Roland Berger restructuring study 2011
Regions set to profit after the crisis
For a large number of Croatian companies liquidity situations have eased considerably compared to last year and for the first time most companies plan to finance their future growth using their own sources instead of bank loans, thanks to a more rational use of internal resources. Croatian economy is to overcome the crisis no earlier than 2013 and the key measures for combating the crisis are still considered to be cost cutting and focusing on core business. These are the conclusions resulting from the latest Roland Berger study of trends in restructuring. The survey has been carried out for the seventh time worldwide and for the sixth time in Croatia.
In the Croatian study 50 small and mid-sized companies were surveyed from more than 8 different industries. The aim of the study was to find out how managers view the long-term competitiveness of their companies in the wake of the crisis and how they are planning to improve this competitiveness during the recovery, particularly with regard to financing.
Restructuring programs carried out during the crisis, such as cost cutting and fine-tuning the business model, opened up new business opportunities resulting with 44% of the managers viewing their company as competitive. The survey shows that majority of the companies have not recognized the importance of risk management in terms of raw materials and currencies. Croatian companies focus on improving efficiency by making processes in the overhead and in IT less complex and by optimizing logistics flows and supply chains.
While Western European companies during the crisis reduce the personnel costs by making their employees' working hours more flexible, Croatian companies tend to provide variable compensation, use temporary workers and revert to outsourcing.
„According to the survey, 73% of the managers improved their company's competitiveness through continuous restructuring actions. Although this percentage seems encouraging at first, it also indicates that there is a problem of unfocused and no real restructuring. Companies continuously cut operating costs without changing the business model which is not sustainable in the long run“, said dr. Vladimir Preveden, Managing Partner of the Roland Berger Zagreb office.
In the Croatian study 50 small and mid-sized companies were surveyed from more than 8 different industries. The aim of the study was to find out how managers view the long-term competitiveness of their companies in the wake of the crisis and how they are planning to improve this competitiveness during the recovery, particularly with regard to financing.
Restructuring programs carried out during the crisis, such as cost cutting and fine-tuning the business model, opened up new business opportunities resulting with 44% of the managers viewing their company as competitive. The survey shows that majority of the companies have not recognized the importance of risk management in terms of raw materials and currencies. Croatian companies focus on improving efficiency by making processes in the overhead and in IT less complex and by optimizing logistics flows and supply chains.
While Western European companies during the crisis reduce the personnel costs by making their employees' working hours more flexible, Croatian companies tend to provide variable compensation, use temporary workers and revert to outsourcing.
„According to the survey, 73% of the managers improved their company's competitiveness through continuous restructuring actions. Although this percentage seems encouraging at first, it also indicates that there is a problem of unfocused and no real restructuring. Companies continuously cut operating costs without changing the business model which is not sustainable in the long run“, said dr. Vladimir Preveden, Managing Partner of the Roland Berger Zagreb office.
mr.sc. Dejana Dojčinović Drilo, Senior Consultant at Roland Berger Zagreb
„Croatian companies need to continue improving their liquidity. This should be done by ensuring as much free cash as possible for operations and growth through focused restructuring actions, by employment of a long-term financing strategy and alternative financing instruments because optimizing working capital alone is not enough. Still, all efforts to increase competitiveness will be in vain if the companies do not focus on the customer by differentiating their value proposition with innovative products.”, says mr.sc. Dejana Dojčinović Drilo, Senior Consultant at Roland Berger Zagreb office. “Instead of just carrying out continuous cost cutting measures, the companies need to focus on structural actions, rationalization and simplification of the operational processes, and the right path towards competitiveness growth of a company is to innovate their business model.”, concludes mr. sc. Dejana Dojčinović Drilo.
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