McKinsey: APAC Region Key to Navigating New Business Environment

A new report by McKinsey & Company says that Asia will take center stage in the “new normal” of disrupted supply chains, geopolitical and climate emergencies, and growing inflation and scarcity.

The report, “Value, speed, and scale: A new era for operations in Asia,” suggests that CEOs need to rethink and reshape their business practices to take best advantage of the changing circumstances in the region. Investment in Asia has tripled over the past ten years, and it is highly likely that the region’s economies will continue to drive global growth. The area is on track to account for 40% of the world’s consumption and more than 50% of global GDP by 2040.

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According to the report, “For forward-thinking CEOs, Asia could be the proving ground for new business practices that can offer solutions to the major challenges of the next decade and beyond . . . CEOs will need to mobilize their organizations to drive end-to-end execution of those choices, which will require aspiration setting and role modelling from the very top. The organizations that get this right will be more adaptable, more resilient, and more sustainable, no matter what the future holds.”

McKinsey’s report suggests that companies whose strategic visions embrace the best of Asia will be well-positioned to respond to factors, such as supply chain disruptions, sustainability programs (which will account for most of an additional $130 trillion in global capital expenditures by 2030), and the ongoing and urgent drive for enterprise digital transformation.

Despite its promise, the region is not without its challenges. APAC is one of the most economically diverse areas in the world, and its people face significant inequalities in wealth, education, and access to healthcare. Further, its manufacturing-forward economies will require significant investment and transformation to prevent further damage to the Earth’s ecosystem and help stave off the worst impacts of climate change.

While today’s business world is rife with uncertainty, McKinsey seems confident that business leaders who think big and move decisively in the region will find that their organizations will be “more adaptable, more resilient, and more sustainable, no matter what the future holds.”