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Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
Informe KPMG: Convirtiendo el riesgo global en oportunidad
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Informe KPMG: Convirtiendo el riesgo global en oportunidad

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El informe Turning Global Risk into Opportunity se basa en los resultados de una encuesta realizada entre 350 empresas de todo el mundo, que se llevó a cabo en diciembre de 2011. Dicha encuesta se …

El informe Turning Global Risk into Opportunity se basa en los resultados de una encuesta realizada entre 350 empresas de todo el mundo, que se llevó a cabo en diciembre de 2011. Dicha encuesta se centró específicamente en conocer las opiniones de los altos directivos del área financiera de entidades del sector minorista, alimentación y bebidas, y fabricantes de bienes de consumo. La muestra de empresas encuestadas refleja de manera homogénea el espectro global de las principales regiones del mundo e incluye entidades de Norteamérica, Latinoamérica, Asia-Pacífico, Europa, Oriente Medio y África.

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  • 1. Consumer marketsTurning global risk into opportunity:Key priorities for consumer company CFOs kpmg.com KPMG International
  • 2. Foreword kPmG International is pleased to present Turning Global Risk into Opportunity, a report based on our recent survey of 350 senior finance executives from consumer markets companies around the world. a series of in-depth interviews with select CFos was also conducted, to enhance the survey findings and fully explore the current state and future outlook for companies in the retail, food, drink, and consumer goods sectors. this is a time of considerable volatility and opportunity for these sectors. Globally, the 2008/09 financial crisis had a lasting affect on consumer behavior, and economic uncertainty, globalization, and new technology all continue to drive change in the way consumers spend. structural changes in the global economy are shifting economic weight from West to east and creating massive new markets for consumer goods and retail companies in emerging economies. at the same time, developed countries are growing slowly, if at all, while competition is increasing from both domestic and overseas players. to succeed in this highly dynamic, fluid environment, manufacturers and retailers must re-think their business models and be willing to adapt quickly to emerging risks and opportunities. they must strike the careful balance between global scale and local relevance, build strong relationships with stakeholders on the ground and be able to manage a wide variety of risks that can undermine their strategic aims. at kPmG, we are constantly seeking to understand how the changing external environment is affecting the performance of food, drink and consumer goods manufacturers and retailers. our research, in which reports like this play an important role, helps us to gain valuable insight into the strategies and tactics that businesses are adopting to succeed in a complex and fast-changing world. this makes us better able to advise our clients which, in turn, helps them to position themselves for sustainable, long-term growth. We would like to thank the executives who participated in this study and we hope the findings are useful as you address the challenges and opportunities you face. We at kPmG welcome the opportunity to discuss this study and its implications for your business in the years ahead. Willy Kruh Global Chair, Consumer Markets KPMG © 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.K
  • 3. Contents 02 Executive summary 06 Searching for market growth 10 The lure of emerging markets 14 Evaluating and executing strategies 18 Getting execution right 24 Risk management 30 Conclusion 32 About KPMG’s Global Consumer Markets practice 32 Acknowledgements© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 4. 2 | Turning global risk into opportunityExecutive summaryTT© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 5. Turning global risk into opportunity | 3 Survey demographics T© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 6. 4 | Turning global risk into opportunity In this report, we examine the impact of these trends on consumer companies through the lens of the chief financial officer. We outline opportunities for market growth, and ways companies are managing across markets with varying development levels and business environments. and we look at how companies are managing risk at a time of considerable turbulence. our study reveals several interesting findings: Successful companies will continue to invest despite a worsening outlook and declining revenues. the mood among many consumer companies is downbeat. around four in 10 respondents to our survey expect their company’s revenues to fall over the next year. retailers are even more likely to be pessimistic about the future, with more than half expecting a decline in revenues compared with fewer than 40 percent of manufacturers. But despite these disappointingSeven in 10 performance expectations, companies still have an appetite for investment inrespondents say market expansion, new product development and digital commerce. to retain market share in developed markets, and gain a hold in emerging economies,that tapping new companies must continue to invest.middle-class Despite their problems, developed markets remain a core focus. although developed markets face the prospect of sluggish economic growth, consumerconsumers in firms still see countries such as the us and Canada as important sources of future business expansion over the next two years. Growth in these markets will be highlyemerging markets challenging over that period, however – and companies that achieve it will require a potent combination of innovation, increased productivity and efficiency, and theis key to their capacity to adapt quickly to changing consumer behavior.growth strategy. But emerging markets will by far represent the biggest opportunity for growth. seven in 10 respondents say that tapping new middle-class consumers in emerging markets is key to their growth strategy. Companies with higher-than-© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 7. turning global risk into opportunity | 5average performance are particularly likely to be focusing on emerging markets. Butthis poses a dilemma for consumer goods companies – they must simultaneouslynurture developed markets and invest for growth in emerging economies. strikingthe balance between the two and timing investments appropriately is a criticalchallenge, and one in which the CFo plays a vital role.Mobile is now the leading technology used to maximize sales. Within the spaceof a few years, mobile communications have transformed consumer behaviorand business practice. CFos see mobile as the top technology for maximizingsales. some retailers are now using mobile devices instead of tills – the first majorinnovation in point of sale for decades. mobile is also the key to tapping emergingmarket growth, since mobile phones are often the primary means to access theinternet in these regions.Risk conversations are becoming more frequent, but an enterprise-wideview of risk is not yet a reality. Formal risk reviews are happening morefrequently to help understand a fast-changing environment. the proportion ofrespondents that conduct formal risk reviews weekly with senior managementhas risen to 19 percent, up from 7 percent two years