Achieving Growth in EMEA (June 2011)

Achieving Growth in EMEAJames Smither, AVP EMEA ResearchFrontier Strategy Group

Our key challenges include balancing direct and indirect distribution and managing process transitions,

whilst always ensuring ethical compliance

EMEA executives face a range of challenges to achieve growth in 2011

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Our challenge is how to expand in

distribution markets, finding the most

ethical partners with willingness to

promote our brand

Since we restructured to an emerging markets function in 2010, the volatility in those

countries is now more obvious and a key challenge is getting Corporate to understand that

My key priority is building a standard

process across such diverse

markets in Europe, the Middle East

and Africa

Our main challenge is sales effectiveness. We’re a global leader

but punching below our weight in emerging markets

Our biggest challenge is finding and keeping talent,

and properly motivating them

11.4%8.8%

Our biggest difficulty is managing our EMEA channel partners through a major product

transition - lots of internal transformation on their part will be needed to achieve that change

Source: FSG Interviews

CEM members’ annual revenue growth in EMEA region

2010 (actual) 2011 (anticipated)

Companies should adopt proactive innovation and geographical flexibility to continue to drive growth amidst challenging market conditions across much of the Europe, Middle East and Africa (EMEA) regions

Opportunities remain plentiful throughout EMEA, but will overwhelmingly benefit those businesses which tailor their strategic planning, sales and distribution approaches to capitalize on the region’s shifting trends

Talent management is emerging as perhaps the most significant overarching constraint on business performance in EMEA – moving ahead of this curve will be critical to future success prospects

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The shadow of the crisis in Middle East and North Africa continues to

loom large in news bulletins and regional commercial forecasts

Challenge 1: Creating growth amidst volatility in the EMEA RegionC

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Complications associated with surging inflation are spreading

throughout EMEA and appear set to persist throughout the remainder of

2011

The debt crisis in the Eurozone also continues to attract headlines,

focused on Greece but with implications throughout Europe and

beyond…

• Supply chain and customer payment interruptions

• Consumers postponing discretionary purchases

• Head Office doubts about long-term viability of region

• Policy flux and delays in transition jurisdictions

• Direct pricing, wage pressure from increasing input costs

• Changing consumer behavior on purchasing & product use

• Interest rate rises create higher cost of borrowing

• Contributory factor in ongoing social unrest trends

• Rising taxes impacting demand and profitability

• Increasing difficulties for customers to access credit

• Shrinking public spending threatens government sales

• Donor aid to region’s emerging markets shrinking

Take ethos of ‘change’ as opportunity to shift market dynamics in your favor in transition countries

Capitalize on increased public spending in other, reacting MENA countries

Make long-term case for region as improving / opening

Re-visit product offerings to capture changing consumer demands

Increase local sourcing and job creation to boost social license to operate

Increase focus on oil exporting countries that are net beneficiaries of surging prices

Recognize opportunities created by necessity of privatizations, public-private partnerships (PPPs) and increasing private sector outsourcing in Eurozone

Re-orientate long-term planning towards new growth frontiers elsewhere in EMEA

Pro

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Challenge 2: Creating a sales process for sustainable goal achievement in EMEA

Key sales-force challenges facing companies in EMEA:

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Over-reliance on top performers

Unpredictable and inconsistent performance

High turnover in the sales force

Cultural resistance to

global corporate best practices

Key opportunities for improving sales performance:

Multinationals need to reduce their reliance on high-performing salespeople to build a sustainable sales force with predictable results

Multinationals rely unduly on salesperson skill for sales success, which is a risky strategy; instead they should focus on standardization of the sales process

Effective communication flow between corporate and local teams is the key to developing standardized and easily replicable processes

Corporate and local teams must balance their unique strengths

Challenge 3: Winning the war for talent in EMEA

Key talent challenges in EMEA:

5Source: FSG Organizational Benchmarking Survey, 2010

Shortages of talent are most acute in the highest growth markets, such as

Africa

Sales

Marketing

Other functions*

13.1

6.7

1.4

% Growth in Headcount Anticipated in 2011

As more companies look to tap growth in emerging markets, there

will be more competition for top talent

Meanwhile, there are increasing legislative pressures to hire more

local staff and promote them faster

Key opportunities:

The EMEA region has an opportunity that counterparts in APAC and LATAM do not; to prepare today for tomorrow’s talent crisis

The talent management and engagement strategies that were successful in the past will need to be innovated and updated as the market evolves

Access to the right talent is the key enabler for achieving growth objectives and besting competitors

At companies most successful in recruiting and retaining top talent have made talent management a top priority for senior management

Achieving Growth in EMEA (June 2011)

Business

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