Entry 2 - “Effect of Danish Boycott Patchy”

This article is describing the current situation of the recent boycott of Danish products in Saudi Arabia. One element that can be seen is the power that the buyers hold. According to Porter, a buyer can be powerful as a result of a number of reasons. A few of them are

1. If the buyer purchases large volumes.
2. The product which they are purchasing is standard in the industry.
3. There is a low switching cost.

It is known that the majority of the products that are exported from Denmark are Dairy products. The fact that a Danish company Arla Foods is afraid of the boycott suggests the importance of the units that are sold in Saudi Arabia. Moreover, the dairy products from other countries are readily available which indicates that there is low switching cost. As a result of all this, it can be concluded that the boycott will affect the Danish companies and their business.

Another important element mentioned by Porter is the power which the wholesalers and retailers have over the manufacturers. The fact that they can influence consumers’ purchasing decisions is very essential for the success of any product. Therefore, the fact that a number of big chains such as Panda have withdrawn all the Danish products from the shelves shows the intensity of this boycott.

On the other hand, there are a number of other outlets that have not taken any action and have not removed any of the Danish products from their stores. In my view, this could affect the perception that the consumers have regarding that store. The sale of that store can get negatively affected in the long-run. The reason for this can be attributed to the fact that the people in Saudi Arabia are more attached towards their religion and therefore, they would react to this incident.

The stores that are boycotting are using this incident as a basis to differentiate themselves from their competitors. They want to have a positive image in the minds of the consumers. By boycotting, they will have to bear some losses in the short-run. However, such a step could lead to consumers having a good perception of their store which will lead to positive results in the future.

Link to the Article