BUSINESS MARKETS AND COMPETITION


BUSINESS MARKETS AND COMPETITION

Geographic markets in which businesses sold goods or services

Businesses were asked to identify all geographic markets (from four options) in which they sold goods or services during the year ended 30 June 2007.

Geographic markets in which businesses sold goods or services(a)(b), by employment size - 2006-07
	Employment size
	0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
	%	%	%	%	%
Local area(c)	80.7	85.1	81.0	78.4	82.0
Outside of local area but within the state/territory	35.8	42.5	49.5	67.9	39.0
Outside of state/territory but within Australia	21.3	24.6	37.5	64.9	23.7
Overseas	7.4	9.8	18.4	36.2	9.1
(a) Proportions are of all businesses in each employment size category.
(b) Businesses were asked to identify all geographic markets in which they sold goods or services. Businesses could report more than one geographic market.
(c) Local area includes the immediate area, town or city in which the business is located.

Just over eight in every ten businesses sold goods or services within the Local area. Although in total, 9% of businesses sold their goods or services to Overseas markets (representing approximately 63,000 businesses), half of these businesses (approximately 30,000) employed 0-4 persons.

By industry, businesses in Mining were more likely to have sold goods or services to Overseas markets (26%), while those in Construction were lowest (2%).


Market share of businesses

Businesses were asked to assess their market share based on their perception of the market in which they operated. Guidance as to how businesses could make this assessment was not specified. Businesses could choose from three broad ranges.

Market share of businesses(a)(b)(c), by employment size - 2006-07
	Employment size
	0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
	%	%	%	%	%
Less than 10%	71.9	51.1	42.6	35.5	63.5
Greater than or equal to 10% and less than or equal to 50%	21.7	38.6	42.2	52.0	28.3
Greater than 50%	6.4	10.3	15.2	12.4	8.3
(a) Proportions are of all businesses in each employment size category.
(b) Market share was based on self-assessment by the business.
(c) The sum of component items within employment size categories may not equal 100.0% due to rounding and/or provision of multiple responses, refer to Explanatory Notes 17-19.

The majority of businesses (64%) reported their market share as being Less than 10%. Businesses with 0-4 persons employed had the highest proportion of businesses reporting Less than 10% of market share (72%), as opposed to 36% of businesses with 200 or more employees.

At the industry level, 80% of businesses in Financial and Insurance Services reported having Less than 10% of market share. Businesses in Accommodation and Food Services were most likely to report a market share Greater than or equal to 10% and less than or equal to 50%. Market share of Greater than 50% ranged from 4% for Construction to 18% for businesses in Transport, Postal and Warehousing.


Main source of business income

Businesses were asked to identify their main source of income from the sales of goods and services during the year ended 30 June 2007. A list of sources was supplied, however, definitions for Large businesses or organisations and Small and/or medium businesses or organisations were not specified.

Main source of business income(a)(b)(c), by employment size - 2006-07
		Employment size
		0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
		%	%	%	%	%
Australian sources
	Government organisations	5.3	4.6	7.5	12.3	5.3
	Large businesses or organisations	12.4	11.6	22.4	43.6	13.1
	Small and/or medium businesses or organisations	40.1	36.4	33.7	22.7	38.4
	General public	47.4	53.3	39.9	26.3	48.4
Overseas sources		2.4	2.1	3.4	8.2	2.4
(a) Proportions are of all businesses in each employment size category.
(b) Businesses were asked to identify their main source of income from the sales of goods or services and were asked to nominate one source only.
(c) The sum of the component items within employment size categories may not equal 100.0% due to rounding and/or provision of multiple responses, refer to Explanatory Notes 17-19.

Just under half of all businesses reported the Australian General public as their main source of income, with Small and/or medium businesses or organisations within Australia as the second highest source of income (38%). Businesses in the 200 or more person employment group reported their main source of income being from Large businesses or organisations (44%).

Businesses in the Accommodation and Food Services industry were most likely to report the Australian
General public as their main source of income (86%). Overall, 2% of businesses reported Overseas sources as their main source of income. This was most prevalent for businesses in Mining (13%).


Reliance on clients, customers and buyers

Businesses were asked whether they relied on a small number of clients, customers or buyers to generate a significant proportion of their income. Definitions of what constitutes a small number of clients, customers or buyers and what is significant were not specified. Businesses that did have a reliance on a small number of clients, customers or buyers were then asked to indicate the potential impact of losing one of these.

