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WIS Sectors Are the “Gear Box” that Connects Macro and Companies!

Custom Market Indexes A Framework to Track and Forecast Company Sales Prospects for Multiple Business Segments and Geographies World Industry Service. Global Insight’s World Industry Service (WIS) Provides Sector Benchmarks for Global Sales Forecasting.

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WIS Sectors Are the “Gear Box” that Connects Macro and Companies!

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  1. Custom Market IndexesA Framework to Track and Forecast Company Sales Prospects for Multiple Business Segments and GeographiesWorld Industry Service

  2. Global Insight’s World Industry Service (WIS) Provides Sector Benchmarks for Global Sales Forecasting • WIS provides a unique set of global sector data, financial benchmarks, and written reports, all delivered via Global Insight’s easy-to-use Web-based platform • Harmonized industries and indicators allow for consistency and comparisons across sectors and geography • User-friendly access facilitates navigation through a multi-dimensional choice of sector, country, indicator, and timeframe • The application of WIS featured here is the Custom Market Index (CMI) framework, which uses WIS sector data to aid in company sales forecasting and market planning • An ideal tool to forecast sales in several business segments and multiple countries/regions around the world

  3. Macro • Policies • Slate of Demand • Scenarios • Prices and Exchange Rates Company • Benchmark Global Sales Growth, Cost Structure, Risks • Market Share • Competitive Technology WIS Platform Drives Macro Performances through Sector Activity to Individual Company Performances WIS sector data represents a big “peer group” of all players that operate in each sector • Data derived from company tax filings • Includes public and private ownership • Creates robust financial benchmarks • Uses sector benchmarks to anticipate likely company prospects Industry • Sources of Demand • Purchases, COGS • Consumer, B2B Markets • Technology, Commercial Linkages • Trade, Competition, and Profits WIS Sectors Are the “Gear Box” that Connects Macro and Companies!

  4. How to Use WIS Information in Sales Forecasting? WIS provides comparative and consistent benchmarks of market size, growth, volatility, correlation, and structure • Use the WIS indicators and reports to understand demand conditions and structural changes in key customer markets The Custom Market Index (CMI) framework facilitates the tracking, analysis, and forecasting of company sales prospects for multiple business segments and regions • Use WIS sector information as the basis for custom framework • Use company sales patterns to “weight” or tie sectors together into tailored market bundles • Produce a finely targeted and informed view of sales prospects Translate economic events into implications for key markets

  5. What Is the Market Size of Key Global Sectors?—Examples of WIS Benchmark Indicators WIS Indicators Provide Robust Benchmarks of Sector Peer Groups(Example of total world sales for the nine top sectors) • WIS indicators show the size and composition of sector markets • Comparable measures are scalable to region and world totals • Ability to scan across sector groups and regions, then drill down to more granular market segments • Metrics allow custom definition of segments and geography

  6. What is the Market Size of Key Global Sectors?—Examples of WIS Benchmark Indicators Drill Down from Top-Level Sectors to Sub-Industries, andShow Market Size Across Countries and Business Segments

  7. What Are the Growth Rates of Key Global Sectors?—Examples of WIS Benchmark Indicators Percent Growth in Inflation-Adjusted Sector Sales(World total from 70 economies) • Sector Growth Rates are a key metric for sales forecasting • Identify and target the fastest-growing sectors, then determine the best geography for sales and production • CMI: Use custom definition of segments and geography to best represent and track a company’s own set of target market segments

  8. What Are the Growth Rates of Key Global Sectors?— Examples of WIS Benchmark Indicators Drill Down from Top-Level Sectors to Sub-Industries andShow Market Growth Across Countries and Business Segments Key Manufacturing Sectors Key Services Sectors CMI Applies WIS Sector Metrics to Company Sales Patterns!

  9. What Are Custom Market Indexes (CMI)? • Companies that operate in or sell into various sectors and several different countries are typically more difficult to track and forecast on a comparable basis across all business components • Also, the actual size of sectors and countries are naturally “weighted” by their actual US$ market size, but these natural “weights” may not be relevant for many companies • The importance of particular sectors to a client can be quite different than the importance of the same sectors to the macro economy Solution: Create a tailored or Custom Market Index (CMI) that calibrates sector measures to an individual company and/or client business patterns • Provides a consistent framework that can be employed on a common basis across all business segments and regions

  10. Global Insight’s Custom Market Indexes • Forecast sales growth, profits and margins, and market share • Communication tool for Wall Street analysts to best illustrate company performance relative to relevant markets • Benchmarking, segmentation, and competitive analysis • Corporate planning and strategy, resource management, expansion, procurement, and competitive investment requirements • Active risk management by sector and geographical dimensions Common Use of Custom Market Indexes

  11. Custom Market Indexes Take Several Forms Global Insight’s Custom Market Indexes • 1) Structural models provide strategic forecasts of company sales • Sales forecasts are measured in US$ (or euro) for size, growth rates, and market share calculations • Flexible “slice and dice,” roll up across all business segments and regions • 2) High-frequency models that feature turning point indicators • Advantage is shorter time forecast horizons • These models can only address segments selling to manufacturing sectors • Forecasts are produced only in growth rate terms (not US$ size or market share) • 3) Leading indicator models of inflection points • Indexes whose known historical values have leading information for future company sales • Identify turning points in growth without forecasts • These models shows turning points only, not growth rates, market size, or market share

  12. Example of Company Custom Market Index —Structural Model Approach Shares of Company Sales from Geographical Regions and Client Industries Are Used to Create Custom Market Index • Roll up sales from all segments and region to company totals; compare CMI to actual company sales performances • Use CMI over history to analyze and explain changes in market shares • CMI provides unbiased market growth expectations CMI Forecast Cells show the percent shares of company sales that originate from clients in the listed sectors and regionsThese shares are used as “weights” that are applied to WIS data to create the company’s actual, attainable custom market

  13. CMI for Brazil versus Brazilian GDP(% change) CMI Is a Framework for Tracking Key Customer MarketsAcross Different Countries Business Segments CMI for the Chemicals Business Segment in Different Regions(%)

  14. Custom Market Index – Example of High Frequency Framework for Selling Into High Technology Sectors Use Monthly/Quarterly Indicators to Track and Forecast Near-Term Growth in Sales • Incorporate WIS high-frequency indicators for key technology and process industries • Use with company sales patterns to create Custom Market Index • Latest WIS data provide up-to-date snapshot of client markets • This version of CMI will forecast sales for a short time horizon (3-6 months), with statistical standard deviations around the forecasts • Focus on growth and inflection points in sales Forecast History

  15. Custom Market Index – Example of Leading Indicator Based Forecast (Lead/Lag Relationships) Nature and Length of Lead/Lag Relationships Are Determined by the Data • Use high-frequency data for “leading indicators” of future sales • Focus on metrics whose known values today anticipate future company sales trends • See likelihood of turning point in sales growth • Use monthly/quarterly sector indicators to develop lead/lag relationships with sector indicators

  16. CMIs Deliver the Global Insight Advantage • Accurately forecast your business segment sales • Determine the strength and vulnerability of your markets • Improve your performance against competitors • Target resources toward most promising areas • Minimize the impact of exposure to business cycles • Minimize your risks as a lender or investor • Translate economic events into impacts on key markets

  17. More Information? Please contact us for a personal demonstration! • Mark Killion, CFAManaging Director, World Industry Service1-610-490-2547mark.killion@globalinsight.com • Prem PremakumarApplications Manager, World Industry Service1-610-490-2525prem.premakumar@globalinsight.com

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