A_vision_for_growth_EN_Final

A vision for growth Business outlook survey

Romania 2013

A Vision for Growth 2013 Page 2

What is “A vision for growth”?

“A vision for growth” explores perceptions of top executives from major companies operating in

Romania regarding the business outlook for 2013.

This Ernst & Young report is based on a survey of 105 C-suite level executives from companies in various

sectors, who provided a perspective on how the domestic business environment is perceived at the beginning

of 2013.

5 main

findings

1 25% of respondents foresee a significant growth (+10-30%) of their company’s turnover in 2013,

while 51% expect a growth rate of +5-10%.

37% of the respondents expect the profit growth rate of their company to range

between 5 to 10%, and 31% between 10 to 30%, although early forecasts present 2013

as difficult year.

Only 2% of respondents say the salary increase in their company is expected

to exceed 10%, while 55% expect it to range between 5 to 10%. However, 42% say the

salary increase will be 0%.

75% of respondents say their company’s strategy to increase sales consists of

introducing new products/services for existing clients, while only 33% say they will enter

new geographic markets for existing products/services.

Most companies are willing to innovate, but they want to do so utilizing internal resources

(63%). There is a tight call among new business opportunity, customer satisfaction, and

operational efficiency, when it comes to areas of innovation utilization.

2

3

4

5


A vision for growth Business outlook survey

Romania 2013

Although 2013 appears to be a

challenging year in many respects,

many companies say they expect

to grow.

Bogdan Ion, Country

Managing Partner


Please indicate the main three elements that you use to define success. (multiple answers)

Question 1

Usually, companies measure their success by a combination of financial results, market share

and brand awareness, but customer satisfaction appears to be very high in their criteria list.

Total Respondents: 99

(Skipped this question: 6)

38%

64%

77%

93%

Brand awareness

Market share

Customer satisfaction

Financial results

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


How much do you expect your turnover to grow in 2013? (one answer)

Question 2

25% of respondents foresee a significant growth (+10-30%) of their company’s turnover in

2013, while 51% expect a growth rate of +5-10%.



0%

3%

4%

17%

51%

13%

12%

-20 to -30%

-10 to -20%

-5 to -10%

0%

+5 to 10%

+10 to 20%

+20 to 30%

0% 10% 20% 30% 40% 50% 60%


How much do you expect your profit to grow in 2013? (one answer)

Question 3

37% of the respondents expect the profit growth rate of their company to range between

5 to 10%, and 31% between 10 to 30%, although early forecasts present 2013 as difficult year.



3%

0%

6%

23%

37%

22%

9%

-20 to -30%

-10 to -20%

-5 to -10%

0%

+5 to 10%

+10 to 20%

+20 to 30%

0% 5% 10% 15% 20% 25% 30% 35% 40%


As the chart shows, 56% of respondents expect no increase in the employees number in 2013,

but 21% foresee a slight increase of 5-10%, mainly due to expected increased activity.

How much do you expect your number of employees to grow in 2013? (one answer)

Question 4



0%

4%

14%

56%

21%

2%

3%

-20 to -30%

-10 to -20%

-5 to -10%

0%

+5 to 10%

+10 to 20%

+20 to 30%

0% 10% 20% 30% 40% 50% 60%


Only 2% of respondents say the salary increase in their company is expected to exceed 10%, while

55% expect it to range between 5 to 10%. However, 42% say the salary increase will be 0%.

How much do you expect the salary level in your company to grow in 2013? (one answer)

Question 5



0%

1%

0%

42%

55%

2%

0%

-20 to -30%

-10 to -20%

-5 to -10%

0%

+5 to 10%

+10 to 20%

+20 to 30%

0% 10% 20% 30% 40% 50% 60%


Confidence in industry growth is rather low, even though most respondents expect their own

revenues to grow (see page 5 and 10).

How confident do you feel regarding the growth of your industry for the next 12 months? (one answer)

Question 6



16%

44%

35%

4%

Not at all confident

Slightly confident

Somewhat confident

Very confident

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%


The difference between confidence in industry growth and company growth forecast is quite

remarkable, which could show that companies place an important trust in their strategy.

