Global CEOs confident about three-year growth

KPMG study says almost 80% of chief execs expect to increase hiring over next three years.

NEW YORK — Chief executives of global businesses are confident about growth over the next three years and are confident about the prospects of the global economy, according to a study released by KPMG International.

The 2015 KPMG CEO Outlook Study of 1,278 chief executives in 10 key markets (Australia, China, France, Germany, India, Italy, Japan, Spain, UK and US) shows 69% in Europe, 66% in Asia Pacific and 52% in the US are more confident than they were last year about growth and the global economy in the next three years.

Seventy per cent of the Europeans and 68% of CEOs from the Asia Pacific region said they’re more confident than a year ago.

In the US, where the recovery is well underway, 19% are more confident than a year ago with another 46% expressing the same level of confidence about their prospects for growth.

Globally, chief executives said they’re set to hire, with 78% expecting to do so through mid-2018.

The study shows companies are grappling with escalating competitive pressures: 86% are concerned about the loyalty of their customers; 74% are worried about new market entrants; 72% are worried about keeping pace with new technologies; 68% are concerned about their competitors’ ability to take business away from them; and 66% are concerned about the relevance of their product or service.

Forty-four per cent of the respondents said they’re only “somewhat comfortable” with their current business models, and 5% are “uncomfortable.” Twenty-one per cent said their organizations are likely to be transformed into significantly different entities in the next three years.

KPMG notes almost one-third of CEOs say their business is not taking enough risk with their global growth strategy and more than half (56%) said they have not fully implemented a company-wide process for innovation.

Half of the respondents noted additional challenges with how their businesses need to improve the way they manages data and analytics and how they need to do more to prepare for a cyber-security event.

Globally, executives have their sights set on developing new growth strategies, having a stronger client focus, expanding geographically, reducing their cost structures, enhancing speed to market and fostering innovation.

When asked where their primary focus would be over the next three years, 94% of US CEOs cited growth, while their Asian and European counterparts identified operational efficiency.

The top three issues for respondents were global economic growth, followed closely by the regulatory environment, and ‘disruptive technology.

CEOs identified expansion outside their home countries as the number one area. US leaders are focused on Europe, especially Central Europe, followed by South America and China.

Chief executives in China, Japan, the UK, Germany, Spain and France, say the US is the region offering the greatest potential for new growth.

Fifty-two per cent of the CEOs say their current growth strategies are built primarily around organic growth, with 42% 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% expect their priority will be organic growth, 22% indicated an even split between organic and inorganic growth through acquisitions, and 19% say it will be through inorganic growth.

Twenty-nine per cent of US company leaders demonstrated a more acquisitive strategy, identifying inorganic growth as a main growth driver.

Click here to access study information.

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