Sunteți pe pagina 1din 107

FACULTATEA DE TIINE ECONOMICE

Universitatea TRANSILVANIA din Braov


























Platforma / Laborator de Analize Statistice i
Previziune a fenomenelor Economico sociale i
Cercetri de marKeTing











Editura Universitii TRANSILVANIA din Braov


R
R
e
e
v
v
i
i
s
s
t
t
a
a


A
A
S
S
P
P
E
E
C
C
K
K
T
T





























Nr. 6
2010









FACULTATEA DE TIINE ECONOMICE
Universitatea TRANSILVANIA din Braov











R Re ev vi is st ta a

A
A
S
S
P
P
E
E
C
C
K
K
T
T



Nr. 6










EDITURA UNIVERSITII TRANSILVANIA DIN BRAOV
2010










Revista ASPECKT

Director platforma/laborator de formare i cercetare interdisciplinar ASPECKT

Prof. univ. dr. Liliana DUGULEAN

Comitetul de redacie

Prof. univ. dr. Nicoleta PETCU - Redactor ef
Prof. univ. dr. Ileana TACHE
Conf. univ. dr. Marius DINC
Lect. univ. dr. Mirela BABA
Lect. univ. dr. Alina TECU
Lect. univ. dr. Radu LIXNDROIU
Lect. univ. dr. Cristinel CONSTANTIN
Lect. univ. drd. Cristina ANTONOAIE

Comitetul tiinific

Prof. univ. dr. Liliana DUGULEAN Editor ef
Prof. univ. dr. Nicoleta PETCU
Prof. univ. dr. Gabriel BRTUCU
Prof. univ. dr. Constantin LEFTER
Prof. univ. dr. Ana ISPAS
Conf. univ. dr. Constantin DUGULEAN
Conf. univ. dr. Dana BOCOR

Revista ASPECKT, ISSN 1844 1777
Platforma/laborator de formare i cercetare interdisciplinar ASPECKT
Facultatea tiine Economice
Universitatea TRANSILVANIA din Braov 2008 Editura Universitii TRANSILVANIA din Braov

Editor: Liliana Dugulean

Revista ASPECKT public studii din toate domeniile tiinelor economice. Studiile trebuie s
conin cercetri, idei, analize i sinteze originale, cu caracter interdisciplinar. Studiile n
format electronic pot fi trimise pe adresele: ldugul@unitbv.ro, nicoleta.petcu@unitbv.ro.




CUPRINS





SURPASSING THE GLOBAL FINANCIAL CRISIS IN THE EUROPEAN UNION
BETWEEN NATIONAL AND EUROPEAN
Ioana BANCIU (Lixndroiu) ...


5


MULTIPLE REGRESSION MODEL FOR GDP OF THE LARGEST EUROPEAN
SOFTWARE PRODUCER (GERMANY) IN THE 2000 2009 PERIOD AND
PREDICTIONS FOR 2010 2012 PERIOD
Axenia Bianca BOITOR .......



17


EXPERIMENTAL LEARNING CASE STUDY GLOBAL MANAGEMENT
CHALLENGE
Evelina GRADINARU ......

23


ANALYSIS OF MARKETING MIX ONLINE RESERVATION SERVICIES IN
TOURISM . CASE STUDY : WWW.BOOKING.COM
Roxana tefania LUPU .............


31


IMPLICATIONS OF THE WELFARE STATE INSIDE THE EUROPEAN UNION
Calin MUREA.......

39


SMALL AND MEDIUM ENTERPRISES - A KEY ELEMENT TO FUTURE
EMPLOYMENT AND PROSPERITY IN EUROPEAN UNION
Carmen NICOLAE.........


49


ANALYSIS OF MARKETING MIX IN CONSULTANCY SERVICES FROM HUMAN
RESOURCES DOMAIN. CASE STUDY: PROFILES INTERNATIONAL
Alexandra PALADE ..........

55


A MULTIVARIATE ANALYSIS OF THE ROMANIAN CAR HOLDERS ATTITUDES
AND BEHAVIOURS
Veronica PRVU ...........


63

CORPORATE SOCIAL RESPONSIBILITY- BETWEEN THEORY AND PRACTICAL
APPLICATIONS
Anca PORONICU ...................


71


ECONOMIC CONVERGENCE ANALYSIS WITHIN THE EUROPEAN UNION USING
ECONOMETRIC MODELS
Liliana Ionela SIMA ..........

77




ANALYSIS OF THE BEER CONSUMPTION LEVEL IN ROMANIA
Alexandra TLPU ......

89

ATTITUDES AND BEHAVIORS OF BRASOV POPULATION REGARDING THE
POSTAL SERVICES
Luminita TUDOR (Constantin)..

97


5


SURPASSING THE GLOBAL FINANCIAL CRISIS IN THE
EUROPEAN UNION BETWEEN NATIONAL AND EUROPEAN



Banciu (Lixndroiu) Ioana
Transilvania University of Braov, Faculty of Economic Sciences and Business
Administration


Abstract: The first part of the paper introduces the causes which have contributed to the
outbreak of the financial crisis, the wrongly implemented measures by some main banks by
periodically injecting funds for solving out financial crises which led to the current financial
crisis. Afterwards, Romania and the European Unions economic situation, unemployment
rate and inflation level are analyzed. The last part of this project presents the macro-
economic perspectives foreseen by different institutions (the Forecast Committee, IMF, CEB)
for the European Union and Romania until 2016.

Key words: financial crisis, economic growth, economic crisis

Introduction
This project is an analysis of the causes which have triggered the financial crisis in the
European Union of its effects on the member states, as well as the measures of economic and
financial stabilization which these states adopted in this period.
The objective of this paper is of presenting the theoretical aspects and the causes of the
economic and financial crisis in the first part, Romania and the European Unions economic
evolution in the second part, prognosis on the BIP growth in the third part, the evolution of
the common ground indices of prices (fourth part), as well as the analysis of the evolution of
the unemployment and inflation rate, whereas, in the last part of the paper, there is a
presentation of the strategies of the monetary policies of the countries from outside the Union,
and some conclusions and recommendations on the measures and steps that must be taken
about the financial, economic and social crisis.

1. Theoretical aspects
The term of financial crisis applies to some situations when institutions or financial
goods lose suddenly a significant share of their value. The current crisis, called the sub-
prime crisis, is a financial crisis triggered by the abrupt fall of cash in credit global markets
and bank systems, caused by the failure of companies which invested in sub-prime mortgages
(high risk level).
The economic crisis is a stage of the economic cycle when there is a sort of goods
excess in comparison to the limited buying capacity of the population, which leads to
production decrease, bankruptcy, unemployment; it represents a stagnation and a disruption of
the economic life.
Economic growth is the BIPs rising evolution for a period longer than three consecutive
semesters.
The global economy entered in 2008 the most significant economic and financial crisis
after the Great Recession in the 30s. The crisis had a high degree of synchronicity, as both
developed and emergent countries were affected, proving in this way the significant growth of
6
the degree of interdependency of the world economies. Initially signaled in the United States,
the economic and financial crisis affected the European countries as well, both the EU states
and the other states that have not adhered to the EU yet. The effects of the turbulences on the
financial markets are evident around the world. On November 15
th
2008, there was a summit
of the G20 leaders, for the support of the global economy, world economic growth and for the
implementation of the necessary reforms in the global financial systems. On this occasion, the
participants reasserted their commitment of continuing the efforts of sustaining the global
economy and of stabilizing the financial markets in order to set the ground for reforms and
economic growth.
Inside the European Union, each member state reacted differently to the causes of the
economic crisis which had different effects on each country and, as a consequence, the
measures that these states took for putting an end to the crisis are different. The problem, at
the level of the European Union, within the context of the reaction to the crisis, is that, on the
one hand, it failed to coordinate the options and then the solutions for ending the crisis, and
on the other hand, the different impact of the solutions as well as the different characteristics
of economies which triggered different performances in the economies of the member states.
The current crisis has multiple causes and the effects are immediate and long-lasting.
There were warning signals, but the size of the crisis, the impact and the contagious effects
were underestimated. It has been noticed that the structures of economic and financial
governing that existed before the beginning of the international crisis did not have the
coherence and the necessary authority for separating the prudential micro from the macro
supervision, as they relied excessively on the micro-prudential supervision from the basis to
the top of the financial institutions and on the monitoring at the country level of the macro-
economic indices, neglecting thus this aspect at the system level concerning the financial and
and macro-economic evolutions which might ask for the monitoring of the interactions
between the financial institutions and between countries.
Similarly, by the EU Treaties in the 90s referring to the free circulations of the money,
there has been an economic increase, but this free circulation of the money has not been
doubled by a harmonization of the economies tax systems, by the settlement and an across-
boundaries European supervision at an adequate level.
The recent summit from Bruxelles (March 24
th
2011), has brought together political
leaders from the whole world, having as topics both the financial crisis from the Euro area
and Portugals difficult financial situation, after the resignation of the Portuguese Prime-
Minister, as a consequence of the rejection by the Parliament of a new austerity plan. An
important point on the agenda of the summit is the so-called pact for the euro, the proposals
included in the pact which will be implemented by the member states refer to salary cuts for
the increase of productivity, the decrease of the work taxes, the adjusting of pensioning age to
life expectation, the establishment by legislation of a maximal level for public obligations as
well as a better coordination of the tax policy in the EU.
The monetary policies of the European Union are established by the Central European
Bank, and the Banks of the member countries form SBCE (The Central System of the
European Banks), which establish all by themselves the monetary policies, but according to
the Central European Bank regulations. Similarly, each member state has its own system of
tax policies.
The global disequilibrium, the settlement framework (settlement and supervision) and
the monetary policy as well as the complexity and opacity of the financiar products,
unsuccessful business models, are the main factors that contributed to the current financial
crisis, and the interests conflicts from the financial sector contributed, in some cases, to the
worsening of the crisis. Equally, the financial markets were characterized by a speculative
behaviour, some investors taking on extremely high risks, a phenomenon which gets ever
7
more serious by the oligopoly of the rating agencies (every market economy functions at its
best if it is accompanied by a democratic, transparent and multi-layered settlement correlated
with a healthy ethic and moral which encourage the financial and economic solid systems and
which does not affect the real economy).
It is likely that the monetary authorities to be responsive for this financial crisis; they
caused it by injecting cash and getting the credit cheap in order to cover prior crises, which
stimulated wild crediting till 2007. This behaviour reflected both the pressure that the crises
put on the central banks by the increase of incertitude, as well as the limits of the monetary
policy. Equally, a more important role of the money would allow to strongly emphasize the
importance of an institutional framework by a clear objective, with a high degree of
operational importance and an adequate degree of responsibility. Similarly, a new light would
be shed on the necessity of ensuring the stability of prices for average time periods. That
would reduce the tendencies for too ambitious adjustments and would diminish the reflection
of the market caprices in the decisions concerning the monetary policies.
These, and others, had as consequences the fact that the public deficit increased from
2,3% of the din BIP in 2008 to 7,5% in 2010, in the European Union and from 2% to 6,3% in
the Euro area (according to Eurostat), the rate of the public debt increasing from 61,6% of the
BIP in 2008 to 79,6% in 2010 in the European Union and from 69,4% to 84,7% in the Euro
area, baffling in a period of two years the budgetary strengthening efforts made by some
member states. Simultaneously, the crisis bore consequences on the workforce within the
Union, the rate of the unemployment in the EU, at the end of 2010, being of 11%.
In 1989, Cristina D. Romer and David H. Romer, published Does Monetary Policy
Matter? A New Test in the Spirit of Friedman and Schwartz; Robert J. Shiller: The
Subprime Solution How Todays Global Financial Crisis Happened, and What to do about
It?; Ben Bernanke and Mark Gertler (1995): Inside the Black Box: The Credit Channel of
Monetary Policy Transmission; Carmen M. Reinhart, Kenneth S. Rogoff (2009): The
Aftermath of Financial Crises.

2. The analysis of the economic situation
In 2008, the increase of the BIP in the EU was already very low (0,8%), and in 2009
there was an average decrease of more than 4%. The recession was especially powerful in the
Baltic States, with negative rates between 14% and 18%. It was only Poland that enjoyed
economic growth in 2009 (1,2%). Yet, the forecasts indicate the first signs of economic come
back.

Table no.1 The evolution of the economic increase (BIP%) between 2000-2009, in the EU, the USA,
Japan and Romania.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
EU 3,87 1,88 0,93 0,79 2,15 1,67 3,03 2,82 0,49 -4,10
Romania 2,1 5,70 5,1 5,19 8,39 4,17 7,9 6 9,42 -8,5
USA 4,17 1,09 1,82 2,50 3,58 3,05 2,67 1,94 -0,00076 -2,63
Japan 2,86 0,18 0,26 1,41 2,74 1,93 2,03 2,36 -1,20 -5,22
Source: Site of the World Bank
8
The evolution of the BIP between 2000/2009
-10
-5
0
5
10
15
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
years
B
I
P
%
EU Romania USA Japan

Fig. no.1 The evolution of the BIP between 2000-2009, in the EU, the USA, Japan and Romania (percent
change compared to the previous year)

Compared to the other states, Romanias BIP had in 2009 a dramatic fall, from 9,42%,
to -8,5%, whereas the European Union had a drop of only 4%.

3. Macro-economic forecasts
Forecasts of the economic increase for the next period were made by some institutions
(IMF, World Bank, National Forecast Committee, CEB), the results of the studies are
presented in the tables below:
Table no.2 Forecasts of the economic increase (BIP%) between 2001-2016, worldwide, for the EU and
Romania.
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
EU 2,1 0,8 2,2 1,7 3,1 2,9 0,4 -4,1 1,7 1,6 1,8 1,7
Worldwide 4,8 2,9 3,6 4,9 4,6 5,2 5,4 2,9 -0,5 5 4,4 4,5 4,5 4,6 4,7 4,7
Romania 2,9 5,7 5,2 8,5 4,2 7,9 6,3 7,3 -7,1 -1,3 1,5 4,4 4,3 4,2 4,1 4
Source: the site of the IMF

Forecasts of BIP increase %
-8
-6
-4
-2
0
2
4
6
8
10
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
EU Worldwide Romania

Fig.no. 2 Forecasts of the BIP increase until 2016

Table no 3 The evolution of the BIP in Romania, between 2007-2014 (Forecast- Percent changes
compared to the previous year)
Year
2007 2008 2009 2010 2011 2012 2013 2014
BIP% 6 9,3 -8,5 -1,9 1,5 3,9 4,5 4,7
Source: Forecast National Committee

9
The evolution of the BIP between
2007/2014(forecast)
6
9.3
-8.5
-1.9
1.5
3.9
4.5 4.7
-10
-5
0
5
10
15
2007 2008 2009 2010 2011 2012 2013 2014
Years
B
I
P
%

Fig. no. 3 The evolution of the BIP in Romania, between 2007-2014 (Forecast- Percent changes
compared to the previous year)
Source: Forecast National Committee (November 5th 2010)
In the graphs presented above, the forecasts made by the Forecast National Committee
and by the IMF are favorable, for both Romania and the EU, and from this we can draw the
conclusion that there will be an economic increase for all states, although not significant, the
measures taken by the member states having positive effects.
As far as the economic increase is concerned, in Romania, it is possible that salary cuts
and VAT increase to have contributed to the fall of the demand under expectation, at the level
of households. In the first quarter of 2010, the private consumption decreased in comparison
to the second quarter of the previous year by 0,9%, and an increase of the tax on the salary
will reduce it even more dramatically. Similarly, the external demand for Romanian products
might decrease if the European economy slows down growth. Thus, the Romanian economy
might suffer. A steeper decrease of the economy would be reflected in the decrease of
budgetary income under the programmed level. The VAT income which is influenced by the
fluctuation of the production, increased slightly (due to the change of the VAT, a good
acceptance of payers and fairly high imports in May and June); yet, a slow in the economic
increase in Europe can trigger a decline of imports.
Based on the information available by the 18
th
of February, 2011, CEB experts
elaborated forecasts concerning the macro-economic evolutions from the Euro area. As far as
the real BIP is concerned, they have forecast a yearly increase average rhythm between 1,3%
and 2,1% in 2011 and between 0,8% and 2,8% in 2012. It is believed that the rate of the
inflation will situate between 2% and 2,6% in 2011 and between 1% and 2,4% in 2012.
The real BIP in the Euro area increased by 0,3% in the fourth quarter of 2010, a level
equal to the one from the previous quarter. In perspective, it is estimated that the process of
economic recovery will continue, the internal demand becoming gradually the main trigger of
the economic growth by exceeding exports. This re-balancing of the economic activity
reflects the effects of the measures of the monetary policy form the previous period, as well as
the significant efforts made for the rebalancing of the efficient functioning of the financial
system. Despite this, it is estimated that the necessity for the re-sizing of balances in different
activity sectors, as well as the fiscal adjustment efforts with a view to re-establishing trust in
the sustainability of the public finance, included as hypothesis in forecasts, will affect the
perspectives referring to the economic growth in the Euro area. In yearly terms, judging by
the growth rhythm of 1,7% in 2010, the real BIP is forecast to grow by values between 1,3%
and 2,1% in 2011 and between 0,8% and 2,8% in 2012. Keeping in mind the forecasts
concerning the yearly growth rhythm which will be significantly lower compared to the
10
period previous to the crisis, it is anticipated that the BIP deviation will be reduced during the
forecast period.
Comparison to the forecasts of other institutions
Both the international organizations and the institutions from the private sector published a
series of forecasts for the Euro area. Yet, they are not strictly comparable to one another or
with the macro-economic forecasts made by the CEB experts because they were done in
different moments. Moreover, different methods are used (partly, unspecified) for obtaining
the hypotheses concerning the fiscal, financial and external variables, but also for the price of
the raw oil and of other raw materials. Eventually, there are differences between the adjusting
methods for the number of the working days from one forecast to the other.
According to the forecasts currently made available by other organizations and
institutions, the growth rhythm of the real BIP in the Euro area will be situated between 1,5%
and 1,7% in 2011 and between 1,7% and 2% in 2012, levels similar to the variation intervals
foreseen in the forecasts of the CEB experts. As far as the inflation is concerned, the available
forecasts anticipate that the yearly average rate of the inflation IAPC will situate between
1,3% and 2,2% in 2011. The majority of these forecasts are inferior to the interval presented
in the forecasts of the CEB experts, because it is possible that they had not taken into
consideration the recent increases of the prices of raw materials. The forecast referring to the
IAPC inflation for 2012 indicates inflation rates between 1,2% and 1,8%, falling into the
interval projected by the CEB experts.

