Family business survey 2014 Findings for Indonesia

Transcription

1 Family business survey 2014 Findings for Indonesia

2 Agenda Key findings at a glance Overview Main Findings: A. Performance and Challenges B. Internationalisation C. How family businesses differ D. Family involvement and succession planning E. Moving to digital and emerging global trends Conclusions Slide 2

3 Key findings at a glance Family Businesses in Indonesia have seen much stronger growth than the global average over the last year and are very bullish about future growth. 83% have grown in the last 12 months (vs. 65% globally) and 96% are aiming to grow over the next five years (vs. 85% globally) The key challenge to growth will be the number of businesses competing (rather than the economy which is a relatively minor issue in Indonesia). In addition, businesses see the need to innovate, attract skills and talent and the need to professionalise as key challenges for the future Ensuring the company s long term future is the most important goal for the next 5 years followed by factors that may help drive this: running the business more professionally, being more innovative, and attracting high quality skills Factors relating to the family (creating employment for family members) and diversification (new products/sectors, exporting) are of less importance Slide 3

4 Key findings at a glance (continued) Family businesses believe they hold some key advantages over nonfamily businesses including: being more entrepreneurial and making decisions faster / being more streamlined with regards to decision making But many recognise the disadvantages too: less open to new thinking and ideas and, to a lesser extent, reduced access to capital (and it being harder to benefit from the recovery as a result) Family Businesses in Indonesia believe they play a role in their country s economy and society; including supporting community initiatives and employment. However they are significantly less likely than the global average to feel this extends to job creation and adding stability to a balanced economy Over half are planning to pass on ownership to the next generation but bring professional management in. A quarter will pass on ownership and management to the next generation 80% of family businesses in Indonesia have procedures in place to deal with family member issues/conflict (on a par with the world as a whole: 83%) Slide 4

5 Methodology 2,378 interviews conducted in over 40 countries 30 interviews In Indonesia Averaging 41 minutes All interviews conducted by phone Conducted between 21 st May and 29 th August 2014 Throughout report: = 2014 country % higher or lower than the global average = 2014 % higher or lower than 2012 % Slide 5

6 Sample profile Slide 6

7 Indonesia sample profile: Business Turnover (US$s) Company age 27% 14% 13% 7% 3% 20% 20% 16% 23% 22% 17% 11% 30% 18% 53% 44% 17% 38% $5-10m $11-20m $21-50m $51-100m $ m >$500m Under 20 years years 50+ years Sector Number of generations Mix of sectors: Manufacturing: 50% (30%) Transport: 13% (6%) Business activities: 13% (7%) Construction: 7% (9%) Others: 5% or less 23% 30% 37% 40% 33% 19% 0% 11% 1 generation 2 generations 3 generations 4+ generations Slide 7

8 Indonesia sample profile: Respondents Role Family member? 64% 47% 49% 52% 48% 36% 7% 8% 23% 23% 23% 19% CEO/MD Owner/ Partner Finance Director Other Board member Family Non-family Family role in business Age 87% 90% 27% 43% 25% 23% 34% 22% 13% 10% 10% 3% 3% 8% Own and manage Just own don t manage Under or older Slide 8

9 Main findings A Organisation performance and challenges Slide 9

10 83% of family businesses in Indonesia grew in the last financial year (compared with 65% globally) and 96% are aiming to grow in the next 5 years (compared with 85% globally) Last year Next five years Growth in last financial year Growth Aims (Next five years) 13% 12% 15% Grow quickly & aggressively Sales Growth 83% 65% 65% 83% 69% 70% Grow steadily Sales Reduction 10% 19% 18% 3% 16% 13% Consolidate 0% 2% 1% Shrink % of Indonesian family businesses predicting growth are confident of achieving it Slide 10

