European Portfolio of Industries September 28 th , 2007 Dr. Fritz Kröger Challenge of the Future Towards Lisbon 2.1

The following analysis is based on a unique data background. 1) Dr. Fritz Kröger, methodology owner Source: A.T. Kearney A.T. Kearney's "Global Growth Database" 660,000 companies 32,100 stock quoted (100%) companies covering 98% of the world’s market capitalization Europe 10,000 North America 10,500 Asia/ Pacific 11,600 630,000 non-stock quoted companies both updated every year 80 in-depth screenings GE Microsoft Emerson Applied Materials Norsk Hydro Kyocera Unilever … 1,000 top executives globally World Economic Forum Davos Wharton Cambridge Schmalenbach-Gesellschaft Hong Kong Sydney … CEO Briefings Publications 4 books in 9 languages one of the most influential con-sultants world-wide in Aug. ‘04 1) A.T. Kearney’s Merger Database 350.000 trans-actions over 16 years all industries all sizes global coverage Global Growth Excellence Survey 2006 112 market leading companies 12% Utilities A.T. Kearney's Growth Initiative

660,000 companies

32,100 stock quoted (100%) companies covering 98% of the world’s market capitalization

Europe 10,000

North America 10,500

Asia/ Pacific 11,600

630,000 non-stock quoted companies

both updated every year

GE

Microsoft

Emerson

Applied Materials

Norsk Hydro

Kyocera

Unilever

…

1,000 top executives globally

World Economic Forum Davos

Wharton

Cambridge

Schmalenbach-Gesellschaft

Hong Kong

Sydney

…

4 books in 9 languages

350.000 trans-actions

over 16 years

all industries

all sizes

global coverage

112 market leading companies

A major finding was the pattern of global industry consolidation: Merger Endgames. Notes: 1) CR3: Market share of the three largest companies of the total market based on Value-Building Growth database (34,000 companies) 2) HHI: Hirschman-Herfindahl Index corresponds to the sum of the squared market shares of all companies and is greater than 90% the axis logarithmically plotted Source: Value-Building Growth database; A.T. Kearney analysis 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%  45% - 10 - 5 0 5 10 15 20 25 0% 10% 20% 30% 50% 60% 70% 80% 90% 100%  45% - 10 - 5 0 5 10 15 20 25 Opening Balance/ Alliance Scale Focus HHI 2) CR3 1) Years Trucks & Trailer Paint & Resin Investment Companies Banks Airlines Medical & Surgical Supplies Div. Chemical Div. Metal Products Mfrs. Department Stores Adhesives Express Laundry & Homecare Business Machines & Office Equipment Electrical Automotive Supplier Aluminum Appliances & Consumer Products Publishing Div. Construction Employment Services Pumps Securities Brokerage Shipping Telecommunication Div. Electrical Automatic Controls Insurance Voltaik Cigarette Defense Electr. Ore Mining Shipbuilding Soft drinks Aluminum Producers Utilities Paper Entertainment production Operators

Profitability follows the endgame curve with a slight time lag. 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% -5 0 5 10 15 20 25 EBIT/ revenues Years Stage 1 Opening Stage 2 Scale Stage 3 Focus Stage 4 Balance/ Alliances Average profitability + Standard deviation + Standard deviation

On global scale consolidation stages follow a flat bell curve. Source: A.T. Kearney analysis Phases World Phase 1 Opening Phase 2 Scale Phase 3 Focus Phase 4 Balance/Alliances % of revenues 0% 10% 20% 30% 40% 50% 60%

US is well balanced. Source: A.T. Kearney analysis Phases World USA Phase 1 Opening Phase 2 Scale Phase 3 Focus Phase 4 Balance/Alliances % of revenues 0% 10% 20% 30% 40% 50% 60%

Europe has major weaknesses. Source: A.T. Kearney analysis Phases % of revenues World Europe Phase 1 Opening Phase 2 Scale Phase 3 Focus Phase 4 Balance/Alliances 0% 10% 20% 30% 40% 50% 60% Consolidation gab Innovation gab 400,000 academics in 10 years to NA

Germany is even more suffering from a gap in “young industries”. Source: A.T. Kearney analysis Phases % of revenues World Germany Phase 1 Opening Phase 2 Scale Phase 3 Focus Phase 4 Balance/Alliances 0% 10% 20% 30% 40% 50% 60%

Singapore is “front loaded” with young industries. Source: A.T. Kearney analysis Phases % of revenues World Singapore Phase 1 Opening Phase 2 Scale Phase 3 Focus Phase 4 Balance/Alliances

Asia has fewer weaknesses. Source: A.T. Kearney analysis Phases World Asia Phase 1 Opening Phase 2 Scale Phase 3 Focus Phase 4 Balance/Alliances % of revenues

Across the Endgames Phases the distribution of European companies is not even distributed. US EU J … with a fatal consequence for the wealth generation in Europe I II III IV

Europe has a significantly minor share (-23.6%) of global market leaders in higher consolidated industries … GDP nominal US $ Share of market leaders in consolidated industries (Phase III and IV) Rest mainly Asia US EU J … with a fatal consequence for the wealth generation in Europe I II III IV

Europe has major weaknesses. Source: A.T. Kearney analysis Phases % of revenues World Europe Phase 1 Opening Phase 2 Scale Phase 3 Focus Phase 4 Balance/Alliances Consolidation gap Innovation gap 400,000 academics in 10 years to NA