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How Companies in Emerging Markets Are Winning at Home

BCG's 2014 Local Dynamos are formidable competitors, defeating foreign and local companies with a comprehensive understanding of their own backyards and a willingness to “go for it.” Global companies seeking to compete in these markets must emulate the characteristics of the Local Dynamos while emphasizing their core advantages as MNCs.

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How Companies in Emerging Markets Are Winning at Home

  1. 2014 BCG Local Dynamos How Companies in Emerging Markets Are Winning at Home August 2014
  2. 2014 BCG Local Dynamos slideshare v7 LZCF .pptx 1 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. BCG has been the leading source for information about global and regional challengers since 2006 2006 China's Global Challengers 2009 The 2009 BCG 100 New Global Challengers 2009 From Crisis to Opportunity 2006 The New Global Challengers 2008 The 2008 BCG 100 New Global Challengers 2011 2011 BCG New Global Challengers 2008 The BCG 50 Local Dynamos 2010 The African Challengers 2009 The 2009 BCG Multilatinas 2012 2012 BCG Southeast Asian Challengers 2013 2013 BCG Global Challengers 2012 The 2012 BCG 50 Chinese Global Challengers Source: BCG analysis.
  3. 2014 BCG Local Dynamos slideshare v7 LZCF .pptx 2 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. The latest addition to the series is 2014 BCG Local Dynamos: How Companies in Emerging Markets Are Winning at Home Emerging markets remain global growth engines. The newest local dynamos excel at converting the constraints of those markets into profitable opportunities. Source: BCG analysis.
  4. 2014 BCG Local Dynamos slideshare v7 LZCF .pptx 3 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Emerging markets continue to present strong growth prospects Population Growth Emerging markets are growing four times faster than mature markets • By 2020, 6.4 billion people will live in emerging markets • South Asia and Africa contribute the most growth Consumption Growth By 2020, emerging markets will add 730 million middle- and affluent-class consumers • These consumer will account for 35 percent of spending • Nearly half of the emerging-market population will be middle-class or affluent Urbanization By 2020, emerging markets will add 600 million urban dwellers • About 40 percent of the world's population will live in these cities • Emerging-market cities will grow ten times faster than mature- market cities Trade Liberalization More than 350 free- trade agreements are in place today • The free-trade movement has been especially strong in the past decade • The Trans-Pacific Partnership and Regional Comprehensive Economic Partnership talks are ongoing Sources: International Monetary Fund; BCG analysis.
  5. 2014 BCG Local Dynamos slideshare v7 LZCF .pptx 4 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Multinational companies have high aspirations for growth in emerging markets 0 25 50 75 100 Significantly gain market share Gain market share Keep pace with market Percentage of those that expect to gain share in emerging markets 92 56 22 14 % Performance in emerging markets 81 35 22 24 Source: BCG Globalization Readiness Survey. Note: The sample size = 156. 78% 78% of multinational companies aspire to gain market share in the future
  6. 2014 BCG Local Dynamos slideshare v7 LZCF .pptx 5 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. But local competitors constitute the largest threat in emerging markets For each type of competitor in this emerging market, how big is the competitive threat? Local companies are much more aware of market trends and nuances, much more agile in terms of response. There is greater focus and investment by the competition. There are simply too many attractive market opportunities around the globe. Multinational corporations are therefore spread thin while locals are very focused. Local competitors are far more effective at scaling their business in terms of ramping up headcount, decision making, and execution. Source: BCG Globalization Readiness Survey. 40 50 73 0 10 20 30 40 50 60 70 80 Multinationals based in developed markets Multinationals based in emerging markets Locally based companies in a specific emerging market %
