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Growth

Champions’ strategies

For many years, Accenture has been carefully examining the growth of the 500 largest companies in Germany. This is what we know: For these globally oriented companies, which generate at least one billion Euros in revenue every year, export is the most important growth driver. However, an economic downturn in important boom markets, as well as mounting reservations about free trade are threatening to make this driving force misfire.

But do the best of the best among the Top500 perhaps already have strategies to capture new growth opportunities? After all, the Growth Champions among the largest companies in Germany have repeatedly proven their flexibility in volatile markets. In the course of our most recent study‚ “Germany’s Top500: Global growth in times of national focus,” we found some patterns that indicate top companies do, indeed, anticipate new obstacles to growth and initiate countermeasures. The results of the study provide some important information that can help other companies learn from the best of the best.

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5 INSIGHTS

TOWARDS A NEW ERA IN WORLD TRADE

Accenture presents five scenarios to describe the current challenges presented by a national focus on a global level (and the risks for world trade related to that), as well as possible courses of action companies might take to secure revenue in foreign markets.


To download the study

1

It is unlikely that further increases in current account surpluses will continue to contribute to growth of the Top500.

Key economic figures show the important role exports play for German companies. Between 2005 and 2015, the current account surplus rose from 158.2 to 244.3 billion Euros. Over the same period, exports as a percentage of GDP went up from 38 to 47 percent.

At the same time, the current account surplus has turned into a risk factor. Important trade partners might push for balanced trade with Germany. Current account surpluses are indicative of imbalances in global trade that cannot be increased at will. Governments decide—with national and protectionist motives in mind—what framework conditions the Top500 will need to meet in foreign markets.


Statistical details, please see study

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2

Regulations will change the competitive positions of national economies overnight.

In the seven most important export markets for German companies, political risks are on the rise. Regulations may strongly limit growth for the Top500. According to the Centre for Economic Policy Research, in the G20 alone, the number of measures taken by countries to protect their own economies has risen from 155 to 463 since 2009.

At the end of 2016, German companies were shocked by one such measure: It will no longer be possible to take profits in China out of the country in the form of dividends. Additionally, starting in 2018, there is going to be a quota for electric cars – a decision that places manufacturers of vehicles with large combustion engines at a great disadvantage. The regulation intensity is already very high in China today, according to an OECD indicator.


3

In its no. 1 industry – car manufacturing – the German economy is vulnerable.

A considerable 59 percent of the revenue increase of the Top500 companies in 2015 was generated by the automobile industry. The figures indicate the importance this leading industry has on the German economy. This industry, in particular, is strongly dependent on exports. The three largest car manufacturers, as well as the three largest car part suppliers, generate around 80 percent of their revenues abroad. Apart from the risk presented by a renewed national focus, the industry faces some challenges presented by new technology trends. Electric drives are increasingly replacing combustion engines. Self-driving cars will change the automobile industry a lot. Significant shifts in market share might be the result.


4

In world trade, jobs are the new currency.

For German car manufacturers, in particular, the discrepancy between foreign revenue and foreign employment is big: 82.9 percent of their proportion of revenue is generated abroad, while only 47.2 percent of employment occurs in foreign markets. The difference between these measures increased between 2006 and 2015. This is why, in the course of national focus, these companies might be exposed to protectionist pressure. The worry is this: In a global economy that is increasingly characterized by a focus on national interests, jobs might turn into the new currency. That means more value has to be created in a respective country to ensure business success.


5

More intense competition pushes German companies’ performance to new heights.

The Growth Champions among the Top500 anticipate challenges and find solutions earlier to ensure growth. The growing interest in mergers & acquisitions (M&As) can be seen as part of a strategy aimed at driving inorganic growth. In the first six months of 2016, more M&A deals involving German companies were completed than in any comparable time period since 2007. The volume of M&A activity more than tripled in comparison with the first half of 2015. What does this mean? Mergers and acquisitions—not building up their own structures and skills abroad—have increasingly contributed to the Top500’s success in other countries. Concentrating on megatrends like digitization and sustainability, as well as cost reductions, also helps the Top500 achieve new levels of performance.


