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Business Pulse
Dual perspectives on the top 10 risks and
opportunities 2013 and beyond
Snapshot presentation
Are you confident
                          that your company
                          is well placed
                          to meet the risks
                          and challenges
                          currently on the
                          horizon?


Page 2   Business Pulse
How can you really
                          know that
                          opportunities aren’t
                          passing you by?




Page 3   Business Pulse
Start exploring now
  The top 10 risks and
  opportunities
  What lies ahead?




Page 4               Business Pulse
What is Business Pulse about?

Business Pulse explores the top 10 risks
and opportunities faced by global            Business Pulse key findings
organizations over the next few years.       ►   There has been a shift in thinking
                                                 among companies this year. Rather
Ernst & Young’s Business Pulse report            than waiting for developed markets
is based on a large sample survey                to recover, they now accept that the
of companies in 21 countries and across          duration of the downturn is uncertain.
various industry sectors.                    ►   Companies continue to focus on
                                                 controlling costs and optimizing
The report takes the pulse of:                   agility to survive in an intensely
                                                 competitive market.
►   Current thinking on risks and
    opportunities and emerging challenges    ►   What is different, compared with two
                                                 years ago, is that companies are
►   Dual perspective on the themes arising       once more looking for growth
    from the top 10 lists                        opportunities, both geographically,
                                                 i.e., in rapid-growth economies, and
►   Expectations from industry executives        in innovation across products,
    and Ernst & Young specialists                services and operations.




Page 5                    Business Pulse
What is the Ernst & Young risk and
opportunity radar?

  At the center of the radar are the risks and opportunities that
  our survey respondents felt were having the biggest impact on
  major organizations worldwide. Arrows indicate the extent to             Cost              Stakeholder
  which the ranking is expected to increase, decrease or remain
                                                                           competitiveness   confidence
  the same between 2013 and 2015. The radar is divided into
  four sections, corresponding to Ernst & Young’s
  Growing Beyond model. The sections are:


                                 ►   Sustaining companies’ economic
 Cost competitiveness                viability



                                 ►   Allowing companies to build
 Stakeholder confidence              stronger relationships with
                                     stakeholders


                                 ►   Maximizing potential market
 Customer reach                      opportunity for products and
                                     services
                                                                           Customer           Operational
                                                                           reach              agility
                                 ►   Improving organizations’ ability
 Operational agility                 to deliver effectively in a quickly
                                     changing market




Page 6                                Business Pulse
Are these your
                          top risks?




Page 7   Business Pulse
Global business risks
(2015 expected ranking in brackets)
Cost                                                  Stakeholder             1.     Pricing pressure (1)
competitiveness                                       confidence              2.     Cost-cutting and profit pressure (2)
Political shocks                                                              3.     Markets risks (3)
                                                                              4.     Macroeconomic risk (4)
                                            Expansion
                                            of government’s role              5.     Management talent and skill
Sovereign debt            Market risks                                               shortages (5)
                                                                              6.     Expansion of government’s role (7)
Macroeconomic risk                                           Regulation and
                                                             compliance       7.     Regulation and compliance (6)
Cost-cutting and profit          Pricing pressure                             8.     Sovereign debt (10)
pressure
                                                                              9.     Emerging technologies (8)
                                                                              10. Political shocks (9)
                                                        Managing talent and
                                                        skill shortages



                     Emerging
                     technologies



                                                                              2013 ranking and expected 2015 ranking
Customer                                              Operational                  Up in 2015   Same in 2015    Down in 2015
reach                                                 agility


Page 8                                   Business Pulse
Are these your top
                          opportunities?




