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EY_A vision for growth_EN 2016

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EY_A vision for growth_EN 2016

  1. 1. A vision for growth Business outlook barometer Romania 2016
  2. 2. Page 2 What is “A vision for growth”? “A vision for growth” is a survey that explores the perceptions of top executives from major companies operating in Romania regarding the business outlook for 2016. In this edition we also provide comparative data with the similar surveys conducted at the beginning of 2014 and 2015. This EY report is based on an online survey of 421 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 2016. 5 main findings 1 In 2016 companies seem to measure their success by a combination of customer satisfaction, financial results, and market share. “Customer satisfaction” goes up from 78% in 2014 and 72% in 2015 to 83% in 2016. “Financial results” have landed on the plateau of 68% in 2016 after a 28% fall in 2015, from 96% in 2014. Compared with 2014 (63%) and 2015 (55%), “market share” goes marginally up from 55% to 56%, while “brand awareness” is on the rise from 41% up to 51%. According to the results of our survey, 41% of respondent companies foresee a significant growth of +10% to +30% of turnover in 2016, while 32% expect a growth rate of +5% to +10% in 2016. The forecasts regarding the evolution of the profit in 2016 are optimistic as well, since 28% of the respondents profit growth rates in the interval from +5% to +10% and 32% expect the profit of their company to grow between +10% to over 30%. 20% of respondents expect no increase in the employees number in 2016. At the same time, 35% of companies say they expect their staff to increase by +1% to +5% this year. Moreover, 36% of respondents expect the number of their employees to grow between +5% and over 30%. These percentages lead us to believe that the projected expansion of businesses in 2016 commensurate with the optimism of the economic growth. In 2016, most companies (44%) expect salaries to go up between +1% to +5%, followed by 31% of companies which expect salaries to go up by +5% to +10% and 12% of companies which expect higher increases of +10% to more than 20%. Still 13% of companies expect no changes in the salary level in 2016. 25% of respondents say they have earmarked investment growth rates of +1% to +5% in 2016 compared to 17% in H2 2015, followed by 45% who say will increase investments by +5% to +20% vs. 42% in H2 2015, and 11% who foresees their investments going up between 20% and exceeding 30% in 2016, compared with 17% at in second half of last year. 2 3 4 5 See here the previous edition of the survey from February 2015.
  3. 3. A vision for growth Business outlook barometer Romania 2016 Our survey reflects the increased focus companies have on sustainable growth in a business environment which, in spite of the prospects for a positive economic evolution, brings both challenges and opportunities. Bogdan Ion, Managing Partner, EY Romania
  4. 4. Page 4 Which is your confidence level in the current economic direction of the country? (single answer) Question 1 – Overall responses At the beginning of 2016, 63% of the respondent companies show confidence in the current economic direction of the country, with 13% of them being “very confident” and 2% being “extremely confident”. This majority of responses illustrates the background of positive business outlook for the current year. Total responses: 421 (Skipped this questions: 0) See here the previous edition of the survey from February 2015. 5% 32% 48% 13% 2% 0% 10% 20% 30% 40% 50% 60% Not at all confident Somehow confident Confident Very confident Extremely confident
  5. 5. Page 5 Please indicate the main three elements that you think will define success in your industry? (only three answers) Question 2 – A 3-year perspective In 2016 companies seem to measure their success by a combination of customer satisfaction, financial results, and market share. “Customer satisfaction” goes up from 78% in 2014 and 72% in 2015 to 83% in 2016. “Financial results” have landed on the plateau of 68% in 2016 after a 28% fall in 2015, from 96% in 2014. Compared with 2014 (63%) and 2015 (55%), “market share” goes marginally up from 55% to 56%, while “brand awareness” is on the rise from 41% up to 51%. See here the previous edition of the survey from February 2015. 78% 96% 63% 39% 7% 7% 9% 72% 68% 55% 41% 15% 7% 6% 4% 83% 68% 56% 51% 26% 13% 4% 1% 0% 20% 40% 60% 80% 100% 120% Customer satisfaction Financial results Market share Brand awareness Number of years on the market Number of employees Going public (IPO) Other 2014 2015 2016
  6. 6. Page 6 How much you expect your turnover to grow in 2016? (single answer) Question 3 – Overall responses The outlook for turnover growth is somehow in line with the positive economic growth for 2016. According to the results of our survey, 41% of respondent companies foresee a significant growth of +10% to +30% of turnover in 2016, while 32% expect a growth rate of +5% to +10% in 2016. Total responses: 411 (Skipped this questions: 10) See here the previous edition of the survey from February 2015. 2% 3% 2% 20% 32% 23% 12% 6% 0% 5% 10% 15% 20% 25% 30% 35% Exceeding -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30%
  7. 7. Page 7 How much you expect your turnover to grow in 2016? (single answer) Question 3 – By industry sector According to responses received to fist half-year edition of the survey for 2016, the following are the top 3 industries that foresee turnover growth rates exceeding 30%: pharmaceuticals industry (17%), IT (16%), and construction/real estate (13%). See here the previous edition of the survey from February 2015. Industry sector Less than -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Over 30% Industry / Manufacturing 5% 2% 5% 24% 26% 27% 9% 2% Retail & Wholesale Trade 2% 20% 46% 12% 14% 6% Services 3% 3% 3% 10% 50% 13% 18% Information Technology (IT) 3% 13% 22% 30% 16% 16% Food & Beverages / Agriculture 21% 31% 21% 21% 6% Construction / Real Estate 6% 9% 13% 22% 31% 6% 13% Power & Energy 10% 14% 19% 29% 10% 14% 4% Transportation 5% 26% 48% 16% 5% Pharmaceuticals / Healthcare 16% 25% 17% 25% 17% Telecom 9% 9% 9% 18% 37% 18%
  8. 8. Page 8 How much you expect your turnover to grow in 2016? (single answer) Question 3 – By industry sector These are the industry sectors which received the largest number of answers per industry. Therefore, we show the distribution of the answers by these six industries for the questions which regard the expected evolution of turnover, profit, investments, number of employees, salary level for 2016. See here the previous edition of the survey from February 2015. 5% 2% 5% 24% 26% 27% 9% 2% 0% 10% 20% 30% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Industry / Manufacturing 2% 20% 46% 12% 14% 6% 0% 20% 40% 60% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Retail & Wholesale Trade 3% 3% 3% 10% 50% 13% 18% 0% 20% 40% 60% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Services 3% 13% 22% 30% 16% 16% 0% 10% 20% 30% 40% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Information Technology 21% 31% 21% 21% 6% 0% 20% 40% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding… Food & Beverages / Agriculture 6% 9% 13% 22% 0% 13% 0% 10% 20% 30% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Construction / Real Estate Not shown intervals received zero answers.
  9. 9. Page 9 How much you expect your turnover to grow in 2016? (single answer) Question 3 – By revenues As shown in this chart, the large companies (those with revenue levels between 50 and 100 M EUR+) are more pessimistic regarding the evolution of their turnover in 2016. Also interesting are the results shown for SME’s with revenue levels of under 50M EUR which appear to have optimistic prospects for turnover growth in 2016. Total responses: 411 (Skipped this questions: 0) See here the previous edition of the survey from February 2015. 33% 20% 11% 11% 15% 10% 12% 8% 34% 10% 14% 8% 6% 8% 8% 11% 20% 34% 29% 25% 34% 30% 19% 40% 22% 36% 38% 37% 36% 34% 22% 10% 33% 10% 14% 13% 14% 31% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% 100 M EUR+ 50 - 100 M EUR 10 - 50 M EUR 1 - 10 M EUR Less than 1 M EUR Not shown intervals received zero answers.
