Global business leaders shifting their focus toward growth for 2012 and beyond, cite increasing revenue as their top priority, finds survey or more than 500 senior executives by AlixPartners

NEW YORK , January 19, 2012 () – Global business leaders are shifting their focus away from survival towards planning for growth in 2012 and beyond, citing increasing revenue as their top priority, above cost-cutting. That’s according to a survey of more than 500 senior executives released today by AlixPartners LLP, the global business-advisory firm, in collaboration with the Economist Intelligence Unit (EIU).

However, even though 69% of those surveyed say their companies are sitting on as much or more cash today as three years ago, 62% see a sovereign-debt default in the euro zone as likely or very likely this year and an even higher percentage, 63%, think the same way regarding a double-dip recession in the global economy. Meanwhile, when asked what governments could do to help business, 46% said increase investment incentives, 38% said cut taxes and 35% said reduce regulatory burdens – the first two often difficult to achieve in an environment of austerity.

As a result, says the survey, companies see themselves proceeding cautiously in the next 12 to 36 months, on almost all fronts.

“In early 2009 AlixPartners was among the first to predict that economies in the West would not bounce back following the so-called Great Recession as they had following past recessions – that the ‘new normal’ would be characterized by bruised consumer confidence, lower demand levels and, consequently, lower levels of output,” said Fred Crawford, chief executive officer of AlixPartners. “Unfortunately, the new normal is upon us, as a fairly high level of geopolitical uncertainty combines with what some would say is a lack of effective economic and political leadership around the world, yielding an economy very much in limbo. It’s against this backdrop that companies are forced to take market share to grow, searching for what might be called ‘stingy growth’ – growth characterized by an unwillingness to spend any more than is absolutely necessary.”

Said John Hoffecker, managing director at AlixPartners and co-lead of the firm’s Enterprise Improvement unit: “Given the externalities of today’s world, stingy growth is really just another name for smart growth. After years of cut-backs, companies today know they need to grow, in part so as not to be left behind by their competitors. But they also know that in a world of limited growth, capturing share requires a delicate balance of aggressiveness and prudence, of old-fashioned optimism tempered with the latest tools and insights into fact-based decision-making.”

Added Patrick “Pat” Byrne, also an AlixPartners managing director and co-lead of the firm’s Enterprise Improvement unit: “We live today in a world of limits, where as a result competitors are nothing short of ruthless in fighting for either market share or what growth that exists. Winners in this world know they can’t shrink their way to growth, but they also know they can’t simply scrap and scramble as they might have in past periods. Success today means taking a holistic approach to all aspects of revenues and costs, from product development to sourcing to distribution and sales.”

The survey revealed several key priority areas for companies looking for growth: technology investment; mergers and acquisitions (M&A); entering new markets, notably new markets in the Asia-Pacific region; and, eventually, increased capital expenditures.

Technology investment

When it comes to growth, technology, including information technology (IT), is top-of-mind, with 34% of executives citing technology as an essential competitive tool, and 38% planning to invest in new IT in the next 12 months. At the same time, however, only slightly more than half of those surveyed (54%) believe that their IT departments play any role at all in shaping their company’s competitive advantages. Of those who do, only 14% rate the job the IT department is doing as excellent.

Steve Deedy, AlixPartners managing director and co-lead of the firm’s Information Management Services unit, said: “Despite companies’ enthusiasm for planned spending on IT and other technologies in 2012, they might be better served looking at what their technologies are already delivering – or, in many cases, not delivering – and demanding more ROI on the infrastructure they already have. The principles of stingy growth shouldn’t be abandoned at the IT department’s door, and especially not just in the name of the ‘bright-shiny-objects disease’ that often pervades the world of tech. At the same time, companies that feel they have already ‘done everything’ to improve performance often find that technology tools such as data mining and analytics can unlock growth potential that they didn’t even know was there.”

Expansion into new markets

Entering new markets was among the top-five priorities for the executives both in the next 12 months and over the next three years, even topping creating new products and services. Perhaps not surprisingly, over 50% cited Asia-Pacific as the most important source of economic growth over both the next 12 months and the next three years. By the same token, 52% said Asia-Pacific is the region where their organization’s future investments are most likely to take place.

