- The worst of the global economic crisis has passed, according to most of the CEOs who participated in Turkish business magazine Capital’s ‘CEO Profile 2009.’ For 2010, the CEOs say rising competitiveness is a top threat and unemployment will be a problem. They will also focus on maintaining market share and being innovative, according to the survey
PERFORMANCE: Some 35.6 percent of CEOs expect big gains in the energy sector. Meanwhile, 31.5 percent think the banking industry will also perform well in 2010. Hürriyet photo
The number of chief executive officers who think the worst of global economic crisis has passed is on the rise, according to the “CEO Profile 2009” survey conducted by Turkish monthly business magazine Capital for its November edition.
More than half of some 160 members of the CEO Club believe that business will be much better next year, the survey said. Among the top priorities of CEOs are maintaining their market share, finding new markets and increasing productivity as well as the number of customers.
“Cost cutting” was on top of the CEO agenda last year. This year’s survey shows that the number of CEOs interested in mergers and acquisitions is lower than that of last year. The survey also said the CEOs’ agendas were headlined by China and unemployment figures.
CEOs’ risk perception seems to have changed with the latest economic and political developments, according to the survey. Last year, CEOs considered technological developments and global instability as the top risks, but that has changed: This year’s threats are the global economic crisis and increasing competition.
Some 20 percent of the 160 CEOs think the global economic crisis it the biggest risk. Last year, 15.4 percent said they thought global instability was the biggest risk. This year only 8.8 percent of CEOs consider global instability a threat. The second-biggest risk factor was increasing competitiveness, according to 11.2 percent of those surveyed. In third place, meanwhile, is the fear of a "regional war."
Countries considered to be risky have not changed for the past four years. The number of CEOs who consider China to be risky has increased. Last year, 38.1 percent identified China as a risk factor although that factor is now 46.8 percent. The second most risky country is the United States, according to 19 percent. Russia, meanwhile, ranked as the third riskiest location at 12.7 percent.
There has been a change in terms of perceived opportunities: Last year, CEOs said Russia was the biggest opportunity, but Iraq tops the list this year, with 27.1 percent seeing big opportunities there. Meanwhile, 23.6 percent think Western and Eastern European countries are promising, while Russia was selected third most promising with 18.8 percent.
Productivity a priority:
Some 20 percent said increasing productivity was most important in 2010, Capital said. Last year, cutting costs topped the agenda. Innovations, followed by customer satisfaction, ranked second.
The importance of finding new markets and attracting new customers is also growing. Some 52.8 percent of the CEOs expect to increase their companies’ capital via new markets and new customers in 2010. Last year that figure stood at 42.3 percent.
Developing new products and introducing new services are also important, according to 44.9 percent of those surveyed.
“Turkey is the 17th largest economy in the world. Currently, like everywhere in the world, Turkey expects to see a significant recovery at the beginning of 2010. That is why the CEOs are more optimistic,” Süreyya Ciliv, Turkcell’s CEO, told Capital.
“However, some market players may be discouraged as some companies with large balance sheets make signals to pull back their liquidity to a safe harbor. That could generate contraction and fluctuations in the markets,” Ciliv said. “Companies with weak capitals could not stand the crisis. They collapsed in the first six months. Those that managed to survive have gained strength. They got conservative and postponed investments. Now it is time to invest though,” Ciliv said. “In 2010 we will prioritize maintaining our market share and emphasizing our innovative side.”
“I am not a big fan of the macro economy,” said İzzet Karaca, CEO of Unilever. “I'd rather keep my eye on the Dow Jones as well as Asian, European and Turkish bourses. The growth figures as well as capacity utilization figures, exchange rates, import and export data are quite important to me,” he said. “Lately all these data seem to have shown improvement except the unemployment rate around the world. I believe that will continue to be our biggest problem,” Karaca said.
“We saw the worst in 2009. However things are improving now. And a sign of that is the Istanbul Stock Exchange surpassing the 50,000 level. Capacity utilization, which surpassed 70 percent, is also a good indicator of the improvement. I believe the Turkish economy will start to grow in the final quarter of 2009 and the improvement will prolong well into 2010. Some fluctuations can be expected, however, as indicators will continue to point north.”
“There are two points that require special attention. One is the risk of inflation and the other is a budget deficit,” said Karaca.
However, not everyone is convinced that business in Turkey will be much better in 2010 than it was in 2009.
“Oil prices, increasing unemployment, budget and foreign trade deficits are on top of risk factors for Turkey,” said Saffet Karpat, chairman of the board of directors at Procter & Gamble. “Without a doubt, 2010 will be a tough year. However, it could be better than 2009. Among the main reason is the improving situation of automotive and construction industries,” Karpat told Capital.
“Some of the most important indicators of exiting the crisis are rapid consumption and dropping unemployment. The consumption tendency seems to have accelerated lately, while the increase in unemployment figures seems to have cut speed. Those data give us a positive outlook for 2010. At P&G, we are planning to speed up our investments next year in an effort to expand the market."
CEOs expect to see a good performance in energy, with 35.6 percent expressing big expectations from the industry. The second priority for the CEOs is banking, with 31.5 percent thinking the industry will perform well in 2010. Last year’s second top priority was telecommunications. Technology industry ranks third, followed by financial services, food, retail and health industries respectively.
Risk management has also proved to be important in times of crisis. Some 69.3 percent of those surveyed said their company has a risk map. Some 78.9 percent of the CEOs said that their companies had an internal audit department while 61.8 percent said their companies had a risk management department.