Home | Growth | PwC: CEOs worldwide look to the US for growth

PwC: CEOs worldwide look to the US for growth

Font size: Decrease font Enlarge font
PwC:  CEOs worldwide look to the US for growth

America is again the engine of the world economy.

A new global CEO survey by professional services giant PwC indicates that business leaders worldwide are looking to the US for growth.

According the 18th Annual Global CEO Survey, more business leaders rate the US as their most important market for overseas growth ahead of all others, including China’s. This is the first time in five years that the US has held such a position.

With the continuing slowdown in China’s manufacturing sector, the stagnation of the EuroZone, and the faltering of many emerging markets, the US recovery – clearly gaining steam in the last two quarters – is seen as the main driver of global growth.

"US CEOs are even less inclined to view global growth positively."

Speaking from the World Economic Forum in Davos, Switzerland, PwC US Chairman Bob Moritz commented on the survey results.

“We ask a question every year in terms of the degree of confidence people have in the fact that the economy will be projected to grow globally over the next 12 months, and in the case of global CEOs, that actually decreased this year from 44% that were very confident last year that the global economy was going to grow, down to 37% this year – not a surprise when you think about the different issues that are potentially affecting the global economy - as you look at the issues in Russia, as you look at the social unrest issues in Europe, as you look at some of the terrorist issues that are happening in the Middle East and/or Europe now as well, as you look at the slowing growth rates coming out of the emerging markets.”

Interestingly, US CEOs are even less inclined to view global growth positively.

“US CEOs are less optimistic about the growth potential of the global economy. 29% were very confident that the global economy would actually improve this coming year, so it gives you a sense at a macro level the mindset of the U.S. CEOs as they think about the opportunities in front of them on a global basis,” Moritz noted.

As for their own companies, it US CEOs are much more optimistic about revenue growth than their global counterparts.

“In the case of global CEOs, [confidence that they can grow their revenues in 2015 is] on balance flat year-over-year. 39% of the global CEOs were very confident they could grow revenues in their own business over the next 12 months. In the case of US CEOs, that number went to 46%, so about 7% above average as you look at it on a global basis, but it is a 10% increase year-over-year. We were at 36% last year,” Mortiz said.

Technology is on everyone’s mind

According to the survey, US CEOs are innovating and accelerating the impact of technology for their customers. CEOs say they are seeing real payoffs from these investments. They expect to take risks to operate within diverse and fluid networks.

In addition, respondents indicated that US CEOs are widening their use of alliances to secure new technology and speed up innovation. They are significantly more willing than peers globally to consider part­nering with competitors or customers. Traditional industry boundaries are blurring, and CEOs expect cross-industry competition to accelerate. Over a fifth (24%) say their business entered or considered entering the tech sector within the past three years.

“What we see happening when you look at and see the CEOs is they are leveraging technology moreso than ever before,” Moritz says, “and that’s across just about all sectors. They’re leveraging technology to interact with consumers, they’re leveraging technology to improve effectiveness and efficiency, they’re leveraging technology to manage their supply chain. They are going digital, and clearly the US individual space is having a rub-off effect when you look at the implications of innovation that comes out of the Apples, the Facebooks, and the Googles of the world. That has transcended into corporate America broadly defined.”

On the other hand, technology is also identified as the main specific business risk for CEOs.  Fully 86% of US CEOs identify cyber security as their main business risk.

“[It’s] not a surprise when you look at the number of cyberattacks that have happened. When you look at what has happened in terms of the attacks that have attacked U.S. companies or US government agencies, it is top of mind for [US] CEOs,” Moritz notes.

Dealmaking will continue apace

The survey also found that, “in the US, transformational deals continue to drive growth in both domestic and cross-border deal activity. Currently, M&A value is at the highest level in recent history, and over a third of US CEOs (44%) plan to enter a new strategic alliance over the next 12 months. Those alliances today are with suppliers and customers. In the future, more CEOs want to extend to alliances with start-ups, competitors, and firms from different industries.

“Most companies are going to have to stretch themselves out of their comfort zone and find partnering opportunities in order to be successful in the next decade,” said Johnson Controls, Inc.’s Chairman, CEO and President Alex A. Molinaroli in the report.

The purpose of this dealmaking has changed from the past, reflecting the new and emerging economy around the globe, and particularly in the US.  According to the report, over a quarter of US CEOs (28%) are seeking deals or partnerships to  get access to new and emerging technologies. Businesses are looking for a lot more from alliances than a sales conduit for existing products and services. They are partnering to accelerate innovation, access technology and new industries.

As Joaquin Duato, Worldwide Chairman, Pharmaceuticals, Johnson & Johnson, puts it in the report, “we are beginning to understand how technology companies and healthcare companies like Johnson & Johnson can collaborate and create value. It’s new, it’s different, and it’s not the same path that we take with life science companies.”

The talent gap…again

In survey after survey of CEOs from all sizes of companies, one constant is the increasing challenge of finding employees with the necessary skill level.

“[US] organizations don't think they have the access to the talent they need to be successful, and that again is higher than other global CEOs' points of view,” Moritz explains. “This goes to the management teams and being able to manage through the uncertainties, risks and opportunities, and it goes to the entry-level employees, into the advertising agency that doesn't have enough visual skill sets, into the engineering organizations or logistics organizations that doesn't have access to engineers, and are worried about the immigration laws to get that talent into the country. It is also, as I said earlier, in the case of cyber, do we have the right technologists to keep pace with the increasing risks that are out there?”

The full report can be found here.

Join PRESIDENT&CEO on LinkedIn

Subscribe to comments feed Comments (0 posted)

total: | displaying:

Post your comment

  • Bold
  • Italic
  • Underline
  • Quote

Please enter the code you see in the image: