Archive for the ‘Gulf (GCC) Region ’ Category

MENA 2.0: The Arab Digital Market

Wednesday, April 4th, 2012

A new engine of economic growth is quietly emerging in the Middle East and North Africa (MENA). Demographics, rising purchasing power and a burgeoning private sector are fueling economic development in a region where markets have been fragmented for too long.

Stretching from Morocco to Oman, MENA’s population tops 350 million, making it the world’s ninth largest market. But trade barriers among countries in the region have constrained market growth. Until now.

Today, an emerging trend is disrupting MENA’s traditional market patterns: a growing segment of urbanized, tech-savvy Arab youths is devouring on-line entertainment, gaming and social media, creating demand for digital services that are delivered across borders. Here comes the Arab digital content market.


Three Books on the Middle East

Friday, April 29th, 2011

If you’re absorbed by events in the Middle East and crave more information about the the region, here are three highly readable, essential books. Each provides a comprehensive view of a surprisingly diverse and increasingly dynamic part of the world.

The Middle East (1997) – Author Bernard Lewis is the senior dean of Middle East scholars. He’s a gifted storyteller with unparalleled subject mastery – a rare combination. Lewis makes clear sense out of complexity. This engaging primer is the gold standard of books on the region.

A Peace to End All Peace – The Fall of the Ottoman Empire and Creation of the Modern Middle East (2001) – David Fromkin toiled for ten years to describe the birth of the region’s nation states. This is the story of how the Western powers carved up the Middle East with little regard for the consequences. It’s required reading for anyone interested in understanding the forces that shape the region today.

The Modern Middle East: A Political History since the First World War (2nd Edition) (2011) – This primer by Mehren Kamrava provides a sound historical context for the events of today’s Arab Spring. Kamrava updated the book in the 2nd edition, published earlier this year.  It’s recommended for anyone wanting to fill the gaps in their understanding of the region.

Delivering to Emerging Markets

Monday, November 17th, 2008



For those interested in delivering their services to emerging markets, BusinessWeek provides an informative piece on Cisco’s EM strategy. The piece provides a glimpse of the company’s ambitious model for expanding its global footprint.

The story doesn’t delve into exactly how Cisco collaborates with emerging players aross geographic and cultural differences, etc.  Often cultural disparities plague global alliances. I wondered how Cisco’s people engage their counterparts in emerging markets?  Has Cisco developed a collaborative model for bridging the cultural gaps that often hamper global service initatives?  These are my questions…

Good Governance Rules

Wednesday, October 22nd, 2008

In the midst of this economic crisis, the World Economic Forum (WEF) has released its annual (’08-’09) benchmarking report about global competitiveness.  (Here’s a short video commentary by a WEF economist.)

Despite the shaky underpinnings and dire economic climate, the U.S. still ranks ahead of the other nations in competitiveness, though economists see thorny challenges ahead.  On the plus side, the U.S. still brings a lot in the area of production potential, well-functioning labor markets, sophisticated businesses, academic leadership and technological innovation.  

While these are sustainable virtues, the U.S. has its work cut out to stay on top as other countries take steps to improve their competitiveness (see Fareed Zakaria’s seminal The Post American World).  Globalization is leading to the “Rise of the Rest”. This pattern has been evident to anyone involved in business dealings across markets over the last decade.   

The report had few surprises. A notable exception is that the UK slipped (from 9th last year to 12th) due to its heavy reliance on a flagging financial services sector. 

Singapore, the Scandinavian nations and Switzerland have been perennial leaders for several years. And it isn’t surprising that the Gulf nations are on the rise due to worldwide demand for hydrocarbons coupled with concerted economic reforms.

Fiinally, some sub-Saharan nations are making headway though, as a region, it still lags behind.  These economies have had 5-6% annual growth rates and relatively low inflation in recent years.  But their infrastrusctures are fragile and they may be hit hard by a global slowdown.    

The WEF report is a lagging indicator of the strengths and weaknesses of global economies.  For example, it doesn’t take into account the prospects of a global slowdown which reduces the demand for resources. 

