Europe s Priority: Servicing Economic Growth

Transcription

1 Europe s Priority: Servicing Economic Growth Gustavo Piga, University of Rome Tor Vergata Management Consulting as a Factor of Economic Growth Rome, June 21st, 2013

2 We had a Dream La grande révolution européenne de notre époque, la révolution qui vise à remplacer les rivalités nationales par une union de peuples dans la liberté et la diversité, la révolution qui veut permettre un nouvel épanouissement de notre civilisation, et une nouvelle renaissance, cette révolution a commencé avec la Communauté européenne du charbon et de l acier. Jean Monnet 2

3 Diversity, European Style 3

4 Recessions are a Nasty Thing 4

5 And MC is no Exception? In 2012 turnover is equal to roughly Mil, with a 1,2% decrease with respect to 2011 and still below the 2008 level. 100,0 Evolution of MC turnover in Italy from 2008 to 2012 (base index number 2008 = 100) 98,8 97,6 95,0 94,

6 Well, not exactly Feaco, Annual Survey, Turnover, 1996=100 6

7 Crisis? Which Crisis? Growth Rates 2011 GDP growth dispersion per-capita within the euro area is huge: Germany is at +3,5% since dal 2007, Portugal -3,5, Spain -5, Italy -6,6 and Greece -14%. MC Growth Rate 2011, FEACO Annual Survey 7

8 «Domestic» Recessions are a Nasty Thing 8

9 Internationalization is one answer. Insufficient. Almost all companies that have international assignments/customers report an increase in turnover (+5% on average), while pure domestic firms suffer an above average reduction in total turnover (-5,4%) Internationalization has been an important leverage for counterbalancing the decline of the Italian domestic market. Domestic Oriented Non Domestic Oriented 15,0% 10,0% 11,6% 9,8% 5,0% 2,8% 1,9% 3,4% 0,0% -5,0% -1,5% -10,0% -7,5% -8,0% Micro Small Medium Large 9

10 Where internal demand is the big thing that matters, especially for SMEs 10

11 IN MC too? The decrease is mainly due to small and micro firms Average trend in management consulting turnover in the last 3 years 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% trend 2010/2009 trend 2011/2010 trend 2012/2011 3,9% 1,7% 2,1% 2,0% 0,3% -2,5% -5,7% -5,8% 1,2% 11,2% -5,1% Micro Small Medium Large 2,7% 11

12 It depends MC Growth Rate 2011, FEACO Annual Survey 12

13 For those where SMEs Suffer: with Permanent Scars. MC industry, while still fragmented, is getting towards and greater concentration Large companies turnover and employment from 2009 to 2012 Turnover Employees 50,0% 41,0% 43,6% 45,3% 50,0% 40,0% 35,0% 40,0% 30,0% 30,0% 22,4% 22,8% 23,8% 24,4% 20,0% 20,0% 10,0% 10,0% 0,0% ,0%

14 Temporary crisis or structural change? Is the market decline faced by the Management Consulting industry due: to a temporary crisis? Where the key issue is having many customers in a difficult competitive position and therefore cutting down the consulting services? or to a structural change? Where the key issues are that: many customers having developed internally strong competences and therefore requiring less the traditional management consulting services many customers being affected by big trends like digital revolution and globalization that are requiring a different consulting support These two visions calls for radically different approaches to manage the present turmoil 14

15 This Recession is Smoke in Our Eyes 15

16 Phelp s Prophecy This recession ( ) is smoke in our eyes. We are suffering from a LONG SLUMP, 30 years old and more. 16

17 But. MC: Share of GDP Feaco, Annual Survey

18 With remarkable differences MC share of national GDP is far lower than other major countries in Europe MC turnover over the National GDP (in %) 0,90% 0,80% 0,80% 0,78% 0,70% 0,60% 0,50% 0,40% 0,52% 0,37% 0,30% 0,20% 0,10% 0,20% 0,17% 0,00% Germany United Kindom AVG of large UE countries France Italy Spain 18

19 Resilience, Western style 19

20 Weathering the Storm 20

21 Industry structure and seems to be driving the limited role Management Consulting plays in the Italian economy What hampers growth of MC in Italy? % of respondents who rated the factor very important. Investment of SMEs in consulting services is too limited 85,4% Investment of Public Sector in consulting services is too limited MC industry is too fragmented Investment of Large Enterprise inconsulting services is too limited Consulting firms lack innovation 54,8% 51,0% 41,0% 33,5% Consulting firms lack of exposure on the marketplace Consulting costs are outside the reach of clients 13,7% 20,2% Source: Assoconsult

22 A Governance for an Industrial Policy for SMEs Small Business Act The essence of the American economic system of private enterprise is free competition The preservation and expansion of such competition is basic not only to the economic well-being but to the security of this Nation. Such security and well-being cannot be realized unless the actual and potential capacity of small business is encouraged and developed. It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise. 22

23 The Triangle Mexico, Puebla. A plan for public support the local SMEs, financed with taxpayers money 80% higher sales and 120% more profits for those SME s that receive consulting services. Especially thanks to support in 2 key functions: marketing, finance and accounting. At the end of the period of support, self-esteem and confidence of the owner-manager rise. UK: the Goverment works with SMEs associations to grant space in 300 and more buildings (owned or rented) of the public sector to reduce SME costs and increase their competiveness. A New Industrial Policy is within Reach, that Involves MC, SMEs and Government. 23

24 And one last Thing: one Part of Europe badly Needs a Fix 24

25 Europe Let us Fix it Together. Let us Dream, (Re)Organize, Challenge. 25