New rivals entering the market, major partnerships produced by integration, price competitions that sweep through sector and others… Some CEOs and general managers believe that for these reasons 2006 will be a more difficult year… How will Beymen’s new general manager stay ahead of their rivals, how will Turkcell fare in the new competitive environment in the marketplace, how will the increase in foreign ownership in the sector affect İş Bankası… The answers to these difficult questions will be determined by the performance and decisions of these companies’ CEOs.
Charles Prince is the CEO of Citigroup, one of the world’s financial giants. But at the moment his job is difficult. Because for the last two years Citigroup has been trying to shake off the negative connotations of having worked with Enron. In order to overcome this, the company currently needs to focus on growth on the domestic market. But, as it does so, it is faced with two problems. The first of these is that the majority of the company’s most experienced executives have passed away. The other problem is that short-term interest rates in the sector have been rising.
But Prince is also has some opportunities. The group is one of the leading companies in its sector in the world. In some foreign countries there are still regions in which its market share is still in single figures. In the future Prince plans to develop this potential and open hundreds of new branches in these regions.
Neville Isdell has been CEO of Coca Cola since 1997. The company has been forced to go on the offensive because, particularly in overseas markets, it has recorded fixed growth for years. But today the fizzy soft drinks market has entered a period of zero growth. On the other hand, fizzy drinks still account for 85 of companies’ total profits. It is difficult for Isdell to find any other business in the world in which profit margins are as large as they are in fizzy drinks. As the head of the largest soft drinks manufacturer in the world with a value of $100 billion, in order to have an impact Isdell has to make a major move.
Who is there in Turkey?
In fact, the CEOs of the global giants are not alone. In Turkey there are currently many CEOs and general managers who are anticipating difficult times ahead. Everybody is waiting to see what some high level executives will do, not because their companies are in trouble but because of reasons such as increasingly difficult competitive conditions in their sectors. When anyone talks about this subject the first sector which comes to mind is telecommunications. The acquisition of Turk Telekom, which is one of the largest companies in Turkey, by a foreign buyer and later the entry into the market of the giant Vodafone following its purchase of Telsim, which was being administered by the Savings Deposit Insurance Fund, looks set to intensify competition in the market. Everyone is closely following these new dynamics among the GSM operators. Paul Doany is the general manager of Turk Telekom, which is 55 percent owned by Oger Telecom. His ‘to do’ list is extremely long. It is headed by the responsibility of being at the head of the company which controls the newly liberalized market. However liberalized it may be and however powerful the rivals that may appear, everyone expects an increase in competition. In addition, he will need to reposition Turk Telekom and determine its strategy during the liberalization process. But the greatest difficulty will be restructuring the organization’s personnel and traditions. In the aftermath of the acquisition, tackling the organizational structure will be a major task all by itself.
The most recent situation in banking
“In March 2001 I spoke with the then representative of the World Bank in Turkey. He said that five banks were enough for Turkey, maybe too many. Turkey is still a long way from this figure. For this reason the consolidation will continue. Bank executives will face difficulties in the future.” These words belong to Murat Kaan Güneri, the managing partner at MKG Partners. Güneri says that bankers will face difficult times. The last two years seen developments which will make things difficult for high level bank executives. Powerful foreigners have begun to compete in the sector: GE has become a partner in Garanti, Fortis has acquired Dışbank, and Koç-Unicredito bought Yapı Kredi. This has created a more difficulty competitive environment for local players. One of the people on whom attention has been focused in these difficult conditions is İş Bankasi General Manager Ersin Özince. Many people are curious about how İş Bankasi, the largest private sector bank, will compete with the foreigners. Another of the bankers who faces difficulties is undoubtedly Koç Financial Services CEO Kemal Kaya. Just the integration process after the acquisition of Yapı Kredi has proved to be a major headache. Will all the branches be kept? Kaya faces many questions, such as: How will the bank’s participations be organized?
The 20 CEOs who face hard times in the future
CEO/General Manager Company Why do they face hard times?
* Telsim-Vodafone The name of the general manager of the company which has bought Telsim has yet to be announced. But the company, which has long been administered by the SDIF, needs to put in order very quickly.
Aslı Karadeniz Boyner Stores Faces difficulties as a result of the new stores which are coming to Turkey and department store concept such as Debenhams and C&A, the brands brought by the Shaya Group.
Aziz Bulgu Migros People are curious to see how the process following the acquisition of Tansaş will be handled. The decisions that will be taken by Bulgu will be very important in the intense competition.
Cüneyt Türktan Avea Became general manager of Avea, the third player in the sector. Is expected to develop the company into a strong player. For this reason everybody’s eyes are on him.
Ersin Özince İş Bankası Its leading position could come under threat if foreigners buy or become partners in a large bank such as Akbank. People are expectantly waiting to see what he will do in the future.
Esel Çekin Beymen Leading equivalent brands such as Harvey Nichols are coming to Turkey. Will Beymen be able to retain its strength. People are wondering what methods Çekin will use in order to compete.
Giray Velioğlu Yapı Kredi Emeklilik The merger of Yapı Kredi and Koçbank will put pressure on their participations. Yapı Kredi Emeklilik will have to retain its position as the leading pension fund during this process.
Hasan Basri Göktan Şekerbank The bank agreed a sales agreement with Rabobank. Then it changed its mind. It will start again from scratch. Issues such as the management of its staff will become difficult
Kemal Kaya Koç Financial Services Will merge Yapı Kredi and Koçbank. It looks as though Kaya will have a difficult task in terms of management during the merger process. At this point the motivation of the workforce will also come under scruting.
Kemal Olgaç Koç Allianz The difficulties inherent in the acquisition by Koç of Yapı Kredi will be reflected on the participations. Insurance companies which use bank branches as sales channels will also have to set new strategies.
Luc De Noirmont CarrefourSA The firm has bought Gima and faces two difficult tasks: managing the integration process and developing a good growth strategy. Noirmont will work harder in the new competitive environment.
Mehmet Nalbantoğlu Koç Data Group Nalbantoğlu has been newly appointed to his post and is expected to set new strategies. The problems that are experienced during integrations will also apply to the largest company in the group, KoçSistem.
Murat Güvenel Yapı Kredi Insurance The merger of Koçbank and Yapı Kredi means that Yapı Kredi Sigorta also faces difficult times. People are expectantly waiting to see what General Manager Güvenel will do.
Muzaffer Akpınar Turkcell Competition has heated up in the operator market. Akpınar is the general manager of the strongest player in the market and will have to be even stronger in the future.
Paul Doany Oger Telekom Has bought a huge company. Needs to continue its domination of the market. Another difficulty is being appointed to head a company with a state structure in a foreign country.
Piraye Antika HSBC HSBC is one of the strongest foreign players and has a good position in the banking sector. But new foreigners are coming. General Manager Antika’s responsibilities are also increasing.
Sinan Şahinbaş Finansbank Finansbank is one of the banks which have begun the sales process. During this period, General Manager Şahinbaş will also have to strive to get ahead of the competition and to manage this process.
Steve Hammet Tesco General Manager Acquisitions have considerably strengthened Carrefour and Migros. Tesco is still stuck with the Kipa identity. How is it going to compete with its rivals?
Temel Kotil THY There is a lot of competition in air transportation. Moreover, it is no longer just on the domestic market. The number of rivals providing services on international flights is also increasing.
Zafer Kurtul Akbank The bank has mandated a consulting firm for its sale or merger. Management processes will be very difficult during this process.
(*): Name yet to be announced.