39% OF ARMENIAN PRIVATE COMPANIES PLAN BUSINESS FOR 1-3 YEARS: POLL

/ARKA/
April 16, 2009
YEREVAN

Latest research from the annual Grant Thornton International Business
Report offers new insight about how far into the future privately
held businesses (PHBs) plan.

The most common planning period is 1-3 years, favoured by 49% of PHBs
globally. 39% of Armenian businesses participating in the survey also
have the same planning cycle. Of PHBs following a 1-3 year planning
cycle, the highest proportions were in Denmark (64%), followed by
New Zealand and the United Kingdom (both 60%) and India and Greece
(both 59%).

PHBs in mainland China are the longest term planners with 44%
of businesses planning more than three years ahead, as opposed to
Armenia’s average of 22% for the same period of planning.

Short term planning is favoured by 21% of PHBs globally and is
especially common in Latin America, with 73% of PHBs in Mexico, 71%
in Argentina and 43% in Chile using a planning cycle of less than
12 months. Armenia, with 35% of PHBs adopting this approach, is also
well above the global average of 21%. It is noteworthy that financial
services is the sector where businesses make the longest plans.

Gurgen Hakobyan, Partner at Grant Thornton Amyot, explains, "Our
experience with many of the privately held companies in Armenia shows
that 3 years is the most common planning period. Usually businesses
plan up to 3 years in our country. This is quite justifiable taking
into account the economic instability. The global economic downturn
is also challenging the formal planning and making it more and more
flexible to be able to respond to arising difficulties.

However, having a short-term operational plan does not eliminate the
need for having a long-term strategic plan. The challenges in the
short-term perspective are easier to overcome if the business has
clear vision of its long-term plan."

The International Business Report also reveals that product
innovation is seen as the most successful initiative for boosting
profitability. When 7,200 PHBs were asked to identify the initiative
that helped profitability most, 20% cited innovation followed by cost
cutting (18%) and pricing strategy (13%). These indicators almost
coincide with the responses of Armenian businesses, with the exception
of cost cutting mentioned by only 7% of PHBs.

The Grant Thornton International Business Report is an annual survey
of the views of senior executives in privately held businesses all
over the world.

Launched in 1992 in nine European countries the report now surveys
over 7,200 PHBs in 36 economies providing territory, regional and
global trend data on the economic and commercial issues affecting a
sector often described as the ‘engine’ of the world’s economy. Data
for eight key industry sectors will be available for the first time
in 2009. The res earch is conducted by Experian Business Strategies
Ltd. Grant Thornton International donates US$5 to UNICEF for every
completed IBR questionnaire, a donation of over US$39,000 in 2008.