- Industry Week, 12 November 2013
Referencing the recent A.T. Kearney paper “U.S. Natural Gas: Growing Pains,” the structural deficiencies in the U.S. gas market and the five fundamental factors that will determine volatility and equilibrium are explained.More
Noncompliance can ruin corporate reputations, shatter financial performance, and destroy careers, families, and lives. With so much to lose, doesn't compliance deserve our undivided attention?
Corporate compliance—or, more accurately, the risk of noncompliance—has become a major concern over the past decade, especially for global manufacturers with operations in many different countries and jurisdictions. When a practice commonly accepted in one country could be a serious criminal or civil offense in another, companies had better know about it.
Many firms understand that compliance can lead to competitive advantage and are making their suppliers commit to compliance standards that go far beyond those required by law.
To understand how companies reduce the risks of noncompliance, A.T. Kearney surveyed execu¬tives at leading manufacturers, conducting in-depth interviews with compliance executives at nearly 40 top companies worldwide. While most studies approach compliance from a legal perspective, we focus our attention on compliance management.
Five major findings emerged from our examination of compliance management in these areas:
- Most companies expect to expand their compliance systems.
- Lower management has a much less favorable perception of compliance systems than top management, indicating a strong need for administrative efforts to generate acceptance at all levels.
- Most companies do not have an independent compliance department that reports directly to the executive board.
- External resources are especially useful for setting up a compliance system.
- The most effective compliance systems integrate compliance and process management.
How do the leaders stay consistently ahead of their markets while formerly thriving businesses fail?
What causes one leading company to stay consistently ahead of the market while another formerly thriving company flounders? The question is intriguing—and pressing, too, during these times of volatility. To explore the reasons and possible solutions, we conducted a study of industry champions. The result was a matrix that measures market success—a combination of growth in sales relative to market growth, and market share relative to the next largest competitor. Where BCG's matrix was created to help companies plan their portfolios, this matrix is used to chart a company's evolution and derive insights about its strategies. We call it the four seasons matrix:
- Spring. Companies that have outgrown their market but are not (yet) market leaders
- Summer. World leaders that have outgrown their markets
- Autumn. World leaders with below-average growth, gradually losing their positions
- Winter. Market followers that are growing more slowly than their market
We chose the axes of growth and market share because both metrics have a strong, proven relationship to long-term profitability and shareholder value. Combining those measures provides a solid basis for picking long-term winners.Close
As lawmakers target conflict minerals, companies could face significant costs to comply.
Manufacturers will face significant raw material cost pressures as lawmakers target conflict minerals. The legislators' current focus is on the war-torn Democratic Republic of Congo (DRC) and adjoining countries.
In the recent past, the supply of and demand for raw materials forced manufacturers to cope with radical market-price fluctuations for commodities such as iron ore and steel; as they formulated successful market strategies, the impact of commodity price spikes became manageable. More recently, procurement professionals have been tested by the scarcity of rare earth metals such as scandium, yttrium, and cer. China, which has the world's largest known deposits of these metals, has exacerbated the challenge by enacting stringent export caps. Again, manufacturers adjusted their strategies and are managing their predicament.
Now on the horizon is a new federal regulation to require companies that make products using certain minerals to disclose whether their supply comes from or near the Democratic Republic of Congo, where mining revenue has funded violent military groups. When this regulation passes, companies with global supply chains will face the daunting task of adapting once again.
- Offshore Magazine, October 2011
To manage the risk of catastrophic events, offshore operators might take a page from the broader oil and gas industry.
- Fuel, September 2011
What are the risk factors and predictors of catastrophic incidents?
Success in booming emerging markets requires meeting customers' needs as well as or better than the locals.
Emerging countries—particularly China and India—are changing the face of global markets, as their economies grow by as much as 10 percent per year. In the wake of this growth, these countries are producing some of the world's fastest-growing, most competitive companies. In the steel market, American and European companies were the undisputed market leaders 20 years ago. Today, steel giant ArcelorMittal—formed after India's Mittal Steel acquired Europe's Arcelor—is the world leader. In chemicals, players from emerging economies, including Sabic and Sinopec, are now among the biggest. The quality and knowledge gap between these companies and those from developed countries is shrinking rapidly as their home markets mature. These companies are no longer low-cost alternatives—they are fierce competitors in the export markets.
While many developed-market companies have succeeded in this changing world, a recent A.T. Kearney survey of executives at German industrial companies indicates that there is more that companies from the developed world can do. Many companies have gone "glocal"—meaning they make global products with some local adjustments— but few have the full range of local value chains in these vital emerging markets, resulting in lower market share and growth that lags their local competitors.
To succeed in these booming emerging markets, companies from developed countries must meet client needs—as well as, or better than, local players.Close
The future market for iron ore—the main raw material in steel production—will be marked by higher, more volatile prices. To stay competitive, steel producers must be vigilant in managing the steel price-volume equation, while continuing to work closely with their suppliers and customers.
Higher, more volatile prices for iron ore mean that steel producers must be vigilant in managing the price-volume equation.Close
How much money a company spends and where it is spent are questions that must be answered in radically different ways.
Capital expenditures are never far from a CFO's agenda, but the issue has received more attention than usual these days, as global capex spending has risen to $10 trillion per year. Using a comprehensive long-term approach, CFOs can "pull the capex lever" to determine how much to spend, where it should be spent and how that spending translates to real returns.Close
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