  10. 10. Page 10 How much you expect your turnover to grow? (single answer) Question 3 – A 3-year perspective In the last 3 years we note positive developments that trend at all levels, starting with the decrease in the range + 1% to + 5% from 37% in 2014 to 20% in 2016 and the 5% increase in the number of companies that expect their turnover to grow by + 20% and over +30% in 2016. See here the previous edition of the survey from February 2015. 2% 2% 20% 32% 23% 12% 6% 2% 1% 3% 4% 17% 26% 35% 7% 2% 3% 37% 30% 19% 2% 0% 5% 10% 15% 20% 25% 30% 35% 40% Exceeding -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% 2014 2015 2016
  11. 11. Page 11 How much you expect your profit to grow in 2016? (single answer) Question 4 – Overall responses The forecasts regarding the evolution of the profit in 2016 are optimistic as well, since 28% of the respondents expect profit growth rates in the interval from +5% to +10% and 32% expect the profit of their company to grow between +10% to over 30%. Total responses: 411 (Skipped this questions: 10) See here the previous edition of the survey from February 2015. 2% 2% 7% 29% 28% 18% 10% 4% 0% 5% 10% 15% 20% 25% 30% 35% Exceeding -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30%
  12. 12. Page 12 How much you expect your profit to grow in 2016? (single answer) Question 4 – By industry sector In 2016, 12% of respondents from food & beverages/agriculture industry, followed by 11% of respondents from IT industry foresee a significant increase of over 30% for their company’s profit, in contrast with 19% of the respondents from the power & energy industry expect a profit decrease of -5% to -10%. See here the previous edition of the survey from February 2015. Industry sector Less than -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Over 30% Industry / Manufacturing 1% 1% 9% 30% 31% 16% 7% 5% Retail & Wholesale Trade 2% 40% 24% 24% 10% Services 2% 11% 24% 24% 24% 10% 5% Information Technology (IT) 5% 19% 27% 25% 13% 11% Food & Beverages / Agriculture 3% 18% 46% 12% 9% 12% Construction / Real Estate 6% 10% 28% 31% 19% 6% Power & Energy 19% 5% 29% 14% 14% 5% 9% 5% Transportation 5% 37% 37% 21% Pharmaceuticals / Healthcare 42% 8% 33% 17% Telecom 18% 28% 9% 27% 18%
  13. 13. Page 13 How much you expect your profit to grow in 2016? (single answer) These are the industry sectors which received the largest number of answers per industry. Therefore, we show the distribution of answers by these six industries for the questions which regard expected evolution of turnover, profit, investments, number of employees, salary level for 2016. Question 4 – By industry sector See here the previous edition of the survey from February 2015. 1% 1% 9% 30% 31% 16% 7% 5% 0% 20% 40% 60% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Industry / Manufacturing 2% 40% 24% 24% 10% 0% 20% 40% 60% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Retail & Wholesale Trade 2% 11% 24% 24% 24% 10% 5% 0% 20% 40% 60% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Services 5% 19% 27% 25% 13% 11% 0% 20% 40% 60% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Information Technology 3% 18% 46% 12% 9% 12% 0% 20% 40% 60% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Food & Beverages / Agriculture 6% 10% 28% 31% 19% 6% 0% 20% 40% 60% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Construction / Real Estate Not shown intervals received zero answers.
  14. 14. Page 14 How much you expect your profit to grow in 2016? (single answer) Question 4 – By revenues Companies with revenue level of 10-50 M EUR are more optimistic regarding the envisaged profit growth rate for 2016. On the reserved side are the large companies with revenue levels of 100 M EUR+, which have a large percentage distribution across the negative level of -5% to -10% interval of the scale. Total responses: 411 (Skipped this questions: 10) See here the previous edition of the survey from February 2015. 50% 13% 12% 12% 14% 13% 6% 17% 13% 3% 11% 11% 5% 13% 17% 38% 30% 30% 29% 27% 21% 28% 37% 33% 37% 36% 38% 33% 39% 16% 12% 21% 10% 12% 16% 20% 27% 0% 20% 40% 60% 80% 100% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% 100 M EUR+ 50 - 100 M EUR 10 - 50 M EUR 1 - 10 M EUR Less than 1 M EUR Not shown intervals received zero answers.
  15. 15. Page 15 How much you expect your profit to grow? (single answer) Question 4 – A 3-year perspective In the past 3 years, companies have reduced their expectations of profit levels exceeding 30%, from 7% in 2014, to 4% in 2016. Still, the following interval of positive profit growth rates (+20% to +30%) has seen a small increase in 3 years and there were slight negative fluctuation of the percentages in the interval +10% to +20% and +1% to +5%. Also noteworthy is the constant lowering of percentages of the number of companies expecting 0% profit growth rate. See here the previous edition of the survey from February 2015. 2% 2% 7% 29% 28% 18% 10% 4% 1% 3% 1% 8% 28% 25% 20% 5% 9% 2% 6% 10% 30% 21% 19% 7% 7% 0% 5% 10% 15% 20% 25% 30% 35% Exceeding -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% 2014 2015 2016
  16. 16. Page 16 20% of respondents expect no increase in the employees number in 2016. At the same time, 35% of companies say they expect their staff to increase by +1% to +5% this year. Moreover, 36% of respondents expect the number of their employees to grow between +5% and over 30%. These percentages lead us to believe that the projected expansion of businesses in 2016 commensurate with the optimism of the economic growth. How much you expect your number of employees to grow in 2016? (single answer) Question 5 – Overall responses Total responses: 411 (Skipped this questions: 10) See here the previous edition of the survey from February 2015. 1% 2% 6% 20% 35% 19% 10% 4% 3% 0% 5% 10% 15% 20% 25% 30% 35% 40% Exceeding -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30%
  17. 17. Page 17 Question 5 – By industry sector Telecom (45%) and IT (32%) are the ones expecting major increases, between +10% and over 30%, in the number of employees in 2016. However, all the industries foresee an increase in the number of employees of +1% to +10%, this being the bracket where services, construction/real estate and transportation sectors show the highest percentages. How much you expect your number of employees to grow in 2016? (single answer) See here the previous edition of the survey from February 2015. Industry sector Less than -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Over 30% Industry / Manufacturing 2% 7% 18% 35% 22% 13% 2% 1% Retail & Wholesale Trade 6% 28% 42% 14% 4% 4% 2% Services 3% 5% 5% 40% 26% 11% 5% 5% Information Technology (IT) 3% 19% 27% 19% 21% 8% 3% Food & Beverages / Agriculture 3% 6% 15% 18% 21% 24% 3% 3% 7% Construction / Real Estate 3% 25% 38% 28% 6% Power & Energy 14% 9% 9% 29% 19% 5% 5% 5% 5% Transportation 10% 11% 53% 5% 11% 5% 5% Pharmaceuticals / Healthcare 8% 33% 34% 17% 8% Telecom 28% 18% 9% 27% 18%
  18. 18. Page 18 These are the industry sectors which received the largest number of answers per industry. Therefore, we show the distribution of answers by these six industries for the questions which regard expected evolution of turnover, profit, investments, number of employees, salary level for 2016. How much you expect your number of employees to grow in 2016? (single answer) Question 5 – By industry sector See here the previous edition of the survey from February 2015. 2% 7% 18% 35% 22% 13% 2% 1% 0% 20% 40% 60% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Industry / Manufacturing 6% 28% 42% 14% 4% 4% 2% 0% 20% 40% 60% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Retail & Wholesale Trade 3% 5% 5% 40% 26% 11% 5% 5% 0% 20% 40% 60% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Services 3% 19% 27% 19% 21% 8% 3% 0% 20% 40% 60% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Information Technology 3% 6% 15% 18% 21% 24% 3% 3% 7% 0% 20% 40% 60% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Food & Beverages / Agriculture 3% 25% 38% 28% 6% 0% 20% 40% 60% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Construction / Real Estate Not shown intervals received zero answers.
