Safety and Security Equipment and Services in Turkey: A Strategic Reference, 2007
ICON Group International, July 2007, Pages: 213
How to Strategically Evaluate Turkey
Perhaps the most efficient way of evaluating Turkey is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance to safety and security equipment and services are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”).
Framework for Prioritizing Countries
Demand/Market Potential Driven Firm
Relative Accessibility
Accessibility/Supply Averse Firm
In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market - neither a market-driven nor a cost-driven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities (e.g. a Canadian firm may have higher accessibility in Canada than a German firm).
Latent Demand and Accessibility in Turkey
This report provides a detailed overview of factors driving latent demand and accessibility for safety and security equipment and services in Turkey. Latent demand is largely driven by economic fundamentals specific to safety and security equipment and services. This topic is discussed in Chapter 2 using work carried out in Turkey on behalf of American firms and authored by the United States government (typically commercial attachés or similar persons in local offices of the U.S. Department of State). I have included a number of edits to clarify the information provided. Latent demand only represents half of the picture. Chapter 2 also deals with micro-accessibility for safety and security equipment and services in Turkey. I use the term “micro” since the discussion is focused specifically on safety and security equipment and services.
Chapter 3 is also a stand-alone report that I have authored. It covers proxy pro-forma financial indicators of firms operating in Turkey. I use the word “proxy” because the provided figures only cover a “what if” scenario, based on actual operating results for firms in Turkey. The numbers are only indicative of an average firm whose primary activity is in Turkey. It covers a vertical analysis of the maximum likelihood balance sheet, income statement, and financial ratios of firms operating in Turkey. It does so for a particular Standard Industrial Classification (SIC) code. That code covers “security systems services”, as defined in Chapter 3. Again, while “security systems services” does not exactly equate to “safety and security equipment and services”, it nevertheless gives an indicator of how Turkey compares to other countries for a proxy adjacent category along various dimensions.
Chapter 4 deals with macro-accessibility and covers factors that go beyond safety and security equipment and services. A country may at first sight appear to be attractive due to a high latent demand, but it is often less attractive when one considers at the macro level how easy it might be to serve that entire potential and/or general business risks. While accessibility will always vary from one company to another for a given country, the following domains are typically considered when evaluating macro-accessibility in Turkey:
Openness to Trade in Turkey
Openness to Direct Investment in Turkey
Local Marketing and Entry Strategy Alternatives
Local Human Resources
Local Risks
Across these domains, a number of not-so-obvious factors can affect accessibility and risk. These are covered in the Chapter 4, which is a general overview of investment and business conditions in Turkey. Chapter 4 is also presented from the perspective of an American firm, though is equally applicable to most firms entering Turkey. This chapter is also authored by local offices of the U.S. government, as is Chapter 2. Likewise, I have included a number of edits to clarify the provided information as it relates to the general strategic framework mentioned earlier.
1 INTRODUCTION & METHODOLOGY 1
1.1 What Does This Report Cover? 1
1.2 How to Strategically Evaluate Turkey 1
1.3 Latent Demand and Accessibility in Turkey 3
2 SAFETY AND SECURITY EQUIPMENT AND SERVICES IN TURKEY 5
2.1 Latent Demand and Accessibility: Background 5
2.2 Latent Demand: Market Composition 6
2.2.1 Physical Security Services 6
2.2.2 Electronic Security Services 7
2.2.3 Cash in Transfer 8
2.3 Latent Demand: Leading Segments 8
2.4 Accessibility: The Structure of Competition 9
2.4.1 Local Production 9
2.4.2 Prominent U.S. Suppliers 9
2.4.3 Foreign Entrants 10
2.5 Accessibility: Market Entry 10
2.5.1 Import Regulations 10
2.5.2 Standards 11
2.6 Key Contacts 11
2.6.1 Trade Organizations 11
2.6.2 Publications 12
2.6.3 Trade Events 13
3 FINANCIAL INDICATORS: SECURITY SYSTEMS SERVICES 15
3.1 Overview 15
3.1.1 Financial Returns and Gaps in Turkey 16
3.1.2 Labor Productivity Gaps in Turkey 18
3.1.3 Limitations and Extensions 19
3.2 Financial Returns in Turkey: Asset Structure Ratios 20
3.2.1 Overview 20
3.2.2 Assets - Definitions of Terms 20
3.2.3 Asset Structure: Outlook 22
3.2.4 Large Variances: Assets 23
3.2.5 Key Percentiles and Rankings 26
3.3 Financial Returns in Turkey: Liability Structure Ratios 39
3.3.1 Overview 39
3.3.2 Liabilities and Equity - Definitions of Terms 39
3.3.3 Liability Structure: Outlook 41
3.3.4 Large Variances: Liabilities 42
3.3.5 Key Percentiles and Rankings 45
3.4 Financial Returns in Turkey: Income Structure Ratios 58
3.4.1 Overview 58
3.4.2 Income Statements - Definitions of Terms 58
3.4.3 Income Structure: Outlook 60
3.4.4 Large Variances: Income 61
3.4.5 Key Percentiles and Rankings 64
3.5 Financial Returns in Turkey: Profitability Ratios 75
3.5.1 Overview 75
3.5.2 Ratios - Definitions of Terms 75
3.5.3 Ratio Structure: Outlook 77
3.5.4 Large Variances: Ratios 78
3.5.5 Key Percentiles and Rankings 81
3.6 Productivity in Turkey: Asset-Labor Ratios 90
3.6.1 Overview 90
3.6.2 Asset to Labor: Outlook 91
3.6.3 Asset to Labor: International Gaps 92
3.6.4 Key Percentiles and Rankings 95
3.7 Productivity in Turkey: Liability-Labor Ratios 108
3.7.1 Overview 108
3.7.2 Liability to Labor: Outlook 109
3.7.3 Liability and Equity to Labor: International Gaps 110
3.7.4 Key Percentiles and Rankings 113
3.8 Productivity in Turkey: Income-Labor Ratios 126
3.8.1 Overview 126
3.8.2 Income to Labor: Outlook 126
3.8.3 Income to Labor: Gaps 127
3.8.4 Key Percentiles and Rankings 130
4 MACRO-ACCESSIBILITY IN TURKEY 141
4.1 Executive Summary 141
4.2 Economic Fundamentals and Dynamics 141
4.2.1 Dynamic Markets 141
4.2.2 Government Intervention Risks 142
4.2.3 Balance of Payments Issues 142
4.2.4 Infrastructure Development 143
4.3 Political Risks 144
4.3.1 Economic Relationship with the United States 144
4.4 Political Risks 145
4.4.1 The Political System 145
4.5 Marketing Strategies 146
4.5.1 Distribution Channel Options 146
4.5.2 Agents and Distributors 146
4.5.3 Franchising Activities 146
4.5.4 Direct Marketing Options 148
4.5.5 Joint Ventures and Licensing Options 148
4.5.6 Creating a Sales Office 148
4.5.7 Selling Strategies 149
4.5.8 Advertising and Trade Promotion 149
4.5.9 Pricing Issues 150
4.5.10 Selling to the Government 150
4.5.11 Intellectual Property Risks 151
4.5.12 Hiring Local Counsel 152
4.5.13 Performing Due Diligence 152
4.6 Import and Export Regulation Risks 152
4.6.1 Tariffs, Non-Tariff Barriers, and Import Taxes 152
4.6.2 Valuations on Imports 152
4.6.3 Licenses Required for Imports 153
4.6.4 Controls on Exports 153
4.6.5 Documentation Required for Trade 153
4.6.6 Special Documentation 154
4.6.7 Entering Temporary Imports 154
4.6.8 Labeling Issues 155
4.6.9 Restrictions on Imports 155
4.6.10 Local Standards 155
4.6.11 Additional Trade Issues 156
4.6.12 Adherence to Free Trade Agreements 157
4.7 Investment Climate 157
4.7.1 Openness to Foreign Investment 157
4.7.2 Conversion and Transfer Policies 158
4.7.3 Expropriation and Compensation 158
4.7.4 Dispute Settlement 159
4.7.5 Performance Requirements and Incentives 159
4.7.6 Right to Private Ownership and Establishment 160
4.7.7 Intellectual Property Risks 161
4.8 Transparency of the Regulatory System 161
4.8.1 Capital Market Risks 162
4.8.2 Political Violence 163
4.8.3 Corruption 163
4.8.4 Bilateral Investment Agreements 164
4.8.5 OPIC and Other Investment Insurance 164
4.8.6 Labor 164
4.8.7 Free Trade Zones 165
4.8.8 Major Foreign Investments 165
4.9 Trade and Project Financing 165
4.9.1 The Banking System 165
4.9.2 Exchange Control Risks 166
4.9.3 General Financing Availability 166
4.9.4 How to Finance Exports and Methods of Payment 166
4.9.5 Types of Available Export Financing and Insurance 167
4.9.6 Project Financing Availability 167
4.9.7 Types of Projects Receiving Financial Support 167
4.9.8 Regional Financing 168
4.9.9 Small Business Support 168
4.9.10 Defense Offsets 168
4.9.11 Banks with Correspondent U.S. Banking Arrangements 168
4.10 Travel Risks 169
4.10.1 Local Business Practices 169
4.10.2 Travel Issues 169
4.10.3 Infrastructure for Conducting Business 170
4.10.4 Temporary Entry of Goods 172
4.10.5 Pricing Issues 172
4.10.6 Country Data 172
4.11 Key Contacts 173
4.11.1 U.S. Mission Trade-Related Personnel 173
4.11.2 United States Department of State 174
4.11.3 Contacts in Washington D.C 176
4.11.4 U.S.-Based Multipliers 177
4.11.5 Turkish Government Contacts 177
4.11.6 Chambers of Commerce 200
4.11.7 Market Research Firms 201
4.11.8 Major Commercial Banks 201
4.11.9 Exhibition Management Companies 203
5 DISCLAIMERS, WARRANTEES, AND USER AGREEMENT PROVISIONS 204
5.1 Disclaimers & Safe Harbor 204
5.2 Icon Group International, Inc. User Agreement Provisions 205
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