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These are the challenges corporate
leaders and investors should be
taking on, however, building their own
capabilities for future growth.
One company can’t solve all the
problems of the developing world, of
course, but today it’s essential for a
venture to understand how it will fill
the gaps that exist in these markets
and thereby contribute to growth.
Otherwise it is going in without a
clear-cut plan. In particular, every
company needs a plan for establishing
the capabilities of operational
efficiency, innovation, and go-to-
market excellence, adapted for each
market where it does business.
• Operational efficiency can be
achieved through a variety of elements,
such as developing more short-term
and flexible business strategies, using
half-year and annual growth plans
as opposed to the more familiar
three- to five-year growth strategies
seen in developed markets, and
transferring more decision-making
powers to local units or developing
more efficient supply chains through
technology adoption and local
partnerships. As labor costs rise in
many of these markets, companies
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must focus less on low-cost labor
and more on improving productivity
through technology enhancements and
automation. Furthermore, they need
to reevaluate their manufacturing
footprint by considering new and
emerging manufacturing centers such
as India, Thailand, and Vietnam, while
also taking into account evolving
trade linkages and market integration
efforts such as the ASEAN Economic
Community in Asia or the Pacific
Alliance in Latin America.
• Innovation is also critical as new
product development, often tailored
for specific markets, has become more
of a necessity. It isn’t just product
innovation, however; this capability
can also involve finding innovative
ways to reach untapped markets, and
those product or process improvements
might even work in the developed
world.
• Go-to-market capabilities that
are regularly reviewed and adapted
enable a company to keep up with
the evolving consumer trends and
maturing business environment in
these markets. These might include
new technologies and sales channels,
as well as an ecosystem of partners
that includes cross-sector players,
public sector entities, and social sector
units. Companies might need to build
that ecosystem by taking a proactive
approach to local entrepreneurship,
mentoring and funding small
companies that might become their
partners or acquisitions someday.
These capabilities will help businesses
compete in a system that might
require launching a new product almost
overnight, or tapping a new customer
base in a remote village, or knowing
who can grant a local permit. In
observing the social, technological, and
institutional developments that now
drive growth markets, we’ve also found
that these capabilities are critical to
success in six key sectors. Using data
from the International Monetary Fund
and BMI Research, we estimate that
these six sectors represent 60 percent
of the GDP of the top emerging
economies across global regions: China
from East Asia and the Pacific, Russia
from Europe and Central Asia, Brazil
from Latin America and the Caribbean,
Saudi Arabia from the Middle East and
North Africa, India from South Asia,
and Nigeria from Sub-Saharan Africa.
Here is a look at how these capabilities
will work in each sector.