Midsize businesses are an important engine of economic growth. They have an enormous appetite for growth, but they currently find themselves squeezed by the effects of an increasingly tough global competitive environment, namely downward pressure on prices, rising input costs and consolidation. To fight these problems and to pursue growth at the same time, midsize businesses need to focus on the following growth priorities in the near future:
Expand aggressively, but profitably - Midsize businesses aim to boost revenue mainly through expansion of their customer base at an optimal rate in existing and new markets. They prefer controlled growth as they fear that overly rapid growth can strain their financial, human and physical assets. For majority of these businesses, cost reduction and efforts to enhance operating efficiency go hand-in-hand with new customer acquisition.
Grow organically - Larger midsize firms appear to be opportunistic about acquisitions, but generally midsize companies will pursue M&A (mergers and acquisitions) as a central plank of growth strategy. They rather pull themselves up by their own bootstraps in order to grow, preferring the path of organic growth to other methods of growth.
Look abroad - Globalisation has made way for midsize businesses to venture into new geographic markets to reap the same benefits that multinationals do. Some will do so to service key customers in new markets while some will seek new sources of demand. Others will discover the benefits of global sourcing. But global growth also requires the acquisition of new competencies, as many midsize firms are only beginning to learn how to manage business across borders.
Stay nimble and responsive - Consolidation is producing larger and more powerful customers and larger, more powerful competitors. Midsize businesses lack the clout of their large rivals to, among other things, attract and retain talented staff, obtain financing, dictate pricing and delivery terms, and use acquisitions to enter global markets. They are not without advantages, chief among them being faster speed of execution, greater pricing flexibility and deeper customer relationships. But these, midsize company leaders say, are the very attributes that are most likely to erode with growth.
Have a good IT System in place - Speed, flexibility and responsiveness need not be sacrificed at the altar of scale. Midsize firms today have access to sophisticated information technology (IT) tools that earlier generations lacked. Their executives say emphatically that IT is critical not only to their ability to grow, but to retain flexibility while they do so. And they plan to use IT to help improve customer service, interaction with suppliers and partners, operational management, and product and service innovation-all in the effort to enhance their scalability and maintain some of the attributes that have served them so well.
Attract good talent and retain them - However, technology is only as good as the people who use it. Midsize firms in all regions, but perhaps more so in Asia-Pacific, grapple with a lack of IT skills among both employees and managers, as well as employee resistance to change. Greater investment by midsize companies in IT training-of managers and employees-is in order. But this challenge extends beyond IT, as executives in the survey expect that a lack of talented staff in general will be among the key impediments to their firms' growth over the next three years. In this, midsize companies find themselves in the same boat as the big players: finding, training and keeping good people is mission-critical.
LuitBiz helps midsize businesses meet all these challenges effectively and provide a platform for them to manage and grow their businesses.
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