  19. 19. Page 19 Quite interestingly, the companies which have revenue levels between 50-100 M EUR show very conservative prospects regarding staff growth in 2016 or even expect important decreases in their number of employees. The companies with the most positive prospects regarding the number of employees increases are those with revenue levels between 1-10 M EUR. How much you expect your number of employees to grow in 2016? (single answer) Question 5 – By revenues Total responses: 411 (Skipped this questions: 10) See here the previous edition of the survey from February 2015. 67% 25% 32% 12% 8% 13% 12% 13% 8% 50% 16% 12% 6% 4% 10% 12% 16% 33% 13% 28% 23% 31% 31% 27% 31% 15% 12% 16% 40% 38% 40% 34% 31% 38% 8% 13% 17% 12% 17% 13% 23% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% 100 M EUR+ 50 - 100 M EUR 10 - 50 M EUR 1 - 10 M EUR Less than 1 M EUR Not shown intervals received zero answers.
  20. 20. Page 20 The 3-year perspective on companies’ expectations regarding the evolution of their number of employees show a steep decrease of percentages for 0% staff number growth, from 37% in 2014 to 20% in 2015 and 2016. The corresponding increase is seen in the interval +1% to +5% (30% in 2014, 35% in 2016) and in the interval +5% to +10% (5% in 2014, 19% in 2016). How much you expect your number of employees to grow? (single answer) Question 5 – A 3-year perspective See here the previous edition of the survey from February 2015. 1% 2% 6% 20% 35% 19% 10% 3% 2% 3% 5% 36% 14% 14% 4% 5% 9% 37% 30% 5% 9% 5% 0% 5% 10% 15% 20% 25% 30% 35% 40% Exceeding -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% 2014 2015 2016
  21. 21. Page 21 How much you expect your investments to grow in 2016? (single answer) Question 6 – Overall responses 25% of respondents say they have earmarked investment growth rates of +1% to +5% in 2016 compared to 17% in H2 2015, followed by 45% who say will increase investments by +5% to +20% vs. 42% in H2 2015, and 11% who foresees their investments going up between 20% and exceeding 30% in 2016, compared with 17% at in second half of last year. Total responses: 411 (Skipped this questions: 10) See here the previous edition of the survey from February 2015. 1% 1% 1% 1% 15% 25% 24% 21% 6% 5% 0% 5% 10% 15% 20% 25% 30% Exceeding -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30%
  22. 22. Page 22 How much you expect your investments to grow in 2016? (single answer) Question 6 – By industry sector The table shows that there are many industries which have earmarked significant investment growth rates for 2016. Moreover, there are industries such as pharmaceuticals/healthcare, telecommunications, and IT which say their investments for 2016 will go up by +20% to over 30%. See here the previous edition of the survey from February 2015. Industry sector Less than -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Over 30% Industry / Manufacturing 1% 1% 1% 15% 23% 27% 21% 5% 6% Retail & Wholesale Trade 2% 2% 10% 24% 28% 26% 4% 4% Services 25% 27% 20% 20% 5% 3% Information Technology (IT) 8% 22% 22% 30% 8% 10% Food & Beverages / Agriculture 3% 7% 18% 33% 24% 6% 9% Construction / Real Estate 3% 16% 34% 22% 12% 10% 3% Power & Energy 10% 5% 5% 28% 19% 9% 19% 5% Transportation 11% 44% 22% 17% 6% Pharmaceuticals / Healthcare 8% 31% 8% 31% 15% 7% Telecom 10% 10% 40% 20% 20%
  23. 23. Page 23 How much you expect your investments to grow in 2016? (single answer) Question 6 – By industry sector These are the industry sectors which received the largest number of answers per industry. Therefore, we show the distribution of answers by these six industries for the questions which regard expected evolution of turnover, profit, investments, number of employees, salary level for 2016. See here the previous edition of the survey from February 2015. 1% 1% 1% 15% 23% 27% 21% 5% 6% 0% 20% 40% 60% Exceeding -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Industry / Manufacturing 2% 2% 10% 24% 28% 26% 4% 4% 0% 20% 40% 60% Exceeding -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Retail & Wholesale Trade 25% 27% 20% 20% 5% 3% 0% 20% 40% 60% Exceeding -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Services 8% 22% 22% 30% 8% 10% 0% 20% 40% 60% Exceeding -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Information Technology 3% 7% 18% 33% 24% 6% 9% 0% 20% 40% 60% Exceeding -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Food & Beverages / Agriculture 3% 16% 34% 22% 12% 10% 3% 0% 20% 40% 60% Exceeding -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% Construction / Real Estate
  24. 24. Page 24 How much you expect your investments to grow in 2016? (single answer) Question 6 – By revenues According to the findings of the current edition of the report, respondents from companies with revenue levels of 1-10 M EUR are quite positive and expect their investments to go up in 2016, followed by companies with revenue levels of 10-50 M EUR. The most reserved outlook regarding investments is shown by companies with revenue levels of 50-100 M EUR. Total responses: 411 (Skipped this questions: 10) See here the previous edition of the survey from February 2015. 33% 67% 33% 10% 11% 12% 16% 9% 13% 20% 33% 7% 14% 5% 11% 4% 4% 40% 32% 32% 25% 28% 26% 26% 40% 33% 34% 36% 33% 38% 37% 52% 26% 34% 33% 15% 10% 20% 8% 9% 31% 0% 20% 40% 60% 80% 100% Exceeding -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% 100 M EUR+ 50 - 100 M EUR 10 - 50 M EUR 1 - 10 M EUR Less than 1 M EUR
  25. 25. Page 25 How much you expect your investments to grow? (single answer) Question 6 – A 2-year perspective The chart shows that only 15% of companies expect no increase in investments in 2016 compared to 19% in the previous year. Also, the most important increase of +8% is seen in the number of companies which expect their investments to grow by +1% to +5% in 2016, whilst there is a significant decrease in the number of companies which expect investments to grow by +30%. See here the previous edition of the survey from February 2015. 1% 1% 1% 1% 15% 25% 24% 21% 6% 5% 1% 2% 19% 17% 23% 19% 7% 10% 0% 5% 10% 15% 20% 25% 30% Exceeding -30% -20% to -30% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% +20% to +30% Exceeding 30% 2015 2016
  26. 26. Page 26 In 2016, most companies (44%) expect salaries to go up between +1% to +5%, followed by 31% of companies which expect salaries to go up by +5% to +10% and 12% of companies which expect higher increases of +10% to more than 20%. Still 13% of companies expect no changes in the salary level in 2016. How much you expect the salary level in your company to grow in 2016? (single answer) Question 7 – Overall responses Total responses: 411 (Skipped this questions: 10) See here the previous edition of the survey from February 2015. 13% 44% 31% 10% 2% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Exceeding -20% -10% la -20% -5% la -10% -1% la -5% 0% +1% la +5% +5% la +10% +10% la +20% Exceeding 20%