Table no. 6 Comparison of forecasts referring to the growth of the real BIP and the IAPC inflation in the
Euro area.
(average yearly percent variations)
Date of publishing BIP Growth IAPC Inflation
2011 2012 2011 2012
OCDE November 2010 1,7 2 1,3 1,2
European Committee February 2011 1,6 1,8 2,2 1,7
IMF January 2011 1,5 1,7 1,9 1,8
Survey of Professional Forecasters February 2011 1,6 1,7 1,9 1,8
Consensus Economics Forecasts February 2011 1,6 1,7 2 1,8
CEB experts forecasts March 2011 1,3-2,1 0,8-2,8 2-2,6 1-2,4
Source: The partial forecast of the European Committee, February 2011, for the data from 2011 and the forecast of the European
Committee from the fall of 2010, for the data for 2012; IMF Word Economic Outlook, October 2010, for inflation and World Economic
Outlook Update, January 2011, for BIP increase; OCDE Economic Outlook, November 2010; the Consensus Economics forecasts and the
CEB poll applied to forecast specialists (ECBs Survey of Professional Forecasts).
Note: both the macro-economic forecasts of the CEB experts and the OCDE forecasts present yearly growth rhythms adjusted by the
number of working days, whereas the European Committee and the IMF present growth yearly dynamics unadjusted by the number of
working days per year. The other forecasts do not specify if the data is adjusted or not by the number of working days.


4. Harmonized indices of consumption prices (HICP)
In a market economy, the prices of goods and services can change at any time. Some
prices go up, others go down. Inflation is when there a generalized growth of the prices of
goods and services, and not only of some specific items. When calculating the average growth
of prices, a greater weight is allowed to more expensive products (such as electricity), than to
cheaper products (sugar, post stamps). The weight of the groups of products is established
depending on their importance in the average budgets of the populations households. For an
indices to maintain its relevance, these weights are updated periodically (they are calculated
on the basis of the results of some polls when the members of households are asked to put
down their expenses). The weights represent national averages, which reflect the spending of
all consumer types (rich, poor, old).
To continue with, we have proposed to analyze the HICP for the Euro area, the recorded
data being presented in the next graph; similarly, we present the weight of the main groups of
products in HICP.
11

Fig.no.4 Weight of the main groups of products in the Harmonized Indices of the Consumption Prices
(HICP): The data refers to the HICP for the Euro area
The weight of the main groups of products in HICP
Household product
7,1
Health
4,2
Transport
15,1
Communications
3,2
Free time and culture
9,7
Education
1
Hotels and restaurants
9,4
Various
8,5
Houses
15,6
Clothing
6,8
Alchoholic drinks and
tabacco
3,7
Food and nonalchoholic
drinks
15,6


Table no.7 The evolution of the HIPC in the EU member states from outside the Euro area and from the Euro
area
(yearly percent variations) 2010 2010 2010 2010
2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4
Bulgaria 7,4 7,6 12 2,5 3 1,9 2,9 3,3 4
Czech Republic 2,1 3 6,3 0,6 1,2 0,4 0,9 1,6 2
Denmark 1,9 1,7 3,6 1,1 2,2 1,9 2 2,3 2,5
Estonia 4,4 6,7 10,6 0,2 2,7 0 2,9 3,1 5
Latvia 6,6 10,1 15,3 3,3 -1,2 -3,9 -2,3 -0,3 1,7
Lithuania 3,8 5,8 11,1 4,2 1,2 -0,4 0,5 1,8 2,9
Hungary 4 7,9 6 4 4,7 5,8 5,2 3,6 4,3
Poland 1,3 2,6 4,2 4 2,7 3,4 2,5 2,1 2,7
Romania 6,6 4,9 7,9 5,6 6,1 4,6 4,3 7,5 7,8
Sweden 1,5 1,7 3,3 1,9 1,9 2,7 1,8 1,3 1,8
The United
Kingdom 2,3 2,3 3,6 2,2 3,3 3,3 3,4 3,1 3,4
Euro area 2,2 2,1 3,3 0,3 1,6 1,1 1,5 1,7 2
Source: Eurostat
The evolution of the HICP in the EU member
states from outside the Euro area and from the
Euro area
-4
-2
0
2
4
6
8
10
12
14
16
18
2006 2007 2008 2009 2010
Years
%
Bulgaria
Republica
Ceha
Danemarca
Estonia
Letonia
Lituania
Ungaria
Polonia
Suedia
Regatul
Unit
Zona euro
Romania

Fig. no. 5 HIPC evolution in the EU member states from outside the Euro area and from the Euro area
between 2006-2010

12
By analyzing the data from the above table and graph, we can notice in 2008 a peak of
the inflation rate in all the countries in the analysis, Latvia having the highest value, 15,3%,
and the lowest value of 3,3% inside the Euro area and Sweden. It is to be noticed that in 2010,
the HICP in Latvia is estimated at -1,2%, (stagflation, which means a stagnation of the
economy, of the inflation and of prices), the highest value being in Romania of 6,1%.

5. The analysis of the unemployment level and of the inflation

In December 2009, the unemployment in the EU was 8,9% in comparison to 7%, in
December 2008. Some countries were especially affected by the crisis. The rate of the
unemployment roughly doubled in 2009, in Ireland and Spain and tripled in the Baltic States.
Latvia (22,8%) and Spain (18,8%) had the highest rates by the end of 2009.
Table no.4 Evolution of the unemployment rate between 2002-2009 (Percent change in comparison to the
previous year):
2002 2003 2004 2005 2006 2007 2008 2009
EU 8,9 9 9,1 8,9 8,2 7,1 7 8,9
USA 5,8 6 5,5 5,1 4,6 4,6 5,8 9,3
Japan 5,4 5,3 4,7 4,4 4,1 3,9 4 5,1
Romania 8,6 7 8,1 7,2 7,3 6,4 5,8 6,9


0
2
4
6
8
10
Unemployment
rate %
2002 2003 2004 2005 2006 2007 2008 2009
Years
Evolution of the unemployment rate between
2002-2009
UE SUA Japonia Romania

Fig no.4 Evolution of the unemployment rate between 2002-2009, in the UE, the USA, Japan and
Romania (percent change compared to the previous year)

In the next part of the paper we have analyzed the evolution of the rate of inflation
compared to the evolution of the unemployment rate in Romania between 2002-2009, the data
being presented in the next table:


Table no .5 Evolution of the unemployment rate and of the inflation between 2002-2009, in Romania
(percent change compared to the previous year)

2002 2003 2004 2005 2006 2007 2008 2009
Inflation rate 22,5

15,3

11,9

9,1

6,6

4,9

7,9

5,6

Unemployment
rate
8,6

7

8,1

7,2

7,3

6,4

5,8

6,9


13
Evolution of the unemployment rate and the
inflation between 2002/2009 in Romania
0
5
10
15
20
25
2002 2003 2004 2005 2006 2007 2008 2009
Years
%
Inflation Unemployment rate

Fig no.5 Evolution of the unemployment rate and of the inflation between 2002-2009, in Romania
(percent change compared to the previous year)

On analyzing the data in the above table, we notice that in the analyzed period, the rate
of the inflation had a descending trend, from the value 22,5% in 2002, to the value 4,9% in
2007, while the rate of the unemployment is rather stable throughout the entire period
between 6 and 8%.

6. Strategies of monetary policy for bottoming down the inflation
The fundamental objective of the monetary policy in all the states member of the EU
from outside the Euro area is prices stability. The strategies of monetary policy are yet
different from one country to another:
Table no. 6 Official monetary policy strategies of the EU member states from outside the Euro area

Monetary policy
strategy
Currency

Characterisitcs

Bulgaria

Currency exchange
objective
Bulgarian leva

Currency exchange objective: monetary council with a
parity of 1,95583 BGL/EUR.
Czech
Republic



Inflation target




Czech Koruna




Inflation target: 3%, with a variation interval of 1
percent points by the end of 2009; afterwards 2%, with
a variation interval of 1 percent points. Controlled
fluctuation of the exchange rate.

Denmark


Currency exchange
objective
Danish Krone


It participates in MCS II within a fluctuation range of
2,25% around a central parity of 7,46038 DKK/EUR.

Estonia






Currency exchange
objective
Estonian Kroon





It participated in MCS II within a fluctuation range of
15% around a central parity of 15,6466 EEK/EUR, by
maintaining the monetary council in a one-sided
decision. On January 1
st
2011, Estonia has adopted
Euro, replacing the Estonian Kroon with a fix and
irrevocable exchange rate of 15,6466 EEK/EUR.

Latvia



Currency exchange
objective
Latvian lats



It participates in MCS II with a fluctuation range of
15% around a central parity of 0,702804 LVL/EUR.
Latvia maintains a fluctuation range of 1% by an one-
sided decision.
Lithuania



Currency exchange
objective
Lithuanian litas



It participates in MCS II with a fluctuation range of
15% around a central parity of 3,45280 LTL/EUR.
Lithuania maintains the monetary council by an one-
sided decision.
Hungary Inflation target Hungarian forint Inflation target: 3% for an average period beginning
14
with 2007. Free fluctuation of the exchange rate.
Poland


Inflation target


Polish zloty


Inflation target: 2,5% 1 percent points (IPC yearly
variation). Free fluctuation of the exchange rate.

Romania







Inflation target







Romanian leu







Inflation target: 3,5%, within a variation interval of 1
percent points for the end of 2010, 3,0%, with a
variation interval of 1 percent points for the end of
2011, and the end of 2012 respectively, and 2,5%, with
an interval of variation of 1 percent points for the end
of 2013. Controlled fluctuation of the exchange rate.

Sweden

Inflation target
Swedish krona
Inflation target: 2% IPC variation. Free fluctuation of
the exchange rate.
The United
Kingdom





Inflation target





Pound





Inflation rate: 2%, measured by IPC yearly variation. In
case of a variation greater than 1 percent point, it is
expected that the Governor of the Bank of England
address an open letter on behalf of CPM to the Ministry
of Finance. Free fluctuation of the exchange rate.

Source: SEBC. Note: In case of the United Kingdom, IPC is similar to
IAPC.

The Central Banks of Hungary and Romania maintained the highest rate of the monetary
interest in 2010 (5,75%, respectively 6,25%, at the end of the year) which reflects higher
levels of the inflation and of the risk bonuses in comparison to other member states of the EU
from outside the Euro area. In case of Romania, the high level of the monetary policy
interests rate reflected at the same time the objective of the Central Bank for counteracting
the risk of the effects generated by the shocks on the part of the offer: the increase of VAT in
July and the going up of the prices of food and energy.

7. Conclusions
The answers to the financial global turbulences in Europe are not similar in all countries.
The causes can vary and there are different national context as a consequence, there cannot
be a unique reform. Yet, as an answer to the global financial turbulences and of the direct
consequences on the European banks, the public European authorities made plans for
supporting the financial system, by either supporting or saving the banks.
The monetary policy in Romania proved at times inefficient as a consequence of the
weak reactions of the economy to the adopted measures, due to the absence of the support of
the other components of the stabilization policy. Even if the monetary policies were oriented
towards the support of the internal and external stability of the national currency, the results
proved more often than not destabilizing, by inducing important pressures on the prices in
economy. The inflation seems to be the main cause of unbalances, the disturbing factor of the
economy, in its fight for macro-stabilization. The adoption of the monetary anchor seems to
have been the only viable solution foe ensuring macro-economic stability. The existence of a
low level of inflation leads, in the long run, to economic growth, even if, for a short period,
the first cost of this situation is represented by the existence of a high level of unemployment.
Recommendations about the measures and initiatives that should be taken with
reference to the financial, economic and social crisis:
- an equilibrium should be found between the need of taking measures which should
help to the preservation of financial stability and the need to preserve the capacity of the
banks of offering credits to the economy; it is important that the bank system should be able
to fulfill its tasks in both crisis and normal times;
15
- the banks need to detail in their clearing system in case of a crisis;
- CEB has a strong role in the European Committee for Systemic risks, by bringing an
important contribution to the financial stability in the EU;
- the introduction of new standards for statistic data referring to the financial sector, by
consolidating the capacities of the European Committee for risk monitoring and supervision;
- the encouragement of the financial innovation on condition that it leads to the
development of some transparent instruments which allow the financing of technological
innovation of a useful sort, of long-term investments, of pension funds, of employment;
- for the revitalization and for relieving the crediting process to judicial and physical
persons, it is essential to find some long-term solutions for solving the difficulties related to
the enormous value of the public debt, which presses on both households and factories;
- an increased transparency in the relations between the member states and in their
relationships with the main financial institutions.
In conclusion, for putting an end to the crisis, long term solutions are necessary, but
they should be immediately applicable and with immediate effects, having as objective the
stabilization of the financial system and the stimulation of the economic growth and of the
employment. We consider that economic reestablishment will be difficult for some member
states, especially for those that received communitarian assistance on payment sheets, and
which do not have currently real opportunities for creating plans of national reestablishment,
with elements which allow the stimulation of the growth and of the employment, because
these states do not do anything besides cutting down on the public spending, tax growing and
cutting down on the brute public debt.


References

1. Bernanke, Ben & Gertler, Mark: Inside the Black Box: The Credit Channel of
Monetary Policy Transmission, 1995, New Zork University;
2. Reinhart, Carmen M. & Rogoff, Kenneth S.: The Aftermath of Financial Crises,
2009.
3. Romer, Cristina S. & Romer, David H.: Does Monetary Policy Matter? A New Test
in the Spirit of Friedman and Schwartz, 1989;
4. Shiller, Robert G: The Subprime Solution How Todays Global Financial Crises
Happened, and What to do about It;
***Annual Report of the Euro Area - 2009; The European Committee
***Economic Crises in Europe: Causes, Consequences and Responses; 2009, The
European Committee
***European Economic Statistics edition 2010; Eurostat (statistical books)
***Global Financial Stability Report April 2011; IMF
***General report on the activity of the European Union 2010; The European
Committee
***Global Economic Prospects; 2010 The International Bank for Reconstruction and
Development / The World Bank
***Forecast of main macro-economic indices for 2010 2014 (Fall forecast- 5
November 2010) National Forecast Committee
***The Cohesion policy: strategic report for 2010 about applying the programs between
2007-2013;2010, The European Committee
***Convergence Report May 2010; CEB
***Taxation Trends in the European Union- Data for the EU Member States, Iceland
and Norway; edition 2010; The European Committee, Eurostat
16
***World Economic Outlook- April 2011; IMF
- http://www.ecb.int/stats/html/index.en.html
- http://www.mfinante.ro
- http://www.intrastat.ro
- http://www.stiucum.com/finante/sisteme-fiscale/344/sistemul-fiscal-al-Frantei
- http://www.bundesbank.de/index.en.php&ei
- http://www.ec.europa.eu
- http://www.insse.ro
- http://www.worldbank.com
- http://www.imf.org.com
- http://eurostat.eu







































17
MULTIPLE REGRESSION MODEL FOR GDP OF THE LARGEST EUROPEAN
SOFTWARE PRODUCER (GERMANY) IN THE 2000 2009 PERIOD AND
PREDICTIONS FOR 2010 2012 PERIOD

Drd. Boitor Axenia Bianca
Scientific coordonater : teacher Brtucu Gabriel
University Transilvania of Braov

Abstract: The German economy - the fifth largest economy in the world in PPP terms
and Europe's largest - is a leading exporter of machinery, vehicles, chemicals, and
household equipment and benefits from a highly skilled labor force. As Europe's
largest economy and second most populous nation (after Russia), Germany is a key
member of the continent's economic, political, and defense organizations. The service
sector contributes approximately 71% of the total GDP, industry 28%, and
agriculture 0.9%. The average national unemployment rate in 2010 was about 7.5%.
1


Keywords: GDP, multiple regression, prevision, software.

1. INTRODUCTION

This paper has as designation the achievement of a multiple regression model wich
will explain the evolution of the Gross Domestic Product of Germany in the 2009 2012
period with an accuracy near to 90% - 100%. Germany is the european contry that has given
to the world more the 40% of the european software produsers. The production of software
influences the GDP and the competitivness of the country. With the help the te multiple
regression model, the paper aims to explain and predict the evolution of the Gross Domestic
Product of Germany.

2. THE METHOD OF THE REGRESSION

The method of the regression analyses the existent relations between the explained
variable and the explanatory variables, based on the observed data for these variables. It can
be determined which of the factors have a significant influence and, knowing the influence of
the factorial variables over the variation of the analyzed phenomenon, previsions of the
variation of the y variable can be made according to the existent values of the x variables.
2

So, the multiple regression was realized with the help of the Microsoft Excel program
and it includes the influence of the following macroeconomic indicators: labour productivity,
exports and the occupied population of Germany recorded in the analysed period.

3. ANALYZING THE GERMANYS GDP

For the analyse of Germanys GDP with the help of the multiple regression model, the
following indicatiors were taken in to account: labour productivity, exports and the occupied
population. The next table presents de values of the used indicators for the multiple
regression:


1
https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html
2
Dugulean l., Course of Statistics in business, University Transilvania from Braov, 2008
18
Table 1. Values of the indicators in the 2000 2009 period
Year
Real GDP
( mil. of euros)
Labour productivity
(euros./pers.)
Exports
( mil. of euros)
Occupied population
(mil. of pers.)
2000 2062,500 67,87 545,249 39,047
2001 2113,160 67,44 638,269 39,208
2002 2143,180 68,56 651,322 38,991
2003 2163,800 70,22 664,180 38,636
2004 2210,900 71,66 731,544 38,796
2005 2242,200 72,32 786,265 38,757
2006 2326,500 72,56 893,041 39,021
2007 2432,400 74,20 962,326 39,693
Sourse: www.imf.org

After the correlation coefficients between the real GDP and the 3 variables (labour
productivity, exports and occupied population) were calculated, it was observed that between
the real GDP and the labour productivity exists a very strong connection determinated by a
value of the correlation coefficient of 0,954243851. Also, the connection between the real
GDP and the countrys occupied population is strong (the value of the correlation coefficient
is 0.7658), and the strong connection between the real GDP and the exports is determined by
the value of the correlation coefficient between them of 0.9563.
Next are presented the following charts to establish also the direction of the
connection between the 4 economic indicators.



Following the structure of the cloud of point in the first chart, it can be seen that the
connection between the real GDP and the labour productivity has a strong and positive
intensity.

19


Following the structure of the cloud of point in the second chart, it can be seen that the
connection between the real GDP and the occupied population has a strong and positive
intensity.




Following the structure of the cloud of point in the above chart, it can be seen that the
connection between the real GDP and the countrys exports has a strong and positive
intensity.
Next, it will be determined the theoretical values of the Germanys real GDP in the
2000 2009 period. The values will indicate the influence of the 3 economic indicators over
the evolution of the real GDP. Also, with the help of the multiple regression, it can be
determinate the model which will explain best the influence of the variables over the analyzed
factor.




