resilient growth final

8/3/2019 Resilient Growth Final

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PwC Resilient growth: Making the most of opportunities away from home 3

As emerging-market growth continues to outstrip!"#!$%&$#'(#)*+'$+*%)%,-+.$,-/+'$-)$0.*#1$#)'$debt crises, it is not surprising that an increasingnumber of companies are refocusing their growthstrategies on those fast-growing markets. With 2%3!"&31$4%431#!-%).5$/-.-)6$4+/$*#4-!#$-)*%,+.$#)'$%&!+)$"+#1!"2$4371-*$0)#)*+.5$+,+/6-)6$,#/8+!.$have moved centre stage for both intercorporate#.$9+11$#.$-)!+/6%(+/),+)!#1$*%,4+!-!-%)$&%/$-)(+.!,+)!:$;"-1+$,#)2$<=>.$)#!3/#112$6/#(-!#!+$toward the prospect of opportunity, their optimism#7%3!$+,+/6-)6?,#/8+!$4%!+)!-#1$)++'.$!%$7+$,%'+/#!+'$72$"+#1!"2$/+#1-.,$#)'$.%3)'$.!/#!+6-*$41#))-)6$#)'$+@+*3!-%):$

Despite sustained higher growth rates-)$+,+/6-)6$,#/8+!.5$,#)2$<=>.$#/+$.!-11$*#3!-%3.$#7%3!$(+)!3/-)6$&%/!":$ A.$#$/+.31!5$0/.!?,%(+/$#'(#)!#6+.$ in some of these markets are being+)B%2+'$72$,31!-)#!-%)#1.$&/%,$%!"+/$emerging-market countries, most)%!#712$<"-)#5$C/#D-1$#)'$E)'-#:$F/#'+$among emerging-market countries

#**%3)!.$&%/$GHI$%&$!%!#1$61%7#1$!/#'+$today, and a third of foreign directinvestment into emerging-marketcountries now originates from+,+/6-)6?,#/8+!?'%,-*-1+'$0/,.:$

C3!$31!-,#!+125$&%/$#)2$*%,4#)25$entering or growing in these markets'+,#)'.$#$*1+#/$3)'+/.!#)'-)6$%&$!"+$"3/'1+.$!%$+.!#71-."-)6$%/$+@4#)'-)6$#$4/+.+)*+$-)$#)$3)&#,-1-#/$,#/8+!5$ working with partners in an uncertain

%44%/!3)-!-+.$-)$3)&#,-1-#/$,#/8+!.5$#1%)6$!"/++$.!#6+.J

1. entering a market

2. maintaining a presence

K:$'+*-'-)6$!%$+@-!$#$,#/8+!

E!$#1.%$*%).-'+/.$!"+$4#/!-*31#/$)++'$ !%$73-1'$#$/+.-1-+)!$61%7#1$.34412$*"#-):$=#*"$.+*!-%)$%&&+/.$#$*%)*-.+$!%%18-!$%&$L3+.!-%).$!%$9"-*"$<=>.$)++'$#).9+/.$!%$#..+..$6/%9!"$4/%.4+*!.$/+#1-.!-*#112$#)'$."#4+$.!/#!+6-+.$#**%/'-)612:$A.$uncertainty continues about the state of ,#B%/$#'(#)*+'$+*%)%,-+.5$!"+$#44+#1$%&$"-6"?6/%9!"$,#/8+!.$/-.+.:$C3!5$however strong its current growth rate,)%$*%3)!/2$-.$-,,3)+$&/%,$!"+$-11.$%&$!"+$61%7#1$+*%)%,2:$A$/-6%/%3.$approach to assessing and monitoring7%!"$%44%/!3)-!-+.$#)'$/-.8.$-.$+..+)!-#1$!%$.3**+..$-)$3)&#,-1-#/$,#/8+!.:

Figure 1: Emerging economies will grow faster than developed economies

F o r e c a s t a v e r a g e a n n u a l G D P g r o w t h , 2

0 1 2

Italy

Spain

France

Germany

United Kingdom

Canada

United States

Japan

Central & Eastern Europe

Brazil

Mexico

Middle East & North Africa

Russia

Argentina

ASEAN-5*

Sub-Saharan Africa

India

China 9.5

7.8

5.9

5.7

4.6

4.5

4.4

4.0

3.6

3.2

2.9

2.7

2.6

2.3

2.0

1.9

1.6

1.3

%

Developing Developed

*Indonesia, Malaysia, Philippines, Thailand and Vietnam.

Note: Select economies shown, using IMF designations.

Source: IMF, World Economic Outlook , 2012 projections, 16 June 2011

Contents Introduction

Introduction ................... 2

Section 1 A two-speedeconomy sets the stage ..........5

Section 2 Global growth strategies: factoring in greater

operational complexity

and risk ............................ 9

Risk monitoring for different

stages of market participation

Market entry ......................11

Market presence ..................14

Market e xit .........................19

Supply chains .....................20

Section 3 Balancing

opportunities and risks ....... 23

Contacts and

contributors.................. 27

environment, sustaining constructive6%(+/),+)!$/+1#!-%).$#)'$,%)-!%/-)6$#$,%/+$*%,41+@$.34412$*"#-)$)+!9%/8:$F"+$4#/!-*31#/.$%&$+#*"$,#/8+!$/+L3-/+$more rigorous attention to changeto determine approaches to bothopportunity and risk.

F"+/+$-.$)%$/+*-4+M$)%$!9%$+,+/6-)6$

,#/8+!.$#/+$!"+$.#,+:$;"-1+$%)+$,#2$be attractive to a South American#6/-&%%'$*%,4#)25$&%/$+@#,41+5$-!$,#2$"%1'$1-!!1+$4/%,-.+$&%/$#$=3/%4+#)$/+!#-1+/:$<%3)!/2$6/%9!"$/#!+.$#1%)+$'%)N!$!+11$!"+$9"%1+$.!%/2:$A*"-+(-)6$6/%9!"$-)$3)&#,-1-#/$,#/8+!.$'+,#)'.$#$,%/+$'+1-7+/#!+$#1-6),+)!$of risk monitoring with both strategic41#))-)6$#)'$%4+/#!-%)#1$+@+*3!-%)$!"#)$+(+/$7+&%/+:$F"-.$/+4%/!$'-.*3..+.$how companies can weigh the array of /-.8.$!"#!$6%$#1%)6$9-!"$!+,4!-)6$




Section 1 A two-speed economy sets the stage

Figure 2: CEOs are confident about growth over the next 12 months

Q: How confident do you feel in prospects for the revenue growth of your company over the next 12 months?

Very confident

Somewhat confident

Not very confident

Not confident at all

Don’t know/uncertain

42

38

15

4

1

%

Base: All respondents (201).

Source: PwC Pulse Survey of the International CEO Panel of PwC’s Annual Global CEO Survey, 26 July 2011

OA)2$-)'3.!/-#1$*%,4#)2$P$-&$-!N.$6%-)6$!%$7+$#$61%7#1$1+#'+/$P$

"#.$!%$"#(+$#$1#/6+$4/+.+)*+$-)$+,+/6-)6$,#/8+!.5Q$.#-'$='9#/'$R:$C/++)5$<"#-/,#)$#)'$<=>$%&$F2*%$E)!+/)#!-%)#15$7#.+'$-)$

S9-!D+/1#)'5$.3,,-)6$34$!"+$,%%'$%&$/+.4%)'+)!.$!%$!"+$

PwC 14th Annual Global CEO Survey. “Fifteen percent of our

revenue right now is coming from emerging markets and 9+N/+$1%%8-)6$!%$'%371+$!"#!$-)$!"+$)%!?!%%?'-.!#)!$&3!3/+:$E!N.$

#)$%44%/!3)-!2$!"#!$2%3$"#(+$!%$!#8+$(+/2$.+/-%3.12:Q

E)$#$/+*+)!$T31.+$.3/(+2$%&$!"+$-)!+/)#!-%)#1$<=>$4#)+1$!"#!$*%)!/-73!+.$!%$T9<N.$ Annual GlobalCEO Survey,$GUI$%&$!"+$UVW$<=>.$surveyed said they were “very *%)0'+)!Q$#7%3!$!"+-/$*%,4#)-+.N$growth prospects in the coming year, with the number rising to 54%/+412-)6$O(+/2$*%)0'+)!Q$#7%3!$

6/%9!"$4/%.4+*!.$%(+/$!"+$)+@!$ three years. (See Figures 2 and 3.)F"+.+$/+.31!.$,#2$#44+#/$.3/4/-.-)6$6-(+)$!"+$)3,7+/$%&$9#/)-)6$1-6"!.$.!-11$X#."-)6$%)$<=>.N$+*%)%,-*$'#."7%#/'.:$Y%9+(+/5$!"-.$*%)0'+)*+$.++,.$7#.+'$%)$#$.37.!#)!-#1$.!/#!+6-*$

rethink undertaken in the aftermath%&$!"+$-)-!-#1$+*%)%,-*$*/-.-.:$E)$!"+$WG!"$61%7#1$<=>$.3/(+2$Z*%)'3*!+'$ -)$!"+$0)#1$L3#/!+/$%&$UVWV[5$%(+/$#$!"-/'$%&$<=>.$/+4%/!+'$!"#!$!"+2$"#'$#1/+#'2$*"#)6+'$!"+-/$.!/#!+62$O-)$&3)'#,+)!#1$9#2.Q$%(+/$!"+$4#.!$!9%$ 2+#/.5$#)'$#)%!"+/$"#1&$/+4%/!+'$!"#!$!"+2N(+$O.%,+9"#!$*"#)6+'Q$!"+-/$

strategies. Despite the recent high1+(+1$%&$+*%)%,-*$!3/,%-1$#)'$%)6%-)6$3)*+/!#-)!25$<=>.$,#2$)%9$&++1$,%/+$4/+4#/+'$&%/$&3!3/+$."%*8.$#.$#$/+.31!$%&$!"%.+$.!/#!+6-*$*"#)6+.:$\#)2$0/,.$focused on costs and margins, andeven as markets have reacted to poor

macroeconomic data a nd themenace of sovereign debt contagion,companies in various sectors have/+!3/)+'$"+#1!"2$+#/)-)6.$#)'$4/%0!.:$

C3!$!"+/+$,#2$7+$#$,%/+$&3)'#,+)!#1$*"#)6+$-)$!"+$7#.-.$&%/$<=>$*%)0'+)*+$1+(+1.J$#.$!/#'-!-%)#1$+*%)%,-*$1+#'+/.$.!/3661+$!%$.3.!#-)$#$/+*%(+/25$

+,+/6-)6?,#/8+!$6/%9!"$"#.$"#/'12$&#1!+/+'5$#)'$!"+-/$*%)!/-73!-%)$!%$61%7#1$]RT$#)'$6/%9!"$*%)!-)3+.$!%$/-.+:$F"+$C^E<$+*%)%,-+.$#**%3)!+'$ &%/$B3.!$W_I$%&$61%7#1$]RT$-)$UVWV$73!$#/+$+@4+*!+'$!%$#**%3)!$&%/$GVI$%&$ 9%/1'$]RT$6/%9!"$%(+/$UVWW$#)'$UVWU:$




Figure 4: Growth to come in emerging markets’ operations regardless of location

Q: In the next 12 months, do you expect your key operations in these regions to decline, stay the same or grow?

