Where is the growth?

The Financial Times recently published an analysis of Europe’s fastest growing companies during the period 2012 – 2015. Perhaps the most interesting point is the industry segmentation of the list and the extent to which it reflects issues of market competition, disruption and opportunity.

In reviewing the list, it is notable that many of the fastest growing companies are new entrants – clearly pointing to disruption. In those circumstances, suppliers are likely to face a situation where demands for innovation are accompanied by significant pressures on margin, leading to a demanding market environment. Other sectors may see a higher ratio of growth for established leaders, reducing the challenges in negotiating agreements.

The growth sectors are themselves interesting. The dominance of IT services, consulting and software indicates the extent to which the digital revolution is impacting business. By contrast, the technology itself (including provision of cloud services) does not appear to offer such strong growth opportunities, presumably because it is a relatively commoditized sector, suffering pressure on margins.

It is data of this type that can increasingly be used to inform and develop contracting and commercial strategies – where are the major areas of growth, what sort of companies are driving that growth, what is the impact on profitability, what types of relationship will be of greatest value and which terms and conditions will be most important to win business.

Sector analysis of fastest growing European companies (Source: Financial Times 26th April, 2017)