Page 9   Business Pulse
Global business opportunities
(2015 expected ranking in brackets)
Cost                                                        Stakeholder                  1.     Innovation in products, services and
competitiveness                                             confidence                          operations (1)
                                                                                         2.     Emerging market demand growth (2)
                                                Excellence in investor                   3.     Investing in process, tools and training
                                                relations                                       to achieve greater productivity (3)

                                                                    Leveraging CSR and
                                                                                         4.     New marketing channels (4)
                                                                    public confidence    5.     Improving execution of strategy across
                                                                                                business functions (5)
                                                                          Investing      6.     Investing in IT (6)
                                                                          in cleantech
                                                                                         7.     Excellence in investor relations (8)
   Innovation in products,                                 Investing in process, tools
  services and operations
                                                                                         8.     Leveraging corporate social responsibility
                                                           and training to achieve
                                                           greater productivity
                                                                                                (CSR) and public confidence (7)
 Emerging market demand
                  growth                                                                 9.     Investing in cleantech (9)
                                                                     Investing in IT
        New market channels                         Improving execution of strategy      10. Global optimization and relocation of key
                                                    across business functions                functions (10)

                                Global optimization and
                             relocation of key functions


Customer                                                    Operational                  2013 ranking and expected 2015 ranking
reach                                                       agility                           Up in 2015       Same in 2015      Down in 2015



Page 10                                     Business Pulse
Plan your risk and opportunity agenda

 Relevant business risks   Specific areas of concern   What would you like   What would you like
 and opportunities         and risk                    to achieve?           to achieve?
 identified                                            (short term)          (mid term)

 1

 2

 3

 4

 5

 6

 7

 8

 9

 10




Page 11                     Business Pulse
Start preparing your business by asking
these questions


 The following slides detail            The risk and opportunity
 a series of self-assessment            self-assessment questions relate
 questions relating to the              to the four radar quadrants.
 top 10 risks and opportunities.        They give a snapshot of which
 To access the full list of questions   risks and opportunities are most
 and insight into each risk and         relevant to the following themes:
 opportunity:                           ►   Cost competitiveness
                                        ►   Stakeholder confidence
  Download the report at
 ey.com/businesspulse                   ►   Customer reach
                                        ►   Operational agility




Page 12               Business Pulse
Cost competitiveness
To see the full list of self-assessment questions, download the full report



Cost competitiveness covers:                                               Self-assessment questions
 Risks                                                                     1. How do you ensure you focus
                                                                              on the right strategic relationships
Pricing pressure has become the biggest risk noted by companies
this year, up from fourth place in 2011.                                      (e.g., encourage innovation
                                                                              to design the right products from the
Cost cutting and the related pressure on profits is cited by                  best materials and secure critical
respondents as the second-biggest risk they face.
                                                                              supply)?
Market risks have risen to third place as companies accept that the
                                                                           2. How do you sustain margins
increasing reliance on emerging markets for growth brings new risks.
                                                                              and operating results in the face
Macroeconomic risk is ranked fourth as the shocks of 2008–09                  of increased global competition?
continue to reverberate.
                                                                           3. What factors should you consider
Sovereign debt and the impact of austerity enters the top 10 list
                                                                              when expanding globally?
for the first time.
Political shocks is also new to the top 10 list, with uncertainty and      4. Which supply markets and
economic volatility affecting not just emerging markets but also Europe.      categories should you target?
                                                                              Are you sourcing from the right
                                                                              locations to be cost competitive?
 Insights
                                                                           5. How do you preserve value while
Ernst & Young estimates that cutting costs by just 1% can help improve        minimizing costs?
bottom-line results by as much as a 10% boost in sales.
Firms are using technology to improve productivity, introducing more
flexible working practices and re-engineering supply chains to service
emerging markets growth.




Page 13                              Business Pulse
Stakeholder confidence
To see the full list of self-assessment questions, download the full report



Stakeholder confidence covers:                                             Self-assessment questions
 Risks                                                                     1. How do you develop insights into
                                                                              the possible impacts of shifts in
Regulation and compliance is listed as the seventh-biggest risk facing
companies and remain a concern to the next few years.                         government regulations on business
                                                                              strategy and performance?
Expansion of government’s role is cited as the sixth-biggest risk.
This is driven in part by tightening regulation.                           2. How do you evaluate the way in
                                                                              which new regulations or laws can
                                                                              create new markets for specialized
                                                                              products or services?
                                                                           3. What capability do you have
                                                                              in scenario analysis and taking pre-
                                                                              emptive action to offset any impact
 Opportunities                                                                of changes in a government’s role?

