Project "Business Tendency Survey of Service Sector in Ukraine" is a quarterly survey of enterprises working in service sector, in particular the telecommunication industry, PR, software development, and banking.
The 8th wave of the survey was conducted in June 2004.
Finally the main findings of this wave of the survey of the Ukrainian banks are the following:
In the second quarter of 2004 business conditions of the banks' sector were generally favorable. It was recorded a continuation of the demand increase on banks' services.
Worsening of majority of operational indicators (operating profit, fee and commission income for inter-bank and clients' transactions, net trading income, etc.) and expected continuation of the trend in Q2-Q3 2004 are alarming. However, managers expect this tendency to cease in the second half of 2004.
In Q2 2004 the self-estimates of banks' competitive position slightly worsened. The worsening of the estimates was more considerable on the market for private clients.
Assessment of the overall economic conditions has improved but during the next 6 months they are expected to deteriorate again.
Regulatory burden, high competition and tax burden are the most significant impediments to the business development in the banking sector.
In the 2nd quarter of 2004 managers' assessments and expectations regarding majority of operating indicators were positive but worse than in the previous periods indicating downward tendency of business activities in the sector.
Deteriorating expectations regarding operating indicators of the enterprises during the next 6 months and enterprises' plans regarding productive innovations during the next 12 months signify that the sector growth might slow down in the medium term while macroeconomic conditions will not considerably change.
Expectations regarding operating indicator for the next 3-4 month signify that enterprises plan to try new segments of the market, attract new customers; and in such a way will try to resolve the demand problem they stick to during the last 6 months.
Against background of rising competitive pressure the enterprises continue the policy of price reduction.
Searching of skilled employees continues to be complicated; recruitment of unskilled workers also became more complicated.
Top of the barriers to business development is hold by high competition, regulatory burden and lack of financial and human capital.
In the 2nd quarter of 2004 managers' assessments and expectations regarding majority of operating indicators were positive indicating growth in the sector.
There was registered further increase in demand in the sector. Enterprises received new orders the major source of which was demand from the domestic clients.
The self-assessment of the enterprises' competitive positions has improved.
During the next 3-4 months managers expect the positive tendencies to be continued. It is forecasted an increase in the activity of domestic clients.
Investment plans of the enterprises for the next 12 months are positive. Unlike in the previous periods, enterprises direct their attention to investments into premises.
Prices and tariffs are expected to grow up further.
It is alarming that the importance of the access to credits and high credit interest rate as a barriers to business development has increased considerably this quarter. They can be considered as major risks to sustainable development of the sector.
About the project
Our Center is aiming to support and develop Business Tendency Surveys in Ukraine. The project "Business Tendency Survey of Service Sector in Ukraine" is one of our first steps in this direction.
support growth and functioning of market economy in Ukraine through creation of market institution and facilitation of communication between the market players;
provide researchers with an opportunity to study reaction of firms in service sector to changes in economic policy in Ukraine;
help our clients from the government to find out expectations of Ukrainian business about future economic development of the county;
create an additional source of information for businessmen that allows to estimate market tendencies;
supplement existing statistics with quality information that helps to study dynamics of business cycles, picks and times of change in tendencies, which can be used to forecast changes in business environment.
The first stage of the project, "Introduction of New Business Tendency Surveys in the Ukrainian Service Sector" was implemented jointly with Swiss Institute for Business Cycle Research of the Federal Institute of Technology (KOF/ETH) in Zurich. The project operated within the framework of Scientific Cooperation between Eastern Europe and Switzerland (SCOPE 2000-2003) and was partially financed by the Swiss Agency for Development and Cooperation (SDC) of the Ministry of Foreign Affairs of Switzerland since October 2000. The result of this stage of the project was adaptation of the international standards for business tendency surveys in service sector to the reality of Ukraine; development of questionnaires and methodology of the survey; and pilot surveys in banking and telecommunication sectors. Currently the project is at it second stage. Starting last quarter of 2003, we conduct survey on the whole sample, and publish an outlook of the survey results for banking and telecommunication sectors. Our goal is to extend the survey to cover other enterprises of the service sector in the country.
Where did the necessity of this survey come from?
Traditional quantitative statistics do not answer the questions about the businesses' assessment of changes in economic environment. However, for proper tactical and strategic planning, the business that works under constant pressure of competition has to have information about tendencies and expectations in their market segment. Therefore, in order to get a comprehensive assessment of environment in a particular sector of economy, quantitative statistics has to be supplemented by qualitative information. Important sources of such qualitative information are Business Tendency Surveys. The methodology for the Business Tendency Surveys was developed and introduced by IFO institute, Munich, Germany. Such surveys became popular in the world, and are important instruments for tracking changes in business environment and identification of opinions of private businessmen.
