In a major new study released by KPMG International, which tracks insights on the coming three years, chief executives of global businesses said they are confident about the ability of their companies to grow over the next three years and are expressing confidence about the prospects for the global economy.
According to the 2015 KPMG CEO Outlook Study of 1.278 CEOs, 69 percent of CEOs in Europe, 66 percent in Asia Pacific and 52 percent in the US are more confident than they were last year about growth and the global economy in the next three years. In assessing their own company’s growth prospects, 70 percent of European CEOs and 68 percent of Asia Pacific CEOs indicated they are more confident than a year ago. In the US, where the recovery is well underway, 19 percent are more confident than a year ago with another 46 percent expressing the same level of confidence about their prospects for growth. Most importantly, CEOs globally are set to hire, with 78 percent of respondents indicating they are expecting to be in hiring mode through mid-2018.
According to the KPMG study, CEOs are grappling with escalating competitive pressures. In order of importance: 86 percent are concerned about the loyalty of their customers; 74 percent are worried about new market entrants; 72 percent are worried about keeping pace with new technologies; 68 percent are concerned about their competitors’ ability to take business away from them; and 66 percent are concerned about the relevance of their product or service in the next three years.
Status Quo: Perhaps the Riskiest Position for any Organization
Importantly, 44 percent of the CEOs indicated that they are only ‘somewhat comfortable’ with their current business model, with five percent expressing that they are ‘uncomfortable.’ In the study, 29 percent of leaders said their organizations are likely to be transformed into significantly different entities in the next three years.
While the results indicate that CEOs are acutely aware of the need to transform their businesses in order to survive and prosper, almost one-third of CEOs say their business is not taking enough risk with their global growth strategy and more than half (56 percent) said they have not fully implemented a company-wide process for innovation.
Half of respondents noted additional challenges with how their business needs to improve the way it manages data and analytics and how they need to do more to prepare for a cyber-security event.
Strategic Priorities over the Next Three Years
Globally, executives have their sights set on the following, in order of importance: developing new growth strategies, having a stronger client focus, expanding geographically, reducing their cost structures, enhancing speed to market, and fostering innovation. When asked whether their primary focus would be on growth or operational efficiency over the next three years, 94 percent of US CEOs cited growth, while their Asian and European counterparts said they were focused on operational efficiency.
In terms of issues having the greatest impact on their company’s prospects and performance, the top three issues identified by CEOs were ‘global economic growth,’ followed closely by the ‘regulatory environment,’ and ‘disruptive technology.’
Today, 52 percent of the CEOs say their current growth strategies are built primarily around organic growth, with 42 percent saying it is a combination of organic and inorganic growth through acquisitions and six percent saying it’s primarily inorganic.
When asked to consider their anticipated growth strategies over the next three years, 59 percent of CEOs expect their priority will be organic growth, 22 percentindicated an even split between organic and inorganic growth through acquisitions, and 19 percent say it will be through inorganic growth. Twenty-nine percent of US CEOs demonstrated a more acquisitive strategy, identifying inorganic growth as a main growth driver.
To view the infographic, animated video and for additional information about the CEO Outlook Study, please visit kpmg.com/CEOoutlook.
In Cyprus fiscal indicators are improving and it is now expected that there willbe an economic
growth in 2015 of around 0,5%. In the last three years there were significant changes in Cyprus, especially after the decision of Eurogroup in March 2013. CEOs had to take decisions and operate in an environment full of uncertainties and difficulties, especially with the imposition of capital controls. In the light of extensive borrowing, businesses seek ways to deleverage and restructure loan facilities. This, together with the lack of financing, makes entrepreneurship difficult. However, the economic environment is improving and the participation of Cyprus in the quantitative easing programme of the European Central Bank and the European Investment Plan will enhance entrepreneurship.
About the 2015 KPMG CEO Outlook Study
The survey targeted 1.278 CEOs in 10 key markets (Australia, China, France, Germany, India, Italy, Japan, Spain, UK and US) and nine key industry sectors (automotive, banking, insurance, investment management, healthcare, manufacturing, technology, retail/consumer markets and energy/utilities). A quarter of the respondents have over US$10B in annual revenue, with no responses from companies under US$500M.