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Country Profile: Argentina By Siddharth S 1221335 Marketing LMN

Political and Legal:


Argentinas political structure is based on a traditional republican division of powers: executive, legislative and judicial. The executive branch is led by the President, elected for a term of four years with the option of re-election for one additional term. Both the President and Vice President, who also serves as the President of the Senate, are elected by direct vote. The National Congress, made up of the Senate and the Chamber of Deputies, represents the legislative branch. The 257 members of the Chamber of Deputies are elected for a four-year period. The Senate represents the 23 provinces and the City of Buenos Aires. Every two years, half of the Chamber of Deputies is reelected and the Senate is renewed by one third. The judicial branch is comprised of the Supreme Court of Justice, the National Council of the Magistracy and the lower courts. The judges are appointed by the President with approval of the Senate and the judges enjoy freedom of action and stability and may only be removed if found guilty of a serious misdemeanor by a jury made up of national legislators, magistrates and lawyers. Each of the 23 provinces has its own republican and representative constitution, which organizes its own powers (executive, legislative and judicial) and regulates the regime of municipal autonomy. The executive branch is lead by a governor elected by the people of each province. The provinces may pass laws on non-national issues, although the principle common laws (civil, trade, criminal, labor, social security and mining) are the part of the National Congress. The City of Buenos Aires also has its own constitution establishing the division of power. The head of the government of the City of Buenos Aires represents the executive power.

The Legal system of Argentina is a Civil law legal system the two pillars of the civil system are the Constitution of Argentina (1853) and the Civil Code of Argentina (1871) Both federal and provincial courts administer Justice. The Federal courts deal with cases that are on a national scale or those to which different provinces or inhabitants of different provinces are parties. The Supreme Court, which supervises and regulates all other federal courts, is composed of nine members nominated by the president and confirmed by the Senate. Other federal courts include nine appellate courts, with three judges for each; single judge district courts, at least one for each province; and one-judge territorial courts. The federal courts may not decide political questions. The president appoints judges of the lower courts. Provincial courts include supreme courts, appellate courts, courts of first instance, and minor courts of justices of the peace and of the market judges. The provincial governors appoint members of provincial courts. Trial by jury was authorized by the 1853 constitution for criminal cases, but its establishment was left to the discretion of congress, resulting in sporadic use. In 1992, a system of oral public trials was instituted in order to speed up the judicial process while improving the protection of procedural rights of criminal defendants. In practice, there is not a truly independent judiciary and the courts lack power to enforce orders against the executive. In 1989, President Menem, in a court-packing maneuver, expanded the number of Supreme Court justices from five to nine. In 2003, shortly after taking office, President Nstor Kirchner signaled his intention to remove some of Menems appointees and to strengthen the judiciary by undoing some of Menems moves that turned the Supreme Court into a political ally of the president rather than an autonomous power of the state. Formal and informal constitutional accusation against Menem-appointed Supreme Court justices between 2003 and 2005 allowed Kirchner to appoint new justices and by doing so he issued a degree limiting the powers of the president of the republic to appoint judges to the Supreme Court.

The constitution prohibits arbitrary interference with privacy, family, home or correspondence. The government respects these provisions. The constitution prohibits torture; however, police brutality and exploitation of power remains a serious problem. The judicial system is also subject to delays, resulting in lengthy pretrial detention. In regard to the political scenario, Argentinas political upheaval in late 2001 that led to the resignation of President Fernando de la Rua must be viewed as a historical event in its political history. Before 1930, Argentina enjoyed around 70 years of political stability that facilitated rapid economic development and made Argentina one of the worlds wealthiest countries. It ranked seventh in the world in per capita income in the 1920s but from 1930 until 1983, Argentina experienced significant political instability, characterized by numerous military coups, 25 presidents, 22 years of military rule, and 13 years of Peronism a form of Corporate Nationalism When the military intervened in 1943, the regime came to be dominated by a colonel serving as Secretary of Labor, Juan Peron, who went on to build a formidable political base through support from the rapidly growing union movement. Perons mobilization of the working class had an enduring effect on Argentinas political system over the next four decades. Even when Peron was ousted by the military in 1955, Peronism as a political movement survived despite attempts by the military and anti-Peronist sectors to defeat it. After his ouster, a series of civilian and military governments ruled until 1973 when Peron was reelected to office after 18 years of exile. Just a year later, however, Peron died and was succeeded by his second wife Isabel, who had little political experience. Economic and political chaos ensued, with political violence surging and Argentina experiencing its first bout of hyperinflation. As a result, the military intervened once again in 1976, but this time ruled directly until 1983, when it fell into disrepute in the aftermath of its failure in the Falkland Islands war with Great Britain in 1982. It was during this period that the military conducted the so-called Dirty War against leftists, guerrillas, and their sympathizers, and thousands of Argentines disappeared. In 1983, Argentina returned to civilian democratic rule with the election of Raul Alfonsin of the moderate Radical Civic Union (UCR). Alfonsin was widely credited with restoring