0% 100%

Africa

Asia Pacific

Central andEastern Europe

Latin America

Middle East

North America

Western Europe

Africa Asia Australasia EasternEurope

Latin America

MiddleEast

North America

WesternEurope

Companyheadquarters

Region of operations

93%

73%

80%

67%

70%

64%

72%

89%

88%

87%

86%

100%

94%

92%

33%

77%

83%

18%

50%

71%

57%

100%

40%

73%

59%

0%

67%

75%

100%

80%

80%

86%

0%

80%

86%

75%

70%

55%

47%

85%

73%

75%

29%

40%

71%

48%

25%

67%

55%

36%

32%

69%

31%

0%

51%

48%

Base: Respondents who reported operations in said region (168-672).

Source: PwC 14th Annual Global CEO Survey

!%$`:HI$#)'$!"+$=3/%D%)+$-.$+@4+*!+'$!%$6/%9$72$B3.!$U:VI:$\+#)9"-1+5$+,+/6-)6$,#/8+!.$#/+$+@4+*!+'$!%$6/%9$#!$#$/+1#!-(+12$D+.!2$a:aI:$F"+$most rapid growth in that group is+@4+*!+'$#,%)6$!"+$1#/6+.!$*%3)!/-+.J$<"-)#$#!$b:HI$#)'$E)'-#$#!$c:VI:1$=(+)$these forecasts are uncertain giventhe pace of change across different

markets this year, but they reinforcethe divide between economies that#44+#/$!%$"#(+$6/%9!"$4%!+)!-#1$#)'$!"%.+$!"#!$#44+#/$!%$7+$.!#11-)6:

=(+)$9-!"$.%$,#)2$,#/8+!.$%)$!"+$&#.!$!/#*8$%&$!"+$61%7#1$+*%)%,25$!"+$1+(+1.$%&$<=>$*%)0'+)*+$/+4%/!+'$-)$!"-.$1#!+.!$.3/(+2$/+.31!$.++,$"-6":$<=>$*%)0'+)*+$1+(+1.$9+/+$#1.%$"-6"$-)$!"+$UVV_$.3/(+2:$<=>.$"#(+$!%$7+$7%1'$-)$their growth and communication.!/#!+6-+.J$4+..-,-.,$-.$)%!$9"#!$investors or the markets want to hear.

<=>.$"#(+$#1.%$!/#'-!-%)#112$."%9)$1+..$*%)*+/)$#7%3!$.1%912$+,+/6-)6$%/$1%)6?!+/,$!"/+#!.$!"#)$/-.8$%/$-..3+$+@4+/!.$"#(+:$Y+)*+$9"25$9"+)$.++8-)6$6/%9!"$-)$)+9$,#/8+!.5$<=>.$)++'$!%$strengthen their understanding of thethreats those markets face and to focus%)$/+.-1-+)*+$#6#-).!$#$7/%#'+/$/#)6+$ of risks.

;"-1+$61%7#1$+*%)%,-*$6/%9!"$/+!3/)+'$!%$H:WI$-)$UVWV5$!"-.$"+#'1-)+$063/+$/+X+*!.$!9%$.4++'.$%&$+*%)%,-*$#*!-(-!2:$R+(+1%4+'$,#/8+!.5$9"-*"$/+4/+.+)!$#7%3!$HVI$%&$!"+$9%/1'$+*%)%,25$#/+$+@4+*!+'$!%$6/%9$.1%9125$at an average of 2.2% inUVWW5$1-!!1+$,%/+$!"#)$"#1&$!"+$/#!+$#)!-*-4#!+'$&%/$!"+$9%/1'$+*%)%,2$

%(+/#11:$A,%)6$'+(+1%4+'$+*%)%,-+.5$!"+$d)-!+'$S!#!+.$-.$+@4+*!+'$!%$6/%9$U:aI5$e#4#)$-.$+@4+*!+'$!%$*%)!/#*!$

Figure 3: CEO’s three-year-growth outlook is confident

Q: How confident do you feel in prospects for the revenue growth of your company over the next three years?

Very confident

Somewhat confident

Not very confident

Not confident at all

Don’t know/uncertain

54

38

5

0

2

%

Base: All respondents (201).

Source: PwC Pulse Survey of the International CEO Panel of PwC’s Annual Global CEO Survey, 26 July 2011

1 IMF figures – June 2011 Global Economic Outlook update on April figures; PwC forecasts August 2011.

Armando Garza Sada, Chair man of the Board of Directors, Alfa,S.A.B. de C.V. in Mexico, summed up the calculus that many leadersare using: “We know that the most dynamic markets will be thoseof the emerging countries, mainly Asia, while the markets of Europeand the United States will grow at a considerably slower rate.”




O;+$7+1-+(+$-!$-.$(+/2$-,4%/!#)!$!%$#'%4!$.!/-*!+/$/-.8$*%)!/%1$

standards and maintain a monitoring system that is prudent on#$,#*/%$.*#1+$#)'$*#)$6-(+$+#/12$9#/)-)6.$/+6#/'-)6$4%!+)!-#1$

4/%71+,.5Q$.#-'$f-$f-"3-5$T/+.-'+)!$%&$!"+$C#)8$%&$<"-)#:$ O>&$*%3/.+$!"+$-,41+,+)!#!-%)$%&$.3*"$#$4%1-*2$)++'.$!%$7+$

#'B3.!+'$&%/$*%3)!/-+.$#!$'-&&+/+)!$.!#6+.$%&$'+(+1%4,+)!:Q

Section 2]1%7#1$6/%9!"$.!/#!+6-+.J$ &#*!%/-)6$-)$6/+#!+/$%4+/#!-%)#1$*%,41+@-!2$#)'$/-.8

F"+/+$#/+$,#)2$-)'-*#!%/.$!"#!$!"+$4#!"$!%$/+)+9+'$6/%9!"$9-11$)%!$7+$

.,%%!"J$#)$%)6%-)6$=3/%4+#)$'+7!$*/-.-.5$34"+#(#1$-)$!"+$\-''1+$=#.!5$+#/!"L3#8+.$#1%)6$!"+$T#*-0*$^-)6$ %&$g-/+5$,#/8+!$(%1#!-1-!2$9%/1'9-'+5$73'6+!$'+0*-!.5$/-.-)6$*%,4+!-!-%)$Z#)'$4/-*+.[$&%/$)#!3/#1$/+.%3/*+.$#)'$!"+$*%).+L3+)*+.$%&$*1-,#!+$*"#)6+5$to name a few. So, the more countries-)$9"-*"$*%,4#)-+.$+@4#)'$!"+-/$%4+/#!-%).$#/%3)'$!"+$9%/1'5$!"+$ ,%/+$!"%.+$*%,4#)-+.$#/+$(31)+/#71+$to events occurring in every part of !"+$61%7+:$

;"-1+$<=>.$"#(+$7+*%,+$,%/+$%4!-,-.!-*5$_WI$%&$!"+,$#1.%$.#-'$!"+2$

9+/+$O.%,+9"#!Q$%/$O+@!/+,+12Q$concerned about economic uncertainty.F"+$&#*!$!"#!$!"+.+$6/%9!"$+@4+*!#!-%).$#/+$73-1!$34%)$#$.%&!$+*%)%,-*$&%3)'#!-%)$.366+.!.$!"+$4%!+)!-#1$&/#6-1-!2$%&$!"+-/$%4!-,-.,:$

F"-.$/-.82$/+#1-!2$-.)N!$1%.!$%)$<=>.M$they’re putting risk high on their#6+)'#.$#.$.!/#!+6-+.$*"#)6+:$S-@!2?$.+(+)$4+/*+)!$.#-'$!"+2$9-11$&%/,#112$incorporate risk scenarios into their.!/#!+6-*$41#))-)6:$

A)'$_UI$.#-'$!"+2$9-11$'+(%!+$,%/+$senior management time to addressing

/-.8:$^-.8$-.$*%,,#)'-)6$#!!+)!-%)$#!$!"+$"-6"+.!$1+(+1.J$HcI$%&$<=>.$.#-'$!"+2$9-11$'+'-*#!+$,%/+$7%#/'$!-,+$!%$risk. (See Figure 5.)

Figure 5: Strategies are responding to changes in demand

Q: To what degree has your company’s strategy changed over the past two years? Which factor had the biggest impact on your need to changeyour strategy?

Economic growth forecasts or uncertainty

Customer demand

Industry dynamics

Competitive threats

Regulation

Attitude toward risk

Shareholder expectations

Capital structure/deleveraging

%

No change Somewhat changed Changed in fundamental ways

51%

33%16%

23

22

17

10

8

7

6

5

Base: All respondents (1,201).

Source: PwC 14th Annual Global CEO Survey



PwC0 Resilient growth: Making the most of opportunities away from home 11

A!$!"+$.#,+$!-,+5$<=>.$#/+$-,4/%(-)6$!"+-/$*%,4#)-+.N$%4+/#!-%)#1$/-.8$management. More than three-quarters%&$<=>.$.#-'$!"+2$-)!+)'$!%$*"#)6+$ their company’s approach to risk ,#)#6+,+)!$%(+/$!"+$)+@!$WU$,%)!".$P$UKI$'+.*/-7+'$!"#!$*"#)6+$#.$O,#B%/:Q$;"-1+$!"%.+$4+/*+)!#6+.$.++,$"-6"5$!"+2$/+4/+.+)!$'+*1-)+.$&/%,$#$

2+#/$+#/1-+/5$9"+)$GWI$%&$<=>.$+@4+*!+'$O,#B%/$*"#)6+.Q$!%$!"+-/$/-.8$ management practices.

