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Panel Report
www.icd-research.com
Global CEO Business Outlook Survey20112012
Reference code: ICDR1250
Published: August 2011
ICD Research
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London EC4Y 0BS
United Kingdom
Tel: +44 (0)20 7936 6400
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Website: www.icd-research.com
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TABLE OF CONTENTS
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TABLE OF CONTENTS
1 Introduction ................................................................................................................................. 61.1 What is this report about? ............................................................................................................. 61.2 Methodology ................................................................................................................................ 61.3 Profile of survey respondents........................................................................................................ 8
2 Executive Summary ................................................................................................................... 93 Industry Dynamics ................................................................................................................... 11
3.1 Revenue growth expectations ..................................................................................................... 113.1.1 Revenue growth expectations by region ............................................................................................... 133.1.2 Revenue growth expectations by turnover............................................................................................ 14
3.2 Future developments in business structure.................................................................................. 163.3 Merger and acquisition activity predictions................................................................................... 17
3.3.1 Merger and acquisition activity predictions by region ............................................................................ 183.3.2 Merger and acquisition activity predictions by company turnover .......................................................... 19
4 Market Growth Outlook............................................................................................................ 204.1 Demand in emerging markets ..................................................................................................... 21
4.1.1 Demand in emerging markets by region ............................................................................................... 234.1.2 Demand in emerging markets by company turnover ............................................................................. 24
4.2 Growth expectations in developed countries ................................................................................ 254.2.1 Growth expectations in developed countries by region ......................................................................... 264.2.2 Growth expectations in developed countries by company turnover ....................................................... 27
5 Threats and Opportunities ...................................................................................................... 285.1 Leading business concerns for 20112012.................................................................................. 28
5.1.1 Leading business concerns for 20112012 by region ........................................................................... 305.1.2 Leading business concerns for 20112012 by company turnover ......................................................... 30
5.2 Key supplier actions to maintain and secure buyer business ........................................................ 315.2.1 Actions to maintain and secure buyer business by region ..................................................................... 325.2.2 Actions to maintain and secure buyer business by turnover.................................................................. 33
6 Procurement Dynamics ........................................................................................................... 346.1
Annual procurement budgets ...................................................................................................... 35
6.1.1 Annual procurement budgets by region ................................................................................................ 366.1.2 Annual procurement budgets by company turnover .............................................................................. 37
6.2 Planned change in procurement expenditure ............................................................................... 386.2.1 Planned change in procurement expenditure by region ........................................................................ 396.2.2 Planned change in procurement expenditure by company turnover ...................................................... 40
6.3 Variations in regional supplier prices ........................................................................................... 41
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6.3.1 Variations in regional supplier prices by region ..................................................................................... 426.3.2 Variations in regional supplier prices by company turnover................................................................... 43
7 Procurement Behaviors and Strategies ................................................................................ 447.1 Critical success factors for supplier selection ............................................................................... 457.2 E-procurement ........................................................................................................................... 46
7.2.1 E-procurement by region ..................................................................................................................... 487.2.2 E-procurement by company turnover ................................................................................................... 49
8 Marketing Spend Activity ........................................................................................................ 508.1 Annual marketing budgets .......................................................................................................... 51
8.1.1 Annual marketing budgets by region .................................................................................................... 528.1.2 Annual marketing budgets by company turnover .................................................................................. 53
8.2 Planned change in marketing expenditure levels ......................................................................... 548.2.1 Planned change in marketing expenditure levels by region................................................................... 558.2.2 Planned change in marketing expenditure levels by company turnover ................................................ 578.2.3 Planned change in marketing expenditure levels vs. revenue growth expectations ............................... 58
8.3 Future investment in marketing and sales technology .................................................................. 598.3.1 Planned investment in marketing and sales technologies by region ...................................................... 608.3.2 Planned investment in marketing and sales technologies by company turnover .................................... 61
9 Marketing and Sales Strategies .............................................................................................. 629.1 Future investment by media channel ........................................................................................... 62
9.1.1 Future investment by media channel by region .................................................................................... 649.1.2 Planned change in marketing spend by company turnover ................................................................... 65
9.2 Marketing agency selection criteria ............................................................................................. 669.2.1 Marketing agency selection criteria by region ....................................................................................... 679.2.2 Marketing agency selection criteria by company turnover ..................................................................... 68
10 Appendix.................................................................................................................................... 69 10.1Methodology .............................................................................................................................. 6910.2Contact us ................................................................................................................................. 6910.3About ICD Research .................................................................................................................. 6910.4Disclaimer .................................................................................................................................. 69
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LIST OF FIGURES
Figure 1: Revenue Growth Optimism (%), 2011 .......................................................................................................................................................... 12Figure 2: Revenue Growth Optimism by Region (%), 2011 ......................................................................................................................................... 13Figure 3: Revenue Growth Optimism by Turnover (%), 2011 ...................................................................................................................................... 14Figure 4: Company Revenue Growth Optimism: Cross-Industry Comparisons (%), 2011......................................................................................... 15Figure 5: Key Expected Changes in Business Structure (%), 2011 ............................................................................................................................ 16Figure 6: Merger and Acquisition Activi ty Expectations by Region (%), 2011 ............................................................................................................ 18Figure 7: Merger and Acquisition Activity Expectations by Company Turnover (%), 2011 ........................................................................................ 19Figure 8: Top Ten Growth Regions (%), 2011 ............................................................................................................................................................. 20Figure 9: Demand in Emerging Markets (%), 2011 ...................................................................................................................................................... 22Figure 10: Demand in Emerging Markets by Region (%), 2011 .................................................................................................................................. 23Figure 11: Demand in Emerging Markets by Company Turnover (%), 2011 .............................................................................................................. 24Figure 12: Growth Expectations in Developed Countries by Region (% Increase Responses), 2011 ..................................................................... 26Figure 13: Growth Expectations in Developed Countries by Company Turnover (% Increase), 2011 ..................................................................... 27Figure 14: Leading Business Concerns (%), 20112012 ............................................................................................................................................ 29Figure 15: Actions to Maintain and Secure Buyer Business (%), 2011 ....................................................................................................................... 31Figure 16: Actions to Maintain and Secure Buyer Business by Company Turnover (%), 2011 ................................................................................. 33Figure 17: Annual Procurement Budgets in US$ (%), 2011 ........................................................................................................................................ 35Figure 18: Annual Procurement Budgets in US$ by Region (%), 2011 ....................................................................................................................... 36Figure 19: Annual Procurement Budgets in US $ by Company Turnover (%), 2011..................................................................................................... 