BOSTON, MA, May 05 (MARKET WIRE) —
Top executives at large companies around the world anticipate rough going
for the foreseeable future and voice less optimism than they did this
time last year, according to a new survey of 440 executives in seven
major economies, published today by The Boston Consulting Group.

In its third survey of executives during the crisis — following surveys
conducted in September and March 2009 — BCG found that half of
respondents expect an L-shaped recovery — that is, a slow and difficult
one. This is a significantly higher percentage than in March 2009, when
only 17 percent were so pessimistic. It also runs counter to the
prevailing view, which is suggested by stock market movements and
investor behavior indicating that “the crisis is behind us.”

The survey — published in In the Eye of the Storm: Ignore Short-Term
Indicators, Focus on the Long Haul, the latest in BCG’s Collateral Damage
series of reports on the global economic crisis — found that the
corporate mood is even gloomier in some countries. In Spain, 64 percent
expect an L-shaped recovery, in Italy, 57 percent expect such a recovery,
while in France, the figure is 52 percent. The Japanese are the most
pessimistic, with 72 percent expecting an L-shaped recovery.

“The somewhat fatalistic views of these global executives corroborate our
perspective that one shouldn’t be overly influenced by short-term
economic indicators. For the West, at least, once the stimulus effect
wears off, we should expect an anemic recovery — the sort of slow-growth
environment that will change the rules of the game for companies as they
seek to grow amid increased competitive intensity,” said BCG senior
partner David Rhodes, co-author of the new book Accelerating Out of the
Great Recession: How to Win in a Slow-Growth Economy (McGraw-Hill, 2010).

“Most developed economies, particularly the United States, face a
prolonged period of slower growth. The world view we’re hearing from
executives is hardly one conducive to job creation, investment, and risk
taking. Executives are, in fact, less enthusiastic about the economic
outlook than many of their governments,” said co-author and BCG senior
partner Daniel Stelter.

Profitability Is Expected to Fall Even Further, M&A Is Expected to
Increase, and Growth Will Be Harder to Achieve

Among the findings from the survey:

– Even after a rather dreadful 2009 — when 64 percent of respondents in
March expected profits to fall — 61 percent now think profitability
will continue to drop.

– Fully 60 percent of respondents expect increased consolidation in
their industry, compared with only 42 percent last year.

– A large majority — 69 percent — now believe growth will be harder to
achieve moving forward; only 56 percent expressed that view in 2009.

Executives Expect Even Less Now from Consumers Than They Did in 2009

Overall, respondents believe consumer attitudes have undergone a sea
change:

– The vast majority of executives — 79 percent — now expect an
increase in the savings rate in their country, which will translate
into less spending. Only 54 percent anticipated increased saving last
year.

– Even more — 89 percent — now anticipate increased consumer price
sensitivity, up from 71 percent in March 2009.

More Protectionism and a Shifting Global Order

“With the passing of a year, managers have become far more resigned to
the likelihood of significant changes to the global economic order. They
believe governments in developed countries will continue interventionist
policies — imposing more regulation and much more actively pursuing
changes in industrial policy. Nearly three-quarters see more negative
attitudes toward Western capitalism taking hold in their markets,” Rhodes
said.

– Among surveyed executives, 78 percent anticipate more trade
protectionism, up from 57 percent last year.

– In the latest survey, 73 percent of respondents expect a rebalancing
of global trade, compared with only 56 percent last year.

– A large majority — 82 percent — believe there will be more
regulation, up from 58 percent last year.

“The emergence of protectionist measures is reinforced by the
quandary in which many governments find themselves: having provided
massive stimulus, many are now heavily indebted — and lack financial
firepower for additional measures. Protectionism, however, does not
require any spending,” said Stelter.

Accordingly, 85 percent of managers believe that their companies are
likely to increase lobbying activities in the next two or three years.

Constraints on Management Are Expected as Well

As government involvement increases, executives see things changing for
management teams:

– Most surveyed executives — 60 percent — believe executive
compensation will be lower over the next five years. They also expect
that it will be more closely linked to long-term shareholder-value
creation and that a lower proportion of any bonuses will be paid in
cash.

– Among respondents, 77 percent believe risk management will become more
important than it is currently.

– And 70 percent of surveyed executives believe that nonexecutives will
play a more important role in setting and challenging company
strategy; will be more active in holding management accountable, and
will themselves need to have a greater technical understanding of the
business.

