotra

Ravi Kant Sharma

Subm i t te d To -

P ro f. Uddeepa n

Cha t te r j ee


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ARGENTINA

COUNTRY

SNAPSHOT

Argentina officially the Argentine Republic , is the second

largest country in South America by land area, after Brazil.

It is constituted as a federation of 23 provinces and an

autonomous city, Buenos Aires. It is the eighth-largest

country in the world by land area and the largest amongSpanish-speaking nations.

Argentina's continental area is between the Andes mountain

range in the west and the Atlantic Ocean in the east. It

borders Paraguay and Bolivia to the north, Brazil and

Uruguay to the northeast, and Chile to the west and south

Argentina is the third largest market in Latin

America with a GDP of 338 billion dollars, after

Brazil and Mexico. It has the potential to be one of

the richest countries in the region as well as in theworld. In fact, it was among the top ten richest

countries of the world in the early twentieth century.

It is now in the process of reconfiguring its market

and mindset to become a prosperous country again.


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INTRODUCTION OF ARGENTINA

8th largest country in terms of surface area, 2nd in Latin America.

High level of Human Development (HDI UNDP): 2nd place in

Latin America

One of the highest rates of literacy (98 %) and school-lifeexpectancy (15.6 years) in Latin America.

English level among the highest in the developing world.

Argentina the Latin American country with the highest number

of Nobel prizes in sciences (three), ranking fourth among

developing countries.

Density of fixed and mobile lines (152 subscriptions per 100

inhabitants): highest in Latin America.


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Argentina has a population of 40 million which is a homogeneous stock of European origin mainly from Spain and Italy- speaking a single language and belonging to one faith (Catholic).

There are no ethnic, linguistic, religious strifes. The literacy rate is 97 per cent and the human

resources have a range of good quality skills. The Indian companies operating in Argentina

employing 1500 Argentines are impressed and happy with the quality of human resources and

the range and depth of the Argentine skill sets. There is a strong base of expertise in science

and technology including in IT and nuclear energy. Many Multinational Corporations including

MTV use Argentina as the centre of creative work and production for the Spanish- speaking

world. IBM and other IT companies have established off-shore centres of software development,

BPOs and KPOs.

Government

Type: Republic.

Constitution: 1853; revised 1994.

Independence: 1816.

Branches: Executive--(72-member Senate, 257-member Chamber of Deputies). Judicial--

Supreme Court, federal and provincial trial courts.

Administrative subdivisions: 23 provinces and one autonomous district (Federal Capital).

Political parties: Peronist (Justicialist, PJ), Radical Civic Union (UCR), numerous smaller

national and provincial parties.

Suffrage: Compulsory for adults aged 18-70; optional for those over 70.

Argentina is the third largest market in Latin America with a GDP of 386 billion dollars, after

Brazil and Mexico. It has the potential to be one of the richest countries in the region as well as

in the world. In fact, it was among the top ten richest countries of the world in the early twentieth

century

Argentina was one of the most developed countries in the beginning of the twentieth century. Ithad the earliest railroads, metro and industrial development. Buenos Aires city was built like the

Paris of Latin America with elegant parks, public buildings, apartment blocks, theatres, cafes,

restaurants and bars . Even now Buenos Aires stands out as the most well organized, elegant and

stylish city of Latin America. Argentina has the most sophisticated and beautiful country clubs

and golf and ski resorts in the region.


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Selected Economies: GDP growth 2003-2011

Argentina Industries?????

Argentina's economy has traditionally been based on agriculture, but the industrial andservice sectors have also grown in importance in recent years. Livestock (cattle and sheep) and

grains have long been the bulwark of its wealth; its cattle herds are among the world's finest. As

an exporter of wheat, corn, flax, oats, beef, mutton, hides, and wool, Argentina rivals the United

States, Canada, and Australia. Its other agricultural products include oilseeds, lemons, soybeans,

grapes, and tobacco. Argentina is the world's largest source of tannin and linseed oil. The Pampa

is the nation's chief agricultural area; however, since the 1930s there has been a great rise in

production in other areas, especially in the oases of the Monte and the irrigated valleys of N

Patagonia.

MAJOR INDUSTRIES ARE:-

1. Agriculture Industry

2. Food Processing


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3. Natural reserves

4. Manufacturing Industries

5. Chemical And Petrochemical

6. Mining Idustries

AGRICULTURE INDUSTRIES (AGRICULTURE GROWTH)

Argentina is an agricultural power. It produces 100 million tons of food products and exportsmore than 50 million tons. Argentina is the second largest producer of agricultural commodities

and livestock after USA. It is a large exporter of wheat, soya and meat. It is the worlds largest

exporter of soy oil and sunflower oil, the second largest exporter of corn, third largest producerof beef , soyabeans and biodiesel and fourth largest of wheat. Argentina is the fifth largest

producer of wine in the world.