37Figure 20: Expected Change in Tota l Procurement Expenditure by Region (%), 2011 ............................................................................................. 39Figure 21: Expected Change in Tota l Procurement Expenditure by Company Turnover (%), 2011 .......................................................................... 40Figure 22: Variatio ns in Regional Supplier Prices (%), 2011 ....................................................................................................................................... 42Figure 23: Variations in Regional Supplier Prices by Company Turnover (%), 2011 ................................................................................................. 43Figure 24: Critica l Success Facto rs for Supplier Selection, 2011 ................................................................................................................................ 45Figure 25: EProcurement: Level of Implementation (%), 2011 .................................................................................................................................. 47Figure 26: EProcurement: Level of Implementation by Regio n (%), 2011 ................................................................................................................ 48Figure 27: EProcurement: Level of Implementation by Company Turnover (%), 2011 ............................................................................................ 49Figure 28: Annual Marketing Budgets: Airports Industry Suppliers (%), 20092011.................................................................................................. 51Figure 29: Annual Marketing Budgets by Region (%), 2011........................................................................................................................................ 52Figure 30: Annual Marketing Budgets by Company Turnover (%), 2011 .................................................................................................................... 53Figure 31: Planned Change in Marketing Expenditure (%), 2011 ............................................................................................................................... 55Figure 32: Planned Change in Marketing Expenditure Levels by Region (%), 2011 .................................................................................................. 56Figure 33: Planned Change in Marketing Expenditure Levels by Company Turnover (%), 2011 .............................................................................. 57Figure 34: Change in Marketing Expenditure Levels by Revenue Growth Expectations (%), 2011 ............................................................................ 58Figure 35: Planned Investment in Marketing and Sales Technologies by Region (%), 2011.................................................................................... 60Figure 36: Planned Investment in Marketing and Sales Technologies by Company Turnover (%), 2011................................................................. 61Figure 37: Future Investment by Media Channels (%), 2011 ...................................................................................................................................... 63Figure 38: Future Investment by Media Channels by Region (% Increase Responses), 2011 .................................................................................. 64Figure 39: Future Investment by Media Channel by Company Turnover (% Increase Responses), 2011................................................................ 65Figure 40: Marketing Agency Selection Criteria (%), 2011 .......................................................................................................................................... 66Figure 41: Marketing Agency Selection Criteria by Region (%), 2011 ........................................................................................................................ 67Figure 42: Marketing Agency Selectio n Criteria by Company Turnover (% ), 2011 ................................................................................................... 68
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LIST OF TABLES
Table 1: Total Industry Survey Respondents by Industry, 2011 .................................................................................................................................... 8Table 2: Respondents by Global Company Turnover (%), 2011 ................................................................................................................................... 8Table 3: Respondents by Region (%), 2011................................................................................................................................................................... 8Table 4: Revenue Growth Optimism (%), 2011............................................................................................................................................................ 12Table 5: Revenue Growth Optimism (%), 2011............................................................................................................................................................ 13Table 6: Revenue Growth Optimism by T urnover (%), 2011 ....................................................................................................................................... 14Table 7: Merger and Acquisition Activity Expectations (%), 2011 ............................................................................................................................... 17Table 8: Merger and Acquisition Activity Expectations by Region (%), 2011.............................................................................................................. 18Table 9: Merger and Acquisition Activity Expectations by Company Turnover (%), 2011.......................................................................................... 19 Table 10: Demand in Emerging Markets (%), 2011 ..................................................................................................................................................... 22Table 11: Growth E xpectations in Developed Co untries (%), 2011 ............................................................................................................................ 25Table 12: Leading Business Concerns (%), 20112012.............................................................................................................................................. 29Table 13: Leading Business Concerns by Region (%), 20112012 ............................................................................................................................ 30Table 14: Leading Business Concerns by Company Turnover (%), 20112012 ........................................................................................................ 30Table 15: Actions to Maintain and Secure Buyer Business by Region (%), 2011 ...................................................................................................... 32Table 16: Annual Procurement Budgets in US$ (%), 2011.......................................................................................................................................... 35Table 17: Annual Procurement Budgets in US$ by Company Turnover (%), 2011 .................................................................................................... 37Table 18: Expected Change in Total Procurement Expenditure (%), 2011 ................................................................................................................ 38Table 19: Variations in Regional Supplier Prices (%), 2011 ........................................................................................................................................ 41Table 20: Variations in Regional Supplier Prices by Region (%), 2011 ...................................................................................................................... 42Table 21: Variations in Regional Supplier Prices by Company Turnover (%), 2011 .................................................................................................. 43Table 22: EProcurement: Level of Implementation (%), 2011 ................................................................................................................................... 46Table 23: Procurement Budget Increase vs E-Procurement (%), 2011 ...................................................................................................................... 47Table 24: EProcurement: Level of Implementation by Company Turnover (%), 2011 ............................................................................................. 49Table 25: Annual Marketing Budgets (%), 2011........................................................................................................................................................... 51Table 26: Annual Marketing Budgets by Region (%), 2011 ......................................................................................................................................... 52Table 27: Annual Marketing Budgets by Company Turnover (%), 2011 ..................................................................................................................... 53Table 28: Planned Change in Marketing Expenditure (%), 2011 ................................................................................................................................ 54Table 29: Planned Change in Marketing Expenditure Levels by Region (%), 2011 ................................................................................................... 56Table 30: Planned Change in Marketing Expenditure Levels by Company Turnover (%), 2011 ............................................................................... 57Table 31: Planned Investment in Marketing and Sales Technologies (%), 2011....................................................................................................... 59
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INTRODUCTION
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1 Introduction
1.1 What is this report about?
This report is the result of an extensive survey drawn from ICD Researchs exclusive panel of C-levelrespondents consisting of CEOs and other senior level respondents such as managing directors and board
members from leading companies. As countries emerge from the effects of recession, this report provides the
reader with a definitive analysis of the industry outlook and explores how opportunities and demand are set to
change in 20112012. This report not only grants access to the opinions and strategies of business decision
makers and competitors, but also examines their actions surrounding business priorities. The report also
provides access to information categorized by region and turnover.
The report also examines:
Revenue growth expectations: projects the revenue growth expectations of major industry stakeholders
Market-specific growth opportunities: identifies top growth regions to enable companies to allocate theirmarketing activities and budgets effectively
Mergers and acquisitions: analyzes expectations surrounding merger and acquisition (M&A) activity and
core influencing factors
Leading business concerns: identifies leading business concerns and subsequent efforts to manage them
Procurement expenditure trends: tracks companies procurement budgets and forecasts possible changes
in spend
Factors for supplier selection: outlines critical factors influencing supplier selection
Marketing expenditure trends: tracks the marketing budgets of supplier companies and forecasts possible
changes in expenditure
Key factors for marketing agency selection: provides insights into the marketing needs of suppliercompany competitors
1.2 Methodology
All ICD reports are rigorously sourced and created according to a comprehensive three-stage methodology:
1) Online Survey
The research source in this report is based on the surveyed opinions and forward-looking expectations of
CEOs, board members and other C-level respondents. ICD Research conducted an extensive online survey
during March 2011 taken by 1,285 CEOs, board members and other C-level respondents.
These respondents are drawn from the ICD Research Industry Insight Panel, an exclusive industry panel
covering over 2 million business professionals worldwide. Respondents represent a dedicated professional
community where participants are surveyed in context, drawn from ICD Researchs industry magazine and
media communities, and delegate relationships across our global industry conference and forum events.
These business communities are made up of highly engaged, qualified professionals, who rely on ICD
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Researchs flagship media brands in their respective markets, enabling ICD Research to access
knowledgeable and informed industry opinion.
