Survey shows U.S. executives' strategies for EC 1992

Business America, Sept 25, 1989

Most U.S. executives may see opportunities in the single European market, but they are relatively unconcerned about its effect on American business, according to a recent survey by KPMG Peat Marwick, the international accounting and consulting firm.

The results of the survey reveal that most executives view the single market as a European event that will have minimal impact on U.S. business. However, almost 75 percent believe EC companies will gain competitive strength in the EC, which explains why 70 percent of respondents are monitoring 1992. Even though more than half have taken steps to position themselves or have plans to do so, only 17 percent of the CEOs and other senior executives responding to the survey have actually implemented plans. Only 22 percent believe the single market will be a reality by the Dec. 31, 1992, target date.

"These results sharply contrast with what respondents say they have to do to compete effectively," says Aidan St. P. Walsh, who runs Peat Marwick's National EC 1992 Desk. "Most agree on two strategies: form alliances with European Community firms and increase on-site manufacturing in Europe. But the fact that the majority have not taken action shows they may be greatly underestimating the impact of the single European market on their businesses."

The survey was conducted among 10,000 senior executives from U.S. manufacturing, high technology, merchandising, and transportation companies. A total of 872 responded.

Nonetheless, respondents were divided on whether Europe will become the dominant global economic power. They expect the impact of 1992 on U.S. companies doing business in the EC to be positive. They envision increased enforcement of EC fair competition laws (70 percent), faster movement of new products to the marketplace (64 percent), more effective deployment of human resources (56 percent), and freer competition in public procurement (53 percent).

To take advantage of the opportunities of the single European market, 80 percent of the respondents affirm that companies will have to develop Pan-European strategies and establish a European identity. In addition, 77 percent expect lower costs for companies with operations in the EC than foreign-based firms; 63 percent believe that non-EC-based companies will face significant trade barriers as a result of 1992. Moreover, 64 percent think it will be more difficult to become established in the EC after 1992.

More than a quarter of the respondents said their 1992 plans involve more risk than usual. Less than half expect to require additional financing to implement their plans.

The study also revealed that companies that have not begun to inaugurate 1992-related activities will take action only when they begin to lose market share in Europe or when European Community regulations of standards adversely affect their products.