Why Some Companies Are Making the Wrong Moves

01/20/09

A survey conducted by Booz & Company of more than 800 senior managers across the world has revealed that many companies—whether financially weak or strong—are struggling to make the right moves in the current economic environment, with many wavering in their confidence of their leadership’s ability to navigate the crisis.

Forty percent of senior managers doubt that their company’s leadership has a credible plan to address the economic crisis, while 46% are not sure about their leadership’s abilities to carry out the plan, credible or not. Even among CEO/board level respondents, a third are sceptical of their own plans.

Sixty-five percent of hard-hit companies are not doing enough to ensure their survival, such as accelerating efforts to dispose of assets or secure external funding; in total a third of all companies appear to be performing inappropriate actions and one-quarter of financially strong companies are not taking advantage of opportunities to improve their position in the crisis.

Despite this, 54% of global respondents still expect the economic crisis to ultimately have a positive impact on their company’s competitiveness.

The Booz & Company survey, conducted in December 2008, explored how well corporate executives are handling the global economic crisis and the actions they are taking. Respondents represented all major industries and were spread across 65 countries. Thirty-seven percent of respondents were CEOs or reported directly to CEOs and a further 24% were two layers below the CEO.

The results show that in many respects, the reason that the recession has hit harder in the UK than in other countries may be because more companies have been caught off-guard and are not sure what action to take. In the UK, according to respondents, a total of 40% of companies—financially weak or strong—appear to be performing inappropriate actions, compared with a third globally.