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International Scientific Conference “Whither Our Economies” November 16-17, 2011
1.
Business Development
Business System Economics and
Management
CO-CHAIRS:
Dr. Dušan Baran
Dr. Jogaila Mačerinskas
Dr. Iveta Šimberova
SECRETARIES:
Laura Aidukien÷
Migl÷ Černikovait÷
6
COMMODITIES MARKET DEVELOPMENT
Dušan Baran
European Polytechnic Institute Ltd. Czech Republic
e-mail [email protected]
Abstract. Commodities, whether food, energy, metals and chairs they are sitting on are real,
tangible things that are part of our everyday lives. All have different characteristics, different supply
and production criteria, demand and other uses. The main commodities traded on major world
exchanges with business volumes significantly exceeding the volume of stock exchanges. In
addition to these exchanges, large producers and consumers also traded increasingly small
investors. This article shows the dynamic of commodities prices and identifies factors influencing
this change. There are a lot of investment opportunities in commodities market both for
conservative investors and investors accepting a high level of risk.
Keywords: Commodities, business, investors, development, markets, precious metals,
agriculture, inflation.
Introduction
Over the last 130 years, humanity has been witness to several growth commodity trends, each
lasting an average of eighteen years, and about the same time, then declined. In the penultimate
commodity boom in the years 1968 - 1982 experienced a surge in commodity prices. Many of the
commodity prices reached their historic highs. But with every boom comes bust and this boom was
no exception. After some 20 years of bear market reached the end of the nineties, global commodity
prices have bottomed. After the Internet bubble burst in 2000, a dramatic increase in demand for
raw materials from emerging markets and insufficient supply, but also to the monetary policy of
central banks, commodity prices began to rise significantly again. Given that the markets were
growing and becoming much more attractive asset for many funds, but also retail investors. By this
time, the commodity markets from the perspective of small investors, the black sheep of the family
investment - small banks serving niche markets, consumers and producers to provide price risk
management.
The growth of interest in commodity markets by retail investors contributed electrification
markets. The revolution in computer technology has changed a method and system of trading,
compared to previous periods of electronic trading platforms for all market participants yielded the
same access to business data, flexibility, the market is, more liquid, efficient, investors will get the
best price, margins are lower, the market disappeared many dealers who retail investor beggaring.
The aim of this article is to analyze recent trends of commodity market. To reach this aim,
prices of commodities (precious metals and agriculture products) are analyzed. Factors influencing
commodities prices are identified. Analysis of recent trends and factors of commodities market
allows predicting price development and identifying investment opportunities.
In this article these methods are applied: analyses, syntheses, comparison, deduction,
induction and graphic methods.
1. Prediction of Development Market Commodities
Future development in commodity markets depends on many factors. One of the most
important factors are:
• monetary policy of central banks
• supply and demand
7
Most commodities are traded globally in dollars. Important role in commodity prices and
U. S. plays a central bank. Fed with massive incentives that the government keeps the economy in
operation since the beginning of the economic crisis, record increases in commodity prices.
Quantitative release in 2010 caused a weakening dollar and lower interest rates. These Steps lead
investors to invest in assets such as commodities.
Monitoring the dollar cost is an important aspect of support for trade commodity market as
commodities and the dollar generally move in the opposite direction. The most frequently used
tools to track the dollar's value is called the dollar index. When the dollar against major currencies
strengthened, commodity markets tend to fall and the reverse is also true when value of the dollar
falls, commodity markets tend to rise. As can be seen on the graph, the value Dollar comparing
CRB index of commodity. This situation is the strong signal for growth in prices commodities.
Graph 1 shows the comparison the dollar index with CRB commodity index.
Graph 1 Comparison the dollar index with CRB commodity index
Source: [9]
2. Precious Metals
One of the prerequisites for future developments in commodity markets, precious metals will
FED policy and central banks. When comes the third wave of quantitative easing, whereof the
chairman, Ben Bernanke is not exponent, can not wait for the rising of commodities in those days
regarded as a safe haven.
Gold
One such store of value is gold. Investment demand for the metal is the huge. Current events
from a macroeconomic point of view are ideal for gold. Riots in Arab countries fear the spread of
inflation in the U. S., Europe and Asia, weak dollar, Fed monetary policy, a large and growing
deficit in the fundamentals are good growth of gold, further supported by investor psychology.
Correction may come, but which investor can use it as an opportunity to buy. Development of the
gold price for 2011 will therefore be growth. Principal trend can be realized through gold ETFs. The
recommendation is SPDR Gold Shares - GLD and the iShares Gold Trust - IAU. Graph 2 shows the
8
comparison the dollar index with gold.
Graph 2 Comparison the dollar index with gold
Source: [11]
Graph 3 shows the development of the gold price with moving averages.
Graph 3 Development of the gold price with moving averages
Source: [12]
Graph long-term development of the gold price moving averages (20-day, 50-day, 100 days)
shows a clear trend. We see that gold since 2008 has experienced price increases, which is the
accompanied by corrections. Now, again hits up, which is confirmed by moving averages. I believe
that growth could continue in the coming months.
9
Silver
Another of precious metals, are considered a safe haven in times of uncertainty, is the silver.
Unlike gold, silver has, more industrial uses, the demand for it is of nineteen minor part driven by
investors and speculators. Never the less, as shown by the graph price of silver tends to move in
correlation with the gold. Silver is a good investment when inflation.
Graph 4 shows the development of the gold price and silver price.
Graph 4 Comparison of the gold and silver price development
Source: [12, 13]
Graph 5 Growth in silver consumption in new application areas
Source: [13]
Graph 5 shows the growth in silver consumption in new application areas.
In the long term, consumption of silver could rise due to their unique properties, such as
excellent electrical conductivity and antibacterial characteristics. There are so the new use of silver
as solar energy, water purification, medicine, etc. This is due, these properties can cause that its
consumption should in coming years increase substantially.
10
3.
Agriculture
There are several important reports that market participants are watching. Perhaps the most
importantis the report published by the U. S. Department of Agriculture (USDA - United States
Department of Agriculture), bringing reports of American and world production, cultivation
farmers' intentions for the coming harvesting season, and an overview of consumption and stock
agricultural crops. During the development of the USDA issued any further reports determining the
approximate volume of harvest.
3.1 Corn
The United States is the world's largest producer and exporter of corn. Although exported only
30% of its domestic production, this 30 % represents 80 % of the total volume of world trade in
maize. According to the U. S. Department of Agriculture, issued USDA report, the ratio of stocks in
2011 would fall to lowest level since record-season 1995 - 1996. Closing stocks in the United States
should move at 675 million bushels. The previous estimate of 745 million counted. USDA therefore
expected to rise.
Table 1 show the USD a corn report.
Table 1 USDA corn report
Source: [14]
Chart of the development of maize prices moving average (20-day, 50-day, 100 days) indicate
an upward trend. Technical analysis suggests that the upward trend could continue, however, may
be accompanied by severe corrections. These corrections can be strong good opportunity to buy.
11
Graph 6 shows the development of the corn price.
Graph 6 Development of the corn price
Source: [14]
3.2 Ethanol
Graph 7 shows the U S ethanol production.
Graph 7 US ethanol productions
Source: [15]
Support the growth of corn prices and high oil prices on world markets. With rising oil prices
and growing demand for biofuels all this is also exacerbated by the policies laid down volumes of
biofuels, the United States is one of the countries, where most ethanol is produced from corn.
12
Conclusions
Prices of commodities in the last decade soared to their historical highs and there are still a lot
of assumptions that this growth will continue. One of the main reasons why it is the influence of
developing countries as demand for agricultural raw materials, metals, oil, energy, construction
materials, as well as the increasing population in these countries, their reaching and changing eating
and consumer habits, long-term reduction of cultivated land, all brings with it increased demand for
commodities. Another factor is the policy of central banks, whose actions led to an increase in asset
prices. In addition, the central bank holds interest rates at such levels that returns are negative after
inflation. In such conditions, investors are leaving traditional investment instruments and deposit
their money into assets such as commodities. About the where and how to invest, the investor must
decide for himself with regard to their knowledge and preferences. Investment ideas and practices
are vastly different depending on which side of the investor and lean as a theory take as their own.
Because conditions in the markets in recent times often change, trading commodities and
commodity indices is need active investment management. But attention to proactively manage the
increasingly seems like a necessity in any market, whether stock or commodity. If an investor wants
to succeed, he must adapt to the market.
References
1. BARAN, D. Kapitálový trh a podnikové financie, Vydavatelstvo STU Bratislava 2003, 169 s.
2. ESNÍDAL, T.; PODHAJSKÝ, P. Obchodování na komoditních trzích. 2. rozš. vyd. Praha : Grada,
2007. 200 s.
3. ROGERS, J. Žhavé komodity. 1. vyd. Praha : Grada, 2008. 240 s.
4. Jílek, J. Akciové trhy a investování. 1. vyd. Praha : Grada, 2009. 656 s.
5. WILLIAMS, L. Kompletní průvodce obchodováním komodit. Praha : Centrum finančního
vzdělávání, 2008. 277 s.
6. Financnik.cz. Více o čtení gafů. [online]. 2009. [cit. 2010-12-31]. Dostupné z WWW:
<http://www.financnik.cz/komodity/manual/komodity-grafy-zdarma.html>.
7. U.S. Commodity Futures Trading Commission. Market Reports. [online]. 2011. [cit. 2011-03-01].
Dostupné z WWW: <http://www.cftc.gov/dea/futures/deacbtsf.htm>.
8. Commodity Correlations. [online]. 2009 [cit. 2011-01-13]. Dostupné z WWW:
<http://www.marketoperation.com/index.php?option=com_content&view=article&id=121&Itemid
=119&eec86572714ce954078c219351033410=5a548b23da5e0357abe09528ce1c01a5>.
9. U.S. Business Cycles. [online]. 2011 [cit. 2011-02-13]. Dostupné z WWW:
<http://www.thumbcharts.com/series/us-business-cycle-graphs-1913-2011>.
10. Investice.ihned.cz. Komoditní ETF fondy. [online]. 1996-2011 [cit. 2011-02-26]. Dostupné z
WWW: <http://investice.ihned.cz/c4-10174900-32948990-i00000_d-komoditni-etf-fondy-prijdouvhod-ii>.
11. SPDR Gold Shares [online]. 2011 [cit. 2011-02-15]. Dostupné z WWW:
<http://www.spdrgoldshares.com/sites/us/>.
12. IShares Gold Trust [online]. 2011 [cit. 2011-02-13]. Dostupné z WWW:
<http://us.ishares.com/product_info/fund/overview/IAU.htm>.
13. THE SILVER BOOK [online]. 2009 [cit. 2011-02-02]. Dostupné z WWW:
<http://www.virtualmetals.co.uk/index.php?inc=products&id=cp11>.
14. United States Department of Agriculture [online]. 2010 [cit. 2011-02-02]. Dostupné z WWW:
<http://www.ers.usda.gov/Briefing/Corn/>.
15. Produkce etanolu v USA [online]. 2009 - 2011 [cit. 2011-05-03]. Dostupné z WWW:
<http://www.colosseum.cz/vzdelavani-a-informace/kurzy>.
13
ECONOMIC EVALUATION OF PROJECTS CO FINANCED FROM THE
EUROPEAN FUNDS
Dagmar Čámská
University of Economics, Prague,
Abstract. This article is focused on investment projects which are co financed from the
European funds. The European funds are important source of money to the Czech economy. The
aim of the paper is shown economic evaluation of supported projects. Economic evaluation of these
projects will be compared with theoretical approaches of business economics. There are several
types of supported programmes. Two will be chosen and compared. Although it seems that
economic evaluation follows all theoretical recommendation mistakes can always occur. Classical
techniques, wrong estimations and bureaucracy followed by corruption are meant as main failures.
Keywords: investment projects, Czech financial support programmes, European funds,
economic evaluation, failures of evaluation.
Introduction
This paper describes economic evaluation of projects co financed from the European funds in
the Czech Republic. First the financial support programmes are introduced as an important source
of money. Then two financial supported programmes are chosen and their application requirements
are shown. The methods of evaluation are discussed. Everything is compared with theoretical
approaches and recommendations of business economics in the field of investment projects and
investment decision making. If it is possible results are documented with the help of surveys. The
last part deals with potential failures of application evaluation.
1. Investment
This article is focused on microeconomic or business approach of investment. According to
Scholleova1 in a narrower sense investment is an asset which is not directly consumed but used to
creating additional asset, the company then sells on the market. It is hardly imaginable that any
company is able to survive for a long time without investment. Each investment is connected at the
beginning with one-off (short-term) cash outlay2. There are various sources of finance. Long-term
sources are usually used for financing investment. As I have already written3 finance sources can be
divided into three categories – traditional internal sources, ownership capital and non-ownership
capital. In the Czech Republic the companies most use bank loans and leasing as non-ownership
capital. With entering the European Union in 2004 another way to capital was opened. An access to
structural funds has been widened. Companies have the possibility to obtain non-returnable
subsidies.
2. Financial support programmes
We will pay attention to programmes co financed from European Union funds which are very
important sources because for running period of 2007-2013, the Czech Republic has € 26.69 billion
available4. There is a huge variety of beneficiaries because projects may be presented by
1
Scholleova, H. Investiční controlling: jak hodnotit investiční záměry a řídit podnikové investice. Grada, 2009, p.13
Scholleova, H. Ekonomické a finanční řízení pro neekonomy, Grada, 2008, p. 103
3
Čámská, D., Kula, D. Financial support programmes and their prediction models. Scientific proceedings, 2011, year
19, issue 2, p. 728–736.
2
4
European Union funds. [accessed 2011-03-30] <http://www.strukturalni-fondy.cz/Information-about-EU-Funds>
14
municipalities, regions, ministries, entrepreneurs, owners of transport infrastructure, non-profit
organizations, schools, research centres and others.
There are four major groups of programmes for the period of 2007-2013 which are financed
thanks to European money:
• Thematic Operational Programs
• Regional Operational Programs
• Operational Programs Prague
• European Territorial Cooperation
These groups contain together 26 different programmes although this article uses data
referring to the state of financial drawing of 19 Czech operational programmes (Objective 1 and 2).
The state of financial drawing of other 7 programmes is not included because these programmes are
part of the Objective 3 of the economic and social cohesion policy implemented in the Czech
Republic. By 3 August 2011 68 958 applications have been submitted in the amount of 1 104.3
billion CZK5. Less than half of projects have been accepted. Figure 1 shows us the latest state of
implementation from July 2011. 66.8% of sources have been already allocated and 33.6% of
sources have been paid to beneficiaries.
Figure 1 Latest state of implementation of the cohesion policy, Source: own elaboration based on data6
It is obvious that more than half of money is already divided among its beneficiaries but
money is still available there. It is time to answer a question how many projects have been
supported. Supported projects are distinguished into three groups – cancelled projects during their
implementation, already finished projects and ongoing group.
Table 1 show how the projects are divided into specific groups according to different
operational programmes. It is necessary to say that numbers are current because the latest update
came from 4 August 2011.
5
European Union funds. [accessed
monitorovaci-zprava>
6
European Union funds. [accessed
monitorovaci-zprava available 09-09-2011>
2011-09-09]
<http://www.strukturalni-fondy.cz/Stav-cerpani/Mesicni-
2011-09-09]
<http://www.strukturalni-fondy.cz/Stav-cerpani/Mesicni-
15
Table 1Current number of beneficiaries of European Regional Development Fund, Source: own elaboration
based on data7
Opperational programmes
Integrated Operational Program
OP Czech Republic-Poland
OP Transport
OP Human Resources and Employment
OP Enterprise and Innovation
OP Prague Adaptability
OP Prague Competitiveness
OP Fishing
OP Technical Assistance
OP Research and Development for Innovations
OP Education for Competitiveness
OP Environment
ROP NUTS II South-East
ROP NUTS II South-West
ROP NUTS II Moravia-Silesia
ROP NUTS II North-East
ROP NUTS II North-West
ROP NUTS II Central Bohemia
ROP NUTS II Central Moravia
All programmes
All
6942
1638
130
3120
6586
486
209
630
105
73
5733
3578
543
552
489
537
291
490
538
32
670
Number of projects
Canc
Finali
elled
zed
81
5349
25
699
--63
20
7
528
2162
6
66
11
105
26
17
4
43
----2
7
2
1733
7
385
7
308
4
273
5
271
10
131
7
253
4
419
12
749
291
Ongo
ing
1512
914
67
3093
3896
414
93
587
58
73
5724
1843
151
237
212
261
150
230
115
19
630
Getting of support is obviously not automatic because there are many requirements which
each project should fulfil. Conditions differ according to different support programmes but some
characteristics are common for all programmes.
3. Common requirements
At the beginning the core idea of the project is the most important. First of all each project
should contain the general beneficial effect. We mean beneficial in a wide sense because also
private companies can ask for money. Secondly the idea of projects has to be consistent with the
objectives of the concrete operational program. Third is time because each program has its
deadlines when it accepts applications.
Parts of application
There are required parts that each application should include – logical framework, feasibility
study, cost-benefit analysis and project budget. If we look at the names and content of these parts
they are similar to parts of business plan. Small exception is cost-benefit analysis which is usually
not part of typical business plans which are created by profit organisations.
The business plan can be characterized8 as a proposal that sets out a new business venture,
direction, product, or course of action. Lamb9 follows that if you write a business plan it is in order
to gain support for your idea. Here we see a visible connection with application forms. According to
7
European Union funds. [accessed 2011-09-09] <http://www.strukturalni-fondy.cz/getdoc/2eec9b32-0674-48ba-a41990fa51db8823/Seznamy-prijemcu?lang=en-GB available>
8
Lamb, S.E. How to Write It: Business Plans and Reports. Business & Economic Review; Oct-Dec2006, Vol. 53 Issue
1, p. 17-24.
9
Lamb, S.E., p. 17-24.
16
Lamb10 the major plan sections are the general business description, a mission statement, goals,
management team, market analysis, the marketing plan, the financial analysis and appendices or
supporting documents. We can compare theoretical major plan sections with two handbooks. We
have chosen two examples – the handbook of Operational Program Prague Competitiveness and the
handbook of ROP NUTS II North-East. It does not matter that one is called feasibility study and the
second study of the economic evaluation of the project.
General structure of feasibility study of Operational Program Prague Competitiveness11
includes parts as general information about potential beneficent, description of project, market
analysis and estimate of demand, management team and human resource management, technical
and technological aspects, impact on the environment, ensure of current assets and investment,
project budget, financial plan, evaluation of the effectiveness and sustainability of the project,
project schedule, risk management and final project evaluation. On the other hand the document of
ROP NUTS II North East12 should contain general business description, market analysis and
estimate of demand, technical and technological solution of project, needs and ensure of current
assets and investment, financial plan, cost-benefit analysis, risk management and detailed final
project evaluation. Both these documents follow theoretical approaches of business economics.
Financial plan and evaluation of project
From business economics point of view the most important parts are financial plan and
evaluation of project. Handbooks of financial support programmes specify in detail the components
of the financial plan. We do not realize any difference if we study the handbook of Operational
Program Prague Competitiveness or the handbook of ROP NUTS II North-East. There are always
components as plan of costs and revenues, plan of state property and resources of its coverage and
cash flow plan because costs do not have to be expenses in same year as well as revenues are not
always incomes at the same period of time.
Each investment project should be evaluated in an economic way if it is enough profitable and
it has sense to implement it. Literature describes many methods or criterions for evaluating.
Basically the criterions of capital projects are divided into two groups – static and dynamic
criterions. The main differences between static and dynamic criterions are written in the article of
authors Scholleova, Fotr and Svecova13. Static criterions consider mainly cash flows. They consider
time in constraint mode and in principle they do not work with risk. On the other hand dynamic
criterions take into account all three factors which mean cash flows, service life and undergone risk
as well. Czech companies usually prefer static criterions although they do not consider risk because
evaluating is simply. Anglo-American literature does not take into account static criterions such as
Anthes14. He points out, despite the difficulty of developing good estimates, especially of benefits,
four basic methods for comparing project costs and returns remain in vogue: payback period, ROI,
net present value (NPV) and internal rate of return (IRR). Many more have been created, but these
four have endured for decades.
Unfortunately Czech research works show that companies prefer statistic criterions. Table 2
contains results from survey of Faculty of Business Administration. The sample consisted 252
Czech companies.
10
Ibid.
Operační program Praha – Konkurenceschopnost Metodická příručka: Studie proveditelnosti pro oblast podpory
OPPK available [accessed 2011-09-09] <http://www.prahafondy.eu/cz/oppk/dokumenty.html>
12
ROP NUTS II North-East – Příloha č.5 PPŽP Studie ekonomického hodnocení projektu [accessed 2011-09-09]
<http://www.rada-severovychod.cz/file/1530>
13
Scholleova, H., Fotr, J., Svecova, L. Investment decison making criterions in practice. Economics & Management;
2010, p. 1018-1023.
14
Anthes, G. What is your project worth? Computerworld; 3/10/2008, Vol. 42 Issue 11, p. 29-32.
11
17
Table 2 Criterion used in evaluating investment projects15
Type of
criterion
static
static
Criterion
N
umber
Indices of profitability and
payback
Payback period
1
90
6
9
dynamic
Discounted Payback Period
2
8
dynamic
Internal Rate of Return
5
5
dynamic
Net Present Value
5
6
dynamic
Profitability Index
2
0
dynamic
Benefit-Cost Ratio
8
Others
9
R
ake-off
7
5 %
2
7%
1
1%
2
2%
2
2%
8
%
3
%
4
%
It is not surprising fact that results vary according to the size of the enterprise or size of the
capital project. It is obvious that small companies will use less sophisticated methods. Anthes16
indicates an example of the Schwan Food Co. which uses NPV, IRR and payback period to evaluate
IT projects costing more than $1 million. The survey of Faculty of Business Administration shows
representative results. Figure 2 confirms that large companies and more important projects are
evaluated using dynamic criterions.
Figure 2 Using methods depending up to the size of the enterprise, absolute frequencies17
We have discussed capital projects in general. We see that the evaluating in the Czech
Republic is not ideal and it does not follow all theoretical approaches and recommendations. We
should answer a remaining question how projects co financed from European funds in the Czech
Republic are evaluated. Feasibility studies emphasize dynamic criterions and they completely omit
statistic criterions. Economic evaluation is required part of each application. In the case of
15
16
17
Kislingerova, E. and others. New Theory of Economy and Management in Organizations and Their Adaptation
Processes. Survey of Faculty of Business Administration, University of Economics, Prague, 2008.
Anthes, G. What is your project worth? Computerworld; 3/10/2008, Vol. 42 Issue 11, p. 29-32.
Kislingerova, E. op.cit.
18
Operational Program Prague Competitiveness18 it has to contain present value, net present value,
internal rate of return, profitability ratio and payback period. Application of ROP NUTS II North
East19 contains the same minus profitability ratio which has the same explanatory power as net
present value. Applicants do not have to count all criterions because they are counted automatically
when they fill numbers of financial plan. It is important to note that all potential projects, that
should be co financed from European funds in the Czech Republic, undergo economic evaluation.
In this case the Czech government do not follow the practices of Czech business environment.
4. Failures
It seems that best approaches for investment decision making have been chosen and they are
used by financial support programmes in the Czech Republic. But as we know failures can always
occur which has a consequence that the chosen projects are not the best. Finally chosen projects do
not have to be the best in main aspects such as profitability, risk or social contribution. As a source
of failure can be traced following factors – classical techniques for evaluation, wrong estimations
and bureaucracy followed by corruption.
Classical techniques
As classical techniques we mean dynamic criterions for evaluation. The right evaluation is
crucial. It is necessary to take into account risks in direct investments project evaluation because we
do not live in a world without risks anymore. Difficulties of classical methods are discussed for
example in the article by professors Dragota20. They point out that the main problem is the
probability distribution for NPV is not normal. The article21 sees solution in modern techniques
which can eliminate some of inconveniences. Sensitivity analysis, decision tree, scenario technique,
Monte Carlo technique and real options are suggested as modern techniques. Handbooks of
financial support techniques react exemplary. As we have already mention risk management and
risk analysis should be part of each application but it goes further because also sensitivity analysis is
required. In this case sensitivity analysis takes into account the level of change of net present value
if some variables are changed. Other techniques as scenarios or Monte Carlo are not used because
they are not so easy applicable and they required input knowledge of applicants.
Wrong estimations
Wrong estimations can happen. It is possible to trace two main reasons of wrong estimations.
First the applicant does not have all pieces of available information. Secondly the wrong estimation
is done as an intentional error by an applicant. First reason can also happen during usual business.
The company underestimates risks, overestimates revenues or omits some important factor. It is
obvious that the projects should avoid wrong estimations and therefore government authorities
require detailed application containing feasibility study. The applicant has to fulfil many pieces of
information how we have already mentioned in the part 3.1. It is time for exploring all important
things which can change results of the project.
Bigger problem is an intentional error by an applicant. We have already emphasized this in
the article Investment projects – importance of pre audit and post audit22. If an entrepreneur
18
Operační program Praha – Konkurenceschopnost Metodická příručka: Studie proveditelnosti pro oblast podpory
OPPK [accessed 2011-09-09] <http://www.prahafondy.eu/cz/oppk/dokumenty.html>
19
ROP NUTS II North-East – Příloha č.5 PPŽP Studie ekonomického hodnocení projektu [accessed 2011-09-09]
<http://www.rada-severovychod.cz/file/1530>
20
Dragotă, V., Dragotă, M.I. Models and indicators for risk valuation of direct investment. Economic Computation &
Economic Cybernetics Studies & Research; 2009, Vol. 43 Issue 3, p. 1-7.
21
Ibid.
22
Kula, D., Čámská, D. Investments projects – importance of pre-audit and post-audit. Scientific proceedings, 2011,
19, issue 2, p. 737–742.
19
appraises a private project, he usually place emphasis on real inputs and data. On the other hand, if
an entrepreneur appraises a subsidized project, the main aim is to fulfil predefined criterions. It
means that he can cheat in order to obtain subsidies. For example, he can underestimate risks or
overestimate cash-flow of the project. Although investors should be honest, they can behave very
pragmatically at the moment paradoxically. Sometimes it happens that investors do not want cheat
but are not able to reliably predict input data because of very positive expectations caused by
possible subsidy obtaining. Consequently, it depends on a project evaluator, whether is able to find
discrepancy or not.
5. 3 Bureaucracy followed by corruption
Government contracts and financial support are connected with bureaucracy and corruption in
many countries. Unfortunately the Czech Republic is no exceptions. The document Transparency of
the regulatory system23 says that bureaucracy and unnecessary red tape remain a source of
complaints by both domestic and foreign investors although the Czech Republic ratified OECD
anti-bribery convention in January 2000. According to Transparency International's Corruption
Perception Index for 201024, the Czech Republic ranks in the 53rd place out of 178 countries. As
DATAMONITOR25 mentions the Czech Republic's percentile ranking on the control of corruption
is 77.0 in 2008. Among the transitioning countries of the former Soviet bloc, the Czech Republic is
rated as one of the better countries in the terms of perception of corruption. But corruption remains
and it is general problem which cannot be solved only on the level of financial support programmes.
Conclusions
The paper described economic evaluation of projects co financed from the European funds in
the Czech Republic. Two supported programmes were chosen – Operational Program Prague
Competitiveness and ROP NUTS II North-East. Application requirements were discussed and
compared between programmes. Although it seems that application requirements include all
important components of classical business plan and economic evaluation follows all theoretical
recommendation of investment decision making failures can always occur. Classical techniques,
wrong estimation and corruption are pointed out as sources of failures.
The article is one of the outputs from the research project “Analysis and evaluation of
investment projects financed from European funds” registered with the Internal Grant Agency of
University of Economics, Prague under the number F3/32/2011.
References
1. Anthes, G. What is your project worth? Computerworld; 3/10/2008, 42(11), p. 29-32.
2. Čámská, D., Kula, D. Financial Support Programmes and their Prediction Models. Scientific
proceedings, 2011, 19(2), p. 728–736.
3. Dragotă, V., Dragotă, M.I. Models and Indicators for Risk Valuation of Direct Investment.
Economic Computation & Economic Cybernetics Studies & Research; 2009, 43(3), p. 1-7.
4. Kislingerova, E. and others. New Theory of Economy and Management in Organizations and
Their Adaptation Processes. Survey of Faculty of Business Administration, University of
Economics, Prague, 2008.
23
Macro-accessibility in Czech Republic: Transparency of the regulatory system. Czech Republic Economic Studies;
2007, p. 31-33.
24
Press release: Index vnímání korupce 2010: Česko je letos na 53. místě a patří k zemím, kde se situace zhoržila.
<http://old.transparency.cz/index.php?lan=cz&id=16&pom_id=99 09-10-2011>
25
Datamonitor: Czech Republic. Czech Republic Country Profile; 2010, p. 1-70.
20
5. Kula, D., Čámská, D. Investments Projects – Importance of Pre-audit and Post-audit.
SCIENTIFIC PROCEEDINGS, 2011, 9(2), p. 737–742.
6. Lamb, S.E. How to Write It: Business Plans and Reports. Business and Economic Review; OctDec 2006, 53(1), p. 17-24.
7. Scholleova, H. Ekonomické a finanční řízení pro neekonomy, Grada, 2008, p. 103.
8. Scholleova, H. Investiční controlling: jak hodnotit investiční záměry a řídit podnikové investice.
Grada, 2009, p. 13.
9. Scholleova, H., Fotr, J., Svecova, L. Investment Decison Making Criterions in Practice.
Economics and Management; 2010, p. 1018-1023.
10. Datamonitor: Czech Republic. Czech Republic Country Profile; 2010, p. 1-70.
11. Macro-accessibility in Czech Republic: 2Transparency of the regulatory system. Czech
Republic Economic Studies; 2007, p. 31-33.
12. Operační program Praha – Konkurenceschopnost Metodická příručka: Studie proveditelnosti
pro oblast podpory 3.3 OPPK available on http://www.prahafondy.eu/cz/oppk/dokumenty.html 0909-2011
13. Press release: Index vnímání korupce 2010: Česko je letos na 53. místě a patří k zemím, kde se
situace zhoržila [accessed 2011-09-09]
<http://old.transparency.cz/index.php?lan=cz&id=16&pom_id=99>
14. ROP NUTS II North-East – Příloha č.5 PPŽP Studie ekonomického hodnocení projektu
[accessed 2011-09-09] <http://www.rada-severovychod.cz/file/1530>
15. European Union funds. [accessed 2011-03-30] <http://www.strukturalni-fondy.cz/Informationabout-EU-Funds>
21
ON THE MOTIVATIONAL ACCENT IN THE MANAGEMENT ACTIVITIES IN
1
CONDITION OF ICT COMPANIES
Tatiana Corejova, Lubomir Bombala
University of Zilina,Slovak Republic.
e-mail [email protected], [email protected]
Abstract. The paper deals with the results of inner motivational aspects of highly qualified
employees of information and communication (ICT) companies. It is based on qualitative research
and the data had collected from different ICT transnational companies during the 2010 year that
was conducted at the University of Zilina, Slovak republic. The main goal of empirical research was
to investigate motivation accent in the managerial activities in the ICT companies. The purpose was
to show that implementation of the motivation accent in managerial activities can help to improve
employee motivation and to increase their performance, loyalty to the organization in the ICT
sector. The special attention in frame of investigation in ICT companies was devoted on the
employee’s self-assessment of his/her inner motivation. We took in consideration such aspects like
employee intrinsic motivation, management areas and attributes of the manager. So, the
contribution follows four areas that have key importance for employees in ICT company and that
are related with inner motivation of employees e.g. inner motivation to quality of work, to ongoing
increasing of the level of professional knowledge and skills, to provide new motives and increase
the effectiveness of performed processes and to cooperate with manager and other departments of
the company. The investigation was based on the combination of research methodologies and three
main methods: scientific observation, questionnaires and comparison with the previous research in
the similar environment (the number and rate of highly educated or highly qualified employees in
the company).
Keywords: motivation, motivation accent, human potential, management, information and
communication company, highly-qualified employee
Introduction
The fast technology changes in the information and communication technology require the
education and motivation of employees with balanced using of the long-valid principles and the
newest information. The changes of the motivation of highly-qualified employees with specific
combination of competences and skills2, contents and forms of motivation or stimulation are
characterized by conversion from classic to integrated forms. Manager of ICT company has to have
skills to create universal communication and motivation frame. The companies prefer to pay for
studies provided by different personal agencies about salaries, benefits in certain sector in certain
place. They are not willing to offer much better conditions except the moment they see big
advantage from hiring of particular person. The highly qualified employees of information and
communication (ICT) companies (human resource) are the main capital in ICT companies. They
have a lot of possibilities also in the crisis time to change the employer and they are carrier of tacit
knowledge. But they have also good salaries in comparison with another sectors, employees or
industries and so we have to give attention on the motivation aspects of these employees. That is
1
This contribution was undertaken as part of the research projects: APVV-0230-07 Regional dimensions of
knowledge economy, VEGA 1/0149/10 Diffusion processes of new mobile services (m-commerce) and their value
chain and APVV KRENAR. It benefited from grants from the Ministry of Education of Slovak Republic and the Slovak
Research and Development Agency for which the authors express their gratitude.
2
Blašková, M., Grazulis, V. 2009. Motivation of Human Potential: Theory and Practice. Publishing Centre of
Mykolas Romeris University, 2009, ISBN 978-9955-19-155-1
22
why we decided to focus our case study on those areas that can make difference in the stimulation
(salary or other material form of salary). University of Zilina has participated in several projects that
investigate the problems of motivation and focused on examination the knowledge economy aspects
and whole knowledge process from creation up to dissemination of knowledge.
1. Theoretical background
The theoretical background of motivation is discussed in many books and publications. It is
not easy to introduce shortly all theoretical concepts. They are based on the investigation and results
of different sciences – psychology, sociology, economics, management etc. In the context of
motivation of employees the purpose of motivation is connected with the terms: performance and
efficiency of employees. Robins and Coulter3 regard the performance and efficiency as the same
term, but the author (Blašková 2006, p. 102) differentiates between these terms and argues by
benefits of efficiency growing following by employee performance. The content of the employee
activities and the intensity of these activities depend on subjective conditions that are noted as the
motivation of people activity. The psychology differentiates two groups of motivation to the work,
two types of motivation4:
• motives that are connected with the work e.g. intrinsic motivation (inner motivation)
• motives that are connected with another areas, e.g. extrinsic motivation 5
Both motives determine the success of company, its performance, profitability, stability etc.
The scale of motives in relation to intrinsic and extrinsic motivation depends on the position and
tasks of employees. By the highly educated employees demonstrate the willingness to increase the
total level of their work when their motivation by managers is better6. The approach to the
investigation of motivation of highly educated employees with specific knowledge and skills
presented in Blaskova, Grazulis, (2009) was used for empirical research of motivation in condition
of ICT companies.7
2. Empirical study
The empirical research was focused also on areas/attributes of manager that are necessary for
proper motivation of his/her employees on following 8 areas of the management of human potential
in the organization:8
• Strategic management and development of highly-qualified employees
• Planning of highly-qualified employees
• Obtaining and choosing of the new highly-qualified employee
• Orientation and positioning of highly-qualified employees
• Evaluation of complex working performance of highly-qualified employees
• Motivation of highly-qualified employees
• Creative management of highly-qualified employees
• Education and development of the knowledge and skills of highly-qualified employees
3
Bedrnová, E. – Nový, I. a kol. 2004. Psychologie a sociologie řízení. 2. vyd. Praha: Management Press, 586 s. ISBN
80-7261-064-3.
4
Bedrnová, E. – Nový, I. a kol. 2004. Psychologie a sociologie řízení. 2. vyd. Praha: Management Press, 586 s. ISBN
80-7261-064-3.
5
Nakonečný, M. 1992. Motivace pracovního jednání a její řizení, Management Press, Praha
6
Blašková, M. et al., 2006. Riadenie a rozvoj vysokokvalifikovaného ľudského potenciálu, TU, Zvolen, ISBN 80228-1701-5
7
8
23
The mentioned areas of management of human potential in the company are offering 2 levels
how organizations can benefit from the employee motivation. The first level that we can call
primary is related to the direct motivation of employees that are in scope of the process of the
motivation. We can see it as a consistence between targets and ambitions of new employees with
targets and ambitions of the organization. The second level that we can call secondary is related to
the level of motivation of managers and people that participated on the process of employee
motivation after successful motivation of the new employee9. This can result in better willingness to
perform this process with other employees in the future. In the following text of contribution the
motivation tools and self motivation problems from the point of view highly-qualified employees
are discussed.
2.1 Basic data research
Case study was based on the empirical research in the several translational companies in ICT
sector. The questionnaire included 21 questions and followed up the research made by Blašková
(2006)10. It has been distributed 124 questionnaires and as received back 55 questionnaires what
represents 44 % of the distributed amount. The research has the attributes of qualitative research,
the number of respondents is relatively small, our methods are stochastic and we use subjective
ways of interpretation of the results. We used the supporting methods – comparison, analysis of
secondary data and analysis of internal documents of companies that are orientated on human
resources management. The distribution of 55 respondents was following: 38 male respondents and
17 female respondents. The distribution from the point of view of age, gender, achieved education
and length of work experience are shown in Table 1-3.
Table 1 Age structure of the respondents
Age of the respondents
up to 24 years
25-34 years
35-44 years
45-54 years
more than 55 years
Number of respondents
5
32
11
3
4
% of respondents
9
58
20
5
7
9
Plamínek, J. 2007. Tajemství motivace, Grada Publishing, Prah
Blašková, M. et al., 2006. Riadenie a rozvoj vysokokvalifikovaného ľudského potenciálu, TU, Zvolen, ISBN 80228-1701-5
10
24
Table 2 Structure of respondents by level education
Level of education
Number
respondents
basic education
0
special secondary
3
general secondary (e.g. grammar school)
2
higher education (e.g. DiS)
3
bachelor’s degree
12
Master’s degree (e.g. Mgr., MsC., Ing., Mag.)
33
university postgraduate
2
of
% of respondents
0
5
4
5
22
60
4
Table 3 Structure of respondents by work experiences
Length of work experience
up to 2 years
3-5 years
6-10 years
11-20 years
more than 21 years
Number
respondents
9
21
5
14
6
of
% of respondents
16
38
9
25
11
Results
In this part of contribution we discussed the selected question and aspects of motivation
related to motivational tools, their perception by employees, self motivation and inner motivation
aspects. We have suggested some ways how to implement motivation accent in the process of
creative management of the employees. We would like to emphasize those instruments that are the
most frequently used. Such instruments are: bilateral and non-blocked communication and freedom
of ideas. The very seldom used instruments are: unusually high and beneficial productivity and
creative as almost participative style of management. We can see from the results in the table 4 that
many of the instruments are not widely used in the ICT sector.
On the question, that was related to the area of education and development of the knowledge
and skills of employees in ICT organizations, 75 % of employees confirmed that their manager pay
certain level of attention to education. The aspect that we should consider is the gender difference.
Female respondents have replied (36% of them) that their manager pays no and rather no attention
to education and development of the knowledge and skills. This can be understood in different
ways. In general ICT organizations offer some way of internal CBT courses to develop the
knowledge and skills. They may really expect more involvement and interest of their manager in the
training or they see the opportunities provided by company as insufficient. Without making any
final judgment we can declare that management approach in this area can really vary from position
to position and from department to department and female employees see this area as the area where
they expect improvement in their manager approach.
25
Table 4 Tools used by manager for formation of working behavior and attitudes
% of answers from total number of respondents
Together
Gender
Age
Male
Female Up to 34 More than 35
34
37
29
37
29
27
23
36
23
36
Tools for formation of working
behaviour and attitudes
strong engagement in problem solving
pursuit for appropriate reaction in every
situation with high level of self-control
creative as almost participative style of
management
bilateral and non-blocked communication
commonly accepted and agreed norms of
mutual interaction
freedom of ideas
situational roles taking over at the
solving of different tasks
unusually high and beneficial
productivity
mutual knowledge enhancement
enlarging of skills and competencies
16
13
21
30
7
59
18
60
20
57
14
60
13
57
29
41
23
40
20
43
29
40
27
43
14
5
7
0
7
0
30
27
33
33
21
14
27
33
36
14
Table 5 Manager attention to education and development
Answer
Together
Answer "yes"
Answer "mostly yes"
Answer "partially"
Answer "rather no"
Answer "no"
7
34
34
18
7
Gender
Age
Male
Female
Up to 34
More than 35
3
14
10
0
33
36
33
36
43
14
33
36
13
29
20
14
7
7
3
14
Table 6 shows the answers on the question that was focused on the more detailed areas by
which the managers have possibility to influence the employee education. We have chosen some of
the areas where manager can direct the education. Managers direct the education to areas that are
connected with the particular position and to areas which are required by organization. There is very
small possibility that employee will participate on the training that is chosen randomly from the list
of available classes. The third areas where the education can be oriented are courses necessary for
fulfilment of employee carrier aspirations. 25 % of respondents stated such possibility is present at
their manager. This is important motivational aspect in the organization. Very interesting are the
results according to age of respondents. They have showed that employees with higher age than 35
have almost no possibility to participate on such courses (in our research 0 %). This can be
explained by several reasons. They do not request such courses and prefer to stay longer at the
current position. This can be connected also with their private life and family background. They are
not willing to change position so often. And also managers expect from them to stay longer at the
current position. 40 % of the employees have got such opportunity to attend courses necessary for
their carrier aspiration. This is quite high percentage but can be caused by two reasons. Majority of
employees are relatively young. As we can see at the beginning of the article (67%) employees that
participated on our research were younger than 35. Managers know about their need to develop and
offer them such training to retain them for the company especially in the cases where they see the
higher performance than standard.
26
Table 6 Orientation of employee education
Orientation of employee education
randomly chosen courses from arbitrary
area
courses necessary for particular position
or working arrangement
courses necessary for fulfillment of
your carrier aspirations
courses required by the organization and
organizational unit
Together
Gender
Age
Male
Female Up to 34
More than 35
5
7
0
3
7
45
50
36
47
43
25
23
29
40
0
43
47
36
50
29
The success of the motivation program from the employee point of view depends on the
characteristics of motivation system of company and on the possibilities to change or to influence
the system by manager in relation with the individual needs and motives of employees11. We have
asked on these characteristics and we have used the term “influenced by your manager” because
especially managers have the possibility to influence their employees. We can declare as we can see
from results that employee opinions in this area are very critical. The most critical and skeptical in
this area are employees older than 35 years. This area would require wider research to find out what
employees see as the cause of this problem. If it is management structure, size of the company or
their manager.
Table 7 Respect of individual needs in motivation system
Answer
"yes"
"rather yes"
"partially"
"rather no"
"no"
Together
Gender
Age
Male
Female
Up to 34
More than 35
7
3
14
10
0
14
13
14
13
14
48
47
50
53
36
27
33
14
23
36
5
3
7
0
14
The type of communication between employee and manager is the important for the
effectiveness of motivation as well as on the performance management in the company.12 The level
of communication has direct impact on communication interchange and because of this has very big
influence on quality of work of employees and as a consequence also on the level of their
motivation. The results (Table 8) show that communication is on the good level (answers yes and
mostly yes) in the case of 68 % of respondents. If we take in consideration the fact that remaining
32 % of respondents have troubles in this area we see this as the right place where the improvement
is needed.
11
Thorne, K., Pellant, A., 2007. The essential guide to managing talent: How top companies recruit, train & retain
the best employees, Kogan Page, London and Philadelphia
12
Strenitzerová, M., Poniščiaková, O., 2006. Diagnostika a manažment procesov v riadení ľudských zdrojov, EDIS,
Žilina
27
Table 8 Openness, effectiveness and regularity of communication with manager
Answer
Together
"yes"
"mostly yes"
"sometimes"
"mostly no"
"no"
23
45
25
5
2
Gender
Age
Male
Female
Up to 34
More than 35
27
14
20
29
40
57
50
36
27
21
20
36
3
7
7
0
3
0
3
0
Source: own research
During the empirical research we have tried also to measure the perception of different
motivational instruments by employees. We have obtained question from one respondent if the
question is set properly regarding phrase “uses or should use”. The explanation is that we want to
know what instrument is the best independently from the fact of manager uses it or it is just the
wish of the employee. The four instruments with the best perception by employees are: creation of
good relationships, providing of necessary information, providing space for independent action and
possibility to participate in educational activities. There are the same instruments considered as the
best by male respondents. Female respondents consider as the best instruments: possibility to
participate in educational activities, providing of necessary information, enabling of carrier growth,
acknowledgement of personal bonus and rewards, creation of good relationships. We can see that
female respondents consider carrier growth and acknowledgement of personal bonus and rewards as
very effective motivational instrument. This difference can be explained by comparatively smaller
amount of female employees and positions that they have in the ICT companies. Employees with
age to 34 years consider as most effective instruments: creation of good relationships, enabling of
carrier growth and possibility to participate in educational activities. Employees older than 35 years
consider as the most effective: providing of necessary information, creation of good relationships,
providing space for independent action.
Table 9 Perception of effectiveness of motivational tools
Motivational tools
acknowledgement of personal bonus and rewards
Together
Gender
Age
Male
Female
Up to 34 More than 35
6
5,7
6,6
6,2
5,1
providing of necessary information
enouncement of praise
creation of good relationships
manifestation of the interest in your opinions and
ideas
providing space for independent action
enabling of carrier growth
correctness of direct supervisor and management
6.5
5.3
6.6
5.5
6,4
5
6,6
5,6
6,8
5,9
6,6
5,5
6,5
6
6,8
6
6,3
3,9
6,2
4,6
6.4
6.2
5.5
6,5
5,7
5,5
6,1
6,7
5,6
6,5
6,7
5,6
6,1
5,2
5,3
possibility to participate in educational activities
usage of threats and sanctions
6.4
2.3
6,1
2,3
6,9
2,1
6,6
2,5
5,8
1,6
The important part of motivational aspects investigation in ICT companies is the employee’s
self-assessment of his/her inner motivation. We think that in the environment of ICT company is
relatively difficult to make this assessment. The first problem is the small objectivity of similar
research if it is performed by line manager. The only possible way how to find out answers on these
questions is the monitoring of employee’s work and outputs of his/her work. This approach is more
objective but requires manager’s effort on regular basis. We have focused our research on following
28
4 areas that have key importance for employees in ICT Company and that are related with inner
motivation of employees:
- To quality of work
- To ongoing increasing of the level of professional knowledge and skills
- To provide new motives and increase the effectiveness of performed processes
- To cooperate with manager and other departments of the company
- As we can see from results in table 10 employees in the ICT companies have high level of
motivation to quality work. We cannot see any major differences from the point of view of age and
gender of respondents.
