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Saturday, November 07, 2015

GDP,World Bank Doing Business Index key to determine market performance




The Strategy& Associate Director, PricewaterhouseCoopers(PwC), strategy consulting capability based in Africa, Peter Hoijtink, has said that to determine a performing market one should study a market’s wealth measured by Gross Domestic Product (GDP) per capitaand institutional quality measured by the World Bank Doing Business Index, ITRealms reports

These are some of the highlights of a new study, ‘Creating value in Africa,’ released recently by Strategy&, PwC’s strategy consulting.

“Companies are faced with a complex dilemma when determining which markets they should enter, and the capabilities required in each market to ensure success. Although detailed on-the-ground study of each market is ultimately necessary, our experience suggests that a good way to start is by studying a market’s wealth (measured by GDP per capita) and institutional quality (measured by the World Bank Doing Business Index). Based on these criteria and how the two are combined, African countries fall into six market types: high, medium and low income, with either strong or weak institutions. Each of these types requires companies to have different capabilities to succeed.
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Executives that follow capabilities - driven strategy will make their companies more coherent and gain a competitive advantage in the African markets where they have decided to expand their operations. The right strategy can transform a company and its industry, delivering substantially superior shareholder returns in the long-term. These are some of the highlights of the new study.

Strategy& Partner, Jorge Camarate said, “Worldwide, multinational companies are including plans to expand across Africa in their growth strategies. CEOs throughout Africa have unanimously confirmed that they see high growth potential on the continent, according to research conducted by PwC.

“This confidence is an indication of the positive long-term trajectory we have seen in general economic prospects, availability of finance, and the increasing presence of potential local and international partners attracted by the African continent’s potential.”

Traditionally, firms formulate a strategy by looking for market opportunities, but all too often it does not work, particularly in the African context. The problem is that such strategies rarely acknowledge the capabilities a company needs to capture those opportunities. As a result, many of these companies have destroyed value in the process instead of benefitting from growth opportunities. “We approach strategy the other way round with an approach that we call a ‘capabilities-driven strategy,” comments Camarate.

Cyriacus Nnaji/GEE
 
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