Competitive Environment a Great Challenge to Growth
October 12 2009 by Fayazuddin A. Shirazi
Despite talks of an early economic recovery, CEOs still believe the competitive environment triggered by the onset of the recession is impacting the growth prospects of their companies and is a biggest challenge facing them at the moment. According to a CEO survey by Frost & Sullivan, majority of the CEOs believe growth is their top priority and to achieve the growth, sales have to be stepped up.
The third annual survey by Frost & Sullivan, a San Antonio, Texas based business research firm, revealed that CEOs feel competitive environments pose largest challenge to growth and that the recession is greatly impacting the growth prospects of their companies.
The survey which assessed the responses from CEOs on growth plans, organizational abilities, management development, external and internal corporate challenges, media perceptions, and corporate reputation to CEOs, Presidents, and Chairpersons, found that 60 percent of respondents consider growth as their top objective – down from 84 percent in 2008 – followed by vision strategy and innovation. Surprisingly, CEOs rate employee satisfaction and shareholder satisfaction as the lowest growth objectives.
When asked how they would achieve the coveted growth, CEOs had varied ideas, with majority of them seeing sales as the crucial tool to bolster the company growth. About 45 percent of CEOs reported increase in sales to be the number one projected growth strategy, followed by strategic partnering (40 percent) and product development (34 percent) which also are instrumental in achieving the desired growth, the CEOs said.
Additionally, customer strategies and geographic expansion have also been utilized by nearly one third of CEOs (both 29 percent). For its second consecutive year, the least successful growth strategy appears to be growth outsourcing (5 percent), the survey report pointed out.
“The numbers are clear,” explains Tonya Fowler, Global Director with Frost & Sullivan’s Customer Research Team. “Consistent with last years results, CEOs remain committed to growth and will utilize a combination of strategies to achieve this goal,” Fowler said in a media release.
Interestingly, Dennis Sommer, sales guru also believes increasing sales drive the growth of a company. However, he says, CEOs looking to increase sales, profit margins and drive new business growth should pull themselves out of the day to day issues and concentrate on core areas of business.
“When times get tough, CEO’s spend more time in the details of the business. By doing this, CEOs lose sight of what is most important, focusing on how to improve business performance in a changing competitive environment,” Sommer noted in his article with SalesHQ, an online community for sales professionals.
Sommer, founder and CEO of Executive Business Advisers, a Columbus, Ohio based business and management consulting firm prescribes a five point formula to achieve growth by focusing marketing dollars on value and not on brand. “Focusing your time and money on “brand marketing” may boost your brand recognition but it doesn’t generate revenues,” he remarks.
“Showing customers what value your product or service provides will generate top line sales revenue. Spend more on such marketing campaigns which gives your customer first hand information on your products value,” reiterates Sommer.
Additionally, a joint survey by the Inside Indiana Business, Ice Miller, and the Butler University College of Business also found that 58 percent of the surveyed CEOs consider sales and business development to be the most crucial areas for them to concentrate.
“CEOs responded somewhat intuitively that sales & business development functions would be two of the most important executive level functions that would help them in executing successfully post economic recovery. Somewhat less intuitively, the third most important functional area ranked was product development,” the Butler University survey noted.
Meantime, corroborating the Butler University study, the Frost & Sullivan report recorded largest decline of CEO confidence in launching new products (31 percent), down 22 points from 2008 (53 percent).
Marred by current economic conditions, CEOs appeared less confident in their organizations’ ability to conduct core growth strategies. The most prominent external challenge to CEOs is the economic recession (65 percent), up 17 percentage points from 2008 (48 percent). All other external challenges appear to have become afterthoughts – becoming less important in just a short period of time, the Frost & Sullivan report observed.