Increased competition means that regional companies will be under pressure to innovate.
Prepare for greater competition
Over the next few years, Asia will remain a dominant recipient of inward foreign direct investment. As companies from both inside and outside Asia continue to target the region, this will increase competition – for assets, talent, resources and customers.
Regional companies need to consider the impact of this trend on their prospects. They also need to decide whether to join other regional companies in looking outside Asia for new opportunities.
Build the capabilities for international expansion
Regional companies seeking to build a global footprint must ensure that they get the basic infrastructure capabilities in place before making bold moves. They need managers who have an understanding of international markets, and core functions, like finance, HR and IT, that can support multiple markets.
Rethink organizational design to enable greater local autonomy
Making the transition from regional to global requires Asian companies to rethink their organizational design and reporting structure. Greater geographic scale makes it more difficult to control from the center.
Regionally focused companies should therefore consider devolving greater autonomy to regions. However, they must do so within a set of parameters and risk frameworks.
Leverage global resources
Even companies that do not see their growth opportunities beyond Asia will need to think globally. Increased competition means that regional companies will be under greater pressure to ramp up their innovation, product and service mix and talent pipelines.
By building partnerships with companies outside Asia, or acquiring companies with the right resources and expertise, regional companies can leverage global resources to ensure that they remain globally competitive.
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