F"-.$*%31'$/+X+*!$!"#!$,#)2$<=>.$ &++1$!"+2$.3**+..&3112$,#'+$*"#)6+.$ -)$%4+/#!-%)#1$/-.8$,#)#6+,+)!$#)'$ #/+$)%9$*%)0'+)!$!"+2$*#)$!3/)$!"+-/$#!!+)!-%)$+1.+9"+/+:$F"+2$"#(+$ a growing understanding of the#44/%4/-#!+$'-(-.-%)$%&$/+.4%).-7-1-!-+.$ 9-!"$/+.4+*!$!%$/-.8M$.+)-%/$management’s job is to gain acomprehensive understanding of +@-.!-)6$/-.8.5$'+*-'+$"%9$,3*"$/-.8$!"+-/$*%,4#)2$9-11$!#8+$#)'$9"#!$ risks are beyond bounds, map strategy #**%/'-)612$#)'$+).3/+$!"#!$!"+$/+.!$ of the organisation is managing%4+/#!-%)#1$/-.8.:$O;+$#/+$,%/+$sensitive to the risk/reward trade-offs,7+*#3.+$!"+$(%1#!-1-!2$-)$!"+$,#/8+!$created during the recession had a big-,4#*!$%)$,#)2$&%/+-6)$+*%)%,-+.$P$ 9"+!"+/$-!N.$.%(+/+-6)$/-.8$-)$=3/%4+5$*#4-!#1$,#/8+!.$-)$!"+$dS$%/$+*%)%,-*$4%1-*-+.$-)$<"-)#5Q$.#-'$e%")$h:$g#/#*-5$<"#-/,#)$#)'$<=>$%&$dS?7#.+'$E)!+/)#!-%)#1$T#4+/:$O;+$4#2$,3*"$more attention now to making sure

we understand and pressure-test the34.-'+i'%9).-'+$%&$(#/-%3.$'+*-.-%).:Q$

What risks are of increasing-,4%/!#)*+j$;"-1+$,#)2$+,+/6-)6$,#/8+!.$#/+$6/%9-)6$7/-.8125$!"+2$#/+$#1.%$#,%)6$!"+$,%.!$(%1#!-1+:$F"+-/$0)#)*-#1$,#/8+!.$,#2$7+$.37B+*!$!%$."#/4$/+(+/.#1.5$!"+-/$4%1-!-*#1$.2.!+,.$

,#2$7+$3).!#71+5$!"+-/$1+6#1$.2.!+,.$,#2$7+$3)&#,-1-#/$#)'$/+631#!-%).$,#2$7+$3)4/+'-*!#71+:$<%//34!-%)$ Z%/$#!$1+#.!$!"+$4+/*+4!-%)$%&$-![$,#2$ be common, and infrastructure may 7+$4%%/12$'+(+1%4+'$-)$.%,+$/+6-%).:$F"+/+$#/+$3)!#44+'$%44%/!3)-!-+.$4/+*-.+12$7+*#3.+$%&$!"+$,#)2$/-.8.$that make the rewards uncertain.

E)$#''-!-%)5$!"+/+$#/+$#$)3,7+/$ %&$6/%9-)6$61%7#1$/-.8.$!"#!$4%.+$immediate threats in emergingmarkets. Among these are economic'-.4#/-!-+.$!"#!$*#)$1+#'$!%$*-(-1$.!/-&+M$&%%'5$9#!+/$#)'$+)+/62$."%/!#6+.M$*1-,#!+$*"#)6+$7/-)6-)6$-)*/+#.-)612$+@!/+,+$#)'$'+.!/3*!-(+$9+#!"+/5$#1%)6$9-!"$3)*+/!#-)$6%(+/),+)!$4%1-*2$/+#*!-%).M$-11+6#1$#*!-(-!-+.$!"#!$3)'+/,-)+$1+6-!-,#!+$73.-)+..$#)'$6%(+/),+)!.M$#)'$,#*/%+*%)%,-*$-,7#1#)*+.$!"#!$*%31'$1+#'$!%$6/%9-)6$*#4-!#1$X%9.$!%$+,+/6-)6$,#/8+!.$ #)'$4%!+)!-#1$#..+!$73771+.:$

F"+$/-.8.$#/+$'#3)!-)65$73!$!"+$&3)'#,+)!#1$#44/%#*"$!%$41#))-)6$ -.$3)*"#)6+':$<%,4#)-+.$)++'$0/.!$ to decide on their risk appetite and

then on which markets afford thebest opportunities given that appetite,#)'$0)#112$%)$!"+$1-,-!.$&%/$!"+-/$!%1+/#)*+$&%/$/-.8:$F"#!$!%1+/#)*+$ 9-11$'-*!#!+$9"#!$,#/8+!.$!%$#(%-'$ %/$9"+)$-!$-.$!-,+$!%$4311$7#*8$&/%,$those the company has ventured-)!%:$;"-1+$-!$,#2$7+$-,4%..-71+$!%$-'+)!-&2$+(+/2$4%..-71+$1%9?4/%7#7-1-!25$

"-6"?-,4#*!$+(+)!$Z#8#$71#*8$.9#)$+(+)!.[5$*/-.-.$41#).$)++'$!%$7+$-)$41#*+$#)'$9+11$!+.!+'$!%$4/+4#/+$&%/$%/$respond to these rare but devastating4%..-7-1-!-+.:$C+2%)'$!"#!5$1+#'+/.$9-11$ 9#)!$%4+/#!-%)#1$/-.8.$,%)-!%/+'5$/+4%/!+'$#)'$,#)#6+'$#!$#11$1+(+1.$%&$the organisation and throughout its.34412$*"#-):$F"+/+$,3.!$7+$#$*%)!-)3%3.$X%9$%&$34?!%?!"+?,-)3!+$information, from a variety of sources#)'$4+/.4+*!-(+.$#)'$#)#12.+'$!%$'+!+/,-)+$9"#!$-.$/+1+(#)!$#)'$"%9$-!$impacts their organisations.>/6#)-.#!-%).$,#2$7+$'+136+'$9-!"$-)&%/,#!-%)5$73!$3)1+..$!"+2$"#(+$!"+$#7-1-!2$!%$-)!+/4/+!$!"#!$-)&%/,#!-%)5$-!$*#)$7+$3.+1+..$%/$9%/.+$,-.1+#'-)6:$g%/$+@#,41+5$,#)2$*%3)!/-+.$#/+$improving infrastructure or adopting B3'-*-#1$#)'$0)#)*-#1$/+&%/,.:$F"%.+$are important changes to ease doing73.-)+..$-)$!"+.+$*%3)!/-+.:$C3!$-&$!"+$greatest risk to a company is/+43!#!-%)#1$/-.8$'3+$!%$4%%/$!/+#!,+)!$%&$9%/8+/.$72$#$.3441-+/5$)%$#,%3)!$%&$improved infrastructure is going tomake doing business in that country 1+..$/-.82:$

Risk monitoring fordifferent stages of market participation

F"+$6/+#!+/$/+1-#)*+$%)$3)&#,-1-#/$#)'$4%!+)!-#112$(%1#!-1+$,#/8+!.$,#8+.$.!/#!+6-*$41#))-)6$#)'$+@+*3!-%)$,%/+$'-&0*31!:$C+1%9$9+$&%*3.$%)$!"+$/-.8.$*%,4#)-+.$9-11$9#)!$!%$*%).-'+/$ when approaching different stages%&$4#/!-*-4#!-%)$-)$3)&#,-1-#/$ markets and how they can embedrisk monitoring into strategic and

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Market entry

F"+$.3**+..$%&$*%,4#)-+.$!"#!$"#(+$ .+!$34$%4+/#!-%).$#)'$'%)+$9+11$-)$ #$*%3)!/2$9"%.+$]RT$6/%9!"$-.$#44/%#*"-)6$'%371+$'-6-!.$*#)$4/%(+$+)!-*-)6$!%$1#!+*%,+/.:$C3!$#)2$6-(+)$market, no matter the attractions,,#2$7+$#$4%%/$0!$&%/$*%,4#)-+.$&/%,$#$4#/!-*31#/$.+*!%/5$&/%,$#$*+/!#-)$"%,+$*%3)!/2$%/$9-!"$#$4#/!-*31#/$.!/#!+62:$

A key danger is that advocates of +)!+/-)6$#$6-(+)$,#/8+!$9-11$&#-1$!%$ 9+-6"$&#*!%/.$#.-'+$&/%,$!"+$+)(-#71+$%(+/#11$6/%9!"$)3,7+/.:$;"-1+$%(+/#11$6/%9!"$,#2$7+$+@!/#%/'-)#/25$!"+$.#,+$-.$)%!$1-8+12$!%$7+$!/3+$&%/$+(+/2$.+*!%/:$<%,4+!-!-%)$,#2$7+$+(%1(-)6$'-&&+/+)!12$!"#)$,#)#6+/.$"#(+$+@4+/-+)*+'$7+&%/+M$*3.!%,+/.$*%31'$

7+"#(+$'-&&+/+)!12:$=(+)$-&$2%3/$.+*!%/$-.$6/%9-)6$.!/%)6125$!"+$6%(+/),+)!$,#2$7+$)3/!3/-)6$1%*#1$*%,4#)-+.$-)$that sector and protecting them fromoutside competition. And every sector"#.$-!.$%9)$(31)+/#7-1-!-+.:$F"+$+)+/62$#)'$)#!3/#1$/+.%3/*+.$.+*!%/.5$&%/$+@#,41+5$#/+$,%/+$#!$/-.8$-&$!"+/+$ are questions about the sanctity of *%)!/#*!.$%/$+@4/%4/-#!-%)$-)$!"+$prospective new market.

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%&$#$73.-)+..$-)$!"#!$*%3)!/2:$F"+$L3#1-!#!-(+$'#!#$."%31'$-)*13'+$information about a country’s/+631#!%/2$+)(-/%),+)!5$1#7%3/$conditions, infrastructure,transparency, corruption, distribution*"#))+1.5$*%,4+!-!-%)5$4/-*-)65$"3,#)$/-6"!.$/+*%/'.5$,%)+!#/2$#)'$0.*#1$4%1-*2$#)'$#$"%.!$%&$%!"+/$&#*!%/.:$F"+)5$*%,4#)-+.$*%).-'+/-)6$!"+$)+9$,#/8+!$,3.!$7+$#71+$!%$.2)!"+.-.+$!"+$data, weigh the various factors anddecide whether the opportunity is#!!/#*!-(+$%)$7#1#)*+:$A11$%&$!"-.$-.$*%,41-*#!+'$72$!"+$&#*!$!"#!$'#!#$#7%3!$+,+/6-)6$,#/8+!.$-.$%&!+)$1+..$/+1-#71+$#)'$,%/+$'-&0*31!$!%$%7!#-)$!"#)$-)$'+(+1%4+'$,#/8+!.:

T%!+)!-#1$/-.8.$#/+$)3,+/%3.:$;"+)$making a decision about whether toenter a new market, a company needsto ask where the country is headed,)%!$B3.!$9"+/+$-!$-.:$]+%4%1-!-*#1$/-.8$ -.$#$,#B%/$*%).-'+/#!-%):$^-.-)6$+@4+*!#!-%).$*%)!/-73!+$!%$/-(#1/-+.$between countries competing toattract waves of new investment.

