Market rules and regulation changes are identified as by far the largest driver of this trend, with 41 percent of Australian firms favoring this explanation. This is the second highest percentage of any country in this category after the UK's 46 percent, and considerably above the global average of 26 percent.
Some factors which have strong significance elsewhere in the world – the economic environment/recession, and increasing competition – appear to have had fewer ramifications for Australian firms, being highlighted by only 15 percent and 5 percent of firms respectively, compared with worldwide averages of 23 percent and 17 percent.
The next two years seem likely to herald great challenges for Australian companies, with a net 44 percent of respondents predicting an increase in complexity. This is the highest proportion in the world, even though almost five times as many expect that rise to be moderate, rather than very significant.
Australian respondents blame complexity on a range of factors. Although more than three-quarters believe government oversight and mergers/acquisitions play some role (in both instances, the highest of any country worldwide), neither are deemed to be crucial. When asked to name just the top two causes, only 10 percent chose either of these categories. Instead, regulation (52 percent), information management (38 percent, second only in the survey to Canada's 40 percent) and operating in more countries (32 percent, second only to Sweden's 38 percent) were considered to be more significant.
The challenges associated with rising complexity correspond to the overall picture worldwide – increased costs (92 percent) and the burden of having more risks to manage (90 percent) were by far the most common side-effects suggested. Conversely, only 58 percent of Australian firms (global average 67 percent) considered that rising complexity made it more difficult to compete in the marketplace.
68 percent of Australian firms see potential new opportunities arising from the increase in complexity, with some 74 percent citing opportunities to gain competitive advantage over their rivals. Making their businesses more competitive, creating better strategies and expanding into new markets were also popular, each identified as possibilities by 68 percent of firms surveyed, closely aligned to the global averages for these categories.
Over the next two years, the majority of Australian businesspeople (57 percent) agree that regulation will be the major driver of increased complexity, compared to the global average of 63 percent. Several factors predicted to be significant triggers in other countries, such as information management, operating in more countries and a more rapid pace of innovation, are expected to be far less relevant in Australia. In fact, just 26 percent of Australian firms, the lowest in the survey, anticipate that the speed of innovation will be significant, compared to a global average of 60 percent.
In the past two years, Australian companies have implemented an array of tactics to help manage complexity. By far the most common was improving information management – at 84 percent, matching the global average precisely. However, whereas 70 percent of firms worldwide attempted reorganizing their businesses, only 62 percent of Australian firms had taken this approach, the third lowest in the survey after the Netherlands (54 percent) and the USA (60 percent). A far more common method favored in Australia was conducting mergers and acquisitions. Some 70 percent of firms reported doing this, the highest in the survey by some considerable distance and well ahead of the global average of 45 percent.
Over the next two years, mergers and acquisitions will continue to play a strong part in the Australian business response to complexity – 56 percent of Australian firms (the second highest in the survey after Ireland's 57 percent) forecast more mergers and acquisitions. Business reorganization will be equally popular (56 percent), but improving information management will continue to dominate, cited by 63 percent, even though that constitutes the fourth lowest percentage in the survey and a full 10 percent behind the global average of 73 percent.
No decisions will be taken lightly. Overall, 96 percent of Australian firms recognizse that managing complexity efficiently is important to their success. In line with every other country, Australians strongly believe that regulation needs to be streamlined (90 percent) and that it's down to governments to collaborate to make this a reality (91 percent).
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