™ Business Barometer Aggregate Report 22 February 2010 Economic Analysis and Decision Support Group

™

Business BarometerAggregate Report

22 February 2010Economic Analysis

and Decision Support Group

© 2010 The Corporate Executive Board Company. All Rights Reserved. 2

Economic Analysis and Decision Support Group

Executive Summary

Functional Indicators

ROAD MAP FOR THE PRESENTATION



Much lower, 6%Somewhat lower, 10%

No change, 13%

No change, 28%Somewhat higher, 16%

Somewhat higher, 34%Higher, 36%

Higher, 18%Much higher, 22%

Much higher, 2%

Lower, 2%

Somewhat lower, 5%

Revenue Cost Pressure3

Business Executives’ 12-Month Outlook: AsiaBased on January 2010 CEB

Asia Business Barometer survey, business executives have an optimistic 12-month outlook on the Asian economies. Most of them expect higher revenues coupled, however, with rising cost pressures.

• 73% of respondents expect revenue in Asia to be higher in the next 12 months, while 54% of respondents expect higher cost pressure.

*BESI is a CEB forward looking index incorporating senior executives’ sentiment on revenue growth and cost pressures in the next 12 month

Business Executives’ Expectations on Revenue Growth and Cost Pressure Source: Business Barometer Survey, Corporate Executive Board

Asia Business Executives’ Sentiment Index (BESI)* - January 2010 Source: Business Barometer Survey, Corporate Executive Board

Negative Outlook Positive OutlookNeutral Outlook

N = 64

55

0 50 100


Economic Analysis and Decision Support Group4

Business Executives’ Assumptions: AsiaBusiness Executives’

assumptions about economic conditions in Asia in the next 12 months reflect a high optimism about growth prospects and an uncertainty about local competition, inflation and costs.

• Most respondents expect high growth in China and other Asian economies.

• 61% of executives expecting higher local competition in the next 12 months.

• 62% of business executives expect higher consumer spending, while 76% have high inflationary expectations for the next 12 months.

• 53% of respondents expect Renminbi to appreciate against USD in the next 12 months, while the value of USD will depreciate against the basket of other major currencies.

• 53% of executives expect prices of energy commodities to increase in the next 12 months; 65% of respondents expect non-energy commodities to increase as well.

Business Executives’ Assumptions on Key Economic Indicators and Drivers Source: Business Barometer Survey, Corporate Executive Board

N = 59

* For Access to Credit, "Higher" means "Better"

2%

4%

13%

49%

5%

11%

10%

18%

11%

2%

3%

20%

45%

35%

47%

59%

28%

34%

36%

28%

58%

22%

31%

21%

56%

53%

65%

49%

28%

23%

61%

53%

62%

25%

67%

67%

76%

24%

Energy Costs

Major Non-Energy Commodities

Local Interest Rates

Access To Local Credit*

Value of USD Against Major Crnc.

Local Competition

Value Chinese Renminbi Against USD

Local Consumer Spending

Local Government Incentives

Economic Growth (China)

Economic Growth (Asia Exclud. China)

Local Inflation

Availability of Qualified Labor

Lower No change Higher



Executive Summary

Functional Indicators

ROAD MAP FOR THE PRESENTATION



4%

9%

3%

2%

4%

14%

19%

5%

4%

9%

29%

38%

31%

33%

23%

9%

43%

25%

52%

46%

53%

49%

5%

3%

14%

18%

5%

9%

5%

11%

2%

2%

2%

2%

8%

7%

3%

Volatility in ValueLocalCurrencies Asia

Lending Standards AccessCredit

General and AdministrativeExpenses

Research & DevelopmentBudget

Numberof M&A Deals inAsia

Capital Expenditures inAsia

Much lower Lower Somewhat lower No change Somewhat higher Higher Much higher


Finance Barometer: Asia

Finance executives’ sentiment for Asia is optimistic. CFOs expect to fund organic and inorganic growth bets as well as long-term innovation

• 58% expect an increase in G&A budgets.

• Finance chiefs are somewhat pessimistic in their outlook on the local lending standards and access to local credit.

• 78% of finance executives expect to increase funding for capital expenditures, 72% expect to increase inorganic growth (M&A), and 63% expect to make long-term innovation bets.

• Most CFOs expect to spend CAPEX on manufacturing equipment and facilities. 31% of surveyed executives plan to purchase more software, and 29% plan to buy new hardware.

Finance Executive Sentiment Index: Asia Source: Business Barometer Survey

Sentiment on Finance Indicators Source: Business Barometer Survey


N = 58

59.1

0 50 100

54% 58%31% 29% 28%

Construction ofFacilities

ManufacturingEquipument

IT Software IT Hardware Vehicles


Economic Analysis and Decision Support Group 2%

5%

18%

4%

2%

5%

29%

24%

36%

20%

25%

30%

59%

30%

43%

29%

45%

50%

30%

43%

19%

4%

2%

2%

2%

4%

4%

4%

4%

14%

53%

48%

17%

15%

15%

16%

9%

13%

2%

9%

2%

2%

4%

7%

6%

Core Input Prices

Introduction New Products

Total Inventory

New Orders

Production

LaborCosts

Supply Chain DisruptionRisk

Capacity


7

Supply Chain & Operations Barometer

Supply chain and operations executives are somewhat cautious. While they are more optimistic about introducing new products and receiving new orders, they expect higher core input prices and labor costs.

