how to run a business in the times of uncertainty...grow ourselves, to find ways of accepting...
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www.future-processing.com
How to run a business in the times of uncertainty?
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AWARDS
PA RT N E R S H I P S A N D M E M B E R S H I P S
and many more...
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Doing business when there is so much uncertainty in the environ-ment creates additional challenges that are not always welcome and can create disruption from the value-generating parts of the business. Parts of me would strongly prefer to operate in an environment which is more stable and less impactful – this would allow us to focus on clients and developing the business to make it more relevant.
On the other hand, the world – and life – are not perfect and that’s what makes them both more interesting. They give us reasons to grow ourselves, to find ways of accepting various challenges and ways to overcome them.
I believe that an approach worth considering to help us cope is to build and cultivate a strong network of trustworthy business partners. People with whom one can navigate together through uncertain times, and maybe even find inspiration and opportunities among them.
Michał Sztanga Managing Director, Future Processing
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British-Polish Chamber of Commerce ul. Zielna 37 00-108 WarszawaPoland
Since 1992, the British Polish Chamber of Commerce has actively supported the growth of business relations between Poland and the United Kingdom. Today, we bring together almost 300 companies of different sizes, across all sectors of the economy, based in Poland and the UK. Our activities in the UK focus on dialogue with potential inve-stors interested in locating operations in Poland, as well as promoting UK best practice to share with Polish businesses and public sector.
Operating from Warsaw and Wrocław, we provide companies with quality networking opportunities; we initiate discussions on various topics relevant to businesses; we follow the latest policy and legislative changes relevant to our members’ interests. We organise business breakfasts, mixers, seminars, study tours and conferences for our members and their clients.
As a founding member of the International Group of Chambers of Commerce in Poland, we engage with the Polish government, ministries, agencies and regulators, to ensure that our members’ voices are heard where it matters most. In particular, we want to see Poland’s business environment as a level playing field for all business, regardless of where they are from.
BPCC events offer members the chance to raise their profile through focused content-marketing, being able to demonstrate their expertise around various policy areas.
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The programme of the Chamber is always based aro-und the business need of our members, identified during the course of regular discussions. All companies of British origin, those trading with the UK and those inspired by the British way of doing business are invited to join us and help create the BPCC agenda.
As of the time of writing, uncertainty continues to be the watchword as far as prospects for the UK economy go. Brexit has happened – the UK is out of the EU institutions. An uneasy transition period has begun while detailed negotiations in around 800 different areas takes place. What will happen when that period comes to an end on 31 December 2020? Will there be a hard Brexit, with the UK and EU failing to reach agreement and falling back on doing trade under WTO rules? Or a free-trade agreement and political accord
with the EU be reached in time? Brexit has happened, the question for business now is – how will the two sides walk away from one another?
We don’t know. What we do know is that a crash-out Brexit will lead to dislocations in the UK’s external supply chain – food, medicines and other products vital to the smooth running of a modern nation. The British government is taking steps to identify and miti-gate disruption risks, but there is still much that can go wrong.
From Poland’s point of view, a crash-out scenario would also be economically painful. The UK is Poland’s third-largest export market (after Germany and Czechia), with automotive and food being the two largest categories of goods sold to the UK. Both rely on just-in-time delivery that would be jeopardised by border controls. Poland is also a major player in UK logistics, with 23% of all trucks entering the UK from the EU being Polish-owned and operated. The loss of the ability to perform cabotage – acting as
Burns Night 2019, Hotel Bristol, Warsaw
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a third-party carrier within the UK and between the UK and other EU members – is likely to mean that many Polish logistics firms would pull out of the UK market. New red tape in the form of EORI numbers, VAT refunds, country-of-origin certification and car-nets will discourage less-determined Polish exporters considering doing business with the UK. From the UK’s point of view, the essential problem facing its economy is that it doesn’t manufacture enough. Manufacturing industry represents only 9% of the value added to the UK economy, compared to Poland’s 18% or Germany’s 20% (World Bank, 2018). This means the UK is con-demned to a massive trade deficit in goods, which it can only (partially) plug with a massive (but not quite as large) trade surplus in services. The problem lies in the fact that the UK’s largest market for services has been the EU. The threat of losing the ‘passporting rights’ that allow UK financial-service providers to operate in continental Europe on the same basis as they do in the UK prompted most of the larger players to set up new, parallel, structures within EU jurisdictions, subject to continental regulators, so they can continue doing
business as before. This was accomplished in most cases before the first Brexit deadline of 29 March 2019. The economic implications of this shift won’t be noticed until October 2020, when the full trade data figures (in goods and services) from 2019 are released.