Companies Are Opting Out of Activities that Lay Groundwork for Growth

“With executives preparing for a more prolonged, anemic recovery –
characterized by greater trade problems, increased consumer price
sensitivity, and greater government interference — it is not surprising
that many companies are not building so aggressively for the future.
However, it is our view that the best companies are both strengthening
and rationalizing their core, preparing to ‘attack’ their competitors and
take advantage of others’ weaknesses in order to grow,” said Rhodes.

– Only about half of managers said that their companies are now
undertaking significant and concerted “attacking” options. By
contrast, two-thirds of market leaders are, in fact, beginning to
think more offensively; yet only about 44 percent of “middle-market”
companies — those typically with revenues of between $1 billion and
$10 billion — are doing so.

– When executives at market-leading companies were asked in which
categories they would be making significant efforts in 2010, only 41
percent said they are planning to increase R&D, only 35 percent
are planning to hire new talent, and less than 40 percent are thinking
of extending their geographic reach, expanding capacity, or exploring
acquisitions.

– Only about a quarter of respondents from middle-market companies are
planning to take any significant action in any of the categories
above.

Said Stelter, “Company executives are viewing the economic outlook
with more caution than the politicians are. But it’s important to
remember that those companies that act decisively can significantly
outperform even in the toughest of economic times.”

About the Survey

Survey results are based on an online questionnaire of 440 executives in
seven countries. All respondents represented companies with at least $1
billion in global revenues in 2009, from all industries except financial
services. The survey was commissioned by The Boston Consulting Group and
administered by Grail Research from February 25, 2010, to March 9, 2010.

About Accelerating Out of the Great Recession: How to Win in a
Slow-Growth Economy
For more about the book, published by McGraw-Hill
in 2010, see http://accelerating.bcg.com/.

About the Collateral Damage Series

The Boston Consulting Group’s Collateral Damage series by David Rhodes
and Daniel Stelter includes the following articles, which can be found
online at

http://www.bcg.com/expertise_impact/capabilities/managing_in_a_slow_growth_econo

y/collateral_damage.aspx.

Collateral Damage, Part 8: Preparing for a Two-Speed World–Accelerating
Out of the Great Recession, January 2010

Collateral Damage, Part 7: Green Shoots, False Positives, and What
Companies Can Learn from the Great Depression, June 2009

Collateral Damage, Part 6: Underestimating the Crisis, April 2009

Collateral Damage, Part 5: Confronting the New Realities of a World in
Crisis, March 2009

Collateral Damage, Part 4: Preparing for a Tough Year Ahead–The Outlook,
the Crisis in Perspective, and Lessons from the Early Movers, December
2008

Collateral Damage, Part 3: Asia, Advantage, and Action, November 2008

Collateral Damage, Part 2: Taking Robust Action in the Face of the
Growing Crisis, October 2008

Collateral Damage, Part 1: What the Crisis in the Credit Markets Means
for Everyone Else, October 2008

About the Authors

David Rhodes is a senior partner at The Boston Consulting Group and
global leader of the firm’s Financial Institutions practice. Since
joining BCG in 1985, he has worked primarily on projects involving major
strategy and organizational change in large financial institutions,
advising clients in Europe, Asia-Pacific, the Middle East, and the United
States.

Daniel Stelter is a senior partner at The Boston Consulting Group and
global leader of the firm’s Corporate Development practice. He is also a
member of BCG’s Executive Committee. During his 20 years with BCG, he has
participated in and directed many projects throughout Europe with a focus
on corporate finance (including M&A, IPOs, due diligence, strategic
alliances, and joint ventures) and strategy (including portfolio strategy
and value management).

About The Boston Consulting Group

The Boston Consulting Group (BCG) is a global management consulting firm
and the world’s leading advisor on business strategy. We partner with
clients in all sectors and regions to identify their highest-value
opportunities, address their most critical challenges, and transform
their businesses. Our customized approach combines deep insight into the
dynamics of companies and markets with close collaboration at all levels
of the client organization. This ensures that our clients achieve
sustainable competitive advantage, build more capable organizations, and
secure lasting results. Founded in 1963, BCG is a private company with 69
offices in 40 countries. For more information, please visit www.bcg.com.

Contact:
The Boston Consulting Group
Eric Gregoire
Global Media Relations Manager

Tel +1 617 850 3783
Fax +1 617 850 3701
gregoire.eric@bcg.com

Copyright 2010, Market Wire, All rights reserved.

