Commoditization, Not Lack of Capital, Is Number One Threat

CAMBRIDGE, Mass., Jan. 30, 2012 /PRNewswire/ -- A recent survey of strategists and competitive intelligence experts throughout the globe shows that commoditization, not access to capital, is the number one concern facing the future health of their companies.

"Given the dire financial news of late – stock markets teetering and countries on the verge of default – it is somewhat surprising that commoditization is the biggest fear evidenced," said Leonard Fuld, Chairman, Fuld & Company. "That said, U.S. and European companies indicated they fear low-cost Asian competitors who have to some degree have eaten their lunch as well as other new entrants – both domestic and Asian - who often bring a low cost structure."

Among the other major findings are:

• Commoditization threats were: disruptive technology, substitute products or services, and market entry by overseas competition, followed by customers gaining strength and squeezing suppliers, and a shift in social norms.
• Access to Credit was not mentioned by a single respondent. In fact, in all but one industry, "access to credit" checked in as dead last among the seven choices from which they selected. This type of universal response on credit as a non-issue does reflect the sense of industry resilience that comes from the stockpiles of cash companies have been building.
• The U.S. and Western Europe stack their threats differently: U.S. respondents least fear overseas competition (28%), while European respondents feel least threatened by changes in social norms (31%) in any way affecting their revenues.
• The fear of commoditization along with disruptive technology were paramount in technology/telecommunications (30%) and pharmaceuticals/healthcare (26%), industries from which one might expect such a response. Somewhat surprising was that this was the premier threat across all service industries, with exactly one-half (50%) of financial service firm respondents pointing to this factor. Likewise, two-thirds of insurance industry participants (67%) believed commoditization was its greatest threat as did a considerable number of consultants (20%).
• Two-thirds (66%) of the insurance industry and one third (33%) of the finance and banking industries are least concerned with overseas competition entering their markets. This may be the case because there already have been so many cross-border acquisitions among banks and overseas players have already bought themselves into their desired foreign market. Insurers are highly regulated, reducing the threat that a rival can surprise a competitor simply because all insurers must publicly file with a regulatory agency first. Despite these explanations, financial services remain one of the most protected industries on the planet.

Who we surveyed

We surveyed senior executives, strategists, and competitive analysts, mostly from Fortune 500 and FTSE 100 companies across North America and Europe. In all, 144 responded, representing a range of industries, including healthcare/pharmaceuticals, manufacturing, services, technology, consumer packaged goods, and financial services.

Fuld & Company is a Cambridge, Massachusetts-headquartered pioneering firm in the field of competitive intelligence, providing research and analysis and strategy gaming for over 33 years with offices in London and Manila.  www.fuld.com   

SOURCE Fuld & Company