Table 10 Inner motivation of employees to quality of work
Answer
very high
sufficiently high
average
rather low
low
Together
Gender
Age
Male
Female
Up to 34
More than 35
32
33
29
33
29
50
57
36
47
57
18
10
36
20
14
0
0
0
0
0
0
0
0
0
0
Table 11 Inner motivation of employees to ongoing increasing of the level of your professional knowledge and
skills
Answer
Toget
Gender
Age
her
Male
Fema
Up to
More than
le
34
35
very high
18
20
14
20
14
sufficiently high
57
67
36
53
64
average
20
10
43
23
14
rather low
2
3
0
3
0
low
2
0
7
0
7
The results introduced in Table 11 employees in the ICT companies have high level of
motivation to ongoing increasing of the level of your professional knowledge and skills. We cannot
see any major differences from the point of view of age of respondents but there is little bit higher
motivation at the employees younger than 34 years. There is visible difference from the point of
view of gender. 87% of male respondents have sufficiently high or very high inner motivation but
only 50% of male respondents have such level of inner motivation to ongoing increasing of the
level of professional knowledge and skills.
29
Table 12 Inner motivation of employees to provide new motives and increase the effectiveness of performed
processes
Answer
Together
Gender
Age
Male
Female
Up to 34
More than 35
very high
14
17
7
10
21
sufficiently high 32
33
29
30
29
average
43
40
50
47
36
rather low
11
10
14
13
7
low
2
0
7
0
7
The level of motivation to provide new motives and increase the effectiveness of performed
processes is the lowest from the 4 areas we are measuring (Table 12). 46 % of respondents have
very high or sufficiently high level of motivation in this area. The higher level of this motivation is
present at male respondents compared to female respondents and at the employees older than 35
years compared to younger employees.
The motivation to cooperate with manager and other departments of the organization is
relatively good (Table 13). There are only 7% of the respondents that declared lower level of the
motivation in this area. From the point of view of gender and age the stronger groups in this area are
male respondents and respondents up to 34 years. But differences are relatively small when we
consider the amount of respondents that participated on this research.
Table 13 Inner motivation of employees to cooperate with your manager and other departments of the
organization
Answer
Together
Gender
Age
Male
Female
Up to 34
More than 35
very high
14
13
14
17
7
sufficiently high
43
47
36
43
43
average
36
37
36
30
50
rather low
7
3
14
10
0
low
0
0
0
0
0
Conclusions
The article has introduced to part of survey results about characteristics and challenges of
motivational aspects from the point of view highly qualified employees at the ICT markets and
highlighted the importance for any ICT organisation or company to consider motivational aspects in
the managerial work. The case study confirms and broadens the theoretical findings on importance
of motivational aspects, on the inner motivation that is very important in the case of highly educated
employees. There is no universal recipe for the successful motivation of these employees in ICT
companies. Most of the aspects are related to manager’s personality and his/her managerial skills.
They create natural environment in which employees can optimally use their knowledge and skills
for the welfare of the organization. The aspects that had the lowest presence in our research are:
usage of effective instruments for motivation, thorough knowledge and control of manager’s
emotions and organizational knowledge, knowledge from the area of management and development
of human potential. Another problem is the insufficient level of emotional intelligence and lack of
knowledge from the area of the management of human resources or potential.
References
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2. Bedrnová, E. – Nový, I. a kol. 2004. Psychologie a sociologie řízení. 2. vyd. Praha: Management
Press, 586 s.
30
3. Blašková, M., Grazulis, V. 2009. Motivation of Human Potential: Theory and Practice.
Publishing Centre of Mykolas Romeris University, 2009.
4. Blašková, M. et al., 2006. Riadenie a rozvoj vysokokvalifikovaného ľudského potenciálu, TU,
Zvolen.
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8. Robins S. P. – Coulter M. 2004. Management. Praha: Grada Publishing, p. 496.
9. Strenitzerová, M., Poniščiaková, O., 2006. Diagnostika a manažment procesov v riadení
ľudských zdrojov, EDIS, Žilina.
10. Thorne, K., Pellant, A., 2007. The essential guide to managing talent: How top companies
recruit, train & retain the best employees, Kogan Page, London and Philadelphia.
31
ATVYKSTAMASIS TURIZMAS LIETUVOJE: ANALIZö IR VYSTIMOSI
TENDENCIJOS
Aldona Damulien÷
Mykolo Romerio universitetas, Ateities g. 20, LT-08303 Vilnius
el. paštas [email protected]
Santrauka. Straipsnyje analizuojamas Lietuvos atvykstamasis turizmas ir jo vystimosi
tendencijos. Nagrin÷jama turizmo sampratos kilm÷ ir apbr÷žimų įvairov÷, atskleidžiami esminiai
turizmą charakterizuojantys bruožai. Analizuojamas Lietuvos atvykstamojo turizmo vystimasis
1993 – 2010 metais ir jį įtakojantys veiksniai. Atskleidžiamos globalios problemos su kuriomis
susiduria turizmo sektorius
Raktiniai žodžiai: turizmo rinka, atvykstamasis turizmas, užsienio lankytojai, turistai,
turizmo eksporto pajamos.
Įvadas
Turizmas – viena perspektyviausių ir stambiausių ekonomikos sektorių pasaulyje. 2010 m.
turizmo ind÷lis į pasaulio bendrąjį vidaus produktą (BVP) siek÷ apie 5%. Tarptautinio turizmo
eksporto pajamos sudar÷ 919 mlrd. JAV dolerių (693 mlrd. eurų) (beveik 3 mlrd. JAV dolerių per
dieną), o tai daugiau kaip 30 % pasaulio paslaugų eksporto arba 6 % bendro prekių ir paslaugų
eksporto1. Pagal prekybos apimti tarptautinis turizmas užima ketvirtą vietą po kuro, cheminių
medžiagų ir automobilių pramon÷s produkcijos eksporto. Turizmo sektoriuje sukurta daugiau nei
235 mln. darbo vietų (8 % visos darbo j÷gos). 2010 m. pasaulio valstyb÷s sulauk÷ iki 940 mln.
keliautojų. 2011 m. JT PTO prognozuoja atvykstančių turistų skaičiaus augimą nuo 4 % iki 5 %2.
Turizmas – tai atviros šalies įvaizdis, paslaugų sferos pl÷tojimas, geresnis šalies
infrastruktūros naudojimas, darbo efektyvumo didinimas, naujų darbo vietų sukūrimas, geresnis
veiklos pasiskirstymas regionuose, aktyvesn÷ užsienio valiutos apyvarta, šalies pajamų did÷jimas,
mažų ir vidutinių įmonių pl÷tra, ryšių su kitais ekonomikos sektoriais stipr÷jimas.
Tod÷l Lietuvai, siekiančiai pagerinti mok÷jimų balansą, užtikrinti pakankamus ir stabilius
tvirtos valiutos gavimo šaltinius, kurti naujas darbo vietas, skatinti šalies infrastruktūros ir atskirų
regionų ekonomikos augimą, pritraukti potencialius užsienio investuotojus, spartus turizmo
vystymas gali tapti būtina ir esmine šių tikslų pasiekimo sąlyga.
Tyrimo tikslas: išnagrin÷ti Lietuvos atvykstamąjį turizmą ir jo vystimosi tendencijas. Tyrimo
objektas: atvykstamasis turizmas.
Siekiant užsibr÷žto tikslo, numatoma:
1.
Atskleisti ir įvertinti turizmo sampratos įvairovę;
2.
Išnagrin÷ti Lietuvos atvykstamojo turizmo kitimą 1993 – 2010 metais ir pagrindinius
įtakojusius veiksnius;
3.
Įvardinti globalias problemas su kuriomis susiduria ir turizmo sektorius.
Tyrimo metodai: straipsnis parengtas sistemin÷s, bendrosios, login÷s, lyginamosios analiz÷s ir
apibendrinimo metodais.
1
UNWTO. Tourism Highlights. 2011 Edition. For more information: Facts & Figures section at www.unwto.org/facts
http://mkt.unwto.org/sites/all/files/docpdf/unwtohighlights11enhr.pdf
2
For the latest trends in international tourism: UNWTO World Tourism Barometer. For an overview of tourism in
2010: UNWTO Tourism Highlights. Šaltinis: http://unwto.org/facts/eng/highlights.htm
32
1. Turizmo definicija
Etimologiškai, žodis „turizmas“ yra kilęs iš lotinų kalbos žodžio „tornare“ ir graikų „tornos“
(tekinis arba apskritimas), reiškiančių jud÷jimą aplink centrinį tašką arba ašį3. Ši reikšm÷ pasikeit÷
anglams prid÷jus priesagą „- izm“ nusakančią „veiksmą ar procesą, tipišką elgesį ar kokybę“, ir
priesagą „-ist“ reiškiančia „asmenį, atlikusį tokį veiksmą“. Žodis kelion÷ kartu su priesagomis izmas ir -ist rodo jud÷jimo aplink ratą veiksmą. Apskritimas – tai atspirties taškas, kuris galiausiai
grįžta atgal į savo pradžią. Tod÷l, pavyzdžiui, kelionę ratu sudaro keliavimas pirmyn ir atgal, t.y.
aktas kai paliekamas pradžios taškas ir grįžtama į jį atgal. Tokia kelion÷ gali būti vadinama
turizmu.
Ilgainiui buvo bandoma tiksliai apibr÷žti turizmo sąvoką, tačiau iki šiol n÷ra prieita prie
vieningo universalaus turizmo apibr÷žimo. Tod÷l mokslin÷je literatūroje galima sutikti skirtingų
požiūrių į turizmo sampratą. Štai keletas jų. Turizmas – tai:
• ,,... visuma reiškinių ir santykių, kylančių iš kelionių bei laikino buvimo toje teritorijoje, tol
kol tai netampa nuolatine gyvenamąja vieta ir n÷ra susijusi su apmokama veikla” (Šveicarijos
profesoriai Hunziker ir Krapf)4;
• „... visumą tarpusavio santykių ir paslaugų, susijusių su laikinu ir savanorišku keliautojo
gyvenamosios vietos pakeitimu nekomerciniais ir neprofesiniais tikslais“ (Bernecher)5;
• „... laikinas žmonių išvykimas ir jud÷jimas toli nuo jų nuolatin÷s gyvenamosios bei darbo
vietos ir visa veikla, vykdoma šios išvykos metu“ (Wanhill)6;
• „... veikla, apimanti turistų elgseną, išteklių naudojimą ir sąveiką su kitais žmon÷mis,
ekonomiką bei aplinka, taip pat fizinį turistų jud÷jimą į kitas teritorijas, kurios n÷ra įprastos jų
gyvenimo vietos“ (Witt, Brooke ir Buckley)7;
• „... žmonių veikla, apimanti jų elgseną, išteklių naudojimą ir sąveiką su kitais žmon÷mis,
ekonomiką bei aplinką, taip pat fizinį turistų jud÷jimą į kitas teritorijas, kurios n÷ra įprastos jų
nuolatinio gyvenimo vietos“(Bull)8.
Skirtingai turizmas apibr÷žiamas ir tarptautinių organizacijų dokumentuose:
• ,,...laikinas, trumpalaikis žmonių jud÷jimas iš savo pastovios gyvenamosios vietos į kitas
vietoves bei užsi÷mimai šių apsilankymų metu; tai apima visą jud÷jimą, taip pat vienadienius
apsilankymus bei ekskursijas” (Didžiosios Britanijos Turizmo Institutas, 1976 m.)9;
• „... viena iš aktyvaus poilsio būdų, kelion÷s siekiant pažinti vienus ar kitus rajonus, naujas
šalis, dažnai derinant jas su sporto elementais“ (Pasaulio Turizmo Organizacijos (PTO), 1981 m.)10;
• „... visos kelionių, ekskursijų rūšys, kai asmuo palieka savo nuolatinę darbo ir gyvenimo
vietą ilgiau nei vienai parai ir trumpiau nei 12 m÷nesių, ir kai išvykos tikslas n÷ra samdoma,
apmokama veikla“ (PTO, 1991 m.)11.
Nežiūrint sąvokų skirtumų, galima išskirti pagrindinius aspektus naudojamus turizmui
apibr÷žti12:
3
Theobald, William F. Global tourism (2nd ed.). Butterworth–HeinemannOksford [Anglija]: Butterworth-Heinemann
, 1998,p.8.
4
Holloway J.C. The Business of Tourism. Harlow: Financial times: Prentice Hall, 2006, p. 4. Jayapalan N. An
Introduction to Tourism. New Delhi: Atlantic Publishers and Distributors, 2001, p. 5.
5
Bernecher, P. Fundaments of tourism. Geneva, 1964, p.14.
6
Wanhill, S. Tourism Statistics to 2000. Proceedings of Current Issues in Services Research Conference. Poole,
Dorset Institute, 1988, p. 2.
7
Witt, S.F., Brooke, M.Z. ir Buckley, P.J. The Management of International Tourism. London: Unwin Hyman Ltd,
1991, p. 4.
8
Bull. A. The economics of travel and Tourism. Australia: Pitman Publishing. 1994, p. 1.
9
Holloway J.C. The Business of Tourism. Harlow: Financial times: Prentice Hall, 2006, p. 5.
10
Dvilevičien÷ D. Kelionių paslaugų industrija ir komercija. Vilnius, 1997, p. 54. Ekonomika sovrem÷nogo turizma.
Moskva-Sankt Peterburg: Torgobyj dom „G÷rda“, 1998, p. 20.
11
Holloway J.C. The Business of Tourism. Harlow: Financial times: Prentice Hall, 2006, p. 5. European Community:
Past and Future of the Tourism.// UK travel Weekly. 1996, Nr.1, p. 16
33
•
išvykimą iš nuolatin÷s aplinkos;
•
laikinumą (laikotarpį iki vienerių metų)13;
•
veiklą kelion÷s metu;
•
kelion÷s tikslą14.
Connell, Stephen, Cooper ir kt.(2006) nurodo, kad, norint paaiškinti terminą ,,įprastin÷
aplinka”, kartais įtraukiama atstumo aplinkyb÷,.
Šie pagrindiniai momentai labiausiai charakterizuoja turizmą ir leidžia išskirti iš kitų
ekonomikos sektorių.
Atkreiptinas d÷mesys į tai, kad visuose aukščiau pateiktuose turizmo apibr÷žimuose
pasigendama atstumo dimensijos. Tod÷l Holloway (2006) pagrįstai iškelia retorinį klausimą ,,Ar
galima turistu vadinti žmogų, kuris tam, kad apsipirktų, iš savo gyvenamosios vietos važiuoja 12
mylių?”15. Turizmo sąvokoje svarbu nubr÷žti ne tik laiko, bet ir atstumo ribas, kas ir buvo bandyta
padaryti JAV, Kanadoje ir Jungtin÷je Karalyst÷je, nustatant atitinkamai 50, 25 bei 20 mylių
atstumus, kuriuos nuvažiavus, jau galima vadintis turistu. Atstumo reikšmę akcentavo taip pat Mill
bei Morrison (1998) pabr÷ždami, kad, nors turizmas visuomet reiškia kelionę, tačiau kelion÷ ne
visada gali reikšti turizmą16. Tačiau atstumo klausimas ir toliau išlieka diskusijų objektu, o turizmui
apibr÷žti dažniausiai naudojama 1991 metais PTO pasiūlyta sąvoka.
2. Atvykstamasis turizmas Lietuvoje 1993-2010 m.
Masinis turizmas – reliatyviai naujas fenomenas. Nors turizmo atskaitos tašku galima vadinti
Anglijoje 1841 m. Thomas Cook suorganizuotą kelionę traukiniu, tačiau istorikai linkę teigti, jog
turizmas masiniu reiškiniu tapo tik po Antrojo Pasaulinio karo.
Lietuvoje rinkos santykiais organizuojamo masinio turizmo pradžia sietina su
Nepriklausomyb÷s atkūrimu šalyje. Atkūrus Lietuvos nepriklausomybę, pirmaisiais metais
analizuojamame sektoriuje mažai kas pasikeit÷, kadangi Lietuvos Respublikos užsienio valstyb÷s
vis dar nepripažino, o jos sienas kontroliavo TSRS tarnybos. Tik po 1991 m. rugpjūčio pučo ir
TSRS žlugimo Lietuva po daugelio centralizuoto valdymo metų prad÷jo naują rinkos ekonomikos
atkūrimo ir raidos etapą. Turizmo sektorių, kaip ir visą privatų šalies ūkį, teko kurti beveik tuščioje
vietoje.
Prasid÷jo sparti turizmo įmonių privatizacija, kuriai juridinį pagrindą suteik÷ 1991 m. vasario
m÷n. 28 d. Valstybinio turto pirminio privatizavimo įstatymas17. Juo remiantis suskaidytos
monopolin÷s turizmo valdymo struktūros, prad÷tos kurti naujos privačios turizmo įmon÷s.
Pirmieji Nepriklausomyb÷s metai pasižym÷jo ryškiu atvykstančių turistų skaičiaus maž÷jimu
(1 pav.). Maž÷jo tiek organizuotų grupių, tiek pavienių turistų skaičius, trump÷jo jų praleistas
laikas Lietuvoje. Didžiausias turistų skaičiaus sumaž÷jimas stebimas 1995 m., kuomet buvo įvestos
vizos NVS šalių piliečiams. Turizmo rinkoje buvo smarkiau jaučiami ankstesnieji ryšiai: tebevyravo
turistai iš Rytų (buvusių TSRS) šalių.
12
Connell J., Stephen J. P. Tourism: A Modern Synthesis, Second Edition. London: Thomson Learning, 2006, p.
12.Cooper Chris et al. Tourism: Principles and Practice. Fourth Edition. Harlow: Financial times: Prentice Hall, 2008,
p. 12.
13
p. 12.
14
p. 12.
15
Holloway J.C. The Business of Tourism. Harlow: Financial times: Prentice Hall, 2006, p. 5.
16
Mill R. C., Morrison A. M. The Tourism System. – Iowa: Kendall/Hunt, 1998, p.12.
17
Lietuvos Respublikos valstybinio turto pirminio privatizavimo įstatymas Nr. I-1115 //Valstyb÷s žinios, 1991, Nr.: 10
-261.
34
Nuo 1996 m. turizmo rinka prad÷jo sparčiai atsigauti (1 pav. ir 1 lentel÷). 1999 m. Lietuvą
aplank÷ jau beveik 4,5 milijono užsieniečių, iš jų – 1,45 milijono turistų (lankytojų su nakvyne).
Pagrindinis lankytojų srautas buvo iš kaimyninių šalių: Rusijos (1,5 mln.), Latvijos (1,2 mln.),
Baltarusijos (762 tūkst.), Estijos (319 tūkst. ) ir Lenkijos (179 tūkst.).
1 pav. Užsienio lankytojų skaičiaus kitimo tendencija 1993 – 2001 m.
Šaltinis: Lietuvos valstybinis turizmo departamentas, 2002, p. 3
Daugiausia užsienio lankytojų (68,89 %) atvyko kelių transportų, 24,44 % - traukiniais, 3,22
% - naudojosi oro transportu ir tik 1,51 % svečių pasirinko jūrų transportą. Užsieniečių išlaidos
Lietuvoje tais metais siek÷ 2,4 milijardus litų, o tai sudaro 14 % viso Lietuvos prekių ir kitų
paslaugų eksporto arba 5,6 % BVP.18
Bet 1998–1999 metų Rusijos kriz÷ l÷m÷ atvykstančių užsienio svečių srauto sumaž÷jimą 2000
– 2001 m. Tiesa, jis buvo ženkliai mažesnis lyginant su 1995 m., nes tiek Rusijos, tiek NVS šalių
rinka jau nebetur÷jo lemiamo poveikio Lietuvos atvykstamajam turizmui. Pagal atvykusių lankytojų
skaičių Rusija užleido vietą Latvijai, daug÷jo svečių iš Vokietijos, Skandinavijos19. Tačiau Vakarų
turistų poreikių netenkinanti šalies turizmo infrastruktūra stabd÷ spartesnę atvykstamojo turizmo
pl÷trą. D÷l ženkliai prarandamos Rytų rinkos ir silpnai pl÷tojamos Vakarų rinkos atvykstančių
užsieniečių srautai maž÷jo ir 2002-2003 m. (1 lentel÷). Tai vert÷ valstybines institucijas ir ypač
privačias firmas daugiau orientuotis į Vakarų rinkas organizuojant ne tik išvykstamąjį, bet ir
atvykstamąjį turizmą. Būtent po 2000 metų imtasi pertvarkyti visus Lietuvos turizmo sektoriaus
elementus. Did÷jant verslo turizmo lyginamajam svoriui ir brangesnio turizmo ekonominio
produkto paklausai, sparčiai pl÷tojama viešbučių statyba, didesnį užmojį įgijo kaimo turizmas, imta
daugiau rūpintis atvykstančiųjų aptarnavimo kokybe20.
Po įstojimo į Europos Sąjungą, turizmas kartu su kitomis ūkio šakomis išgyveno spartų
augimą, kurį lyd÷jo kasmet did÷jantis užsienio lankytojų srautas. Nors statistin÷s apskaitos
pasikeitimas 2004-2006 m. neleidžia pratęsti atvykstančiųjų keliautojų skaičiaus kitimo analiz÷s,
tačiau, remiantis turimais atvykusių iš trečiųjų šalių piliečių duomenimis, galima konstatuoti apie
lankytojų srauto tolesnį did÷jimą (1 lentel÷). Ypač akcentuotini 2006 m., kuomet sulaukta net 11,4
% svečių daugia nei 2005 m. Daug÷jo svečių ir ateinančius dvejus metus. Nežiūrint kasmet
did÷jančio užsienio lankytojų skaičiaus, 2008 m. buvo pasiektas tik 1999 m. lygis.
18
Trumpa Lietuvos turizmo statistikos apžvalga 1999. http://www.tourism.lt/lt/stat/stat99.htm
Lietuvos turizmo statistikos apžvalga, 2000 http://www.tourism.lt/lt/stat/stat00.htm
20
Labanauskait÷ D. (2002). Tarptautinio turizmo įtaka ekonominiam augimui. Ekonomika ir vadyba
2002. Kaunas: Technologija, p. 41-43.
19
35
1 lentel÷ Užsienio lankytojų skaičiaus dinamika Lietuvoje 1997-2010 metais21
Eil.Nr.
Metai
Užsienio lankytojų
pokytis
tūkst. žmonių
procentais
grandininis
grandininis
bazinis kitimo
kitimo tempas
tempas
1
1996
3497
100,00
2
1997
3702
205
105,86
105,86
3
1998
4287
585
115,80
122,59
4
1999
4 453,8
166,8
103,89
127,36
5
2000
4 092,1
-361,7
91,88
117,02
6
2001
4 195,2
103,1
102,54
119,97
7
2002
3 999,4
195,8
95,33
114,37
8
2003
3 635,2
364,2
90,89
103,95
9
2004
2 019,1
***
***
10
2005
2 080,4
***
***
11
2006
2 317,3
***
***
12
2007
4 214,4
***
***
120,51
13
2008
4 458,7
244,3
105,80
127,50
14
2009
4 001,3
457,4
89,74
114,42
15
2010
4 073,0
71,7
101,79
116,47
16
2010/1996
576,0
***
***
116,47
Šaltinis: sudaryta remiantis atitinkamų metų Statistikos departamento leidiniais „Lietuvos statistikos metraštis“,
„Turizmas Lietuvoje” ir internetiniu šaltiniu http://www.tourism.lt/turizmo_statistika/apzvalgos.php.
skaičius, tūkst.
žmonių
Po įstojimo į Europos Sąjungą, turizmas kartu su kitomis ūkio šakomis išgyveno spartų
augimą, kurį lyd÷jo kasmet did÷jantis užsienio lankytojų srautas. Nors statistin÷s apskaitos
pasikeitimas 2004-2006 m. neleidžia pratęsti atvykstančiųjų keliautojų skaičiaus kitimo analiz÷s,
tačiau, remiantis turimais atvykusių iš trečiųjų šalių piliečių duomenimis, galima konstatuoti apie
lankytojų srauto tolesnį did÷jimą (1 lentel÷). Ypač akcentuotini 2006 m., kuomet sulaukta net 11,4
% svečių daugia nei 2005 m. Daug÷jo svečių ir ateinančius dvejus metus. Nežiūrint kasmet
did÷jančio užsienio lankytojų skaičiaus, 2008 m. buvo pasiektas tik 1999 m. lygis.
Tačiau 2007 m. prasid÷jusi JAV finansų kriz÷, v÷liau peraugusi į pasaulinę ekonominę krizę,
dar kartą smog÷ turizmo sektoriui: 2009 metais bendras užsienio svečių skaičius lyginant su 2008
m. sumaž÷jo 10,26%, o nakvojančių (turistų) – net 16,8 %. Kriz÷s padariniai buvo juntami ir 2010
m., kuomet Lietuvą aplank÷ tik 4 073,0 turistų arba vos 1,8 % daugiau nei 2009 m.
Lankytojų srauto sumaž÷jimui įtakos tur÷jo taip pat Lietuvos prisijungimas prie Šengeno
erdv÷s (2007- 12- 21; oro uostuose nuo 2008- 03- 30), ženkliai sumažinęs svečių iš Rusijos srautą22.
Jei 2007 ir 2008 metais Rusija buvo pirmaujanti šalis pagal iš jos atvykusių turistų skaičių, tai 2009
m. šis skaičius sumaž÷jo net 16,7 proc. arba 1 proc. punktu.
Neigiamą vaidmenį suvaidino ir „FlyLAL – Lithuanian Airlines“ bankrotas 2009 m. D÷l šios
aviakompanijos nutrauktų skrydžių sumaž÷jo turistų srautas iš Jungtin÷s Karalyst÷s 23 proc.,
Italijos – 40 proc. ir ypač Airijos – beveik 50 proc. Tai ypač neigiamai paveik÷ turizmo sektorių,
nes šių šalių piliečių vidutin÷s kelion÷s išlaidos gerokai viršija bendrą visų šalių vidurkį (Italijos –
14 proc., Jungtin÷s Karalyst÷s – 34 proc., o Airijos net 43 proc.). Tiesa, Lietuvos turizmo rinkos
21
Lietuvos Respublikos Statistikos departamentas prad÷jo teikti susistemintą informaciją apie turizmą nuo 1996 metų.
1996-2004 m. pateikiami Vidaus reikalų ministerijos Valstyb÷s sienos apsaugos tarnybos duomenys; 2004–2006 m. –
duomenys apie atvykusius tik iš trečiųjų šalių, o nuo 2007 m. - asmenų srautų pasienio kontrol÷s punktuose statistinio
tyrimo ir Vidaus reikalų ministerijos Valstyb÷s sienos apsaugos tarnybos duomenys.
22
Milašien÷ A. Zaliapūgien÷ B. Šengeno zonos įtaka turizmo srautams Lietuvoje. Tarptautin÷s mokslin÷s metodin÷s
konferencijos „Inovacijos turizmo versle ir moksle“ straipsnių rinkinys. Klaip÷da: S. Jokužio spaustuv÷ – leidykla,
2008, p. 4–6.
36
smukimą d÷l skrydžių stokos dalinai amortizavo Lietuvos vardo tūkstantmečiui pamin÷ti skirti
renginiai bei „Vilnius – Europos kultūros sostin÷“ kultūriniai renginiai 23.
Nagrin÷jamu laikotarpiu Lietuva daugiausiai turistų pritrauk÷ laisvalaikio, verslo ir
profesiniais bei draugų ir giminių lankymo tikslais. Nors 2009 m. lankytojų srautas maž÷jo visose
šiose srityse, tačiau verslo ir profesiniais tikslais apsilankančių turistų svarba bendrame sraute
išaugo nuo 28,5 proc. 2007 metais iki 36,2 proc. 2009 metais24. Galima teigti, kad ekonomiką
ištikusi finansų kriz÷ mažiausiai paveik÷ būtent šiuo tikslu keliaujančius svečius iš užsienio.
Verslo turistai šalyje palieka 4–5 kartus daugiau pajamų nei atvykę kitais tikslais, be to
užmezgami naudingi ryšiai prekybos pl÷tojimui, skatinamos investicijos. Šie turistai generuoja
pajamas ir laisvalaikio paslaugas siūlančioms įmon÷ms, dalis jų grįžta į Lietuvą tiesiog poilsiauti.
Tod÷l šis lankytojų segmentas šaliai ypač svarbus. Verslo turizmas Nacionalin÷je turizmo pl÷tros
programoje yra viena iš prioritetinių turizmo šakų, tačiau kol kas Lietuvoje gyvuoja vienintel÷
verslo turizmo įmon÷ – L2S (Lithuania to Success).
Kelion÷s tikslas yra pagrindinis faktorius, nuo kurio priklaus÷ kelion÷s trukm÷. 2009 metais
vidutin÷ metin÷ užsieniečio kelion÷s Lietuvoje trukm÷ – 4,5 nakvyn÷s. Vidutiniškai didžiausias
nakvynių skaičius teko tiems, kurie lank÷si Lietuvoje sveikatingumo tikslais – vienam svečiui teko
net 14,13 nakvyn÷s. Antroje vietoje – draugų ir giminių lankymas su 6,53 nakvyn÷mis25. Žinant,
kad tarp turistų buvimo šalyje trukm÷s ir iš turizmo gaunamų pajamų egzistuoja tiesioginis ryšys
(ilg÷jant buvimo trukmei, did÷ja gaunamos pajamos), galima teigti, kad užsienio turistų kelion÷s
laiko trump÷jimas neigiamai atsiliepia iš atvykstamojo turizmo gaunamoms pajamoms.
Maž÷jant pas gimines ir draugus apsistojusių užsienio turistų skaičiui, did÷jo kolektyvin÷se
apgyvendinimo įmon÷se nakvojančiųjų skaičius ir nakvynei skirtų turistų išlaidų dalis, o tuo pačiu –
kolektyvinio apgyvendinimo įmonių gaunamos pajamos. 2007–2009 m. apie 51 proc. visų į Lietuvą
atvykusių užsienio turistų pasinaudodavo viešbučių tipo apgyvendinimo paslaugomis. 2010 m.
Lietuvos apgyvendinimo įmonių (be kaimo turizmo) paslaugomis naudojosi 840 tūkst. užsieniečių.
Bendrosios Lietuvos ūkio pajamos iš turizmo 2010 metais sudar÷ 4,16 mlrd. litų arba 4,4 %
šalies BVP dydžio. Kelionių paslaugų eksporto (atvykstamojo turizmo ) pajamos siek÷ 2,69 mlrd.
Lt ir sudar÷ 25 % šalies paslaugų eksporto arba 4 % prekių ir paslaugų eksporto.
Apibendrinant galima teigti, kad Lietuvos atvykstamasis turizmas vyst÷si netolygiai d÷l
vidaus ir išor÷s veiksnių poveikio. Tolesn÷ turizmo pl÷tra priklausys nuo busimų mikro ir makro
aplinkos pokyčių.
3. Turizmo iššūkiai ir jų įtaka turizmo pl÷trai
Pasaulio globalizacijos ir integracijos procesai ir iš to išplaukiančios pasekm÷s neaplenkia ir
turizmo industrijos. XXI a. ji vis dažniau susiduria ir susidurs su problemomis, kurios įtakoja ne
vien tik verslininkų sprendimus tam tikros nacionalin÷s valstyb÷s ribose, bet ir keičia šių šalių
vyriausybių darbotvarkes26. Tai:
Žem÷s klimato pokyčiai. Pasaulyje stebima audrų, potvynių, žem÷s dreb÷jimų, ugnikalnių
išsiveržimų ir kitų negandų did÷jimo tendencija. Daugelis ekspertų mano, kad, jeigu artimiausiu
metu nebus imamasi toli siekiančių priemonių, pasaulio žem÷s klimato pokyčiai ir jų įtaka orui ir
gamtai sukels rimtą pavojų. Turizmas yra viena iš ekonomikos sektorių, kurį ypač veikia klimato
pokyčiai ir stichin÷s nelaim÷s. Mokslininkams pateikiant vis daugiau įrodymų apie art÷jantį
globalinį atšilimą bei ozono sluoksnio maž÷jimą, gali iš esm÷s pasikeisti turistų traukos centrai.
23
Turizmo būkl÷s apžvalga. Vilnius: Valstybinis turizmo departamentas prie Ūkio ministerijos, 2010. – URL:
www.tourism.lt/.../TURIZMAS_apzvalga_uz%202008_2009I%20ketv_UM_2.doc.
24
Statistikos departamento leidiniai ,,Turizmas Lietuvoje” 2007, 2008, 2009 metais.
25
Statistikos departamento leidiniai Turizmas Lietuvoje 2009, 2010.
26
Henderson, Joan C. Tourism crises: causes, consequences and management . Amsterdam : Elsevier : ButterworthHeinemann, 2007.
37
Terorizmas ir smurtas. Rugs÷jo 11 įvykiai JAV, įvykiai Rusijoje (Maskvoje ir Beslane),
Breivikio žudyn÷s Norvegijoje ir kt. pakeit÷ ne vien galingiausių pasaulio valstybių krašto
apsaugos doktrinas, bet ir turizmo verslą. Teroristų veiksmai s÷ja baimę. Tod÷l vis daugiau turistų
renkasi šalis su mažesne teroro atvejų rizika. Be to, vis daugiau žmonių renkasi kelionę autobusu,
mašina ar net dviračiu, vietoj skrydžio l÷ktuvu.
Globalin÷s ligos. Daug÷jant tarptautinių kelionių šalyse su skirtingu klimatu ir skirtingais
higienos reikalavimais, did÷ja rizika užsikr÷sti įvairiomis ligomis. Daugelyje vadinamųjų
besivystančių dažnai turistų lankomų šalių, 50% bendro mirtingumo atvejų sukelia infekcin÷s ligos.
Kuo didesnis žmonių mobilumas (pavyzdžiui, turistinių kelionių metu), tuo greičiau gali išplisti
virusas visame pasaulyje. SARS, AIDS, naujos kartos gripo virusas H1N1 ir kitos epidemijos
skatina ne vien naujos „sveikatos apsaugos paradigmos“ klostimąsi, bet realiai veikia ir visą turizmo
industriją.
Šie globalūs iššūkiai įtakoja daugelio valstybių, jų tarpe ir Lietuvos turizmo sektorių:
regionuose, kuriuose kyla terorizmo ar globalinių ligų gr÷sm÷, ženkliai sumaž÷ja turistų srautai ir
net gali sustoti turizmo infrastruktūros pl÷tra. Ir priešingai, did÷ja turistų pasiūla saugesn÷se,
turizmui palankesn÷se, patrauklesn÷se valstyb÷se. Tokiu būdu gali pasikeisti turistų traukos
centrai27. Turistų traukos centrai gali persistumti ir d÷l klimato pokyčių.
Lietuva turi visas prielaidas tapti vienu iš tokių turistų traukos centru. Pasinaudodama savo
lyginamuoju pranašumu ji turi didinti turizmo sektoriaus konkurencingumą. Siekiant dinamiško ir
tvaraus augimo, būtina pl÷toti turizmo naujoves, stiprinti paslaugų teikimo kokybę visose sektoriaus
grandyse, bandyti įveikti paklausos sezoniškumą, įvairinti turizmo paslaugų pasiūlą, pasiūlyti darnų
ir aukštos kokyb÷s turizmo produktą. Akcentuotina turizmo sinergijos su menu ir amatais svarba,
kuri gali ne tik paįvairinti turizmo pasiūlą, bet ir pad÷ti išsaugoti kultūros paveldą, pl÷toti vietos
ekonomiką. Tai gali apimti visą spektrą kultūros paveldo (įskaitant kultūros maršrutus), šiuolaikin÷s
kultūros, saugomų gamtos objektų, sveikatingumo ir rekreacijos (įskaitant SPA turizmą), švietimo,
kulinarinį, istorinį, sporto ar religinį turizmą. Siekdama išsaugoti savo konkurencinį lygį, turizmo
pramon÷ turi prisitaikyti prie demografinių pokyčių – pasaulio gyventojų sen÷jimo proceso –
pasiūlydama šios segmento poreikius atitinkančius turizmo produktus. Į turizmo paslaugų teikimo
sistemą taip pat turi būti integruotas riboto judumo gyventojų segmentas, turintis specifinius
poreikius.
Pagrindinis šalies turizmo potencialas – keturios prioritetin÷s turizmo rūšys: kultūrinis,
aktyvaus poilsio, dalykinis bei sveikatos turizmas, iš kurių labiausiai pamin÷tinos dvi pastarosios.
Išvados
Turizmas yra viena perspektyviausių ir stambiausių ekonomikos sektorių pasaulyje. Tačiau
tai, kad iki šiol n÷ra vieningo universalaus turizmo apibr÷žimo, rodo šio reiškinio sud÷tingumą.
Darbe atlikta analiz÷ parod÷, jog atvykstamasis turizmas pl÷tojosi Lietuvoje labai netolygiai.
Per dvidešimties metų laikotarpį akcentuotini trys nuosmukiai, kuomet ženkliai sumaž÷davo į šalį
atvykstančių turistų skaičius: 1993-1995 m., 2000-2003 m. ir 2009-2010 m.
Netolygią turizmo raidą daugiausiai l÷m÷: 1990-1995 m. ekonomikos recesija šalyje; 1998m.
Rusijos ekonomin÷ kriz÷; 2008–2010 m. pasaulin÷ ekonomin÷ kriz÷.
Prognozuojat tolesnę turizmo pl÷trą Lietuvoje, būtina atsižvelgti į globalias problemas su
kuriomis vis dažniau susiduria ir susidurs pasaulio turizmo industrija: klimato pokyčius, terorizmą
ir smurtą, globalines ligas, kurios realiai gali pakeisti turistų traukos centrus.
Panaudojus ir maksimaliai sustiprinus esamas turizmo sektoriaus potencialo stipriąsias puses
– gana išvystytą turizmo infrastruktūrą ir įvairialypius turizmo išteklius, sudarančius prielaidas kurti
ir realizuoti subalansuoto turizmo produktus ir pagal galimybes užtikrinant adekvatų finansavimą,
27
Organizacija meždunarodnogo turizma. Pod red.akcijej A.A Skamnickogo. Moskva: Gardariki, 2008.
38
Lietuva gali sukurti ir pasiūlyti originalius produktus ir tapti vienu iš patrauklių turistų traukos
centrų.
Šaltiniai
1. Bernecher, P. Fundaments of tourism. Geneva, 1964.
2. Bull. A. The economics of travel and Tourism. Australia: Pitman Publishing. 1994.
3. Connell J., Stephen J. P. Tourism: A Modern Synthesis, Second Edition. London: Thomson
Learning, 2006.
4. Cooper Chris et al. Tourism: Principles and Practice. Fourth Edition. Harlow: Financial times:
Prentice Hall, 2008.
5. Dvilevičien÷ D. Kelionių paslaugų industrija ir komercija. Vilnius, 1997.
6. Dwyer, Larry; Forsyth, Peter and Dwyer, Wayne. Tourism economics and policy. Bristol;
Buffalo (N.Y.); Toronto: Channel View Publications, 2010.
7. For the latest trends in international tourism: UNWTO World Tourism Barometer. For an
overview of tourism in 2010. UNWTO Tourism Highlights.
http://unwto.org/facts/eng/highlights.htm
8. Henderson, Joan C. Tourism crises: causes, consequences and management. Amsterdam:
Elsevier: Butterworth-Heinemann, 2007.
9. Holloway J.C. The Business of Tourism. Harlow: Financial times: Prentice Hall, 2006.
10. Labanauskait÷ D. Tarptautinio turizmo įtaka ekonominiam augimui.// Ekonomika ir vadyba.
2002. Kaunas: Technologija.
11. Lietuvos Respublikos turizmo įstatymas. 1998 m. kovo 19 d. Nr. VIII-667. 2 str. 1 dalis.
Valstyb÷s žinios, 1998, Nr. 32-852.
12. Lietuvos valstybinis turizmo departamentas, 2002, p. 3
13. Milašien÷ A. Zaliapūgien÷ B. Šengeno zonos įtaka turizmo srautams Lietuvoje. Tarptautin÷s
mokslin÷s metodin÷s konferencijos „Inovacijos turizmo versle ir moksle“ straipsnių rinkinys.
Klaip÷da: S. Jokužio spaustuv÷ – leidykla, 2008.
14. Mill R. C., Morrison A. M. The Tourism System. – Iowa: Kendall/Hunt, 1998.
15. Organizacija meždunarodnogo turizma. Pod red.akcijej A.A Skamnickogo. Moskva: Gardariki,
2008.
16. Wanhill, S. Tourism Statistics to 2000. Proceedings of Current Issues in Services Research
Conference. Poole, Dorset Institute, 1988.
17. Witt, S.F., Brooke, M.Z. ir Buckley, P.J. The Management of International Tourism. London:
Unwin Hyman Ltd, 1991.
18. Theobald, William F. Global tourism (2nd ed.). Oksford [Anglija]: Butterworth-Heinemann,
1998.
19. Trumpa Lietuvos turizmo statistikos apžvalga 1999. http://www.tourism.lt/lt/stat/stat99.htm
20. Turizm i rekreacija na puti ustoičivogo razvitija. Moskva: Sovetskij sport, 2008.
21. Turizmas Lietuvoje 2007, 2008, 2009, 2010 metais. Vilnius. Statistikos departamentas.
22. Turizmo būkl÷s apžvalga. Vilnius: Valstybinis turizmo departamentas , 2010. – URL:
www.tourism.lt/.../TURIZMAS_apzvalga_uz%202008_2009I%20ketv_UM_2.doc
23. UNWTO. Tourism Highlights. 2011 Edition. For more information: Facts & Figures section at
www.unwto.org/facts http://mkt.unwto.org/sites/all/files/docpdf/unwtohighlights11enhr.pdf
24. 2010 m. Lietuvos turizmo trumpa ekonomin÷ analiz÷.
http://www.tourism.lt/turizmo_statistika/apzvalgos.php
39
INBOUND TOURISM IN LITHUANIA: ANALYSIS AND TRENDS OF
DEVELOPMENT
SUMMARY
Aldona Damulien÷
Tourism – one of the most promising and fastest growing economic sectors, which is facing
the challenges and opportunities of the global competitive market. The subject of the thesis – the
analysis and trends of development of inbound tourism in Lithuania – is relevant because of the
current changes that took place in recent decades regarding Lithuania’s integration into the EU and
the Schengen area, as well as the global economic recession that has reflected in the performance of
tourism sector.
The objective is to reveal the peculiarities of Lithuania’s inbound tourism functioning and its
development, to find out the prospects of the development conception. For this reason the subject
that has been chosen is the development and prospects of the inbound tourism of Lithuania. The
aforesaid objective leads to the following tasks: to get acquainted with the concept of tourism, its
economic implications; to review the development of the inbound tourism of Lithuania since the
independence, and assess the implications of accession to the EU; to carry out the statistical analysis
of sector’s current state; to evaluate the situation and prospects of Lithuania’s inbound tourism
based on tourism recourses, four priority types of tourism. The problem of the tourism development
and its prospects is being conceptualized in this research. Following research methods have been
used: systematic and logical analysis and synthesis of scientific literature, statistical analysis.
Social and economic development in Lithuania opened the possibility to integrate into the
international tourism market. During the pos-Soviet transformation a significant moment was
joining the Shengen area that has given the freedom of movement. The largest loss of the
reorganization – the loss of East market share for political reasons. Based on survey results, the
main tourism potential of the country - the four priority types of tourism: cultural, active recreation,
business and health tourism with the biggest consideration for the last two. While formatting
internationally competitive tourism product, it is proposed to draw bigger attention to the
development of country’s image, purposeful marketing strategy, the use of tourism recourses for the
development of infrastructure.
Keywords: tourism market; inbound tourism; foreign visitors; tourist; tourism revenues.
40
ASSESSMENT OF EFFICIENCY OF THE SUPPORT MECHANISM FOR
ELECTRICITY GENERATION FROM RENEWABLE ENERGY SOURCES IN LATVIA
Arta Denina, Janis Zvanitajs
Riga Technical University, Faculty of Engineering and Management
Meza str. 1/7, Riga, LV-1048, Latvia
Abstract. The paper analyzes and assesses the efficiency of promotion of electricity
generation from renewable energy sources (RES) in Latvia by looking at the economic incentives
available for entrepreneurs. The main support measure is the obligatory purchase mechanism
(OPM) and the feed-in tariffs for electricity that is generated from RES (RES-E). The methodology
for assessing the efficiency of the economic incentives for RES-E producers is set out. The paper
concludes that there is a room to improve the efficiency of economic incentives for RES-E
generation in Latvia.
Keywords: Renewable energy sources, electricity, cost of electricity generation, support
mechanism, efficiency.
Introduction
There is not much scientific work done in the field of economic analysis that would focus
exclusively on efficiency assessment of the support incentives for RES-E generation in Latvia. In
fact, there has been now thorough assessment carried out on the efficiency of introduction and
expansion of RES-E generation in Latvia. This article represents added value in the respective field
by presenting some analysis and findings of a detailed scientific work carried out by the authors.
The term efficiency refers evaluation of how adequate the input is compared to the output
achieved.
The two most relevant and recent pieces of the scientific research in Latvia have been done in
2009 and 2010, although they do not directly address the topic of this paper. The research paper
“Use of renewable energy sources to ensure sustainable development of Latvia” provides a general
analysis of the benefits RES can bring to the economy (Gaidis et al., 2010). The research carried out
by a group of researchers from Riga Technical University in 2009 “Possibilities for enhanced uses
of RES”, analyzes scenarios for possible use RES in energy production (Riga Technical University,
2009).
For each investment decision the crucial issue is the pay-back time of the investment. In order
to promote use of RES for electricity generation and to ensure acceptable level of return on
investment for potential investors, governments often set a regulatory framework where RES-E
generation is supported. The design of this support can and does vary significantly. There are many
instruments (i.e. feed-in tariffs, investment support, tax discounts, etc.) that can be introduced to
foster RES-E generation business. However, it is important to ensure that the designed support
framework is effective and efficient. This can be very challenging, since, on one hand, it should
guarantee stability and predictability for investments, and, on the other, balance economic
motivation for the potential investor with the overall cost to the society.
In Latvia as in many other countries RES-E generation is not competing in a market place.
Instead, prices for RES-E are set by the regulatory framework. The major support mechanisms for
enhancing RES-E generation business are the obligatory purchase mechanism (OPM) of RES-E
produced and a favourable electricity price (feed-in tariff) which is allocated to the RES-E
producers in Latvia. In addition, the government has set RES-E targets to promote RES-E
generation. Latvenergo AS, the largest electricity utility in Latvia, has a legal obligation to buy all
RES-E produced in Latvia. The tariffs for electricity from different RES sources are set by several
41
legislative acts. Since these measures are complementing each other, in the paper the term support
mechanism is used and it covers both.
The aim of this article is to assess efficiency of the support mechanism for RES-E producers
in Latvia.