ago. Conversations aboutrisk may be more frequent, but few companies have an enterprise-wide viewof their risk exposure. most deal with specific risk categories locally, or withinthe business unit. this makes it difficult for companies to understand theinterdependencies across risk categories, or align specific risk mitigation effortswith overall strategy.Sustainability has moved from being a ‘nice to have’ to a core businessissue. For CFos, the potential for using sustainable approaches to reducecosts through energy efficiency, improved logistics and reduced packaging isimmediately appealing. according to research previously conducted by kPmG,as many as eight in 10 consumer goods firms have developed a sustainabilitystrategy1. among our respondents, more than half say sustainability positivelyimpacts their operating costs. Finance functions also have a key role to play insustainability reporting, which is likely to deepen further as new developmentssuch as integrated reporting become established.1. http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/ corporate-sustainability-v2.pdf, p.14.T© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 8. 6 | Turning global risk into opportunity Searching for market growth than manufacturers to be pessimistic, with almost half expecting a decline in revenues. this reflects the sector’s structural challenges across much of the developed world. Despite these challenges, developed economies remain the most important markets for most consumer companiesMore than four out by a considerable margin. they account for a significant proportion of globalof 10 respondents revenues and profitability. at Procter & Gamble, for example, north americaexpect revenues accounted for 41 percent of theover the coming company’s net sales in 2010, according to its annual report. retaining andyear to be lower generating market share in these economies, against a highly challengingthan last year. economic backdrop, is a critical area of focus for executives. TTo what extent do you agree that your company’s revenues are likely to be lower this yearthan last year? Total 13% 22% 22% 30% 13% Manufacturing 10% 27% 24% 27% 12% Retail 18% 15% 19% 34% 14% Strongly disagree Disagree Neutral Agree Strongly agreeSource: KPMG International Survey, November 2011.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 9. Turning global risk into opportunity | 7Overall, survey respondents say the (see chart on next page). EstablishedUS and Canada offer the greatest markets certainly have their advantages,opportunities for growth over the next including consumer familiarity with thetwo years (see map below), despite products, access to data that can guidetheir sluggish forecast growth rates: the search for growth opportunities,Oxford Economics expects GDP growth and ready-made distribution channels.of 2.5 percent in 2012 and 2.7 percent They also have customers with moneyin 2013 in the United States, while the to spend: In the US, annual privatecorresponding figures for Canada are consumption per capita currently stands2.1 percent and 2.6 percent. at around US$34,000 and will rise to almost US$45,000 by 2020. In China, byThe fact that the US and Canada are contrast, the corresponding figures areestablished markets continues to make US$2,150 and US$7 ,140.them attractive to consumer companiesWhere does your company expect to find the greatest opportunities for growth over the next two years? US and Canada (44%) Eastern Russia (6%) UK and Europe (9%) Western Europe (16%) Japan (5%) Turkey (5%) Mexico (8%) India China (24%) Africa (ex S. Africa) (4%) Central America (10%) (15%) Asia (ex China and Japan) Brazil (19%) (12%) Australia (7%) South America (ex Brazil) (10%) South Africa (7%) Middle East (ex Turkey) (8%) Percentage of respondents selecting the countries/regions above: Over 25% 15%-24% 5%-14% Less than 5%Source: KPMG International Survey, November 2011.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 10. 8 | Turning global risk into opportunity Identifying levers for suggest that more can be done from an execution standpoint to achieve top-line growth growth. “Better execution can be a key source of growth, says David tehle, CFo ” But established markets can also be of Dollar General, a us-based discount highly competitive – and even saturated. retailer. “By making sure we do things at a time when consumer confidence right, measuring performance, and then remains fragile, knowledgeable taking appropriate action to improve our consumers do not always become processes, we can drive additional sales ready purchasers. Given that developed without even opening new outlets. ” markets are expected to perform fairly weakly over the next few years, Innovation is another vital source of with GDP growth of just 1.9 percent growth in developed markets. With expected in 2012, where do consumer input costs rising and consumers companies expect to achieve growth? seeking greater value, leading retailers and manufacturers must invest in one important area is increased brands or ramp up marketing budgets efficiency and productivity, which will to increase brand equity. this will lead to bottom-line savings. Companies help them withstand pressure from have spent the past few years refining lower-cost competitors and retain their cost and operating models, but market share. Innovation is becoming some CFos interviewed for this report more collaborative and open, with What characteristics make the US and Canada most attractive to consumer companies? Established market 60% Economic growth 25% Demand for our 21% existing products Political stability 17% Proximity to established 16% markets or manufacturing Growing affluence 12% Appetite for new 8% products we can deliver Access to local capital 7% Distribution infrastructure 4% Less price sensitivity 2% Source: KPMG International Survey, November 2011.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 11. Turning global risk into opportunity | 9businesses working more closely with at target, for example, increased byretailers and other partners to source 17 percent between 2009 and 2010, .3and implement new ideas. according to its 2010 annual report.of course, investment in innovation the us-based luxury goods companycomes at a cost. Companies must tiffany provides a good illustrationbe prepared to hold steady – or even of the top end of this phenomenon.increase – their allocation to r&D “We think that the global luxuryagainst a backdrop of declining revenues consumer is in a fairly strong positionand a weak economic outlook. this and has recovered well after the initialtakes courage, but it may be the only shock of the financial crisis, says ”way in which companies can secure the Patrick mcGuiness, tiffany’s seniorgrowth that they think is most likely in Vice-President and CFo. “By contrast,developed markets such as the us. the aspirational consumer continues to struggle slightly and is more sensitivesome companies are experimenting to the current economic downturn. ”with “premiumization” strategies,which drive affluent consumers to on the other side of the barbell, morespend on high-end brands that have and more consumers are seekingan aspirational lifestyle component. value for money in a way not evidentalcoholic beverage manufacturer prior to the financial crisis. “We haveDiageo, for example, has invested seen the emergence of a very cost-heavily in premium brands, which it conscious consumer who is exertingbelieves have contributed to around that approach across the full spectrumone-third of its growth