8.1 Overview: US Perspective

eBusiness has to be seen in context, as part of economic life of a society. It is equally subject to trends and influences as traditional business, and needs the same level of attention, research and analysis. The broad features of the US economic scene are as follows:

Though the European Union has a larger collective economy, {1} and China may top the list before the decade is out, {25} the US has currently the largest economy of any single country. Its GDP in 2011 was over $15 trillion, {2} and its GPD per capita was $48,100, the 12th highest in the world. {3} There are periodic moves to find or create another international currency, {4} {5} {6} but some 66% of global currency reserves are currently held in dollars and only 25% in euros. {1} American influence extends to the IMF and the World Bank, {7} and 133 of the world's 500 largest companies are headquartered in the country. {8} Much of the manufacturing of electronic products has been offshored to India and southeast Asia, but Americans continue to dominate the industry they invented, taking a 53% share in the 2012 worldwide semiconductor market. {9}

The US has a diversified economy, the retail trade and food services (estimated per capita sales) being: {10}

Year

2000

2009

Motor vehicle

& parts dealers

2, 827

2,207

Furniture & home

furnishings

324

283

Electronic &

appliances stores

292

321

Building material

& garden supplies dealers

813

875

Food &

beverage stores

1,579

1,861

Health & personal

care stores

551

826

Gasoline stations

886

1,267

Clothing &

accessory stores

595

668

Sports, hobbies, books

& music stores

270

265

General merchandise

stores

1,433

1,931

Miscellaneous

store retailers

383

344

Nonstore

retailers

640

1,019

Food services

& drinking places

1,082

1,478

Retail sales

total

11,674

13,343

Economic Trends

Economies are continually changing: expanding in some sectors, contracting in others. Information is available from government outlets, business magazines and marketing studies. The US Bureau of Economic Analysis summarizes matters as: {11}

Recoveries in durable-goods manufacturing, wholesale trade, and professional, scientific and technical services industries were the leading contributors to the turnaround in U.S. economic growth in 2010, according to revised statistics on the breakout of real gross domestic product (GDP) by industry from the Bureau of Economic Analysis. Overall, 16 of 22 industry groups contributed to real GDP growth.

Manufacturing value added—a measure of an industry's contribution to GDP— rose 11.2 percent, a sharp return to growth after two consecutive years of decline. Durable-goods manufacturing rose 17.0 percent in 2010 after declining 14.9 percent in 2009. Nondurable-goods manufacturing increased 5.1 percent in 2010 after falling 2.7 percent in 2009.

Wholesale trade value added grew 3.9 percent in 2010, after two years of decline, reflecting strong growth in motor vehicle wholesalers. Six of 22 industry groups contracted in 2010. The largest contributors were real estate and construction, which fell for the sixth consecutive year at 3.2 percent.

Pundits exist in plenty {12}, as do commercial studies, but a company wishing to conduct its own forecasts can use regression analysis etc. on the leading economic indicators {13} coupled with data on the specific area of interest.

Ecommerce

US ecommerce is naturally concentrated in nonstore retailers, but accounted for 4% overall in 2009. {14}

Type of Business

Ecommerce Sales

(US$million)

Percentage of

Total Retail sales

Nonstore retailers

116,543

37.3%

Motor trade and parts

dealers

17,201

2.5%

Clothing and clothing

accessories stores

2,965

1.4%

Miscellaneous stores

retailers

2,360

2.2%

Electronics and

appliance stores

1,140

1.2%

Food and beverage stores

883

0.2%

Building material and

garden equipment

447

0.2%

General merchandise

stores

220

>0.05%

Health and personal

care stores

117

0.1%

Total

145,214

4.0%

That 4% has been rising steadily, but the rate of increase, year on year, has fallen off: a result of the global slowdown and a maturing market: {15}

Year

2001

2002

2003

2004

2005

% of

Retail

1.0%

1.3%

1.6%

1.9%

2.3%

Annual

Increase

24.8%

30.5%

28.3%

27.2%

25.7%

 

 

 

 

