Scenario planning – how to find the right strategy at ... - Roland Berger

Study 7
F2
Emerging countries plan to invest a total of nearly USD 30 trillion
in their B2B and B2C sectors over the next 20 years, according
to Roland Berger estimates
USD
30,000,
000,000,000
faucet designs. But after entering China, the company soon
discovered that Chinese homeowners do not favor sleek and trim
faucets. They want very visible, substantial handles and bodies.
After some in-house soul-searching, Hansgrohe designed a line of
heavyweight mixers exclusively for China. These bathroom fixtures
are now marketed very successfully to Chinese homeowners, but
they don't feature in the product catalog outside China.
When planning to enter emerging markets, successful companies
respond to trends outside their core industry. Siemens serves as
an excellent example of how to derive strategy from megatrends.
The company set up a dedicated department for sustainable urban
development. By tracking and analyzing broad long-term trends,
such as population change and urbanization, Siemens became a
global pioneer in sustainable urban development, especially
among emerging and developing countries. Siemens also bet on
higher emerging market demand for cheap and easy to use SMART
products: Simple, Maintenance-friendly, Affordable, Reliable
and Timely to market. With these design principles, they design
products pitched to the needs of newly industrializing and
developing countries. A good example is portable X-ray equipment,
which is now indispensable for doctors in Africa practicing in
clinics distributed across a large geographical area.
What are the risks
However, if executives do not correctly interpret emerging and
developing economy market conditions, companies may
experience difficulties. According to Roland Berger estimates,
German companies investing in emerging markets with the wrong
strategy miss potential revenues of several USD 100 million
a year. What's more, industrialized countries will find their
innovative edge quickly dulled if they miss tomorrow's trends.
Asia's automotive industry has already leapt over several
development stages in a single bound to dominate battery
technology, a critical e-mobility component. Chinese, Indian and
Arab companies increasingly bid for European and American
acquisitions. In 2011, for the first time, Europe was the top
destination for Chinese direct investment, totaling
USD 10.4 billion.