2) Secondary Research
Collection of the latest market-specific data from a wide variety of respected third-party industry sources:
Government statistics
Industry associations
Company filings
Broker reports
International organizations
Industry news websites
Industry reports
3) Data Analysis and Report Writing
The results of this research have been analyzed and evaluated by ICD Researchs in -house industry-specific
analysts. The analysts research and analysis expertise, marketing pedigrees, market research and consulting
backgrounds, and ongoing continuous education on leading macro-economic and industry news and events
have shaped their analytical judgments and conclusions of the industry opinions gathered.
4) Quality Control
A) Templates
Detailed process manuals
Standardized report templates and accompanying style guides
Advanced data analysis and survey programming tools
QC checklists
B) QC Process
Randomized spot checks on data integrity
Peer review
Senior-level QC
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INTRODUCTION
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1.3 Profile of survey respondents
Our in-depth industry survey was completed by 1,285 C-level respondents containing CEOs and other senior
level respondents such as managing directors and board level respondents from industries shown in the table
below:
Table 1: Total Industry Survey Respondents by Industry, 2011
Industry type % respondents
Transport 14%
Pharmaceutical 13%
Power 10%
Interior Design 10%
Mining 9%
Medical Device 7%
Airports 6%
Hotel and Cruise 6%
Food and Beverage 6%
Packaging 5%
Aerospace 5%
Construction 5%
IT 4%
Overall 100%
N.B. Results may not equal 100% due to rounding
Source: ICD Research Industry Survey 2011 ICD Research
Table 2: Respondents by Global Company Turnover (%), 2011
Company turnover Percentage of respondents
Less than US$100 million 91%
US$100 millionUS$1 billion 7%
More than US$1 billion 2%
Overall 100%
Source: ICD Research Industry Survey 2011 ICD Research
Table 3: Respondents by Region (%), 2011
Region Percentage of respondents
North America 23%
Europe 41%
Asia-Pacific 21%
Rest of the World 15%
Overall 100%
Source: ICD Research Industry Survey 2011 ICD Research
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EXECUTIVE SUMMARY
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2 Executive Summary
The global industry is confident about revenue growth in 2011
Overall, 63% of C-level respondents are more optimistic about revenue growth for their company over the
next 12 months than the previous 12 months. Strong growth in emerging markets such as Eastern Europe has
contributed to an increase in revenue optimism. The need to expand customer base and invest in innovative
technologies are cited as the major factors behind the rise in revenue growth optimism. The top three key
expected changes for 2011 are to expand in current market, introduction of new products and services and
expand abroad.
Mergers and acquisitions are expected to increase in 2011
Global industry executives expect to see increased levels of consolidation, with 61% of respondents predicting
that there will be either a significant increase or an increase in M&A activity over the next 12 months.
Improving operational efficiency to attain economies of scale, increases in geographical presence and
business competence, and increases to customer bases for better return on investment (ROI) are the key
drivers for M&A activity.
A high proportion of respondents expect that, due to market uncertainty, small companies may have found it
difficult to sustain credit lines and will look to larger companies for support. For instance, a C-level respondent
an airport operator company based in North America states: Repeated losses due to the economy have
made consolidation and mergers the only sensible business solution for many industries. At this point, it is not
so much a matter of business success that is key, but having a revenue source that is stable.
China, India and Brazil are the most important emerging markets
Respondents identify China to be the most important region for growth among emerging markets, along with
India and Brazil. Chinas growth is expected to increase in 2011 due to strong market potential, strong
economic growth and sufficient labor resources. For example, CSR Zhuzhou Electric Locomotive Research
Institute Co., Ltd., a subsidiary of CSR Corporation Ltd. (CSR), signed an agreement with Wabtec
Corporation, which is based in the US, in May 2011. Under the agreement, the company will manufacture
braking systems for rail cars.
The US, Singapore, Taiwan and Hong Kong, Australia, Germany and the UK are identified as the most
important regions for growth among developed regions. Singapore acts as a significant trading base for the
South-East Asian region, with low corporate taxes and strong intellectual property rights attracting companies
to set up their operations in the region. For example, in April 2011, Pan Pacific Hotels & Resorts announced
that it will launch its flagship Parkroyal Hotel in Singapore in 2012.
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Companies face key challenges in market uncertainty, responding to pricing pressure and cost
containment
Market uncertainty, responding to pricing pressure and cost containment are the most immediate business
concerns for the global industry. Market uncertainty is considered a leading concern by most companies due
to falling or limited demand that has increased price competition between companies. With the aim of
increasing revenues, business models have to be reworked to avoid the prospect of markets being lost. For
example, major European home decoration companies such as Saint-Gobain, DIY and B&Q have closed retail
stores in prominent cities in China due to low individual demand. Many companies are forced to innovate and
differentiate products.
Average annual procurement budget is expected to increase in the next 12 months
The average size of the global annual procurement budget for respondents in 2011 is expected to be US$26
million, with Asia-Pacific leading with US$47 million. Procurement budgets are expected to rise over the next
12 months by an average of 11%, and companies are also expected to invest in developing advancedtechnologies to reduce costs and enhance brand value. Procurement expenditure is high in Asia-Pacific due to
strong economic growth, rising affluence and a surge in demand for raw materials, which have compelled
companies to invest in new technologies and sustainable measures. For example, Harmony Gold Mining
Company Ltd., based in South Africa, is considering diversifying its mining operations into Indonesia and the
Philippines.
Average marketing budgets are expected to rise by 10% in 2011 as compared to 2010
The average size of the global, annual marketing budget is estimated to be US$1.2 million in 2011, with the
Rest of the World leading with US$1.2 million. ICD Researchs industry survey revealed that, on average,
global industry suppliers marketing budgets are expected to rise by 10% over the next 12 months. The
generation of new customers, introduction of new products, increased new contract orders, brand awareness
and support and expansion of current markets are considered to be the most important objectives to achieve
through the increased budgets.As we are planning to expand our business, publicity and industry awareness
is crucial for our company. Therefore, our marketing department is under pressure to reveal its presence
across the industry,quotes a board-level executive of a packaging industry supplier company in the Asia-
Pacific region.
Market intelligence research, client acquisition solutions and business performance management
solutions will dominate future investment
Market intelligence research, client acquisition solutions,business performance management solutions and
CRM solutions emerged as the most important areas of investment among marketing and sales solutions
activities in 2011. New media such as email and newsletters, corporate and brand websites and online
content sites have increased in importance among C-level respondents. The rapid development of online
social networking channels such as Twitter, LinkedIn and Facebook provides new opportunities for
respondents to effectively communicate messages between industry partners to build networks.
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INDUSTRY DYNAMICS
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3 Industry Dynamics
In this chapter, executives provide their future expectations for the growth prospects of their companies, as
well as insights into the type and likelihood of structural changes in the competitive landscape in terms of
mergers and acquisitions and business structure. This provides a snapshot of the business outlook for theindustry.
Key Findings:
Across the industry, 63% of respondents are more optimistic about revenue growth for their companies
over the next 12 months.
Of all respondents, 74% from the Rest of the World, 65% from Asia-Pacific are optimistic about revenue
growth over the next 12 months, compared to 63% in the North America and 59% in Europe.