If Asia-Pacific’s growth, particularly China’s, fails to match that additional capacity input, the results could spell big trouble not just for the East but for the West. “The days of making easy money by expanding into China are over,” said Ivo Naumann, AlixPartners managing director and head of the firm’s office in Shanghai. “Rising labor and other costs in recent years mean that China has, according to separate AlixPartners research, in many cases fallen behind Mexico and other nations as the low-cost country of choice for production, while sluggish end-markets in the West for China’s exports are showing signs of being a drag on China’s production-based domestic economy. China still is, of course, a huge force to be reckoned with on the world economic stage, but a lot has changed in a very short time.”

Mergers & Acquisitions

Though corporations – and private-equity firms – are sitting on large piles of cash, deal activity has not reached levels many had anticipated. Despite ongoing volatility, the survey found that many executives see acquisitions as a key growth tool in the next year. When asked about how they might utilize their cash for their domestic operations, 29% said to make acquisitions (while 26% said the same regarding their overseas operations). When asked where their acquisitions would take place in the next 12 months, most (32%) said Asia-Pacific, followed by North America (27%), Europe (23%), Latin America (16%) and the Middle East (10%).

“The M&A picture could change dramatically in the near future, particularly if the global economy weakens due to a big sovereign default in the euro zone or some other exogenous event,” said Jay Marshall, AlixPartners managing director and head of the firm’s strategy and business development activities, including its outreach to private equity. “In this kind of uncertain environment, operational due diligence and risk management are key considerations for any transaction, particularly in international expansion.”

Increased capital expenditures

Cutting capital expenditures was rated as the top strategy for improving corporate performance over the last three years -- topping even financial restructuring or outsourcing. Despite lingering caution, executives are now looking at ramping up CapEx, with 36% saying they plan to use some of their cash to invest in new equipment and facilities for domestic operations and 25% saying the same for overseas operations. At the same time, however, only 16% of respondents have firm plans to begin investing in major capital projects in the next 12 months, and 66% who expect to launch major capital projects say they will wait at least a year to make them, underscoring the uncertainty of today’s economic environment.

Looking inside

Though many firms are significantly stronger now than during the recession, having taken great strides to cut costs and refocused their priorities, the survey reveals that the hard work is not yet over. One indication of that: 47% of the executives surveyed said controlling costs continues to be a top priority.

“Although companies have taken great strides in strengthening their bottom lines over the past few years, it’s important that the lessons learned during the recession not be forgotten,” said Crawford. “Strong internal controls and a sound balance sheet are no longer ‘ideals’ to strive for, but rather necessities for operating in today’s marketplace. Particularly with costs starting to creep up in even restructured sectors, companies must remain vigilant on all fronts.”

“Companies must learn how to grow profitably within this new reality,” he continued, “or risk being surpassed by forward-looking companies that are finding innovative ways to create and deliver value and drive growth, while keeping an eye on costs.”

While the survey found commonalities among companies in varying regions, it also revealed many differences, as indicated below:

United States

Forty-five percent of U.S. corporations have more cash than three years ago, and they plan on utilizing their cash position to diversity their products and services (40%), invest in new IT (39%), invest in new equipment or facilities (38%), and expand into new markets (36%).

However, the survey found that U.S. companies are more reticent about undertaking major capital projects in the near-term. Only 3% of U.S. companies plan on undertaking a major investment in the next 12 months, compared to 16% of companies globally.

U.S. companies are generally more optimistic about their domestic market than others. The survey found that 40% of U.S.-based executives see North America as the most important source of economic growth in the next 12 months as compared to 14% of respondents globally. Similarly 35% of U.S. companies expect North America to lead economic growth in the next three years as compared to 13% of respondents globally.


Europeans surveyed expect the euro-zone crisis to continue to have a significant impact on the continent’s business environment for some years to come, although views among experts are divided about how deep that impact might be. The severity of the crisis is illustrated by 59% of European survey participants saying that over the course of the next 12 months a sovereign default in the euro zone is a likely or very likely scenario and 62% saying that a double-dip recession is likely or very likely. Forty-three percent also cited consumer confidence as the most significant factor holding back their three-year investment plans.

