A vision for growth - How high performing companies are moving forward in challenging times
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16 January 2012 |
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ERNST & YOUNG S.R.L. |
Address
Strada Dr. Felix Iacob, Nr. 63-69
Cladirea Premium Plaza, Etaj 15
011033 Bucuresti, Sector 1
Phone
+40-21-402.40.00
Fax
+40-21-310.71.93
Website
www.ey.com
Moving forward in challenging times
Market volatility has had a considerable impact on companies’ approach to how they will generate growth – both in relation to their process and how they act. The way that they have been pursuing the four key growth drivers has caused them to grow beyond their competitors.
Beyond the tight strings of today’s business operating reality, high-performing companies have been alert to the impact of the economic turmoil on their markets and their customers and have acted to re-establish their customer focus and relationships. They have sought to get ahead in responding to new patterns of demand.
In these challenging times, all companies could benefit from examining how their performance compares in the key areas where high performers are adopting differential strategies to secure their growth.
Executive summary
As the year 2011 draws to an end, the global business community is grappling with the new economic realities in which they operate. Since 2008, the familiar business environment, characterized by new technological innovations and continuous asset appreciation, has undergone tremendous changes. The new reality that the global economic crisis has ushered in is comprised of uncertainty, budget cuts, price reductions and austerity. Public and private institutions alike are struggling to maintain the same level of services and benefits while reducing their budgets and finding innovative ways to do more with less.
The developing economies, like the BRICS nations (Brazil, Russia, India, China, South Africa) appeared to be better prepared for the global economic crisis than their Western counterparts. Foreign direct investment, which traditionally flew from West to East, is increasingly flowing in reverse. Consecrated European brands are being acquired at a discount by Chinese or Indian companies, which are proving to be fierce, proactive competitors, having made a name for them in the new mantra of frugal innovation.
Even the rapid-growth markets are not immune to the effects of a weakened global economy: their growth is slowing as the developed world faces a possible second recession, which may yet occur despite all the traditional remedies having been administered.
The Romanian business environment represents the main focus of this report. Our respondents incuded 95% privatelyowned companies and 5% state-owned companies. In the private sector, we surveyed the high performing companies that operate in Romania, both foreign and domestic owned. They are representing a young and vibrant private sector, growing and developing in a dynamic economy. While learning the valuable lessons of the market economy, they are faced with the unpredictable and sometimes tough challenges of globalization.
The high performing companies of Romania must have a proactive strategy. They must develop a sustainable competitive advantage and learn how to compete in apolycentric world.
According to a recent Ernst & Young report, four factors standout for businesses:
- Market variation has led to a two-speed world
- Market volatility is a constant
- Cost pressure is being squeezed from both sides
- Stakeholders are holding back from commitment
These four characteristics mark the “new economy” as different from the old; however, with the passing of time, they become predictable elements that business must address but can also start to plan for.
Key findings
Who are the 172 interviewed companies?
The report, A Vision for Growth, provides a fresh insight into the characteristics of successful companies in Romania by interviewing their top executives. The survey underpinning this report was performed at the end of October 2011, and was based on the responses of 172 executives of high performing companies operating in Romania. This research was conducted in collaboration with Advanced Solutions andthe Griffiths Management School from Emanuel University of Oradea.
The report explores the main characteristics of high performing companies ranging from the markets they operate in to how they use innovation and how they perceivethe business environment. We have also considered their investment strategies, the impact of change in customers’ demands and most important factors that contributed to the companies’ success in coping with the global crisis.
Most of the responding companies have been ranked in top 10 in various rankings. They are the stars either of their industry, of their geographical region or they are perceived as top companies among those of similar dimension. The interviewedsurveyed are almost equally split between Romanian (47%) and foreign companies (53%).