In order to achieve the aim, there are the following tasks:
• to establish the methodology for assessing efficiency of the support mechanism for the
RES-E generators in Latvia,
• to evaluate the development of the RES-E generation in the total electricity supply
structure in Latvia;
• to establish a cost reference for different types of the RES-E generation;
• to calculate the prices that generators producing RES-E from various sources of RES are
entitled to within the framework of the support mechanism in Latvia;
• to assess the overall cost paid to the RES-E generators in Latvia;
• to provide an international comparison for the cost of support mechanisms in different EU
member states.
The main sources used to elaborate this paper include research reports from the international
organizations such as International Energy Agency, the European Commission, the European
Statistics Office EUROSTAT, as well as from the Latvian authorities such as Ministry of Economy,
Commission of regulation of the public services, Central Statistical Bureau of Latvia. Unpublished
data from Latvenergo AS as well as the legislative acts that set out methodology for calculation of
feed-in tariffs for selling RES-E produced in Latvia are also used.
The authors have used qualitative and quantitative methods to better explain some aspects of
the article, such as analysis and synthesis; logical and abstractive construction; data grouping and
comparing; correlation – regression analysis; etc.
The paper has the following structure:
In the beginning of the paper the methodology to assess efficiency of the support mechanism
for RES-E producers in Latvia is set out. Then, the RES support mechanism in Latvia is addressed.
This is followed by presentation of the change in the electricity supply structure in Latvia with
particular focus on the development of RES-E generation. The calculation of the feed-in tariffs for
different sources of RES-E shown in an international perspective follows next. Then the cost
reference for RES-E generation is set. The costs are compared with the feed-in tariffs. The paper
concludes that the RES-E generators in Latvia are well remunerated; however, there is a need for
further research in order to pursue with further assessments of the efficiency of the support
mechanism in Latvia.
1. Methodology
Several indicators can be used to assess efficiency of a support mechanism. In this paper the
authors provide the comparison of the RES-E tariffs in Latvia and the cost of RES-E generation
from an international perspective.
The cost of generating electricity and the expected price for
selling the RES-E are the major factors that potential investors in RES-E projects consider.
From the economic efficiency point of view, the optimum situation is reached when the tariff
or price paid for a unit of RES-E is the closest to the cost level of production costs of a RES-E unit.
If the tariff is set too low, there will be no investment projects in RES-E generation. In contrary, if
the tariff is set too high, a situation for windfall profits is created bringing the overall efficiency of
the support mechanism down. Setting the right tariff for RES-E is a challenge. It depends very
much on the technological and market maturity of a RES-E technology (International Energy
Agency, 2008).
The most recent publication of the International Energy Agency (2010) on levelized costs of
electricity generation is used as a reference for the cost estimates for RES-E generation. An
example of the comparison of the RES-E generation cost and the tariffs is provided. Here the tariffs
are calculated using freely chosen installed capacity ranges for the RES-E power plants.
42
2. The support mechanism for RES-E generators in Latvia
The OPM of the RES-E for special tariffs, the major principle of the current support
mechanism for enhancing RES-E generation in Latvia is in place since 1995. However, since then it
has evolved significantly. The state owned public limited company Latvenergo AS is responsible
for purchasing all produced RES-E electricity in Latvia. The tariff to be paid for a unit of RES-E is
calculated from the formulas set by the legislation. The tariffs are different for output of each RESE technology. Therefore, also the generators` revenues from RES-E selling vary.
Until 2002 there were no set limitations as for the amount of RES-E to be purchased in the
framework of the OPM. The price for RES-E was set on the basis of the average electricity tariff
(AET) in Latvia. For small hydro installations it meant double AET, for wind – 1,5 times AET.
After 2002 Latvenergo AS has been obliged to buy only the amount of RES-E that was produced
from the new RES-E generation capacities (not exceeding the annual quota set by the government
each year). For example, in 2005 the only quota available was for biomass (20 MW) and biogas (3
MW) power plants. In fact, the largest capacity quota in general was set for biomass and biogas
power plants. However, only hydro sector and wind experienced real growth in terms of numbers of
companies generating electricity and capacities installed. Despite the important quota for biomass
and biogas no plants were built in this time; these plants first entered into the operation only after
2006. The quota principle was in place until 2005. It was then replaced by the RES-E
generation/consumption quota (targets). Since 2007 a target for RES-E as a share in the total
electricity consumption has been set for each year. The RES-E targets have been set with an
increasing tendency: 44,62% in 2007 and 54,57% in 2010 and the years after.
3. Development of RES-E generation in Latvia
RES-E generation capacity. There has been significant investment made into RES-E
generation. In 2010 there were in total 1622 MW of RES-E capacity installed. The 3 large
hydropower plants account for 95% of this amount. 5% or 72 MW are distributed among the small
independent RES-E generators as follows: 26 MW of small hydro, 30 MW of wind, 5 MW of
biomass and 11 MW of biogas (Central Statistical Bureau of Latvia, 2011).
The total electricity supply in terms of output in 2009 has increased by slightly more than one
fifth compared to that of 2000 and reached 7220 GWh. There has been significant growth in
electricity generation from the decentralized RES and CHP power plants (this growth has taken
place thanks to the support mechanism). Electricity supply from the CHP installations has risen
from 150 GWh in 2000 to 580 GWh in 2009 while the decentralized RES-E installations generated
120 GWh in 2009 (forth fold compared to 2000) (Ministry of Economy, 2011).
Figure 1 compares the electricity supply structures in Latvia in 2000 and 2009. Thanks to the
increased RES-E generation, electricity imports have decreased. In the electricity output from the
decentralized power plants small hydro and wind generation accounted for 50% and 40%,
respectively.
43
50
47,2 47,0
45
40
35
30,2
30
25
20
19,6 20,4
2000
22,9
2009
15
8,1
10
2,5
5
0,5
1,6
0
Large hydro Large CHP
Import
Other RES
Other CHP
Figure 1 Electricity supply structure in Latvia in 2000 and 2009, % (authors` construction based on the working
document on energy statistics from the Ministry of Economy of Latvia)
Figure 2 shows the structure of the domestic electricity generation in Latvia in 2009 by source
of fuel. Almost 65% of the total electricity generation came from RES, mainly large hydro.
Contributions from other RES, i.e. small hydro, wind, biogas and biomass are significantly smaller.
Fossil fuels;
2010 GWh; 36%
Biogas;
45 GWh; 1%
Biomass;
4 GWh; 0%
Wind;
50 GWh; 1%
Small hydro;
66 GWh; 1%
Large hydro;
3391 GWh; 61%
Figure 2 Structure of the domestic electricity generation in Latvia in 2009, GWh and % (authors` construction
based on the working document on energy statistics from the Ministry of Economy of Latvia)
Domestic RES-E generation. As shown in the previous figure the domestic RES-E generation
in Latvia is dominated by hydropower business (97% in the total RES-E generation activity). 3%
are almost equally shared by wind and biogas generation (biomass is the least used RES source with
only 0,1% share) (Fig. 3).
44
1,3%
0,1%
97,2%
1,4%
Hydro
Wind
Biogas
Biomass
Figure 3 Structure of the domestic RES-E generation in Latvia by source in 2009 (authors` construction based on
the working document on energy statistics from the Ministry of Economy of Latvia)
Figure 4 shows the structure of the RES-E generation business in Latvia in 2010. In there
were 182 companies that operated within the framework of the support mechanism and received the
feed-in tariff for the produced RES-E output. 77% or 139 companies were producing electricity
from small hydro; 14% or 26 companies operated in wind business. 6% of the total number of
companies generated RES-E from biogas. Only 3% or 6 companies were power stations, burning
biomass.
6; 3% 11; 6%
26; 14%
139; 77%
Small hydro
Wind
Biomass
Biogas
Figure 4 RES-E generation businesses in 2010 in Latvia by RES source (authors` construction based on
unpublished information from Latvenergo AS)
Since 1997 there has been a gradual increase in number of companies producing RES-E under
the support mechanism. The total number of such producers has increased from 15 in 1997 to 182 in
2010. Figure 6 illustrates statistical significance in growth of numbers of the RES-E generators
benefiting from the support mechanism in Latvia from 1997 until 2010. Statistically important
increases can be observed for RES-E generators in total and also for the RES-E generators grouped
by source of RES. The corresponding coefficients of determination are displayed in the figure.
45
200
180
160
140
120
100
Total R2 = 0,8151
Small hydro R2 = 0,7426
Wind R2 = 0,818
Biogas R2 = 0,7787
Biomas s R2 = 0,8385
80
60
40
20
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Biomass
Wind
Total
Biogas
Small hydro
Linear (Total )
Linear (Wind)
Figure 5 Trends in rise in number of RES-E producers benefiting from the support mechanism in Latvia, 1997 2010 (authors` construction based on unpublished information from Latvenergo AS)
4. Assessment of the efficiency of the support mechanism in Latvia
RES-E tariffs under the support mechanism. There has been frequent change in the respective
legislation that sets out formulas for calculation of the tariffs for RES-E. The relative legislation
includes the following Ministerial Decrees: Ministerial Decree Nr. 503 (adopted in July 2007);
Ministerial Decree Nr. 198 (adopted in February 2009); Ministerial Decree Nr. 486 (adopted in May
2009); and Ministerial Decree Nr. 262 (adopted in March 2010). Therefore, RES-E generators
receive different tariffs.
Figure 6 compares RES-E tariffs according to each piece of legislation in force from 2007
until 2011. The current Ministerial Decree Nr. 262 contains the same formula for calculation of the
tariffs as set out in the Ministerial Decree Nr. 486 (amendments to the Ministerial Decree Nr. 198).
Tariffs are thus the same. In Figure only reference to the Ministerial Decree Nr. 486 is made.
The most generous support level has been under the Ministerial Decree Nr. 198. The authors
have deliberately chosen the capacity interval of 0,6 – 0,8 MW for small hydro, biomass and biogas
installations and 0,25 MW and 1 MW for wind power plants (in general, there is installed capacity
differentiation in the methodologies for setting tariffs for RES-e purchase within OPM; also, a
different tariff setting formula for RES-E purchase from wind installations with installed electric
capacity smaller than 0,25 MW and for wind installations with installed capacity over 0,25 MW). In
the same Figure “name of renewable energy source 10” means the tariff paid to a RES-E generator
for the first 10 years of operation of a RES-E power station; “name of renewable energy source
10+10” means the tariff paid to the RES-E producer 10 years after the first 10 years of operation of
a RES-E installation. The maximum duration of support is 20 years. The tariff level is set in the
Latvian national currency lats (LVL).The National Bank of Latvia has set the official exchange rate
between euros and lats and it is 0,702804 lats for 1 euro.
46
M D Nr. 503
M D Nr. 198
Ame nd. M D Nr. 198
250,00
200,00
150,00
100,00
50,00
W
in
d
W
in
d
10
(0
,2
10
5
+1
M
W
0
)
(0
,2
5
M
W
W
)
in
d
S
10
W
m
in
al
(1
d
lh
M
S
yd 10
m
W
+1
al
ro
)
lh
0
1
0
(1
yd
(0
ro
,6 MW
10
)
+1
0,
8
0
M
(
B
0,
W
io
6
)
m
-0
a
B
ss
,
8
io
M
10
m
W
as
(0
)
s
,6
10
-0
+1
,8
0
M
(0
W
,
6
B
)
io
0,
ga
8
s
B
M
10
io
W
ga
(0
)
s
,
6
10
+1
0,
8
0
M
(0
W
,6
)
-0
B
io
,8
ga
M
s
B
W
10
io
)
ga
(2
s
-2
10
,5
+1
M
0
W
(2
)
-2
,5
M
W
)
0,00
Figure 6 Tariffs for RES-E by source, LVL (authors` construction based on the Ministerial Decrees Nr. 503, Nr.
198, and Nr. 486)
As shown in this particular example, the Ministerial Decree Nr. 198 significantly increased
RES-E tariff for wind, small hydro and biogas (with capacity 0,6 – 0,8 MW). On average this
increase has been by 55%. Ministerial Decree Nr 486 (Amendments to the Ministerial Decree Nr.
198) lowered the tariff levels by almost 19%. Compared to average tariff levels for RES-E as set by
the Ministerial Decree Nr. 503, amendments to the Ministerial Decree Nr. 198 nevertheless
increased the tariff levels on average by 9,3%. Similar patterns can be observed for the RES-E
generating technologies in a different range of installed capacity.
25,00
180,00
160,00
140,00
120,00
100,00
80,00
60,00
40,00
20,00
0,00
20,00
15,00
10,00
5,00
H UK
un
ga
ry
I
Li taly
t
Lu hua
xe ni
m a
bo
ur
P
or g
tu
ga
l
S
pa
Th
e Sw in
N
et ede
he n
rla
nd
s
La
tv
ia
A
us
tri
C
a
B
ze
ch elg
iu
R
ep m
u
D blic
en
m
ar
Fr k
a
G nce
er
m
an
y
0,00
AVE RES-E support tariff, EUR/MWh
Support for RES-E unit from each electricity unit consumed, EUR/MWh
Figure 7 Average support tariff (bars) and the cost for RES-E from each electricity unit consumed (dots) in the
European countries in 2009, EUR/MWh (authors` construction based on CEER Report on Renewable Energy Sources,
p. 10-11; Energy in Latvia in Figures, 2011, p. 19; and unpublished information from Latvenergo AS)
Since the introduction of the support mechanism there has been a significant rise in the cost.
In 1997 the cost was around 0,4 million lats (0,57 million EUR), in 2010 the cost had increased ten
times compared to the cost of 2001 when it was around 2 million lats (2,8 million EUR). Figure 8
places Latvia in the international perspective regarding the average tariffs paid for RES-E
(EUR/MWh), on one hand, and the price paid for RES-E by each unit of electricity consumed
(EUR/MWh). The data reflects the situation in 2009. The average RES-E tariff, close to 170
47
EUR/MWh, is the highest in Latvia (bars in the figure), while the price for the RES-E support paid
by the electricity consumer for each electricity unit consumed (dots in the figure) is comparatively
low (3,46 EUR/MWh).
Cost of generating RES-E. In general the RES-E technologies represent a clear tendency of
decreasing the cost of electricity generation over time. For example, since early 1980s the RES-E
generation cost from wind power plants has decreased by two thirds (International Energy Agency,
1998). Also the cost of electricity generation from solar PV has decreased steeply since 1980s.
Although the gradual cost reduction is well known, there is hardly any comprehensive data
available on the actual cost of RES-E generation. The International Energy Agency publishes
regular estimates for projected electricity generation costs, including those of RES-E plants. Figure
8 shows its most recent evaluations regarding the cost of RES-E generation. These costs are forward
looking and apply for the plants that are foreseen to start operation by 2015. Only minimum values
have been reported for electricity generation from biomass and biogas plants. These values are used
as a reference.
507,33
500,00
400,00
300,00
200,00
137,64
125,26
109,11
67,12
100,00
0,00
Small hydro
Onshore
wind
Biogas*
Biomass*
Solar PV
Figure 8. Average projected cost of electricity generation by source, EUR/MWh (authors` construction based on
projected costs of generating electricity, International Energy Agency, 2010)
Comparison of the tariffs for RES-E in Latvia and the cost of RES-E generation. Comparing
the tariffs paid to the RES-E generators under the current legislation Ministerial Decree Nr. 262 (the
specific example in Fig. 6) with the referenced cost estimates for RES-E generation, one can
observe the following:
• RES-E generators operating a wind power plant with installed capacity exceeding 0,25 MW
receive 76 to 127 EUR per MWh produced (from 100 to 167 EUR per MWh in case of a power
plant with installed capacity of less than 0,25 MW). This is in the range of minimum (86
EUR/MWh) and maximum (165 EUR/MWh) in the reference generation cost data;
• small hydro operators receive 136 to 170 EUR per MWh produced. This is above the
reference average electricity generation cost for hydropower and well above the reference minimum
(65 EUR per MWh) but below the reference maximum (210 EUR/MWh);
• RES-E generators from biomass power plants are paid 124 to 164 EUR per MWh. This is
above the minimum reference value of 109 EUR per MWh;
• RES-E generators from biogas power plants receive 161 to 201 EUR per MWh. This is two
and more times than the minimum reference value of 67 EUR per MWh.
Conclusions
Thanks to the support mechanism for RES-E generation there has been gradual increase in
RES-E generation business in Latvia. Assessing the efficiency of this support mechanism is a
difficult task. The major problem is the data availability on the cost of RES-E generation. From the
48
analysis based on the specific example provided by this paper it can be concluded that the RES-E
generators in Latvia are well remunerated. However, in order to pursue with a more detailed
assessment of the efficiency of the support mechanism in Latvia a detailed methodology for
comparison of the RES-E generation costs against the RES-E tariffs need to be established.
References
1. Central Statistical Bureau of Latvia (2011). EN22. Electric capacity and produced electricity
from renewable energy sources. [Accessed August 9 2011]. Internet Access:
http://data.csb.gov.lv/DATABASE/vide/Ikgadejie%20statistikas%20dati/Enerăētika.asp.
2. Commission of regulation of the public services of Latvia (2010). Annual report 2010. Internet
access: http://sprk.gov.lv/doc_upl/SPRK_publiskais_parskats_2010.pdf [Accessed July 25 2011].
3. Council of European Energy Regulators (2011) CEER Report on Renewable Energy Support in
Europe. [Accessed August 11 2011]. Internet Access: http://www.energyregulators.eu/portal/page/portal/EER_HOME/EER_PUBLICATIONS/CEER_PAPERS/Electricity/
2011/C10-SDE-19-04a_RES_4-May-2011%20final.pdf.
4. European Parliament and Council (2009). Directive 2009/28/EC on the promotion of the use of
energy from renewable sources and amending and subsequently repealing Directives 201/77/EC
and 2003/30/EC. [Accessed July 26 2011]. Internet Access:http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:140:0016:0062:en:PDF.
5. European Commission (2008). The support of electricity from renewable energy sources.
Commission staff working document. [Accessed July 25 2011]. Internet Access:
http://ec.europa/eu/energy/climate_actions/doc/2008_res_working_document_en.pdf.
6. Gaidis K. et al. (2010). Use of renewable energy sources to ensure sustainable development of
Latvia. [Accessed December 5 2010]. Internet Access:
http://www.sfl.lv/upload_file/2010%20gads/AER_petijums.pdf.
7. International Energy Agency (1998). Projected costs of generating electricity. OECD Publishing.
240 p.
8. International Energy Agency (2008). Deploying Renewable. Principles for effective policies.
[Accessed July 25 2011]. Internet Access:
http://www.iea.org/textbase/nppdf/free/2008/DeployingRenewables2008.pdf
9. International Energy Agency (2010). Projected costs of generating electricity. OECD Publishing.
215 p.
10. Latvijas Republikas Ekonomikas ministrija (2011). Latvijas enerăētika skaitĜos. [Accessed
August 11 2011]. Internet Access:
http://www.em.gov.lv/images/modules/items/Latvijas_energetika_skaitlos_2011 (1).pdf.
11. Ministerial Decree Nr. 250 (12.04.2005.) on total capacity amount for installation in 2005 and
amount for each type of technology if electricity is produced from renewable energy sources.
[Accessed August 16 2011]. Internet access: http://www.likumi.lv/doc.php?id=106473&from=off.
13. Ministerial Decree Nr. 40 (20.01.2004) on total capacity amount for installation in 2004 and
[Accessed August 16 2011]. Internet access: http://www.likumi.lv/doc.php?id=79567.
15. Ministry of Economy of Latvia (2011). Energy in Latvia in Figures. [Accessed August 16 201].
Internet Access:
http://www.em.gov.lv/images/modules/iems/Latvijas_energetika_skaitlos_2011(1).pdf.
16. Riga Technical University (2009). Possibilities for enhanced use of renewable energy sources in
Latvia. [Accessed December 5 2010]. Internet Access:
49
http://www.videszinatne.lv/attachments/175_AER%20izmantosanas%20modelis%20un%20ricibas
%20plans_KOPSAVILKUMS.pdf.
17. Unpublished materials from Latvenergo AS.
50
EFFECTS OF CHANGE IN VARIANCE ACTIVITIES WHEN COMPUTING
CRITICALLY NODE USING THE PERT METHOD
Karel Doubravský, Radek Doskočil
Brno University of Technology, Czech Republic,
Abstract. The paper generally deals with the effects of a change in variance activities when
computing the criticality node of a PERT network diagram. The main aim of the paper is to analyze
the effects of a change in variance activities for two different approaches used when computing the
criticality node. In order to achieve the aim, a hypothesis is formed that the change in variance
activity should affect the computation of the criticality probability of nodes. The analysis is applied
to a sample PERT network diagram comprising 9 nodes and 14 activities. A time analysis is
developed using the PERT method, and the criticality node is computed using both approaches. The
computed results serve as input for further statistical processing.
Keywords: PERT method, node criticality, mean value, variance, standard deviation,
hypothesis testing.
Introduction
Project management is nowadays a widely discussed discipline. This fact is substantiated by
numerous scientific articles, books and publications dealing with these problems1,2,3. This discipline
is also included in the courses of numerous faculties focusing on economy both in the Czech
Republic and abroad. Experts are also associated in various professional organizations or
associations4,5. Project managers and other members of the project team use different tools,
techniques or methods in project management. If we take a closer look at these tools, we will find
out that in certain cases the manner of their application varies, depending on the approach of
individual authors. One of the various approaches is node criticality computation in the PERT
method (Program Evaluation and Review Technique) generally using two different approaches to
the computation. Neither approach considers mutual size of variances of the individual activities.
This fact might affect appropriateness of use of one or the other approach. The computation of node
criticality is one part of a probability analysis. In the framework of this analysis criticality of
activities is also computed (depending on the user needs)6 , together with computation of the
probability of meeting the planned deadlines7.
The purpose of the present paper is to compare the two different approaches with regard to
activity variations. For the purpose of the comparison the authors defined the assumption that the
change of activity variance can affect the computation of node criticality. The defined issue is
demonstrated on a sample case of a PERT network diagram consisting of 9 nodes and 14 activities8.
1
Bergantiños, G., Vidal-Puga, J. (2009) A value for PERT problems, International Game Theory Review.
Garcia, P. J. et all. (2005) The Two-Sided Power Distribution for the Treatment of the Uncertainty in PERT,
Statistical Methods and Applications.
3
Herreri'as-Velasco, J.M., Herreri'as-Pleguezuelo, R. & van Dorp, Johan René. (2011)Revisiting the PERT mean and
variance, European Journal of Operational Research,.
4
Society for Project Management Czech Republic. (2011) [Online], [24 Aug. 2011],http://www.cspr.cz/
5
International project management association. (2011) [Online], [20 Aug. 2011], http://www.impa.ch/
6
Premachandra, I. M. (2001) An approximation of the activity duration distribution in PERT, Computers & Operations
Research.
7
Jablonský, J. (2002) Operační výzkum; kvantitativní modely pro ekonomické rozhodování, Professional Publishing,
Praha.
8
Rais, K., Doskočil, R. (2006) Operační a systémová analýza I, BUT Brno, Business Faculty, Brno.
2
51
1. Materials and methods
Three estimated times of activity duration were used in the network diagram used – the
optimistic, the most likely and the pessimistic one. Subsequently mean times of activity duration (1)
were calculated using the formula9:
t ij =
a ij + 4 m ij + bij
6
,
(1)
where: i, j = node number,
tij = time of activity duration,
aij = optimistic estimate of activity duration,
mij = estimate of most likely activity duration,
bij = pessimistic estimate of activity duration.
Variances (2) and standard deviations (3) of activity duration were also calculated. The
following formulas were used for the calculations:
σ 2 t ij =
(bij − aij ) 2
36
bij − a ij
σ t ij =
.
6
,
(2)
(3)
For the purpose of the time analysis the basic time characteristics were further calculated on
the basis of standard equations. Further information can also be found in literature10,11.
Using an incidence matrix the possible earliest times of nodes (4) were calculated using the
following formulas:
ETN j =max { EFT ij } , kde EFT ij= EST ij +t ij
,
(4)
ETNj = Earliest Time of Node,
EFTij = Earliest Finish Time of Activity,
ESTij = Earliest Start Time of Activity,
tij = activity duration.
The permissible Latest Times of Nodes (5) were calculated using the following formulas:
LTN i=min { LST ij } , kde LST ij =LFT ij tij
,
(5)
LTNi = permissible Latest Time of Node,
LFTij = permissible Latest Start Time of Activity,
LFTij = permissible Latest Finish Time of Activity,
tij = activity duration.
There are two generally used approaches to variance computation needed for a node criticality
analysis.
9
Plevný, M., Žižka, M. Modelování a optimalizace v manažerském rozhodování, (2005) West Bohemian University
in Plzen, Plzeň.
10
Černá, A. (2008) Metody operačního managementu, Oeconomica publishers, Praha.
11
Wisniewski, M. (1996) Metody manažerského rozhodování, Grada Publishing, spol. s r.o., Praha.
52
The first approach is based on the assumption that variances of Earliest Times of Nodes (6)
correspond to the calculated variances of Earliest Finish Times of Activities and the one is selected
that pertains to the maximum duration to the Earliest Finish Times of Activities coinciding with the
respective node.
2
2
σ ETN i =σ EFT ij pro
max { EFT ij } , j=1,2 , ... ,k
i
,
(6)
σ2ETNi = variance of Earliest Time of Node,
σ2EFTij = variance of Earliest Finish Time of Activity,
k = number of nodes.
Variances of permissible Latest Times of Nodes (7) in the first approach correspond to the
calculated variances of the permissible Latest Start Times of Activities and the one is selected that
pertains to the minimum duration of the permissible Latest Start Times of Activities coinciding with
the respective node13.
2
2
σ LTN j =σ LST ij pro
min { LST ij } , i=1,2 , .. . , k
j
,
(7)
σ2LTNj = variance of permissible Latest Time of Node,
σ2LSTij = variance of permissible Latest Start Time of Activity,
The second approach is based on the assumption that variances of Earliest Time of Nodes (8)
correspond to the calculated variances of Earliest Finish Times of Activities and the one is selected
which shows the maximum value of the ones coinciding with the respective node.
σ 2 ETN i =max {σ 2 EFT ij } , j=1,2 , .. . , k
i
,
(8)
σ2ETNi = variance of Earliest Time of Node,
σ2EFTij = variance of Earliest Finish Time of Activity,
Variances of permissible Latest Times of Nodes (9) correspond to the calculated variances of
the permissible Latest Start Times of Activities and the one is selected which shows the maximum
value of the ones coinciding with the respective node12.
σ 2 LTN j =max {σ 2 LST ij } , i=1,2 ,. . . , k
j
(9)
σ2LSTij = variance of permissible Latest Start Time of Activity,
12
Operation Analysis. Materials for Lectures and Seminars. (2003), Faculty of Applied Science, West Bohemian
University in Plzen, Plzeň.
53
When looking for the probability with which non-critical nodes become critical it is sufficient
to specify the probability of the interference margin of the node to equal or be less than zero, i.e.
probability (10):
P ( IM i ≤0)=P ( LTN i ETN i ≤0)
(10)
P = probability,
IMi = Interference margin,
ETNj = Earliest Time of Node.
The calculated value (parameter) of the standardized normal distribution (11) will be based on
u=
( LTN i ETN i )
√ σ 2 LTN i +σ 2 ETN i
(11)
u = value of standardized normal distribution,
ETNj = Earliest Time of Node,
σ2ETNi = variance of Earliest Time of Node.
The sought probability will be the value of distribution function F(u), found for example in
statistical tables or using appropriate software13.
To verify the hypothesis selected apparatus of mathematical statistics will be used, in particular
instruments of hypothesis testing and t-test. Further information can be found in literature14,15.
2. Results
The network diagram consisting of 9 nodes and 14 activities had three estimates of times of
activity duration set: optimistic (aij), most likely (mij) and pessimistic (bij) (see table 1). Index i
represents the initial activity node and index j the end activity node.
Table 1 further includes calculated mean times of activity durations (tii), their variances (σ2tij)
and standard deviations (σ tij). The calculated variances of activities (1;4) and (4;6) show that their
values are different in size from all other activity variances.
13
14
15
Gros, I. (2003) Kvantitativní metody v manažerském rozhodování, Grada Publishing a.s., Praha.
Mathews, P. (2005) Design of Experiments with Minitab, ASQ Quality Press, Milwaukee, Wisconsin.
Wonnacott, T. H., Wonnacott, R. J. (1990) Introductory Statistics for Business and Economics, Wiley, Oxford.
54
Table 1 Calculation of Mean Activity Duration and Variance
i
1
j
2
aij
5
mij
6
bij
13
tij
7.00
σ2tij
1.78
σ tij
1.33
1
3
2
3
4
3.00
0.11
0.33
1
4
4
4
20
6.67
7.11
2.67
2
3
0
0
0
0.00
0.00
0.00
2
6
2
5
8
5.00
1.00
1.00
2
7
5
5
5
5.00
0.00
0.00
3
6
3
5
7
5.00
0.44
0.67
4
5
5
6
7
6.00
0.11
0.33
4
6
2
5
15
6.17
4.69
2.17
5
8
1
3
5
3.00
0.44
0.67
6
8
0
0
0
0.00
0.00
0.00
6
9
7
7
7
7.00
0.00
0.00
7
9
2
8
8
7.00
1.00
1.00
8
9
3
6
9
6.00
1.00
1.00
Table 2 represents the incidence matrix of the network diagram. Its inside cells include
calculated mean times of activity duration (see table 1). The last column includes Earliest Times of
Nodes (ETNi) calculated with formula (4) and the last row includes permissible Latest Times of
Nodes (LTNj) calculated with formula (5).
Table 2 Incidence Matrix – Earliest and Latest Times of Nodes
i
ETNi
0.00
1
7.00
2
7.00
3
6.67
4
5
12.67
6
12.83
7
12.00
8
15.67
9
21.67
LTNi
0.00
9.67
9.67
6.67
12.67
14.67
14.67
15.67
21.67
The next stage of the node criticality analysis is represented by the calculation of variances of
time characteristics on the level of both nodes (Earliest and Latest Times of Nodes) and activities.
Incidence matrix is again used for practical processing where only some of the time characteristics
values and their variances are entered. Further information can be found in literature16. The
following part of the text includes results of both examined approaches to variance calculations.
2.1. Approach I
Table 3 shows the network diagram incidence matrix. Its inside cells include calculated
variances of activity durations (see table 1). The last column includes variances of Earliest Times of
Nodes calculated with the first approach (6), i.e. the variances correspond to the calculated
variances of activities and the one is selected that pertains to the maximum duration of Earliest
Finish Times of Activities coinciding with the respective node. The last row includes variances of
Latest Times of Nodes calculated with the first approach (7), i.e. the variances correspond to the
calculated variances of activities and the one is selected that pertains to the minimum duration of
the Latest Start Times of Activities coinciding with the respective node.
16
Gros, I. (2003) Kvantitativní metody v manažerském rozhodování, Grada Publishing a.s., Praha.
55
Table 3 Incidence Matrix – Variances of Earliest and Latest Times of Nodes – Approach I
i
1
σ ETNi
0.00
8.67
2
2
σ LTNi
2
3
4
5
1.78
1.78
7.11
7.22
1.00
0.44
1.56
1.44
6
7
8
9
11.81
1.78
7.67
8.67
0.00
1.00
1.00
0.00
Table 4 summarises the values of the above tables needed for the node criticality calculation.
The first column shows node numbers, and the second interference margins. The third column
shows values of the parameter of standardized normal distribution and the matching values of
distribution function of standardized normal distribution (column four), corresponding to the node
criticality probability.
Table 4 Node Criticality Calculation – Approach I
1
0.00
0.00
0.50
i
IMi
u
F(u)
2
2.67
-1.60
0.05
3
2.67
-1.79
0.04
4
0.00
0.00
0.50
5
0.00
0.00
0.50
6
1.83
-0.53
0.30
7
2.67
-1.60
0.05
8
0.00
0.00
0.50
9
0.00
0.00
0.50
2.2. Approach II
Table 5 shows the network diagram incidence matrix. Its inside cells include calculated
variances of activity durations (see table 1). The last column includes variances of Earliest Times of
Nodes calculated with the second approach (8), i.e. the variances correspond to the calculated
variances of activities and the one is selected that pertains to the maximum variance of the possible
variances of activities coinciding with the respective node. The last row includes variances of Latest
Times of Nodes calculated with the second approach (9), i.e. the variances correspond to the
calculated variances of activities and the one is selected that pertains to the maximum duration of
the Latest Start Times of Activities coinciding with the respective node.
Table 5 Incidence Matrix – Variances of Earliest and Latest Times of Nodes – Approach II
i
1
2
3
4
5
6
7
8
9
σ ETNi
0.00
1.78
1.78
7.11
7.22
11.81
1.78
11.81
12.81
12.81
2.00
1.44
5.69
1.44
1.00
1.00
1.00
0.00
2
2
σ LTNi
Table 6 summarises the values of the above tables needed for node criticality calculation. The
first column shows node numbers, and the second interference margins. The third column shows
values of the parameter of standardized normal distribution and the matching values of distribution
function of standardized normal distribution (column four), corresponding to the node criticality
probability.
Table 6 Node Criticality Calculations – Approach II
I
IMi
u
F(u)
1
0.00
0.00
0.50
2
2.67
-1.37
0.09
3
2.67
-1.49
0.07
4
0.00
0.00
0.50
5
0.00
0.00
0.50
6
1.83
-0.51
0.30
7
2.67
-1.60
0.05
8
0.00
0.00
0.50
9
0.00
0.00
0.50
56
3.
Discussion
Values from the last column (node criticality probability) of tables 4 and 6 were used for
further calculations. The performed analyses show that the probable critical path is identical
whichever of the two approaches is used. The only difference is shown by the values of F(u) of
nodes 2, 3, 6 and 7. The question is whether this difference is statistically significant or not. To find
this the statistical apparatus of hypothesis testing was used.
The values of the calculated probabilities for both approaches were included in two data files.
To compare the values in these data files there was the t-test for two basic files. The basic
conditions of use of this test are data normality and independence. To verify data normality the
Shapiro-Wilcoxon test was used. The requirement of independence of the values of both files
appears to be the key requirement. Regarding the nature of the calculations where two probability
values were specified for each node the requirement of independence might be violated. To verify
the independence the Pearson correlation coefficient was calculated and the test of independence of
two characters was performed. The calculated Pearson coefficient equalled 0.998. This value
indicated a strong linear correlation between the found probability values. This assumption was
further verified by the independence test. The null hypothesis of this test can be formulated as
follows: The probability values are independent. The alternative hypothesis is: The probability
values correlate. For the selected significance level α = 0.05 the test criterion t = 50.521 was
calculated and the critical value t 0 , 975 ( 7 ) = 2 . 365 was specified. As the value of the test criterion
was higher than the critical value (50.521 > 2.365) the null hypothesis was denied and the
alternative hypothesis was accepted. This means that the probability values correlated (were not
independent).
For this reason the calculated probability values were considered paired values. To find out
whether the difference between the probability values was statistically significant or not the t-test
for paired values was used. For that reason the difference was calculated on the basis of probability
pairs for each node. The values formed a new data file. The basic characteristics were calculated for
this data file: the selected mean x = − 0 . 008 and the standard deviation s = 0 . 013 . The basic
assumptions for use of t-test for paired values include the assumption of data normality. The
normality of data (obtained as the difference between probabilities) was verified by the ShapiroWilcoxon test. The p-value was calculated for the selected significance level α = 0.05 with the
result p = 0.15. As the p-value was higher than the selected significance level the null hypothesis
was applied (the difference values were normally distributed). Thus the basic condition was fulfilled
and the pair t-test calculation could be performed. The null hypothesis says that the differences
between the calculated probabilities are close to zero (i.e. both approaches yield similar results).
The alternative hypothesis says that the differences are significantly different from zero (i.e. both
approaches yield different results). The calculated characteristics (selected mean and standard
deviation) were used for the calculation of the test criterion t = – 1.846. For the selected
significance level the critical value t 0 , 975 ( 8 ) = 2 . 306 was specified. As the absolute value of the
test criterion was lower than the critical value (1.846 < 2.306) the null hypothesis was not denied
(the probability differences are close to zero). This means in our case that the differences between
the calculated probabilities were not statistically significant, and therefore the change of activity
variances did not affect the calculation of the node criticality probability.
For illustration table 7 shows the analysis of node 8. Two activities (5;8) and (6;8) lead to node
8 (see column 1 of the table). The other columns show the calculated numerical characteristics and
intervals 3σ for both approaches.
57
Table 7 Analysis of Node 8
Approach I
Node 8
Activity
(5;8)
Activity
(6;8)
Mean
duration
(µ)
15.67
Approach II
Variance
(σ2)
µ-3σ
µ+3σ
7.66
7.37
23.97
Mean
duration
(µ)
15.67
15.67
7.66
7.37
23.97
12.84
11.8
2.53
23.14
Variance
(σ2)
µ-3σ
µ+3σ
11.8
5.36
25.96
15.67
7.66
7.37
23.97
12.84
11.8
2.53
23.14
If the first approach is used the node characteristics will always correspond to the
characteristics (mean duration, variance) of one of the activities. The upper threshold of interval 3σ
i.e. (µ+3σ) of node 8 is identical with the upper threshold of interval 3σ of activity (5;8). As soon as
activity (5;8), which is the longest of the activities leading to node 8, ends, the activities starting
from node 8 can begin.
If the second approach is used the mean time of the node will correspond to the maximum
mean time of activities leading to node 8. The variance of node 8 will correspond to the maximum
variance of activities leading to node 8. This approach incorporates a time margin for activities
starting from node 8. The value of the margin in our case is (25.96 – 23.97). This margin need not
be obvious in the case when a situation occurs that the maximum value of the mean duration of
activities and its maximum variance apply to the same activity. This situation would correspond to
the first approach where no margin is applied.
Conclusions
The present paper deals with analysis of the effect of a change of activity variance in two
different approaches to the node criticality calculation. These approaches were presented on a
sample of the PERT network diagram consisting of 9 nodes and 14 activities. The results of both
approaches were subsequently subject to a statistical examination showing that the two approaches
yielded identical results. The initially formulated hypothesis thus was not confirmed, which can be
interpreted as follows: Changes of variance of activities do not affect the node criticality. The
probability values are statistically identical. This indicates that the user of the PERT method, when
choosing the approach to the node criticality computation, need not consider the size of the initially
calculated activity variances.
References
1. Bergantiños, G., Vidal-Puga, J. (2009) A value for PERT problems, International Game Theory
Review.
2. Černá, A. (2008) Metody operačního managementu, Oeconomica publishers, Praha.
3. Garcia, P. J. et all. (2005) The Two-Sided Power Distribution for the Treatment of the
Uncertainty in PERT, Statistical Methods and Applications.
4. Gros, I. (2003) Kvantitativní metody v manažerském rozhodování, Grada Publishing a.s., Praha.
5. Herreri'as-Velasco, J.M., Herreri'as-Pleguezuelo, R. & van Dorp, Johan René. Revisiting the
PERT mean and variance, European Journal of Operational Research, 2011.
6. International project management association. (2011) [Online], [last viewed: 20 Aug. 2011],
http://www.impa.ch/
7. Jablonský, J. (2002) Operační výzkum; kvantitativní modely pro ekonomické rozhodování,
Professional Publishing, Praha.
8. Mathews, P. (2005) Design of Experiments with Minitab, ASQ Quality Press, Milwaukee,
Wisconsin.
58
9. Operation Analysis. Materials for lectures and seminars. (2003), Faculty of Applied Science,
West Bohemian University in Plzen, Plzeň.
10. Plevný, M., Žižka, M. Modelování a optimalizace v manažerském rozhodování, (2005) West
Bohemian University in Plzen, Plzeň.
11. Premachandra, I. M. (2001) An approximation of the activity duration distribution in PERT,
Computers & Operations Research.
12. Rais, K., Doskočil, R. (2006) Operační a systémová analýza I, BUT in Brno, Business Faculty,
Brno.
13. Society for Project Management Czech Republic. (2011) [Online], [24 Aug. 2011],
http://www.cspr.cz/
14. Wisniewski, M. (1996) Metody manažerského rozhodování, Grada Publishing, spol. s r.o.,
Praha.
15. Wonnacott, T. H., Wonnacott, R. J. (1990) Introductory Statistics for Business and Economics,
Wiley, Oxford.
59
FACEBOOK AS SUPPLEMENTARY COMMUNICATION TOOL OF CZECH
FOOTBALL AND HOCKEY CLUBS1
Jiří Kotáb
University of Economics,
Prague Winston Churchill, Sq 4 130 67 Prague 3, Czech Republic,
Abstract. The research paper investigates if there are effects of being active at Facebook for
Czech football and ice hockey clubs. In Theoretical Background there are classical tools for
promoting sports matches of football clubs. Then there are presented web 2.0 technologies used by
Czech sports clubs and conclusions of previous researches. Next theoretical parts describe recent
works of authors on Social Media Topic. And the last part of theory describes clubs’ perspective of
official Facbook pages. In Methodology the procedure of regression analysis is presented there. In
Research part there are number of Facebook fans set as independent variable and average home
attendance in season 2010/2011 of clubs of Gambrinus Liga (football) and Tipsport Extraliga (ice
hockey) as dependent variable. Research Results part presents regression line and formula which
confirms the established hypothesis.
Keywords: Sport, Football, Ice Hockey, Club, Facebook, Attendance, Regression analysis.
Introduction
The research paper considers effects of Facebook as communication tool of sports clubs with
their fans. This article is the outcome of the research project Using Web 2.0 Technologies in Sports
Promotion. According to previous researches web 2.0 tools can be used as supplementary
communication tool for sports clubs to communicate with their fans. Sports matches are unique type
of products which are directly connected with emotions so communication with web 2.0 tools offers
itself. There has been already answered lot of questions which are presented thereinafter but now
we have to solve more questions: what is real aim of communication strategy of football clubs? Is it
generating new fans on the Facebook pages? No, football clubs usually have no direct revenues
from having most fans on the Facebook pages. Generating unique visitors on official club web
pages is more important because there is increasing of value of advertisement place for sponsors.
Main aim of communication strategy of the club should be increasing of average home attendances.
This effect directly influences more revenue streams. If the club has higher attendances, the club
has higher match day incomes – fee for the tickets, parking fee, fee for merchandising products.
Club can charge more from operators of refreshment stalls if the club rent it and don’t operate itself.
And it increases position in bargaining with potential sponsors because it is always better to
persuade sponsor if the club have full stands in comparison with the club with empty stands. There
are investigated football and ice hockey clubs in the highest divisions in the Czech Republic in
2010/2011 season. There is assumed positive dependence between being active at Facebook and
having high home attendances that is the main reason why linear regression analysis is used as main
research method.
1 Theoretical Background and Hypotheses
Sport and Media
1
This article is the outcome of the research project Využití Webu 2.0 v propagaci sportu registered at IGA VŠE
under evidence number F3/2/2011
60
The main topic of famous sports marketers and sports economists (Bill Gerard, Wladimir
Andreff, Andrew Zimbalist, Chris Gratton, Harry Arne Solberg, Novotný2 and others) about
connection sport and media is about selling sports media broadcasting rights to TV companies.
There are several sport marketers who orient their work on promoting sports matches by clubs or
franchises (in professional leagues) but if they go to internet communication they stop with Web
sites. There are only few articles connected with sport and web 2.0 technologies (social networks /
social media) but this number is rapidly increasing over the last years. Yu Kyoum Kim, Trail Galen
and Yong Jae Ko3 describes that there is very important to promote relationship quality with fans.
And using media are one of the way how to do it. The importance of marketing in sport is evident
and is mentioned in works by Rosner et al4 or Supovitz5, which is more oriented on sports events.
Sport Marketing
Sport marketing consists of all activities designed to meet the needs and wants of sport
consumers through exchange processes. Sport marketing has developed two major thrusts: the
marketing of sport products and services directly to consumers of sport, and the marketing of other
consumer and industrial products or services through the use of sport promotions.
Viewpoint of singularity of sport marketing of professional clubs can be seen in uniqueness of
sport product (unpredictability, simultaneous production and consumption, strong personal and
emotional identification), sport market (many sport organizations simultaneously compete and
cooperate), sport finances (indirect revenues are frequently greater than direct operating revenues)
or sport promotion (media and sponsors emphasize celebrities, widespread media exposure of
sport).
Promoting sports matches
If we look at recent sport marketing publications of prestigious authors clubs can attract fans
to sports matches by complex marketing plans which include many types of advertisement and
communication tools and techniques. Publications Sport Marketing by Mullin6 et al or Sports
Marketing by Fullerton7 there is presented studies of marketing initiatives for the NBA clubs by R.
Dick, B. Turner8 and Mawson9. This list ordered by fans importance:
Promotional giveaway items
1.
2.
3.
4.
5.
2
Promote star players of league
Group sales with discounted pricing
Implementation of good public relations
Partial-season ticket plans
Radio advertising
Novotný, Jiří: Ekonomika Sportu Vybrané kapitoly II, Oeconomica Publisher, Prague 2010, ISBN: 978-80-245-1701-
8
3
Yu Kyoum Kim; Trail, Galen; Yong Jae Ko: The Influence of Relationship Quality on Sport Consumption Behaviors:
An Empirical Examination of the Relationship Quality Framework., Journal of Sport Management, 7/11/2011
4
Rosner, S.,R., Shropshire, K. L.: The Business of Sports, 2nd Edition, Jones & Bartlett Learning, USA 2011, ISBN>
0-7637-8078-2
5
Supovitz, F.: The Sport Event Management and Marketing Playbook, John Wiley and Sons Inc., Hoboken, New
Jersey USA 2005, ISBN: 0-471-46007-9
6
Mullin, J., B., Hardy, S., Sutton, W., A.: Sport Marketing, Human Kinetics, 3rd edition, Champaign 2007, ISBN: 07360-6052-9
7
Fullerton, S. Sports Marketing, Mc Graw Hill, 2nd edition, New York 2010.
8
Dick, R., Turner, B. Are Fans and NBA Marketing Directors on the Same Page? A Comparison of Value of
Marketing Techniques, Sport Marketing Quarterly 16, no. 3 (2007).
9
Mawson, L., Coan, E. Marketing Techniques Used by NBA Franchises to Promote Home Game Attendance, Sport
Marketing Quarterly 3, no. 1, 1994.
61
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
Newspaper advertising
E-mail via Internet/Web site
Direct mail
Referrals and word-of-mouth
Outdoor advertising (e.g. billboards)
Grassroots marketing with community service programs
Meetings with sponsorship and corporate ticketing programs
Special pregame and postgame events
Select a target market with strategic and research plan
Employee incentives with theme nights
Booster and special membership clubs
In-arena messages and public address announcements
Civic groups and local leader initiatives
Telemarketing with upselling
David King10 investigated that clubs in US professional leagues use the web 2.0 technologies
very often. The content of the presentation is similar to content on the official Web sites but there is
important feedback from fans and club can get useful information. Leivadiotou et al11 also confirms
the importance of Electronic word-of-mouth (WOM) and presents Facebook as contemporary mean
through which e-WOM is applied.
