Ernst&Young: Flexibility, speed and unconventional thinking are the prerequisites of a successful expansion

2 February 2012 — Daniela GHETU
"Betting the future on rapid-growth markets simply because they have the right economic and demographic conditions is not enough" says Ernst&Young in its most recent report "The world is bumpy: globalization and new strategies for growth".

After in-depth interviews with senior executives and high-level experts conducted at end-2011 analyzing data of The 2011 Globalization Survey, an online survey of 992 global business executives conducted for Ernst & Young by the Economist Intelligence Unit, the current report concludes on the main challenges of globalization and the best ways to respond them. Flexibility, speed and unconventional thinking seem to be the core ingredients of the future successful business expansion.

Half of the senior executives questioned for this report think that the global economy is likely to fall into recession by the end of 2012. Two-thirds consider it likely that there will be a new global financial crisis triggered by Eurozone debt defaults. Nearly half of the respondents think that China could suffer a major economic slowdown over the next five years and one-third expect a similar outcome for Brazil and India.

Global integration is stronger, as the third E&Y annual Globalization Index shows: after a brief pause in 2009, the overall average globalization score for the world's largest economies is estimated to have increased in 2011 and is expected to continue increasing through 2015.

Increased integration has amplified some economic conditions. As many of the world's markets cool down, the risk that politicians will resort to trade-distorting measures to curry favor with a local electorate cannot be discounted.

The sovereign debt crisis in the Eurozone and the global economic slowdown have also raised the possibility of a new credit crunch as banks scale back lending against a backdrop of declining confidence in interbank markets.

This scenario presents many hurdles for global companies and some lack the flexibility, responsiveness or skills needed to scale them. Our research for this report uncovered four fundamental business challenges that companies must navigate in the years ahead.

Learn about what could be the success recipe in the following years by reading E&Y's report "The world is bumpy: globalization and new strategies for growth"

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