During the first morning of Orange’s Live 11 event, Dr Daniel Thornily gave a rather stunning overview of the economic state of play across the world. The quick take away: Look to the emerging marketins. And the key to success for business in emerging markets? Dr Thorniley says that it is this:
Dr Daniel Thorniley at Orange Business Live 11
– and friendship
Right now, consumer products are experiencing single digit growth, but that is 7-9% in emerging markets versus 1% in the US. Over in the UK, household disposable income fell last year, and it will probably fall again this year.
There are three levels of confidence: “my friend’s friend has lost his job”, “my friend has lost his job”, “I have lost my job”. It is about levels of confidence, and companies are not confident, because consumers are not confident. USA has 9% unemployment. The average hours worked in the US last year was around 34 hours – the lowest number since 1945. Just because people are ‘in’ jobs, does not mean that they are happy and working fully.
Meanwhile, back in Europe, Dr Thorniley says “we are seeing the slow crucifixion of the Euro” – the tails of the markets are wagging national economies. There is trouble at home, as it were, which puts even more focus on the emerging markets.
To win in emerging markets, flexibility and speed are key, but compliance is not optional. Cutting corners is not an option, even in emerging markets. Don’t over burden yourself with KPIs – if you have hundreds, you have hundreds to many, focus on a dozen or so key indicators. Avoid shortermism – a challenge if you are burdened with quarterly reporting to the markets.
Dr Thorniley also had some amazing stats on Russia and doing business in Russia – Russia, Turkey and Poland are still ‘hot’ markets. Yes, they are hard to get in to, but the rewards are great. However, the world is changing. Western companies are good at selling high quality products to premium customers, That [probably] isn’t the future of business.
Although this all sounds like good news, there is a consequence to the growth in emerging markets:- increased demand for scarce resources, and the resulting cost inflation. Those price pressures will have to come back to the consumers.
The challenge for business to get out of this dilemma is to improve productivity and efficiency. It is genuinely more and more critical, and IT has a key roll to play in that, which is why the sector remains healthy.