SA CEOs look to the future
South African CEOs are more confident than their global counterparts about revenue growth in the short and medium term. The PricewaterhouseCoopers 10th Annual Global CEO Survey shows that 64% of canvassed CEOs are very confident about revenue growth over the next twelve months, compared to a 52% vote of confidence globally. On a three-year horizon, 56% of SA CEOs are highly optimistic about growth and they are also far more positive than they were a year ago.
The survey, which presents the views of CEOs of 39 SA companies, shows that the main strategy for growing turnover will be through better penetration of existing markets for existing products, followed by access and retention of key staff resources, accompanied by technological innovations. This growth would be financed mainly by internally generated cash flows, and to a lesser degree, debt and equity.
The main threats to business operations are listed as inadequate infrastructure, political instability and a shortage of key skills. There are also concerns in relation to over-regulation and low cost competition. Companies have indicated they are more than willing to spend resources on combating these risks, particularly the skills issue, which is not a concern for other jurisdictions.
In contrast to their global counterparts, SA CEOs do not see terrorism, scarcity of natural resources and commodity prices as major threats.
The PwC survey results indicate that 33% of respondents are in the planning phase of mergers and acquisitions activity likely to materialise in the next twelve months. Most of this activity is focused on Africa, with significant interest in Western and Eastern Europe. The objective of such a strategy is to access new markets and customers.
In these cross-border transactions, SA CEOs find that their biggest obstacle is conflicting regulatory requirements. This contrasts with the global finding where cultural issues and conflicts are the biggest hurdle. SA companies are also wary of encountering stakeholder opposition and are unhappy with being classified as a third-world country.
The PwC survey reveals that CEOs view being in South Africa as a major competitive advantage and significant growth opportunities exist here. Another important competitive advantage they cite is owning the organisations entire value chain. They believe that globalisation benefits both developed and developing markets, it has diminished cultural differences to some degree, and they are generally supportive of a single global code of ethics.