democratic institutions, but economic conditions during his tenure were chaotic, with hyperinflation and considerable labor problems. The winner of the 1989 election, Carlos Menem of the Justicialist Party took office early and Alfonsin left six months before the end of his term Menem transformed Argentina from a state-dominated protectionist economy to one committed to free market principles and open to trade. Most state enterprises were privatized; hyperinflation was eliminated; and the economy was opened up to foreign trade and investment. In 1991, the government pegged the Argentine peso to the U.S. dollar and limited the printing of pesos to the extent that they were backed by U.S. dollars, a policy that helped keep inflation in check, but became a major factor in Argentinas recent financial turmoil. (The dollar peg led to an overvaluation of the peso, and continued overspending led to large increases in external debt.) Menem broke with the traditional Peronist protectionist policies favorable to the working-class and labor but still yet steady increase in corruption and high unemployment at the end of his second term were factors that led to the defeat of his party in the October 1999 elections. Fernando de la Rua won the October 1999 presidential race. Although there was initial optimism when de la Rua took office in December 1999, that optimism had faded by the end of 2000 because of doubts about the governments ability to bring about economic recovery and because of corruption in the administration. The government though it negotiated several financial arrangements with the IMF in 2000 and 2001, it was unable to fulfill condition imposed by the IMF relating to spending cuts. The IMF ultimately declined further financial support in December 2001, because Argentina could not produce a balanced budget. Argentines began rapidly withdrawing dollars from banks until the government limited withdrawals to $1,000 per month. The denial of access to bank funds, combined with already high poverty and unemployment rates after four years of recession, sparked widespread opposition to the government. As confidence in the government was shaken, widespread demonstrations erupted around the country, with thousands calling for the Presidents resignation. Protests turned violent with rioters battling police with stones and bottles. As a result of the violent protests,

President de la Rua fled the presidential palace and resigned on December 20, 2001, paving the way for a series of interim presidents from the Peronist party. Peronist Senator Eduardo Duhalde ultimately became president on January 1, 2002, with a mandate from Congress to serve out the remainder of de la Ruas term. Duhalde, who had been Vice President under Menem from 1989-1991, Governor of the Buenos Aires province, and the PJs 1999 presidential candidate, was one of the most well-known and powerful Peronist leaders. President Duhalde faced daunting political and economic challenges when he assumed office, most significantly the ability to quell social unrest associated with the countrys financial instability. Protests against banks and politicians continued in the first half of 2002, but the widespread social violence of December 2001 was not repeated, and the Duhalde government survived. Duhalde initially promised such populist measures as increasing the states role in the economy and protecting local industries, but he did not pursue a protectionist economic model. In the end, the Argentine economy stabilized under the Duhalde government. As part of his economic plan, Duhalde abandoned the Argentine currencys one-to-one peg to the U.S. dollar that had been in place since 1991 and ultimately adopted a unified floating exchange rate in February 2002. While the Duhalde government was unable to secure IMF financing in 2002 because of lack of progress on key fiscal and other structural reforms, it did secure a seven-month IMF arrangement in January 2003, valued at almost $3 billion. The Duhalde government was also able to clear Argentinas arrears with the World Bank and the Inter-American Development Bank, which allowed new loans in early 2003 to finance social safety net programs in order to reduce the impact of the economic crisis on the poor. President Kirchner whose bold policy moves in the areas of human rights, institutional reform, followed by him and economic policy have helped restore Argentines faith in government. Upon taking office, President Kirchner purged the militarys top officers and vowed to prosecute current and retired military officials responsible for human rights violations conducted during the last era of military rule.