  7. 2014 BCG Local Dynamos slideshare v7 LZCF .pptx 6 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Meet the 2014 local dynamos Based in RDEs Located in rapidly developing economies Local Focused primarily on their home market Private sector Are not government owned and do not enjoy monopolistic privileges Innovative Have deployed formidable business models to master the challenges of their markets Successful Market performance is very strong when compared with multinationals and established local incumbents Source: BCG analysis. Note: RDE = rapidly developing economies. The five characteristics of local dynamos
  8. 2014 BCG Local Dynamos slideshare v7 LZCF .pptx 7 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. A three-step framework helped identify the 2014 local dynamos Source: BCG analysis. Note: RDEs = rapidly developing economies. Select the final set of dynamos The RDEs were divided into seven regions on the basis of location and size: Africa, China, India, Latin America, Middle East and Turkey, Russia, and Southeast Asia Companies in each region met the following criteria: • They were successful and domestically focused, with strong market positions despite lacking traditional bases of incumbency – The were not owned by the government – The did not have privileged access to resources or the market • They succeeded by adapting to the unique challenges of their home markets and are regarded as outstanding successes by local analysts and industry peers Companies chosen for the final set offered the following: • Interesting business models or compelling stories • Representation of a wide range of industries and regions • Variation in size and profitability • Lessons for multinational corporations Create a short list of the best companies within each region Steps Criteria 2 3 Divide RDEs into regions 1
  9. 2014 BCG Local Dynamos slideshare v7 LZCF .pptx 8 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. The 2014 local dynamos represent 20 countries • China Minsheng Bank • Dalian Wanda Group • HaiDiLao Hotpot • Home Inns & Hotels Management • Jia Duo Bao • Jiangsu Hengrui Medicine • S.F. Express • Tingyi Cayman Islands Holding Company • Xiaomi • Yonghui SuperstoresBrazil • Cielo • Enalta Inovações Tecnológicas • GranBio • Magazine Luiza • Ourofino Chile • Banco de Crédito e Inversiones Colombia • Quala Mexico • Banco Mercantile del Norte • Cinépolis Kenya • Equity Bank Morocco • Douja Promotion Groupe Addoha Nigeria • Guaranty Trust Bank South Africa • Discovery Health • Woolworths Zambia • Zambeef Products • Bashneft • Mail.Ru • • Tinkoff Credit Systems Bank Saudi Arabia • Abdul Latif Jameel • Almarai Turkey • Abdi Ibrahim • BIM • LC Waikiki United Arab Emirates • Air Arabia Indonesia • Bank Rakyat Indonesia • Wings Malaysia • RHB Banking Group • SapuraKencana Petroleum Philippines • SM Thailand • Bangkok Dusit Medical Services Vietnam • Masan Group • Amara Raja • Bennett, Coleman & Company • Flipkart • IndiGo • Jubilant FoodWorks • Micromax • Narayana Health • Shriram Transport Finance China (10) India (8) Southeast Asia (7) Russia (4) Latin America (9) Africa (6) Middle East and Turkey (6) Source: BCG analysis.
  10. Blank.potx 9Draft—for discussion only Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. A high proportion of the 2014 local dynamos are in the consumer goods and financial services industries 22 20 16 12 10 10 6 4100 80 60 40 20 0 Consumer goods Financial services Industrial goods and energy Retail Internet and technology Health care Travel Entertainment and media % Sector Industry Business type 44 8 26 22 100 80 60 40 20 0 % B2C B2B Mixed Other 62 3880 0 60 40 20 100 Services Manufacturing % Source: BCG analysis. Note: B2B = business to business; B2C = business to consumer. Most dynamos operate in the services sector and conduct business with consumers directly
  11. 2014 BCG Local Dynamos slideshare v7 LZCF .pptx 10 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. The new local dynamos grow faster than their peers Annual revenue growth, 2009–2013 3 5 11 28 0 10 20 30 % MSCI Emerging Markets Index companies MSCI World Index companiesBCG local dynamos S&P 500 companies Sources: Bloomberg; BCG analysis.