Respondents from medium and large sized companies are more optimistic about revenue growth than
smaller companies in the next 12 months.
The top three key expected changes for 2011 are expand in current market, introduction of new
products and services and expand abroad.
Overall, respondents from all industries expect to see increased levels of consolidation, as 61% predict
an increase in the level of M&A activity over the next 12 months.
The majority of respondents from North America and Europe expect an increase in M&A activity duringthe next twelve months.
From large companies, 82% of respondents expect an increase in M&A activity during the next twelve
months, while 74% from medium-sized companies and 60% from small companies anticipate similar
trends.
3.1 Revenue growth expectations
Overall, 63% of respondents are more optimistic about revenue growth for their company over the next 12months than the previous 12 months. A further 24% are neutral, while 9% of respondents are less optimistic
about their companys revenue growth prospects.
Strong growth in emerging markets such as Eastern Europe has contributed to an increase in revenue
optimism. For example, Imtech, a technical services provider in Europe, has received high order inflow for
high-tech traffic solutions in Russia, Lithuania and Romania. The need to expand customer base and invest in
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innovative technologies are cited as the major factors behind the rise in revenue growth optimism for industry.
The expansion of product offerings to increase sales is also considered to be a prime factor.
In addition to this, the revision of business policies, management changes, steps taken by companies to
rationalize costs, favorable government policies and commodity price stability have all led to increased
optimism levels among industry respondents. For example, the Australian governments plan to reduce the
headline rate of tax from 40% to 30% has proved to be immensely beneficial for companies that either operate
in Australia or plan to expand their businesses into the country.
In an interesting development, many major companies are shifting their research and manufacturing activities
to the Asia-Pacific region, and as a result, markets in China, South Korea, India, Vietnam and Indonesia are
set to grow at a healthy rate despite regulatory constraints. A comparatively large and increasing population,
coupled with increasing disposable income, makes the Middle East and Asian countries attractive for
investment.
Table 4: Revenue Growth Optimism (%), 2011
Growth optimism % Respondents
More optimistic 63%
Neutral 24%
Less optimistic 9%
Don't know 2%
Overall 100%
N.B. Results may not equal 100% due to rounding
Source: ICD Research Industry Survey 2011 ICD Research
Figure 1: Revenue Growth Optimism (%), 2011
Source: ICD Research Industry Survey 2011 ICD Research
63%
24%
9%
4%
Question: Are you more or less optimistic about revenue growth foryour company over the next 12 months compared to the previous 12
months?
More optimistic
Neutral
Less optimistic
Don't know
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3.1.1 Revenue growth expectations by region
Of all respondents, 74% from the Rest of the World and 65% from Asia-Pacific are optimistic about revenue
growth over the next 12 months, compared to 63% in North America and 59% in Europe. Optimism in Europe
is slightly lower than other regions due to the recent debt crisis, although Europe is expected to move towards
recovery in 2011 with various strategic moves which are either in the process of implementation or have
already been implemented earlier this year. For example, in March 2011, the UK government announced a
freeze on air passenger duty (APD) until 2012 to increase demand for long-haul flights. On a similar note,
companies from other sectors are also optimistic about increases in their revenue growth outlooks. For
example, Kinnarps, a leading supplier of interior products in Sweden, has obtained the largest single-order
contract from Princess Noura Bint Abdulrahman University in Riyadh, Saudi Arabia, to deliver thousands of
desk tables, chairs, easy chairs, coffee tables and more.
Strong growth in emerging markets such as India and China has also contributed to an increase in revenue
optimism. For example, Advanced Technologies, which is based in the US, has doubled the production
capacity of its water technologies manufacturing plant in Wuxi New Zone in Eastern China.
Table 5: Revenue Growth Optimism (%), 2011
Growth optimism North America Europe Asia-Pacific Rest of the World
More optimistic 63% 59% 65% 74%
Neutral 22% 28% 21% 17%
Less optimistic 9% 11% 8% 6%
Don't know 6% 3% 6% 4%
Overall 100% 100% 100% 100%
N.B. Results may not equal 100% due to rounding
Source: ICD Research Industry Survey 2011 ICD Research
Figure 2: Revenue Growth Optimism by Region (%), 2011
Source: ICD Research Industry Survey 2011 ICD Research
63
59
65
74
22
28
21
17
9
11
8
6
6
3
6
4
North America
Europe
Asia-Pacific
Rest of the World
Question: Are you more or less optimistic about revenue growth for your companyover the next 12 months compared to the previous 12 months?
(% respondents by region)
More optim istic Neutral Less optim istic Don't know
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3.1.2 Revenue growth expectations by turnover
For analyzing revenue growth expectations by company turnover, companies are classified as small, medium-
sized and large, based on the turnover mentioned below:
Turnover less than US$100 million: small company
Turnover between US$100 millionUS$1 billion: medium-sized company
Turnover more than US$1 billion: large company
Medium-sized and large companies are more optimistic about revenue growth than smaller companies, with
71% and 70% of C-level respondents expecting growth in revenue in the next 12 months.
Table 6: Revenue Growth Optimism by Turnover (%), 2011
Revenue optimism Less than US$100 million US$100 millionUS$1 billion More than US$1 billion
More optimistic 63% 71% 70%
Neutral 24% 23% 19%
Less optimistic 9% 6% 11%
Dont know 5% 1% -
Overall 100% 100% 100%
N.B. Results may not equal 100% due to rounding
Source: ICD Research Industry Survey 2011 ICD Research
Figure 3: Revenue Growth Optimism by Turnover (%), 2011
Source: ICD Research Industry Survey 2011 ICD Research
63
24
9
5
71
23
6
1
70
19
11
0
More optimistic
Neutral
Less optimistic
Dont know
Question: Are you more or less optimistic about revenue growth for your companyover the next 12 months compared to the previous 12 months?
(% respondents by turnover)
Less than US$100 million US$100 mill ionUS$1 billion More than US$1 bil lion
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The net differences in the optimism levels of various industries are mapped in the following figure; the global
nature of the ICD Research Survey 2011 allows for analysis of the relative positions of each industry. The
mining industry leads the chart, followed by aerospace and power, whereas the defense and construction
industries exhibit the lowest growth optimism.
Figure 4: Company Revenue Growth Optimism: Cross-Industry Comparisons (%), 2011
Source: ICD Research Analysis / ICD Research
34%
38% 39% 40%41%
43%46%
48% 48% 49%50%
54%58%
60%
0%
10%
20%
30%
40%
50%
60%
70%
Net difference in revenue growth optimism
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3.2 Future developments in business structure
The changing economic environment has forced companies to reconsider their business structures and
incorporate necessary changes. Respondents were asked how they see their companies business structures
changing in the next 12 months, and if they will be expanding or diversifying into specific markets or product
sectors. The answers have been segmented into different stakeholder categories, which identify the apparent
changes anticipated across the industry and provide insights into general airport industry dynamics.
The top three key expected changes for 2011 are expand in current market, introduction of new products
and services and expand abroad. Companies have assigned high importance to the launch of new
innovative products and services, and managing prices. For example, Orville Redenbacher, a popcorn
specialist based in the US, introduced a new microwavable popcorn bag that is considered to be extremely
consumer friendly. On a similar note, Borealis, involved in chemical and innovative plastics solutions,
introduced a new packaging film, BorShape.
