How to succeed in business: the Sinaloa Cartel

1/5/2015

Writing in Nexos, University of London post-doctoral student David Peréz Esparza outlines the reasons the Sinaloa Cartel is one of the world’s most successful companies.  As a multi-national company (with sales and marketing outlets in 54 counties (compared to Cemex, which only operates in 17) with a 35 percent world-wide market share in its core product (marijuana), and with more employees than McDonalds, perhaps it might be profitable to other entrepreneurs to study the factors leading to the Sinaloan’s success.

Peréz acknowledges the Sinaloan’s geographical advantage — production facilities close to transportation.  Besides the port of Mazatlán and excellent roads — incidentally vastly improved under the Calderón Administration thanks to the new Mazatlán-Durango highway — Sinaloa has airfields (recognized and otherwise) offering easy access to their single most important outlet, the United States.  Having acquired facilities in a number of other seaports  (Manzanillo, Lazaro Cárdenas, Acapulco and Salina Cruz) within a comfortable proximity, vastly simplified the ability of the Sinaloans to dominate the export market.

While there has been some drop in sales lately, due to moves to legalize marijuana in the United States, the Sinaloans, opiates remain steady, with some growth in sales, and with it’s already existing transportation facilities in place, has been able to adjust to changing consumer demand.  Ports are not only for export.  China and Mongolia provide the ingredients needed for methamphetamine production, and with the Sinaloan’s sales force already in place, there seems to be an unlimited growth ahead.

More than geography and product delivery though, what has been essential to the success of the Sinaloans has been their management structure and successful branding.  Mixing the best of both worlds, the Sinaloan mangement strategy has been to adopt both the common Asian business model, with key executive positions held by people related by blood or marriage, with the model used by successful U.S. and European firms of hiring outside experts for specific tasks (accounting, software design, money laundering, murder) as needed.  Having avoided expanding beyond what is necessary to preserve the core business of peripheral trades like extortion, kidnapping, truck highjacking, and murder for hire, has given the Sinaloans a reputation as the “best” in their trade… evidenced perhaps by the reluctance of the government to pursue high level leaders of the Cartel, as opposed to the “low hanging fruit” of groups like the Beltran-Leyva Family, the Zetas.  The Sinaloans have been masters of “soft” media manipulation:  when they slaughter their rivals or potential threats to their own interests, they are very good at how they present their side of the story.  Their “narco-mantas” (the poorly spelled banners they hang up at the scene of the crime)  give a rationale for their acts are less a taunt of their would-be rivals or those seeking to close down their industry, as it is a “sorry we had to do this” note… that they know will be reported, bad spelling and all.  The bad spelling probably isn’t intentional, but it does help, in creating the popular image of the Sinaloans as “hillbillies” simply trying to make a living, and not the sophisticated international luxury goods supplier that it is.  One suspects the attention the Cartel pays to popular culture… commissioning corridos and other “low-brow” entertainment… is part of the same branding strategy.

Certainly, they have been a successful business, and with their funds, are able — as with other multinationals — to underwrite political campaigns and to steer public policy towards their own interests.  One wonders why business professors are endlessly gabbing on about Bill Gates or Warren Buffet, or holding up UPS or McDonalds as models of successful businesses other than they just can’t imagine a bunch of yahoos from back of beyond Mexico are just as capable of forming successful international firms as any gringo.

Well, there is that whole “criminal” thing… but still…

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