Building Your Global Strategy · Building Your Global Strategy ... Acquisition strategy Accretive...

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© 2012 Crain Communications Inc

Concurrent Session: Sales & Marketing

Building Your Global Strategy

• Adam Pode, Director, Research and Analysis, Europe, Staffing Industry Analysts

• Ton Mulders, Director, Strategic Solutions, Europe, Staffing Industry Analysts

Thursday, March 15 | 1:45 pm | Veranda DE


If the World is your Oyster, …….Where are the Pearls?

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Agenda

Source: Alexander Gordin, Wharton Magazine

•Why?• How?•Where?

“For any business in today’s world, not expanding internationally is practically a sin”.


Agenda

• So why expand?• How?•Where?

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Where Better Than the USA?

• Improving economy

~ 1.8% GDP growth

• The biggest single market in the world

~ $93.8 billion

• Good predicted growth rates

~ At least 7% for 2012

• 9,000 companies to choose from

Source: Staffing Industry Analysis, The Economist and the US censue


International Growth Drivers

• To meet client expectations• To take advantage of fast(er) growing staffing markets• To diversify your business /reduce dependence on the

USA• Leverage existing corporate technology, know-how and

intellectual property, and…• To take advantage of lower competition (sometimes)

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SwedenNorway

Finland

Japan

United States

UnitedKingdom

FranceGermany

Netherlands

Poland

Denmark

ItalyPortugal Spain

Ireland

Canada

Mexico

Brazil

Australia

Confidential Report – NOT for Distribution | ©2012 by Crain Communications Inc. All rights reserved.

South Africa

Argentina

Global staffing market (to scale)

Source: Staffing Industry Analysts

Belgium

Switzerland


A Question of Size

Source: Expansion Patterns of Major European Staffing Companies, Staffing Industry Analysts Briefing, 2009

Staffing Company Annual Sales

Average number of countries in international network

€10 billion plus 29€1 billion to €10 billion 13€500 million to €1 billion 6€100 million to €500 million 5€50 million to €100 million 2Under €50 million 0

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US, UK, Dutch and Swiss staffing companies are the most adventurous in expanding into new markets

But now others beginning to show ambitions

Synergie (Fr)Groupe Crit (Fr)Gi Group (It)Trenkwalder (Au)

The Explorers


Whose Eating your Lunch?

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Agenda

•Why?• How do I expand?•Where?


Expansion PatternsCultural or geographical proximity

French staffing companies most inclined to launch in Luxembourg

German staffing companies most inclined to launch in Czech Republic or Slovakia

Dutch staffing companies most inclined to launch in Belgium or Poland

US staffing companies most inclined to launch in the UK

UK staffing companies most inclined to launch in the Netherlands

Source: Expansion Patterns of Major European Staffing Companies, Staffing Industry Analysts Briefing, 2009

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Acquisition strategy

Accretive to earnings

Speed of entry

Elimination of a competitor

Acquisition of management talent

Economies of scale

Potentially improve technology, products or services

Organic strategy

Generally less expensive

No culture clash or integration issues

Consistency of delivery

Cohesive technology across whole of the organisation

Internal staff development opportunities

Less organisational stress

Buy or Build?


Pick acquisition model in accordance with your management style and acquisition objectives

Centralised

Acquire 100%- Tighter control

Integrate and rebrand

Cut and paste

Export high-performing managers

Service internationalaccounts

Decentralized

Acquire majority- Lower initial investment

Take advantage of synergies but retain brand

If it ain’t broke don’t fix it

Rely on local management expertise

Win local business

Horses for Courses

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Agenda

•Why?• How?•Where should I go?


Country Evaluations

Legislative environmentTemporary staffing legislation- Sector prohibitions- Restriction on assignment

duration- Limits on % of agency workers

Protections on dismissal of permanent workers

EconomyGDP 2011-2016

Staffing marketSizeGrowth rateLevel of competition/ consolidation

Business environmentEase of doing businessPolitical stabilityCorruption

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Country Staffingmarket size

Regulation1 Ease of doing business2

Economic growth3

Staffing growth 2011

Long termgrowth Potential

Competition/consolidation

Stability/corruption4

Total

China 1 4 2 5 4 5 5 1 27

Australia 5 4 4 3 3 2 1 5 27

Hong Kong 1 4 5 5 4 2 1 4 26

Singapore 1 4 5 5 4 2 1 4 26

New Zealand 2 2 5 3 4 2 2 5 25

India 2 3 1 5 4 5 4 1 25

Japan 5 4 4 1 3 2 1 4 24

1 OECD Employment Protection Index/SIA 2 International Finance Corporation 3 IMF (2011-2016 GDP) 4 World Bank Governance Indicators

