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Global Economy Report – The View Of Contract Negotiators

October 4, 2009

According to a study by IACCM, top negotiators and contract experts confirm that the world economy has stabilized – and more than half believe that conditions for their business will improve in the next 3 – 6 months.

A unique global survey of members of the International Association For Contract & Commercial Management (IACCM) confirms that overall trading conditions have moved to a balanced position, with 32% reporting a continued decline in business over the last 60 days against 29% indicating an upturn.

  The focus of business negotiations is also changing and while 50% remain under strong pressure to renegotiate prices on existing agreements, an equal number are now actively negotiating new opportunities.

 However, the results suggest that much of this growth in new opportunities may come from switching sources of supply. Researching alternative suppliers is currently a major activity for 44% of buyers – but only 19% of their customers appear to be aware of this.

Regional and industry variations indicate a patchy recovery. Optimism is strongest in Asia-Pacific, where 64% of respondents expect growth in the next 3 – 6 months, against 52% in the Americas and just 45% in Europe / Middle East and Africa. Different industries also show stark contrasts, with less than a quarter of those in Services and Oil and Gas reporting a continued decline in business over the last 60 days (and a third saying conditions have already improved), versus nearly 40% in Technology and Software indicating decline and just 27% recording some improvement.

For those who ask whether the business world has improved its ethical values as a result of the financial meltdown, the answer appears to be negative. 34% feel that current economic conditions have been accompanied by a decline in the ethical standards of business practices and negotiations, versus just 4% who feel they have improved. Supply-side negotiators in particular feel that ethical standards have fallen – 44% report negative experiences, against just 33% of buyers. The issues cited most frequently are unilateral extensions of payment terms; unreasonable pressure to cut prices on existing agreements; and a tendency by sales people to promise whatever it takes to win business.

 The IACCM study was undertaken in the period 16th – 24th September and invited responses from 13,000 business negotiators and contract management specialists located in more than 100 countries and from more than 2,000 international companies. The full report can be viewed at www.iaccm.com

 

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