Excellence in investor relations is ranked seventh, highlighting the       4. With whom do you collaborate
importance of a broad funding base in today’s relatively tight credit         to track changing regulations and
world.                                                                        seek compliance assistance?
Leveraging CSR and public confidence is ranked eighth overall and          5. How do you reduce your exposure
expected to rise to seventh in the coming years. This is especially true      to share-price volatility?
in developing markets.
                                                                           6. How do you identify cleantech
Investing in cleantech is placed as the ninth opportunity, emphasizing        investment opportunities that
that institutional investors now demand greater transparency.                 are supported by proprietary
                                                                              technologies and multiple
                                                                              partnerships to minimize risk?


Page 14                              Business Pulse
Customer reach
To see the full list of self-assessment questions, download the full report



Customer reach covers:                                                    Self-assessment questions
 Risks                                                                    1. How do you effectively evaluate
                                                                             rapid-growth markets to ensure
Emerging technologies are still narrowly considered a top 10 risk,
ranked ninth, down from fifth in 2011: they remain a worry for many          that they fit with your competencies
firms due to the disruptive capabilities of ongoing technological            and strategic objectives?
development.                                                              2. How is innovation embedded
                                                                             in your business model?
                                                                          3. How can you work more effectively
                                                                             with channel partners to ensure
                                                                             the value proposition is easy for the
                                                                             market to understand?
                                                                          4. How are you tracking t he risk
 Opportunities                                                               and adoption rates of emerging
Innovation in products, services and operations is ranked in first           technologies? Which ones are likely
place. This is especially important for finding unexploited gaps in          to have limited value or high
existing markets, but it is also becoming increasingly important within      deployment risk?
major rapid-growth markets.                                               5. How do you assess changes
Emerging market demand growth is the second-biggest overall                  in factors such as adoption of IT,
opportunity.                                                                 workforce demographics and
New marketing channels ranked fourth, a sharp increase from 2011,            the rise of social media in order
as companies see increasing opportunities in this area.                      to identify which emerging
                                                                             technologies are having the
                                                                             most impact?



Page 15                               Business Pulse
Operational agility
To see the full list of self-assessment questions, download the full report



Operational agility covers:                                                 Self-assessment questions
 Risks                                                                      1. How do you minimize variability
                                                                               in your supply chain while
Managing talent and skill shortages is a perennial challenge
for those seeking to expand and innovate. This risk fell to fifth overall      introducing more cost effective
from third in 2011.                                                            processes and solutions?
                                                                            2. How do you plan and prepare for
                                                                               the increased volatility of the market
                                                                               you operate in?
                                                                            3. Have you effectively consolidated
                                                                               and standardized global activities –
                                                                               including using a shared service
 Opportunities
                                                                               center?
Investing in processes, tools and training to achieve greater
                                                                            4. How do you ensure you have the
productivity is cited by executives as the second-biggest opportunity,
ahead of growth in new markets.                                                right people with the right skills
                                                                               in the right roles?
Investing in IT is a crucial element of strategy implementation and
overall performance, and is seen as the sixth-greatest opportunity.         5. How do you ensure you have the
                                                                               right solutions and integrated
Improving execution of strategy across business functions is                   systems and processes in place
considered more important by respondents in mature markets than their
                                                                               to increase collaboration?
peers in rapid-growth markets. This opportunity is ranked fifth overall.
Global optimization of key functions is a new opportunity on the top
10 list, as companies rethink operations from a global perspective to
help ease the pressure on skills shortages.



Page 16                                Business Pulse
For more information




  For more information
  and contacts go to
  www.ey.com/businesspulse




Page 17          Business Pulse
Please share your feedback
businesspulse@ey.com
Ernst & Young
Assurance | Tax | Transactions | Advisory

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and
advisory services. Worldwide, our 167,000 people are united by our
shared values and an unwavering commitment to quality. We make
a difference by helping our people, our clients and our wider
communities achieve their potential.

Ernst & Young refers to the global organization of member firms
of Ernst & Young Global Limited, each of which is a separate legal
entity. Ernst & Young Global Limited, a UK company limited by
guarantee, does not provide services to clients. For more information
about our organization, please visit www.ey.com.

