Pricing in a global market remains top executive concern
By Staff -- Manufacturing Business Technology, 2/1/2005 12:00:00 AM
"A weak dollar, volatile oil prices, and geopolitical uncertainty" have eroded the collective confidence of 16,500 business executives from 148 countries surveyed in the annual McKinsey Global Confidence Index, released year-end 2004.
While a majority remains confident of the economic prospects for their industries, countries, and world as a whole, overall the index has fallen 12 percent since January 2004. In separate findings, the survey was corroborated by a 2005 forecast released last December by the Organization for Economic Cooperation and Development, which recalibrated downward by 10 percent economic growth projections for the U.S., and by 24 percent that in the euro zone, from what was projected six months earlier.
Execs in telecommunications ranked among the most confident of the future, "perhaps because the industry has worked through its debt bubble and new technologies offer new opportunities for attackers and incumbents alike," say the survey authors. By region, executives in developed Asian countries were the least confident overall.
Pricing amidst a more competitive global market ranked as the top concern, outdistancing talent shortages and operational performance. And while the largest companies anticipate being as likely to lay off employees as to hire new ones, one-third of total respondents expect to expand staffing in the next six months, with smaller companies more predisposed.
The report underscores pressure for restructuring in the high-tech industry.
"Growth has slowed, profits have shrunk, and investors are eager for the billions of dollars in potential value to be had from mergers & acquisitions, downsizing, and liquidations," says the report. "There are formidable barriers to consolidation of high-tech... but the barriers are starting to erode. While they might delay change a little longer, restructuring is inevitable—and likely to happen sooner rather than later."
High-tech sectors ripe for consolidation include IT services and software—particularly enterprise applications, and network & systems management; middleware; server applications; and hardware, particularly PC and notebook computers, network gear, and storage.
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