20
Table 2. Calculation of the multiple regression
Regression Statistics
Multiple R 0,997741599
R Square 0,995488299
Adjusted R Square 0,993232449
Standard Error 11,88957587
Observations 10
ANOVA
df SS MS F
Significance
F
Regression 3 187145,7016 62381,90052 441,2918195 2,005
Residual 6 848,172086 141,3620143
Total 9 187993,8736
Coefficients
Standard
Error t Stat P-value Lower 95%
Upper
95%
Lower
95,0%
Upper
95,0%
Intercept
-
1912,992536 390,1844715
-
4,902790028 0,002703269
-
2867,739544
-
958,24553 -2867,7395
-
958,24553
X Variable 1 21,00500835 2,88743741 7,274619454 0,00034343 13,93970354 28,070313 13,939704 28,070313
X Variable 2 0,43798303 0,058243267 7,519891186 0,000286368 0,29546689 0,5804992 0,2954669 0,5804992
X Variable 3 59,46709528 10,33856251 5,751969405 0,00120229 34,16954414 84,764646 34,169544 84,764646

After the calculation of the multiple regression model with the help of the Microsoft
Excel program, it came up the next function model for the calculation of the theoretical real
GDP. Because all of the coefficients of the 3 variables and of the constant are not significant
different from 0, all the constants and the variables included in the model will be taken in to
account at the calculation of the theoretical values. For Multiple R we have a value of 0.997
which represents a strong correlation between the dependent variables and the independent
variable. R square is equal with 0.995 meaning that the linear model is valid, and the
independent variables explain in a proportion of 99.5% the variation of Y. The values of P are
very good for all the three variables, being smaller that 5% and the intervals of confidence
dont include the value 0, meaning that they do not change their signs from - to +. The t-
Student test indicates that all the estimators are significantly different from 0. The theoretical
value for the Student test is 2.52, which is smaller than the computed values in absolute
values.

We have the folowing function:

Y = 1912,992536+21,00500835*X
1
+0,43798303*X
2
+59,46709528*X
3
,

Where:
Y = theoretical real GDP (2006 mil. of euros);
X
1
= Labour productivity ( euros/employee);
X
2
= Occupied population ( mil. of pers. );
X
3
= Exports ( mil. of euros);

Folowing the calculation with the help of the function, we have the next values of the
theoretical real GDP:

Table 3. Values of the theoretical real GDP:
Year Theoretical real GDP ( mil. of euros)
2000 2073,439
2001 2114,722
2002 2131,060
21
2003 2150,449
2004 2219,716
2005 2255,227
2006 2322,733
2007 2427,489
2008 2488,692
2009 2389,413

Next it will be presented the prevision for the next three years of the variables from
the chosen model and the values of the theoretical real GDP calculated with the help of the
model for the years 2010, 2011 and 2012.

Tabel 4. Previsions of the variables from the model

Year Labour productivity
(euros/employee.)
Exports
( mil. of euros)
Occupied population
(mil. of pers.)
Theoretical real GDP
(mil. of euros)
2010 73,62 1000,631 39,817 2439,454
2011 73,99 1043,297 39,928 2472,574
2012 74,37 1085,964 40,038 2505,693


After knowing the previsons of the variables, we calculated the lower and the upper
limits adequated to the previsons of the theoretical real GDP for the 2010 2012 period.
Between this values the real GDP of Germany will be found in 2010, 2011 and 2012.

The formula for the interval of confidence is:

] 1 ) ( [
1 2 2 /
1
+ ' ' =
+

+ + + h t h t k n h t h t
X X X X t y ICy
c
o
o

After following all the steps for the forcast, we came up whith the next intervals and
values:

Table 5. The lower and the upper limits of the future values of the real GDP

Year Theoretical
real GDP
Variance of the residual
error
Lower limit Upper limit
2010 2439,454 15,33996
2401,918 2476,989
2011 2472,574 16,33955
2432,592 2512,555
2012 2505,693 17,43345
2463,035 2548,352


22
2000,000
2100,000
2200,000
2300,000
2400,000
2500,000
2600,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
M
i
l
.

o
f

e
u
r
o
s
Year
Fig. 4 The evolution of the real GDP, the adjustment of the
indicator in the 2000 - 2009 period and the previsons for 2010 -
2012 period
Real GDP Theoretical GDP


Because the R square value is 0.9955, the chosen model explains the evolution of the
real GDP very good, in a proportion of 99.5%.

4. CONCLUSIONS

As you can see from the charts, the previsions for the real GDP in Germany for the
period 2010 2012 represent a growth that will be found between the two limits of 2401,918
mil. euro and 2476,989 mil. euro for the year 2010, between the two limits of 2432,592 mil.
euro and 2512,555 mil. euro for 2011 and between 2463,035 mil. of euros and 2548,352 mil.
euro for 2012.
Even the previsions calculated with the help of the multiple regression indicates an
economic growth for Germany in the next 3 years, this fact is not certain because of the global
events that will affect Germanys economy in the next years to come as it did so far.


Literature:

1. Duguleana L., Curs statistic n afaceri , Universitatea Transilvania, Braov, 2008
2. Internationl Monetary Fund, World Economic Outlook (October 2010)
3. https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html












23

EXPERIMENTAL LEARNING
CASE STUDY GLOBAL MANAGEMENT CHALLENGE



Evelina GRADINARU, student at Masters of Marketing Policies and Strategies
Transilvania University from Brasov, Faculty of Economic Sciences
Coord. Lect. Dr. Cristinel CONSTANTIN


Abstract: The present paper contains an analysis of marketing mix elements in
management consulting services, focusing on a case study of the largest competition
in the world of strategy and management, Global Management Challenge. It also
provides information on how this business simulator works and the advantages of
using such a method of experimental learning.

Key words: development, management consulting, business simulator.



1. INTRODUCTION

The theme of the present paper is called "experimental learning". The concept of
experimental learning is based on the idea that the best way of learning is by practice and that
you cannot just absorb the knowledge of others, it is also necessary to create your own, as a
result of the experience gained over time.
The case study was conducted on the business simulator Global Management
Challenge.
This product, distributed in Romania by Dima Consulting Group and Profiles
International, was of great interest to me as it is the largest strategic management competition
in the world that addresses both staff and students. The contest, which was attended by over
400,000 people currently relies on an interactive business simulator designed to enable direct
experimental learning of strategic management mechanisms of a business in a competitive
environment.
In this paper I will present some aspects regarding the market of management
consulting services, followed by theoretical concepts found in the dedicated literature. The
main objective is to analyze the marketing mix strategies used by the Global Management
Challenge simulator, which allowed it to achieve first place in management competitions.



2. THE MANAGEMENT CONSULTING SERVICES MARKET

Management consultancy services are inextricably linked to the business services
market in Romania. In statistical terms, the market for business services is a part of marketing
services, representing those services that are subject to sale and purchase on the market,
regardless of the moment of payment, price and type of collection methods.
3


3
National Institute of Statistics - Romanian Statistical Yearbook 2009
24
Management consulting has its origins in the United States, from over 100 years ago.
Nowadays, it is present in almost all areas of business. However, the most important areas of
interest in consulting underwent radical changes, especially over the last decades. Interest in
management consultancy has grown considerably in recent decades, given the increasing
volume of trade between business partners in this market, and the impressive size of some of
the actors involved. Literature addressing this area has focused on its evolution, namely the
explosive development in the last decades of the 20th century, but also on the factors
influencing this trend.
The state of knowledge regarding the issue of management consulting services was
synthetically approached by M. Kipping who identified three levels of analysis in the field of
management consultancy services (Table 1).
For each of these three levels, the analysis is focused on the following basic elements:
the system, the basic units in the system, the system structure, interactions between basic units
and the role of knowledge.

Table 1. The three levels of analysis in management consultancy

Elements I level II Level III Level
The system Industry Firm Project
Basic units Firms Employees Project relations
The structure Concentration Organisation Networks
Interactions Competition Collaboration/Competition Trust
The role of
knowledge
Product Processing Transfer/Transformation
Source: Adapted from McKenna, C.D. The Worlds Newest Profession: Management
Consulting in the Twentieth Century. Cambridge University Press, 2006, pg. 3

At the first level of analysis proposed by McKenna, the basic units of the system,
represented by management consulting, are the consulting firms. Inputs and outputs of these
organizations are vital to the structure of the industry and can be described by different
degrees of concentration. Interaction is characterized by competition and the role of
knowledge is mainly to provide basic units with a certain 'product' within the industry. In
order to analyze management consulting from this perspective it is necessary to conduct
historical studies in different situations.
On the second level, the system is represented by the firm and the base units are the
employees. Inputs and outputs, represented by the recruitment and resigning processes, play
an important role in the system structures, which is represented by the firm's formal and
informal organization. Employees cooperate in different projects, but at the same time,
compete for a certain status or other rewards within the organization.
4

The third level of analysis aims to analyze the interaction between consultant and
client, namely the ways in which consultants transfer knowledge to beneficiaries.
At this level, the system consists of individual projects and the basic units are made up
of relationships that are created within the process generated by conducting these projects.
In this area we find large companies, SMEs and independent practitioners who provide
a wide range of services such as identification and recruitment of executive staff,
psychometric testing, project management, trial consulting, coaching and training, etc.
Practical experience in terms of management consultants has shown that expertise,
know-how, skills and experience of service providers, and management consultants

4
Sadler, Ph. Management Consultancy. A Handbook for Best Practice. Kogan Page, 2001
25
respectively, make up the physical support that form these services, while the management
consultant can assume the role of knowledge transfer as he has accumulated through study
and practical experience considerable information on how to act and managerial procedures
applicable in different situations.
Business success is achieved when the management is developing a strategy and an
organizational form perfectly adapted to the environment in which the organization operates.
In this context, success is seen in the company's ability to provide customers with better goods
and services than its competitors.
5
This involves the phenomenon of change and competition
always generates new products and technologies that create added value for consumers. That
is why, for most businesses, success is only a passing phenomenon.
The main challenge brought to companies by the XXI century is to identify the
resources needed to achieve a sustainable long-term competitive position and generate value
and profit to all parties directly involved. At the same time, organizations must constantly
adapt to ever higher standards regarding new services, systems of relationships and business
models, many based on Internet technology.

3. THE MARKETING MIX IN THE MANAGEMENT CONSULTING
SERVICES MARKET

The concept of service poses an issue of great interest nowadays, an important role in
this respect being held by a number of concepts such as "new economy" or "service
economy", which underlines the importance of services in the process of economic
development. One of the first authors that dealt with such concepts is Alvin Toffler
6
, with his
paper called "Third Wave".
From Ph. Kotlers point of view a service is represented by any action that a subject
can perform for another, which is essentially intangible and does not result in transferring
ownership of assets. Its production may or may not be related to that of a commodity.
The marketing mix is the set of marketing tools (product, price, placement and
promotion) that are put together by a company to produce the response that it wants from the
targeted market. With services, however, the concept is extended to the 7Ps, adding to the
initial model: personnel, process, evidence (physical evidence).
The product is anything that can be offered to the market in order to capture interest,
to be acquired, used, or consumed and that can satisfy a desire or need. Price is the only
component that produces income. Distribution is the means by which products or services
reach the consumer and promotion is a sum of activities through which the product/service is
known by customers and that persuades them to buy it.
The Product Policy in a service providing organization is represented by all the
actions through which the company sets its objectives, selects its strategies, schedules and
carries out concrete measures. Defining product policy is based on the contents of the product
and results in the formulation of objectives and strategies aimed at the product as a whole
(global) and its structural components (sub-product mix).
The Pricing policy has on the other hand a more complex character determined by the
specific way in which it reflects the supply and demand, product relations, the role of
promotion, the perception by its customers. Price is a flexible element, being able to quickly
modify and the only variable that generates profit within the marketing mix.
The Distribution policy contains all the activities that occur in the space and time that
separates the provider to the consumer. The characteristics of services, especially their

5
Kipping, M. Trapped in Their Wave: The Evolution of Management Consultancies. In T. Clark and Fincham (eds), Critical Consulting.
Oxford, Blackwell, 2002
6
Toffler, A. Third Wave, Politics, Bucharest, 1983
26
inseparability, intangibility and perishability make the distribution structure, objectives and
strategies to differentiate themselves from the situation encountered on a product
market.
Promotion Policy refers to all the actions taken to boost the penetration of services on
both market and consumers, to boost sales.
Staff
In the process of delivering services, the staff is a part of what you buy, the contact
between provider and client is very important in deciding to purchase.
Process
Services are usually offered in the presence of the customer. Therefore, the process of
delivering the product is part of what the customer pays for. Through processing the provider
is seeking to avoid the appearance of waiting threads caused by applicant congestion at the
delivery points of services and targets a rational labor division according to the oscillating
intensity in service demand.
Physical test
Almost all services are materialized in physical elements. A full service hair salon
offers hair care, even an insurance company offers illustrated documentation for the policies
sold.
Given the intensive development of this market, service providing firms are
increasingly forced to improve the productivity of their services. Companies should avoid a
too large increase in productivity, which can be damaging to the quality perceived by the
consumer. Some measures in this regard lead to the standardization of the quality of benefits,
leading to an increased consumer satisfaction, but others cause a deep standardization and
contribute to consumer dissatisfaction. Two essential concepts addressing the quality of the
services provided refer to efficiency and effectiveness. Peter Drucker has pointed out very
well the difference between them: efficiency is doing things right and effectiveness is doing
the right thing.
7



4. EXPERIMENTAL LEARNING - GLOBAL MANAGEMENT
CHALLENGE

Following the above mentioned concepts, the worlds largest strategic management
competition comes to support companies, offering them the opportunity to experience
management decisions in an environment without constraints and without fear of error,
allowing the search for the best solutions, result analysis and the opportunity of immediate
feedback to the companys management decisions.
Global Management Challenge is, for 32 years, the worlds most important strategy
and management competition, addressing both staff and students. The contest, which was
attended by over 400,000 people currently relies on an interactive business simulation
designed to enable direct experimental learning, in a competitive environment, of the strategic
mechanisms of business management.
Global Management Challenge, through the management of a fictitious company, is a
realistic simulation of a business. Based on a simulation model developed and perfected by
the Operational Department of the University of Strathclyde in Scotland, it was improved and
updated constantly, benefiting from the evolution of technology. This simulator is updated
annually, depending on the dynamics of international markets. The computer model simulates
the economic environment, competitive relationships between companies and interactions

7
Peter D., Stern Ph. - Marketing Management and Strategy, Prentice Hall, Fourth Edition, 2006
27
between different departments of the company. Thus, a fictitious market is being generated,
on which a number of companies (equal to the number of teams attending the contest)
compete in a regular business environment to achieve their essential purpose: to obtain the
highest price per share, resulting from the highest profits, thus determining the wining
company in that market and the winning team in the contest.


5. THE MARKETING MIX IN THE GLOBAL BUSINESS MANAGEMENT
CHALLENGE SIMULATOR

As mentioned, the marketing mix comprises the marketing tools (product, price,
placement and promotion) that are used by the company to produce the response it wants
from the targeted market. In the services market, however, the concept is extended to the 7
Ps, adding to the initial model: personality, process, evidence (physical evidence). These
elements will also be presented in the Global Management Challenge business simulator.

Product Policy

This product is offered on the Romanian market by Dima Consulting Group, a human
resources and management consulting firm, and Profiles International, 2011 being the seventh
year when this simulator was distributed in Romania. The complexity of this product resides
in the fact that the competition requires decisions and arrangements on both strategic and
operational level, including all the areas of business management:
analysis of financial conditions - a full financial report, monitoring profitability, debt
control, the level of dividends;
production planning - quantity, range of products, means of production;
marketing - price, promotion and advertising expenses;
research and development - product changes, quality control;
sales geographic areas, distribution channels;
logistics management of supplies, the choice of means of transport;
human resources management - recruitment, dismissals, training, motivation,
remuneration within the limits of a system of wages and commissions;
management of crisis situations.
It can be said that, although present since 2004, this product is still in a growth phase,
a phase in which it generates profit, as sales grow faster than costs, through the growing
number of companies that resort to this form of training. Unlike the previous edition, in which
100 teams have signed up, 2011 brought to the GMC business simulator 300 teams from
romanian companies. This success is due to the fact that the simulator is updated annually,
depending on the dynamics of international markets.

Price Policy

The cost of this product is 300 euro for each team registered by the company.
The first step that needs to be done to participate is to purchase the Global Management
Challenge manual which teaches each client how to take decisions.
On the other hand, another segment of consumers who are heading to the simulator, is
represented by students who have the chance to show, without any cost, their managerial
potential to all of the companies participating in the competition and the public across the
country, through the results being published during the actual contest.
28
Thus, its being accomplished one of the main objectives, to facilitate direct contact
between businesses and students with managerial potential.
In terms of price, it is similar, for example, with the Brightbiz simulator - simulation
of business, finances for non-financiers, made by the company Brightway.

Distribution Policy

Distribution and delivery of consulting services are made directly by specialized
personnel from the company. Thus, a direct distribution strategy was chosen. It is done
exclusively via the Internet. Customers receive the product after the online payment, receiving
a username and a password that gives them access to the page in which they will implement
the decisions. They also receive a manual of the simulator, and for the companies having at
least 10 participating teams, a training held by an employee of the company Dima Consulting
Group, specializing in that direction.

Promotion Policy

Selling the simulator requires intense use of direct marketing, assigned employees
contacting, via Internet and phone, companies all over the country. Another method of
promotion, specific to public relations and with an important role in promoting the GMC, is
represented by the annual conference focusing on human resources organized by Profiles
International, strategically placed before the launching of the Global Management Challenge,
with renowned participants from Romania and abroad.
Advertisements for Global Management Challenge are transmitted through the
following media:
Press - messages were broadcasted in specialized magazines (eg. Saptamana
Financiara, Financiarul)
Radio - broadcasted on national stations (eg. Magic FM)
Outdoor advertising - through promotion folders, flyers, brochures, leaflets and other
publicity materials
In 2011 important investments were made to advertise the simulator. Thus, the Global
Management Challenge was promoted on the Magic FM radio station. The newspapers
"Financiarul" and "Saptamana Financiara" are the main co-organizers, and large companies
such as Mercedes Benz Romania, G4S, the Prut SA, are partners of Dima Consulting Group
and Profiles International in promoting this simulator.
For the same purpose of promotion and information, the simulator has its own website.
The website for the Global Management Challenge is:
http://www.gmcromania.ro/home.html .
Promotion in the academic environment is supported by the partners in this sector: The
National Association of Student Organizations from Romania, the Association of Economics
Students in Romania, Babes Bolyai University Students Organization, Business Club,
Managers in Dialogue Association.
Also, the team GMC Romania organizes a series of events in major universities in the
country designed to attract students targeted by companies registered in the competition.


Staff

The staff is a very important element in the Global Management Challenge simulator.
Business consultants are those who come into direct contact with customers, becoming a part
29
of the purchased product. The success is due mainly to the company staff, which is available
to participants throughout the competition. Before being hired, potential consultants go
through an assessment process.

Process

The simulation takes place online. The team decisions are communicated in a special
form called a Decision Table, compiled by each team registered in the simulator. Each
qualified team will receive an access code to complete the Decision Table. Thanks to the
Internet, effective communication throughout the competition is guaranteed, and the
participants from the same team can meet according to a schedule convenient for them,
without overlapping with daily activities.

Physical test

The actual simulation does not require physical contact between service providers and
beneficiaries. Everything is done online.
Following the decision communicated in this way, the participants are being informed
with the current standings of the teams participating at the simulation and a complete
management report that contains a fictitious company balance sheet, the decisions taken
within the company and the availability and use of resources for the next quarter to be
influenced by future decisions.