About Ernst & Young's Advisory Services
The relationship between risk and performance improvement is an
increasingly complex and central business challenge, with business
performance directly connected to the recognition and effective
management of risk. Whether your focus is on business
transformation or sustaining achievement, having the right advisors
on your side can make all the difference. Our 25,000 advisory
professionals form one of the broadest global advisory networks of
any professional organization, delivering seasoned multidisciplinary
teams that work with our clients to deliver a powerful and superior
client experience. We use proven, integrated methodologies to help
you achieve your strategic priorities and make improvements that
are sustainable for the longer term. We understand that to achieve
your potential as an organization you require services that respond
to your specific issues, so we bring our broad sector experience and
deep subject matter knowledge to bear in a proactive and objective
way. Above all, we are committed to measuring the gains and
identifying where the strategy is delivering the value your business
needs. It’s how Ernst & Young makes a difference.

© 2013 Ernst & Young
All Rights Reserved
EYG no. AU1454

This publication contains information in summary form and is therefore intended
for general guidance only. It is not intended to be a substitute for detailed
research or the exercise of professional judgment. Neither EYGM Limited nor
any other member of the global Ernst & Young organization can accept any
responsibility for loss occasioned to any person acting or refraining from action
as a result of any material in this publication. On any specific matter, reference
should be made to the appropriate advisor.


ED None
EMEIA MAS 1427.0213

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Business Pulse - Dual perspectives on the top 10 risks and opportunities 2013 and beyond

