In a major new study released by KPMG International, which tracks insights on the coming three years, chief executives of global businesses said they are confident about the ability of their companies to grow over the next three years and are expressing confidence about the prospects for the global economy.

According to the 2015 KPMG CEO Outlook Study of 1,278 CEOs, 69 per cent of CEOs in Europe, 66 per cent in Asia Pacific and 52 per cent in the US are more confident than they were last year about growth and the global economy in the next three years.

In assessing their own company’s growth prospects, 70 per cent of European CEOs, 68 per cent of Asia Pacific CEOs and 19 per cent of US CEOs indicated they are more confident than a year ago. Most importantly, CEOs globally are set to hire, with 78 per cent of respondents indicating they are expecting to be in hiring mode through mid-2018.

“The overall message we’ve gotten from CEOs around the globe, is that they are positive about their prospects over the next three years, and importantly that they are looking to hire more people,” said John Veihmeyer, global chairman of KPMG International.

“There is a more positive change in confidence versus the prior year, in Europe and Asia compared to the US, which is in part reflective of the US being in a more advanced stage of the economic recovery.”

According to the KPMG study, CEOs are grappling with escalating competitive pressures. In order of importance: 86 per cent are concerned about the loyalty of their customers; 74 per cent are worried about new market entrants; 72 per cent are worried about keeping pace with new technologies; 68 per cent are concerned about their competitors’ ability to take business away from them; and 66 per cent are concerned about the relevance of their product or service in the next three years.

86 per cent of CEOs are concerned about the loyalty of their customers

Importantly, 44 per cent of the CEOs indicated that they are only “somewhat comfortable” with their current business model, with five per cent expressing that they are “uncomfortable”. In the study, 29 per cent of leaders said their organisations are likely to be transformed into significantly different entities in the next three years.

While the results indicate that CEOs are acutely aware of the need to transform their businesses in order to survive and prosper, almost one-third of CEOs say their business is not taking enough risk with their global growth strategy, and more than half (56 per cent) said they have not fully implemented a company-wide process for innovation.

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

“CEOs continue to confront business challenges of unprecedented complexity,” said Mr Veihmeyer. “Many CEOs in our study have repeated what I am hearing when I meet with business leaders – that they need to take more calculated risks with their growth strategies.

“They know they are going to have to have to do things differently, and they are looking hard at their organisations to determine how they can transform to stay relevant and strengthen their competitive positions.”

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

When asked whether their primary focus would be on growth or operational efficiency over the next three years, 94 per cent of US CEOs cited growth, while their Asian and European counterparts said they were focused on operational efficiency.

In terms of issues having the greatest impact on their company’s prospects and performance, the top three issues identified by CEOs were ‘global eco­­nomic growth’, followed closely by the ‘regulatory environment’, and ‘disruptive technology’.

When asked which areas they expected to devote significant capital to over the next three years, CEOs identified expansion outside their home countries as the number one area.

US CEOs are focused on Europe, especially central Europe, followed by China and South America. For CEOs in China, Japan, the United Kingdom, Germany and France, the US is the region offering the greatest potential for new growth. “The resiliency of the US economy makes the US an attractive investment target for companies based in Europe and Asia,” said Mr Veihmeyer.

Today, 52 per cent of the CEOs say their current growth strategies are built primarily around organic growth, with 42 per cent saying it is a combination of organic and inorganic growth through acquisitions and six per cent saying it’s primarily inorganic.

When asked to consider their anticipated growth strategies over the next three years, 59 per cent of CEOs expect their priority will be organic growth, 22 per cent indicated an even split between organic and inorganic growth through acquisitions, and 19 per cent say it will be through inorganic growth.

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

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