SOURCE: The Boston Consulting Group

The Boston Consulting Group

February 03, 2011 00:01 ET

How Companies Can Win in a World With Two Rates of Growth: Fast and Slow

New Four-Part Report Features Insights From The Boston Consulting Group and Wharton Faculty

BOSTON, MA--(Marketwire - February 3, 2011) - A "two-speed" world has emerged, characterized by slow growth in the developed countries of Europe, North America, and Japan, and faster growth in rapidly developing economies such as China, India, and Brazil. To succeed in this "new normal," companies must develop different strategies, innovative products, and new, low-cost operating models, explain experts from The Boston Consulting Group (BCG) and the Wharton School in a special report titled Rethinking Operations for a Two-Speed World.

Building a low-cost global production network that draws on the strengths of each geographical region is critical. So too is innovating products, processes, and business models to stay one step ahead and increase margins wherever possible. One thing is clear, said Joe Manget, global leader of BCG's operations practice. "You can't just export your operating model to an emerging economy. To compete successfully, you have to develop a fundamentally new model -- one that embraces the differences in culture and growth."

The new report features four segments:

  • Strategies for a Two-Speed World -- How can companies meet the needs of both low-growth and high-growth markets while differentiating themselves from foreign and local competitors?
  • Manufacturing in a Two-Speed World -- Companies need both lean products and systems that help them keep costs down, respond quickly to customer needs, and ramp volume up or down as needed.
  • Winning in Two Worlds: Supply Chain Flexibility -- How can companies create adaptable supply chains that work for both slow- and fast-growing markets, without sacrificing sales volumes or margins?
  • Innovation: The New Two-Way Play -- It takes a lower price or a better mousetrap to win market share. In rapidly growing economies, companies must release new products and services while paying strict attention to costs.

"It sounds like a cliché, but companies really do need to master the ability to think globally but act locally," said BCG senior partner and managing director Hal Sirkin. "Customizing everything for local markets is key."

Manufacturers from developed nations have capitalized on the low labor costs of emerging economies for decades. But many of these same companies are now moving R&D, distribution, and sales offshore to capitalize on emerging markets where GDP is growing dramatically and household incomes are on the rise. In 2009, China surpassed the United States to become the world's top market for new vehicles. And the large-cap companies of the S&P 500 that break out sales and profits earned abroad reported that 47 percent of 2009 sales (some $2 trillion) originated outside the United States, up from 45 percent in 2007. Many analysts expect that number to reach 50 percent soon.

As growth slows in developed nations and picks up speed in emerging economies, companies must balance the needs of both worlds cost-effectively. Success in each market requires different products, different ways of operating, and different ways of looking at the world.

To obtain a link to the report or arrange an interview with one of BCG's featured experts, 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 71 offices in 41 countries. For more information, please visit www.bcg.com.

About Knowledge@Wharton

Since its launch in 1999, Knowledge@Wharton, the Wharton School's award-winning online journal of business research and analysis, has evolved from a single website into a network of sites that provide cutting-edge knowledge and timely business analysis to more than 1.68 million registered users in 195 countries. Recognized among its peers and outside experts as the premier online business school publication, Knowledge@Wharton uses innovative technology, including podcasts, videos and mobile channels, to engage its audience.

As of 2006, the Knowledge@Wharton Network included three regional editions: Universia Knowledge@Wharton, launched in January 2003, is published in Spanish, Portuguese and English. China Knowledge@Wharton, launched in March 2005, offers articles in simplified and traditional Chinese as well as English. India Knowledge@ Wharton was launched in November 2006.

In its most recent efforts to expand its number of regional editions and in order to further provide region specific knowledge to a wider audience, Knowledge@Wharton launched Arabic Knowledge@Wharton in March 2010 in partnership with the Abu Dhabi-based Centre of Excellence for Applied Research & Training (CERT).

The audience of Knowledge@Wharton's Global Network is expanding and produces over 9 million page views annually across the sites. The subscriber base of the Knowledge@Wharton Global Network includes senior executives at Fortune Global 500 and Fortune U.S. 100 companies, among other high level managers, as well as leaders from government, academia and the media.

The Wharton School of the University of Pennsylvania -- founded in 1881 as the first collegiate business school -- is recognized globally for intellectual leadership and ongoing innovation across every major discipline of business education. The most comprehensive source of business knowledge in the world, Wharton bridges research and practice through its broad engagement with the global business community. The School has more than 4,900 undergraduate, MBA, executive MBA, and doctoral students; more than 9,000 annual participants in executive education programs; and an alumni network of 85,000 graduates.