Expansion in current markets remained the highest priority in 2011, and respondents plan to increase theirproduct lines and expand facilities in present locations. For example, Moses H Cone Memorial Hospital has
begun construction of its US$200 million North Tower in Greensboro, North Carolina. This will add an
additional 79,248 square meter to the hospitals existing area and allow it to replace semi-private rooms with
96 private patient rooms designed to enhance patient recovery and safety.
Figure 5: Key Expected Changes in Business Structure (%), 2011
Source: ICD Research Industry Survey 2011 ICD Research
70
51
37
30
27
16
3
1
Expand in current market
New products and services
Expand abroad
Stabilizing company finances
Hiring new talent
Pricing management
Other
Don't know
Question: Globally, what are your company's top priorities in the next 12 months?(% respondents)
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3.3 Merger and acquisition activity predictions
Overall, executives from all industries expect to see increased levels of consolidation, with 61% of
respondents predicting that there will be either a significant increase or an increase in M&A activity over the
next 12 months. ICD Researchs 2011 survey highlights improving operational efficiency to attain economies
of scale, increases in geographical presence and business competence, and increases to customer bases for
better return on investment (ROI) as the key drivers for M&A activity.
A high proportion of respondents expected that, due to market uncertainty, small companies may have found it
difficult to sustain credit lines and will look to larger companies for support. For instance, a C-level executive of
an airport operator company based in North America states: Repeated losses due to the economy have
made consolidation and mergers the only sensible business solution for many industries. At this point, it is not
so much a matter of business success that is key, but having a revenue source that is stable.
In a competitive and technology-driven market, unstructured business entities are most favorable for
consolidation in the process of growth. The current security and surveillance market is fragmented andunstructured, but is likely to witness a number of acquisitions to improve growth through collaborative efforts in
technology, research and innovation,explains a board-level executive of a defense security and surveillance
company based in Europe.
Attempts to reduce operational costs and increase organizational efficiencies are also major factors in the rise
in consolidation expectations. For example, a C-level executive from a packaging converter company in
Europe comments: A significant number of smaller converters or packaging companies will be struggling to
survive as operational costs increase to unprecedented levels. Such spiraling costs will drive smaller
companies to either sell or close their businesses. For their customers sakes, however, these companies
should opt to sell. Other factors that help to create a favorable environment for M&A are a steady
improvement of the global economy and equity market, intention to increase current facilities to meet
overwhelming demand, intention to achieve synergies and reduce costs, low interest rates and financial
support from governments in accelerating growth.
Table 7: Merger and Acquisition Activity Expectations (%), 2011
Expectations Percentage
Significant increase 15%
Increase 46%
No change 23%
Decrease 2%
Significant decrease 1%
Dont know 12%
N.B. Responses are not mutually exclusive, and therefore do not equal 100%
Source: ICD Research Industry Survey 2011 ICD Research
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3.3.1 Merger and acquisition activity predictions by region
The majority of respondents from North America and Europe expect an increase in M&A activity during the
next twelve months. Of companies that operate in North America, 67% expect increased level of M&A activity,
while 60% of respondents from Europe have similar expectations.
Table 8: Merger and Acquisition Activity Expectations by Region (%), 2011
Expectations North America Europe Asia-Pacific Rest of the World
Significant increase 16% 13% 15% 20%
Increase 51% 47% 44% 39%
No change 22% 24% 25% 19%
Decrease 2% 2% 3% 2%
Significant decrease - 1% 1% 2%
Dont know 8% 13% 12% 18%
Overall 100% 100% 100% 100%
N.B. Results may not equal 100% due to rounding
Source: ICD Research Industry Survey 2011 ICD Research
Figure 6: Merger and Acquisition Activity Expectations by Region (%), 2011
Source: ICD Research Industry Survey 2011 ICD Research
16
51
22
2
0
8
13
47
24
2
1
13
15
44
25
3
1
12
20
39
19
2
2
18
Significant increase
Increase
No change
Decrease
Significant decrease
Dont know
Question: What change do you expect to see in the number of mergers and acquisitionsin your industry over the coming 12 months and why? (% respondents by region)
North America Europe Asia-Pacific Rest of the World
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3.3.2 Merger and acquisition activity predictions by company turnover
An analysis of survey results reveals that 82% of respondents from large companies expect an increase in
merger and acquisition activity during the next twelve months, while 74% of respondents from medium-sized
companies and 60% from smaller companies and anticipate similar trends. Using synergies between multiple
partners or organizations, such as purchasing and integrated flight networks, helps us to reduce costs and
improve our strategic position in the market, says a board level respondent from an airports systems
integrator company that operates in Europe.
Table 9: Merger and Acquisition Activity Expectations by Company Turnover (%), 2011
Expectations Less than US$100 million US$100 millionUS$1 billion More than US$1 billion
Significant increase 15% 19% 19%
Increase 45% 55% 63%
No change 23% 19% 11%
Decrease 2% 2% -
Dont know 13% 5% 7%
Overall 100% 100% 100%
N.B. Results may not equal 100% due to rounding
Source: ICD Research Industry Survey 2011 ICD Research
Figure 7: Merger and Acquisition Activity Expectations by Company Turnover (%), 2011
Source: ICD Research Industry Survey 2011 ICD Research
15
45
23
2
13
19
55
19
2
5
19
63
11
0
7
Significant increase
Increase
No change
Decrease
Dont know
Question: What change do you expect to see in the number of mergers and acquisitionsin your industry over the coming 12 months and why?
(% respondents by company turnover)
Less than US$100 mil lion US$100 mil lionUS$1 bil lion More than US$1 bil lion
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4 Market Growth Outlook
This chapter provides a definitive assessment of the emerging regions on which marketing executives should
concentrate, and their interpretation of the economic situation in developed regions. Responses were
categorized by company type, region and turnover.
Key Findings:
China, India, Brazil and Middle East are considered to be the most promising emerging markets in 2011.
Large companies prefer Russia and South Africa as the other two promising regions, while medium-sized
companies consider Eastern Europe and the Middle East as having high potential for growth.
India, China and the Middle East have been identified as the most promising markets by C-level
respondents throughout all regions.
The top five developed countries expected to generate the most demand in 2011 are the US; Singapore,
Taiwan and Hong Kong; Australia; Germany and the UK.
Companies operating in North America expect to invest in the US, while respondents from Asia-Pacific
gave more importance to Singapore, Taiwan and Hong Kong, and Australia.
Irrespective of turnover, Singapore, Taiwan and Hong Kong, Australia and the US are identified as the
developed regions with the most growth potential.
Figure 8: Top Ten Growth Regions (%), 2011
Source: ICD Research Industry Survey 2011 ICD Research
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4.1 Demand in emerging markets
Developments following the global economic crisis of 20082009 suggest that demand and consumption will be
increasingly sourced from emerging economies. As a result, multinational corporations are viewing emerging
economies not only as production locations, but also as major customer bases for future growth. Respondentswere asked: Which emerging markets do you expect to offer your industry the most growth over the next 12
months? Responses have been categorized by different stakeholder categories to iden tify specific growth
regions.
