Accenture: More than one-third still lack effective global network to fulfill demand, increase market share
New York — October 14, 2005 — U.S. businesses expect sales revenue generated outside the United States to grow to an average of 42 percent of their total revenue over the next three years, up from 35 percent today and 26 percent three years ago, according to a study released this week by Accenture.
The study was based on a survey of 160 sales/marketing and supply chain management executives from U.S. companies with revenues exceeding $1 billion.
Despite the strong growth expectations, U.S. companies' market share in foreign markets might be at risk of declining. Nearly half (47 percent) of the sales and marketing executives surveyed said a poorly designed or executed global operations strategy has contributed to a failure to grow market share in important new markets.
Additionally, 40 percent of all executives surveyed said their companies do not have a global procurement, manufacturing and distribution network that is designed to deliver products on time and at the budgeted cost.
However, upgrading global operations is clearly a priority, as virtually all (97 percent) of respondents said their companies are doing so. More than three-quarters (80 percent) of respondents said their companies are upgrading global operations due to a desire to penetrate new markets and two-thirds (67 percent) said their companies are doing so to combat new competition from emerging market companies.
Many companies see globalization as both an opportunity and a threat, and wisely so, said Bill Read, executive partner in Accenture's Supply Chain Management practice. While new markets provide the opportunity to grow the top line, they are also producing bold new competitors. In this environment, the lack of a global operations strategy that provides effective sourcing, manufacturing, distribution, service and support capabilities will impair the ability of U.S. businesses to grow profitably in new markets.
China is the most important emerging market for U.S. companies: Of the respondents who are upgrading their global operations to penetrate new markets, the greatest number — 82 percent — selected China as one of their most important emerging markets, followed by India and Eastern Europe, at 56 percent and 38 percent, respectively. Of the respondents who are upgrading global operations to combat new competition from emerging market companies, 85 percent selected China as the country where their major emerging market competition is based.
In late 2005, S. Radoff Associates, on behalf of Accenture, surveyed 160 sales/marketing and supply chain management executives from U.S. companies with revenues exceeding $1 billion to explore the impact of global operations capabilities on market share growth in emerging markets. Respondents' titles included vice president, division/department head, director, executive vice president and C-level executives.
Watch for the upcoming Web In Depth series on China: China or Bust and Entering China: No One Said It Was Easy, coming in November.