Slowing global economies, rising geopolitical risks, and falling commodity prices are significant challenges for businesses around the world, but they need not be barriers to growth for companies in emerging markets. In fact, most of these markets are still growing faster than their mature counterparts, according to a report1 from Boston Consulting Group (BCG).
As these rapidly expanding companies from emerging markets look to grow they are increasingly competing with multi-national companies. And against a backdrop of slower growth and greater competition from businesses in emerging markets , multi-national companies need to develop strategies to counter these rivals -both the strength and volume of which is growing says BCG.
These “global challengers” are fueled by high aspirations for global leadership and decisive action. According to David Michael, professor of practice, School of Global Policy and Strategy, University of California, San Diego (UCSD) and former senior partner at BCG, a decade ago it was a struggle to identify 100 such companies; today it’s difficult to winnow the list down to 100. His view: multinationals are making a grave misstep if they fail to account for these upstart competitors and formulate a plan to respond to this threat.
So how are businesses from emerging market gaining a competitive edge over developed world businesses?
Leveraging technologyAccording to a recent study, emerging world businesses are moving fast to gain a technological edge over their developed world counterparts, and thus may be better positioned for growth. In a study2of more than 1,800 global business executives emerging market executives were shown to be more bullish on leveraging technology to provide the requisite flexibility and agility to fuel growth as compared to their developed market counterparts. Key findings from the study:
• 77% of emerging market business execs polled cited having “cutting-edge” technology/IT as a significant growth factor (compared to just 62% of developed market business execs).
• Three-quarters (75%) of emerging market business execs said having support for flexible business processes was of “significant” importance, compared to just 62% of those in developed countries.
• Emerging market business execs were also more likely to see the value in using technology to liberate personnel from manual tasks to focus on higher value-added work activities; 75% of emerging market business leaders said this was of “significant” importance as compared to only 65% of developed market business leaders.
Benefit from newer business systems One of the benefits that emerging market businesses have is they aren’t tied to old business processes and systems. They are free to implement modern present-day business systems that leverage newer technologies such as mobile and cloud to improve agility and remove complexity. With these systems, they have the ability to bring information to those who need it, at the moment they need it, in a form that they can use, and in a way that they can take action. This can give them a tremendous edge over more established businesses in the developed world that might be running older systems that prevent them from being responsive and adaptable to change.
Newer business systems – such as enterprise resource planning (ERP) solutions that are key to running and managing operations have also been designed to support the needs of global business. Therefore, emerging world businesses running next-generation ERP systems benefit from a powerful toolkit of capabilities to support global growth.
These include: • Sophisticated tax engines assist with global tax determination
• Compliance platforms to support local reporting requirements
• Currency engines to assist in helping ease trading complexity in multiple currencies
• Cross-border trading functionality provides support for reporting of goods shipped/source to/from countries and intra stat reporting
• Support for multiple accounting standards critical to support revaluation requirements around assets according to IFRS guidelines and US Gap standards
• Support for regional and local banking standards, i.e. SEPA requirements for Euro states
• Product classification support to meet standardized international codes (UNSPC codes and regional requirements)
• Multi-lingual support for customer-facing documents and to support overall user experience
• Social enterprise capabilities to support internal and external team collaboration across borders and proactively manage the challenges of a virtual team environment
Digitization is making businesses more agile In her Harvard Business Review article, 7 Traits of Companies on the Fast Track to International Growth, author Nataly Kelly says that even in older industries that pre-date the web, such as manufacturing and pharmaceuticals, those companies that are more invested in online and software-based models for strategic business areas tend to have faster rates of global growth. Her take: Digitization makes a company more agile and responsive to opportunities in global markets.
Many organizations leverage e-commerce to give them a virtual presence and an additional sales channel with relatively minimal investment. But outside of e-commerce, digital capabilities can bring to the fore operational costs and inefficiencies, and provide the global “glue” to bind the extended organization together and improve collaboration. This can then support channel partnerships to extend a company’s presence in new countries/regions and help drive greater return on investment from potential strategic mergers and acquisitions. Buying and implementing new technology is easier and more cost effective than ever before – so organizations can quickly use these capabilities to give themselves a major competitive leg up. The recent advent of cloud computing is a great global technology democratizer – making powerful technology affordable to organizations where previously it was out of reach.
Established businesses in the developed world need to be vigilant and aggressive in their use of new technology, or they may find themselves outflanked by emerging market businesses, potentially shifting the nexus of power in the global economic and business landscape.
Guest Author
He is the Channel Director for Epicor in the Middle East, Africa and India. Anish joined Epicor in 2011and brings along with him more than 17 years experience of regional ERP industry. Anish is responsible for managing the entire sales organization, including the direct sales force as well as the channel partners that Epicor works with throughout the region.
Prior to joining Epicor, Anish had spent three years with Microsoft and was handling new business acquisition for Saudi Arabia. Anish has a decade long experience in managing Sales, Business Development & Channel Management for global ERP solutions such as MS Dynamics, ORION, BaaN, Intuitive& SAGE.