The take away is that governments play a substantial role in shaping a nation’s long-term capacity to compete in an increasingly global and crowded world.  Good governance rules.

Gulf-based Airlines Soar

Monday, March 3rd, 2008

Dubai-based Emirates Airlines continues to capture attention. At the recent (Nov, ’07) Dubai Air Show, the carrier ordered a stunning 245 new wide-body planes, spreading orders among both manufacturers: 120 Airbus A350 XWB jets, 11 more A380 super-jumbos and a dozen Boeing 777-300ERs. The orders, totaling $34.9 billion, bring the value of the airline’s fleet to about $60 billion USD.

The Dubai air show — one of the most prestigious commercial trade shows — is regarded as a bell weather of Gulf region carriers who are racing to expand their fleets, and convert the region into a major global hub. Emirates’ regional rivals are Doha-based Qatar Airways and Abu Dhabi-based Etihad, and three have been reporting record growth.

Emirates Airline, the largest airline in the region, is already the world’s 10th largest carrier, and it’s gaining altitude rapidly. It already serves 99 cities in 62 countries and, on average, is adding a new city every couple months.

Despite its aggressive growth strategy, the carrier says its keeping its focus on delivering a highly differentiated service product.  The company offers customers a 200-channel in-flight entertainment system and a responsive, well-trained customer-facing staff.

Emirates is entirely government owned, but its chairman, Sheik Ahmed Bin Saeed Al Maktoum, said recently that 30 percent of the company may be sold in public markets.

Operationally, Emirates is a sleek machine. Its operating costs are significantly lower than those of its European or U.S. rivals, and the carrier continually seeks business process and supply chain efficiencies.

We’re betting that Emirates, like its regional competitors, will maintain its staffing and service levels, even as competitors outside the region begin tightening their belts. At a time when many carriers are battling both record fuel prices and a declining U.S. dollar, Emirates should realize $1 billion in profit in the fiscal year ending March 31 on total revenue of $8.1 billion, an 18.5 percent increase over the last year.

The carrier is ahead on the currency front because it’s pegged between the UAE’s dirham and the U.S. dollar. (Emirates reports results in dirhams, but a big chunk of its earnings is in euros and pounds sterling, and the dollar’s slide is helping the carrier.)

Emirates is benefiting from the Gulf region’s unprecedented economic growth.  This boom, fueled by high oil prices and a nascent tourism industry, is expected to continue despite a world-wide economic slump on the horizon that is being predicted my many economists.

Dubai is well-situated to capture European customers en route to Asia and about half its traffic moves through Dubai International Airport.  Over the past 15 years Dubai International Airport has developed into one of the largest hubs in world aviation.

A new airport, Dubai World Central Al Maktoum International Airport, the world’s largest, is under construction 12 miles from the city center.  It will be ten times the size of the current airport and will entail a port, hotels, residential areas, as well as a free-trade zone.

The only major ripples in the pond are concerns about regional political instability and, as other carriers acquire longer-range aircraft, Dubai’s draw as a hub may be reduced.  But, for now, the picture looks rosy.  If the carrier makes the same prudent business choices as it has recently, the airline should be a force to reckon with for a long time to come.

GCC Practice

Monday, March 3rd, 2008

Last year, we launched our Emerging Markets practice to address new opportunities brought about by converging market forces, chiefly globalization.  Several factors played into our selection of which markets to enter.  Our focus is on rapidly growing markets in Southern-Eastern Europe, Sub-Saharan Africa “hot spots,” and the six nations of the Gulf Cooperative Council (GCC) and the surrounding region known as “MENA,” (Middle East-North Africa).

The case for entering the energy-rich GCC was compelling. Demand for the region’s energy will likely infuse $3 trillion in capital into these economies over the next decade. An emerging class of affluent consumers is demanding high-grade services in telecommunications, financial services, real estate, transportation, hospitality as wel as the region’s burgeoning “connected communities”.

Governments in the region appreciate the need for a diversified foundation and recognize that they must foster entrepreneurialism while creating an infrastructure enabling companies to compete on a global level.

What adds to the market’s promise is that business leaders in the region are convinced that their companies need to become more competitive. They know that in order to operate on a global stage characterized by complexity, speed and ever-greater synchronicity, competitive business capabilities cannot be passively acquired.