in the past ten of their purchasing intent, says ”years.2 others, such as Waitrose in the adrian Gratwicke, CFo of metcash, auk, are focusing on creating “value wholesale distribution and marketing Companies mustbrands” to target lower-income or moreprice-sensitive customers. Between company based in australia. “so whether it’s food, shoes, electronics or be prepared to hold2005 and 2010, the share of basketaccounted for by private “value” brands sunglasses, it’s all being forced through the same prism. ” steady—or evenin us retailers increased from 15.3 one important implication of this trend increase—theirpercent to 17 percent.3 .4 is that any retailer or manufacturer that allocation to R&Danalysts describe this polarization asa “barbelling effect, whereby affluent ” occupies the middle ground will find itself squeezed by increased sales at against a backdropconsumers continue to spend whilea growing cohort are forced to trade the top and bottom end of the market. these companies will need to decide of decliningdown to cheaper products. this explains whether they should hold their ground, revenues and awhy high-end luxury goods companiesand discount brands are currently and expect consumer behavior to change back in their favor, or introduce weak economicperforming more strongly than theirmid-market peers. sales at discount premium or value sub-brands in order to capture their share of this trend. outlook.retailers are also rising: net earnings http://www.just-drinks.com/interview/just-the-answer-andy-fennell-chief-marketing-officer-diageo_id100588.aspx2. The rise of the value-conscious shopper, Nielsen.3.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 12. 10 | Turning global risk into opportunity The lure of emerging markets While developed markets like the industry average. among that group, us may remain the most important 65 percent say that they are focused for the foreseeable future, the more on non-domestic markets, and biggest growth engines are the 80 percent say that tapping new middle emerging markets. according to the class consumers in emerging markets International monetary Fund’s latest is key to long-term growth strategy. World economic outlook, emerging retailers in the survey tended to be economies will grow by 6.1 percent in slightly more focused on non-domestic 2012, compared with just 1.9 percent markets than manufacturers. for developed economies. Despite this, many consumer companies the long-term opportunity is even more have discovered, to their disappointment, exciting. according to the organization that emerging markets can be challenging for economic Co-operation and business environments. although risks Development,4 the number of people in vary, many developing markets suffer the global middle class will grow from from poor infrastructure, complex 1.8 billion to 4.9 billion between now and regulatory environments and high levels 2030. most of these new consumers, of political risk. these are markets that who have a daily expenditure of between require patience and a willingness to us$10 and us$100, will live in emerging commit resources for some time beforeEmerging markets. achieving returns. and slowing growth ineconomies For consumer companies based in some emerging economies can dampen expections for these new consumer developed markets, expansion intowill grow by emerging markets will be key to markets, at least in the short term.6.1 percent in 2012, driving long-term growth. among the respondents, almost 70 percent say But perhaps the biggest problem facing consumer companies incompared with tapping new middle-class consumers in emerging markets is central to their emerging markets is intensifying competition – particularly from localjust 1.9 percent growth strategy. For 58 percent, non- domestic markets are now more a focus companies. ten years ago, consumer companies entering emergingfor developed for growth than their home market. markets would have been most concerned about competition fromeconomies. these figures are even more striking among those who say their company’s rival multinationals. today, local players are just as likely to pose a competitive financial performance is ahead of the threat. Companies headquartered in 4. The emerging middle class in developing countries, Working Paper No. 285© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 13. Turning global risk into opportunity | 11emerging markets typically have theadvantages of a deep understandingof local customers, strong balancesheets and good relationships onthe ground to navigate a challengingbusiness environment. any companyentering these markets musttherefore be confident that it has theassets to compete effectively. It isnotable that respondents based inasia-Pacific, who are geographicallyclosest to some of the largestemerging markets, are more likely tobe investing more vigorously in thesemarkets than their competitors (seechart below). these results apply in thecase of both retail and manufacturingconsumer companies. THow vigorously, if at all, are you investing in emerging markets (relative to overall revenue)? Asia Pacific 6% 16% 35% 44.0% US/Canada 11% 15% 41% 34% Middle East/Africa 8% 16% 52% 24% Latin America 8% 15% 55% 23% Europe 11% 27% 51% 12% We are not investing in emerging markets at all Less vigorously than our competitors At about the same level as our competitors More vigorously than our competitorsSource: KPMG International Survey, November 2011.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 14. 12 | Turning global risk into opportunity Identifying top the entire population of the u.s.5 this huge, fast-growing consumer base markets presents companies with massive opportunities, but diversified spending after the us and Canada, respondents power across this vast country also say China offers the next best prospects increases operational complexity and the for growth, citing its strong economic challenges of achieving scale. performance and the growing affluence of its population (see chart below and Despite the growth rates in emerging page 7). “China is a huge piece of the markets, some consumer companies expected growth engine from a global remain reluctant to invest there. ethics luxury brands standpoint, so we’re and corporate governance remain a aligning many of our resources to be key concern, particularly in the light of able to tap into that opportunity, says mr ” legislation such as the Foreign Corrupt mcGuiness of tiffany. Practices act in the us and the Bribery act in the uk. although slightly different In the past decade, private consumption from each other, these laws both make per capita in China has risen from individual board directors liable for charges us$477 to us$1,810. the middle of bribery and corruption in overseas class is spreading across the country markets, even if they were unaware that into China’s fast-growing second and such actions were taking place. third-tier cities and is now larger than What characteristics make China most attractive to consumer companies? Economic growth 53% Growing affluence 27% Established market 26% Political stability 24% Appetite for new products 14% we can deliver Demand for our existing products 12% Proximity to established markets 10% or manufacturing Distribution infrastructure 7% Lack of competition 5% Less price sensitivity 5% Access to local capital 5% Source: KPMG International Survey, November 2011. 