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Growth Team MembershipTM:European
Corporate Strategy and Corporate Development Priorities Survey Results
May 2009
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What is Growth Team Membership™?
The Growth Team Membership™ (GTM) is an annual subscription program that supports individual executives in the eight functions (CEO’s Growth Team) that CEOs rely on to shape and execute their growth strategy.
GTM offers growth-focused research, events and services designed to increase the effectiveness, productivity and impact of these executives.
If you have any questions or comments, please contact us at [email protected]
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Table of Contents Growth Team MembershipTM Research
Page
Section 1: Summary of Findings …………………………………..……………….…..4
Section 2: Business Environment Factors….............................……………………..8
Section 3: Key Corporate Strategy and Corporate Development Challenges…....11
Section 4: Conclusions and Implications……………………..……………………....15
Section 5: Respondent Demographics……………………..…………………...…....16
The content of these pages are © 2009 Frost & Sullivan. All rights reserved.
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Summary of Findings Growth Team MembershipTM Research
Factors in current business environment impacting Corporate Strategy and Corporate Development plans in 2009
Respondents identified the following as the top five environmental factors:
1. Global economic downturn (72%)
2. Increasing need for product/service innovation (28%)
3. Emerging global markets (24%)
4. Intensifying competition (20%)
5. Decreasing customer demand (14%)
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Summary of Findings continued Growth Team MembershipTM Research
Key Challenges facing Corporate Strategy
Respondents were asked to designate their top three key issues:
1. Developing effective strategy implementation plans (39%)
2. Balancing demands for short-term profit with long-term strategic goals (29%)
3. Engaging with stakeholders to overcome barriers to new strategy adoption (23%)
The effectiveness of the Corporate Strategy Function
• The largest part of respondents (48%) rated the effectiveness of their function as “Average,” while 42% rated it as “Above Average”
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Summary of Findings continued Growth Team MembershipTM Research
Key Challenges facing Corporate DevelopmentRespondents were asked to designate their top three key issues:
1. Identifying promising new targets before competitors (39%)
2. Creating a methodology for identifying and evaluating the “right” strategic partners (17%)
3. There was a tie for the third challenge:
• Assessing and balancing risk across a broad portfolio of acquisition opportunities (25%)
• Developing a system for identifying capability gaps where strategic partners are either necessary or beneficial (25%)
The effectiveness of the Corporate Development Function• 42% of respondents rated the effectiveness of their function as “Average,” while
37% rated it as “Above Average”
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Summary of Findings continued Growth Team MembershipTM Research
Sample Population• The survey was sent to Corporate Strategy and Corporate Development
executives throughout the European Union
• The total number of respondents was 88
Respondent Demographics• 71% work in a B2B company while 26% work in a hybrid (B-to-B and B-to-C)
• 52% work in a private company while 32% work in a public company
• The largest set of respondents (33%) was from companies with revenues of below €70million
• The Electronics and Security (26%) industry had the largest number of survey respondents
Business Environment Factors
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Top Business Environment Factors Growth Team MembershipTM Research
The current global climate (72%) is the predominant business environment factor affecting Corporate Strategy and Corporate Development executives’ decision making in 2009. Given the focus of these two functions role in orchestrating corporate growth, it is not surprising that the respondents recognise the need for product development (28%) and emerging global markets (24%) as influencing their 2009 planning.
Please indicate the two business environment factors that have the most impact on your 2009 Corporate Strategy and Corporate Development plans.
N=71
72%
28%
24%
20%
14%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Global economic downturn
Increasing need forproduct/service innovation
Emerging global markets
Intensifying competition
Decreasing customer demand
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Business Environment Impact on Corporate Strategyand Corporate Development Growth Team MembershipTM Research
Three of the top five business environment factors are perceived as having a negative impact on Corporate Strategy and Corporate Development decision-making. The economic downturn and its effects on customer demand and competition reflect the negative climate that executives are operating in. However, both functions identify positive factors for growth through emerging global markets and innovation.
(N=72)
Please indicate the impact that each of the following forces have on your 2009 Corporate Strategy and Corporate Development plans.
Business Environment Positive Impact No Impact Negative Impact
Global economic downturn 1% 10% 89%
Increasing need for product/service innovation 93% 7% 0%
Emerging global markets 76% 18% 6%
Intensifying competition 14% 12% 74%
Decreasing customer demand 1% 17% 82%
Key Corporate Strategy and Corporate Development Challenges
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Top Three Key Corporate Strategy Challenges Growth Team MembershipTM Research
For Corporate Strategy two of their top three challenges concern strategy implementation: developing effective implementation plans and engaging with key stakeholders to overcome barriers to implementation. Respondents are challenged to balance short-term profits with long-term goals.
(N=41)
Please indicate the top three challenges shaping your Corporate Strategy decision-making in 2009.
Challenge One
• Balancing demands for short-term profit with long-term strategic goals (29%)Challenge Two
• Developing effective strategy implementation plans (39%)
Challenge Three • Engaging with stakeholders to overcome barriers to new strategy adoption (23%)
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Root-cause of Top Three Key Corporate Strategy Challenges Growth Team MembershipTM Research
Process was identified as the root-cause involved in balancing short-term profit and long-term strategic goals as well as in engaging stakeholders for strategy implementation. Staffing issues was recognised as the root-cause of the challenge in developing effective strategy implementation.
