SOURCE: The Boston Consulting Group

The Boston Consulting Group

February 02, 2010 00:01 ET

Companies Will Be More Successful in Globalization if They Learn From Competitors in Rapidly Developing Economies, Says The Boston Consulting Group

The Economic Crisis Has Changed the Nature of Globalization, Accelerating the Shift in the Economic Center of Gravity From West to East and Allowing New Global Challengers to Seize Competitive Advantage

BOSTON, MA--(Marketwire - February 2, 2010) -  The worst crisis in half a century has changed the rules of the game for companies with international ambitions, according to a White Paper published by The Boston Consulting Group (BCG). Western companies must become more like the brash upstarts from the rapidly developing economies (RDEs) such as China and India if they are to succeed in the new global business environment.

"It is no longer enough to take the home-country business model into RDE markets and to target customers in premium segments and the main cities," said BCG senior partner Bernd Waltermann. "The biggest growth opportunities in the developing countries lie in the midmarket and below, where consumers have very different needs that the new global challengers from the RDEs are adept at meeting."

The paper, titled Competing for Advantage: How to Succeed in the New Global Reality, sets out an analytical framework to help companies achieve competitive advantage in markets around the world. The BCG Global Advantage Diamond identifies four factors -- market access, resource access, local adaptation, and network coordination -- that are essential to developing successful globalization strategies, creating business models that can adapt to local demands, and integrating those models into the global network to share best practices and achieve synergies.

"Using this framework, businesses can achieve better penetration of markets relative to peers and competitors from both developed and developing countries," said BCG partner Arindam Bhattacharya. "Developing all four elements of the diamond creates economic advantages that competitors will find hard to copy."

A Framework for Success

The Global Advantage Diamond can be used by companies to map their optimal global footprint and devise a strategy to achieve it.

Most Western companies will have planned their globalization strategies in incremental steps -- expanding into new markets, for example, or offshoring production. The most successful global companies now adopt a philosophy of "manyness" -- many products and services, drawing on many skills, talents, ideas, organizations, and systems to compete in many market segments.

However, they do not lose sight of the benefits of their global networks, and draw talent and products from their RDE operations back to their markets in the developed economies. Some of the world's leading global companies now embody manyness in their organization, in some cases moving the headquarters of operating divisions to RDEs.

"It is important that a company's senior managers understand the new global reality and the need for change," said BCG senior partner Jim Hemerling. "They should visit RDEs to get firsthand knowledge of their cultures and needs. Listen to customers, suppliers, partners, and, above all, your people in the local markets regarding their concerns and the opportunities they see."

To receive a copy of the report or arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

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 68 offices in 39 countries. For more information, please visit www.bcg.com.