5. http://business.financialpost.com/2011/12/24/the-biggest-story-of-our-time-the-rise-of-chinas-middle-class/© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 15. Turning global risk into opportunity | 13For mr. Gratwicke of metcash, the adds mr. Gratwicke. “the reality is thatdifference in standards of governance there are very few companies that gobetween developed and emerging into China and make money and evenmarkets has caused the company to look fewer that have been able to extract orvery closely at potential investments repatriate the money they earn.”in less deveoped economies. “Wehave found there is a gap between Dealing with multiple layers ofour requirements to observe certain bureaucracy can also cause problems,governance requirements as a publicly and underscores the importance oflisted company in australia and what is securing local management talent withacceptable in a developing or less well the necessary contacts and knowledgedeveloped economy, he says. “Where ” of how the system works. “You haveopportunities have presented themselves to understand not just the way thein developing economies, we’ve tended Chinese market operates, but alsoto look at them in a little more detail. ” the interplay between provincial and national governments, says Jonathan ”the volatility in emerging markets, and mason, CFo of Fonterra, a multinationalthe risk of abrupt, adverse regulatory dairy company. “In our investments inchange, can also pose a deterrent to China, we have secured local consentinvestment. “You can invest an awful to operate. But for some overseaslot of time, effort and money in getting a multinationals, this can be a newbusiness to a certain point in China, and phenomenon to which they are notthen all of a sudden, the laws change, ” accustomed. ”Growth ambitions: A regional perspectiveA R DHL Global Connectedness Index 20116.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 16. 14 | Turning global risk into opportunity Evaluating and executing strategiesRespondents Any growth strategy needs investment, and CFOs play a critical role in evaluating More than two-thirds say market expansion is a key area for budgetfrom emerging potential options and determining how increases over the next year. Most resources should be allocated. Among companies are also ramping up investmentmarket regions are those surveyed, almost 70 percent say in new product development, andmore likely to be they are increasing their company’s overall operating budget in 2012 (see digital marketing and commerce. Again, respondents from emerging marketincreasing overall graphic below). Manufacturers are more regions are more likely to be increasing likely than retailers to be increasing their budgets for these activities.budgets – reflecting allocation, with 73 percent of the former In some cases, budgets will need tothe scale of their and 63 percent of the latter ramping up their budgets for the coming year. increase to keep pace with inflation. Foropportunities Respondents from emerging market example, it is unsurprising that companies are increasing budgets for raw materialsand relatively regions are more likely to be increasing and energy, as not to do so would mean overall budgets, reflecting the scale retrenchment when these costs arelarger need for of their opportunities and their rising. That said, the overall goal amonginvestment. relatively larger need for investment. For example, 81 percent of Latin respondents is clearly one of growth. To retain market share in developed markets American companies are increasing and gain a hold in emerging economies, their budgets, compared with only companies are ready and willing to invest. 51 percent of those from Europe. If they do not, they will be left behind To what extent will your operating budgets change in 2012?40%35%30%25%20%15%10% 5% 0% Decrease by Decrease by Decrease by No change Increase by Increase by Increase by at least 20% 11% to 20% 1% to 10% 1% to 10% 11% to 20% at least 20% New product development Market expansion Digital marketing and commerce Labor Raw materials (excluding energy) Energy Property, Plant and Equipment (PPE) Overall budgetSource: KPMG International Survey, November 2011.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 17. Turning global risk into opportunity | 15 a profitable expansion. so we need to evaluate our options carefully. ” the kind of growth strategies companies pursue varies depending on the stage of development within a market. In emerging markets, new product development is seen as having the most potential as a growth strategy. these markets are often at a much earlier stage of development from a consumer perspective, so it is natural that the focus is more on creating new lines and even categories to suit local tastes. In more mature markets, the focus is on increasing sales activity for existing product lines (see chart below).TWhich strategies will have the greatest impact on overall revenue growth atyour firm in the next two years? Expanding sales activity 44% for existing product lines 47% 40% Supply chain efficiency 46% Digital (online and mobile) 39%and social media advertising 36% 38% Mergers and acquisitions 37% 38% Print and TV advertising 38% 38% Pricing adjustments 48% 34% New product development 59% Joint ventures 34%(shared ownership of assets) 33% 32%Online and mobile commerce 37% Mature markets Emerging marketsSource: KPMG International Survey, November 2011.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 18. 16 | Turning global risk into opportunity Building a rationale whether a particular opportunity aligns with those competencies. If it does, for investment we’ll consider it. ” although CFos are not always When planning a new investment, instrumental in setting strategies, they Dollar General uses a wide variety of certainly play a crucial role in ensuring data and analytical tools to determine investment decisions are grounded the best new store locations, in rigor and analysis. Finite resources including analyzing neighborhood must be allocated carefully, and trade- profiles, complementary businesses, offs must be made between different competitors, demographics, income objectives and time horizons. at a levels, job types and using a range of time of considerable uncertainty in the financial tests. the company also has global economy, this role is more critical detailed profiles of 66 segments of than ever to ensure that the company customers that it calls “people types. ” chooses the right strategy to suit both “We then apply our knowledge of the current and future conditions. distribution of these people types in different cities and suburbs to help mr. Gratwicke emphasizes the place, design and stock stores to meet importance of ensuring any new local needs, says mr. tehle. ” investment in a particular market is aligned with the company’s overall For companies that operate in emerging corporate strategy and capabilities. markets, building an investment “We have a set of core competencies rationale is even more complex. one that could be applied to any opportunity key challenge is a lack of historical data outside of our home market, he says. ” on consumer preferences. “When “so it’s important for us to assess seeking to support an investment© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 19. Turning global risk into opportunity | 17hypothesis in a market like China, youhave to look at the broad demographicdata, the creation of wealth inside thecountry and other macroeconomic datapoints, says mr. mcGuiness of tiffany. ”“You can’t always look at the history ofconsumer behavior for this segmentbecause that data may not exist. ” One challenge ofFinance leaders must also manage the building a rationaletrade-offs between allocating resources for investmentto profitable, but low-growth developedmarkets, or shifting them to high-growth in emergingmarkets that may require investment overa period of years before turning a profit. markets is a lackInvestments in new markets, particularly of historical dataemerging ones, typically take longer toachieve returns because the company on consumerneeds to build awareness of its brands,and develop an infrastructure that will preferences.enable its products to reach the market. THow long do you expect new product introductions to take to deliverexpected ROI? 15% < 3 months 10% 30% 3-6 months 23% 31% 7-12 months 31% 15% 13-24 months 23% 2% 25-36 months 6% 3% > 36 months 2% New products in existing markets New products in new marketsSource: KPMG International Survey, November 2011.