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Upbeat outlook as companies pursue growth.

Renewed enthusiasm is sweeping through leading Asian and multinational companies, with a new study suggesting that most companies are now seeking growth opportunities in Asia.

However, companies should move quickly to take advantage of changing market conditions or risk being left behind.

An Andersen Consulting study, titled "Shifts in the Shoreline: Asia's New Business Environment," found that three-quarters of chief executives and senior executives listed entering new markets as part of their business strategy.

The report also stated that two-thirds of Asian companies and three-quarters of multi-nationals now viewed the region as an opportunity rather than a crisis. This is a vast change from 12 months ago, when only half of the Asian companies consulted held this view.

Strategies now being pursued by companies include expansion into new markets, increasing production capacity, and investing in information technology and re-engineering processes.

The same study last year found companies were pursuing mainly defensive strategies, such as cost cutting, postponing investment, rationalising and restructuring.

Mr Alan Salter, of Andersen Consulting, said the Asian crisis had radically changed the region's market dynamics.

"Asia will not return to pre-crisis conditions where companies could succeed based on the region's strong natural growth rates alone," he said.

"(But) rewards are there for those companies who understand the radically altered market conditions left in the wake of the crisis and act quickly to capitalise on them.

"Those companies that are slow to respond will be hit by greater competitive intensity, new market entrants and severe pressure on their existing value propositions."

Mr Salter said companies developing their response to the changing market dynamics should consider the following strategies.

* Consolidation: Gain economies of scale and build market share while competitors are weak.

* Regionalisation: Build critical mass and diversify local market risks.

* Liberalisation: Enter previously restricted markets and increase foreign investment options.

* New technology: Get a competitive advantage based on technological efficiency, knowledge management and diver-sification.

* Supply chain integration: Link companies with customers more successfully through improved logistics.

The study found some companies had already started building competitive advantages.

"British Telecom has used market liberalisation to expand its regional presence, extending its operations into Japan, Singapore, Malaysia, Hong Kong and South Korea," Mr Salter said.

"Chinese electronics giant, Haier, increased its revenue by 58 per cent in 1998 following a similar regional expansion into Japan."

Other examples include Sony, which made significant investments in new convergent technologies, and Unilever, which expanded its regional operations by entering new markets in China and the Philippines.
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Publication:Business Asia
Geographic Code:90ASI
Date:Jun 28, 1999
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