BOSTON, MA, May 05 (MARKET WIRE) —
Top executives at large companies around the world anticipate rough going
for the foreseeable future and voice less optimism than they did this
time last year, according to a new survey of 440 executives in seven
major economies, published today by The Boston Consulting Group.

In its third survey of executives during the crisis — following surveys
conducted in September and March 2009 — BCG found that half of
respondents expect an L-shaped recovery — that is, a slow and difficult
one. This is a significantly higher percentage than in March 2009, when
only 17 percent were so pessimistic. It also runs counter to the
prevailing view, which is suggested by stock market movements and
investor behavior indicating that “the crisis is behind us.”

The survey — published in In the Eye of the Storm: Ignore Short-Term
Indicators, Focus on the Long Haul, the latest in BCG’s Collateral Damage
series of reports on the global economic crisis — found that the
corporate mood is even gloomier in some countries. In Spain, 64 percent
expect an L-shaped recovery, in Italy, 57 percent expect such a recovery,
while in France, the figure is 52 percent. The Japanese are the most
pessimistic, with 72 percent expecting an L-shaped recovery.

“The somewhat fatalistic views of these global executives corroborate our
perspective that one shouldn’t be overly influenced by short-term
economic indicators. For the West, at least, once the stimulus effect
wears off, we should expect an anemic recovery — the sort of slow-growth
environment that will change the rules of the game for companies as they
seek to grow amid increased competitive intensity,” said BCG senior
partner David Rhodes, co-author of the new book Accelerating Out of the
Great Recession: How to Win in a Slow-Growth Economy (McGraw-Hill, 2010).

“Most developed economies, particularly the United States, face a
prolonged period of slower growth. The world view we’re hearing from
executives is hardly one conducive to job creation, investment, and risk
taking. Executives are, in fact, less enthusiastic about the economic
outlook than many of their governments,” said co-author and BCG senior
partner Daniel Stelter.

Profitability Is Expected to Fall Even Further, M&A Is Expected to
Increase, and Growth Will Be Harder to Achieve

Among the findings from the survey:

– Even after a rather dreadful 2009 — when 64 percent of respondents in
March expected profits to fall — 61 percent now think profitability
will continue to drop.

– Fully 60 percent of respondents expect increased consolidation in
their industry, compared with only 42 percent last year.

– A large majority — 69 percent — now believe growth will be harder to
achieve moving forward; only 56 percent expressed that view in 2009.

Executives Expect Even Less Now from Consumers Than They Did in 2009

Overall, respondents believe consumer attitudes have undergone a sea
change:

– The vast majority of executives — 79 percent — now expect an
increase in the savings rate in their country, which will translate
into less spending. Only 54 percent anticipated increased saving last
year.

– Even more — 89 percent — now anticipate increased consumer price
sensitivity, up from 71 percent in March 2009.

More Protectionism and a Shifting Global Order

“With the passing of a year, managers have become far more resigned to
the likelihood of significant changes to the global economic order. They
believe governments in developed countries will continue interventionist
policies — imposing more regulation and much more actively pursuing
changes in industrial policy. Nearly three-quarters see more negative
attitudes toward Western capitalism taking hold in their markets,” Rhodes
said.

– Among surveyed executives, 78 percent anticipate more trade
protectionism, up from 57 percent last year.

– In the latest survey, 73 percent of respondents expect a rebalancing
of global trade, compared with only 56 percent last year.

– A large majority — 82 percent — believe there will be more
regulation, up from 58 percent last year.

“The emergence of protectionist measures is reinforced by the
quandary in which many governments find themselves: having provided
massive stimulus, many are now heavily indebted — and lack financial
firepower for additional measures. Protectionism, however, does not
require any spending,” said Stelter.

Accordingly, 85 percent of managers believe that their companies are
likely to increase lobbying activities in the next two or three years.

Constraints on Management Are Expected as Well

As government involvement increases, executives see things changing for
management teams:

– Most surveyed executives — 60 percent — believe executive
compensation will be lower over the next five years. They also expect
that it will be more closely linked to long-term shareholder-value
creation and that a lower proportion of any bonuses will be paid in
cash.

– Among respondents, 77 percent believe risk management will become more
important than it is currently.

– And 70 percent of surveyed executives believe that nonexecutives will
play a more important role in setting and challenging company
strategy; will be more active in holding management accountable, and
will themselves need to have a greater technical understanding of the
business.