Brexit is currently only one – albeit the biggest – uncertainty facing British business. The wider world is becoming a less certain place. The potential of a full-scale trade war between China and the USA is particularly unsettling. As markets close themselves
Meeting of members with the Scottish Trade Minister Ivane McKee
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off from free trade, those that remain become more fiercely competitive. These global pressures, coupled with the stress of Brexit, means that strategic planning for British business is more fraught than it has been for decades. Some firms, fearing the loss of their biggest clients and customers, are moving to the continent. Management has to appear optimistic to the outside world, but how are they really feeling?
A major risk for the UK and Polish economies is a sud-den devaluation of the pound, which may happen if the markets believe that a free-trade agreement with the EU can’t be reached in time. This will hit the margins of Polish exporters while making UK imports more expensive.
If there is one sector of business that looks to remain untouched by Brexit, it is IT. The global economy is galloping at full tilt towards AI-driven businesses, with several revolutionary technologies becoming main-stream at the same time – augmented reality/virtual reality (AR/VR), the Internet of Things (IoT), distributed ledger technology (DLT or blockchain), cloud computing and of course, machine learning/artificial intelligence. Companies that fail to move several rungs up the tech-nology ladder will lose competitiveness and risk falling out of the market.
The UK, like many advanced economies, faces an acute shortage of IT workers, in particular in coding and networks. Here, Poland is stepping up to the challenge. With many firms across Western Europe and North America outsourcing increasingly sophisticated tech processes, the Polish tech sector is proving capable of taking on new business and delivering outstanding results. Despite falling demographics, Poland has man-aged to increase the number of tech graduates leaving its universities in recent years, and is also attracting top tech talent from Ukraine, Belarus and even India.
Real Estate & Construction breakfast, Hotel Westin, Warsaw
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For British firms worried about they will be able to cope with IT issues post Brexit, where they will be able to find workers – the answer seems simple – Poland will remain an outstanding partner to whom outsourcing innovative tech projects will continue to make sense. Finding the right partner in Poland will
require care; a good place to start is one that has a long and accomplished track record of working for UK firms and understands the cultural nuances of cross-border outsourcing.
There will not be any tariffs on zeros and ones crossing borders; Polish IT exports to the UK still have a great future despite Brexit.
Michael Dembinski, the BPCC’s chief advisor, was born in the UK and studied at Warwick University and The City University, London. He worked at the Confedera-tion of British Industry from 1981 to 1997, for four years as an information officer, then as editor and, for nine years, as managing editor of the business monthly, CBI News. Michael moved to Poland with his young family in 1997 and since 2002 has worked with the British Polish Chamber of Commerce after five years working in publishing for CenterTel (now Orange), PTK (now UPC Polska) and Trader.com (now part of Agora S.A.).
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As Benjamin Franklin said, “There are only two things certain in life: death and taxes”. Uncertainty and risks are inseparable part of each business activity. These are not identical phenomena though. A risk is a func-tion of uncertainty, and uncertainty influences a deci-sion maker’s way of conduct by risks the uncertainty derives from. You can insure (yourself?) against the majority of risks. However, there is no insurance against uncertainty.
In the globalised economy, the level of uncertainty increases exponentially, which results in the growth of the amplitude of possible (positive and negative) devi-ations from the planned effects of a project. Therefore, identifying the determinants of such deviations, and then reducing or eliminating them, have become the objectives of any effective business activity. Sources of increasing uncertainty, and consequently of risks, may be located within the organisation or in the envi-ronment in which it operates.
