In line with the majority of countries, market rules and regulation changes were highlighted as major driving forces behind the rise in complexity by 35 percent of German respondents. However, whereas most developed economies also identified the recession as a chief cause of greater complexity, this was not the case in Germany, where it was the choice of only 16 percent. A larger number, 18 percent, believed globalization was a more significant factor. Worldwide, no other country viewed globalization as being such an important driver of complexity.
Although a slender majority of German firms expect a further rise in complexity over the next two years, 41 percent of German firms surveyed expect the level of complexity to remain the same. Only two other countries had a greater proportion of respondents anticipating no change – Ireland (48 percent) and Mexico (42 percent).
Corresponding with the global pattern, German businesspeople believe that government regulation (49 percent) and tax policies (31 percent) are the two greatest factors causing complexity in their businesses today. Further reflecting the worldwide picture, German respondents highlighted managing increased risks as the top challenge they faced due to the increase in complexity. At 92 percent, the proportion of German companies identifying more risks as a core challenge was the second highest after Canada's 94 percent. But other challenges also occupy the minds of German managers, with increased costs and the need for new skills both cited as key challenges by more than three-quarters of German respondents.
The outlook for creating new opportunities from this shifting landscape appears bleak compared to the rest of the world. Only 53 percent of German firms quizzed believe complexities create any new opportunities – the lowest in the survey. 40 percent of German firms do not believe complexity provides any new opportunities at all.
The expected source of potential opportunities also sets Germany apart from other countries. Of those respondents who did identify opportunities, many – 81 percent – thought the creation of new products was the most likely outlet – the highest proportion of any country. A similar proportion – 79 percent – believed there was an opportunity to gain a competitive advantage through exploiting increased complexity. Approximately threequarters of those interviewed also viewed expansion into new markets and new business strategies as potential side-effects.
Only 38 percent of German firms expect the causes of complexity to change over the next two years, considerably less than most Far East, Asian and developing economies, but comparable to other European and Scandinavian economies. Globally, most companies believe regulation will drive complexity, closely followed by speed of innovation and information management. Germany fits this model perfectly, with 74 percent of respondents citing regulation, and 61 percent each opting for speed of innovation and information management. Conversely, the Germans appear to have more faith in their regulators than their European neighbors in the UK, France and Ireland; only 39 percent of German businesspeople surveyed believed government oversight would contribute to increasing complexity.
In tandem with the rest of the world, firms in Germany have focused primarily on improving information management and reorganizing their businesses to tackle increasing complexity over the past two years – with 89 percent and 68 percent of German firms respectively having undergone these processes. These tactics will continue over the next two years as well, but a large proportion of businesspeople in Germany – 54 percent – also expect to significantly modify their approach to human resources. Within Europe, only companies in France – 58 percent – are placing a greater significance on changing human resources.
The significance of changing levels of complexity in the business environment is widely recognized within German firms. Some 93 percent acknowledge that managing complexity is integral to their businesses' success. The message is clear: while companies can help themselves to navigate growing business complexities by acquiring new skills, they believe that governments should simplify regulation wherever possible (92 percent), and above all work alongside other governments (94 percent) to streamline the global regulatory landscape.
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