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 20. 18 | Turning global risk into opportunity Getting execution right In slower-growth, developed an untapped market for his company economies, the focus continues to at the time: “Instead of building be on efficiency, productivity and cost and owning a distribution center in reduction. By contrast, fast-growth California, we signed a short-term leaseRather than emerging markets unsurprisingly require a more entrepreneurial on a center operated by a third party, which will give us the flexibility to eitherinvesting heavily mindset. the pace of change in those business environments can require scale up or wind down the investment if it doesn’t work out. ”in fixed assets, constant experimentation, quick decision-making, and speedy scaling the same principle applies in emergingconsumer goods up of successful ideas. markets. Consumer companies understand they must scale up theircompanies rather than investing heavily in fixed assets, consumer companies are investments quickly to capture a huge market at speed. often, the only wayare building building partnerships and outsourcing to do this is through partnerships with arrangements that can easily be local companies that have easier andpartnerships scaled up or down. this gives them quicker access to distribution channels the ability to respond quickly to or manufacturing assets or resources.and outsourcing changing external conditions, from a For profitable growth in both developedarrangements that deteriorating environment in some developed markets to rapid growth in and emerging markets, consumer companies must strike a careful balancecan easily be scaled emerging ones. between global and local. they mustup or down. mr. tehle explains how Dollar General adopted this approach when building ensure they derive economies of scale through shared services and integration a presence in California, which was of key activities, such as manufacturing How different are consumer preferences in markets where your company plans to expand versus your current markets? 2% 11% 19% Very different Somewhat different 35% Slightly different 33% No different at all Don’t know/Not applicable Source: KPMG International Survey, November 2011.
  • 21. Turning global risk into opportunity | 19and procurement. they must also take investing more vigorously in emerginginto account the preferences of local markets than their competitors, thisconsumers so that their products are figure rises to 60 percent (see chart onrelevant in each market. previous page).Differences in local consumer most companies recognize the needpreferences and tastes mean to adapt most products to suit differentcompanies need to adapt their markets. Just one-fifth of the surveyedproducts. more than half of our survey companies based in the us andrespondents say that the consumer Canada, for example, say that they sellpreferences in markets where they all their products unchanged in everyplan to expand are somewhat or very market. among respondents based indifferent from their current markets. asia-Pacific, this figure is even loweramong those who say they are (see graphic below).How is your company developing products to meet consumer needs in other markets? Middle East/Africa Asia Pacific Europe 50 50 50 44% 40% 39% 40 40 40 33% 30 30 30 20% 20 16% 20 18% 17% 20 16% 15% 10% 10 8% 10 8% 10 3% 0 0 0 Latin America US/Canada 50% 50 50 41% 40 40 30 30 19% 21% 21% 23% 20 20 10 9% 6% 10 6% 3% 0 0 We sell our products unchanged in all markets We adapt only the labeling, packaging and/or We adapt our local products for other markets instructions for other markets We develop products specifically for other markets We develop products specifically for other markets and do not sell them domestically and then adapt them for domestic markets (reverse innovation)Source: KPMG International Survey, November 2011.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 22. the most common approach is to that provide its country operations with adapt products developed for domestic central resources and functions that do markets to meet the needs of other not require localization. over time, says markets. more than four out of ten richard Glanville, aurora Fashions’ CFo, respondents from the us and Canada, the scope of these shared services latin america, asia-Pacific and the has expanded beyond functions such middle east/africa adopt this approach. as finance and human resources to Very few companies, especially outside encompass a wide variety of activities. of asia-Pacific and the middle east and africa, say they develop products “shared services started off being specifically for other markets or take those parts of the operation that didn’t those products and adapt them for their touch the customer and where we domestic markets (a concept known as thought we could derive economies of reverse innovation). scale, he explains. “But more recently ” we’ve expanded that quite a lot and From the CFo’s perspective, the trade- now have a lot of central expertise in off is between local relevance and cost. e-commerce, photography and video a consumer company could ensure its that we can supply to country markets products are tailored to each market for them to apply their own local by decentralizing entirely the product adaptations.” development process, but this would in most cases be prohibitively expensive. the goal is therefore to create shared a shift in focus capabilities and platforms for products for r&D at a regional level, and then apply a local In the longer term, it seems clear overlay to ensure the product suits local that success across markets with tastes and customs. very different cultural and economic aurora Fashions, a uk-based environments will require a more international fashion retailer that owns localized approach to product the Coast, Warehouse and oasis development that takes into account brands, has developed shared services the needs and expectations of an © 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.TA
