Transformation in Emerging Markets: From Growth to Competitiveness

Transformation in Emerging Markets: From Growth to Competitiveness

          
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Transformation in Emerging Markets: From Growth to Competitiveness

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  • Emerging markets have driven growth for many multinational corporations (MNCs) for years, and they will continue to do so. But these are turbulent times as commodity prices plunge, currencies are devalued, and equity markets gyrate. The profitability of many MNCs’ operations is already under attack, and future performance will be challenged by slower macroeconomic growth, increasing costs, and heightened competition from local companies, which are rapidly gaining scale, experience, and capability. To reduce these pressures, companies will have to focus much more on improving their competitiveness through constant productivity gains.

    Most MNCs have emphasized growth in emerging markets at the expense of other metrics, such as operating margins. Shifting the emphasis to include profitability requires implementing process discipline, leveraging scale, and instituting behaviors that focus on constant efficiency gains. Such changes are not easily achieved. For many MNCs, a fundamental transformation will be necessary, executed market by market.

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