nternational companies of argentina

7/27/2019 nternational Companies of Argentina

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Comments-3.5,Analysis part not proper as per Porters Theory

INSTITUTE OF EDUCATIONAL EDUCATIONAND RESEACH

TRIM -3

2011-2013

INTERNATIONAL BUSINESS ENVIORNMENT

Assignment -1

Porter Model Analysis of International Companies of Argentina


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ARGENTINA

COUNTRYSNAPSHOT

Argentina officially the Argentine Republic , is the secondlargest country in South America by land area, after Brazil.It is constituted as a federation of 23 provinces and anautonomous 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 mountainrange in the west and the Atlantic Ocean in the east. It

borders Paraguay and Bolivia to the north, Brazil andUruguay to the northeast, and Chile to the west and south

Argentina is the third largest market in LatinAmerica with a GDP of 338 billion dollars, afterBrazil 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 richestcountries of the world in the early twentieth century.It is now in the process of reconfiguring its marketand mindset to become a prosperous country again.


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INTRODUCTION OF ARGENTINA

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

High level of Human Development (HDI UNDP): 2 nd place inLatin 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 numberof Nobel prizes in sciences (three), ranking fourth amongdeveloping countries.

Density of fixed and mobile lines (152 subscriptions per 100inhabitants): highest in Latin America.


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A rgentina 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 humanresources have a range of good quality skills. The Indian companies operating in Argentinaemploying 1500 Argentines are impressed and happy with the quality of human resources andthe range and depth of the Argentine skill sets. There is a strong base of expertise in scienceand technology including in IT and nuclear energy. Many Multinational Corporations includingMTV use Argentina as the centre of creative work and production for the Spanish- speakingworld. 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 asin the world. In fact, it was among the top ten richest countries of the world in the early twentiethcentury

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 theParis 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 andstylish city of Latin America. Argentina has the most sophisticated and beautiful country clubsand golf and ski resorts in the region.


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Selected Economies: GDP growth 2003-2011

Argentina Industries?????

A rgentina'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) andgrains have long been the bulwark of its wealth; its cattle herds are among the world's finest. Asan exporter of wheat, corn, flax, oats, beef, mutton, hides, and wool, Argentina rivals the UnitedStates, 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 Pampais 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)

A rgentina 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 commoditiesand 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 producer of 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 equalto 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 globallycompetitive. While in USA and EU, agro-exports are subsidized, the Argentine governmentimposes an export tax of over 30 per cent for some commodities and still the exportsarecompetitive.

Argentina has a large area -almost equal to that of India- with variety of fertile soils andclimates. There are abundant water resources. The climate is congenial without extremes. Itranges from the warm northern parts to the cold Patagonia in the south lending itself for growingdifferent crops. The famous Pampa region of Argentina , the vast fertile plains, is one of themost productive regions in the world. Most of the farming is done in a commercial scale by largelandowners holding thousands of hectares. Most of the farms are managed by professionals whohave studied agronomy. They are supported by an excellent network of research anddevelopment 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 proteinsas 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 productArgentina has become a leading player on a global scale in soybean production (3rd placefollowing 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 promotingalso 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 andshipping. 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 andglobaly 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 hasentered 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 thecoming 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 andexports to Chile.

Gas and Oil are important resources being increasingly exported to the neighboring countriesand 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 theArgentina oil and gas sector, covering the entire value chain of the industry. It analyzes andforecasts 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. Themineral resources have not yet been fully explored yet.