CONCLUSIONS AND PROPOSALS

Global Management Challenge responds in some degree to the main challenge that the
twenty-first century brings to companies, to get that long-term competitive position and to
generate profit.
Organizations must constantly adapt to ever higher standards regarding the 7Ps of the
marketing mix on the services market, systems of relationships and business models based
mostly on Internet technology.
In order to maintain the currently growing demand for this product it is important to
constantly improve it, to adapt it to ever changing requirements of the management
consultancy market and to assure that it is one step in front of the problems that a company
might face in the real world. The future cannot be predicted, problems cannot be always
anticipated but preparing for the unknown requires experience in dealing with past problems,
and a simulator like this can bring experience to a company without the cost disadvantages
implied by solving them on the actual market. The knowledge and experience brought by this
product can make the difference between being on the market and being outside the market.


REFERENCES

1. Kipping, M. Trapped in Their Wave: The Evolution of Management Consultancies.
In T. Clark and Fincham (eds), Critical Consulting. Oxford, Blackwell, 2002
2. Kotler Ph. Marketing Management, Teora, Third Edition, Bucharest, 2003
3. Olteanu, V. Marketing services, Ecomar, Bucharest, 2003
4. Peter D., Stern Ph. - Marketing Management and Strategy, Prentice Hall, Fourth
Edition, 2006
30
5. Sadler, Ph. Management Consultancy. A Handbook for Best Practice. Kogan Page,
2001
6. Toffler, A. Third Wave, Politics, Bucharest, 1983
7. National Institute of Statistics - Romanian Statistical Yearbook 2009
8. Romanian Global Management Challenge Guide
9. http://www.gmcromania.ro/competition.html










































31
ANALYSIS OF MARKETING MIX ONLINE RESERVATION
SERVICIES IN TOURISM . CASE STUDY : WWW.BOOKING.COM



Roxana tefania LUPU, student at Masters of Marketing Policies and Strategies
Transilvania University from Brasov, Faculty of Economic Sciences and Business
Administration
Coord. Lect. dr. Cristinel CONSTANTIN




Abstract : This project attempts to provide an overview of trade electronic.
Information Technology has become the future of tourism. Development processes
within ICT and the Internet, in particular, have revolutionized the entire industry of
tourism, creating new business models.

Key words: e-tourism, booking, Intenet, informaion, marketing mix



1. INTRODUCTION

This paper aims the analysys of the marketing mix upon online booking systems. The
study case was conducted on online reservation system www.booking.com, system belonging
to S.C. Priceline S.A. The site is the international online leader in the reserved
accommodation services through online. This paper presents aspects of the tourism market
materialized in conceptual literature branch. The main purpose of this paper is to analyze the
components of the marketing mix of www.booking.com , system elements that have led to
international leadership.



2. LITERATURE REVIEW

Tourism has become one of the largest industries in the world and its development
shows a continuous growth every year. Thus, tourism is becoming a highly competitive
economic sector, led by developments in information technology competitiveness, innovation
and communication. University of Surrey is one of the most important research centers
dealing with frequent global tourism.
School of Management has developed the idea that tourism is a new niche, which
stimulates research for the future.
1
According to Forrester Research Institute, the e-commerce sales rise in 2003 over 12.2
billion USD at world wide.
2

Due to the increasing use of Internet, online environment provides opportunities for
tourism providers to distribute information in a way more quickly and also allow them to
handle more easily customer requirements. IT in general and especially for travel and tourism
show that more and more consumers use the on-line services, presumably for information or
purchases of on-line tourist products.
3

32
The Internet has become increasingly popular in the marketing environment,
providing enormous potential. It is therefore ideal for tourism marketing. More and more
consumers inform themselves for their holiday planning through the online medium.
4
Tourism marketing can be defined as: the strategy of the entrepreneurs and providers
of tourism services in the event of the existence of the buyer, the art of discovering new
clients, of penetrating new markets or new market sections, of maintaining and make use of
traditional markets.
5

Trying to define the concept of tourism marketing, we must first present the steps
needed to achieve the marketing process.
The first stage of the marketing process can be identified with knowledge of the
tourism market, in which the following actions be taken: global analysis of the market,
knowledge of the external environment in which tourism enterprises operate , identify
segments that match the specific needs of consumers, in tourism demand. This knowledge is
not a static process but dynamic as even consumers requirements and market in its whole
evolve from a period of time to another. It is necessary the understanding and knowledge the
future market requirements, evolution while providing global demand and in part of each
segment..
Forecast appears to be a necessity in marketing tourism marketing activity. By all
means the forecast mechanism put into action all the work carried out to determine the
evolution and the final proportion of a tourist phenomenon.
68

We define a second stage of marketing, internal environmental action of tourist
enterprise. This step aims marketing decisions that the company should adopt in the definition
of its offer and meet consumer needs. Combining the best marketing tools in a dosage
deliberately chosen by the decisions taken to achieve a goal, related organization and efficient
tourist action is known in literature as the marketing mix (product, price, distribution and
promotion).
Market success of an enterprise depends on how it defines its marketing mix, often
referred to as the marketing program. Tourism marketing mix variables can be defined as a set
of marketing tools that a company can use a tourist target market in order to achieve its
marketing objectives.
7

In a simplified formulation, marketing mix includes product, offered at a fixed price,
with a particular promotion to communicate something about a particular product to the
customers and a way the product becomes available the place of consumption

Product policy. Tourism product is ,, the combination of services and facilities which
is materialized in specific natural and artificial attractions environments and tourist facilities
created, which are components of the tourism offer and run a positive force of attraction of
tourists..
8

,, Like any other product, seen in terms of marketing, tourism product is the physical
expression of firm response to tourism demand "
9
, adjusting the PH . Kotler and B. Dubois, is
what the company can offer the market in a form which can be seen, bought and consumed, in
order to meet consumer needs in case the need for travel.
9



1

School of Management, University of Surrey, eTourism is the future! ( 8.12.2011 )
2
Forrester Research Institute 2003 - http://www.forrester.com ( 29.11.2011)
3
http://www.unctad.org/en/docs/c3em25d3_en.pd
4
Humelnicu Serevin A., Tourism development in the online medium , articol publicat in revista ASPECKT, nr 3
din 2009, pag 75
5
Snack O., Economia i organizarea turismului, Ed. Sport -Turism, Bucuresti, 1975, pag.10
6
Patriche D. , Ispas A., Marketing turistic, Editura Infomarket, Brasov 1999, pag 8


7
Olteanu V. ,,Marketingul serviciilor o abordare managerial , ed. Ecomar, Bucureti, 2003, pag.17
8
Snack O.,op.cit , pag. 14
33

Pricing and rates. Decisions relating to the target price set a price that is acceptable
to consumers and at the same time high enough to cover a travel companys expenses.

Distribution policy. In terms of policy decisions on the distribution, they aim
selecting means allowing products to be accessible to consumers. These means mention:
evaluation of various intermediaries (organizers of trips, travel agencies, tour - operators),
selection of these intermediaries for the marketing of tourism products, promotion and
fostering of intermediaries, defining a transport between the place of residence and place of
the target population destination, the implementation of a reservation system..
Distribution is one of the few elements of the marketing mix, which may allow more
tourism enterprises to improve their competitiveness and performance.
10


Promotion Policy. Regarding the decisions on promotion policy , they are intended to
inform consumers of the existence of product and - induce him to buy this product instead of
a competitor.
In tourism marketing, tourism phenomenon because of the three-dimensional, the four
traditional elements of marketing mix do not appear to be sufficient for effective marketing of
tourism products and services. Therefore, taking into account as an important travel
destination decision analysts A. Morrison and D. Cowell proposed extension of traditional
marketing elements with three elements: personnel, physical evidence ambient environment
and processing services.

Staff play an important role because they are the ones who sell packages, those who
are in direct contact with the client. A travel agent should know what he sell in this that he
can offer customers the best option depending on what he seeks.

The course of action. Services are usually provided in the presence of the consumer.
Therefore the process of delivering product is part of the consumer pays.
10

Environment. Is the physical environment in which tourism has been performed. Its
components can be both tangible (the organization of the reception's desk distinct
compartments, with distinct personal problems dealing with different guest) and intangible
(weather). This category includes foreign elements over which management actions are often
indirect and difficult. Regardless of whether they are tangible or intangible environmental
components contribute decisively to the definition of "experience" of travel.
11

Combining these elements of marketing mix lead to a successful sale when they are
used properly, the greatest responsibility fell on account of staff.


3. OVERVIEW OF THE ONLINE SYSTEM WWW.BOOKING.COM


9
Kotler Ph., Managementul marketingului, Ed. Teora, Bucuresti, 1997, pag. 20
10
Buhalis D. - Senior Lecturer in Tourism University of Westminster , Strategic use of information technologies in the tourism industry,
Londra, 2007, pg. 4






34
Headquartered in Amsterdam, Booking.com is an international leader in the
accommodation reserved through online services. Booking.com is part of the group company
Price-line (NASDAQ). The group is composed of four main brands - Booking.com,
Agoda.com, Priceline.com and Travel Jigsaw.
Established in 1996, Booking.com B.V. guarantees the best prices for any type of
property, ranging from small independent hotels to five-star luxury properties through
Booking.com. The Booking.com website is available in 41 languages and offers over 180,032
hotels in 161 countries.
The company promotes the idea that such a reservation for a hotel room should be
done in a simple manner because the time plays a very important role for the traveler.




Figure 1. Evolution of turnover
Source: Adapted after http://companycheck.co.uk/company/03512889
11



In figure one we you can see an increase in turnover from 2005 until 2008. In 2009 a
slight decrease in turnover, decrease due to the financial crisis. In 2010 the turnover of the
company began to grow considerably.


4. THE ANALYSIS OF MARKETING MIX OF THE ONLINE SYSTEM
WWW.BOOKING.COM

Marketing mix is all controllable and tactical marketing tools (product, price,
placement and promotion) that company makes up to produce the response you want from the
market concerned.
12




12
4.1 Product policy


11
Baltescu C. ., Particularitatile aplicarii marketingului in domeniul turistic , articol publicat in revista ASPECKT, nr 1 din 2008, pag 39
12
Kotler, P., Armstrong G. Principiile marketingului, Ed. Teora, Bucureti, 2004, pg. 11

35

The product range is given for all travel offers that www.booking.com site offers.
Booking.com has contracts with more than 180,000 hotels worldwide..
Within the reservation can speak of product lines because these groups are
homogeneous products, closely linked, sold to the same categories of customers and
distributed through the same distribution channel.
For example a customer wants to travel to Rome, Italy. He seeks a 5 * hotel, all
inclusive and is willing to spend a certain amount of money for this trip. He enters the site and
begins to seek information. The site enables the client to seek the best offers optimal because
of the search system infiltrated the site.

4.2. Pricing and rates

Booking.com acts as an intermediary between the client and hotels registered in the
database of the company. Prices are set by each hotel and updating of the site is
www.booking.com by trained personnel within each hotel. Booking.com takes no
responsibility in respect to rates shown on the site. What should customers really know is that
payment is made directly to hotels. At the end of each month, the hotels will receive a bill
with the amount of Booking.coms commission of that month. So Booking.com works on a
commission basis.

4.3. Distribution policy

Semantic systems are designed to connect incomplete information to reduce the
difficulty in finding and understanding the source of information, thus facilitating access to
"surf" the tourist offers. The semantic systems, knowledge about the meaning and
significance of web resources are stored as data (meta-data) that can be processed by
computer. Services for finding, integrating and linking information are based on semantic
descriptions.
When a hotel decides to enter into a contract with those from www.booking.com,
these hotels offer specialized software that enables customers to seek information about a
product and they also see if there are any places available. So in this case we speak of an
indirect distribution channel (only) because it uses a single intermediate and that the
reservation system www.booking.com. This factor is an advantage in terms of time because
you no longer have to wait for confirmation that the hotel accommodation.
The connection between companies providing tourist services and the final
beneficiaries is done through distribution. Tourists need information before you travel and to
choose between options and also an increase in information needs.
Booking.com acts as a service "find and reserve and as an advisor for the client,
freeing them from the burden of poor product search options for comment due to client sites
within the site. Customers can read hold opinions of those who stayed in some hotel.

4.4. Promotion Policy

Booking.com is today one of the largest booking sites in the world where you can find
almost any destination imaginable, with photos, reviews and a payment system super -
safe.The greatest method of promotion that the company enjoys is mouth promotion. Many
turn to booking.com site because no fees are charged as do most online booking sites.
Another method of promotion that Booking.com uses is association with Facebook
network (the largest social network in the world).
36
Booking.com allows authentication through Facebook account, Google and Yahoo.
RSS feed. Allows loyal readers to be informed on the update of the page content
from web page using a special software called "aggregator".
Newslleter. Newsletter option is present in the booking.com website where customers
can view special offers.
Booking.com was associated with Apple and it appeared Booking.com for iPhone
which is a very useful application. The application is free and can be downloaded from the
App Store. It searches for hotels and accommodation near the location where you are or any
other destination you want, you can view hotel images you want, you can read customer
reviews, you can make very simple and secure booking, you can save data confirming the
iPhone.

4.5. Staff

As a travel agency staff plays an important role in tourism activity. Once a customer
performed an online reservation, Boooking.com acts as intermediary between client and hotel,
transmitting to the relevant hotel the details of the reservation and send a confirmation e-mail
for and on behalf of the client from the information provided by the hotel.

4.6. The course of action

When a client wishes to book on www.booking.com he must follow a number of
steps. These steps are:
1. Open your browser - search engine
2. In the search engine we are looking for information we need
3. Search engine generates a list of URLs -choose www.booking.com
4. The site interface opens
5. To make a reservation must to be logged, and if we dont own an account we can
make one can
6. In the site is infiltrated a search engine. The client chooses the destination, hotel and
period.
7. Having completed the selection criteria, the customer opens a page with all necessary
information. Also in this phase the client can check room availability in a hotel, can
read the views of those who were accommodated at the hotel selected.
8. If the customer wishes to reserve online and decided a room then it will move to the
next step, to pay the room itself. Payment will be made with an electronic card.
Complete with personal information and money will be withdrawn to the client
electronic card.
9. After the actual payment of the customer will receive an e- mail the reservation was
made. Payment will go directly to the hotel. Bokking.com plays the role of
intermediary. At the end of each month, the hotels will receive an invoice from
Booking.com. with commissions quantum from that month.
The system is very easy to use and takes less than 10 minutes to make reservation. Also
there is the possibility of cancellation, which in some cases may be free in some cases dont,
depend on each hotel's policy.

37

4.7. Enviorement

Appearance and functionality of booking.com site plays an important role in this
element of the marketing mix, because the place benefit is lacking. Everything is done
through online and this entails the lack of dislocation of the customer at the place benefit. In
this case, time becomes a very important indicator when a customer wants to travel.


CONCLUSIONS

Exchange of information is very important at every stage of sales cycle. Information
must be able to move quickly and securely between clients, intermediaries and each travel
suppliers involved in meeting customer needs. As a result, information technology (IT) - mix
of computers and electronic communication - has become the future of the tourism industry.
Its powers allow information to be used more efficiently and to circulate through the
online almost instantly. As a result, has had and continues to have a major effect on the
tourism industry operating procedures.
One of the most powerful marketing tools - electronic distribution - has developed
rapidly.
Priceline understood the needs of consumers, event which granted them a place
amongst the most profitable companies in the world. Combining the best elements of the
marketing mix have led the system of reservation www.booking.com among one of the most
profitable sites of its kind.
However, known for embracing technology readiness, electronic marketing and
distribution of products have gained rapid acceptance in tourism. As a result, marketers
working in the tourism sector should be aware of its evolution.




REFERENCES


1. Baltescu C.., Particularitile aplicrii marketingului n domeniul turistic , articol
publicat n revista ASPECKT, nr 1 din 2008, pg. 39
2. Buhalis D. - Senior Lecturer in Tourism University of Westminster , Strategic use of
information technologies in the tourism industry, Londra, 2007, pg. 4
3. Humelnicu Serevin A., Tourism development in the online medium , articol
publicat in revista ASPECKT, nr 3 din 2009, pg. 75
4. Kotler Ph., Managementul marketingului, Ed. Teora, Bucureti, 1997, pg. 20
5. Kotler, Ph., Armstrong G.- Principiile marketingului, Ed. Teora, Bucureti, 2004, pg.
11
6. Olteanu V. Marketingul serviciilor o abordare managerial, Ed. Ecomar, Bucureti,
2003, pg.17
7. Patriche D. , Ispas A., Marketing turistic, Ed. Infomarket, Braov 1999, pg 8
8. Snack O., Economia i organizarea turismului, Ed. Sport -Turism, Bucureti, 1975,
pg.1
9. Forrester Research Institute 2003 - http://www.forrester.com
38
10. School of Management, University of Surrey, eTourism is the future!
http://www.unctad.org/en/docs/c3em25d3_en.pd
11. http://companycheck.co.uk/company/03512889
12. www.booking.com














































39



IMPLICATIONS OF THE WELFARE STATE
INSIDE THE EUROPEAN UNION



Murea Calin
Transilvania University from Brasov, Faculty of Economic Sciences



Abstract: The welfare state seems to face serious problems when it comes to its
sustainability, inside the European countries. These manifest under the form of
population ageing, low fertility and an increase in social spending which is grater
then the rhythm in which the finances of every country can handle (an aspect common
to all countries), as well as a high level of unemployment, development differences
between different regions of these countries (in Germany and Italy). Despite this, there
are long term solutions that could solve these problems. These solutions must be found
by every country and applied to the specifics of every nation to ensure the best
development and the highest level of living for all citizens in the future.

1. Introduction

In this paper I will try to analyze what are the problems that welfare states have to face
and to try to identify possible solutions that might solve these problems. I will try to see if the
welfare state can develop on the long term. Also I will try to show the status of some
countries which chose three different types of welfare state. On the other hand it seems that
this system is the path that all countries in the development process take, which is easy to
understand. All citizens want to have the best living conditions from the taxes they are
paying, and all countries want to ensure this for their citizens. It remains to be seen if the
problems which have started to appear can be overcome, or if the welfare state cannot be
anymore a model to be followed by the countries of the European Union, and those in the
entire world. Its clear that there isnt a single general solution, because every state has
different conditions, mentalities and resources.