  • 23. Turning global risk into opportunity | 21increasingly discerning customer base. reflects the regulatory landscape. somerather than have a centralized r&D emerging markets remain difficultfunction that creates global products for retailers to enter without formingthat can be adapted for different a joint venture or partnership. Butmarkets, companies will increasingly this is changing: In January 2012, theneed to carry out r&D locally in Indian government paved the way foremerging markets to ensure products global retailers to enter the country byare relevant for the local environment changing the previously restrictive lawsand conditions. governing overseas investment in the sector. according to the new rules, non-there are signs that this shift in the domestic companies can now own 100focus of r&D is now underway. percent of retail stores selling one brand.respondents in asia-Pacific are mostlikely to allocate at least 10 percent of It is also striking that high-performingtheir r&D budget to emerging markets, companies tend to be most enthusiasticas one might expect given their about shifting r&D to emergingproximity to China and India. But even markets. among those respondentscompanies in developed markets are who say their financial performanceearmarking substantial amounts of their is ahead of the industry average,r&D budget to emerging economies 22 percent are investing more than(see chart below). one-fifth of their r&D budget in emerging markets. By contrast, justmanufacturers are more likely to be 8 percent of those whose performanceincreasing r&D budgets in emerging is on par with the industry average areeconomies than retailers. In part, this making a similar allocation.How much of your 2012 budget for research and development is earmarked for emerging markets? Middle East/Africa 16% 12% 20% 28% 24% Latin America 16% 27% 37% 19% 1% Asia Pacific 4% 30% 50% 16% US/Canada 9% 6% 34% 39% 13% Europe 13% 13% 37% 29% 9% Less than 1% 1% to 4% 5% to 9% 10% to 20% More than 20%Source: KPMG International Survey, November 2011.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 24. 22 | Turning global risk into opportunityCase study: Technology in a multi-channel world in terms of its ability to maximize sales. It ranks higher than both the internet and e-commerce, providing a clear illustration of both the speed of transformation in the communications industry and its impact on business.TOver the next two years, which of the following technologies will be mostimportant to help you maximize sales? Mobile technology (including mobile apps, location-based intelligence) 40% CRM (Customer Relationship Management) 31% Business intelligence 20% Internet/website 19% SCM (Supply Chain Management) 19% Social media 18% ERP (Enterprise Resource Planning) 18% E-commerce 14% Sensors/RFID (Radio-frequency Identification) 8% Other 1%Source: KPMG International Survey, November 2011. M™ iPad is a trademark of Apple Inc.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 25. Turning global risk into opportunity | 23approach is generating huge amounts customer behavior and preferences.of incremental sales and margin for us, ” Collecting this data is not easy,adds mr. Glanville. because it is often in an unstructured format, but companies that do this wellIn emerging markets, the speed with will be in a strong position to conductwhich mobile has become the key analysis on new investments andcommunications and commercial manage the performance of existingdevice is even more extraordinary. assets. “It all comes back to theIn africa, for example, there are now data, says mr. Glanville. “the finance ”500 million mobile phones on the function needs to work closely withcontinent; in 1998, there were fewer the teams in shared services and inthan 4 million.7 over the past few years, the brands to try and derive uniqueafrica has become the world’s leading insights into how our customers arecenter for mobile payment transfers. behaving. once we are able to collectthe consultancy Juniper research those unique insights, we are then inpredicts that by 2015 mobile banking a position to ask ourselves whetherwill grow into a us$22bn industry in we are doing the right things and if weafrica.8 need to do anything differently. ”success in both developed and But while the opportunities areemerging markets will therefore considerable, so are the speed withdepend on the swift adoption of which companies must move and themobile as a device for communicating risks of getting it wrong. “In the oldwith customers and for facilitating days, you’d have an idea for a newtransactions. Consumer goods and system, you’d specify and code it,retail companies that are slow to then pilot it over a period of about aembrace mobile will find themselves year before implementing it, says mr. ”struggling to keep up at a time when Glanville. “In a multi-channel world, youcompetition for market share is just can’t wait that long.”becoming increasingly fierce.new technologies, such as mobile andsocial media, can also be importantsources of information and data about7 http://www.guardian.co.uk/technology/2011/jul/24/mobile-phones-africa-microfinance-farming . http://www.reuters.com/article/2011/01/26/africa-mobilebanking-idUSLDE70L02N201101268.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 26. 24 | Turning global risk into opportunity Risk management difference is political instability, which is more likely to keep manufacturers up at night than retailers. In recent months, there has been a series of protests in China as workers become more concerned about the government’s plans to move the economy away from low-end manufacturing to more value-added and innovative industries. In november 2011, more than 10,000 workers in shenzhen and Dongguan went on strike to protest cuts in overtime. there have also been clashes between workers and police in shanghai over plans to relocate a singaporean consumer electronics supplier, which will lead to large-scale job cuts.9 to succeed in this environment, companies must rethink their business models and turn received wisdom on its head. “all previous paradigms and points of reference have become invalid, says ” mr. Brioschi of Coop lombardia. “as CFos, we need to learn how to handle R Which sources of volatility pose the most serious risks to your company’s growth in the next two years? Economic uncertainty 44% Political instability 27% Sovereign debt crises 22% Stock market swings 21% Systemic banking stress 19% Foreign exchange risk 18% Interest rate risk 13% Commodity and input prices 11% Predatory trading practices 6% Other 1% Source: KPMG International Survey, November 2011. 9. http://www.ft.com/cms/s/0/61673902-1e6e-11e1-bae4-00144feabdc0.html#axzz1ixnHfMIe© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 27. Turning global risk into opportunity | 25and adapt to a very unstable market. I also have a risk management functionthis requires stronger forecasting skills that reports into me so I have a broaderand, above all, constant comparison and mandate, covering everything fromreference to others in our sector. ” physical assets to product safety and brand protection. there is also a fairly in-In such an environment, risk depth risk management process that sitsmanagement becomes less about behind our corporate governance processdealing with tactical exposures to ensure the audit committee, Ceo andassociated with the supply chain, CFo are able to sign off on our accounts. ”business continuity and health andsafety, and more about assessing how Yet bringing risks together underthe company’s strategy will hold up an enterprise-wide umbrella is notagainst considerable economic andmarket uncertainty. although some common among consumer companies. the majority of respondents do not Currency risk isconsumer companies will have adedicated risk function, it often falls to manage any category of risk at the enterprise level. Currency risk is the risk most likelythe CFo to bring management of theserisks together at an enterprise level most likely to be managed centrally, as cited by 43 percent of the CFos to be managedand provide a bird’s-eye view of overall surveyed. But other risk categories, centrally, as citedstrategic and tactical risk exposures. including technology, reputation and“risk management for the CFo is a infrastructure, are formally reviewed by 43 percent of at an enterprise level by fewermulti-faceted role, says mr. Gratwicke. ” than one-quarter of respondents the CFOs surveyed.