Companies that do an effective job in emerging markets interview multiple candidates before selecting any partners and structure these relationships to ensure that all parties profit together—or not at all.

These companies also need to be adept at enabling local content development as a capability. Often there is an explicit condition, laid down by a government authority, that the established company must create local jobs. Other times, the request is more unusual.

For instance, when Mittal Steel (now ArcelorMittal) was looking to take over a Romanian steel plant in 2006, a local bishop requested that Mittal’s executives build a Roman Orthodox church at the entrance of the plant. Mittal’s true capability had to do with integrating acquired assets, but its respect for the idea of local content—no matter how nonstandard the request—helped bring down barriers.

Atkins, headquartered in the U.K., is another example of a firm that has expanded geographically.

In 2013, the company derived 10% of its business from the Middle East. It is designing the new international airport in Jeddah, Saudi Arabia, and is also known for the Burj Al Arab luxury hotel in the UAE, the Dubai metro, and the Bahrain World Trade Center. Meanwhile, for its commodity-oriented services, such as computer-aided design drawings, Atkins operates low-cost design centers in India and the Philippines.

Value-Chain Expansion

Traditionally, D&E companies are not set up to reinvent “who” they are or what they do. The rise of integrated firms has typically involved construction firms expanding into D&E, as opposed to the other way around, because of the economics of D&E (far less risky and thus more profitable than construction).

An increasing share of industry revenue is going to “integrated” design and construction firms. Design–construction integration has long been the rule in the petroleum industry, but it’s now becoming more common in other sectors, including transportation, power, and manufacturing. Among the 150 biggest global D&E firms in 2013, 53% were integrated firms, up from 45% in 2004.

But to be successful in value-chain expansion, product and service innovation is the key capability. And clients’ need for various services in the course of a project’s often decades-long life cycle gives rise to a broad set of opportunities for D&E companies. D&E firms are now starting to look at these and other services as ways to win new business, increase revenues, and diversify their portfolios.

To maximize the impact of successful product and service extensions while minimizing the impact of any stumbles, best-in-class D&E companies take a structured approach and use a stage-gate decision process. As a prelude to this, they generate hypotheses and scenarios about where their best opportunities exist. And when they succeed, the results can be dramatic.

For example, even prior to the URS acquisition, AECOM has been particularly aggressive in expanding into new service areas. In 2010, it bought Tishman Construction, a company with a strong position in program management that is overseeing the reconstruction of the World Trade Center in New York. Expanded service offerings now account for a sizable portion of AECOM’s growth (over 50% revenue growth in total since 2008).

Sector Expansion

Whereas companies expanding their geographies and value chains have market knowledge and some brand recognition to build on, sector-expanding companies have to establish a new reputation and client network. They also have to diversify their fundamental market and design expertise. Given these materially greater challenges, sector expanders are more likely to pursue partnerships or acquisitions. This means that strong business development is the critical capability for success.

To be sure, there is no way to eliminate all risk in moving to a new or augmented strategy. But answering a few critical questions can help point you in the right direction.

How quickly are the different market areas growing, and how healthy are the margins? Who are the entrenched competitors, and in what ways are they vulnerable? Where does it make the most sense to compete? What will the new strategy mean for our operating model?

Although much of the D&E sector remains fragmented and regional, the trend toward globalization and consolidation is undoubtedly accelerating. As it does, the winners will be those that possess a clear set of capabilities and that, more importantly, align those capabilities with their specific strategies for expansion. Now is the time for established D&E companies to figure out how to make those two things come together and reposition themselves for the future.

Christopher Dann, a partner at Strategy& (formerly Booz & Co. and a unit of PricewaterhouseCoopers since April), has more than 20 years of experience specializing in strategic decision-making and risk management in the energy, industrial, and infrastructure industries. He can be reached at Christopher.Dann@strategyand.pwc.com.

Owen Ward, a principal at Strategy&, has more than 10 years of consulting experience specializing in strategic planning and investment decision analysis for energy and infrastructure clients. He can be reached at owen.ward@strategyand.pwc.com.