winning business concepts in turbulent times in cee · § new competitors & investorsfrom...
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7. GROW EAST CONGRESS - 17TH MARCH 2016
Prof. Arnold SchuhCompetence Center for Emerging Markets & CEEWU Vienna
WINNING BUSINESS CONCEPTS IN TURBULENT TIMES IN CEE
7th Grow EastCongress – 17th March2016WKOVienna
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Turbulent times in CEE
7. GROW EAST CONGRESS - 17TH MARCH 2016
§ Repercussions of global & financial crisis can befelt until today
§ Ongoing industry consolidation (e.g., retailing, banking)
§ Host governments turn from welcoming tounfriendly attitude towards foreign investors
§ Russia-Ukraine conflict§ Europe‘s migration crisis§ Shattered expectations & uncertainty among
foreign investors
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CEE needed five years to regainpre-crisis economic level
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Source: Roland Berger, 2015
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Turbulent times in CEE
7. GROW EAST CONGRESS - 17TH MARCH 2016
§ Repercussions of global & financial crisis can befelt until today
§ Ongoing industry consolidation (e.g., retailing, banking)
§ Once welcoming host governments become moreunfriendly towards foreign investors
§ Russia-Ukraine conflict§ Europe‘s migration crisis§ Shattered expectations & increased uncertainty
among foreign investors
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Changing nature of growth andcompetition
7. GROW EAST CONGRESS - 17TH MARCH 2016
§ Slower growing markets than before 2009§ Polarization of markets with widening „bottom-of-
the-pyramidҤ Government interventions are tilting the playing
field towards local competitors§ Emergence of strong local competitors§ New competitors & investors from Turkey, Russia,
China and Middle East appear on the scene
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Western regional players have totackle many issues at once
7. GROW EAST CONGRESS - 17TH MARCH 2016
§ Shrinking edge as „innovators“ & “modernizers“§ Focusing on optimization of existing network
§ Centralization / Regrouping§ Leaner / Nearshoring (Shared Service Centers)
§ Shifting perspective from market to sourcing/ pro-duction
§ How to deal with less-friendly and nationalistic host governments?
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„Betting on the natural competitiveedge“: Innovation & brands
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„Being on the safe side“: Multi-tier brand strategies
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„Bucking the trend“: Manufacturing in „protected“ markets
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NEUSICHT
„Made in CEE“: Thriving on localstrengths
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Foreign investor‘s view Local firm‘s view
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Local players look for growth at home and abroad
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§ Local firms have moved up the learning curve andbecome more competitive
§ „Big idea“ or „quality product at a lower cost“ asstarting points for strategy
§ Leveraging lower cost base, educated workforceand other „regionally-rooted assets“
§ Local governments create space for their growth§ Growth via expansion to foreign markets§ However, profitability varies by industries and
strategies
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“Local Heroes”: Industry and strategy type influence profitability
ROS = Return on sales (Ø EBIT/Sales 2010-13)
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„Ahead of the market“: Visionaries & game changers
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„Smart specialization“:Hidden champions & niche players
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Conclusions
7. GROW EAST CONGRESS - 17TH MARCH 2016
§ Winning in CEE markets has become morechallenging
§ Western firms may be surprised by the way howmarkets and competitive constellations changed
§ Local firms have to find out how to nurture futuregrowth – alone, via investors or by teaming-up
§ All firms – foreign & local ones – have to addressin their strategies the political environment too
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Contact
Prof. Dr. Arnold SchuhDirector of the Competence Center for Emerging Markets & CEEWUWelthandelsplatz 1, Building D11020 Vienna, [email protected]/emcee