5 = Most Attractive, 1 = Least Attractive

Asia Pacific




Economic growth3





Total

Sweden 4 5 4 4 4 3 2 5 31

Germany 5 4 4 1 4 2 2 4 26

Italy 4 4 2 1 4 4 4 3 26

UK 5 5 5 2 2 1 1 4 25

Belgium 4 4 4 2 3 2 1 4 24

Netherlands 5 5 3 1 2 1 1 5 23

France 5 2 4 1 3 2 1 4 22

Spain 4 2 3 1 2 4 2 3 21



Western Europe

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Economic growth3





Total

Poland 3 5 2 3 5 5 2 3 28

Turkey 2 2 2 5 4 5 3 2 25

Hungary 2 4 3 2 4 3 3 3 24

Russia 2 5 1 4 3 5 3 1 24

Czech Republic 2 3 2 3 2 4 3 3 22

Romania 2 2 2 3 3 4 3 2 21



Eastern Europe




Economic growth3





Total

Canada 4 5 5 2 3 3 2 5 29

US 5 4 5 3 3 3 1 3 27

Mexico 5 3 3 4 4 4 2 2 27

Argentina 3 3 1 5 2 5 2 1 22

Brazil 5 1 1 4 3 4 2 2 22



North & South America

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Economic growth3





Total

Qatar 1 1 3 5 5 5 2 3 25

South Africa 4 5 3 3 2 1 2 2 22

Kuwait 1 1 2 5 3 5 2 2 21

UAE 2 2 3 4 3 3 1 3 21

Saudi Arabia 1 1 4 4 2 5 2 1 20

Egypt 1 2 1 4 1 5 4 1 19



Middle East/Africa


Higher Potential

Lower Potential

Not Recorded

Hot Spots

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Japan

Sweden

Brazil

Italy

Poland

Qatar

Our Focus


Manufacturing27%

Services57%

Construction 4%

PublicSector

3%

Other8%

Market Size €52 billion

Market Growth 2011 7%

Market Share (Top 3) 13%

Source: CIETT

Source: Staffing Industry Analysts Estimates

Staffing Market FactsStaffing Market by Sector Deployed

Source: IMF

GDP Forecast 2011 +1.4%

Japan

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PositivesLarge but condensed market

Highly skilled and well educated workforce

Relatively young market (founded 1986)- Penetration Rate 1.7%- Highly fragmented

Increasing adoption of Western business practices

NegativesLanguage/Culture- Local business partner

Large, well-established local competitors- Includes staffing companies

owned by Panasonic, Fujitso, Nippon Life Insurance, Nissan, Bank of Tokyo/ Mitsubishi, Asahi Mutual Life, etc

‘Job for life’ traditionAgeing population

Japan


Manufacturing15%

Services55%

Construction2%

PublicSector

2%

Other18%

Market Size €6.4 billion


Market Share (Top 3) Fragmented

Source: CIETT




Source: IMF

Brazil

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Positives5th largest country (by geography and population)

7th largest economy- One of the fastest-growing- Largest in Latin America- Diverse- Extensive natural resources

NegativesTerm limit on length of assignment - staffing companies are pseudo-

outsourcing companies

Difficult business environment

Low value industry- 4th highest number

of agency temporary workers in world

Brazil


Manufacturing41%

Services49%

Construction 3%

PublicSector

3%Other5%




Source: CIETT



Source: IMF


Italy

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PositivesRelatively young labour market- Founded 1997

Low levels of competition- Less than 100 staffing

companies in operation (but lots of Executive Search firms)

NegativesVolatile economy- Austerity measures

Staffing companies must conduct business in minimum of four regions

Business concentrated in North

Relatively few multi-national clients

Organised crime

Italy


Manufacturing29%

Services57%

Construction2%

PublicSector

8%

Other4%




Source: CIETT




Source: IMF

Sweden

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PositivesGood business environment

Stable economy

Well-educated workforce

High wages

Relatively liberal regulatory environment

NegativesHigh taxes

Temporaries must be employed by agency (hence Swedish Derogation)

- 90% pay when not working

Sweden


Manufacturing70%

Services25%

Other5%

Market Size €748 million



Source: CIETT




Source: IMF

Poland

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PositivesPopulation: 38 million- Most populous post-

communist member of EU

One of the fastest growing economies in Europe- No recession!- 6th largest in EU

Good source of skills to export to other marketsWell regulated staffing marketInternational client base

NegativesForeign business disputes issues

Competition from other international staffing firms- Margins under pressure

Mostly blue-collar

Poland


Manufacturing17%

Services45%

Construction12%

PublicSector 14%

Other12%

Market Size €72 million


Market Share (Top 3) Fragmented





Source: IMF

Qatar

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PositivesRichest Muslim country

- Banking sector relatively unscathed

Construction boom- World Cup 2022- Tourism

Less than 50 staffing companiesTwo thirds of businesses are international companies- 12 year tax holidays for foreign

investors and foreign companies allowed 100% foreign ownership

- No income tax

NegativesUnusual labour market - Reliance on foreign workers- Qatarization policy- No contract switching

Very conservative and bureaucraticLocal contacts essentialEconomic dependence on oil and gasRegional instability

Qatar


NA staffing companies well-positioned to take advantage of international growth

High growth opportunities outside NAIn established staffing marketsIn emerging staffing markets

The most attractive markets are normally the most competitive

Having the right people just as important as having the right location

Summary

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Any Questions?


Survey

0% 10% 20% 30% 40% 50% 60% 70% 80%

Asia Pacific

BRIC

Europe

Latin America

MEA

North America

https://www.surveymonkey.com/s/9QTDJWB

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Western Europe CEE CIS

CEEEstoniaLatviaLithuaniaPolandCzech Rep.SlovakiaHungarySloveniaCroatiaBosnia H.SerbiaMontenegroRomaniaBulgariaMacedoniaAlbaniaTurkey

CISArmeniaAzerbaijanBelarusKazakstanKrgyzstanMoldovaRussiaTajikistanTurkmenistanUkraineUzbekistan

WEAustriaBelgiumDenmarkFinlandFran\ceGermanyGreeceIcelandIrelandItalyLuxembourgNetherlandsNorwayPortugalSpainSwedenSwitzerlandUK


Completing SIA’s Global Footprint

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