To Our Respondents
We are grateful for your participation in the Business Tendency Survey in Service Sector that is conducted by Center for Social and Economic Research CASE Ukraine. Thank you that you found the time to provide answers to our questionnaire. Your answers are extremely important for the future development of the project and the methodology, and for the quality of future leading indicators. If you have questions or suggestions, please do not hesitate to contact us by mail or send us a message to: firstname.lastname@example.org. Dear potential respondents! If you are interested to take part in our survey, please contact us by the same e-mail address: email@example.com. We also hope that the answers to the frequently asked questions provided here will help you to make a decision. A word of caution: although we provide information about the survey, and answer question in English, the survey is targeting enterprises working in Ukraine, and is conducted in Ukrainian only.
Answers to the Frequently Asked Questions
What are the different types of Tendency Surveys?
The Tendency Surveys can be separated into two categories. First are the surveys that are conducted to identify some specific changes in the economy. Such surveys are conducted on the on-demand bases and are irregular. The second are the surveys that are conducted on regular bases (mostly one a quarter). The purpose of such surveys is to identify tendencies and possible changes in the business environment in a short run. This is the type of survey we are asking you to participate.
Who are participants of regular Tendency Surveys?
These surveys target consumers or top managers of enterprises in different sectors of economy, as well as "qualified experts". A survey records an opinion of these people with respect to current situation, the changes in the environment during particular period of time, and their expectations during the next time period.
What is the use of the results of Tendency Surveys?
Such studies are very useful as a tool to track the business cycles and other periodic changes in business environment, and changes in business opinions. The data collected during a survey, can be used as leading indicators to forecast future changes in the economy. The survey data is most important for identifying picks of business cycle, changes in the direction of growth.
How is the Tendency Survey conducted?
The Business Tendency Survey is conducted by mail. The main instrument of the survey is questionnaire that is simple and does not require extensive work from the respondent. The questionnaire has close-ended questions, and the respondent just has to choose an answer that fits him the best. The questions do not require any quantitative data, but require only quantitative assessment of the situation (an opinion). The questions are asked in the way similar to "how", not "how much". Therefore, a respondent has to indicate an increase or decrease of a certain indicator during some period of time, and what are his/her expectations about the changes in the future period.
Who is conducting the Business Tendency Survey?
Center for Social and Economic Research CASE Ukraine has a team of experts who are specialists in the tendency surveys. In addition, we are getting an advice and expertise from leading international and Ukrainian experts to prepare analysis based on the results of the survey.
What is the process of selection of enterprises into the sample of the Survey?
Enterprises were randomly selected from the roster of registered enterprises in the sector, obtained from the Committee for Statistics of Ukraine. In some sub-sectors, like banking, the number of enterprises is limited, and all enterprises were included in the sample.
Who may have access to the data, submitted by each enterprise?
The answers by the top management of the enterprise are strictly confidential. They are not available to any government or non-government institution. After entering the answers in the computer database (that DOES NOT contain names of enterprises or respondents), all individual responses are destroyed.
What happens with completed questionnaire?
After receiving your completed questionnaire, we enter the answers in a computer database where they are mixed with answers of other respondents. On the bases of answers of all respondents we create a single indicator for every answer. The indicator does not allow tracing back answer of individual respondent. After entering the answers to the database, the paper copy of completed questionnaire is destroyed.
How long does it take to complete questionnaire?
Answering the questionnaire will take about 10 minutes of your time. The questions primarily have three possible answers: "+" for increase in an indicator, "0" if the indicator is unchanged, and "-" for decrease in indicator.
What should I do if at the time of the next round I expect to be on vacation or business trip?
We will be extremely grateful if you ask your deputy to complete questionnaire in this case.
What magnitude of the changes do you define as "increase" or "decrease"?
You have to define yourself if some change is significant enough for your enterprise to consider it a change. The main criterion for us is not a magnitude, but your perception of the change.
Why do we concentrate on banking and telecommunication sector?
For the initial phase of the project we selected sub-sectors of the service sector that are experiencing the most rapid changes and growth. In the future, we are planning to include other sub-sectors into the survey.
How to subscribe
CASE Ukraine sends every new issue of the survey report to our respondents as a paper-based copy free of charge. Everybody else can obtain the report on our web-site, or by e-mail. If you want to receive the survey results regularly, please send your e-mail on the following address: firstname.lastname@example.org. In case you want to unsubscribe, you need just to inform us and your e-mail address will be excluded from the list.
During the period 2000 to 2003 this project was partially supported by Swiss Agency for Development and Cooperation (SDC) of the Ministry of Foreign Affairs of Switzerland (http://www.sdc.admin.ch/). We also would like to thank Swiss Institute for Business Cycle Research of the Federal Institute of Technology (KOF/ETH) in Zurich (http://www.kof.ethz.ch/) for the support of this project.
- Business tendency survey