  27. 27. Page 27 Question 7 – By industry sector No less than 18% of companies in retail & wholesale trade expect major increases in salary level of +10% to +20%. However, all the industries foresee an increase in the salary level of +1% to +5%, the interval where telecommunications, food & beverages / agriculture, and retail & wholesale trade industry sectors show the highest percentages. How much you expect the salary level in your company to grow in 2016? (single answer) See here the previous edition of the survey from February 2015. Industry sector Less than -20% -10% to -20% -5% to -10% -1% to -5% 0% +1% to +5% +5% to +10% +10% to +20% Over 20% Industry / Manufacturing 10% 42% 36% 12% Retail & Wholesale Trade 8% 48% 26% 16% 2% Services 21% 34% 32% 10% 3% Information Technology (IT) 11% 41% 35% 11% 2% Food & Beverages / Agriculture 6% 52% 33% 9% Construction / Real Estate 19% 44% 31% 6% Power & Energy 48% 43% 5% 4% Transportation 5% 37% 48% 5% 5% Pharmaceuticals / Healthcare 17% 42% 25% 16% Telecom 9% 64% 18% 9%
  28. 28. Page 28 These are the industry sectors which received the largest number of answers per industry. Therefore, we show the distribution of answers by these six industries for the questions which regard expected evolution of turnover, profit, investments, number of employees, salary level for 2016. How much you expect the salary level in your company to grow in 2016? (single answer) Question 7 – By industry sector See here the previous edition of the survey from February 2015. 10% 42% 36% 12% 0% 20% 40% 60% 0% +1% to +5% +5% to +10% +10% to +20% Exceeding 20% Industry / Manufacturing 8% 48% 26% 16% 2% 0% 20% 40% 60% 0% +1% to +5% +5% to +10% +10% to +20% Exceeding 20% Retail & Wholesale Trade 21% 34% 32% 10% 3% 0% 20% 40% 60% 0% +1% to +5% +5% to +10% +10% to +20% Exceeding 20% Services 11% 41% 35% 11% 2% 0% 20% 40% 60% 0% +1% to +5% +5% to +10% +10% to +20% Exceeding 20% Information Technology 6% 52% 33% 9% 0% 50% 100% 0% +1% to +5% +5% to +10% +10% to +20% Exceeding 20% Food & Beverages / Agriculture 19% 44% 31% 6% 0% 20% 40% 60% 0% +1% to +5% +5% to +10% +10% to +20% Exceeding 20% Construction / Real Estate Not shown intervals received zero answers.
  29. 29. Page 29 Depending on the industry sector there are SMEs of 1-10 M EUR that seems to be on the optimistic side with high percentages of expected salary growth rates, while the other companies are more conservative regarding the salary growth rates in 2016. How much you expect the salary level in your company to grow in 2016? (single answer) Question 7 – By revenues Total responses: 411 (Skipped this questions: 10) See here the previous edition of the survey from February 2015. 14% 14% 11% 10% 18% 10% 6% 7% 14% 25% 31% 27% 21% 14% 29% 34% 41% 33% 43% 14% 11% 15% 29% 29% 0% 20% 40% 60% 80% 100% 0% +1% to +5% +5% to +10% +10% to +20% Exceeding 20% 100 M EUR+ 50 - 100 M EUR 10 - 50 M EUR 1 - 10 M EUR Less than 1 M EUR Not shown intervals received zero answers.
  30. 30. Page 30 Besides the decrease in the number of companies which expected no salary changes, from 19% in 2014 to 13% in 2015, there is a even more significant decrease in the number of companies expecting only a 1-5% salary growth rate, from 60% in 2014 to 44% in 2016. The corresponding increase is shown in the number of companies earmarking salary increases of +5% to over 20% both in 2015 and 2016. How much you expect the salary level in your company to grow? (single answer) Question 7 – A 3-year perspective See here the previous edition of the survey from February 2015. 13% 44% 31% 10% 2% 1% 2% 11% 49% 30% 6% 19% 60% 19% 2% 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 Exceeding -20% -10% la -20% -5% la -10% -1% la -5% 0% +1% la +5% +5% la +10% +10% la +20% Exceeding 20% 2014 2015 2016
  31. 31. Page 31 The level of confidence in industry growth consolidates in 2016, with 42% of “somewhat confident” responses vs 34% in 2015, and 30% in 2014. The percentage of “very confident” responses increases to 17% in 2016, from 15% in 2015 and 7% in 2014. At the same time, there is a 5% increase in the “not at all confident” responses, from 7% in 2015 to 12% in 2016. How confident do you feel regarding the growth of your industry, for the next 12 months? (single answer) Question 8 – A 3-year perspective See here the previous edition of the survey from February 2015. 12% 29% 42% 17% 7% 43% 34% 15% 14% 49% 30% 7% 0% 10% 20% 30% 40% 50% 60% Not at all confident Slightly confident Somewhat confident Very confident 2014 2015 2016
  32. 32. Page 32 In 2016, the top 3 industries “not at all confident” regarding the sector’s growth potential are: power & energy (38%), telecom (18%), and chemicals (17%), while the top 3 “very confident” industries are: R&D / New technology (50%), IT (36%), and tourism (27%). How confident do you feel regarding the growth of your industry, for the next 12 months? (single answer) Question 8 – By industry sector Total Respondents 399 (Skipped this question: 22) See here the previous edition of the survey from February 2015. 17% 3% 10% 11% 6% 8% 38% 17% 14% 11% 18% 13% 12% 42% 36% 30% 23% 17% 33% 19% 50% 50% 36% 25% 27% 40% 37% 33% 41% 42% 37% 51% 42% 42% 43% 16% 40% 50% 37% 20% 50% 43% 19% 23% 15% 36% 17% 17% 50% 10% 14% 18% 27% 13% 12% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Not at all confident Slightly confident Somewhat confident Very confident
  33. 33. Page 33 The number of respondents that are slightly confident in the growth of their company drop to 20% in 2016, from 45% in 2015, and 23% in 2014. At the same time, the percentage of those “somewhat confident” goes up from 19% in 2015 to 42% currently, and the percentage of “very confident” responses goes up from 32% in 2015 to 25% currently. How confident do you feel regarding the growth of your company for the next 12 months? (single answer) Question 9 – A 3-year perspective See here the previous edition of the survey from February 2015. 20% 42% 35% 3% 45% 19% 32% 23% 37% 40% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Not at all confident Slightly confident Somewhat confident Very confident 2014 2015 2016
  34. 34. Page 34 In 2016, the top 3 industries “not at all confident” regarding the company’s growth potential are: power & energy (14%), tourism (13%), and telecom (10%), while the top 3 “very confident” industries are: food & beverage / agriculture (57%), chemicals (50%), publishing & printing (50%) and R&D / New technology (50%). How confident do you feel regarding the growth of your company for the next 12 months? (single answer) Question 9 – By industry sector Total Respondents 399 (Skipped this question: 22) See here the previous edition of the survey from February 2015. 8% 3% 4% 14% 4% 10% 13% 8% 16% 10% 21% 14% 8% 33% 17% 33% 20% 28% 20% 13% 24% 21% 34% 52% 33% 39% 53% 50% 34% 33% 17% 41% 39% 30% 40% 41% 61% 50% 29% 57% 36% 33% 42% 19% 50% 50% 35% 33% 40% 34% 35% 18% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Not at all confident Slightly confident Somewhat confident Very confident
  35. 35. Page 35 Low cost remains the main strength of the respondents’ competition in the local market despite decreasing from 41% in 2015 to 33% in 2016. Brand awareness (trust) decreases from 37% in 2014, to 29% in 2015 and up to 30% in 2016, and is now on the second place. A spectacular increase is seen in Partnerships up to 17% in 2016 from only 9% in 2014 and 2015. Please select the main strength of your competition in the local market (Romania). (single answer) Question 10 – A 3-year perspective See here the previous edition of the survey from February 2015. 26% 37% 9% 14% 7% 7% 41% 29% 9% 13% 5% 3% 33% 30% 17% 14% 6% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Low cost Strong brand awareness (trust) Partnerships Distribution channels R&D Other 2014 2015 2016
