EY_A vision for growth 2015_RO vs FDI

A vision for growth Romanian-owned vs. Foreign-owned companies

March 2015

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 2015..

This EY report is based on an online survey of 202 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 2015. This is an

analysis of the split between the aggregated results for Romanian-owned companies and foreign-owned companies

operating in Romania.

5 main

findings

1

In 2015, Romanian-owned companies measure their success by a combination of brand awareness (67%), number of

employees (57%), financial results (53%), and customer satisfaction (52%). At the same time, the foreign-owned

companies operating in Romania (FDIs) use a combination of agile and streamlined processes (100%), number of years in

the market (67%), and market share (49%).

55% of the Romanian-owned companies foresee a significant growth of +10% to +31% for their company’s

turnover in 2015 compared with 39% of the FDIs, while just 37% of Romanian companies expect a growth rate of

+1% to +10% in 2015, compared with 49% of FDIs. Still, a small percentage of FDI companies (8%) expect negative

evolutions.

14% of the Romanian respondent companies foresee a significant growth rate of +10% to exceeding 20% for their

company’s salary level in 2015, compared with only 2% of the FDIs, while 80% of Romanian companies expect a

salary growth rate of +1% to +10% in 2015, compared with 91% of FDIs. Still, a marginal percentage of RO and of

FDI companies expect negative evolutions.

Romanian companies said that in case of market stagnation/decline 63% of them would seek external funding to secure

positon on the market, 50% would grow through M&A and 48% would transform the market through innovative approaches.

For FDIs 57% would stay on the market and 52% would transform the market. Interestingly, 50% of both Romanian and

FDIs said would grow through M&A.

30% of the Romanian companies foresee a significant growth rate of +10 to +31% for their company’s number of

employees in 2015 compared with 16% of the FDIs, while 59% of Romanian companies expect a number of

employees growth rate of +1 to +10% in 2015, compared with 54% of FDIs. Still, a 6% percentage of RO and 16%

of FDI companies expect negative evolutions.

2

3

4

5

See here the overall findings of Feb. 2015 edition.

http://www.slideshare.net/EYRomania20/ey-a-vision-for-growth-2015

A vision for growth Business outlook survey

Romania 2015

Our survey reflects the increased focus

companies have on sustainable growth in a

business environment which brings both

challenges and opportunities.

Bogdan Ion, Managing Partner, EY Romania

Please indicate the main three elements that you use to define success. (multiple answers)

Question 1

In 2015, Romanian-owned companies measure their success by a combination of brand awareness (67%), number of employees

(57%), financial results (53%), and customer satisfaction (52%). At the same time, the foreign-owned companies operating in Romania

(FDIs) use a combination of agile and streamlined processes (100%), number of years in the market (67%) and market share (49%).

Total Respondents: 186

(Skipped this question: 16


67%

43%

49%

20%

47%

48%

33%

100%

33%

57%

51%

80%

53%

52%

67%

0% 20% 40% 60% 80% 100% 120%

Number of years on the market

Number of employees

Market share

Going public (IPO)

Financial Results

Customer satisfaction

Brand awareness

Agility and streamlined processes

Romanian

FDI


How much do you expect your turnover to grow in 2015? (one answer)

Question 2

55% of the Romanian-owned companies foresee a significant growth of +10% to +31% for their company’s turnover in 2015

compared with 39% of the FDIs, while just 37% of Romanian companies expect a growth rate of +1% to +10% in 2015, compared with

49% of FDIs. Still, a small percentage of FDI companies (8%) expect negative evolutions.


(Skipped this question: 18)

4%

2%

2%

4%

22%

27%

37%

2%

4%

4%

12%

25%

32%

13%

10%

0% 5% 10% 15% 20% 25% 30% 35% 40%

-10 to -20%

-5 to -10%

-1% to -5%

0%

1% to +5%

+5 to +10%

+10 to +20%

+20 to +30%

Exceeding 31%

Romanian

FDI



How much do you expect your turnover to grow in 2015? (one answer)

Question 2 (by industry sector)

In 2015 the highest turnover expectation of the Romanian respondent companies are for both industry/manufacturing and services

sector. The FDIs expectation in terms of turnover growth are rather low comparing to local companies. Still, in the services sector,

50% of FDIs foresee growth rates from 10% to 20%.

