@Risk

Has your company spent the last few years adjusting to a “new normal?”

For many firms, the answer to that question is an unequivocal “yes.”

Without a doubt, pressures from the global economy have transformed business practices throughout the enterprise, and recently released key issues research from The Hackett Group confirmed that many large companies are adapting to a new status quo characterized by increased volatility and uncertainty in:

• demand,
• cost of raw materials and energy, and
• availability of talent.

In fact, nearly one in five companies in The Hackett Group’s 2012 study said they expect to see 25 percent or more volatility in these areas over the next two to three years.

How will companies adapt? The research shows that many companies are focusing on: (more…)

Many companies are focused on emerging markets to fuel growth. But in order to achieve success, these companies typically must clear numerous –and sometimes daunting –hurdles.

For example, Deloitte recently surveyed business leaders from companies expanding into developing economies. They said their primary challenges to increasing revenues in emerging markets are:

• providing products and services at affordable prices that meet customer needs (43 percent)
• competition from local businesses (40 percent)
• brand awareness in the market (40 percent)
• navigating protectionist policies and government bureaucracy (39 percent)

Clearly, each individual business situation is different, and so each company that eyes expansion into emerging markets must carefully weigh options and design strategies around the special requirements of each country’s consumer and regulatory environments.

The Deloitte study found companies with successful emerging markets operations implement certain strategies to generate revenue. They: (more…)

China is now the most attractive emerging market for apparel retailers, according to A. T. Kearney’s latest Apparel Index, and already, several brands have aggressively entered the market.

PHV Apparel Group (perhaps best known for its signature brand, Izod) plans to open 3,000 stores in China over the next five years. Likewise, Italian retailer RDM has invested $910 million to develop five luxury outlet centers there, and Gap, Inc. opened stores in Beijing and Shanghai late last year.

According to A. T. Kearney, China’s growing middle class is expanding its buying behaviors beyond traditional venues.

“Retail formats in China are diversifying beyond traditional department stores. Chinese consumers are beginning to shop at venues such as hyper markets, specialty stores, outlets, discount stores and online,” Hana Ben-Shabat, a partner with A.T. Kearney and co-leader of the 2011 Apparel Index study, said.

The United Arab Emirates ranked second in the 2011 Apparel Index, driven by a population with a high disposable income and immense fashion consciousness.  In addition, as A. T. Kearney points out, the expatriate populace and tourism also drive consumption in this market. Plus, the UAE is both a regional commerce center in the Middle East and a preferred market for entering the Middle East, as well as for testing new products and retail formats.

The Retail Apparel Index is calculated on a scale from 0 to 100. It includes analysis of the clothing market attractiveness (60 percent), levels of retail development (20 percent) and country risk (20 percent). Country risk indicators include political and financial risk, business readiness and business cost of crime, terrorism and corruption.

Here are the 2011 Apparel Index “top ten,” along with each country’s overall score: (more…)

Growth economies are ripe for investment and development, but a new report from Maplecroft reminds us that these opportunities often come hand-in-hand with significant business challenges.

Maplecroft’s Global Risks Atlas 2011, focuses on seven key ‘global risk’ areas, which are defined as risks that have the ability to affect multiple regions and industry sectors, but are outside the control of an individual government or business. The list of seven key global risk areas includes:

• macroeconomic risk
• security risk
• governance risk and illicit economies
• resource security
• climate change
• pandemics
• societal resilience, including human rights

The four countries that top the ranking  –Somalia (1), Sudan (2), Afghanistan (3) and DR Congo(4) –are all rated ‘extreme risk.’ Each of these countries is characterized by weak governance, internal conflicts and regional instability.

However, as Maplecroft points out, business leaders may want pay particular attention to the several strategically important growth economies that are also rated as ‘high risk.’ Nigeria (12), India (15), the Philippines (17), Russia (21) and Indonesia (32) are among the countries driving most of the positive momentum behind the world economy, but Maplecroft rates all of them as ‘high risk.’

Each of these countries face unique challenges, but, with the Philippines (8), Russia (10) and India (11) rated ‘extreme risk’ and Nigeria (12) and Indonesia (28) considered ‘high risk’ in the ‘security risk’ category, politically motivated violence and terrorism must now be a primary concern for investors in these territories. (more…)

The Indian retail sector is in high-growth mode, and analysts expect it to grow more than $879 billion by 2018.

But, a new study says this growth is jeopardized by inefficient supply chain systems.

The new research, conducted by the Confederation of Indian Industry (CII) and Amarthi Consulting, says India loses $65 billion every year due to inefficient supply chain systems. The country, ranked 47th on logistics, lags behind others, such as Japan, US, Germany and China, and faces significant supply chain challenges, including: (more…)