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As Canada emerges as probably the best G-7 country to do business in, and a hot investment destination, Canadian CFOs are being called on to provide additional support to their C-suite colleagues.
Accenture identifies four key focus activities for CFOs as they prepare to play a greater role in helping their companies achieve high performance in this new environment.
Although the global economy has recovered to some extent from the downturn of 2008, the recovery has been marked by slow growth and the highest levels of economic volatility in history. There may be no return in sight to what used to be known as “normal”.
In this climate of uncertainty and economic malaise, Canada, named by the Economist Intelligence Unit as the best place to do business among the G-7 countries over the next few years, has emerged as an attractive destination for many foreign investments thanks to its perceived combination of political stability, low corporate tax, solid fiscal and regulatory policies and abundance of natural resources. This trend is illustrated by the number of foreign companies that are aggressively pursuing investment activities in Canada, including:
China National Offshore Oil Corporation (CNOOC) is buying Canadian oil producer Nexen for CAN$15.1 billion (US$15.3 billion).
Brazil’s Vale has outlined plans to invest over CAN$10 billion (US$10.2 billion) in its Canadian operations over a five-year period.
Germany’s K+S Group is breaking ground on a new potash mine worth CAN$3.25 billion ($3.3 billion).
In addition, it seems an increasing number of individuals are investing in Canada through debt and equity securities. For example, in May 2012, non-residents bought a record CAN$26 billion of Canadian securities, mostly in the form of government bonds.
This increased investment in Canada reflects a heightened level of interest from foreign organizations, both private and state-sponsored, and may be driving Canadian enterprises and their executive teams, including C-suites and boards of directors, into a sophisticated and complex international forum. Many Canadian companies’ CFOs and their finance functions, in turn, are seeking new ways to advise their C-suite peers in this enhanced role and in the “new normal.”
To help Canadian executives and boards respond to the challenges of their new role, Canadian CFOs and other executives in the finance function may be called to provide advice and guidance in three key areas.
Strategic growth. Canadian CFOs and other senior finance executives may benefit their companies by helping manage the growth agenda, determining where to invest for growth in what we have termed a “multi-speed world”, that is, with low-growth mature markets and high-growth, higher-risk emerging and developing markets.
Ensuring optimal capital allocation. A key focus here is in managing the cost agenda, effectively planning and allocating resources in a volatile and uncertain world.
Shareholder stewardship. With the influx of foreign capital (through both direct and indirect investment) into Canada, we may see more pressure on Canadian executive teams and boards of directors to meet a higher level of expectations in terms of both returns and in greater transparency.
While many Canadian CFOs and their finance functions appear to be well positioned to guide companies in their efforts to seize this opportunity to create wealth for internal and external stakeholders alike, we suggest they consider maintaining a firm focus on these key activities:
Actively develop the capabilities and practices that help the larger enterprise grow in a volatile global economy.
Manage the major talent challenges globalization has created for today’s finance organizations.
Develop flexible and responsive finance operating models that allow for early identification of changing business conditions and rapid response to unforeseen events.
Manage the high impact of current and future regulations relevant to the business by initiating proactive compliance programs and developing capabilities for real-time compliance measurement.
With decisive action, Canadian companies, and their finance organizations, may benefit from responding with pace and confidence to seize the opportunity presented to them in this new environment.
Michael Tsaprailis is a managing director and leads Accenture’s Finance & Enterprise Performance practice in Canada. Based in Montreal, he has over 20 years of international experience in finance, finance operations, enterprise performance management strategy, merger and acquisition planning and integration, IT, as well as front-and back-office operations and shared services. With his broad experience in the oil and gas, natural resources, industrial products, automotive, retail, consumer products, and communications and high tech sectors, Michael guides forward thinking companies on their journey to high performance.
Chris Kaemmerer is a senior manager with Accenture’s Finance & Enterprise Performance practice. Based in Toronto, he has over 20 years of consulting and industry experience in managing a wide range of complex finance transformation projects for global resources, products, and telecommunications companies. His primary focus is helping clients to establish finance functions that work strategically with the business to support superior enterprise results.
January 7, 2013
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