MANUFACTURING INDUSTRIESThe 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 CNGtechnology. 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

Crdoba is Argentina's major industrial center. It is the center of metalworking, especiallyfor motor vehicle production. Argentina's other principal industrial enterprises are heavilyconcentrated in and around the city of Buenos Aires. The plants are close to both the many rawmaterials imported by ship and the vast productive area of the pampas. The major industries inBuenos Aires are food processing, motor vehicles, consumer durables, textiles, chemicals and

petrochemicals, printing, metallurgy, and steel. Other industrial areas include Rosario, withimportant steel-producing plants and oil refineries, tractor and meat-packing plants, andchemical and tanning industries


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MINING INDUSTRIES

THE ANDEAN MOUNTAINS PROVIDE ARGENTINA WITH RICH MINERALDEPOSITS. SOME OF THE MINERALS WHICH ARE BEING MINED AT PRESENT ARE,COPPER, TIN, LEAD, ZINC, GOLD, SILVER, AND URANIUM. THE MAINEXPLOITATION OF COPPER AND GOLD, MINERA DE LA ALUMBRERA, IN THEPROVINCE 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 isassociated with Tabacos Norte S.A.) and Nobleza Piccardo (a subsidiary of British AmericanTobacco, which sells international brands such as Lucky Strike, Viceroy and Camel, as well asnational 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 themdirectly involved in the planting and harvesting, only about 2% in the manufacturing of thederived products, and the rest in distribution and sales. Therefore, despite the fact that theconsequences of smoking are a major health issue in Argentina, the national governmentsupports 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 inrecent years. Aerolineas Argentinas offers three direct flights a week between Sydney andBuenos 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 5.5mln. 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 participationof the government, a range of petrochemical centers (poles) to produce basic hydrocarbons.

Chemical enterprises and affiliates of the leading foreign companies are mainly concentrated ingas and oil producing provinces (Buenos-Aires, La-Plate, Cordoba, Santa-Fe, Campana,

Neuken). Smaller oil refineries, with prevailing trend being primary distillation, are located inextraction sites: San-Lorenzo, Campo-Duran, Plaza Huincul, Rio-Grande, Lujn de Cuyo


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In a Nut Shell various industries of Argentinaaccording 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. Thehorse 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 beenexporting 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

M ichael Porter has described a category scheme consisting of three general types of strategies that are commonly used by businesses to achieve and maintain competitive advantage.These three generic strategies are defined along two dimensions: strategic scope and strategicstrength. Strategic scope is a demand-side dimension (Michael E. Porter was originally anengineer, then an economist before he specialized in strategy) and looks at the size andcomposition of the market you intend to target. Strategic strength is a supply-side dimension andlooks at the strength or core competency of the firm. In particular he identified two competenciesthat 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 threedimensional 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 succeedat offering the lowest price while still achieving profitability and a high return on investment, thefirm must be able to operate at a lower cost than its rivals. There are three main ways to achievethis.

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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very fast. In manufacturing, it will involve production of high volumes of output. Theseapproaches mean fixed costs are spread over a larger number of units of the product or service,resulting in a lower unit cost, i.e. the firm hopes to take advantage of economies of scale andexperience curve effects

2. Differentiation Strategy

Differentiate the products in some way in order to compete successfully. Examples of thesuccessful use of a differentiation strategy are Hero Honda, Asian Paints, HLL, Nike athleticshoes, Perstorp BioProducts, Apple Computer, and Mercedes-Benz automobiles.

A differentiation strategy is appropriate where the target customer segment is not price-sensitive,the market is competitive or saturated, customers have very specific needs which are possiblyunder-served, and the firm has unique resources and capabilities which enable it to satisfy theseneeds in ways that are difficult to copy

3. Segmentation Strategy

In adopting a narrow focus, the company ideally focuses on a few target markets (alsocalled a segmentation strategy or niche strategy). These should be distinct groups withspecialized needs. The choice of offering low prices or differentiated products/services shoulddepend on the needs of the selected segment and the resources and capabilities of the firm.

Argentina Industries Based On Porters Model

Argentina Industriesbased on PorterStategy

NarrowMarketScope

SegmentationStrategy

Pharmaceutical


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Chemical andPetrochemicalPlastic Industries

DifferentiationStrategy Cost Leadership

BroadMarketScope

WineAgricultureIndustries

Energy Natural reservesMinerals BankingReserves Food Processing

ManufacturingIndustriesTransportation

UniquenessCompetency

Low CostCompetency

Thanking You

nternational companies of argentina

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