As profit growth slows in coming years, there will be more companies fighting for a smaller slice of the pie. Richard Dobbs, director of the McKinsey Global Institute, said incumbent industry leaders need to disrupt their own organizations to succeed instead of simply focusing on defending their current market niche. ‘Too many executives say ‘I don’t want to launch this new product or this new channel because it will cannibalize my existing business’ so they don’t launch it and somebody else comes along and eats the business instead,’ said Dobbs. For the past three decades, corporations have enjoyed record profit growth, new market opportunities, and declining costs. According to the recently released ‘Playing to Win’ report from McKinsey Global Institute (MGI), earnings before interest and taxes more than tripled in real terms from 1980 to 2013 across all global corporations while net income after interest and taxes rose fivefold. The report said companies from advanced economies still earn more than two-thirds of global profits, and Western firms are the world’s most profitable. ‘They’ve had benefit from lower interest rates. They’ve had benefit from lower taxes. They’ve been able to expand globally and sell to consumers around the world,’ said Dobbs. ‘It’s been a wonderful 30 years.’ But Dobbs said this unprecedented run for Western multinationals may be coming to an end as new rivals are putting industry leaders on notice as the business environment turns more uncertain and hyper-competitive.
Subscribe to TheStreetTV on YouTube:
For more content from TheStreet visit:
Check out all our videos:
Follow TheStreet on Twitter:
Like TheStreet on Facebook:
Follow TheStreet on LinkedIn:
Follow TheStreet on Google+:
source
