In the news 2014

MICE opportunity knocking on GCC doors
Distribution market: Pan Arab

Strategy&’s partner Richard Shediac, principal Antoine Nasr, and senior associate Georges Assy write that over 10 million business tourists arrive in the GCC every year; yet the region is not currently one of the world’s prime destinations for the most lucrative part of tourism – meetings, incentives, conventions, and exhibitions. These visitors come to meet colleagues based in the region, to make connections, or to prospect for business in a part of the world that has a strong economic base and that is diversifying into new industries. However, not enough of these business travellers come to attend large meetings, such as exhibitions and conventions – a state of affairs that GCC policymakers should be looking to change.

 

Distribution market: Pan Arab

According to Strategy&’s partner Daniel Diemers, principal Abdulkader Lamaa, and senior associate Jihad Khalil, digital technology is reshaping wealth management around the globe, according to a Strategy& survey that appeared in our Global Wealth Management Outlook 2014-2015. Interestingly, however, wealth managers in the Middle East, while generally confirming the importance of digital technologies, did so with less conviction and sense of urgency than their Asian, European, and North American counterparts.

 

Distribution market: Pan Arab

Strategy& principal Hicham Fadel writes that the seemingly infinite amount of internal and external information available to companies can easily lead to analysis paralysis. Companies can search through large data sets, but can end up with few insights that are useful for identifying growth opportunities. Instead, by using digital visualization techniques to transform the mass of customer data into small micro-segments, companies can produce offerings tailored for individuals, using the most effective channel to reach that particular person.

 

Distribution market: United Arab Emirates

Strategy&’s partner Jayant Bhargava writes that global players will need to re-evaluate and reaffirm their presence in the region or risk missing the opportunities. To drive the evolution of the media market, large regional and international media companies need to combine the creative energy of Arab youth with their institutional structures to support the transformation of the industry. As international media firms and investors consider expansion strategies, the Middle East warrants renewed attention.

 

A Deadly Mix
Distribution market: Pan Arab

Strategy&’s senior partner Gabriel Chahine explains in an interview that we continue to be strong in the Middle East, and we are still a separate line of business, while under the PwC umbrella. In terms of autonomy and execution, nothing has changed, except for some obvious clients.

 

Strategic Growth
Distribution market: Pan Arab

Strategy&’s partner Hans-Jorg Kutschera and principal Leonardo Monti write that the global aviation and aerospace industries are experiencing rapid growth, in contrast to the more sluggish global economy. Passenger numbers are forecast to double over the next fifteen years, from 3.3 billion passengers in 2014 to 6.6 billion in 2030. But future expansion will not be evenly distributed. The Middle East and Asia are likely to benefit significantly.

 

Distribution market: United Arab Emirates

Strategy&’s partners Samer Bohsali and Ramy Sfeir, principal Karim Abdallah, and senior associate Bruno Wehbe write that the GCC countries face a significant housing shortage for lower income groups, despite increasing affluence and robust economic growth. The GCC population is rising fast and there is a younger generation and wants to own its homes.

 

Distribution market: Pan Arab

According to Strategy&’s partner Georges Chehade, it is a very large area of opportunity and – when we talk about SMEs – quite a large chunk of revenues depend on the services provided. There will be a lot of opportunities to localize. As the sector matures, developing a value chain will hold huge potential for employment generation and investment opportunities across industries, infusing wealth into the Lebanese economy that could last well into this century and perhaps beyond.

 

World of Advice
Distribution market: Pan Arab

Strategy&’s partner Per-Ola Karlsson writes that [The Middle East] has undergone some important changes, and is becoming a more mature consulting market, where clients are becoming more sophisticated, more clear on what they need support with and more advanced in their tendering processes.

 

Total R&D Spending Growth at Large Companies Fell Last Year
Distribution market: Pan Arab

Strategy&’s partner Georges Chehade writes that while total R&D spending at large companies rose to its highest level ever in 2014, the rate of growth was the second lowest in a decade, according to a new study from Strategy&, formerly Booz & Company.

