The economy dominates the responses of CEOs as they consider which external factors will influence growth through 2009. More than 90 percent of respondents feel that U.S. and global economic conditions, as well as inflation and cost of capital, will have an impact on their company’s growth. Also important will be regulation and energy prices, according to 84 percent of participants.

Four out of five CEOs say mergers and acquisitions will affect their growth in the year ahead — 20 percent believe growth will be driven mainly by M&A activities.

Asked which internal factor will affect their company’s growth, 82 percent cite operational efficiency as influencing profitability; more than 70 percent view their management team as important to both sales and earnings. Other factors high on the list are new product development, new technology and strength of brand. Cost of compliance is now the top profit concern of only 8 percent of CEOs, down from 17 percent in 2006.

CEOs predict budget increases in every area, with 62 percent planning to spend more for energy and 58 percent for technology through 2009. More than half expect to up the raw-materials budget and half say customer- relationship management costs will rise.

When asked which trends most influence business planning, a majority (71 percent) point to the direction of interest rates, up from 56 percent last year. Energy rates, foreign exchange rates, GDP and consumer prices are also CEO concerns.

Although they acknowledge that times will be difficult, CEOs also take their social responsibilities seriously: When asked to identify the most important corporate responsibility pursuit, the majority (63 percent) say they need to ensure that labor practices throughout the organization are ethical. More than a third report that they are formalizing policies relating to corporate responsibilities. About 30 percent say they are initiating and sustaining environmental practices.

Click for larger view

Click for larger view