Brick by BrickEngineering innovation driven growth of Eastern European enterprises. “The future of work” project Team : Mech Mathew John Kerala, India
Refining the Refinery A quick look at the general data and trends in EE• Largely dependant on foreign ownership of industries and financial sectors.• Growing exports is the key driver of economic growth. Exports are mainly absorbed by western Europe.• Current GDP growth averages at 3% , which is expected to remain relatively stable. However, the recent reduction in GDP growth rates is a cause for worry.• Top 500 regional companies reported a reduction of average net income in 2012. The revenue growth of the 500 largest companies in Central and Eastern Europe averaged 9.8% in 2011 and 7% in 2012• Russia, Poland, Hungary and Czech Republic displayed exceptional resilience even during the global financial melt-down. A great deal of it, owing to strong domestic markets.
Holding it together A look at the prospects and competitiveness of EE countries. Key industries that registered revenue growth Competitiveness (2011-2012) • Well-educated population with strong• Process industries including focus on science and engineering. automobile and electronics manufacturing. • Remuneration costs are significantly• Energy and Resources lower than Western European levels• Consumer and Transportation although countries like Poland are industries. beginning to catch-up Key sectors with significant potential • A weak business environment continues to limit the growth potential of EE countries.• Chemical Industry• Life Sciences • Deterioration of cost competitiveness has• IT and Telecom been observed recently, which can be• BPO and KPO offset by improving the business operations for EU environment throughout the region .
Pedal to the metal On the inherent strengths of EECEE is perceived as the third mostattractive region worldwide (at 21%) The potential tofor FDI. position itself as the bridge between Western Europe and the Asian growth Resource rich, with a very economies to the east. strong Energy and resource industry base. Countries like Poland and Russia have a good technology base for Main source of comparative manufacturing and IT sectors. advantage has been a CEE countries already have an combination of low excellent infrastructure in taxes, relatively low labour place for process industries. cost and a highly skilled but affordable workforce.
Looking for cracks On the general weaknesses of EE Prescriptive business practices and mostly based Ageing population on compliance. coupled with brain drain. Bureaucracy, corruption, deficit s in transparency and an underdeveloped legal and tax framework in several regions. Limited collaboration Despite improvements, between enterprises and *shadow economy of research institutes. EE countries is still Limiting the knowledge quite sizeable, limiting production and absorption the availability of potential and failing to capital. ( Around 17% capitalize in terms of R&D of the official GDP) labour force.*Shadow economy – Realm of legal business activities performed outside the purview of authorities.*FDI- Foreign Direct Investment.
The big picture >Vision for future management of EE companies<Decentralization byreserving only the An Adaptivebroad powers to the enterprisetop management. capable of responding to market signals An observer committee issuing non-mandatory recommendations on opportunities for localized Allowing participants to use not only their units to coordinate with one knowledge but also another to enable a more their creative initiative effective enterprise development.
A bigger picture Engineering sustainable innovation Creation of an Focus on Innovation and Resource collaboration productivity Sustainable platform accessible Innovation to select sectors of an enterprise Prioritizing R&D enabling free spending to exchange of ideas. ensure optimal use of available funds and Creation of a vigilant collaborating Recruitment of system with research talented to monitor and institutes. professionals from assimilate effective Non-EU/EEemerging technologies countries to offsetand to ensure optimal dwindling HRallocation of resources pool. in all key sectors
An even BIGGER picture Interacting with the world. Build stakeholder relationship with offshore locations and ensuring they Generating domestic sources benefit from of competitiveness and widened access to productivity improvements technologies and transfer of critical know-how. Single operations center supported by a network of Greater focus on B2B* secondary centers across the marketing; leveraging the globe aimed at creating a technology and infrastructure global footprint. already in place.*B2B- Business to Business*Value chain: Linked set of all value-creating processes or activities that convert basic input materials intoproducts or services for the final consumer.
All the details in the fabric. Making Internal collaborations work Maintaining competitiveness• Considering projected returns with • Making greater use of cross border collaboration costs and opportunity costs. value and supply chains in the EU to Without a tangible business return, there strengthen quality infrastructure. is no profitability in collaborated initiative. • Initiating a data management• Collaborate to facilitate transfer of best standardisation process, which is practices of individual sectors to the required for getting reliable and remaining sectors within the enterprise. consistent data from all divisions.• Collaborating to make additional products • Strong focus on resource available to the client. productivity and to adding value to current products and processes.• Creation of an observer committee to evaluate all possible pairings to identify • Establishing a performance based promising opportunities and to identify culture, sharing personal the ones that can never work. responsibility and accountability for the results of operations.
• Greater collaboration with domestic research institutions to facilitate innovation and resource productivity.• Developing contingency plans to face competitor reaction prior to deployment of a solution, IF at all any are likely• Using widely available software solutions to enable managers of localized units to base consequential decisions on scientifically valid experiments. However, in the interest of speed , managers with significant experience in a particular field may proceed with decisions based on intuition.• Creation of investment fund not included in operational and capital budget to fund initiatives that can build capabilities and long-term competitive advantages.• Training localized teams as a single unit and not as individual members on topics ranging from best practices and operational efficiency to ethics and conducts.
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