The top five emerging markets expected to offer most opportunities for industry growth in 2011 include China
with 33% of respondents, India with 30%, Brazil with 24%, the Middle East with 22% and Eastern Europe with
22%.
Chinas growth is expected to increase in 2011 due to strong market potential, strong economic growth and
sufficient labor resources. Both China and India have become very attractive to foreign investors due to their
strong economic growth. For example, CSR Zhuzhou Electric Locomotive Research Institute Co., Ltd., asubsidiary of CSR Corporation Ltd. (CSR), signed an agreement with Wabtec Corporation, based in the US, in
May 2011. Under the agreement, the company will manufacture braking systems for rail cars.
Domestic companies are competing with multinational companies in the Chinese market. For example, Zhuhai
United Laboratories, a Hong Kong-headquartered pharmaceutical manufacturing company, expects to invest
US$151.42 million for the development of the domestic insulin market, which is usually dominated by foreign
players.
India plans to place more emphasis on PPP projects, particularly regarding plans that have been proposed in
the India Vision 2020 document. For example, software service provider Infosys Technologies has already
secured government projects to design intelligent power grids for several state governments in India; the
company plans to secure more government contracts in the near future. Similarly, a new coal power plant is
currently under construction in Gujarat, India; the new plant is expected to be one of the biggest coal-fired
plants in the world and will be commissioned in 2012.
Other emerging markets with strong growth potential are:
Rwanda
Peru
Chile
Nigeria
VenezuelaUAE (Dubai)
Central and Eastern European countries
The Caribbean Islands
The Philippines
Indonesia
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Table 10: Demand in Emerging Markets (%), 2011
Market Percentage
China 33%
India 30%
Brazil 24%
Middle East 22%
Eastern Europe 22%
Russia 19%
South Africa 12%
Saudi Arabia 10%
Turkey 10%
Indonesia 9%
Mexico 9%
Argentina 7%
Vietnam 7%
N.B. Responses are not mutually exclusive, and therefore do not equal 100%
Source: ICD Research Industry Survey 2011 ICD Research
Figure 9: Demand in Emerging Markets (%), 2011
Source: ICD Research Industry Survey 2011 ICD Research
7
7
9
9
10
10
12
19
22
22
24
30
33
Vietnam
Argentina
Mexico
Indonesia
Turkey
Saudi Arabia
South Africa
Russia
Eastern Europe
Middle East
Brazil
India
China
Question: Which emerging markets do you expect to offer your industry the mostgrowth over the next 12 months? (% all respondents)
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4.1.1 Demand in emerging markets by region
According to respondents from different regions, China, India and the Middle East are expected to register most
growth. Although some similarities exist throughout regions regarding emerging markets identified for growth,
the order of importance assigned to different markets varies by region.
In North America:
China
India
Brazil
In Europe:
Eastern Europe
China
Russia
In Asia-Pacific:
India
China
Middle East
In the Rest of the World:
Brazil
Saudi Arabia
Middle East
Figure 10: Demand in Emerging Markets by Region (%), 2011
Source: ICD Research Industry Survey 2011 ICD Research
0
10
20
30
40
50
Russia
China
India
Brazil
Argentina
Indonesia
MexicoSaudi Arabia
South Africa
Turkey
Vietnam
Middle East
Eastern Europe
Question: Which emerging markets do you expect to offer your industry themost growth over the next 12 months? (% respondents by region)
North America Europe Asia-Pacific Rest of the World
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4.1.2 Demand in emerging markets by company turnover
Irrespective of turnover, emerging markets such as China, India and Brazil are identified as the regions with
the largest growth potential in the industry in the next 12 months. The survey results show that, apart from
these regions, large companies identify Russia and South Africa as the other promising regions, whilemedium-sized companies consider Eastern Europe and the Middle East as having high potential for growth.
Figure 11: Demand in Emerging Markets by Company Turnover (%), 2011
Source: ICD Research Industry Survey 2011 ICD Research
0
10
20
30
40
50
60
Russia
China
India
Brazil
Argentina
Indonesia
MexicoSaudi Arabia
South Africa
Turkey
Vietnam
Middle East
Eastern Europe
Question: Which emerging markets do you expect to offer your industry themost growth over the next 12 months? (% respondents by company turnover)
Less than US$100 m illion US$100 m illionUS$1 billion More than US$1 billion
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4.2 Growth expectations in developed countries
Many critics cite developed regions as the most negatively affected by the global economic crisis in 2008
2009. As a result, emerging markets have attracted increasing amounts of investment over the last two years,
due to improved chances of ROI. However, as the world economy enters a recovery phase, there areindications that developed regions will offer increased opportunities for the airports industry in 2011. This
section identifies the developed countries expected to offer the most growth potential. Respondents were
asked: How do you expect economic conditions to change in the following regions in 2011?
Survey results indicate that the top five developed countries expected to generate demand in 2011 are the
US; Singapore, Taiwan and Hong Kong; Australia; Germany; and the UK. The US is one of the most important
developed markets in the world: for example, NV Energy has added a 484MW combined-cycle plant at its
existing 144MW Harry Allen Generating Station in Nevada, US. The new facility will be able to meet 80% of
Southern Nevadas energy needs. Similarly, in April 2011, American Airlines and Japan Airlines (JAL) entered
into a close co-operation agreement to provide cargo customers with more routing choices, new destinations,
and increased cargo capacity by utilizing their mutually combined worldwide network.
Singapore acts as a significant trading base for the South-East Asian region, with low corporate taxes and
strong intellectual property rights attracting companies to set up their operations in the region. On a similar
note, in April 2011, Pan Pacific Hotels & Resorts announced that it will launch its flagship Parkroyal hotel in
Singapore in 2012, located at the key gateway into the central business district and the Raffles Place financial
hub. On a similar note, Hon Hai Precision, the parent of Taiwanese IT giant Foxconn, plans to buy a stake in
E-Ton Solar Tech, a Taiwanese solar cell company, for a consideration of US$130 million. The investment is
in line with Hon Hai's new development policies targeting clean energy.