  • 1. Business Pulse Dual perspectives on the top 10 risks and opportunities 2013 and beyond Snapshot presentation
  • 2. Are you confident that your company is well placed to meet the risks and challenges currently on the horizon? Page 2 Business Pulse
  • 3. How can you really know that opportunities aren’t passing you by? Page 3 Business Pulse
  • 4. Start exploring now The top 10 risks and opportunities What lies ahead? Page 4 Business Pulse
  • 5. What is Business Pulse about? Business Pulse explores the top 10 risks and opportunities faced by global Business Pulse key findings organizations over the next few years. ► There has been a shift in thinking among companies this year. Rather Ernst & Young’s Business Pulse report than waiting for developed markets is based on a large sample survey to recover, they now accept that the of companies in 21 countries and across duration of the downturn is uncertain. various industry sectors. ► Companies continue to focus on controlling costs and optimizing The report takes the pulse of: agility to survive in an intensely competitive market. ► Current thinking on risks and opportunities and emerging challenges ► What is different, compared with two years ago, is that companies are ► Dual perspective on the themes arising once more looking for growth from the top 10 lists opportunities, both geographically, i.e., in rapid-growth economies, and ► Expectations from industry executives in innovation across products, and Ernst & Young specialists services and operations. Page 5 Business Pulse
  • 6. What is the Ernst & Young risk and opportunity radar? At the center of the radar are the risks and opportunities that our survey respondents felt were having the biggest impact on major organizations worldwide. Arrows indicate the extent to Cost Stakeholder which the ranking is expected to increase, decrease or remain competitiveness confidence the same between 2013 and 2015. The radar is divided into four sections, corresponding to Ernst & Young’s Growing Beyond model. The sections are: ► Sustaining companies’ economic Cost competitiveness viability ► Allowing companies to build Stakeholder confidence stronger relationships with stakeholders ► Maximizing potential market Customer reach opportunity for products and services Customer Operational reach agility ► Improving organizations’ ability Operational agility to deliver effectively in a quickly changing market Page 6 Business Pulse
  • 7. Are these your top risks? Page 7 Business Pulse
  • 8. Global business risks (2015 expected ranking in brackets) Cost Stakeholder 1. Pricing pressure (1) competitiveness confidence 2. Cost-cutting and profit pressure (2) Political shocks 3. Markets risks (3) 4. Macroeconomic risk (4) Expansion of government’s role 5. Management talent and skill Sovereign debt Market risks shortages (5) 6. Expansion of government’s role (7) Macroeconomic risk Regulation and compliance 7. Regulation and compliance (6) Cost-cutting and profit Pricing pressure 8. Sovereign debt (10) pressure 9. Emerging technologies (8) 10. Political shocks (9) Managing talent and skill shortages Emerging technologies 2013 ranking and expected 2015 ranking Customer Operational Up in 2015 Same in 2015 Down in 2015 reach agility Page 8 Business Pulse
  • 9. Are these your top opportunities? Page 9 Business Pulse
  • 10. Global business opportunities (2015 expected ranking in brackets) Cost Stakeholder 1. Innovation in products, services and competitiveness confidence operations (1) 2. Emerging market demand growth (2) Excellence in investor 3. Investing in process, tools and training relations to achieve greater productivity (3) Leveraging CSR and 4. New marketing channels (4) public confidence 5. Improving execution of strategy across business functions (5) Investing 6. Investing in IT (6) in cleantech 7. Excellence in investor relations (8) Innovation in products, Investing in process, tools services and operations 8. Leveraging corporate social responsibility and training to achieve greater productivity (CSR) and public confidence (7) Emerging market demand growth 9. Investing in cleantech (9) Investing in IT New market channels Improving execution of strategy 10. Global optimization and relocation of key across business functions functions (10) Global optimization and relocation of key functions Customer Operational 2013 ranking and expected 2015 ranking reach agility Up in 2015 Same in 2015 Down in 2015 Page 10 Business Pulse
  • 11. Plan your risk and opportunity agenda Relevant business risks Specific areas of concern What would you like What would you like and opportunities and risk to achieve? to achieve? identified (short term) (mid term) 1 2 3 4 5 6 7 8 9 10 Page 11 Business Pulse
  • 12. Start preparing your business by asking these questions The following slides detail The risk and opportunity a series of self-assessment self-assessment questions relate questions relating to the to the four radar quadrants. top 10 risks and opportunities. They give a snapshot of which To access the full list of questions risks and opportunities are most and insight into each risk and relevant to the following themes: opportunity: ► Cost competitiveness ► Stakeholder confidence  Download the report at ey.com/businesspulse ► Customer reach ► Operational agility Page 12 Business Pulse
  • 13. Cost competitiveness To see the full list of self-assessment questions, download the full report Cost competitiveness covers: Self-assessment questions Risks 1. How do you ensure you focus on the right strategic relationships Pricing pressure has become the biggest risk noted by companies this year, up from fourth place in 2011. (e.g., encourage innovation to design the right products from the Cost cutting and the related pressure on profits is cited by best materials and secure critical respondents as the second-biggest risk they face. supply)? Market risks have risen to third place as companies accept that the 2. How do you sustain margins increasing reliance on emerging markets for growth brings new risks. and operating results in the face Macroeconomic risk is ranked fourth as the shocks of 2008–09 of increased global competition? continue to reverberate. 3. What factors should you consider Sovereign debt and the impact of austerity enters the top 10 list when expanding globally? for the first time. Political shocks is also new to the top 10 list, with uncertainty and 4. Which supply markets and economic volatility affecting not just emerging markets but also Europe. categories should you target? Are you sourcing from the right locations to be cost competitive? Insights 5. How do you preserve value while Ernst & Young estimates that cutting costs by just 1% can help improve minimizing costs? bottom-line results by as much as a 10% boost in sales. Firms are using technology to improve productivity, introducing more flexible working practices and re-engineering supply chains to service emerging markets growth. Page 13 Business Pulse
