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3 November 2008
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Uncertain and Underprepared—Has the CFO Role Ever Been More Difficult? The Economist, 30 October 2008 Few of the CFOs grappling with the current turmoil have ever experienced anything like it. To this newness comes narrowness: largely shaped by Sarbanes-Oxley in recent years, the CFO role has often strongly focused on technical accounting skills or corporate administrative functions such as IT and procurement. The future will require CFOs to not only navigate unprecedented uncertainty in financial markets, but also contribute more to the strategic focus and aim of the firm than ever before. Full disclosure: Kurt Reisenburg, head of CEB’s finance practice, contributed to this piece. |
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Op-Ed: Justice Department Eases Antitrust Guidelines The New York Times, 1 November 2008 A new set of guidelines from the Justice Department’s antitrust division provides a narrower interpretation of abuse than would have previously justified government intervention against potential monopolies. |
Our view: With antitrust restrictions potentially relaxed, the downturn provides an increased opportunity for strategic acquirers. Research shows that acquisitions made during an economic down cycle, when multiples are depressed, prove more successful for the buyer (and their shareholders). |
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The Specter of Deflation Looms Large The New York Times, 31 October 2008 Softening global demand and falling prices has a number of prominent economists predicting that goods will pile up waiting for buyers and prices will fall, suffocating fresh investment and worsening joblessness for months or even years. |
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“Heard in the Suite”—Uncertain Repercussions for Business in China This feature highlights member quotes on emerging trends, challenges to conventional wisdom, and underreported news. Member companies are voicing concern over the global recession's impact on China. While a slowdown is expected, those with a focus on growth in China are anxious to know what possible business, policy, and environmental events will ensue, and what sectors will be hit most dramatically. One strategist wondered about the macroeconomic effect of a slowdown in China, asking “One year from now, will China be a bigger or a lesser exporting threat to us?” |
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Study Argues that Emerging Markets Will Surpass the West in Five Years The Guardian, 31 October 2008 A new study from John Hawksworth, chief economist at PricewaterhouseCoopers, suggests that emerging markets are on course to contribute more than 50% of global GDP by 2013, taking into account the purchasing power of those in living in poorer countries. “It is striking that such a significant shift in world GDP share from advanced economies to emerging economies could occur within as little as five years,” says the report. |
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In Japan, Young Workers Shun Promotion The Wall Street Journal, 1 November 2008 Cautiousness reflects the experience of watching older generations devote their lives to work only to face job and pay cuts that came with the recession of the 1990s and early 2000s, and that getting a promotion no longer means a big pay raise. |
Our view: While maybe not as extreme, we are witnessing similar trends among western workforces too. To combat this, we see progressive organizations make use of the shifting employment preferences of this “new” workforce to design appealing opportunities. Furthermore, companies devote more of their time than with previous workforce groups on maximizing productivity. They use deep knowledge of this workforce to change work processes and quickly target any investment to the most productive segments. |
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Daily Capital Markets Review: Stocks Rise as Rates Ease, Sending S&P to Best Week Since ‘74 Corporate Executive Board, 31 October 2008 This summary includes news items regarding global liquidity, the TED spread, commercial paper and T-bill rates, currencies and commodities, and corporate debt spreads and new issuances. If you would like to receive the Review after markets close (instead of the next morning), please click here. For a recap on capital markets and issues that are top-of-mind for CFOs, listen to our weekly podcast. |
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