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Ready, Set, Grow?

Deciding how (and when) to reinvigorate growth now ranks as a CFO's biggest challenge.

Next up, Western Europe, where the market is more competitive but where the Coach brand has made inroads in recent years as more European shoppers have traveled to the United States.

Companies that have already gone global may find that they can do it again, this time with a focus on new markets and a more granular view of customer needs. German manufacturing giant Siemens, for example, is exploring new industries and new technologies in its push for growth. “The single biggest growth area for us is in the renewable-energy space,” says finance chief Joe Kaeser, who adds that although the economic cycle has taken a modest toll on the sector, “we see the business getting a lot of advantage from the sustainability and environmental discussions going on around the world.”

Siemens is also focusing on developing products tailored to the specific needs of individual developing markets, says Kaeser. “It’s important to find demand locally. It’s not about exporting a product to an emerging market and then getting the check. It’s about engineering solutions in those respective countries.”

Kaeser gives the example of a trip to an Indian hospital by a Siemens executive who was touting the benefits of the company’s new MRI machine. The doctor he met with acknowledged that he might be interested in buying such a device, but brought the Siemens senior executive into a large room where 60 women were about to deliver babies. Instead of a new MRI, he said, what would be really helpful would be some technology to monitor all of the women’s progress and determine which patient needed a doctor’s help first. “This is just one example of how unique local requirements can help shape market solutions,” says Kaeser. “Don’t provide an American or a German solution to India; they need an Indian solution. That’s how growth happens.”

Go Shopping

For companies with comfortable cash balances, the time could also be right for an acquisition, though not necessarily a splashy, headline-making deal. “Good growth companies,” says the Darden School’s Hess, “tend to make acquisitions that are small and very strategic, like the acquisition of a technology or product or customer segment or geographic segment.” Cisco Systems is a veritable poster child for that strategy, and Hess says it is a model more companies should follow: deals that are relatively inexpensive and therefore lower risk “are wise now.”

At HSNi, “we’ve built up a substantial cash position and we are looking at possible opportunities to take advantage of the weak environment to acquire some businesses that make sense for us,” says Schmeling. Vetting those targets properly is one of her top concerns, however, and the process looks to be a lengthy one, as she and her business-development and strategy groups search for targets that will prove to be both an excellent fit and a very good value.

Richmond of Darden Restaurants says an acquisition isn’t in the company’s plans at the moment, although he is keeping an eye on potential targets. “There are lots of great valuations out there,” he says, “but I don’t know if that makes for great deals.” He does acknowledge the possible need to make a purchase eventually to continue to grow over the long term, but says it will likely be another restaurant chain that Darden can bring under its umbrella — not a food supplier, restaurant technology provider, or other peripheral acquisition.

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