SOURCE: The Boston Consulting Group

March 06, 2008 12:08 ET

Companies From Emerging Markets Are Redefining the Rules of Competition and Conquering Their Domestic Markets, Warns New Report by The Boston Consulting Group

50 Companies and Their Winning Strategies Featured in BCG's New Report on Emerging Market-Based Local Dynamos

BOSTON, MA--(Marketwire - March 6, 2008) - Companies from rapidly developing economies (RDEs) are redefining the rules for local competition in their home markets, thus putting the expansion plans of many global industry leaders at risk, The Boston Consulting Group (BCG) warns in a new report on 50 of the most impressive companies from RDEs. The report, titled "The BCG 50 Local Dynamos: How Dynamic RDE-Based Companies Are Mastering Their Home Markets -- and What MNCs Need to Learn from Them," is being released today.

The list comprises 50 homegrown champions that are quickly conquering their domestic markets through fierce competition and innovative business models that defy traditional competitive advantages. The report outlines the successful strategies that these companies have in common and the six key success factors that are helping them win in these markets.

"Industry leaders need to learn from this new breed of rivals if they want to win in their markets," urged David C. Michael, the report's coauthor and a Beijing-based BCG senior partner. "They are increasingly finding that deep pockets, solid patent libraries, and successful business models are not enough to face down the local dynamos on their home turf."

The pace of expansion of some of these economies will accelerate in the coming years.(1) As mature markets slow down and potentially enter recessions, RDEs are becoming increasingly important to global companies.

"China and India are the hot global growth markets for companies today. But Western companies are at serious risk of missing out on the growth boom in such markets," said report coauthor and New Delhi-based BCG partner Arindam Bhattacharya. "In fact, these markets are being conquered by dynamic local companies, which are mastering local challenges, creating huge competitive advantage and shareholder value."

With over $60 billion in total revenues(2) and average year-on-year growth rates of over 50 percent, the local dynamos are already key players in their domestic markets: 37 out of the 50 have become clear market leaders in their segments, often at the expense of bigger, international rivals.

"In many countries these are truly turning out to be David-versus-Goliath stories," added Michael. "Some of these companies are real upstarts that were not even on the radar until recently. And now, all of a sudden, they are setting the pace in their own markets."

By many measures, the BCG 50 local dynamos are already outperforming established industry leaders. They are growing revenues faster than the S&P 500 and the Fortune Global 100 and have better operating margins and have created far more shareholder value in the last four years.

"Unlike other companies in RDEs that are deciding to go global, local dynamos are opting to stay home instead, at least for now," Bhattacharya added. "In doing so, they are adding another dimension to the level of competition that multinational companies face. For the global leaders, it is truly becoming a case of competing everywhere, with everyone."

As a group, the BCG 50 represent a broad range of industries. They primarily focus on business-to-consumer markets and target the middle class. Notably, 10 out of the 50 companies target a group that other companies ignore altogether: the poor.

Of the 50 companies on BCG's list, the bulk (41) are from China, India, Brazil, and Mexico, with the rest coming from 6 other rapidly developing economies. All of them are characterized by the use of an innovative business model adapted to win in their home markets.

The BCG 50 local dynamos include companies such as Shanda, Tencent, and Goodbaby from China, SKS Microfinance and Apollo Hospitals from India, Grupo Elektra from Mexico, and O Boticário from Brazil.

For media inquiries or to order a copy of The BCG 50 Local Dynamos please contact Eric Gregoire - gregoire.eric@bcg.com or 617-850-3783.

About the Methodology for Selecting the BCG 50 Local Dynamos

Produced by BCG's Global Advantage Initiative, the report is based on a detailed screening of several hundred companies from RDEs. First the BCG research team chose ten countries on the basis of economic size, real GDP growth, and market potential. Next it selected a group of companies that had achieved domestic success in these countries despite lacking such traditional means of incumbency in RDEs as government ownership or a monopoly license. Finally, it chose 50 of the companies that were really dynamos and therefore the owners of an original business model specifically adapted for the unique challenges of their domestic markets.

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 66 offices in 38 countries. For more information, please visit www.bcg.com.

(1) The Economist Intelligence Unit estimates that emerging markets will
account for 45 percent of the world's GDP and 60 percent of world GDP
growth by 2010.
(2) Figures from 2006, the most recent year for which full financial data
are available for comparison.

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    Eric Gregoire
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