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}

Insurance	5.0%
Wholesale distribution	4.8%
Discrete manufacturing	3.8%
High Tech	3.5%
Healthcare providers	3.1%
Process manufacturing	2.5%
Energy and utilities	1.8%
Professional & technical services	1.7%
Banking and finance	1.1%
Retail	1.0%
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

1. Power of the U.S. Dollar, or Why the Dollar Won't Collapse by Kimberly Amadeo. About.com April 2012.
2. GDP News Release. US Bureau of Economic Analysis. March 212.
3. GDP per capita. CIA. 2008-11.
4. IMF calls for dollar alternative. CNN Money. February 2011.
5. Shifting wealth: Is the US dollar Empire falling? by Helmut Reisen. Vox. June 2009
6. Foreign Exchange Reserves, 2000-2010 by Denise Bedell. Global Finance. June 2010.
7. US Interests and the International Monetary Fund by C. Randall Henning. Peterson Institute. June 2009.
8. U.S. losing grip on world's largest companies by Shelley Dubois. Fortune Magazine. July 2011.
9. US takes 53% worldwide semi market share by David Manners. Electronics Weekly. January 2012.
10. Table 1053. Retail Trade Sales. US Census Bureau. 2011.
11. Revised Statistics of Gross Domestic Product by Industry for 2003-2010. Bureau of Economic Analysis. December 2011. Extensive data.
12. Five Hot Stocks That Could Double This Year' And Other Useless Financial Advice . Financial Mentor. Promotional, but stressing the problems with financial forecasts.
13. Global Business Cycle Indicators: US. Conference Board. April 2012.
14. Table 1055. Retail Trade Sales. US Census Bureau. 2011.
15. US Ecommerce Growth. D Stephen White. August 2010.
16. The Growth of B2B Ecommerce BtoBB2B. Summary of a Forrester report.
17. Top 500 Internet Retailers. Internet Retailer. 2010.
18. 2011 Top Retailers. Stores.Org. July 2011.
19. IT Spending and Staffing Benchmarks 2011/12. Computer Economics. April 2012.
20. IT Spending: No Longer The First Thing Cut by Chris Murphy. Information Week. September 2011.
21. Economic Significance Study - Key Findings. Convention Industry Council. 2012.
22. The future of video conferencing. Nefsis. 2012.
23. Conferencing News. A conferencing web portal: audio web and video.
24.Videoconferencing Useful Links. CityIs. April 2012.
25. China Could Overtake The US Economy By 2025 Or Sooner by Kerri Shannon. NuWire Investor. August 2010.