In the near term, 48% of Europeans said that steps to reduce labor costs will be taken at their respective organizations over the next 12 months. When asked the same question but over a three-year horizon, the figure stands at 35%. But it is not just labor costs that are expected to come down -- efficiencies are also being sought out by European companies for their facilities. Forty-three percent of European respondents expect their organizations to consolidate facilities over the next 12 months, with 37% forecasting consolidation to go on for the next three years.

However, streamlining costs to create a leaner organization is only half the picture. Over half of those surveyed in Europe (54%) expect to begin investing in major capital projects within the next three years. Investment in technology was ranked as a priority by 59% of respondents, and 64% said that they would be focusing on Web-based software and services.

Said Stefano Aversa, co-president of AlixPartners and head of the firm’s operations in the EMEA region: “‘Euro pessimism’ still prevails among Europe’s top executives, who are focused on improving the productivity of their core businesses while they look at new export markets as their main source of growth, particularly with a weaker euro. In today’s highly uncertain macroeconomic environment, European business leaders are preparing to execute contingency turnaround plans and tending to hold onto their cash, while being surgical with capital investments. Those that have international exposure, particularly to Asia-Pacific, will find themselves in a stronger position in 2012 than those who are focused only on Europe. Regional players will need to concentrate on productivity and efficiency gains rather than top-line growth.”


Respondents in the Asia-Pacific region mirror their counterparts in Europe, expecting fears of a euro-zone crisis to continue to have a significant impact on the region’s business environment. Sixty percent of survey participants from Asia-Pacific say that over the course of the next 12 months a sovereign default in the euro zone is a likely or very likely scenario. Geopolitics is also much on their minds, as 39% see these concerns being the biggest threat to their five-year growth plan.

While respondents generally are optimistic about their own regions, this is especially true for Asia-Pacific respondents, as 78% see their own region as the best place to do business in the next year. That compares with 40% of North American respondents assessing their own region’s prospects best and only 12% of Europeans.

While 41% of respondents in Asia-Pacific have cut labor costs in the past three years and 30% have cut capital spending, these trends look to change in the next year. A quarter of the respondents in the region see increases in labor costs in the next year and 38% see capital expenditures rising.

Middle East

The Middle East respondents reflected the most gloom about the immediate future, as 70% believe that it is likely or very likely that there will be a double-dip recession in the global economy within the next year. That compares to about 63% when all survey responses are counted.

Middle Easterners are also have reservations about the outlook for their own region, as 64% expect to see continued unrest in the Middle East political situation in the coming year. Rising food and commodity prices will also be a concern, as 44% of respondents in the region see persistently high prices leading to widespread social unrest.

Companies in the Middle East, as in other areas of the world, have refilled their cash coffers in the past three years, with about 55% of those surveyed saying their cash positions have at least somewhat improved. However, only 24% of that group said they would be using that cash for domestic acquisitions – tied for last with European respondents and far below Latin America’s 43%.

Instead, 37% of the respondents said that domestically, they would use their new-found cash to diversify their products mix or invest in new IT technology.

About the Survey

This AlixPartners/EIU survey, “Winners Don’t Play Dead: Doing More with Less in an Uncertain Future,” was conducted by the Economist Intelligence Unit for AlixPartners in September 2011 of 536 senior business executives around the world. The survey that underlies this report is based on answers from respondents of which 49% were C-level executives. The head offices of their organizations are based in almost 70 different nations. Roughly 33% of them have company headquarters in North America, 27% in Western Europe, 17% in the Asia-Pacific region, 11% in the Middle East, 6% in Latin America, 4% in Africa and 2% in Eastern Europe. Companies with annual revenue of $500 million or less comprise 46% of the responses and 19% of the responses came from companies with $10 billion or more in annual revenue.

About AlixPartners

AlixPartners LLP is a global business-advisory firm offering comprehensive services in four major areas: enterprise improvement, turnaround and restructuring, financial-advisory services and information-management services. Founded in 1981, the firm has more than 900 professionals in offices around the world, and can be found on the Web at

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