FT Decision Dynamics - Global Business Outlook Survey 2012

Decision Dynamics 2012

DECISION
DYNAMICS

2012
Global Business Outlook Survey


March 2012

Dear Decision Maker,
This year makes the ninth year that the Financial Times has conducted the Global Business Outlook Study in
collaboration with Doremus.

Over 600 global senior decision makers once again shared their experiences and plans, providing
tremendous insight into their organizational and personal expectations for the coming year. As you will see,
optimism declined sharply this year compared to 2010. Six out of ten respondents expect further decline in the
global economy over the next six months. And nearly half of them do not believe the economy will recover until
or after 2013.

This study provides deep insights into global decision maker sentiment on a variety of issues including:

n Priorities and challenges for their organization
n Role of the CEO in the business purchase process
n Purchase process decision-making criteria
n Traditional, online and multi-media consumption
n Media attitudes
n Technology usage at work and home

We hope you find our Ninth Annual Global Business Outlook Study helpful and insightful. A special thank you to all
executives who participated in this year’s survey. We look forward to continuing the conversation.

Financial Times Global Customer & Market Insight Group
Anita Hague Daniel Rothman Enzo Diliberto
Global Director Americas Director Europe Director
Direct Line: 44 (0)20 7873 4151 Direct Line: 212-641-6468 Direct Line: 44 (0)20 7873 3349
anita.hague@ft.com daniel.rothman@ft.com enzo.diliberto@ft.com

About the Financial Times
The Financial Times, one of the world’s leading business news organizations, is recognized internationally for its
authority, integrity and accuracy. Providing essential news, comment, data and analysis for the global business
community, the FT has a combined paid print and digital circulation of 601,269 (Deloitte assured, 3 October 2011
to 1 January 2012) and a combined print and online average daily readership of 2.2 million people worldwide
(PwC assured, November 2011). FT.com has more than 4.3 million registered users and 267,000 paying digital
subscribers. The newspaper, printed at 22 print sites across the globe, has a global print circulation of 319,757
(ABC, January 2012).

2

Table of Contents

Page
Business Outlook 4 – 16
Economic Outlook 4–5
Corporate Goals and Challenges 6–8
Impact of Key Global Events 9
Investment 10
Employment 11
Criteria for Choosing Suppliers 12 – 15
Important Stakeholder Messages 16

Technology & Media 17 – 23
Tuned Into Media Throughout Day 17
Media Mix 18 – 19
Going Mobile 20
Use of Apps 21
Mobile and Tablet Trends 22
Media Attitudes 23 – 24

Executive Summary 25

Background & Methodology 26

3

Business Outlook

Economic Outlook
Levels of optimism plummeted again this year. Respondents are only slightly more optimistic about the global
and local economies than in 2008, and are at the same levels as 2008 for their industry and company. As in previ-
ous years, respondents do feel better about their own prospects than about the environment.

% Expecting Improvement

In the next six months, what changes do you expect in…global economic conditions, your local
economic conditions, your industry’s economic conditions, your company’s results?

Only 29% of respondents actually expect their company results to worsen, but four in ten are pessimistic about
their industry and more than half about their local economy (54%) and the global economy (59%). These are all
at the highest levels (other than 2008) since we first conducted this survey in 2003.

The only significant differences in outlook come from different geographies. In most previous years, Asian
respondents were more optimistic than Europeans or North Americans. This year Americans are noticeably more
optimistic about the local economy and their industries than either Europeans or Asians.

% Expecting Improvement
USA UK Cont Europe Asia
Global Economy 26% 24% 25% 25%
Local Economy 34% 19% 24% 24%
Industry 33% 23% 26% 15%
Company 46% 39% 37% 29%

4

Business Outlook

When asked specifically when the global economy will recover, almost half said not until 2013 or later.

% Expecting When Global Economy Will Recover

When do you expect the economy to recover?

5

Business Outlook

Corporate Goals and Challenges
Whatever the economic conditions and outlook, cost containment/improving efficiency has been at least tied for
the top spot among corporate goals since we began asking the question in 2004. This year is no exception: cost
containment/improving efficiency is a top objective for almost half of all companies and more than six in ten of the
largest companies. This year one of the growth goals – improving market share – has equal mentions to cost cut-
ting, and another – developing and marketing new products/services – is fairly close behind. Expanding into new
markets and finding and keeping talent continue to round out the top five goals, though well behind the top three.

% Citing as One of Top Three

Overall, which 2-3 of the following are the most important goals/priorities for your organization this year?

6

Business Outlook

Company size makes a difference on the top two goals: larger companies are more likely to be focused on efficiency,
while smaller companies are more focused on growth, specifically bringing new products and services to market.
Among the largest companies, efficiency is cited by more than twice as many respondents as is growth.


