• Next-Generation Economic Clusters

    Next-Generation Economic Clusters

    These emerging economic clusters have jump-started industries and accelerated economic development in mature and developing markets worldwide.

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    Globally, economic clusters (EC) are abundant in a variety of forms: special economic zone, industrial zone, free zone, economic city, and technology cluster. Examples of successful ECs can be found across industry sectors and geographic regions, including aerospace in Brazil's Embraer Cluster, biomedical applications in Singapore's Biopolis, and petrochemicals and steel products at the Jubail and Yanbu Industrial Cities; in the United States, Michigan’s Economic Development Corporation helped transform the state’s automotive industry by developing high-tech and clean-tech emerging skills and capabilities.

    Yet, ECs have frequently started without a clear strategy to meet their economic development objectives. Only by clearly defining their playing field and truly differentiating themselves can many ECs become true incubators of economic development.

    Key considerations include focusing on sectors and parts of the value chain, and aligning with the long-term local or regional economic development agenda; orchestrating the right ecosystem to enable sector and value chain growth; and creating a sustainable link to the host country economy.

    For the incubator to flourish, it needs to function as an ecosystem, bringing together and balancing various enablers to access a market. These enablers include a focused strategy, sound facilities and infrastructure, favorable regulations and ease of doing business, talent and technology development, access to capital and financing, and promotion of small and medium-sized enterprises and entrepreneurs.

  • Agile Government: A Citizen-Centric Approach to Growth

    Agile Government: A Citizen-Centric Approach to Growth

    An agile government holds the key to sustained growth and development in the GCC.

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    The Gulf Cooperation Council (GCC) has achieved in one decade what took most other nations several decades: making the leap from a resource-based to an emerging global economy. Today’s citizens and private-sector organizations have clearly benefited from the region’s improvement initiatives but they are inevitably raising their expectations of government. People want transparency, have grown impatient with service problems, and are scrutinizing financial targets more than ever. They want to work together to make a difference, and they expect their voices to be heard.

    To meet these expectations and deliver on the economic diversification and manpower development promises set out in future visions, GCC governments will need to become more responsive, putting citizens and the private sector at the core of everything from process and systems to organization and culture. Developing an agile, citizen-centric government will be vital to the region’s economic growth.

  • Strategic Partnerships: The Way to Win in India's Hydrocarbon Sector

    Strategic Partnerships: The Way to Win in India's Hydrocarbon Sector

    In today’s complex hydrocarbons market, building the right alliances can be a game changer.

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    Around the world, the hydrocarbon sector is operating in a rapidly changing, complex environment. To survive, players must continuously upgrade their technologies, capabilities, and resources. Thriving, however, requires more. Amid growing demand, more complex exploration and production, strict environmental norms, and mounting cost pressures, capturing long-lasting value depends on forming strategic partnerships.

    Alliances are nothing new for hydrocarbons. But in today’s dynamic environment, building the right alliances can be the winning move, especially for hydrocarbons in India. Across the value chain, opportunities are opening up. However, the challenges are many, including poor access to capital, a non-conducive business environment, insufficient understanding of reserves, poor infrastructure, project bottlenecks, and significant energy subsidies.

    Strategic partnerships can deliver significant, long-lasting value as players collaborate to share risks and rewards, co-create and innovate, and tap the power of complementary assets and capabilities. Market participants that play their part in forming strategic partnerships will reap the many rich dividends offered by India’s hydrocarbon sector.

  • Supply Chain 2025—Trends & Implications for India

    Supply Chain 2025—Trends & Implications for India

    A joint A.T. Kearney-CSCMP study

    As India's economy grows and the operating environment evolves, it is critical to understand the macro trends that will shape future supply chain design.

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    As India's economy grows and the operating environment evolves, it is critical to understand the macro trends that will shape future supply chain design.

