Nearly 8 in 10 respondents believe it is now more complicated to do business than two years ago, but just 18 percent believe the increase has been very significant. The majority, 61 percent, believe the increase has been somewhat significant or minimal. Only in Switzerland and Italy did fewer respondents identify a very significant increase.
The overriding reasons for the increase in the complexity of conducting business on British shores are clear. Market rules and changes in regulation were identified as among the top two causes by 46 percent of UK businesspeople – the highest single response from any country within this category. This is particularly high compared to results from the Far East, where few respondents (China, 8 percent, Japan, 18 percent, South Korea, 21 per cent) believe regulation and rules are among the top factors driving complexity.
Almost a quarter of UK respondents (23 percent) also highlight the recession as a key factor behind the rise in complexity.
Looking ahead over the next two years, only 12 percent of UK respondents are predicting a very significant further increase in complexity. This is roughly in line with the UK's European counterparts, but less than half the percentage recorded for markets further afield such as China, Japan and Brazil, and much less than the 34 percent recorded in India. A much larger proportion of UK businesspeople are anticipating a moderately significant increase in complexity (34 percent), or even that the situation will remain the same (30 percent).
Uniquely among European countries, UK respondents identified higher costs as the biggest challenge they face thanks to increased complexity (86 percent). This is in line with more geographically distant economies such as South Africa, China, India, Japan, Singapore and Australia – the other countries where higher costs were highlighted as the major challenge. Having a greater number of risks to manage (74 percent) and the need for new skills (70 percent) are also major challenges associated with greater business complexity in the UK.
More than seven in 10 UK respondents believe that new opportunities can be created as a result of rising business complexity. 86 percent see the potential for new and better strategies to emerge – globally, only Mexico (98 percent) and Brazil (88 percent) argue this more strongly. UK businesses are also confident that gaining competitive advantages and focusing on existing business strategies (83 percent each) will emerge as opportunities resulting from increased complexity. Only 55 percent think the creation of new products is a likely side-effect of complexity, one of the lowest in the survey, exhibiting far less confidence than countries such as Germany and Russia, where four-fifths of respondents who see opportunities arising cite the chance to make new products.
In line with the reasons given for the rise in complexity over the past two years, UK businesspeople believe that government regulation will be the strongest driver of increased complexity in future. Some three-quarters of respondents (76 percent) declared that regulation would be the primary cause of rising complexity. 69 percent highlighted the prospect of operating in more countries as causing future complexity – disproportionately high compared to the global average of 46 percent, and second only to Mexico (70 percent).
Most UK companies (81 percent) have focused on improving their information management in response to rising complexity. Reorganizing the business has been on the agenda for seven out of 10 UK companies. In contrast, only 30 percent of UK firms have changed their approach to human resources – the lowest total worldwide outside of Scandinavia.
This trend will continue over the next two years, with improving information management (82 percent) and business reorganization (71 percent) identified as the core tactics for dealing with the changes. It's an issue UK companies are clearly taking seriously – with 95 percent recognizing managing complexity as important to their ongoing success.
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