Electronic Media
In Sport Marketing by Bernard Mullin12 is possible to find chapter Electronic Media whose
author is Tim Ashwell from the University of New Hampshire. In this chapter it is presented how to
build winning Web site. Maybe more important conclusion of the paper is that organizations should
investigate the relative cost and benefits of producing their own media products. And it is possible
the conclusion take into consideration also for Web 2.0 technologies. There comes the question:
Does investing into Web 2.0 technologies have any impact on attendance?
Web 2.0 technologies in Czech sport
Twitter has big potential in the Czech Republic because club can communicate with fan very
fast but Twitter doesn’t have big membership because it still doesn’t support Czech language.
YouTube is important web for sharing video. Clubs can promote their video campaigns via
YouTube. The main and most important web 2.0 tool in the Czech Republic is the Facebook.
According to previous research football clubs use this communication tool. There have been already
answered questions concerning the Facebook communication of Czech professional football clubs
by quantitative analysis: How much official fans clubs have on their official pages? How often
clubs communicate with fans via this communication tool? One of conclusions was: Official
Facebook pages generate about 10% of unique visitors of official Web sites of AC Sparta Praha and
FC Viktoria Plzeň. In qualitative analysis topics and forms of clubs’ communication and levels of
fans’ respond were evaluated.
Most clubs operates official Facebook pages only posting links to their official Web sites (FC
Viktoria Plzeň) but few clubs works with the Facebook very creatively (AC Sparta Praha) so fans
can feel they can get something extra in comparison with Web sites.
10
King, D. Click This Button if You 'Like' Sports on Facebook. Information Today; Jul/Aug2010, Vol. 27 Issue 7, p 3535, 1/2p.
11
Leivadiotou, E.; Markopoulos, D. Cyber Communities and Electronic Word-of-Mouth: The Use of Facebook in the
Promotion of Hospitality Services, MIBES Transactions, 2010, v. 4, iss. 1, pp. 138-51
12
Mullin, J., B., Hardy, S., Sutton, W., A. Sport Marketing, Human Kinetics, 3rd edition, Champaign 2007.
62
Web 2.0 technologies in Sport
According to the research of L. van Daal Twitter is used by one of eight top athletes in the
Netherlands mostly as complementary communication tool which can use athletes which are not so
often in spotlights.
Nowadays Web 2.0 technologies (Social media) seem to be very up to date topic because one
of theme session of prestigious conferences EASM 2011 or NASSM 2011. Coppes13 (2011)
describes whole area of online personal branding in sport area via Social Media sites and states
online reputation management has become increasingly important for a professional athlete in this
fast paced world. Wallace14 is preparing case study of Facebook communication of NFL teams.
There are several evaluations of Social Media campaigns which are connected with sporting events
for example with the FIFA World Cup 2010 Santomier15.
According to work of Blaszka16 122 teams in MLB, NBA, NFL, and NHL have their Twitter
and Facebook accounts located somewhere on their team webpage. This suggests that sport
organizations are at least trying to engage with their consumers. The communication between sport
organization and consumer is no longer one-way rather, a two-way, interactive process to engage
their fans. In the same work author presents results of research: In season 2010/2011 74.3% of the
Twitter users attended at least one game of their favorite team in US leagues. Sport managers
should seek to drive more consumers to their Twitter page in hopes that it fosters fan identification,
interest in the team, and future game attendance.
According to McLaren17 Tony Fernandes (new boss of QPR football club) is a huge advocate
of using social media to aid transparency in his companies (great interview we did with him last
year). This is something he has done with Air Asia and continued with great success with the Lotus
F1 team. In work of Thomaselli18 in college football organization The Bowl Championship Series is
considered to have committed a major blunder when it used its pages on the online social networks
Twitter and Facebook to simply present marketing information rather than to interact with football
fans.
Hypothesis and research question of the research
Clubs’ perspective
The main hypothesis in the research paper is: “Football and hockey clubs which are active at
Facebook (the most developed Social Media in the Czech Republic) have higher home average
attendances.” The hypothesis is founded on the premise that football and hockey clubs use official
Facebook pages as supplementary communication tool with fans to attract them to the stands. Clubs
actively try to enlarge the community at Facebook and see the equation more fans at Facebook
pages equals more fans in the stands.
2 Methodology
13
Coppes, J.: Online Personal branding from professional Dutch Sports athletes via Social Media, NASSM Conference
2011, June 4, London, Ontario, USA.
14
Wallace, L., Wilson, J., Miloch, K. Sporting Facebook: A Case study with the National Football League, Texas
Woman's University.
15
Santomier, J., 2008, ‘New Media, Branding and Global Sports Sponsorship’, International.
16
Blaszka, Matthew, "An Examination of Sport Consumers’ Twitter Usage" (2011). Kinesiology Theses. Paper 1.
http://digitalarchive.gsu.edu/kin_health_theses/1
17
McLaren, D.: QPR and Social Media, UK Sports Network – Digital Tech & Sport. 25 August 2011,
http://www.theuksportsnetwork.com/qpr-and-social-media
18
Thomaselli, R.: If you're wondering what not to do when it comes to social media, learn from BCS. Advertising Age,
11/30/2009, Vol. 80 Issue 40, p3-22, 2p
63
Due to the research hypothesis there is assumption that there is link between Facebook fans of
football club and average attendance of home matches. That is the reason why Linear Regression
Analysis is used as main research method.
Linear Regression Analysis
According to Hindls et al19 or Leeds et al20 finding existence of one or more dependent
variables on one independent variable is the main aim of regression analysis. Appropriate stochastic
model is the result of regression analysis. General formula of linear regression analysis is possible
to express:
(1)
where:
y – dependent variable
a – coefficient of dependence
x – independent variable
b – random variable
1.
2.
3.
4.
5.
The procedures of used research methods are:
Define dependent and independent variables of the research sample.
Count P values to displace the theory that variables are independent with 95% significance level.
Form the trend line of values and count its regression function and its values.
Count R squared values which are called as indexes of determination and explains rate of
variability.
Interpret the results of the regression analysis.
3 Research
Attendance and number of Facebook fans
In the clubs’ perspective we try to confirm the hypothesis if the football or hockey club is
active at Facebook (the most developed Social Media in the Czech Republic) then it has higher
home average attendances. It is investigated for football clubs and ice hockey clubs in season
2010/2011 in the Gambrinus Liga (the highest Czech football league) and the Tipsport Extraliga
(the highest Czech hockey league). Football and ice hockey are the most attended spectator oriented
sports in the Czech Republic.
Table 1 Attendance and Facebook Fans
Club name
No
Number of fans on official FB pages
Average home attendance
25th July 2011
season 2010/2011
1
FC Viktoria Plzeň
6990
5379
2
AC Sparta Praha
96414
7774
3
SK Slavia Praha
24053
5864
4
FK Teplice
2156
4385
5
FK Baumit Jablonec
2293
3616
6
SK Sigma Olomouc
3442
4887
7
FK Ústí nad Labem
0
3086
19
Hindls, R., Hronová, S., Seger, J., Fischer, J.: Statistika pro ekonomy, 7th edtion, Professional Publishing, Prague
2006.
20
Leeds, M., von Allmen, P.: The Economics of Sports, Pearson Education Inc., Boston 2011.
64
8
FC Slovan Liberec
0
4376
9
1.FK Příbram
1123
3492
10 1.FC Slovácko
7336
4781
11 FC Hradec Králové
6789
4508
828
3815
2661
3804
10371
4791
15 FC Zbrojovka Brno
2602
3580
16 SK Dynamo České Budějovice
2430
3434
17 HC Eaton Pardubice
22285
8922
18 HC Kometa Brno
22192
7165
6478
6068
20 HC Sparta Praha
37609
5165
21 HC Slavia Praha
13484
5012
22 Bílí Tygři Liberec
11746
5467
23 HC Vítkovice Steel
12 192
5046
24 HC MOUNTFIELD
10189
4774
5170
4606
12 Bohemians 1905
13 FK Mladá Boleslav
14 FC Baník Ostrava
19 HC Plzeň 1929
25 PSG Zlín
26 HC BENZINA Litvínov
0
4110
27 HC Oceláři Třinec
7456
3688
28 HC Energie Karlovy Vary
9650
3573
29 BK Mladá Boleslav
1714
3349
30 HC Vagnerplast Kladno
3068
2159
Total Average
11091
4689
Football Average
10593
4473
Hockey Average
11660
4936
Source: own research
There are only official facebook pages taken into consideration. In some cases (FC Slovan
Liberec, FK Ústí nad Labem, HC Benzina Litvínov) there is possible to see value 0 fans. It is
because these clubs do not use Facebook pages as an official communication tool.
65
4 Research Results
Figure 1 Facebook fans at official pages and average home attendance
Source: own calculation
P value: 0.000137
R2 coefficient of determination: 0.64
The regression function for Facebook fans and average attendances of home matches is:
y = 0.05x + 4135
From this formula hypothesis that clubs which are active on the Facebook in the Czech
Republic have slightly higher (coefficient is 0.05) attendances of home matches with high rate of R2
coefficient of determination 0.64 can be confirmed. According to the P value is 0.000137 (is lower
than 0.005) it is possible to confirm that this model is valid with 95% significance level. The
coefficient 0.05 seems to be low number. But it means when club reach 20 new Facebook fans they
get 1 fan into stands. For clubs with long tradition and wide market it is not so difficult to gain 20
new Facebook fans.
5 Discussion
Previous researches discovered firstly there is big potential in using web 2.0 technologies in
the Czech Republic for marketing purposes, secondly if and how much the football clubs in the
Czech Republic use the web 2.0 technologies for communication with their fans, thirdly there were
quantitative and qualitative analyses of official Facebook pages on the impact on internet awareness
and generating visitors on official Web site. The aim of this paper was to see further if there is
connection between number of fans at official Facebook pages and attendances at home matches of
football and ice hockey clubs.
The research confirmed that there exists direct impact of being social at the most extended
web 2.0 technologies (the Facebook) in the Czech Republic and attendances at home matches on
football and ice hockey stadiums.
66
Therefore it does it worth to invest in official Facebook pages. Of course Facebook pages are
not “panacea” that will full stands of football stadiums and ice hockey arenas all the time but it can
be supplementary communication tool which can help to promote every single match. In
comparison with classical marketing communication tools administrating Facebook pages is not so
costly and if club have big number of the fans at the Facebook then it is possible to contact mass of
people without being charged.
We must say that research results are limited only to the Czech Republic and are not valid to
global football clubs such as Barcelona CF or Manchester United because our clubs have mostly
fans mostly from our country and therefore there is possibility they will attend the match personally.
On the other hand overseas fans of the global clubs can be attracted by the Facebook campaign to
buy clubs’ merchandising products.
The limitation also exists in quality of communication on the Facebook.
The research has another limitation because there is not only clubs’ perspective to become a
“fan” of the official Facebook pages of his/her favorite club. Becoming the fan represents one of
possible expressions: I am fan of my club. I am proud on the club. I want to be part of the club. I
want to be connected with my club. Or I want you to see that I am fan of my club. These possible
motivations can be investigated in future research.
Conclusions
Although the research has its limitations the main hypothesis: “Football and hockey clubs
which are active at Facebook (the most developed Social Media in the Czech Republic) have higher
home average attendances.” was confirmed by the regression analysis and model is valid with 95%
significance level. Having more fans at official Facebook pages in the Czech Republic has the
positive effects on home attendances of two most popular professional sports (football and ice
hockey). Football and ice hockey clubs should operate official Facebook pages. It is not costly and
they can address masses of people very fast. Nowadays the Official Facebook pages should be part
of communication of every club. However there are still few clubs which don’t use it. The
Facebook has huge potential also in their function. Most of clubs in the Czech Republic don’t use
full potential of these technologies but that is the question of next researches. Same as investigating
fans’ perspective why to become fan of his/her favorite club on Facebook pages.
References
1. Blaszka, Matthew, "An Examination of Sport Consumers’ Twitter Usage" (2011). Kinesiology
Theses. Paper 1. http://digitalarchive.gsu.edu/kin_health_theses/1
2. Coppes, J.: Online Personal branding from professional Dutch Sports athletes via Social Media,
NASSM Conference 2011, June 4, London, Ontario, USA.
3. Yu Kyoum Kim; Trail, Galen; Yong Jae Ko: The Influence of Relationship Quality on Sport
Consumption Behaviors: An Empirical Examination of the Relationship Quality Framework.,
Journal of Sport Management, 7/11/2011.
4. Dick, R., Turner, B.: Are Fans and NBA Marketing Directors on the Same Page? A Comparison
of Value of Marketing Techniques, Sport Marketing Quarterly 16, no. 3 (2007)
5. Fullerton, Sam: Sports Marketing, Mc Graw Hill, 2nd edition, New York 2010.
6. Hindls, R., Hronová, S., Seger, J., Fischer, J.: Statistika pro ekonomy, 7th edtion, Professional
Publishing, Prague 2006.
7. King, D.: Click This Button if You 'Like' Sports on Facebook. Information Today; Jul/Aug2010,
Vol. 27 Issue 7, p35-35, 1/2p
8. Leeds, M., von Allmen, P.: The Economics of Sports, Pearson Education Inc., Boston 2011.
67
9. Leivadiotou, E.; Markopoulos, D.: Cyber Communities and Electronic Word-of-Mouth: The Use
of Facebook in the Promotion of Hospitality Services, MIBES Transactions, 2010, v. 4, iss. 1, pp.
138-51
10. Mawson, L., Coan, E.: Marketing Techniques Used by NBA Franchises to Promote Home Game
Attendance, Sport Marketing Quarterly 3, no. 1, 1994
11. McLaren, D.: QPR and Social Media, UK Sports Network – Digital Tech & Sport. 25 August
2011, http://www.theuksportsnetwork.com/qpr-and-social-media
12. Mullin, J., B., Hardy, S., Sutton, W., A.: Sport Marketing, Human Kinetics, 3rd edition,
Champaign 2007.
13. Novotný, Jiří: Ekonomika Sportu Vybrané kapitoly II, Oeconomica Publisher, Prague 2010.
14. Rosner, S.,R., Shropshire, K. L.: The Business of Sports, 2nd Edition, Jones & Bartlett Learning,
USA 2011.
15. Santomier, J., 2008, ‘New Media, Branding and Global Sports Sponsorship’, International,
Journal of Sports Marketing and Sponsorship, October edition, pp. 15-28.
16. Supovitz, F.: The Sport Event Management and Marketing Playbook, John Wiley and Sons Inc.,
Hoboken, New Jersey USA 2005.
17. Thomaselli, R.: If you're wondering what not to do when it comes to social media, learn from
BCS. Advertising Age, 11/30/2009, Vol. 80 Issue 40, p 3-22, 2p.
18. Wallace, L., Wilson, J., Miloch, K. Sporting Facebook: A Case study with the National Football
League, Texas Woman's University.
68
VERIFICATION OF INFORMATION SYSTEM WEAK POINTS IN THE SECURITY
AREA
Miloš Koch
Brno University of Technology, Czech Republic.
Abstract. The article describes the results of a research dedicated to the situation in selected
areas of information systems, testing the hypotheses about the variances of results in relation to the
company size using the good correspondence test with the relevance level of 0.05. The investigation
used data from the research portal ZEFIS. Questions regarding the security of information systems
were answered by about 660 respondents from 283 companies. The sample in the survey was
comprised of approx. 77 percent of respondents from the Czech Republic, 18 percent from the
European Union countries, and the rest from other countries. The obtained results do not confirm
the validity of working hypotheses that larger firms perceive data as more important and they have
better data protection than small firms.
Keywords: effectiveness, information systems, key factors, ICT, ICT security
Introduction
The article was written as a part of the project called „The Development of Knowledge Needed
for the Improvement of Information Support of Economic Business Management“. This project is
supported by the Internal Grant Agency at Brno University of Technology and registered under No.
FP-S-11-1. The results used in the article were taken from the author’s research portal ZEFIS.
Objective of which is to make it possible for companies from all over the world to assess the
effectiveness of their information systems free of charge, to find the weak points thereof and
compare the results with the reference database of the other companies.1
The concept of effectiveness is understood here according to Drucker as a synergy of
efficiency and meaningfulness. The survey covers the following areas:
- User satisfaction with the information system
- User satisfaction with the information support level
- Quality of user training
- What information systems are used
- Employees´ awareness of corporate objectives in view of their respective roles
- Existence of an information strategy in the company
- Experience with outsourcing and ASP
- Perception of trends in the area of information and communication technologies
The inquiries studied in the research cover all six key areas of the Information Systems
Successfulness Model by Delon & McLean (2003).
1. General Assumptions
Many authors deal with the issue of information system effectiveness. It is important to
distinguish between the words Software and Information System - S. Ozkan (2006)2. Among world
respected authors dealing with the general effectiveness model are DeLone and McLean. Their
1
www.zefis.cz – research website on-line. Although primarily the research focused on ICT users in Czech and Slovak
companies it extended to other countries, too, on the grounds of possible comparison and identification of variances, if
any.
2
OZKAN, S., A Process Capability Approach to Information Systems Effectiveness Evaluation, The Electronic Journal
of Information Systems Evaluation, Vol. 9, (2006) Iss. 1, pp 7-14.
69
model was published back in 1992 and subsequently was updated in 2002 and 20033. It is this
model that is used by many authors at present. Majid Ramezan (2009) has built up a model to assess
IS effectiveness in the Iranian oil industry. In his work he primarily deals with the assessment of
user satisfaction4.
Furthermore, L. Pitt, for example, in his article (1995) approaches the issue on the basis of the
assumption that the IS is actually a service provider and to assess quality he makes use of the
SERVQUAL model, or else a marketing tool for service quality measuring. The basic stone of this
approach is the paradigm of contradiction between clients´ ideas and the service actually provided
to them. In this model, the information system user plays the role of a client and the IS that of a
service provider – supplier5.
Many times the models are created for very specific conditions. An example may be the one
described in the article by H. Sajady (2008), who tries to assess benefits of an information system
on a stock exchange, or A. Mashour (2008), who set up a model for the assessment of effectiveness
in the bank sector67. G. Panigyrakis (2006) concentrates on marketing information system and its
assessment in practice.8
The articles mentioned above judge information systems from various points of view and for
specific needs and requirements. The data processed are always focussed on a narrow segment
compliant with the modelled issue.
Further on, M. Maryška in his article (2007) deals with economic effectiveness of the
information system comparing two different approaches to the issue9.
2.
Research Organisation
Data used in this article are based on the respondents´ answers in the ZEFIS portal. Within the
controlled survey taking place in 2011, questions relating to security were answered by randomly
selected 662 respondents from 283 companies who use an information system in their work.
Although the sample is not very big it is the maximum of data we managed to get in the period. The
total number of respondents in the ZEFIS system is 2176 from 1176 companies. The questions
regarding security were added to the campaign of the survey 2011, and therefore answers by all
respondents kept in the database are not available. The structure of answers of new respondents to
questions from other areas, investigated previously, does not vary from those of the remaining
respondents, and hence we may suppose that the results obtained are in the least indicative to think
about the situation of some areas of the information system security.
3
DELONE, W.H., and MCLEAN, E.R. Measuring E-Commerce Success: Applying the DeLone & McLean
Information Systems Success Model. International Journal of Electronic Commerce (9:1), Fall, pp 31-47. 2004.
4
RAMEZAN, M., Measuring the effectiveness of a human resource information system in National Iranian Oil
Company: An empirical assessment, Iranian Journal of Management Studies (IJMS) ,Vol 2. No.2. June 2009 pp: 129 –
145.
5
PITT, LEYLAND; WATSON, RICHARD; AND KAVAN, C. Service Quality: A Measure of Information Systems
Effectiveness, MIS Quarterly, Vol. 19, No. 2 (Jun., 1995), pp. 173-187.
6
SAJADY, H., DASTGIR, M., HASHEM, H.N., Evaluation of the effectiveness of accounting information systems,
International Journal of Information Science & Technology,Vol. 6, No. 2 ( July / December, 2008).
7
MASHHOUR, A., ZAATREH, Z.. A Framework for Evaluating the Effectiveness of Information Systems at Jordan
Banks: An Empirical Study, Journal of Internet Banking and Commerce, Vol. 13, No.1. 2008.
8
PANIGYRAKIS, GEORGE G, CHATZIPANAGIOTOU, KALLI-OPI C., The impact of design characteristics and
support services on the effectiveness of marketing information systems: an empirical investigation, Review of business
information systems second quarter, Volume 10, 2006, pp. 91- 100.
9
MARYŠKA, M., Měření ekonomické efektivnosti informačního systému, Systémová integrace, Vol. 2, 2007, pp. 8598.
70
600
500
400
300
Diagram 1 Structure of respondents by countries
The companies were divided to groups by the number of employees in line with the
methodology of the Czech Statistical Office. In the table below respondents are divided by
company size. In order to study results by company size respondents were put together to groups of
similar sizes.
Table 1 Numbers of respondents by company size – put together
Company size
Number of employees
Number of respondents
S1
S2
S3
S4
1-49
172
50-199
134
200-999
167
>1000
189
200
180
160
140
120
100
80
60
40
20
0
S1 1-49
S2 50-199
S3 200-999
S4 >1000
Diagram 2 Numbers of respondents by company size – put together
3. Assessment
In this paragraph we will discuss some of the surveyed areas of the information system
security. They were formulated these working hypotheses:
H1 : Larger firms perceive the data as more important than small firms
H2 : Larger firms have better data protection and security than small firms
Given the scope of this article was not possible to describe the results of all examined areas of
safety data, it is limited to a comparison of three factors:
71
- Internet access
- The Possibility of Connecting of External Memory Devices
- Data Backup responsibility
3.1 Access to the Internet
Do you have internet access
from your computer at work?
a)
No
b) Restricted only to selected
websites
c)
Yes, unrestricted
450
400
Diagram 3 Internet access
It was investigated whether respondents had access to the Internet at work and whether the
access was completely free or limited to certain websites only. Generally, the access to the Internet
is not necessary for a number of company professions and represents a safety risk.
Diagram 4 Internet access by company size in percents
Table 2 Accepting/rejecting the hypothesis about the correspondence of the internet access based on the
company size
Company size
χ2
Rejection of the hypothesis significance level of 0.05 (5.99)
S1
37.208
yes
S2
S3
S4
2.935
9.026
2.768
no
yes
no
We reject the hypothesis about the correspondence of structure of the answers regarding
Internet access at work for small companies up to 50 employees and for mid-size companies having
200-999 employees. In the smallest companies the restriction is only very small, as expected, while
nearly all employees have unrestricted access to the Internet, which increases safety risks and may
reduce work productivity if the Internet is used for entertainment and relax. On the other hand, in
72
mid-size companies the restriction is at the highest level – most respondents have the Internet
restricted to certain websites. This result was expected rather in the biggest companies from group
S4.
3.2 The Possibility of Connecting of External Memory Devices
Can you connect any external memory device
(USB disk or similar) into your computer at
work?
600
400
a) No
b) Yes
c) I don’t know
200
0
a
b
c
Diagram 5 The possibility of connecting external devices
The possibility of connecting external devices is usually considered a relatively high safety risk
because of potential virus infection and copying and abuse of company data.
Diagram 6 The possibility of connecting external devices by company size
Table 3 Accepting/rejecting the hypothesis about the correspondence of the external memory device connection
based on company size
Company size
S1
S2
S3
S4
χ2
2.328
10.400
0.040
3.932
no
yes
no
no
The hypothesis about the correspondence of structure of the answers regarding the possibility
of connecting external devices may be rejected only for companies with 50-199 employees but not
for small companies. In these companies we see somewhat higher restrictions laid by the employer
when permitting external devices and the reason may be a greater fear of data abuse in big
companies that usually have one or more owners taking more care about the data than in the small
companies where professional management in the area of ICT is usually missing. In total, the high
number of companies permitting their employees external memory devices is very surprising.
3.3 Data Backup
73
Who is responsible for the backup of your data or
files which you have on your computer at work?
a)
An automatic backup system
b)
A specialist of the Information System
Department
c)
Myself, personally
d)
Someone else, not from the Information
System Department, e.g. your colleague
e)
Nobody, there are no data stored in my
computer
f)
Nobody, but there are files and data in my
computer that I create and use
Diagram 7 Who is responsible for backup
Diagram 8 Who is responsible for backup by company size
Table 4 Accepting/rejecting the hypothesis about the correspondence of backup responsibility based on company
size
Company size
χ2
S1
S2
S3
S4
16.049
9.207
18.473
13.931
yes
no
yes
yes
The hypothesis about the correspondence of structure of the answers with the total data backup
condition we hereby reject for all groups except for companies with 50-199 employees. It is
interesting how relatively few companies use automatic backup or location of all data outside the
employee’s computer. Likewise, direct responsibility of an employee for data backup is very high in
all groups of companies. On the other hand, though, it is encouraging to see that the worst possible
alternatives „d“ and „e“ – no user data backup or backup carried out by another employee than it
should be – occur in all groups of companies in a very limited number.
74
Conclusions
Due to the article scope it was not possible to publish more areas included in the investigation
– the issue of ICT security in the ZEFIS system is covered by ten questions, and furthermore we
studied the possibility of programme installation by the user, impact of loss or destruction of the
user’s computer, and others.
The article gives a description of the results of a research of weak points in three selected areas
of the information system security. In all the companies included in the survey unrestricted Internet
access prevails and the worst situation is in small companies in line with our expectations, where
ICT management is not very good and is usually performed by managers who are not experts in
ICT.
In the area of risks arising from the possibility of connecting external devices the situation in
general is very bad in all companies regardless of the size. The best situation appears to be in small
companies up to 200 employees but even here nearly eighty percent of employees can connect
external devices to their computers, which may be a significant safety risk of data abuse by the
employee.
In terms of data backup as a key attribute of ICT security the situation varies according to the
company size. The situation appears to be the best in big companies with 200-999 employees. In all
companies the percentage of backups carried out by the users is relatively high.
The obtained results do not confirm the validity of working hypotheses H1, H2 that larger
firms perceive data as more important and they have better data protection than small firms.
It is not possible to generalize the results due to the size of the selection file but they are
interesting and can serve as basis for further research and as a warning to managers about the
insufficiency of their data and information system security.
References
1. BASL, Josef, BLAŽÍČEK, Roman. Podnikové informační systémy : Podnik v informační
společnosti – 2. výrazně přepracované a rozšířené vydání. 2008. vyd. Praha : Grada Publishing, a.s.,
2008. 283 s.
2. ČESKÝ STATISTICKÝ ÚŘAD. Využívání informačních a komunikačních technologií v
podnikatelském sektoru za rok 2009. Kód: w-9702-09. Dostupné on–line
http://www.czso.cz/csu/2009edicniplan.nsf/p/9702.
3. DELONE, W.H., and MCLEAN, E.R. Measuring E-Commerce Success: Applying the DeLone &
McLean Information Systems Success Model. International Journal of Electronic Commerce (9:1),
Fall, pp 31-47. 2004.
4. MARYŠKA, M., Měření ekonomické efektivnosti informačního systému, Systémová integrace,
Vol. 2, 2007, pp. 85-98.
5. MASHHOUR, A., ZAATREH, Z. A Framework for Evaluating the Effectiveness of Information
Systems at Jordan Banks: An Empirical Study, Journal of Internet Banking and Commerce, Vol. 13,
No.1. 2008.
6. NOVOTNÁ, V. Ověření slabých mist informačních systémů. TRENDY EKONOMIKY A
MANAGEMENTU. 2010. 2010(7). p.38-47.
7. OZKAN, S., A Process Capability Approach to Information Systems Effectiveness Evaluation,
The Electronic Journal of Information Systems Evaluation, Vol. 9, (2006) Iss. 1, pp 7-14.
8. PITT, LEYLAND; WATSON, RICHARD; AND KAVAN, C. Service Quality: A Measure of
Information Systems Effectiveness, MIS Quarterly, Vol. 19, No. 2 (Jun., 1995), pp. 173-187
9. PANIGYRAKIS, GEORGE G, CHATZIPANAGIOTOU, KALLI-OPI C., The impact of design
characteristics and support services on the effectiveness of marketing information systems: an
75
empirical investigation, Review of business information systems second quarter, Volume 10, 2006,
pp. 91- 100.
10. RAMEZAN, M., Measuring the effectiveness of a human resource information system in
National Iranian Oil Company: An empirical assessment, Iranian Journal of Management Studies
(IJMS) , Vol 2. No.2. June 2009 pp: 129 – 145
11. SAJADY, H., DASTGIR, M., HASHEM, H.N., Evaluation of the effectiveness of accounting
information systems, International Journal of Information Science & Technology,Vol. 6, No. 2 (July
/ December, 2008).
12. SODOMKA, Petr. Informační systémy v podnikové praxi. 2. vyd. Brno: Computer Press, a.s.,
2010. 351 s.
13. ZEFIS – research website. On line www.zefis.cz.
76
THE USE OF THEORETICAL MODELLING OF THE ENVIRONMENTAL,
SOCIAL AND CORPORATE GOVERNANCE (ESG) PERFORMANCE INDICATORS1
Alena Kocmanová
Brno University of Technology, Business and Management Faculty,
Kolejní 4, 612 00 Brno, Czech Republic,
Petr Němeček
Tomas Bata University in Zlín, Faculty of Management and Economics,
Mostní 5139,760 01 Zlín, Czech Republic,
Abstract. In her paper, the author analyzes the use of theoretical modeling of the
environmental, social and corporate governance (ESG) performance indicators. Economic,
environmental, social and governance factors form the core business strategy, as part of its daily
operations, the challenge to succeed, defense against the threat, the incentive opportunities. Very
important is their connection with the company performance assessment based on an evaluation
(measurement) of a company complex performance, determined by these factors. Using advanced
quantitative methods (optimization/stochastic/dynamic, etc.) in a measurement of complex
company performance can be refined on qualitative aspects by capturing them with nondeterministic methods (uncertainty/data mining/imprecision/fuzzy logic, etc.). The aim of the
papers is the proposal theoretic possibility utilization fuzzy logic for evaluation (measurement) of a
complex company performance. This shows that classic models are very simplified, this due to the
need of using rationale, mainly qualitative models together with “fuzzy logic”.
Keywords: qualitative modeling, fuzzy logic, environmental, social, corporate governance,
economic performance indicators.
Introduction
Performance management is a management style based on an evaluation of both financial and
non-financial indicators, the so-called Key Performance Indicators. The set of such indicators has a
coherent concept, and it is fully comprehensible for, and integrated into, the company-wide system
of future-oriented management. A precondition for a successful implementation of performance
management is a correctly defined performance indicator, straightforward communication of
results, a suitable form of performance management implementation with respect to the company's
specific needs and a conscious interlinking of the strategic, tactical and operating levels of company
management through performance indicators.
Good application of performance management hinges on the determination of performance
indicators for the company's individual sections, which are monitored, measured and evaluated over
time. Performance indicators are derived from decomposed objectives of individual processes (or
functional areas) and critical success factors of the corporate strategy. By measuring and evaluating
them, we can accomplish monitoring of successes and failures. When defining the overall system of
performance measurement, we need to emphasize the purposefulness, i.e. the need to measure the
right indicators, which means that we need to choose the right performance indicators that are most
closely related to corporate performance. The second step is to measure the indicators properly, i.e.
to select the proper measurement technique. The purpose of performance measurement is not a
perfectly elaborated system of performance measurement of any undertaking. Performance
measures should, rather, be considered a framework within which measurements take place.
1
This paper is supported by The Czech Science Foundation. Name of the Project: Construction of Methods for
Multifactor Assessment of Company complex Performance in Selected Sectors. Reg. Nr. P403/11/2085
77
The environmental, social and economic factors and Corporate Governance are at the heart of
the corporate and business strategies, they are part and parcel of daily operations, stimulate work for
success and work as an indicator of threat and risk and push for seizing opportunity, and of course
they should become part of the voluntary corporate reporting on the assessment of links between the
environmental and economic assessment of performance, the social assessment of performance and
the relation to Corporate Governance (Kocmanová, Němeček, 2009).
Great importance is attributed to the defining of Key Performance Indicators (KPIs) in the
economic, environmental, and social and governance areas for a specified CZ-NACE industry and
subsequent measurement of sustainable development.
The corporate sustainability reporting and sustainability performance of a company would
thus be defined by the integrated achievement of economic, social, environmental and corporate
governance performance measures. Sustainability performance is, however, often understood as
performance in environmental and social terms, thus excluding economic performance
(Schaltegger, Wagner, 2005).
Decision-making is based on a qualified assessment (measurement) of a situation determined
at the same time by multiple factors (indicators), primarily in their horizontal development. In
pursuit of an outstanding informative force an emphasis is currently placed not only on the absolute
data, but in the first place on the change data and analyses of changes of these changes. That is,
dynamics of systems is the focus of attention. Appropriately applied vertical analyses then add
further dimension to the conditions for decision making. In this conjunction other methods have to
be discussed: logical and empirical methods, methods of qualitative and quantitative research such
as in particular modelling of asocial statistics (Chvátalová, Kocmanová, Dočekalová, 2011).
A systematic approach to problem solving is of great importance in relation to decisionmaking processes. The theory of systems, i.e. system analysis is another important approach based
on gradual decomposition into subsystems and elements; it focuses on transformation of system
inputs into outputs, i.e. behaviour and features of systems.
Decision-making processes in the public as well as commercial sectors, economic
management and political sphere have to be subject to multicriterial, multifactor and non-unifiably
algorithm able managerial decision-making and control (Talašová, 2003).
The construction of methods for rational while at the same sophisticated use of multifactor
metric, creation of change methodology, a methodical handbook for a specific industry considering
modifiability and broad spectral application, will be universally applicable in the commercial,
institutional and public spheres, its outputs will be a means of international relevance.
Modelling and optimization of vaguely described and prohibitively complex systems in a
realistic environment must necessarily be based on vague and sparse knowledge. The very reason is
that the interdisciplinary nature of problems under study must integrate different knowledge items
and different types of uncertainties.
Conventional methods of optimization and consequently decision making have very limited
areas of applications if realistic tasks must be solved. Those traditional algorithms use conventional
mathematics i.e. equation based models. Such models are information intensive. It means that the
classical models are heavily simplified. This shows that classic models are very simplified, this due
to the need of using rationale, mainly qualitative models together with “fuzzy logic”. Ecosystem
modelling has a rich history firmly based in general systems theory (Jorgensen, 2000), and social
theorists can trace the ancestry of their soft systems approaches to general systems theory, see e.g.
classical works (Kauffman, 1993; Peterson, 1993). Among the social theories that have drawn
heavily on general systems theory, and which explicitly consider the relationship between society
and the environment, is the theory of ecological communication (Grant, 2002).
From ESG performance data is necessary to determine KPIs to identify company overall
performance. Great importance is attributed to the defining of KPIs in the economic, environmental,
social and governance areas for a specified CZ-NACE activity (NACE is an acronym standing for
Statistical Classification of Economic Activities, used by the EU since 1970. NACE provides a
framework for statistical data relating to activities in many economic areas. Classification of
78
economic activities CZ-NACE replaced the Branch classification of economic activities (OKEC)
and has been used since 2008 in the CR) with subsequent measurement of sustainable development.
The Reporting and overall performance of a company in a specific CZ-NACE activity would thus
be defined by the integrated achievement of economic, social, environmental and governance
performance measures. Sustainability performance is, however, often understood as performance in
environmental and social terms, thus excluding economic performance.
1. Methods modelling
The process of creating models of real situations (in general, not just in economics) may be
called “real phenomena modelling”. The more real situation aspects the model embraces, the more
exactly it describes it. Such a model, however, may not be suitable for understanding context and
achieving clearness, processing and further manipulation (obtaining results within a reasonable time
span, formulation of conclusions; possible uncovering of strengths and weaknesses of facts or
inappropriate use of ICT). Modelling may be categorized from different points of view. For
example if the focus is on description, this may be of verbal, visual, quantitative, qualitative or
analytic kinds. If the focus is on character, this encompasses deterministic and stochastic, static,
dynamic and other approaches.
When modelling employing advanced quantitative methods, optimization, stochastic,
dynamic, further mathematic (e.g. disaster theories) and other methods, the level of examination
may be increased by also considering significant aspects of qualitative character, mainly consisting
in capturing facts no deterministically, e.g. by capturing phenomena under conditions of
indeterminateness, by means of data extraction, by considering and reflecting upon uncertainty not
just by “measuring“ of empirical data, but also uncertainty of methods, technology, the facts that
economic, environmental as well as social experiments are difficult to control, by taking into
account degrees of phenomenal ambiguity, delimiting certain balance space etc. The resulting
methods should be modifiable, enabling e.g. local specification taking into account abnormal or
marginal conditions, with a potential of reasonable prediction, deducing historical development,
single- and multicriteria, capable of further simplification (e.g. comparative static approach) etc.
(Gander, Hřebíček, 2004), (Hřebíček, Chvátalová, 2009).
In this way new methods are created, but along with that even some older methods have been
re-discovered and transferred from their academic environment into practical use. Mathematicians
found inspiration in the nature and developed new theories such as fuzzy logic (determining “how
many“ elements belong in a specific set), artificial neuron networks (are sort of imperfect model of
the human mind, termed “black box“, as it is impossible to thoroughly learn about an internal
structure of a system), genetic algorithms (used where exact solutions of practical problems would
be almost infinitely long if systematically examined) or chaos (describes behaviour of non-linear
systems which though having a hidden order, still appear as systems controlled by chance effects).
The construction of methods for rational while at the same sophisticated use of multifactor
metric, creation of change methodology, a methodical handbook for a specific industry considering
modifiability and broad spectral application, will be universally applicable in the commercial,
institutional and public spheres, its outputs will be a means of international relevance. As regards
statistical methods inputs into researches, creation of new fuzzy stochastic models is essential at
present for the description and evaluation of sets of numerical and linguistic data of chance nature
with dominating indeterminateness, creation of unconventional mathematic-statistical methods for
fitting discrete distributions of probability aimed at categorical analysis including the testing of
statistical hypotheses and multi-criteria decision-making and software implementation of developed
methods and their application to real data and information sets (Karpíšek, 2008).
79
2. Methodology Qualitative Modelling
Modelling and optimization of vaguely described and prohibitively complex systems in a
realistic environment must necessarily be based on vague and sparse knowledge. The very reason is
that the interdisciplinary nature of problems under study must integrate different knowledge items
and different types of uncertainties. Conventional methods of optimization and consequently
decision making have very limited areas of applications if realistic tasks must be solved. Those
traditional algorithms use conventional mathematics i.e. equation based models. Such models are
information intensive.
Qualitative models seem to be particularly suitable for long-term predictions of behaviour of
complex systems. The methodology of common sense reasoning will be used to formalize this fact
and derive implications for different stages of transition. The inclusion of heterogeneous aspects,
economic dynamics produces rather complicated models. The result will be a qualitative definition
of a vector optimization problem.
A qualitative model is the most advanced calculus, which can be used as a theoretical
background to formalize common sense reasoning. In brief, there are instances where traditional
formal models may not be the most appropriate tools for understanding and explaining political
tasks.
In their place, common sense reasoning may provide an alternative. As an explanation of a
qualitative model, suppose there are only three qualitative values
positive, zero or negative
(1)
a qualitative solution of a qualitative model is specified
if all its n qualitative variables X1, X2, …Xn
(2)
Are described in the qualitative triplets
(X1, DX1, DDX1), (X2, DX2, DDX2),… (Xn, DXn, DDXn),
(3)
where Xi is the i-th variable and DXi and DDXi are the first qualitative and second qualitative
derivations with respect to the independent variable to t (which is usually time).
If X1 is e.g. profitability then DX1 indicates profitability changes (growing, declining or
constant) and DDX1 indicates what is happening to the rate of change in profitability. Precise
quantitative functions are not known. What is known is that the profitability is rising, staying
constant or falling at an unknown rate of change.
Fig. 1 gives a qualitative description of an oscillation process. The corresponding triplets (3)
are given there.
A typical example of a qualitative knowledge item can be formalized by a certain simple
relation between two variables X and Y. The complete set of relations has 3 . 3 . 3 = 21 different
shapes. Only six of them are given in Fig. 2. All relations are qualitative. It means that nothing is
qualitatively known. For example the relation 22 indicates clearly that there is a linear relationship
between Y and X. If X = 0 then Y is positive. However, nobody knows e.g. the slope. It is clear that
the slope is positive.
80
(+ 0 -)
e.g. Triplet (+ - +) = (X, DX, DDX)
(+ - -)
(+ + -)
(+ + 0)
(+ + 0)
Time
(+ - 0)
Concentration
(+ 0 +)
(+ + +)
(+ - +)
Figure 1 A qualitative description of an oscillation process
However, there are such qualitative relations which are known so vaguely that the second
derivative is unknown (unpredictable) and therefore the following description is used to
characterized them:
if X is increasing then Y is increasing
if X is decreasing then Y is decreasing
if X is decreasing then Y is increasing
if X is increasing then Y is decreasing
Y
MZ+
(4)
MZ-
(5)
Y
22
21
X
Y
X
Y
24
23
X
Y
X
Y
25
26
X
X
Figure 2 Qualitative shape
In other words the first derivatives are related as follows
DX = DY
DX = -DY
MZ+
MZ-
(6)
(7)
81
Qualitative screening
To simplify the problem, let us suppose that there are two independent variables X1, X2 and
two objective functions Q1, Q2. Both objective functions have to be maximized. The fact that both
objective functions are maximized is formally described as:
DQ1 = + ; DQ2 = +
(8)
Let us suppose that a qualitative model has the following set of three solutions / scenarios
described by the corresponding triplets (3):
X1
1 +++
2 ++3 +--
X2
+++
+-+-+
Q1
+-+++
+-+
Q2
+-+-+++
(9)
Therefore the first qualitative solution is totally wrong (see (8)). The reason is simple. The
first derivative must be positive, see (8). However, the first scenario in (9) gives for both objective
functions negative first derivatives:
DQ1 = DQ2 = Moreover the second derivatives are negative as well, see (9)
DDQ1 = DDQ2 = It means that both objective functions are decreasing more and more rapidly.
Therefore the qualitative behaviour of independent variables X1 and X2, see the first
scenario (9)
X1
1 +++
X2
+++
(10)
is totally unacceptable if we want to achieve maximization of both objective functions as it is
required by (8).
The second scenario in (9) maximizes the first objective function and decrease the second
one. The third scenario maximizes the second objective function and decreasing the first one. In the
set of scenarios (9) there is no such scenario which maximizes both objective functions at the same
time. If there would be a set of scenarios which contains the following scenario:
X1
++-
X2
+-0
Q1
+++
Q2
+++
then the scenario (11) is the best possible one (Dohnal, 2002;
Brož, Z.; Kocmanová, A.; Luňáček, J.; Meluzín, T., 2008).
(11)
Dohnal M., Vícha T.,2008;
82
3.
The Concept and used Methods
Reporting tools designed for the ESG performance together with Corporate Social
Responsibility (CSR) and GRI-appear as essential at present. The overall company performance
plays a key role in its corporate strategic policy and sustainability of success. The creation of
reliable methods of company performance measurement where concurrent acting of multiple factors
is in play can be considered a prerequisite for success not only in decision making, but also with
regard to corporate governance, comparison possibilities, development of healthy competition
environment etc.
The overall company performance plays a key role in the general development of a company.
The creation of a reliable method of company performance measurement where concurrent acting
of multiple factors is in play can be considered a prerequisite for success not only in decision
making, but also with regard to general corporate governance, comparison possibilities,
development of healthy competition environment etc.
Examine, analyze and categorize contemporary characteristics of the individual pillars:
economic, environmental, social and corporate governance (or the attractive sustainability of
success) in relation to the measure of progress or dynamics of development of the overall company
performance, so that the basic data and preparation for the construction and defining of multifactor
methods in a rational and useful manner identify the system of conditions as the support to
subsequent creation of an applicable methodology.
The following sets of variables are identifying ad as important by a group of experts Integration of environmental performance; Integration of social performance; Integration of
corporate governance.
Integration of Environmental Performance – Environmental Reporting.
Defining of key performance indicators – Environmental performance; 1) Carbon emissions,
greenhouse gas emissions, disclosure/measurement and reporting; 2) Climate change; effect on
Company/risk exposure/opportunities; 3) Ecosystem change; 4) Facilities citing environmental
risks; 5) Hazardous waste disposal/cleanup; 6) License to operate in communities; 7) Pollution; 8)
Renewable energy; 9) Resource depletion; 10) Toxic chemical use and disposal.
Integration of Social Performance – Social Reporting.
Concept Corporate Social Responsibility; Safety and Health Protection at Work; Health and
Safety Management System;
Defining of key performance indicators – Social performance: 1) Community relations; 2)
Discrimination; 3) Diversity (employee/Board diversity); 4) Facilities, citing social risks; 5)
Genetically modified organisms; 6) Living wage disputes; 7) Predatory lending; 8) Political
contributions; 9) Political risk of involvement in troubled markets, countries; 10) Shareowner
advisory vote on executive compensation; 11) Slave labour.
Integration of Corporate Governance.
The development of Corporate Governance regulation in the Czech Republic (CR) uses a
dualistic model: mechanism of written law enforcement, in CR mainly the Commercial Code, and
self-regulation mechanism, characterized by self-imposed observing of the required rules. This
mechanism is primarily implemented through the code of company governance and due diligence
principles. The company is governed by a body of shareholders – the general meeting reported to by
the board of directors as an executive managing body and by the supervisory board as a surveillance
authority.
Determination of key performance indicators – Corporate Governance performance: 1)
Cumulative voting; 2) Dual-class share structure; 3) Executive compensation (pay for performance,
pay equity);4) Majority voting; 5) Poison pills; 6) Say on pay; 7) Separation of chairman/CEO
position; 8) Shareowner rights; 9) Staggered Boards; 10) Takeover defenses/market for control.
83
On the basis of these quantities will simulated program possible scenario development. The
results do not represent the sole possibility of the development, but they can be regarded as the
auxiliary tool for decision-making, as they bring additional and auxiliary information on the
relations between input variables.
The main advantage of this procedure is that there is no need for numerical values of
parameters; it provides a comprehensive set of possible scenarios that could not be determined by
quantitative modelling.
The using of suitable ICT tools to facilitate the calculations and the visualizations of models
of these indicators development and these differences.
Qualitative modelling a new and topical manner - an opportunity to increase action readiness
and preparedness of Czech undertakings to deal with demanding changes in the business
environment while emphasizing the implementation of Sustainability Reporting into corporate
practice as a way to further enhance undertakings' flexibility and adaptability in satisfying the
customers' needs, producing high potential life-long value for the undertaking, increasing corporate
performance, corporate competitiveness on the market at the time of globalization, internalization,
standardization and informatization.
