The BCG 50 Local Dynamos: How Dynamic RDE-Based Companies Are Mastering Their Home Markets - and What MNCs Need to Learn from Them.
BOSTON (PRWEB) March 25, 2008
That's according to a new report from The Boston Consulting Group (BCG), "The BCG 50 Local Dynamos: How Dynamic RDE-Based Companies Are Mastering Their Home Markets - and What MNCs Need to Learn from Them." The report tells the stories of 50 dynamo companies whose business plans are defying the traditional competitive advantages of global players. Many are David vs. Goliath scenarios involving upstart companies that were not even on the radar until recently, and are suddenly setting the pace in their own markets.
"Too many multinational companies base their RDE strategies on outmoded assumptions," explained BCG partner and report co-author Arindam Bhattacharya. "RDEs are now so dynamic and complex that it is simply not useful to regard them, as many multinationals do, as 'x years behind our home market' or to use business models from home as the preferred path to success in RDE markets. For instance, China will simply never look like any other market: The country has the largest number of mobile-phone users in the world, while, at the same time, 300 million people live on $1 a day and there are 140 million migrant workers."
The report predicts that head-to-head battles within RDEs between global companies and local dynamos, as well as among the dynamos themselves, will become increasingly common in the years ahead, and the stakes will escalate as the RDE markets grow. Central to the success of the local dynamos has been an unwavering focus on their local markets and an ability to create and execute business models entirely attuned to the local environment.
"Unlike other companies in RDEs that are deciding to go global, local dynamos are opting to stay home instead, at least for now. In doing so, they are adding another dimension to the level of competition that multinational companies face," added Bhattacharya, who is also co-author, with two other BCG partners, of the forthcoming book, GLOBALITY: Competing with Everyone from Everywhere for Everything (Business Plus, June 2008).
Bhattacharya and his colleagues who worked on the report are available discuss its insights and share stories of the local dynamos that are redefining competition within their markets. For example:
-- India: Meeting the needs of budget-conscious consumers. CavinKare entered the personal-care market by selling shampoo in affordable sachets to rural customers. Now, with a 16% share of local shampoo sales, it's giving market leaders Hindustan Unilever and P&G a run for their money. Also in India, Titan Industries has become the world's sixth-largest watch maker by producing more than seven million attractive yet affordable watches a year, with the biggest seller going for $25, including a one-year warranty.
-- Mexico: Selling big-ticket items to - and fulfilling unmet needs of - people who live on less than $10 a day. Mexican retailing and financial services giant Grupo Elektra started off by offering goods on credit, allowing people with low incomes to afford TVs, washing machines, refrigerators and other important items. Having developed a relationship with its customers - and having developed competencies in credit vetting, risk control and debtor book management - Grupo Elektra very quickly added banking to its list of services. Now the company's vast network of stores doubles as bank branches, where people can withdraw, deposit and transmit cash, as well as get loans.
-- China: Figuring out how to get around software piracy issues to develop a new kind of gaming industry. Software piracy in China poses a big hurdle to video-game console makers like Sony and Microsoft, whose business model is based on selling cheap consoles and expensive software. This model doesn't work in China. Local companies in China have sidestepped the problem by creating an alternative, piracy-proof video-gaming industry based on massively multiplayer online role-playing games, or MMORPGs. This new industry grew 70% between 2005 and 2006. One player in that industry, Shanda, also tackled the obstacle of how to get people to pay in a country where e-commerce isn't widely used and credits cards are still a new concept. Shanda enables Chinese gamers to purchase prepaid gaming cards from local merchants.
-- Brazil: Taking budget airline strategies to new heights. Gol, a Brazilian budget airline, does a lot of what U.S. budget airlines do, like operating a fleet of identical planes. It also takes some extra steps to better serve Brazilian consumers, for whom price is the primary consideration, ahead of convenience and speed. Gol uses multiple-stop itineraries to extend service to previously unprofitable destinations. To fully utilize planes, it schedules flights late at night and early in the morning, as well as throughout the day. Gol's planes fly at nearly 80% capacity.
Business Results Are Often Stellar
By many measures, the BCG 50 Local Dynamos outperform established industry leaders and are growing revenues faster than the S&P 500 and the Fortune Global 100. They also have better operating margins and have created far more shareholder value in the last four years. Together, the 50 have over $60 billion in total revenues, and their average year-on-year growth rate is over 50%. Thirty seven of the 50 have become clear market leaders in their segments, often at the expense of bigger, global rivals.
To receive a copy of "The BCG 50 Local Dynamos: How Dynamic RDE-Based Companies Are Mastering Their Home Markets - and What MNCs Need to Learn from Them," or to schedule a conversation with one of the authors, please contact Alexandra Corriveau at Sommerfield Communications, Inc. (212) 255-8386 or firstname.lastname@example.org.
About the Methodology for Selecting the BCG 50 Local Dynamos
Produced by BCG's Global Advantage Initiative, the report is based on a detailed screening of several hundred companies from RDEs. First the BCG research team chose ten countries on the basis of economic size, real GDP growth, and market potential. Next it selected a group of companies that had achieved domestic success in these countries despite lacking such traditional means of incumbency in RDEs as government ownership or a monopoly license. Finally, it chose 50 of the companies that were really dynamos and therefore the owners of an original business model specifically adapted for the unique challenges of their domestic markets.
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients in all sectors and regions to identify their highest-value opportunities, address their most critical challenges, and transform their businesses. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 66 offices in 38 countries. For more information, please visit http://www.bcg.com.