“there are the traditional risk activities, (see chart below).around treasury, finance and capital, butWhat types of risk does your company formally review at the enterprise levelrather than by region or business unit? Currency risk 43% Operating risk 37% Interest rate risk 28% Political risk 28% Technology risk 24% Infrastructure risk 21% Reputational risk 21% Physical security risk 19% Insurance risk 17% None of the above 5% Dont know/Not applicable 2%Source: KPMG International Survey, November 2011.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 28. 26 | Turning global risk into opportunity But even if companies do not have a business and risk analysis at a regional full enterprise-level approach to risk level to identify trends and emerging management, careful layering of risk threats or opportunities. “While theThe fluid, fast- management at the local, regional regulatory or compliance work happens and global levels can help provide more at a country level, our regionalchanging nature the visibility CFos need. For mr. finance teams are more focused on strategic business analysis, withof the risk mcGuiness, the key is to have global policies and procedures that can be additional support coming from theenvironment cascaded down to the local level. “We strongly believe that culture is created at corporate office. ” the fluid, fast-changing nature ofmeans finance the top and cascades down through the organization, so the further away you the risk environment means financeleaders are are from the corporate headquarters in leaders are engaged in more frequent dialogues with senior management new York, the more important it is toengaged in more have strong leadership on the ground about potential exposures. the proportion that has formal risk reviews to embody the business ethics andfrequent dialogues approach that we support on a global weekly with senior management has risen from seven percent two yearswith senior basis, he says. ” ago to 19 percent today, while the the structure of the finance function proportion holding formal reviewsmanagement strengthens this approach. In each annually or less often has also fallen (see chart below). this has increasedabout potential country, the local teams report to one of three regional centers in europe, dramatically the workload for CFos butexposures. asia-Pacific and the americas. these provide necessary oversight within provides comfort that the company is managing its exposures appropriately a similar time zone, and perform in an uncertain world. How frequently does your company hold formal risk reviews with senior management? 19% Weekly or more often 7% 32% Monthly 32% 27% Quarterly 29% 15% Semi-annually 15% 6% Annually or less often 12% 1% Never 3% 1% Dont know 1% Today Two years ago Source: KPMG International Survey, November 2011.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 29. Turning global risk into opportunity | 27E explains. “We know our suppliers well, we visit their factories and know their owners. We don’t hop from one supplier to the next. ” sometimes, however, supply chain disruption can be caused by circumstances that are entirely out of a company’s control. among survey respondents, supply chain lapses are seen as the most serious operating threats associated with emerging markets (see chart below). In 2011, the explosion of the Fukushima nuclear plant in Japan affected consumer companies from around the world, not just in asia. Companies also had to contend with the political upheaval of the arab spring, floods in thailand and an earthquake in new Zealand. according to an april 2011 report from kPmG, most companies reported resilience to the earthquake in Japan and the political upheaval in the middle east, although 61 percent of respondents saw increases in energy, input, and merchandise prices as theN most significant short-term impact.What are the most serious operating threats in emerging markets vs. maturemarkets in the next two years? 34% Competition 66% 32% Access to capital 40% 36% Superior technology 40% 38% Supply chain lapses 37% 34% Access to raw materials 35% 32% IP protection 24% 10% Other 12% Emerging markets Mature marketsSource: KPMG International Survey, November 2011.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 30. 28 | Turning global risk into opportunityCase study: Sustainability reaches the finance functionOver the past few years, sustainability pledged to halve the environmental Ensuring sustainability initiativeshas moved to the center of the footprint of its products, help more have real business benefits is a keycorporate agenda. Once seen than 1bn people take action to improve responsibility for the CFO, accordinglargely as a “nice to have” add- their health and well-being and source to Mr. Gratwicke of Metcash—whichon to business practices, often 100% of its agricultural raw materials has undertaken a number of suchhoused in a satellite corporate social sustainably. initiatives including fitting premises withresponsibility function, it is now a key photovoltaic cells, consolidating logisticstopic for boardroom discussion. In a For finance functions focused on cost to reduce fossil fuel consumption andrecent KPMG survey of companies, reduction programs over the past few integrating sustainable practices into62 percent said they have a strategy years, the potential for sustainability to new buildings. “We always try to marryfor corporate sustainability in place. strengthen the bottom line is an attractive up the economics of taking a certain feature that has helped drive its adoption. action from a sustainability perspectiveA growing number of companies More than half of the respondents say with ensuring it makes good businessin the consumer sector are turning sustainability has had a positive impact on sense as well, he says. “For the most ”sustainability into a core driver of their their operating costs and almost three- part, you can achieve both aims andcompetitive positioning. The consumer quarters think it has made them more that’s what we strive to do. ”goods giant Unilever, for example, has competitive (see chart below).What impact do your company’s sustainability initiatives have on key aspects of your business?50%40%30%20%10% 0% Very negative impact Some negative impact No impact Some positive impact Very positive impact Don’t know/ Not applicable Operating Costs Sales Reputation Innovation Competitiveness New Product development Market valueSource: KPMG International Survey, November 2011.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 31. Turning global risk into opportunity | 29T© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 32. 