1. How to think about strategy for
new emerging markets
Beyond BRIC
December, 2010
2. Dalberg provides strategic advice to funders, NGOs, social entrepreneurs,
corporations, governments and international institutions
Global 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
Johannesburg
Strategic 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)
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3. Most Danish companies are still producing in Denmark for a Danish or EU
audience
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. Strategy formulation and execution is a different exercise when the context
may 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. 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
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6. How well does your product and business model
align 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. 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. Who do you critically depend on in your value chain and what is the structure
of 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. By reaching out to 20,000 companies and score 800 institutions we found a new
class of very professional non-commercial partners
The top of the list was a surprice to
many in the sector
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 model
Source: Organization websites (links above), Partnering for Global Development (BCLC), Public-Private
Partnerships Transform Aid (SSIR), AD internal research and analysis
11. Partnership building has over the past 10 years gone from symbolic to
very operational and value-adding
High
Traditional Development: Emerging Partnership Models
• Supply-side bias
Complex
Public Coalition
Sector Structures
Social
development
Private
Sector
Market Based Approach
Low • Demand-side bias
Low Financial development High
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Source: ”Development Collaboration: None of Our Business?”, Accenture Development Partnerships
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
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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
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