Table 11: Growth Expectations in Developed Countries (%), 2011
Growth expectations Increase Remain the same Decrease Don't know Overall
USA 43% 30% 12% 15% 100%
Singapore, Taiwan and Hong Kong 41% 27% 3% 29% 100%
Australia 35% 33% 6% 25% 100%
Germany 34% 39% 6% 21% 100%
UK 31% 37% 16% 16% 100%
Canada 30% 40% 4% 25% 100%
South Korea 28% 32% 7% 33% 100%
Japan 27% 21% 27% 26% 100%
France 20% 44% 13% 24% 100%
Italy 13% 41% 20% 26% 100%
Spain 13% 34% 28% 25% 100%
N.B. Results may not equal 100% due to rounding
Source: ICD Research Industry Survey 2011 ICD Research
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4.2.1 Growth expectations in developed countries by region
An analysis of responses by region reveals significant variations with respondents from companies with
leading operation in North America expected to invest in the US, while respondents from Asia-Pacific gave
more importance to Singapore, Taiwan and Hong Kong, and Australia. Respondents from Europe expect to
invest in Germany and UK, while Japan seems promising to respondents from companies operating in theRest of the World. Overall, developed markets identified for growth by respondents in various regions are:
In North America:
USA
Canada
In Europe:
Germany
UK
In the Asia-Pacific:
Singapore, Taiwan and Hong Kong
Australia
In the Rest of the World:
Japan
Singapore, Taiwan and Hong Kong
Figure 12: Growth Expectations in Developed Countries by Region (% Increase Responses), 2011
Source: ICD Research Industry Survey 2011 ICD Research
0%
10%
20%
30%
40%
50%
60%
70%USA
Canada
UK
Germany
France
ItalySpain
Japan
South Korea
Australia
Singapore, Taiwanand Hong Kong
Question: For the following developed markets how do you expect demand tochange in 20112012? (% respondents by region)
North America Europe AsiaPacific Rest of the World
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4.2.2 Growth expectations in developed countries by company turnover
An analysis of growth expectations for developed countries by company turnover reveals no significant
variation. Irrespective of turnover, Singapore, Taiwan and Hong Kong, Australia and the US are identified as
the developed regions with the most growth potential. Nevertheless, large companies also gave high
preference to South Korea and Japan, while small companies consider Germany and the UK to be promising.
Figure 13: Growth Expectations in Developed Countries by Company Turnover (% Increase), 2011
Source: ICD Research Industry Survey 2011 ICD Research
0%
10%
20%
30%
40%
50%
60%
USA
Canada
UK
Germany
France
ItalySpain
Japan
South Korea
Australia
Singapore, Taiwanand Hong Kong
Question: For the following developed markets how do you expect demand tochange in 20112012? (% respondents by turnover)
Less than US$100 million US$100 millionUS$1 billion More than US$1 billion
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5 Threats and Opportunities
Constantly changing business dynamics present both threats and opportunities to companies operating across
all industries. The most important challenges facing companies and how these can be overcome have been
captured in our industry survey. In addition, respondents were surveyed on how suppliers can better maintainor win business from buyers, and where the key areas of opportunity lie during the next 1218 months.
Key Findings:
Market uncertainty, responding to pricing pressure and cost containment are the most immediate
business concerns for the industries.
Regulatory change seems to be a leading concern for companies operating in North America, while
responding to pricing pressure is of higher importance to companies with leading operations in Europe.
Rising competition and the retention or recruitment of skilled staff remains a more immediate business
concerns for larger companies than small and medium-sized companies.
Industry respondents consider innovate products, improved customer service, provide support for
generating new business, engage in partnerships to optimize working capital and reduce costs, improve
payment terms and reduce prices to be the foremost actions for suppliers to secure business.
Reduce prices and work harder to reduce costs are considered of higher importance to large
companies than to medium-sized and small companies.
5.1 Leading business concerns for 20112012
Of all the challenges industry executives are expected to face in 2011, market uncertainty, responding to
pricing pressure and cost containment are the most immediate business concerns. While 51% of companies
rate market uncertainty as the most important business concern during 20112012, a further 39% rate
responding to pricing pressure as the second-most-important concern. Similarly, cost containment and
rising competition are considered to be the other significant business challenges in 20112012 by 37% and
32% of the industry respondents respectively.
Market uncertainty is considered a leading concern by most companies , as falling or limited demand has
increased price competition between companies. With the aim of increasing revenues, business models have
to be reworked to avoid the prospect of markets being lost. For example, major European home decoration
companies such as Saint-Gobain, DIY and B&Q have closed retail stores in prominent cities in China due to
low individual demand.
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According to 37% of respondents, cost containment is a major concern. Rises in raw material prices have
become a leading business challenge and many companies are on the lookout for innovative solutions.
Increased competition has led to increased pricing pressure for many companies, which in turn has negatively
affected their profitability. Many companies are forced to innovate and differentiate products, and at the same
time save considerable amounts in operational costs. A C-level respondent from a supplier company based in
North America states: Mycompany is focused on the development and application of new technologies for
increasingly sophisticated missions and mission support.
Retention or recruitment of skilled workforce is a leading concern, as identified by 28% of respondents. In
order to retain staff, many companies plan to raise salaries substantially in 2011. Other incentives including
education programs and fringe benefits are on the cards.
Table 12: Leading Business Concerns (%), 20112012
Leading business concerns 20112012
Market uncertainty 51%
Responding to pricing pressure 39%Cost containment 37%
Rising competition 32%
Retention or recruitment of skilled staff 28%
Political interference 25%
Regulatory change 24%
Reducing debt or bad debt 17%
Dealing with staff shortages 15%
Others 4%
N.B. Responses are not mutually exclusive, and therefore do not equal 100%
Source: ICD Research Industry Survey 2011 ICD Research
Figure 14: Leading Business Concerns (%), 20112012
Source: ICD Research Industry Survey 2011 ICD Research
4
15
17
22
25
28
32
37
39
51
Others
Dealing with staff shortages
Reducing debt or bad debt
Regulatory change
Political interference
Retention or recruitment of skilled staff
Rising competition
Cost containment
Responding to pricing pressure
Market uncertainty
Question: What are the biggest concerns for your organization in 20112012?(% all respondents)
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5.1.1 Leading business concerns for 20112012 by region
Market uncertainty, cost containment and retention or recruitment of skilled staff remains the leading
business challenges for respondents throughout regions.Highlighting this concern, a board member of a coal
mining company in North America states: Our company is expecting a severe shortage of skilled technical
labor which could be asignificant constraint on our business growth.
Table 13: Leading Business Concerns by Region (%), 20112012
Leading business concerns North America Europe Asia-Pacific Rest of the World
Market uncertainty 52% 56% 45% 44%
Regulatory change 37% 20% 18% 24%
Retention or recruitment of skilled staff 36% 19% 34% 34%
Cost containment 33% 36% 43% 36%
Responding to pricing pressure 32% 46% 36% 36%
Political interference 30% 20% 24% 34%
Rising competition 29% 30% 38% 36%
Dealing with staff shortages 17% 9% 21% 19%
Reducing debt or bad debt 17% 16% 14% 21%
Others 5% 3% 5% 2%
N.B. Responses are not mutually exclusive, and therefore do not equal 100%
Source: ICD Research Industry Survey 2011 ICD Research
5.1.2 Leading business concerns for 20112012 by company turnover
Irrespective of size, companies consider market uncertainty, cost containment and responding to pricing
pressure to be the three leading business concerns. However, rising competition and the retention or
recruitment of skilled staff remains a more immediate business concerns for larger companies than small andmedium-sized companies.
Table 14: Leading Business Concerns by Company Turnover (%), 20112012
Leading business concerns Less than US$100 million US$100 millionUS$1billion More than US$1 billion
Market uncertainty 52% 36% 41%
Responding to pricing pressure 38% 48% 44%
Cost containment 36% 48% 48%
Rising competition 32% 35% 48%
Retention or recruitment of skilled staff 28% 31% 44%
Political interference 25% 27% 22%
Regulatory change 23% 36% 30%
Reducing debt or bad debt 17% 17% 7%
Dealing with staff shortages 14% 18% 22%
Others 4% 3% 4%
Source: ICD Research Industry Survey 2011 ICD Research
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5.2 Key supplier actions to maintain and secure buyer business
Global economic uncertainty has made cost concerns a higher priority for most companies. Simultaneously,
demand is changing as regular patterns of purchasing have become disrupted due to the recession and a
subsequent tentative move into recovery in some parts of the world. These changes require proactive and
improved methods of securing new business, as well as maintaining current business, as industry buyers
review their current supplier bases more closely.
