As the recovery in developed markets proceeds unevenly, executives are looking to emerging markets for growth. In fact, based on its recent survey of executives of global companies headquartered in developed markets, The Boston Consulting Group reports that 73 percent said that emerging markets were a top priority. But only 13 percent said that their companies were well prepared to win in these markets.
For many companies—even those that have been operating overseas for decades—expansion into emerging markets puts them outside their comfort zone. Their traditional strengths of brand, scale, and channel management may not carry the same weight in these markets.
Even early success in emerging markets may not be sustainable. Many companies that entered these markets at the high end with Western products and services have struggled to move into the middle, where consumer tastes and income levels require a fundamentally different approach. Other companies have celebrated early success but then experienced rapid erosion of market share as more nimble and, especially, local competitors started to move in.
While chief executives recognize that the world is changing swiftly, many are struggling to orient their organizations around new opportunities. Through our work with clients and our analysis of emerging markets over the past decade, BCG has developed a Globalization Readiness Index to help clients understand where they stand.
The index measures a company’s capabilities against five traits of successful global businesses. Companies that want to get serious about globalization need to assess their organizations against these traits.