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.
In a major new study released by KPMG International, the 2015 KPMG CEO Outlook Study of 1,278 CEOs, 66 percent of business leaders in Asia Pacific are more confident than they were last year about growth and the global economy in the next three years.
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.
“The overall message we’ve gotten from CEOs around the globe, is that they are positive about their prospects over the next three years, and importantly that they are looking to hire more people,” says John Veihmeyer, Global Chairman of KPMG International.
“There is a more positive change in confidence versus the prior year, in Europe and Asia compared to the US, which is in part reflective of the US being in a more advanced stage of the economic recovery.”
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.
Findings show that 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 organisations 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.
“CEOs continue to confront business challenges of unprecedented complexity,” Veihmeyer adds.
“Many CEOs in our study have repeated what I am hearing when I meet with business leaders - that they need to take more calculated risks with their growth strategies.
“They know that they are going to have to have to do things differently, and they are looking hard at their organisations to determine how they can transform to stay relevant and strengthen their competitive positions.”
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 percent indicated an even split between organic and inorganic growth through acquisitions, and 19 percent say it will be through inorganic growth.