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EMEA in 2017: Five things MNCs need to get right

Tags: mncs market emea

The “new normal” that started with the drop in global commodity prices in 2014 will extend well into 2017, with sluggish developed Market growth, continued slowdown in China, and low commodity prices is creating a challenging environment for Mncs to accelerate growth. While EMEA markets will see a relative stabilization in volatility, and a slight pick-up in growth, this is a far cry from the strong recovery many MNCs are hoping for.

So in the absence of a rebound in growth, what should MNCs be doing to improve performance during 2017? The short answer is, business as usual will be increasingly risky. Companies need to adjust their expectations and assumptions about the long-term size and growth potential of their opportunities in the region, and focus on relentless prioritization in terms of where they can win and how they can do it. This calls for five key executional priorities:

  1. Create a balanced regional portfolio

The gaps between the winners and losers from the commodity price drop in EMEA continue to expand. A number of commodity exporting markets are reshaping governance policy and budgets, and with that, the operating environment for MNCs. As growth in most of EMEA’s largest markets is slow, and the fast-growth opportunities in the region are generally small and/or risky, MNCs need to take a careful look at their EMEA market portfolios and ensure that the assumptions that underline their priority investments are still valid. Additionally, companies should increasingly be looking for opportunities sub-nationally, prioritizing, for example, cities, regions, or specific sectors and segments where they have the highest potential to win.

  1. Align execution along segments

Increasingly, we see leading MNCs tailoring their channel, marketing, product, and pricing strategies to specific segments within individual markets, and this will become a more prominent strategy as competition in the largest, slow-growing markets in the region accelerates. This is already a clear trend in markets such as Russia, but we expect to see more companies applying it in large, priority markets such as Saudi Arabia and South Africa during 2017.

  1. Enhance the sophistication of your channel

Currency depreciation and public spending shifts have made customers in many EMEA markets a lot more price sensitive. This is a challenge for MNCs looking to sell high-quality, more expensive products, especially if they import, rather than produce locally. To defend their price premiums against lower-cost competitors, companies will increasingly need channel partners who can run sophisticated sales processes, excellent after-sales support, bidding for complex tenders, and best-in-class marketing and information collection. In other words, the channel will increasingly need to professionalize and become more of a strategic partner, rather than a mere reseller, to defend price premiums and position MNCs in segments where their products can be most competitive. MNCs have a key role to play in making this transition by shifting their incentives, monitoring, and the support they provide to local partners.

  1. Develop a localization strategy

While MNCs have been under pressure to localize teams, products, and manufacturing in multiple EMEA markets for several years now, these pressures have accelerated as governments seek to boost local production and defend domestic players. In many cases, there are clear tradeoffs between localizing in one market vs. another, and companies will increasingly need to approach this question as part of their broader regional or even global strategy, rather than a country-specific issue.

  1. Manage ongoing disruptions

The relative stabilization in growth in EMEA does not mean companies will face a predictable 2017. In fact, political and economic pressures and disruptions as diverse as China’s slowdown, the US presidential election, and a series of political shifts in Western Europe and Africa will require MNCs to remain vigilant. To do so, regional leaders need to empower local teams with the tools and frameworks to systematically monitor the local environment and have sufficient flexibility to suggest course corrections and adjustments.

While 2017 is unlikely to bring the much-awaited emerging markets recovery MNCs are hoping for, it is within companies’ control to adjust more quickly and effectively to this environment and get ahead of their competitors. The ones who do will dominate EMEA’s new normal.

EMEA in 2017: Disruptor Summary

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The post EMEA in 2017: Five things MNCs need to get right appeared first on Emerging Markets Insights.

This post first appeared on Emerging Markets Insights: A Blog By Frontier S, please read the originial post: here

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EMEA in 2017: Five things MNCs need to get right


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