To succeed not just in global markets but even at home, emerging market companies must combine their traditional advantages with a relentless focus on developing the capabilities required to catch up with world-class competitors elsewhere.
Reports and studies
Many companies in emerging countries are so focused on chasing growth that they fail to invest in improving their organizational capabilities, which leaves them unprepared when growth slows and competition from increasingly savvy developed-world multinationals intensifies. It’s critical that the next generation of emerging-market corporations heed this lesson and develop enterprise capabilities from the very beginning—even as they battle for early advantage by seizing nascent business opportunities. This article lays out four steps that “emerging giants” must follow to build an organization that can excel over the long term.
Culture is critically important to business success, according to 84 percent of the more than 2,200 global participants in the 2013 culture and change management survey. Findings also suggest strong correlations between the success of change programs and whether culture was leveraged in the change process — pointing to the need for a more culture-oriented approach to change. However, there is a clear disparity between the way companies view culture and the way they treat it. Less than half of participants saw their companies effectively managing culture, and more than half said a major cultural overhaul was needed. How can leaders take steps to enrich and more effectively leverage their culture?
The Chinese leaders need to take decisive action over the next three to five years or risk long-term stagnation: to slow down, clean up, implement structural reforms, stimulate domestic consumption, and upgrade the industrial base. In this time, a successful outcome is not just important for China but also crucial for the rest of the world.
A Strategy& survey with more than 700 executives finds that a capabilities-driven approach to value creation leads to higher returns, on average, than other ways of doing strategy. Capabilities-driven companies owe their success to having a truly distinctive way of providing value, a powerful set of capabilities, and coherence between their strategy and capabilities. By contrast, companies that compete on the basis of economies of scale, lucrative assets, or diversification fare less well. The survey also finds that companies with a clear identity — standing for something unique and consistent over time — tend to perform better than others, and that a capabilities-driven approach helps them develop that identity.
In truth, although another financial crisis may have been narrowly averted, the longer-term outlook reveals a global economy that will remain quite fragile. It’s becoming clear that we’re transitioning to a period of much slower economic growth than what we’ve become used to during the last decade.
China is regaining its historical position as a global innovation power. The China Innovation Survey, now in its second year, shows that innovators in mainland China are gaining rapidly in competitiveness compared with companies in Europe, United States, and other regions.
It is true that having a portfolio of strong, differentiated brands will become increasingly important to Chinese firms, not only in overseas markets, but also domestically.
Chinese companies’ desire for international expansion can create real opportunities for win-win partnerships with Western firms. And the best Chinese firms actually do possess distinctive capabilities that could be quite useful to Western firms in other emerging markets.
Go-to-market strategies for emerging markets: How CPGs can better serve the so-called organized trade
The retail business in emerging markets is undergoing a shift from informal, traditional channels to modern, or “organized,” trade. To succeed in this environment, CPG sales organizations must understand the operational complexities and local realities in individual markets. Moreover, they need a go-to-market model that is tailored to a retailer’s unique requirements.
Many multinationals will find it exceptionally difficult to win in the Chinese mid-market, especially smaller- and medium-sized firms that lack the financial and managerial resources to develop and implement a comprehensive China strategy. Seven principles can help multinationals develop a winning strategy to sell to a rising segment of eager Chinese customers in the mid-market.
Strategy&’s Fit for Growth* approach is a proven way forward for companies that want to cut costs and grow stronger. The Fit for Growth Index measures how well a company connects its cost and growth agendas by assessing companies in three key areas: strategic clarity and coherence with a clear and aligned set of capabilities; aligned resource base and cost structure; and supportive organization. The study analyzed nearly 200 public companies across a wide range of industries. Each company’s index score was calculated and compared with its total shareholder return over the past two years.
Food processing companies have recognised how damaging it can be to neglect the safety of their products. However, they have not as yet clearly realised the opportunities that are open to them with appropriate investments in food safety. Strategy& has investigated which are the emphases already being set by the food and drinks manufacturers today, and has found that there are still a significant number of gaps.
China could very well be the mother of all “black swans”- the low-probability, high-impact events-due to its exceptionally large size and increasing interconnectivity with other parts of the world. Unfortunately, few corporate enterprise risk management (ERM) departments have the resources or local understanding to contain a true black swan event in China. Thus companies can adopt a 3-step process to better prepare themselves from these risks.