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Overcoming recession imposes a change in entrepreneurs’ behaviour
English Section Publicat de AG&F 23 Apr 2012 08:00
In economic theory, trust is defined as a positive condition that allows various types of agents participating in the changes implemented within certain capitalist business relations - investors, entrepreneurs, beneficiaries etc. - to operate in optimal conditions, without having to suffer from influence factors - usually exogenous - which may act in various ways, such as: disloyal competition, financial indiscipline, recession, unfavourable legislative framework etc. The respective concept was defined with perfect accuracy by North-American specialists who state that all actions implying the earmarking of available resources - particularly those from the capitals category - must be based on the idea of "reliability". Although at a first glance it looks like a quite easily fulfilled condition, reality shows that contemporary entrepreneurs - particularly those not holding enough experience in terms of market economy operation - are ever less willing to undertake the "risk" of using this resource.
 
The construction sector counts among the most affected sectors from this point of view, sector company managers displaying a reticent attitude and showing suspicion in all the efforts related to their own activity. The research carried out by the market survey institutions shows that this rejection conditions is usually inversely proportional in terms of their manifestation degree to the entrepreneurial culture level, which leads to the facing - particularly by developing economies - of investment blockages, mainly caused by the lack of trust in the business environment, public/ private partners, legislation etc. A relatively objective explanation could consist in the fact that, given the lack of habits specific to the capitalist environment and due to insufficient practice, many managers faced losses or unjustifiably fear such a situation. But, as an economic law of an almost axiomatic value states that there is a direct dependency relation between risk, uncertainty and gain, clearly the grounds of sustainable development cannot be laid without the creation of a responsible and objective trust climate.
The economic crisis has "cleaned" the market, but has not fully cut out existing flaws
More than in other activity sectors, the Romanian insulating joinery manufacture segment has been affected, from the start of the first businesses in the 90’s, by this lack of trust culture. If during the years of business prosperity and incredible boom, peaking with the reaching in 2008, of a total market value of almost EUR 1.2 billion, the respective imperfection was not too important, the demand being high enough to basically annul almost any potential tensions among system manufacturers and/ or suppliers (although there were significant exceptions), after the start of recession, due to the dramatic drop of beneficiaries’ solvency and the reduction of financing provided by banking institutions and investment funds, things changed radically. What came next was quite predictable, some companies being suffocated by the financial pressures generated by oversized credit lines (whose contracting ignored fundamental aspects, such as the use of the production capacities to a minimum share of 70%), others being forced to reorganize, following competition pressures or simply against the background of a complete lack of requests. However, it seems that the elimination of the inconvenience represented by the excessive market atomization, defining the "boom" period, was not enough to generate that necessary level of trust actually representing the fundamental ingredient of a "healthy", or at least functional economy. Subsequently, the analyzed sector is marked by hostile positions - most of the times based on subjective elements - and actions rather targeting the blocking of initiatives. This attitude might by justified by grounds related to the ethnographic structure, but the subject is not pertinent enough, particularly considering the increasingly obvious business internationalization trends, defining the globalization process.
A change of entrepreneurial mind frame is a must
The previously mentioned subject is even more important if we consider that the local insulating joinery segment is defined quite strikingly by a tendency to access export markets, particularly those demand segments which cannot be covered by standardized units, provided by big window producers from countries like Poland. The respective opportunity was noticed in the areas with demand for customized joinery elements, available for more accessible prices than the national offer (considering that even the population from strongly industrialized European countries faced in the last few years a series of obvious reductions of budgets intended for construction or rehabilitation operations). If the hostile attitude to competitors (internal and external) is maintained and lacking the necessary transparency, which represents - in the Western competition environment - an almost obligatory element, it is obvious that the respective outlet will rapidly be exhausted, without allowing the exploitation, in conditions of economic rationality, the available opportunities. All these issues do have solutions, but it takes will to overcome the current habits and implement determined measures for improving the entrepreneurial mentality and the general organizational behaviour. The respective subject was theoretically approached quite comprehensively and exhaustively, but experts agreed on the fact that applying the principles decisively depends on the national specificity and the business culture defining the business environment.
"Secret" information, known by all competitors
The first step towards relaxing and adopting a trust attitude is that of becoming aware of the advantages of having such an attitude. Upon a superficial analysis, randomly comparing benefits and costs, we might reach the conclusion that the company’s so-called "secrets" are not worth being publicized in exchange for presumed image advantage. What are though the "values" so carefully guarded by managers or administrators: turnover, marketing strategies (product, distribution, price and promotion), medium and long term investment intentions, enterprise’s technological endowment, staff data (recruitment method, professional preparation level, wages) etc.? It can be easily proven that all previously mentioned elements represent, to a more or less considerable extent, data which can be revealed without endangering the company’s overall efficiency. Thus, the information on the sales level is already public, on the line ministry’s website, although in Romania information has a certain delay. As for the product strategy, the secret could be kept only until the actual market launch, while aspects related to distribution, price and promotion are public by excellence, since they target entities outside the company. Investment intentions may indeed represent an element related to a company’s "intimacy" and may depend on its subsequent development, but it is just as true that this information may be revealed when the decision is final and there is no element endangering the respective process. However, the strange thing is the hiding of used technology-related data, particularly at a time when the production process is carried out by means of automatic equipment (more or less performant), provided by producers whose offer is equally available for all sector companies. No factory can be equipped with essentially different machines, except perhaps in terms of the accuracy of the processing operations or productivity.
 
Article published in the March/April 2012 issue of the FEREASTRA Magazine. For detailed information click here!
 
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