In the economic arena, the Kirchner government has overseen a strong revival of the Argentine economy, with economic growth rates of 8.8% in 2003, 9% in 2004, 9.2% in 2005, and an estimated growth rate of 7.8% in 2006. Unemployment decreased from a high of about 24% in 2002 to about 11% in early 2006. In June 2005, the Kirchner government was successful in restructuring more than $100 billion in defaulted bond debt saving the country more than $67 billion in the largest debt-reduction ever achieved by a developing country. Although Argentinas macroeconomic recovery has been impressive, many poor and middle-class Argentines have yet to see major improvements in living standards. Although poverty rates have declined over the past three years, about 34% of the population was still estimated to be in poverty in 2005, with almost 12% of the population living in extreme poverty. The Kirchner government also faces the challenges of curbing inflation, which is forecast to average 11% in 2006, while at the same time maintaining strong economic growth. Argentinas relations with the IMF under the Kirchner government have been contentious at times. In September 2003, after months of tough negotiations, Argentina reached a three-year stand-by agreement that provided a credit line of about $12.5 billion. Although IMF accords are not normally politically popular, the accord was widely praised in Argentina as an agreement with realistic fiscal targets that would enable Argentina to deal with such issues as employment and social equity. Argentina suspended its IMF loan program in August 2004 because of IMF pressure on completion of debt negotiations with bondholders and on Argentine progress in implementing key economic reforms. In January 2006, Argentina ultimately chose to repay its $9.5 million debt owed to the IMF in order to give the government autonomy on economic policy. Although the move was politically popular in Argentina, some critics argue that it would have been wiser to pay down other more expensive debt or to use the money on infrastructure or social spending.

Geography and Infrastructure:


Argentina is the second largest country in Latin America geographically. Indeed, at slightly over 1 million square miles (2.8 million square kilometers), Argentina is the eighth largest country in the world. Argentina's geography, however, is rather unique. Cone-shaped, Argentina is about two and one half times longer north-south (2070 miles/3330 kilometers) than it is east-west (a mere 860 miles/1384 kilometers at its widest on the nation's northern border, and the country is considerably narrower for most of its length). Most of its north-south border is shared with Chile, its neighbor to the west, from which it is geographically cut off by the largely impassable barrier of the Andes. This has led Argentina to develop somewhat independently from the rest of Latin America, with a decidedly European influence to its culture. Even the European influence however, has historically been moderated by Argentina's position in the extreme southern part of the globe. For all its great size, Argentina is sparsely populated. Argentina has a population of just over 40 million people. While this makes the country the fourth most populous nation in Latin America (after Brazil, Mexico, and Colombia), Argentina is about on par in population with Europe's mid-size states (Spain, for example). Added, Argentina's population is not evenly distributed. Buenos Aires is the fifteenth largest metropolitan area in the world. With a population of 11.2 million people, greater Buenos Aires is home to just under one of every three Argentines. When one combines greater Buenos Aires with the large number of Argentines in such other major cities as Crdoba, Rosario, and Tucumn, fully 87 percent of Argentines live in urban areas. This leaves large expanses of the Pampas and Patagonia very sparsely populated. In turn, the population distribution has led to a marked dichotomy in Argentina between the city and the country. The country's provinces are divided in 7 zones regarding climate and terrain. From North to South, West to East:

Argentine Northwest: Jujuy, Salta, Tucumn, Catamarca, La Rioja Gran Chaco: Formosa, Chaco, Santiago del Estero Mesopotamia: Misiones, Corrientes Central: Crdoba, Entre Ros Cuyo: San Juan, Mendoza, San Luis The Pampas: Santa Fe, La Pampa, Buenos Aires Patagonia: Rio Negro, Neuqun, Chubut, Santa Cruz, Tierra del Fuego

The Argentine Andes contain some of the tallest mountains in South America, including Cerro Bonete 6,872, Ojos del Salado 6,893 m, Cerro Mercedario 6,768 m, and Cerro Aconcagua, which at 6,960 m is the tallest peak on the continent and in the entire Western Hemisphere. Both of these peaks are located near the Chile border southwest of San Juan. The Andes region is also home to arid basins, lush foothills covered with grape vineyards, glacial mountains, and half of the Los Lagos Region (Lake District) (the other half is in Chile). The Lake District, named for the many glacial lakes carved out of the mountains and subsequently filled by melt-water and rain, is located in the southern Andes and boasts a diverse natural landscape of glaciers, native old growth forests, lakes, rivers, fjords, volcanoes, and sentinel mountains. Throughout the Andes that separate Chile and Argentina there are more than 1,800 volcanoes, 28 of which are considered to be active. These account for approximately one-fifth of the Earth's active volcanoes. Patagonia, the southern region of Argentina, is a combination of pastoral steppes and glacial regions. Located in this region near the Chilean border is Parc Nacional Los Glaciares (Glacier National Park ), where some 300 glaciers make up part of the Patagonian Ice Cap (21,760 km2). The ice cap, flowing into the Pacific oceans from the Andes, is the largest in the Southern Hemisphere outside of Antarctica. Thirteen of the glaciers feed lakes in the region. The Upsala glacier, at 60 km long and 10 km wide, is