The World Economic Forum diagnoses macroeco-nomic risks in terms of the likelihood of occurrence and the significance of impact on the world’s econ-omy. The January 2019 report highlights the ten most significant risks include:
How to run a business in the times of uncertainty?
Rafał Żelazny, Ph.D., senior controlling specialist at Future Processing Ltd. Business consultant and public administration adviser, researcher, university lecturer, vice chairman at Tychy City Council. Research inter-ests: knowledge-based economy, information society, economics of information and innovation. Author of scientific publications, development strate-gies and expert reports.
Full list of publications and other activities available at www.rzelazny.pl
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As you see, taking into account both criteria in total, risks that must be considered in the first place are: failure of climate-change mitigation and adaptation, extreme weather events, natural disasters, cyber-attacks, man-made environmental disasters, biodiversity loss and ecosystem collapse, water crises. In short, most risks relate to the natural environment and only one to an IT-related technological area.
Considering risks of highest concern for doing busi-ness, the chart on the next page presents results for Poland and the UK in 2019.
Source: The Global Risks Report 2019, World Eco-nomic Forum, p. 6; http://www3.weforum.org/docs/WEF_Global_Risks_Report_2019.pdf
Extreme weather events
Failure of climate-change mitigation and adaptation
Natural disasters
Data fraud or theft
Cyber-attacks
Man-made environmental disasters
Large-scale involuntary migration
Biodiversity loss and ecosystem collapse
Water crises
Asset bubbles in a major economy
Top 10 risks in terms of
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Weapons of mass destruction
Failure of climate-change mitigation and adaptation
Extreme weather events
Water crises
Natural disasters
Biodiversity loss and ecosystem collapse
Cyber-attacks
Critical information infrastructure breakdown
Man-made environmental disasters
Spread of infectious diseases
Likelihood
Categories
Top 10 risks in terms of
Impact
Economic Environmental Geopolitical Societal Technological
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Categories
Economic
Environmental
Economy score
Global average score
Geopolitical
Societal
Technological
Cyber-attacks
Failure of national governance
Asset bubble
Fiscal crises
Failure of financial mechanism or insititution
Terrorist attacks
Failure of reginal or global governance
Unemployment or underemployment
Data fraud or theft
Profound social instability
Energy price shock
Failure of critical infrastructure
Large-scale involunatry migration
Critical information infrastructure breakdown
Misuse of technologies
Failure of climate-change mitigation and adaptation
Biodiversity loss and ecosystem collapse
Deflation
Extreme weather events
State collapse or crisis
Man-made environmental catastrophes
Food crises
Spread of infectious diseases
Failure of urban planning
Unmanageable inflation
Illicit trade
Natural catastrophes
Interstate conflict
Water crises
Weapons of mass destruction
32.1
30.4
28.6
26.8
25.0
25.0
25.0
19.6
19.6
16.1
12.5
12.5
12.5
12.5
10.7
8.9
7.1
7.1
5.4
5.4
5.4
5.4
5.4
3.6
3.6
3.6
3.6
3.6
3.6
3.6
Risk Share
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U N I T E D K I N G D O M
Interstate conflict
Cyber-attacks
Failure of national governance
Fiscal crises
State collapse or crisis
Data fraud or theft
Failure of reginal or global governance
Large-scale involunatry migration
Failure of financial mechanism or insititution
Asset bubble
Terrorist attacks
Extreme weather events
Energy price shock
Profound social instability
Natural catastrophes
Unemployment or underemployment
Unmanageable inflation
Critical information infrastructure breakdown
Illicit trade
Misuse of technologies
Biodiversity loss and ecosystem collapse
Weapons of mass destruction
Water crises
Man-made environmental catastrophes
Spread of infectious diseases
Failure of critial infrastructure
Failure of climate-change mitigation and adaptation
Failure of urban planning
Food crises
Deflation
44.4
38.5
38.0
35.6
31.7
26.8
26.8
26.8
24.9
24.4
19.0
17.1
15.6
13.7
11.7
11.2
9.3
8.3
6.8
6.8
6.3
5.4
4.4
4.4
3.9
3.4
3.4
1.0
1.0
0.0
Categories
Economic
Economy score
Global average score
Geopolitical
Environmental
Societal
Technological
Risk Share
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P O L A N D
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Among the top three major risks for the UK, there are cyber-attacks, failure of national governance, and a potential asset bubble.
