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Making headway in a volatile world - The challenges of achieving sustainable growth - EY - Australia

Making headway in a volatile world

The challenges of achieving
sustainable growth

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What do you think the top challenges are for business in general over the next few years?

What do you think the top challenges are for business in general over the next few years?

Base: All (246) ANZ (111) Asia (135)

How much of a priority is cash flow compared to three years ago?

How much of a priority is cash flow compared to three years ago?

Base: All (246) ANZ (111) Asia (135)

While an issue across the region, cash flow is more of an issue for ANZ-based CFOs. Sixty-two percent see it as more of a priority for their organisation than three years ago, compared to 51% of Asia-based CFOs, indicating a more conservative approach to cash flow management in ANZ companies compared to Asia.



In Asia, rapid growth market issues including rising competition and sluggish consumer demand were cited as key concerns, after the top three challenges of sluggish consumer demand in the EU and US, high commodity prices and HR issues. This reflects the importance and potential impact of rapid growth markets on Asia-based organisations’ regional business strategy.

The region’s CFOs are concerned about the noise and challenges being produced by the current macroeconomic environment.

A turbulent business landscape

From their perspective, Europe’s sovereign debt issues and the on-going debt crisis in the US are reducing demand for Asian exports to other parts of the world — a trend that is likely to continue given the extremely low growth forecasts coming out of the UK, US, Europe and Japan.

Moreover, the shaky US dollar is making export markets even less attractive, based on currency exchange. As a result, even in Asia’s rapid growth economies, market confidence, consumer purchasing and risk appetite are all weakening.

Asked to rank their top three challenges for business in general, the region’s CFOs nominated:

  1. Sluggish consumer demand in Europe and the US — demonstrating the region’s vulnerability to the economic crises playing out in the rest of the world.
  2. High commodity prices — increasing the cost of manufacturing inputs. In countries where manufacturing demand has stabilised or fallen, companies are looking to maintain or decrease output, pointing to the potential for manufacturing facility closures and redundancies.
  3. Human resource issues — particularly hiring, retention and wage inflation. In Asia’s growth markets, businesses are struggling to find executives with the right mix of skills, who also speak the local language, know the culture and understand the market.

In ANZ, CFOs are also concerned about the availability of credit, given the ANZ banking systems’ heavy dependence on offshore funding. Further, 62% of ANZ CFOs surveyed cited cash flow as the most important priority and the key to take advantage of business opportunities.

Depending on their industry, other ANZ challenges cited include: tough retail conditions, the uncertainty plaguing consumer sentiment, the high Australian dollar and the cost of labour.




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Making headway in a volatile world: the challenges of achieving sustainable growth

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