Business Practices Survey
This is the first release of economy-wide business practice statistics in New Zealand. Business practices are defined as systems, processes and procedures adopted by a business to improve its performance. The survey was jointly sponsored by the Ministry of Economic Development (MED), the Ministry of Research Science and Technology (MoRST), and Statistics New Zealand.
The primary objective of the Business Practices Survey (BPS) was to gain an understanding of the wider state of business practice in New Zealand firms, including:
(1) Commitment to the use of information technology.
(2) Adoption of management practices.
(3) Commitment to capability improvement and innovation.
Detailed reports and analysis of the BPS data will be published at a later date in cooperation with MED and MoRST.
Information technology
The BPS collected data on the use of information technology (IT) and its role in the operation of New Zealand businesses. This includes:
(1) The development of infrastructure for IT systems by businesses.
(2) The use of IT by businesses, and the impact of IT on business operation.
(3) The use of the Internet by businesses, including use of email, and involvement in e-commerce.
(4) Barriers to the use of the Internet by businesses.
Information technology infrastructure
The BPS asked respondents to provide information on the type of IT systems used and how intensively employees utilised the IT systems owned by the business.
Eighty-eight percent of New Zealand businesses regularly (at least once a week) use a PC, workstation, or terminal. Forty-six percent of businesses have computers which are stand alone, while 44 percent of businesses have computers which are connected to a local area network (LAN). Nine percent of businesses do not have computers.
Use of information technology
The BPS asked respondents to provide information on their use of IT in the business environment. The categories in the survey are not mutually exclusive and respondents could indicate more than one type of use. The survey results show that the most common use of IT in New Zealand business is for accounting systems (80 percent), while over half use IT for other forms of data processing (60 percent) and for information management (53 percent).
Internet use
The emergence of e-commerce has presented new opportunities for New Zealand businesses, including potentially larger markets in which to sell goods and services, and improved communication with customers and suppliers. The survey reveals that 79 percent of New Zealand businesses regularly use the Internet.
Thirty-six percent of New Zealand businesses operate a website. Total sales generated through the Internet are estimated to be $523 million in the year ended June 2001. This represents 0.3 percent of total operating income reported by businesses. The value of Internet sales is difficult to measure as many businesses do not record sales over the Internet separately. If an Internet sales figure could not be provided, respondents were asked to provide an estimate of Internet sales as a percentage of operating income. Ten percent of businesses have a facility for receiving on-line orders for goods and services on their website.
Use of email
Seventy-nine percent of New Zealand businesses regularly use email. The most common uses of email are communicating with customers and suppliers (69 percent); and transmitting and receiving data files (50 percent).
Restrictions on the use of the Internet
The BPS asked respondents to indicate the factors that restrict their use of the Internet.
Twenty-nine percent of New Zealand businesses stated that the Internet was not relevant to their businesses activity, while 21 percent said the risk of viruses or hackers' accessing confidential information restricts their use of the Internet.
Management practices
The BPS collected information on the adoption by New Zealand businesses of various management practices that are considered to lead to an improvement in business performance. The areas in which information was collected by the survey included:
(1) Leadership and planning.
(2) Customer management.
(3) Supplier management.
(4) Quality management.
(5) Information management and benchmarking.
(6) Market focus.
Leadership and planning
Leadership and planning practices attempt to develop a vision for the future, and to align the organisation's stakeholders with the same values and vision.
The survey shows that 68 percent of New Zealand businesses have a formal planning process. Eighteen percent of businesses set goals for up to six months, while 33 percent set goals for between six months and one year.
Customer management
Customer management practices aim to provide businesses with an understanding of the current and future requirements of their customers. This includes staying informed about customer preferences and obtaining feedback from customers.
Seventy-five percent of New Zealand businesses reported they have set procedures for dealing with customer complaints. Fifteen percent of businesses have focused on new export markets in the last three years.
Supplier management
Supplier management practices concentrate on building relationships between businesses and their suppliers. This includes effective purchasing and distribution networks and a focus on developing partnerships.
Sixty-nine percent of businesses report they have systems for monitoring the quality of suppliers' products. Of these businesses, 58 percent monitor most or all of their suppliers' products.
Quality management
Quality management practices refer to systems developed to provide quality products that meet or exceed customer requirements. Quality management systems certification are methods which businesses use as a benchmark to assess the adequacy of their quality programme (eg ISO9000).
Twenty-six percent of New Zealand businesses have, or are planning to implement, systems to gain quality management systems certification.
Information management and benchmarking
Information management and benchmarking practices involve searching for, gathering and using information to identify risks and opportunities, measure performance against goals, and compare performance of the business against the products, practices and processes of competitors.
Eighty percent of New Zealand businesses reported having a formal system in place to manage the storage and retrieval of information. Sixty percent of businesses monitor competitors' products either quite closely or very closely
Innovation
An innovation is defined as the introduction into the market by a business of a new or significantly improved product (good or service) and/or the introduction within a business of a new or significantly improved process. An innovation is the result of new or recent developments or applications in science, technology, or other knowledge areas, or the result of new combinations of existing technology. Although an innovation should be new to the business, it does not have to be new to the market.
The BPS examined the intensity and characteristics of innovative behaviour by firms, and how innovation fits into the operation of the business. This includes:
(1) The rate at which each industry group introduced new or significantly improved products or production processes.
(2) The type of innovation activities carried out by business relating to the introduction of new or significantly improved products and processes.
(3) The extent to which business have invested in innovation activities.
Introduction of new or significantly improved products or processes
Sixty-two percent of New Zealand businesses have offered new or significantly improved products to their customers in the last three years. Forty-nine percent of businesses have introduced improved production processes in the last three years. Production processes include new ways to supply services or deliver products.
Innovation activities
The BPS asked respondents to indicate what innovative activities the business invested in during the previous 12 months (year ended June 2001), in relation to the introduction of new or significantly improved products, services or processes.
Fifty percent of New Zealand businesses in the previous 12 months (year ended June 2001) had invested in machinery and equipment specifically relating to the introduction of new or significantly improved products, services or processes. Forty-six percent of businesses had invested in employee training, while 28 percent had invested in in-house research and development relating to the introduction of new or significantly improved products.
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Expenditure on innovation
The BPS asked respondents to provide their level of business investment in innovative activities as a percentage of total expenditure.
Thirty-nine percent of New Zealand businesses reported spending up to 5 percent of their total expenditure on innovation. Four percent of businesses spend more than 30 percent of their total expenditure on innovation.
For technical information contact:
Mark Jackson or Mathew Page
Christchurch 03 374 8700
Email: info@stats.govt.nz