Global economic recovery has been fragile so far. Even as developed economies like the US are showing signs of improved performance, many emerging markets like Brazil and India have begun to underperform. Many say the worst is over but some fear that a lot will depend on how the US Federal Reserve handles quantitative easing.
In this situation, what are the main concerns of CEOs across the world ? What is their reading of the economy? How are they preparing their companies? What are the challenges they think they will face in the next five years? A survey of 1,344 CEOs across 68 countries by PwC and released at the World Economic Forum in Davos gives all the answers.
First the good news. CEOs across the world are more optimistic about economic recovery than they were last year. About 44 per cent of those surveyed said the economy would improve in the next 12 months.
Last year, only 18 per cent of the CEOs were confident of a recovery. Also only seven per cent of the CEOs this year said things could get worse on the economic front. This is much lower than the 28 per cent who felt this way last year. In fact, 39 per cent of CEOs say they expect to see revenue growth in their respective companies in 2014.
This optimism is already bringing about a change in their strategies. CEOs are shifting from survival to growth mode but with some caution. A third of the CEOs plan to focus on opportunities in countries where they do business. Only 14 per cent want to explore new geographies.
They also see the US, UK and Germany as more promising than some of the BRIC countries . They maintain that China is growing robustly but Brazil is suffering the effects of high debt and India is lagging due to its inability to open its market. (The Business Today - C fore Business Confidence Survey released earlier this month showed a marginal increase in confidence among Indian CEOs - see businesstoday.in/bci-jan2014)
The bad news for BRIC nations does not end there. CEOs are increasingly open to exploring non-BRIC countries such as Indonesia, Mexico, Turkey, Thailand and Vietnam to fuel future growth, the survey shows.
No doubt, the CEOs voiced some apprehensions as well. As many as 47 per cent of them said they are worried about the strength of the recovery in developed markets and an almost equal number, 46 per cent, worried about the slowdown in high growth emerging markets.
So how are the CEOs preparing for the future? They have identified three trends that will have huge impact on their business over the next five years. About 81 per cent said technological advances would matter greatly, followed by demographic changes (60 per cent) and shift in economic power (59 per cent). Not surprising that 35 per cent of them said their focus would be on product and service innovation. Close to 30 per cent of the CEOs polled said they will focus on increasing their business share in existing market, 14 per cent said they will foray into newer market and 10 per cent preferred mergers and acquisition.