The perceived reasons for this rise in complexity differ from the general picture worldwide. Although market rules/regulation changes and economic environment/recession are deemed in some way accountable (21 percent and 17 percent respectively, against global averages of 26 percent and 23 percent), the most commonly cited factor in South Korea is increasing competition (33 percent). India is the only other country in the survey to take this view. Looking ahead, whereas most countries are expecting a further increase in complexity over the next two years, the picture in South Korea is slightly different. Here, there is an equal split between companies anticipating an additional rise in complexity and those who are expecting a levelling off or even a decrease.
In terms of key factors causing complexity, South Korea mirrors the global trend, splitting the attribution between regulation (42 percent) and tax (32 percent). Regulation in particular seems to be an even more significant factor in South Korea than in its Asia-Pacific neighbors, Singapore (26 percent), Japan (30 percent) and China (33 percent).
Several challenges are identified by South Korean firms as side-effects of complexity. The three major challenges – more risks to manage (90 percent), the need for new skills (82 percent) and increased costs (74 percent), tally neatly with the global picture. But relatively few businesspeople in South Korea say that complexity makes it more difficult to compete – only 58 percent, as opposed to a worldwide average of 67 percent.
Almost four-fifths of South Korean firms see opportunities as well as challenges in complexity. Principally, 85 percent of respondents believe there is an opportunity for gaining a competitive advantage – considerably higher than the global average of 73 percent, and far outstripping the weightings in this category for China (51 percent), Japan (68 percent) or Singapore (68 percent). A high proportion of companies also see the chance to make their businesses more efficient and create new or better strategies – 74 percent and 77 percent respectively.
Turning the clock forward two years, a dominant 74 percent of respondents in South Korea predict that mergers and acquisitions will contribute towards further complexity. This is the highest vote for this cause in the survey, pointing to a very active M&A market in this part of the world in the next two years. Tax policy and information management – 57 percent each – are also expected to be key contributors towards additional complexity in business.
In harmony with the vast majority of other countries in the survey, South Korean firms have concentrated on two key tactics to counteract increasing complexity so far: improving information management (88 percent) and reorganising all or part of the business (74 percent). Over the next two years, and in line with the global trend, the same two methods are expected to be further employed to help control complexity (improving information management – 81 percent; reorganizing all or part of the business – 65 percent), with attempts to influence public policy and modifying approaches to human resources (50 percent each) also playing a part.
All of the South Korean firms surveyed believe that governments should work together to make the global regulatory environment less complex. The South Koreans seem to place a far greater emphasis on international cooperation than companies elsewhere in their region. This collaborative approach was advocated by only 73 percent of Chinese firms, 82 percent of Japanese firms and 88 percent of firms in Singapore.
Like the vast majority of countries, however, South Korean businesspeople believe strongly that managing complexity is important to their companies' success (94 percent), that businesses will need to acquire new skills to address complexity (92 percent) and that overall regulation needs to be streamlined (92 percent).
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