25% of the business leaders in Romania are very confident and 40% are relatively confident that their companies will grow in 2013. However, they are less optimistic regarding the growth of the industry they are active in – only 4% being very confident in this evolution. In terms of turnover, 51% expect a moderate growth rate in 2013, of 5% -10% - according to the findings of the Business Outlook Survey, A vision for growth, published today by Ernst & Young. Profit growth estimates are also positive – 37% expect to have an increase of 5% -10%, while 22% expect a double-digit profit growth of up to 20%. Only 9% of respondents are very optimistic, counting on a 20% -30% profit increase.
The Ernst & Young study is based on a survey conducted between 21 January and 5 February this year. The report assesses the answers of 105 top local executives, outlining their outlook on the business environment in Romania for 2013
"Although 2013 appears to be a challenging year in many respects, many companies responded to our survey saying that they expect to grow."says Bogdan Ion, Country Managing Partner at Ernst & Young Romania.
A focus on increasing productivity
30% of businessman surveyed said they resorted to cost reductions in order to cope with the pressures imposed by the economic crisis in the local business environment in 2012, while 28% focused on increasing productivity.
While low costs are still considered an important factor in a company's market competitiveness, the attention of the local business community is focused on a new factor in 2013, according to the answers of 31% of respondents. Thus, over 39% of respondents expect the main competitive battle to be on building brand awareness and increasing brand trust.
Should the market continue to have a weak trend in the next 12 months, or even regress, 76% of respondents say they intend to remain on the market until it stabilizes. 46% of respondents stated that they are ready to face challenges in 2013 through innovative business approaches, while 15% intend to strengthen their market position through mergers and acquisitions.
Customer satisfaction defines success in the local market
Customer satisfaction is considered by 77% of respondents to be one of the most important three factors that define a company’s success of on the local market. Beside this, business leaders mentioned turnover (93%) and market share (64%). Over 38% also considered brand awareness to be important.
Regarding customer demand, 66% of respondents consider that there will be no major changes over the next 12 months, opposed to only 2% who expect to see changes and 32% who believe it will remain the same as last year.
Skilled labor makes the difference
60% of business executives who participated in the Ernst & Young study believe that their success on the market depends largely on the skills of the team. 83% of respondents considered that the labor force education level is very important for the success of the company.
Relating to team members, 21% of respondents said they plan to increase the number of employees in 2013 and 56% expect to maintain the same number of employees as last year. If 55% predict a wage increase of 5-10% in 2013, in line with the expected rate of inflation, 42% expect a wage stagnation for the next 12 months.
Funding will continue to be primarily through bank loans
47% of respondents said that the main financing source for their companies’ investments in 2012 were bank loans, while 45% intend to use the same financing source in 2013. Only 41% of respondents are considering the possibility of using EU funding in 2013.
Innovation, but through internal resources
The report also highlights that the majority of respondents pay great attention to innovation. This is considered to be a vector of future growth and one of the main methods to generate new business opportunities. However, companies in Romania are still quite shy when it comes to investment in innovation. Most of them intend to use internal company resources for this purpose. Thus, 63% of respondents plan to encourage innovation in their organizations and only 7% said they intend to make partnerships with organizations specializing in research and education.
In this context, only 18% of companies say they will continue the low prices battle to increase sales in 2013. In contrast, 75% responded that they will bring new products/services on the market, for existing customers, 33% intend to enter new markets with the products/services they have, while 20% say that they have redesigned their products in order to enter new geographic markets.
About “A vision for growth" study
The Ernst & Young Business Outlook Survey on the Romanian business environment in 2013 is based on a study that examines the perceptions of 105 top executives from local organizations operating in various economic sectors. The vast majority of those involved in the study come from companies with turnovers of more than 50 million Euro. They answered the Ernst & Young survey during 21January – 5 February, 2013.
About Ernst & Young
Ernst& Young is one of the world's leading professional services firms with approximately 167,000 employees in 700 offices across 140 countries, and revenues of approximately $24.4 billion in 2012. Our network is the most integrated at global level and its vast resources allow us to help our clients benefit from every opportunity. In Romania, Ernst & Young has been a leader on the professional services market since its set up in 1992. Our 500 employees in Romania and Moldova provide seamless assurance, tax, transactions, and advisory services to clients ranging from multinationals to local companies. Our offices are based in Bucharest, Cluj-Napoca, Timisoara, Iasi and Chisinau. For more information, please visit www.ey.com
