Business Trends Down

These and other concerning trends are contained in the findings of the latest New Zealand Business Trends survey compiled by the New Zealand Institute of Management.
The survey of 290 chief executives suggests that little over half, 55 percent, of the organisations that responded have written mission statement. This is dramatic drop from the 84 percent of businesses that claimed to have written mission statements when they were surveyed in 1997. However, 59 percent of organisations without mission statement intend producing one.
The drop in the number of organisations with published business strategy is equally dramatic, down from 68 percent in 1997 to just 37 percent this year.
The greater number of smaller enterprises and the lower number of large organisations that responded to the survey this year has perhaps dragged down the level of commitment to prepared statements of intent and strategy. In 1997, 44 percent of the CEOs who took part in the survey represented organisations with less than 100 employees and 13 percent employed more than 500 people. This year 69 percent of the companies that responded had less than 100 employees and only four percent employed more than 500.
The composition of the survey respondents probably also has an impact on the performance measure priorities revealed. Most rate positive cash flow and return on sales as the important measures of performance. Return on investment and return on equity rate more highly as key indicators with larger organisations. Growth in share price and dividend payments are rated the least important performance measures.
Most businesses, however, expect an increase in profitability this year. Some 44 percent of them expect those increases to be between 10 and 19 percent.
Businesses placed most emphasis on targeted marketing, improved management of quality and increased product focus to lift their profitability in the coming year. All businesses, whether in service industries or manufacturing, regard cutting staff training, reducing staff numbers and cutting expenditure on R&D as their least important priorities when looking to improve profits.
Just over half (56 percent) of CEOs reported clearly defined marketing strategy. But 26 percent did not. Most expect their strategies to have two- to three-year planning horizon.
When it comes to competitive advantage both business services enterprises and manufacturers consider “quality of product”, “reliability of product and service” and “understanding their customers” the three most important factors. Speed of delivery and technical excellence ranked ahead of price as other key competitive influencers.
Only 23 percent of businesses that responded to the survey have an ISO 9000 certification, and only five percent are planning to obtain one.
There has also been downward shift in environmental attitudes, companies seem less interested in taking responsibility for environmental management. Almost half, 45 percent, of businesses feel that the prime responsibility for creating better environment rests with the Government, up from 27 percent reported in the 1997 survey. And whereas in 1997, 36 percent of CEOs said they carried out regular environmental audits, that figure is now down to 27 percent.
And interestingly, less companies claimed to have an information technology strategy. That has slipped from 44 percent in 1997 to one third in this latest NZIM survey. further seven percent are preparing strategy which is similar to the number reported four years ago. The majority (52 percent) reported two- to three-year planning horizon for their IT strategies.
On most facets of information management, the finance director holds responsibility. In 27 percent of cases, the finance director was responsible for the effective day-to-day use of information and in 20 percent of cases was also responsible for deriving ways in which their organisation can use information more effectively in the long term.
The survey was conducted by NZIM and supervised by Ken Fink-Jensen of the Wellington-based, Business Research Centre.