Australian middle market organisations remain optimistic despite global uncertainty, a new survey by Ernst & Young has revealed.
The EY Growth Barometer survey canvassed 2340 executives from middle market companies across 30 countries, including Australia. The survey showed 23% of Australian middle market companies — those with annual revenues of at least $US1 million ($1.25 million) — plan to deliver growth of 11% to 25% this year, outpacing World Bank global gross domestic product (GDP) growth forecasts of 2.7%.
According to the survey, 20% of middle market business leaders in Australia are eyeing entry into a new geographical market as a primary growth strategy.
However, increasing competition was cited as the number one external threat to growth plans (24%), followed by geopolitical instability (11%) and rising interest rates (14%).
Rob Dalton, growth markets leader for EY Oceania, explained that Australian middle market leaders are not allowing geopolitical uncertainty “to impact their decisions, attitudes or long-term thinking”.
“Australian middle market businesses are taking advantage of new technologies and globalisation,” Dalton commented.
“They are using international growth and expansion as a way to address local skilled talent needs, develop strong global ecosystems, and are adept at using AI [artificial intelligence] and automaton to seize new markets and opportunities.”
The survey found that 38% of Australian mid market companies strongly agree that “successful growth depends on the strength of a company’s wider network more than its internal capabilities”. Meanwhile, around a fifth of them are placing a strategic priority on using customer data to drive innovation from the bottom up, compared with under 17% globally.
“C-suite leaders are complementing internal skills and capabilities with a collaborative external ecosystem that may include suppliers, partners, customers, influencers and sometimes competitors,” Dalton commented.
“We see this strongly in the market.”
Among Australian companies, 18% stated that they “foster a culture of innovation where we accept and learn from failure”, compared with 13% globally.
Australian executives also place a heavy emphasis on technology and talent. Technology disruption was seen as the most significant internal challenge to growth at 22%, compared to 17% globally. Additionally, 38% of businesses plan to recruit more full-time staff this year, compared to 27% globally.
Lack of skilled talent was found to be third biggest challenge for Australian businesses. Amid growth of robotic process automation, only 1% believe that robots presage staff reductions of more than 30%, with the most common prediction being less than 10%.
“Australian middle market businesses have an entrepreneurial approach,” Dalton commented.
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“Rather than be held back by disruption and uncertainty, they are using these challenges to improve efficiency and grow and expand their products and their markets.”