 

And More
Distribution market: United Arab Emirates

Strategy&’s senior partner Per-Ola Karlsson explains in an interview that the Middle East is one of the hottest consulting markets in the world right now…and getting a lot of attention from global consulting firms. Part of the reason that the combination made a lot of sense was it would enable PwC and the combined firm to have a leading position in the region in this space.

 

Family Fortune has a Feminine Side
Distribution market: Pan Arab

Strategy&’s partner Ramy Sfeir writes that family businesses are a vital economic force in GCC countries, contributing around 80% of the region’s non-oil GDP. Many are currently undergoing a leadership transition, as the founders cede control to the second or third generations, while encountering new market and competitive forces. As GCC family businesses take steps to meet these challenges, they have an important opportunity to encourage their often highly talented and educated female family members to more actively participate in the family business or family activities.

 

Distribution market: Pan Arab

According to Strategy&’s partner Daniel Diemers and senior executive advisor Walid Boustany, the GCC continues to be a standout region for wealth creation. Investable and liquid assets grew by 15 to 20 percent each year from 2009 to 2013, reaching around $2.2 trillion in the region, according to our forthcoming study “GCC Private Banking 2010-2011.” Wealth management centers such as Dubai, Saudi Arabia, Qatar and Kuwait have seen particularly robust growth in individuals’ assets, fuelled by increasing domestic wealth and inflows from politically unstable countries elsewhere in the Middle East and North Africa.

 

Adapt to a Dynamic Market
Distribution market: Pan Arab

Strategy&’s partners Andrew Horncastle and Jayant Gotpagar, and principals Frederic Ozeir and Sonal Singh write that the global chemicals industry has experienced a series of large-scale disruptions in recent years. Demand is shifting away from Western countries toward rapidly growing Asian markets. Performance and specialty chemicals, which traditionally offered higher margins, are increasingly becoming commoditized. On the supply side, the feedstock mix has changed, due to the shale gas boom in North America and abundant coal in China, The result is a more dynamic market, with varied regional implications.

 

Digital Disruption Needs Solid Structure
Distribution market: United Arab Emirates

Strategy&’s partners Bahjat El-Darwiche and Milind Singh writes that new technologies such as Careem and Uber place an onus on regulators in the Middle East to adapt. If done right, this can nurture innovation. The digital revolution is calling existing regulatory frameworks into question and disrupting multiple sectors. In Beirut and Dubai, people can use apps such as Uber or Careem to book rides and avoid conventional taxi services. In other cities, however, taxi drivers have protested because these digital services deprive them of business.

 

In Defence, Information is as Vital as Weaponry
Distribution market: Qatar

Strategy&’s principal Abdulkader Lamaa and senior associate Andrew Suddards write that as the GCC countries improve their military skills and capabilities, they must keep in mind that weaponry and tactics alone are not enough. A critical element in today’s military transformation is the use of information technology. This has affected all aspects of defence, from the management of logistics to military operations. Indeed, one of the crucial aspects of mission success is “information superiority”.

 

Big Data Reshapes Decision-Making
Distribution market: Pan Arab

According to Strategy&’s partners Bahjat El-Darwiche and Walid Tohme, despite the rapid growth of big data, organizations should keep its influence in perspective, although remarkable, the big data phenomenon is merely the continuation of a journey in which ever-more-elaborate data has influenced decision-making. Executives must focus on carefully formulating the business questions that enable the swift and accurate identification of those nuggets of data that they believe can improve their organization’s performance or allow them to gain access to new revenue pools.

 

Recovery of Governmental Consulting in Dubai
Distribution market: United Arab Emirates

According to Strategy&’s partners Joe Saddi and Per-Ola Karlsson, and partner Samer Bohsali, as companies expand and face unprecedented disruptive threats, they are increasingly demanding a mix of strategy and executional capabilities from global consultancies. The recent merger with PwC positions Strategy& to lead this convergence between strategy and implementation consulting in the region and the world.

