BOSTON, MA--(Marketwire - February 2, 2010) - The worst crisis in half a century has changed the rules of the game for companies with international ambitions, according to a White Paper published by The Boston Consulting Group (BCG). Western companies must become more like the brash upstarts from the rapidly developing economies (RDEs) such as China and India if they are to succeed in the new global business environment.
"It is no longer enough to take the home-country business model into RDE markets and to target customers in premium segments and the main cities," said BCG senior partner Bernd Waltermann. "The biggest growth opportunities in the developing countries lie in the midmarket and below, where consumers have very different needs that the new global challengers from the RDEs are adept at meeting."
The paper, titled Competing for Advantage: How to Succeed in the New Global Reality, sets out an analytical framework to help companies achieve competitive advantage in markets around the world. The BCG Global Advantage Diamond identifies four factors -- market access, resource access, local adaptation, and network coordination -- that are essential to developing successful globalization strategies, creating business models that can adapt to local demands, and integrating those models into the global network to share best practices and achieve synergies.
"Using this framework, businesses can achieve better penetration of markets relative to peers and competitors from both developed and developing countries," said BCG partner Arindam Bhattacharya. "Developing all four elements of the diamond creates economic advantages that competitors will find hard to copy."
A Framework for Success
The Global Advantage Diamond can be used by companies to map their optimal global footprint and devise a strategy to achieve it.
Most Western companies will have planned their globalization strategies in incremental steps -- expanding into new markets, for example, or offshoring production. The most successful global companies now adopt a philosophy of "manyness" -- many products and services, drawing on many skills, talents, ideas, organizations, and systems to compete in many market segments.
However, they do not lose sight of the benefits of their global networks, and draw talent and products from their RDE operations back to their markets in the developed economies. Some of the world's leading global companies now embody manyness in their organization, in some cases moving the headquarters of operating divisions to RDEs.
"It is important that a company's senior managers understand the new global reality and the need for change," said BCG senior partner Jim Hemerling. "They should visit RDEs to get firsthand knowledge of their cultures and needs. Listen to customers, suppliers, partners, and, above all, your people in the local markets regarding their concerns and the opportunities they see."
To receive a copy of the report or arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.
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