Overall, which 2-3 of the following are the most important goals/priorities for your organization this year?

There are a few differences among respondents:
n Focus on cost-cutting increases with company size, from 42% among the smallest companies to 63% of the
largest. The smallest companies are also less likely to have finding and keeping talent as a goal.

n Both developing new products and services and expanding into new markets are priorities for more of the
smaller companies than for their larger counterparts.

7

Business Outlook

Similar to the past two years, general market conditions remain the top challenge by a considerable margin,
mentioned by six in ten respondents. Global economic conditions moved back into second place, up 12% from
2010. Most other challenges are also rated about the same as they were last year, with some declines in concerns
about government regulation (38% to 26%) and new competitors entering the industry (25% to 15%).


Overall, which 2-3 of the following are the biggest external challenges to meeting your goals for the year?

8

Business Outlook

Impact of Key Global Events
In addition to their market challenges, seven in ten respondents say their business has already been impacted by,
or will be impacted by, low consumer confidence and the European debt crisis. In addition, US debt and budget
issues and global unemployment have or will impact more than half.

% Expecting or Experiencing Impact

Have any of these events significantly impacted your business during the past 12 months?
Do you expect any of these events to significantly impact your business in the next 12 months?

There are a few differences in how these issues impact respondents. For half of the issues (European debt crisis,
US debt/budget, Arab spring and Japan disasters), companies that operate globally are most likely to feel the
impact. And there are some differences by geography, with Asian respondents feeling the impact of European and
US economic issues more than might be expected.

% Has Impacted + % Expect Impact
USA UK Cont Europe Asia
European debt 44% 55% 71% 73%
US debt/budget 73% 29% 39% 60%
Unemployment 66% 33% 43% 42%
Japan disasters 25% 20% 20% 40%

9

Business Outlook

Investment
Despite the gloomy outlook, more companies plan to increase rather than decrease spending in most categories.
As in most previous years, IT is the area most likely to see increased spending. The 37% of respondents planning to
increase IT spending over the next 12 months are a little more than double those who plan to decrease spending.

% Planning Increases/Decreases for Next Year

Is your organization increasing or decreasing investment in the following areas compared to last year?

Overall, spending increases outnumber spending decreases in most categories by smaller margins than last year,
but better than in 2009.

Net Spending Change: % Increasing - % Decreasing
2009 2010 2011
IT 18% 35% 22%
Training 4% 16% 12%
R&D 9% 23% 11%
Advertising/Marketing -2% 18% 10%
Facilities -2% 7% 5%
M&A -2% 7% 5%
CSR -4% 6% 0%
Green 2% 4% -1%

10

Business Outlook

Employment
Only a quarter of companies plan to hire this year, while a similar number expect their organization’s
employment level to decrease. This is somewhat worse than in 2010 and very similar to 2009. Small companies
are most likely to maintain current levels of employment, while mid-sized and large companies are
considerably more likely to expect cuts.

Expected Year Over Year Change

How will your organization’s employment change compared to last year?

11

Business Outlook

Criteria for Choosing Suppliers
Apart from spending limitations, would-be suppliers to these companies face some other challenges. One is that
levels of trust in suppliers have been declining since we initiated this survey in 2003. Trust in suppliers from all
financial services categories have declined significantly again this year, with commercial and investment banks
being hit particularly hard.

Net Change in Level of Trust: Financial Services

Over the past year, how has the level of trust in your lead provider in the following categories changed?
(Graphs show the net of “more trusted” minus “less trusted”)

While trust in these categories is down significantly across the board, the biggest net decrease for commercial-
banking is not surprisingly among small company respondents.

12

Business Outlook

In the technology sector, declines are less severe. Telecom is seeing the worst net decrease. Here too, the biggest
net decrease is among the smallest companies.

Net Change in Level of Trust: Technology

Over the past year, how has the level of trust in your lead provider in the following categories changed?
(Graphs show the net of “more trusted” minus “less trusted”)

Among the supplier categories that were added to the survey in 2009, all saw net declines similar to the last two
years. Trust in employee benefit providers was a net -10% (-12% last year); advertising/communications
agencies were a net -7% (-10% last year); and law firms were -6% (-2% last year).

13

Business Outlook

Despite the negative trend in trust, respondents perceive many of these types of suppliers as becoming more
critical to their business over the next year or two. In particular, they see technology and advertising
communications providers increasing in importance. Management consultants are the one category of supplier
that is seen as being less important by a significant margin.

