Many firms plan short-term

Published by rudy Date posted on April 8, 2009

Survey finds preponderance of service companies
MAJORITY of privately held businesses in the country conduct relatively shorter planning periods compared with most firms around the world, according to an international business report.

In a statement, Punongbayan & Araullo said the Grant Thornton International Business Report 2009 showed that 55 percent of Filipino companies have a planning cycle of one year or less.

The report noted that 49 percent of privately held businesses polled globally carry out more than one year up to three years of planning. In China, 44 percent of respondents plan for more than three years.

Punongbayan & Araullo, the local partner of Grant Thornton, said that most privately held businesses in the Philippines belong to the services sector, which entails shorter and speedier planning cycles so that firms could immediately tweak operations to catch up with fast-changing trends.

In China’s case, meanwhile, most companies are in the manufacturing sector, which requires longer planning periods.

The same report showed that to boost profitability, 23 percent of privately held businesses in the country mostly conduct a productivity review in-house, while 21-percent outsource the same.

“These two efforts are both closely related to efficiency and cost reduction. With a productivity review, companies can revisit their processes and supply chains, address inefficiencies, and emerge with an operating procedure that gives them more bang for their buck, so to speak. This may involve outsourcing certain functions, which is what an increasing number of businesses in more advanced markets are doing,” Greg Navarro, Punongbayan & Araullo CEO and managing partner, said.

The same report showed that 19 percent of privately held businesses in the Philippines usually employ product innovation, 14 percent engage in pricing strategy, while seven percent undertake cost-cutting.

Twenty percent of respondents said product innovation is the top initiative to increase profits, followed closely by cost-cutting. –Ben Arnold O. de Vera, Reporter, Manila Times

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