2. Theoretical aspects

The welfare state represents a concept in which the state plays an important role in the
protection and promoting of the economic and social welfare of its citizens. It is based on an
equal distribution of wealth, opportunities and a public responsibility for those who cannot
ensure the minimum resources for a decent life. (Britannica, 2010)
By a welfare state we understand a nation in which the state takes various actions and
develops various programs meant to ensure social help for those who need it, like
unemployment compensation, old-age pensions, family allowances, food stamps and aid to
the blind and deaf, etc. After the Second World War changes made place, in the sense that
public assistance should be a right for all citizens, not only for the poor. (Hoyer, 2010)
According to Espring and Anderson there are three models of welfare state. In the case
of the first model bureaucracy plays an important role, because the state must maintain a strict
40
control over those who need social help. In the case of the second model, bureaucracy is
reduced to its minimum. Here the state offers help to those who fulfill certain conditions, like
the number of children, the need for medical assistance, etc. The third model relies on a high
level of taxation, model being used in Scandinavia. (Academic Dictionaries and
Encyclopedias, 2011)
Inside the European Union we can identify four types of welfare state, although each
state has its own particularities. So we have:
- The Nordic model, with Norway, Sweden, Denmark, Finland and Holland.
- The Continental model, with Germany, France, Austria, Belgium and Luxemburg.
- The Anglo-Saxon model, with England and Ireland.
- The Mediterranean model, with Greece, Italy, Spain and Portugal.
(Academic Dictionaries and Encyclopedias, 2011)
According to Espring-Anderson there are three types of welfare models:
- The liberal model, which is aimed at those who have low earnings and
concentrates on benefits based on needs (England)
- The corporatist model, refers to the degree of participation on the labor market,
and intervenes only when family has exhausted all its means to help (Germany,
France, Italy and Austria)
- The social-democrat model, where everyone contributes to the maintain of the
welfare state, and the high level of social services is maintain by o high level of
employment (Sweden, Norway, Finland and Denmark)
(Challenges to the Nordic Welfare State Comparable indicators, 2009)

3. Empirical Aspects

The members of the European Union are facing a challenge which has to do with their
own social protection programs. These challenges consist in demographic change, population
ageing, a drop in fertility levels and the risk of poverty. These concepts lead to a rethinking of
the welfare state, so it can be sustainable. Three major issues have to be taken in
consideration: the first issue is about investments made in children and in families with
children, because they are the foundation for the future and for this a lot of resources are
needed; the second issue refers to work related life, considering the fact that for the majority
of the people work represents the main source of welfare throughout their life; the third issue
is about finding a sustainable, optimum and equable system for giving pensions. (Espring-
Anderson, Gallie, Hamerjick, Myles, 2010)
As we are about to see, the majority of the European states are facing problems, no
matter what the adopted model is. The ever more growing population ageing process,
unemployment and social services, pensions especially, which need more and more resources
to be financed, represent problems that need practical solutions, which must ensure the
sustainability of the welfare state, as well as maintaining a high level of living for its citizens.

Welfare state in Germany

O pressing problem for the German state is the increasing number of old people out of
the total number of population. This increase, combined with the decrease in the number of
young people that work, are putting great pressure on the nations economy.
A great accent is being put on insuring incomes, disregarding other citizenship rights,
which lead to reform application only in the cases that secure these incomes or do not threat
the existing systems. (Cox, 2002)
41
German policies are formed around the principle of aversion towards risk. This is why
all attempts meant to limit unemployment compensations and to promote work policies that
are meant to sustain the welfare are not popular with the general population, because they
reduce the probability of getting an income in the case in which a person cant work.
Another influential factor regarding this matter is being represented by the grate power
of German work syndicates. German policies rely on high incomes (backed by powerful
syndicates) and high taxes, and in result firm are not willing to make new jobs anymore.
States in which syndicates have grate power are showing high unemployment rates, because
of the demands made by these syndicates, while in countries like Holland and Denmark where
syndicates dont have that much power the Government has a greater autonomy, the
negotiation process on the labor market is more decentralized, and unemployment is much
lower. In the next table we can see how things are regarding unemployment rates in states that
have adopted different welfare models:

Total Men Women


Nordic
countries
Denmark 3.9 3.3 4.5
Finland 7.4 7.4 8.1
Iceland 2.7 2.7 3.1
Norway 3.6 3.6 3.4
Sweden 6.9 6.9 7.2

Europe, large
countries
Germany 9.8 10.2 9.4
France 9.2 8.4 10.1
UK 5.3 5.7 4.9

Central
Europe, small
The Netherlands 3.9 3.5 4.4
Belgium 8.2 7.4 9.3
Austria 4.7 4.4 5.2

Southern
Europe
Spain 8.5 6.3 11.6
Italy 6.8 5.4 8.8
Greece 8.9 5.6 13.6

Eastern Europe
Hungary 7.5 7.2 7.8
Czech Republic 7.1 5.8 8.8
Poland 13.8 13 14.9

Table 1: Unemployment rates shares of the workforce by gender, Europe, 2006
(Source: Chalenges to the nordic welfare state, Norman, M, Ronning, E. Norgaard, E., 2009)

We can see that out of all countries that have adopted the continental model, Germany
has the highest level of unemployment. Nordic countries have the best numbers as well as the
United Kingdom, while those with similar or high unemployment rate are the Mediterranean
countries and east countries. This is worrying because it shows that Germany must take
urgent measures to promote labor, in order to decrease unemployment.
Unlike Denmark and The Netherlands, where reforms were obvious and made
optimum results, in Germany the well needed reform wasnt made, because of the large
number of old people that opposed major changes relating social benefits. Programs that came
with downsizes were welcomed with disapproval, and the political parties that came out with
them were sanctioned by vote, which made these parties give up easily. (Hoyer, 2010)
Another major problem regarding Germany consists in a big difference between west
and east. The reunification of Germany let to the transfer of large sums of money from the
42
west to the east, where unemployment is high and the demand for social help is also high. In
the last two decades 1.6 billion euros were transferred. (The Economist, 2010)
Meanwhile Germany continues not to recognize the qualification of immigrants. This
is how half a million immigrants absorb long-term offered social benefits, but cannot occupy
the available jobs that were not occupied by German population.
Welfare state in Italy

Italy has a total different welfare model from Germany or the Nordic states. Like all
Mediterranean countries we have a great degree of fragmentation when it comes to social
benefits and we also have an uneven distribution of those benefits within the general
population. Most of this given help is represented by pensions but, despite this, another
common factor with all Mediterranean countries is the big responsibility that falls on the
family when it comes to taking care of the weak. This is shown in Map 1, which presents the
percentage of GDP that is being given for helping the elderly, in 2006.
Out of the Mediterranean countries Italy and Greece have the lowest spending for
taking care of the old, and Spain and Portugal have numbers only a little bit high. The same
thing is present in France and Belgium. A totally different situation can be seen in the Nordic
countries and United Kingdom, where the state spends a lot of money for taking care of the
old.
When it comes to taking care of old people and those with disabilities family has the
most important role, while the state doesnt intervene almost at all. In Italian society the
woman takes care of the family and the man is the one who earns money. This is why the
Italian state usually gives help to women for being mothers and wives, not workers.

Map 1: Spending on taking care of the old as a percentage of GDP, 2006
(Source: Eurostat)
43

Like all welfare states Italy is facing the problem of population ageing and high
unemployment rates. The social trends are low economic growth, high unemployment rates, a
low mortality rate and a lower fertility rate, and these trends are making risk factors grow,
which in turn are contributing to the increase of the total cost of maintaining welfare.
There is also a trend for the elderly to live in separate homes from their children. This
is why Italy needs a lot of work force in home assistance. Immigrants are contributing
decisively to social services and also are occupying those jobs that Italians refuse.
(Marlicchio, Pugliese and Spinelli, 2009) Despite the fact that across the European Union
efforts to stop marginalization and exclusion are taken, a third of all jobs are of low quality,
without the possibility of learning new skills and are characterized by bad working conditions.
(Espring-Anderson, Gallie, Hemerjic and Myles, 2001)

Welfare state in the Nordic countries

The Scandinavian welfare model adopted by Norway, Sweden, Denmark, Iceland and
Finland is considered one of the best in the world, considering the high level of development
in each of these countries. Some researchers believe that this is the product of simple
coincidences that will soon lose their effects, while others think that its going to be a success
in future like it has been since now.
The fact is that these countries managed to grow because some exceptional conditions,
which were not present in other states, and this is why the Scandinavian model cannot be
applies in other parts of the world in exactly the same form. (Andersen, Holmstrm,
Honkapohja, Korkman, Sderstrm and Vartiainen, 2007)
The Scandinavian model is based on three key elements. The first is represented by the
relation between the state and the people. The welfare system is based on a high taxation
made by the state. This would not be possible without o long relationship between the state
and its citizens, in which the state was not an element of oppression, because in the
Scandinavian societies the state with all its institutions and organization, alongside the
Church, fulfilled their role while maintaining a very good communication with the people.
Also all the social services are organized at a local level so this communication gets good
results.
The second fundamental element is universality. The concept of social benefits is
applied to everyone. Its considered that all citizens should benefit from living conditions as
high as possible, not only the ones that are poor, like we have in the case of the Mediterranean
countries.
The third element is equality. Over time peasants held very good positions, while land
lords lost their power. This means that the difference between social classes began to
decrease. It is also known that in the Nordic countries we have small differences between
incomes, low rates of poverty and small differences between the employment rates of males
and females. (Alestalo, Hort and Kuhnle, 2009) In Table 2 we can see that, unlike
Mediterranean countries, Nordic countries have higher rates of employment for women:


Total Men Women


Nordic
countries
Denmark 77.4 81.2 73.4
Finland 69.3 71.4 67.3
Iceland 84.6 88.1 80.8
Norway 75.4 78.4 72.2
Sweden 73.1 75.5 70.7
44

Europe, large
countries
Germany 67.7 72.8 62.2
France 63.8 69.0 58.8
UK 71.5 77.3 65.8

Central
Europe, small
The Netherlands 74.3 76.1 53.2
Belgium 61.0 70.5 46.3
Austria 70.2 74.6 47.4

Southern
Europe
Spain 64.8 76.1 53.2
Italy 58.4 70.5 46.3
Greece 61.0 74.6 47.4

Eastern Europe
Hungary 57.3 63.8 51.1
Czech Republic 65.5 73.7 56.8
Poland 54.5 60.9 48.2

Table 2: Employment rate, Europe, 2006
(Source: Chalenges to the Nordic welfare state, Norman, M, Ronning, E. Norgaard, E., 2009)

We can see that nordic countries have a higher rate of employment for women than
Belgium, Germany, United Kingdom or France. The fact that substantial benefits are given to
all the citizenz is shown in Map 2. Here the scandinavan countries stand out, with a spending
average much higher than that other states with different welfare models, like the continental
or mediterranean model.
An essential condition for this system to work is a high taxation within these states.
Countries like Norway, Sweden or Denmark are known for their high taxes. In Tabel 3 we can
easily see this.
Another important factor for the succes of the scandinavian states is linked to the
1980s and 1990s crises that they went through. These crises were deep, but Denmark,
Norway, Sweden and Finland had their chance to make their economies stronger and to make
them more flexible. If, before these crises their economies were not productive, after the
economies were very developed. This was seen in the last years when the scandinavian
countries managed to get out of the financial crysis rather easily and without many loses.
(Eklund, 2011)


Map 2: Total expenditure on social protection per head of population, Europe, 2006
(Source: Eurostat)
45





Figure 1: Current taxes on wealth, income, etc., %GDP, 2006
(Source: Eurostat)


It is very difficult to summarize the scheme that was put into action in Scandinavia,
and could work in other countries. Especially because all the reforms were made in a different
period of time, crises were of a different nature and specific Nordic elements had their role to
play. One of these is combining individualism, backed by politics that support individual
autonomy and social mobility, with a great sense of subordination of personal interests to
societys general interests. (Berggren and Tragardh, 2011)

Another proof for the fact that Nordic countries continue to be some of the most
prosper in the world, and their economies some of the strongest, is The Global
Competitiveness Report 2010-2011 made by the World economic Forum, that took place at
Geneva in 2010. It shows the fact that Nordic countries surpass the European Union (EU27)
at all 12 chapters and the USA at 9 out of 12. (Schwab, 2010)

46

Figure 2: Comparison on competitiveness between Nordic countries, EU and USA,
2010-2011
(Source: Nordic capitalism: Lessons learned, Eklund, K., lecture at The World Economic
Forum, Geneva, 2010)


Conclusions


Theres a clear trend for all states to develop and to become welfare states, but in order
to achieve this on a long term, these countries must take into consideration certain facts and to
learn from states with tradition in this matter.
Its clear that in the case of the Nordic countries, as well as well as those which
adopted the continental or Mediterranean model, a series of problems is starting to occur. In
the case of Germany the biggest issue remains high costs regarding labor. Over time the
decline of low qualified jobs has been compensated by the development of jobs that need a
high qualification, which lead to an improvement of the labor market. Although large German
firms have transformed into multinationals (BMW, Volkswagen, Siemens), there is a serious
concern when it comes to the rate of unemployment. This factor combined with the alarming
increase in the population ageing process is putting great pressure on the German welfare
state. (Streek and Trampusk, 2007)
The Italian welfare state was initially built as a conservative corporatist model, but in
the 1960s and 1970s a transformation into a social democrat model has been attempted, a
model characterized by a higher degree of universalism. The costs turned out to be too high
and Italy was soon facing alarming rates of inflation and unemployment. Attempts to handle
this negative economic situation were made, through privatization and decentralization, at
pressures from the European Union. Despite this, the Italian welfare system is threatened by
internal factors, like differences between north and south, high immigration and low rates of
employment by women, and also by factors that all states have to face, like the population
ageing process and low fertility. (Denti, 2007)
47
Scandinavian countries are not facing low employment rates or high costs like
Germany, nor a weak participation on labor market for women and discrepancies between
different parts of the country like Italy, but its facing population ageing and low fertility. On
the other hand social benefits tend to overcome the financial resources. A solution would be
income negotiations, in the sense that incomes should be negotiated with each individual.
This would lead to local crisis that could be solved by firms, rather than at a general level.
Andersen, Holmstrm, Honkapohja, Korkman, Sderstrm i Vartiainen, 2007) Also there
has been a transformation af the welfare system in denmark in last couple of years. This
transformation materialized in a system based on different layers, especially in the pensions
insurance system, which could loosen the pressures that are being put on the countrys
finances, considering the fact that the national system is no longer the only option for the
citizens. (Kvist and Greve, 2011)

After all these analyses we can conclude that the welfare state can be applied in all European
countries. But for this to happen, correct decisions have to be made in order to solve all
problems that can appear. There is no such thing as a general solution that can be applied to
all countries, because each state has its own particularities. Negotiating income for each
individual, ways of attracting new workers on the labor market, etc. could be some of the
right solutions.




REFERENCES
1. Andersen, T., M., Holmstrom, B., Honkapohja, S., Korkman, S., Soderstrom, H., T.,
Vartiainen, J., 2007. The Nordic Model. Embracing the glabalization and sharing
riscks, The Research Institute of the finish Economy, Toloustieto Oy
2. Berggren, H., Tragardh, L. , 2011.Social trust and radical individualism, lecture at
The Economic Forum, Geneva
3. Cox, Robert H. April, 2001. The Social Construction of an Imperative: Why Welfare
Reform Happened in Denmark and the Netherlands but Not in Germany, World
Politics 53 (3): 463-498
4. Denti, D., 2007. The Italian Welfare State, Sodernstorns hogskola University College
5. http://www.denti.it/papers/Davide%20Denti%20-
%20The%20Italian%20Welfare%20State.pdf
6. Eklund, K., 2011. Nordic capitalism: Lessons learned, prezentare susinut la World
Economic Forum, Geneva
7. Espring-Andersen, G., Gallie, D., Hemerjick, A., Myles, J., 2001. A new welfare
arhitecture for Europe?, rapot trimis ctre preedenia belgian a Uniunii Europene
8. Hoyer, A., 2010. German Resistance to Welfare State Reform: Voter Blockades,
Coalitions and Unions, Critique: A worldwide journal of politics
9. Kvist, J., Greve, B., 2011. Has The Nordic Welfare Model Been Transformed?, Social
Policy & Administration, Vol. 45, Nr. 2, pag. 146-160
10. Norman, M., Ronning. E., Norgaar, E., 2009. Challenges to the nordic welfare state.
Comparable indicators, Nordic Social statistical Comittee
11. Schwab, K., 2010. The Global Competitiveness Report 2010-2011, Global Economic
Forum, Geneva
12. Streeck, W., Trampusch, C., 2005, Economy Reform and the Political Economy of the
German Welfare State, German Politics, Vol. 14, Nr. 2, pag. 174-195
48
13. Academic Dictionaries and Encyclopedias, 2011. European welfare state,
14. http://en.academic.ru/dic.nsf/enwiki/6744647
15. Encyclopedia Britanica, 2011. welfare state,
16. http://www.britannica.com/EBchecked/topic/639266/welfare-state
17. Eurostat, 2011. http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/













































49



SMALL AND MEDIUM ENTERPRISES
- A KEY ELEMENT TO FUTURE EMPLOYMENT AND PROSPERITY IN
EUROPEAN UNION



Phd. Student Carmen NICOLAE, Transilvania University from Braov



Abstract: This paper explores the role of small and medium enterprises in the
European Union. Small and medium-sized enterprises (SMEs) have for some time
been recognised as the backbone of EU economy employing some 70% of its
workforce and generating almost 58% of the business value added. Being the most
dynamic and with highest capacity to innovate and grow theEuropean Union put them
truly to the forefront of European economic policy. SMEs in Europe, however,
consistently underperform compared to their American counterparts and to larger
companies particularly with regards to levels of productivity, growth and innovation.
Explanations include a lack of entrepreneurial culture with 60% of Europeans
claiming never to have considered the idea of setting up of their own business, while
those who have ventured find that regulatory and financial constraints hold their
businesses back. There is a further gap to be filled with a strong need for practical
advice and concrete assistance from both the Member States and the EU on how to
better grow their business and its prospects.

Key words: Small and Medium Enterprises, Small Business Act, the European Union,
Entrepreneur, Value-Added



1. INTRODUCTION

Following the daily news, it is easy to get the impression that the European economy
is dominated by large, multinational enterprises. Their multi-billion Euro takeovers, global
expansion plans or -more recently- risks of mega bankruptcies dominate the headlines.
What usually gets lost is that more than 99% of all European businesses are, in fact,
small and business enterprises (SMEs). They provide two out of three of the private sector
jobs and contribute to more than half of the total value-added created by businesses in the EU.
Moreover, SMEs are the true back-bone of the European economy, being primarily
responsible for wealth and economic growth, next to their key role in innovation and research
& development. What is even more intriguing is that nine out of ten SMEs are actually micro
enterprises with less than 10 employees. Hence, the mainstays of Europe's economy are micro
firms, each providing work for two persons, in average.
Small and medium-sized enterprises (SMEs) play a decisive role in the
competitiveness and dynamic of the European economy. To help them realise their growth
potential, the EU is working towards promoting entrepreneurship and creating a friendlier
business environment for small businesses.
50


2. SMALL AND MEDIUM ENTERPRISE DEFINITION

On 6 May 2003 the European Commission adopted Recommendation 2003/361/EC
regarding the SME definition which replaced Recommendation 96/280/EC as from 1 January
2005. The revision takes account of the economic developments since 1996 and the lessons
drawn from the application of the definition. In particular, it raises the financial ceilings to
take into account price and productivity increases since 1996 and introduces a typology of
enterprises (difference between the three categories: autonomous, partner and linked) and a
calculation method for the thresholds, which gives a realistic picture of their economic
strength. It ensures that enterprises which are part of a larger grouping and could therefore
benefit from a stronger economic backing than genuine SMEs, do not benefit from SME
support schemes.