11 The key issues facing family businesses in Indonesia are government policy / regulation, staff recruitment and competition. Compared with the rest of the world, businesses in Indonesia are less concerned about market conditions Key internal issues in next 12 months Key external issues in next 12 months Staff recruitment 47% 49% Govt policy/regulation 33% 50% Company re-organisation 20% 28% Competition 43% 32% Business/product development 13% 25% Market conditions/ Euro uncertainty 27% 63% Availability of finance 13% 15% Exchange rates 23% 13% Technology Cash flow/cost control 13% 13% 10% 19% Price of raw materials Infrastructure 20% 10% 7% 5% Search for professional talent especially in technology development. (Third Generation family business) Human resource (quality & quantity). Attract quality people talent and get more of them. (Second Generation family business) Government policy, performance evaluation and execution e.g.2006 Bio-fuel policy still not executed by Government till now. (Third Generation family business) Competition (size of the competitors),even though we are currently top 3 in Indonesia. (Second Generation family business) Slide 11

12 Family businesses in Indonesia are more likely to see the number of businesses competing as a challenge but less likely to identify the general economic situation as a challenge Next five years Key challenges in five years time Number of businesses competing Need to continually innovate Attracting the right skills/talent Price competition 42% 73% 67% 64% 63% 61% 60% 58% Need to professionalise Retaining key staff Need for new technology Company succession planning Complying with regulations Increasingly international environment General economic situation Containing costs 40% 53% 50% 48% 41% 36% 50% 47% 43% 42% 33% 40% 37% 56% 33% 44% Suppliers/supply chain Conflict between family members 11% 23% 26% 20% Slide 12

13 It may be that the recession and the tough environment emerging afterwards has sharpened Family Business thinking. Their priorities are clearly set out here the long term future and success of the business come first. The key enablers of commercial success are the second priority and family and community related aspects are less important Relative importance of personal and business goals over the next 5 years (out of 100) Next five years Ensure company's long term future Run business more professionally 8.8% 13.2% 16.0% 16.2% Improve profitability More innovative Attract high quality skills Ensure staff are rewarded fairly 11.9% 13.7% 10.7% 9.3% 9.4% 10.1% 8.7% 9.4% Contribute to the community / positive legacy Grow as quickly as possible Diversify into new products/sectors Move into new regional markets in home country Enjoy work and stay interested Different export markets 5.0% 4.3% 5.0% 4.0% 4.8% 5.6% 4.6% 3.8% 4.0% 5.4% 3.7% 4.3% Ensure business stays in the family Create employment for other family members 1.7% 1.4% 0.7% 4.4% (New question in 2014) Slide 13

14 Main findings B Internationalisation Slide 14

15 Increased internationalisation is predicted. 18% of sales today are accounted for by international sales (expected to rise to 24% of sales) The new countries for exports will primarily be in Asia Pacific Next five years Avg. % of sales = International (based on all i.e. all exporting and nonexporting businesses) Currently In 5 years time 18% 24% Countries/regions seeing biggest increase in five years (Indonesia)? Asia Pacific Europe Africa 18% 12% 88% Russia: 12% Malaysia: 29% China: 24% Thailand: 24% India: 18% Singapore: 12% Americas 6% 25% 32% Middle East/Gulf No new countries 0% 6% Slide 15

16 Main findings C How family businesses differ Slide 16

17 Family businesses generally feel positively about how their sector compares with other businesses. However, Indonesian businesses tend to be less positive than businesses in other countries % agreeing with statements about how family businesses behave Play an important role in job creation Measure success differently not just profit / growth More entrepreneurial Take a longer term approach to decision making Decision making is more streamlined / faster Were able to withstand the recession better Re-invent themselves with each generation 57% 78% 57% 71% 57% 59% 57% 55% 53% 69% 53% 47% 50% 56% Add stability to a balanced economy Less open to new thinking and ideas 43% 43% 36% 73% Take more risks Harder to benefit from recovery (due to capital access issues) 30% 38% 30% 34% Slide 17

18 Almost all feel family businesses have a strong sense of responsibility to support employment, while three quarters agree that family businesses do all they can to retain staff and that they have a strong sense of responsibility to support community initiatives % agreeing with statements about how family businesses differ to other businesses Strong sense of responsibility to support employment 76% 97% Do all they can to retain staff, even in the bad times 73% 72% Strong sense of responsibility to support community initiatives 59% 73% The culture/values tends to be stronger 57% 73% Slide 18

19 Main findings Family involvement and succession planning D Slide 19

20 80% of Indonesian family businesses have non-family members on the board % have non-family members on the board 80% 65% % have non-family staff who have shares 50% 34% Further % likely to offer shares to nonfamily in the next five years 33% 18% Slide 20