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Growth Champions

AMONG THE TOP500

For the seventh year in a row, Accenture identified the Growth Champions among the German Top500 companies. In 2015, 39 companies had managed, over the last five years, to exceed the total Top500 average, as well as their own industry average, in terms of revenue growth. They also generated higher profits than their respective industry average over the same period. The line-up of the Growth Champions reveals the industries to which particularly successful companies belong.

Which nine companies have been among the Growth Champions for the past three years? You can find out in the study.


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Automotive industry


Six Growth Champions hail from the automobile industry – three manufacturers and three automotive suppliers. Together, they managed to increase revenues by 8.5 percent in the 2011 to 2015 period and achieve profitability of 6.2 percent. Each with a margin of 7.8 percent, ElringKlinger and Knorr-Bremse are the most profitable Growth Champions in the automobile industry.

Machine and plant manufacturing


Machine and plant manufacturing companies count the most Growth Champions among them. The study names eight Top500 companies from the industry as Growth Champions. Altogether, these companies achieved a revenue growth of 9.1 percent and profitability of 4.9 percent over a five-year period, from 2011 to 2015. Some individual companies – such as Kuka and Dürr – managed to present excellent growth figures.

Chemical industry


Four Growth Champions came from the chemical industry. This group shows remarkable figures, with revenue growth rate of 8.1 percent and profitability of 8.5 percent. Symrise is at the top of the Growth Champions list from the chemical industry, with a 13.3 percent growth rate and a 9.2 percent margin.
See the full list of Growth Champions

Growth Champions

Average REVENUE growth 2011-2015

 

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Mobile XS!

Ways to succeed

IN TIMES OF GROWING TRADE BARRIERS

Growth: Generate additional revenue through platforms and ecosystems
Growth: Generate additional revenue through platforms and ecosystems
The platform economy enables a new form of scaling and globalization. Companies can use platforms to offer customers in different markets locally adapted and hyper-personalized services. Such digital services disrupt the traditional pattern of export of goods and regulation. The Top500 can ensure their growth potential if they establish digital platforms as global networks and appear in every country as adapted ecosystems, together with local partners. At this point, German companies are lagging behind the global average when it comes to applying this strategy.
Sustainability: Take advantage of the sustainability megatrend to increase competitiveness
Sustainability: Take advantage of the sustainability megatrend to increase competitiveness
All over the world, countries are struggling with big environmental problems for which the market offers very few good solutions. All doors continue to be open for providers of such solutions. The circular economy and resource efficiency enable cost reductions and profitability increases for all companies. A transparent and ecological alignment of the corporate strategy ensures customer trust in brands. This involves aligning business models with social requirements and communicating success in that field. Accenture calculated the financial effects that might result from a consistent focus on a sustainability strategy.
Profitability: Leverage cost-reduction programs to increase room for maneuver
Profitability: Leverage cost-reduction programs to increase room for maneuver
In times of trade barriers and digital transformations, financial stamina might become the decisive factor in competitive advantage. The Top500 adapt their structures to align to the changed strategy and optimize their bottom lines. In effect, they reduce the complexity of their existing business models to create capacities for new business in the digital world. Accenture provides some examples of how Top500 companies have introduced extensive cost-reduction programs.

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The entire

study


The study “Global growth in times of national focus” examines five scenarios in which current political trends in the most important export countries might lead to serious obstacles to free trade. There is a danger that traditional exports might falter as a growth driver for the Top500. Accenture shows that even in a new era, where globalization is taking a break, there are actions companies can take to create new growth opportunities.


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‘Until just recently, we were negotiating the Transatlantic Trade and Investment Partnership, and others, but all of a sudden the motto now is “everyone for themselves”’

 

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Frank Riemensperger

Country Managing Director
Accenture

Peter Pfannes

Managing Director, Strategy
Accenture