Press Release – PwC
Survey finds 40% of New Zealand CEOs very confident about revenue growth, despite an expected challenging global economy this yearSurvey finds 40% of New Zealand CEOs very confident about revenue growth, despite an expected challenging global economy this year
Findings from PwC’s New Zealand CEO Survey, released today, show New Zealand CEOs are less positive about the outlook for the global economy than they were last year, but remain optimistic about their own business growth.
The report shows only 23 per cent believe the global economy will improve this year which compares to last year’s more confident 47 per cent. More than half of New Zealand CEOs believe the global economy will stay about the same this year.
Despite the more challenging outlook for the global economy, 40 per cent of New Zealand respondents are very confident about their company’s growth prospects in the coming year and an additional 51 per cent are somewhat confident. PwC New Zealand Chief Executive Officer Bruce Hassall says that the outlook for New Zealand may prove to be more resilient than many currently believe.
“Given the wide-ranging uncertainties CEOs are facing – cyber security, over-regulation, geopolitical stability – it’s easy to see why they’re divided about whether there are more threats or opportunities today. But it’s not all doom and gloom. Kiwi organisations are remaining optimistic about their own growth prospects despite the possibility of a stagnant or declining global economy.”
Fifty-five per cent of New Zealand CEOs say there are more opportunities for growth than three years ago, and 66 per cent say there are more threats – or depending on your mindset, a business environment plagued by threats but ripe with opportunity! To equip themselves for this challenge, chief executives are focusing on three core capabilities: addressing greater stakeholder expectations; harnessing talent, innovation and technology; and new metrics for success beyond the bottom line, Mr Hassall says.
“CEOs everywhere are understanding that despite the tremendous challenges they face today, they need to build a business that’s ready for the more complex global marketplace of the future.”
Strategies for growth
CEOs say they will undertake a number of restructuring activities to strengthen their companies this year. Overall, 64 per cent of New Zealand CEOs say they will cut costs (compared with 68% globally), 57 per cent will form strategic alliances or joint ventures (49% globally) and 21 per cent will outsource a business process or function (28% globally).
Internationally, global respondents again ranked the US as their most important market for growth over the next 12 months. Overall, 39% 0f CEOs say the US is among their top-three overseas growth markets, compared with 34% for China, 19% for Germany, 11% for the UK and 8% for Brazil.
“It’s become more difficult to pin down where growth will come from across the globe,” Mr Hassall says. “China’s economic rebalancing and the fragility of its debt-laden local government and private sector continues to concern investors and rattle entire industries. However, as China slows down overall, the composition of the growth is shifting from an infrastructure-driven economy to consumer spending of the middle rising class, which could bode well for New Zealand’s agrisector.”
What worries CEOs most?
Availability of key skills tops the list of concerns named by 85 per cent of New Zealand CEOs, more than the global level (74%), and slightly up from last year’s New Zealand figure (84%).
The speed of technological change has increased slightly to 70 per cent for New Zealand respondents from 68 per cent last year, slightly higher than 61 per cent of CEOs globally. However, it has dropped from the second-highest concern last year to now rank fifth in New Zealand.
Concern about cyber threats and the lack of data security has seen one of the biggest jumps with 77 per cent of New Zealand CEOs viewing it as a top threat to business growth, compared to 66 per cent last year. It remains steady at 61 per cent for CEOs globally.
Over-regulation was noted by 74 per cent of New Zealand respondents, and 79 per cent of CEOs worldwide; the fourth year in a row that it has risen.
Other top concerns cited by New Zealand’s CEOs include exchange rate volatility (74%), and geopolitical uncertainty (54%) although less than global peers (74%).
Regional trade
New Zealand CEOs are once again looking to Australia (70%), China (60%) and the US (47%) as the top three markets in the coming year.
The recent Trans-Pacific Partnership (TPP) agreement marks a growing movement towards regional trading blocs. This is highlighted by only 23 per cent of New Zealand CEOs saying the world is moving towards a single global marketplace (as opposed to regional trading blocs at 77%).
New Zealand CEOs also cited geopolitical uncertainty at 51 per cent (although less than global peers at 74%) and new entrants to markets 68 per cent (higher than 57% globally). For CEOs worldwide, other notable concerns include fiscal deficits and debt burdens (72%), increasing taxes (70%), as well as social instability (60%) and shifting consumer patterns (60%).
Advances in technology
The majority of New Zealand CEOs (85%) expect technological advances to be the most significant global trend to influence stakeholder expectations within their sector over the next five years.
New Zealand CEOs are also finding more ways to use technology to engage with their stakeholders, with data and analytics (72%) and social media communications and engagement (70%) rating the highest in terms of connecting technologies.
While 70 per cent of New Zealand respondents still view the speed of technology change as a business threat, cyber security is increasingly concerning with 77 per cent citing it as a threat.
“Unfortunately, there is no magic bullet for cyber threats. It’s a journey towards a culture of security, not a solution in and of itself. It is a path that starts with the right mix of technologies, processes and people skills,” says Mr Hassall.
New metrics for success
Within the context of wider stakeholders, New Zealand CEOs have identified a number of areas they say businesses should be doing more to measure impact and value, including key risks (40%) and environmental impact (40%). They also say businesses need to do a better job at communicating organisation purpose and values (60%) and business strategy (57%).
Thirty-six per cent of New Zealand respondents say businesses should be doing more to measure the impact and value of innovation. Despite this only 55 per cent of New Zealand CEOs say they are making changes to improve societal value of research and development and innovation in response to changing stakeholder expectations (compared to 76% globally).
“A large part of the challenge lies in the adoption and use of technology. And it’s not simply about going digital and moving everything online, but continuously generating, collecting, analysing and reporting information, with coverage that’s both deep and meaningful,” Mr Hassall says.
Nonfinancial indicators of success are being increasingly recognised with 40 per cent of New Zealand CEOs making major changes (and 55% making some change) to how they manage brand, marketing and communications.
ENDS
Content Sourced from scoop.co.nz
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