Argentina is using at present only 34 million hectares for agriculture. They can easily

double the area of cultivation and volume of production. Argentina has a large area -almost equal

to that of India- with a variety of fertile soils and climates. There are abundant water resources.

Agribusiness is the mainstay of the economy and exports. It is modern, large-scale and globally

competitive. While in USA and EU, agro-exports are subsidized, the Argentine government

imposes an export tax of over 30 per cent for some commodities and still the exports

arecompetitive.

Argentina has a large area -almost equal to that of India- with variety of fertile soils and

climates. There are abundant water resources. The climate is congenial without extremes. It

ranges from the warm northern parts to the cold Patagonia in the south lending itself for growing

different crops. The famous Pampa region of Argentina , the vast fertile plains, is one of the

most productive regions in the world. Most of the farming is done in a commercial scale by large

landowners holding thousands of hectares. Most of the farms are managed by professionals who

have studied agronomy. They are supported by an excellent network of research and

development laboratories.

THE SOYBEAN AGRIBUSINESS SYSTEM IN ARGENTINA:

Soybean and sub-products demand has also been promoted by events concerning European Union

public health measures (due to BSE outbreak), which, since 2003, led to banning animal proteins

as cattle food. These events determined the fact that the European Union became a major

importer of soybean and by-products, especially of protein flours, as well as maize processing


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industry product

Argentina has become a leading player on a global scale in soybean production (3rd place

following the U.S. and Brazil), as well as in its processing, occupying the first place in soy flour

and oil exportation. Active policies on biofuels development that other countries are promoting

also boosted Argentine soy oil demand.

Companies are.

Futvent Sa

Argensoja Sa Argentina

Argensoja Sa Argentina

Globaltrade Import-Export Argentina Argentina

Valor Natural Ltd. Argentina

FOOD PROCESSING

Argentina has developed an efficient infrastructure, logistics and network for transportation and

shipping. The river ports around Rosario connect to the grain silos and agro processing plants.

The food processing industries of Argentina are one of the most advanced in the world and

globaly competitive. For example, the oil crushing capacity of Argentina is the third highest in
http://www.list-of-companies.org/Details/10342136/Argentina/Futvent_SA/http://www.list-of-companies.org/Details/10341834/Argentina/Argensoja_SA/http://www.list-of-companies.org/Argentina/http://www.list-of-companies.org/Argentina/http://www.list-of-companies.org/Details/10341834/Argentina/Argensoja_SA/http://www.list-of-companies.org/Argentina/http://www.list-of-companies.org/Argentina/http://www.list-of-companies.org/Details/10341982/Argentina/Globaltrade_Import-Export_Argentina/http://www.list-of-companies.org/Argentina/http://www.list-of-companies.org/Argentina/http://www.list-of-companies.org/Details/10233846/Argentina/Valor_Natural_Ltd_/http://www.list-of-companies.org/Details/10233846/Argentina/Valor_Natural_Ltd_/http://www.list-of-companies.org/Argentina/http://www.list-of-companies.org/Argentina/http://www.list-of-companies.org/Details/10341834/Argentina/Argensoja_SA/http://www.list-of-companies.org/Argentina/http://www.list-of-companies.org/Details/10341834/Argentina/Argensoja_SA/http://www.list-of-companies.org/Argentina/http://www.list-of-companies.org/Details/10341982/Argentina/Globaltrade_Import-Export_Argentina/http://www.list-of-companies.org/Argentina/http://www.list-of-companies.org/Details/10233846/Argentina/Valor_Natural_Ltd_/http://www.list-of-companies.org/Argentina/http://www.list-of-companies.org/Details/10342136/Argentina/Futvent_SA/


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the world- even ahead of Brazil- with the latest technology and plants. The commercialization of

agribusiness is done by well established Commodity Exchanges specializing in cereals and other

agroproducts in Buenos Aires and Rosario.

Packing and processing of foodstuffs is the oldest and most important industry in Argentina.

Beginning in the last part of the 19th century, the great frigorficos, or meat-packing plants, werefounded to prepare beef for export to Europe. In recent times, the Argentine government has

entered directly into the meat-processing enterprises, which for many years were under

Thus it is evident that Argentina is well-placed to become a global agricultural power in the

coming decades in which food shortage is going to be one of the main concerns of the world.

