Leaders wanted
<h>133 US firms</h> have managed to become world leaders in their field. But in Europe only 58 have achieved the same feat. Vincent Mercier, Managing Partner in Paris, says companies must take action now. What exactly is Europe's issue with the fact that US firms are leaders in most industries? It leads to a dangerous growth gap. The European Union is still the largest economy in the world with GDP of EUR 11.8 trillion. But this will change in the near future: with growth of less than 2% over the past 15 years, Europe is lagging far behind the US with 3%. One of the main drivers behind this growth gap is a lack of global market leaders of European origin, of "European global champions". Why? Because the top companies in an industry invest a lot more in R&D than their smaller competitors. This means they grow faster and are more profitable, thanks to their economies of scale. Market leaders of European origin are also crucial to future economic development because only they can open up large new markets with high entry barriers. What are the hurdles facing European companies? | ||
American and Asian competitors have fewer problems making the most of their growth potential. In Europe, companies suffer from overregulation and a climate that stifles innovation in many areas. What's more, they pay high taxes to finance excessive government spending. Too much is done to finance current spending, and too little is invested in future competitiveness through R&D and innovation. Given such massive hurdles, is the idea of a "European champion" worth pursuing? Definitely. Europe is a very dynamic and attractive market and will remain so in the future. EU enlargement and the economic power being created in Eastern Europe offer huge growth potential. Also, in my opinion, despite pervasive euroskepticism, Europe offers the essential ingredients for innovation and manufacturing excellence. What needs to be done to make more European companies into global champions? | ||
At a political level, we must develop a common understanding of how European companies can be supported to become leading players on the world stage. This is the only path to success, as we can currently see at Airbus. But often national pride and competition watchdogs in Brussels hinder this type of growth process. What can management do to make a company a European champion? The different cultures, wishes and national sensitivities are both a challenge and a great opportunity. If Danone yoghurt has to be different in every country, the company can benefit from its varied experiences, and this can be useful in a global market. Other innovations arise when employees work in multicultural teams. This should be much easier in Europe than in the US, but is still too rarely practiced. Vincent Mercier is a member of the Executive Committee and Managing Partner of Roland Berger Strategy Consultants offices in Paris and Brussels. Together with the leading French business school HEC and the country's major management magazine "Enjeux – les Echos", Roland Berger awarded the "Prix de l'entreprise européenne" to eight top European companies with French roots. The president of the jury was Louis Schweitzer, Chairman of Renault. If you have any questions or concerns, please feel free to contact us:  |
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