(N=41)
For the top three challenges you selected above, please indicate whether the root-cause of the challenge is staff, technology or process.
Challenge Staff Technology Process
1. Developing effective strategy implementation plans 56% 25% 19%
2. Balancing demands for short-term profit with long-term strategic goals 42% 8% 50%
3. Engaging with stakeholders to overcome barriers to new strategy adoption 33% 22% 44%
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Top Three Key Corporate Development Challenges Growth Team MembershipTM Research
Two of Corporate Development executives’ top three challenges focus on their role in mergers and acquisition: identifying promising new targets before competitors and assessing risks across a broad portfolio of acquisition targets. The other two key challenges involve identifying capability gaps where strategic partners could be beneficial, and creating a methodology to find and evaluate potential strategic partners to fill those gaps.
(N=37)
Please indicate the top three challenges shaping your Corporate Development strategy and decision-making in 2009.
Challenge One • Identifying promising new targets before competitors (39%)
Challenge Two
• Assessing and balancing risk across a broad portfolio of acquisition opportunities (25%)
• Developing a system for identifying capability gaps were straetgic partners are either necessary or beneficial (25%)
Challenge Three
• Creating a methodology for identifying and evaluating the “right”strategic partners (17%)
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Root-cause of Top Three Corporate Development Challenges Growth Team MembershipTM Research
Staffing was the primary root-cause for Corporate Development’s top two challenges. For the tied third challenge, process was equally at fault or the predominant root cause.
(N=18)
For the top three challenges you selected above, please indicate whether the root-cause of the challenge is staff, technology or process.
Challenge Staff Technology Process
1. Identifying promising new targets before competitors 57% 14% 29%
2. Creating a methodology for identifying and evaluating the “right” strategic partners 67% 33% 0%
3a. Assessing and balancing risk across a broad portfolio of acquisition opportunities 50% 0% 50%
3b. Developing a system for identifying capability gaps where strategic partners are either necessary or beneficial 40% 0% 60%
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Corporate Strategy and Corporate Development Function Effectiveness Growth Team MembershipTM Research
The most common rating for their function was “Average” regardless of if respondents were Corporate Development (42%) or Corporate Strategy (48%) executives.
Please asses the overall effectiveness of your function as compared to other firms in your industry.
N=40
N=19
10%
48%
42%
0%
11%
42.00%
37.00%
10%
0% 10% 20% 30% 40% 50% 60%
Below Average
Average
Above Average
Exceptional
CorporateDevelopmentCorporate Strategy
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Conclusions and Implications Growth Team MembershipTM Research
Business EnvironmentBoth sets of executives are concerned about the current economic environment and the decreasing customer demand and intensified competition it engenders. However, emerging global markets and innovation are seen as positive developments for these two growth-focused functions.
Key Corporate Strategy and Corporate Development ChallengesCorporate Strategy executives’ main concern is effective strategy implementation. There are echoes of this concern over the challenge in engaging the appropriate stakeholders to overcome barriers to strategy execution. Respondents are also pressured to balance companies’ long-term goals with the imperative to generate short-term profits.
Corporate Development’s primary challenges revolve around their role in acquisition. The recession adds pressure to identify potential acquisition targets before competitors, and to prioritise acquisitions in a way that aligns the acquisition strategy with the corporate strategy. The function also faces process-based challenges when looking to do alliances or joint ventures rather than M&A, whether it is creating an effective methodology to evaluate potential strategic partners, or identifying capability gaps that partners may fill.
Addressing the root-causes of these challenges necessitates Corporate Strategy and Corporate Development functions further enhancing their staff and improving their processes.
Moving ForwardThe Growth Team MembershipTM is focusing its Best Practice Guidebooks to address the key issues that have been identified in this survey.
If you have any questions or comments please contact us at [email protected]
Respondent Demographics
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Demographics: Enterprise Type Growth Team MembershipTM Research
The largest segment of respondents work in a private company
Please indicate the type of enterprise best represents your organisation.
Enterprise Type
10%
37%
42%
Public Private Venture Capital
N=85
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Demographics: Business Model Growth Team MembershipTM Research
The over two-thirds of the respondents work in a B-to-B companies
Please indicate which of these options best describes your business model.
N=85
72%
28%
24%
0% 10% 20% 30% 40% 50% 60% 70% 80%
B-to-B
B-to-C
Both B-to-B and B-to-C
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Demographics: Company Revenue Growth Team MembershipTM Research
The largest group of respondents work in a company with revenues of below €70 million
Please indicate which of these revenue ranges best represent your organisation. This should include all divisions, business units, and facilities.
N=85
33%
18%
8%
20%
17%
0%
10%
20%
30%
40%
Below € 70 million € 70 million to €347.99million
€348 million to €695.99million
€ 696 million to €7 billion
More than € 7 billion
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Demographics: Top Five Participating Industries Growth Team MembershipTM Research
The majority of the respondents work in the Electronics and Security or Healthcare and Life Sciences Industries
Please indicate which of these Industry categories best describes you organisation.
N=87
26%
25%
25%
23%
14%
0% 10% 20% 30%
Electronics and Security
Healthcare and Life Sciences
Information and CommunicationsTechnologies
Energy and Power Systems
Automotive and Transportation