Recent Searches
This global survey captures cross-sector perspectives from more than 1,200 chief executives on their most pressing strategic challenges. EY-Parthenon Strategy Partner at EY Australia, Grant Mitchell outlines his top three takeaways set to impact the business landscape in the next financial year.
CEOs are confronting an unusually volatile economic and geopolitical landscape. An overwhelming 98% of global CEOs are concerned about rising trade barriers – half say they are very concerned. 42% cite geopolitical, macroeconomic and trade uncertainty as the number-one risk to meeting their growth targets - double the next biggest risk, which is cybersecurity.
This uncertainty is causing real effects. 54% of CEOs are delaying investments, 44% are reorganising supply chains, and 39% have relocated operations to other countries.
While the majority of CEOs are responding, certain sectors are notably more influenced by geopolitical issues. In the consumer products and manufacturing industries, only 10% of CEOs report no change as a result of geopolitical or trade policy shifts. Conversely, in the power and utilities sector, this figure is 30%, likely due to a combination of limited operational flexibility and lower exposure to these policies.
Some CEOs are planning for a lasting geostrategic and tariff balance. Innovation is increasingly complementing onshoring, with designing out tariffed materials nearly as common as domesticating supply chains. Irreversible actions are prevalent: 40% of CEOs have relocated assets to another region, and 20% have exited a geographic market entirely.
Indeed, a pivotal question for CEOs may be whether and how to accommodate a geopolitical situation that appears to be more challenging for some time. In a volatile environment, for how long is it possible to postpone moves vs taking advantages of reset opportunities?
Some questions for boards and CEOs
Despite uncertainty, CEOs report high levels of intent around corporate actions. Globally, only 1% of CEOs claim not to be planning acquisitions, divestments or JVs, with plans to acquire 60% more prevalent than divestments.
Motives for action differ across sectors. In acquisitions, CEOs focus on either consolidation to expand value chains and scale operations or enhancement to enter new markets and gain technologies or capabilities. Thus, acquisition activity extends corporate strategies and industry direction.
CEOs report strong value creation from recent deals. Of those who completed acquisitions or divestments in the last two years, 55% say the value creation met or exceeded expectations, while 23% report some value creation but below expectations. Only 2% of CEOs report that their deals destroyed value.
This historic view of significant success is consistent with the widespread intent to take action in the future. But it also challenges conventional wisdom – and a number of previous quantitative studies - that many M&A deals fail to create value, particularly on the buy side.
These survey findings highlight two key issues for Boards and CEOs. First, if the self-reported results are accurate, they need to review their dealmaking processes, including business development, deal execution, and post-merger integration. Second, they must reconcile a volatile environment with their competitors' intent to remain active in the asset market.
Some questions for boards and CEOs
The survey also gauges CEOs' attitudes towards AI implementation, focusing on key trade-offs regarding its pace and approach.
Most CEOs are increasing AI investments due to declining costs. Globally, 37% of CEOs are expanding AI, while 27% remain cautious due to regulations and geopolitical risks. CEOs in retail, technology, and mobility sectors are more careful, likely because these areas are vulnerable to cybersecurity and geopolitical challenges.
Most CEOs also believe the experience of AI implementation to date encourages further acceleration rather than scaling back. In all surveyed sectors, CEOs are 44% more likely to agree they are accelerating based on results vs scaling back due to mixed or disappointing returns. Sector experience does vary, however.
Broadly speaking, CEOs in capital-intensive industries are experiencing positive results from AI implementation. Specifically, CEOs in the oil and gas sector are 2.9 times more likely to be accelerating their AI initiatives than scaling them back, while mining CEOs are 1.8 times more likely to do the same. The survey results among CEOs are balanced, with telecoms, retail, and consumer products falling into this group.
However, the approach to AI implementation remains less clear. CEO attitudes towards AI adoption decisions vary. Even in sectors where CEOs are inclined to accelerate AI implementation, there is little consensus on whether the adoption should be driven centrally or at a departmental level.
These survey results suggest CEOs are genuinely uncertain about the best approach, or AI implementation approaches are driven by the nature of the implementation or the characteristics of the organisation rather than adherence to any kind of best practice. There is, for now, no correlation between the returns being experienced by CEOs and the implementation approach.
Some questions for boards and CEOs
While CEO surveys provide but a small snapshot of what is happening in the minds of CEOs, they are also important sources of competitive intelligence. Across all areas of this survey, the picture that emerges of CEO thinking is increasing maturity in responses to geostrategic issues; increasing confidence in value creation through inorganic activity; and an acceleration of AI pace with an increasing realisation of the importance of context and specific objectives in making implementation decisions. For leaders, comparing their attitudes and approaches to the answers of others can stimulate important, contemporary questions that might be part of a Board and CEO agenda for the next 12 months.