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]+!$1%*#1$

E).-6"!$-)!%$1%*#1$*31!3/+$-.$+.4+*-#112$important for companies entering an3)&#,-1-#/$,#/8+!:$<31!3/+$*#)$7+$#$*/-!-*#1$'+!+/,-)#)!$%&$!"+$73.-)+..$,%'+1$#$*%,4#)2$*"%%.+.$&%/$#$6-(+)$1%*#1+5$-)*13'-)6$*3.!%,+/$&%*3.5$4/%'3*!$%/$7/#)'$1%*#1-.#!-%)$#)'$

'-.!/-73!-%):$E!$*#)$#1.%$7+$#$'+*-'-)6$&#*!%/$-)$!"+$-)(+.!,+)!$(+"-*1+$3.+'5$!"+$.+1+*!-%)$%&$4#/!)+/.$#)'$!"+$composition of management.

<%,4#)-+.$*#))%!$#..3,+$!"#!$!"+2$*#)$.-,412$!/#).41#)!$!"+-/$"%,+$73.-)+..$,%'+1.$!%$#$)+9$,#/8+!:$A$dS$insurance company that hoped to take#'(#)!#6+$%&$/#4-'12$6/%9-)6$*#/$%9)+/."-4$-)$̂ 3..-#$'-'$)%!$0)'$%3!$3)!-1$-!$"#'$,#'+$#$,#B%/$-)(+.!,+)!$!"#!$^3..-#).$9+/+$)%!$&#,-1-#/$9-!"$!"+$*%)*+4!$%&$'+'3*!-71+.:$F"+$*%,4#)2$&%3)'$%3!$!%%$1#!+$!"#!$*%).3,+/.$+@4+*!+'$-).3/+/.$!%$*%(+/$#)2$'#,#6+$!%$!"+-/$*#/.5$+(+)$.,#11$'+)!.$#)'$.*/#!*"+.:$S-)*+$-!$*%31'$)%!$charge enough to make the business4/%0!#71+5$!"+$*%,4#)2$9-!"'/+9$&/%,$^3..-#5$.3&&+/-)6$,#B%/$1%..+.:$

<%,4#)-+.$,3.!$'-&&+/+)!-#!+$7+!9++)$!"+$*31!3/+.$#)'$)%/,.$%&$!"+$,#)2$'-(+/.+$4#/!.$#)'$4%431#!-%).$%&$!"+$

#7%3!$&%/$!"+$4#.!$.+(+/#1$2+#/.$9-11$*%)!-)3+:$\#/8+!.$+(%1(+5$#)'$!"+$#44+#1$%&$+,+/6-)6$,#/8+!.$-.$.4++'-)6$34$+(%13!-%):$F"+$&#*!$!"#!$many emerging markets are growing/#4-'12$#)'$#!!/#*!-)6$)+9$,#/8+!$+)!/#)!.$&/%,$#11$%(+/$!"+$9%/1'$means that there is much more*%,4+!-!-%)$&%/$!"+$1%9?*%.!$1#7%3/$

#)'$)#!3/#1$/+.%3/*+.$!"#!$!/#'-!-%)#112$"#(+$,#'+$!"+.+$,#/8+!.$#!!/#*!-(+:$A.$#$/+.31!5$#**+..$!%$!#1+)!$#)'$/+.%3/*+.$*#)$)%$1%)6+/$7+$!#8+)$&%/$6/#)!+':$<"-)#5$&%/$+@#,41+5$-.$now intent on shifting from being a.%3/*+$%&$1%9?*%.!$,#)3&#*!3/-)6$!%$#!!/#*!-)6$,%/+$"-6"?(#13+$73.-)+..+.:$E!N.$/#-.-)6$!#@+.$%)$&%/+-6)?%9)+'$businesses and offering incentives for"-6"?(#13+$73.-)+..$#*!-(-!-+.5$1-8+$'+(+1%4-)6$*1+#)$+)+/62$!+*")%1%6-+.:$C/#D-15$9"-*"$"#'$7++)$4/%(-'-)6$-)*+)!-(+.$&%/$-)!+/)#!-%)#1$+)+/62$*%,4#)-+.$!%$"+14$'+(+1%4$-!.$6#.$#)'$%-1$/+.%3/*+.5$-.$6-(-)6$T+!/%7/#.5$!"+$state-owned company, a stake in any *%).%/!-#$&%/,+'$!%$+@41%/+$!"+$13*/#!-(+$O4/+?.#1!Q$%&&."%/+$%-10+1'.:2

>)$!"+$%!"+/$"#)'5$9"-1+$-)!+/)#!-%)#1$+)+/62$*%,4#)-+.$#/+$)%!$0)'-)6$C/#D-1$#.$"%.4-!#71+$#$,#/8+!$#.$-!$"#'$been, infrastructure companies are

Have you considered?

Ensuring strategic alignment

k$ Y%9$'%$E$(-+9$/-.8$-)$+,+/6-)6$,#/8+!.5$ -)$4#/!-*31#/$&/%,$#$4%/!&%1-%$4+/.4+*!-(+j

Market prioritisation

k$ E.$!"+$,#/8+!$E$#,$1%%8-)6$#!$1#/6+$#)'$6/%9-)6$ in my sector?

k$ E.$!"+$"%.!$6%(+/),+)!$!/2-)6$!%$4/%!+*!$!"+$ domestic industry in my sector?

k$ Does my strategy mitigate the risk of contracts’ notbeing honoured in the new ma rkets?

k$ E.$!"+/+$#$'#)6+/$%&$+@4/%4/-#!-%)$-)$!"+$)+9$,#/8+!j

k$ A/+$!"+/+$.4+*-#1$1%*#1$/-.8.$&%/$,2$.+*!%/j

k$ A/+$!"+/+$#1!+/)#!-(+5$1+..$4%431#/$,#/8+!.$9-!"$+L3#112$6%%'$6/%9!"$4/%.4+*!.j

k$ ;"#!$9+-6"!$."%31'$E$6-(+$!"+$(#/-%3.$/-.8.$-)$deciding whether to enter the market?

k$ Y%9$.!#71+$-.$!"+$6%(+/),+)!j$;"#!$-.$!"+$/+1#!-%)."-4$7+!9++)$,2$"%,+$*%3)!/2$#)'$!"+$*%3)!/2$%&$!"+$)+9$,#/8+!$E$#,$*%).-'+/-)6j

k$ Y%9$73.-)+..$&/-+)'12$-.$!"+$/+631#!%/2$+)(-/%),+)!j$A/+$'%,+.!-*$,#/8+!$41#2+/.$4/%!+*!+'$72$/+631#!-%).$%/$+)&%/*+,+)!$)%/,.j

Developing entry strategy

k$ Y%9$9-11$!"+$*31!3/#1$)%/,.$-)$!"+$!#/6+!$*%3)!/2$63-'+$,2$'-.!/-73!-%)5$.34412$*"#-)$%/$*3.!%,+/$-)!+/#*!-%).j$Y%9$9-11$!"-.$-,4#*!$,2$*%.!.j

k$ ;"#!$/-.8.$#)'$%44%/!3)-!-+.$'%$!"+$*%3)!/2N.$1#7%3/$*%)'-!-%).5$-)&/#.!/3*!3/+5$1+(+1$%&$!/#).4#/+)*25$*%//34!-%)5$'-.!/-73!-%)$*"#))+1.$%/$%!"+/$&#*!%/.$present?

k$ R%+.$,2$.!/#!+62$,-!-6#!+$!"+$/-.8$%&$ET$1%..j$

A/+$4#/!)+/.N$%7B+*!-(+.$#1-6)+'$!%$4/%!+*!$ETj$ E.$-!$4%..-71+$!%$8++4$!"+$ET$*/-!-*#1$%4+/#!-%).$-)$home markets?

k$ What are the country’s demographics, and how is!"#!$1-8+12$!%$*"#)6+$-!.$1#7%3/$&%/*+$#)'$*%).3,+/$purchasing patterns?

k$ A/+$!"+/+$-)!+/-,$.!+4.$E$*#)$!#8+$7+&%/+$&3112$+)!+/-)6$!"+$,#/8+!j$A/+$!"+/+$.!+4.$E$*#)$!#8+$!%$4/+4#/+$!"+$,#/8+!$.%$-!$-.$,%/+$"%.4-!#71+$9"+)$ E$'%$'+*-'+$!%$+)!+/j

Plan implementation

k$ R%+.$,2$.!/#!+62$,-!-6#!+$!"+$/-.8$!"#!$E$#,$ /+*+-(-)6$4%%/?L3#1-!2$#)'$3)/+1-#71+$-)&%/,#!-%)$about this market?

1-8+12$!%$7+$,%/+$9+1*%,+:$C/#D-1$-.$*3//+)!12$,#8-)6$4/+4#/#!-%).$!%$ "%.!$!"+$.3,,+/$>12,4-*.$-)$UVWa$#)'$!"+$;%/1'$<34$-)$UVWG5$7%!"$%&$ which require major infrastructureimprovements. At the same time,C/#D-1$-.$'+(+1%4-)6$-!.$!/#).4%/!#!-%)$1-)8.$9-!"$!"+$*%3)!/2N.$-)!+/-%/$#)'$it’s seeking foreign investment and

4#/!-*-4#!-%)$&%/$#11$!"+.+$4/%B+*!.:$

<"+*8$#1!+/)#!-(+.$

A)$-).3&0*-+)!12$!"%36"!?%3!$'+*-.-%)$,#2$#1.%$*#3.+$*%,4#)-+.$!%$%(+/1%%8$#1!+/)#!-(+$,#/8+!.$9-!"$+L3#112$6%%'$6/%9!"$4/%.4+*!.:$A$1%9+/?4/%01+$market may afford better opportunities!"#)$#$,%/+$4%431#/$%)+$7+*#3.+$-!$-.$1+..$*%,4+!-!-(+$#)'$1+..$*%.!12$!%$

%4+/#!+$-)$-!:$E)$6+)+/#15$+,+/6-)6?,#/8+!$.!/#!+6-+.$."%31'$*%).-'+/$business needs across markets. Setting34$/+6-%)#1$"+#'L3#/!+/.$-)$!#1+)!$hubs may make more sense than.+!!-)6$34$&311?X+'6+'$"+#'L3#/!+/.$ in every country.

