As a strategy to raise sales, most companies have chosen to introduce new products and services and the opening of new distribution channels. Regarding the decline in prices, there is a reduction of 8 percentage points in the focus on this factor, from 18% in January 2013, to 10% in June 2013.
Meanwhile, business leaders’ confidence in the industry their companies operate in decreased significantly between January and June: the proportion of companies not at all confident in the potential of their industry this year increased by 17 percentage points, up to 33% of companies, while the percentage of companies somewhat confident decreased from 35% to 23% over the same period – according to the study "A new vision for growth - June 2013" published today by Ernst & Young.
What are your expectations regarding the increase in turnover in 2013?
Referring to the estimates on profit growth, these also remain positive, staying in the same parameters as in the January 2013 edition. In January, 68% of respondent companies expected increased profits in 2013, in June the percentage of these companies fell by 2 percentage points to 66%. Of the total companies, 11% actually expect an increase in profits by 30%.
The Ernst & Young study is based on a survey conducted during the period 1 - 14 June 2013. The report analyzes the responses of 103 top executives, presenting their perceptions on the Romanian business prospects in 2013.
Funding continues to be mainly through bank loans
The preferred financing instrument for investment in the next 6 months is still through bank credit for 45% of companies both in January and in June, while venture capital investment has a decrease in preferences, from 8% in January to 6% in June 2013.
Salaries stagnate or slightly increase
Companies have the same expectations on the number of employees in mid-2013 as in the beginning of the year. In both editions of the Ernst & Young study, 26% of respondents planned new employments, while 55% in June, versus 56% in January, will not make new employments this year.
Regarding salary, 53% of business leaders said they plan to offer a raise of 5-10%, above the expected rate of inflation, while 45% expect a stagnation in wages this year.
What mid-year concerns do companies have?
To cope with the pressures imposed by the difficult economic environment over the past year, 33% of surveyed business leaders said they continued to cut costs. However, 23% focused on increasing productivity, while 22% on introduction of new products. An increased trend was noticed in the creation of new products and in lowering costs, but also in hiring talent. The latter trend emerging – that of focusing on talented employees – draws us closer to the global trends.
What best describes your company's reaction to the business environment in the past year?
Lowering costs is still considered an important factor for the company's competitiveness on the market, even showing an increasing trend, up to 40% of the respondents - the same level of importance that the local business community gives to strengthening brand awareness and raising confidence in the brand. Thus, 40% of respondents expect the main competitive battle this year to be through marketing efforts.
“Although perspectives on some of the financial indicators show a slight downward trend at mid-year, many companies remain optimist about their financial results in 2013”, says Bogdan Ion, Country Managing Partner Ernst & Young Romania.
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About the study "A new vision of growth"
The Ernst & Young study on the perception of the Romanian business environment in 2013 issued in June 2013 is based on a survey that examines the perceptions of 103 top executives from local organizations operating in various industries, of which 27% of companies with revenues exceeding EUR 100 million, 12% between EUR 50-100 million, 33% between EUR 10-50 million. They answered Ernst & Young’s survey during 1 -14 June 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 over 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