the largest in South America and can only be reached by boat, since it floats in Lago Argentino. The next largest is the 4.8 km wide Perito Moreno, which stretches about 35 km to Lago Argentino, where it forms a natural dam in the lake. Jagged mountain peaks formed from granite include Cerro Fitz Roy 3,405 m, Cerro Torre 3,102 m, and Cerro Pinculo 2,160 m. Smaller mountain ranges also exist in central South America. These ranges cut across the center of the country and serve as the divider between the southern Patagonia region and the northeastern Pampas. From west to east these ranges are the Sierra Lihuel-Calel, the Sierra de la Ventana, and the Sierra del Tandil. Plateaus The Somuncur Plateau is a basalt plateau with alternating hills and depressions. It stretches across the Ro Negro and Chubut provinces, or the area from the Chubut River north to the Ro Negro. The region undergoes severe climate changes between the winter and summer months. The area has lava formations and contains many fruit and alfalfa plantations. Cattle ranchers find this area to be ideal for raising their livestock. A smaller plateau, the Atacama Plateau, occupies the region just east of the Andes Mountains in northern Argentina and extends east to the city of San Miguel de Tucumn. In Argentina, the fluvial net is integrated by many systems of different economic relevance, which could be measured by their amount of flow and navigability. Water flow relevance is based on its potential to be used for irrigation and as a source of energy. On the other hand, lakes and lagoons are permanent accumulations of water over impervious depressions. Their difference is mainly based on their extension and depth. They are very important for stream regulation, as a source of energy, touristic attraction. Argentina has a good infrastructure system in comparison with other Latin American nations, but many areas need significant improvement. The nation has 215,434 kilometers (133,870 miles) of roads, including 734 kilometers (456 miles) of expressways or highways, but only 63,553 kilometers (39,492 miles) of the country's roads are paved. Argentina has been the recipient of a number of aid packages to improve infrastructure.

For instance, the United States has provided US$7 million and the World Bank provided US$450 million for highway construction. There is an extensive rail system that transports both freight and passengers around Argentina, with a total of 38,326 kilometers (23,816 miles) of track. Argentina has 10,950 kilometers (6,804 miles) of navigable waterways. However, most of the country's major ports are located on the Atlantic coast, and little freight is transported along the inland waterways. The nation's main ports include Bahia Blanca, Buenos Aires, Comodoro Rivadavia, La Plata, and Mar La Plata (all located on the Atlantic Coast). Inland river ports include Rosario and Santa Fe, while the port of Ushuaia is located in the extreme southern tip of the nation near Cape Horn where the Atlantic and Pacific Oceans meet. Argentina has a small merchant marine of 26 ships with more than 1,000 tons of gross weight. This includes 11 petroleum tankers. In order to provide fuels to inland areas and ship resources to ports for export, there is a broad pipeline system. There are 4,090 kilometers (2,542 miles) of crude oil pipelines, 2,900 kilometers (1,802 miles) for other petroleum products, and 9,918 kilometers (6,163 miles) of natural gas pipelines. Buenos Aires has an extensive system of public transportation but most smaller cities and towns in Argentina have limited transportation resources. Buenos Aires additionally has an underground; the only one in the country, and Greater Buenos Aires is serviced by a system of suburban trains. There are 1,359 airports in Argentina, although only 142 have paved runways. Buenos Aires has 2 major airports. The first, Ezeiza International Airport, is the main point of arrival and departure for most international flights. Most domestic or regional flights, including those to Brazil, Uruguay, and Paraguay originate from the second major airport in Buenos Aires, Aeroparque Jorge Newbery. Most major international air carriers offer service to Buenos Aires. Argentina's national airline is Aerolineas Argentinas. The government is involved in a program to privatize airports. Thus far, 33 major airports have been turned over to private companies to operate. Transport in Argentina is mainly based on a complex network of routes, crossed by