Table 1. The new SME definition

Enterprise category Headcount Turnover or Balance sheet total
medium-sized < 250 50 million 43 million
small < 50 10 million 10 million
micro < 10 2 million 2 million

Enterprises qualify as micro, small and medium-sized enterprises (SMEs) if they fulfil
the criteria laid down in the Recommendation which are summarized in the table below. In
addition to the staff headcount ceiling, an enterprise qualifies as an SME if it meets either the
turnover ceiling or the balance sheet ceiling, but not necessarily both.


2. SMALL BUSINESS ACT FOR EUROPE

Adopted in June 2008, the Small Business Act for Europe it is a document which
reflects the European Commission's political will to put into place a comprehensive SME
policy framework for the EU and its Member States.
The national and local environments in which SMEs operate are very different and so is
the nature of SMEs themselves (including crafts, micro-enterprises, family owned or social
economy enterprises). Policies addressing the needs of SMEs therefore need to fully
recognize this diversity and fully respect the principle of subsidiarity.
The mid-term review of the EUs Modern SME policy from 2005 to 2007 showed that
both the Member States and the EU have made progress in creating an SME-friendlier
business environment. The European Commission has significantly increased the SME focus
in major EU support programmes for 2007-2013. Member States have substantially improved
the business environment for SMEs, taking inspiration from best practice exchanged in the
context of the European Charter for Small Enterprises endorsed in Feira in 2000 and by
implementing the 2006 Spring European Council conclusions, e.g. by introducing one-stop
shops for company registration and reducing the time and costs required to start a business.
In addition, the EUs strategy for better regulation is crucial for SMEs, which will
greatly benefit from the modernisation and simplification of existing EU legislation and from
51
the ambitious programme to reduce administrative burdens arising from EU legislation by
25% by 2012.
Despite this encouraging progress, the EU still needs to take further significant
measures to release the full potential of SMEs5. In general, EU SMEs still have lower
productivity and grow more slowly than their counterparts in the United States. In the US,
surviving firms on average increase their employment by 60% by their seventh year, while
employment gains among surviving firms in Europe are in the order of 10% to 20%. SMEs
still face market failures undermining the conditions in which they operate and compete with
other players in areas like finance (especially venture capital), research, innovation and the
environment. For example, about 21% of SMEs indicate that accessing finance is a problem,
and in many Member States the percentage is much higher for micro-enterprises.
At the heart of the European SBA is the conviction that achieving the best possible
framework conditions for SMEs depends first and foremost on societys recognition of
entrepreneurs. The general climate in society should lead individuals to consider the option of
starting their own business as attractive, and acknowledge that SMEs contribute substantially
to employment growth and economic prosperity. As a key contribution to achieving an
SMEfriendly environment, the perception of the role of entrepreneurs and risk-taking in the
EU will therefore have to change: entrepreneurship and the associated willingness to take
risks should be applauded by political leaders and the media, and supported by
administrations. Being SME-friendly should become mainstream policy, based on the
conviction that rules must respect the majority of those who will use them: the Think Small
First principle.
The Small Business Act aims to improve the overall policy approach to
entrepreneurship, to irreversibly anchor the Think Small First principle in policymaking
from regulation to public service, and to promote SMEs growth by helping them tackle the
remaining problems which hamper their development.
According to Communication from the European Commission to the European
Council, the European Parliament, the European Economic and Social Committee and the
Committee of the Regions (Brussels, 25.06.2008) the European Union and Member States
should create an environment within which entrepreneurs and family businesses can thrive
and entrepreneurship is rewarded.
The 2007 Flash Euro-barometer on entrepreneurial mindsets shows that 45% of
Europeans would prefer to be self-employed, compared to 61% in the US. This has not
changed for many years. People in Europe need to be made more aware that self-employment
is a potentially attractive career option and be provided with the necessary skills to turn their
ambitions into successful ventures.
The education system, and in particular the school curricula, do not focus enough on
entrepreneurship and do not provide the basic skills which entrepreneurs need. Children can
learn to appreciate entrepreneurship from the beginning of their education.
As an estimated 6 million small business owners will retire over the next ten years,
Europe cannot afford to risk losing these businesses due simply to difficulties in business
transfers and to a lack of appreciation of the traditional role of family business. A greater
number of transfers of business would have an immediate positive effect on the European
economy: successful transfer of business preserves more jobs on average than those created
by new start-ups. Transfer of business should therefore be given the same support as setting
up a new business. Recognition of the special role of SMEs and in particular family-based
enterprises, their typically local base, socially responsible attitudes and capacity to combine
52
tradition with innovation, underpins the importance of simplifying the transfer of businesses
and the skills associated with them.


3. IMPLEMENTATION OF THE SMALL BUSINESS ACT

Since its launch by the European Commission in October 2007, the idea of a Small
Business Act for Europe has raised many expectations. While it is widely supported at
government level, by the European Parliament and by the SME community, it is important to
implement it thoroughly. This requires the full political commitment of both the Commission
and the Member States. Therefore, as a basis for a renewed commitment to SMEs, the
European Commission invites the European Council to welcome and support the Small
Business Act for Europe, adopt the 10 principles and commit to the implementation of the
actions proposed. Moreover, the Commission invites the Council and Parliament to swiftly
adopt the related legislative proposals.
On 15 December 2009, the European Commisison adopted a report which highlights
the progress made in implementing the SBA, both at European Union and national level. This
report accentuated the ideea that the financial and economic crisis has determined the need for
far-reaching and comprehensive policy measures in favour of SMEs. It also summarises the
progress achieved in 2009, which has been the first full year of implementation of the SBA,
focussing mainly on the measures contained in the SBA Action Plan and in the European
Economic Recovery Plan.
Both the Commission and the Member States have taken substantial action to
improve SMEs access to finance, to facilitate their access to EU and third country markets
and to improve framework conditions for SMEs in particular by removing unnecessary
administrative burdens.
The Member States have also shown strong political commitment to implement the
SBA, but vary as regards both the approach taken and the results achieved. Several Member
States have 'transposed' the SBA as a whole into their national policy programmes. Belgium
launched its Plan PME in October 2008, which includes 40 measures covering the main
objectives of the SBA. In Italy, the government created a working group to monitor the
implementation of the SBA, with actions proposed in ten areas. The Irish Government has
adopted a similar approach.
In their 2009 National Progress Reports in the context of the Lisbon Partnership for
growth and jobs, Finland, France, the Netherlands, Romania and the United Kingdom have
explicitly reported on how they are implementing the SBA. France has taken action in the
three priorities of the SBA Action Plan. The United Kingdom has presented in a very detailed
annex the measures taken for each of the ten principles of the SBA. Moreover, some regions,
such as Catalonia (Spain) or North Rhine-Westphalia (Germany), have also adopted the SBA.
However, most frequently, Member States have adopted concrete measures identified as
priorities in the SBA Action Plan.
In order to improve access to finance the European Commission has simplified state
aid rules and has pointed clearly to the need to better take into account SMEs needs at
Member State level. The new General Block Exemption Regulation (GBER) adopted as part
of the SBA consolidates into one text and harmonises the rules reviously set out in five
separate regulations, and enlarges the categories of state aid covered by the exemption. The
GBER introduced new rules on aid intensities for SMEs (i.e. 20% higher aid proportion
allowed for small enterprises and 10% higher for medium-sized enterprises) as well as on
53
incentives for the creation of start-ups and support for women entrepreneurs. Block exempted
aid for SMEs amounted to 2.8 billion in 2008, an increase of 0.3 billion compared to 2007.
The Commission also adopted a Handbook on State Aid rules which gives a concise overview
of the aid possibilities for SMEs permitted under Community state aid rules.
In addition, the Commission adopted a temporary framework on state aid 2009/2010
providing Member States with increased possibilities to tackle the effects of the credit
squeeze on the real economy. In particular, Member States are able to grant subsidised loans,
loan guarantees at a reduced premium, risk capital for SMEs and direct state aid of up to
500 000 without notification of individual cases.
The European Investment Bank (EIB) group has played a crucial role in easing
SMEs access to finance in 2009. It has substantially increased its lending activity dedicated
to SMEs from 8.1 billion in 2008 to around 11.5 billion in 2009. Besides the continuous
implementation of the SME instruments foreseen under the Competitiveness and Innovation
Framework Programme ( 1.13 billion earmarked for 2007-2013), 200 million has been
allocated for mezzanine finance for 2009.
In September 2009, the first investment (of 1.85 million) was made in the
framework of the JASMINE initiative, launched in 2008 by the European Commission to
promote the development of micro-finance institutions in Europe. Furthermore, the
Commission has stepped up its efforts to provide Member States and other stakeholders with
information on SMEs access to finance through regular surveys.
As a response to the financial and economic crisis, and often using the temporary
framework on state aid, most Member States have also adopted policy measures to enhance
SMEs access to liquidity, especially to bank lending, through the creation and extension of
loan and guarantee schemes for SMEs (Austria, Belgium, the Czech Republic, Denmark,
Estonia, Finland, France, Germany, Greece, Hungary, Italy, Lithuania, Luxembourg, the
Netherlands, Spain and the United Kingdom). The EIB package of 30 billion for loans to
SMEs also allows some member countries to use a second level guarantee scheme. In
addition, Belgium and France have set up a "credit mediator" acting as a contact point for
SMEs and entrepreneurs that have problems with their bank.


4. CONCLUSIONS

The Small Business Act aims to design rules according to the "Think Small First
Principle". All new legislative and administrative proposals at European and national level
should be subjected to an "SME test" to assess their impact on SMEs. Where this impact is
considered negative, Member States will be able to use measures such as derogations,
transition periods and exemptions in particular from information and reporting requirements.
For example, through the EU Directive on VAT invoices, electronic VAT invoices are put on
an equal footing to paper invoices. Another EU Directive will offer the opportunity to EU
Member States to relieve micro enterprises from the obligation to present their annual
accounts.
Also the SBA Adapt public policy tools to SME needs A new code of best practice for
public procurement will facilitate SMEs' access to public procurement contracts. It offers
solutions to difficulties faced by small companies by improving access to information about
public contracts and how to bid on-line, reducing excessive financial requirements, and
cutting the paperwork. A higher level of state aid will be allowed to smaller companies, and
rules for state aid to SMEs will be made simpler. National governments also do not need to
54
notify this support to the Commission. Overall, these measures increase the possibilities for
state aid to SMEs.



REFERENCES


1. European Commision: Report on the Implementation of Small Business Act,
Brussels, 2009.
2. European Commision: The European Economic Recovery Plan, Brussels, 2008.
3. Council of the European Union, 2945
th
Council Meeting: Competitiveness (Internal
Market, Industry and Research), Brussels, 28-29 May 2009.
4. http://ec.europa.eu/enterprise/policies/sme/small-business-
act/implementation/index_en.htm


ACKNOWLEDGEMENT: This paper is supported by the Sectoral Operational Programme
Human Resources Development (SOP HRD), ID76945 financed from the European Social
Fund and by the Romanian Government.


























55



ANALYSIS OF MARKETING MIX IN CONSULTANCY SERVICES
FROM HUMAN RESOURCES DOMAIN. CASE STUDY: PROFILES
INTERNATIONAL



Alexandra PALADE, student at Masters of Marketing Policies and Strategies
in Transilvania University from Brasov,
Faculty of Economic Sciences and Business Administration
Coord. Lect. Dr. Cristinel CONSTANTIN



Abstract: The current paperwork contains the analysis of marketing mix in
consultancy services from human resources domain. For this analysis was created a
case study at Profiles International Company, world leader in field of psychological-
aptitude evaluation used by the personnel in various human resources activities.

Key words: consulting, market, marketing mix, evaluation tools.



1. INTRODUCTION

The topic of this paperwork is called Analysis of marketing mix in consultancy
services from human resources domain. I have realized the case study at Profiles
International Company. I have chosen this company because it is world leader in human
resources evaluation, having over 70 regional headquarters and over 50.000 clients, juridical
persons, world wide. In this paperwork I want to present a few aspects regarding the market
of consultancy services, followed by the conceptual story of speciality literature. The main
objective of this paperwork is to analyze the strategies of the marketing mix of Profiles
Company, strategies which lead in obtaining the top position in human resources evaluation
on the market.

2. LITERATURE REVIEW

Marketing concept was founded in 1957 by John B. Mc. Kitterick (CEO General
Electric): marketing concept is the philosophy of consumer orientation, philosophy which
implies integral and coordinated actions and reaching a certain goal Marketing concept was
founded in 1957 by John B. Mc. Kitterick (CEO of General Electric) which stated: the
concept of marketing is the philosophy of orientation to consumers, which implies full and
coordinated actions as in achieving a specific purpose.
13
The term service, in Philip
Kotlers vision, represents any activity or benefit that one party can offer another, which is
generally intangible and whose result does not imply ownership of a material good.
14


13
Lefter, C. (coordonator) Marketing, vol. 1, Ed. Universitii, Braov, 2006, pg. 25
14
Kotler, P. Managmentul marktingului. Editura Teora, Bucuresti, 2007, pg. 570
56
Marketing mix is all controllable and tactical marketing tools (product, price,
placement and promotion) that it makes up company to produce the response you want from
the market concerned.
Marketing, in other words, represents the art and science to sell. The ingredients for a
successful marketing are (by Philip Kotler) the four P: Product, Price, Promotion, Placement
or distribution.
15
In services however, the concept is extended to 7 Ps, being in addition to
the initial model: personnel, process, test (physical proof).
The product is the combination of goods and services which the company offers to the
concerned market.
16
The price is the amount of money which the clients must pay to obtain
the product. The placement (distribution) refers to a companys activities that make the
product available for targeted clients. The promotion represents the activities that
communicate the merits of the product and persuading the clients to buy.
Product policy. In vision of the author of Marketing. Explanatory Dictionary
product policy represents
17
a decision adopted by manufacturing or commercial enterprises
regarding size, structure and evolution of the range of goods and services. Product policy is
often compared with the heart of marketing
18
.
Price policy. Price is a market instrument and an index of economic and social reality.
The price is the only marketing mix variable which leads to profit, all the others are
generating expenses or investments. The price is a very flexible element of the mix which can
be modified very quickly, unlike the product characteristics and the distribution activity.
Distribution policy. The distributions role is to insure the necessary balance in the
market first of all between demand and offer, between producers and consumers. Likewise it
is the role of the distribution to streamline the selling buying processes.
Promotion policy. The promotion must be seen as a key instrument of the marketing
mix. The way in which they are combined by the company the different promotion
components in order to achieve objectives give birth to promotional mix.
People. All the services depend on the persons that provide it. Often, they are the ones
that have direct contact with the consumer. We can say that the staff is part of the product
which we buy.
Process. The services are usually provided in the presence of the consumer. That is
why the process through which the product is delivered is part of the process the consumer
pays for.
Physical proof. It has an important role in making services tangible. The architecture
of the building, the layout and decorations of interior spaces are essential. These can influence
the behaviour of consumers in at least four ways: they can be attracted by the use of special
architectural designs, which can be perceived to convey a message; colours can also have a
stimulating effect, while the physical environment can influence clients mood.
Ambient factors represent environmental conditions below the immediate level of
consciousness, that attract attention only when they are absent or unpleasant. Design refers to
visual stimuli, of which the probability to be noticed by clients is far greater than that of
ambient factors. These factors can be aesthetic, like architecture, colour, style, and
accessories, or functional: comfort, layout and interiors.




15
Kotler, P., Armstrong G. Principiile marketingului, Ed. Teora, Bucureti 2004, pg. 82
16
Olteanu, V. Marketingul serviciilor, Ed.Ecomar, Bucureti, 2003, pg.167
17
Florescu C, Pop N. Al. Malcomete Marketing dicionar explicativ, Ed Economic, Bucureti, 2003, pg 537
18
Lefter C (coord.) - Marketing, vol. II, Ed Universitii Transilvania, Braov, 2006, pag 375, 405
57
3. GENERAL PRESENTATION OF PROFILES INTERNATIONAL
COMPANY

Profiles International is world wide leader in the evaluation of the human resources,
having over 70 regional headquarters and over 50.000 clients, juridical persons, world wide.
The main headquarter is in Waco Texas, USA. In Europe, the national representatives are
found in countries like: Germany, France, Great Britain, Italy, Spain, Czech Republic,
Hungary. The representative from Romania was opened in 4th of September 2003 within a
launching at Marriot Hotel in Bucharest, in the presence of over 70 companies and the vice-
president of Profiles International dr. Chuck Wilson. The company promotes the
implementation of psychological- aptitude and professional evaluation system consisting of
performing tests approved by the Association of American Psychologists, validated for world
population. It represents a premier for Romania the fact that such system of evaluation is
available on-line, and the tests and reports generated after the applying are in Romanian.
To pinpoint the companys growth, I will show you in the chart 1 the evolution of the
turnover for Profiles International in 2003, the launching year until 2009 and in the table 1 I
will enumerate the value of the turnover for every year.

Chart 1. Evolution of the companys turnover

267471
1107788
843641
6319516
1580233
928897
1199652
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
2003 2005 2007 2009
Turnover (Lei)

From chart 1 can be observed a growth of the turnover from 2003 to 2006 after which
a decline comes. In 2006 was recorded the highest value. In 2006, after having managed
several projects financed through structural funds, Profiles International experienced a surge
in turnover. In 2007, as these projects entered the final phase, Profiles turnover averaged its
previous values, once more. In 2008 turnover started to grow again, this growth own to the
fact that, after the revealing of the economical crisis, the companies realized that consultancy
is necessary, especially in human resources domain, to overcome the crisis moments, to make
bigger economy and maximum efficiency.
The market of consultancy companies, in Romania, is in continuous growth and
diversification. The companies are increasingly turning to this kind of services taking in
consideration the development state of the economy. Another problem is the lack of
experience in resolving the situation to which the companies overcome everyday (personnel
evaluation, market research, trainings, qualifications, market surveys etc). For these problems,
Profiles International offers solutions based on: managers development, employees
motivation, talent management, improving customers services, management diagnosis, team
development tools etc.
58
The company is aimed strictly for the national market, which is a clause in the license
to use the software of the copyright holder. The services sector market in which the company
works is registered among the highest growth rate.
The awards offered to Profiles International, in those 8 years of activity are:
The best debut 2003
Member of The Honor Society 2003
Member of The Executive Comitee 2004
Member of The Presidents Council 2006.
19

The founders of Profiles International, Doru Dima with Jim Sirbasku and Bud Haney
received the award National Director 2006 as recognition of the fact that Romania was the
best representation amongst 120 countries.

