Effect of Danish Boycott Patchy

This article describes the reaction of the Saudi supermarkets to the Danish controversial cartoons, looking at it from the business strategy angle I don’t think it will have a strong effect on Denmark economy; the largest exporters of dairy products in Europe and whos economy rely heavily on dairy products exports. Based on Porter’s “Bargaining Power of Buyers” the Arab or Muslim can be considered a strong buying power, even though most of the countries are poor or developing countries, but with a population of more than one billion, I think they can have an effect, but small, timely and not forever.

No action was taken by most Arab governments to support the boycott since such thing can have negative impact on their relations with the European Union and the World Trade Organization. The boycott cannot be considered organized, its only lead by the media not by organizations established for this purpose. These factors can lessen the impact of the boycott especially that some supermarkets are still fully stocked with many Danish products and it’s a personal choice for the customer to buy or not.

In the other hand most of the Danish products sold in Arab states can be considered undifferentiated and the buyers can always find an alternative with zero switching costs, especially the dairy product.

Removing the Danish products from the shelves in some supermarkets can fall under “Relationship Dynamics” in Hamel framework. Where the supermarkets are concerned of what happened and want the people to notice that they are also angry of the cartoons, in order to sustain its Muslim customers loyalty.

It is doubtful that the Danish product can recover 100% of its position in the Middle East, and this will allow the current suppliers to increase their sales or open the doors to new supplies to take shares in the Arab markets.