Tools for Economic Recovery

Whilst economists have signaled the official ending of the recession, there is little doubt that challenging economic conditions persist. Despite this backdrop, many companies have survived and some have even thrived. The question is how?

Eversheds embarked on a study of more than 1,000 senior executives across the world to assess their levels of confidence and the measures they were taking to stabilize and even grow their businesses.

Executive Summary

Chinese confidence soars, while USA mood slumps

One in four senior executives across the globe is less confident now than at the beginning of the year. However, the mood varies greatly from country to country. The boom in economic confidence in China continues, with 83% of senior executives more confident now than at the beginning of the year, compared to just 28% in the USA. Manufacturing is among the most confident of sectors, along with chemicals/pharmaceuticals and transport and distribution.

Businesses have combined cost cutting with customer focus

Across the globe, it is evident that businesses have put in place a combination of measures to combat the difficult economic climate. Most prominently, these included proactive business development activity. In fact, an increased focus on customer relationship management (CRM) was the most popular tool that was deployed across the globe, closely followed by seeking new market segments.

However, as well as positive proactive measures, there have been some difficult decisions to make during the last 18 months. This has been a period of tough decisions. With 46% of businesses cutting discretionary spending, 38% freezing or reducing pay and 34% making redundancies.

There were notable differences in the approach taken by different parts of the world to combat the difficult economic climate. Interestingly, positive and proactive measures, such as increased CRM and targeting new clients, were the most prevalent tactics in the majority of areas.

Russia was the most proactive area in terms of taking positive steps to come out of the recession. In contrast, the UK, France, and Ireland were most active in terms of cost-cutting. Job losses have been most prolific in the UK, France, Spain and the UAE.

Best Factoring Company Get the Cash you need Today

Tools for Economic Recovery

Apply Now

Businesses are on the acquisition trail

Looking ahead, the focus shifts slightly and businesses look set to concentrate on corporate strategy much more than they have during the last 18 months. One in five senior executives (22%) said their business would be looking at potential acquisitions during the next year. The energy and natural resources sector are most focused on acquisitions in the year ahead, closely followed by food, drink and tobacco companies.

Positive people outlook

There appears to be a renewed appetite to increase staff numbers – only 15% said they had increased staff during the last 18 months, but this rose to 29% when asked about plans for the year ahead. Chemicals/pharmaceuticals companies and those in the healthcare sector are most focused on recruitment. This correlates with an overall declining trend in redundancies, with just 19% planning redundancies in the year ahead – down from 34% in the last 18 months.

Confidence levels

Senior executives were asked how confident they felt at the mid-point of 2010 compared to the beginning of 2010.

The findings show that confidence has grown most in:

  • China (77% more say they were more positive than less positive)
  • Russia (50%)
  • Germany (34%)
  • Italy (20%)

Confidence has dipped most significantly in:

  • Spain (12% more say they were less positive than more positive)
  • USA (8%)

Looking at different market sectors, those in manufacturing are among the most confident, along with:

  • Transport and distribution
  • Chemicals/pharmaceuticals
  • Energy and natural resources
  • Food, drink, and tobacco

The charts show the difference between positive and negative responses to the question: “Do you feel more confident in terms of your organization’s economic outlook now than you did at the beginning of 2010?”

The need for more than green shoots

Businesses are looking for more than positive economic data to feel confident. They are looking for concrete proof such as signs of growth or evidence that their business has picked up.

  • Evidence of growth was the biggest factor affecting confidence levels among senior executives.
  • Of respondents in China 34% said they were more confident because of positive signs of growth.
  • Conversely 30% of respondents in Spain and Germany said they were less confident because of the lack of evidence of growth.
  • Employment prospects had a surprisingly low impact on confidence levels.
  • The exception was Italy, where 41% of those attributed their lower level of confidence to poor employment prospects.
  • Business activity levels were a strong barometer of economic confidence.
  • In each country, at least one fifth of respondents blamed low levels of activity as the reason for their pessimistic mood.
  • Conversely, 42% of respondents in the UK and 48% in Ireland said that good levels of business activity made them more optimistic.
  • Economic data, either positive or negative, did not have such an impact on confidence as other factors.
  • However, a significant proportion of respondents in France (30%), Russia (29%) and the UK (23%) said disappointing data was behind their lack of confidence.
  • Governmental leadership did not have a significant impact on confidence levels on the whole.
  • However, one in five USA respondents (21%) and almost a third of German respondents (29%) identified weak governmental leadership as a key reason for their pessimism.
  • In contrast, almost one in five UK respondents said they were more confident as a result of strong governmental leadership.

Tools for recovery

Senior executives were asked about the business tools they had utilized during the last 18 months and the measures they plan to take in the year ahead in the following areas:

  • driving demand;
  • changing supply;
  • cost reduction;
  • investment;
  • changing corporate strategy; and
  • international expansion.

Best Factoring Company Get the Cash you need Today

Tools for Economic Recovery

Apply Now

Across the globe, driving demand has been a key area of focus and looks set to continue during the next 12 months, with businesses specifically focused on seeking new markets and increased CRM activity.

Cost-cutting plans seem to be slowing down, although they have been heavily deployed in many areas during the last 12 months.

Instead, there seems to be a stronger appetite to invest in a number of areas:

  • increased marketing activity;
  • increasing staff numbers; and
  • increased research and development.

From a closer analysis of the results, some key trends emerged around each of the tools:

Driving demand
  • There has been a big focus in this area across all countries, with China, Spain, and France leading the way in searching for new market segments.
  • Increased CRM activity has been particularly prolific in the UAE, the UK, and France.
Cost reduction
  • This has been another significant area of focus for businesses with nearly half (46%) making cuts to discretionary spending and a third (34%) making redundancies during the last 18 months.
  • However, the current outlook is more positive, with less appetite to cut costs in the year ahead.
Changing supply
  • From changing the supply of products and services to outsourcing staff and reorganizing teams, this has been an active area.
  • Of senior business figures, 21% have outsourced staff or services in the last 18 months and this jumps to 30% in the year ahead.
Investment
  • The biggest areas of investment in the last 18 months have been in increasing marketing spend and increasing spend on technology. This looks set to continue with nearly 40% of respondents planning to spend in these areas in the next 12 months.
  • There is a much greater appetite to invest in the next 12 months, with 29% of respondents looking to increase staff numbers, as opposed to just 15% who have deployed this over the past 18 months.
Corporate strategy
  • There is a much stronger desire for deal making in the year ahead, with one in five businesses (22%) on the acquisition trail in the year ahead – up from just 13% in the last 12 months.
  • Russia, Italy, China and Spain were the most focused on acquisitions in the year ahead.
International expansion
  • China is leading the way in seeking out new international markets. Of respondents, 58% said they had explored international opportunities into an average of more than two countries in the last 18 months, while 76% plan to do so in the year ahead.
  • Only 16% of companies in the USA said they had sought out international markets in the last 18 months, and just 18% plan to do so in the year ahead.

© Business Money Ltd 2010

Achieve economic recovery for your business today!

Apply Securely, call 888-400-5931 ext 1 or email us.

Money When Your Business Needs It Most!™

  • Get Cash Today

    Best Factoring CompanyGet the Cash You Need Today

    Just fill out this quick & easy form!

  • This field is for validation purposes and should be left unchanged.
Get Cash Today
  • Quick Contact Form
  • This field is for validation purposes and should be left unchanged.

Back to Top

Best Factoring Company

Get Started Immediately