A time to conserve

Compared with a few years ago, companies are behaving more “conservatively” on several issues, such as borrowing, entering new businesses and investments.

19.08.2014 22:32:500
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A time to conserve
The recent rise in the rate of market risk has resulted in companies behaving more sensitively when it comes to growth. The priority has become profitability and holding onto what they already have rather than the speed of growth.

Compared with a few years ago, companies are behaving more “conservatively” on several issues, such as borrowing, entering new businesses and investments. In terms of the number of stores, production centers and even the number of customers, they are opting to move forward according to the principle of “small but sound”.

Experts describe this situation as companies displaying an introspective reflex and predict that the trend will increase. "We grew by 100 per cent for two years in succession. This speed resulted in us looking to digest growth in order to move forward in a sound fashion.

Rapid growth meant that we spent a lot of time focused on production figures and as a result were not looking at management. In fact, in the medium term this concept of “let’s produce and grow whatever the cost” is a threat to the healthy continuation of the business. From now on, instead of 100 per cent growth, our target is small but sound and sustainable growth.”

These words belong to Erkunt Traktör General Manager Zeynep Erkunt. But it is not just Erkunt. At the moment, a lot of other companies are looking at things in the same
way. They are focusing on sound rather than rapid growth, profitability rather than turnover and looking to spread risk rather than shoulder it all.

Experts say that the main reason for this is that the disruption in the dynamics of the economy has resulted in companies displaying an introspective reflex. Msearch General Manager Ali Midillili says that companies have reacted to the contraction in the market in a competitive environment by looking to protect themselves. ~

“At the moment, everyone has begun to focus on their basic activities. Because that is where profits come from. The more productive you are, the more you increase your profits. The trend of growing economic conservatism will continue to increase both in Turkey and in Europe,” he says.

The combination of the global economic turbulence in recent years and the vulnerability of the Turkish economy to political developments has made companies more sensitive when it comes to the issue of growth. The priority has become profitability and maintaining what companies already have rather than the speed of growth.

Kibar Holding CEO Tamer Saka sums up the current situation as follows: “For everyone it is a time when they are both seeking to hold onto what they have and looking at opportunities. One needs to be very careful. In this period, we have also become more conservative and focused on restructuring.”

Orjin Group Co-Chair Zafer Yıldırım says that, particularly because in recent years profit has been around the limit, they are more cautious and calculating when it comes to every kind of growth.

“We are now in a situation where we act more carefully and more calculatingly,” he says. Aksa Board Member Mustafa Yılmaz says that they are also taking a break when it comes to growth and that they are concentrating on products with the highest profit margin and on developing process selections. He describes the situation as one in which “Turnover will remain the same or decline by less than 5 per cent.”~

The attitude towards both customers and the number of products has become more conservative. Akbulut Holding Board Chair Hakan Akbulut says that they have become more selective in terms of the number of customers and are trying to focus on customers who are worth it in terms of effort and cost.

Karakaş Atlantis Board Chair Kamil Karakaş says that this year they are targeting a smaller number of customers and have stopped working with customers who do not comply with their standards.

Sun Tekstil is increasing its productivity and profitability by focusing on a small number of customers. Sun Tekstil boss Sabri Ünlütürk says that they adopted this approach after the 2008 crisis and review it every year.

Gülle Tekstil Board Chair İsmail Gülle says that, from a conjunctural perspective, it is a risky period to be forming relationships with untested customers. He adds that in terms of products they are focused on those for which there is most demand.

The search for greater productivity is now changing the location of the management and the production facilities. Many companies are opting to product in less locations or concentrate all administration in one location.

For example, in order to increase productivity, the Mondi Group has begun to adopt the management concept of producing in a small number of locations instead of many locations and concentrating the administration in a few or just one location. ~

Mondi Group General Manager Kaan Özkan says that in order to optimize costs they have merged their two factories in a single location. “We have closed our factories in Babaeski and Mersin and established a very large new factory in Çorlu. This has provided significant advantages in terms of operational productivity, stock costs and management productivity,” he says.

Karakaş Atlantis began its preparations to produce in just one location in 2013 and realized its plans this year. The company is now active in just one location. Karakaş Atlantis Board Chair Kamil Karakaş says that, in addition, they are also trying to introduce a centralized management system.


Today we are in a period where increasing sales and turnover do not in themselves result in profits. If you sell your product at a profit, growth in turnover means that you have additional profit. Otherwise you are just increasing your losses. For that reason, growth by itself has ceased to be a target.

Understanding demand preferences, how they have developed and for which reasons, has taken on great importance. Companies which cannot obtain this information or do not give it importance are faced with great risks. Because the issue here is not a decline in demand. It is the demand being met by other producers or service providers. As a result, what is important now is managing profitability, not production. Profit has to be the basic aim of every business.~

Türkiye ve dünya ekonomisine yön veren gelişmeleri yorulmadan takip edebilmek için her yeni güne haber bültenimiz “Sabah Kahvesi” ile başlamak ister misiniz?


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