Conclusions
The primary and crucial basis of the conception is the fact on quality monitoring of real-life
conditions, their good knowledge, gathering of empirical data, when mainly the values of the
mentioned ESG factors come to the fore, for the individual phases of the economic, environmental,
social and corporate governance performances, while not only their values, but also their roles and
priorities, content and functions and mutual interaction will be monitored, and proposals and
methodical procedures will be formulated based on them as benefits to help boost company
performance.
The dynamic development of corporate accountability and corporate sustainability reporting
in the Czech Republic takes place in an era where investors want more than just a good product or
an attractive sound of a brand. Moreover, the growing demand for and offer of the reporting
corresponds with the rapid development of information society. We need to take into account
market trends and issues affecting society, analysis of risks and opportunities.
It is not insignificant that the question of “language“, i.e. understanding, appears problematic.
A framework for describing this new world view has not been generally established. This actually
involves creating and handling intangible values. By means of proven methods, ESG metrics for
mass effect of multiple factors need to be developed, so that the decision on determining the ESG
strategy is possibly the most suitable and its suitability provable. Therefore a demand for ESG data,
research and analyses is developing. At the same time the factor of time and development has to be
considered, in order to prevent that the relevant facts become out-of-date before they are
formulated, and the factor of development and changes for the methods revealing the ESG strategic
priority from the previous period (trend) in the continuity of quantified goals for the future.
Relevant data to be used in global research in this field is very difficult to obtain (experiments
are difficult to control or repeat), and the same is true of monitoring the impacts of comprehensive
external effects.
Significant are the levels of environmental, social and government strategies and company
performance. Strategically important activities may improve the corporate governance, sustainable
activities and social responsibility; they create the intangible value of the company. Responsible
sustainable development of corporate resources is the basis for the target company strategies. The
main executive message clearly explains why the responsible and sustainable development of
corporate resources is the basis for comprehensive company strategies.
It is being pointed to the following: urgent need of satisfactory domestic environment
characterized by working infrastructure, sound public administration, levels of human resources,
knowledge of world markets and market practices and it is recommended that the process of
84
opening of economies becomes slower, the role of national governments is enhanced and
effectiveness of supranational supervision is improved.
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Measuring Corporate Performance. In Environmental Software Systems. Frameworks of
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(ISESS 2011). Brno:Springer. p. 454-460.
8. Jorgensen, S.E., Muller, F. (Eds.), Handbook of Ecosystem Theories and Management. Lewis
Publishers, New York, 2000.
9. Karpíšek Z. (2008) Zadeh-Type Fuzzy Probability with Triangular Norms. In: 15th Zittau Fuzzy
Colloquium. Conference Proceedings. Zittau, 17. – 19. 9. pp. 126-133.
10. Kauffman, S.A. The Origins of Order: Self-Organization and Selection in Evolution. Oxford
University Press, New York, 1993.
11. Kocmanová, A., Němeček, P. (2009) Economic, Environmental and Social Issuses and
Corporate Governance in Relation to Measurement of Company Performance. In Liberec Economic
Forum Liberec: Technická univerzita v Liberci, Fakulta ekonomiky, 2009. s. 177-187.
12. Kocmanová, A., Hornungová, J., Klímková, M. (2010) Impact of Economic, Social and
Environmental Performance on Sustainable Development in the Czech Republic. In The 15th
Intenational Business Information Management Conference (IBIMA) Cairo Egypt. The American
University in Cairo School of Business: IBIMA USA. p. 722-730.
13. Peterson, M.J., Peterson, T.R., A rhetorical critique of ‘nonmarket’ economic valuations for
natural resources. Environ. Values 2, 1993, Pages 47-65.
14. Peterson, T.R., Peterson, M.J., Valuation analysis in environmental policy making: How
economic models limit possibilities for environmental advocacy. In: Cantrill, J.G., 1996. Weinberg,
G.M. An Introduction to General Systems Thinking. Wiley, New York, 1975.
15. Talašová J. (2003) Fuzzy metody vícekriteriálního hodnocení a rozhodování. Olomouc: UP PF.
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16. Schalteger, S.,Wagner, M. Managing Sustainability Performance Measurement and Reporting
in an Integrated Manner, Sustability Accounting as the Link between the Sustainability Balanced
Scorcared and Sustainability Reporting. Dordrecht: Springer, 2006.
85
FREE ECONOMIC ZONES IN THE WORLD AND INITIATIVES OF GEORGIA
Nana Akhalaia, Nino Liparteliani
Gori University, Georgia
Abstract. The article deals with the development of free economic zones during the last
decades which became a significant occurrence of the world economic. It is enough to point out that
in early 1990s more than a thousand such zones were registered but by 2004 1/3 of the world
commodity circulation was due to free economic zones. Our purpose was to study the world
practice of organizing and functioning of special economic zones, which show that they are creating
and they practically influence achieving various goals. The goal of creating free economic zones is
deeply involving the country in distribution of international labor. Due to this the issue is actual, as
it deals with increasing producing competitive production and in this way increasing transferring
foreign currency. This is quite logical. If a country is unable to open economic widely for foreign
enterprising capital then it is able to do it under the free economic zones. Free economic zones are
also necessary for an interested country to provide the inner market with high quality production.
Free economic zones foresee involving in international relations not only by means of enterprising
but also in tourism, cultural-sanatorium spheres as well which finally increases foreign currency
income. Free economic zones are appealed for implementation native and foreign scientifictechnical achievements in national economic. The goal for creating free economic zones for
developing countries is to prepare qualified workers, engineers, economic and administrative
personnel for own country and last opening free economic zones are discussed as the model of
modernization of economic.. The object of the research is the positive world practice of creating
free economic zones which shows the effectiveness of the method of recovering of economic. Our
aim is to prove the necessity of existing free industrial zones in Georgia, such as Poti, Kutaisi,
Kobuleti free industrial zone as the first free industrial zone in Georgia.
Keywords: Free economic zone, attracting investments, free industrial zone of Poti, economic
consequences of Russian aggression, new workplaces.
Introduction
Free economic zones are functioning successfully in many countries of the world. They are
functioning as in developed industrial countries, such as: United States of America, Japan, Germany
or England and also in developing countries. At first free economic zone was considered the special
territory of the largest sea port or its neighboring region, which was separated from the country
customs territory with the duty-free regime for import-export of foreign goods. The status of free
ports had during the centuries: Livorno – in 1547, Genoa – in 1595, Venice – in 1661, Marseille –
in 1669, Odessa – in 1817, Vladivostok – in 1862, Batumi – in 1878. Nowadays status of free port
has in Switzerland – Bux, Geneva port, in Brazil - Manaus, in Romania – Sulina etc. In such kind of
ports goods are kept in storages for defined and undefined period of time, and then they are supplied
to the domestic market of the mentioned country with customs tax or are exported abroad duty-free.
Due to the monopolization of markets and protectionist politics of countries with free ports there
were created free economic zones in place of such kind of ports.
In developed capitalist countries free economic zones are created as a rule in crisis districts,
where there is undeveloped infrastructure and high level of unemployment. With awarded status
free zones for these regions emphasis is not made on attracting investments but they try to create
conditions for development of integrated manufacturing in domestic market. In developing
countries with less developed economic the main purpose of economic zone creation is attraction of
foreign capital, advanced technologies and management experience, stimulation of export,
86
improvement of its structure, growth of employment, preparation of qualified staff, receiving
additional monetary revenues.
Before Russian aggression against Georgia and the world economic crisis it was approved
government action plan which covered three years. Because of the planned changes in economic,
fiscal and monetary politic it is possible to add lots of things to this plan. According to the plan
country would maintain economic course and dynamic of the last year.1 Yet before Russian
aggression against Georgia and the world economic crisis President of Georgia signed the law
“about free industrial zones” on July 3, 2008.2 This law establishes the rule of creation and
liquidation of free industrial zones on the territory of Georgia; defines the management of free
industrial zones and within the borders of zones rules of management and service-supervisor organs
creation and activities, establishes additional conditions for industries of free industrial zones, tax
privileges and other questions connecting to activities of these zones. Analytic office of the
parliament of Georgia prepared a conclusion where there is mentioned that free industrial zones are
one of the elements of new international distribution of work. In conditions of economic
globalization free zones are efficient instrument for activate foreign-economic activities of the
country.
1. Opportunities to develop the free economic zones in Georgia
The question of opening free industrial zone in Poti caused great deference of opinions. There
were a lot of questions:
– Since there acts quite liberal tax and custom code in Georgia, is there any necessity of
additional privileges for investors?
– By what criterions should we select especially Poti as a special economic zone?
– Is there appropriate infrastructure in Poti which will give us opportunity to create such kind
of zone quickly?
– What resources are connected to administrating of the zone and preventive measures
implementation of potentially dangerous activities and creation of controlling institutions in it?
The perspective of special economic zone in Georgia has been discussed on the background
of that nowadays Georgia is more developed country, which means that our country has no
privileges of cheap workforce and huge domestic market. The existing tariff regime in Georgia is
one of the most liberal in Europe. In 2007 in 120 countries of the world there were acting more than
2000 different kinds of free economic zones, whose total annual turnover exceeded 60 billion USA
dollars.3 It seems the government of Georgia was relying on this data, when it was making decision
about creation free industrial zone in Poti. Positive argument says that there will be a huge
opportunity for developing business in free industrial zone. The positive side of the free industrial
zone is that advanced technologies, know-how will more actively come into the country, because
the nature of capital is objective, it flows where there is less tax. By the government prognosis the
free economic zone is being created for three expectations: first - being given additional impulse to
economic development of Georgia, second – such kind of precedents exist there and many of them
are successful and three - there should be created successful economic development centres and the
first is Poti where such kind of zone was created.4 In summer 2007 Ministry of Economic
Development of Georgia claimed about leasing of Poti Sea port and creation a free industrial zone
1
Meskhia J. The post-war period and the perspectives of Georgia Economy. Magazine -Business and Law. Tb. 2008(8)
g. 11.
2
The Decree of the Government of Georgia - about creation, arrangement and functioning rules approval of a free
industrial zone, № 131. June 3, 2008. Tbilisi.
3
Sikharulidze D. Economic Effectiveness of Foreign Business in Georgia. Magazine – Metsniereba (Science). Tb.
2008(9) p. 7.
4
Chikvaidze D. Free Industrial Zones will be created in Georgia. Magazine – Business and Management. Tbilisi.
2007(2) p. 4.
87
on the territory of the port. For creation of free industrial zone 1 billion USA dollar Arab investment
came into Georgia through two state companies DUBAI WORLD and JAFZA. JAFZA was
investor, manager of free industrial zone and consultant of the Georgia government. It promised to
invest till a billion dollar in Georgia. On the first stage of project 300 million dollar will be used for
a new container terminal and free industrial zone construction. The same amount of investment will
be implemented on the second stage of project. At the same time a special logistic park and elite
districts construction was planned in Tbilisi.
A free economic zone of Jebel Ali JAFZA, which was established 25 years ago, is considered
as one of the most successful free economic zone in the world and is situated in Dubai Emirate. In
experts’ opinion this zone seriously pushed Dubai economic development and contributed its
formation as important trade, financial, transport and tourist center. JAFZA is managing not only
Dubai but also other countries’ analogical free zones and compete with different countries
governments. They work in China, Malaysia, Morocco, India, Romania, Turkey, Great Britain and
many other countries.
On August 2007 Ministry of Economic Development of Georgia claimed interest expression
competition on the project: Lease of Poti Sea Port and creation and management of free industrial
zone (400ha) nearby territory of the port during 49 years. One of the largest port of Black Sea Basin
and the largest port of dry cargos serving in Caucasus is situated on TRACECA corridor and
represents the most important part of Caucasus transit, transport network. It connects by means of
straight sea routes to the largest ports of Europe and Asia and has straight ferry communication with
ports of Black Sea in Ukraine, Russia and Bulgaria. The port is inclusion in country’s rail network
and connects to every city of Georgia by means of roads, has a connection with airport of Poti and
international airport of Batumi (80km). In 2006 the turnover of marine port consisted 7 million ton,
which is 9.1% more than the data of previous years. In 2007 the turnover was increased with 12% in
compare of previous year. The sum of unloading containers is equal of 127 000 TEU (twenty ft.
containers). The port services all kinds of load and functions during the whole year. In port function
famous transportation lines and companies such as Maerski, CMA-CGM, MSC, ZIM Line. Besides
this, several private companies implement exploitation of terminal on the base of lease agreement.
As one of the best equipped and modernized port of Black Sea East Coast, the port of Poti has got
ISO 9001-2000. To take into account the increase of turnover between the countries of Europe and
Asia, Poti port has the potential of increase the capacity and attracting-servicing about 25 million
ton load annual. The offered territory (400 ha) for the creation of free zone is directly bordered the
port from the North and follows the sea coast. The presumable duration of lease is 49 years. The
investor should develop the main infrastructure of free industrial zone, build the necessary
buildings, draw out the appropriate procedures and rules also manage the zone during the lease
agreement period according to the Georgian law. In his/her duty also include to attract invests in the
zone from the international companies for the goal of secure with increased load flow of the port.
Firs of all 12 companies were interested in connection of the lease of Poti marine port and for
creation the free industrial zone on the nearby territory of port.5 8 companies from them continue
the participation on the next stage, among them were:
1.
DP and Lafza – United Emirates
2.
RAK Investment Authority - United Emirates
3.
Hutchison Westports – Great Britain
4.
CMA CGM – France
5.
Hamburger Hafen-Und Logistic Aktiengese//schaft – Germany
6.
International Container Terminal Services – Philippines
7.
ZIM PORTS – Israel
8.
Momentum Engineering - United Emirates
5
Great interest – Free Industrial Zone. Journal - Business news of Business. Tbilisi. 2007(8) p. 21.
88
On the base of competition the representatives of United Emirates were chosen. On March
2008 the free industrial zone of Poti was opened officially, but after the famous appearance of
August even this investment project stopped temporarily. Poti port received huge financial losses.
For a long time worked only 35 % of port. Due to reduce of load flow the port had 2 million USD
losses. After the bombard technique and property of 279 000 USD was out of order. TurkishGeorgian oil company “Channel Energy” received 100 000 USD losses from the debris of cluster
bomb were damaged its reservoirs.
In Georgia in 2009 with government resolution was created free industrial zone of Kutaisi
(FIZ), it is located at the former territory of Kutaisi motor plant.6 Total area is 27ha. The initiator of
creation is the territory owner “Georgian International holding” LTD, which at the same time is the
administrator of FIZ. Created 100% private capital and its constituents are individuals the citizens
of Georgia. The goal of company-administrator is to create industrial zone constructed on the
principle of free entrepreneurship as local also foreign investors’ strengths. In free industrial zone of
Kutaisi functions company FRESH – GEORGIA LTD. The activity category is to output-realization
of domestic gas and electro techniques. The investment implemented in 2009 consisted 55 750 580
USD. For the creation of full industrial cycle the company has planed extra investments: in 2010 –
269 685 250 USD quantity, in 2011 – 126 541 250 USD quantity. As a result of implemented
investment nowadays functions the constructive department of domestic gas and electro techniques.
Produce realization implements in Georgia. The value of realized produce is 107 000 GEL. The
produce is ready for unloading for Azerbaijan and Ukraine. After the implement of total amount of
investments (451 977 080 USD) will be created the full industrial cycle, which secures the
production of components details at place on the base of local and imported materials, annual 75-90
million USD amount of manufacture. Kutaisi is the second city of Georgia by size and industrial
importance. Its population is 180 000 persons with last describe and consists almost 4% of
Georgian population. The produce manufactured in it with Imereti region consisted 14-15% of
Georgian gross domestic product and national income for 1990. In Kutaisi was manufacturing 16%
of Georgian industrial produce.
Also in 2011 was created free industrial zone in Tbilisi at the territory of airport. The creation
of free industrial zone secured Jewish-Georgian Company “Tera 1”.
The creation of Kobuleti free industrial zone looks attractively and interesting. The State will
isolate 11.3ha at the territory of Kobuleti pine forest, where investors will be able to built 27 hotels
in privilege conditions. According to draft law, the appropriate plot – maximum 3.5ha will transmit
to the investor in property with symbolic price – 1 GEL. He / She should built average or high class
hotel – maximum 7 storey and 60 rooms. 1 million GEL is determined as minimal investment.
About 19 000 person live in Kobuleti. The city is 25km far from Batumi. Traditionally, this place
was attractive for the tourists having average income then large investments. From 2011 with
preliminary calculations after the project completely set in motion in Kobuleti will be created about
2 000 extra hotel apartments and will be appeared 500 work places.
In 2011 planed to create the free industrial zone in central section of Khelvachauri region.
Soon in Khelvachauri region at the 15ha territory can be make free industrial zone, 8km on the way
from Batumi. This territory gives the mean of creation 2500 work places. The period of leasing is
49 year. The price of leasing is 1 GEL at 1sqm, which corresponds to 0.55USD.
Finally we can conclude that the pros of opening free industrial zone in Georgia is that
advanced technologies, know- how will be incoming more actively in country as the nature of
capital is objective flows there where is the less tax. What is concretely necessary for this? The
main thing is that the investors be sure that Georgia is a good country for conducting business. The
hard work is necessary not only with the future theoretical investors also with them who are in
6
Namicheishvili R. Basic Principles of Economic and Social Transformation in Kutaisi. Magazine – Economic Profile.
Kutaisi 2008(4) g. 9.
89
country now as they stay here and be satisfied. Foreign investors create large part of small business
and appropriate the new work places. This is vitally important for the country.
Conclusions and recommendations
The perspective of special economic zone in Georgia should have been discussed on the
background of that nowadays Georgia is more developed country, which means that our
country has no privileges of cheap workforce and huge domestic market.
There will be a huge opportunity for business development in Free Industrial Zone.
The positive side of the free industrial zone establishment in Georgia is that advanced
technologies, know-how will be more actively coming into the country, because the nature
of capital is objective, flows there where is the less tax.
The main thing is that the investors be sure that Georgia is a good country for conducting
business. The hard work is necessary not only with the future theoretical investors also with
them who are in country now as they stay here and be satisfied.
Foreign investors create large part of small business and appropriate the new work places.
This is vitally important for the country.
References
1. The Decree of the Government of Georgia - about creation, arrangement and functioning rules
approval of a free industrial zone. June 3, 2008 (131). Tbilisi.
2. Meskhia J. The post-war period and the perspectives of Georgia Economy. Magazine -Business
and Law. Tbilisi. 2008(18) p. 11.
3. Sikharulidze D. Economic Effectiveness of Foreign Business in Georgia. Magazine –
Metsniereba (Science). Tbilisi. 2008(9) p. 7.
4. Namicheishvili R. Basic Principles of Economic and Social Transformation in Kutaisi. Magazine
– Economic Profile. Kutaisi 2008(4) p. 9.
5. Great interest – Free Industrial Zone. Journal - Business news of Business. Tbilisi. 2007(8) p. 21.
6. Chikvaidze D. Free Industrial Zones will be created in Georgia. Magazine – Business and
Management. Tbilisi. 2007(2) p. 4.
7. Internet recourses.www.banksadfinance.ge, www.civil.ge, www.ramazepec.wordpress.com,
www.economy.ge, www.polity.ge.
90
STRATEGIC APPROACH TO SALES HUMAN RESOURCES MANAGEMENT OF
UKRAINIAN COMMERCIAL BANK IN CONDITIONS OF CRISIS
Dmytro Lukin, Tetyana Mazylo
Prominvestbank, State Higher Educational Institution «Ukrainian Academy of Banking of the
National Bank of Ukraine
Abstract. Present world financial crisis tests the strength of banking sector of all countries,
including Ukraine. The conditions of functioning of commercial banks changed greatly, so do the
tasks that face them. All such challenges of modern period must be efficiently solved not only by
the managers, but also by personnel of commercial banks. That is why, it is very important to
receive the theoretical studies of questions of crisis human resources management for competent
skilful decisions in the bank practice. The choice of correct personnel strategy and its realization
underlies in going out of the bank’s crisis.
Key words: personnel, bank, crisis, human resources strategy, motivation.
Introduction
Banking sector in economics of majority of countries, including Ukraine, experience hard
times today. Profitability of banking activity felt down, society becomes more negative to banks and
bankers. In conditions of this, requests to personnel of commercial bank must change, so do
requests to personnel management strategy. As we see it, in present-day conditions, there is no need
in formal, but a real acceptance of strategic importance of human factor in banking establishment.
As a result of it, strategic approach is needed for the personnel management in terms of anti-crisis
measures of commercial bank.
1. Basic researches and publications
In spite of the fact, themes, which are dedicated to personnel management, are quite popular
today and are subject of researches of many authors (for example, monographs of М. Аrmstrong, S.
Shekshnya, S. Bаzаrov, V. Pugachov, V. Travin, Е. Utkin, and others), problems of anti-crisis bank
personnel management did not found enough interpretation in science literature. Even specialized
publication, that reveals different aspects of personnel work in banking institutions, authors (for
example, Т. Lobanova, A. Kostuc) specially do not examine the special questions of crisis
personnel management. On the other hand, there are many interviews of practicing bank
administrators on this theme in periodicals. That is why, it is very important, to receive the
theoretical studies of questions of crises human resources management for competent skilful
decisions in the bank practice.
Unsolved parts of the problem
As we see it, in present-day conditions, there is no need in formal, but a real acceptance of
strategic importance of human factor in banking establishment. As a result of it, strategic approach
is needed for the personnel management in terms of anti-crisis measures of commercial bank. Aim
of the article – identify basic trends of anti-crisis bank personnel management and means of it
realization.
Exposition of basic material
In terms of financial crisis, traditional problems, that banks usually solve, are added with new,
such as decrease of revenue of balances, reduction of deposits of population and enterprises, a
certain imbalance of currency position, big temporal gap between loans and credits, certain increase
of particle of problematic credits in bank portfolios etc. Stabilization of situation in concrete bank
foundation depends not only on suspended decisions of shareholders and top-manager in financial
91
politic field, involvement of means, but on everyday efforts of all banks employees, their abilities
and orientation on positive result.
Unfortunately, nowadays most of Ukrainian bank managers give priority only for financial,
material and informative resources. Human capital stands on nearly the last place in this list. We
can assert, that in majority of banks in terms of crisis the approach to personnel as costs is (Tab. 1)1,
and this must be reduced to minimum.
Table 1 Characteristic of difference in approaches to the concept of staff
Staff-costs
Staff-resource
Forcing
Minimization
Small period of planning
Results
Quantity
Inflexible
Dependable
Reasonability
Optimization
Protracted period of planning
Means + results
Quality
Flexible
Autonomous
Global staff reduction in banks and big decrease in quantity of bank branches and subsidiaries
means that staff-costs strategy is dominating in bank field. It is the world practice. For example,
nearly by 83 thousands employees of large financial companies in the world were dismissed since
last July due to financial crisis in the U.S. and Europe. The number of job losses is the same as the
number of all personnel of big banks like Goldman Sachs or Morgan Stanley. Only U.S. bank
Citigroup has announced a reduction of 52 thousand jobs worldwide in the next six months, after
bank losses last year totalled $ 20 billion. At the same time, last year, Citigroup already reduced its
staff by 23 thousand employees.
The scale of reductions in separately taken structures varies from 90 persons (0.1% of total
workforce of the company) in a London bank HBOS to 9160 (66 percent) in the American Bear
Stearns. On average, financial firms laid off 3.3% of its employees, which many times lower than
the last recession of 2000-2003, when the big banks and funds have been reduced 17% of
workplaces2.
There are the same tendencies in Ukraine. Quantity of unbalanced structural subdivisions of
commercial banks in Ukraine had cut down only from October 2008 till July 2009, nearly on 1500
units. For example, «UkrsibBank» has shut 100 departments; «Finances and Credit» - 80;
«Nadrabank» - 77; «Ukrprombank» - 32; «Forum» - 20, «Rodovid Bank» - 19; «Kyiv» - 14 3. In the
first half of 2010 financial agencies have closed nearly one thousand branches. Since the beginning
of 2009 till July 1, 2010 banks had closed a total of nearly three thousand branches. Thus only one
branch outside the country continues to operate - the Cyprussubsidiary of Ukraine's largest
Privatbank (Dnepropetrovsk). In the period between October 2008 and October 2010 nearly on 60
thousand employees of Ukrainian commercial banks were left without job4.
In parallel with the closing of offices local banks are actively reducing staff. Since the
beginning of 2009 about 20 thousand people ended working in the banking sector. Overall, from the
beginning of the crisis, number of bank employees declined by 22,5%. According to the report, the
number of employees of the Ukrainian banks in September 2010 amounted to 219.65 thousand
people. For illustration of reducing process see diagram 1.
Despite global shortenings, banks didn’t make it up to decrease costs greatly. Facts of
National Bank of Ukraine states that administrative costs of credit institutions for the first quarter of
1
Управление персоналом организации: Учебник. Под ред. А.Я. Кибанова. Москва: ИНФРА-М, 2000. - 512 с.
http://e-finance.com.ua/ru/banks/2008/05/27/V_SShA_uvoleny_83_tysjachi_bankirov/
3
РБК-Україна. http://www.rbc.ua/ukr/newsline/2009/07/21/566890.html
4
Васильева А. Банковские увольнения.
http://economics.lb.ua/finances/2011/03/31/90673_Bankovskie_uvolneniya.html.
2
92
2009 grew from 3 billion hryvnas. - to 8,73 billion hryvnas, when in the first quarter of 2009 costs
made up 5,92 billion hryvnas., and in the first half of 2010 eventually increased by 200 million
USD compared to the same period of 2009 - to 17.6 billion USD 5. These facts prove our thesis that
in condition of crisis problems of bank field cannot be solved with cruel reduction of costs on staff.
This is not a panacea.
Besides reduction of personnel, we must mark another tendency manpower administration of
banking institutions that is also a part of unprofitable personnel-strategy – this is an intrusion of
basic principles of “taylorism” into management. It concerns banks with foreign capital in first
place, but it is becoming normal for many domestic banks. It is characteristic for “taylorism”:
• maximum splitting of productive operations and simplification of work functions;
• absolute (thoughtless to some extent) realization of operating standards;
• severe demarcation of administrative and executive functions, creative (leading,
organizational) and non-creative (monotonous, executive) work.
It is strange, but the fact remains, Ukrainian bank field that is actually intellectual, is now
starting to fill with such mechanical treatment of human place in organization. Most creative
functions are given to main office that is sometimes situated in foreign countries. Workers of all
subsidiary fields are made to do work out schemes, instructions and standards.
So, commercial bank is becoming more like single tool, where each «knot» (subsidiary,
department, etc) and «screw» (employee) quickly and clearly execute their functions, without
intruding into the work of other «knots» and «screws», and having no information about their
positive experience or failures. As a result, monotony, featurelessness and depersonalization of
work, that makes it impossible to become necessary to life and source of implementation of
personality. This does not concern lower workers of bank organizations (cashier, tellers) only, but
also managers of lower and middle structural unit of management.
Figure 1 The number of personnel of the Ukrainian banking system (commercial banks only), thousands of people
Moreover, majority of bank workers ran into great worsening of labour conditions. We can
label such characteristics:
• spreading of service zones,
• increase of working hours,
• increase of workload. Quite a typical situation: worked that is usually done by 10-12
employees, is made by three or five people left.
• increase of psychical load. In such a hard time nervous stress and waiting for «terrific» of
nearly all clients of commercial banks (borrowers and investors) is taken by personnel of bank.
5
Гриньков Д. М. Широко закрытые //- БИЗНЕС № 38(921) от 20.09.2010,
http://www.business.ua/articles/bank_market/3912/.
93
With the intensification of work, system of compensation of working efforts has become much
worse. In the majority of banks, emoluments of employees have been upholded or decreased,
premiums are cancelled, bonus programs liquidated, social package – shorten or abolished. So,
taking in account inflation and workload, we can say, that nowadays working in bank sector of
economy becomes low-profitable. All the stimulation systems in banks are based only on one
motivating factor – fear of dismissal. Specialists say, fear «works» 2–3 months only, and there
appears indifference or annoyance, and as consequence, loss of loyalty of staff to organization. And
this by-turn assists poor execution of functions, nervous breakdowns, emotional relief, relaxation on
the bank clients, and breach of bank secret and so on. As a result, critical state of organization
intensifies.
So, in our point of view, it is important to accent the attention on the development of
reasonable personnel strategy in terms of financial crisis. HR strategy must follow bank strategy.
There are two ways to overcome the crisis - either the liquidation of the organization, or its
development in another capacity.
Elimination strategy is used in organizations in which all or main activities are in decline, both
in terms of profit, well as because of the position on the market in comparison with competitors.
There are two ways to implement this strategy. The first variant - a complete liquidation of the bank
as an organization, the second - its resale. Only by defining the further destiny of the organization
we should decide about optimizing workforce.
If the bank is liquidated, its assets are selling by parts (buildings, equipment, etc.), it is
advisable to keep employees that perform solely technical, accounting functions, which do not nor
solve strategic problems, nor adhered to organization and willing to work for short time. Thus,
personnel costs are reduced to a minimum.
If there is a purpose to profitably sell the entire crisis bank as an organization apparently, it is
advisable to keep personnel core of the bank as an essential element that is laid in the sales price.
Perspective of the existence of the bank should be reported to the key staff to avoid their leaving
and to use their personnel potential for more profitable sales of organization.
Strategy of rescue and recovery of organization. This type of strategy is anti-crisis on the
whole. The main objective here - is to save bank as an organization to bring it on a new level of
development and gain stability for a long term. Leadership of crisis banking institution should state
the main goals of crisis management and human resources strategy inform it up to staff. In our
opinion, such purposes include:
• ensuring an optimal balance of storing processes and updating of personnel potential of the
bank;
• removal of social tensions in primary collectives (branches and divisions);
• human resources development in accordance with innovative and anti-crisis needs of
organization;
• identify existing and hidden interests and values that prevail in different groups of personnel
of various levels of government bank;
• providing economic and information security of the bank and prevent escape of information
and fraud by staff;
• compliance with labour laws;
• consideration of conjecture of labour market.
For successful implementation of this strategy we need to add certain efforts to highlight socalled "problematic sites", effects that slow down the livelihoods of the banking institutions and to
develop particular measures. Let’s pay attention to the most important of those.
1. It is necessary to formulate the basic requirements to the personnel which are needed just
in crisis terms of bank functioning. We must note that during the crisis banking activities are aimed
at solving issues not only financial nature, but rather psychological: negotiating with borrowers,
reducing nervousness of investors (especially elderly people) and other.
We believe that problems cannot be solved with only similar professional and skill
characteristics of workers. Other staff skills and competence are now needed more than in a stable
94
situation. Therefore purely professional (qualification) requirements for the personnel of a banking
institution in crisis conditions, in our viewpoint should be added with following: psychological
stability and ability to work under stress; internal self-discipline, loyalty to the banking
organization, negotiating skills and ability to listen, ability to work in teams, mutual aid, flexibility
of experts to changing conditions, focus on long-term goals dedication; reliability of the relationship
between employees and departments, focus on long-term goals, initiative and intuition.
2. Carefully analyze the presence or absence of the necessary elements of personnel
management system (like planning of staff, organization of recruitment and hiring, training and
staff development, business valuation, availability and effectiveness of incentive mechanisms, etc.)
and create balanced modern system of human resource management.
3. It should be noted, that the rapidly changing macroeconomic environment continually
establishes new requirements to the bank personnel. The mismatch of personnel competence to the
needs of the organization in production exacerbates crisis and leads to low productivity and
excessive personnel costs. According to surveys conducted in late 2008 (at the beginning of the
sectoral crisis) professional standards consistent of 15.2% of managers of Ukrainian banks only6.
Ligning competencies to the needs of the bank must stand on one of the highest positions of
importance.
4. Develop a qualitative analysis of the official structure of the bank. Most crisis banks can be
characterized by a lack of clear, rational distribution of functions among employees, duplication of
work; deficit or surplus personnel. Thus, the main goal should not be reducing staff numbers but
optimization based on the definition of specific goals and objectives of each officer in the exit from
crisis strategy of the bank.
5. Analyze parameters of composite organizational culture. Manifestation of weak
organizational culture during the crisis can be: lack of initiatives of employees; hard emotional
atmosphere in the collective because of the threat of dismissal or a sense of hastening collapses of
organization; large number of conflict situations, nervous breakdowns. It is important to determine
the presence of the countercultures and try to neutralize them. Particular attention should be paid to
identifying informal leaders who can make both positive and negative impact on bank staff during
the crisis.
6. Check the loyalty and reliability of personnel and identify contingent of employees which
are potential or real threats to the economic security of the bank.
7. Motivation of staff is of particular importance. On one hand, we agree that the salary of
board members of most Ukrainian banks is excessive 7 and requires filling during the crisis. But we
believe that it is completely wrong to refuse bonus programs related to ordinary employees of
banking institutions.
According to the definition, compensation package is material and immaterial reward received
employee as compensation for the representation of organization of his time, health and results of
work8. More stressful nature of work of crisis bank requires adequate compensation of labour
efforts. Therefore in our view, in the face of rising inflation in the first place attention should be
paid to economic incentives for staff. In our opinion such improvements of the following areas of
staff compensation are possible:
• After the program of optimizing the number of staff, salaries should be raised taking into
account of the new workload and stressful working conditions of employees remaining in the bank.
The stimulation of employees from front offices, departments of work with individuals and
6
Половинко А. Банки и кризис. Организатор. 2010(2). С. 22.
Костюк, О.М. Корпоративне управління в банках в умовах фінансової кризи: визначення пріоритетних
напрямів розвитку / Проблеми і перспективи розвитку банківської системи України : збірник тез доповідей
ХІІ Всеукраїнської науково-практичної конференції (12-13 листопада 2009 р.): у 2 т. / Державний вищий
навчальний заклад «Українська академія банківської справи Національного банку України». – Суми: ДВНЗ
«УАБС НБУ», 2009(1). С. 74.
8
Мордовин С.K. Управление человеческими ресурсами: 17 модульная программа для менеджеров
«Управление развитием организации» / Мордовин С.K // [Текст] : Модуль 16. / - М.: ИНФРА-М, 1999. 360 с.
7
95
professionals that deal with reduction of arrears requires special attention, as these officials with the
most intense and stressful character of labour during the crisis.
• Do not cancel bonuses, make them applicable tool to stimulate instead. The criteria for
awarding bonuses should be performance or effectiveness of work.
• The introduction of spot bonuses that is one-time reward for specific achievements (for
example, the successful negotiation about restructuring of external debt).
• A possible variant would also be an input of new methods of stimulating for certain
categories of managers at a specific period (for example, on a period of revision of credit portfolio
to make it better).
• Maximally leave the corporative benefits, which are aimed at creating a sense of caring on
the part of organization (such as catering, flexible labour, health insurance, etc.).
• Thus, the social package should be created on a "cafeteria", that is to give employees a
choice of benefits.
8. It is necessary to examine the activity of top management in building the strategy of
formation and use of labour potential of bank carefully examine the level of competence of each
senior and middle management, his ability to work in crisis conditions.
9. Carry out the work with the personnel reserve for the nomination and evaluation of skills
of reservists for work in crisis conditions.
We should note that due to financial crisis and the labour market, new trends have appeared to
protect the rights of bank employees. Employers of banking sector should pay attention to proposals
that are actively discussed (yet online) about a trade union of bank employees. A similar movement
is a response to massive reduction of personnel in the field, reducing of the real wages of bank
employees, and unprofessional methods of dismissal of certain staff members and uncertainty about
the future of people working in banks and so on. Therefore, if employers will not listen to the
advice of specialists in personnel management now, then later they will have to make concessions
to teams that are already under pressure of trade unions.
Conclusions
Problems that banking institutions are facing during the financial crisis are very complex and
unusual. They require coordinated actions from shareholders, managers and ordinary employees of
the bank.
First of all, it is very important to decline staff-costs approach in management. It is therefore
essential to use own human resources like the most flexible resources, which would be able to adapt
to the new conditions of operating.
Secondly, HR strategy of crisis organization must follow the bank strategy. The choice of HR
strategy must depend on the bank’s afterlife. Correct HR strategy can considerably reduce costs and
increase production efficiency.
Thirdly, the management must concentrate its efforts on the creation of the effective system of
motivation, drop of the stress of staff and develop personnel competences adjust in accordance with
new needs of the bank.
In our opinion, only an integrated approach, when it is along with financial and organizational
changes, is gaining crisis personnel measures, it will allow banks to survive the crisis with minimal
losses.
References
1. Армстронг М. Практика управления человеческими ресурсами. 8-е изд. / Пер. с англ. Под
ред. С.К. Мордовина. – СПб.: Питер, 2007. – 832 с.: с ил. – (серия «Классика МВА»).
2. Васильева А. Банковские увольнения: http://economics.lb.ua/finances/
2011/03/31/90673_Bankovskie_uvolneniya.html.
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3. Гриньков Д. М. Широко закрытые//БИЗНЕС № 38(921) от 20.09.2010.
http://www.business.ua/articles/bank_market/3912/.
4. Карпова О. Кризис и персонал.
http://www.bmconsult.ru/library/publications/element.php?ID=408 (20.10.08).
5. Корпоративная стратегия компании в период кризиса.
http://www.prostobiz.ua/biznes/razvitie_biznesa/stati/korporativnaya_strategiya_kompanii_v_perio
d_krizisa.
6. Костюк О.М. Корпоративне управління в банках в умовах фінансової кризи: визначення
пріоритетних напрямів розвитку//Проблеми і перспективи розвитку банківської системи
України: збірник тез доповідей ХІІ Всеукраїнської науково-практичної конференції (12-13
листопада 2009 р.): у 2 т./Державний вищий навчальний заклад «Українська академія
банківської справи Національного банку України». Суми: ДВНЗ «УАБС НБУ». 2009 (1).
7. Костюк О.М. Корпоративне управління у банку. Суми: ДВНЗ «УАБС НБУ», 2009. 332 с.
8. Лобанова Т.Н. Банки: организация и персонал/Учебно-практическое пособие. М.:
Издательство «Городец», 2000. 400 с.
9. Мордовин С.K. Управление человеческими ресурсами: 17 модульная программа для
менеджеров «Управление развитием организации» / Мордовин С.K //Модуль 16./М.:
ИНФРА-М, 1999. 360 с.
10. Осипова Е. Управление персоналом в рамках стратегического менеджмента.
http://www.iteam.ru/publications/strategy/section_32/article_1411
11. Половинко А. Банки и кризис / А. Половинко // Организатор. – 2010 (2). С. 22-25.
12. РБК-Україна. Інформаційна агенція:
http://www.rbc.ua/ukr/newsline/2009/07/21/566890.shtml.
13. Сотрудник как средство от кризиса:
http://www.seychas.ua/highlife/2008/12/11/articles/1981.htm.
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2000. 512 с.
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Учебно-практическое пособие. Изд. 5-е, перераб. и доп. (Серии "Библиотека журнала
'Управление персоналом") — М.: ЗАО "Бизнес-школа "Интел-Синтез", 2002. 368 с.
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SIGNIFICATION OF MARKETING EFFECTIVENESS IN INDUSTRY1
František Milichovský, Iveta Šimberová
Brno University of Technology, Faculty of Business and Management,
e-mail [email protected]; [email protected]
Abstract. Nowadays, marketing and marketing performance are becoming one of the most
important sections in all companies. The reason for this change is made by world globalization.
Many companies have to improve own corporate marketing activities, especially in industrial
marketing. Marketing thinking brings new view on market environment and creates specific
marketing tools, which are possible to use in industry area. Companies have no comparison with
own competitors in the individual industry fields, which is only possible using appropriately by
chosen instruments. The goal of this paper is map current level of knowledge on the issue, based on
a search of scientific articles and researches.
Keywords: marketing effectiveness, industry, corporate performance, measurement.
Introduction
To be an effective in all actions, also in marketing activities, it is one of fundamental interests
of each company. For business competitiveness and sustainability of its successful functioning of
the market, it is important to have appropriate metrics for measuring effectiveness. The issue of
measuring the effectiveness of marketing activities between the professional and scientific
community devoted considerable interest.
Every company should be able to demonstrate own efficiency and effectiveness by used
metrics or other processes and standards. Businesses may be missing a direct comparison with
competitors in the industry, which is only possible using appropriately chosen instruments, whether
financial or non-financial.
In conclusion, this paper has focused on review of chosen articles which deal with kind of
metrics, especially marketing metrics. It is remarkable that some authors aren’t considering the use
of some metrics without possibility of their application in other areas of production. Therefore, it is
important to do thorough research, in which there would be a definition of the metrics for
measuring effectiveness of the company.
1. Methods and Resources of this paper
This paper is based on secondary research, includes scientific articles and books. These
sources are focused on marketing metrics, which are divided into two basic groups – financial and
non-financial metrics. Some companies use one other kind of metrics which measure marketing
activities – marketing metrics.
Therefore it is necessary to determine the effectiveness of own marketing activities, it is
appropriate to examine how the level of efficiency can be obtained. To achieve this, it was
necessary to choose an approach to achieve the following objectives:
1.
Review of relevant literature with a focus on metrics,
2.
Disposal project data,
3.
Conclusions based on survey.
1
This paper is supported by project FP-S-11-3/1417, with title “Innovative approaches in management and marketing
in a global environment of European” due to Faculty of Business and Management at Brno University of Technology.
98
2. Marketing effectiveness
Marketing effectiveness could be defined as ratio of return on marketing and marketing cost2.
For measurement of marketing effectiveness we should use different metrics, which are from
corporate view divided into two groups: financial and non-financial.
Marketing effectiveness should be depictured as return of spent finance into marketing
activities in company. Marketing effectiveness according Kotler and d Keller3 includes five
attributes of marketing orientation:
• Customer philosophy,
• Marketing integrated organization,
• Strategic orientation,
• Operative strategy,
• Organizational imperatives.
Marketing measurement is complex process which depends on multiply metrics than single
number of organizational health. Therefore it reflects current state of the organization and should
influence on company’s future changes4.
3. Marketing metrics
In general, marketing metrics are tools which help evaluate past performance as way to
improve future corporate strategy and implementation marketing programs5. Marketing metrics
usually build connection between financial outcomes and marketing strategy6.
Halachmi7 described several reasons which are important for measurement:
• If you can’t measure it, you can’t understand it
• If you don’t understand it, you can’t check it
• If you can’t check it, you can’t improve it
Therefore is necessary taking marketing metrics as most significant priority in each company?
The reason for it should be dissatisfaction with classical metrics which are focused on accounting,
corporate costs or IT trends.
Marketing metrics as total group of metrics is difficult to split. It depends on the person which
makes separation.
One of way of dividing marketing metrics should be dividing into two basic groups, financial
and non-financial8. Individual compound of these two groups depends on focusing of authors.
Financial metrics should include e.g.:
• Financial indicators like ROI, ROE,
• Marketing ROI or ROMI,
• Data envelopment analysis, or
2
Daukševičiūté, I., Valainis, A., Vilkaité, N. Conceptualization of Effectiveness of Marketing Tools. Intellectual
Economics. 2011(5).
3
Milichovský, F. Marketingová efektivnost v kontextu strategického marketingu. 2010, International workshop for
PhD students. pp 1-6.
4
Eechambadi, N. High performance marketing: Bringing method to the madness of marketing. 2005, Dearborn Trade
Pub.
5
Solčanský, M.; Sychrová, L.; Milichovský, F. Marketing Effectiveness by Way of Metrics. 2011, In Economics and
management, roč. 2011, č. 16, s. 1323-1328.
6
Petersen, J. A., McAlister, L., Reibstein, D. J., Winer, R. S., Kumar, V., Atkinson, G. Choosing the right metrics to
maximize profitability and shareholder value. 2009. Journal of retailing. 85, pp 95-111.
7
Halachmi, A. Performance Measurement in only One Way of Managing Performance. 2005. International Journal of
Productivity and Performance Management, Vol. 54 Iss. 7, pp.502-516.
8
Solčanský, M.; Sychrová, L.; Milichovský, F. Marketing Effectiveness by Way of Metrics. 2011, Economics and
management, roč. 2011, č. 16, s. 1323-1328.
99
• BM index (reports on cost, revenues and margins).
Non-financial metrics should include these metrics:
• Comparative study,
• Customer satisfaction and loyalty, or
• Customer lifetime value.
From another view on marketing metrics is possible to divide them into six groups9:
1. Financial indicators, which includes e.g. turnover, profit, return indicators,
2. Market measuring with e.g. market share, advertising shares,
3. Measurement of customer behavior (e.g. loyalty, penetration, number of new customers),
4. Measurement of customers moving has e.g. customer satisfaction, brand recognition,
5. Measurement direct customers by level of distribution, returns of intermediary,
6. Measurement of innovation which could contains number of new products, share of new
products on earnings.
Nevertheless, Sampaia et al.10 indicated ten most relevant metrics, mentioned by Brazilian
managers. These metrics are:
1. brand/product knowledge,
2. commitment/purchase intent,
3. customer satisfaction,
4. market share,
5. number of complaints,
6. perceived quality,
7. profit/profitability,
8. Return on Investment (ROI),
9. sales volume,
10. service/product availability
These ten metrics were divided into four groups with their importance level. As the most
important group of metrics they found customer visions with connection with product vision which
got the highest values.
There is possible to find some metrics in both of financial and non-financial groups.
Submission of chosen metric into one of mentioned groups depend on connection several metrics.
For example some authors use customer lifetime value as financial metric11.
9
Milichovský, F.; Solčanský, M.; Sychrová, L. Approaches to Measuring the Effectiveness of Marketing Activities.
2011, In Trends Economics and Management, Vol.. V, Iss. 8, pp131-138. ISSN: 1802-8527.
10
Sampaioa, C. H., Simõesb, C., Perina, M. G., Almeidac, A. Marketing metrics: Insights from Brazilian managers.
2011, In Industrial Marketing Management, Vol.40, Iss 1, pp 8-16.
11
Doyle, P. (2008) Value-Based Marketing: Marketing Strategies for Corporate Growth and Shareholder Value.
2008, Chichester : John Wiley & Sons. ISBN: 978-0-470-77314-7.
100
Figure 1 Model of marketing metrics importance (Sampaioa et al. 2011)
4. Industrial marketing
Industrial marketing seems like one kind of marketing activities which are usually used in
common companies. If we look at it from view of our consumer to which are produced industrial
products, it is true. Yadin12 defines industrial marketing as whole process in industrial company as
knowledge which is based on own customers (who buy and use offered products and services).
