Executive Briefings

Business Execs Expect More Tough Times, But Aren't Taking Tough Actions

Too few companies have taken or plan to take the long-term, defensive measures necessary to survive and thrive in the wake of the Great Recession. Although businesses around the world are entering 2010 with an appropriately sober view of the business climate, only 28 percent say that reducing labor costs is a priority for 2010, only 26 percent have made managing cash flow a priority, only 16 percent say that balance sheets and debt restructuring are a priority, and only 13 percent have put exiting non-core businesses on the list of priorities.

These findings are drawn from a Boston Consulting Group (BCG) survey of 434 executives at companies with more than $1bn in annual revenue in seven countries. The survey was fielded in conjunction with the forthcoming book Accelerating Out of the Great Recession: Winning in a Slow-Growth Economy (McGraw-Hill, January 2010) by BCG senior partners David Rhodes and Daniel Stelter.

In the face of economic pressure, executives have focused on short-term defensive actions, the authors say. Between 50 percent and 70 percent of surveyed executives have made the easier, more obvious moves such as increasing their focus on key customers; reducing administrative and travel spending; renegotiating supplier contracts; and reducing inventory levels, marketing budgets, and wages. But far fewer have made, or plan to make, more wrenching, longer-term moves. Only 44 percent plan selective exits from product lines, only 39 percent plan selective exits from customer segments, and only 43 percent have taken or plan to take actions that involve divesting businesses and exiting sales channels.

"The slow-growth world that we're in, and should expect to be in for some time, fundamentally changes the nature of competition. Life is going to be harder," says Rhodes. "From now on, every day should be treated as if it were a World Series game -- because there will be no more regular season games."

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Too few companies have taken or plan to take the long-term, defensive measures necessary to survive and thrive in the wake of the Great Recession. Although businesses around the world are entering 2010 with an appropriately sober view of the business climate, only 28 percent say that reducing labor costs is a priority for 2010, only 26 percent have made managing cash flow a priority, only 16 percent say that balance sheets and debt restructuring are a priority, and only 13 percent have put exiting non-core businesses on the list of priorities.

These findings are drawn from a Boston Consulting Group (BCG) survey of 434 executives at companies with more than $1bn in annual revenue in seven countries. The survey was fielded in conjunction with the forthcoming book Accelerating Out of the Great Recession: Winning in a Slow-Growth Economy (McGraw-Hill, January 2010) by BCG senior partners David Rhodes and Daniel Stelter.

In the face of economic pressure, executives have focused on short-term defensive actions, the authors say. Between 50 percent and 70 percent of surveyed executives have made the easier, more obvious moves such as increasing their focus on key customers; reducing administrative and travel spending; renegotiating supplier contracts; and reducing inventory levels, marketing budgets, and wages. But far fewer have made, or plan to make, more wrenching, longer-term moves. Only 44 percent plan selective exits from product lines, only 39 percent plan selective exits from customer segments, and only 43 percent have taken or plan to take actions that involve divesting businesses and exiting sales channels.

"The slow-growth world that we're in, and should expect to be in for some time, fundamentally changes the nature of competition. Life is going to be harder," says Rhodes. "From now on, every day should be treated as if it were a World Series game -- because there will be no more regular season games."

Read Full Article