8%

26%

33%

33%

14%

29%

43%

14%

0% 10% 20% 30% 40% 50%

-10 to -20%

-5 to -10%

-1% to -5%

0%

1% to +5%

+5 to +10%

+10 to +20%

+20 to +30%

Exceeding 31%

Industry / Manufaturing

Romanian

FDI

12%

13%

25%

50%

6%

7%

13%

13%

27%

27%

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 31%

Services

Romanian

FDI



How much do you expect your profit to grow in 2015? (one answer)

Question 3

36% of the Romanian companies foresee a significant growth of +10% to +31% for their company’s profit in 2015 compared with

34%% of the FDIs, while 55% of Romanian companies expect a profit growth rate of +1% to +10% in 2015, compared with 56% of

FDIs. Still, a marginal percentage of RO and FDI companies expect negative evolutions.



4%

2%

4%

36%

20%

18%

4%

12%

2%

2%

5%

22%

33%

24%

6%

6%

0% 5% 10% 15% 20% 25% 30% 35% 40%

-20 to -30%

-10 to -20%

-1% to -5%

0%

1% to +5%

+5 to +10%

+10 to +20%

+20 to +30%

Exceeding 31%

Romanian

FDI



How much do you expect your profit to grow in 2015? (one answer)


In 2015, the highest profit growth rate expectation of the Romanian respondent companies are for the services sector. The FDIs

expectation in terms of profit growth are topping the ones of the local companies in the +1% to +5% bracket only.

8%

50%

18%

8%

8%

8%

16%

17%

33%

17%

17%

0% 20% 40% 60%

-20 to -30%

-10 to -20%

-1% to -5%

0%

1% to +5%

+5 to +10%

+10 to +20%

+20 to +30%

Exceeding 31%

Industry / Manufacturing

Romanian

FDI

12%

12%

25%

12%

13%

13%

13%

7%

14%

29%

29%

21%

0% 10% 20% 30%

-20 to -30%

-10 to -20%

-1% to -5%

0%

1% to +5%

+5 to +10%

+10 to +20%

+20 to +30%

Exceeding 31%

Services

Romanian

FDI



How much do you expect your investments to grow in 2015? (one answer)

Question 4

54% of the Romanian companies foresee a significant growth of +10% to +31% for their company’s investments in 2015 compared

with 28% of the FDIs, while 39% of Romanian companies expect an investment growth rate of +1% to +10% in 2015, compared with

55% of FDIs. Still, a marginal percentage of RO and FDI companies expect negative evolutions.



2%

5%

10%

23%

32%

16%

5%

7%

2%

5%

17%

22%

28%

11%

15%

0% 5% 10% 15% 20% 25% 30% 35%

-20 to -30%

-10 to -20%

-1% to -5%

0%

1% to +5%

+5 to +10%

+10 to +20%

+20 to +30%

Exceeding 31%

Romanian

FDI



How much do you expect your investments to grow in 2015? (one answer)


In 2015, the highest investment growth rate expectation of the Romanian respondent companies are for the services sector. The FDIs

expectation in terms of investments growth rate are topping the ones of the local companies in the +1% to +10% bracket for

industry/manufacturing and in the bracket +5% to +20% for services sector.

10%

10%

40%

30%

10%

14%

29%

14%

14%

29%

0% 20% 40% 60%

-20 to -30%

-10 to -20%

-1% to -5%

0%

1% to +5%

+5 to +10%

+10 to +20%

+20 to +30%

Exceeding 31%

Services

Romanian

FDI14%

43%

29%

14%

9%

10%

27%

18%

27%

9%

0% 10% 20% 30% 40% 50%

-20 to -30%

-10 to -20%

-1% to -5%

0%

1% to +5%

+5 to +10%

+10 to +20%

+20 to +30%

Exceeding 31%


Romanian

FDI



How much do you expect your number of employees to grow in 2015? (one answer)

Question 5

30% of the Romanian companies foresee a significant growth rate of +10 to +31% for their company’s number of employees in 2015

compared with 16% of the FDIs, while 59% of Romanian companies expect a number of employees growth rate of +1 to +10% in

2015, compared with 54% of FDIs. Still, a 6% percentage of RO and 16% of FDI companies expect negative evolutions.