To diagnose the perception of uncertainty and risks among economic operators in the British market more precisely, Future Processing (FP) prepared a ques-tionnaire on selected dimensions of uncertainty in the opinion of its business partners. The electronic version of the questionnaire was sent to Future Pro-cessing’s clients in the UK. The most important results are presented on next pages.
Source: The Global Risks Report 2019, World
Economic Forum; http://reports.weforum.org/
global-risks-2019/survey-results/global-risks-of-high-
est-concern-for-doing-business-2019/#country
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TO THE QUESTION:
What are your forecasts regarding the company’s financial condi-tion in the perspective of the next 6 months?
A half of respondents answered: “it’s difficult to say”,
others answered either “it will definitely improve” or “improve”. None of companies answered “Deteriorate” and „It will definitely deteriorate”.
TO THE QUESTION:
Identify the most important factors within the organization that influence the assessment of your company’s situation in the per-spective of 6 months.
The respondents indicated the following factors (in descending order): the need to optimize the organizational structure, financial liquidity, non-adaptation of the offer to the needs of the market.
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TO THE QUESTION:
Identify the most important factors outside the organisation that influence the assessment of your company’s situation in the perspective of the next 6 months:
rising exchange rate risk,
Brexit uncertainty,
labour costs,
legislation directly affecting your company/industry (e.g. digital services tax, GDPR),
technological distance to products and services of competing companies in the EU.
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TO THE QUESTION:
What actions are you taking or are you going to take advantage of your strengths or external opportunities? And what actions do you undertake or intend to take to limit or eliminate the indicated threats and overcome your own weaknesses?
Investing in technology, being innovative and customer edu-cation campaign to buy the right product. Creating products that customers need/want.
Structural and organisational changes.
Transformation of services.
Streamline the decision making process and utilise resources well.
Look at reducing cost of customer onboarding. Focus on service divisions that are very costly.
Difficulty recruiting the right people.
Consider secondly resource provider, limit overheads.
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Taking into account the outcome of the questionnaire and the phenomena taking place in the political, economic, social, technological, environmental and legal surroundings, it seems that the following issues should be discussed:
Significance of the institutional environment for doing business, including institutions which are widely perceived as formal (e.g. legal standards, contracts), and, more impor-tantly, as informal (e.g. trust, habits, informal principles of cooperation). One of the key resources of companies in the conditions of high uncertainty is trust in busi-ness. This directly immeasurable value will enable us to reduce negative consequences of the uncertainty in the circumstances where it is difficult to maintain predictable business relations and assess such relations solely using hard financial ratios.
The trust is measured, among others, with a trust index (2019 Edelman Trust Barometer), which is calculated for non-govern-ment organisations, business, government sector, and media. The outcome for business in 2019 is presented in the follow-ing chart. The UK is the market with prevailing uncertainty in business, although the outcome improved in comparison with 2018 by 4%.
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Source: 2019 Edelman Trust Barom-ete Global Report, p. 40; https://www.edelman.comsites/g/files/aatuss191/files/2019-03/2019_Edel-man_Trust_Barometer_Global_Report.pdf?utm_source=website&utm_medi-um=global_report&utm_campaign=down-loads
T R U S T I N B U S I N E S S I N C R E A S E S I N 2 1 O F 2 6 M A R K E T S
Trust
Y-to-Y Change
Neutral Distrust
Distrusted in 10 markets
Glo
bal 2
6
Russ
ia
S.Ko
rea
Turk
ey
Irel
and
Japa
n
Spai
n
Hon
g Ko
ng
Ger
man
y
U.K
.