Santa Fe, with zinc- and copper-smelting plants, flour mills, and dairy industry

NATURAL RESERVES

Argentina is self-sufficient in energy and a net exporter of oil and gas. It produces 800,000

billion per day of crude oil of which 300,000 bpd is exported. It has two billion barrels of

reserves. Off-shore exploration has only now been started and the land area is under-explored.


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Argentina is the second largest gas producer (50 billion cubic metres) in Latin America and

exports to Chile.

Gas and Oil are important resources being increasingly exported to the neighboring countries

and to the world market. Together with mining products they make out for 15% of total exports.

The Future of Argentina Oil and Gas Industry to 2020- provide a comprehensive overview of the

Argentina oil and gas sector, covering the entire value chain of the industry. It analyzes and

forecasts each of the oil and gas segments in Argentina including upstream sector, pipeline,

refinery, LNG and storage sectors

Argentina has significant reserves of gold, silver, zinc, uranium, copper, phosphate and iron. The

mineral resources have not yet been fully explored yet.

MANUFACTURING INDUSTRIES

The Argentine manufacturing industry is relatively large and diversified. It is strong in food

processing, automobiles, auto parts, engineering, metallurgy, pharmaceuticals and

biotechnology. Argentina is a pioneer in the world in the development and use of CNG

technology. Some Argentine companies are globally competitive in pharmaceuticals,

biotechnology, CNG technology, hydroelectric power machinery and niche engineering fields.

Among Argentinas manufacture goods are processed food, textiles, clothing, metallic and non-

metallic mineral products, wood products, paper, pharmaceutical products, chemicals and

petrochemical products, aluminum, steel, cars, electrical machinery and appliances, machinetools, turbines, cranes, agriculture machinery, and space and nuclear products.

Construction, engineering and consultancy activities have developed to an important stage,

extending to the Latin-American market and other countries.

INDUSTRIAL INDUSTRIES

Crdobais Argentina's major industrial center. It is the center of metalworking, especiallyfor motor vehicle production. Argentina's other principal industrial enterprises are heavily

concentrated in and around the city of Buenos Aires. The plants are close to both the many raw

materials imported by ship and the vast productive area of the pampas. The major industries in

Buenos Aires are food processing, motor vehicles, consumer durables, textiles, chemicals and

petrochemicals, printing, metallurgy, and steel. Other industrial areas include Rosario, with

important steel-producing plants and oil refineries, tractor and meat-packing plants, and

chemical and tanning industries


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MINING INDUSTRIES

THE ANDEAN MOUNTAINS PROVIDE ARGENTINA WITH RICH MINERAL

DEPOSITS. SOME OF THE MINERALS WHICH ARE BEING MINED AT PRESENT ARE,

COPPER, TIN, LEAD, ZINC, GOLD, SILVER, AND URANIUM. THE MAIN

EXPLOITATION OF COPPER AND GOLD, MINERA DE LA ALUMBRERA, IN THE

PROVINCE OF CATAMARCA, IS AN AUSTRALIAN VENTURE.

TOBACCO INDUSTRIES

The tobacco industry of Argentina produced 157,294 tons of tobacco harvest, most of which

(93,327 tons) was exported. The planted area was 831.75 km, of which 776 were harvested.

The tobacco industry is dominated by two transnational companies: Messalina Particulars S.A.

(a subsidiary of Philip Morris International, which sells the Marlboro brand, and which in turn is

associated with Tabacos Norte S.A.) and Nobleza Piccardo (a subsidiary of British American

Tobacco, which sells international brands such as Lucky Strike, Viceroy and Camel, as well as

national ones like Jockey and Derby).

Tobacco plays an important role in the economy of the producing areas, which are comparatively

poor provinces. The Argentine tobacco industry employs 500,000 people, about half of them

directly involved in the planting and harvesting, only about 2% in the manufacturing of the

derived products, and the rest in distribution and sales. Therefore, despite the fact that the

consequences of smoking are a major health issue in Argentina, the national government

supports the producers by means of a Tobacco Special Fund (Fondo Especial del Tabaco, FET),

which consists in a subsidy plus easier access to credit in order to modernize the industry.

TRANSPORTATION

The most widely-known national airline is Aerolineas Argentinas which has been operating for

more than 60 years. It covers nearly all the domestic routes and has also an important continental


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and inter-continental network. There are also other private airlines that have been growing in

recent years. Aerolineas Argentinas offers three direct flights a week between Sydney and

Buenos Aires, with a short stopover in Auckland, New Zealand.

