THE RETURN TO TURNOVER!
When it comes to performance indicators, turnover is as old as commerce itself… Developments over the years, such as the increase in competition and globalization, have made it necessary to use different criteria in order to assess a company’s performance
n 2015, more than 25 per cent of the Capital500 companies experienced a fall in profits. Indeed, there were significant declines in profitability. Moreover, nearly 17 per cent suffered a decrease in turnover. In addition to companies which have direct contacts with consumers, such as fast-moving consumer goods and retailers, industrial companies also turned to economies of scale. A significant proportion of companies sacrificed some of their profits. Mete Uslukılınç, GFK Turkey General Manager for Consumer Products, explains the reasons which necessitated the shift to turnover as follows:
“It is much more expensive to regain market share than it is to hold onto it,” he says. “One of the important factors that pushes companies to target growth in turnover in times of turbulence is trying to preserve market share. In addition, economies of scale are also important for producers. When combined with effective cost management, a growth in turnover gives them a chance to minimize losses.”
THE FOCUS IS MARKET SHARE
In fact, there have always been discussions in the corporate world about the choice between profits and turnover. Sabancı University Executive Development Department Director Cüneyt Evirgen agrees. He says that companies are continually caught in the dilemma between “turnover or profit”. After noting that those who prefer turnover opt for growth, he adds:
“Large corporates compare profit to a train. It is difficult for a train to start off. It is difficult for it to find a rhythm. But if you stop these companies, then it is difficult to start them again. Turnover means market share. If the market grows then you need to increase your turnover. If the market contracts, then your market share must not decrease. If the market remains the same, then you have to preserve your market share.”
In recent years, Polat Holding has been one of those which has made progress by giving importance to turnover. The company’s CEO Baran Demir says: “When necessary we sacrifice some of our profitability in order not to relinquish our market share and lose our major customers. Increasing turnover means that we protect the size of our market.”
PROFIT MARGIN HAS A MAJOR IMPACT
There are many reasons for the return to a focus on turnover. Associate Professor Dr.