  36. 36. Page 36 Low cost is still seen as a the main strength of the competition across most of the industry sectors, except for strong brand awareness in pharmaceuticals / healthcare, publishing & printing, services, and tourism industries, as it is partnerships for the power & energy sector and R&D in case of new technology sector. Please select the main strength of your competition in the local market (Romania). (single answer) Question 10 – By industry sector Total Respondents 399 (Skipped this question: 22) See here the previous edition of the survey from February 2015. 3% 37% 13% 17% 25% 5% 17% 28% 6% 18% 20% 6% 6% 33% 52% 20% 31% 33% 17% 33% 33% 42% 28% 37% 27% 44% 36% 8% 26% 20% 17% 3% 25% 38% 17% 8% 17% 27% 20% 28% 12%17% 3% 3% 7% 17% 5% 50% 3% 9% 3% 42% 16% 20% 32% 30% 33% 19% 50% 33% 22% 46% 9% 33% 22% 43% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Distribution channels Low cost Partnerships R&D Strong brand awareness (trust)
  37. 37. Page 37 To what extent do you expect your customers' demand to change in the next 12 months? (single answer) Question 11 – Overall responses A remarkable 62% of respondents expect their customers’ demand to “somewhat increase” in 2016 compared to only 3% which expect it to “increase dramatically”. Just 5% believe customers’ demand will “somewhat decrease”, while 30% expect it to stay the same. Total Respondents 399 (Skipped this question: 22) See here the previous edition of the survey from February 2015. 0% 5% 30% 62% 3% 0% 10% 20% 30% 40% 50% 60% 70% Decrease dramatically Somewhat decrease Stay the same Somewhat increase Increase dramatically
  38. 38. Page 38 To what extent do you expect your customers' demand to change in the next 12 months? (single answer) Question 11 – By industry sector There is only one industry sector which expect their customers’ demand to decrease dramatically in 2016, namely services industry sector. The industries that have the highest percentage of respondents who say their customers’ demand will increase dramatically in 2016 are pharmaceuticals / healthcare and R&D / New technology industries. Total Respondents 399 (Skipped this question: 22) See here the previous edition of the survey from February 2015. 3% 3% 4% 3% 17% 5% 17% 2% 3% 64% 58% 61% 67% 60% 75% 42% 57% 17% 67% 60% 58% 64% 80% 67% 21% 42% 39% 27% 33% 17% 41% 33% 50% 16% 32% 28% 27% 20% 33% 12% 3% 3% 5% 5% 33% 6% 8% 9% 3% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Other Chemicals Construction / Real Estate Food & Beverages / Agriculture Industry / Manufacturing Information Technology Pharmaceuticals / Healthcare Power / Energy / Mining Publishing & Printing R&D / New Technology Retail & Wholesale Trade Services Telecommunication / Media Tourism Transportation Increase dramatically Somewhat increase Stay the same Somewhat decrease Decrease dramatically
  39. 39. Page 39 In your opinion, which is the most important obstacle entrepreneurs and managers have to overcome to develop the business? (multiple answers) Question 12 – Overall responses According to the respondents to the current edition of the survey, the most important obstacle entrepreneurs and managers have to overcome to develop the business is bureaucracy (54%) and uncertainty (53%), followed by lack of political stability and public policy vision (51%), and taxation level (49%). Total Respondents 399 (Skipped this question: 22) See here the previous edition of the survey from February 2015. 15% 25% 30% 37% 49% 51% 53% 54% 0% 10% 20% 30% 40% 50% 60% The state of the local economy Difficult access to finance Lack of entrepreneurial education The state of the national economy Taxation level Lack of political stability and public policy vision Uncertainty Bureaucracy
  40. 40. Page 40 On a scale from 1 to 5, please indicate to what extend the following changes in legislation will impact your business in 2016? (1 - lowest impact, 5 - highest impact) (one answer for each option) Question 13 – By intensity of impact Respondents say that the following changes in legislation will have the highest impact & high impact in their businesses going forward: reinvested profit tax exemption (64%), decrease of tax on dividends (58%), and reduction to 20% of VAT (55%). Total Respondențs: 348 (Skipped this question: 73 See here the previous edition of the survey from February 2015. 17% 17% 20% 52% 42% 19% 25% 17% 19% 25% 18% 20% 23% 26% 32% 27% 25% 14% 18% 23% 34% 17% 25% 23% 10% 14% 23% 11% 17% 12% 7% 6% 6% 12% 4% 0% 20% 40% 60% 80% 100% Other Reinvested profit tax exemption Reduction to 20% of VAT Change of the tax system for freelancers (PFA/PFI) Relaxation of taxation regime for micro-companies Decrease of tax on dividends rate New developments in the international taxation (BEPS, FATCA, CRS) Lowest impact (1) (2) (3) (4) Highest impact (5) 58% 55% 64%
  41. 41. Page 41 Please name other legislative changes for your business operation you expect in 2016? Question 14 – Overall responses The number one legislative changes for their business operation that respondents expect in 2015 is the salary tax decrease (33 responses), followed by fewer taxes (28) and an amended Labor legislation (24 responses). Total Respondențs: 209 (Skipped this question: 212 See here the previous edition of the survey from February 2015. Legislative changes mentioned by respondents No. of answers Decrease of salary taxes 33 Fewer taxes 28 Labor legislation 24 Corporate income tax decrease 18 Excises legislation 17 Other 16 Simplified access to EU funds 16 Laws to support SMEs 14 Public acquisition law 11 Less bureaucracy 11 Energy laws 9 Tax exemption for the reinvested profit 9 Insolvency law 3 Top 10 legislative changes (%) 18% 15% 13% 10% 9% 9% 9% 7% 5% 5% 0% 5% 10% 15% 20% Decrease of salary taxes Fewer taxes Labour legislation Corporate income tax decrease Excises legislation Other Simplified access to EU funds Laws to support SMEs Public acquisition law Less bureaucracy
  42. 42. Page 42 On a scale from 1 to 5, please rate the importance of innovation for the successful performance of your company? (1 - lowest impact, 5 - highest impact) (single answer) Question 15 – Overall responses Innovation is seen as having a very high impact & high impact in the successful performance of the company by 74% of respondents in 2016. Only of companies see innovation as having a “medium impact”, and even fewer (7%) consider innovation of “low impact”, while just 1% say innovation is of “no impact” on their business agenda. Total Respondențs: 348 (Skipped this question: 73) See here the previous edition of the survey from February 2015. 1% 7% 18% 39% 35% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% No impact Low impact Medium impact High impact Very high impact
