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Survey shows need to export and innovate, not export or innovate

22nd November 2013

First ever survey of business operations launched by Pathfinder

If Ireland’s economy is to realise global ambitions, enterprises must export and innovate, and not limit their efforts to selling more of the same to new and existing markets – that was the message from Pathfinder as it launched Ireland’s first Business Operations survey today. 

The Pathfinder Business Operations Survey 2013 included in-depth interviews with nineteen senior Chief Executive Officers, Chief Operations Officers and Operations Managers in a range of sectors including finance, technology, food, insurance, agribusiness and the public sector. These and over 150 other businesses took part in a detailed questionnaire exploring market sentiment, company expectations, pricing strategy and outsourcing strategy. Among the key findings are:

Economy & company sentiment: Faith & hope 

·54% of businesses said the Irish economy did better in 2012 than 2011 and the same percentage expects it to do better this year compared to 2012.

·79% of businesses expect their firms to perform better this year than last year, with only 3% expecting a worse performance.

"The improvement in sentiment bodes well for a short to medium term recovery, and companies have faith in their own ability to grow in the coming years. A full 100% of those surveyed stated that they expected the economy to be better in 2017 than it was in 2012, the last full year for which results are available. When pressed, nearly all agreed this was based on hope,” said Saiid Ordibehest, Pathfinder’s Managing Partner.

Enterprise & plans for growth: Export and innovate, not export or innovate

·28% of companies said new customers were the main source of growth, 23% cited existing customers, 18% cited exports and new geography with 18% citing new products & innovation.

·51% of companies stated that growth was the main focus for 2013, with 17% citing cost reduction, and 16% citing focus on improvement of quality & service. 

"Perhaps the key finding of the survey is the worrying trend to focus exclusively on existing and new markets and customers, with no widespread efforts towards innovation or quality improvement. If Irish businesses are to build a sustainable path to recovery, our enterprises need to add to the global value chain through innovation and productivity. Selling more things to more people does not sustain long-term economic growth,” he said.

Pricing: Mixed news for consumers. 

·52% expect their prices to rise over the next 12 months, but only 28% expect higher prices from their suppliers.

·32% actually expect that they will lower their prices in the next year.

"The responses on pricing were very interesting, as over half (52%) of those surveyed expect their prices to rise in the next year, but just over a quarter expect their suppliers prices to rise. News for consumers is mixed, while prices may go up in some areas, nearly one third surveyed (32%) said they expect prices to lower. What we can see is that the complexities of the economic difficulties cannot be dealt simply with price changes,” Saiid continued.

Outsourcing: Not the golden ticket 

·54% of outsourcing was to other Irish companies.

·Only 32% of those companies who used outsourcing found that it reduced costs, while exactly half (50%) found that it made impact costs.

·63% of those companies that used outsourcing found that there was no change to the quality of service, with only 31% finding it improved the service.

"Outsourcing is not a golden ticket for Irish businesses and most surveyed found that it brought neither quality or cost improvements to their business This supports the growing view that outsourcing only works when companies strategically decide what elements are core to the business and ensure that is kept in-house,” said Saiid.

Speaking after the publication, Saiid added; "In undertaking the first survey of operational managers, Pathfinder wanted to see how Irish businesses were dealing with the issues faced due to the economic recession. We knew there were good news stories for Irish business, but we wanted to find out what steps they had taken to stay competitive and grow.

"Operational costs have always been key to the success of a business, but reducing these in the difficult economic circumstances was, as one manager told us, ‘It was more than just a target, it was a matter of business survival.’ The positive outlook every single participant gave for both 2013 and for the next 5 years show that the steps for consolidation, changes to consumer patterns, rationalisation through outsourcing and the introduction of lean methodology have been beneficial to the operation of many local businesses.

"What is clear from the interviews and survey, the CEOs and COOs are not willing to rest as they see the shoots of growth beginning to appear. There is much more work to be done to compete globally, which is where future growth will come from, but the enthusiasm within many companies is clear,” Saiid concluded.

You can read the survey here.

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