Net Change in How Critical Providers are to Business Strategy

Over the next year, do you expect the following categories of providers to become more or less critical to your business strategy?
(Graph shows the net of “more critical” minus “less critical”)

14

Business Outlook

In addition to trust issues, many buyers are looking at criteria beyond simply being provided with a quality prod-
uct or service at a competitive price. These other dimensions offer suppliers opportunities to restore trust and
out-perform competitors. And the lack of these dimensions can be enough to lose business. High ethical stan-
dards have always topped the list, which seems to dovetail with the growing trust issues.

This year, while the rank order of issues is almost identical to last year, all of the numbers are down, suggesting
that in a difficult environment, companies are not as choosey about who they work with.

% Enough to Preclude Doing Business With a Supplier

Meeting product or service specifications at a competitive price is usually the most important - but not the only -
business decision making criteria. Would the lack of any of the following keep you from doing business with a company?*

There are some geographic differences in how these issues are weighted. Asians generally put more weight on
these kinds of criteria, with significantly higher scores for financial performance, management, governance,
business strategy and brand name. Europeans are far less concerned with ethical standards than others, but
otherwise grade these criteria the same as do North Americans.

* In 2011 the question was changed from “Would a lack of any of the following keep you from doing business with a company?
Yes/No.” (Forced Answer). The 2011 question was tick all that apply.

15

Business Outlook

Important Stakeholder Messages
Although respondents have a different outlook than they did last year, a majority still see performance and trust
as the most important messages to convey to their various constituencies.

n Asian respondents rank things a bit differently than others, with stability edging out trust for second place and
growth getting the same number of mentions as trust.

n Ownership status makes a difference as well. Although both public and private companies view performance
as the most important stakeholder message, growth is a far more important message for public companies
(52% versus 32% for private companies), and trust is far more important for private companies (61% versus
44% of public companies).

% Stating Important Messages for Stakeholders

Which of the following corporate messages will be important for your company
to communicate to stakeholders through the recovery?

16

Technology and Media

Tuned Into Media Throughout the Day
Executives tend to have an almost insatiable appetite for information. At any given time in the day, they are using
a variety of media. These patterns have not changed significantly over the past few years. Overall use of each
category of media has held steady as well.

Media Consumption by Time of Day

When do you tend to consume each of the following types of media?

International newspaper readership before work is highest in North America where the readership is almost double.

Europeans listen to more radio before work and on weekends, while North Americans are most likely to listen
during the work day.

17


Media Mix
While consumption of traditional media hasn’t declined significantly among the executive audience, a wide variety
of social and digital media have been added to the mix. Most have slightly higher adoption for leisure than for
work; for social networking leisure use is more than double work use. More than half of executives watch online
videos, read blogs and watch webcasts and podcasts both for leisure and for work. Social networking sites are
used by almost six in ten respondents for leisure, but respondents prefer professional networking sites for work
use; professional networking sites are used by more than 60% while only about a quarter report social network-
ing use for work purposes, and only 8% report frequent use. Whether for work or for leisure, virtual worlds, social
bookmarking, location-based apps and having a personal blog have the lowest penetration among this audience.
If we look at the activities respondents do “frequently,” professional networking is the most frequently used for
work (30%) and online video most frequent for leisure (30%). Online video is also the second ranked activity for
work at 20%, and the runners-up for leisure use are reading blogs and social networking, both at 20%.

% Do Frequently or Sometimes

How often do you do the following for work-related purposes?
How often do you do the following for leisure purposes?

There were few significant changes over 2010. Use of community sites and social bookmarking declined by more
than 10%, while Twitter use increased by 13%.

In terms of using digital media for work-related purposes, the differences by age are slight. However, leisure use is
more correlated with age. The under-45 group are more likely to view webcasts and video, use social
bookmarking and have a blog. The 55+ group have lower use of podcasts, reading blogs, social networking, Twitter
and games.

18


This audience continues to consume much traditional media in its traditional print format, or in a mix of print and
online. Leisure magazines are least likely to be read either online or via mobile (13%). In general, most online
reading is still done on a computer; mobile devices and tablets are used by only a small percentage of respondents.

Readership of Traditional Media

Do you read [type of publication] mostly in print or online?

The under-45 group has lower “mostly print” readership of newspapers, at 44% compared to 61% of the 55+
group, and is correspondingly more likely than their older counterparts to read mostly online. For general business
magazines and leisure publications as well, they are somewhat less likely to read in print and more likely to read
online or in a mix.

19


Going Mobile
Just under a third of respondents use their phone or other mobile device only for basic functions like calling and
emails. The others use their mobile devices for multiple functions, from checking the news to online banking and
shopping.

Virtually all of these activities are inversely correlated with age. With the exception of managing investment accounts
and using QR codes, the under-45 group is the most active and the 55+ group the least. Also, while only 15% of the
under-45 respondents say they don’t use their mobile device for any of the functions below, more than twice as
many among the 55+ group stick to calls and email.