5%

2%

9%

14%

42%

12%

14%

2%

4%

2%

5%

40%

19%

17%

9%

4%

0% 10% 20% 30% 40% 50%

-10 to -20%

-5 to -10%

-1% to -5%

0%

1% to +5%

+5 to +10%

+10 to +20%

+20 to +30%

Exceeding 31%

Romanian

FDI



How much do you expect your number of employees to grow in 2015? (one answer)


In 2015, the highest growth rate in the number of employees expected by the Romanian companies are in the services sector. The

FDIs expectation in terms of number of employees growth rate are topping the ones of local companies in the 5% to 20% bracket for

industry/manufacturing only.

14%

14%

43%

29%

60%

30%

10%

0% 20% 40% 60% 80%

-10 to -20%

-5 to -10%

-1% to -5%

0%

1% to +5%

+5 to +10%

+10 to +20%

+20 to +30%

Exceeding 31%


Romanian

FDI18%

45%

19%

18%

11%

50%

13%

13%

13%

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 31%

Services

Romanian

FDI



How much you expect the salary level in your company to grow in 2015? (one answer)

Question 6

14% of the Romanian respondent companies foresee a significant growth rate of +10% to exceeding 20% for their company’s salary

level in 2015, compared with only 2% of the FDIs, while 80% of Romanian companies expect a salary growth rate of +1% to +10% in

2015, compared with 91% of FDIs. Still, a marginal percentage of RO and of FDI companies expect negative evolutions.



2%

2%

5%

68%

21%

2%

2%

4%

37%

43%

10%

4%

0% 20% 40% 60% 80%

-5 to -10%

-1% to -5%

0%

1% to +5%

+5 to +10%

+10 to +20%

Exceeding 20%

Romanian

FDI



How much you expect the salary level in your company to grow in 2015? (one answer)


In 2015 the highest salary growth expectation of the Romanian-owned companies are for the industry/manufacturing sector.

FDIs expectation in terms of salary growth rates are topping the ones of local companies in the +1% to +5% bracket for both

services and industry/manufacturing.

75%

25% 50%

40%

10%

0% 20% 40% 60% 80%

-5 to -10%

-1% to -5%

0%

1% to +5%

+5 to +10%

+10 to +20%

Exceeding 20%

Services

Romanian

FDI

11%

38%

38%

13%

10%

30%

40%

10%

10%

0% 10% 20% 30% 40% 50%

-5 to -10%

-1% to -5%

0%

1% to +5%

+5 to +10%

+10 to +20%

Exceeding 20%


Romanian

FDI



How confident do you feel regarding the growth of your industry, for the next 12 months?(one answer)

Question 7

59% of the Romanian respondent companies are “confident” or “somewhat confident” regarding the growth of their industry in 2015 at

the par with the FDIs, while 41% of Romanian companies are “slightly confident” or “not at all confident” at the par with the FDIs.



6%

35%

46%

13%

8%

33%

41%

18%

0% 10% 20% 30% 40% 50%

Not at all confident

Slightly confident

Somewhat confident

Very confident

Romanian

FDI



78% of the Romanian respondent companies are “confident” or “somewhat confident” regarding the growth of their company in 2015

compared with 77% of the FDIs, while 22% of Romanian companies are “slightly confident” regarding the growth of their company

compared with 17% of the FDIs .

How confident do you feel regarding the growth of your company for the next 12 months? (one answer)

Question 8



6%

17%

52%

25%

22%

39%

39%

0% 10% 20% 30% 40% 50% 60%

Not at all confident

Slightly confident

Somewhat confident

Very confident

Romanian

FDI



Romanian respondent companies consider the 3 main strengths of their competitors to be the following ones: strong brand awareness

(35%), low cost (31%), and distribution channel (12%). FDIs consider the top 3 main strengths of their competitors to be: low cost

(53%), strong brand awareness (24%), and distribution channel (15%).

