Ingredients for Economic Growth Begin to Emerge
Organisations across the globe have identified some of the key drivers they believe will stimulate economic performance, according to data collated by KPMG. The findings, revealed today, highlight the actions businesses need to take to drive growth, and outline the external factors – regarded as being beyond organisations’ control – which many executives also expect to stimulate economic recovery.
Given the retrenchment that many organisations have been focused on in recent years, a significant proportion argue that expansion into emerging markets (52 per cent) and engaging in M&A or divestiture activities (47 per cent) is appropriate over the next 12 months. The results, based on discussions between KPMG and over 300 executives across Europe, Asia and North America, also show that almost half (48 percent) of those questioned believe investment in ‘new and improved’ technology is critical initiative to aid recovery.
Bill Thomas, Partner in KPMG’s Advisory Practice says: “Despite the seemingly relentless flow of negative economic news, it is encouraging to witness executives planting seeds of thought with the potential to grow into green shoots of recovery. Yet it remains important to balance a desire for investment with the need to optimise costs, because so much uncertainty has taken its toll on the resources at organisations’ disposal after three years of cost cutting.”
Asked to identify which factors will influence economic growth, respondents focused on a mixture of activities – some of which they have direct influence over and others driven by macro political-economic decisions:
top answers included the implementation of innovative management practices (50 percent), development of strong global governance policies and procedures (45 percent) and employing alternative business models to better serve customers (43 per cent)
just 13 percent of those asked believe that restrictive government trade policies will harm economic recovery and only 1 in 4 (24 percent) claim that regulatory policies or hostile business environments will adversely affect opportunities for business.
Bill Thomas continues: “Respondents are suggesting that the problem of dysfunctional and fragmented operating models is a very real issue, just as much as a lack of ‘rules of engagement’. These are not easy problems to overcome but by recognising them organisations are one step closer to identifying and acting on potential solutions. It’s the strongest indication yet that business is thirsty for change.”
At 59 percent respondents in North America are more accepting that customer relationships will be improved if cloud technology, business intelligence software and a more sophisticated approach to social media is adopted. This figure falls to 55 percent in Asia and drops to just 38 percent across Europe.
It is also notable that just 2 percent of organisations plan to invest and expand their operations in domestic and Western markets – a figure that rises to 4 per cent in America and 7 percent in Asia. More intend to improve their global service delivery chains, with Europe leading this drive (39 percent) compared to 30 percent in America and just 14 percent amongst organisations based in Asia.
However, more organisations in Asia (31 per cent) also intend to shift their back office operations off-shore, compared to their European (25 percent) and North American counterparts (23 percent).
Bill Thomas concludes: “There is clearly some optimism beginning to emerge in businesses around the globe, and whilst there is a general agreement around the core themes that will aid recovery it will be intriguing to see how these play out as the global economy develops during the next 12 months.”