As the region diversifies away from energy to a knowledge-centric economy, businesses have to do more than merely bridge functional gaps. They have to build dynamic, efficient business processes and relational skills. They realize that competitive capabilities can only be transformed through continuous interaction with experts with experience in global markets.

As companies seek to capitalize on business opportunities popping up, a shortage of top-flite business professionals is exacerbating skilled labor shortages. Many companies have been hiring expierienced, non-native practioners who bring added diversity as well as know-how.  As that trend continues, a legion of talented, foreign workers will introduce new ideas and approaches.  But ultimately, success will come when a true fusion occurs between native and non-native knowledge workers.  Well-integrated, globally-oriented organizations serving the region are already on the horizon, but there’s a lot of work to be done in this challenging area.

We’re excited to see that regional businesses aren’t simply clamoring for best practices—they’re demanding next practices that enable them to deliver competitive, customer-centric services at lower prices. They are adopting more advanced tools and relying on data-driven metrics to track and manage their business activities.

Global business consultancies entering these markets are finding the environment to be challenging due to prevailing business traditions. For example, decision makers in the region remain protective, sharing their plans slowly, wary of abdicating control to outsiders.

Many global consultancies, new to the region, have struggled with this.  They’ve experimented with a range of business strategies, often partnering with local companies to gain a foothold in the region, spending considerable resources in the process.  Some are succeeding, but many have not.

We believe our approach sets us apart from other global firms.  We are bringing together people, cultures and ideas from around the world, transforming businesses in the region and driving unprecedented value.  Having worked throughout the Middle East, we recognize the paramount importance of demonstrating respect for and sensitivity to both the traditions and challenges of the region.  Our aim is to remain open to alternate, more effective ways of seeing, communicating, and tackling problems, and this region is an interesting market space.

Techno trend roundup…

Sunday, December 23rd, 2007

Google released its annual year-end list of its most popular queries, suggesting the latest trends. No surprises this year. The fastest rising query in ‘07 was ‘iPhone,’ an impressive techno-business phenomenon. Its meteoric sales in Europe this past week prove that the iPhone is a truly global phenomenon.

But, with all the hoopla about how the iPhone is revolutionizing the marketplace, we’re missing another interesting – if less sexy – mobile trend: the rapid acceleration of cell phone penetration in emerging markets and its impact on the global marketplace.

Mobile phone penetration in developing regions is staggering. And, it’s a key contributor to economic growth. Studies show that every 10 percent increase in mobile penetration results in a country’s GDP growth of 0.6 percent.

The growth of mobile teleco penetration affects global poverty, and the way people in emerging regions consume a growing range of services from prepaid phone cards to banking services.  Micro economies in rural villages are developing around those who buy and sell prepaid vouchers. People are using cell phones to enable their nascent businesses to flourish. Some of these micro-enterprises are growing – rapidly.

Until recently, network coverage in emerging regions focused on large cities as well as in major tourist areas. But operators are realizing the sheer economics of extending their networks to rural areas, particularly in regions without fixed line infrastructures. In order to do this, base stations are being built at a record pace. It’s a major undertaking, with financial costs to match.  But the ROI is massive.

Looking back at the past year and looking ahead, here are the hot, new trends facing teleco operators in emerging markets:

1. Infrastructure sharing: operators using the same base station sites and transmission equipment reducing network infrastructure costs.
2. Consolidation of carriers.
3. Investment is coming from unlikely sources such as private equity firms.
4. 3G leapfrogging in emerging markets. (Operators in Qatar and Saudi Arabia have begun to offer 3G services, as did South Africa.)
5. WiMAX is emerging as a platform alternative for introducing new mobile services over vast expanses.
6. Deregulation in Middle East markets is enabling greater competition and better service/pricing. GCC nations, Qatar, Saudi Arabia, Bahrain, as well as Lebanon are awarding new licenses for carriers.  Consumers are benefiting from better service.
7. Regional call-centers will be used to help convert prepaid customers to higher-revenue, lower-churn post-paid accounts.
8. Celtel’s Pan-African roaming network will enable people across geographic borders to connect without having to pay for incoming calls.

