It’s the third month of 2015; some people are still trying to find their footing while others already feel the need for a holiday. Some are chief executives of companies who are trying to stay abreast with economic activity to maintain the status quo, or go one better, and increase profits.
Many are not rosy over this year’s economic growth, but there’s still a bit of confidence in their ability to keep the performance of their companies stable. They believe global economic growth will decline more than twice. The International Monetary Fund (IMF) has cut South Africa’s growth forecast to 2.1%.
According to PriceWaterhouseCoopers’ (PwC) Global CEO Survey, only 29% of South African chief executives, compared to 37% globally, anticipate global economic growth will improve in 2015.
PwC’s Senior Partner for Africa, Suresh Kana, says chief executives are facing a multitude of challenges and uncertainties in global markets, which is affecting global growth.
“The government’s response to fiscal deficits, debt burdens and social instability are more concerning than a year ago,” he says.
The reports states that the emergence of digital technology has completely changed how companies do business. Mobile technologies are seen by 90% of South African CEO’s as most important to their company, including data mining and analysis, cybersecurity, battery and power technologies as well as cloud computing.
Information technology affects many organizations and they will be left behind if they do not keep up with the changing trends, says Hitachi Data Systems’ Executive Vice President of Global Services, Hicham Abdessamad. He says there is a huge shift happening in the market of cloud transformation not seen before and it is happening quickly. Companies should take advantage of this change and adjust with the market.
“It’s about staying relevant,” says Abessamad. “By 2015, 35 percent of IT spend will be managed outside the IT department’s budget.”
Kana says that chief executives know that they must adapt to disruptive changes in technology and in their markets.
Many chief executives see technology as a key vulnerability for their organizations. Technological change saw the second biggest increase of all the threats. The PwC report states that the pace of change is inescapable: less than a decade after its initial public offering, Google’s revenue soared from $3 billion to $60 billion.
“[CEOs] need to put technology at the core of their business to create value for customers. Finding new ways of thinking and working in this new competitive landscape is critical to success,” says Kana.
When technology is a strength, there are significant opportunities for growth.
Business leaders are increasingly aware that fundamental forces of change will affect their industries over the long term, according to PwC’s report. Technological advances, demographic changes and a shift in global economic power are some of the disruptive trends that companies need to be aware of. The interplay between them is transforming the macroeconomic landscape.
But challenges remain in other spheres of their businesses. Sixty eight percent of South African CEOs plan to implement a cost-reduction initiative over the next nine months. This includes cutting their workforce.
According to the report, about 22% of chief executives plan to cut their workforce. Retail company, Edcon, announced job cuts in February. In November, Edcon reported a loss of $94 million in the 26 weeks to September 27, from $111 million a year earlier.
To be able to build for success in 2015, the report suggests that companies should focus on what they are good at. They must re-evaluate the business they are in; anticipate policy issues; build diverse yet aligned partnerships; transform through digital and also develop a good mix of talent. Only 39% of the head of companies expect to increase their headcount, compared to 50% globally.
To stay in the game, business leaders must think strategically and
be adaptable.