50% of companies plan to increase market share in 2009

Companies are responding aggressively to the downturn, intending to take advantage of competitors’ weakened position to snare market share, says a new survey.

Companies are responding aggressively to the downturn, intending to take advantage of competitors’ weakened position to snare market share, a new survey says.

KPMG’s survey of 132 respondents from companies employing between 50 and 400 people shows that 78% believe the economy will contract in the next six to 12 months and 54% plan to take advantage of this and increase market share.

The survey found that businesses are not changing their underlying business model but are rationalising and refocusing on company outcomes and individual performance.

Graeme Matthews, national managing partner of KPMG’s middle market advisory practice says half of those forecasting to gain market share also plan to make an acquisition of a competitor.

“In a slowing economy, maintaining current revenues inevitably means that you need to blast someone else out of the market. There will be casualties,” Matthews says.

The major concerns for businesses are managing costs and profitability and managing cash flow and liquidity.

“Despite the credit crunch, only 3% of respondents are concerned about refinancing existing debt or sourcing additional debt. There is a real risk that some are being lulled into a false sense of security as banks stiffen their response to increasing defaults,” he says.

The survey found that 40% of respondents plan to reduce staff numbers in the coming six month and 72% would like to see infrastructure projects fast tracked and so would welcome the recent Australian Government announcements of major infrastructure projects.

“Half of respondents want additional fiscal stimulus from the government to keep the economy growing, yet only 11%of respondents are taking advantage of Government grants. Grants and concessions are currently available for small to medium enterprises undertaking innovative technology improvement and export activities, for example, Climate Ready, R&D tax offset, and the Export Market Development Grant.

“Given the state of the economy this figure should be much higher – what better time to make use of these grants when access to funding is limited?”

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