Business Trends, Opportunities And Risks Worldwide

8th February 2005

The Economist Intelligence Unit has just published a new white paper on the business trends, opportunities and risks that preoccupy global business leaders, based on a worldwide survey of 500 senior executives. The report is sponsored by Dimension Data and Oracle Corporation. The full report is available on the Economist Intelligence Unit web site as a Pdf file at
http://www.eiu.com/site_info.asp?info_name=corporate_landing_eiu_CeoBriefing2005

Fully 87% of companies predict their revenues and profits will grow in 2005, according to a new report written by the Economist Intelligence Unit and sponsored by Dimension Data and Oracle Corporation. Executives are aware of a number of risks to the business environment, but believe that improvements in customer service, cost-efficiency and innovation will help them deliver significant growth in the next three years.

The report, called CEO Briefing, includes the findings of a global survey of 500 senior executives, almost half of which were chief executives. A total of 34% of executives predict that growth for 2005 will be robust. The top strategies to achieve this growth will be to build stronger customer relationships, develop new products and services, and penetrate new customer markets. The survey also shows that innovation is back on the corporate agenda, and that offshoring is gathering pace: 57% of executives see offshoring as a critical force reshaping the global marketplace, up from 51% last year.

Other key findings from the report include the following:

Competition intensifies for global offshoring.
According to a new ranking model featured in this year's CEO Briefing, India is the world's most attractive offshoring location, thanks mainly to its English-speaking low-cost labour force and a common law legal system. China comes second, and is the world's top offshoring location for manufacturing. The Czech Republic, Poland and other Eastern European countries are also increasingly attractive offshoring destinations.

China is the best market for growth, but also a major source of risk.
With another year of strong growth forecast for 2005, China is cited by 35% of executives as the country offering the greatest opportunities for business expansion. However, executives fear that turbulence in China's economy could have major repercussions for the global economy. Some Western executives believe it is only a matter of time before Chinese companies start to compete in international markets.

Disruptive technology is back.
Advances in technology are seen as the single most important driver of change. Executives believe that new technologies will fuel growth in the life sciences, information technology and telecoms industries. IT will play a vital role connecting and managing complex, globalised operations; as a result, mobile networks, business intelligence solutions, and supply chain integration technologies are seen as increasingly important technologies for the next three years.

Governance goes global.
A total of 45% of executives believe there will be a greater move towards a command and control-style of management, versus 18% who predict a move in the opposite direction. Companies will continue to march towards their compliance deadlines, but there is also a big focus on the broader aspects of governance.