 

Sector in GCC Growing Rapidly
Distribution market: United Arab Emirates

I think Egypt has strong support from the GCC and the country has a better track record in law and order. This is encouraging for consultants wanting to work there, writes Strategy&’s partner Per-Ola Karlsson.

 

Distribution market: Pan Arab

According to Strategy&’s principal Karl Nader, the Mall of the World reinforces the confidence that exists in the UAE’s retail sector, which has redefined what people might expect from malls in creating destinations. In the GCC you don’t have natural hopping districts. If you go around the world – Paris, New York, Miami, or Milan – there are natural shopping districts, in the middle of cities.

 

Widening Scope
Distribution market: Pan Arab

Strategy&’s partner Philipp Wackerbeck writes “I don’t see foreign, including inter-GCC investment, as a key driver of the Islamic economy for the rest of 2014, at least not in the banking side. While Malaysian investors are more focused on Europe and, particularly the UK, Islamic banking markets will primarily be driven by domestic players seeking to gain additional market share. With still a lot of growth opportunity in domestic markets, there’s less of a need for players to expand internationally, also given the partially bad experience some players have gained with a too-fast international expansion.

 

Booz & Company and PwC’s Merger: A Quantum Leap in the Investment Sector
Distribution market: Pan Arab

Strategy&’s senior partner Joe Saddi explains in an interview that around a year and a half ago, we reviewed Booz & Company’s strategy in light if the major changes witnessed in the investment arena, and noticed that the need to achieve radical changes at the level of the company’s activities has become a must, as our clients’ requirements are growing in terms of scientific and technological development in addition to their increasing interest in all work-related details.

 

Analytical Marketing Essential
Distribution market: Pan Arab

Strategy&’s partner Hilal Halaoui and principal Hicham Fadel write that operators in the region need to adopt more analytical marketing techniques if they are to continue to attract new customers and increase revenues. Traditional marketing, which treats all consumers the same, is failing to yield result and pricing is become less useful to stimulate top-line growth.

 

Strong Need for GCC Companies to Use Corporate Culture to Reap More Powerful Business Results
Distribution market: Pan Arab

According to Strategy&’s senior partner Per-Ola Karlsson, senior executive advisor Jon Katzenbach, and principal James Thomas, culture plays an equally important role – along with strategy and operating model – in determining a company’s outcomes; finding ways to capture and use the motivating energy that culture can generate is therefore essential.

 

Over 70% of 2013 CEO Turnovers are Planned
Distribution market: Saudi Arabia

Per-Ola Karlsson, senior partner with Strategy& writes that the vast majority—70%—of CEO turnovers at the world’s largest 2,500 public companies in 2013 were planned events, as opposed to forced turnovers or the result of mergers, and 76% of incoming CEOs were “insiders” who were promoted from within the company.

 

Sector Shows No Signs of Cooling
Distribution market: United Arab Emirates

Strategy&’s partner George Sarraf writes that by pooling demand for air conditioning, district cooling is significantly more cost-effective over the long term than any other system currently being employed at individual building level. It also has less negative environmental impact than conventional solutions.

 

Why Do Women Fail in Managing Companies in Comparison to Men?
Distribution market: Pan Arab

According to Strategy&’s 2013 Chief Executive Study, one of the main reasons behind women failing as CEOs of these companies is the fact that 35% of them were externally hired, compared to 22% of men. The study shows that external employees stand weaker chances in achieving results defined by the recruiters, who usually seek external capabilities to pump new blood and disregard the experiences of the directors who have long served the company.

 

Towards a Culture of Success to Enhance Value and Performance
Distribution market: Pan Arab

Strategy&’s principal James Thomas writes that GCC companies are increasingly ambitious, establishing strong regional and global presences while aiming to recruit and develop highly skilled workforces. With these ambitions come greater challenges: competing with top-tier foreign companies and managing the changing realities in the talent markets, with their influx of younger people who have markedly different attitudes from those of the veteran employees whom they are replacing.