<"%%.-)6$!"+$/-6"!$,%,+)!$!%$+)!+/$ -.$#1.%$*/3*-#1:$F"+$dS$-).3/+/$!"#!$/+!/+#!+'$&/%,$^3..-#$9%31'$"#(+$"#'$#)$+)!-/+12$'-&&+/+)!$+@4+/-+)*+$"#'$ -!$+)!+/+'$!"+$,#/8+!$.+(+/#1$2+#/.$1#!+/:$C2$!"+)5$%!"+/$*%,4#)-+.$"#'$&#,-1-#/-.+'$*%).3,+/.$9-!"$!"+$*%)*+4!$%&$'+'3*!-71+.$#)'$!"+$,#/8+!$7+*#,+$4/%0!#71+:$>/$!"+$*%,4#)2$

*%31'$"#(+$'+(+1%4+'$#$)+!9%/8$%&$+@-.!-)6$7/%8+/.$!"/%36"$9"-*"$!%$.+11$its products rather than entering the,#/8+!$9-!"$&311?.*#1+$%4+/#!-%).:$ F"+$7/%8+/.$*%31'$!"+)$"#(+$1#-'$!"+$6/%3)'9%/8$&%/$#$,%/+$+.!#71-."+'$4/+.+)*+$.+(+/#1$2+#/.$1#!+/:

*%3)!/-+.5$4#/!-*31#/12$-)$!"+$1#/6+.!$markets. And because there can besuch marked differences from region!%$/+6-%)5$-!$-.$*/3*-#1$!"#!$*%,4#)-+.$#-,$!"+-/$73.-)+..$,%'+1.$#!$.4+*-0*$,#/8+!$.+6,+)!.:$=(+)$-)!+/)#1$6/%9!"$/#!+.$*#)$(#/2$'/#,#!-*#112$between different regions of any given*%3)!/2:$=(+/2$#/+#$-.$1-8+12$!%$7+$

'-.!-)*!5$#.$*31!3/#1$&#*!%/.$#/+$%)+$%&$!"+$7-66+.!$*"#11+)6+.$!%$#)2$61%7#1$6/%9!"$.!/#!+62:$e3.!$7+*#3.+$#$company has become acquainted with!"+$*31!3/+$%&$%)+$.+*!-%)$%&$!"+$*%3)!/2$#)'$+.!#71-."+'$#$.3**+..&31$73.-)+..$!"+/+$'%+.$)%!$,+#)$-!$-.$9+11$prepared to do business in other parts%&$!"+$*%3)!/2:$g%/$+@#,41+5$<"-)#N.$1#!+.!$0(+?2+#/$+*%)%,-*$41#)$4/-%/-!-.+.$-)1#)'$6/%9!"5$9"-*"$"#.$1#66+'$7+"-)'$!"+$/+*+)!$7%%,$-)$*%#.!#1$*-!-+.:$S-,-1#/125$-&$#$*%,4#)2$"#.$+.!#71-."+'$#$73.-)+..$!"#!$#44+#1.$!%$%)+$4%/!-%)$%&$!"+$4%431#!-%)5$-!$,#2$9+11$7+$,-..-)6$%3!$%)$%!"+/$opportunities with other segments.

<"#)6+$"#44+).$

E)$,#8-)6$!"+$'+*-.-%)$!%$+)!+/$#$ )+9$,#/8+!5$*%,4#)-+.$#1.%$*#))%!$assume that the attractive businessenvironment that they have heard

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development,” Financial Times, 14 November 2010.




And a company attempting to speed34$4/%'3*!-%)$#)'$'+1-(+/2$!%$,++!$ #$'+,#)'$.3/6+$-.$1-8+12$!%$-)*3/$.37.!#)!-#1$#''-!-%)#1$*%.!.:$<%,4#)-+.$may be surprised by surges in demandbecause data may be hard to acquire in+,+/6-)6$,#/8+!.$#)'$9"#!N.$#(#-1#71+$,#2$)%!$7+$/+1-#71+:$E)$+,+/6-)6$,#/8+!.$+.4+*-#1125$-)&%/,#!-%)$,#2$

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A gap between the information that"+#'L3#/!+/.$#)'$1%*#1$*%3)!/2$,#)#6+/.$/+*+-(+$*#)$#1.%$B+%4#/'-.+$#$company’s success in a distant market.F"+$3)'+/.!#)'-)6$!"#!$*%/4%/#!+$headquarters has of conditions in a)+9$,#/8+!$P$#$(-+9$%&!+)$"+#(-12$-)X3+)*+'$72$!"+$"+#'1-)+.$%&$61%7#1$)+9.$%/6#)-.#!-%).$P$*#)$7+$(+/2$

Market presence

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+(%1(-)6$/-.8.$(+/.3.$!"+$7+)+0!.$%&$,#-)!#-)-)6$%/$+@4#)'-)6$!"#!$4/+.+)*+$*%)!-)3+.:$E!$,3.!$8++4$!#7.$%)$."-&!.$-)$4%1-!-*#1$.+)!-,+)!$#)'$4%9+/$7/%8+/.5$/+631#!-%)5$73'6+!$*%)'-!-%).$#)'$%!"+/$factors. A company that gets off to agood start in a new market may be71-)'.-'+'$-&$-!$#..3,+.$!"+$.-!3#!-%)$ -.$.!#!-*:$E!$."%31'$/+#..+..$-!.$73.-)+..$,%'+1$%)$#$4+/-%'-*$7#.-.M$+)!/2$,%'+1.$,#2$)%!$7+$%4!-,#1$#&!+/$#$2+#/$%/$!9%$%&$*%,4+!-!-%):$<%,4#)-+.$9-11$9#)!$)%!$%)12$+#/12$9#/)-)6.$-&$!"+$73.-)+..$

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Succeeding long term requiresoperating as a responsiblecorporate citizen, balancingeconomic rewards withsocial and environmentalinvestment.

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that the group the proposed insurance 9%31'$*%(+/$4%.+'$)%$/-.8$#)'$!"#!$%!"+/$*%,4#)-+.$"#'$.3**+..&3112$%&&+/+'$!"+$-).3/#)*+:$C3!$"+#'L3#/!+/.$.!%%'$0/,5$#)'$!"+$73.-)+..$%44%/!3)-!2$ 9#.$1%.!:$;"-1+$,#)#6+,+)!$#!$headquarters can receive aninaccurate impression of conditions in#$*%3)!/25$1%*#1$,#)#6+/.N$-)&%/,#!-%)$$can have a vested interest in,#-)!#-)-)6$#)'$73-1'-)6$!"+-/$73.-)+..+.5$.%$!"+2$,#2$7+$-)*1-)+'$ !%$6-(+$%(+/12$/%.2$/+4%/!.$%&$1%*#1$business conditions.

The understanding that corporate headquarters has of !"#$%&%"#'(%#()(#*+(,)-.*&(/()(0%*+("1&*#(2*)0%34(%#56*#!*$(by the headlines of global news organisations — can be very different from what local managers see.




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1+(+1$%&$#'#4!#!-%)5$!%$!"+$4%-)!$9"+/+$%(+/.+#.$%4+/#!-%).$#/+$!"+,.+1(+.$#$.%3/*+$%&$4/%'3*!.$#)'$-))%(#!-%):$F"+$]1%7#1-.#!-%)$\#!3/-!2$\%'+1$Z]\\[$(see Figure 7), describes some of thedimensions most affected as companies,%(+$!"/%36"$!"+.+$'-&&+/+)!$4"#.+.:$E!$%&&+/.$#$.-,41+$73!$*%,4/+"+).-(+$framework for decision-makers to-'+)!-&2$.%,+$%&$!"+$8+2$*"#11+)6+.$#!$each stage. Key to this framework is theunderstanding that a company’s61%7#1-.#!-%)$!/#B+*!%/2$,#2$)%!$7+$1-)+#/5$)%!$#11$73.-)+..+.$9-115$%/$."%31'5$,%(+$&/%,$!"+$+@4%/!$!%$!"+$

%/-6-)#!+$4"#.+:$A$*%,4#)2N.$#7.%13!+$4%.-!-%)5$"%9$61%7#1$-!$-.5$-.$1+..$-,4%/!#)!$!"#)$-!.$4%.-!-%)$/+1#!-(+$!%$its major competitors or industry 1+#'+/.:$E)'++'5$-)$.%,+$-)'3.!/-+.$!"+$O+@4%/!Q$4"#.+$,#2$7+$.3&0*-+)!$#.$1%)6$#.$!"+$*%,4#)2$*#)$+).3/+$-!$maintains its competitive advantage.

Figure 7: Globalisation maturity model

Dimension

Phase 1: Export model

Phase 2:Regionalise model

Phase 3: Originate model

Associated risks

Market reach The home market

dominates; foreign sales are

made through representative

offices and third parties

The company has an active

presence in several major

markets outside the home

region, often with local

partners

The company adapts its

market approach for each

region, and may make

long-term structural

commitments to partnership

Aggressive pursuit of sales

growth increases both

delivery and compliance risk

Market offerings Products offered in

non-home regions are

virtually identical to home

market products

Product characteristics are

adjusted for local market

requirements

Product offerings originate in

and are tailored to new

regions and may be sold

globally

How local is local? Countries

such as India, have large

variations in culture, climate

and incomes among, and

even within states.

Is information flowing from

local management to the

Board and vice versa?

Operations The company has a strong

national supply chain withinternational distribution

An increasing proportion of

production and supply islocalised in new regions;

quality systems are evolved

The company manages a

global footprint and usestotal landed cost to

determine sourcing,

production and distribution

locations, with integrated

quality management

What are the critical nubs

along the supply chain? Areas prone to natural

catastrophes? Ports or

airports with high through-

rates that could be affected

by strikes?

Procurement Commodities and

manufacturing services are

procured from low-cost

countries

The company actively

sources in newly targeted

regions and partners with

local companies

The company manages a

global tiered partner network

In both phases 2 and 3

supplier networks can be

a crucial channel for risk

resilience — contagion.

Exposure to disruptions

can be eased by strong

networks. Tiered networks

need careful supervision

to avoid reputational or

corporate social

responsibility issues

IP management IP is closely guarded and

held tightly in the home

market/company

headquarters

The company deploys R&D

centers in expansion regions

The company maintains a

global network to exploit the

wider R&D ecosystem, while

ensuring innovation and

quality in design

Do laws and regulations

exist to protect IP in those

areas — and their

governments ensure they

are enforced?

Capital The majority of capital

financing is provided by the

home region

The investor base becomes

more global and regional

allocations of capital are

increased

Financial structures are

designed to access new

sources of capital in-region

How volatile are local

capital markets?

How interventionist, or not,

have governments been

historically?

Talent The company’s senior

management is based in the

home country andtransferred to new markets

The company recruits locally

and regional management

teams are from the newregion

The senior management

team is composed of leaders

representing their homeregions

How available is local talent?

Will home country managers

be able to adapt to theenvironment? How intense is

competition for talent in the

area?

Operating model The company uses a radial

structure — a dominant hub

with multiple spokes

representing internal and

external partners

The company increases

collaboration, both internally

and with external partners

The company understands

and leverages multiple

operating models to

optimise global opportunities

Proliferation of operating

models creates undue

complexity and lack of

transparency across the

enterprise

Governance and risk The company uses a

traditional command and

control approach with a

functional/business

unit-based structure

Increasing regional dimension

rebalances functional and

business unit roles; regulatory

and compliance procedures

are evolved

The company uses

integrated global/local

governance process and

regional P&Ls in parallel with

business unit-based

performance management

Is the country’s regulatory

and tax system still evolving

rapidly; is it relatively

efficient; what is the likely

outlook for tax agreements

between the home country

and new market? Is there a

culture of good compliance

across the corporation or are

there regional variations?

