How to think about strategy fornew emerging marketsBeyond BRICDecember, 2010
Dalberg provides strategic advice to funders, NGOs, social entrepreneurs,corporations, governments and international insti...
Most Danish companies are still producing in Denmark for a Danish or EUaudience                     Emerging              ...
Strategy formulation and execution is a different exercise when the contextmay change in a matter of months instead of yea...
Strategic thinking in frontier markets is a game of additionality                                                         ...
How well does your product and business modelalign to the needs of the local market?               The key challenges     ...
How well does the value chain to your target market work?                The key challenges                               ...
Who do you critically depend on in your value chain and what is the structureof the relationship?              The key cha...
By reaching out to 20,000 companies and score 800 institutions we found a newclass of very professional non-commercial par...
Hundreds of programs are being now developed every year Agency – Program                  Key Figures              Key Tre...
Partnership building has over the past 10 years gone from symbolic tovery operational and value-adding             High   ...
How much of the value of your products are you effectively able to capture?               The key challenges              ...
Questions for discussion            Questions            • What do you see as the biggest barrier to getting started on   ...
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Dalberg Workshop - Beyond BRIC

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Dalberg Workshop - Beyond BRIC

  1. 1. How to think about strategy fornew emerging marketsBeyond BRICDecember, 2010
  2. 2. Dalberg provides strategic advice to funders, NGOs, social entrepreneurs,corporations, governments and international institutionsGlobal presence Expertise in topics critical to global development • Global health • Access to finance • Climate change, conservation and energy Copenhagen • Programs in conflict areas, and post-conflict recovery Geneva San New York • Agricultural development Francisco Washington DC • Education Dakar Mumbai • Human rights Nairobi • Emerging and bottom-of-pyramid markets Santiago • Corporate supply chains JohannesburgStrategic advisory services Broad range of clients and partners• Strategic roadmaps and portfolio design• Impact assessment• Multi-stakeholder facilitation• Recommendations on strategic partnerships• Due diligence on grantees/investees• Technical assistance to grantees/investees• Program/portfolio management World Bank• Operational improvements (for large programs)• Policy advice (for governments and international institutions) 1
  3. 3. Most Danish companies are still producing in Denmark for a Danish or EUaudience Emerging Falling star Rising Star markets 75% of global Danish economic growth engineering Best Seller is taking place firms Bo Concept here Sales Majority of Danish SMEs Most Denmark/ Danish C20 companies EU Problem child Cash Cow Denmark /EU Emerging Markets Production 2
  4. 4. Strategy formulation and execution is a different exercise when the contextmay change in a matter of months instead of years Megatrends have a faster acceleration and deeper impact.. • Urbanisation from rural to urban Demand and • The effects of climate change Development opportunity • Explotion in the need of health, and trends agriculture, and energy services due opportunity to demographics trends Still a reality, but in The new emergng reality... decline.... • Explotion in South-South trade • State own • Local financial are becoming enterprises that are Development sector Economic mature very active players trends conditions • Emergence of middle class with • Legislation not new demands implemented • Wish for technology leap • Hiring or firing of frogging staff can be a year • Governments that increasingly long exercise are becoming assertive and can • Red tape is given stimulate own economy • Desire for Public-Private 3 Partnership models
  5. 5. Strategic thinking in frontier markets is a game of additionality Barrier of Value entrance Value proposition proposition Total Economics Value chain Acess Strategy for and frontier markets financing Access/par- tnerships Partnering 4
  6. 6. How well does your product and business modelalign to the needs of the local market? The key challenges • How to avoid changing price • A Swedish house fabrication company policy, product features, and located in Malmø Value learning a new market in one proposition exercise • Offering: prefabricated houses and local • Avoid having too many production partnership business models running in 35% parallel due to the often very • Product: Structural insulated panels diverse market needs and (SIPs) that are made by sandwiching a spending potential of various core of expanded polystyrene (EPS) segments between two structural boards What can be done? 26% • Understand the public and private market segments and be willing to change e.g. from B to C models to B to B models • Avoid focusing only on countries, but give sufficient attention to the company’s role in a global or regional value chain 5
