Now Is the Time to Prepare for the Euro

...U.S. companies need to pay more attention to looming single currency.

For nearly a year now, several U.S.-based multinational companies have been trying to take a measure of the euro, the single European currency that's scheduled to debut on Jan. 1, 1999. But in talking with these and other U.S. companies doing business in Europe, one gets the impression that many of them are more than an ocean away from appreciating what's about to happen. Few companies fully understand that the introduction of the euro could dramatically change the way they price products in Europe, affect where they locate offices and factories, and alter their accounting and financial-reporting practices. The euro's promises to cut foreign-exchange and some other transaction costs doesn't clearly register. There's a remarkable absence of urgency. Perhaps more than geography is involved in the absence of urgency. New Year's Day 1999 seems a long way off. Why, we're not yet to mid-year 1997. What's more, mandatory use of the euro won't come until the new millennium. And France and Germany, Europe's most ardent boosters of the euro, may not fiscally and monetarily qualify to participate in its debut. So why not ease into the euro, which is exactly what some U.S.-based companies are doing? Why not go through the inevitable learning process at that future time when British pounds, German marks, and French francs are pass? There's compelling reason not to wait: The coming change is not small change. It is, at the least, a very big pocketful of (euro) change. Customers and suppliers of companies that do business in the European Union (EU), for example, already have concerns about the switch to a single currency. What are the executives and managers of those companies that do EU business doing now to identify customers' and suppliers' needs and to prepare to meet those needs? Similarly, how much thought have they given to their employees in the EU, whose pay and benefits soon will have to be calculated in euros? How much thought? That is the key question. And it goes beyond the euro. How much strategic thought do executives give to developments that seem remote in time or geography? More than 400 executives in a recent Strategic Leadership Forum/A.T. Kearney Inc. poll complained that too little attention is paid to the outside world in corporate strategic planning. Massive strategic-planning staffs have been absent from the headquarters of major multinationals for a decade or more. And many are gone with good reason: They weren't close to markets or culture; they didn't know manufacturing or technology or logistics; they were more interested in getting their hands into everything than in getting their bodies out of the way. But if the last decade is any illustration, executives cannot afford to not to think out of their present business box. Who anticipated the fall of the Berlin Wall fully enough to be able to capitalize on its business consequences? Who thought about what Russia might be like after Gorbachev and communism--and was ready to act upon his or her assumptions? How much thought is now being given to Germany after Chancellor Helmut Kohl leaves office (presumably not before he serves another term, however)? Or to China after the current leadership has passed from the scene? Or to Cuba after Castro? Or to the Middle East after Netanyahu, Arafat, and Hussein? Or to South Africa after Mandela? Or to the U.S. after Clinton? These are critical strategic questions, for they force (or should drive) fundamental examination of where and how business is done without regard to political personalities, while recognizing that such personalities help shape both the present and future business environment. This is the time to answer these critical questions--and to pose still others. But the process needs to begin right now. Today is tomorrow's yesterday and, ready or not, the euro, unlike Samuel Beckett's Godot, will arrive.

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