    By 2025, the Indian economy will have grown multifold and consumers will have become much more heterogeneous, presenting organizations with a unique set of opportunities and challenges. The supply chain will be impacted by various evolving macro-factors for which organizations will have to prepare. Within this context, the Council of Supply Chain Management Professionals (CSCMP) and A.T. Kearney undertook a joint study to determine the major trends that will shape India’s supply chain by 2025, and the impact these trends will have on organizations. While numerous “wild cards” are likely to shape future supply chains in India, this paper highlights six trends that we believe will have the biggest impact and discusses how organizations should prepare:

    • More mega cities. A growing population and urbanization will lead to several cities becoming mega demand centres. Increased congestion and space constraints will require organizations to create a different supply chain model to serve these cities. Going vertical, common carrier deliveries, use of electric vehicles, and flexible unloading are some options to consider in designing supply chains for these cities.
    • Proliferation of segments. Increasing consumer segments, the emergence of new channels, and a greater number of products will lead to the creation of multiple new segments. Organizations will need to customize activities across their supply chains to deal with different segments, and move away from today’s “one size fits all approach.”
    • Improved supply chain infrastructure. With planned investments in infrastructure—road, rail, and ports—the supply chain is expected to become faster and more connected across all modes. The increased size of the multi-modal network will drive larger and more consolidated facilities.
    • Better regulatory climate. Regulatory changes are expected but the timing will continue to remain uncertain. GST, fiscal incentives, and sustainability and activism are some of the factors that are likely to change. Scenario-based planning will help in preparedness.
    • Increased globalization. India will become more connected globally with larger numbers of imports and exports and an increased share of global trade. More organizations will have a regional manufacturing footprint. Managing risk, traceability, compliance, and responsiveness will be critical to success.
    • Affordable technologies and big data. Decreasing costs of technology will lead to more data and information on supply chains. Organizations will need to build up their technological and analytical capabilities to leverage and benefit from this data.

    While many changes will occur by 2025, some aspects of the supply chain will remain as they are today. For example, volatility in supply and demand will continue, making risk management and scenario planning critical. Business pressure to deliver “more with less” will not change anytime soon, forcing supply chains to further increase efficiencies and balance customization with consolidation. And skill gaps in talent will likely endure, moving organizations toward selective automation, skills development, and better working conditions.

  • IT Cost Transformation

    IT Cost Transformation

    Out-of-control IT costs call for a more radical approach, one that considers the big picture.

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    For many IT departments, costs are climbing steadily while demand and complexity are growing. Increasing complexity is bringing longer development times, making it difficult for IT departments to satisfy business expectations in a timely, cost-effective manner.

  • Feeding a Billion People: The Role of the Food Processing Industry

    Feeding a Billion People: The Role of the Food Processing Industry

    As India's population soars, the challenge of feeding its people is growing. The food processing industry will be a primary part of the solution.

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    Economic growth over the past decade has reduced poverty significantly, bringing 20 million people above the poverty line every year. However, India continues to face significant bottlenecks in feeding nutritious food to more than a billion people, leading to chronic undernourishment and malnutrition, lifestyle diseases, and micronutrient deficiencies. Resolving these issues will require improvements on several fronts: availability, affordability, consumer awareness, quality, safety, and access to food. We believe the food processing industry will need to play a central role in improving India’s nutrition situation, thanks to its link between farms and shelves, India’s unique market conditions, and the industry’s role in job creation and economic growth.

    To feed the country’s currently undernourished population, India needs a 3 to 4 percent increase in its food supply. By 2025, two factors will impact the country’s food requirement, driven primarily by increasing incomes, rapid urbanization, and more inclusive growth:

    • India’s food mix will continue to move away from grains and pulses and toward dairy, fruits and vegetables, meat, and edible oils.
    • Aggregate energy intake levels are likely to increase.

    Significant availability risks must be bridged by the food industry, especially for grains and pulses, edible oils, and dairy products. In addition to availability, the pillars supporting improvement in India’s nutrition future are affordability, quality and safety, and consumer awareness. Availability and affordability limitations for lower-income groups have led to persistent undernourishment. Lack of awareness and issues with food quality have driven overconsumption in upper-income groups, and all four contribute to the high incidence of micronutrient deficiencies.

