2014 Navigate Australias Business Agenda

8/12/2019 2014 Navigate Australias Business Agenda

1/17

The Business Agenda in Australia

Discussion document

November 17th, 2013


2/17

WorkingDraft-LastModified26/04

/200712:02:50PM

Printed

1

OBJECTIVEUNDERSTAND THE THEMES OF CHANGE IN

CORPORATE AUSTRALIA

Objective

Method

Understand what is top of mind of Australian CEOs

Identify key themes of change over the past 5 years

Reviewed 42 annual reports of top 50 Australian companiesfor the years 2008/09 and 2012/13

Examined CEO and Chairman reports

Recorded mentions and top priorities for each issue within 5 broad

areas of focusgrowth, corporate responsibility, cost management,people/organisation and portfolio management


3/17


/200712:02:50PM

Printed

2

EXECUTIVE SUMMARY4 KEY THEMES EMERGING

Cost Management Is Now Top of Mind Step change in corporate responsibility

Increasing focus on cost Shift to human/behavioural organisational levers

82

80

77

63

575. People/Organisation

3. Portfolio Management

1. Cost Management

4. Corporate Responsibility

2. Growth

Percent of companies

mentioning theme

7

9

10

14

20

34Corporate governance

Regulation

Community

Risk management

Environment

Health and safety

Change in mentions

82

60

2008/09 2012/13

22%

Number of mentions

47 62

53 38

74 81100% =

Percent of total mentions

Human/behavioural

Structural/decision based

2008/09 2012/13


4/17


/200712:02:50PM

Printed

3




82

80

77

63



1. Cost Management


2. Growth


mentioning theme

7

9

10

14

20


Regulation

Community

Risk management

Environment

Health and safety

Change in mentions

82

60

22%

Number of mentions

47 62

53 38

74 81100% =


Human/behavioural


2008/09 2012/132008/09 2012/13


5/17


/200712:02:50PM

Printed

4

COST MANAGEMENT IS THE MOST IMPORTANT THEME ON THE

STATED CORPORATE AGENDA

Importance in 2012/13

Percent of companies mentioning themeTheme

5. People


1. Cost Management


2. Growth

16

27

38

44

70 82

80

77

63

57

Top priority

Source: 42 annual reports of Australian top 50


6/17


/200712:02:50PM

Printed

5

0

5

10

15

20

25

30

35

0 5 10 15 20 25 30 35

ALL INDUSTRIES BUT CONSUMER HAVE INCREASED THEIR FOCUS ON

ORGANIC GROWTH

Resources

ConsumerFinancial

Primary

Inorganic

Organic

Number of mentions 2008/09-2012/132008/09

2012/13

What are the

drivers of

this change?



7/17

WorkingDraft-LastModified26/04/200712:02:50PM

Printed

6

ORGANIC GROWTH LEVERS DIFFER BY INDUSTRYNumber of mentions 2012/13: Percent

2721

70

4541

3353

14

30 34

40

26

16

25 25

Consumer Finance Resources Primary Total

Product serviceinnovation

Geographicexpansion

Investmentfor increasedcapacity

Key organicgrowth lever



8/17


Printed

7




82

80

77

63



1. Cost Management


2. Growth


mentioning theme

7

9

10

14

20


Regulation

Community

Risk management

Environment

Health and safety

Change in mentions

82

60

2008/09 2012/13

22%

Number of mentions

47 62

53 38

2012/132008/09

74 81100% =


Human/behavioural



9/17


Printed

8

0

5

5

11

26

5

13

0

-6

32

50

31

0

34

42

11

33

22

16

16

17

25

25

-17

THE CORPORATE RESPONSIBILITY AGENDA EXTENDS BEYOND

GOVERNANCE ISSUES

Sector

Percentage point changes to mentions

Initiative Consumer Financial Resources Primary

1. Growth

2.Corporate responsibility

3. Performance execution

4. People and organisation

5. Portfolio management

Theme

Key driver for sector

Healthand safety

Environment

Community

Regulation

Corporategovernance

Riskmanagement



10/17


Printed

9




82

80

77

63



1. Cost Management


2. Growth


mentioning theme

7

9

10

14

20


Regulation

Community

Risk management

Environment

Health and safety

Change in mentions

82

60

2008 2012

22%

Number of mentions

47 62

53 38

20122008

74 81100% =


Human/behavioural



11/17


Printed

10

FOCUS ON COSTS HAVE INCREASED SUBSTANTIALLY

Importance in 2012

Percent of companies mentioning themeTheme

5. People


1. Cost Management


2. Growth

16

27

38

21

70

41

36

39

59

12 82

80

77

63

57


Top priority

Mentions

0

-4

14

22

Change 2008 to 2012

Percentage points


12/17


Printed

11

GREATER FOCUS ON COST MANAGEMENT IS BEING DRIVEN BY CAPEX

BLOW OUTS

Mentions

77

58

61

50

108

2008

138

2012

Cost/operational

Cost/Capex

Theme

5. People


1. Cost Management


2. Growth



13/17


Printed

12

RESOURCES ARE NOT THE ONLY INDUSTRY INCREASING FOCUS ON

COST

0

5

10

15

20

25

0 5 10 15 20 25

Financial

Primary

Revenue

Cost/operations

Number of mentions 2008-2012

Resources

2008

2012

What are the

drivers of

this change?Consumer



14/17


Printed

13

Revenue of all analysed companies

$ Billions

Operating expense of all analysed companies

$ Billions

Operating margin

Percent

125

2007/08

113

08/09

124

09/10

147

10/11

194

11/12

237

2012/13

13.6%

22.7

2007/08

23.1

08/09

21.1

09/10

20.5

10/11

20.7

11/12

24.4

2012/13

+1.5%

102

2007/08

90

08/09

102

09/10

121

10/11

160

11/12

188

201/132

13.0%

Employees

Thousands

793 804 864 923 987 1,130

Source: Bloomberg, ASX and Company Reports

TRENDS IN OPERATING MARGINSviz-a-viz COSTS AND REVENUE


15/17


Printed

14




82

80

77

63



1. Cost Management


2. Growth


mentioning theme

7

9

10

14

20


Regulation

Community

Risk management

Environment

Health and safety

Change in mentions

82

60

2008/09 2012/13

22%

Number of mentions

47 62

53 38

2012/132008/09

74 81100% =

Percent of total mentions *Indicates multiple mentions by each company

Human/behavioural



16/17


Printed

15

SHIFT FROM STRUCTURAL TO HUMAN/BEHAVIOURAL PEOPLE

LEVERS

2008/09 2012/13

Theme



1. Cost Management


2. Growth


Total mentions*

62

47

38

53

74 81100% =

Structural/

decision-making

Human/

behavioural

* Includes multiple mentions by each company


17/17

WorkingDraft-LastModified26/04/2

00712:02:50PM

Printed

16

ORGANISATIONAL INITIATIVES DIFFER BY INDUSTRY SECTORPercentage point change in mentions

Sector

Initiative Consumer Financial Resources Primary

-16

0

0

-11

6

0

6

-6

-6

19

6

6

-9

7

6

19

-18

-6

38

0

27

0

0

11

22

53

51

8

33

8

-17

-25

0

-17

3

17

Culture/engagement

Values

Peopledevelopment

Capabilitybuilding

Recruitment

Succession

Performancemanagement/accountability

Incentives

Organisationalstructure

Human/

behavioural

Structural/decision

making

Main changes on initiativesby industry

Documents

2014 Navigate Australias Business Agenda