Please describe the main strength of your competitors in the local market, Romania. (one answer)

Question 9



53%

24%

15%

6% 2%

31% 35%

12% 12% 8%

0%

10%

20%

30%

40%

50%

60%

Low cost Strong brandawareness

(trust)

Distributionchannels

Partnerships R&D

FDI

Romanian



To what extent do you expect your customers' demand to change in the next 12 months? (one answer)

Question 10

73% of the Romanian respondent companies expect their customer’ demand to “increase dramatically” or “somewhat increase” in the

next 12 months in 2015 compared with 58% of the FDIs which only expect to “somewhat increase”; at the same time, 27% of

Romanian companies expect their customers’ demand to “stay the same” or “decrease” compared with 42% of the FDIs .



2%

40%

58%

2%

25%

69%

4%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Somewhat decrease

Stay the same

Somewhat increase

Increase dramatically

Romanian

FDI



What is the importance of innovation for the successful performance of your company? (1 – no importance, 5 – very high importance)

(one answer)

Question 11

For 70% of the Romanian respondent companies innovation is of “very high importance” or “high importance” for the successful

performance of their companies compared with 50% of the FDIs, while for 12% of Romanian companies innovation is of “low

importance” or “no importance” compared with 19% of the FDIs .



2%

17%

31%

29%

21%

6%

6%

18%

35%

35%

0% 5% 10% 15% 20% 25% 30% 35% 40%

No importance (1)

Low importance (2)

Medium importance (3)

High importance (4)

Very high importance (5)

Romanian

FDI



For 80% of the Romanian respondent companies the rate of dependency of their success on the skills of the labor force is “very high”

or “high” compared with 75% of the FDIs, while for 4% of Romanian companies the rate of dependency of their success on the skills of

the labor force is “low” compared with 2% of the FDIs .

How would you rate the dependency of your company's success on the skills of the labor force? (one answer)

Question 12



0%

2%

23%

33%

42%

0%

4%

16%

32%

48%

0% 10% 20% 30% 40% 50% 60%

No dependency (1)

Low dependency (2)

Medium dependency (3)

High dependency (4)

Very high dependecy (5)

Romanian

FDI



Which of the following factors best describe the impact of your employees on company's success? (one answer)

Question 13

88% of the Romanian respondent companies rate their success as dependent on the education level and key skills of their employees

compared with 90% of the FDIs, while10% of Romanian companies rate their success as dependent on the employee retention

compared with 6% of the FDIs .



4%

6%

90%

2%

10%

88%

0% 20% 40% 60% 80% 100%

Our company's success is highlyinfluenced by salary gross

Our company's success is dependent onemployee retention

Our company's success is dependent oneducation level and key skills

Romanian

FDI



Which of the following best describes your company’s primary strategy for financing its investments in the past year? (one answer)

Question 14

When it comes to financing investments in 2014, 48% of Romanian companies used mostly bank loans vs. 35% of FDIs; share capital

was used by 23% of Romanian companies vs. 21% of FDIs, followed by intercompany loans, own resources and reinvested profit

used by 15% of Romanian companies vs. 23% of FDIs.



23%

5%

16%

21%

35%

15%

6%

8%

23%

48%

0% 10% 20% 30% 40% 50% 60%

Other (intercompany loans, ownresources, reinvested profit)

No investments

Our company used venturecapital to finance its investments

Our company used share capitalincrease to finance its

investments

Our company used bank loans tofinance its investments

Romanian

FDI



Which of the following best describes your company's preferred strategy for financing its investments in the next 12 months? (one answer)

Question 15

For the Romanian respondent companies the main strategy for financing investments in 2015 appears to be through bank loans 53%

vs. 49% for FDIs. The share capital comes second as a strategy in financing investments 22% Romanian companies vs 15% FDIs,

followed by intercompany loans, own resources and reinvested profit with 10% Romanian companies vs 21% for FDIs.



4%

9%

21%

15%

49%

4%

10%

10%

22%

53%

0% 10% 20% 30% 40% 50% 60%

No investments

Venture capital

Other (intercompany loans, ownresources, reinvested profit)

Share capital increase

Bank loans

Romanian

FDI



Which of the following best describe the reaction of your company to the business environment in the past year? (one answer)

Question 16

Romanian businesses reacted to the pressures coming from the business environment by reducing costs (24% RO vs 35% FDIs), by

increasing productivity (24% RO vs. 29% FDIs), or by releasing new products (23% RO vs. 15% FDIs).