4. THE MARKETING MIX OF PROFILES INTERNATIONAL

The marketing mix is all controllable and tactical instruments (product, price,
placement and promotion) that the company makes up to produce the response it wants from
the market concerned
20
.
The marketing mix, in the consultancy services, besides the classic 4P, is completed
by: physical affiliation associated with the image of the consultancy company, the role of
humans and consultancy process (standard methodology).
21

Further, I will present the product, price, distribution and promotion policy for Profiles
International but also people, process and physical test.
a) Product policy
Profiles International companys product portfolio includes 5 product categories,
namely: pre screening; promotion, recruitment, career guidance; evaluation, training and
management diagnose; personal development and the last category, team development.
Amongst the advantages of using Profiles products includes:
The scale of low distortion (it can be checked the veracity of the information
provided)
The products are being validated (they have been designed to be neutral in
terms of race, national origins, handicaps, sex or age)
Supplies many types of reports
It adapts to the existing positions on the market
Are easy to understand and administrate
Requires a low time to complete and interpret the results.
All Profiles evaluation and development instruments are available in an on-line
integrated system, usable at any computer with internet access. For every client is created this
kind of exclusive system, the entry being secured by an username and password.
All these tests can be performed on-line but also in classic method using paper and
pencil. For those who prefer the classic method (Pencil/Paper) the assessments may be given
to be completed in the booklet version, following that an operator to enter them into the
system.





19
http://www.profilesinternational.ro/about-us/profiles-awards.html
20
Kotler, P., Armstrong G. Principiile marketingului, Ed. Teora, Bucureti, 2004, pg. 11
21
Mitrutiu, M., Mixul de marketing n serviciile de consultan tez de doctorat, Universitatea de Vest din Timioara, Timioara, 2007,
pg.7
59
Table 1. Profiles International product portfolio

Category Products Application
time
Types of reports
Pree- screening Integrity and work
ethic indicator
20-30
minutes
For interview





Recruitment,
Promotion, Career
Guidance
Profile XT 60-70
minutes
- Placement
- Individual
- Coaching
- Compatibility with
many jobs
- Job analysis
Profile XT Sales 60-70
minutes
Selection
Placement
Promotion
Self improvement
Customer Service
Profile
20-30
minutes
Placement
Individual
Coaching
Sales Indicator 15-20
minutes
- Management
- Individual

Evaluation, Training
and Diagnosis of
Managers
Checkpoint 360 15-20
minutes
Simple
Comparable
Diagnosis of
Organizational
Management
- -
SkillBuilder - -

Personal Development
Performance
Indicator
15-20
minutes
Management
Individual
Workforce
Compatibility
60-70
minutes
For Manager and
Subordinate
Team Development Team Analysis 15-20
minutes
Analysis

Source: adapted after http://www.profilesinternational.ro/products.html
In the category of pre-screening is included the integrity and work ethic questionnaire
called Step One Survey. On the side of career recruitment, promotion and guidance are
included 4 assessments of skills and vocational skills. Are included in this category: Profiles
XT (file compatibility with the job) which has the motto: The right man in the right place.
This is an evaluation instrument used for selection, coaching, training, promotion. The second
product, from this category is Profiles XT Sales (the right sales man), instrument for the
selection, training and coaching mans in sales. The instrument called Customer Service
Profile (customer service) is used for being assured that all the employees from the company
help serve customers better. Profiles Sales Indicator is used for selection, management and
60
training the sales man for sales force optimization. For managers evaluation, training and
diagnosis it can be chosen one of three instruments: Checkpoint 360 (used both for
individual career development as for success of the organization), Diagnosis of
Organizational Management (synthesis report of the management team development, the
report being a synthesis of collected information from individual Checkpoint assessments of a
whole management team; is created an consistency analysis of each manager and the group
with the vision, mission, strategic objectives of the company) or SkillBuilder (which
represents an individual training for managers; offers managers the opportunity to develop
their skills). For personal development, the company offers 2 instruments which are
Performance Indicator and workforce compatibility. First instrument evaluates 5 essential
factors of personality and their impact over the 7 important aspects of success in work, and
the second one is meant to offer practical suggestions of harmonious and effective
collaboration between manager and subordinate. For team development is necessary to build
a strong team. You can call the instrument named Profiles Team Analysis, which is a team
analysis questionnaire.
Seeing Profiles products results, these evaluation instruments helps companies to
improve productivity, to increase sales, to employ the right people, to increase the efficiency
of the managers, to reduce staff turnover, to motivate the employees.
For recruiting the staff, you must specify that these test results should supply a third of
the selection process, for the rest is recommended the interview, the confirmation of the
personal data, work experience. All these should be used in association with the reports
results.
For the product policy, you must approach an assortment stability strategy. Through
this is maintains the assortment area and intensifies the effort in improving the quality. The
strategy aims to preserve and strengthen the market position and the prestige.
b) Price policy
The system presents low implementation costs. The first step to be made in order to
acquire Profiles human resources management system is the purchase of a license that offers
the right to use the database and the site. Afterwards, every client is thought how to use it.
Every kind of test has a price, so every completed test represents a test unit. The generated
test report is available in the database as son as it is completed and its automatically sent to
the e-mail address. A plus brought by Profiles is the fact that any visualization of any report
for the completed test is free. The training for using Profiles system takes during a day.
The contract is negotiated with every client, and in case of dealerships the prices are
fixed. Each dealer has a monthly target value.
The strategy applied by the company for price policy is differentiated pricing policy
according to customer, depending on the delivery emergency or the volume.

c) Placement policy
The distribution and delivery of consulting services is made directly by specialized
personnel of the company. This way, we choose for direct distribution strategy. Profiles
International brings new instruments on the market, products which operates in human
resources field, in evaluation of abilities and professional skills. It is aimed strictly to national
market. It can be considered, apparently, that market is limited but offers a strong business
development. In year 2010 were registered in Romania 610.000 active companies (according
to Chamber of Commerce and Industry of Romania).
22

Assessment results are received through a report, the report can be sent by e-mail
(electronic) or hard copy (printed).

22
http://www.ccir.ro./evenimente/evenimente-organizate-de-ccir/eveniment/view/topul-naTional-al-firmelor-editia-a-xviii-a-2011
61
d) Promotion policy
The publicity made by Profiles International is a publicity realized at national level.
The publicity messages were transmitted by the following media:
o Press the messages were distributed in specialty magazines (ex: Saptamana
Financiara)
o Radio broadcasted on national channels (ex: Magic FM)
o Television main TV channels (Prima, Pro Tv, Antena 1)
o External publicity by presentation folders, flyers, brochures, leaflets and
other publicity materials.
Also for promotion policy, the company holds an own information website. The
website for Profiles International is the following:
http://www.profilesinternational.ro/home.html. Also on the website, the potential clients have
the possibility to subscribe to a newsletter (periodic electronic newsletter) which can be
received on the e-mail address. This newsletter keeps in touch with developments and trends
in their field of activity.
Profiles International annually organizes International Human Resources Conference,
this year reached its seven edition. In this conference are presented the new trends and it
represents an opportunity to met specialist from human resources domain also from the
country as from abroad. At this conference the National Director participated as speaker, this
being another way of promoting the company.
The proposals regarding the strategies for promotion policy of Profiles International
are: company image expansion strategy, organizing a promotional activity, strategy of
companys global promotion.
e) People
For Profiles International the staff represents a very important element which is given
proper attention. The companys consultants are the ones that come in direct contact with the
customers, so that they are part of the product bought. So, the success of the company owes
especially to the staff. Because in the product portfolio are recruiting tools, before any
employing, the potential employees are evaluated at least by an instrument. Usually they use
Profile XT. Also, all employees have higher education and most of them follows deepening
programs.
f) Process
Services, in case of Profiles International, are provided either in the presence of the
consumer, either on-line. This thing depends on the buyers wish. If he chose the on-line
version, the assessment can be completed on the internet, and the report generated is sent by
e-mail. There is the possibility that the process to be realized in the presence of the consumer,
at the companies headquarters. In this case the process in which the service is delivered is part
of the product which the consumer pays.
g) Physical proof.
Profiles International has its head office in Brasov, at 35 Miraslau St. The building is well-
positioned, easily noticeable and accessible. The position of offices and interior spaces is a
key strength in attracting customers. As company colours are white and blue, all Profiles
advertising campaigns use these colours. These colours can also be found on the company
logo.
Figure 1. Profiles International Logo


62
5. CONCLUSIONS

The consultancy company market, in Romania, is in continuous growth and
diversification. Companies are increasingly turning to such services given the stage of
economic development. Profiles International is the world leader in human resources
assessment. The company aimed strictly for national market.
For product policy, is approached an assortment stability strategy. Through this it
maintains the assortment range and intensifies the effort in order to improve quality. The
strategy aims to preserve and strengthen the market position and the prestige gained.
Regarding price policy the company adopts differential pricing strategy depending on the
client, depending on delivery urgency or volume. Distribution and services delivered by the
consultant are directly made by the companys specialized staff. This way it optimizes for
direct distribution strategy. The propositions regarding strategies for promotion policy of
Profiles International are as followed: strategy for extending companys image, organizing
promotional activities, strategy for global promotion of the company.


REFERENCES

1. Florescu C, Pop N. Al. Malcomete Marketing dicionar explicativ, Ed Economic,
Bucureti, 2003
2. Kotler, P. Managmentul marktingului. Editura Teora, Bucuresti, 2007
3. Kotler, P., Armstrong G. Principiile marketingului, Ed. Teora, Bucureti, 2004
4. Mitrutiu, M., Mixul de marketing n serviciile de consultan tez de doctorat,
Universitatea de Vest din Timioara, Timioara, 2007
5. Olteanu, V. Marketingul serviciilor Ed Ecomar, Bucuresti, 2003
6. http://www.ccir.ro./evenimente/evenimente-organizate-de-ccir/eveniment/view/topul-
naTional-al-firmelor-editia-a-xviii-a-2011
7. http://www.profilesinternational.ro/products.html
8. http://www.marketing-vanzari.edrs.ro/ -Revista Marketing Dinamic si Excelenta in
Vanzari


















63



A MULTIVARIATE ANALYSIS OF THE
ROMANIAN CAR HOLDERS ATTITUDES AND BEHAVIOURS



Veronica PRVU, student at Masters of Marketing Policies and Strategies
Transilvania University of Brasov, Faculty of Economic Sciences
Coord: Cristinel CONSTANTIN, Transilvania University of Brasov, Faculty of Economic
Sciences



Abstract : The paper contains an analysis of different variables that influence the
behaviour of the consumer on the automobile market. It is shown the importance of
the cars atributes in the consumer mind and their influence for the competitive
advantage.

Key words: discriminant analysis, principal component analysis, homogeneity
analysis

1. INTRODUCTION

The purpose of this paper is a critical analysis of the market strategies used by
automobile companies, but also a local market analysis to determine its evolution in this
period of time.
This paper assumes that the evolution of the car market has a downward trend and it is
therefore very important to know the factors that caused this phenomenon.
The main objective of the paper is to determine the market strategies implemented by
car companies and analysis of this market in terms of sale volume, but also marketed brands.
The paper also tries to identify the purchasing criteria for new cars by Brasov owners,
but also the satisfaction of those who have a Dacia car.
In addition to this analysis will be carried out a quantitative research that uses inquiry-
based survey to find out the purchasing criteria for new cars.

2. LITERATURE REVIEW

The subject of multivariate analysis deals with the statistical analysis of the data
collected on more than one (response) variable. These variables may be correlated with each
other, and their statistical dependence is often taken into account when analyzing such data.
Response variables under consideration are often described as random variables and since
their dependence is one of the things to be accounted for in the analyses, these response
variables are often described by their joint probability distribution.
23

There are two main factor analysis methods: common factor analysis, which extracts factors
based on the variance shared by the factors, and principal component analysis, which extracts
factors based on the total variance of the factors. Common factor analysis is used to look for

23
Stevens, J. P.- Applied multivariate statistics for social sciences, Lawrence Erlbaum, Fifth edition, 2001, pg. 10
64
the latent (underlying) factors, where as principal components analysis is used to find the
fewest number of variables that explain the most
variance.
24

The principal component analysis (PCA) is the oldest and most versatile method. The
goal of PCA is to decompose a data table with correlated measurements into a new set of
uncorrelated (i.e., orthogonal) variables. These variables are called, depending upon the
context, principal components, factors, eigenvectors, singular vectors, or loadings. Each unit
is also assigned a set of scores which correspond to its projection on the components.
The results of the analysis are often presented with graphs plotting the projections of
the units onto the components, and the loadings of the variables.
25

Discriminant function analysis is used to determine which continuous variables
discriminate between two or more naturally occurring groups. For example, a researcher may
want to investigate which variables discriminate between fruits eaten by (1)primates, (2)
birds, or (3) squirrels. For that purpose, the researcher could collect data on numerous fruit
characteristics of those species eaten by each of the animal groups. Most fruits will naturally
fall into one of the three categories. Discriminant analysis could then be used to determine
which variables are the best predictors of whether a fruit will be eaten by birds, primates, or
squirrels.
26

Linear Discriminant Analysis easily handles the case where the within-class
frequencies are unequal and their performances have been examined on randomly generated
test data. This method maximizes the ratio of between-class variance to the within-class
variance in any particular data set thereby guaranteeing maximal separability. The use of
Linear
Discriminant Analysis for data classification is applied to classification problem in
speech recognition. The prime difference between LDA and PCA is that PCA does more of
feature classification and LDA does data classification. In PCA, the shape and location of the
original data sets changes when transformed to a different space whereas
LDA doesnt change the location but only tries to provide more class separability and draw a
decision region between the given classes.
27


Figure 1 A comparison of PCA and LDA

Source: Duda, R. O., Hart, P. E., Stork, D. G.- Pattern Classification (Second Edition), Wiley
Interscience, New York, New York, USA

24
Richarme, M.- Eleven multivariate analysis techniques: key tools in your marketing research survival kit, Decision Analyst, 2002, pg. 3
25
Abdi, H.- Multivariate analysis, Encyclopedia of Social Sciences Research Methods, Sage Publication, 2003, pg. 1
26
Poulsen, J.; French A.- Discriminant function analysis, Sage Publication, 2001, pg. 1
27
Balakrishnama, S.; Ganapathiraju, A.- Linear discriminant analysis- a brief tutorial, Institute for Signal and Information Processing,
Department of Electrical and Computer Engineering, Mississippi State University, pg. 1
65
One of the basic techniques for the analysis of categorical data is homogeneity
analysis, also known as multiple correspondence analysis.
The focus of the various derivations and presentations of homogeneity analysis is on a single
group of observations (individuals, objects, etc.). However, in many applications the same
variables are administered to multiple groups of objects. Typical examples include personality
inventories administered to depressed and `normal' individuals, marketing survey
questionnaires distributed to socioeconomic groups and so on.
28



3. A MULTIVARIATE ANALYSIS OF THE AUTO MARKET

The paper is based on a market research among the car owners from Brasov. The objective of
the research is to identify the acquisition criteria of a new car.
The members of the sample are car owners from Brasov, are over 18 years and were selected
using the sample in step. They were asked to answer the questions of a questionnaire. The answers
from the 100 respondents were structured in a SPSS sheet and it was applied a multivariate analysis to
fix the links between different characteristics.
The first method is a discriminant analysis that studies the Dacia customers. There are used
the following variables: the degree of satisfaction of the respondents regarding to their Dacia car, their
attitude about the safety and the price-quality ratio of the automobile.
The dependent variable is nominally measured, a dichotomous scale with Yes and No
answers.
The independent variables are measured with proportional or interval scales.
Using the SPSS system the results can be synthesized in the following tables:
Table 1 Group Statistics
Are you satisfied with the quality of
the car that you have? Mean Std. Deviation
Valid N (listwise)
Unweighted Weighted
No Price-quality ratio 3.38 1.188 8 8
Safety 2.38 1.061 8 8
Maintenance cost 1200 968.061 8 8
Yes Price-quality ratio 4.37 .926 27 27
Safety 4.04 .980 27 27
Maintenance cost 734.07 595.013 27 27
Total Price-quality ratio 4.14 1.061 35 35
Safety 3.66 1.211 35 35
Maintenance cost 840.57 709.283 35 35


The average of the independent variables are significant different in the three groups. Those
who are satisfied with the quality of the vehicle have average satisfaction from the quality-price of the
car of 4.37 points on a 5 level scale, 5-very satisfied. In the other case (those who are not satisfied with
the quality of the vehicle), mean is 3.38 points on the same scale.
The average degree of satisfaction with the safety car is higher for those who are satisfied with
the quality car than those who are not.




28
Michailidis, G., Leeuw, J.- Multilevel homogeneity analysis with differential weighting, Computational statistics &Data analysis, 32,
2000, pg. 411-412
66
Table 2 Tests of Equality of Group Means

Wilks' Lambda F df1 df2 Sig.
Price-quality ratio .840 6.272 1 33 .017
Safety .658 17.132 1 33 .000
Maintenance cost .922 2.804 1 33 .103


Values F in the table are higher (price-quality ratio and safety) than the theoretical
values obtained from the Fisher distribution table. As a result, the both variables specified
have a significant discriminant power. Variable safety has a higher discriminant power
because the coefficient Wilks Lambda is lower and the F value is higher than the price-
quality variable.

Table 3 Canonical Discriminant Function Coefficients

Function

1
Price-quality ratio -.149
Safety 1.002
Maintenance cost .000
(Constant) -2.656
Unstandardized coefficients


The table above shows that maintenance costs do not have a significant discrimination
effect. This is why this variable is not listed in the statistically function and it is not included
in the model.
The discriminant function is statistically significant and has the following expression:


Table 4 Classification Results


Are you satisfied
with the quality of
the car that you
have?
Predicted Group
Membership

No Yes Total
Original Count No 4 4 8
Yes 2 25 27
% No 50 50 100
Yes 7.4 92.6 100
Cross-validated Count No 3 5 8
Yes 3 24 27
% No 37.5 62.5 100
Yes 11.1 88.9 100


The information structured in table 4 show that from eight respondents who said they
are dissatisfied with the quality of the car, four (50%) would have to be part of the satisfied
group according to the discriminant score. Thus only 50% of respondents are correctly
67
classified. In the other case (people that are satisfied with their cars quality), 92.6% of
respondents are correctly classified according to the discrimination function. In this respect
we can conclude that the obtained function could give quite good results in identifying
satisfied customers according to their attitudes regarding the quality price ratio and cars
safety.
The second method used is principal component analysis and it aims to identify the
interdependences between different variables regarding the importance given by respondents
to some attributes of cars: price, safety, durability and fuel consumption.


Table 5 Component Matrix


Component

1 2
Price -.975 -.016
Durability .270 .734
Safety .562 .408
Fuel consumption .567 -.781


The above table shows that the first component is mainly correlated with price and
safety and the second one is correlated with durability and fuel consumption. Therefore the
first component refers to the correlation price-safety and the second one to the engine
characteristics.


Table 6 Descriptive Statistics

Mean Std. Deviation Analysis N
Price 28.48 16.253 100
Durability 20.87 9.915 100
Safety 25.68 10.482 100
Fuel consumption 24.45 13.519 100

The table above contains the averages for the categories of response depending on the
importance given by the sample members, which means that a higher score represents greater
importance.
Price is considered the most important feature that respondents take into account when
purchasing a car (28.48 points). Next in ranking is safety (25.68 points). The last two features
are durability and fuel consumption.