Figure 6: Three distinct phases of globalisation

Key aspects

of globalisationFirst wave:

Export

Second wave:

RegionaliseNew wave:

Originate

Market reach

Market offerings

Operations

Procurement

IP management

Capital

Talent

Operating model

Governance and risk

! ! !

Source: PRTM Front Line Survey of 30 Global Businesses, December 2009




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F"+$4"2.-*#1$/-.8.$4/+.+)!$-)$#)2$.34412$*"#-)$#/+$#1.%$+@#66+/#!+'$ #.$.34412$*"#-).$7+*%,+$1%)6+/$#)'$,%/+$+@!+).-(+:$F/#).-!$!-,+.$*#)$ 7+*%,+$4/%1%)6+'$&%/$,#)2$/+#.%).5$-)*13'-)6$#$'+4+)'+)*+$%)$%)+$,%'+$of transport. A shutdown of theT#)#,#$<#)#1$*%31'$.+/-%3.12$ disrupt a business dependent on."-44-)6$!"/%36"$!"+$*#)#1:$S-,-1#/125$companies dependent on air transport-)$=3/%4+$9+/+$.!2,-+'$72$!"+$E*+1#)'-*$(%1*#)-*$*1%3':$<3.!%,.$'+1#2.5$'+1#2.$-)$.!%/#6+$#)'$!+//%/-.,$*#)$&3/!"+/$'-./34!$.34412$*"#-).:$=@!+)'+'$.34412$*"#-).$,#2$"#(+$#$"-6"+/$1-8+1-"%%'$%&$'-./34!-%)$73!$#1.%$,#2$7+$,%/+$#'#4!#71+5$9"+/+#.$.-,41+$%)+.$#/+$(31)+/#71+$!%$+@*+..-(+$*%)*+)!/#!-%):$

<%,4#)-+.$9-!"$+@!+)'+'$.34412$

chains need to have access to and*%)!-)3#112$#)#12.+$-)&%/,#!-%)$ about any changes that occur in thecountries from which they source.g%/$+@#,41+5$#$*%,4#)2$,3.!$8++4$informed of energy price increasesand resource shortages and the-,4#*!$!"+2$"#(+$%)$.3441-+/.N$ #7-1-!-+.$!%$/+,#-)$-)$73.-)+..:$ E!N.$#1.%$-,4%/!#)!$!%$8)%9$.3441-+/.N$


k$ R%$E$8)%9$,2$73.-)+..$4#/!)+/.$9+11$+)%36"j$A/+$!"+-/$-)!+/+.!.$.3&0*-+)!12$#1-6)+'$9-!"$,-)+j$E.$,2$'3+$'-1-6+)*+$(-6%/%3.$+)%36"j$S"%31'$E$"#(+$.!/-*!+/$63-'+1-)+.$6%(+/)-)6$9"%,$E$'%$73.-)+..$9-!"j

k$ R%+.$,2$.!/#!+62$,-!-6#!+$!"+$/-.8$%&$,2$.3441-+/.N$going out of business?

k$ A/+$,2$.3441-+/.N$-)!+/+.!.$#1-6)+'$!%$,++!$%3/$standards for business ethics, working conditions,

"3,#)$/-6"!.$#)'$*%,,3)-!2$'+(+1%4,+)!$-..3+.5$*#/7%)$&%%!4/-)!.5$.+*3/-!25$-)!+11+*!3#1$4/%4+/!2$/-6"!.$4/%!+*!-%)$#)'$4/%'3*!$L3#1-!2j

k$ R%$)#!3/#1$/+.%3/*+$#)'$1#7%3/$*%.!.$.!-11$B3.!-&2$sourcing from this market?

k$ E.$!"+$1%*#1$6%(+/),+)!$.344%/!-(+$%&$,2$.3441-+/.j

k$ Y#(+$9+$,-!-6#!+'$!"+$/-.8$%&$%3/$7+-)6$/+1-#)!$%)$%)+$form of transportation or one transportation mode for%7!#-)-)6$!"+$,#!+/-#1.$#)'$4/%'3*!.$9+$)++'j

k$ ;"#!$#/+$9+$'%-)6$!%$,#-)!#-)$!"+$1%2#1!2$%&$%3/$.3441-+/.$.%$9+$'%$)%!$1%.+$!"+,$!%$*%,4+!-!%/.j

k$ How have we mitigated the risk of our competitors’+@"#3.!-)6$!"+$,#!+/-#1.$#)'$4#/!.$9+$/+12$%)$&/%,$%3/$.3441-+/.j

k$ A,$E$/+*+-(-)6$!"+$&++'7#*8$E$)++'$&/%,$*3.!%,+/.j

k$ Y#(+$!"+$/-.8.$%&$!+//%/-.,$%)$!"+$+)!-/+$.34412$*"#-)$7++)$+(#13#!+'j

k$ E.$,2$.34412$*"#-)$(31)+/#71+$!%$&/#3'$%/$*%//34!-%)j

k$ ;%31'$,%/+$+)6#6+,+)!$9-!"$1%*#1$6%(+/),+)!.$7+$"+14&31j

k$ Y#(+$#11$/+1+(#)!$'-&&+/+)*+.$-)$1%*#1$!#@+.5$ *3.!%,.$#)'$/+631#!-%).$#)'$!"+-/$+)&%/*+,+)!$ been assessed?

k$ Y%9$#/+$9+$,-!-6#!-)6$!"+$/-.8$%&$/+631#!%/2$*"#)6+.$!"#!$*%31'$&%/*+$*%).%1-'#!-%)$%&$.3441-+/.j

F"+$4%431#/-!2$%&$+,+/6-)6$,#/8+!.$&%/$.%3/*-)6$*/+#!+.$.4+*-#1$/-.8.:$<%,4#)-+.$.3/(+2-)6$!"+$61%7+$&%/$!"+$7+.!$41#*+.$&/%,$9"-*"$!%$.%3/*+$,#2$0)'$!"+,.+1(+.$'+4+)'-)6$%)$!"+$.#,+$.3441-+/.$%&$8+2$/#9$,#!+/-#1.$and components as their competitors 9%/1'9-'+:$;-!"$.3*"$*%)*+)!/#!-%)5$*%,4+!-!%/.$*#)$#11$7+$(31)+/#71+$!%$

."%/!#6+.$%/$4%1-!-*#1$%/$/+631#!%/2$'-./34!-%).$!"#!$*3!$%&&$.3441-+.$%&$ !"+$*/-!-*#1$,#!+/-#1.:$<"-)#N.$/+*+)!$*3!7#*8$%&$+@4%/!.$%&$/#/+$+#/!"$+1+,+)!.5$)+*+..#/2$&%/$!"+$/+)+9#71+$energy industry, among others, is a4/-,+$+@#,41+:$

<%,4#)-+.$."#/-)6$.3441-+/.$9-!"$%!"+/$*%,4#)-+.$#1.%$/-.8$"#(-)6$-)!+11+*!3#1$4/%4+/!2$.!%1+):$<27+/.+*3/-!2$/-.8.$,#2$#1.%$7+$+1+(#!+'$-)$+,+/6-)6$,#/8+!.$ because it can be harder to conduct'3+$'-1-6+)*+$%)$73.-)+..$4#/!)+/.$ #)'$.3441-+/.$!%$+).3/+$!"#!$!"+2$ #/+$!/3.!9%/!"2:$A.$.34412$*"#-).$

7+*%,+$,%/+$*%,41+@5$-!$,#2$ 7+*%,+$-)*/+#.-)612$'-&0*31!$!%$ ensure that information transmitted+1+*!/%)-*#112$-.$.+*3/+:

Global supply chains andcorporate partnerships aremore complex today thanthey have ever been.




Section 3C#1#)*-)6$%44%/!3)-!-+.$#)'$/-.8.

F"+/+$#/+$,#)2$/+#.%).$&%/$*%,4#)-+.$!%$7+$%4!-,-.!-*$#.$!"+$/+*+..-%)$/+1#@+.$-!.$6/-4$%)$!"+$9%/1'$+*%)%,2:$C3!$3)/+.%1(+'$*"#11+)6+.$!"#!$*%)!/-73!+'$to the recession continue to pose risks,#)'$)+9$61%7#1$/-.8.$#/+$,%3)!-)6:$g-11+'$9-!"$*%)0'+)*+5$73.-)+..$1+#'+/.$*%31'$)+61+*!$!%$*%).-'+/$!"+$4+*31-#/-!-+.$%&$4#/!-*31#/$.+*!%/.5$

9-!"$4#/!-*31#/$73.-)+..$,%'+1.5$ 9-!"-)$4#/!-*31#/$*31!3/+.:$F"+2$,-6"!$%(+/1%%8$'-&&+/+)*+.$7+!9++)$!"+-/$home markets and new markets and#!!+,4!$!%$/+41-*#!+$.3**+..&31$73.-)+..$,%'+1.$-)$3)&#,-1-#/$!+//-!%/-+.:$A)'$!"+2$,-6"!$#..3,+$P$7+*#3.+$,#)2$73.-)+..+.$&%3)'$#$9+1*%,-)6$73.-)+..$+)(-/%),+)!$#$2+#/$#6%$P$!"#!$!"#!$.#,+$+)(-/%),+)!$9-11$4+/.-.!$-)'+0)-!+12:$>)$!%4$%&$!"+.+$#/+$!"+$"-6"?-,4#*!5$1%9?4/%7#7-1-!2$/-.8.$P$1-8+$)#!3/#1$'-.#.!+/.5$%-1$.4-11.$#)'$*-(-1$3)/+.!$P$!"#!$.++,$!%$7+$%**3//-)6$ with ever-greater frequency and that"#(+$!"+$#7-1-!2$!%$'+.!/%2$#$73.-)+..:$

F%$)#(-6#!+$*1+#/$%&$!"+.+$/-.8.5$*%,4#)-+.$9-11$7+$9-.+$!%$&%*3.$%)$ #$/#)6+$%&$.!+4.$/+1#!+'$!%$41#))-)65$4+%41+$#)'$*31!3/+$#)'$4#/!)+/.:$

T1#))-)6$

k$ !"#$"%&'()%*'+,-$&./%)0/1%

appetites and tolerance and3.+$!"+,$!%$63-'+$-)!+/)#!-%)#1$strategy.

k$ Anticipate high-impact risks !"#!$*%31'$7/-)6$2%3/$*%,4#)2$down, and create crisis management41#).$7#.+'$%)$1-8+12$*%).+L3+)*+.$/#!"+/$!"#)$4%..-71+$*#3.+.:$ d)'+/.!#)'$"%9$L3-*812$!"%.+$ risks can affect your company, 2%3/$.3441-+/.$%/$2%3/$*3.!%,+/.:$

k$ 2$/()"%3'-)4/%-)"%/(5#*0"$67&%informed$#7%3!$4%!+)!-#1$"-6"?-,4#*!$/-.8.$.%$!"+2$*#)$*"#11+)6+$!"+-/$<=>.N$#44/+*-#!-%)$%&$#)'$preparedness for those risks.

