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Cartel And The Cocaine Industry Essay

1348 words - 5 pages

Cartel and the Cocaine Industry

The drug cartel based in Cali, Colombia, was one of the largest players in the multi-billion dollar worldwide cocaine industry. Although their operations are highly illegal, opposed by both Colombian and US law enforcement agencies, the cartel continues to run a very effective operation. The vast majority of this cocaine is destined for the US market. It reaches the US by numerous routes - by air, by sea, but mostly over land by Mexico. Once the cocaine reaches the United States, Cali has makes use of its distribution network to deliver the drugs wholesale to the retailers, typically ethnic crime gangs. The Cali cartel is similar in its methods with many of the Mexican cartels. Cali and the Mexican cartels are both a threat to the U.S. and most of these groups are no longer operating. The following will show how they are similar to each other, and how these groups controlled their organized business. Cali is primarily in the business of manufacturing, distributing, and wholesaling cocaine for the US market. Its competitive advantage lies in its distribution networks, which can transfer tons of illegal material through actively hostile territory.
This is a brief listing of the strengths and weaknesses of the Cali cartel. Cali's great strength lies in its distribution network. Finding sufficient numbers of people who are willing to risk their lives and freedom, and who will not cooperate with law enforcement agencies, is the first barrier. A distribution network also requires airstrips, hidden warehouses, and corrupt officials, and these take time and money to develop (Bernards, 1990). Cali's network is also highly compartmentalized, and proficient at laundering the large quantities of cash it generates. Because of the sheer scale of Cali's wealth, they can afford to buy ships and aircraft, bribe government officials at the senior level, hire top lawyers, and pay Colombia's paramilitaries and guerrillas to provide protection (Bernards, 1990). South America has a virtual monopoly on the supply of coca leaves. The region is also a very efficient producer of other illegal agricultural products, such as opium poppies and marijuana.
Cali's main weakness is the fact that the product it sells is illegal. This puts it at a competitive disadvantage with respect to legal narcotics, such as tobacco, alcohol, and Valium (Holloway, 1988). It faces much higher operating costs, contracts are not enforceable, and it has no access to traditional advertising media. This is by the fact that it is exempt from government regulations and taxes. Cocaine is essentially a commodity product, sold on price and purity. This means Cali cannot differentiate its product from other traffickers. However, this is not a serious weakness. Although Cali attempts to reduce the risk by using multiple routes, interdiction of a major shipment can cause a temporary loss of market share. As a high profile organization, Cali faces more...

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