Global outlook pays off for companies
OVER the past decade it has paid for a company to think globally - selling products overseas or setting up factories abroad. Those companies that had an overseas presence grew faster and were more profitable.
That's the conclusion of a Conference Board study of 1,250 small, medium, and large corporations. The Conference Board is a business research organization in New York.
However, that strategy may change in the future, says Charles Taylor, an author of the report. If there is a change it will be because of the North American Free Trade Agreement and the recent completion of the Uruguay Round of the General Agreement on Tariffs and Trade. The key element of both NAFTA and GATT is the reduction of tariff barriers.
``Improved market access may see a deceleration by US firms to locate overseas over the rest of the century,'' Mr. Taylor says. The survey found that the main reason why companies located overseas in the past was market access, not cheap labor.
Despite this possible shift, Taylor says he also expects a continued interest in doing business with China, India, Southeast Asian countries, Eastern Europe, and the former Soviet Union.
If companies do start to focus on these emerging markets, it would be a major shift from their past practices.
The Conference Board survey found that the largest concentration of United States companies was in Western Europe (60 percent), Canada and Mexico (47 percent), and the Pacific Rim (41 percent), excluding Japan. In the case of Japan, the study found that many US companies have joint ventures or licensing agreements.