relatively inexpensive long-distance buses and by cargo trucks. Fluvial transport is mostly used for cargo. Expressways have been recently doubled in length (to nearly) and now link most (though not all) important cities. The most important of these is probably the Panamerican National Route 9 Buenos AiresRosarioCrdoba freeway. The longest continuous highways are National Route 40, a 5000-km stretch along the Andes range and the 3000km seaside trunk road National Route 3, running from Buenos Aires to Ushuaia. Argentine long distance buses are fast, affordable and comfortable; they have become the primary means of long-distance travel since railway privatizations in the early 1990s greatly downsized Argentina's formerly ubiquitous passenger rail service. Argentina's infrastructure sector presents very high-untapped potential for potential investors and sponsors of infrastructure projects. In order to unlock this potential, the government should embark on a change in policy in order to attract capital into the sector - the only viable way to significantly revive infrastructure activity. However, there will be robust economic activity, which will make moderate sector growth. In January 2011 the Argentinean government announced it would spend US$241mn on several small infrastructure projects - a move which, is believed, is aimed at winning provincial votes and quelling social instability amid rising inflation and cash shortages. On July 13 2010, China pledged US$10bn for Argentina's railway infrastructure projects, and expressed a willingness to build new nuclear power generation facilities in the country. US$400mn has been allocated for the Great North road project, which will pave many of the routes in the country's northern provinces and reduce transportation costs. A total of US$200mn will be used for a water and sanitation project to improve water access and potable water coverage for 1mn people living in poverty in the northern provinces. Investment in real estate as a hedge against rising inflation. Property holds better value than bonds or cash during times of high inflation so this could stimulate buying activity and hence underlying construction activity over the next few years.

Argentina's infrastructure sector remains dependent to some extent on a US$10bn credit agreement from China. Meanwhile, the sector continues to benefit from robust economic activity. Argentina has inaugurated its third nuclear power plant. The Atucha II plant was opened by Argentine President Christine Kirchner, who said the plant was a step towards diversifying the country's power production. The 700MW plant is expected to be fully operational by Q312, raising the proportion of Argentina's power production from nuclear to 10%. The Inter-American Development Bank (IDB) offered US$400mn in financial assistance to Argentina to develop infrastructure for 70 poor urban settlements (December 2011). The loan, secured by the Ministry of Federal Planning, Public Investment and Services, will be directed towards the provision of basic services, such as electricity, infrastructure and gas distribution for the urban settlements. The loan will as well be used to build storm drains, access roads, pedestrian networks, green spaces, and water and sewage networks. The project has been designed to benefit 280,000 low-income residents. The US$10bn Chinese credit agreement for Argentine railways is the major factor which will be driving increase in Argentina's infrastructure sector in the coming years. While such projects and robust economic activity should allow the sector to comfortably maintain average yearly increase of 5%.

Structure of Distribution
Developing a profitable go-to-market strategy in Latin America is not an easy task given the multitude of consumer sales channels at work. In urban areas, the arrival of modern retailers in the form of global supermarket, hypermarket and club stores has shaken up traditional channels made up of owner-operated independent retailers built upon inefficient layers of intermediaries. B2C e-commerce has certainly changed the way Latin Americans buy travel services and read newspapers; however, it would be mistake to

abandon independent and informal channels of retail that still represent more than threequarters of Latin American retail for fast moving consumer goods. Latin American retail markets are developing rapidly, driving changes in distribution channels which will shape logistics in the region for years to come. Modern retailers have been migrating to urban areas, shaking up traditional channels. But much of the region will still be served by the owner-operated, independent retailer whose business is based on layers of intermediaries. Non-store consumer sales are on the rise, but electronic commerce is still lagging most other channels, accounting for only 1% of retail sales. Formal Latin American retail sales are expected to reach US$1 trillion in 2010. Understanding how channel structure will look three years from now warrants study of what is driving the growth or decline of each channel. Independent (non-chain) retailers account for 60% of all instore retail but are gradually losing market share to modern retailers in the area of fast moving consumer goods. Modern retail comprises roughly 40% of in-store retail sales, mainly through hypermarkets and supermarkets. Middle-to-upper- income consumers generally prefer modern retailers. Mass consumer segments continue to prefer shopping through independent retailers and informal channels (street vendors, markets) but will gravitate to modern retail as wages, car ownership and credit card penetration grows. The direct (or multi-level) sales format has proven to be very effective in Latin America, accounting for roughly 75% of nonstore retail sales. The channel is particularly effective for selling cosmetics and health products. E-commerce constitutes 15% of non-store sales but less than 1% of total retail. Online sales are growing faster than any other channel. However, challenges in delivering physical products limit the viability of e-commerce to digital products (travel, music, software) as well as hard-to-find IT hardware.

