As international companies face steadily increasing challenges from players in emerging economies, how can they ensure that they remain competitive? “Looking beyond the obvious: Globalization and new opportunities for growth”, a report from key business experts at Ernst and Young (EY), provides insights and recommendations on this topic.
In short, globalisation is changing; companies must understand the consequences and adapt to operate successfully in a world market, and global leaders who thrive at creating and leading culturally diverse teams will find greater long-term success by adapting their global mind-set accordingly.
In the wake of the economic downturn in established markets such as Europe and the US and the slowing down of growth in emerging markets such as the BRIC countries, global organisations are operating in a world of increasing complexity, interdependency and risk. This environment requires businesses to become more resilient, and experts agree that business leaders need to be brave and consider the opportunities to be found in a growing number of emerging yet unpredictable markets.
So what has changed for leading organisations tackling growth in the globalised world? The EY report highlights that a shift has occurred in the relationship between the established markets and the emerging economies. An increasing number of companies from the latter group have now grown to rival long-established organisations on the world market – and across many sectors.
Examples abound in many countries. In Chile, LAN Airlines recently acquired TAM (Brazil) creating Latin America’s largest airline Latam Airlines Group. In South Africa, MTN Group has become Africa’s largest mobile operator. It has 183 million subscribers and licenses in 21 countries across Africa and the Middle East. In 2011 alone, about 60% of its revenues originated outside South Africa.
Key trend indicators also point to technology and the flow of ideas as the biggest game changer in the globalised market. Mindray is a case in point; they are China’s largest medical-equipment manufacturer and generate more US patents per revenue dollar than many global leaders. More than half its revenues of $900 million were generated overseas.
Another key trend is the steady increase in the flow of capital and finance out of emerging economies. Companies across countries as diverse as Indonesia, Mexico and South Africa are seeking to expand into the global market, and now have the capital to acquire businesses in established markets such as the UK, France or the US.
The global market is diversifying, and in order for companies to remain competitive, the need for their leaders to adapt in a rapidly changing global environment becomes paramount. Global leaders will benefit not only from an increased awareness of culture’s key drivers and their impact on doing business in other countries, but more importantly from adopting a fresh mind-set towards developing relationships with colleagues and contacts in a changing global market.
© Communicaid Group Ltd. 2013