k$ Embed key risks into your businessplans.$A11$!%%$%&!+)5$ !"+/+$-.$4%%/$1-)8#6+$7+!9++)$

/-.8$-'+)!-0*#!-%)$#)'$73.-)+..$41#))-)6$-)$+,+/6-)6$*%3)!/-+.:$

k$ Analyse information continuously, from a variety of sources representingdifferent perspectives. Draw on+@4+/!.$&/%,$#$(#/-+!2$%&$'-.*-41-)+.$#)'$&/%,$#/%3)'$!"+$61%7+:$

k$ Consider the best pace forentering a new market.$F"#!$*%31'$,+#)$,%)-!%/-)6$#$,#/8+!$3)!-1$ -!$/+#*"+.$*+/!#-)$,-1+.!%)+.M$ B3,4-)6$-)$%)$!"+$6/%3)'$X%%/$7+&%/+$*%,4+!-!%/.$+)!+/M$-)-!-#112$'+(+1%4-)6$#$.,#11$&%%!"%1'5$.3*"$ #.$!"/%36"$#$1-#-.%)$%/$.#1+.$%&0*+.$ %/$/+4/+.+)!#!-(+.M$%/$,%(-)6$#66/+..-(+12$-)!%$#)$#1/+#'2$competitive market.

k$ Test a market by setting upoperations in a similar,neighbouring country.$F"#!$9#25$ #$*%,4#)2$*#)$6/#'3#112$6#-)$&#,-1-#/-!2$9-!"$!"+$*%3)!/2$ #)'$.1%912$73-1'$-!.$4/+.+)*+:$T#/!-*-4#!-)6$-)$B%-)!$(+)!3/+.$#)'$,+/6+/.5$,+#)9"-1+5$+)#71+.$#$*%,4#)2$!%$+.!#71-."$#$.37.!#)!-#1$4/+.+)*+$-)$#$)+9$,#/8+!$#)'$L3-*812$6#-)$8)%91+'6+$%&$'%-)6$73.-)+..$!"+/+$&/%,$1%*#1.:$

O<1+#/125$9+$#/+$)%!$-)$)%/,#1$!-,+.$#)'$.%,+$%7.+/(+/.$

7+1-+(+$P$+.4+*-#112$-)$!"+$#&!+/,#!"$%&$!"+$3)4/+*+'+)!+'$"-6"12$*%)!+)!-%3.$'+7#!+$%(+/$/#-.-)6$!"+$)#!-%)#1$'+7!$

*+-1-)6$-)$%/'+/$!%$4/+(+)!$.%(+/+-6)$'+&#31!$-)$!"+$dS5$!"+$ 9%/1'N.$1#/6+.!$+*%)%,2$P$!"#!$!"+/+N.$#$4%..-7-1-!2$!"#!$!"+$

61%7#1$+*%)%,2$9-11$.1-4$-)!%$#$'%371+?'-4$/+*+..-%)5Q$.#-'$S#BB#)$e-)'#15$h-*+$<"#-/,#)$#)'$\#)#6-)6$R-/+*!%/5$eS;$

S!++1$f-,-!+':$O]%(+/),+)!.$#/+$'%-)6$9"#!$!"+2$*#)$!%$

prevent that from happening, but one cannot know for sure"%9$!"+$61%7#1$+*%)%,2$,-6"!$#(+/!$#)%!"+/$.1-'+:Q$




k$ Collaborate with governments to gain a window into the direction%&$!#@#!-%)5$/+631#!-%).$#)'$%!"+/$8+2$!/+)'.$!"#!$9-11$#&&+*!$)+9$+)!/#)!.N$73.-)+..+.$1-8+$2%3/.$#)'$"+14$2%3$.%/!$%3!$*%)X-*!-)6$#)'$%4#L3+$1#9.:$F%$1#2$!"+$6/%3)'9%/8$&%/$.3*"$*%11#7%/#!-%).5$-!$-.$(-!#1$&%/$managers to network with a range

%&$6%(+/),+)!$%&0*-#1.:$

F"+$,%/+$+@!+)'+'$2%3/$connections, the better prepared 2%3$9-11$7+$!%$9+#!"+/$*"#)6+.$ -)$4%1-!-*#1$4#/!-+.$%/$-)'-(-'3#1$%&0*-#1.:$E!$."%31'$6%$9-!"%3!$saying, however, that the highest-)!+/)#!-%)#1$.!#)'#/'.$%)$#)!-*%//34!-%)$,3.!$7+$34"+1'$ #!$#11$!-,+.:$

k$ Get involved in community development efforts to create6%%'9-11$#)'$+#/)$#$1-*+).+$!%$%4+/#!+$!"/%36"$*%/4%/#!+$.%*-#1$/+.4%).-7-1-!2:$

A.$8)%91+'6+#71+$#)'$.!/#!+6-*$#.$ a company may be about entering#)$3)&#,-1-#/$,#/8+!5$!"%36"5$'-(+/.-0*#!-%)$."%31'$7+$!"+$foundation of its risk management,#2$7+:$m%$,#!!+/$"%9$#44+#1-)6$#$,#/8+!$#)'$)%$,#!!+/$"%9$#.!3!+12$ you oversee your presence there,

!"+$,%.!$'+4+)'#71+$.!/#!+62$-.$)%!$ !%$/+12$%)$-)(+.!,+)!.$-)$#)2$%)+$market but to pursue opportunitiesin many diverse markets at once.


R+.4-!+$#11$!"+$7+.!$-)!+)!-%).$#)'$!"+$,%.!$/-6%/%3.$41#))-)6$4/%*+..+.5$!"/++$.!/%)6$&%/*+.$*%)!-)3%3.12$threaten to disrupt and distract companies competing-)$3)&#,-1-#/$,#/8+!.:$

1. F"+$(+/2$%4!-,-.,$#)'$*%)0'+)*+$!"#!$.43/$

companies to venture into new markets and pursue7%1'$6/%9!"$%44%/!3)-!-+.$*#)$#1.%$*#3.+$!"+,$!%$-6)%/+$!"+$"-6"?-,4#*!5$1%9?4/%7#7-1-!2$/-.8.$!"#!$*#)$'+.!/%2$!"+-/$*%,4#)-+.:$E!$*#)$7+$'-&0*31!$!%$&%/6+$#"+#'$-)!%$)+9$!+//-!%/2$-&$2%3$&%*3.$!%%$,3*"$%)$#11$!"+$!"-)6.$!"#!$*%31'$6%$9/%)6:$F"-.$-.$#11$!"+$,%/+$/+#.%)$!%$+).3/+$!"#!$)%)+@+*3!-(+$'-/+*!%/.$7+$ 9+11?-)&%/,+'$#7%3!$#)'$&3112$#44/+*-#!+$!"+$"-6"?impact risks companies face and that they *%)!-)3%3.12$*"#11+)6+$!"+-/$<=>.N$'+*-.-%).$/+6#/'-)6$/-.8$#44+!-!+5$!%1+/#)*+$#)'$4/+4#/+')+..$!%$'+#1$9-!"$!"+$*%).+L3+)*+.$%&$"-6"?-,4#*!$/-.8.:$

2. A$/+1#!+'$!+)'+)*2$-.$!"#!$.+)-%/$,#)#6+,+)!$'%+.$not do enough about risk because of the3)4/+'-*!#7-1-!2$%&$!"+$,%.!$'+(#.!#!-)6$/-.8.$!"+2$face. Disastrous events, on the orders of a major+#/!"L3#8+5$S+4!+,7+/$WW5$!"+$]31&$%&$\+@-*%$%-1$.4-115$!"+$+#/!"L3#8+$-)$e#4#)$#)'$Y3//-*#)+$l#!/-)#$"#(+$7++)$.%$/#/+$!"#!$9"+)$/-.8$,#)#6+/.$*#1*31#!+$!"+$4/%7#7-1-!2$%&$.3*"$+(+)!.5$-!$-.$)+61-6-71+:$n+!$#11$those events happened in just the past decade.Managers don’t know how to thin k through the costs (+/.3.$!"+$7+)+0!.$%&$,-!-6#!-)6$.3*"$3)3.3#1$73!$"-6"?-,4#*!$/-.8.5$.%$!"+2$-6)%/+$!"+,:$F"+$'#)6+/.$&/%,$!"-.$-)*1-)#!-%)$!%$-6)%/+$9"#!$-.$.%$'-&0*31!$!%$

#)!-*-4#!+$*#)$7+$%(+/*%,+$72$41#))-)6$&%/$consequences rather than causes, since many *%).+L3+)*+.$9-11$7+$!"+$.#,+$/+6#/'1+..$%&$*#3.+:$

3. Another force is the breakdown in the sharing of information between parts of the organisation that

)++'$-!$P$#$4"+)%,+)%)$9+$*#11$!"+$-)&%/,#!-%)$chasm. Such information breakdowns are key reasons that companies do not do enough to address/-.8:$A.$-)'-*#!-%)$%&$!"+$+@-.!+)*+$%&$.3*"$#$*"#.,5$bKI$%&$<=>.$-)$%3/$.3/(+2$!9%$2+#/.$#6%$.#-'$6+!!-)6$-)&%/,#!-%)$#7%3!$/-.8$9#.$*/3*-#15$73!$%)12$UKI$ of them said they were getting the informationthey needed.

F"#!$*"#.,$*%)*+/).$!"+$."#/-)6$#)'$X%9$%&$/-.8$-)&%/,#!-%)$!"/%36"%3!$!"+$+)!+/4/-.+:$F%%$%&!+)5$-)&%/,#!-%)$#7%3!$/-.8$-.$*%)0)+'$!%$!"+$7%#/'/%%,5$.-1%+'$-)$73.-)+..$3)-!.$%/$1%.!$-)$C2D#)!-)+$-)&%/,#!-%)$.2.!+,.:$=&&+*!-(+$/-.8$,#)#6+,+)!$requires that organisations make sure risk information is shared throughout the enterprise.

