Global port operator DP World, Emirates, and telecom major etisalat have now secured a place of honour in the list of 100 companies that can take on the global corporate titans, according to Boston Consulting Group, or BCG.
In a report titled ‘ BCG Global Challengers 2011, released globally on Thursday, the global management consulting firm said those 100 firms, also including Saudi Basic Industries Corporation and El Sewedy Electric from Egypt from the Middle East region, are the “hidden engines” of the global economy. This year, overall, there are 23 new challengers in the list from 16 countries. “These companies can qualify for inclusion in the Fortune Global 500 in five years as they grow faster and more profitably than MNCs from developed world,” BCG, a leading advisor on business strategy, said in its report.
According to the report, this group of 100 companies has begun to leapfrog past established multinationals in global industry rankings. About half of them could qualify for inclusion in the Fortune Global 500 within the next five years.
Overall, the global challengers generated revenues of $1.3 trillion in 2009. They also grew annually by 18 per cent and averaged operating margins of 18 per cent from 2000 through 2009. During this period, the annualised total shareholder return of the global challengers that were publicly listed was 17 per cent.
“If the challengers continue on their current growth path, they could collectively generate $8 trillion in revenues by 2020 — an amount roughly equivalent to what the S&P 500 companies generate today,” said Thomas Bradtke, Partner and Managing Director in BCG’s Dubai office and originator of BCG’s Global Challenger report series in 2006.
“The inclusion of the UAE, Saudi Arabia and Egypt reflect the growing economic importance of the Middle East in general, and these countries in particular. The Middle Eastern champions clearly demonstrate that the region is well capable to diversify beyond its oil and gas endowment. Middle Eastern challengers succeed with unique business and operating models, technological strength or the ability to penetrate fast growing but difficult markets,” said Bradtke.
Although China, India, Brazil, Mexico, and Russia still dominate the list of home nations, countries in other regions, such as Africa, are starting to foster world-class companies.
“The global challengers should be seen by farsighted multinationals as potential customers and partners, to be worked with for mutual benefit. The global challengers certainly demonstrate strategies, capabilities and attitudes that are worth studying by the world’s incumbents,” said Bradtke.
“On the other hand, the Middle Eastern challengers can often still learn from their incumbent peers how to take operational excellence and customer care to the next level,” he said.
According to BCG, the global challengers have historically been well distributed across industries. Industrial goods, with 35 challengers, and resources and commodities, with 24, continue to lead the list. The construction industry (with six challengers) moved up the list, reflecting the growing importance of infrastructure in developing markets. The need to fuel growth in rapidly developing economies, or RDEs, has set global challengers on the acquisition trail. From January 2006 through August 2010, challengers in the resources and commodities industry announced 154 cross-border mergers and acquisitions, far more than any other sector and nearly twice the 86 deals completed in the five previous years.
(C) Khaleej Times
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