  12. 2014 BCG Local Dynamos slideshare v7 LZCF .pptx 11 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. The new dynamos also create stronger value than their peers 0 100 200 300 400 1/1/20141/1/20131/1/20121/1/2010 1/1/20111/1/2009 Index of total shareholder return 2009–2013 (base=100) MSCI Emerging Markets IndexMSCI WORLDBCG local dynamos S&P 500 Sources: Thomson Reuters Datastream; BCG analysis. Note: The index of total shareholder return for BCG local dynamos is based on publicly traded companies.
  13. 2014 BCG Local Dynamos slideshare v7 LZCF .pptx 12 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Catering to customers and local conditions Leveraging digital technologies Operating at warp speed Adapting to uncertainty and circumstance Building talent engines Establishing functional excellence Key success factors Capabilities that are specific to the business models that dynamos deploy to thrive in emerging markets Strengths and skills commonly found in multinational companies Competitive advantages BCG identifies the six key success factors of the new local dynamos Source: BCG analysis.
  14. 2014 BCG Local Dynamos slideshare v7 LZCF .pptx 13 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Key success factors Example Case study Bank Rakyat Indonesia Indonesia's most profitable bank brings the bank to the customers. It sends employees with handheld devices into 2,300 busy markets and bazaars to serve street vendors and merchants, who have limited time for bank transactions. Xiaomi Xiaomi has skyrocketed to success by capturing the enthusiasm for the Internet among young people in China. The company relies solely on e-commerce to sell devices and solicits design ideas from customers online. In 2013, it sold about 18.7 million smartphones in China, outselling Apple. Home Inns & Hotels Management Home Inns saw an opportunity in the underserved and fragmented budget-hotel market in China and moved aggressively to fill it. Using a combination of acquisitions and franchising, the company grew fourfold in five years. Equity Bank Equity Bank successfully serves customers in rural Kenya by using a combination of agents and mobile banking, eliminating the need for customers to travel long distances to reach a bricks-and-mortar branch. Cinépolis Cinépolis cultivates both internal and external talent. Dedicated recruiting, two- year management training, MBA sponsorship, and Cinépolis University are all available to employees, while members of the public are invited to attend the SeedCamp program to enhance customer experience. Narayana Health Narayana Health provides affordable health care in India by leveraging economies of scale. They build "health cities" with high numbers of beds at each site, resulting in high asset utilization, greater bargaining power with vendors, and highly trained physicians. Each of the key success factors is illustrated in the local dynamos' unique path to success Catering to customers and local conditions Leveraging digital technologies Operating at warp speed Adapting to uncertainty and circumstance Building talent engines Establishing functional excellence Source: BCG analysis.
  15. 2014 BCG Local Dynamos slideshare v7 LZCF .pptx 14 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. More information about BCG’s 2014 research on global and regional challengers Authors of this analysis Vincent Chin Senior Partner and Managing Director BCG Singapore David Michael Senior Partner and Managing Director BCG San Francisco 2014 BCG Local Dynamos How Companies in Emerging Markets Are Winning at Home A report by The Boston Consulting Group July 2014 2013 BCG Global Challengers Allies and Adversaries A report by The Boston Consulting Group January 2013 The 2011 BCG Global Challengers Companies on the Move: Rising Stars from Rapidly Developing Economies Are Reshaping Local Industries A report by The Boston Consulting Group January 2011 The African Challengers: Global Competitors Emerge from the Overlooked Continent A Focus by The Boston Consulting Group June 2010 The BCG 50 Local Dynamos: How Dynamic RDE-Based Companies Are Mastering Their Home Markets—and What MNCs Need to Learn from Them A report by The Boston Consulting Group March 2008 Source: BCG analysis. To request a more detailed overview of the findings, please contact To request a media interview, please contact Eric Gregoire at To discuss the findings with a BCG expert, please contact Belinda Gallaugher at Publications are available on BCG's thought leadership portal,, and at Highlights from this series