Part 2:How They Will Do It (Cont'd)

Companies continue to have the same concerns emphasising the serious human resources facing the country. Resignations due to migration and poor output from the education system will continue to be a major drag on the country’s development.

Raising Capital

Respondents were asked to indicate whether they propose to raise capital in 2001 and identify how those funds would be applied

A decreased number of twenty-nine percent (29%) of the respondents indicated that they do not plan to raise capital. In 1999 and 1997 this number was thirty-five percent (35%) and thirty-one percent (31%) respectively.

The remaining seventy-one percent (71%) identified as the main reasons for raising capital the following:

 

  • To embark on capital expenditure/ expansion program – 29%

  • To fund new products/ services – 27%

  • To fund current operations such as working capital – 20%

  • To retool – 18%

  • To fund diversification – 18%

Other reasons identified were to fund an acquisition, joint venture or strategic alliance (13%), to expand into new geographic markets (11%), to re-finance debt (9%) and to return capital to existing owners (2%).

Companies were asked to rank on a scale of one to ten the principal sources of capital they are likely to use in the event that they planned to raise capital in the next twelve months

The source of capital that companies were most likely use was cash flow/operating profit (28%), long term bank debt (16%) and short term bank debt (10%). There was a noticeable decline from 29% to 16% in the number of respondents that opted for long term bank debts as compared to the previous year.

The least favoured options were the issue of shares and employee stock ownership plans.

 

Ram & McRae’s Comments

Even as the Government and the Private Sector Commission advance the concept of a Guyana Stock Exchange, businesses continue to demonstrate a reluctance to dilute control even if spreading the risk and ownership increase the size of the pie.

Companies also need to review their financial structure and how they enlarge and partake in the pie. The lukewarm approach of respondents to the issue of shares is hardly encouraging.

Growth Strategies

Respondents were asked to rank on a scale of one to ten, the growth strategies they are likely to pursue in the next twelve months.

On a weighted basis, thirty-six percent (36%) of the respondents felt that upgrading technology was the number one strategy for growth. Though this was the most popular choice this year the percentage of respondents decreased from sixty-one percent (61%) in the previous year.

Thirty-three percent (33%) identified new products/services development, thirty percent (30%) believed in investing in PR & advertising programmes and twenty-six percent (26%) believed in expanding into new domestic markets and improving their existing products.

Introduction of new products/ services (33%) was favoured over improvement (27%) or diversification (21%) of existing products. Once more respondents preferred to expand into new domestic markets (26%) over expanding into new international markets (19%).

Ram & McRae’s Comments

Responding to the threat of the Millennium Bug in 1999, many businesses invested substantially in their computer systems that not only made them Y2k compliant but also enhanced their technological capabilities and competitive advantages.

Regional & International Trade Competition

Companies were asked about the extent to which their businesses are subject to external competition

Only forty-nine percent (49%) of the respondents this year felt that they were subject to a great deal or fair amount of external competition as compared with sixty-one percent (61%) last year. Fifty-one percent (51%) considered that it had little or no impact on their businesses compared with thirty-seven percent (37%) last year.

Companies were asked about their expectations of external competition of the next twelve months

Twenty-one (21) respondents or forty-seven percent (47%) expect no change in the level of external competition as compared with thirty-eight percent (38%) in the previous year. Eighteen (18) companies or forty percent (40%) anticipate increased competition whilst only one company expected it to decrease. Two companies did not know what competition would be like in the upcoming year.

Ram & McRae’s Comments on Competition

There is decreased perception of the exposure and vulnerability of companies to external competition.

Whilst the response may initially appear surprising, only some companies, such as those in the food and beverage industry can readily identify or define the source of their competition.