21 Over a half of family businesses in Indonesia have nonworking family member shareholders Family involvement in businesses % have family members working as Senior Executives within the company 100% 93% % have family members working within the company, but not as senior executives 53% 49% % have family members who don t work for the company but have company shares 53% 48% % have family members who don t work for the company or have shares, but are recompensed in other ways 17% 18% Slide 21

22 60% of family businesses in Indonesia have next generation family members working for the business Family Next Generation involvement in businesses % have Next Gen family members working as Senior Executives within the company 60% 43% Any next gen working for business 60% % have Next Gen family members working within the company, but not as senior executives 27% 28% 55% % have Next Gen family members who don t work for the company but have company shares 33% 23% % have Next Gen family members who don t work for the company or have shares, but are recompensed in other ways 10% 7% Slide 22

23 80% of Indonesian family businesses have at least one procedure/mechanism in place to deal with conflict (on a par with the global average: 83%) Procedures in place Shareholders agreement 53% 54% Measuring and appraising performance Family constitution 22% 40% 39% 37% Family council Incapacity and death arrangements Conflict resolution mechanisms 27% 32% 23% 23% 27% 43% Entry and exit provision 20% 33% Third party mediator Nothing 13% 20% 17% 27% Slide 23

24 70% of family businesses have some sort of succession plan, while 27% of family businesses have a succession plan in place that is robust and documented Succession plan for key senior roles? % with a succession plan in place for at least some senior roles All senior roles 13% 16% Most senior roles 17% 18% 70% 53% Small number of senior roles 20% 40% None 20% 44% 27% of Indonesian family businesses have a succession plan in place that is robust and documented (16% worldwide) Slide 24

25 Over a half of Indonesian family businesses are planning to pass on ownership to the next generation but bring professional management in. A quarter plan to pass ownership and management down to the next generation Future plans Pass on ownership but bring professional management in 32% 57% Pass on management to next generation 23% 40% Sell/float 10% 20% Breakdown in Indonesia Flotation / IPO: 10% Sell to private equity investors: 3% Don't know 8% 10% Other 0% 1% Slide 25

26 Main findings E Moving to Digital and Emerging Global Trends Slide 26

27 The majority of Indonesian family businesses recognise the importance of digital (more so than the global average) % agreeing with statements about the digital world Need to adapt organisation to an increasingly digital world 72% 90% Moving to digital will help raise organisational awareness 64% 87% Understand the tangible business benefits of moving to digital and have a realistic plan for measuring them 57% 87% Attracting talent to undertake the conversion to digital is at the top of our agenda 43% 63% Slide 27

28 Family Businesses in Indonesia have a similar outlook to the world as a whole in terms of the global trends that will transform business over the next 5 years although place more emphasis on a shift in global economic power and less on urbanisation Next five years Top three global trends that will transform business over the next 5 years (Indonesia) Ranked top 3: 53% 80% 47% 80% 27% 17% 23% 13% 20% 20% Demographic shifts 33% 30% Shift in global economic power 17% 20% 10% Resource scarcity and climate change 10% 47% Technological advances 10% 13% 3% Urbanisation Ranked 3rd Ranked 2nd Ranked 1st Ranked top 3 (globally): 56% 60% 52% 79% 40% Slide 28

29 Conclusions Optimism and ambition for the future is high with 96% aiming for growth over the next 5 years. The general economic situation is not such an issue in Indonesia as it is in many other markets (although competition is seen as fierce). Businesses in Indonesia have similar priorities to businesses around the world although place more emphasis on the number of businesses competing. They recognise the importance of professionalising the business in order to help meet these ambitious growth targets Family businesses in Indonesia recognise the important role family businesses play in the economy and society, although are less likely to feel they play an important role in job creation or adding stability to a balanced economy Family businesses in Indonesia seem to be better placed than average in terms of succession. Although only 27% have a robust and documented succession plan in place this compares with favourably with the world as a whole (16%) Slide 29

30 2014 PricewaterhouseCoopers LLP. All rights reserved. In this document, refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity JM-OS