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What’s on the agenda for mid-market businesses?

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Mid-market businesses are the engine room of New Zealand’s economy. The latest edition of our Engine Room Survey asked local mid-market businesses about their biggest challenges and how they’ve navigated the past few years of COVID-19-related challenges. In this article we outline the key findings.

COVID-19 has accelerated digital transformation

The impact of the pandemic led to a number of changes for New Zealand’s businesses including the need to streamline and bring forward digitisation plans.

Our survey results mirrored this. It revealed that 90% of businesses have already digitised, or are currently undergoing a digital transformation. This is a positive change. New Zealand businesses previously lagged behind the rest of the world with only 23% considering digitisation a top priority in 2019, compared to 44% globally.

Digital capability is stronger than ever before

58% of respondents said they have strong digital tools and technology in place, and another 33% said they are moving in the right direction. This is in contrast to our 2021 Global Family Business Survey where only 39% of global organisations said their digital capabilities were strong. It demonstrates the importance of digital enablement in the modern business environment and that it’s a priority for local businesses.

Businesses are better equipped to navigate change

The survey revealed the sentiment among businesses that the pandemic experience allowed them to return stronger and better equipped to navigate ongoing change. Now in the middle of 2022, it’s clear those who made adjustments to their organisation will be in a better position to face the new challenges presented by dynamic global markets, inflation, growing supply costs and access to talent.

The ability to grow sales remains a challenge

Global economic drivers are changing continually. This is influencing what businesses believe are their biggest challenges ahead. While the issues are largely the same as in previous surveys, their significance has increased. The top challenges from our recent survey are:

  1. Ability to grow sales
  2. Availability of key skills
  3. Supply chain

ESG concerns are not a focus

The survey results showed Environmental, Social and Governance (ESG) concerns are not currently high on the agenda for mid-market businesses. Alongside the results of PwC’s Global Family Business Survey and the New Zealand results of the CEO Global Survey, we can see a relative under prioritisation of ESG in business strategies. However New Zealand  small and medium sized businesses do differ from their global counterparts in their desire to take a leadership role to address ESG challenges – only 25% expect to lead in this space.

ESG presents opportunities for business

What’s clear globally is the increasing demand for companies to demonstrate their sustainability and climate credentials. This can have a significant impact on how investors, customers and potential employees view and respond to an organisation. While it might not yet be seen as a priority by many New Zealand businesses, the global market is rapidly changing. ESG is one of the areas where small and medium sized companies have the opportunity to lead.

As the most trusted form of business, potentially more agile and relatively free from short-term market pressures, small and medium sized businesses can make a substantial impact by embracing the ESG agenda.

Written by Matt White – Partner, and Assurance at PwC

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