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An Action Plan for Challengers, Multinationals, and Governments

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  • A fundamental reordering of global competition is under way.
  • In the era of allies and adversaries, challengers and multinationals need to figure out when to compete and when to cooperate.
  • Rather than impose restrictions on challengers, governments should recognize these companies as sources of job growth and investment capital.

2013 BCG Global Challengers

In the new world order, global challengers are becoming stronger and multinationals are seeking fresh sources of growth. Challengers and established multinationals are increasingly chasing the same consumers and customers. But there are also opportunities for them to join forces. Those that figure out when to compete and when to collaborate will be better off than those that decide to go it alone. Meanwhile, governments can encourage economic development most effectively through policies that recognize the importance of their homegrown challengers but also allow foreign companies to participate.

Opportunities for Challengers

The future success of the 2013 BCG global challengers is not guaranteed. Just half of the global challengers selected in 2006 continued to make the cut in 2013. To reach the next level of global expansion, challengers require greater capabilities, greater engagement with both private and public entities, and greater access to new growth opportunities.

Build capabilities beyond cost advantage. The success of global challengers will increasingly rest on innovation, operational excellence, quality, branding, and customer service. These capabilities need to be backed by organizational capabilities such as talent management and brand-building. For example, the shortage of experienced managers in Africa leads to poor efficiency and productivity of both global and local companies in many African countries. Even in China, which graduates a large number of university students each year, talent management was the most commonly cited concern among HR and business executives in China.

Successful postmerger integration remains a key challenge. As more challengers use M&A to vie for industry leadership, they will need to get stronger at smoothly folding large companies into their own and managing the talent, operational, and organizational complexities that come with

Strengthen stakeholder management. As challengers increase their overseas footprint, stakeholder management becomes even more important. Political, nongovernmental, and regulators are critical stakeholders. Challengers should treat these stakeholders as if they are partners—or run the risk that they become opponents.