36% of LV manufacturers export more than half of production
36% of Latvian manufacturers are exporting more than half of their production, far ahead of non-manufacturing enterprises in terms of export volumes. In addition, manufacturers are focusing more effectively on increasing sales in foreign markets. On average, manufacturers see this as a business priority 33% more than do business people in other sectors, according to the measure of Latvia’s business vitality, or the NORDEA VITAMETER, carried out by the Nordea Bank and the Stockholm School of Economics in Riga (SSE Riga).
For manufacturers, it is as important to improve efficiency and profits as to strengthen their position in export markets. Manufacturers are less concerned than other companies about their company's survival. However, cost reduction is as important to manufacturers as to everyone else. Business people, particularly manufacturers, also mention the need to improve product or service quality and upgrade technologies among their key priorities.
“The willingness to adapt and change is a clear sign of a company's vitality. In this day and age, when everything can be copied, companies must constantly seek their distinguishing features and be one step ahead with their ideas, innovations, and service. Stiff competitive conditions mean that Latvian entrepreneurs need to be especially active – to increase their productivity, competitiveness, visibility, gain new markets, expand their range of partners, attract capital and the support of potential investors in order to enhance their appeal and make a contribution to the business environment in general. In the future we will have to be able to work even more efficiently” said Jānis Buks, manager of Nordea Bank in Latvia, stressing that Nordea and SSE Riga created the Vitameter not just to carry out regular 'health checks' on Latvian companies, but, most importantly, to provide a prescription – recommendations for increasing business vitality.
Arnis Sauka, Head of Business and Management Department at SSE Riga
Author of the study, Head of the Stockholm School of Economics in Riga Business Department and lecturer Dr. Arnis Sauka also stresses: “The desire to reduce costs and enhance products is a good sign. To date, Latvian companies have not formulated their strategies sufficiently clearly in terms of price leadership and the creation of high added value. Companies follow a middle path, combining relatively high costs and the creation of low value-added products, thereby virtually eliminating any serious opportunity to compete globally.”
The Nordea Vitameter shows that, overall, Latvian manufacturers rate competitiveness higher than do service providers and traders. Manufacturers' competitiveness is mainly based on choosing more successful business strategies. Manufacturers have more regular customers, diversified product ranges; manufacturers also rate their level of innovation 23% higher than do other companies. Manufacturers have demonstrated a greater willingness to take risks and work harder to overtake their competitors.
Manufacturers are also more successful than service providers and traders in the utilisation of communication networks – for competitiveness, where Latvia’s entrepreneurs generally had the poorest indicators. Manufacturers mainly obtained information for product development from customers, suppliers, and competitors. Manufacturers rated the role of business associations, the Investment and Development Agency of Latvia and banks more positively as sources of important information.
“The contacts available to businesses, in other words, their communication network is one of the most effective and cheapest ways to involve the external resources needed to increase competitiveness, so it is pleasing that manufacturers suffer less from the ‘stand-alone farmer’ principle, so typical of Latvian entrepreneurs” commented A. Sauka, adding that “entrepreneurs, including manufacturers, give an undeservedly low rating to the potential of partnering with business laboratories, universities and research institutes.”
Nordea Vitameter presentation and discussion on October 14, 2011
Kopsavilkums diskusijai, 2011.g. oktobris (LV)0.58 MB, pdf
Pētījuma infografikas (LV)0.41 MB, pdf
The Nordea Vitameter is a measure of Latvia’s business vitality, compiled by Nordea Bank and SSE Riga.
The first study on the competitiveness of enterprises was carried out in May and early June of 2011, surveying 591 randomly selected business managers and owners.
Author of the study, Head of SSE Riga Business and Management Department
Dr. Arnis Sauka