Capturing the BRICS Markets
Thursday, February 9, 2006
Aggregate spending power may be immense but the average Russian, Chinese, Brazilian or Indian consumer will hardly be flush with cash. The world?s biggest economies will no longer be the richest. Luxury goods companies will doubtless continue to find a ready market among brand-conscious elites. But companies hoping to capture the emerging mass market will need to develop products (and business models) tailored not only to local taste but also to local spending power…
…partnering is often not only desirable but also a necessity. Whether because of law, political reality or common sense, operating successfully in Brics countries will require alliances with local companies. For multinationals that play well with others, this will be challenging. For companies more comfortable in a solo role it may be an insuperable obstacle…
While none of these challenges is insurmountable, they do amount to a compelling case for caution. Yes, the Brics economies represent a potentially vast new source of profitable growth. But this assumes that economic growth continues ? hardly a certainty ? and that companies have the right mix of managerial competences to take advantage of the opportunity.
Remember that life inside big companies is already much more complex than was the case 20 or 30 years ago. Today?s multinationals are managed through an endless process of subtle (and sometimes not-so-subtle) negotiation between business managers, country managers and functional managers, sometimes with regional managers and key account managers chipping in for good measure. Hierarchy is often ambiguous and decision-rights diffuse.
Serious expansion into the Brics economies will add further complexity, with new product lines, new risks and new partnerships. Countries hitherto relegated to ?other? in segmental reporting will loom large in investors? eyes; country managers once marginalised will demand seats at the top table. Worse still, conference calls once scheduled for a civilised hour will be shunted to late at night or the early hours.
Thus the winners will not necessarily be those companies with the most finely tuned product portfolios, the strongest political connections or the best relationships with local partners. No, the spoils will go to organisations that somehow manage to beat the odds by creating order from ever-increasing chaos. The limiting factor will be neither ideas nor opportunities nor capital but the availability of managers with the skills ? and endurance ? to thrive in the brave new world of Brics.
Continue reading “Capturing the BRICS Markets“
(Via PSD Blog)