Generally we could describe it as kind of marketing of industrial products and services to industrial
buyers, users and manufacturers. A managing director’s corporate task is to run the company,
smoothly and profitably, and deliver the highest possible dividend to shareholders
Therefore, industrial marketing need a lot of information from different corporate departments
with appropriate communications between each of the directors, managers and other executives
through whole company, who is responsible for decision making. This could be taken as some
essence in industrial marketing.
Industrial products13 are this kind of production, which is manufactured, distributed and
promoted only to industrial buyers, users and manufacturers (it is a business-to-business). This
product group contains four main types of products:
• capital equipment;
• consumable supplies;
• manufactured goods;
• raw materials.
5. Measuring in industrial company
Each company need to measure own activities in own production. Main problem should be in
choice right metrics for measurement performance. A lot of managers in Czech companies use
unsuitable metrics for measuring performance and effectiveness or they interpret gained results in
wrong way.
Some differences should be between industry companies and organization which produce
services depend on manager’s choice. For basic separating companies is perfect range of NACE
(acronym from title “Nomenclature générale des Activités économiques dans les Communautés
Européennes”). This scale could perfect separate individual kind of industry into right groups.
During 2011 was made research work focused on marketing activities in various companies in
Czech Republic. This research was attended by 238 representatives of business. From this statistical
sample are 110 companies classified as industry companies (from total count it is 46,22%).
That companies use various metrics mentioned in Table 1. For other potential metrics
answered respondents less than four percent, what means their occasional usage?
12
13
Yadin, D. The International Dictionary of Marketing. 2002, London : Kogan Page Limited. P185.
Yadin, D., p186
101
Table 1 Most usually used marketing metrics and marketing activities in Czech companies
Number of customers
Net profit
Variable and fixed costs
Customer satisfaction
Profit per customer
Market share
Marketing expanses
ROMI
ROI
Absolutely
101
91
81
80
64
60
45
15
29
Relatively in %
9,34
8,42
8,88
7,40
5,92
5,55
4,16
1,39
2,68
Source: Own research
It is engrossing that companies use mainly metrics mentioned in Table 1. It may be due the
simplicity of use these metrics. However, it is necessary to do thorough survey.
6. Discussion
Metrics listed above are the most used in Czech companies. Many of them are useable in
different organizations; always depend on appropriate marketers, if they focus on financial or nonfinancial metrics. It is very interesting that among the most used metrics in Table 1 are two metrics
from non-financial metrics – customer satisfaction and number of customers.
From the financial metrics is convenient to refer about financial indicator ROMI – Return on
Marketing Investment. This indicator is recommended by many marketers and specialist as suitable
financial metrics. It could be expressed as percentage of net profit and costs activities. It seems
similar like index ROI, but that is mistake. Marketing activities isn’t kind of investments like
general business investments14.
Young and Aitken15 explain marketing ROI as process of creating positive value for business.
This process should be bad for some companies when they must demonstrate actual cost
effectiveness.
But according Jalkala and Salminen16 almost the most important is way of measuring customer
satisfaction, with customer reference as considerable part of marketing activities for industrial
suppliers. Helm and Salminen17 pointed customer are key sources of competitive advantage,
because good customer approach should create market access or critical information for industrial
suppliers.
Conclusions
Implement an effective marketing practices is very important for every business. It is obvious
that one of the principal problems is the inability of some metrics applications in diverse sectors
(industry, services, public administration). Because is marketing effectiveness one of the most
significant parts in corporate marketing field. It is remarkable that some marketing experts aren’t
14
Solčanský, M., Šimberová, I. Measurement of Marketing Effectiveness. 2010, In Economics and Management, Vol.
15, pp. 1 – 6, ISSN 1822-6515.
15
Young, A., Aitken, L. Profitable Marketing Communications – A Guide to Marketing Return on Investment. 2007,
London : Kogan Page Limited. ISBN: 978-0-7494-4942-1.
16
Jalkala, A., Salminen, R. T. Practices and functions of customer reference marketing — Leveraging customer
references as marketing assets. 2010, In Industrial Marketing Management. Vol.39, pp 975-985.
17
Helm, S., Salminen, R. T. Basking in reﬂected glory: Using customer reference relationships to build reputation in
industrial markets. 2010, In Industrial Marketing Management. Vol.39, pp 737-743.
102
considering the use of some metrics without possibility of their application in other areas of
production.
Industry area is just a specific area for measurement effectiveness. Therefore is almost
necessary create kind of “board of corporate metrics” where would be included both of financial
and non-financial metrics. For example it should be indicator ROI, ROMI, net profit, customer
satisfaction, scrap percentage or accident rate in dependence on individual branch.
References
1. Ambler, T., Kokkinaki, F., Puntoni, S. Assessing Marketing Performance: Reason form Metrics
Selection. In Journal of Marketing Management. 2004, 20, p. 475 – 498.
2. Daukševičiūté, I., Valainis, A., Vilkaité, N. Conceptualization of Effectiveness of Marketing
Tools. Intellectual Economics. 2011, 5(2).
3. Doyle, P. (2008) Value-Based Marketing: Marketing Strategies for Corporate Growth and
Shareholder Value. Chichester: John Wiley & Sons. 2008.
4. Eechambadi, N. High performance marketing: Bringing method to the madness of marketing.
2005, Dearborn Trade Pub.
5. Halachmi, A. Performance Measurement in only One Way of Managing Performance. In
International Journal of Productivity and Performance Management. 2005, 54(7), p. 502-516.
6. Helm, S., Salminen, R. T. Basking in Reﬂected Glory: Using Customer Reference Relationships
to Build Reputation in Industrial Markets. In Industrial Marketing Management. 2010, 39, p. 737743.
7. Jalkala, A., Salminen, R. T. Practices and functions of customer reference marketing —
Leveraging customer references as marketing assets. In Industrial Marketing Management. 2010,
39, p. 975-985.
8. Milichovsky, F. Marketingová efektivnost v kontextu strategického marketingu. In International
Workshop for PhD students. 2010, p. 1-6.
9. Milichovský, F.; Solčanský, M.; Sychrová, L. Approaches to Measuring the Effectiveness of
Marketing Activities. Trends Economics and Management, 2011, 5(8), p.131-138.
10. Petersen, J. A.; McAlister, L.; Reibstein, D. J.; Winer, R. S.; Kumar, V.; Atkinson, G. Choosing
the Right Metrics to Maximize Profitability and Shareholder Value. Journal of Retailing. 2009, 85,
p. 95-111.
11. Sampaioa, C. H., Simõesb, C., Perina, M. G., Almeidac, A. Marketing metrics: Insights from
Brazilian managers. Industrial Marketing Management. 2011, 40(1), p. 8-16.
12. Solčanský, M.; Sychrová, L.; Milichovský, F. Marketing Effectiveness by Way of Metrics.
2011, In Economics and management, roč. 2011, č. 16, s. 1323-1328.
13. Solčanský, M., Šimberová, I. Measurement of Marketing Effectiveness. Economics and
Management, 2010, 15, p. 1 – 6.
14. Yadin, D. The International Dictionary of Marketing. 2002, London: Kogan Page Limited.
15. Young, A., Aitken, L. Profitable Marketing Communications – A Guide to Marketing Return on
Investment. London: Kogan Page Limited. 2007.
103
MAIN ASPECTS OF RISKS ADMINISTRATION IN THE PROJECT ADJUSTMENT
PROCESS
Nino Paresashvili, Irine Maisuradze, Ivane Javakhishvili
Tbilisi State University, Georgia.
Abstract. The role of the risk while implementing a project in general and in particular
situation is under review of the present article. In modern unstable situation management of risk is
the matter of actual importance since it is the significant tool in the arsenal of modern global world.
If we deliberate the example of Georgia we will see that creation of the risks management structure
and its development is especially intricate task. For Georgian modern realities while the project
implementation the risks management is going on rather at the expense of experiments and failures.
Keywords: risks administration, project adjustment, optimal decision, the risk analysis and
evaluation, efficiency of project regulation.
Introduction
Economic and social advance of the state significantly depends upon the peculiarities of the
processes of the project current adjustment throughout various fields, the risks forecast while
implementation of any project and elaboration of the activation system for their eradication. The
manager responsible for risks should cover all preventive measures serving to minimize the
undesirable outcome resulted from any unexpected features connected with the project..If we take
into account the environment when the organizations coordinate their activities in permanently
changing and unexpected conditions, provision of economic sustainable development of the state
becomes especially actual, and this depends upon classification and analysis of the various hazards
standing before different current ongoing projects in numerous fields of the state. Successful
overcoming of the crisis covers financial stability of the organizations, inculcation of positions in
the market and numerous positive tendencies. The agenda for combat crisis involves the most
important issues including: the hazards analysis and selection of evaluation strategy; systems
approach towards management of hazardous situation; definition of a response to the risk and
criteria regulation; usage of methodology to calculate the risks marginal values; to take the optimal
decision and etc.1
The risk and Evaluation
The risks adjustment and the analysis for searching the decision is rather important issue of
modern business relations. In any process and the organizational structure is considered to be
necessary to deliberate the hazardous situation as the phenomenon and to carry out corresponding
activities for their prevention. At the same time we should recognize the complicated structural
phenomenon that is based upon numerous factors. While implementation of any process the
comprehension of the risk management is the important factor. In conditions of appropriate
realization and consecutive regulation, the right policy of the risk-management will reveal not only
undesirable events but may determine the profitable and successful perspectives of development.
Each leader of the project is aware of the hazards being behind the project and moreover the
all hazards may not be avoided. No matter which way is right one is not always able to get rid of
development of the casual situation which may be out of control. The planned schedule involves the
1
Gabidzashvili B. Economic Ambiguity and Risks in Businessmen Activities. Monograph, Publisher ”Universal”, 2010,
p.209.
104
list of activities to be fulfilled; however the plan doesn’t take into account the serious potential
hazards of the project. The risk implied in the project is a probability of all results and undesirable
events. The risks connected with the project developments may be resulted in stoppage or
destruction of the project. Some undesirable cases may be revealed until the project starts but others
are not subjected to the forecast and can’t be foreseen.
All projects involve the hazards like exceeding the expenses, breach of terms, low capacities,
disappointment of customers, dismantling of business and other. Therefore the hazards management
and their definition are rather significant issues. The risks regulation is oriented towards the fact that
it is necessary to elucidate many possible negative events, to minimize their impact, to make
attempts to prevent them, however if they occur we should provide the appropriate means to cover
unforeseen charges.
Taking into account the methods of principles and implementation of the risk management it
is necessary to pay ordinary attention to each stage. Following of the content statement the
identification and definition of a potential risk is the necessary process. The processes involving
risks may consider all events that while their original rising cause problems. So the risks
identification may be undertaken from their initial source or from the problem itself.
The manager should pay regular attention to the analysis of the source. The hazardous sources
may be placed inside or outside of the system to be surveyed. The objects of risky sources may
involve the partners, users, employees and natural situation.
Exposure of possible risks connected with the project and their analysis are formally
connected with the problematic areas of detection, evaluation and analysis before the project
undertakes. This is rather practical process than reactive. In other words it is preventive process
aiming to minimize any unexpected failure or undesirable results. It is definitely the project leader
active readiness before the hazardous effects. The successful coordination of risks connected with
the project gives opportunity to the project manager to better supervise future and increase
possibilities to achieve objectives of the project in the framework of approved estimate according of
technical requirements.2
The main components of the risks regulation process are following: identification of reasons
caused risks; the risks analysis and evaluation; definition of a response to risks; planning of
expenses while emergencies; creation of reserves in case of emergencies. Identification of reasons
of risks starts with definition of the description which may hinder the project working or prevent its
implementation. The problematic areas are created by the works which earlier have not been done.
In the activities connected with detection of problems should take part all members of the project
leading team? It is better to start from the risks which are completely adjusted to the project as a
whole and not to some specified section. The members of the project team should be given
opportunity to deliberate in multi-lateral way and their focus must not be limited by the concrete
section of the network.3 Among the issues on the agenda are mostly significant the following: how
much the specialists qualification is in conformity with the requirements rising from the project
implementation; in comparison with the majority of the project the innovation quality of the present
project – high, average or low; according to your viewpoint which factor of the project is connected
with the biggest risk – expenses, time or functional fulfilment and why it is so.
In the process of the problems analysis may be reviewed the risks connected with the
specified threats (threat to losses, threat of infringement of personal information confidentiality,
accidents and other incidents). Threats may come from various directions but mostly from
depositors, clients, lawful authorities and official structures as well.
If the source or the problem is known, the threat and the hazards may be studied how they
may be caused. We may bring the example: exemption of the partner from the project that may
create threat to finances and existence of the project as well; the confidential information may leak
2
3
Keshelashvili G., Paresashvli N. Project Management. 2009, p. 122.
Keshelashvili G., Paresashvli N. Project Management. 2009, p. 122.
105
from even closed network; the risk may have system feature or sovereign depending of the sphere
we are working in and the processes we coordinate.
The selected method of identification depends on traditions, sphere of activities and their
adjustment. The identification methods are made by general format or the source through definition
of the problems and events.
Creation and development of the risk-management structure in Georgia represent especially
complicated task, since the project governing the responses to the questions on revealed risks
should be made immediately followed by eradication actions. Or in better case the risks must be
forecasted in prior according to analysis of tendencies and possible sources.
For the last years in Georgia actually have not been established the fundamental researches in
direction to the risk management. The scientific literature don’t involve the historical traditions of
ample scientific analysis, the managers are less aware of foreign experience and traditions. Thus, in
Georgian modern reality coordination of projects and risks in most cases happen at the expense of
experiments and mistakes.
There are number of tasks before the projects managers, from which are important : to define
needs for necessity of the risk management and analysis; to select the risk management methods
and the sources; to implement formation of organizational structure of risk management and the
analysis; identification of the risks, selection-experience of the best trends of their management and
reduction; to define the risk value, margins and control ; analysis, monitoring and evaluation of the
project regulation efficiency.
Despite implemented researches over risk management and analysis there is no fundamental
definition of the risk management analysis in the project. Thus, selection of the studies trends such
as the risks coordination in the project management and definition of analysis for searching solution
are defined by not only processes of Georgian projects coordination but also by foreign theories
based on the best practical examples, analysis and systematization.
In modern conditions the issue of the projects risks management is diverse and complex
structure which is changeable in swiftly developing environment taking into account time and
conditions. Exactly for this reason elaboration of the whole standard is a hard task, the number of
problems include discussion features and require further elaboration.
We considered justified that attempts of Georgian scientists in this sphere directed to studying
and deliberation of the risk and the processes connected thereof, like the phenomenon or present
world economics or of other spheres priority and significant target of research. Working out of risks
search, definition, analysis and their adjustment system; elaboration of instruments and mechanisms
through which the risks will be reduced, the efficiency of the system of risks regulation and
probability of losses should be evaluated.
In modern unstable conditions management of risks is actual task as much as it represents the
important tool in arsenal of modern world arsenal. While implementation of each project should be
stated which outside and inside threats exist in different entities and focus attention to the methods
which will help managers to reduce or avoid threats. The risk management study is targeted to:
statement of legal environment and political risks connected with financial, market, business,
currency exchange rate, inflation, operation and human recourses. The article also covers gauging
and evaluation methodology and estimation of the costs limits being under risk (V). The practical
examples in various entities will reflect important issues and provide us with successful tools and
methods used for the risk coordination.
The research objective is represented by theoretical-practical analysis of the process of the
project regulation and the statement of practical methods for implementation of successive activities
and systematization of processes of risks study and management, classification of potential risks,
peculiarities of avoidance from risks, recognition-approval of risks, control and interruption,
minimization of losses and other methods as well. Therefore classification of risks, analysis and
permanent control are preconditions for successful quality and growth of efficiency of processes.
These raise the chance to achieve the aim and reduce the risks probability at all levels of the project.
The methodological basis we should take: system approach to the risks regulation, theories for
106
taking decision for financial managers, principles of management responsibility and obligations
coordination, the theory for selection of evaluation strategy, criteria for financial risks, methodology
of calculation of risks value limits.
In process of the projects coordination the focus should be directed to the inter-relationship
between subsystems and basic elements because we should take into account possible risk of each
sub-system involved in implementation of the project which stipulates the basic elements.
Aiming to observe the market rules the companies should retain transparency in order for the
market representatives could evaluate the risks existence. This scope the efficiency may not be
achieved if is not formed the inner system of risks calculation and inner system of adjustment and
description-fixing of documentation. Reduction of all kind of risks is an ultimate strategy of the
project management. The right management and appropriate team of managers, this is the main
factor for risks elimination.
Let’s take Georgian example, in 2010 was held millennium program by Georgian statistics
national service in the framework evaluation project concerning the program efficiency. The project
represented the innovation study on description of village infrastructure. All stages of activities
were accompanied by the risks definition, analysis and reduction process. Description covered 3529
Georgian rural settlements excluding occupied territories. 4 Based on selected data the information
product was created which was helpful and necessary either in Georgia for decision makers over
rural infrastructure, wide community or international organizations. As a result of description of
infrastructure was established the database in which are given up-to-date information about existing
situation in Georgian villages. In particular, provision of natural gas, power energy, drinking water,
sewage system, intensity of natural calamities, irrigation system and access to other important
services.
Moreover as a result of the implementation of population list it became possible to define
existence of such rural units as: healthcare, education entities, banks, mixed entities, or specialized
markets, the enterprises processing agricultural products, other objects which are necessary for the
people welfare.
Other than deficit of qualified personnel, separate isolation of respondent made us to focus the
risks; sending respondents selection-makers for each field working; creation of different teams for
working caused loosing of some information; the date of interview which is acceptable for
respondent may turned to be not useful for interview since the other interview may be planned at
the same time in another village.
Correspondingly update the respondent selection scheme became necessary. In order to
diminish risks was recommended planning to be implemented by one person who would be
responsible for the quality of conducted interviews. So for the respondents selection-makers was
necessary to have following features: the respondents selection maker should have been aware of
the study essence, objectives and tasks for making respondents agree on interview.
The selection-maker should be well aware of the certain region specification, placements of
the rural area and accessible roads in order to define rationally the date and time of interviews in
selection process.
The selection makers are required to present high social capital.
Owing to a.m. specification selection of respondents should be implemented by zonal
supervisors. The zonal supervisor was selected according to regional specificity. Each supervisor
was appointed for each region. The exception concerned big regions where were sent two
supervisors and small regions which according of geographical distribution will be united by zonal
supervisor. Selection of the respondents implemented by zonal supervisor had the following
positive sides conditioning the risks reduction: the zonal supervisors was well aware of the region
specificity, they had good relations with the local population and had certain contacts with the
4
National Statistics Office of Georgia, www. geostat.ge. Tbilisi, 2010.
107
community Sakrebulo (Board) representatives. Correspondingly, the process of the respondents’
election made by them was coordinated in more operative and high profile.
Owing to the fact that the interviews distribution plans was compiled by zonal supervisor,
aiming to avoid dissemination of information it was better to select respondents only by one unit
to implement the respondents selection, consensus on interviews days and further planning.
In order to reduce risks and neutralize possible negative attitude of respondents for each
respondent were prepared letters which were handed them before starting of interviews. The letters
clearly defined description objectives, tasks and importance of their participation while process of
description of infrastructure. For provision of listing quality for recording of interviews were used
dictating machines – technical gadgets. Recording by dictating machines served the following aim
– the interviewed person had expectation to check perfectness of records quality. As a result all
questions were guided by the instruction. As well the practice showed that the method of control
and analysis of interviews quality represent more perfect mechanism.
Though recording by dictating machine was accompanied by negative factors that arose new
risk, in particular: possible negative attitude from respondents – respondents estrange – recording
by dictating machine somehow “restrain” respondents, especially in rural area with non - Georgian
speaking population.
In order to reduce risks and to neutralize the possible negative attitude for each respondent
were prepared letters where along with listing description was made focus to confidential issues, the
letters and questionnaires for non-Georgian speaking people were prepared in corresponding
language.
Regular consecutive comprehension of above risks and solution made positive effect on the
process of listing and the survey aims were achieved in perfect way.
In the framework of the project on evaluation of impact of millennium program by Georgian
national statistics service is one more current innovation, inculcation of monitoring control of the
field under survey and the process of analysis of which successful implementation is directly in
proportion with provision of survey quality and reflects all risks of all stages of study, its positive
sides and setbacks.
Managers very often focus towards conception of governing risks, the strategy of
administration risks, the analysis of financial risks when in the process of the project
implementation usage of the forecast methods is very important as well, « naturally – indefinite »
forecast of situation and behavioural risks.
While the process of project administration it is desirable to deliberate decline from average,
square decline showings and deliberate variation ratio along with the calculation methodology of
average level of hazards. The managers often give the risk zone grading but it would be more
reasonable to review the risky zone with more specified classification represented by ultimate and
inadmissible zones and to make more appropriate statements.
Examples of Georgia evidence that even in massive projects implementation process
managers pay attention to the negative events of the project and they reflect the measures to
eradicate them. It would be desirable if managers deliberate in advance other successful or
disadvantageous foreign and local projects in the process of the project implementation and based
on thereof define the similar risk-factors system of reasons of advantages and disadvantages and
elaborate this risk-factor in complex system consisting of advantages and disadvantages.
While the managers have talks over marketing strategy would be more wishful for them to
connect the marketing study role with the process risk-factors detection.
From the point of looking for reasonable solution it would be more advisable to use
probability evaluations while the project administration process, for example mathematical waiting
that would result numerous probabilities based on multiplication sum. All these is very complicated
process with its essence and certainly owing to calculation and takes into account number of
mathematic processes in order to achieve the aim and it is necessary to take into account these
methods and approaches.
While the process administration it is necessary to review contingencies of unexpected cases,
108
the planning process and the matrix of response to risks.
While regulation of financial recourses we often face the task of fighting uncertainty and
ambiguity. This indefiniteness involves two types: it is impossible to clear up the current situation
of the financial system with admissible specification; it is unknown or non-definable (or can’t be
stated with required specification) the financial indices of future period and its concomitant
parameters. Non-precise multiplications in this case plays the role of uncertainty modelling
instruments, which from their side base on human cognition ability and by features categories
operation and logical statement possibility of formation with featuring forms.
The great importance is conferred to the right calculation of the cost limits of hazards because
inappropriate estimation may cause regulating press and additional sanctions from central or local
structures and expenses of the cost remuneration of the bank guaranties; excessive estimation of the
risk costs will cause surplus insurance costs and will increase the bankruptcy probability.
If we talk about future importance of financial factors in this case is possible and helpful
operation with non-specified figures and functions. The modelling total result takes the similar view
and becomes possible to evaluate possible declines risk from preliminary defined norms.
Based on non-specified sets of theory in order to define risks in financial management are
used: the enterprise bankruptcy risk analysis; the project risk evaluation; formation of optimal
portfolio of business and securities; fixing of actual prices of units; evaluation of investment
attraction of shares and obligations; necessity to develop the internet technologies and justified
analysis.
The policy of administration of information risks is in direct connection with the company
information management and the information security policy. The main benchmarks of information
risk management should be : the definition of risks management scale; interrelation between
information risks regulation and the company strategic planning processes; the aims of the project
information risks management and the principles; which risks are admissible – it should be
established; responsibility for information risks management. When the hazards are revealed and
evaluated the decision should be taken over adequate response. Among responses are distinguished
the risks reduction, or retention, readdressing and participation.5
In some cases they consciously choose retention version, because the risk sometimes is so
large that it is simply impossible (insensible) their readdressing or reduction (for instance, force
major - earthquake, floods etc). In other cases the risks are involved in the estimate reserve. They
are destined for a case of their emergence. Risks retention – in case we elaborate the emergency
schedule and use it in case of hazardous situation. Sometimes we may not take into account the
risks and simply agree the estimate increase for risky cases. The risks readdressing or redistribution
is rather simple undertaking. Readdressing doesn’t change risks; readdressing the risks for the other
side is followed by payment of surplus cost, which has fixed prices. The contracts are the classical
example of the risks readdressing from leaser to lessee. Lessee knows that its firm should make
payment for any risks. So the factor of financial risk is added to the contract cost. Till the risks are
readdressed leaser should foresee which side can make better control of factors causing hazards and
their specification. Is lessee able to overcome risks? While working over risks it is necessary to
define liability and make written justification. The simpler way of risks readdressing is represented
by insurance. However in many cases it is unreal, since it is not easy and simple to define hazardous
conditions for insurance agent, who is not aware of the project affairs. It becomes easier to insure
the risks like natural calamities which have low probability of happening and rather serious results.
For the last time the large attention is directed towards exposure and calculation process of
risky situations, which on one side represents the risk motivation and on the other side the
opportunity to reduce the project cost. Cooperation between leasers and lessees made farmers to
think over improvement of technological processes and methodical, in order to encourage lessees by
way of innovation offers while the project implementation. Though this method may imply
5
Gabidzashvili B. Economic Ambiguity and Risks in Businessmen Activities. Monograph, Publisher ”Universal”, 2010,
p.p. 181-183.
109
increasing of costs at initial stage and the risk that the process may be activated, however expenses
for risks and profits may be divided between leaser and lessee.
More attention is paid to risks before starting the project the more is possibility for making
them minimized. When the forecasted risk becomes real the plan of preventive measures to protect
the environment from unexpected events is used in order to reduce the negative effect. In case of
unexpected developments the plan meets the questions: what, where and when and in which quality
it will happen? Absence of such plan causes serious mistakes while administration. Delayed
solutions or taking decisions after risks may be rather dangerous and expensive. In case of
unexpected developments at earlier stage designation of alternative activities, planning encourages
finding the way out of crisis and this will significantly improve the project successive opportunities.
The plan should cover evaluation of costs and source of financing. All participants should approve
it since usage of such plan means change of sequence of processes. Therefore the plan should be
checked by the team members in order to minimize their unexpectedness.
The risk-management process, despite the range of the project represents systems and logics
approach to the risks coordination. The risks fundamental solutions should be in conformity and
inter-related with the company activation strategic objectives and the priorities. Any project should
cover the policy of risks regulation, the risks administration procedures should be a part of daily
activities. The issue is the policy of improvement of information risks management which should be
subjected to the policy of the sole system of the project risks. Both should meet requirements for
risks regulation which should be agreed with co-workers.
Conclusions
The article “Main Aspects of Risks Administration in the Project Adjustment Process” focuses
towards the risks role while the project implementation process generally and in particular case. In
modern unstable conditions the risks management is actual since as much it represents the
significant tool in the arsenal of modern global world. If we review the example of Georgia we will
see that creation of the risks management structure and its development is especially intricate task.
For Georgian modern realities while the project implementation the risks management is going
rather at the expense of experiments and failures.
We should sort out the situation when the issue of projects risk management is diverse and
complicated structure, which in rapidly developing environment is volatile considering time and
conditions, just therefore elaboration of its sole standard becomes difficult. The selected method of
risks identification depends on traditions, the sphere of activities and alignment. The identification
methods are created by general format or the source, through definition of problem and the
phenomenon. While the single project implementation process should be stated which kind of inner
and external threats exist in various entities and the focus should be emphasized to the methods,
which may help managers to reduce such threats or avoid them. As more attention is delivered to
the risks till starting the project there may be more opportunities to minimize them. When the risk
forecast comes true then the preventive measures are necessary in order to reduce risks.
We consider that the scientists research attempts in this sphere which direct to study and
deliberate risks and the processes in this regard are completely justified as the phenomenon and the
foremost and the most important item of study of contemporary world economic or other spheres; to
elaborate the system of analysis and management of risks survey and definition; to elaborate tools
and mechanisms whereby will be reduced risks and will be evaluated the efficiency of risks
management system and probability of possible losses.
References
1. Gabidzashvili B. Economic Ambiguity and Risks in Businessmen Activities. Monograph,
Publisher ”Universal”, 2010, p.209.
2. Clifford F., Graj, E., Larson W. Project Management. Irwin McGraw-Hill, 2007.
110
3. Hillson D. Practical Project Risk Management: The Atom Methodology. Management Concepts.
2007.
4. Keshelashvili G., Paresashvli N. Project Management. 2009.
5. Gardner, D. Risk: The Science and Politics of Fear. Random House, Inc., 2008.
6. National Statistics Office of Georgia. Tbilisi 2010. www. geostat.ge.
111
DELEGATION VERSUS EMPOWERMENT IN MANAGING EMPLOYEES
Monika Rolkova, Viera Farkasova
The Faculty of Operation and Economics of Transport and Communication
Zilina, Slovakia,
Abstract. One of the competences, which determine the effectiveness of each manager, is his
or her ability to effectively delegate tasks to the subordinates, which means transfer the
responsibility for carrying out tasks and the necessary power as well. The effective delegation
releases managers´ hands to performing other important tasks that can be performed only by
themselves and develops staff, increase their responsibility for completing tasks and also motivates
them. More people who are able to manage their own work and get the information necessary for
performing the tasks by themselves are needed. Employee empowerment is a systematic transfer of
decision-making competency from the top of the hierarchy to the self-governing structures. It
removes barriers in the organization, overcomes bureaucracy, strengthens the feeling of
involvement of the employees and improves long-term performance and synergy in the
organization.
Keywords: delegation, employee empowerment, responsibility, barriers, delegation rules
Introduction
The current senior management is often drowned in an operational agenda. Usually because
of an inappropriate way they respond to emerging problems. One of the important competences,
which in fact determine the effectiveness of each manager, is ability to effectively delegate tasks to
the subordinates, thus transfer the responsibility for carrying out tasks together with the necessary
power. Proper delegation releases the hands of managers to performing other important tasks that
can be performed only by themselves and develop staff, increase their responsibility for completing
tasks and also motivates them.
Manager while delegating must ensure that employees have the necessary conditions and
resources to enable them to perform specified tasks. Then during the process he should not
intervene in the implementation of tasks with the exception of situations where an employee fails to
fulfil his role, or he performs poorly. Many managers are unable to give up responsibility and want
to know about every detail that happens in the work of their subordinates, they constantly control,
guide, intervene in their activities, thereby the employees are losing responsibility for their
performance, because they know that their manager is always close and prepared to do the task for
them if there was any problem. Managers thus hamper their development, discourage them and
don’t have the best results because they devote a large portion of time for activities where should be
someone else in charge, so there is no time for their own work.
The delegation presupposes confidence - the employee knows what is his role, has the
necessary resources, or knows where he can get them, has the trust of manager that he can handle
the task, although he has always an open door, if he needs consultation during the task completing.
The delegation of managers should not be taken as the transfer of tasks that they themselves do not
want to do or blaming staff, if something goes wrong and vice versa, and collecting accolades for
themselves, if team manages to get a good result.
112
1. Delegation procedure
For proper delegation these rules should be followed:
• The role must be clearly specified. The employee must know what should be an output and
how long should it takes.
• Managers should explain the broader context of subordinate role. Why is it necessary to do
it, what makes sense for the overall outcome of the team or company and what complications can
arise during its implementation.
• Determining the evaluation criteria. The employee should know how and on what basis will
be assessed the success of the task.
• Handing the necessary powers. Employees are passed with the necessary powers to perform
their tasks and are provided adequate resources (financial resources, advice, training, human
resources, etc.).
• Verification of understanding and motivation. The manager should ensure that the employee
understood the assignment and is motivated to accomplish the task.
2. What is appropriate to delegate
Of course, you can delegate any task. For effective delegation manager tends to delegate only
certain tasks and others keeps for himself, because they are a load of managerial function and their
delegations would not be appropriate. When delegating it is necessary to assess the ability of
employees and provide them with appropriate tasks, or slightly more difficult if the manager will
consider that they have to cope with them and want to develop them. Manager should always
delegate:
• gathering information - gather the necessary information for a manager can effectively
carry out another employee to release him the space for his analysis and design some
solutions needed.
• repetitive tasks - management time is too precious to re-write routine reports and
comparison with the budget expenditure. After training it can handle any of the
subordinates.
• detailed work - searching for errors in the documents, data verification, these all are
activities which occupy a disproportionately high share of manager’s time and should be
done in minimum of his time.
• representation - a manager can not be everywhere and it is appropriate when he can
effectively use his authorized staff to go on less important meetings or conference calls, and
then summarize for him the main conclusions.
• development tasks - manager should train and prepare employees with the potential for
future features and develop them by giving them grants challenging tasks that will be
required of them in the future.
3. What is not suitable to delegate
Some activities should remain in the hands of managers, because they are the main tasks of
his role:
• long-term goals - long-term vision for forming the company and its objectives, a manager
can use the advice of the staff, but the final version must be in his hands.
• monitoring and evaluation of employee performance, labor discipline - to assess the work
of subordinate or conduct disciplinary interviews should always be done by a manager and
not of someone else because of lack of time.
•confidential and politically sensitive tasks – in some tasks are dealt with confidential
information, such as salaries or new business plans of the company. This would be without a
113
serious reason not to get out of the hands of the manager as well as carrying out tasks from
his boss that he wants to carry out by manager personally.
4. Barriers to delegation
Managers often delegate tasks ineffectively, or not at all, because they don’t know how to do
it right, does not have time for effective delegation or are afraid of losing their positions. The reason
of this can be their misconceptions as for example:
• You can not rely on employees.
• By delegation manager loses control over the tasks and results.
• The manager is the only one who has all the information and it is time consuming to give
them all to the employees.
• Manager is able to the task faster.
• Delegation reduces managers´ power and authority.
5. Upward delegation
Delegation means giving the roles to the workers in accordance with their capabilities,
together with the powers necessary to complete the task. Often, however, there is the fact that
employees return task to manager only partly completed, do not make the necessary decisions and
rely on the boss decides for them; check the task and eventually he completes it. If the manager
tolerates such behavior, employees start to rely on it, don’t take any responsibility, don’t grow
professionally and a manager does the work for someone else. The only solution is to return them
task back and get them to reflect on how to continue, what they suggest, and what solutions they
already have tried. If they are asking manager for a decision, he should ask them what decision they
would consider the most appropriate and if not made any major mistakes, let them continue and
complete it by themselves. In the terms of delegation of tasks there is tendency in recent years to
start to use the specific term employee empowerment.
6. Employee empowerment
Today it is really not enough, if the employee only performs duties, companies need people
who can take responsibility. More people who are able to manage their own work and get the
information necessary for performing the tasks by themselves are needed. They know goals; share
the values and vision of the company and the specific tasks they can set out by themselves. The
more sophisticated processes are used in organization, the more people are prepared to administer
high performance, the more need is to establish for them relative autonomy - self-governing team.
To be able to accurately and quickly respond to what is happening in the market, the company
needs to focus to reduce level of decision-making. In recent years, more people receive the
assignment, in the best case they were able to meet it without mistakes and quickly. Now the
confusing dynamic environment requires a quick response, it is not possible to be let information
struggling through the whole hierarchy to the very top of the company, and thence in the form of
assignments back down again to the people. The decision must occur close to the situation, to the
problem. This leads to the other demands on people.
Employee empowerment is a systematic transfer of decision-making powers of the hierarchy to
the self-governing structure. It removes barriers and helplessness in the organization and overcomes
bureaucracy. It improves long-term performance, synergy in the organization, strengthens the
feeling of involvement and flexibility of employees.
Empowering employees and encouraging them to engage in various business functions usually
make them feel like they are valued by the company, it improves morale. When morale is high,
workers are more productive, which translates to greater revenue and profit (Thibodeaux, 2011).
Duran (2011) comes to the same conclusion – that there is a positive correlation between employee
114
empowerment and productivity. Motivated, empowered employees are more inclined to see the
organization succeed, and they will often deliver better customer service.
Conditions that support empowerment are for example:
• clearly defined responsibility for results
• continuous access to actual results (permanent feedback)
• decision-making power in the key issues that affect performance
• clearly defined link between the results, rewards and recognition
Why empowerment fails:
• reluctance to lose control over the process
• environment of mistrust and fear
• "You wanted it so you must cope with it by yourself"
• organizational barriers (bureaucracy, hierarchy, etc.)
• feeling of abuse of employees
Apart from cases of initial resistance arising from distrust of change and worry concerning
new demands, it is commonly found that the major resistance to employee empowerment comes
neither from senior management nor from the employees themselves but from middle level
supervisors who perceive their positions of authority threatened (Keighley, 1993).
On the other side, if subordinates tend to go with every small problem to the manager and
leave all decisions on him, it's usually because they are learned so or do not have the necessary
powers, to complete the tasks. The manager should think about how he can pass operational agenda
to his team effectively, develop the smartest people through empowerment and obtain for himself
time for his strategic role.
As Jack Hyles puts it: "Don't use your people to build a great work; use your work to built
great people." This in principle epitomizes the concept of empowerment (Theyaqu, 2009).
References
1. Doughty, H.A. Employee Empowerment: Democracy or Delusion? In: The Innovation Journal:
The Public Sector Innovation Journal, vol.9 [online]. Retrieved from:<
http://www.innovation.cc/scholarly-style/doughty-emp.pdf>
2. Duran, D.A. What Does Employee Empowerment Mean&How Is It Productive? [online].2011.
Retrieved from: <http://www.ehow.com/info_8001351_employee-empowerment-meanproductive.html >
3. Hroník, F. Empowerment aneb Proměny rozvoje lidských zdrojů. Business Brunch 4/2009.
4. Hroník, F. Manažerská integrita. Brno: MotivPress, 2008. ISBN 978-80-904133-0-6.
5. Thibodeaux,W.:What is Employee Participation&Empowerment. [online] 2011. Retrieved
from:< http://www.ehow.com/info_8304383_employee-participation-empowerment.html>
6. Theyaqu,D. Delegation versus Empowerment [online].2009. Retrieved from:
<http://ezinearticles.com/?Delegation-Versus-Empowerment&id=2029131>
7. Urban, J. Řízení lidí v organizaci. Praha, ASPI Publishing s.r.o., 2003.
115
THE CORE PRINCIPLES OF STUDIES PROGRAMS – A MEANS TO MATCH THE
INTERESTS OF PARTICIPANTS OF STUDIES PROCESS AND TO STIMULATE
INTERACTION BETWEEN SCIENCE AND STUDIES
Aleksandras Vytautas Rutkauskas
Mykolas Romeris University, Lithuania,
Abstract. The object of this article is the process of studies, seeking the sources and factors
of this process effectiveness in the stage of studies programs preparation and primarily highlighting
the necessity of interests’ compatibility of process participants – entrants, university, business and
nation. Without mentioned detection of the interests of process’ participants and anticipation of its
compatibility in the studies program as digest of purposes, means and possible results of projecting
studies process the attributes of the studies process such as competitiveness based on economy of
process, flexibility and adaptivity should be unclosed and possible general values of the studies
process and drafts of values for every participant of process – for the university – the value of
services provider, for the student – values of the knowledge and practical skills formed by the
programme, for the business – surplus values, for the nation – public values should be defined. Plus,
already in the program of studies process should be estimated risks of discrepancy between the
purposes projected in the program and process of the reality. The prevention of the mention risks or
the education of students’ abilities to qualify the subsequences of possible risks is necessary
requirement for studies process and its’ organizers. The hope is flattering that commanding
requirement to follow the principles of interests’ compatibility, to do reasoned estimations of
mentioned values and to publish its results openly will eliminate the base for unreasoned or even
demagogical discussions about the advantages, disadvantages or necessity of the one or other
program. Moreover, objective information would be useful for choice of entrants. They could to see
the receivable benefit from program, possible risks and, finally, to have the guaranty that the
liabilities established in the program will be fulfilled. In order to concretize the principles of studies
programs preparation, as the object of the research a faculty of one Lithuanian university was
selected, where the complex of studies according the programs of business, management and
economics are performed. In order to prevent the paper of becoming a commercials of that faculty,
it is named as FF.
Keywords: study program, information systems, science, and specialization.
Research type: conceptual paper.
1. General remarks about assessment of studies programs effectiveness today and
improvement possibilities of this assessment
The presentation of studies programs goals implementation possibilities with the help of
programs methodical and material description, modules set and necessary literature digest just
reminds about programs material provision, organizers understanding about good program structure
and knowing about most new literature necessary for programs process1. However this not creates
sufficient assumptions to assess and implement attributes of the studies process such as program
1
Laipsnį suteikiančių pirmosios pakopos ir vientisųjų studijų programų bendrųjų reikalavimų aprašas. Patvirtinta
Lietuvos Respublikos švietimo ir mokslo ministro 2010 m. balandžio 9 d. įsakymu Nr. V-501.
Magistrantūros studijų programų bendrųjų reikalavimų aprašas. Patvirtinta Lietuvos Respublikos švietimo ir mokslo
ministro 2010 m. birželio 3 d. įsakymu Nr. V-826.
Lietuvos Respublikos švietimo ir mokslo ministro įsakymas „D÷l vadybos ir verslo administravimo studijų krypties
reglamento patvirtinimo“. 2008 m. liepos 31 d. Nr. ISAK-2294, Vilnius.
116
competitiveness, adequacy to interests of programs participants, program economy, flexibility and
adaptivity and, finally, value created of program and risk of program2.
Study program is production of intellectual activity and has long evolution period (Hill et al,
2003; Murias et al, 2008; Staskeviciute ir Neverauskas, 2008; Katiliūt÷ ir Kazlauskien÷, 2010;
Stukalina, 2010). For this reason studies program instead original musical composition often
reminds folk musical composition useful for conversation about music, amateurish training and,
finally, for professional concerts. Truly, studies program having the same modules set and
references could be found in the programs digest of both most progressive world university and
ordinary college.
On the other hand, in the face of studies and science management monopolization, if it would
happen in any country, we should say that science and studies also studies programs is not just
public resource or public good about which should care just government of particular country. In
order to develop mentioned programs features first of all the interests of all interested parties –
future specialists, business, universities and nation – should be deeply realized and to know how to
estimate receivable value.
Talking about competitiveness of studies programs as a single product of institution of studies
services it would mean the ability of that program to attract more students going to get particular
speciality in particular institution and in this way giving bigger financial benefit. However thinking
about studies program brand as whole and expansion of this brand influence to the increase of
general value created by studies program the interests of all interested parties participating in the
program management process and those who using studies program services should be seen and
estimated. First of all there are interests of the students interested in demand of their acquired
knowledge and practical skills in the labor market. Second are interests of business as direct user of
specialist knowledge and practical skills in order to get value-added. And finally, interests of the
nation, which the main capital is intellectual and well-educated yang person.
In order to implement program goals especially important attribute is economy of program.
Economy of program should be a direct component of the competitiveness of program, but
regarding to nowadays reality demand – to look for saving possibilities in any activity, we should to
assess whether knowledge and practical skills got from program, i.e. value for specialist, business
and nation is got with the minimal inputs.
It is not debatable that flexibility and adaptivity of the program are important features of
programs competitiveness and economy.
Doubtless that estimation and practice of value of the studies programs as creation giving
intellectual product and service should become imperative. Probably it will become impulse to
unclose the benefit which exploiting and projecting studies program should bring to every
participant of the studies process (Wolansky, 2001; Doherty, 2008; Grundey, 2008; Benton, 2011;
Rutschow ir Schneider, 2011; Verdina, 2011; Bana e Costa ir Oliveira, 2012)
2. About information systems as integrate component of studies programs and necessity
to invoke adequate information systems
In the last section mentioned consideration that description of the knowledge and practical
skills got from program, set of the program modules and digest of the important literature, potential
indicators of the methodical and material equipment should be complemented by generally known
or created by program authors’ information system, which has expanded information about possible
challenges for particular speciality from both practical skills allowing professionally deal with
activities tasks, inadequacy and unknowing of decision methods viewpoints. These are most often
meet strains of studies program risk and the readiness of the students to buffer the subsequences is
2
Lietuvos Respublikos mokslo ir studijų įstatymas. 2009 m. balandžio 30 d. Nr. XI-242, Vilnius.
Studijų kryptis sudarančių šakų sąrašas. Patvirtinta Lietuvos Respublikos švietimo ir mokslo ministro 2010 m. vasario
19 d. įsakymu Nr. V-222.
117
important attribute of studies program quality. Also it is a means for students who are going solo to
increase benefit got from studies program.
Naturally, that mentioned risks on knowledge and its conversion to the practical skills, as rule,
can not to become direct object of the academicals and practical lectures or practical exercises
because the credo of the studies is preparation for particular speciality. Preparation for the possible
risk challenges is separate problem requiring several decision means and methods. Thus, also
according to the shortening duration of studies, especially important is to create information system
or to use already existing one in order to see particular speciality in the risk challenges context.
Programs from both general value and separate value strains creation viewpoints very
important place should to take in specialists’ preparation for possible risk challenges. Thus,
programs organizers and administrators also users and assessors should to understand, that students
ability to work self-dependently should be complemented by students ability to overtake him as
“programmed” professional answering to risk challenges. Most effective this problem is tackling
involving students into science-research activity and giving for them knowledge about riskiness of
the future possibilities and possibilities to manage this riskiness.
The force of the studies program conveys not just by abilities of students education to know the
processes they interested in but also by unclosing new possibilities of that processes development
and giving abilities for future professionals to use those possibilities. This is especially effective
search way of the studies and science research synergy.
The implementation of the last three paragraphs of this section is not possible without
functioning of studies programs infrastructure information system, principles of which are discussed
in the next section (Fig. 1).
I N FO R M AT I O N
Information about demand changes in labor market and
international relationships development
Information
about
knowledge
and practical
skills
inadequacy to
possible
changes
STUDY PROGRAM
The digest of modules
Means for practical skills education
External and foreign relationships
Scientific, information accumulation and usage
skills
Knowledge
about
possibilities,
tools and
methods to
manage risk
of studies
programs
Information about innovations and science results possible
influence to activity, for which specialists are prepared
SYSTEM
Figure 1 The scheme of the general possibilities of interactions between studies programs and its information
system
3.
FF objectives and possibilities to harmonize interests of students, social
development and business and to enshrine interface between science and studies
3.1. The definitions used in this text (SUDIS, SETDIS, BUDIS, INNVIS, REGCDIS,
REGDRIS) could be understood as linkups of paganism or other mystical powers of invisible
environment. However it is just acronyms of definitions every day used in auditoriums and business
or politics environment. The main part of these definitions is IS – information system.
118
In many cases, information system is understood as an entirety of definitions, opinions and
consistent patterns formatted in base system together with hypothesis of characteristics of base
system and information needful for decisions, which are necessity for achieving purposes. In our
case information system is a digest of knowledge entirety about base system, for example
investment processes development requirements, goals and its achievement possibilities based on
most important factors – knowledge and intellect power of coming professionals and real activities
estimated with possibilities requirements’ investments. It should be together with seeing how to
train mentioned power and to estimate demand and possibilities.
The object of this section is FF studies programs complex, which is pointed to create
knowledge and skills entirety, which, from one side, lets to meet students’ interest to get package of
knowledge and practical skills giving competitiveness advantages in labor market for a long time
and to safe ability to refresh competitiveness knowledge and practical skills in the perspective, from
the other side, lets to guarantee that business, which will become user of graduates’ knowledge and
skills, would be ensure about creation of added value and graduates’ flexibility reacting into
changes of environment and work processes.
