The Impact of EU Enlargement PricewaterhouseCoopers Date: 30 April, 2003 Project No Prepared by: G Keaty

2 Introduction

3 Objectives of the Study  PricewaterhouseCoopers commissioned a survey among the major investors in CEE to discover the attitudes to and their preparedness for the enlargement of the EU.  An independent research company, Opinion Window Research International, was commissioned to carry out this study.  The preliminary results of the study were presented at the PwC seminar, 30th April 2003, in Prague.

4 Methodology  Telephone interviews  Number of interviews: 100 major corporations  112 companies were contacted in total  The respondent: The relevant senior executive. Responsible for overseeing his/her company’s EU related issues  The research was based on a list of companies provided by PwC  Interviewing:  15 April - 6 May 2003  Note: All questions were not always answered. The number of answers are indicated for each question. For some questions, more than 1 option was possible.

5 Job function of respondents Base: All companies

6 Industry sector Base: All companies

7 How many of the 10 accession countries do the companies have a presence in? Base: All companies that answered (n=91)

8 Results

9 Will the enlargement of the EU impact your company? Base: All respondents who were contacted (n=112)

10 Preparation process: All companies Base: All companies that replied (n=88) When did your company’s planning for EU enlargement start/ when will it start? 2003 = 63% Extent of the expected impact (scale: 1= no impact, 4=high impact) Extent of the expected impact = 2.6 (scale: 1= no impact, 4=high impact) 2002 = 23%

11 Preparation process: Companies with budgets of 100,000 Euro or more for changing the company structure due to EU enlargement Base: All companies that replied (n=18) When did your company’s planning for EU enlargement start/ when will it start?

12 Preparation process (2 of 2) Implementation of planning process A local or regional approach? Local = 46%, Regional = 38%, Both local and regional = 16% Base: All companies which started/will start planning for EU enlargement and replied (n=100)

13 Planning process: For those companies with a budget of 100,000 Euro or more for changing the company structure due to EU enlargement Implementation of planning process Base: All companies which started/will start planning for EU enlargement and replied (n=19)

14 Preparation process: Will outsourcing i.e. IT support, consultants, etc be required? Base: All companies that replied (n=96)

15 Impact on company structure Will this lead to centralisation or decentralisation of top and middle management? Average impact on top/middle management: 2.8 scale: 1- no impact, 4 - high impact Base: Companies whose structure will be changed (n=16) Will preparation for the impact of EU enlargement require change or adjustment of your company structure? Base: All companies (n=100)

16 Impact on creating job functions in the following areas Scale: 1 – no impact, 4 – high impact Higher impact Lower impact Base: All companies that will be affected by EU enlargement and answered on individual elements

17 Impact on creating job functions: For those companies with a budget of 100,000 Euro or more for changing the company structure due to EU enlargement Scale: 1 – no impact, 4 – high impact Higher impact Lower impact Base: All companies with a budget over 1000,000 Euro that answered (n=19)

18 Trading relationship with EU accession countries: Services, Goods Base: Companies that will be affected by EU enlargement and replied

19 Categories of Services: Percentage of companies trading with and within accession countries Base: Companies that receive or provide services agreements (n=68)

20 Importing/Exporting companies: Probability of company restructuring in the following areas Base: Companies involved in imports and exports (n=72) Scale: 1 –low probability, 4 – high probability Higher probability Lower probability

21 ERP, Accounting and reporting tools (1 of 2) Which Enterprise Resource Planning System does your company use? Base: All companies (n=100)

22 ERP, Accounting and reporting tools (2 of 2): 25 % of companies’ with an ERP system need to radically adjust them to comply with proper processing and international audit systems Base: Companies which need to radically adjust their ERP systems (n=24) Which domains need to be adjusted? Average size of adjustment: 2.4* Average size of adjustment: 2.1* * Scale of adjustment: 1- slight adjustment, 4- substantial adjustment 46% need to adjust both accounting and reporting tools

23 ERP, Accounting and reporting tools: C ompanies with a budget of 100,000 Euro or more for changing the company structure due to EU enlargement Base: Companies which need to radically adjust their ERP systems and have a budget of over 100,00 Euro for adapting to EU enlargement (n=6) Which domains need to be adjusted? Average size of adjustment: 2.5* Average size of adjustment: 2.6* * Scale of adjustment: 1- slight adjustment, 4- substantial adjustment 83% need to adjust both accounting and reporting tools

24 Keeping informed on the issues Base: All companies (n=100)

25 Do you think that EU enlargement will increase the need to evaluate your company structure and decision-making processes? Base: All companies (n=100)

26 Average perceived need for assessment and remedial action in various areas 4 = great need 1 = no need Base: All companies that believe the EU enlargement will increase the need to evaluate the company structure and decision making processes (n=34)

27 Average perceived need for assessment and remedial action in various areas 4 = great need 1 = no need Base: All companies that believe the EU enlargement will increase the need to evaluate the company structure and decision making processes (n=34) and have a budget of over 100,00 Euro for adapting to EU enlargement (n=11)

28 Changing company structure: Costs How much do you expect changes in your company structure to cost? Base: All companies (n=100) Base: All companies which were able to answer(n=100) Do you have a budget for changing the company structure?

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