I’m not knocking the iPhone as the tech-business story of the year. Apple’s success will change the shape of things to come in the coming year and beyond. The iPhone has earned a special place in the zeitgeist of commerce.  But, consider the under-reported story of mobile penetration in emerging regions, and fathom the scope and scale of what’s on the horizon.

Africa and beyond

Tuesday, November 13th, 2007

Our company made a commitment in 2005 to transferring business skills and innovative practices, along with new technologies, to emerging markets. Our associates share a passion for this effort. But, frankly, we don’t say much about it in our communiqués, and we’re likely missing opportunities to marshal more support and gather additional resources. We know that we need to change that in the coming months.

Throughout Africa, business knowledge is crucial to economies at every stage of development. It enables companies to establish more effective capabilities necessary for developing thriving businesses. Knowledge transfer between companies makes sense. Well-structured collaborations are thriving and the benefits flow in both directions.

Efforts are mounting to raise awareness. In 2007, an unprecedented string of high profile events placed this agenda on the radar screen. After the Davos symposium and the much lauded TED events in both Monterrey and Arusha, Tanzania, African entrepreneurial successes are getting lots of attention.

In a more modest French conference hosted by Insead last April, “Nurturing Business Education in Africa,” a diverse group of educators focused on practical steps for transferring knowledge. “We will be looking for practical ways that business schools and their professors can strengthen the capability of African schools to train the continent’s future managers.”

A recent CNN Int’l article notes, “Africa is in desperate need of qualified and talented management to help its economies, not only running companies but helping entrepreneurs and ensuring more effective corporate and legislative governance policy”.

The publicity that Africa is getting seems mostly helpful and is growing more so as it attracts not just luminaries, but pragmatic entrepreneurs whose early forays are informing the business community about the region’s market potential. But, a looming concern is this becoming a flavor of the day movement.

Like all trends, it runs the risk of being discarded, supplanted by the next, new shiny idea. Another issue is the process being co-opted by global companies seeking to enhance their images. This may dampen the aspirations of those who genuinely want to make things happen.

This project isn’t for short term thinkers. Gains typically come through successive approximations. It takes patience and perseverance to develop opportunities across cultural divides. But, we’re finding that it’s worth the effort.

Considering the Gulf

Friday, October 19th, 2007

In a recent workshop, conducted by a partner serving the Gulf region, we focused on the challenges and exciting opportunities facing industries in the mineral-rich Gulf region.  It had been a while since my last visit to region and the changes taking place are seismic.

Markets in the region are developing consumer services at an unprecedented rate. We see continued growth throughout the Gulf Cooperation Council (GCC), i.e. Saudi Arabia, UAE, Bahrain, Kuwait, Qatar, and Oman. Soaring oil prices there are giving rise to a burgeoning consumer market.

GCC nations are investing substantial resources in their infrastructures, while the service sector is poised to take off.

The GCC has amassed an estimated $1.5 trillion in capital which will fund the rapid development of infrastructure and services in the next 5-10 years. During that time, Dubai’s Palm islands project and the first phase of the Dubailand theme park are to be completed among the region’s many spectacular mega-projects.

The GCC’s airlines are among the fastest growing in the world. Dubai-based Emirates along with its rivals, Qatar Airways and Abu Dhabi’s Etihad Airways are in a race to attract affluent, global customers. All three carriers offer improved, innovative premium class amenities and each has announced a stunning array of new offerings for the coming year.

U.S. firms stand to gain significantly by bringing to the region innovative practices, technology and with a flexible stance.   The region inspires a wide-eyed appreciation of how companies, unconstrained by legacy systems and thinking, are leap-frogging technology and business practices.  The region is already driving global innovation and this is only the beginning.

While mature markets are influenced by different drivers, companies in both markets management must continually aspire to higher performance standards in order to compete successfully for rapidly growing consumer markets.

Despite the geo-political instability and their risks just outside the GCC, the opportunities in the region are in the “blue sky” realm—something mature economies haven’t witnessed in my lifetime.