Teaching institution, which aims to achieve all goals perfectly, needs to attain students having
proper preparation and intellect and who also aims their goals reasonably. Business, in turn, using
the great asset of country – intellectual potential should be responsible for efficient practice of it and
future development guarantee. To see this and to promote is the obligation of every government.
Great loss for country could be when young people, requesting largest investments, are wrong
identified, when intellectual career education is prosecuted by teaching institutions having not
enough competences, when supply of specialists is not adequate to real demand, when it is
incapable to use created valuables – young specialists.
3.2. Base provisions of formation of FF studies programs complex. The complex of FF studies
programs is oriented into such prospective professionals’ career education, which would guarantee
possibilities of perfection for him and also would enable him to use acquired knowledge and
practical skills seeking social, economical and intellectual development of Lithuania during the
integration into beneficial EU and global structures. The quality of studies is recognized as the main
means for implementation of most important goal of studies complex.
3.3. Presumptions and resources of implementation of FF studies programs. High intellect level
of bachelor and master entrants and labor markets’ practical demand of specialists trained in the
faculty could be declare as main presumptions for successful implementation of studies programs
complex3. As the main improve for presented arguments is high average of studies of entrants and
high level of placement of FF graduates.
The main resources of FF, giving knowledge and skills, are high qualification of lectures,
plenty of knowledge necessary for every specialization or profession, high international mobility of
students during studies and, most important, very purposeful accumulating and also generating in
faculty knowledge, which creates the corona of graduates’ knowledge. Accumulating and
generating knowledge usually has double mission. First, it is oriented into high performance of
graduates’ knowledge and skills. Second, it is oriented into promotion of business development
possibilities in the sphere, for which faculty is preparing specialists. Strong synergetic effect is
received in the case of success also storing and generating knowledge joins in knowledge base or
information system formation (Barkhi ir Williams, 2010).
Here (Fig. 1) we would like to represent the main moments of interaction between studies
programs and its information system. Information system could include the possibilities of
3
Lietuvos Respublikos švietimo ir mokslo ministro įsakymas “D÷l jungtinių studijų programų bendrųjų reikalavimų
patvirtinimo”, 2009 m. gruodžio 31 d. Nr. ISAK-2833, Vilnius.
Lietuvos Respublikos švietimo ir mokslo ministro įsakymas “D÷l laipsnį suteikiančių pirmosios pakopos ir vientisųjų
studijų programų bendrųjų reikalavimų aprašo patvirtinimo”. 2010 m. balandžio 9 d. Nr. V-501, Vilnius.
Lietuvos Respublikos švietimo ir mokslo ministro įsakymas „D÷l nuolatin÷s ir ištęstin÷s studijų formų aprašo
patvirtinimo“. 2009 m. geguž÷s 15 d. Nr. ISAK-1026, Vilnius.
Lietuvos Respublikos Vyriausyb÷s nutarimas „D÷l studijų sričių ir krypčių, pagal kurias vyksta studijos aukštosiose
mokyklose, sąrašo ir kvalifikacinių laipsnių sąrašo patvirtinimo“. 2009 m. gruodžio 23 d. Nr. 1749, Vilnius.
119
methodical and material equipment or could be analyzed as the subsystem complementing mention
possibilities.
Further we will represent (Fig. 2) real information systems serve as studies programs’
information systems in order to educe the requirements for students entering to bachelor and master
studies and also to define skills of those, who works after FF studies graduation.
3.4. The particularities of organization of FF studies programs complex implementation. From
Fig. 1 we can see that decision about demand of necessary knowledge and practical skills is taken
analyzing macro economical, social, integration and other macro goals in their interaction with
solution of social problems, search and implementation of business development strategies,
investments as most active and unique means in order to impact development of Lithuania and,
maybe, its’ survival, also to ensure national, technological, intellectual, organizational maturity and
its’ dynamics.
Fig. 2 lets us to understand in which goals’ and interests’ hierarchy level necessary knowledge
is accumulated and guaranteed for concrete studies program or specialization and also scientific
researches, which, from one side, are necessary for modern and long-lasting knowledge formation
for future professionals and, from the other side, for incentive of business development in spheres
where FF graduates should and could be in the lead.
In order to guarantee successful way to mentioned leadership for students, who chose
bachelor or master studies at FF the singleness of intellect, readiness and motivation is needed.
3.5. The principles of individual program (specialization) selection. FF maintains limited
number of programs on the same time – two of bachelor and two of master studies. In order to
ensure the flexibility of these programs large number of specializations, which are prepared on the
base of information system and gives particular knowledge, is prepared. The selection of
specializations in concrete period usually proceeds following special procedure (Fig. 3):
• according to forecast of specialities and professions dynamics made in EU, Lithuania and
other countries with analogical or reachable social-economical development, the list of most
expected and popular in Lithuania professions is formed;
• according to current knowledge systems and it’s refreshable possibilities, proper
specializations are selected;
• the competitiveness in labour market of specialists prepared of FF specializations is
estimated;
• the levels of entrants’ readiness, intellect and motivation for specializations are forecasted;
• the decision about concrete specialization is made;
The team, which should implement programs, specializations refreshing information systems
and other required means is formed.
120
SUDIS– Sustainable development information system
SETDIS – Social, economical and technological
development information system
BUDIS – Business development information system
INNVIS – Investment information system
REGCDIS – Regional competitiveness development
information system
REGDRIS – Regional development risk information system
Figure 2 Hierarchical scheme of information systems interaction detailing (
and integrating feedback (
)
) rising demand and preparing
• This procedure is prosecuting according to requirement maximally by specialization to
supply the interests of all in this process participating sides, i.e. specialist to-be, business, university
and government (Fig. 2).
School graduates, who intellectually and objectively are ready
for studies at university and reasonably reaching for speciality,
which has competitiveness in market and long lasting value,
and readiness to react into
all profession requirements’
changes
Government, which is
responsible for saving
and education of most
important resource of
country – „genetic fund“
Speciality, which lets to realize interests
of professional to-be, business using his
capabilities, university qualifying
specialists and fostering their activities
arsenal and government, which is
responsible for country’s future.
Business,
which is interested on
specialist’s capability
to create added value,
readiness to participate
in business
management and
technological
development and
flexibility
FF, which reaches
to dispose studies’ programs able to
competitive in the country and
international level and adequate scientific
researches results
Figure 3 FF specialization as interests’ realization results of specialist, educating faculty, business using
specialist’s knowledge and skills and government
121
4. Programs management
In order to develop the quality of studies, to look for economically optimal studies process
development ways, enshrine relationships of today’s market in science and studies sphere the
important attention should be given for the studies programs creation and management from both
fundamentally of management and timeliness viewpoints4. It should be guaranteed that for the
existence and development of the studies program influence would have interests and decisions of
all interested parties. In the aggregated management structure of the program (see Fig. 4) the actions
of the subjects of direct programs process and its perspective development – programs council and
leader are unclosed together with the interests and actions of programs organizers, users and
assessors.
Programs estimators
- Vice-rector for
studies (the quality of
studies; value for
programs owner)
- MSM (public value)
- Business (added
value)
Programs council
Programs leader
Programs organizers
Departments of the
university;
Scientific laboratories;
Social and foreign
partners.
The organization and
implementation of the
program
Users of the programs services: 1.Preparing specialists. 2. Others
Figure 4 Aggregated management structure showing necessary to implement decisions (
(
). Double cursor shows plurality of requirements and information
) and notifications
According to Fig. 4 the main duties and rights of the participants of studies programs in the
programs management process could be formatted:
1. The main functions of the operative programs management and monitoring of the
implementation quality and the strategic management belongs to the leader of program, which:
- is responsible for the studies process adequacy to the declared programs goals and quality;
- is balancing operatively the interests of programs users, assessors and organizers;
- is responsible for programs succession and resumption. He is the main strategist of quality
and marketing;
- is responsible for programs council.
2. Programs council (scientific-methodical commission in the case of department programs and
directorate of studies in the case of interdepartmental programs) is responsible for the coordination
of interprogramical and interdepartmental interactions and accumulation of the information got
during particular programs process supervision and its representation for the leader.
3. Programs users are responsible for their readiness and attempts to master knowledge and
practical skills giving to them in particular way. If they unreservedly follow liabilities they have
right to require part compensation for departed from declared services and to make restitution of
subsequences during some time.
4
Studijų kokyb÷s vertinimo centro direktoriaus įsakymas “D÷l vykdimų studijų programų vertinimo metodikos
patvirtinimo”, 2010 m. gruodžio 20 d. nr. 1-01-162.
122
4. Programs assessors assessing and informing programs council about programs adequacy to
programs users (in the broad sense) and about created value for the owner (for the university),
public value (for the nation) and added value (for the business). It should become as a base for
assessment of programs generated value as whole.
5. Theoretical basics and estimation practice of the intellectual product or activities value
estimation already is in the mature state period but this practice for the estimation of generating
value of studies programs is not large. But it is doubtless that this method based on science and
progressive experience should safe programs from incompetent “fighters” for the saving of interests
of nation, business and university.
6. Programs organizers should be professionally and financially free choosing services in one
or other program and to have the guaranty of activity’s succession if the services meet the
requirements of quality and contract conditions.
Further we will discuss the selection one of the programs and the preparation for its
implementation.
A note. The author in the paper was not discussing on the key questions of the paper – about
the interests of participants of the program, about the value, created by the program for its
participants, about the program risk and its prevention, because the authors of the formulated topics
have not been met nor in Lithuanian, nor in the foreign literature. The presented list of literature
was as an information system for the author on the peculiarities of study process in Lithuania and in
EU. The author positively thinks that the questions discussed in the paper are worth exceptional
attention.
Concluding remarks
Academic studies program is the plan of knowledge giving and practical skills formation. On
the results of this plan are interested not just university as the owner of the intellectual capital –
program and student as recipient of programs direct result but also particular activities as users of
programs prepared specialists, services helping in added value creation and nation as keeper of
public value creation.
Success of the studies program depends on both compatibility of interests of mentioned
interested parties and created spreads of owner, user, added and public values. As the base of
programs utility and acceptability should be integral, i.e. all mentioned values included value.
The factors related between each other by program potential utility are not just program
competitiveness, economy, adaptivity and flexibility but also important becoming program
riskiness, which subsequences management is constructive ability of the future specialist.
The participants of the studies program process – university, student, business and nation
have their commitments and rights: for the university – to get nation support, for the business – to
get services of specialist understanding local business peculiarities, for the nation – to see the
creation of the value for users and investors and, finally, for the students – to have rights for the
compensation if the owner of the program not guaranteed promised quality and amount of the
knowledge and skills.
One of the success preconditions of the studies program is programmed management.
References
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švietimo ir mokslo ministro 2010 m. birželio 3 d. įsakymu Nr. V-826.
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pakopos ir vientisųjų studijų programų bendrųjų reikalavimų aprašo patvirtinimo”. 2010 m.
balandžio 9 d. Nr. V-501, Vilnius.
7. Lietuvos Respublikos švietimo ir mokslo ministro įsakymas „D÷l vadybos ir verslo
administravimo studijų krypties reglamento patvirtinimo“. 2008 m. liepos 31 d. Nr. ISAK-2294,
Vilnius.
8. Lietuvos Respublikos švietimo ir mokslo ministro įsakymas „D÷l nuolatin÷s ir ištęstin÷s studijų
formų aprašo patvirtinimo“. 2009 m. geguž÷s 15 d. Nr. ISAK-1026, Vilnius.
9. Lietuvos Respublikos mokslo ir studijų įstatymas. 2009 m. balandžio 30 d. Nr. XI-242, Vilnius.
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studijos aukštosiose mokyklose, sąrašo ir kvalifikacinių laipsnių sąrašo patvirtinimo“. 2009 m.
gruodžio 23 d. Nr. 1749, Vilnius.
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Developmental Education [interaktyvus]. MDRC, June 2011. [žiūr÷ta 2011-10-15].
<http://www.eric.ed.gov/contentdelivery/servlet/ERICServlet?accno=ED521471>.
12. Bana e Costa, C. A.; Oliveira, M. D. 2012. A Multicriteria Decision Analysis Model for Faculty
Evaluation. Omega, 40: 424–436.
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Study Programme Implementation at Higher Education Institutions. Economics & Management.,
16: 987–991.
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Perception. Economics & Management., 15: 580–586.
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and Evaluation in Higher Education. 35(2): 241–262.
16. Benton, R. J. 2011. Using Student Course Evaluations to Design Faculty Development
Workshops. Academy of Educational Leadership Journal. 15(2): 41–53.
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124
NAUJI STUDIJŲ PROGRAMŲ PRINCIPAI KAIP PRIEMONö SUDERINTI STUDIJŲ
PROCESO DALYVIŲ INTERESUS IR PUOSELöTI MOKSLO IR STUDIJŲ SĄVEIKĄ
Aleksandras Vytautas Rutkauskas
SANTRAUKA
Studijų programos tikslų įgyvendinimo galimybių pristatymas tik metodinio ir materialiojo
programos aprašo, modulių sąrankos ir skaitytinos literatūros sąvado pagalba veikiau primena apie
programos materialinį aprūpinimą, reng÷jų geros programos sandaros supratimą ir šviežiausios
programos vykdymui priimtinos literatūros žinojimą, tačiau nesudaro pakankamų prielaidų įvertinti
ir įgyvendinti tokių programos savybių kaip programos konkurencingumas, adekvatumas
programos dalyvių interesams, programos ekonomiškumas, lankstumas ir adaptyvumas ir, pagaliau,
programos kuriama vert÷ bei programos rizika.Šio straipsnio analiz÷s objektas yra studijų procesas,
ieškant to proceso efektyvumo ištakų ir veiksnių, jau studijų programų parengimo etape ir
akcentuojant proceso dalyvių – studijuojančiųjų, universiteto, verslo ir valstyb÷s interesų
suderinamumo būtinybę. Studijų programoje, kaip projektuojamo studijų proceso tikslų, priemonių,
vyksmo ir tik÷tinų rezultatų sąvade, be jau pamin÷tų proceso dalyvių interesų atskleidimo ir jų
suderinamumo numatymo tur÷tų atsiskleisti ir tokie studijų proceso atributai kaip
konkurencingumas, paremtas proceso ekonomiškumu, lankstumu ir adaptyvumu, tur÷tų būti
nubr÷žtos programuojamo studijų proceso galimos bendrosios vert÷s ir verčių kiekvienam iš
proceso dalyvių: universitetui – savininko vert÷s, studijuojančiam – vartojamosios vert÷s, verslui –
prid÷tin÷s vert÷s, valstybei – viešosios vert÷s apmatai. Ir dar, jau studijų proceso programoje tur÷tų
būti įvertinti programoje projektuotų tikslų ir tikrov÷s vyksmo neatitikimo rizikos iššūkiai, kurių
prevencija ar studijuojančių geb÷jimo sušvelninti galimų rizikų pasekmes išugdymas yra būtinas
reikalavimas studijų procesui, taigi ir jo organizatoriams. Straipsnyje puosel÷jama viltis, kad
įsakmus reikalavimas laikytis aptariamų interesų suderinamumo principų, atlikti pagrįstus pamin÷tų
naudų vertinimus ir viešai juos skelbti atimtų pagrindą neargumentuotoms ar netgi demagogiškoms
diskusijoms apie vienų ir kitų programų privalumus ir trūkumus ar jų reikalingumą. Dar daugiau,
objektyvi informacija pasitarnautų būsimų studentų pasirinkimui, kai jie matytų tiek gautiną iš
programos naudą, tiek galimas rizikas ir, pagaliau, tur÷dami garantiją, kad programose iškelti
įsipareigojimai bus tikrai įvykdyti. Konkretizuojant studijų programų rengimo principus,
nagrin÷jimo objektu pasirinktas Vilniaus Gedimino technikos universiteto Verslo vadybos fakulteto
studijų kompleksas.
Raktiniai žodžiai: studijų programa, informacin÷s sistemos, mokslas, specializacija.
125
SOCIAL NETWORKS FOR BUSINESS: CASE OF LATVIA
Deniss Ščeulovs
Riga Technical University, LV-1048 Riga, Meža str.1/7,
Abstract. Today's information and telecommunications technology makes it possible to
communicate data and other information exchange and regardless of location, distance and time
space. The computer revolution that has profoundly changed production and communication is
destined to change marketing just as profoundly1. The most popular e-tool used for communication
is social networking. Social networks have experienced an evolutionary process - in the beginning
was like-minded grouping, news exchange by mean of e-mail. Later on developed social networks,
that became a tool for e-business. Social networks can be effectively used in different e-business
and e-marketing activities, such as sales, advertising, PR, human resources, customer segmentation
etc.
Keywords: internet, social networks, social networks’ development, e-environment, emarketing.
Introduction
Objective of the paper is to describe and evaluate social networks’ phenomena, to describe the
reason and justification of its occurrence from marketing theory point of view, to describe the place
and importance of social portals in e-marketing and main problems that social network creators and
users face. What contains knowledge about the social portals and what kind of opportunities this
resource offers; who are the clients and how to increase their quantity? What are the business
benefits of using this kind of portals in the market? The author analyzes the impact of social portals
on various activities of enterprises - changes in marketing, sales, business planning under the
influence of social portals, risks that are associated with social portal usage. Prospects for the
development of relations between businesses and their customers in the context of social portals.
Research methodology: the author employs well-established quantitative and qualitative
methods of research: grouping, analysis, statistic method, etc.
The theoretical and methodological background of the research is formed by, scientific
researches and publications, publications from mass media and professional literature; statistical
information from legal institutions as well as information collected by the author during the survey.
Findings: research result shows that social networks may be classified based on various
factors. Depending on company’s aims and specifics different social networks can be used for
maintaining different processes.
Originality/value: in this paper the author presented their findings based on theoretical,
scientific and field research. Author has conducted research on e-environment utilization among
Latvian enterprises.
Conclusions: electronic social networks are the major tool for entrepreneurs in the electronic
environment. Wise usage of the opportunities that the entrepreneur can extract from operations in
social networks, may significantly improve the competitiveness of the company - sales channel and
market scope expansion, sales increase, new product development, testing and bringing to the
market or improving the existing product portfolio, target audience analysis and segmentation,
various marketing activities maintenance, e-commerce development, etc.
At present time in Latvia, even considering that Internet in Latvian entrepreneurship is widely
used during long time, active e-marketing employment and social networking in e-environment is at
inception point. This observation is especially characteristic to Latvian micro and small enterprises.
1
Rapp, S. Collins, T.L. 1996. The New Maximarketing: McGraw-Hill.
126
1.
Theories of sociology
Every day we are in different types of relationship with different people, thus creating a social
network. How? In order to realize this fact, some questions should be answered. Perhaps you've
found a job through a friend or friends? Perhaps you and your friends share common interests that
unite you in a club or interest group? In the end of the day, you simply meet one another at home,
work, outdoors, or perhaps you are a web portal and social network (facebook.com) user. The
essence of the social networks is in possibility of contacting other people who, in turn, are
connected with other people, and they, in turn, with other ones, etc. Thus, we can conclude that
social network is a group of people and the relationships between them.
The idea and premise of social portals can be searched in the theories of sociology. For
example, French sociologist Pierre Bourdieu examines mental routine as bloodedly changing as
individuals are too linked to each other through "their" social space and its applicable standards
(Ozolzīle, 2009).
Another sociologist, George Homans, in his theory of social exchange emphasizes three social
groups: small, primary and secondary2.
Main features of the small groups: small, limited number of participants; common purpose
and motivation of the group; group membership feeling (we and they); common norms and values
that determine the interaction; differentiated social roles that are united by a common goal.
Main features of the primary groups: frequent contacts; different types of contacts (verbal,
optical, etc.); mostly direct contacts (face-to-face); frequent emotional contacts; small number of
people.
Main features of the secondary groups: rare contacts; predominantly indirect contact;
predominantly verbal contact; primarily emotional contacts; large number of people.
Analyzing the contemporary sociological theory, the authors want to highlight the concept of
"globalization." E. Gidens treats it like this: Globalization is the process of strengthening the
intensification of social relations and mutual dependence3.
Globalization means that we are increasingly becoming citizens of the "one world", that our
actions are increasingly influencing others and vice versa. At the present day globalization affects
all people in all parts of the world, both rich and poor.
Globalization encompasses not only the economy but also politics, culture and social sphere.
The main engine of modernization so far has been the information and telecommunication
technology development.
Globalization development has been provoked by many other factors. First, the end of the
Cold War and the emergence of new international and regional forms of cooperation have
contributed to the convergence of different nations and countries.
Secondly, information technologies have provided a free flow of information around the
world and created a new global worldview.
Thirdly, the number of multinationals and their influence increased so that those creating the
production and sales network transformed into intermarket elements.
Globalization - opened and controversial process, whose consequences are difficult to predict
and control (Fisks, 2009). Important role in globalization process has global community – where
people around the world views themselves as potential partners or even family members in a vast
increasingly interconnected human family4.
Analyzing sociological theories, the authors concluded that the emergence of social portals is
quite natural. Their appearance became possible owing to development of modern digital
technology. It can be asserted, that the basis for the emergence of social web portals are modern
2
Ozolzīle, G. Socioloăija: 2009. Biznesa vadības koledža, p. 12-14, 19; p. 45-46; p.98.
Fisks, P. 2009. Mārketinga ăēnijs: JāĦa Rozes apgāds, p 143.
4
Kotler, Ph., Keller, K.L., Brady, M., Goodman, M., Hansen, T. 2009. Marketing Management: Pearson Education
Limited, p.844.
3
127
sociological theories on one hand, and digital technology, namely the Internet, together with
modern marketing, on another.
2.
The study of social networks
The study of the phenomenon of social networks for many decades, occupies the minds of
sociology scientists, especially in Western sociology, which is rapidly developing. Network
researchers are interested in explanation models and tools that go beyond the traditional quantitative
methods. In addition, there is a rich set of mathematical methods that allow creating a fairly
sophisticated model of social interaction that describe almost any social system. It is believed that
the first time the term "social network" was applied in 1954 by John Barnes in «Class and
Committees in a Norwegian Island Parish», published in «Human Relations» magazine5. Using of
social systems theory for marketing problems has long-standing tradition. In 1967, for instance,
Fisk tried to structure all marketing activities by introducing the marketing system a set of
marketing activities6. Describing network Fuchs use definition the essentialism – it is how the
network works when it protects its foundations7.
Defining the concept of analysis of social networks, the author believes that it is the study of
existing social relationships in a group of people. In contrast to classical methods of analysis that
explore the individual characteristics of people, the main purpose of social network analysis is to
study the interaction between people and to determine its occurrence conditions. Relationships are
investigated in the context of relationships between individuals (or groups of individuals) and their
actions are considered to be interrelated rather than isolated. It is important that "links" refer not
only to communication between people, but also to of various resources and activities exchange.
A central aspect of social network analysis is that the views, feelings and actions of people are
created not because of their personal qualities, but because of relationship form they are
participating in. The main concept of "network" idea hides in the fact that each person has a
relationship with other people who are both linked with some other people etc., thus, a social
network is associated with a group of people and the relationships between them.
There are different social network analysis and evaluation methods both qualitative and
quantitative.
Qualitative research methods - unstructured or exploratory studies, which allow to collect and
analyze detailed information about the object of investigation.
Quantitative research methods whose main goal is collection of information for further
processing and analysis, including statistical analysis. Collected information is also used for
qualitative researches.
These or other methods are chosen depending on the research objectives, as well as the
number of participants of social networks. Information accessibility is also very significant fact.
The authors believe that the most useful tools for social network research are qualitative
research methods such as surveys and questionnaires, interviews, observation.
Questionnaires should be used in case when the number of participants is sufficiently large
and information which is planned to receive should be standardized and structured. Also it must be
collected within a short period of time. The questionnaire usually includes questions about
respondents' relationships with other people.
Interview. Face to face or phone interviews are usually used in cases where all necessary
information about the social network cannot be obtained through questionnaires. In-depth
interviews are particularly useful in cases when more detailed explanations or clarifications are
necessary, as well as in cases when the number of respondents is small.
5
Webopeadia [online] [citeded 25.02.2011.] – Available from Internet:
http://www.webopedia.com/TERM/S/social_network.html
6
Ludicke. M. K. A 2006. Theory of Marketing: Gabler Edition Wissenschaft, p.36.
7
Fuchs, S. 2001. Against essentialism – A theory of culture and society. Harvard press University Press, p 16.
128
Observation. This method is widely used for studies of small groups in order to analyze
people that are involved in direct relationship process. As verbal responses are not necessary this
method should be applied in cases when it is impossible to get verbal or written answers8.
Observation method also helps to understand the various psychological and behavioral
characteristics and aspects of the social network.
Analysis of the documentation. Relationship connections can also be studied by using a
variety of published data - documents, files, diaries, etc.9
Thanks to modern digital technology and the Internet, social networks are becoming an
integral part of everyday people's life, whose number is growing daily. Social networks are
functioning as a mediator in their relationship.
While using one another social network, people have greater access to various resources
(including information) that would not be available when searching for them on their own. Thus,
the study of social networks can be useful for entrepreneurs in their various marketing and PR
campaigns - to know which channels to use in order to transmit a message to potential and existing
customers and clients. It is also important to know which social portals are used by the target
audience.
3.
Social web portal types
There are a lot of methods and types of classification in traditional marketing, for example,
classified forms of marketing, consumers and their behaviour, motivations of consumers, products
and services, as well as many other factors, objects, etc. Classification takes place according to
different criteria and parameters. Since the main participants in the social internet networks are
people who are also customers or potential customers, the author will consider various ways of
classifying consumers and will propose his social network classification.
F. Kotler proposes to classify consumers by the following features: income level, age group,
geographic, psychographic, behavioral principle10.
D. Blythe classifies consumers according to their: geographic characteristics; psychographic
characteristics, socio-economic characteristics, demographic characteristics11. Kotler, Jain and
Meysinsi are classifying consumers based on their value to the company in terms of revenue12:
1. "Platinum" (top team) - 1% of the most active consumers;
2. "Gold (large consumers)" - 4% of active clients;
3. "Iron (average consumers)" - 15% of active consumers;
4. "Lead (small customers)" - the remaining 80% of active consumers.
From the authors viewpoint this particular classification can be used for long-term e-business
and e-commerce planning.
These classifications, their principles or individual elements are applicable to the social
network classification.
The authors offer to classify social portals according to its destination:
1. Contact social Internet network (plaxo.com, partnerpedia.com, etc.);
2. Communicational channels (facebook.com, linkedin.com myspace.com, draugiem.lv,
wordpress.com, youtube.com, facelink.ru etc.)
3. Sales channels (amazon.com, ebay.com, etc.)
4. Business tools (wawe.google.com, google.com, twitter.com, alibaba.com etc.
5. Etc.
8
Praude, V. Šalkovska, J.. 2006. Mārketinga komunikācijas: Vaidelote, p.124-128.
Kotlers. F. 2007. Kotlers par mārketingu: kā radīt, iekarot tirgu un dominēt tajā: Lietišėās informācijas dienests, p.
156.
10
Blaits, Dž. 2004. Mārketings. Rokasgrāmata. – R.: Zvaigzne ABC, p.87.
11
Котлер, Ф. Джайн, Д.К. Мэйсинси, С. 2003. Маневры маркетинга. Современные подходы к прибыли, росту и
обновлению: ЗАО «Олимп-Бизнес», p.124.
12
Twitter [online] [citeded 23.02.2011] – Available from Internet: http://twitter.com/about#about
9
129
The main objective of the social web portals is to provide mutual communication and
exchange of information between people within business environment.
The main functions of business social networks are: 1. Establishing new business contacts; 2.
Business, managers, employees, individual entrepreneurs profile presence or creation; 3. Links to
entrepreneurs’ blogs; 4. Job search; 5.Opportunity to receive the results of various types of
examinations and investigations; 6. various business discussion groups creation and maintenance
Businesses can use the following benefits participating and using social networks to enhance
their competitiveness:
1. Establishing and getting a wide variety of business grouped contacts, for example, potential
customers, suppliers and intermediaries. You can also use business contacts for the various types of
consultations in both directions - both to receive and provide, for example, legal, financial,
marketing, etc.;
2. Opportunity to assess and measure the efficiency of communication processes in real mode;
3. Possibility of evaluating and measuring the results of two-way communication;
4. Opportunity to assess and analyze costs - advertising, marketing event, promotion, etc.
A striking example of a successful business online social network is www.twitter.com with
175 million registered users on 14.09.201013.
The main features of the portal: regulated number of characters in blogs - 140 characters.
Real-time negotiation possibility. Ability to follow and monitor the expert, customer and potential
customers statement about various events, for example, the opinion about services and products including critical feedback.
Social online networks also offer a number of tools that can be used in business activities:
1. Communication and cooperation platforms (BaseCamp, Google Wave);
2. Conducting various processes (sales, promotion, etc.), its control, registration, data sharing,
virtual workgroup creation (Facebook, Linkedin, etc.);
3. Communication establishment (Skype, MSN etc.);
4. Shared user programs (Google Doc's, etc.);
5. Various micro-services for direct communication with customers, potential customers and
partners;
Organizations that use or are willing to use an electronic environment for entrepreneurship
should have a high level of cultural communication and understanding of teamwork (collaboration).
Entrepreneurs must have the skills and knowledge to work in an electronic environment. They
should have a clear understanding of responsibility in dealing with social networks, as different
processes are taking place and developing rapidly, and employers need to be able to manage these
processes and be responsible for results.
Benefits that an entrepreneur can get from using social networking as follows:
1. Optimization and evaluation of communication processes and their costs;
2. Collaboration model creation, which will lead to company's improvement;
3. Joint problem solving with clients;
4. Efficiency and productivity analysis within the framework of the team;
5. Working time's and corresponding payment's control, as well as function supervision.
Social networking for business development: the channels of communication and promotion.
As it was already mentioned people are being united by interests, values and attitudes. The
same thing can be attributed to social online networks. Social Internet networks are a place where
people can meet other people, answer questions, thus possibly help them, as well as ask questions
and listen to other's opinions.
Depending on the action and participants’ activity, authors proposes to divide them into three
groups:
1. Members, who themselves create original content;
2. Participants who comment, evaluate, transmit, copy, vote etc.
13
Niedrītis J. Ē. Mārketings. 2005. Trešais, pārstrādātais un papildinātais izdevums. – R.: Turība,. p.407.
130
3. Participants who only consume the content (information) posted by others.
Social networks can be used to promote products and services, as well as to communicate
with clients or potential clients.
Social networks as communication channels:
1. Possibility to create groups of supporters and fans of the brand;
2. Possibility of communicating exact target audience and "its" environment;
3. Possibility to quickly obtain information about consumer current needs and interests;
4. Possibility of receiving feedback and react accordingly;
Social networks as distribution channel:
1. Possibility of virtual "direct selling" - selling products or services in the "midst of
socialization" of the target audience (eg, insurance, ticket, information and banking services, etc.);
2. Less time is being spent on the product or service sales provided that the consumer agreed
to purchase;
3. Increased service delivery speed.
Generalizing all above mentioned, author concluded that electronic social networks are a
major tool for entrepreneurs in the electronic environment. Wise usage of its opportunities may
significantly improve the competitiveness of the company - expand sales channels and scope of the
market, increase sales, bring to market new products and test them or improve existing product
portfolio, analyze and segment target audience, carry out various marketing activities, develop ecommerce, etc.
4.
Social networks usage by both sides of e-market - Latvian enterprises
In order to understand what kind of e-tools are used by Latvian e-market shares, authors of the
paper have carried out the following research activities: one study describes buyers' or prospective
buyers' activity, the other one - the internet selling activity. Due to the fact that it is impossible to
cover all e-environment, in the study, authors have imposed certain limitations. In buyers case there
was made a separate e-environment elements' analysis, namely, social network and its user analysis.
Research: Social networks and those participants – customers
The author carried out a research on January 2011 with the aim to understand what activities
in what social networks customers do. The target group comprised people in the age group from 20
to 43 years, both genders; total number of respondents was 147. A questionnaire was designed, with
8 questions including 2 open questions.
According to the research results most popular social networks are local network draugiem.lv,
it is used by 31.4% of respondents and facebook.com - is used by almost 31% of respondents,
14.3% uses local one.lv site (the site is used for more Russian-speaking audience). Business social
networks used by almost 9% of respondents and are tweeting almost 13%.
Social networks members are quite active, regular attendance in a single social network
31.1%, two and four - almost 16%, three - almost 18%. In addition, 71% of respondents visit web
sites several times per day. Almost 30% of respondents consider themselves to be active social
network users. 30% of respondents use social networks to communicate with friends, exchange of
information, advising and recommending sometimes for peers, as well as for consuming this kind of
information. Almost 18% of respondents regularly update personal information, almost 26% of
respondents follow the events, news and announcements made by friends and other people and
made in company profiles. Interesting is the fact that over 45% of respondents like to keep a track
of various sales and opportunities with the aim to buy cheaper. For example, sites were possible to
buy goods and services significantly cheaper (advertisement campaign) (cherry.lv, perkamkopa.lv,
deal.lv, etc.). The survey confirmed a fact that social network members use e-procurement
environment in a very active manner - more than 46% regularly shop online, more than 25% of
respondents use a discount shopping website. Of those who regularly shop online, more than 21%
rely on friends' views and recommendations; more than 12% are influenced by the promotional
information in various social networks.
131
Conducted survey is an evidence of good social network user activity level. In addition,
respondents are open to a variety of activities related to shopping. They are actively using
opportunities to shop online. Author believes that companies must communicate and sell their
goods and services more actively by using e-environment.
Research: Latvian entrepreneurs and e-environment.
The previous survey showed that Latvian e-environment users are opened to various emarketing activities; they are willing and able to spend money in the Internet. In order to understand
Latvian entrepreneur level of involvement in e-environment, as well as their operational activity in
this distribution channel segment, authors carried out a survey.
The author of the paper carried out a research on October 2010 – December 2010 with the aim
to define how they use most popular e-tools such a corporate homepages, blogs etc. The target
group comprised people in the age group from 30 to 65 years (managers and employees of different
companies); total number of respondents was 175 small and medium enterprises, acting in various
Latvian economic structures emerging sectors. A questionnaire consisted of 10 questions.
99% of all respondents have homepages in Latvian, but only 43% of all respondent’
homepages translated into Russian and English or other language. Only 31% of all respondents
have corporate blogs, and only 13% of them regularly update information in blogs. 90% of bloggers
write those in Latvian. 80% of all respondents’ homepages name and emails correspond to the name
of the company. Only 5% of all respondents use homepage for human resources activities –
headhunting (for example, in other western countries and America this proportion is close to 20 %).
76% of all respondents have separate section with products and services offered description. Only
34% of all respondents have links to their profiles in popular social networks. Only 12% of
respondents offer to buy and pay products and services via corporate homepage. On the positive
side stands the fact that one third of the respondents maintain relationships with customers with
corporate blog help, but communication takes place only in Latvian. Irregularity of such
communication also reduces the company's awareness among other consumers.
Conducted study shows that Latvian companies use the main e-tools not very actively and
effectively, using mostly only a single language to communicate with consumers, which narrows
the number of potential buyers. Author of the paper assumes that they are not completely aware of
the market's globalization, as well as e-market's opportunities and benefits. The study also confirms
the fact that the majority of respondents use a website as a company's business card, and not as a
sales and interactive communication tools.
Another survey which involved 314 Latvian companies, conducted by the Latvian Internet
Association showed that vast majority of Latvian companies have profiles in social networks, the
most popular of which is Twitter.com. Facebook.com took the second place, while third place went
to Draugiem.lv. 26.4% of respondents indicated that are using Twitter.com for business purposes,
22.6% - Facebook.com and 20.8% - Draugiem.lv. Only 18.9% of companies have no profiles in any
of the social networks. 3.8% of companies do not know why they are in social networks, 5.1% do
so because it is trendy and everyone talks about it. According to survey performer opinion
entrepreneurs do not pay sufficient attention to performance evaluation on these sites. Only 37.5%
of respondents conduct analysis activities in the social networks and have idea of how effective it
is14.
The author of the paper believes that Latvian entrepreneurs should change themselves ASAP,
change their views on e-market e-business and e-commerce management, as it can lead to the
situation where not only competitors, but also consumers will be more intellectually mature on the
same business and thus the business will bring significant losses, as Chairman and Chief Executive
of GE prof. Jack Welch said: "At a time when off-track change take place faster than in-house one,
your end is not far away"15.
14
Pētījums: Twitter Latvijā kĜūst populārāks par draugiem.lv [online] [citeded 17.02.2011.] – Available from Internet:
http:// www.lia.lv/aktualitates/ 19/ petijums_ twitter_latvija_klust_popularaks_par_draugiem
15
How Jack Welch runs ge: A Close-up Look at How America's #1 Manager Runs GE – [online] [citeded 15.01.2011]
– Available from Internet: http://www.businessweek.com/1998/23/b3581001.htm
132
Conclusions
Summarizing all above mentioned, authors want to highlight the importance of social online
networks. Social Internet networks have become an integral part of everyday life for most people
around the world. Necessity of building social networks among humans has appeared before the
Internet and electronic social networks, as evidenced by a variety of sociological research.
Globalization is an important catalyst for social networking, which covers all spheres of
activity - economics, politics, culture and social sphere16.
The next stage in social network development is associated with the development of
telecommunication technologies, including Internet. It hosted a lot of people, in various social
networks and portals depending on their interests around the world. The main feature of the
electronic social online networks is relationship and two-way communication between the
participants.
For better understanding of social networks, as well as the possibility of their use in business
it is necessary to investigate them, using different methods. Thanks to the capabilities and features
of Internet, research can be conducted at different scales and at different levels depending on the
needs and goals of entrepreneurs.
For the best social web portal and network usage, the author proposes to classify them
according to their destination.
The main driver of change in business is a consumer, whose power and importance with each
passing day becomes more influential.
E-environment and Internet provides significant benefits for sustainable business
development.
Latvian e-market participants - both buyers and sellers are active in eenvironment, and their level of activity is growing on a regular basis. Nevertheless, Latvian
entrepreneurs are not always following and examining customers' activity and needs within the eenvironment. For example, the Latvian entrepreneurs "activated" on twitter.com, despite the fact
that buyers are not using it as active as other social networks. Not all companies are clearly aware
of its goals, operating in e-environment.
Author of the paper are suggesting to use more e-tools in business processes, because, it they
are available easily and can be used in most fields of the everyday activities. Many of e-tools
available via internet have low price or are free of charge. This aspect is especially important for
small and medium business development.
It is important to remember, that communication process within electronic environment is
very fast and information, both positive and negative, spreads very quickly. That is why
entrepreneurs should not only be computer literate and well oriented in cyberspace, and know how
to work with various electronic media tools - the portals, including social, search engines,
databases, etc.
However, the field of research is very wide and this paper presents just an insight in the large
scope of questions what should be analyzed in the future researches.
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Press, p 16.
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9. Kotlers. F. 2007. Kotlers par mārketingu: kā radīt, iekarot tirgu un dominēt tajā: Lietišėās
informācijas dienests, p. 156.
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11. Котлер, Ф. Джайн, Д.К. Мэйсинси, С. 2003. Маневры маркетинга. Современные подходы
к прибыли, росту и обновлению: ЗАО «Олимп-Бизнес», p.124.
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p.407.
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Available from Internet:
http:// www.lia.lv/aktualitates/ 19/ petijums_ twitter_latvija_klust_popularaks_par_draugiem
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134
STAKEHOLDER APPROACH IN MARKETING STRATEGY
Petra Smakalova, Iveta Simberova
Brno University of Technology, Czech Republic.
Abstract. Stakeholder approach has still gained greater popularity, especially in the last 15
years. We can mark a boarder socio - economic trends, affecting the business environment, as the
reason of this access creation. This approach appears to be useful in many ways and its intense
interest brings new possibilities to use. One of the possibilities is to use stakeholders approach in
business activity for creating marketing strategy, which lies in the formulation for choosing correct
stakeholder and build relationship with them and creating competitive advantage. In order to deal
company with stakeholder through business activity was successful the companies should choose
appropriate marketing strategy.
Keywords: stakeholders, stakeholders approach, marketing strategy, business activity,
relationship marketing
Introduction
In the present time constant change, globalization, technological advances and rapidly
changing market, it is still difficult to orientate in a highly competitive environment for company.
Every company that wants to succeed on the market should have chosen such business activity that
would promote the overall company strategy. There are countless factors that affect the competitive
environment.
Expect customers, who are key elements of business activities, there are other stakeholders
who are getting to the fore with which company come into relationship and who more or less can
affect the future development and performance of the company.
Stakeholders approach recognizes importance of all groups or individual who are in a
relationship with company. Appropriate business activity, the company can establish or strengthen
their existing relationship with individuals group of stakeholders who generate business value and
which vice versa the company generate the value. Essence of marketing strategy is to meet the
satisfaction of all individual groups of stakeholders and as well harmonize their “anchor” towards
the goals of the company. Investing in relationship with stakeholders and business activities can
form a permanent increase in business performance.
Research development question was set:
Which groups of stakeholder the most affect the future development and performance of the
companies through business activities?
The paper presents knowledge and findings of literary review which is supported by primary
research within project of Internal Grant Agency Faculty of Business and Management Brno
University of Technology FP-S-11-3/1417. The topic of research was “Innovation approaches in
management and marketing in a global environment of European”. Primary research was conducted
by questionnaire survey in companies from different sectors (the most important sectors are
outlined in Table 1 and different size in the Czech Republic in 2010. It was asked about 983
respondents, only 147 respondents answered.
135
Table 1 Companies according to NACE
Session
Manufacturing Industry
Wholesale and retail trade
Construction
Professional, scientific and technical activities
Information and Communication
1.
Count in %
34,03
21,01
8,40
7,98
7,56
Source: author’s research, 2010
Stakeholders approach
In the nineties of last century was an extremely important customer. There is a need to know
are their needs, requirements and aspiration. Customer value is assigned the key concepts of the
contemporary market economy.1 But today’s competitive environment emphasizes not only on
customers, but also to other groups of stakeholders from the company environment with which the
company comes to relationships, and who have affect on the overall success of the operation of the
market. 2
Drucker (1955) argued that the purpose of the firm is to create and maintain satisfied
customers on that later followed Frieman (1970) with his theory that purpose of the company is to
maximalist shareholder return and in later years Ghosal (2005) argued strongly that shareholder do
not have priority over other stakeholders who can be equally important for company 3.
Although most research in marketing emphasizes especially the role of end users, companies
are often aware that other groups of stakeholders are decisive element for their behavior and
performance of the company. Previously, it was goal of marketing to create value for customer. The
assumption was that if the companies satisfies customers, gain the market share and automatically
achieves positive financial results. This means that business activities have led to an increase in
market share. Unfortunately, a satisfied customer may not be profitable. Marketers 21st century are
aware of the need for a more comprehensive, coherent approach that goes beyond traditional
application of marketing concept.4 Therefore, today’s marketing takes into account the other group
of stakeholders who have an impact on company.5
2.
Choosing correct stakeholders
Freeman (1984) states that it is management’s task to create a list of the firm’s stakeholders. It
is incumbent upon the corporation to identify its stakeholders and to formally acknowledge those
groups as stakeholders in the company. Without such acknowledgement, a dialog between the
corporation and stakeholder can not take place6. Edward Freeman (1984), defined a stakeholder as
“any group or individual who can affect or is affected by the achievement of the organization’s
objectives“7. Stakeholders can be individuals, groups, organization, institution, society and
environment. Freemen explained who stakeholders are, but it unclear which of them is keys.
1
Jirásek, J. Management budoucnosti. Praha: Porfeccional Publishing, 2008, pp. 204.
Šimberová, I. & Pollard, D. Stakeholder relationship focus in marketing concepts of companies. Brno: Brno
University of Technology, pp. 82-83.
3
Zinkin, J. Strategic marketing: balancing customer value with shareholder. Nottingham: Nottingham University
Business School, pp. 163-181.
4
Kottler, P. & Keller,K.L. Marketing Management, 12th ed. Praha: Grada Publishing, a.s., 2007, p. 792.
5
Doyle, P. Value- Based Marketing: marketing Strategies for Corporate Growth and Shareholder Value, 2nd ed.
British: John Wiley & Sons, Ltd, 2008, p.365.
6
Jurgens,M., Berthon, P., Papania, L. & Shabbir, H.A. Stakeholder theorzy and practice in Europe and North America:
The key to success lies in a marketing approach. London: European Academy of Business and Society, 2010, p.769775.
7
Doyle,P.,p. 365.
2
136
Owing to the limited organizational resources, businesses are not able to include all the
identified stakeholders’ issues in their plans, so have to establish an importance ranking in order to
address the needs and expectations of the most relevant stakeholders in a strategic context8. There
are many frameworks that can be used in order to classify stakeholders. Several authors proposed a
variety of stakeholder types. For example, Morgan and Hunter (1994) noted four basic type of
organizational stakeholder: internal, buyers, supplier and lateral9. Lerner and Fryxell (1994)
highlighter five major stakeholders: customer, community, stockholders, government and
employees10. Donald and Preston (1995) categorized stakeholder into governments, investors,
political groups, supplier, customer, trade associations, employees and communities11. Clarkson
(1995) addressed two major stakeholder groups: primary and secondary. Primary stakeholder
groups comprise of employees, customers, investors, suppliers, government, and community with
whom the corporation may have a formal, official, or contractual relationship. Secondary
stakeholders are media and special interest group toward whom a firm does not have any
contractual obligation12. Mitchel, Agle & Wood (1997) develop a comprehensive identification
typology based on normative assumptions defined by the stakeholder possessing at least one of the
following attributes: (1) power to influence the organization (2) legitimacy of relationship with the
organization and (3) urgency of a claim on the organization13. Henriques and Sadorsky (1999)
introduced four groups: regulatory, community, organizational, and media. Recently, Sirgy (2002)
categorized stakeholders into three groups: internal, external and distal14. Salience of different
stakeholder group varies in the literature. Donaldson and Preston (1995) note that all stakeholder
groups are equally important15. A growing number of researchers argue the firms must identify the
salient stakeholders and deal mostly with them (Galbreath, 2006, Greenley and Foxall, 1997)16.
Authors Anderson (1982), Freeman a Reed (1983) defined stakeholders as those most necessary for
the firm’s survival or the ones that have strong legitimacy claims over the firm and thus require its
urgent attention (Agle et al., 1999)17.Other authors are aware of the importance of the other
stakeholders that do not provide financial resources to the firm (e.g. employees, competitors), they
emphasize here the role that financial resources play in organizational survive (Deshpandé and
Farley 1998)18.
Authors Hilman a Keim (2001) argue that it depends mainly on managers who decide which
groups of stakeholder are primary for company.19
Orientation to key stakeholders is positively related to performance like sales growth, market
share a product success20.
