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Private Canadian Companies Poised to Excel InternationallyThursday, October 22, 2009 > 12:37:38
Global recovery providing "an edge" in market expansion:
KPMG Enterprise survey
Over half (57%) of Canadian private companies said foreign operations were important to their company's overall growth strategy, according to a KPMG EnterpriseTM 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% 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% indicated their revenues should grow by more than 80% 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%, from 36% a year ago, and 18% said they would decrease expansion, compared with 12% previously.
During good economic times, 60% said they would retain the status quo, down slightly from 63% last year. One-third said they would increase foreign expansion during an upturn, up from one-quarter a year ago, while only 6% said they would cut back, compared with 10% 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% of respondents said the global credit crisis had an impact on their ability to implement plans for expansion in foreign markets, 43% claimed it had little or no impact. In terms of international outsourcing, 70% 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% of respondents who said they were already conducting business outside Canada. Responding companies represented a wide range of industries, the largest component (25%) being commercial/industrial manufacturing businesses. All regions of Canada were represented, with 47% based in Ontario and 28% 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.