Major Swing Factors in Corporate Management

The ongoing crisis in the eurozone, currency volatility, and a presidential poll are considered as major swing factors in corporate management for next year, market experts said Wednesday.

Geopolitical risks, stemming from the death of North Korean leader Kim Jong-il, recently increased, but local companies do not view the communist state-related events as major deciding factors for their management strategies, according to experts.

“The eurozone crisis and foreign exchange rates could directly affect corporate profitability, and local firms should pay keen attention to economic factors rather than geopolitical risks,” said Kim Yun-ki, a researcher at Daishin Economic Research Institute.

Experts said it is unclear how things in the communist state will unfold. “Who knows what will happen in the North in the future? Uncontrollable variables are put to the sidelines,” said Kim Hyung-ju, a researcher at LG Economic Research Institute.

Rather, local companies are increasingly concerned about Europe and currency rates.

The European region is one of key export markets for local companies such as Samsung Electronics Co., LG Electronics Co., and Hyundai Motor Co.

Europe is our biggest export market. It would be difficult to generate more profits next year as long as the region’s economy is struggling to recover,” an official at Samsung Electronics said.

A volatile currency rate could pose risks to local companies as the weakness of the Korean won to the U.S. dollar increases financial burdens on foreign debts and the costs of imported goods.

“A weak currency rate could usually help boost overseas sales by exporters, but the problem is the volatility, which could increase uncertainty,” said Bae Sang-keun, an official at Federation of Korean Industries.

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