Bangkok--11 Feb--Grant Thornton
New research into the biggest constraints on the success of businesses shows that, for the first time in many years, reduced demand is seen as the biggest barrier to business expansion. Globally, 49% of companies rank shortage of orders as a major constraint, a rise from 31% in 2008 (see chart). 25 of the 36 economies surveyed in the Grant Thornton International Business Report (IBR) placed reduced demand at the top of the league of constraints.
Perhaps more surprising in the current global economic climate is that red tape (30%) continues to outrank shortage of finance (27%) as a constraint on expansion plans. Last year’s biggest global constraint, availability of skilled workforce, has predictably dropped out of the top three constraint concerns.
The countries most concerned about reduced demand are Japan (78%), Italy (70%) and Vietnam (64%).
Peter Walker, senior partner for Grant Thornton in Thailand said, "It's clear that the impact of falling demand is being felt around the world as consumers are spending less due to concerns about job security. Every company in every market has been affected differently by the economic downturn, often by circumstances completely beyond the control of the management team. But it is important that business leaders remain in control of their destiny. That means being proactive, taking time to understand the specific issues affecting their business, and developing strategies that allow them to respond quickly to changes in the market place."
However, while much of the world is feeling constrained by reduced demand, there are a few economies where the availability of skilled workers continues to be an issue, with Botswana (54%), Australia (47%) and South Africa (41%) all still identifying this as their greatest business constraint.
Companies in other countries continue to feel constrained by red tape with Mexico (66%) and Poland (45%) ranking this higher than all other constraints.
Business leaders in Thailand responded evenly across all constraints, including cost of finance, shortage of working capital, red tape, availability of skilled work force and reduced demand, all around the 20% range. This evenly distributed response indicates that businesses in Thailand feel they are under pressure from many fronts, depending on their individual circumstances. The most dramatic year on year change from Thailand business leaders was regarding the lack of skilled workforce which rated highly at 68% last year but fell to 17% this year. Peter Walker commented that, “This fall in concern over skilled labour reflects the current slowdown in hiring, eclipsed by the other issues that businesses face in the recession. Despite this, we are advising our clients to pay special attention to staff retention at this time as good staff always have options if they become dissatisfied. Given that it may not be possible to pay generous bonuses or salary increases, non-financial retention strategies should be considered.”
The Grant Thornton International Business Report is an annual survey of the views of senior executives in privately held businesses all over the world. Launched in 1992 in nine European countries the report now surveys over 7,200 PHBs in 36 economies providing territory, regional and global trend data on the economic and commercial issues affecting a sector often described as the 'engine' of the world's economy. Data for eight key industry sectors will be available for the first time in 2009. The research is conducted by Experian Business Strategies Ltd. Grant Thornton International donates US$5 to UNICEF for every completed IBR questionnaire, a donation of over US$39,000 in 2008.
To find out more about the Grant Thornton International Business Report, please visit www.internationalbusinessreport.com. This press release can also be downloaded at www.grantthornton.co.th/press.
About Grant Thornton in Thailand:
Grant Thornton in Thailand is well recognized by the business community as one of the leading professional service firms in Thailand and has been in Thailand since 1991. We helped many clients successfully navigate the Asian economic crisis of the late 1990s, applying a mixture of techniques, including debt restructuring, cost cutting and business plan revision. We have also helped many clients realise acquisition and expansion opportunities.
Our services include business consulting, external and internal auditing service, domestic and international tax planning, corporate finance advisory, restructuring and reorganization, merger and acquisition, executive recruitment, succession planning and remuneration planning. To learn more about our firm, please visit our web site: www.grantthornton.co.th
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