The vast majority of Gulf businesses plan to grow and are also among the most positive globally about the impact of increased globalisation, according to the ICAEW Global Enterprise Survey 2010. However, making the most of your business’ growth potential requires you to be ‘financially tidy’, says ICAEW.
According to the survey, Gulf businesses score among the highest when it comes to being positive about the impact of increased globalisation. 70% have plans to expand into or increase their market share in other countries in the next couple of years, with adapting their products or offering higher value-added products or services being key strategies. Of those planning to boost foothold outside their home country, more than half plan to increase share or expand in neighbouring countries, with as many as one third of these businesses planning expansion into Asia-Pacific and Africa.
Amanda Line, Regional Director, ICAEW Middle East: “The Gulf is typically seen as a gateway both to Africa and Asia because of its geographical position. No other region surveyed plans to focus as much on Africa, as the Gulf countries. However, while businesses see opportunities, they also face hurdles.”
Access to finance has been a particular challenge for Gulf businesses in the past year, with around a quarter of businesses stating that changes in interest rates, raw material costs and exchange rate moves have also had a negative impact on the business’ competitiveness. However, looking ahead, access to finance is rated as one of the factors expected to have the most positive influence on their business in the next year.
Gulf respondents were of differing views on other factors impacting on their business’ competitiveness; some have benefited from changes in energy costs, others have not. The same goes for energy and oil/petrol price changes. Although views on the likely impact of these factors on business over the next year is similarly divided, on balance, more expect changes in raw material costs to have a negative rather than positive influence.
Line continued: “Successful expansion into other markets requires knowledge of key issues as well as cultural ‘rules’ in these markets. It is critical to do your homework.
“Success is also likely to hinge on your business’ ability to access finance. You might have to raise cash in your home market. While businesses expect that to become easier, it is key to keep your house in order, be transparent and provide as much and high-quality financial information as possible, whether your capital comes from capital markets, banks or other financiers.”