F"+.+$-,4+'-,+)!.$!%$#''/+..-)6$/-.8$P4.2*"%1%6-*#1$barriers, the information chasm and high-impact/-.8.$P$#11$41#2$*/-!-*#1$/%1+.$-)$!"+$+,+/6-)6$#)'$%!"+/$3)&#,-1-#/$,#/8+!.$&%/$9"-*"$<=>.$"#(+$.3*"$"-6"$"%4+.:$<%,4#)-+.$!"#!$9#)!$!%$7+$!"+$9-))+/.$-)$!"+.+$+(+/?,%/+?*%,4+!-!-(+$,#/8+!.$9-11$)++'$!%$"#(+$#$'++4$3)'+/.!#)'-)6$%&$7%!"$!"+$4/#*!-*#1$/-.8.$%&$'%-)6$73.-)+..$-)$!"+,$#)'$"%9$4.2*"%1%6-*#1$#)'$%/6#)-.#!-%)#1$7-#.+.$*#)$#,41-&2$!"+.+$/-.8.:$

T+%41+$#)'$*31!3/+$

k$ Create a risk managementculture such that when things6%$9/%)65$+,41%2++.$/+.4%)'$#44/%4/-#!+12$#)'$!%4$,#)#6+,+)!$-.$L3-*812$-)&%/,+':$<%,4+).#!-%)$systems must reward desired7+"#(-%3/.:$F%$!"+$+@!+)!$4%..-71+5$

.4/+#'$!"#!$.#,+$*31!3/+$!"/%36"%3!$.34412$*"#-).:$

k$ Put top talent in charge of key new ventures.$E&$-!$'%+.)N!$&++1$1-8+$!"+$-)(+.!,+)!$-.$9%/!"9"-1+5$-!$4/%7#712$,+#).$!"+$41#).$#/+$!%%$ambitious.

k$ Hire people with culturalsensitivities$#)'$!"%.+$&#,-1-#/$ 9-!"$1%*#1$*31!3/+.:$S%,+$%&$!"+$,%.!$.3**+..&31$*%,4#)-+.$'%-)6$business in emerging markets are*%,,-!!+'$!%$"-/-)6$%)12$1%*#1$+@+*3!-(+.$#)'$,#)#6+/.:$Y-/-)6$1%*#1$#**%3)!#)!.5$1#92+/.$#)'$%!"+/$4/%&+..-%)#1.$*#)$#1.%$"+14:$

T#/!)+/.$

k$ Establish solid partnerships with suppliers that can provide-)(#13#71+$-).-6"!$-)!%$!"+-/$"%,+$*%3)!/-+.5$#.$9+11$#.$!/#).4#/+)*2$into their operations. Strong

/+1#!-%)."-4.$*#)$7+$&%/,+'$72$6-(-)6$.3441-+/.$.-6)-0*#)!$(%13,+.$of business, assisting them with!"+$'+(+1%4,+)!$%&$)+9$*#4#7-1-!-+.$#)'$,++!-)6$/+631#/12$9-!"$ !"+-/$+@+*3!-(+.:$S!/%)65$1%2#1$/+1#!-%)."-4.$*#)$"+14$+).3/+$!"#!$!"+$.34412$*"#-)$,++!.$.3''+)$demand spikes. At the same time,*%,4#)-+.$."%31'$*%).-'+/$diversifying their sourcing toreduce dependence.

There are many reasons forcompanies to be optimistic asthe recession relaxes its gripon the world economy.




S#,41+$F#71+$%&$^-.8.

General risks

k$ =*%)%,-*$'-.4#/-!2

k$ Food, water and energy shortages

k$ <1-,#!+$*"#)6+

k$ E11+6#1$#*!-(-!-+.

k$ \#*/%+*%)%,-*$-,7#1#)*+.

k$ h%1#!-1+$,#/8+!.

k$ d).!#71+$4%1-!-*#1$.2.!+,.

k$ d)&#,-1-#/$1+6#1$.2.!+,.

k$ d)4/+'-*!#71+$/+631#!-%).

k$ <%//34!-%)

k$ d)'+(+1%4+'$-)&/#.!/3*!3/+

Market entry

k$ Differing sector and country growth rates

k$ =(%1(-)6$,#/8+!

k$ ]%(+/),+)!$4/%!+*!-%)$&%/$)#!-%)#1$41#2+/.

k$ <%)!/#*!$4/%!+*!-%)

k$ =@4/%4/-#!-%)

k$ ]+%4%1-!-*#1$/-.8

k$ ^-.-)6$+@4+*!#!-%).

k$ ^+1#!-%)."-4$7+!9++)$"%,+$#)'$"%.!$*%3)!/-+.

k$ <31!3/#1$'-&&+/+)*+.

k$ h#/-#!-%).$-)$*31!3/+5$6/%9!"$/#!+.$#)'$ other factors between regions

k$ <"#)6-)6$+*%)%,-*$+)(-/%),+)!

k$ ^-.-)6$9#6+.

k$ Shifting government incentives

k$ \-.,#!*"+'$/-.8$!%1+/#)*+

k$ E)!+11+*!3#1$4/%4+/!2$4/%!+*!-%)

k$ f#7%/$*%)'-!-%).

k$ E)&/#.!/3*!3/+

k$ <%//34!-%)

k$ ]%(+/),+)!$-).!#7-1-!2

Market presence

k$ <%,41#*+)*2

k$ S"-&!.$-)$4%1-!-*#1$4%9+/

k$ Shifts in power brokers

k$ <"#)6+.$-)$/+631#!-%)

k$ <"#)6+.$-)$73'6+!$*%)'-!-%).

k$ <"#)6+.$-)$!#@$4%1-*-+.

k$ Surges in demand

k$ E)&%/,#!-%)$6#4$7+!9++)$"+#'L3#/!+/.$ #)'$1%*#1$,#/8+!.

k$ f#*8$%&$34?!%?'#!+$'#!#

k$ ]/%9-)6$*%,4+!-!-%)

k$ E)#'+L3#!+$'#!#

k$ <31!3/#1$'-&&+/+)*+.$7+!9++)$/+6-%).

k$ ]%(+/),+)!$-).!#7-1-!2

k$ <"#)6-)6$+*%)%,-*$+)(-/%),+)!

k$ E,4#!-+)*+$

Market exit

k$ C#//-+/.$!%$/++)!/2 k$ ^+43!#!-%)#1$/-.8

k$ T/%"-7-!-%).$#6#-).!$*#4-!#15$4/%0!$/+4#!/-#!-%)

k$ =@-!-)6$!%%$+#/12$%/$!%%$1#!+

k$ <%/4%/#!+$/+.4%).-7-1-!2$#)'$+!"-*.

Supply chain

k$ =!"-*.

k$ Working conditions

k$ Human rights

k$ <%,,3)-!2$'+(+1%4,+)!$-..3+.

k$ <#/7%)$&%%!4/-)!

k$ Security

k$ E)!+11+*!3#1$4/%4+/!2$/-6"!.

k$ T/%'3*!$L3#1-!2

k$ <"#)6-)6$,#/8+!$*%)'-!-%).

k$ ^-.-)6$1#7%/$*%.!.

k$ ^-.-)6$/#9$,#!+/-#1.$*%.!.

k$ F/#).-!$!-,+.

k$ <3.!%,.$'+1#2.

k$ F+//%/-.,

k$ ^-.-)6$+)+/62$4/-*+.

k$ ^+.%3/*+$."%/!#6+.

k$ ;+#8$.3441-+/.k$ E)#'+L3#!+$'%9).!/+#,$'#!#

k$ >(+/'+4+)'+)*+$%)$1-,-!+'$.3441-+/.

k$ <27+/#!!#*8.

k$ >(+/'+4+)'+)*+$%)$%)+$,%'+$%/ route of transportation

k$ Fraud

k$ <%//34!-%)

Contacts and contributors

Miles EversonT#/!)+/5$T9<$dS$m+9$n%/85$mn$oW$ZaGa[$G_W$caUV$

Christopher MichaelsonR-/+*!%/5$T9<$dS$\-))+#4%1-.5$\m$oW$ZaWU[$Hba$GGb_$

A*8)%91+'6+,+)!.

;+$!"#)8$!"+$T9<$+@4+/!.$1-.!+'$#7%(+$9"%$!%%8$!"+$!-,+$!%$."#/+$!"+-/$(-+94%-)!.$9-!"$%3/$+'-!%/-#1$!+#,:

S4+*-#1$!"#)8.$!%$<"/-.!%4"+/$\-*"#+1.%)$&%/$-).!-6#!-)6$#)'$."+4"+/'-)6$!"-.$/+4%/!:$F"+$+'-!%/-#1$!+#,$&%/$!"-.$4371-*#!-%)$-)*13'+'$<"/-.!%4"+/$\-*"#+1.%)5$f-)'#$<%/,#)5$S"+#)#$F#,7%3/6-5$</-.!-)#$A,4-15$f#//2$n35$=,-12$<"3/*"5$f%*8$m+1.%)5$f-.#$<%*8+!!+5$S3D#))+$S)%9'+)$#)'$S"#))%)$S*"/+-7,#):$

E)$#''-!-%)5$S#6+$m+9,#)$&/%,$!"+$=3/#.-#$]/%34$.+/(+'$#.$#)$#'(-.%/$!%$!"+$#)#12.-.$"+/+-):

S"#))%)$S*"/+-7,#)$1+'$4/%B+*!$,#)#6+,+)!$#)'$,#/8+!-)6$+&&%/!.M$e#*L3-$^-(+!!5$]#/2$g#-/,#)$#)'$>'6-.$o$<%,4#)2$ 9+/+$/+.4%).-71+$&%/$'+.-6)$#)'$4/%'3*!-%)M$#)'$A'-7#$l"#)$#)'$F/#*2$g31"#,$*%%/'-)#!+'$%)1-)+$4/%,%!-%):

Alastair RimmerT#/!)+/5$T9<$dl$f%)'%)$+44 (0) 20 7213 2041

Harry G. Broadman\#)#6-)6$R-/+*!%/5$T9<$dS$;#."-)6!%)5$R<$oW$ZUVU[$KWU$VcV_$

F+//-!%/2$*%)!/-73!%/.

f+#'-)6$*%)!/-73!%/.

Brenda EprileT#/!)+/5$T9<$<#)#'#oW$ZGWa[$cab$UKGb

Christof MenziesT#/!)+/5$T9<$]+/,#)2 oGb$Zab[$bHcH$WWUU

Bob SempleT#/!)+/5$T9<$E/+1#)'oKHK$ZV[$W$_bUaGKG

Mark StephenT#/!)+/5$T9<$dl oGG$ZV[$UV$_cVG$KVbc

Keith StephensonT#/!)+/5$T9<$S-)6#4%/+oaH$aUKa$KKHc

Felix SutterT#/!)+/5$T9<$S-)6#4%/+oaH$aUKa$_KGc

Richard SykesT#/!)+/5$T9<$dl oGG$ZV[$UV$_cVG$HGaa

Sandra BirkensleighT#/!)+/5$T9<$A3.!/#1-#oaW$Z_[$KUH_$cGVc

Hans BorghoutsT#/!)+/5$T9<$m+!"+/1#)'.oKW$ZV[$cc$_bU$_a_W

Marie CarrT#/!)+/5$T9<$dSoW$ZKWU[$Ubc$acUK

Ward DuvallT#/!)+/5$T9<$dl oGG$ZV[$UV$_UWU$W_aW

Keith RobinsonR-/+*!%/5$T9<$dl$f%)'%)$+44 (0) 20 721 35554

David Van OssR-/+*!%/5$T9<$dl$f%)'%)$oGG$ZV[$_cVU$UGG$_GW



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