Global companies can no longer operate in isolation from the dynamics of the global economy.
The outlook for global economies is weak at best, with deterioration mostly arising from the Eurozone debt crisis, a weak US recovery and soaring commodity prices.
Business and consumer confidence is fragile and if it worsens it has the potential to drive a global recession. While there is a theme of growth in emerging markets, it is counter-balanced by the overall theme of stagnation in developed markets.
This is what is known as a “two-speed” economy and the uncertainty it generates creates barriers to equity investment and debt capital. Bank markets are hampered by:
- A supply/demand imbalance as a result of large refinancing requirements in leveraged economies
- The need for banks to quickly recapitalize in the light of sovereign downgrades, leveraged buyout risks and regulatory pressure.
In our recent survey of 1,200 leading companies, 79% of businesses reported that their markets are increasingly globalized through global demand and/or global operations.
The competitive environment for businesses today could be characterized as being both a battle for capital and a battle for growth. However, there are strategies and tactics that can be employed to give a business a better chance of succeeding: