What are the biggest issues you face in 2001?
Eric Anstee, Old Mutual: Management of investor relations, risk management/ Turnbull, changes in accounting standards.
John Smith, BBC: Keeping abreast of new technologies and the way competitors react and adapt to these changes will be very important. It will also be important to understand how new technologies can be used internally to streamline business processes.
New ways of working have also meant a move away from traditional company structures, with a much greater emphasis on forming alliances, partnerships and networks. Managing these new relationships requires new skills so training and development will be vital. Training and development will also be important in maintaining the prominence of the traditional accounting qualification.
Martin Turner, 365 Corporation: Battling against overly negative tech sector sentiment and delivering short-term profitability without sacrificing long-term growth.
With the euro reaching all time lows, do you see any future in the currency at all? Do you think the UK should join the single currency?
Anstee: The euro has depreciated alongside other currencies such as the Australian dollar. The UK should only join on the right terms/exchange rate. This has implications for our forex dealing business.
Smith: The euro has had a difficult first two years with a total depreciation of around 25% against the US dollar. In large part this seems to have been due to unanswered questions about its long-term viability, but the US slowdown will enable the euro to consolidate recent gains, and its future is brighter.
The UK should only participate in EMU once the five economic criteria outlined for participation are clearly satisfied and even then only with the support of the electorate.
Turner: Recently, the euro has staged a recovery, against both sterling and the US dollar. I believe that the UK should join the euro, which would lead to significant efficiencies as we expand into European markets.
Do you expect the first signs of recession in 2001? How bad will it be?
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Anstee: The first signs were already evident in 2000, but a soft landing is my prediction.
Smith: There are general signs of a slowdown in the pace of economic growth in many of the world’s main economies. While a continuing slowdown might be expected in 2001 we expect the prudent management of monetary policy within these economies to result in the avoidance of full-scale recession.
Turner: I see an economic downturn, but not a recession. Growth rates over the past few years in the US were not sustainable, and were partly fuelled by excessive stock market valuations (particularly in the tech sector), which have now corrected.
After the beating that dotcoms took this year, what do you see as the future of the new economy?
Anstee: Very positive for some selected parts – the recent shake out was necessary.
Smith: For many of these dotcom business models it was hard to see how revenues and profits would be generated and sustained, and it was only a matter of time before they began to fail and the market woke up to the need to be discriminating – but there’s no shortage of capital for winning ideas.
We are now seeing traditional companies using the new technologies, and this trend will continue. Some research shows that 70% of on-line shoppers wish to purchase from known brands; 23% of households now have digital television; 52% of the population have mobile phones; and 45% of adults use the internet. Whatever happens to the ill-fated 3G phones the arrival of true broadband interactivity on TV is likely to make a real difference to consumer behaviour.
Turner: The beating was due to a realisation that many dotcoms were simply bad businesses. The future of the new economy is bright – technology is changing the world fundamentally, and those companies that exploit this change will enjoy great success.
What advice do you have for fellow FDs for 2001?
Anstee: Be positive.
Smith: My only advice is to make sure you are managing the issues I have outlined.
Turner: Prepare for an economic downturn and accept the fact that the capital markets will look for large, profitable businesses with a proven track record. Tech sector businesses that can’t make a profit will suffer.