  43. 43. Page 43 On a scale from 1 to 5, please rate the importance of innovation for the successful performance of your company? (1 - lowest impact, 5 - highest impact) (single answer) Question 15 – By industry sector There are very few industry sectors where innovation is seen as having the lowest impact for successful performance. These are: transportation (7%) and services (6%). The industries where innovation has the highest impact are pharmaceuticals / healthcare (67%), R&D / New technology (60%), and IT (52%). Total Respondents: 348 (Skipped this question: 73) See here the previous edition of the survey from February 2015. 43% 18% 19% 46% 38% 52% 67% 26% 20% 60% 30% 23% 14% 33% 27% 37% 55% 50% 36% 44% 33% 33% 42% 60% 40% 40% 37% 43% 25% 20% 10% 9% 19% 14% 12% 15% 32% 20% 21% 26% 29% 34% 40% 3% 18% 12% 4% 6% 9% 8% 14% 8% 7% 7% 6% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Other Chemicals Construction / Real Estate Food & Beverages / Agriculture Industry / Manufacturing Information Technology Pharmaceuticals / Healthcare Power / Energy / Mining Publishing & Printing R&D / New Technology Retail & Wholesale Trade Services Telecommunication / Media Tourism Transportation Highest impact (5) (4) (3) (2) Lowest impact (1)
  44. 44. Page 44 What are the main drivers for innovation in your company? (multiple answers) Question 16 – Overall responses The most important driver for innovation is efficiency (66%), followed by performance (62%), people (51%), the need to beat competition (48%) and cost (47%). Unfortunately, the lowest percentages are recorded by: environment preservation (13%), technical uncertainty (10%), and diminishing resources (6%). Total Respondents: 348 (Skipped this question: 73) See here the previous edition of the survey from February 2015. 1% 6% 10% 13% 23% 29% 34% 47% 48% 51% 62% 66% 0% 10% 20% 30% 40% 50% 60% 70% Other Fewer resources Technical uncertainty Environment preservation Increased production Market share Change Cost Competition People Performance Efficiency
  45. 45. Page 45 What are the main drivers for innovation in your company? (multiple answers) Question 16 – By industry sector The most important driver for innovation in publishing & printing sector is lack of people (36%), in R&D / New technology is performance (21%), in services sector is also performance (20%), and in retail & wholesale trade is efficiency (19%). Total Respondents: 348 (Skipped this question: 73) See here the previous edition of the survey from February 2015. 1% 5% 3% 2% 2% 3% 2% 4% 3% 7% 5% 9% 13% 7% 8% 8% 12% 8% 9% 16% 9% 7% 10% 10% 5% 11% 11% 14% 15% 12% 11% 16% 10% 15% 5% 13% 11% 7% 10% 14% 2% 9% 4% 9% 12% 2% 4% 6% 7% 5% 1% 5% 7% 7% 9% 4% 5% 9% 7% 5% 4% 10% 8% 8% 7% 13% 8% 16% 18% 17% 16% 15% 19% 16% 17% 14% 16% 19% 19% 16% 15% 18% 13% 7% 14% 11% 12% 12% 20% 16% 14% 11% 14% 8% 13% 12% 14% 17% 13% 17% 10% 16% 18% 12% 14% 14% 21% 18% 20% 17% 18% 13% 1% 2% 1% 2% 2% 3% 4% 5% 2% 7% 2% 5% 5% 4% 3% 4% 1% 8% 7% 2% 1% 3% 3% 16% 18% 12% 14% 9% 15% 8% 8% 36% 21% 14% 15% 13% 10% 13% 1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Other Chemicals Construction / Real Estate Food & Beverages / Agriculture Industry / Manufacturing Information Technology Pharmaceuticals / Healthcare Power / Energy / Mining Publishing & Printing R&D / New Technology Retail & Wholesale Trade Services Telecommunication / Media Tourism Transportation Technical uncertainty Change Cost Increased production Market share Efficiency Competition Performance Fewer resources Environment preservation People All of the above
  46. 46. Page 46 Which of the following best describe your company's primary strategy for financing its investments in the past 12 months? (single answer) Question 17 – Overall responses In 2015 companies used mainly intercompany loans, own resources, or reinvested profit to finance investments (43%), followed by bank loans (34%). Compared to 2014, there is a 9% increase in intercompany loans and own resources and a 20% decrease in bank loans. Total Respondents: 348 (Skipped this question: 73) See here the previous edition of the survey from February 2015. 2% 3% 6% 12% 34% 43% 0% 10% 20% 30% 40% 50% Other Our company used venture capital to finance its investments Our company used share capital increase to finance its investments No investments Our company used bank loans to finance its investments Our company used intercompany loans, own resources, or reinvested profit to finance its investments 2016 2% 3% 6% 12% 34% 43% 12% 23% 5% 42% 18% 2% 10% 54% 34% 0% 10% 20% 30% 40% 50% 60% Other Our company used venture capital to finance its investments Our company used share capital increase to finance its investments No investments Our company used bank loans to finance its investments Our company used intercompany loans, own resources, or reinvested profit to finance its investments 2014 2015 2016
  47. 47. Page 47 Which of the following best describe your company's primary strategy for financing its investments in the past 12 months? (single answer) Question 17 – By industry sector In 2015 companies from all industries used mainly intercompany loans, own resources, or reinvested profit to finance investments, followed by bank loans. Financing by share capital increase appear in the chart only at companies from publishing & printing (20%) and pharmaceuticals / healthcare (17%). No investments are shown mainly in services (31%) and trade (21%) industry sectors. Total Respondents: 348 (Skipped this question: 73) See here the previous edition of the survey from February 2015. 27% 64% 38% 39% 37% 36% 33% 26% 20% 20% 35% 31% 29% 17% 33% 43% 18% 50% 43% 45% 52% 50% 48% 20% 80% 37% 23% 71% 67% 47% 7% 7% 11% 3% 17% 5% 20% 5% 9% 3% 9% 4% 4% 3% 3% 5% 2% 7% 17% 9% 8% 7% 1% 3% 16% 20% 21% 31% 16% 13% 3% 3% 3% 20% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Other Chemicals Construction / Real Estate Food & Beverages / Agriculture Industry / Manufacturing Information Technology Pharmaceuticals / Healthcare Power / Energy / Mining Publishing & Printing R&D / New Technology Retail & Wholesale Trade Services Telecommunication / Media Tourism Transportation Our company used bank loans to finance its investments Our company used intercompany loans, own resources, or reinvested profit to finance its investments Our company used share capital increase to finance its investments Our company used venture capital to finance its investments No investments Other
  48. 48. Page 48 Which the following best describes your company's preferred strategy for financing of investments for the following 12 months? (single answer) Question 18 – Overall responses Intercompany loans, own resources or reinvested profit will remain companies’ preferred strategy to finance investments in 2016, according to 46% of respondents, up from 13% in 2015. The second preferred financing source will be bank loans (34%), down from 53% in 2015. Total Respondents 339 (Skipped this question: 82) See here the previous edition of the survey from February 2015. 2% 2% 6% 10% 34% 46% 0% 10% 20% 30% 40% 50% Other Venture capital Share capital increase No investments Bank loans Intercompany loans, own resources, or reinvested profit 2016 2% 2% 6% 10% 34% 46% 9% 21% 4% 53% 13% 12% 49% 39% 0% 10% 20% 30% 40% 50% 60% Other Venture capital Share capital increase No investments Bank loans Intercompany loans, own resources, or reinvested profit 2014 2015 2016
