Local Companies vs. MNCs in the Emerging Market


Local Companies vs. MNCs in the Emerging Market

BCG has published a report on 50 Local Dynamos in Rapidly Developing Economies (RDE) and the report looks at how these Local Dynamos are giving a stiff competition to MNCs.

BCG’s study looks at the missing piece of localization strategy in MNC’s deck, as well as how homegrown products are leveraging their knowledge of local markets while biggies packed with patents, deep pockets are still figuring out to how to beat their local rivals.

BCG Report local dynamos vs MNCs.

Few key stats from the report:

  • By 2010, emerging markets will account for 45% of world’s GDP, and 60% of GDP growth.
  • Indian Retail Industry, worth more than $230bn in 2005 is growing at a CAGR of 6% and is expected to touch $310bn by 2010.

The key factors that works in the local market:

  • Customizing to local needs
  • Devising innovative business models that overcome local challenges.
  • Leveraging latest technologies
  • Benefiting from low-cost labor and overcoming shortages of skilled labor.
  • Scaling up fast.
  • Sustaining long-term hypergrowth without imploding.

The study has some interesting findings on local strategy, for e.g.:

  • In China, MNCs like Microsoft and Sony faced a fundamental obstacle to video gaming , i.e. piracy. So domestic companies created an alternative video-gaming industry based on MMORPG (i.e. massive multi player online role-playing games) and increased the market from $16mn in 2005 to $600 mn in 2006.
  • Amul : Apart from ironing the supply chain, Amul uses latest technology stack – right from customized ERP to perform data analysis to satellite communication technology to collect and track transactional data.
  • QQ (an IM client owned by Naspers which owns MIH/ibibo in India)’s avatar are far more local and fun and customizable than the MNC counterparts.

11 Indian companies have made it to the list of 50 local dynamos:

  • Amul
  • Apollo Hospitals
  • Bharti Airtel
  • CavinKare Group
  • ICICI Bank
  • The Indian Hotels Company
  • ITC Ltd.
  • NIIT
  • SKS Microfinance
  • Subhiksha, and
  • Titan Industries

Download the PDF here

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