 

More Women Moving Up in World’s Top Companies
Distribution market: Pan Arab

Strategy&’s senior partners Ken Favaro, Per-Ola Karlsson, and Gary L. Nielson write that as much as a third of the incoming class of CEOs will be women by 2040, based on a 10-year trend in our data, ever higher education of women, continuing entry of women into the business workforce and changing social norms around the world. We see a similar trend also in the Middle East with an increasing amount of women as CEOs or in other senior leadership positions, not least in family-owned businesses that constitute an important part of these economies.

 

Telcos have to Stand Out from the Crowd
Distribution market: United Arab Emirates

Strategy&’s partner David Tusa, principal Milind Singh, and associate Ming-Chyuan Chan write that commoditisation is sweeping across the global mobile telecoms industry with implications for corporate and investment performance. In many countries, customers view mobile product and service offerings from different operators as interchangeable – no more distinctive than other commodities such as beans or gas. And the mobile industry is making matters worse. When competitors cannot differentiate themselves with products or services, they often just differentiate with price, draining billions of dollars of value from the industry.

 

Benefit in Analysis
Distribution market: Pan Arab

Strategy&’s principal Hicham Fadel writes that to an increasing degree, telecom companies are struggling to compete and grow in many emerging markets using favored strategies of the past. Their underlying assumption – that there are still new users to acquire, and that these new users would compensate for price reductions – no longer holds in often heavily saturated markets.

 

Region Must Coordinate Resource Policies
Distribution market: United Arab Emirates

Booz & Company’s chairman Joe Saddi discusses how we need a framework so that planning for food security, power generation, and desalination are all linked in policy thinking. Governments need to be aware of the need to find ways to optimize these scarce and increasingly expensive resources. It is important for countries in the Middle East to plan for these three areas in a much more coordinated manner since they all affect each other deeply.

 

All the News that’s Fit on Multiple Platforms
Distribution market: United Arab Emirates

According to Booz & Company’s principal Jayant Bhargava, seven out of 10 Middle East readers are likely to reduce or cease reading newspapers altogether over the next two years. This poses a serious threat to the region’s newspaper publishers. Changing consumer behavior, rapid technological innovation and a dearth of advertising revenues have combined to cast a pall of gloom over the newspaper industry worldwide.”

 

Guide the Education Sector while it’s Young
Distribution market: United Arab Emirates

Booz & Company’s partner Leila Hoteit and senior associate Maya El Hachem write that job training in the region needs work, both in operations and funding. Regulators should mould it now, before it sets in its ways. The region’s governments and businesses urgently need to develop a workforce that can meet the challenges of growth in the 21st century. Without workers whose skills match the needs of the labour market, countries in the Middle East and North Africa (MENA) will not only fail to thrive; they leave themselves vulnerable to political and social instability.

 

Technology 2014: 5 Key Trends
Distribution market: Pan Arab

Booz & Company’s partners Ramez Shehadi and Raymond Khoury, and principal Fady Kassatly write that new technologies such as smartphones, tablets and social media channels are fundamentally changing the way that people in the MENA region interact and process information. Additionally, prices for mobile technology continue to drop, making these platforms more accessible to lower-income segments of the population. Faced with this new reality, governments must urgently change the way they connect with their citizens and customers.

 

Development in GCC Causing Surge in NCDs
Distribution market: Pan Arab

Booz & Company’s partners Gabriel Chahine and Jad Bitar, and senior associate Pierre Assouad write that NCDs have been linked to lifestyles that exist in developed countries, namely bad eating habits, high-sugar, fat-heavy diets and a lack of physical exercise. Increasing wealth has, of course, had positive effects on public health, such as funding large-scale health awareness and vaccinations campaigns, to tame the threat of communicable diseases, such as polio, measles and rubella, among others. However, in the GCC region, as elsewhere, these gains to public health and individual well-being are now being offset by the increasing prevalence of NCDs and associated mortality rates.