Reliance on clients, customers or buyers, by employment size - 2006-07
		Employment size
		0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
		%	%	%	%	%
Businesses that relied on a small number of clients, customers or buyers(a)		54.2	40.0	37.4	29.3	48.7
Potential impact on business income from loss of one of these clients, customers or buyers(b)(c)
	Little or no impact on the business's income as it would have been relatively easy to find replacement client, customer or buyer	42.7	42.5	31.3	^28.8	41.9
	Moderate to large impact on the business's income as it would have been difficult to find replacement client, customer or buyer	41.5	47.0	54.3	^56.8	43.6
	Extremely large impact which would have forced the business to close	15.9	10.5	14.4	14.4	14.5
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
(a) Proportions are of all businesses in each employment size category.
(b) Proportions are of businesses that relied on a small number of clients, customers or buyers to generate a significant proportion of their income, in each employment size category.
(c) The sum of component items within employment size categories may not equal 100.0% due to rounding and/or provision of multiple responses, refer to Explanatory Notes 17-19.

Just under half of all businesses reported a reliance on a small number of clients, customers or buyers to generate a significant proportion of their income, with the proportion decreasing with each successive employment size range.

Of the businesses that reported relying on a small number of clients, customers or buyers, 44% indicated there would be a Moderate to large impact on business income if one of these clients was lost. An Extremely large impact was reported by 14% of businesses.

At the industry level, businesses in Construction were most likely to rely on a small number of clients, customers or buyers to generate a significant proportion of their income. Of these, 49% reported that they would have experienced Little or no impact on income if they lost one of those clients. Businesses within the Administrative and Support Services; and Electricity, Gas, Water and Waste Services industries were the most likely to experience an Extremely large impact on their income in the event of losing one of these clients.

The prospect of losing one of these clients would be more likely to have a Moderate to large impact on innovation-active businesses (50%) than non innovation-active businesses (40%).


Number of competitors

Businesses were asked to indicate the number of competitors they had during the year ended 30 June 2007. Guidance as to how businesses could make this assessment was not specified. Businesses could choose from three response options.

Number of competitors(a)(b)(c), by employment size - 2006-07
	Employment size
	0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
	%	%	%	%	%
No effective competition	17.7	9.3	9.2	8.9	14.5
One or two competitors	11.1	15.8	13.1	7.5	12.6
Three or more competitors	71.3	74.9	77.8	83.7	72.9
(a) Proportions are of all businesses in employment size category.
(b) Businesses were only asked the number of competitors in the categories shown in the table.
(c) The sum of component items within employment size categories may not equal 100.0% due to rounding and/or provision of multiple responses, refer to Explanatory Notes 17-19.

Almost three quarters of businesses reported having Three or more competitors. No effective competition was reported by 14% of all businesses and was most prevalent in businesses with 0-4 persons employed, at 18%, twice the proportion of large businesses.

Three or more competitors was the most common selection by businesses across all industries, ranging from 56% of businesses in Transport, Postal and Warehousing to 82% of businesses in Wholesale Trade. Businesses in the Manufacturing industry were most likely to report having One or two competitors (20%), compared to 6% of businesses in Financial and Insurance Services.

Non innovation-active businesses were more than twice as likely than innovation-active businesses to have operated in an environment with No effective competition.


Nature and size of competitors

Businesses that reported operating in a competitive environment were asked to identify the nature and size of their competitors. Businesses could identify multiple responses for each nature and size of competitors.

Similar in nature to this business means that the goods or services provided or the activity undertaken are similar. Different in nature to this business means that the goods or services provided or the activity undertaken include some similar goods, services or activities as part of a much wider range or a much smaller range. For example, if two retailers are both selling clothing only, then they are similar in nature. However, if one sells clothing only while the other is a department store, then they are different in nature.

Nature and size of competitors(a)(b)(c), by employment size - 2006-2007
		Employment size
		0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
		%	%	%	%	%
Similar in nature to the business and:
	smaller than the business	15.9	28.3	39.9	54.5	21.9
	about the same size as the business	59.8	63.0	61.7	65.8	61.0
	larger than the business	53.4	48.6	49.6	53.6	51.6
Different in nature to the business and:
	smaller than the business	5.4	8.7	16.2	28.2	7.4
	about the same size as the business	14.1	14.3	21.1	26.4	14.8
	larger than the business	35.8	27.8	29.5	29.2	32.8
(a) Proportions are of those businesses that identified having one or more competitors, in each employment size category.
(b) Nature of competitors is based on the assessment of the business.
(c) Businesses were provided with definitions for 'similar in nature' and 'different in nature'.

Just over six in every ten businesses with at least one competitor, reported their competitors as being both
Similar in nature to the business and About the same size as the business. This combination of nature and size was the most commonly reported, followed by competitors Similar in nature and Larger than the business (52%) and competitors Different in nature to the business and Larger than the selected business (33%).

Similar in nature to the business and About the same size as the business was reported by 70% of businesses in the Accommodation and Food Services industry, the highest among all industries.