Arge
ntin
a
Fran
ce
Aust
ralia
Italy
U.S
.
Cana
da
Braz
il
S. A
fric
a
Sing
apor
e
The
Net
herl
ands
Mal
aysi
a
Colo
mbi
a
Mex
ico
UAE
Indi
a
Indo
nesi
a
Chin
a
56 34 39 43 44 44 44 45 47 47 49 50 52 53 54 56 58 58 60 60 61 65 71 74 77 79 80
-7 +3 +3 +3+3 -3 +4 +4 +4 0+2 +5 +5+7 +7 -1 +6
0- +
+6 +6+7 +1 +1+1 +1 +1-5 +9
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TO THE QUESTION:
The question used in the Edelman Trust Barometer Global Report was: Please indicate how much you trust that insti-tution to do what is right using a nine-point scale where one means that you “do not trust them at all” and nine means that you “trust them a great deal.” 9-point scale; top 4 box, trust. General population, 26-market average.
Systematic and holistic monitoring of risks deriving from the increasing uncertainty of the environment. It is recom-mended to review environmental factors (e.g. in accordance with the PESTEL methodology) and assess the likelihood and direction of the impact of the identified factors on the defined areas of an organisation in order to establish a kind of a system of early warning about potential con-sequences of the increasing uncertainty.
At present, Brexit is one of the most popular risks referred to by companies in the British market and markets cooperating with the UK. Surveys conducted in the UK confirm that this is one of the major sources of uncertainty for the British business.
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Source: Brexit Is Already Affecting UK Businesses — Here’s How, Harvard Business Review, March 2019; https://hbrorg/2019/03brexit-is-already-affecting-uk-businesses-heres-how
B U S I N E S S U N C E RTA I N T Y O V E R B R E X I T I S I N C R E A S I N GMore than 50% of executives surveyed in the UK now say it’s one of their top three sources of uncertainty.
The share of firms responding that Brexit was one of their top three drivers of uncertainty rose from 36% in August 2016 to 54% in the period between November 2018 and January 2019, with the proportion who thought that Brexit was their top current source of uncertainty increasing from 9% to 23%.
Aug.-Sept.2016
0
25
50
75
100
Feb.-Apr.2017
% o
f exe
cutiv
es s
urve
yed
Aug.-Oct.2017
Feb.-Apr.2018
Aug.-Oct.2018
Nov.-Jan.2019
LegendTop source of uncertainty2nd or 3rd sourceOne of many sourcesNot important
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Source: Brexit Is Already Affecting UK Busi-nesses — Here’s How, Harvard Business Review, March 2019; https://hbr.org/2019/03/brexit-is-already-affecting-uk-businesses-heres-how
E X P E C T E D I M PA C T O F B R E X I T O N U K B U S I N E S S E S
The following graph presents the areas where the impact of Brexit is the greatest in the opinion of British companies.
UK business executives foresee lower sales and exports and rising costs.
0-1-2-3-4
Expected impact (%)
5 61 2 43
Sales
Exports
Unit costs
Labor costs
Financing costs
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H O W W I L L B R E X I T I N F L U E N C E Y O U R B U S I N E S S ?
