The Danish Boycott

Article: Effect of Danish Boycott Patchy

The boycott of Danish products in Saudi Arabia is a clear illustration of Porter’s “bargaining power of buyers” on two levels – the consumer level and retailer level.
Consumers were able to exert bargaining power because the boycotted Danish products are undifferentiated and because they are of the kind where quality is not important. Retailers had a significant bargaining power over manufacturers because their decisions to pull out Danish products from the shelves directly influenced the consumers’ purchasing decisions, and actually left them with no choice but to join the boycott.

The article can also be linked to Hamel’s “customer interface” concept in two ways. First, the retailers’ boycott greatly reflects the element of relationship dynamics. It seems that supermarkets were pulling out Danish products to establish a political and ideological stance that corresponds with that of their customers. One retail manager says “We have stopped promoting Danish products since early last week. This is a very important issue for us out of principle”. Indeed, the decision could have been a reflection of genuine principle, but ask yourself this… Would they have been so quick to stand by their principles if their customers were all Danish? Most likely not. Pulling out Danish products from the shelves and “leaving the shelves empty for the people to notice” are obvious efforts to establish an emotional affiliation with the customers and even to invoke a sense of loyalty to the store.

Second, a certain level of information and insight can also be observed in the retailers’ boycotting decision. The article says that “emails and text messages continue to circulate urging Muslims to boycott Danish products”. The supermarkets probably used this insight of their customers to make a decision that they would appreciate and like. Another example of information and insight is when SADAFCO, after noticing a drop in the stock price and being inundated with phone calls, decided to clarify its position to the public.

And finally, the article can be linked with Hamel’s “strategic resources” concept, in particular the core competencies element. The supermarkets’ knowledge about what its customers value and what principles they hold can be considered a strong competency that can be transferred (and indeed was transferred) to new opportunities. Knowing that most customers supported the boycott helped the supermarkets find a new way to strengthen its ties with its customers – and that is by joining the boycott as well.