How confident do you feel regarding the growth of your company for the next 12 months? (one answer)

Question 7



3%

31%

40%

25%

Not at all confident

Slightly confident

Somewhat confident

Very confident

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%


Low cost does not seem to be the main strength of the respondents’ competition in the local

market, competitors’ brand becoming more important in 2013.

Please describe the main strength of your competitors in the local market, Romania. (one answer)

Question 8



39%

31%

14% 14%

2% 0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Strong brand awareness (trust)

Low cost Partnerships Distribution channels R&D


Where would you position your sales strategy between the two following dimensions: relational and transactional? (one answer)

Question 9

Relational companies build long-lasting relations with their customers, while transactional ones focus

only on transactions. 68% of the respondents to our survey say their company has a 100% relational

sales strategy, aspect which should be considered when reading the next 2 slides.

68%

24%

6%

2%

100% Relational

50% Relational

50% Transactional

100% Transactional




To what extent do you expect your customers' demands to change in the next 12 months? (one answer)

Question 10

While 2% of respondents expect their customers’ demand to change dramatically,

66% foresee only a slight change.



66%

32%

2%

Somewhat change

Stay the same

Change dramatically


What impact will the change in customers' demand have on your company in the next 12 months? (one answer for each option)

Question 11

Even though the previous chart showed that companies do not expect substantial changes in customers’

demand, the highest impact (if any) could occur on innovation strategy, brand positioning, marketing and

operations.

Total number of responses: 576

18%

21%

33%

49%

36%

24%

64%

60%

47%

46%

54%

53%

19%

19%

20%

5%

10%

24%

0% 20% 40% 60% 80% 100% 120%

Operations

Marketing

Brand positioning

CSR (Corporate Social Responsibility)

Organizational structure

Innovation strategy

No impact

Moderate impact

High impact


Most companies are willing to innovate, but they expect to do so utilizing internal resources (63%).

How do you plan to use innovation in your company in the next 12 months? (one answer)

Question 12



63%

20%

7%

7%

3%

We will rely on in-house innovation for our activity

We will rely on others' innovation for our activity

We will not use innovation

We will partner with research and educational organizations

Other

0% 10% 20% 30% 40% 50% 60% 70%


How does your company plan to use innovation to support the overall growth strategy? (one answer)

Question 13

There is a tight call among new business opportunity, customer satisfaction, and operational

efficiency, when it comes to areas of innovation utilization.



33%

24%

20%

15%

5% 3%

0%

5%

10%

15%

20%

25%

30%

35%

Innovation will be focused on new

business opportunity

Innovation will focus on satisfying

customers' changing demands

Innovation will be focused on operational efficiency

Innovation is our main competitive

advantage

Innovation will not affect our overall

growth

Other


The high dependency on labor force’s skills indicates that companies are fully aware of the

direct link between employees’ competency level and company’s performance.

How would you rate the dependency of your company's success on the skills of the labor force? (one answer)

Question 14



1%

23%

60%

16%

Low dependency

Medium dependency

High dependency

Extremely high dependency


83%

12%

5%

Dependent on education level

and key skills

Dependent on employee

retention

Highly influenced by salary

costs

Which of the following factors best describe the impact of your labor force on company's success? (one answer)

Question 15

No less than 83% of the respondents say that education and skill of labor force play the most

important role in their company’s success.




What do you consider to be the most important attributes for the leadership of your organization? (multiple answers)

Question 16

Industry expertise, good risk/caution balance and embodiment of the organization’s values and

culture (tone at the top) appear to be the most important attributes of the successful leader.



59% 54% 53%

44% 41% 38% 33% 31%

0%

10%

20%

30%

40%

50%

60%

70%

Industry expertise

Strikes the right balance between

risk taking and caution

Articulates and embodies the

value and culture of the

organization

Engages effectively with

multiple stakeholders

Decisiveness Can lead in a regional business

environment

Can command the respect of

colleagues and reports

Has a strong graps of

financials


Over 95% of companies agreed that legal, tax and regulatory environment plays

a moderate to high role in their growth.

