Global CEO Survey: Industrial manufacturing CEOs cautiously optimistic in volatile marketplace
Those most optimistic about the economy still plan to revisit their corporate strategies for the next year. The survey found 71 percent of corporate executives expect to make strategic changes in course due to concerns about prospects for economic growth, customer demand and competitive threats, with 13 percent planning "fundamental alterations."
"Concerns about economic growth are a big driver in corporations planning changes in the way they do business. The survey found 67% of those who are planning strategic changes are taking a potentially slow economy into account. But it's by no means the only factor," the survey concluded. Customer demand and competitive threats also ranked high on the list of reasons to change their strategic game plan.
About 68 percent of CEOs will be "focusing more heavily on innovations" designed to reduce costs. While nearly four-fifths of the executives are somewhat or very confident about revenue growth during the next 12 months, just 18 percent believe the global economy will improve, with 40 percent predicting it will decline.
PWC researchers reported only 22% of the manufacturers intend to make a major change to their capital investment decisions this year, compared to 36% last year. "That doesn't mean they are not ready to invest if the right opportunities arise, though: 35% are planning to complete a cross-border merger or acquisition in the next 12 months," researchers found.
Corporate executives plan to continue to keep a tight rein on costs during the next 12 months with 78 percent implementing cost-reduction initiatives and 70 percent planning to "trim the fat."
"Industrial manufacturing CEOs... are now focusing on the upside rather than the downside. They are refashioning their business models to cope with a world where the risks and opportunities are increasingly interconnected, but the sources of growth are often local," the survey concluded. Challenges in this area include redesigning business strategies to meet local demands, choosing the right employees and having a game plan to defend against risks.
"Market opportunity, natural resources, talent-all these factors matter when companies decide where and how to locate operations. But tax may also be a major issue: 47% of industrial manufacturing CEOs say tax policies are a `significant factor' in their decision-making on cross-border locations," according to the survey.
"Industrial manufacturing CEOs are paying especially close attention to changing tax conditions because of high debts and deficits in developed economies: 37% anticipate they'll change growth strategies as a result... "17% of industrial manufacturing CEOs are `extremely concerned' about the increasing tax burden in countries where they operate."
In the next 12 months CEOs be forced to continue to take worldwide economic conditions into account, which include; weighing China's impact on the global economy, whether to design products specifically for foreign markets and how to handle the European debt crisis.
"Many of the industrial manufacturing CEOs surveyed are already feeling the impact of Europe's sovereign debt crisis. More than half say their companies have been directly affected. Strikingly, almost as many 47 percent are changing how they do business as a result," the survey reported.
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