  7. 7. How well does the value chain to your target market work? The key challenges Dalberg client NN, a multinational • How to recreate a profitable agriculture company seeking to enter business in a value chain, where African market many of the typical rutine and Value chain commoditized elements are weak • Across the value chain was obstacles in or non-existing origination, process & refining, • How to penetrate a market where packaging, marketing/distribution, and specific companies/public warehousing agencies are controlling vital parts of the value chain? • Also physical infrastructure, skills gab, and red tape and high tarrifs had to be addressed What can be done? 26% • Create partnerships with organisations that can provide capabilities to close the gaps in the value chain • Engage in policy dialogue and best practices with governments and potential develop joint programs • Establish alliances or acquire with gatekeeper businesses 6
  8. 8. Who do you critically depend on in your value chain and what is the structureof the relationship? The key challenges • How to find the correct partners that can make up for the short Partnering comings in the value chains and eco systems? • How to constructive the true win- 35% situations, so non-traditional win partners also have a long-terms interest in sustaining the partnership? What can be done? 26% • Use analoges from other industries or other countries to find out what features the most desired partners should have • Consider all partner options from alliances, M/A, joint programs, etc. • Conduct very serious due dilligence on potential non- traditional partners 7
  9. 9. By reaching out to 20,000 companies and score 800 institutions we found a newclass of very professional non-commercial partners The top of the list was a surprice to many in the sector
  10. 10. Hundreds of programs are being now developed every year Agency – Program Key Figures Key Trends, Focus Areas and Partners DANIDA – Dept for $3M budget Partnerships focus on Danish-based organizations and local partners: Business 96 B2B •B2B Partnerships – Long-term business linkages with Danish & local companies Cooperation & TA partnerships •Innovative Partnerships for Development (IPD) – Partnerships in CSR and SRI 2008/2009 DFID Works across all sectors of donors and investors. Focus on MNC partnerships: aid: £3.3B (57%) • Push Boundaries – business practices to support MDG DFID – Business for bilateral, £2.3B • Promote growth –create the right conditions to encourage business Development (39%) multilateral £337B channeled • Responsibility –promote successful corporate responsibility thru UK NGOs DFID’s recent PPPs focused on transparency, health, & innovative finance facilities: •Extractive Industries Transparency Initiative (EITI) •Major funder of the GAVI Alliance • Helped create International Finance Facility for Immunization (IFFIm) 437 alliances •PPPs: partner through competitions, strategic alliances, financing facility $238.4M funds •Global Compact: coordinates the German Global Compact Network GTZ – Public-Private (thru 2007) •CSR: advisor to help companies address and implement CSR practices Partnership •Projects –56% in Asia & Africa; 41% in economic reform •Partnership Fund Ratio – 37% GTZ, 49% private, 15% other. $4-$5M est. budget Partner with private sector, multilaterals, civil NGOs and universities: for 2010 •Private sector partnering focused on financing, cooperation forums, dialogue, business SIDA – Dept of Dev information and competence development. Partnerships •Swedish Business for Development (B4D) – linking all businesses SMEs  MNCs $9B in alliances Leader in cross-sector partnering, focus on multiple partners and target USAID investment at 680 alliances ~25% and leveraging field staff to drive partnerships. USDA - GDA 1,700 partners •16 person team divided by region sector, technical training ~$15M program •Field-driven partnerships budget in 2005 •2.7:1 avg partners: USAID ratio •Moving toward Global Framework modelSource: Organization websites (links above), Partnering for Global Development (BCLC), Public-PrivatePartnerships Transform Aid (SSIR), AD internal research and analysis
  11. 11. Partnership building has over the past 10 years gone from symbolic tovery operational and value-adding High Traditional Development: Emerging Partnership Models • Supply-side bias Complex Public Coalition Sector Structures Socialdevelopment Private Sector Market Based Approach Low • Demand-side bias Low Financial development High 10 Source: ”Development Collaboration: None of Our Business?”, Accenture Development Partnerships
  12. 12. How much of the value of your products are you effectively able to capture? The key challenges • How to finance services from commercial and non-traditional Total economics partners in a way that still makes • Vestergaard Frandsen is a European ones own products profitable? company specializing in complex emergency response and disease control products (Bed nets, Lifestraw) What can be done? 26% • Create public-private partnerships • The company have several partnering • Find social investors that are models where they don’t bare all the costs willing to pay for the additionality to sell their products: • Connect north and south sales • Donation model e.g. via partnership and marketing efforts with Rotary • Find alternative income sources • Carbon credit markets (could over for partners make their Lifestraw free) • Joint programs with UNICEF, where their products in a part of a larger health package and campaign • Social investment, where Acumen is co-funding scaling up mechanisms 11
  13. 13. Questions for discussion Questions • What do you see as the biggest barrier to getting started on emerging markets? • What do you anticipate to be the largest strategic challenge to obtain a correct posture in an emerging market? • Is there anything that the Danish Government or industry associations can do to help overcome these additional strategic obstacles 12

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