To what extent does the legal, tax and regulatory environment play a role in the growth of your company? (one answer for each option)

Question 17

(Total number of responses: 289)

4%

5%

4%

46%

49%

49%

49%

45%

46%

0% 20% 40% 60% 80% 100% 120%

Tax

Legal

Regulatory

No role

Moderate role

Very important role


Which of the following best describes your company primary strategy for financing its investments in the past year? (one answer)

Question 18

When it comes to financing investments, in 2012 companies used mostly bank loans (47%),

followed by share capital increase (12%).



47%

18%

4%

31%

Our company used bank loans to finance its investments

Our company attracted share capital increase to finance its investments

Our company used venture capital to finance its investments

Other (intercompany loans, own resources, reinvested profit)

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%


Which of the following best describes your company's preferred strategy for financing its investments in the following 12 months? (one answer)

Question 19

In 2013 as well, the main companies’ strategy for financing investments

appears to be through bank loans (46%).



45%

20%

8%

27%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Bank loans Share capital increase Venture capital Other (intercompany loans, own resources, reinvested profit)


Which of the following best describe the reaction of your company to the business environment in the past year? (one answer)

Question 20

In 2012, businesses reacted to the pressures coming from the business environment by reducing

costs (30%) or increasing productivity (28%), substantially more than by talent acquisition (4%) or

M&As (1%).



30%

28%

16%

13%

5%

4%

2%

1%

Cost reduction

Productivity increase

New products

Restructure of the organization

Other

Talent acquisition

Reduce capital investment

Merger and acquisitions

0% 5% 10% 15% 20% 25% 30% 35%


Which of the following actions will your company take to increase sales? (one answer)

Question 21

75% of respondents say their company’s strategy to increase sales consists of introducing new

products/services for existing clients, while only 33% say they will enter new geographic

markets for existing products/services.



75%

33%

31%

26%

20%

18%

8%

5%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Introducing new products and/or services for existing client and to attract new clients

Enter new geographic markets for existing products/services

Opening new distribution channels/reorganizing distribution to use multiple channels

Increase investment in marketing and sales

Adapting existing product/service for new geographic markets

Cutting prices

Increase prices

Merging with and/or acquiring competitors to increase market share


In case of stagnation/decline in your current markets what will be the step/s your company will pursue in the next 12 months? (all that apply)

Question 22

Most companies (76%) say that they will continue to stay on the market if it declines. A high

percentage of companies (46%) though, are willing to transform the market through innovative

approaches in case such a decline occurs.



76%

46%

15%

7%

2%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Stay on the market until is stable again in order to secure it and increase the trust level

Transform the market trought innovative approaches

Grow on the market through Mergers and Acquisitions

Seek external funding to secure our position on the market

Leave the market and seek new ones


Demographics The results of this survey reflect the

responses received to our

questionnaire in the period between

21 Jan. and 5 Feb. 2013, from 105

top executives of major companies

operating in Romania.


Demographics

Romanian company (yes/no) Business type

No, 57%

Yes, 43%

67%

29%

4%

Bussiness to Bussiness

Bussiness to Consumers

Bussiness to Government

0% 20% 40% 60% 80%


Demographics

Industry sector

Company revenue level

24%

12%

10%

9%

8%

7%

7%

4%

4%

2%

13%

Industry/Manufacturing

Pharmaceuticals/Healthcare

Power/Energy/Mining

Services

Retail & Wholesale trade

Construction/Real estate

Food & Beverages/Agriculture

Telecom/Media

Tourism

Chemicals

Other

0% 5% 10% 15% 20% 25% 30%

7%

14%

38%

12%

29%

Less than 1 M EUR

1-10 M EUR

10-50 M EUR

50-100 M EUR

100 M EUR +

0% 10% 20% 30% 40%


Demographics

Entity type

Job title of respondent

67%

22%

10%

1%

Privately owned

Publicly listed

Private Equity Portofolio Company

Government/State-owned enterprise

0% 20% 40% 60% 80%

34%

32%

8%

7%

5%

4%

4%

3%

3%

CFO/Treasurer/Controller

CEO/President/Managing director

Manager

Board member

SVP/VP/Director

Head of business unit

Head of department

Other C-level executive

Other

0% 10% 20% 30% 40%


Thank you!

Documents

A_vision_for_growth_EN_Final