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The rise of multinationals from emerging economies is one of the defining stories of recent decades. While companies within Brazil have a history of exposure to foreign multinationals, it was not until the 1990s that they began to expand beyond their borders in earnest.
During that time, multinational business models have proliferated, driven by improvements in technology and freer cross-border trade and investment. Information, funds, products and services now flow more easily between the world's established and emerging poles of economic activity.
The challenge for businesses is how to build effective international operating models in a highly complex operating environment.
Our research uncovers just how ill-prepared Brazilian companies are to enter into or execute any form of internationalization strategy. Executives are feeling a lack of preparedness and capabilities across all components of their operations. And whether looking at their processes and organizational structures, their information technology, their people, culture or even their leadership, there’s a great deal of evidence pointing to why Brazilian companies have moved to internationalize more slowly than businesses headquartered in several other emerging markets.
Download the Key Messages Report for “Brazil Unleashed: Lessons in Building World-Class International Operations”
Brazil Unleashed: The Challenge of International Growth
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In an effort to understand more about how to overcome the barriers to the emergence of Brazilian multinationals, the Accenture Institute for High Performance conducted extensive research across more than 100 Brazilian multinationals and aspiring multinationals.
The research found that fewer than one in five of these companies (18 percent) are confident that they have the full set of operational capabilities required to execute their internationalization strategy.
As part of the research, an operating model diagnosis was conducted with the purpose of highlighting pain points and uncovering the factors distinguishing successful Brazilian internationalizers from the less successful ones.
This research report uncovers performance gaps and identifies best practices, drawing on benchmarks of high performance from Brazil and beyond.
Value chains have become fragmented and dispersed across continents. Whether they are chains of supply, distribution, manufacturing or innovation, organizations have systematically disaggregated and located business activities to where the most appropriate resources, talent and capital lie. This process has enabled enterprises to gain operational efficiencies and establish centers of expertise. But at the same time, it has unearthed a new set of risks and challenges related to the increasingly complex and interconnected web of global business activities.
Brazil’s internationalizers clearly see significant room for improvement in their operating models. On one hand, the extent of their dissatisfaction with current approaches and their low confidence is surprising. On the other hand, their recognition of these pain points gives them an opportunity to proactively work toward improvements.
This study revealed six key areas of focus where Brazil’s burgeoning multinationals (MNCs) can learn from their successful counterparts.
Balancing global and local imperatives. Executives must evaluate every business activity for opportunities to improve both global efficiency and local responsiveness.
Aligning mindsets with ambitions. To effectively operate a global business, executives must develop a global mindset.
Developing global models for global talent. Optimizing recruitment, skills development and talent retention is a critical element of success in any globalization strategy.
Investing in process performance measurement. Process performance management using advanced analytical techniques helps executives measure, evaluate and predict performance and enhance workforce productivity.
Nurturing the nervous system. An integrated information technology infrastructure is critical to allowing people, processes and structures to operate effectively across a global organization.
Fostering resilience through dynamism. Organizations must develop dynamic operating models, investing in mechanisms that enable them to effectively mobilize people, funds and ideas across countries and business units.
Despite recent turbulence in the economic environment, Brazilian firms remain optimistic about internationalization opportunities. Indeed, 76 percent of the respondents in our study believe that global expansion will be critical to their company's growth in the next three to five years. Most of the companies we talked to (74 percent) are confident that they have a clear strategy for international market entry and expansion. But a strategy is only as strong as a company's ability to implement it. Whether Brazilian companies succeed on the global stage will hinge on the strength of their commitment to building the capabilities and operating models appropriate for the coming era of global competition.
Armen Ovanessoff is a senior research fellow for the Accenture Institute for High Performance, where his focus is on macro-economic, geo-political and business trends in emerging economies.
Athena Peppes is a thought leadership research associate manager for the Accenture Institute for High Performance in London.
Carolin Puppel is a strategy senior manager with the Rio De Janeiro team in Brazil.
February 20, 2014
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