Independent retailers bore the Argentine crisis better than any other category and reaped the benefits of recovery by increasing sales 130% from 2002 to 2006. Customers became extremely price-conscious and avoided modern retailers because of perceived higher prices. Modern retailers were severely constrained by a protective law passed during the crisis that limited the construction of new retail outlets based on size. Domestic chains like Coto halted expansion to focus on debt restructuring. French-owned Auchan finally pulled out in 2004 from complications arising from the crisis. Its stores were sold to Spain's San Jose and most recently were acquired by Wal-Mart. Modern supermarkets offer consumers an alternative shopping experience marked by unprecedented brand selection, bulk pricing and a well-lit, climate-controlled shopping experience. Most importantly, consumers can save time by purchasing a wide range of goods under the same roof. Hypermarkets take the concept further by combining grocery and department store shopping. Discounters (club stores) were the last to arrive and have consequently grown swiftly in popularity with CAGRs of, nearly 18% in Argentina . Argentina is shifting back to modern retail, which currently accounts for 39% of consumer goods sales. Major players include Cencosud of Chile, Carrefour, the local conglomerate Coto, and Wal-Mart. Hypermarkets, supermarkets, and discount stores have extremely high penetration among the upper and middle classes, and they are trying to broaden their customer base. Non-Store Retail Non-store retail methods, such as home shopping (largely composed of infomercial and catalogue sales), direct sales and online retailers are also benefiting from rising disposable incomes in Latin America. The middle class in Latin America is growing in real and relative terms for the first time in 30 years and they represent the target market for direct sellers, the leading category within the non-store retail channel.

Home Shopping Home shopping was never a strong channel in Argentina due to obstacles such as fraud, lack of credit and unreliable postal systems but in Argentina, they are regaining ground with recovered cable usage after the 2001 crisis. Internet retail has already surpassed home shopping in Chile and Brazil, and is expected to do so in Argentina and Mexico in 2007 or 2008. Direct (Multi-level) Sales Direct sellers in Latin America secured 28% of cosmetics/toiletry retail sales for 2006. This sales method is well-established in most countries.Direct sales representatives in Latin America totaled 5.6 million individuals, of which 80% are women. Representatives can earn or supplement their income from home with flexible hours. They have access to rural and lower income consumers out of reach of modern retailers. Direct sales face less competition from internet sales than home shopping because of the loyal customer base and personal touch, not to mention the lack of internet penetration. In Argentina, direct sales companies had to rebuild their representative and customer bases after economic hardship forced many of them to seek alternative employment. Direct sales are forecast to grow proportionally with disposable income. Internet Retail B2C ecommerce is gradually emerging as a viable channel thanks to increased internet penetration.Argentina had invested in internet infrastructure before the economic crisis in 2001 so internet usage grew rapidly during recovery; however, over half of current internet users are concentrated in Buenos Aires. Online sales have been concentrated in the areas of travel, electronics and downloadable media, much like the US internet retail market in the 1990s. Products that are digitally transferred (air plane tickets, music, software) do not face the delivery challenges of

physical goods. Stores keep very low stock on IT products, so their consumers often purchase them online. Recently, categories like government services and education have seen increased online transactions. Consumers have greater confidence in the security of online transactions because of measures taken by the government, financial institutions and electronic payment systems

Porters Diamond Of National Advantage:

Porters Diamond Of National Advantage: Argentina


Factor Condition: Argentina is rich in natural Resources Eg: mineral, natural Gas reserves). Also substantial progress is being made in improving infrastructure and communication. The banking regulations have improved significantly. But certain challenges are still in place such as uneven infrastructure development, education system facing budget cuts thus reducing the quality of the education. Demand Conditions: There is a significant demand from the upper segment market and the demand for quality products have increased. There are also regulatory standards present, which are on par with the international standards. There is a significant gap in the distribution of income. Added consumers often prefer imported goods to domestic due to perceived poor quality. Even though there are significant regulations in place, they are not enforced in a stringent manner. Related and Supporting Industries: Due to FDI there is an increase in the quantity of suppliers have increased. Added these suppliers have increase the quality of their supplies as companies have the option to import. Also regional industrial Special development programs are phased out, thus relocating suppliers closer to the market. But the quality of suppliers is still low compared to international standards. Added, small and medium sized suppliers are facing financial and competitive challenges.

