29 November 2012 18:48 [Source: ICB]
Business leaders should focus on opening new markets to achieve sustained success
The good news is that the economic recovery will continue for some time yet. The bad news is that a softening of the market can be expected in 2014. Therefore, business leaders need to prepare for this by adjusting their management strategies and increasing their efforts to expand into new markets.
The situation is not as serious as the press has made it out to be
Brian Beaulieu, CEO, Institute for Trend Research
"By considering a wide variety of factors beyond the common economic indicators that can impact the economic climate, such as the psychology of consumer confidence, cultural behaviours, energy and labour numbers, tax policies, international trade and natural disasters, we are able to put the information into context and identify overall trends," Beaulieu explains.
Currently, the trend is positive, even on the consumer side, and companies should expect another two to four strong quarters before any sign of slowdown appears. Leaders need to be prepared to meet the continued growth in demand, including enough skilled employees and inventory so that they can respond effectively.
This prediction is made in spite of the claims of impending doom presented in the media with respect to sequestration and the "fiscal cliff." According to Beaulieu, the situation is not as serious as the press has made it out to be, but there will be a small reduction in government spending.
Inflation, however, will be an issue in late 2013 and 2014, and companies do need to prepare for this change in the economic climate. Importantly, this softening in the US market will rapidly become a global issue, as both Europe and Asia are now dependent on the consumer spending of Americans.
"The rising cost of food and fuel, which the Federal Reserve has said is beyond its power to control, combined with the inevitable tax increases that will be implemented regardless of the outcome of the 2012 presidential election, will be too much for consumers to manage, and they will reduce spending," says Beaulieu. "Fortunately, the inflation will not be enough to lead to recession, but consumers will feel the pinch."
BRACING FOR THE BUBBLE
ITR also believes that there is the potential for an asset price bubble in the bond market as a result of some of the policies implemented by the Federal Reserve. The company has, however, developed strategies that business executives can implement to protect themselves in the event that this prediction is true, but that will not cause any harm if it does not come to pass.
Chemical distributors and their executives should, in fact, have money to invest, as ITR is bullish on the chemical industry in the US, including the distribution segment. "The increasing availability of low-cost natural gas provides US manufacturers with a tremendous competitive advantage and is driving real growth." As a result, chemical distributors that prepare properly have the chance to weather the softening of the economy in 2014 with little impact on their businesses. The key to preparation, according to Beaulieu, is opening new markets.
"The management teams at chemical distributors need to use their imagination and bring as much human energy as they can to bear on identifying new opportunities to sell their products," he says. That includes finding new customers in existing markets, new applications for existing products, entering new regions and end-use markets and taking on new products for both existing and new customers.
"To maximise company performance for the coming years, companies need to develop a skilled and innovative workforce, maintain appropriate inventory levels, and work hard to identify any opportunities to sell products where they have never sold before, including taking advantage of the lower cost of doing business in the US to take market share from competitors," Beaulieu says.
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