This past Thanksgiving, FSG’s CEO, Richard Leggett posted an article on Harvard Business Review’s website. Weaving in anecdotes from his extensive client experiences and FSG data studies, the article discusses how multinational companies (MNCs) are dealing with the recent economic slowdown in the BRIC countries. While companies face lower growth in traditional emerging market strongholds, they still expect emerging markets to contribute to both high profits and high growth in sum.
The increased focus on emerging markets as a source of corporate profits is a dramatic shift from when FSG first opened its doors in the early 2000s. Corporate expectations at headquarters were low and regional executives were primarily charged with expanding market share. Today, MNCs have adopted a dual strategy of “going deep” in markets while simultaneously and aggressively pursuing the next frontier markets.
The article goes on to raise examples from across the globe. In Asia, as growth is slowing in China and India, MNCs are increasingly looking to ASEAN countries. Indonesia has attracted MNC attention as it has a young and urban growing middle class that will sustain growth. In Indonesia however, there are other considerations for MNCs to address such as high transportation costs compared to the region and corruption. In Africa, the Nigerian economy is perhaps the most exciting frontier market in the world. Due to a complete overhaul in how GDP is calculated, Nigeria will become the largest market in Africa in 2014. An example of the impressive growth Nigeria’s strong fundamentals are supporting is the automobile market which has seen in some cases a 33% increase in sales.
Please follow this link for the original article that discusses each case in detail.