The most successful businesses in the West Midlands during the recession will be those focused on the future rather than just concentrating on survival, according to Ernst & Young boss Ronnie Bowker.
Mr Bowker, the senior partner at Ernst & Young’s Birmingham office, said he believed the companies which will emerge the strongest from the current crisis are those that clearly identify opportunities to sustain their development during the downturn and take strategic decisions that distinguish them from their competitors in the future.
“A period of crisis can provide opportunities to drive change more rapidly and effectively than a period of prosperity, and the region’s businesses need to keep one eye on the future as well as focus on the issues of today,” he said.
“Intense pressure is bearing down on executives to anticipate and prepare for the challenges of the next 12 months.
Mr Bowker’s comments come on the back of a recent report from Ernst & Young, called Opportunities in Adversity, which canvassed the views of 350 board members of international corporations.
The results of the report reveal how corporates are adapting their business strategies to a deep international recession and how their key priorities are evolving over the next 12 months.
He said, “Far from being frozen into inactivity, companies seem to be using the current conditions to accelerate key strategic decisions.
“Today’s mantra for business is ‘Cash is King’ and the drive to cut internal costs has already impacted internal business strategy,” he adds.
According to the study, more than 80 per cent of respondents have already undertaken a major costs saving analysis, nearly two-thirds had instigated a head count reduction programme and over half had rationalised their spending on IT.
Corporates said they expected significant or reasonable savings in their supply chain operations, their sales and marketing, operations and IT functions.
In strategic terms, 40 per cent of global companies and 53 per cent of European ones said they were actively considering selling non-core or non-performing business. However, a reasonable proportion of corporates saw the recession as an opportunity to expand, with 34 per cent globally and 38 per cent in Europe thinking of making strategic acquisitions.
Birmingham-based transaction services partner John Houlden says, “Whether companies are looking to sell parts of their businesses to raise cash to help them through a difficult period or are actively looking to buy distressed assets from their competitors, the same basic rules apply: be prepared, be flexible, think the unthinkable and take decisive action.”
While most developed markets were either perceived as stagnant or in decline, companies still saw major opportunities in emerging markets. China (59 per cent), India (45 per cent), South- east Asia (26 per cent) and Eastern Europe (31 per cent) were the areas of the world that most global companies believed would have the best growth opportunities.
Some 18 per cent of companies expect significant growth still in emerging markets in the near future; the majority (57 per cent) expect growth to continue but at a slower pace than over the last two years and 25 per cent predicted their growth will slow significantly.
