"US firms upbeat about the euro" December 1998, Harris Research
To assess how well US companies are prepared for the advent of Economic and Monetary Union (EMU) in Europe, Harris Research conducted a recent survey on behalf of KPMG. The results show that US corporations, like their European counterparts, see EMU transition as a priority issue. A vast majority of the 193 US companies polled have made measurable progress in reviewing and addressing EMU issues. However, the research also revealed significant weaknesses on a number of fronts:
at the planning level, where resources and budget needs have not been clearly assessed;
at the execution level, where plans are implemented slowly; and
even more importantly, at the strategic level. US enterprises are reacting with defensive strategies that fail to recognise the impact EMU will have on their business, and overlook both the challenges and the opportunities.
There is no doubt that US companies with significant business in Europe are getting ready for the transition to EMU, but these efforts remain fragmented, purely technical and are not focused on in a global strategic perspective. US corporations need to take a closer look at how EMU impacts on their core business strategies or they could lose competitive standing and miss some major opportunities in the marketplace.
Methodology
The fieldwork was conducted by Harris Research – a premier UK-based business and political research firm – during March and April 1998. Chief Financial Officers and IT executives from 193 US companies were
interviewed by phone.
US companies' preparedness for the Economic and Monetary Union in Europe (160KB) is available for download in Adobe Acrobat .pdf format.
European companies face EMU threat from US
When the US research results are compared with KPMG's annual survey of EMU readiness among European companies*, it was found that the US is ahead in a number of key areas, including readiness for pricing issues and company location. The survey demonstrates that, while not yet entirely ready for EMU, US companies are likely to pose a serious threat to their European counterparts as the effects of the single currency take hold.
The US advantage
Commenting on the results, Vicky Pryce, KPMG Management Consulting chief economist, said: "This survey demonstrates that, in some of the most essential areas, US companies are ahead of, or level with, European organisations. Almost half of the US respondents believed EMU would make intra-European trade easier – a view shared by only a quarter of European respondents. Ironically, European companies that are not prepared even for increased competition within the EU once EMU starts are now facing additional threats from the US. They must act quickly to get ahead or risk losing ground."
Vicky Pryce continues: "US companies are, to some extent, in a more favourable position than European competitors because they can take advantage of the simplicity of a single European currency without having to convert existing systems and operations. However, many US companies in our survey have compounded this natural advantage by making more strides towards early preparedness than we have seen in Europe so far.
* The second annual survey by KPMG Management Consulting of the preparedness of European business for Economic and Monetary Union. Fieldwork was conducted by the Harris Research Centre among companies employing more than 5,000 people and with a European headquarters in a member state of the EU. More than 300 companies participated, the eligible respondent being the person responsible for European finance.
For more details on the comparison between the preparedness of US against European companies, contact Russell Fox at KPMG Management Consulting at russell.fox@kpmg.co.uk
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