Chemical and Petrochemical Industry of Argentina

Total annual production of chemical and petrochemical industry of Argentina is estimated at 5.5

mln. tons in 2006, with 40% of them being the products of basic chemistry, 30% - semi-

products and components, 30% - ready-made materials and finished products

The country has favourable prerequisites to develop its chemical and petrochemical industry:

availability of different kinds of chemical raw materials, oil self-sufficiency and discovering of

large natural gas deposits, relatively extensive network of pipelines, launching, with participation

of the government, a range of petrochemical centers (poles) to produce basic hydrocarbons.

Chemical enterprises and affiliates of the leading foreign companies are mainly concentrated in

gas and oil producing provinces (Buenos-Aires, La-Plate, Cordoba, Santa-Fe, Campana,

Neuken). Smaller oil refineries, with prevailing trend being primary distillation, are located in

extraction sites: San-Lorenzo, Campo-Duran, Plaza Huincul, Rio-Grande, Lujn de Cuyo


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In a Nut Shell various industries of Argentina

according to sector are

AgribusinessLargest agro-commodity exporters are:

1. Cargill-18 million tons,

2. Bunge-14 m tons,

3. Dreyfus-9 m tons,

4. AGD-6.5 m tons, Molinos -5.5 m tons.

Argentina has an international reputation for thoroughbred and polo horses. The

horse population is 3.3 million.

WineThe total number of vineyards are 27000 and wineries 1500.

The industry was earlier focussed on domestic consumption which is 40 litres per head per

year, sixth in the world ahead of Spain. Wine exports have been increasing in recent years,

reaching 1 bn dollars in 2010. Besides wine, Argentina exports Must and table grapes.

Malbec is the signature wine of Argentina.

Energy Repsol and Petrobras are the major oil producers.

It is the second largest gas producer (50 bn cu mts) in Latin America.

Total reserves are estimated to be 620 bn cu mts. It exports gas to Chile.

Argentina has the world's third largest shale gas reserves of 774 tcf

Argentina is a pioneer and largest user of CNG technology. Argentine companies have bee

exporting CNG conversion kits and technology to many countries. Galileo, a leader in

Argentina in CNG sector has supplied technology and equipments to India

Minerals Argentina has significant reserves of gold, silver, zinc, uranium, copper and iron. Mineral


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exports are around 3.6 billion

Industries are:-

1. Aluminio Argentino

2. S.A.I.C. (ALUAR),

3. Borax Argentina S.A.,

4. Cementos Loma Negra

5. C.I.A.S.A

Pharmaceutical The Argentine pharmaceutical market is valued at 4.7 billion dollars. There are 110laboratories in the country, of which 17 are international laboratories and the rest are

national. Market leaders are Bayer, Bag and Roemmers.

The top ten pharma companies are :

1. Roemmers,4.Elea,

2. Bag, Ivax Argentina, 5.Sanofi Aventis,

3. Gador , 6 Montpellier,

PORTERS GENERIC STRATEGY

Michael Porter has described a category scheme consisting of three general types ofstrategies that are commonly used by businesses to achieve and maintain competitive advantage.

These three generic strategies are defined along two dimensions: strategic scope and strategic

strength. Strategic scope is a demand-side dimension (Michael E. Porter was originally an

engineer, then an economist before he specialized in strategy) and looks at the size and

composition of the market you intend to target. Strategic strength is a supply-side dimension and

looks at the strength or core competency of the firm. In particular he identified two competencies

that he felt were most important: product differentiation and product cost (efficiency).


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He originally ranked each of the three dimensions (level of differentiation, relative product cost,

and scope of target market) as either low, medium, or high, and juxtaposed them in a three

dimensional matrix

PORTERS DISTINGUISHES 3 SEGMENTS

1. Cost Leadership Strategy

This strategy involves the firm winning market share by appealing to cost-conscious or price-

sensitive customers. This is achieved by having the lowest prices in the target market segment,or at least the lowest price to value ratio (price compared to what customers receive). To succeed

at offering the lowest price while still achieving profitability and a high return on investment, the

firm must be able to operate at a lower cost than its rivals. There are three main ways to achieve

this.

The first approach is achieving a high asset turnover. In service industries, this may mean for

example a restaurant that turns tables around very quickly, or an airline that turns around flights


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Chemical andPetrochemical

Plastic Industries

DifferentiationStrategy Cost Leadership

BroadMarketScope

WineAgricultureIndustries

Energy Natural reserves

Minerals Banking

Reserves Food Processing

ManufacturingIndustries

Transportation

UniquenessCompetency

Low CostCompetency

Thanking You

Documents

Porter Model Analysis of International Companies of Argentina