30 | Turning global risk into opportunityConclusionConsumer companies face a highly divergent growth picture across developed andemerging markets. In mature economies, consumer confidence remains low andunemployment stubbornly high. retailers are struggling with disruptive change in theirsector caused by new technologies and changing customer habits. manufacturers facetheir own challenges, including building brand awareness at a time when media andcommunications channels are fragmenting and an increasingly value-conscious andfickle customer base.In emerging markets, the picture is very different. although growth has slowedslightly in recent months, from 7 percent in 2010 to 6.4 percent in 2011, most .3leading emerging markets continue to enjoy robust economic growth. Per capitaincomes are rising, as is demand for consumer products and the sophistication ofretail networks. But as many companies have found, these are difficult markets inwhich to succeed.Faced with this highly divergent, multi-faceted business and operatingenvironment, there are a number of key action points that CFos shouldconsider in order to position their company for sustainable, long-term growth.Seek out ways to hold on to market share in developed markets. althoughmature markets, such as europe and the us, are set to grow slowly over the nextfew years, they are still home to the world’s richest consumer base, and so willremain critical as a key source of cash flow and profitability for the foreseeablefuture. Companies should seek to maintain market share through new innovationand through strategies to increase efficiency and productivity across the business.Make difficult trade-offs between developed and emerging markets.Companies surveyed are, in general, increasing their budgets to keep pace indeveloped markets and capture share in emerging ones. But in an environmentwhere capital is tight, the funds available for investment are limited. the CFomust play a critical role in evaluating potential investments and subjecting themto rigorous analysis. this is likely to involve difficult trade-offs, particularly asinvestment increasingly migrates to the high-growth emerging markets. Yet at thesame time, CFos must temper over-enthusiasm for emerging markets – such istheir allure that many companies are likely to invest too much and leave themselvesexposed to declining market share in their core markets.Adapt to changing consumer behavior. the global financial crisis has had amajor impact on consumer behavior. Customers are now more price-sensitivethan ever, but also willing to spend on quality if they think they are getting valuefrom their purchases. tracking consumer behavior and changing product strategyin-line with its evolution will be critical to success. But companies must be carefulnot to dilute their brands, or lose coherence through overly frequent changes totheir products and pricing.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 33. Turning global risk into opportunity | 31Balance global scale with local relevance. as consumer companies diversifytheir international footprint, they must decide the extent to which they will localizetheir product or service offerings. localization is crucial to ensure relevancewith customers, particularly at a time when domestic competitors are gainingin confidence. this will increase sales, but it will also ramp up costs. CFos musttherefore work closely with the business to see where economies of scale can beachieved without sacrificing local content.Harness mobile as a key communications and commercial device. In thespace of just a few years, mobile has transformed the landscape for the retail andconsumer sectors. CFos and other senior executives now recognize it as a keytool for driving sales and awareness, both in developed and emerging markets.location-based services can help to drive traffic to stores, and be used to reachout to customers on a real-time basis about offers and promotions. But mobile alsoshifts the balance of power between customer and company. With constant accessto price information, consumer reviews and competitor information, customers aremore knowledgeable than ever. Building strong, lasting relationships with thesecustomers will be a key challenge in the coming years.Gain an enterprise-wide view of risk. today’s fast-changing, dynamic riskenvironment requires constant monitoring. as consumer and retail companiesdiversify their international footprint, the scale and scope of risks facing thebusiness becomes even broader. this highlights the need for an enterprise-wide view of risk that will enable companies to gain insight into exposuresright across the supply chain, and be able to assess their severity andinterdependency with other parts of the business. CFos should explore waysof achieving a more consistent, holistic view of their risks that will providesenior management with greater insight into the potential threats that couldundermine their strategic choices.Further integrate sustainability with the finance function. sustainability isbecoming core to business practice. For CFos, there are quick wins to be gainedfrom energy efficiency and other cost-saving measures, which have a dualbenefit of improving the bottom line and reducing environmental impact. But assustainability becomes more embedded in customer expectations, it will alsobecome an increasingly important driver of sales and improvements to corporatereputation. CFos should work closely with the business to assess the benefitsand monitor performance of different sustainability initiatives, and engagewith external stakeholders to better understand what they are seeking fromsustainability reporting.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 34. 32 | Turning global risk into opportunityAbout KPMG’s GlobalConsumer MarketspracticeKAcknowledgementsWe would like to thank the executives Adrian Gratwicke, CFo of metcash, awho responded to our survey and wholesale distribution and marketingespecially those who participated in the company based in australia.interviews. the companies interviewedinclude: Jonathan Mason, CFo of Fonterra, a multinational dairy companyDavid Tehle, CFo of Dollar General, the headquartered in new Zealand.largest discount retailer in the unitedstates by number of stores. Andrea Brioschi, CFo of Italian retailer Coop lombardia.Patrick McGuiness, senior Vice-President and CFo at tiffany & Co, a Richard Glanville, CFo of auroraus-headquartered jewellery company. Fashions, a uk-based international fashion retailer that owns the Coast, Warehouse and oasis brands.© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 35. © 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  • 36. Contact us Willy Kruh Global Chair, Consumer Markets KPMG International +1 416 777 8710 wkruh@kpmg.ca Mark Larson Global Head of Retail KPMG International +1 502 562 5680 mlarson@kpmg.com Elaine Pratt Global Marketing, Consumer Markets KPMG International +1 416 777 8195 epratt@kpmg.ca kpmg.com the information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. no one should act on such information without appropriate professional advice after a thorough examination of the particular situation. the views and opinions expressed herein are those of the survey respondents and do not necessarily represent the views and opinions of kPmG International. © 2012 kPmG International Cooperative (“kPmG International”), a swiss entity. member firms of the kPmG network of independent firms are affiliated with kPmG International. kPmG International provides no client services. no member firm has any authority to obligate or bind kPmG International or any other member firm vis-à-vis third parties, nor does kPmG International have any such authority to obligate or bind any member firm. all rights reserved. the kPmG name, logo and “cutting through complexity” are registered trademarks or trademarks of kPmG International. Designed by evalueserve. Publication name: turning global risk into opportunity: key priorities for consumer company CFos Publication number: 120154 Publication date: February 2012T

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