  49. 49. Page 49 Which the following best describes your company's preferred strategy for financing of investments for the following 12 months? (single answer) Question 18 – By industry sector Intercompany loans, own resources or reinvested profit will remain companies’ preferred strategy to finance investments in 2016 across all industry sectors as well. The second preferred financing source will be bank loans, while share capital increase will be used by pharma companies (33%), and venture capital will be used by publishing & printing companies (20%). Total Respondents 339 (Skipped this question: 82) See here the previous edition of the survey from February 2015. 25% 64% 32% 50% 38% 39% 17% 33% 20% 20% 36% 25% 29% 17% 26% 46% 27% 64% 32% 53% 43% 50% 39% 40% 60% 40% 34% 71% 42% 67% 4% 14% 4% 9% 33% 6% 20% 7% 10% 4% 1% 6% 20% 3% 18% 9% 4% 4% 3% 3% 22% 20% 12% 22% 33% 7% 3% 1% 5% 6% 8% 0% 20% 40% 60% 80% 100% Other Chemicals Construction / Real Estate Food & Beverages /… Industry / Manufacturing Information Technology Pharmaceuticals / Healthcare Power / Energy / Mining Publishing & Printing R&D / New Technology Retail & Wholesale Trade Services Telecommunication / Media Tourism Transportation Bank loans Intercompany loans, own resources, or reinvested profit Share capital increase Venture capital No investments Other
  50. 50. Page 50 Which of the following factors best describe the reaction of your company to the business environment in the past year? (single answer) Question 19 – A 3-year perspective The most important shift in responses is that cost reduction ceases to be the reaction of the companies to the changes of the business environment (21% in 2016 vs. 30% in 2015). The first position is occupied now by the productivity increase (27% in 2016 and 2015), followed by new products (19% in 2016 and 2015 vs. 17% in 2014). Talent acquisition and access to EU funds show also important percentage increases in the current edition of the survey. See here the previous edition of the survey from February 2015. 1% 2% 4% 4% 6% 16% 21% 2% 1% 5% 14% 19% 30% 27% 5% 2% 5% 2% 15% 17% 22% 32% 0% 5% 10% 15% 20% 25% 30% 35% Other Reduced capital investment Reduced market coverage Mergers & Acquisitions Attraction of EU funds Talent acquisition Restructure of the organization New products Cost reduction Productivity increase 2014 2015 2016
  51. 51. Page 51 Which of the following factors best describe the reaction of your company to the business environment in the past year? (single answer) Question 19 – By industry sector Productivity increase was the most important reaction of companies transportation to the business environment in the past year (47%), while companies in chemicals focused on cost reduction (46%), companies in R&D / New technology focused on attraction of EU funds (40%) and companies on publishing & printing focused on new products (40%). Total Respondents: 339 (Skipped this question: 82) See here the previous edition of the survey from February 2015. 4% 7% 4% 9% 40% 9% 9% 18% 46% 36% 25% 17% 9% 17% 33% 20% 20% 19% 16% 43% 8% 20% 4% 4% 7% 3% 6% 20% 7% 3% 14% 28% 18% 12% 14% 22% 12% 33% 17% 40% 26% 16% 14% 25% 7% 25% 27% 20% 25% 32% 37% 17% 11% 20% 20% 26% 22% 14% 42% 47% 9% 4% 1% 2% 1% 5% 6% 8% 7% 16% 18% 20% 18% 16% 27% 20% 12% 25% 20% 14% 12% 3% 12% 6% 3% 3% 15% 8% 6% 17% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Other Chemicals Construction / Real Estate Food & Beverages / Agriculture Industry / Manufacturing Information Technology Pharmaceuticals / Healthcare Power / Energy / Mining Publishing & Printing R&D / New Technology Retail & Wholesale Trade Services Telecommunication / Media Tourism Transportation Attraction of EU funds Cost reduction Mergers & Acquisitions New products Productivity increase Reduced capital investment Reduced market coverage Restructure of the organization Talent acquisition Other
  52. 52. Page 52 In case of stagnation/decline in your current markets what will be the step/s your company will pursue in the next 12 months? (multiple answers) Question 20 – A 3-year perspective In case of stagnation / decline of the market 70% of companies will stay on the market until is stable again in order to secure it and increase the trust level in 2016 compared to 65% in 2015 and 56% in 2014. In 2016, 47% say will transform the market through innovative approaches and 15% say that will grow on the market through M&A. See here the previous edition of the survey from February 2015. 2% 7% 10% 15% 47% 70% 1% 2% 8% 12% 47% 65% 5% 10% 10% 56% 56% 0% 10% 20% 30% 40% 50% 60% 70% 80% Other Leave the market and seek new ones Seek external funding to secure our position on the market Grow on the market through M&A (Mergers & Acquisitions) Transform the market through innovative approaches Stay on the market until is stable again in order to secure it and increase the trust level 2014 2015 2016
  53. 53. Page 53 In case of stagnation/decline in your current markets what will be the step/s your company will pursue in the next 12 months? (multiple answers) Question 20 – By industry sector While companies from all industries will stay on the market until is stable again in order to secure it and increase the trust level, the top 3 ones that are ready to transform the market through innovative approaches are: food & beverages (41%), transportation (36%), and pharmaceuticals / healthcare (34%). Total Respondents: 339 (Skipped this question: 82) See here the previous edition of the survey from February 2015. 43% 60% 52% 34% 49% 42% 33% 42% 38% 28% 49% 54% 67% 61% 52% 10% 6% 7% 6% 2% 3% 12% 4% 2% 8% 26% 28% 30% 41% 34% 33% 34% 19% 38% 27% 29% 33% 22% 31% 36% 10% 6% 9% 16% 7% 8% 33% 20% 12% 18% 10% 9% 8% 4% 9% 6% 3% 2% 4% 15% 16% 27% 8% 2% 11% 2% 0% 20% 40% 60% 80% 100% Other Chemicals Construction / Real Estate Food & Beverages / Agriculture Industry / Manufacturing Information Technology Pharmaceuticals / Healthcare Power / Energy / Mining Publishing & Printing R&D / New Technology Retail & Wholesale Trade Services Telecommunication / Media Tourism Transportation Stay on the market until is stable again in order to secure it and increase the trust level Leave the market and seek new ones Transform the market through innovative approaches Grow on the market through M&A (Mergers & Acquisitions) Seek external funding to secure our position on the market Other
  54. 54. Page 54 Which the following actions is your company taking to increase sales? (multiple answers) Question 21 – A 3-year perspective 73% of the companies are introducing new products or services for existing clients and attracted new clients in order to increase sales in 2015, 41% are increasing the investments in marketing and sales, 40% are entering new geographical markets, and 38% are opening new distribution channels. Only 14% are cutting prices and 11% are increasing prices. See here the previous edition of the survey from February 2015. 2% 9% 11% 14% 23% 38% 40% 41% 73% 7% 9% 10% 15% 31% 38% 41% 66% 7% 5% 10% 22% 29% 32% 24% 80% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Other Merging with and/or acquiring competitors to increase market share Increase prices Cutting prices Adapting existing product/service for new geographic markets Opening new distribution channels/ reorganizing distribution to use multiple channels Enter new geographic markets for existing products/services Increase investment in marketing and sales Introducing new products and/ or services for existing client and to attract new clients 2014 2015 2016