Companies Are Opting Out of Activities that Lay Groundwork for Growth

“With executives preparing for a more prolonged, anemic recovery –
characterized by greater trade problems, increased consumer price
sensitivity, and greater government interference — it is not surprising
that many companies are not building so aggressively for the future.
However, it is our view that the best companies are both strengthening
and rationalizing their core, preparing to ‘attack’ their competitors and
take advantage of others’ weaknesses in order to grow,” said Rhodes.

– Only about half of managers said that their companies are now
undertaking significant and concerted “attacking” options. By
contrast, two-thirds of market leaders are, in fact, beginning to
think more offensively; yet only about 44 percent of “middle-market”
companies — those typically with revenues of between $1 billion and
$10 billion — are doing so.

– When executives at market-leading companies were asked in which
categories they would be making significant efforts in 2010, only 41
percent said they are planning to increase R&D, only 35 percent
are planning to hire new talent, and less than 40 percent are thinking
of extending their geographic reach, expanding capacity, or exploring
acquisitions.

– Only about a quarter of respondents from middle-market companies are
planning to take any significant action in any of the categories
above.

Said Stelter, “Company executives are viewing the economic outlook
with more caution than the politicians are. But it’s important to
remember that those companies that act decisively can significantly
outperform even in the toughest of economic times.”

About the Survey

Survey results are based on an online questionnaire of 440 executives in
seven countries. All respondents represented companies with at least $1
billion in global revenues in 2009, from all industries except financial
services. The survey was commissioned by The Boston Consulting Group and
administered by Grail Research from February 25, 2010, to March 9, 2010.

About Accelerating Out of the Great Recession: How to Win in a
Slow-Growth Economy
For more about the book, published by McGraw-Hill
in 2010, see http://accelerating.bcg.com/.

About the Collateral Damage Series

The Boston Consulting Group’s Collateral Damage series by David Rhodes
and Daniel Stelter includes the following articles, which can be found
online at

http://www.bcg.com/expertise_impact/capabilities/managing_in_a_slow_growth_econo

y/collateral_damage.aspx.

Collateral Damage, Part 8: Preparing for a Two-Speed World–Accelerating
Out of the Great Recession, January 2010

Collateral Damage, Part 7: Green Shoots, False Positives, and What
Companies Can Learn from the Great Depression, June 2009

Collateral Damage, Part 6: Underestimating the Crisis, April 2009

Collateral Damage, Part 5: Confronting the New Realities of a World in
Crisis, March 2009

Collateral Damage, Part 4: Preparing for a Tough Year Ahead–The Outlook,
the Crisis in Perspective, and Lessons from the Early Movers, December
2008

Collateral Damage, Part 3: Asia, Advantage, and Action, November 2008

Collateral Damage, Part 2: Taking Robust Action in the Face of the
Growing Crisis, October 2008

Collateral Damage, Part 1: What the Crisis in the Credit Markets Means
for Everyone Else, October 2008

About the Authors

David Rhodes is a senior partner at The Boston Consulting Group and
global leader of the firm’s Financial Institutions practice. Since
joining BCG in 1985, he has worked primarily on projects involving major
strategy and organizational change in large financial institutions,
advising clients in Europe, Asia-Pacific, the Middle East, and the United
States.

Daniel Stelter is a senior partner at The Boston Consulting Group and
global leader of the firm’s Corporate Development practice. He is also a
member of BCG’s Executive Committee. During his 20 years with BCG, he has
participated in and directed many projects throughout Europe with a focus
on corporate finance (including M&A, IPOs, due diligence, strategic
alliances, and joint ventures) and strategy (including portfolio strategy
and value management).

About The Boston Consulting Group

The Boston Consulting Group (BCG) is a global management consulting firm
and the world’s leading advisor on business strategy. We partner with
clients in all sectors and regions to identify their highest-value
opportunities, address their most critical challenges, and transform
their businesses. Our customized approach combines deep insight into the
dynamics of companies and markets with close collaboration at all levels
of the client organization. This ensures that our clients achieve
sustainable competitive advantage, build more capable organizations, and
secure lasting results. Founded in 1963, BCG is a private company with 69
offices in 40 countries. For more information, please visit www.bcg.com.

Contact:
The Boston Consulting Group
Eric Gregoire
Global Media Relations Manager

Tel +1 617 850 3783
Fax +1 617 850 3701
gregoire.eric@bcg.com

Copyright 2010, Market Wire, All rights reserved.