Eastern Europe: On the way to rebirth? CEE Barometer 2011
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Noiembrie 2011 |
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HORVATH & PARTNERS MANAGEMENT CONSULTING S.R.L. |
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The worldwide financial crisis had significant effects, especially in the CEE region, which were demonstrated somewhat by a noticeably increased focus on cash and risk management issues.
Management summary
After a serious economic downturn, the recovery has however now set in again inthe majority of the CEE countries. Overall, analysis of the CEE markets is once more unmistakably positive: the CEE region is seen as very appealing especially as a sales market, even if competition and margin pressure are becoming increasingly tougher. The focus of planned measures thus lies in marketing and sales, perhaps with the development and expansion of new sales channels as well as the optimization of product portfolios. However, the need for action still exists in finance and controlling in the participating companies, perhaps in further development and professionalization of objective management tools. Potential lies especially in many companies in an increased use in benchmarking, in the optimization of supporting IT systems, as well as in purchasing controlling and in sales management. For sustainable improvement of cost structures, Eastern Europe is increasingly seen by big players as place for production and for shared service centers. Here the trend toward bundling of the back office activities of many CEE countries into hubs or service platforms is currently on the rise. Not only can cost structures therefore be trimmed down, but management of CEE activities can also be more efficiently andeffectively structured, and last but not least, the operational risk of individual countries can be reduced.
In summary, the opening question of this study thus has a positive answer: the CEE region is on the way to a rebirth. The potential of these markets at our doorstep shows no sign of diminishing. Those who succeed in operating cost-efficiently and managing effectively in this regional market, despite fragmentation into many small countries, will thereby win.
Main results
Participating Companies
A total of 105 managers of companies active in the CEE market took part in the CEE Barometer 2011. All industry sectors were represented by the participating companies.
Two thirds of the participants have already been active in Eastern Europe for over ten years. A quarter of them have been active in Eastern Europe for between five and ten years. Only a minority of the participants had just recently begun their activitiesin the CEE region.
The participating companies are evenly distributed along the size spectrum: a quarter of participants employ up to 250 people in the region, and 29% of participants of the study are active in Central and Eastern Europe with already over 1,000 employees.
According to geographic presence in the region, the largest portion of participants represent countries in the CEE5 region (Poland, the Czech Republic, Slovakia, Hungary and Slovenia). About a third of the participants is present additionally inBulgaria, Romania or Moldova, as well as a third in CIS and Balkan countries, respectively. In contrast, participants‘ involvement in Baltic countries lies at only eight percent.
Current Analysis of CEE Markets
Apppeal of CEE as a business location
For the managers polled, the CEE region still holds appeal: two thirds consider the region a very appealing market, another 45% see Eastern Europe as a very appealing production location, and just under a third rated CEE countries veryattractive as a shared service center location. All in all, the region‘s appeal lies more in its existing and anticipated purchasing power rather than in its favorable production factors.
Eastern Europe‘s great appeal as a sales market and shared service center location is attested to especially by companies with longstanding (more than ten years‘) experience in the region.
Companies present in the Baltic and CIS countries tend to consider the market a little more appealing. Participants with activities in CIS countries also find Eastern Europe especially attractive as a shared service center location.
Compared to the results of the 2009 CEE Barometer, it appears that the assessment of Eastern Europe‘s appeal as a market has remained unchanged, while its appeal as a production location and shared service center location has increased considerably.
As a shared service center location, CEE countries are mainly of interest to large companies: because the larger a company gets, the more appealing thecentralization of internal company services such as finance or IT becomes, more than a third of the participants from large companies (with more than EUR 1 bn in turnover) consider the outsourcing to an Eastern European shared service center to be of medium or great appeal.