  55. 55. Page 55 Which of the following actions is your company taking to increase sales in 2016? (multiple answers) Question 21 – By industry sector Companies from all industries are planning to enter new geographic markets for existing products/services and also to introduce new products and/or services for existing clients and to attract new clients. It is noteworthy that 10% of companies from transportation sector are cutting prices, while 10% of companies in food & beverages are increasing prices. Total Respondents: 339 (Skipped this question: 82) See here the previous edition of the survey from February 2015. 15% 18% 16% 14% 19% 20% 14% 23% 31% 18% 10% 18% 26% 8% 9% 30% 36% 30% 24% 30% 27% 33% 28% 23% 28% 35% 29% 26% 21% 30% 18% 10% 23% 17% 13% 15% 20% 16% 23% 18% 19% 15% 7% 21% 15% 11% 7% 5% 5% 12% 16% 5% 8% 24% 3% 7% 27% 8% 12% 16% 18% 12% 18% 12% 14% 13% 13% 8% 12% 20% 15% 25% 15% 4% 2% 7% 4% 4% 13% 5% 5% 3% 7% 4% 4% 7% 10% 3% 2% 7% 4% 7% 7% 9% 6% 7% 5% 5% 7% 2% 7% 10% 4% 4% 4% 18% 2% 0% 20% 40% 60% 80% 100% Other Chemicals Construction / Real Estate Food & Beverages / Agriculture Industry / Manufacturing Information Technology Pharmaceuticals / Healthcare Power / Energy / Mining Publishing & Printing R&D / New Technology Retail & Wholesale Trade Services Telecommunication / Media Tourism Transportation Enter new geographic markets for existing products/services Introducing new products and/ or services for existing client and to attract new clients Increase investment in marketing and sales Adapting existing product/service for new geographic markets Opening new distribution channels/ reorganizing distribution to use multiple channels Merging with and/or acquiring competitors to increase market share Increase prices Cutting prices Other
  56. 56. Page 56 Mention briefly the main challenge that you are noticing now in your industry/field of activity? (number of answers) Question 22 – Overall responses There are 3 main challenges respondent companies notice in their industry/field of activity for 2016 are the following: pressure on margins (46 responses), difficult labor market and demographic conditions (42 responses), and low competitiveness of the Romanian economy (27 responses). Total Respondents: 268 (Skipped this question: 153) See here the previous edition of the survey from February 2015. 9 11 11 11 14 14 14 14 17 19 19 27 42 46 0 5 10 15 20 25 30 35 40 45 50 Cash flow management Cost cutting Legal framework uncertainty Managing financial risks Customer satisfaction Harsh competition Poor infrastructure Sustainable growth Business development Corruption Political instability Low competitiveness Labor market and demographics Pressure on margins
  57. 57. Page 57 Mention briefly the main opportunity that you are noticing now in your industry/field of activity? (number of answers) Question 23 – Overall responses The 3 main opportunities respondent companies notice in their industry/field of activity for 2016 are the following: domestic market growth potential (48 responses), decreased VAT rate (28 responses), partnerships & alliances (24 responses). Total Respondents: 265 (Skipped this question: 156) See here the previous edition of the survey from February 2015. 5 6 10 10 10 11 11 12 13 16 20 20 21 24 28 48 0 10 20 30 40 50 60 Cloud technology Low costs Access to EU funds e-commerce Energy infrastructure Disruptive innovation (IoT) Social economy Market consolidation Changing business models Entering new markets More entrepreneurial businesses Technological advancements Growing demand for IT services Partnerships and alliances Decreased VAT Domestic market growth potential
  58. 58. Page 58 Mention briefly the main potential for investment /development that you are looking at for the next 1-3 years in your industry. Question 24 – Overall responses According to the respondents to the survey, the main potential for investment in 2016 is triggered by the need to increase efficiency (21% of companies), followed by the need to expand the market with new customer segments (17%), and expand the market in new countries (16%). The need to secure sustainability is mentioned as an area for future development only by 8% of companies. Total Respondents: 322 (Skipped this question: 99) See here the previous edition of the survey from February 2015. 2% 8% 8% 14% 15% 16% 17% 21% 0% 5% 10% 15% 20% 25% Other Secure sustainability Expand market with new regions (in Romania) Change/adapt the business model Expand operations Expand market in new countries Expand market with new customer segments Increase efficiency
  59. 59. Demographics The results of this survey reflect the responses received to our questionnaire in the period between 27 January and 12 February 2016, from 421 top executives of major companies operating in Romania.
  60. 60. Page 60 Romanian company (yes/no) County where the company is based Demographics See here the previous edition of the survey from February 2015. 60% 40% Yes No 18% 1% 2% 2% 2% 2% 2% 3% 3% 3% 4% 5% 6% 7% 40% 0% 10% 20% 30% 40% 50% Other Constanța Arad Bihor Sibiu Prahova Bacău Iași Argeș Mureș Timiș Brașov Ilfov Cluj București
  61. 61. Page 61 Demographics Industry sector Company revenue level (for 2015) See here the previous edition of the survey from February 2015. 8% 1% 2% 3% 3% 3% 3% 4% 5% 8% 8% 9% 9% 13% 21% 0% 10% 20% 30% Other R&D / New Technology Publishing & Printing Telecommunication / Media Chemicals Pharmaceuticals /… Tourism Transportation Power / Energy / Mining Construction / Real Estate Food & Beverages /… Information Technology Services Retail & Wholesale Trade Industry / Manufacturing 14% 35% 28% 10% 13% 0% 10% 20% 30% 40% Less than 1 M EUR 1 - 10 M EUR 10 - 50 M EUR 50 - 100 M EUR 100 M EUR+
  62. 62. Page 62 Entity type Respondent’s job title Demographics See here the previous edition of the survey from February 2015. 2% 6% 10% 82% Government/State-owned enterprise Private Equity portfolio company Publicly listed Privately owned 0% 25% 50% 75% 100% 6% 4% 4% 4% 5% 6% 9% 15% 16% 31% 0% 10% 20% 30% 40% Other CIO/Technology director Head of business unit Other C-level executive Board member SVP/VP/Director CFO/Treasurer/Controller Head of department Manager CEO/President/Managing director
  63. 63. Page 63 We would like to thank all who have responded to our questionnaire and thus made possible the existence of this edition of the survey. We have been very glad to see the increasing interest in this survey reflected in the increasing number of responses received. A special thank you goes to Diana Dumitrașcu, Executive Director of doingbusiness.ro for her significant and always prompt support in the preparation of this survey. This is a quantitative survey/analysis which aims at showcasing the trends of the surveyed topic and advance working hypotheses which might be subsequently validated by extensive market research conducted on representative samples. This written material is accurate to the best of our knowledge at the time of issue. It is, however, meant as a general guide and comes with the recommendation that professional advice be sought before any action is taken. Elena Badea Associate Director Branding, Marketing & Communication EY Romania elena.badea@ro.ey.com Constantin Măgdălina Senior Knowledge Management Branding, Marketing & Communication EY Romania constantin.magdalina@ro.ey.com See here the previous edition of the survey from February 2015. The project team
  64. 64. EY | Assurance | Tax | Transactions | Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. © 2016 EYGM Limited. All Rights Reserved. ey.com

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