Many organizations considering a global growth strategy consider a national or regional view when formulating their growth strategy. But another, alternative strategy is taking shape—focus on fast-growing urban areas!
A tremendous wave of urbanization is fueling growth across the emerging world. It’s said that this urbanization trend will create an over four-billion-strong global “consumer class” by 2025, up from one billion in 1990. Nearly two billion will be in emerging market cities. Few organizational leaders, however, focus on the importance of cities when considering global growth strategies. Researchers Richard Dobbs, Jaana Remes and Fabian Achaer, writing in a recent McKinsey Quarterly issue comment that “fewer than one in five executives makes location decision at the city (rather than country) level”.
“Our research indicates that 440 emerging-market cities…will account for close to half of expected global GDP growth between 2010 and 2025”, the author write. “Crafting and implementing strategies that emphasize such cities will require new attention from senior leaders, new organizational structures that take account of urban rather than just regional or national markets, and potentially difficult choices about which activities to scale back elsewhere to free up resources for new thrusts”, they say.
In addition to supporting geographic priority-setting, a city-level view can help companies sharpen their marketing strategies. For example, non-profit organizations in the math, science and engineering fields would want to study demographics to find those cities where universities are located, where there is a growing research and manufacturing base and where young professionals in these disciplines reside. These demographics, combined with a study of household incomes and spending patterns will help organizations to sharpen their global strategies.
As significant global economic activity shifts to developing nations, non-profit organizations should be aware of the growth dynamic taking place in cities. Giving an organization’s growth strategy a global dimension may enable non-profits to be positioned to allocate resources more effectively and to more readily seize global opportunities. For the full member edition article, go to https://www.mckinseyquarterly.com/Strategy/Globalization/Unlocking_the_potential_of_emerging-market_cities_3015
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