Leaders of the fastest-growing technology companies say the era of clever, tricky and complex new-economy business plans is over. A survey of corporate CEOs conducted by Deloitte & Touche LLP (D&T) shows movement toward safe business plays and a focus on consolidating gains and increasing profits.
During the first quarter of 2001, D&T’s technology and communications group surveyed CEOs heading its Fast 500 list of quick-growing technology companies, in markets including computer hardware, software, the Internet and biotechnology.
More than a third of these plan no major structural changes for their companies this year, avoiding initial public offerings (IPOs) of stock or buyouts by bigger companies. Last year, half were heading for an IPO or a merger as a strategic direction for their companies; this year only 18 per cent are plotting the same course, according to the survey.
However, 32 percent of CEOs said they plan to acquire another company this year, up more than 10 times last year’s three per cent who said acquisition was part of the growth strategy.
With the financial markets adrift and the new-economy currency of stock certificates less attractive, CEOs surveyed said finding the money for acquisitions, or for anything else, is an obstacle. Thirty percent cited lack of capital as standing in the way of growth. Capital ranked second to the challenge of finding talented employees as a growth impediment, a problem leading the list for four years, according to D&T.
About one in five CEOs said that problems executing their business strategy globally is the biggest stumbling block to growth. North America remained the largest target market for companies surveyed, but the margin shrank dramatically. Last year, about 80 per cent looked to North America to fuel their growth over the next five years. This year only 30 per cent see it as their biggest growth market.
China as a growth market has the attention of about one quarter of respondents, and other Asia-Pacific countries are attractive to eight per cent of CEOs. Last year, only eight per cent of CEOs surveyed identified the Asia-Pacific region, including China, as their growth engine.
Deloitte & Touche, in New York, can be contacted at http://www.us.deloitte.com/.