Bulletins

Manufacturing & Industrial - December 15, 2009

Global Changes Herald a New World Order in the Manufacturing and Industrial Sector

Price pressures due to the availability of low-cost alternatives present a serious threat to some of the world’s largest manufacturing and industrial companies, according to the 2009 Global Market Intelligence survey. Other threats include acquisitions and international expansion, increased market share by Chinese producers, manufacturing over-capacity in parts of Western Europe as well as the emergence of modified or new innovative products.

The survey results suggest that a new world order in the manufacturing and industrial sector may be on the horizon. Conducted by Global Intelligence Alliance, the 2009 Global Market Intelligence survey consolidated the responses of 46 senior executives at some of the world’s largest global manufacturing and industrial companies to find out about executives key concerns with regards market opportunities, threats and the intrinsic role market intelligence plays within their companies in making better business decisions.

Modified and innovative products might mean less clarity in terms of market structure and definitions
One of the key concerns mentioned by senior executives include the reduction in clarity between their ‘traditional’ product lines due to product innovation and the emergence of competitors who may also offer the ‘niche’ products they already do.

Indeed, several senior executives also frequently cite product commoditization as a threat. Couple this with population dynamics of an aging population in parts of Western Europe, the new middle class in Asia and the increasing trend of international expansion and market acquisitions in order to gain access to new customers, it is likely that a new global order will become more prominent.

The changing landscape within the manufacturing and industry sector across the globe, together with what is viewed as some of the biggest threats to companies such as pricing pressures and international expansions, may draw attention to a lack of available information many companies may have about their direct competitors, or even companies across their value chain who may offer substitute products.

30% of senior executives at major manufacturing and industrial firms rated price pressures due to the availability of lower cost alternatives as the single largest threat to their businesses, followed by 13% who view acquisitions and international expansions as the second largest threat. A result of this would be an inability to make informed business decisions. To reinforce this point, one of the factors cited by respondents include the ‘inability of some European companies to react quickly to utilize core competitive advantage in the face of changing demand’.

What do you see as the biggest business threats in your own industry?

What do you see as the biggest business threats in your own industry?

Base: 45: Northern & Western Europe (64%), North America (21%), Other (15%)

Source: Global Intelligence Alliance, Global Market Intelligence survey 2009

Manufacturing & Industrial companies rated the availability of information ‘as and when needed’ in order to support business decisions the lowest
Only 8% of the respondents within the Manufacturing and Industrial sector rated information availability as ‘available as and when needed’, compared to 18% within Logistics and Transportation, 16% within the Automotive and Financial Services, 14% within Energy Resources & Environment and 13% within Training and Education.

Manufacturing and Industrial companies also rated lower (68%) compared to the Chemicals (74%), Telecoms, Technology & Media (75%) and Pharmaceuticals (71%) companies when it comes to the existence of systematic market intelligence operations in their companies.

Having more visibility across your industry either by product, customer, competitor or even by geography is imperative in order to grow successful business practices. The relatively low rating seen by respondents in the Manufacturing & Industrial sector may not be conducive to reacting in an agile manner to a global environment characterized by changing competitive and customer structures).

What do you see as the biggest business opportunities in your own industry?

Base: 46, Northern & Western Europe (64%), North America (21%), Other (15%)

Source: Global Intelligence Alliance, Global Market Intelligence survey 2009

Acquisitions and international expansions are also seen as business opportunities if it is evaluated and planned accordingly
Every cloud has a silver lining and market threats are no exception to this rule.

Despite viewing acquisitions and international expansion as a major threat, senior executives also see growing markets and changing international landscapes as areas for potential business opportunities. A significant 21% rated this as presenting the largest business opportunity for manufacturing and industrial companies.

Other areas that were rated highly as presenting areas of opportunity include climate change and its impact on the energy sector. With legislative changes and growing consumer concern for sustainable manufacturing and production practices, this is an area of significant opportunity for companies hoping to ride on this green wave.

Developing modified and innovative products and services is rated by 15% of the respondents in the study as presenting areas of significant opportunity.

Market Intelligence is mainly organized under the Strategic Planning and Business Development division, however there is only an average level of integration of market intelligence with decision-making
The good news is that Market Intelligence*, for a large number of respondents in Manufacturing and Industrial firms, is organized under strategic planning and business development (46%). This is significantly higher compared to other industries, where it is 35% for Consumer and Retail, 33% for Telecommunication, Technology and Media, 32% for Pharmaceuticals and Healthcare and 33% for the Chemicals industry. In this area, manufacturing and industrial firms score well above the average of 37% overall for all companies.

On the contrary however, despite being organized under strategic planning and business development functions, the level of integration of market intelligence with decision-making remains relatively weak when compared to its counterparts in other industries (6%). Leisure and Travel score the highest as an industry sector (25%), followed by automotive (13%), Pharmaceuticals and Healthcare (10%) and Consumer and Retail (9%).

Market Intelligence needed to sharpen competitive edge
Looking ahead, Manufacturing and Industrial companies would gain from conducting more competitive intelligence and market monitoring on a global basis, as well as customer intelligence to gain a better understanding of areas in which they can develop a competitive advantage in order to counter the price pressures they face.

* Market Intelligence or MI is the discipline where organizations systematically gather, process and analyze information from their operating environment to facilitate decision-making

Download 2009 Global Market Intelligence Survey report

More about GIA's Manufacturing and Industrial practice

For media inquiries, send an email to media(at)globalintelligence.com.

Download any of our Best Practice White Papers.

More About GIA Services Monitoring Services | Strategic Analysis | Rapid Research | Intelligence Software | Intelligence Best Practices

About Global Intelligence Alliance

Global Intelligence Alliance (GIA) is a strategic market intelligence and advisory group. GIA was formed in 1995 when a team of market intelligence specialists, management consultants, industry analysts and technology experts came together to build a powerful suite of customized solutions ranging from outsourced market monitoring services and software, to strategic analysis and advisory.

Today, we are the preferred partner for organizations seeking to understand, compete and grow in international markets. Our industry expertise and coverage of over 100 countries enables our customers to make better informed decisions worldwide.

www.globalintelligence.com