  • 14. Stakeholder confidence To see the full list of self-assessment questions, download the full report Stakeholder confidence covers: Self-assessment questions Risks 1. How do you develop insights into the possible impacts of shifts in Regulation and compliance is listed as the seventh-biggest risk facing companies and remain a concern to the next few years. government regulations on business strategy and performance? Expansion of government’s role is cited as the sixth-biggest risk. This is driven in part by tightening regulation. 2. How do you evaluate the way in which new regulations or laws can create new markets for specialized products or services? 3. What capability do you have in scenario analysis and taking pre- emptive action to offset any impact Opportunities of changes in a government’s role? Excellence in investor relations is ranked seventh, highlighting the 4. With whom do you collaborate importance of a broad funding base in today’s relatively tight credit to track changing regulations and world. seek compliance assistance? Leveraging CSR and public confidence is ranked eighth overall and 5. How do you reduce your exposure expected to rise to seventh in the coming years. This is especially true to share-price volatility? in developing markets. 6. How do you identify cleantech Investing in cleantech is placed as the ninth opportunity, emphasizing investment opportunities that that institutional investors now demand greater transparency. are supported by proprietary technologies and multiple partnerships to minimize risk? Page 14 Business Pulse
  • 15. Customer reach To see the full list of self-assessment questions, download the full report Customer reach covers: Self-assessment questions Risks 1. How do you effectively evaluate rapid-growth markets to ensure Emerging technologies are still narrowly considered a top 10 risk, ranked ninth, down from fifth in 2011: they remain a worry for many that they fit with your competencies firms due to the disruptive capabilities of ongoing technological and strategic objectives? development. 2. How is innovation embedded in your business model? 3. How can you work more effectively with channel partners to ensure the value proposition is easy for the market to understand? 4. How are you tracking t he risk Opportunities and adoption rates of emerging Innovation in products, services and operations is ranked in first technologies? Which ones are likely place. This is especially important for finding unexploited gaps in to have limited value or high existing markets, but it is also becoming increasingly important within deployment risk? major rapid-growth markets. 5. How do you assess changes Emerging market demand growth is the second-biggest overall in factors such as adoption of IT, opportunity. workforce demographics and New marketing channels ranked fourth, a sharp increase from 2011, the rise of social media in order as companies see increasing opportunities in this area. to identify which emerging technologies are having the most impact? Page 15 Business Pulse
  • 16. Operational agility To see the full list of self-assessment questions, download the full report Operational agility covers: Self-assessment questions Risks 1. How do you minimize variability in your supply chain while Managing talent and skill shortages is a perennial challenge for those seeking to expand and innovate. This risk fell to fifth overall introducing more cost effective from third in 2011. processes and solutions? 2. How do you plan and prepare for the increased volatility of the market you operate in? 3. Have you effectively consolidated and standardized global activities – including using a shared service Opportunities center? Investing in processes, tools and training to achieve greater 4. How do you ensure you have the productivity is cited by executives as the second-biggest opportunity, ahead of growth in new markets. right people with the right skills in the right roles? Investing in IT is a crucial element of strategy implementation and overall performance, and is seen as the sixth-greatest opportunity. 5. How do you ensure you have the right solutions and integrated Improving execution of strategy across business functions is systems and processes in place considered more important by respondents in mature markets than their to increase collaboration? peers in rapid-growth markets. This opportunity is ranked fifth overall. Global optimization of key functions is a new opportunity on the top 10 list, as companies rethink operations from a global perspective to help ease the pressure on skills shortages. Page 16 Business Pulse
  • 17. For more information For more information and contacts go to www.ey.com/businesspulse Page 17 Business Pulse
  • 18. Please share your feedback businesspulse@ey.com
  • 19. Ernst & Young Assurance | Tax | Transactions | Advisory About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com. About Ernst & Young's Advisory Services The relationship between risk and performance improvement is an increasingly complex and central business challenge, with business performance directly connected to the recognition and effective management of risk. Whether your focus is on business transformation or sustaining achievement, having the right advisors on your side can make all the difference. Our 25,000 advisory professionals form one of the broadest global advisory networks of any professional organization, delivering seasoned multidisciplinary teams that work with our clients to deliver a powerful and superior client experience. We use proven, integrated methodologies to help you achieve your strategic priorities and make improvements that are sustainable for the longer term. We understand that to achieve your potential as an organization you require services that respond to your specific issues, so we bring our broad sector experience and deep subject matter knowledge to bear in a proactive and objective way. Above all, we are committed to measuring the gains and identifying where the strategy is delivering the value your business needs. It’s how Ernst & Young makes a difference. © 2013 Ernst & Young All Rights Reserved EYG no. AU1454 This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither EYGM Limited nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor. ED None EMEIA MAS 1427.0213