In turn, surveys conducted in Poland reflect the problem of Brexit from the point of view of foreign investors operating in the Polish market. Detailed data is presented in the following table: Source: https://ahk.pl/fileadmin/AHK_Polen/
user_upload/AHK_Ankieta_koniunk-turalna_2019.pdf
Certainlyyes
22,3%
5,5%
5,5%
5%
6,7%
9,9%
10,1%
9%
10%
5,5%
2,9%
6,5%
0,5%
No impact
Decrease in revenues
Decrease in export to UK
Decrease in orders from UK
Increase in costs, including in particular:
transport costs
customs duties
costs of certificates, permissions
Complication in supply chain
Problems with availability of workers
Difficulty in finding business partners
Decrease in investments made by businesses in UK
Withdrawal of businesses from UK
20,8%
14%
8,9%
12,9%
15,4%
17,3%
18,2%
18,5%
23,5%
8%
12,9%
13,9%
6,4%
Rather yes Rather no Probably noI do not have
an opinion
18,3%
27%
21,9%
19,8%
25,6%
22,3%
17,7%
19,5%
18,5%
34,3%
31,7%
17,9%
20,8%
24,3%
32%
34,8%
34,6%
28,7%
26,7%
27,8%
27,5%
26,5%
31,3%
32,7%
26,9%
31,7%
14,3%
21,5%
28,9%
27,7%
23,6%
23,8%
26,2%
25,5%
21,5%
20,9%
19,8%
34,8%
40,6%
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The implementation of solutions that will distrib-ute risks among all counterparties, so that the moment a risk occurs, losses incurred by one counterparty do not constitute gains for the other (a kind of a game where the sum is zero), which may in consequence result, at the first stage, in unilateral problems for the counterparty to which all risks have been transferred or which has taken such risks over, or even in the termination of cooperation. For example, currencyexchange risk between counterparties may be limited by the use of relevant contract regulations (e.g. index-ation upon the change of an exchange rate by the defined %, the breakdown of payments into two currencies at the defined proportion, etc.).
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Who we areA B O U T U S
We are software develop-ment experts who leverage technology and ask the right questions to bring you tan-gible results in the form of reliable, high quality, sustain-able software that is delivered on time, right first time.
We build long-lasting part-nerships through honesty, transparency and open com-munication. We are trusted with our clients’ business and technology problems, delight-ing them with our talented, agile and adaptable team.
Working with us is like hav-ing a partner next door. Our can-do attitude, positive atmosphere and energetic approach create a unique cul-ture that fosters open-mind-edness and drive to succeed.
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From the very beginning of Future Processing, we wanted it to be the place with happy, integrated and motivated teams, able to work together and share knowledge on a daily basis.
That is why, we decided to build our own technological campus called FPark, which is not just an office space. It is a place we designed to meet the expectations of our team.
Great People = Great SoftwareO U R T E A M & V A L U E S
Apart from comfortable offices and conference rooms, it houses a library, a kindergarten, a restaurant, a spa and a fitness club, which makes coming to work a real pleasure.
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This approach stems from our belief that it is the people, enthusiastic about their work, who continually drive our company forward and are responsible for our clients’ success.
You’re always invited to visit us here in Gliwice, meet our team and experience the atmosphere for yourself.
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Over the last 20 years, we have evolved our unique approach to delivering the best software for our clients. We call this The Future Processing Way.
The Future Processing Way is a combination of methods, tools and behav-iours which helps our clients achieve great results through our partnership. It describes what you as a client can expect from us in terms of the way we work.
Technical Expertise
Our 20 years’ experience means technical expertise that translates into competi-tive advantage for your busi-ness delivered fast.
Predictable and high-quality delivery
Focus on predictability and quality of delivery gives you peace of mind allowing you to make commitments to your stakeholders and take more dynamic business decisions.
How we deliverTHE FUTURE PROCESSING WAY
Trustworthy partnership
An approach based on mutual trust, is a way of minimising risks while maximising oppor-tunities and achieving tangi-ble results from projects we run together.
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Operational agility
We allow you to scale and flex as your business require-ments change. Our goal is to adjust to your business, not the other way around.
Strong work ethic
We value honesty, integrity and fairness – peace of mind, so that you feel safe and con-fident about your project.
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We maintain partnership relations with our clients - over 65% of revenue comes from clients who have worked with us for over 3 years and our Net Promoter Score for 2019 is 63% (-100 to +100) - a result generally deemed excellent.
*www.delighted.com/nps-benchmarks
Net Promoter Score We are in the 100th percentile of the software industry*
Net Promoter ScoreABOUT US
LOW AVERAGE
63HIGH
28 41 70
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