8
León- Soriano, R., Munoz-Torres, M.J. & Chalmeta- Rosalen, R. Methodology for sustainability strategy planning
and management. Industrial management & Data Systems, 2009,p. 249-268.
9
Geuchan, L, Hynchul, A. & Heeseok,L. Formulation strategies for stakeholder management: a case- based reasoning
approach. Korea Advanced Institute of Science and Technology, 2005, p. 831-840.
10
Geuchan, L, Hynchul, A. & Heeseok, L, p. 831-840.
11
Geuchan, L, Hynchul, A. & Heeseok,L., p. p. 831-840.
12
Mishra, S. & Suar,D. Do stakeholder strategy and salience influence corporate social responsibility in Indian
companies? Social Responsibility Journal, 2010, p.306-327.
13
Kyj, M.J., Kyj, L., An institution- stakeholder framework for examining business relationship dynamics in a
transforming Eastern Europe. Journal of World Business, 2009, p.300-310.
14
Geuchan, L, Hynchul, A. & Heeseok, L.
15
Xinming, H., Xioxiang, Z., Xiaoqing, L. & Piesse, J. Stakeholder orientation and organizational performance in an
emerging market, Journal of General Management, 2011, p.163-181.
16
Grinstein, A. & Goldman, A. Beyond the final consumer: the effectiveness of a generalist stakeholder strategy.
European Journal o Marketing, 2009, p.565-597.
17
Grinstein, A. & Goldman, A.,p.565-597.
18
Grinstein, A. & Goldman, A. Beyond the final consumer: the effectiveness of a generalist stakeholder strategy.
European Journal o Marketing, 2009, p.565-597.
19
Hilman, A.J. & Keim, G.D. Shareholder value, stakeholder management and social issue: What¨s the Bottom line?
Strategic management Journal, 2001, p.125-139.
20
Xinming, H., Xioxiang, Z., Xiaoqing, L. & Piesse, J. Stakeholder orientation and organiyational performance in an
emerging market, Journal of General Management, 2011, p.163-181.
137
Choosing the right stakeholders is important, because some stakeholders do not offer the
potential to create value either because the cost of serving them exceed the benefits they generate,
or because the company does not have the appropriate bundle of skill to serve them effectively21.
3. Relationship marketing and marketing strategy in business activity
There is a fundamental paradigm shift in the way marketing is being redefined22. The
increasing attention paid to customer retention and to the relationship between the firm and its
stakeholder led to the affirmation of the more relationship - oriented marketing paradigm. Leaving
the real of single transaction towards new dynamic type of relationships shape the way marketing is
seen and expected to perform (Webster, 1992)23. A key definition of marketing‘reconceptualization
describe its purpose as to „identify and establish, maintain and enhance, and hence necessary
terminate relationship with customers and other parties so that the objectives regarding economic
and other variable of all parties are met“(Gronroos, 2007)24. This task is responsible for relationship
marketing which according to Kotler, aims to build long term relationships with each other
important parties – customers, suppliers, distributors and another business partners – to retain and
acquire business relations with them25. Also Author Das (2008) argue that relationship marketing
create one of the important components for creating marketing strategy, where relationship
marketing is not limited to the consumer market, but understand complex relationships, which may
be more effective than limited to relationship with customer.26.
Relationship marketing is defined as a process of building relationship with customers and
other stakeholders that enhance business opportunities27. Author Kanagal (2008) to add this idea
and adds that relationship marketing is an element that is part of marketing strategies and that helps
to understand needs and desire of stakeholders who are necessary for creating business challenge28.
These relational exchanges, it is argued, are becoming so important that they can constitute firm
resources that can lead to competitive advantage (Hunt, 1997, 2000, Hunt & Morgan, 1995)29.
Managing relationship with customers and significant stakeholder form an important part of
the formulation marketing strategies30.
Marketing theory posits that to enable marketing strategy implementation and achieve
superior performance, managers should organize business activities in different ways depending on
their marketing strategy (Slater & Olson, 2000, Walker & Ruekert, 1987)31.
The purpose of the strategy is determining the future direction of the company. There are
many different approaches for formulating marketing strategies. In our article we consider the
generic strategies. These strategies are formed according the relative power of stakeholders and
21
Doyle, P. Value- Based Marketing: marketing Strategies for Corporate Growth and Shareholder Value, 2nd ed.
British: John Wiley & Sons, Ltd, 2008.
22
Malhotra, N.K. & Agarwal, J. A stakeholder perspective on relationship marketing: Framework and proposition.
Journal of relationship marketing, 2002, p. 223-240.
23
Hoffmann, A.O.I. &Pennings, J.M.E. & Wies, S. Relationship marketing’s role in managing the firm- investor dyad.
Journal of Business Research, 2010, p. 896-903.
24
Hoffmann, A.O.I. &Pennings, J.M.E. & Wies, S.,p. 896-903.
25
Kottler, P. & Keller,K.L. Marketing Management, 12th ed. Praha: Grada Publishing, a.s., 2007, p. 792.
26
Das,K. Relationship marketing research (1994-2006) an academic literature review and classification. Market
Inteligence & Planning, 2008, p.326-336.
27
Šimberová, I. Synergy in marketing management- challenge for innovation of industrial company.. Brno: Brno
University of Technology, 2010, p.783-791.
28
Kanagal, N. Role of relationship marketing in competitive marketing strategy. Journal of Management and Marketing
Research, 2008.
29
Arnett,D.B, German, S.D & Hunt, S.D. The Identity Salience Model of Relationship Marketing Success: The case of
nonprofit Marketing, Journal of marketing, 2003, p. 89-105.
30
Kanagal, N.
31
Vorthies, D.W. & Morgan, N.A. A configuration Theory assessment of marketing organization Fit with business
strategy and its relationship with marketing performance, Journal of marketing, 2003.
138
their potential to cooperate or threaten corporate strategy. The result is a four – way typology of
generic strategies32:
1. Offensive strategies should be adopted if a stakeholder group has relatively high
cooperative potential and relatively low competitive threat.
2. Defensive strategies should be adopted if a stakeholder group has a relatively high
competitive threat and relatively low cooperative potential.
3. Swing strategies should be adopted if a stakeholder group has a relatively high cooperative
potential and competitive threat.
4. Hold strategies should by adopt if a stakeholder groups has a relatively low competitive
threat and cooperative potential.
The company should use the Offensive stakeholders, keep the Hold stakeholders, defend the
Defensive stakeholders and cooperate with the Swing stakeholders.
4.
Research results
As the literature review show, other groups of stakeholders are increasingly getting to the fore
than just customers. Therefore it is necessary to companies create a comprehensive and coherent
approach to all groups of stakeholders who have an impact on company. In order to deal company
with stakeholder through business activity was successful the companies should choose appropriate
marketing strategy. Aim of the paper is to map literary review about stakeholder approach for
creating marketing strategy and find out, that groups of stakeholder the most affect the future
development and performance of the companies through business activities.
Research development question was set for acquiring knowledge whose task was to find out
that group of stakeholder the most affect the future development and performance of the companies
through business activities. This research question was a part of questionnaire research where
respondents asked to evaluate relationship with individual stakeholders for different areas of
business management. They were supposed to mark cross positive or negative answer depending on
whether the individual groups of stakeholder affect or not to affect an area of business management.
The results are discussed below:
Table 2 is divide in ten boxes where in first of them are defined individual groups of
stakeholder and in other boxes is defined different areas of business management. As we can see
from the bottom line of table, business activity is one of the important areas of business
management. The numbers in individual boxes is number of responders who answered positive. For
example, there are 127 companies (from 147 respondents) are affected by customers, 95 companies
(from 147 respondents) is affected by suppliers, 76 companies (from 147 respondents) are affected
by employees in business activities of company.
For clarity the problem we have created a bar graph 1, where we see the percentage effect of
the most important stakeholder in business activities with company. Other stakeholder with less
than 50% effect, are not take into account.
32
Miles, S. & Friedman, A. L. Stakeholders: Theory and Practice. Oxford University Press, 2006, pp.330.
139
Table 2 Assessment of relationship with each stakeholder
Source: own research,2010
Per
Manuf
son
Finan
Busin
Informati
acturi
al
cial
ess
on
ng
ma
mana
activit
managem
nag
proces
geme
ies
ent
ses
eme
nt
nt
61
43
127
73
74
Stakehold
ers
Pla
nni
ng
Organ
izing
Stimul
ation
Con
trol
Customers
123
92
87
88
Suppliers
113
92
44
67
68
16
95
81
48
Employees
102
121
110
110
82
110
76
67
67
Management
137
138
118
132
106
133
130
138
122
Shareholders
125
112
99
116
77
107
119
136
104
54
24
17
62
14
9
50
94
27
19
13
14
58
18
18
26
27
27
9
2
7
35
14
3
24
17
20
Centre
39
27
24
21
45
13
22
25
33
Consultancy
22
25
20
24
18
26
30
33
33
authorities
26
18
11
73
31
26
32
42
30
Citizens
15
7
17
12
5
18
21
4
21
Universities
8
4
5
3
18
19
7
3
16
4
2
5
5
23
2
4
0
12
Competitors
101
63
80
39
69
28
111
58
64
Media
26
20
33
15
9
5
43
13
43
13%
11%
10%
12%
9%
8%
13%
12%
11%
Financial
institution
Local
goverment
authorities
Chamber of
Commerce
innovation
State
Research
centers
Share of
individual
areas of
business
140
The m os t im por tat s tak e holde rs
86%
81%
76%
65%
E
m
pl
oy
ee
s
S
up
pl
ie
rs
C
om
pe
tit
or
s
S
ha
re
h
ol
de
rs
52%
C
us
to
m
er
s
88%
M
an
a
ge
m
en
t
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Graph 1 The most important stakeholders
Source: own research, 2010
There are 6 the most important groups of stakeholders who have a significant effect on the
business activities of the companies:
• Management - 88% effect on the business activities of the companies,
• Customers – 86% effect on the business activities of the companies,
• Shareholders – 81% effect on the business activities of the companies,
• Competitors – 76% effect on the business activities of the companies,
• Suppliers – 65% effect on the business activities of the companies,
• Employees – 52% effect on the business activities of the companies.
Conclusion
The research was involved 147 companies in the Czech Republic, different size and
orientation. For the development of the research was defined research question: Which groups of
stakeholder the most affect the future development and performance of the companies through
business activities? As the literary solution, and the results of research question shows that more
and more to the fore and other important groups of stakeholders than just consumers who affect the
future development and business performance. Among these important groups according to the
research include. Management, customers, owners, competitors, suppliers and employees.
Therefore, the need for firm to create more a comprehensive and coherent approach to these
particular groups of stakeholders who have an impact on business and sophisticated marketing
strategies, trying to establish or strengthen their relationships with them. Firms should therefore
apply a comprehensive approach to these interested parties and try to maintain a suitable marketing
strategy and get on my tent.
For current status of knowledge of the issue and given the complexity of data acquisitions,
consider interviewing for selected form is sufficient. But we are aware that this type of questioning
is not ideal for obtaining a deeper knowledge. We recommend any in follow- up research to select
different type of questions and a different form of questioning based on the assessment scale. This
form of inquiry will allow us to get more specific and relevant information on that will help us to
pursue the issue further. Now, by solving the research we found out that groups of stakeholders are
significant due to development enterprise. Based on the lessons learned would be good to use that
knowledge and extend it to other research. The task would be to determine what values are selected
group of stakeholder recognized most often and how much a link exists between knowledge and
values of stakeholders and marketing strategy and how it affects.
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142
THE LATVIAN LARGE-SCALE SHOPPING CENTERS DEVELOPMENT
PERSPECTIVES
Tatjana Staube, Ineta Geipele
Riga Technical University, Latvia.
Abstract. The article provides the analysis and the vision on the development of the largescale retail real estate in Latvia. The authors concentrate the attention on the large-scale shopping
centers that are presented by over 360 thousand sq.m of gross leasable area and planned to be a little
less than doubled up to 2015. The target is to analyze the target audience and business scope,
therefore the authors decide on the standardization of the shopping centers as the objects of the
research, the spatial planning concept for the retail real estate within the theoretical and practical
scope.
Key words: large-scale shopping mall, retail real property, retail density, spatial planning, the
concept of territory
Introduction
The recent fluctuations in the world economies influenced the national economies. Latvia has
experienced sharp annual inflation rate changes, significant people income decrease and significant
population emigration flow, bank financing limitations. These issues were among the main reasons
why retail turnover per capita considerably changed in capital city, and kept the same positions in
rural area, a number of retailers left the market, but services and catering outlets observed
expansion opportunities. The big shopping projects stand idle, but small traditional format real
property items appear while developers wait for the positive movements in the market.
The research object is the large-scale shopping centers.
The authors applied a theoretical overview of the issues on the large-scale shopping centers
standards and allocation clues to the practical samples. The methods include analyzing the official
statistical data on the main economical indicators and retail real estate market indexes. The research
results observation of the development perspectives of the large-scale shopping centers on the micro
and macro levels.
1.
The essence of the large-scale shopping malls
1.1. Standardization of the retail real property
The shopping and entertainment centers considered to be big format real estate objects.
According to International Council of Shopping Centers (ICSC) research, a European shopping
center is a retail property that is planned, built and managed as a single entity, comprising units and
“communal” areas, with a minimum gross leasable area (also GLA abbreviation is used further in
text) of 5,000 square meters (sq.m further in text)1. A framework was created after extracting
common elements from center types throughout Europe. This new framework classifies shopping
centers into 11 broad based international types of centers, which can be grouped into two broader
categories—traditional and specialized, as shown in table 1.
1
Lambert, J. One Step Closer to a Pan-European Shopping Center Standard. Illustrating the New Framework With Examples in The
Research Review [interactive]. New York: International Council of Shopping Centers, 2006, 13(2): 35-40 [accessed 2011-09-05],
p.35
143
Table 1 International standard of European shopping center types2
The extended understanding of the large-shopping center that accounts minimum one anchor
tenant of a compact hypermarket format valued in 3,000sq.m of GLA and a focus catchment area
considering minimum 30,000 inhabitants is a basis for the spatial or territory planning concept for
such type of a real property3. Here, one of the highly required positions is the client parking area
accessibility on shopping center’s territory.
1.2.
The concept of territory
The spatial or territorial concept may be applied towards a symbol of location of any real
estate object, or a land lot, or a body of land plots. In a wider sense, a territory is the place of the
existing or potential entrepreneurship, where the interests of three groups of the society meet: the
population (represented by the state itself from the standpoint of macroeconomics); the entrepreneur
or developer and/or investor, and the partners of the potential deal (collaboration partners, potential
investors, tourists etc.). Territory plays a very important role in the spatial design planning, since a
territory is an actual place, where the interaction of the external and internal aspects is really taking
place. The utilization of a territory or economically justified action to deploy there a particular real
estate object of a specific kind and type promotes and provides the direction of the long-term
business development in the country. One of the most distinctive factors for the locations for largescale shopping malls is to ensure the flow of potential consumers through the existing freeways and
public transportation stops. The right location for the minimum format of the large-scale retail
property may be central and/or on the edge of catchment area.
2. The aspects of the Latvian large-scale shopping centers territory’s vision
2.1. The macroeconomic problematic issues
Analyzing the development perspectives, the investor would be willing to examine such data
as the existing economic situation, which, in case of the state of Latvia, would mean the primary
necessity to analyze the market of the capital city - Riga. Historically, Riga plays the main part in
the Latvian economy. Within the recent years, the rates of the Latvian gross domestic product
(GDP) and the Latvian retail turnover concentrated in Riga keep at the same level – 55% and 60%
correspondingly. The table 2 presents the data from the economy’s recession period. Compared to
the rest of the Latvian territory, the retail turnover per one resident of the capital was more than 3
times higher.
Table 2 The role of Riga in the Latvian economy.
2
3
Lambert, J.,op.cit., p.35.
Staube, T., Geipele, I. Lielformāta tirdzniecības objektu izvietošanas teritoriju telpiskās plānošanas vīzija. Scientific Journal of
Riga Technical University, Economics and business. 2009, p.94.
144
Analysis of available statistical data breakdown in recession period4
Year
Indicator / Region
GDP, current price, billion
EUR
GDP breakdown, %
Retail turnover6,
billion EUR
Retail turnover breakdown, %
Population, million people
Retail turnover per capita,
EUR
Inflation rate, % to previous
year
Riga
Region
2008
Rest
Latvia
Latvia,
TOTAL
Rest
Latvia
2009
Rest
Latvia
Latvia,
TOTAL
12.45
10.58
23.03
n/a5
n/a
54.0
46.0
100.0
n/a
n/a
4.31
2.85
7.16
3.25
2.13
5.38
60.2
0.72
39.8
1.58
100.0
2.27
60.4
0.71
39.6
1.55
100.0
2.26
1,835
3,153
4,558
1,376
2,379
6,008
15.4
18.60
3.5
In the frame of high inflation rate influenced the considerable growth and further fluctuations
of the Latvian GDP in recent decade, in 2009 it returned at early 1990-ies and/or 2004 years level at
2000comparative prices – the periods of regaining the independence and entering the EU. The
period of 2000-2005 is the starting point for the straight development of the retail real property in
Latvia. Although retail dominates in Riga, it survived approximately 2 billions EUR drop at current
prices (or 37 per cent points at 2005 constant prices) in the recession period. The capital region
dominance difference in retail turnover per capita of over 1,500 EUR gap is evident in comparison
to the rates in out of Riga territories identifying the lapsided retail property development in Latvia.
The official Latvian statistics justifies that the major annual emigrants flow from Latvia was
fixed in the first years after resoration of the Republic’s independency, but in 2009 regained at 2001
level – 5,000 persons. Here, together with negative demopraghy saldo it influenced fixed reduction
of population in a country.
However, the investors possibly rely on the high local market potential due to the following
factors:
• central geographical location of Latvia within the Eastern board of the European Union
(EU),
• physical market saturation gap considering the average ratio in EU of 170 sq.m per 1,000
inhabitants7,
• comparibly poor spectrum of the presented formats of the large-scale shopping centers in
Latvia,
• high local market demand for the European shopping traditions adoptions.
4
Central Statistical Bureau of Latvia database and site information [interactive]. Riga: Central Statistical Bureau of
Latvia, 2011 [accessed 2011-09-08].< http://www.csb.gov.lv/>.
5
n/a – not available information
6
Retail business, except cars, motorcycles, and gasoline; repair services of the individual usage items, household
equipment and installations.
7
Baltic property market report, 2008. Lithuania, Latvia, Estonia. [interactive]. Riga: NEWSEC, 2008 [accessed 201109-05].< http://www.pwc.com/lt_LT/lt/assets/publications/baltic-property-market-report-2008.pdf>, p.37.
145
350
Population, GLA
300
250
200
150
100
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Year
population, 10 thousand people
GLA per 1000 inhabitants
Figure 1 Large-scale shopping centers density and population trend in Latvia
in the forecast period 2008-2015. Authors’ calculations
2.2. The microeconomic aspects
As far back as fifteen years ago, there were no large-scale shopping centers in Latvia, or on 0
sq.m per 1000 inhabitants. Due to the favorable economic circumstances and the low level of the
real estate market development, many professional developers and investors of the Baltic Sea region
demonstrated great activity in the development of the Latvian retail market: ICA/Ahold Ltd. (net of
the RIMI stores) – alliance from the Netherlands, Norway, and Sweden; Linstow Ltd. (the current
Galactico owned shopping centers – Mols, Alfa, Origo, etc.) from Norway, Vilniaus Prekyba Ltd.
and Palink Ltd. (consequently, net of the Maxima and IKI stores) from Lithuania. Thanks to the
experience obtained in their countries of origin, these companies, based on the results of the spatial
planning, developed several shopping malls and stores in the first-priority locations, thus facilitating
the creation of the high level turnover and the non-stop interest of potential leaseholders and
investors. Here, exactly due to Riga brings out the major cash flow in Latvia, the large-scale
shopping centers development started in the part of capital city with high concentration of
economical activity and the most intensive flow of potential customers. Daugava River’s right coast
was that location.
Together with Riga’s real estate economy and real estate market development, the investors’
interest to build the large-scale shopping attracted the locations with following characteristics
(visual illustration is in figure 2):
• Close to the historical cultural and business center of Riga with high pedestrians and
transport flow;
Residential areas of
a) high employment rate, b) high population density, c) population explosion ( caused also by
new dwelling projects realization);
Next to transportation connection points (bus station, central railroad station);
• Attached to centrally located or roadways (Brivibas Street, Krasta Street, Barona Street);
146
Figure 2 Current large-scale shopping centers’ and new projects’ locations in Riga city matching the Riga Dome
research data on a breakdown of a total population number8. Red dots are new projects and green dots – existing
locations
• In the large-scale non-built territories on the edge of residential areas; in the old factories
territories9.
The Daugava River from the consumers’ perception in Riga is a physical obstacle, which one
needs to overcome to reach the over-the-river location of the shopping center. During the
developmental expansion of Riga, two shopping regions are evident: Pardaugava (Daugava River
left coast) and the right bank of the Daugava River, thus facilitating satisfaction of the demand and
change of the purchasing traditions for the most part of the potential consumers.
3. Large-scale shopping centers’ real estate market options in Europe
The large-scale shopping centers real estate market has reached the saturation phase. Riga’s
agglomeration expansion causes more qualitative than quantitative market changes.
Table 3 The large-scale shopping centers’ market saturation in Riga and Latvia.
Authors’ calculations
The total shopping malls GLA, sq.m per 1,000 inhabitants
Regions
Year 2008
Latvia
158
Year 2010
Year 2015
177
308
Comment: Eurostat forecast of entire Latvian population in 2015 is adapted10
8
Authors’ complex research based on: Social-economical analytics in Riga districts [interactive]. Riga: Riga City
Council, 2011 [accessed 2011-09-08].< http://www.apkaimes.lv/>. Description of shopping center projects data Cube
City, Riga Akropole; Linstow Portfolio; Official statistics of shopping centers Stockmann, Riga Plaza; Baltic property
market report, 2008. Lithuania, Latvia, Estonia. [interactive]. Riga: NEWSEC, 2008 [accessed 2011-09-05].<
http://www.pwc.com/lt_LT/lt/assets/publications/baltic-property-market-report-2008.pdf>. p. 39; Golubevs, R.
Budlevskis, M. Mazumtirdzniecības biznesa nianses. In The Varianti.lv [interactive]. Riga: Valranti.lv, 2008 [accessed
2009-09-05]. http://varianti.lv/sakums/articles/show/375; Kossovičs, M. Tirdzniecības centri gatavojas taupības
režīmam. In The Latvijas Tirgotājs [interactive].
Riga: Latvijas Tirgotājs, 2008 [accessed 2009-09-05].
<http://www.tirgotajs.lv/sablons.php?sk=2&ra=119&ga=2009&SID=vmzzwqshf>.
9
Staube, T., Geipele, I. Lielformāta tirdzniecības objektu izvietošanas teritoriju telpiskās plānošanas vīzija. Scientific
Journal of Riga Technical University, Economics and business. 2009, 3(18): 93-104. p.98
10
Authors’ complex calculations based on: Description of shopping center projects data Cube City, Riga Akropole;
Linstow Portfolio; Official statistics of shopping centers Stockmann, Riga Plaza; Baltic property market report, 2008.
Lithuania,
Latvia,
Estonia.
[interactive].
Riga:
NEWSEC,
2008
[accessed
2011-09-
147
As an evidence to the market saturation is 2006 sales deal between the biggest developer,
Linstow Ltd., and the investment fund ACTA (Norway) involving the owned by the Linstow Ltd.
shopping malls Alfa, Mols and Dole, with total square area over 150 thousand square meters11.
Migration and natural decrease of population and ambitious projects sizes is precondition to the
remarkable doubling of the market saturation. Retail property is concentrated in Riga, but it does
not make sense to analyze Riga region separately from the rest of Latvia. Capital city’s retail
property saturation would overlap the 900 sq.m level per 1,000 inhabitants in 2015. Under the
circumstance if Latvia economy is able to attract foreign consumer’s interest and integrate into the
European economy development at a fast pace as capable and active state, the next phase of largescale shopping centers’ development would be the expansion of the objects which territories format
allow further development, and retail park projects realization (e.g., Linstow Retail Park project in
Saliena). That would mean efficient market campaigns within spatial planning, attracting clients
from the distant residential areas and strengthening the loyalty in the current catchment area.
Following the results of the market analysis provided in 2007 by the worldwide real estate
consultancy Company Jones Lang LaSalle (Figure 3), the density of the European shopping center
market is approximately 170 sq.m per 1,000 inhabitants. This is the leading indicator among the
professional developers of the shopping centers and investors when looking for territories for the
new projects. Supplementing the results of the analysis provided by figure 2, the one may conclude
that the market participants from the Baltic Sea region and the Western European are ready (below
the median indicator at the Figure 3 are countries from the Czech Republic – Sweden), and the
barometer of this activity shows that there are almost more than 455 million people (under the
provision that the population number is a constant) at the territory of the potential development12.
Under the provision that the median indicator at the territory of Europe while planning big format
commercial objects, their number may reach 4,400 projects. For its part, Latvia would have, in
addition, approximately, 80,000 sq.m of total commercial area. It has been partly implementing by
the traditional small formats of the current year projects, however, this may return due to natural
competition between the formats.
05].<http://www.pwc.com/lt_LT/lt/assets/publications/baltic-property-market-report-2008.pdf>. p. 39; European
Commission Statistics (EUROSTAT) database and site information [interactive]. Luxembourg: EUROSTAT, 2011
[accessed 2011-09-07]. <http://ec.europa.eu/eurostat>.; Baltic States and Belarus real estate market review.
Accelerating success. Riga: Colliers International, 2011 [accessed 2011-09-06].http://www.colliers.com; Baltic
property market report, 2010. Lithuania, Latvia, Estonia [interactive]. Riga: NEWSEC, 2011 [accessed 2011-0907].<http://www.newsecbaltics.com/>.
11
Linstow and Norwegian investment fund Acta business deal facts [interactive]. Riga: Zvērinātu advokātu birojs
Raidla LejiĦš & Norcous, 2009 [accessed 2009-09-10].< http://www.rln.lv/lv/n-archive2006.htm>.
12
Authors’ complex calculations based on: European Commission Statistics (EUROSTAT) database and site
information [interactive]. Luxembourg: EUROSTAT, 2011 [accessed 2011-09-07]. <http://ec.europa.eu/eurostat>;
Щербакова, E. На начало 2007 года постоянное население России насчитывало 142,2 миллиона человек. In
Домоскоп Weekly, электронная версия бюллетеня Население и общество. Москва: Национальный
исследовательский университет „Высшая школа экономии” [interactive]. 2007, 279 – 280 [accessed 2009-0824].<http://demoscope.ru/weekly/2007/0279/barom01.php>.
148
Figure 3 Jones Lang LaSalle Company’s market research data. Large-scale shopping centers density, Fall,
200713
The collaboration with the foreign investors caused the improvement of professional
knowledge of the local market specialists. The research on the large-scale shopping centers’s
market density increase in Latvia results the surplus of the commercial leasable area in the mediumterm, but international market become optional for the Latvian specialists to develop new real estate
objects professionally and attract interest for the international partners for opening business in the
territory of Latvian state.
Conclusions
Summary of the results of the carried research the authors present within the following issues:
1. The successful realisation of the retail real property requires the focused and deep look on
the territorial or spatial planning. The concept of territory’s development and standards of the largescale shopping centers might be considered.
2. In the scale of Europe, Latvia is a small scale country. Even more the entire retail
concentration is located in Riga. This brings a misbalance into the entire country or lapsided retail
property development proved by one of the ratios – retail turnover per capita and market saturation
breakdown between Riga Region and “rest Latvia”.
3. The Latvian central location between the New EU members from Baltic Sea region and
professionalism of the presented large-scale shopping centers’ developers and retail brands
companies raise the potential of the local market in a long-term perspective and cultivate the other
markets up to 80,000 sq.m GLA locally and over 4,400 projects in Europe.
References
1. Baltic States and Belarus real estate market review. Accelerating success. Riga: Colliers
International, 2011 [accessed 2011-09-06].<http://www.colliers.com>
2. Baltic property market report, 2008. Lithuania, Latvia, Estonia. [interactive]. Riga: NEWSEC,
2008 [accessed 2011-09-05].< http://www.pwc.com/lt_LT/lt/assets/publications/baltic-propertymarket-report-2008.pdf>.
13
Baltic property market report, 2008. Lithuania, Latvia, Estonia. op.cit., p. 39.
149
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4. Central Statistical Bureau of Latvia database and site information [interactive]. Riga: Central
Statistical Bureau of Latvia, 2011 [accessed 2011-09-08].< http://www.csb.gov.lv/>.
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2010 [accessed 2010-08-24].<
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3(18): 93-104.
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миллиона человек. In Домоскоп Weekly, электронная версия бюллетеня Население и
общество. Москва: Национальный исследовательский университет „Высшая школа
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150
ASPECTS OF EVALUATION OF THE EFFECTIVENESS OF THE CZECH
CONSTRUCTION INDUSTRY DUE TO THE LIFE CYCLE
Lucie Sychrová
Brno University of Technology, Czech Republic,
Abstract. Objective/purpose: Aim of this paper is to map out the specifics of the Czech
construction market and justify the relevance of the choice of this sector as a targeted area within
the marketing-oriented research work. Article analyzes the construction industry especially from the
perspective of construction production, construction contracts, business, construction, and
associated development of sales in this field. The purpose is to provide a holistic view of
development in the construction industry in recent years and determine whether it is appropriate to
target the areas of marketing research. These specific features and aspects are discussed from the
perspective of the life cycle of a product / service - construction activity. This contribution was
prepared on the FP VUT Brno the number of solved FP-S-11-3/1417 project titled "Innovative
approaches in management and marketing in Europe a global environment". Originality / value:
Outline of the links between the specifics of the construction market and the various stages in the
life cycle of construction companies provided products / services. Methodology / approach:
induction, deduction, analysisLimits / Implications of Research: Continued development in the
construction industry, both in terms of new technologies, as well as from the perspective of the
relevant macro indicators, narrowing the timeliness of this study for a shorter period of time.
Further insight into the industry may vary according to the investigated problem. This study
analyzes the construction industry from the perspective of the needs of marketing research.
Keywords: Czech construction industry, effectiveness, building products, construction
contracts, construction work, the annual comparison, the life cycle of service / product life-cycle
Introduction
Construction is an industry which plays an important role in stimulating the growth of the
economy. Currently produces approximately 5% of gross value added and employ about 9% of
people. Decisive role in the performance of the domestic construction industry, contracts for public
sector-oriented transport infrastructure, and procurement of foreign investors focused on building
the business and administration. The structure of business entities reached a similar character as in
other EU countries. As the number of businesses are dominated by small and medium enterprises.
Big companies often operate as part of foreign companies. It is the entry of foreign capital into the
sector played an important role in shaping industry structure, but also in increasing the
competitiveness of firms. This article offers a view on the Czech construction industry across the
years of its development.Contemplates the possibility of using a closer look through the different
stages of the life cycle of a product / service (in building terminology: the life cycle of the contract).
This contribution was prepared on the FP VUT Brno the number of solved FP-S-11-3/1417 project
titled "Innovative approaches in management and marketing in Europe a global environment".
1. Czech construction market
As follows from data published by the Czech Statistical Office1, in 2007, total construction
output increased by 6.7%. Approximate value of permitted constructions was CZK 357.7 billion,
1
Industry, construction [interactive]. Prague: Czech Statistical Office, 2011 [accessed 2011-9-5]
<http://www.czso.cz/csu/csu.nsf/kalendar/aktual-pst>
151
decreased by 0.9%. In 2008, total construction output increased by 0.6%. Approximate value of
permitted constructions was CZK 390.8 billion (up 9.3%). Construction output in 2009 at constant
prices decreased by 1.0%, adjusted for working days decreased by 0.6%. Civil engineering recorded
annual growth of construction output by 14.3% (contribution +4.0 pp) and building construction fell
by 7.0% (-5.0 pp contribution). Construction output in 2010 at constant prices decreased by 7.8%,
adjusted for working days fell by 8.0%. Production of building construction recorded a decrease of
8.4% (contribution -5.6 pp) and civil engineering fell by 6.7% (-2.2 pp contribution).Construction
output in the 2nd quarter of 2011 fell year on year by 5.7%. Production of building construction fell
by 2.5% (contribution -1.6 pp) and civil engineering recorded a decline in construction output by
11.7% (contribution -4.1 pp).
The number of construction contracts, construction enterprises with 50 or more employees in
2010 grew by 15.7%, many businesses in the country concluded 39 121st The number of
construction contracts, construction enterprises with 50 or more employees in the 2nd quarter of
2011 grew by 21.1%, many businesses in the country concluded 13 690th The total value of these
contracts decreased by 29.1% and reached CZK 41.2 billion, building construction 17.5 billion
CZK (-5.2 pp contribution, a decrease of 14.7%) and civil engineering CZK 23,7 billion
(contribution -23.9 pp, drop by 36.9%). Decrease the volume of construction orders for civil
engineering was influenced by a higher comparative base in the 2nd quarter of 2010, when the
value of construction orders rose by 11.5%. At the end of the 2nd quarter of 2011 Construction
enterprises with 50 or more employees concluded a total of 13,300 orders (up 12.1%), and these
contracts represented a stock not yet carried out construction work worth CZK 165.3 billion (down
3.8 %).
The following table provides a comparative view of the anticipated construction and
development of sales in comparison with selected countries.
Table 1 Predicted the development of construction and sales
Development Construction (prediction companies)
Czech Republic
Hungary
Slovakia
Poland
2011
-5,6%
0,4%
-1,4%
3,4%
2012
-0,6%
5,3%
5,6%
1,5%
Sales development (prediction companies)
Czech Republic
Hungary
Slovakia
Poland
2011
-2,7%
0,9%
0,9%
3,5%
2012
0,4%
4,7%
4,4%
2,8%
Last year ended with expected annual decline of 7.8%, which almost exactly match the
assumption. Perhaps it will seem that it's not a bad result. If we compare this year rather than fall,
but by 2008, the first year of crisis, we are already at a value of nearly 13%, and considering the
boom even more unique solar photovoltaic (for the year 2010, implemented a CZK 50 billion!) then
it is already more than 17%. Statistics of the year recorded in the individual months increase by 48%. At the end of the first quarter grew by 5.9%, but the fall of 2008 to almost 20% complete!
Companies still expect a continuing decline in its revenues, compared to their predictions in
January there was a slight deterioration. Again, the worst situation, they perceive the greatest
representatives of the companies. Large construction companies expect their sales decline by 3.9%.
152
Small businesses expect a moderate decline in sales by 1.6%. 2 The situation from the perspective of
the respondents engaged in building or engineering construction shows the continuing large
differences between these two segments. Fewer orders confirms only 37% of building construction
(32% in January), compared with a large construction, where 56% of respondents confirmed.
Figure 1 Expected development of construction
2. The issue of life-cycle product / service
Each product has its life cycle (Dunk, 2004). During this cycle, changing business objectives,
depending on the stage of life cycle in which the product is not. A prerequisite to successful
survival of the product on the market including evaluation objectives defined for each phase of
product life cycle. The effectiveness of marketing activities is reflected in the final phase of volume
sales of the product or service (Wong, Ellis, 2007). The most effective advertising is the one that
will maximize sales, while investment in advertising will be minimal. Return on investment is one
of the major problems of the effectiveness of advertising. Investments made in advertising with us
does not have to always return. Each product goes through various stages of the life cycle. The life
cycle of product development refers to the volume of sales and profits. Length of life cycle depends
on the nature of the product and its market success. According to life cycle stages in which the
product is not, shall be amended only targets manufacturers, but the volume of sales growth, profit
and efficiency of various promotional tools (advertising, personal selling, sales promotion,
publicity). As stated Che in his work (Che, 2009), advertising itself is most effective in the
implementation phase of the product on the market, where consumers know the product. The aim of
the advertising message is to inform customers about new product and thus increase sales and
profits. In the growth phase, the volume of sales and profits have been depressed because of all
instruments of promotion. Stage of maturity is again characterized by increasing advertising, sales
volume had reached the point of maximum and begins to slowly decline. Most are applied to sales
promotion, as well as in decline, the demand for the product greatly decreases. The product passes
through various stages of the life cycle, such as a human being who has the youth, other
requirements and goals than in old age. How to properly and effectively apply the advertising just
2
Czech Construction Qualitative Analysis [interactive]. Prague: Topinfo, 2010 [accessed 2011-8-28]<http://stavba.tzbinfo.cz/7560-kvalitativni-analyza-ceskeho-stavebnictvi-2011>
153
depends on the stage, in which the product is located. Effective advertising (Pavlov, Bourne, 2011)
is a tool to influence consumer preferences so you just bought "our" product. This is necessary to
know the needs and wishes, and accordingly to effectively apply an effective advertising campaign.
Figure 3 The features of each life cycle phase 3
3. Research problem and research methods
Research question is to connect the building industry with the elements of life cycle stages of
contract and outlined the most important metrics observed across phases. The research method
consists in drawing the above-described information concerning the construction and life cycle of a
product / service of the conclusions, which are aspects of the construction company Most critical.
This was done by deduction and induction.
4. Research result
Among the most important metrics that affect the performance of construction companies
across phases include:
The financial metrics:
1. Costs of construction contracts (costs associated with the development and application of
construction contracts in practice across periods, should be seen in connection with the development
of revenue and marketing costs)
2. Marketing expenses (cost of sales and marketing activities across periods)
3. Margin (profit contribution revenues in each phase)
4. Cash flow (to see which specific activities generate cash flow and at which stage)
5. The stock index (in the case of joint stock companies to monitor trends in share values)
6. Return on sales (ROS)
7. Return on investment (ROI)
8. The customer metrics:
3
Kotler, L., Philip, J. (1991) Marketing management-analysis, planning, implementation and control. Prentice-Hall,
Englewood Cliffs, 1991.
154
9. Marketing cost per user (monitoring marketing expenses in connection with the number of
customers)
10. The cost of procurement (in the case of firms receiving construction contracts through
public procurement)
11. The profitability of individual construction contracts / customers
12. Customer value (the aim is to increase customer value)
13. The number of construction orders (in most cases it is the service - the provision of
construction works)
The choice of suitable metrics from the perspective of the life cycle:
Stage 1 – Introduction
In the initial phase of the life cycle need to include monitoring the response time. On the basis
of appropriate metrics can then track the effectiveness of the initial phase. It is necessary to
constantly monitor the process of building contracts.
Stage 2 – Growth
At this stage it is necessary to focus on the period from the start of the contract until the full
scale and in particular monitor the yield and the need for corrections made in the process.
Stage 3 – Maturity
In this phase, the construction company mainly focuses on competitive pressures and trying to
establish their competitive advantage. They must react quickly enough to changes occurring in the
market place.
Stage 4 – Decline
The final phase is the evaluation phase of the contract monitoring spokojenosi the contract in
terms of complaints, customer retention and attracting new customers based on positive references.
5. Discussion
Developments in production and building construction contracts shows a clear trend. The
development is highly variable. Construction is a sector whose performance affects a number of
factors. The main factors in addition to the overall macroeconomic indicators, it is possible to
include the fact whether or not a company dependent on government procurement. Large
construction companies expect a decrease in sales for 2011 of 3.9%. Small businesses expect a
moderate decline in sales, by 1.6%. The situation in the construction and civil engineering
continued to show large differences between the two segments. Prediction performance for the
sector in 2011, at least not deteriorated. Conversely outlook for 2012 worsened - the first time, the
company predicts continuing decline in the Czech construction next year, the sector will recover
slower than expected. The worst perceived status and views of representatives of large construction
companies, engineering and construction segment. In the currently most efficient way of obtaining
contracts, consider a large company tenders. Developments in 2010 and 2011 (Q2) shows a
downward trend.
Domestic construction output year on year in July 2011 fell by 11.1%, which further
deepened the June decline. Production of building construction decreased compared to the same
period last year by 6.4 percent and civil engineering output by nearly 20 percent.4 The drop was
recorded mainly for road construction. The annual decline in construction output is gaining
momentum and is primarily due to lower investment in civil engineering. Given the expected
4
Everyone saves, construction dying [interactive]. Prague: Magazine Právo&Seznam.cz [accessed 2011-95]<://www.novinky.cz/ekonomika/243827-vsichni-setri-stavebnictvi-skomira.htm
155
development of the state budget for next year can expect an early improvement. Construction
industry still does not free from crisis and not the views of others does not inspire optimism.
Decrease by more than 11 percent is due to the large reduction in production engineering, which
resulted in restrictions on investment by the state. It builds a larger number of buildings, but a
smaller value. Number of building permits has increased, but the value of orders fell by more than a
quarter. State, firms and households save. The pre-crisis levels, the domestic construction industry
could get the earliest in 2013. Fell slightly and apartments. They started to build them by 6.2
percent less. This is primarily due to the fact that the housing market is now stagnant, and above all
new dwellings on the market surplus.
For the above reasons, on-site execution of a deeper and more detailed analysis of
development indicators (sales, procurement, production) from the perspective of the individual
phases of product life cycle. The first phase (Introduction) requires the creation of a new product /
service and then to market. This phase is very long. This time lag leads to a loss of market share,
loss of earning potential and finally the loss of competitive advantage. This longer response time
should therefore be as short as possible and to measure effectiveness across this stage of metrics
used in particular focusing on the location of this inefficiency (market share, profitability,
competitive advantage). In the second stage (Growth) is a company able to place the product on the
market, but not perfect product / service. We are constantly exploring the perfection of order and to
correct deficiencies found. It is therefore a time to refine the product. To measure the effectiveness
of this stage is the need to focus on possible problem areas that at this stage of the construction
company preventing the full power and start the order. The third phase (Maturity) is a phase of
maturity, a phase which has already been incorporated into the contract due to changes in market
and customers. To monitor the effectiveness of the need to focus on those metrics that are able to
respond to the competitive position (competitive benchmarking metrics). In the final phase
(Decline) in terms of monitoring the effectiveness of an important moment of maintaining existing
customer satisfaction evaluation and learning from the process. It is also the stage where there is a
service and claim management. The chosen metrics should therefore reflect these particular
moments. At each stage it is necessary to capture the most important feature that is typical for this
phase and the use of appropriate metrics to monitor. Construction has in the life cycle of the
contract also specific elements. Focusing on both moments simultaneously, thus a typical feature of
the life-cycle and investigated the specifics of the industry (construction), thus creating space for a
basic evaluation of the effectiveness of marketing activities.
Conclusions
Czech construction shows a downward trend. Each phase of the selected analysis period
(2008-2010) show a highly variable trend, but compared to the base year 2008 is currently possible
to speak of a significant downturn. It is useful to examine the effectiveness of marketing approach
of companies across the life cycle stages and determine the possible torque inefficient behavior
Czech construction companies.
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157
INFLUENCE OF STOCK-KEEPING-UNITS DISTRIBUTION WITHIN SUPPLY CHAIN ON
THE PROFITABILITY OF THE SYSTEM AS A WHOLE
Rimvydas Jasinavičius
Mykolas Romeris University, Lithuania
Girius Jasinavičius
UAB “TOC sprendimai”, Totorių 30-3, Vilnius,
ABSTRACT
Profitability of sales never loses their relevance while formulating business objectives,
managing its processes, and analyzing the results. The actual sales of goods and services delivered
through the value added are the result of professionally managed operational processes of whole supply
chain.
Constantly striving for continuous improvement of the operational efficiency, it is important to
identify the constraints that are the prime cause of the existing problems. These existing barriers
directly influence and determine the profitability of the system and often create non-productive costs.
This article examines how the different accumulation of inventory volumes in a coherent supply
chain affects profitability system as a whole. It analyzes the cause of commonly existing problems in
different global supply chains. Analysis mainly focuses on two distribution strategies through the
supply chain: "push" strategy based on pre-term forecasts methods and "pull" strategy based on actual
sales data and rapid replenishment of goods sold. It is analyzed and explained why “pull” strategy
under methodology of Theory of Constraints is much more effective.
This article includes a specific supply chain management methods based on Theory of
Constraints that challenges traditional supply chain management. Analysis covers errors of forecasts
and their influence on the supply chain results. Examines other essential factors of existing problems
and suggests alternative methods such as buffer management, rapid respond and replenishment of
goods sold and other.
The results of alternative supply chain management according Theory of Constraints is supported
by case study. Presented methods were implemented in the household chemicals wholesale and retail
trading company “Zolusca” (Moldova, Chisinau). With in a short period of time the company achieved
notable economic results: increase in sales volumes by 40%, significant increase in net profit, increase
in inventory turnover by 2 times, freed cash flow from inventory, expansion of points of sales, others.
Keywords: supply chain, supply chain management, distribution, stock-keeping-units, sales,
Theory of Constraints; "pull" distribution strategy, “push” distribution strategy, forecasts, rapid
replenishment.
158
CORPORATIVE MANAGEMENT IN GEORGIAN COMPANIES
(EXAMPLE OF JSC “TBILAVIAMSHENI”)
Larisa Takalandze
Sukhumi State University, Georgia,
ABSTRACT
The issues of corporative management are relatively new ones for Georgian companies. At the
outset of market reforms, most of them developed based on their own assets. Though, at the rapidly
growing market, in the conditions of dynamically changing technologies and severe competition, the
own assets are apparently insufficient. The companies inevitably face the issue of attraction of the
external financial assets, and in quite significant quantities. This requires from the companies
organization of its operation in accordance with the state-of-art management principles.
As we have stated, the corporative management institute is quite weakly developed in our
country. Currently, in Georgia, there are numerous problems related to corporative management;
among them – unawareness of the shareholders in their rights, negligence with respect of the
established procedures, ineffective management bodies, non-public nature of information, legislation
weaknesses etc.
To deal with this problem, the International Finance Corporation IFC (WB Group member,
operating for private sector and supporting formation of open and competitive markets in the
developing countries) has performed wide-scale and effective work; it has already completed the
corporative management project in Georgia, intending assistance to Georgian companies in the sphere
of improvement of corporative management practices. Introduction of responsibility, accountability and
transparence principles in the company’s activities promoted the profitability and attraction of the
investments. IFC provided assistance in improvement of legislative environment regulating corporative
management, as well as adoption of voluntary corporative management code by the Georgian Banks’
Association. IFC has also conducted seminars and individual consultations on legal and financial
aspects of corporative issues and implemented the pilot program for the selected companies and banks.
In result, in numerous companies and banks improvement of the corporative management practice led
to improvement of effectiveness. One of such entities is JSC “Tbilaviamsheni” (former Tbilisi Aviation
Factory). Thus, the article provides consideration of the problems with respect of corporative
management, as well as peculiarities of corporative management in Georgia, on the example of
Georgian company “TAM-Tbilaviamsheni”, the company, which, currently, is the most successful in
using of the corporative management principles.
159

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