Global recovery providing "an edge" in market expansion: KPMG Enterprise
TORONTO, Oct. 14 /CNW/ - Over half (57 percent) of Canadian private companies said foreign operations were important to their company's overall growth strategy, according to a KPMG Enterprise(TM) survey, Taking on the World: Positioning Canadian Private Companies for Global Success.
More than three-quarters of respondents indicated that they sell or export outside the country, import goods or services, and/or use foreign vendors or distributors. Nearly one-half of survey respondents said they considered their foreign expansion to be successful, while one-quarter admitted to being unsuccessful. Respondents were senior executives, with more than half of them CEOs, presidents, and/or owners.
"As we enter a period of global economic recovery, foreign markets will become the places to be if an organization is to achieve maximum growth," said Dennis Fortnum, National Leader, KPMG Enterprise. "Canada seems poised to excel as the global economy recovers, giving Canadian organizations an edge in doing business globally."
The survey documents the extent of private companies' foreign operations to date; sheds light on the benefits of global expansion for private companies, and the key challenges and risks of doing so; and provides information about local employee and supply resources in foreign markets.
Key findings include:
- Sixty percent of private companies surveyed said they plan to expand
their presence outside Canada during the next 5 years
- More than half of respondents said less than 40 percent of their
total revenues came from operations outside Canada
- Looking ahead, leaders of Canadian private companies indicated that
revenue from foreign operations would grow over the next five 5 and,
specifically, 14 percent indicated their revenues should grow by more
than 80 percent during this period.
Just over one-half of the private companies surveyed said that they would not change their global expansion plans during an economic downturn, which was up from just under one-half in last year's survey. However, the percentage of companies who said they would increase their foreign expansion during a downturn fell to 25 percent, from 36 percent a year ago, and 18 percent said they would decrease expansion, compared with 12 percent previously.
During good economic times, 60 percent said they would retain the status quo, down slightly from 63 percent last year. One-third said they would increase foreign expansion during an upturn, up from one-quarter a year ago, while only 6 percent said they would cut back, compared with 10 percent in 2008.
"There are much larger markets beyond Canada's boundaries, and foreign expansion provides an opportunity to increase sales and profitability," said Fortnum. "Opportunities are available to not only large public corporations, but also to small- and medium-sized private companies."
The 2009 survey included new questions related to the economic recession. While 40 percent of respondents said the global credit crisis had an impact on their ability to implement plans for expansion in foreign markets, 43 percent claimed it had little or no impact. In terms of international outsourcing, 70 percent of respondents said the downturn had little or no effect. And more than two thirds said the situation had not prompted them to make changes in their foreign expansion plans.
While Canadian private company owners and CEOs are enthusiastic about the prospects for global expansion in the coming years, lessons learned from the recession provide a reminder of the need to be cautious. Yet, at the same time, the downturn has also demonstrated just how competitive and global the new business world has become-and, consequently, of the need to identify and exploit opportunities abroad.
A combined methodology was undertaken for this year's Taking on the World survey, including by telephone, online, and one-on-one interviews. The companies selected were already doing business outside Canada or were planning to do so. Respondents were senior executives, more than half of them CEOs, presidents, and/or owners.
The focus of this report is based upon the 96 percent of respondents who said they were already conducting business outside Canada. Responding companies represented a wide range of industries, the largest component (25 percent) being commercial/industrial manufacturing businesses. All regions of Canada were represented, with 47 percent based in Ontario and 28 percent in the four Western provinces. Two-thirds of the companies surveyed had annual revenues of less than $50 million; three-quarters had fewer than 250 employees.
The study was completed between June and July 2009.
About KPMG Enterprise
KPMG Enterprise is a network of professionals devoted exclusively to serving private companies in Canada. Our business advisers care passionately about the success of their private company clients. As the primary point of contact, they take time to understand your business and help deliver value that is unique to your private company, bringing forward leading people and resources to serve your specific needs. Our service delivery goal is to provide relevant, timely advice and ideas in a way that is manageable and affordable, which can ultimately help any private company save time and money.
KPMG LLP, a Canadian limited liability partnership established under the laws of Ontario, is the Canadian member firm affiliated with KPMG International, a global network of professional firms providing Audit, Tax, and Advisory services. Member firms operate in 144 countries and have more than 137,000 professionals working around the world.
SOURCE KPMG LLP
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