MTI Consulting
2012 CEO Business Outlook Survey by MTI Market Research
Monday, 23 January 2012 04:30 Published in NewsGlobal Worries
75% of the respondents feel that in 2012 the global economy will either remain depressed (66%) or further slide (9%). The Euro Zone and North America, which together represents 58% of the global economy still represents 46% of Sri Lanka’s exports, therefore reduced consumption levels in these markets is likely to impact Sri Lanka. In this regards, Sri Lanka’s strategy of export diversification to Asia and other emerging markets is a prudent move, but requires significant market development to convert the intent to export earnings. The fact that even the BRICS have started to downward revise their growth rates and resorted to devaluation is certainly a concern for emerging markets like Sri Lanka.
Tea, which is Sri Lanka’s second highest export earner (US$ 1.4billion) depends significantly on the Middle East, Russia and the neighboring former Soviet States. Most of these markets are likely to see a continuation of the socio-political challenges, the only consolation being that tea is an integral part of the staple diet.
Above all, another 2008 style global financial crisis remains the biggest short term threat to the global economy
Top 6 Challenges to the Sri Lankan Economy
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By contrast, almost 90% of the respondents feel that the Sri Lankan economy will either stabilize (65%) or even accelerate (24%). This certainly is an encouraging sign of optimism and comes on the back of 2 ½ years of exceptionally high economic growth, the tangible results of this has been experienced across most sectors.
75% expect the global economy to remain depressed
yet 90% feel that the Sri Lankan economy will stabilize or accelerate
The fact that 75% expect the global economy to remain depressed or slide further, yet almost 90% feel that the Sri Lankan economy will stabilize or accelerate, is an interesting paradox! While the optimism of the local business community (even in the face of global challenges) needs to be commended, we should not lose touch with global ‘ground reality’.
The silver lining for Sri Lanka would be the strength of our apparel industry (that caters to some of the world’s top brands, while making remarkable progress in moving further on the value chain) and the tourism industry that benefits from the end of the war, the relatively undiscovered product (in Sri Lanka) and relatively low expectations from the first time traveler to the Island
Sri Lankan businesses expect an even better 2012
Interestingly, 58% expect their business to do better in 2012 compared to their performance in 2011, while another 31% expect the same level of performance as in 2011. Only a minority of 11% expect a slide in 2012.
58% of Sri Lankan businesses expect 2012 to be better than 2011 31% expect it to be the same as 2011
Business Challenges
HR retention is viewed as the single most weighing issue with a consideration of 17.5% of the respondents reflecting HR related matters as their main business challenge. High utility costs (14.6%) and Expansion (13.6%) are also considered as a challenge to businesses in the next 12 months. At the same time, adding on to the bottom line worries of the decision makers is the challenge of profit generation (12.6%).
In 2012, the main Business Challenge will be
Ground Reality – verbatim response from some of the CEOs
• To recruit the right caliber of employees to cater to our expansion plans.
• Retain customers, staff and innovate our business.
• To manage costs to ensure good margins.
• Rising interest rates, volatile commodity prices and increasing electricity tariffs.
• Financial stability in the Middle East and Europe.
• Depressed economies resulting in less buying power.
• Strengthen the fundamentals and take off to next level.
• Cost of borrowings to remain at present levels.
• Ability to respond fast to changing needs in the market
"Marketers should be held more accountable" says MTI chief
Sunday, 25 March 2001 00:00 Published in News"Marketers should be held more accountable and Management Accountants should provide relevant information to facilitate this process", was the core message of a presentation made by MTI's Bahrain-based CEO at the CIMA auditorium this week.
Traditional measures of marketing accountability included sales, market share and profitability. The international marketing expert defined Marketing Accountability as " Accountability for optimum results from the business environment and marketing investments ". The inadequacy of traditional measures and the environmental pressures for better bottom-line performance in turbulent times has driven the need for a paradigm shift in marketing accountability
Mr. Cader explained 5 important aspects of marketing accountability: Universe Optimization, Brand Equity Management, Value Proposition, Customer Profitability and Customer Satisfaction. These were supported by specific examples of how these measures could instill a greater sense of marketing accountability, eventually leading to improved bottom line performance.
He also listed several ways in which an organization could successfully implement a marketing accountability system. This included the following: Senior management commitment - Organization wide, cross-functional teams - Focus on both people and processes - Make it part of the organizational culture and develop supporting systems.
The international marketing expert urged the management accountants to include these marketing accountability scores in published accounts - as it would help shareholders better understand the future potential of the company's performance. He said that most published accounts focus on the history, when in fact what shareholders need is the company's projection for the future.
Mr. Cader's call to the management accountants to provide more meaningful information was supported by Mr. Richard Ebell (President CIMA Sri Lanka Division) and Mr. Sanjay Senanayake (Financial Controller, Slimline). Hilmy Cader was equally critical of the current level of marketing accountability by Sri Lankan marketers and marketing companies, which was confirmed by MTI's research.
Sri Lanka’s Tea industry a year ago was recovering, buoyed by production and earnings estimates of 310 MN Kg and US $ 1.5 BN respectively until trouble hit prompting a US$150 MN government bailout. While granting that the present economic conditions may be partly to blame, the lack of clear strategic direction, we point out is among one of the many reasons why Sri Lanka tea is very
price dependent.
Thus Sri Lanka’s tea price movements behave like any other commodity, responding to pipeline demand systems. Last year, tea prices soared on a general upswing in commodity prices. Tea production on the other hand was up thanks in part to improved rainfall and fewer labour disruptions. Therefore the recent industry bucking trend is not fully attributable to production and
marketing initiatives, but purely to external market forces.
MTI’s research and analytics point to deep rooted strategic challenges facing the tea industry that subsidies may not address. We also comment broadly on initiatives that the industry should reflect on in the context of today’s hard times.