    Securing India’s nutrition future requires addressing the underlying structural causes of these gaps and limitations, including:

    • A slowdown in productivity and lack of alignment on production incentives that impact farm output
    • Limited organized presence and poor procurement and supply chain infrastructure, leading to waste, unnecessary price buildup, and poor food quality and safety
    • Lack of scale and modern technology limiting the nutritional impact and added value in processing
    • Inability to effectively monitor and ensure food quality and safety across the value chain
    • Gaps in research and training that limit improvement programs across the value chain
    • Absence of consumer awareness about balanced diet, quality, and food safety issues

    Eleven initiatives for India’s food and nutrition situation will effectively meet the goal of feeding a billion people (see figure 1). Across these 11 areas, four broad themes, discussed in detail in this report, form the basis of an action agenda for private players and government:

    1. Use private-public partnerships in production, extension services, supply chain, and high-nutrition foods
    2. Simplify regulations and policies, and ensure stronger implementation in integrated planning, implementation, and standardization
    3. Improve transparency in price, volumes, and food produce inventory
    4. Increase innovation and skills to drive growth over the next decade

     Initatives for feeding a billion people in India

  • California Aerospace Industry Economic Impact Study

    California Aerospace Industry Economic Impact Study

    Aerospace is a major source of jobs and revenues in California. The state must take steps to support it into the future.

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    California has been at the forefront of the aerospace industry for more than a century. California-based aerospace businesses and government organizations play crucial roles in commercial, civil, and national security programs, and the industry is a crucial source of high-paying jobs, tax revenues, and technological innovation.

    A.T. Kearney recently conducted an independent study on the aerospace industry’s impact on California’s economy. This study shows the importance of this industry’s revenue impact, employment impact, and share of the global aerospace market.

  • Road Map to Success for the Construction Equipment Industry

    Road Map to Success for the Construction Equipment Industry

    With high infrastructure growth expected in India, the earthmoving and construction equipment (ECE) market is estimated to increase by 20 to 25 percent.

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    A well-developed infrastructure is a foundation for growth in any country, paving the way for a better quality of life and a rapid rise in gross domestic product (GDP), especially for developing countries such as India. However, building infrastructure in a country as diverse and populous as India isn’t easy. The country is behind in terms of infrastructure when compared to other leading developed and developing countries—for example, India has one of the world’s densest road networks but a low number of multilane highways, and its airports are among the most crowded in the world.

    In its 12th Five-Year Plan, the government has earmarked approximately $1 trillion for infrastructure investment. Consequently, infrastructure spending is expected to grow from 7.2 percent of GDP in 2012 to 9 percent by 2017. This is likely to spur the demand for earthmoving and construction equipment (ECE), and if the industry’s full potential is realized, the result could be a $16 billion to $21 billion industry by 2020.

    This significant opportunity raises some important questions: What challenges need to be overcome for the ECE industry to harness this potential? What enablers will help the ECE industry fulfill its potential? What global best practices can help address these challenges, and how effectively can they be used in India?

    To answer these questions, A.T. Kearney and the Indian Construction Equipment Manufacturers’ Association (ICEMA) conducted a joint study to identify the industry’s challenges and opportunities and assess potential solutions. The findings are presented in this report.

  • Boost Procurement's Buying Power with Analytics

    Boost Procurement's Buying Power with Analytics

    For procurement professionals feeling the pressure to produce greater value, analytics offers myriad benefits.

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    Analytics. It is a word that strikes procurement professionals in different ways. For some, it is the must-have tool for taking procurement into the future. For others, just how it will help sourcing is unclear. And for many, it is a source of anxiety: How do I acquire the analytics I need when I don’t understand analytics in the first place?

    Indeed, as companies beef up their competitiveness, leadership expects procurement to generate additional value beyond cost. In turn, procurement is contributing more to strategic differentiation. Analytics is key to that growth: Spend analytics vastly improves visibility on purchased goods, services, and opportunity identification. Advanced bid analysis helps sourcing experts deftly juggle conditional discounts and alternative bids. And cost regression analysis pinpoints unusually high vendor pricing for a negotiating advantage.

