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Winner of the 2013 Small Business Book Award - Top 10 Overall
The newest economic behemoth, China, is snatching market share from the U.S., Japan, and Europe at an alarming rate. But China isn't alone. The world's largest producers of biofuel, meat, consumer electronics, regional jets, baked goods, candy, and many other products are all emerging market multinationals (EMMs). And industries ...
Winner of the 2013 Small Business Book Award - Top 10 Overall
The newest economic behemoth, China, is snatching market share from the U.S., Japan, and Europe at an alarming rate. But China isn't alone. The world's largest producers of biofuel, meat, consumer electronics, regional jets, baked goods, candy, and many other products are all emerging market multinationals (EMMs). And industries poised to be taken over by EMMs include personal computers, IT services, mining, wind turbines, and cement.
The balance of power in the global economy is shifting.
Are you in a position to compete with the most energetic, imaginative companies on the planet?
In Emerging Markets Rule, two experts on the global shift in economic hegemony explain what is happening, why it is happening--and how you can prevent it from happening to you. The authors provide an action plan based on leaner, more operationally proficient ways for maintaining the competitive advantage based on seven new axioms of global competitiveness:
Emerging market multinationals are here to stay; they're not going to go away, even when the global economy rights itself. "What began as a necessity--a kind of guerilla-business warfare against the corporate superpowers--has now evolved into best practices and is on its way to becoming what everyone needs to know," the authors write. "Simply put, down is up. The weak have become strong."
You need to learn these new "best practices" now because tomorrow will be too late. Emerging Markets Rule is your road map for business success in the increasingly competitive, chaotic global markets.
"Emerging-market multinationals have reshaped global competition. Using well-articulated views duly substantiated with facts, this book explains why and how they have become formidable players in both high-technology and traditional industries. This book is a worthy read for businesses and individuals alike seeking to comprehend the phenomenon of the emerging market multinational." -- S. D. Shibulal, CEO and Managing Director , Infosys
"This book shows the strength and potential of companies that stand out in emerging markets, reaffirming entrepreneurship, innovation, and sustainability as fundamental factors for the outbreak of global competitors." -- Alessandro Carlucci , CEO, Natura Cosmeticos
"The authors have touched on an important idea that emerging market growth can often be tapped by companies located in those markets. This is an essential book leading us to identify the niche markets and strategies for those emerging markets. A must for all international companies with growth ambitions." -- Leonard A. Lauder, Chairman Emeritus, The Estee Lauder Companies
"A must-read for any company on its way to becoming a global one. You will learn from companies that have developed unique ways of competing in tough markets such as China and India." -- Jorge Zarate , China General Manager, Grupo Bimbo
AXIOM 1 Execute, Strategize, Then Execute Again
Winners act while losers agonize over what to do.
However beautiful the strategy, you should occasionally look at the results.
Formulating a strategic statement has become a corporate ritual, a way to keep bad spirits at bay. Stakeholders have grown to expect a clear and workable strategy emanating from the top of the corporation. Customers and suppliers, employees, and—most important—shareholders and bondholders demand proof that top management knows what it's doing in the form of a strategy. Strategies are supposed to give each department, unit, and individual throughout the organization a sense of direction and a path to achieving good performance, financial or otherwise. And sometimes strategies are indeed beautiful, especially when they contain the attributes that we expect to find in business leaders: vision, boldness, and grandiosity.
But strategy making can and does become an obsession. Too often, American, European, and Japanese multinationals suffer from a new type of corporate malaise—too much strategizing. Top managers agonize over how to formulate the perfect strategy, and when they hit upon one that captures their imagination, they get infatuated with it. Even worse, when they see performance declining, they tend to focus on changing the strategy instead of honing in on what is likely the real culprit—execution.
In his best-selling book, From Good to Great, Jim Collins concludes that "there is absolutely no evidence that the good-to-great companies invested more time and energy in strategy development and long-range planning." Indeed, in company after company, Collins found that the same strategy could lead to very different results depending on who the managers were and how they exercised leadership.
So why do executives spend so much time worrying about strategy? Why do they enjoy strategy making so much? For starters, strategizing is a good method for escaping from the nitty-gritty aspects of reality. It can even become a form of daydreaming. Execution is simply not the kind of task that the top brass finds attractive or worthy of its time. Unlike strategizing, execution requires attention to detail, precision, and constancy. Little surprise, then, that managers at so many established firms favor delegating the many nuisances involved in execution. They prefer to do the big thinking while other, often lesser paid employees are told to worry about the day-to-day.