 

 

Year

2006

2007

2008

2009

2010

% of

Retail

2.8%

3.2%

3.3

3.6%

4.0%

Annual

Increase

23.6%

20.0%

3.9%

0.9%

3.8%

Very much larger is the US B2B ecommerce market. Precise figures are hard to come by, much of the information being confidential to private dealing agreements. Forrester's estimate was $2 trillion by 2009, however, about 10% of business sales overall. The Gartner Group put the global figure at over $7 trillion in 2010, of which north America's share would approach $2.8 trillion. Europe would grow to $2.3 trillion, Asia to $900 billion; and Latin America to $124 billion. {16}

The top ecommerce companies are large: {17}

Company

Amazon.Com,

nc

Staples, Inc.

Apple, Inc.

Dell, Inc.

Office Depot, Inc.

Market sector

Mass

merchant

Office

Supplies

Computers

& electronics

Computers

Office

Supplies

Online Sales

(US $ millions)

$ 34,200

$ 10,200

5,227

4,802

4,100

2009-2010 Growth

24.8%

4.1%.

23%

6%

0%

 

 

 

 

 

 

Company

Wallmart.Com

Sears Holding

Corp

Liberty

Media Corp.

Office

Max, Inc.

CDW Corp.

Market sector

Mass

merchant

Mass

merchant

Mass

merchant

Office

Supplies

Computers

& electronics

Online Sales

(US $ millions)

4,095

3,107

3,040

2,859

2,717

2010 Growth

17%

12%

17.8%

3.0%

10.0%

But not the largest. Amazon is ranked 19th, for example and Apple 21st among US retailers. {18}.

Specific Markets

Each industry is complex, especially the IT industry.

Change in IT operational budget from previous year (20010-11) by sector: {19}

Insurance5.0%
Wholesale distribution4.8%
Discrete manufacturing3.8%
High Tech3.5%
Healthcare providers3.1%
Process manufacturing2.5%
Energy and utilities1.8%
Professional & technical services1.7%
Banking and finance1.1%
Retail1.0%
Government-3%

Figures show general trends: IT budgets 2006-2011: {19}

Year

2006

2007

2008

2009

2010

2011

Median growth

of IT budgets

4.1%

5.0%

4.0%

0.0%

0.0%

2.0%

IT spend as

% of revenue

2.0%

1.8%

1.5%

1.5%

1.8%

1.6%

IT budget

per user

$8,105

$7,676

$7010

$7,379

$7,002

$6,667

Companies differ in their IT allocations. A June 2011 survey of CIOs and other IT leaders found that, compared to the previous year, 56% would have an increased IT budget, and 17% a decreased budget. In 2010, 34% expected an increase and 35% expected a cut. Looking to 2012, 51% expected an increased IT budget, and 15% a reduced budget. {20}

A newcomer to the conferencing services market, for example, might start their research in three areas.

1. Estimate how much was being spent on conferences and the like in America.

The Meetings Industry's direct contributions to the US economy from 1.8 million corporate and business meetings, trade shows, conventions, congresses, incentive events and other annual meetings are: {21}
   $263 billion in spending
   1.7 million jobs
   $106 billion contribution to the GDP
   $14.3 billion to federal tax revenues
   $11.3 billion to state and local tax revenues, etc.

2. Learning that traditional business-to-business video conferencing market is a $3 billion industry, predicted to grow to $5 billion by 2015, {22} subscribe to Conferencing News {23}, and follow this up with CityIs's listings of 19 information sources for more details. {24}

3. Study the competition: what was offered, at what cost and terms, etc., drawing up a more detailed and objective comparison than the white paper commonly presents. Should theirs be an advisory service, or should they actually supply the service? Much depends on research findings, and the marketing spend needed to establish a brand identity.

Questions

1. Provide a more detailed account of the US economy.
2. America created the digital economy and will continue to lead it for the foreseeable future. Discuss.
3. Correlate US IT growth with US economic trends.
4. Outline a research strategy for another area of the US digital economy.

Sources and Further Reading

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