Respondents are doing even more on their tablets, using them for an average of 6 out of the 11 activities about which
we asked. The most common are checking news, visiting websites, searching and downloading and using apps.
(See next page for more on the apps they use.)

Mobile and Tablet Activities

Do you do any of the following on your cell phone or other mobile device?
Do you do any of the following on your tablet?*

* Base for tablet: 208 tablet users
20


Use of Apps
Forty-three percent of respondents agree that they “use many apps” on their mobile device, and 70% use many
apps on their tablet. For mobile devices, news, weather and navigation/map/location apps are the most popular,
all used by at least two-thirds of respondents. On tablets, books/reading and news apps are used by more than
eight in ten and weather by more than seven in ten.

n North Americans are the heaviest users of mobile apps, with the highest usage for most categories. Asians
tend to use fewer tablet apps than either Europeans or North Americans.

n Younger respondents (under 45) seem to view their tablets more as a vehicle for fun; they have the heaviest
use of entertainment and game tablet apps. Older users (55+) appear to be more attracted to utility and are
the biggest user of news, reference and weather apps.

n There are also several categories where the under-45 group has significantly higher use of mobile apps than
either of the other age groups: navigation, entertainment, games, social networking, reading and healthcare.

Mobile and Tablet App Use

Do you have any of the following types of apps installed on your mobile device?
Do you have any of the following types of apps installed on your tablet?

* Base: have apps on mobile/tablet

21


Mobile and Tablet Trends
Like many others, most respondents are connected to work most of the time, with about two-thirds saying they
typically don’t turn off their mobile devices at night, on weekends or when on vacation. Tablets are making signifi-
cant inroads into use of PCs and laptops, but less so with television.

Mobile % Agree

I do not turn off my work mobile device when on holiday 66%
I do not turn off my work mobile device at night/on weekends 63%
I use many apps on my mobile device 42%
I use my mobile device only for voice calls 36%
I have separate mobile devices for business and leisure 26%

Tablet* % Agree

I access work e-mail on my tablet 72%
I use many apps on my tablet 70%
My tablet is replacing my usage of laptops/PCs 52%
I enjoy playing games on my tablet 38%
My tablet is replacing my usage of TV 25%

* Base for tablet: 208 tablet users
22


Media Attitudes
Respondents are partial to online sources that maintain traditional journalistic standards, and get most of their
online news and information from the websites of traditional media. Only about one in five look mostly to sites
that reflect their own political view points, while the rest seek out sites with multiple viewpoints, or a mix of the two.

Media Attitudes

When you are looking for news and information online, which do you prefer?

23


When we delved into the importance of online news outlets hewing to traditional journalistic standards, we found
widespread concern but differing solutions. Answers vary somewhat by age, with the oldest respondents slightly
more likely to either trust print sources more or to consult multiple sources, while the under-45 group is more
likely to look for individual sources they can trust regardless of medium.

As more and more news and information is sourced online, concerns have been raised about online sources
that don’t share traditional journalistic standards and fact checking practices. Do you share this concern?

24

Executive Summary

Business Outlook Executive Summary
After two years of improvement in outlook and spending, this year’s respondents are gloomier. Spending and
hiring plans are down, although not as severely as the downturn in sentiment might suggest. As a majority don’t
expect a global recovery before 2013, spending and hiring seem likely to remain subdued over the next year or
more. Additionally, low consumer confidence and sovereign debt issues will continue to impact more companies
over the next six months and perhaps longer.

Relationships with suppliers continue to show signs of frustration, even as companies become more dependent
on many of them. Although performance may be the most important message for investors, it would appear that
communicating – and delivering on – messages of trust may be the most important initiative with customers and
prospects.

Technology & Media Executive Summary
This audience consumes a wide range of media: to focus exclusively on traditional media, or exclusively on digital,
means missing opportunities. Given the importance of newspapers, general business, and trade magazines, it is
worthwhile to explore media partnerships where you can have a presence across a variety of channels to reach
their readers both online and off. Consider the quality of online sources, just as you do in print: this is an audience
that is concerned about the trustworthiness of all their news and information sources. Smart phones look like a
promising avenue, as do tablets, although tablet penetration is considerably less at this point. Although most
non-voice call use (especially apps) appear to be more for leisure than work purposes today, the right business
content or app could help broaden executives’ perceptions of what their mobile devices can do for them.

25

Background and Methodology

Background and Methodology
n Annual survey conducted jointly by the Financial Times and Doremus since 2003
n Global online survey of senior executives
n Mix of industries and company sizes
n 300+ responses each year (628 in 2011)
n Current results from October 2011

26

FT Decision Dynamics - Global Business Outlook Survey 2012

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