• Executive sentiment regarding the development of new products and SKUs is positive: 69% expect to introduce more new products.

• 72% of operations executives are optimistic about the outlook for new orders, and 69% expect higher production levels.

• However, executives are more pessimistic about input prices and labor costs: 55% expect higher core input prices, and 69% expect higher labor costs.

• Only 36% executives anticipate higher supply chain disruption risk.

Supply Chain & Operations Executives Sentiment Index Source: Business Barometer Survey

Sentiment on Supply Chain and Operations Indicators Source: Business Barometer Survey


N = 56

© 2010 The Corporate Executive Board Company. All Rights Reserved.

40.8

0 50 100



Sales Barometer

Sales executives’ sentiment is somewhat positive, as they expect to sell more to new customers, while keeping or growing the existing customer base.

• 61% of sales executives expect sales to new customers in the next 12 months to increase or remain at the current level. Further, 60% believe that sales to existing customers will increase or remain the same.

• With higher expectations for sales to new and existing customers, only 23% of heads of sales are optimistic that the average sales-cycle time will decrease.

• 25% of sales executives anticipate an increase in discount incentive policies.

• 67% of sales executives expect an

increase in sales headcounts.

Sales Executives Sentiment Index Source: Business Barometer Survey

Sentiment on Sales Indicators Source: Business Barometer Survey


N = 54


63.1

0 50 100

5%

17%

8%

31%

33%

51%

62%

26%

41%

26%

23%

48%

4%

2%

6%

2%

2%

2%

6%

2%

4%

45% 11%

2%

13%

13%

4%

7%

6%

Sales New Customers

Sales Existing Customers

Avg Sales Cycle

Reliance DiscountsIncentives

Sales Headcount




8%

8%

49%

67%

57%

25%

19%

2%

2%

9%

2%

4% 10% 10%

6%

8%

4%

8%

4%

2%

Marketing Budget Per Rev.

Dedicated AdvertisingAgency Employees

Customer Loyalty


9

Marketing Barometer

Marketing executives’ outlook for the next 12 months is rather optimistic, as they do not expect negative changes in budgets and dedicated advertising resources.

• 49% of heads of marketing expect no change in marketing budgets, while 40% plan to increase them.

• 67% of marketing executives expect no change in availability of dedicated advertising resources, and 17% expect to increase them.

• The outlook for customer loyalty is rather mixed: while nearly 26% of marketing executives expect loyalty to increase, 57% expect the same level of customer loyalty in the next 12 months.

Marketing Executives Sentiment Index Source: Business Barometer Survey

Sentiment on Marketing Indicators Source: Business Barometer Survey


N = 53


56.35

0 50 100




Human Resources Barometer

HR executives’ outlook is rather negative, reflecting expectations of higher costs, high employee disengagement and unwanted turnover.

• HR executives expect significantly higher employee compensation and benefits costs (particularly for health care) over the next 12 months.

• 44% of HR executives believe that employee engagement will increase. 44% expect unwanted turnover to rise, as well.

• 51% of HR executives foresee a higher volume of new hires.

Human Resources Executives Sentiment Index Source: Business Barometer Survey

Sentiment on Human Resources Indicators Source: Business Barometer Survey


N = 54

45.71

0 50 100

4%

11%

4%

4%

7%

4%

43%

29%

53%

45%

44%

37%

42%

31%

29%

36%

6%

9%

4%

4%

2%

2%

11%

22%

11%

2%

4%

4%

Unwanted Turnover

Average Per Employee TotalCompensation

Average Per EmployeeTraining Spend

Employee Engagement

Total Hiring Volume




Real Estate Barometer

Real estate executives anticipate that the stock of company-owned real estate will remain unchanged.

• While 58% of real estate executives expect higher number of work spaces, 81% see no change in the company-owned real estate, 51% expect no change in rented real estate.

• 50% of real estate executives expect no change in the vacancy rates, while 31% believe that number will increase in the next 12 months.

Real Estate Executives Sentiment Index Source: Business Barometer Survey

Sentiment on Real Estate Indicators Source: Business Barometer Survey


N = 53


52

0 50 100

2%

14%

16%

37%

50%

51%

81%

47%

28%

5%

5%

5%

2% 9%

17%

5%

7%

12%

5%

2%

Num. Work Spaces

Real Estate Vacancy Rates

Amount Rented Real Estate

Amount Company OwnedReal Estate


CORPORATE EXECUTIVE BOARD

WWW.EXECUTIVEBOARD.COM

™

Economic Analysis and Decision Support

Group

Oleg Polishchuk Senior DirectorRoman Cech Consultant Shehryar Ansari DirectorRandeep Rathindran DirectorJian Chen Director

EADS contact information:

571.303.6257

[email protected]

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™ Business Barometer Aggregate Report 22 February 2010 Economic Analysis and Decision Support Group