In reality, CEOs should be deeply engaged in execution, or else change their title. Strategy determines where a business wants to go, but execution is the art of getting there. Execution means being prepared to put in practice a value proposition aimed at doing well what is good for customers—delivering products and/ or services efficiently and on time. Clearly, the winning approach involves executing before strategizing. Benetton and Matsushita are ready examples of companies with strategizing run amok.
Benetton, the Italian fashion firm once admired for its colorful sweaters and global reach, has tried at least six strategies for cracking the American market over the past decade. Management first tried exports from Italy, which turned out to be too expensive because of high manufacturing and transportation costs, and simply not in tune with consumer preferences across the ocean. Try as Benetton might, most American males simply won't buy brightly colored sweaters.
Next, the company tweaked the designs and the distribution channels, also to no avail. Then they brought in provocative billboard ads from Europe, featuring worthy causes like preventing AIDS or improving race relations, and Americans found them offensive or a naked attempt to exploit sensibilities for profit. Still later, Benetton enlisted Sears and a South Korean manufacturer in a joint venture that fell apart in the wake of the backlash against some of the controversial posters. Most recently, management has made an attempt to imitate competitors by opening megastores.
There was nothing intrinsically wrong with any of these various strategies, but the fact remains that none of them boosted the company's fortunes in the U.S. market, the world's largest. And here's why: top management disengaged itself from execution, did not follow up on details, and did not help middle management fully grasp the positive and negative feedback loops of each new strategy. They thought that their job was done once the strategizing was completed.
"The United States is very competitive and requires a specific strategy," argued Vice President Alessandro Benetton in 2010, after 20 years of losses in the American clothing market. "We are considering some alternative in terms of a specific plan for the United States." But while Benetton trots out new schemes, hoping to experience a strategic epiphany, brands like H&M and Zara have surged ahead. The value of their brands now exceeds Benetton's many times over.
Another example of a business that tragically neglected to emphasize execution: once upon a time people praised Matsushita's 250-year strategic plan. It was visionary, audacious, even epic, and it seemed to set the company on a path toward unending domestic and international growth, catapulted by the wonders of its powerful brands: Panasonic, Technics, and JVC. Such an ambitious plan certainly motivated employees by infusing their daily routines with purpose and meaning. Perhaps, then, the Japanese consumer electronics and electrical appliances giant—now known as Panasonic—should be admired for an unwavering belief in long-range planning and grand strategizing. But is it really wise to make decisions today that could tie up resources into the distant mists of time, especially in a rapidly changing global economy? To be fair, the company founder's faith in far-sighted planning was matched by a compulsive attention to detailed implementation and execution on the factory floor, where humans and machines transformed raw materials into products with mass appeal. Konosuke Matsushita instilled in his employees the values of precision and perfection. What's more, Panasonic offered a unique value proposition: products of high quality at an affordable price.
But American and European observers and managers took note of the company's strategy and long-range planning rather than of its more mundane capability to implement and execute, with dire consequences for many of Panasonic's Western rivals. Thus, Phillips and the now-defunct AEG spent years trying to come up with a long-term strategy for success in consumer electronics and household appliances, without focusing on what really made Panasonic work: operational excellence. European and American appliance makers failed to match the Japanese zeal for manufacturing excellence.
In time, too, the Japanese company forgot its own formula for success. Managerial turnover at the top, embarrassing product quality problems, and a rapid decay in design and marketing capabilities made Panasonic vulnerable to new competitors, and its market share and financial performance plummeted at the hands of South Korean and Chinese electronics and appliance companies. But make a note of why this happened, frame it, and hang it on the wall behind your desk: the issue wasn't that Panasonic had long forgotten its 250-year strategic plan. Rather, it lost ground in the marketplace because it failed to implement and execute with the passion that made it one of the greatest companies of the twentieth century. Top management was, well, sitting complacently at the top, unlike the founder's team of decades past, who spent most of their time on the
Excerpted from EMERGING MARKETS RULE by MAURO F. GUILLÃeN, ESTEBAN GARCÃ?A-CANAL. Copyright © 2013 by Mauro F. GuillÃ?n and Esteban GarcÃ-a-Canal. Excerpted by permission of The McGraw-Hill Companies, Inc..
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Introduction: A Permanent Revolution 1
1 Axiom 1: Execute, Strategize, Then Execute Again 17
2 Axiom 2: Cater to the Niches 45
3 Axiom 3: Scale to Win 69
4 Axiom 4: Embrace Chaos 89
5 Axiom 5: Acquire Smart 111
6 Axiom 6: Expand with Abandon 131
7 Axiom 7: No Sacred Cows! 151
8 Take Action! 169