@Revolution:Global Business News

New Economy, Leadership, Entrepreneurship, Management, Global Business

Capital Management

Posted by iBlog on January 6, 2008

Most business executives around the world agree that global social, environmental, and business trends are generally more important to corporate strategy than they were five years ago. But relatively few companies act on these trends, and many of those that do appear to be acting tentatively and have yet to see significant positive results, according to the latest McKinsey Quarterly survey.1

Take, for instance, the growing number of consumers in emerging economies. Almost eight respondents out of ten consider this trend important for global business, and six in ten think it will have a positive impact on their companies’ profits. Yet little more than one-third say that their companies have taken active steps to address it.

The survey also revealed that only 17 percent of the executives report that actions their companies have taken on such trends have produced a significantly positive result. One reason might be that companies are not making all of the (or the right) strategic moves to realize the full opportunities of the trends. Almost seven executives out of ten, for example, say that their companies addressed the consumer trend by building operations or expanding existing ones in emerging economies. But just slightly more than four in ten report that their companies developed new, lower-cost products or services for customers in these economies—which is often a prerequisite for serving the huge and fast-growing middle-income segment in, for instance, China and India.

Why don’t companies act on trends that their executives say are important? Respondents often cite higher strategic priorities and a lack of skills and resources or say that their companies simply haven’t yet decided whether or not to act.

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