Trends Identified
The disruptive decade
The global economic outlook is certainly enough to test even the strongest enterprises. The eurozone is still mired in recession and the US economy is forecast to expand by just 2.2% this year.1The situation in some of the growth markets is also getting harder, as the slowdown in the BRIC economies demonstrates. While market conditions in many countries are still very difficult, CEOs are more positive about the prognosis than they were last year: 52% think the global economy will stay the same for the next 12 months and only 28% believe it will shrink. In 2012, by contrast, 48% were convinced the global economy would contract.But economic plateaux aren’t exactly grounds for cheer. That’s why short-term confidence about the prospects for revenue growth has continued falling (see Figure 1). CEOs in Western Europe are especially nervous. Only 22% feel very confident they can increase their company’s revenues in the coming 12 months, compared with 53% of CEOs in the Middle East and Latin America.
2013
16th Annual global CEO Survey
PWC
What worries CEOs most?
Today’s CEOs are concerned about a wide range of potential and ongoing threats to their business growth prospects. These include catastrophic events, economic and policy threats and commercial threats.We asked CEOs about their organisation’s ability to cope with the potential impact of various disruptive scenarios. The majority thought their organisations would be negatively affected, with major social unrest being cause for the greatest concern (see Figure 3). Indeed, CEOs are far more concerned about this than they are about a slowdown in China, possibly because they’ve already factored the latter into their calculations.
2013
16th Annual global CEO Survey
PWC
A three-pronged approach
So what are CEOs doing to make their organisations more resilient in this era of ‘stable instability’? Our survey shows that they’re taking three specific approaches:A) Targeting pockets of opportunity: CEOs are focusing on a few well-chosen initiatives, primarily in their existing markets, to stimulate organic growth. They’re more wary about entering new markets or engaging in mergers and acquisitions (M&As), and diluting their resources too much. B) Concentrating on the customer:CEOs are looking for new ways to stimulate demand and foster customer loyalty, such as capitalising on digital marketing platforms and involving customers in product/service development. But they’re also aiming to keep their R&D costs down and make the innovation process more efficient. C) Improving operational effectiveness:CEOs are balancing efficiency with agility. They’re trying to cut costs without cutting value or leaving their organisations exposed to external upheavals. They’re also delegating power more widely and collaborating with organisations to share resources and develop new offerings.
2013
16th Annual global CEO Survey
PWC
It’s a question of trust
We’ve discussed what CEOs are doing to make their organisations more agile, more appealing and more profitable. To succeed in, and align, these three goals, CEOs know they’ll have to repair the bridges between business and society. CEOs also recognise the important role that business can play in addressing social challenges and improving national outcomes.
2013
16th Annual global CEO Survey
PWC
Confidence disrupted
The year 2012 unfolds with wide disparities in potential outcomes in many economies, and little prospect of a coordinated turnaround. Just 15% of CEOs believe that the global economy will improve this year (see Figure 2). Incremental improvements in business optimism seen in the PwC 15th Annual Global CEO Survey over the past two years are reversing. In a sign of converging economic fortunes, confidence declined in parallel among CEOs across all regions, except for the Middle East and Africa.
2012
15th Annual global CEO Survey
PWC
Balancing global capabilities and local opportunities
A sensible strategy for globalisation today means far more than building cheaply in one location and selling in another. What has changed is the way operations are configured. India’s Tata is now the largest manufacturer in the UK. Taiwan’s HTC pioneered the use of Google’s Android software. New operational strategies are required to compete successfully in such markets.
2012
15th Annual global CEO Survey
PWC
Resilience to global disruptions and regional risks
CEOs report that they are less likely this year to focus on changing approaches to risk management than on other areas of priority, from strategies for talent to organisational structure. Significant defensive steps have already been taken: balance sheets have improved and cash reserves have been built. Enterprise risk is now more frequently discussed in boardrooms.
2012
15th Annual global CEO Survey
PWC
The talent challenge
Theoretically, finding a good candidate to fill a position should now be a very straightforward exercise. There have never been as many educated people in the world, nor has it ever been as simple for employers to tap this vast pool online. Highly skilled talent is also highly mobile; but just in case, networking advances also mean that many more tasks can be handled remotely or outsourced.
2012
15th Annual global CEO Survey
PWC
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