Firm Strategy and Rivalry: Inward FDI has lead to modernization of various industries. As a result of foreign completion modern management and production techniques have been implemented. There is a significant internationalization of Argentine firms and also outward foreign investment. But challenges are there is not much local rivalry present in the some sectors of the industry. There were significant barriers to entry but now have reduced, but still these are not enough to lure foreign investors. There is an outdated law and regulations of Intellectual Property rights present in the country.

Government: Argentinas economic growth and prosperity can be greatly enhanced by a healthy regional economy by having Large, accessible markets for exports and foreign investment thus making Argentina a far more attractive as a place to invest Argentina will inevitably suffer if it is isolated or an island amid countries that are not prospering Argentinas productivity can be greatly enhanced by regional coordination. Chance: The national competitive advantage of Argentina might be dealt with a significant set back, if there is another military coup and the fall of democracy.

Porters Diamond Of National Advantage: India


Factor Condition: India is still high with natural resources and making significant investments in improving infrastructure. There is high spending on improving health care and education but with high population it seems to be a difficult task but India is at an advantage as there is significant English speaking population when compared to Argentina. Also there is a comparatively young work force available.

Demand Conditions: There is a large gap between the rich and the poor in India similar to the Argentine Problem of distribution of income. The Upper segment market is demanding high quality products. Added, there are new several regulations in place to align India to the global rules. There is high domestic consumption as what is produced in India is consumed in India. Added a presence of a a booming software industry In India and many Technology based start ups are providing services for domestic clients also.

Related and Supporting Industries: India opened up to FDI in retail recently thus opening the markets for international companies to set up chains in India. They have a large SME sector to back them up, so localization of the suppliers with a due time is very much possible. The SMEs have high quality and are on Global standards when compared to Argentina. Various incentives are handed out to SMEs to conduct business thus fostering growth and sustainability. The E commerce boom in India has further fueled online portals for procurement and selling of Raw material as well as selling finished products.

There are special economic zones in various parts of the country and industrialization is spread through out the country as when compared to Argentina, which is focused only on the Capital City. Firm Strategy and Rivalry: There is intense rivalry among the industries with a significant focus on cost cutting and handing down the benefit to the customer. There are Numerous SMEs spread all across India, with high competition and quality cost and completion time being a few primary differentiation factors. The barriers to Entry have been significantly reduced since 1991 and thus enabling major MNCs to set up and operate in India, bringing in high capital and also technology into the Country. There is an efficient and updated cyber laws and Intellectual property law in place, but the labour laws are still archaic and need to be updated. Government: India has not had a single military coup in its history post liberation from the British Empire and has been a democratic country since 1947. The government in India has been relatively stable with most of them completing their elected terms. India is a stable political environment to invest in but an investor must be careful of the ideologies followed by the various political parties. The downside is the significant level of bureaucracy present in the tiers of the government, which may lead to delays in decision making. Chance: India will be a vibrant economy and have a prosperous future, if the corruption in the system is removed and a transparent and less rigid governance is implemented.

Conclusion:
Argentina with its new Government is a growing substantially. There are significant investments in infrastructure and reduction of entry barriers. The country is rich in natural resources and the SMEs in Argentina are meeting global quality requirements. The countrys legal system is transparent but still not completely government independent, but future amendments are in suite to ensure a free, independent judiciary. The risk of another military coup is significantly low as majority of the Argentine population is happy with current government in place. The network of road interconnecting Argentina and also inland navigable waterways, which can be used to move cargo, add to the benefit of transporting good and raw materials quickly and economically. Argentina has high expertise in the field of science and technology with successful nuclear energy programs that can meet the countrys current and also future energy requirements. The communication sector is being opened up thus allowing private companies to increase quality, cut down rates and increase penetration. Argentina is highly urbanized and the influenced by European origin. It is has good cultural backgrounds and has good presence in art, media, music, sports primarily football thus offering a very diverse customer base. Thus I conclude, that Argentina is good market to enter and achieve sustained growth in any industry such as manufacturing, services, health care, communication agriculture etc.

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http://www.reuters.com/article/2011/07/01/idUS187496+01-Jul-2011+BW20110701