Trends Identified
Targeting emerging markets
The divergence within the global economy is one of the main reasons why most CEOs (84%) say they’ve changed their company strategy in the past two years – with a third of them describing the change as ‘fundamental’. Only half the world is growing at a robust rate. Although the International Monetary Fund (IMF) forecasts global growth at 4.2% for 2011, developed countries – which make up 52% of the world economy – are growing at only half that pace. In contrast, emerging markets are booming, with Indonesia, India and China all forecast to grow faster than 6%.1
2011
14th Annual global CEO Survey
PWC
Putting customers at the centre of innovation
CEOs are placing a higher premium on innovation today. Since 2007, business leaders have consistently reported that their single best opportunity for growth lay in better penetration of their existing markets. Now they’re just as likely to focus on the innovation needed for new products and services (see Figure 5). It’s high on the agenda in virtually all industries, including industrial sectors such as metals, chemicals and manufacturing.
2011
14th Annual global CEO Survey
PWC
Bridging global skills gaps
The ‘war for talent’ was declared more than 10 years ago, but few CEOs are prepared to declare victory. They know talent isn’t just a numbers game. It means finding, retaining and motivating employees whose skills really fit the company’s strategy. Given that 84% of CEOs have changed strategies in the past two years, companies’ talent needs are changing, too. So talent is now at the top of the CEO agenda for 2011, across all regions (see Figure 7).
2011
14th Annual global CEO Survey
PWC
Achieving shared priorities with government
While CEOs focus on their own growth plans, many also see a common purpose with governments. Constrained budgets are forcing difficult decisions on public sector leaders; CEOs are keen to protect shared priorities that are critical to business growth and their own competitive advantages. Fostering a skilled labour force is but one area where CEOs see greater potential for deeper engagement with government bodies.
2011
14th Annual global CEO Survey
PWC
Globalisation reimagined
CEOs’ shift towards a targeted strategy signals the advance of globalisation – but it may diverge from how it’s looked in the past. Companies are not only affected by globalisation; the actions they take will shape it. And this time, the evidence shows, CEOs are going to do it a little differently.
2011
14th Annual global CEO Survey
PWC
Rethink: From crisis to cautious optimism
Confident in companies, tentative on recoveries CEOs are emerging from deeper cost-cutting than they expected last year. In last year’s survey, conducted as the financial crisis unfolded late in 2008, 26% of CEOs told us they expected headcount reductions over the next 12 months. A year later, close to half of respondents reported they cut jobs and at least 80% of CEOs in each region initiated cost reductions. In North America and Western Europe, close to a quarter of companies divested a business or exited a significant market. It is clear that few considered simply riding out the recession a viable response. ‘The crisis took us to a new place. It was a reset for our business’, said Angela F. Braly, President and CEO of US health insurer WellPoint Inc. They are now guardedly confident about generating revenue growth in the near term and they are decidedly more confident over a three-year time horizon. Indeed, over that time period, CEOs are about as confident of their revenue prospects as they have ever been in our survey. Of course, this may partly be a reflection of the depths to which demand had sunk.
2010
13th Annual global CEO Survey
PWC
Reshape: The post-crisis environment
Worst fears fail to materialise on regulations… yetRegulation is a perennial concern for CEOs. This year,how business leaders view regulatory issues has to be understood through the lens of ‘what might have been’at the start of 2009, when the uncertainty which hung over the financial system and by extension, the global economy,was so great. At that time, drastic measures to contain the crisis and preserve national economies were a realistic prospect. Massive bailouts ensued and with them,expectations of radical regulation to prevent another crisis.The alarmist scenarios of trade barriers and regulatory rewrites largely failed to materialise. Yet there remains asense that more regulatory change is inevitable. CEOs see little encouraging news on compliance costs. Regulatory burdens on corporations were not addressed during the downturn. In fact, in this year’s survey, more CEOs citeda lack of progress on cutting red tape than a year ago,67% to 57%. Only 2% of CEOs based in the US said the government has reduced regulations (see figure 2.1).Some governments are listening, at least when it comes to taxes. Our annual measure of the comparative ease of paying taxes in 183 countries found that 45 economies had reduced the tax burden on SMEs, or made it easier for them to pay taxes, in the year through 1 June 2009.4Yet, few CEOs believe that trend will continue.
2010
13th Annual global CEO Survey
PWC
Result: Adapting to compete
Short-term cost focus Despite widespread restructurings last year, many businesses remain committed to further cost-cutting. In an indication of the cost pressure they continue to face, 69% of CEOs we surveyed plan cost-reduction initiatives in the next 12 months, compared with the 88% who made cuts over the past year (see figure 3.1). Business leaders are also bracing for continued volatility. ‘Under the current situation, demand changes every day, and enterprises need to adapt rapidly. In fact, wide fluctuations in market conditions have become very normal and we must be ready to respond to a whole range of possible conditions: low market prices, strong demand, or no demand’, Huang Tianwen, President of China-based Sinosteel Corporation, told us.
2010
13th Annual global CEO Survey
PWC
An historic moment: One world united in crisis
Concerns about the prospect of a recession in the US, the UK and some other developed economies mounted, as 2008 marched on. By the time autumn arrived in the northern hemisphere, a deep economic winter seemed imminent. The trigger point came in mid-September, when US investment bank Lehman Brothers filed for bankruptcy, felled by nearly US$60 billion in bad debts, and another US investment bank, Merrill Lynch, announced it would be acquired by Bank of America to avoid a similar fate. That evening, the US Federal Reserve asked two other Wall Street investment banks to help inject US$75 billion into insurer American International Group.2 All the major advanced economies were either in, or about to enter, a serious recession. Indeed, the International Monetary Fund (IMF) expressed fears that 2009 might be the worst year for the industrialised economies since World War II.3
2009
12th Annual global CEO Survey
PWC
The search for global solutions
Léo Apotheker, Co-CEO of the global business software maker SAP AG, which is based in Germany, says: ‘One of the characteristics of the current environment is that we’re actually dealing with more than one crisis. We have an economic downturn, but we also have an environmental crisis of significant proportions. Global warming has made its effects felt, and is no longer something to be disputed. We also have an energy crisis. And we have a scarcity of resources problem. There are nearly seven billion human beings on the planet and we need to feed them, and so we have a serious issue to address.´
2009
12th Annual global CEO Survey
PWC