Trends Identified
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
Walking a tightrope
How does a business meet the current, acute demands of survival and at the same time ensure its business model is both durable over the long term and positioned to take best advantage of a return to growth? Stephen Green, Group Chairman of the UK-based international banking and financial services organisation HSBC Holdings plc, explains: ‘One of the obvious risks is that current emergencies drive out the longer-term perspective…You cannot rebalance economies overnight. No institution, whether it’s a bank, or a government, or the World Bank or the IMF, has the power to do this. It simply will take time, and it’s a difficult tightrope to walk.’ Walking the tightrope requires CEOs to balance extreme, short-term threats to survival, on the one hand, and on the other, large-scale, global issues that impact long-term success. Many CEOs believe this requires a mindset that is different from the past.
2009
12th Annual global CEO Survey
PWC
Business confidence: Vigour & Circumspection
For 11 years, our Annual Global CEO Surveys have tracked how confident global leaders feel about the prospects for growth. The overall level of confidence has now dipped for the first time in five years. But this troubling picture masks two very different regional trends. CEOs in the industrialised Western economies are less confident about the prospects for business growth than they were last year. Those in the emerging economies of Asia, Latin America and the ‘new’ Europe, by contrast, see increasing opportunities for expansion.
2008
11th Annual global CEO Survey
PWC
Mergers & acquisitions: Underlying optimism & Contrasting direction
The economic prognosis may be gloomy, but many CEOs are still keen to expand overseas. However, North American CEOs are more cautious than their peers in other regions, and Asian CEOs favour strategic alliances over M&As.
2008
11th Annual global CEO Survey
PWC
Global risks: A riskier &/or Safer world
Does greater connectivity increase the risk that local difficulties will turn into global disasters? Or does it provide opportunities to diversify and thus dilute the dangers? The preliminary evidence suggests that it may actually do both.
2008
11th Annual global CEO Survey
PWC
Climate change: Pragmatism & Heightened awareness
During the past 12 months, climate change has soared up the public agenda. So what are CEOs now doing to combat the threat of global warming? At first glance, our survey suggests that they are largely reactive. But closer inspection shows greater levels of commitment, especially among CEOs running big companies.
2008
11th Annual global CEO Survey
PWC
People and change: Strategy & Execution
Talent remains a major issue, but results fall short – suggesting competitiveness is hampered while opportunities lie within reach. Two-thirds of CEOs want recruitment, motivation and development improved. But they give HR a low vote of confidence. Leaders and all-around performers prove hardest to find, while organisational structures get in the way of collaborative people. Senior or middle management weaknesses are blamed most often for hindering change programmes. A gap separates vision from execution. Discipline is needed to drive strategies through tactics, structures and results.
2008
11th Annual global CEO Survey
PWC
Collaborative business networks: Opportunistic & Systematic
More than half of all CEOs believe that collaborative networks will play a major role in the way companies operate in the future. CEOs in Asia Pacific – one of the world’s fastest-growing regions – are particularly convinced about the value of collaborative networks. At present, networks are mainly used to accomplish ‘soft’ goals such as the advancement of learning and sharing of best practice, rather than to enhance product and service pipelines. Most companies have not yet developed a systematic way of developing and capitalising on networks. They are still opportunistic in their approach. Effective collaboration requires a clear understanding of the kinds of networks that are possible, the business objectives of the different stakeholders and the risks.
2008
11th Annual global CEO Survey
PWC
Regulations: Public & Private
Nearly two-thirds of CEOs – rising to more than three-quarters in some parts of Europe – factor the regulatory framework into their business decisions to ‘a great extent’. Taxation and the labour laws are the two areas of regulation CEOs would most like to see improved. However, there are significant national variations in opinion. More than half of all CEOs support global harmonisation of critical elements of the regulatory regime. Very few CEOs believe that their governments are reducing the regulatory burden or creating a business-friendly environment. A study with the World Bank concludes that there is a win-win on both sides, if government simplifies tax systems, eases the compliance cost on businesses and reduces tax rates.
2008
11th Annual global CEO Survey
PWC