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By Matthew Quinn
Despite the state of the global economy, international expansion is now a priority for middle market executives and a major part of their growth strategy and revenue stream, according to a survey by KPMG.
The survey of 1,000 executives from middle market companies in July and August found that 60 percent of those polled said their company has plans to further expand its global presence over the next five years.
Furthermore, 53 percent said management is very focused on overseas expansion and 53 percent said that global expansion is integral to their company's growth strategy. In 2007, KPMG conducted the same mid-market survey and found only 39 percent of execs said global expansion was a focus for leadership and 37 percent said it was an integral part of their company's growth strategy.
That increased interest likely stems from the success many companies have had overseas. Almost half of the executives surveyed said more than a quarter of their current revenues stem from non-U.S. operations and customers. That's a big change from the survey when 52 percent of respondents said non-U.S. operations and customers accounted for 10 percent or less of total revenues.
The impact of overseas earnings is only expected to get bigger. In fact, two-thirds of executives expect non-U.S. revenues to increase over the next five years and among those more than a quarter see growth in excess of 25 percent in that time.
Half of respondents expect to expand by increasing the number of employees their company has internationally and 41 percent have plans to add offices or physical plants.
An important driver in the move overseas is the poor outlook for the economy at home. A full 58 percent said the U.S. economy is worse than last year and expansion overseas is increasingly seen as a way to generate revenue growth.
Execs are well aware that there are major risks in global expansion. They said the economies of the prospective foreign countries, the U.S. economy and the local laws in the prospective countries were the most prominent concerns. Other risks include human resource issues, available capital and geopolitical issues.
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