    So what holds back some groups from acquiring these capabilities while others surge ahead? Leadership may not yet see analytics’ value to procurement. Staff may not have the resources to produce reliable data or may worry about lacking analytics knowledge. Finally, the path to developing analytical capability may be unclear. This paper discusses how to overcome these hurdles and offers three strategies for acquiring analytical know-how.

  • Supplier-Driven Innovation and Sourcing in the <nobr>IT Category</nobr>

    Supplier-Driven Innovation and Sourcing in the IT Category

    23rd CPO Executive Roundtable

    Procurement can obtain greater value from the supply base in the IT category by partnering with other internal areas. 

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    The procurement function increasingly provides value beyond cost.

    Day One of our 23rd CPO Executive Roundtable focused on how procurement can contribute by linking innovation-focused suppliers with the business. Creating the right incentives for suppliers to innovate, however, can be difficult. Companies that have traditionally been aggressive with vendors may find it hard to earn their trust. Moreover, a number of thorny questions must be resolved, such as who owns intellectual property and patents from joint efforts. Those companies that get it right can reduce time to market and execution risk, while raising quality and sales profitability.

    The sessions on Day Two dealt more specifically with the IT category. Because IT evolves so rapidly, sourcing succeeds best when handled as an ongoing activity rather than a periodic one. Furthermore, the IT category easily encompasses more than 50 different spend areas, and the supply management framework typically involves multiple stakeholders from around the company—all in all, a very complex environment.

    While mega-supplier deals gone bad have made many companies hesitant to put too many IT eggs in one basket, proven strategies can still yield value in IT sourcing, and IT transformation efforts can bring about a step change in both cost and capability.

  • Social Impact Business Opportunities in Mexico

    Social Impact Business Opportunities in Mexico

    U.S.-Mexico Chamber of Commerce, Northeast Regional Chapter

    A meeting on behalf of the U.S.-Mexico Chamber of Commerce Northeast Chapter discussed social impact business opportunities in Mexico.

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    On November 1, 2013, A.T. Kearney’s New York office hosted a conference on behalf of the United States-Mexico Chamber of Commerce Northeast Chapter (USMCOC-NE) to discuss the current business and investment opportunities related to social impact projects, companies, and entrepreneurship in Mexico. This conference continued a series of events that have been jointly conducted by A.T. Kearney and USMCOC-NE. Previous topics have included Mexico’s optimal positioning as a nearshoring destination, Mexico’s role in NAFTA-centered supply chains, Mexico’s competitiveness in the global economy, the importance of human capital development to Mexico’s future competitiveness, and Mexican innovation, entrepreneurship, and venture capital financing.

    This event provided an open dialogue about what is being done in Mexico to make a positive impact on the living conditions and economic opportunities for those at the bottom of the socioeconomic pyramid through the application of sound business and investment principles. Attendees heard from a distinguished group of entrepreneurs, investors, and philanthropists who are making a difference in the Mexican social impact space. These individuals shared their experiences and opinions in a pair of panel discussions.

    The day’s discussions made it clear that while the social-focused projects in Mexico are helping those at the bottom of the socioeconomic pyramid and bringing returns for investors, much more work remains to be done to elevate the poor above a subsistence-level standard of living. Government efforts, which for too long have doled out funds that have only made a short-term impact, have been eclipsed by the work of private-sector social groups that are bringing disruptive, lasting change to help make Mexico a more productive society. The application of private-sector principles for resource allocation is increasing both social and financial returns.

    This document summarizes the content delivered by the panelists, along with responses to the question-and-answer sessions that followed.

  • Delivering a Superior Automotive Customer Experience in Developing Markets

    Delivering a Superior Automotive Customer Experience in Developing Markets

    How can automakers stand out in developing markets? By providing a top-notch customer experience.

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    In developing markets, auto industry competition is ramping up and customers are growing more experienced and demanding. To succeed in today's market, you've got to make customers happy during the sales process—or else they'll go find another automaker.

