Optimism on uncertain grounds

Intensifying market VUCA and less attractive market and growth prospects should be leading corporate decision makers to adapt their strategy processes, e.g. their corporate strategies should focus on a shorter time horizon, and thus enable corporate decision makers to react more quickly towards changes in the market environment.

Yet the study shows that decision makers are defining their strategies for the next five years with a more or less constant time horizon - a surprising result given the further increase of VUCA strikes. However, the assessment of market attractiveness and future prospects correlates with the time intervals in which the decision makers review their corporate strategy: The more pessimistic the respondents are about market attractiveness and future prospects, the more likely they are to shorten the time horizon for reviewing their corporate strategy.

As key triggering event for an adaptation of the corporate strategy, 91 percent of respondents mentioned changed consumer preferences, 75 percent stated changes in the competitive environment. Regarding the relevance for realising corporate goals over the next five years, efficiency optimisation, focus on core business and development of new technologies stand out as the most important measures, whereas a realignment of business focus is considered the least important.

Most important strategic measures over the next five years largely focus on organic measures such as growth programmes (75 percent), restructuring (71 percent) and research and development (62 percent). Inorganic measures such as transactions are much less frequently on the agenda to adjust the competitive positioning: Only 11 percent consider carve-outs as a relevant measure and 38 percent joint ventures. At least, every second respondent mentions the acquisition of a company as a relevant option.

Many decision makers are currently focusing on their core business and greater efficiency. Only a minority are considering transactions to quickly and effectively counter new trends in dynamic markets. Tobias Huesmann, Director Delivering Deal Value at PwC Germany, believes this is a mistake, because: "It usually takes longer and ties up more resources to achieve strategic goals through organic measures. This is particularly true in a volatile market environment, where the winner is the one who stands out from the competition through agile and decisive strategic measures," the expert says. In his view, carve-outs are a good way to release capital where it generates poor returns and instead invest in the promising core business, for example new technologies or products or markets.