Global Markets Complexity Index

A Guide for Multinationals Navigating Expansion and Contraction
Developed for The Wall Street Journal

The GMCI is a framework for geographic footprint strategy that helps multinationals navigate international expansion and contraction. Explore the analysis of market, operational, and regulatory complexity across 100 countries in the report and interactive map below.

Download the GMCI 2020 Report
(This link will be live on August 9)

GMCI 2020

A less complex footprint leads to higher operating margins

The GMCI categorizes 100 countries into eight complexity groups. Spreading operations across more GMCI groups—operating in countries with widely varying levels of complexity—has a direct, negative impact on operating margin. Conversely, retrenching to fewer groups can yield a positive boost to profitability. This may require making strategic exits at first. Footprint Complexity Score (FCS) measures the number of and distance between complexity profiles in which they operate. The FCS is calculated by summing the percentage of a company’s operating countries in each group multiplied by how far that group is from 'home base.'

MULTINATIONALS WITH LOWER FOOTPRINT COMPLEXITY ENJOY HIGHER OPERATING MARGINS
How Footprint Complexity impacts your Operating Margin

5 Things multinationals with successful market entries get right

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1. BE DELIBERATE

Choose wisely and take country complexity into account.
Example: The allure of India’s large population, fast growth, and relative wealth is attractive to many Western companies, but its high complexity has led to high-profile retreats, such as Walmart and GM.

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2. PACK LIGHTLY

Minimize risk by ensuring an easy exit is feasible. Carefully consider the mode of entry and selection of the market.
Example: in Bulgaria, Uber kicked‐off operations within weeks with only two employees running the local operation. When faced with prohibitive regulatory complexity, Uber cut losses and made a swift exit.

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3. BYPASS THE CONGESTION

Bypassing traditional channels and going direct may be successful in countries with high Market and Operational Complexity. 
Example: Companies like Amway have entered and grown quickly in complex countries. Their salesforce swiftly expands into rural areas and bypasses negotiations with local distribution channels. 

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4. ESTABLISH AN AWAY BASE

Start with one of the small jewels, and use it as a platform for regional coverage.  
Example: Small countries have inherent advantages—less diversity in consumer tastes, concentrated populations in urban areas, and fewer challenges transporting products. In places like Hong Kong and Singapore, those advantages have been amplified by consistently applied, business‐friendly regulatory models.

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5. TAKE A MAP

Moving from low- to high-complexity groups requires new skills and resources.  
Example: IKEA’s expansion, while gradual, is noteworthy for how it follows the GMCI roadmap.


IKEA'S EXPANSION PATH FOLLOWS GMCI GROUPINGS

IKEA's Expansion Path

 

GMCI 2019 garners notable media attention

The Wall Street Journal describes the GMCI as a "...new index [that] helps identify which countries have similar operating environments so investors—both corporate and financial—can make more-informed decisions on which countries they will be comfortable or capable of operating in.” Quartz frames the GMCI as a new tool to tackle complexity and CFO Magazine and CEOWorld Magazine also featured articles exploring the GMCI's impact.

READ THE GMCI 2019 REPORT HERE >>

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Case Study

We help companies find new sources of profitable growth in complex environments

Learn how we helped a global media organization that was losing tens of millions of dollars per year determine how and where to grow to regain profitability, resulting in digital ad revenue growth of more than 50%.

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