2%

4%

5%

10%

15%

29%

35%

2%

2%

7%

18%

23%

24%

24%

0% 10% 20% 30% 40%

Atracttion of EU funds

Reduced capital investment

Mergers & Acquisitions

Talent acquisitions

Restructure of the organization

New products

Productivity increase

Cost reduction

Romanian

FDI



Which of the following actions will your company take to increase sales? (multiple answers)

Question 17

For the Romanian companies the top 3 actions to increase sales will be: 71% to adapt their existing product/service for new

geographic market, 63% to cut prices, and 57% to merge/acquire competitors to increase market share. For FDIs the top 3 actions to

increase sales will be: 86% to increase prices, 52% to open new distribution channels, and 46% to introduce new products/service at

the par with enter new geographic market. Also, the strategy of increasing investment in marketing and sales goes up to 46% for FDIs.



29%

38%

46%

46%

86%

46%

43%

52%

71%

63%

54%

54%

14%

54%

57%

48%

0% 20% 40% 60% 80% 100%

Adapting existing product/service for new geographicmarkets

Cutting prices

Enter new geographic markets for existingproducts/services

Increase investment in marketing and sales

Increase prices

Introducing new products and/ or services for existingclient and to attract new clients

Merging with and/or acquiring competitors to increasemarket share

Opening new distribution channels/ reorganizingdistribution to use multiple channels

Romanian

FDI



In case of stagnation/decline in the market what will be the steps your company will pursue in the next 12 months? (all that apply)

Question 18

Romanian companies said that in case of market stagnation/decline 63% of them would seek external funding to secure positon on the

market, 50% would grow through M&A and 48% would transform the market through innovative approaches. For FDIs 57% would stay

on the market and 52% would transform the market. Interestingly, 50% of both Romanian and FDIs said would grow through M&A.



50%

38%

57%

52%

50%

63%

43%

48%

0% 10% 20% 30% 40% 50% 60% 70%

Grow on the market through M&A(Mergers & Acquisitions)

Seek external funding to secureour position on the market

Stay on the market until is stableagain in order to secure it and

increase the trust level

Transform the market throughinnovative approaches

Romanian

FDI



Demographics The results of this survey reflect the

responses received to our

questionnaire in the period between

10 and 16 February 2015, from 202

top executives of major companies

operating in Romania.

Romanian vs FDI company

Demographics

Company revenue level (for 2015)

47% 53%

FDI

Romanian

9%

25%

35%

6%

25%

42%

21%

25%

2%

10%

0% 20% 40% 60%

Less than 1 M EUR

1-10 M EUR

10-50 M EUR

50-100 M EUR

100 M EUR +

Romanian

FDI



Demographics

Industry sector Job title of respondent

2%

4%

4%

2%

4%

6%

4%

6%

9%

11%

30%

17%

4%

4%

4%

6%

4%

2%

8%

12%

12%

12%

8%

22%

0% 10% 20% 30% 40%

Other

Tourism

Publishing & Printing

R&D / New technology

Food & Beverages /Agriculture

Retail & Wholesale trade

Telecommunication / Media

Transportation

Pharmaceuticals /Healthcare

Construction / Real Estate

Information Technology (IT)

Power & Energy

Services


Romanian

FDI

2%

2%

2%

6%

4%

38%

46%

2%

2%

2%

2%

4%

6%

4%

8%

12%

58%

0% 20% 40% 60% 80%

Other C-level executive

Chief accountant

Employee

General Manager for romanianplant

managing consultant

Member of the ExecutiveBoard

Owner

Head of business unit

Board member

SVP/VP/Director

Manager

CFO/Treasurer/Controller

CEO/President/Managingdirector

Romanian

FDI



Project team members

Elena Badea Head of Market Enablement

EY Romania

[email protected]

Constantin Măgdălina Knowledge Management Officer,

Marketing, EY Romania

[email protected]

We would like to thank all respondents for their

answers to the questionnaire of this survey.



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.

© 2015 EYGM Limited.

All Rights Reserved.

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EY_A vision for growth 2015_RO vs FDI

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