Respondents were asked to identify the three most important ways that suppliers can secure business from
buyers in the current economic climate. Survey results show that, in 2011, suppliers identified innovate
products, improve customerservice, provide support for generating new business, engage in partnerships
to optimize working capital and reduce costs, improve payment terms and reduce prices as key factors to
secure business, as expressed by 46%, 43%, 39%, 39% and 29% respectively of C-level respondents.
To improve customer service and reduce costs, some companies are showing willingness to form partnerships
with suppliers. A C-level executive from a power industry supplier company operating in North America says:Mycompany is looking to collaborate with other companies in the power sector to significantly reduce lead
times and meet commitments.Another board-level respondent of a mining equipment supplier company with
leading operations in Asia-Pacific states: Our company is focused on providing technical support that is, in a
way, related to customer service for our clients.
Figure 15: Actions to Maintain and Secure Buyer Business (%), 2011
Source: ICD Research Industry Survey 2011 ICD Research
1
2
9
13
18
22
24
28
28
29
39
39
43
46
None of these
Other
Provide support f or offsetting existing business attrition
Provide other concessions and incentives
Demonstrate better ROI
Sign long term agreements
Off er more flexibility in delivery
Work harder to reduce costs
Reduce prices
Improve payment terms
Provide support for generating new business
Engage in partnerships to optimize working capital and
Improve customer service
Innovate products
Question: What are the three most important ways that suppliers can help buyers'business in the current business climate? (% respondents)
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5.2.1 Actions to maintain and secure buyer business by region
Respondents across all regions rank efforts to innovate products, provide support for generating new
businesses, improve customer service and engage in partnerships to optimize working capital and reduce
costs as the leading actions suppliers should take to secure business. For example, a C-level executive from
a hydropower generation company operating in Asia-Pacific states: We expect our suppliers to provide good-
quality products and services at a reasonable price.
Respondents from North America and Europe region give importance to innovate products as t echnological
innovation can help reduce costs, enable the development of more efficient processes and bring products to
market more quickly than in the past. For example, InterCall Europe, a UK-based arm of Intercall Inc.,
introduced a new line of easy-to-install and competitively priced conferencing packages designed for small
and medium-sized businesses under the InterCall SMB portal in April 2011.
Table 15: Actions to Maintain and Secure Buyer Business by Region (%), 2011
Actions
North
America Europe Asia-Pacific
Rest of the
World
Innovate products 52% 48% 45% 35%
Provide support for generating new business 43% 40% 35% 40%
Engage in partnerships to optimize working capital and reduce costs 40% 38% 39% 44%
Improve customer service 39% 41% 50% 43%
Work harder to reduce costs 26% 29% 26% 29%
Demonstrate better ROI 23% 19% 16% 14%
Improve payment terms 22% 26% 32% 40%
Reduce prices 22% 28% 31% 32%
Sign long-term agreements 18% 19% 26% 32%
Offer more flexibility in delivery 18% 24% 24% 28%
Provide other concessions and incentives 12% 12% 12% 17%
Provide support for offsetting existing business attrition 9% 10% 8% 7%
Others 4% 1% 3% 1%
None of these 2% 1% 1% 1%
N.B. Responses are not mutually exclusive, and therefore do not equal 100%
Source: ICD Research Industry Survey 2011 ICD Research
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5.2.2 Actions to maintain and secure buyer business by turnover
An analysis of responses by company turnover identified minor variations in responses and attitudes.
Irrespective of size of company turnover, innovate products, improve customer service, engage in
partnerships to optimize working capital and reduce costs and provide support for generating new business
are identified as the major actions for suppliers to maintain and secure business with buyers. However, reduce
prices and work harder to reduce costs are considered of higher importance to large companies than to
medium-sized and small companies.
Figure 16: Actions to Maintain and Secure Buyer Business by Company Turnover (%), 2011
Source: ICD Research Industry Survey 2011 ICD Research
0
0
11
11
11
30
22
33
33
11
44
22
59
59
1
0
9
12
26
23
24
35
26
30
39
30
43
46
1
2
9
13
18
22
24
27
28
29
39
40
42
46
None of these
Others
Provide support for off setting existing business attrition
Provide other concessions and incentives
Demonstrate better ROI
Sign long term agreements
Offer more flexibility in delivery
Work harder to reduce costs
Reduce prices
Improve payment terms
Engage in partnerships to optimize working capital andreduce costs
Provide support for generating new business
Improve customer service
Innovate products
Question: What are the three most important ways that suppliers can help buyers'business in the current business climate? (% respondents by company turnover)
Less than US$100 million US$100 millionUS$1 billion More than US$1 billion
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6 Procurement Dynamics
This chapter reveals the current size of companies procurement budgets and how spending in supplier
organizations will change, providing insight into the buying behaviors and market competition for supplier
companies. Forward-looking expectations for category-level spending on specific products and services revealthe future needs in the industry and identify vital business opportunities for suppliers.
Key Findings:
For 2011, the average size of the global, annual procurement budget is estimated at US$26 million.
Respondents in Asia-Pacific have the highest procurement budgets, at US$47 million in 2011, followed by
the Rest of the World at US$35 million and North America at US$22 million.
Procurement budgets of survey respondents are expected to rise by an average of 11% over the next 12
months.
The greatest increase in procurement budgets is expected for respondents that primarily operate in North
America, as they expect a 13% budget increase. This is in contrast to respondents in Europe, who are
expected to see the lowest increase in spending.
Respondents from large companies expect their procurement expenditures to increase by an average of
8% over the next 12 months, while respondents from small companies expect their procurement
expenditure to rise by 10%.
Of all respondents, 63% expect an increase in supplier prices, while 13% expect a decrease and 21%
expect no change.
Of respondents from companies that operate in North America and the Rest of the World, 68% each
expect supplier prices to increase, followed by respondents from Europe with 61% expecting an increase.
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PROCUREMENT DYNAMICS
Global CEO Business Outlook Survey 20112012 Page 35
ICD Research. This product is licensed and is not to be photocopied Published: August 2011
6.1 Annual procurement budgets
The total size of the annual procurement budgets reveals the potential available share of expenditure to
suppliers. This section identifies budgets by company type, turnover and region. For 2011, the average size of
the global annual procurement budgets is estimated at US$26 million. While 41% of respondents indicate that
they will restrict their procurement budgets to less than US$250,000 in 2011, 21% of respondents expect their
annual procurement budgets to range between US$1 million and US$10 million.
Companies are also expected to invest in developing advanced technologies to reduce costs and enhance
brand value. Some companies plan to enhance their product mix and market presence through acquisitions.
For example, Terra Firma, a high-voltage-grid operator based in Italy, acquired Rete Rinnovabile Srl, a solar
energy comp