The BCG 50 Local Dynamos: How Dynamic RDE-Based Companies Are Mastering Their Home Markets—and What MNCs Need to Learn from Them
A new phenomenon is taking place in rapidly developing economies (RDEs) around the world: in industry after industry, multinational companies (MNCs) entering these markets are finding themselves facing very strong homegrown competitors. These dynamic local companies are proving fiercely competitive, and many are dominating their markets. For instance, Focus Media took just four years to become the largest outdoor-advertising company in China, with a 95 percent market share. And in Brazil, Grupo Positivo has won a larger share of the PC market than Dell and Hewlett-Packard combined.
These local dynamos, unlike the RDE-based companies we recently discussed in The 2008 BCG 100 New Global Challengers, have not gone global—yet. But they have come up with ingenious new business models that combine the intrinsic advantages they have in their home markets with cutting-edge technologies and advanced business practices. Most important, they share a genius for converting market conditions that most MNCs would see as obstacles into opportunities.
The authors of this report discuss 50 companies that they and the BCG research team have selected as representative of the broad phenomenon of rising local dynamos. They also identify the six success factors that distinguish dynamos from their less effective peers. And they suggest some important lessons that MNCs can learn from the dynamos' example.
PDF- Note to the Reader
- Spotting the Market Opportunity
- A Local Revolution
- RDE Markets: Incubators of Business Dynamism
- Six Key Success Factors
- Dueling with the Dynamos: New Rules, New Tactics
- Questions to Consider
- For Further Reading
Much has been written about companies from rapidly developing economies (RDEs) that are “going global” and conquering markets abroad. (Indeed, The Boston Consulting Group’s New Global Challengers series explores this trend.) But another set of equally important RDE-based companies are “staying home” and conquering their domestic markets. Among these companies are many that are using truly innovative business models to beat back two types of competitors: multinational companies (MNCs) that are seeking shares in those markets and established domestic incumbents, many of which are state-owned.
We call this group of companies local dynamos. They are domestically focused, at least for now, and have devised formidable business models with which to master the intense dynamics of their local markets.
MNCs seeking to capture growth in those markets are often surprised to discover how fiercely competitive the local dynamos are. Even more unsettling, many MNCs find that their own deep pockets, solid patent libraries, vast experience, successful business models, and smart employees are not enough to face down the local dynamos in their domestic markets. The issue of how to compete with these bold companies on their home turf has thus become a billion-dollar challenge for many of the world’s largest and most powerful companies.
This report has two main goals: first, to describe this new phenomenon taking place in RDE markets around the world, in which homegrown companies are effectively defending those markets against much larger foreign competitors; and second, to help readers understand how they do it. What success factors are they deploying? What strategies and tactics are local dynamos pursuing to gain a competitive edge over their bigger, wealthier, and more experienced foreign rivals? What can they teach us?
After addressing these questions, we demonstrate to MNCs that are eager to participate in RDE markets that all is not lost. A number of MNCs are winning in these markets. The path to success involves learning from the locals and borrowing from their approaches, while also bringing the MNCs’ own strengths to bear in ways the locals cannot match.
We hope you will find this report both interesting and useful, and we would welcome the opportunity to discuss the implications of our findings for your business.
Arindam Bhattacharya is a partner and managing director in the New Delhi office of The Boston Consulting Group.
David C. Michael is a senior partner and managing director in the firm's Beijing office and Head of BCG Greater China.
-
Wealth Markets in China: Seeking the Opportunity to LeadMore -
The World’s Next E-Commerce Superpower: Navigating China’s Unique Online-Shopping EcosystemMore -
The Dragon Wants to Spend: Turning the Corner on Consumer Lending in ChinaMore -
Dressing Up: Capturing the Dynamic Growth of China’s Fashion MarketMore -
Navigating the New Consumer Realities: Consumer Sentiment 2011More