    Customer satisfaction, however, can only come when automakers and their dealership partners readjust their focus. Yes, making good cars will always be important, but that alone won't cut it in crowded markets where several manufacturers make quality, innovative, well-designed vehicles of all sizes and styles. Creating a good experience opens the door to a long-lasting brand connection with buyers, who will go from that first car to a second while referring their friends and family. All in all, improving the customer experience could increase annual sales by as much as 20 percent within a country.

    We recently sought to find out how automakers are faring in customer experience across developing markets. We conducted a study of customer experience at dealerships in three high-growth yet different developing markets: Brazil, India, and China. This paper examines the findings of that study and what automakers in these and other developing markets can do to achieve best-in-class customer experience.

  • GCC Family Businesses: Unlocking Potential Through Active Portfolio Management

    GCC Family Businesses: Unlocking Potential Through Active Portfolio Management

    In tough times, GCC family businesses tend to stay strong, but the reverse occurred after 2008. It's not too late to rebound.

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    Like families in general, family businesses seem to function relatively well in troubled times. In fact, many studies show that, in the long run, they perform better than other business models. Key factors for their ongoing success include a management perspective that emphasizes the long term, strong brand and family name recognition, and often a strong focus on the core business.

    But in the GCC countries, family businesses are trending in the opposite direction. During the recent crisis, they have been less resilient than the rest of the economy despite a pre-downturn history of rapid growth and market dominance. This might come as a surprise to some, considering the advantages GCC family businesses enjoy which include the ability to capture the region’s significant growth via international partnerships and franchises across multiple sectors, and exceptional leaders with strong entrepreneurial spirit and intimate knowledge of local markets.

    If the region’s family businesses are to return to their historically high level of performance, they must not only grow and sustain their current business, but develop beyond the GCC. Active portfolio management is an indispensable tool for accomplishing that goal.

  • Eight Ways Telcos Can Grow Revenues

    Eight Ways Telcos Can Grow Revenues

    By revamping their business-to-business offerings and overhauling their sales strategies to refocus on underserved markets, telecom operators can find higher profits, improved returns on investment, and increased volume growth.

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    By revamping their business-to-business offerings and overhauling their sales strategies to refocus on underserved markets, telecom operators can find higher profits, improved returns on investment, and increased volume growth.

    The B2B mobile telecom market is growing rapidly. Global demand for IT and mobile services will rise more than 4 percent between 2010 and 2015; in North America, the B2B market is growing at five times the rate of B2C. Within this growth spurt, the medium-sized company segment will grow twice as fast as small and large companies over the next five years.

    Eight best practices can help effectively and sustainably increase overall sales productivity and unlock significant revenue growth within the midsize market.

  • Nutraceuticals: The Front Line of the Battle for Consumer Health

    Nutraceuticals: The Front Line of the Battle for Consumer Health

    Nutraceuticals represent one of the most exciting areas of health innovation, but achieving full potential will require all stakeholders to adapt.

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    Consumer healthcare has become the battleground where pharmaceutical and consumer goods firms compete for growth. With more people around the world dying from obesity than starvation, poor nutrition is now recognized as a major risk factor for chronic diseases. Most health systems are ill-equipped to deal with this trend. Increasingly, patients are being encouraged to take part in their own treatments, and a consumer market has been developing midway between the supermarket-based world of consumer goods companies and the scientific, pharmacy-based world of pharmaceutical firms.

    The front lines of this battle are nutritional products that have been proven to help prevent or cure disease. These “nutraceuticals” present a tantalizing opportunity for breakthroughs to prevent and manage common health problems, offering consumer-focused solutions to issues that are currently addressed only by pharmaceutical interventions—or not at all. However, despite being a hot spot for growth, they still suffer from the same challenges as the rest of the sector, with market growth barely keeping up with the rise in gross domestic product.

    In this paper, the third in our Winning the Battle for Consumer Healthcare series, we delve further into the nutraceuticals market to understand the opportunities and barriers to growth. We also look at the successes and challenges faced by both consumer goods and pharmaceutical companies as they strive to gain the upper hand in this promising new market.


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