European companies risk being overtaken by their US counterparts when it comes to Economic and Monetary Union (EMU), warns a report from KPMG Management Consulting.
While European firms are still struggling to adapt to EMU, a survey of US businesses found they are ahead in several crucial areas, including readiness for pricing issues and company location.
"This survey demonstrates, that in some of the most essential areas, US companies are ahead of, or level with, European organisations," said Vicky Pryce, chief economist with KPMG Management Consulting.
For instance, the survey found just under a third of US companies have not started their review of the effects of EMU on their pricing structures, compared to 46 per cent of European firms. Nearly a quarter of US firms intend to adopt the euro as an accounting currency next year, compared to just 20 per cent of European companies.
Pryce concedes that US companies are, to some extent, in a more favourable position than their European competitors because they can take advantage of the simplicity of a single European currency without having to convert existing currency operations.
"However many US companies in our survey have compounded this natural advantage by making more strides towards early preparedness than we have seen in Europe so far," she warned.
Pricing reviews are an excellent example, Pryce believes. The trend towards price harmonisation as a result of EMU is likely to affect the vast majority of countries trading in Europe, squeezing margins and forcing companies to make tough decisions about marketing, supply chain and location of operations.
"If European firms are not ready to make these choices, they may not be able to act quickly enough to cope with changes in customer and consumer demands," Pryce said. "If this happens, our survey suggests, others are already waiting in the wings, ready to step in to fill the gap."
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