68
Figure 3 The emplacement of the respondents depending on income in the plane of two
factors
-3 0 3
Price-safety
-3
0
3
E
n
g
i
n
e

c
h
a
r
a
c
t
e
r
i
s
t
i
c
s
Income
Low-income Middle-income High-income


The emplacement of respondents grouped according to their incomes shows an
agglomeration in the center of the above chart that signifies an equilibrium in the importance
given to the four factors that explain the principal components. In spite of this evidence, we
can notice that people with low and medium incomes tend to appreciate better the price and
durability but also there are people that appreciate the cars safety and durability. There are
few people from these income categories that are concerned about fuel consumption. As
regards the respondents with high incomes, they are spread on the entire chart surface, which
means that there is a high heterogeneity at the level of this group. In this respect, there are
people with high incomes that are concerned about durability but almost the same proportion
is concerned about fuel consumption. A similar pattern is recorded for the first component.
The last method used in our multivariate data processing is the homogeneity analysis
and refers to the links between sex, age income and the automotive brand owned.
Correspondence analysis is based on existing distances between categories of variables on the
graphical representation in two dimensions plan











69
Figure 4 Homogeneity analysis between gender, age, income and brand car
-3 -2 -1 0 1 2 3
Dimension 1
-3
-2
-1
0
1
2
3
D
i
m
e
n
s
i
o
n

2
Dacia
Skoda
Opel
VW
Peugeot
Audi
Renault
Low-income
Middle-income
High-income
Female
Male
18-29 years
30-39 years
40-49 years
50-59 years
60 and over 60 years
What brand is the car you own?
Income
Gender
Age



In the figure above the categories of analyzed variables were represented by dots. The
dots emplacement shows that the brand Renault, Skoda and VW are owned mainly by males,
people with high incomes (over 2500 RON) and aged between 18 and 29 years, and between
40 and 60 years hold. Brands like Dacia, Opel and Audi are owned mainly by women, people
with medium income (between 1200 and 2500 RON) and aged between 30 and 39 years. The
last brand (Audi) is an anomaly in this correlation between variables because the respondents
income does not match the high price of these automobile, but also high maintenance costs.
This one could be explained by the small number of respondents that indicated this brand,
which cannot be considered statistically significant.
Some categories are quite isolated on the chart being low correlated with the other
categories. These ones are Peugeot cars, which recorded a small number of answers and also
other categories like the respondents aged over 60 years and the ones with low income (below
1200 RON).


CONCLUSIONS

The undertaken analysis aims determining the importance given by respondents
according to certain characteristics of owned cars. Thus, the two components considered
important by subjects are price-safety and engine characteristics (durability and fuel
70
consumption). The income distribution of respondents notices a different attitude to the two
components analyzed.
Further analysis is related to the attitude of respondents who hold Dacia against the
quality-price, safety and maintenance costs. For those who are not satisfied with the quality of
Dacia car, 50% would have to fit in the satisfied group. In the other group, 7.4% of the
satisfied respondents should be within the list of those unpleased.
Another conclusion is related to determining the characteristics of respondents
according to owned car. Thus, men, people with high incomes, young people but also aged
between 40 and 60 have a car branded Renault, Skoda or VW. On another hand, women,
medium-income people and those aged between 30 and 39 years have Opel, Dacia or Audi
cars.


REFERENCES


1. Abdi, H.- Multivariate analysis, Encyclopedia of Social Sciences Research Methods,
Sage Publication, 2003.
2. Balakrishnama, S.; Ganapathiraju, A.- Linear discriminant analysis- a brief tutorial, Institute
for Signal and Information Processing, Department of Electrical and Computer Engineering,
Mississippi State University.
3. Constantin, C. Sistem informatice de marketing, Ed. Infomarket, Brasov, 2006
4. Duda, R. O.; Hart, P. E.; Stork, D. G.- Pattern Classification (Second Edition),Wiley
Interscience, New York, New York, USA.
5. Michailidis, G., Leeuw, J.- Multilevel homogeneity analysis with differential
weighting, Computational statistics &Data analysis, 32, 2000.
6. Poulsen, J.; French A.- Discriminant function analysis, Sage Publication, 2001.
7. Richarme, M.- Eleven multivariate analysis techniques: key tools in your marketing
research survival kit, Decision Analyst, 2002.
8. Stevens, J. P.- Applied multivariate statistics for social sciences, Lawrence Erlbaum, Fifth
edition, 2001.




















71


CORPORATE SOCIAL RESPONSIBILITY- BETWEEN THEORY
AND PRACTICAL APPLICATIONS



Anca PORONICU, student at Master of Marketing Policies and Strategies
Coord. Lect. univ. dr. Cristinel CONSTANTIN
Transilvania University Brasov, Faculty of Economics and Business Administration



Abstract: This paper contains a theoretical analysis of the the term social
responsibility, making reference to the area to which it belongs, the strategies that
firms involved in social life are using and various arguments, both pro and con as to
promote social responsibility. It also includes some of the campaigns which
Kronospan company has developed.

Key words: social responsibility, concept, role, arguments.



1. INTRODUCTION

Social responsibility takes many forms and knows various definitions. Basically, the
concept of Corporate Social Responsibility (CRS) represents the business involvement in
public life and is applied regularly through voluntary initiatives aimed at employee benefits,
community and environment. Although the concept is still new in Romania, companies have
realized that for the effective exercise they need the community support, which is rarely
offered free of charge.
It may be reduced to the old saying "One hand washes the other". As companies face
the challenges of a changing environment, they become increasingly aware that CSR can
positively influence competitiveness. Although the main purpose of a company is to generate
profit, it can at the same time, contribute to social and environmental goals, solve real
problems in society by integrating social responsibility as a strategic investment in their work.


2. LITERATURE REVIEW

CSR is a fundamental concept - such as freedom or equality - which is continuously
redefined to meet the needs that are also in constant change from one era to another. WBCSD
defines CSR as "the commitment of businesses to contribute to sustainable economic
development, working with employees, their families, local community and society at large to
improve their quality of life.
29
" CSR practices are based on ethical values and respect for
employees, community and environment.
Currently, researchers believe that the CSR analysis is in undeveloped stage because
no theoretical concepts or empirical methods are yet substantiated..

29
http://www.wbcsd.org/templates/TemplateWBCSD2/layout.asp?type=p&MenuId=NDEx&doOpen=1&ClickMenu=LeftMenu
72
For CSR to become a strategic component of the enterprise a series of steps are required:
achieving social and environmental analysis include: working conditions, energy and water
consumption, etc..
setting targets to improve the collective actions and voluntary activities,
implementation of action programs in social responsibility
30
.
Each company must integrate social responsibility issue in its own business strategy.
In this sense, a company should focus on individuals, putting employees first - valuing them
as the most important assets, establish a system where the activities remain transparent. The
role of social responsibility is clearly defined as responsibilities of the management, the
introduction of codes of conduct, equal treatment of all shareholders, regardless of the share
they hold, transparency and conflict-scale transactions in the General Assembly of
Shareholders.
31

The speciality literature summarizes the three approaches to CSR, each including an
approach and going beyond the previous one. We speak in this case of the following:
addressing responsibility as an obligation to shareholders, the approach to all stakeholders
responsibility and liability approach as an obligation to society as a whole. The first approach
corresponds to the firm's business model, one that emphasizes the acquisition of profits,
considering that the only reason for the existence of a business organization is to produce
goods and services more efficient. The other two approaches, cover more modern business
requirements. These two correspond to socio-economic model, one who believes that business
organization should take responsibility above profit maximization.
Recent years show that more and more leaders adopt socio-economic model, for at
least three reasons:
First, business is driven by corporations, which are creation of society, so this will achieve a
direct social involvement,
Secondly, there is a competition between businesses in the CSR,
Third, many business people understand that it is good to promote social action and that
often is not enough to act legally, its also necessary to ensure better public image.
Currently, companies have developed a specific social behavior, going beyond the
strict profit maximization, with advocates of both models of social responsibility. Their
arguments are summarized below.
Arguments for promoting social responsibility:
companies can not ignore social issues because they are part of society,
businesses have the financial, technical and management resources they need to solve
complex social problems,
companies can create a more stable enviroment and can ensure safety on the long term,
responsible decisions made by companies can prevent increased government intervention,
which would force them to do what is best,
corporations benefit from society, so they need a society that allows them to exist and
operate.
Arguments against corporate social responsibility:
managers are responsible primarily to shareholders, so their actions should focus on the
recovery of investments made by them,
time, money and experience of entrepreneurs must be used to increase profits and not to
solve society's problems,
social issues are affecting society at large, so companies can not handle them on their own,
social issues are the responsibility of officials, who were chosen just for this and should be
held accountable for their decisions,

30
30
Burlea, A.- Responsabilitatea social a ntreprinderii, ed Universitaria, Craiova, 2007, pag 19
31
Oprea, L. - Responsabilitate social corporatist, ed Tritonic, 2005, pag 46
73
corporate obligations to do good can not be extended indefinitely. This could lead to
companies unable to obtain profits.
32

The main challenge for companies operating in Romania currently is the realization
that social responsibility is not only a tool to maximize the image, but a key element driving
the long-term success, directly related to social and environmental performance of the whole
community .
33



3. KRONOSPAN ROMNIA - CORPORATE SOCIAL RESPONSABILITY

Kronospan Romania, member of the Kronospan International Group Holdings Ltd. is
present on the Romanian market since December. On 3 December 2009, the company
officially opened a plant producing wood panels, a true work of art of the field. It was an
important event for Kronospan who managed to take a significant investment, despite the
global downturn. Investment in Romania covers more than 200 million, costs that included
building the most advanced sections for producing OSB in Eastern Europe and is also one of
its kind in the country.
As a company that depends on natural resources, Kronospan Romania considered as a
primary responsibility

conservation and environmental protection. Kronospan strategy is to
preserve nature, with its diversity for future generations and to combine economic,
environmental and social impact for a company respected in the community.
Environmental policy aimes at following directions: continuous improvement,
management by teamwork, leadership through involvement in planning prevention, law
enforcement, rules and standards.
Continuous improvement: Kronospan Romania constantly evaluate their work
to identify the impact on the safety of workers, community health and natural resources for a
harmonious relationship with the environment
Management through teamwork: understanding the responsibilities of each individual
working in a colective way is essential to success.
Leadership through involvement: Kronospan Romania supports the conservation of natural
resources and pollution prevention. The company is always present in the community through
various programs aimed at youth education regarding CSR and environmental protection.
Prevention through planning: impact analysis is present in every decision taken. Are
considered and implemented strategies to eliminate any factors that may create unacceptable
risks to their employees and the community.
Compliance with laws, rules and standards in force obeying the law is
imperative . Partnership with the whole community is the ethical responsibility.
34

Social responsibility is one of the fundamental values promoted by Kronospan. To this
end, the company is actively involved in the life of the communities in which they operate,
both through direct economic investment and social responsibility programs.







32
http://www.responsabilitatesociala.ro/editoriale/responsabilitatea-corporativa-in-romania-de-unde-si-incotro.html
33
Iamandi, I. - Etic i responsabilitate social n afacerile internaionale, ed Economic, Bucureti, 2008, pag 280
34
http://www.kronospan.ro/ro/protectia-mediului.html

74
4. SOCIAL RESPINSABILITY PROGRAMS

The company generally promote social responsibility projects in two main directions:
education and supporting young people and environmental protection.
CSR can be divided under several different types. From the perspective of a communicator
the most useful typology is made by Philip Kotler and Nancy Lee in the book "Corporate
Social Responsibility: Doing the Most Good for Your Company and Your Cause." According
to this typology, when it comes to social responsibility, we talk about the following
categories:
Promoting a cause. In this case the company contribute with money or other resources to
increase public awareness and concern for a cause, or to mobilize the public to donate,
participate or volunteer to support a cause. The main focus is the persuasive communication
in support of one of the objectives above .The resulted funds are usually taken over and
managed by one or more partners (public institutions or NGOs).
In June 2010, Kronospan organized a campaign in which people were invited to bring
all the furniture that is no longer used, whether or not they were good, at one of the collection
centers available to them. Parts that could be used were donated to the needy, and those
already damaged were recycled, being made into new items of furniture components.
Social Marketing. CSR is a program that the company are using to change negative
behavior or to persuade the public to adopt positive behavior.
Even if the program is using tactics aimed at increasing awareness and education, the main
focus is to change behavior. Typically, the behaviors targeted by a campaign must be linked
to serious problems of society.
For a social marketing campaign to be justified, the problem must affect a significant number
of people. Kronospan Romania participated as a partner in the "I prefer to know in advance",
a project conducted by the global initiative "Susan G. Komen for the Cure". The purpose of
the project - awareness of women in deprived areas of breast cancer, increasing the number of
breast cancers diagnosed in early stages, by organizing sessions based on education-
communication facilitated by volunteers, for the transmission of information on breast self-
knowledge and accessing existing services in the county of Brasov for the diagnosis and
treatment of breast cancer.
Philanthropy. Under this program the company contributes directly with money or products
to support a cause. Philanthropic activities may take the following forms: cash donations,
grants, scholarships, providing expertise, access to distribution channels, locations and
equipment. At the beginning of the school year, Kronospan Romania decided to surprise
children at School no. 11 " T. O. IOSIF "in Brasov. Kronospan donated boards and
laminated paneling. The company also supported the rehabilitation of the day center
"Diaconia". Help came in the form of cash and material investment reaching 10,000 Euro
Kronospan has partnered with AIESEC Brasov, the Sustainability Education Program.
The first action within this partnership aimed at supporting the Life Center Association,
"Young people and street children." To this day Kronospan Center donated flooring for
common spatial where daily activities take place and students from AIESEC employees
partner with their traditional, BRD Groupe Societe Generale, have installed flooring.
Kronospan is a AIESEC partener since 2009, being together in their projects, such as
Sustainability Education Program (CSR national project), AIESEC Academy Regional
Training Conference and Youth Development Program. They aim to professional and
personal development of young people and providing opportunities for them.
Volunteer in the community. This type of initiative encourages employees to volunteer in
community support, an NGO or a cause. Among the actions a company can take to stimulate
employee volunteering include: promoting volunteering as a valuable organizational
75
communication recommendation certain cases through internal recruitment and organizing
teams of volunteers, providing paid time off that employees use to volunteer, recognizing
employees who have distinguished themselves in voluntary actions. Kronospan Romania
marked World Environment Day through a partnership with the sanitation company Comprest
and Nature Protection and Tourism Club. The partnership has resulted in an action to green
hill zone Lempes between localities Bod and Harman. Over 70 volunteers, employees and
volunteers from NPTC, Kronospan and Comprest teams participated in this action to clean an
area where traditionally every weekend, people come to forget that grass but must protect.
Socially responsible business practices. Socially responsible practices are initiatives that a
company takes to improve the operation voluntarily, to contribute to the welfare
of the community and the environment. For an initiative to be considered as part of CSR, its
character must be essentially voluntary. In other words, can not be regarded as a CSR
initiatives companies take as a result of pressure from the authorities, NGOs or consumers.
Kronospan has implemented the latest technology in environmental protection but also
adopted different policies in terms of resources, transport, waste, to ensure that its business is
conducted with the lowest environmental impact. The Kronospan waste arising from other
manufacturing processes is recycled and turned into products or used to generate zero carbon
emissions. If a waste is not recycled by them it can be used in partnership with other
companies. Kronospan constantly monitor their water and energy consumption to identify
opportunities to reduce it.
Kronospan is also FSC, certification that ensures that wood used in the production
process comes from verified forests, well managed, which provides a renewable and
sustainable resource. Kronospan has various programs in terms of transport: the efficiency of
travel plans, investment in vehicles equipped with the latest technology to reduce the amount
of pollutants emitted, encouraging use of public transport and alternative means such as
cycling, reducing unnecessary travel and use of teleconferencing. Another priority is the
resource efficiency is to minimize water consumption and rational use of fuel and paper.


5. CONCLUSIONS

Corporate social responsibility involves a way of doing business in a manner that
exceeds expectations of ethical, legal, commercial and public from the company. In view of
the early companies in promoting socially responsible policies and practices, they are more
than a collection of discrete practices or initiatives motivated by marketing or public relations
reasons.
Often, the term social responsibility is corporate philanthropy confused with mere
compliance with the law. Areas such as environmental protection, employee welfare,
community and civil society in general, are issues of concern for companies. CSR activities of
a company brings benefits at two levels: for the society and the company. The easy to guess
the benefits related to the good society and the public interest.
Knowing these benefits and their pursuit, including general business strategy, are
essential to ensure a greater involvement of romanian companies. Kronospan Romania
focuses on customer needs, on their desires and especially on how it can meet expectations on
a particular product within the company. The company's policy and its staff are customer and
environment oriented and pays great attention to these actors in the decisions they take.




76

REFERENCES

1. Burlea, A. - Responsabilitatea social a ntreprinderii, ed Universitaria, Craiova, 2007,
pag 19
2. Iamandi, I. -Etic i responsabilitate social n afacerile internaionale, ed Economic,
Bucureti, 2008, pag 280
3. Oprea, L. - Responsabilitate social corporatist, ed Tritonic, 2005, pag 46
4. http://www.kronospan.ro/ro/protectia-mediului.html
5. http://www.responsabilitatesociala.ro/editoriale/responsabilitatea-corporativa-in-
romania-de-unde-si-incotro.html
6. http://www.wbcsd.org/templates/TemplateWBCSD2/layout.asp?type=p&MenuId=ND
Ex&doOpen=1&ClickMenu=LeftMenu





































77



ECONOMIC CONVERGENCE ANALYSIS WITHIN THE
EUROPEAN UNION USING ECONOMETRIC MODELS


Sima Liliana Ionela
Transilvania University of Braov, Faculty of Economic Sciences and Business
Administration


Abstract:Achieving all nominal convergence criteria has been the main concern of
states that aspire at adopting the European currency, but this does not always
illustrate complete long-term economic performance. Within the strategy for adopting the
European currency, a real economic convergence should always be indirectly influenced
because it exhaustively reflects macroeconomic results and the current status of economic
convergence within the European Union. Consequently, the main objective of this study is
scientific substantiation of EU-states economic convergence models, as well as
highlighting the indicators which determine economic disparities reduction within the
community. In this study, I approached European countries economic convergence by
eliminating inter-countries disparities based on adequate econometric models for
economic growth evaluation and estimating the interstates convergence period,
assessing the feasibility of Romanias real convergence with the EU, estimating beta
convergence and the issue of real convergence.

Key words: neoclassical model, unconditional convergence, conditional convergence,
economic growth



1. Introduction

The topic of real economy convergence is not new. Almost all great economists that
dealt with long-term economic growth took into account in their analysis the issue of real
convergence. The detailed and systematic research in the real convergence field started
together with the econometric applications of these models. Data regarding the indicators
used for analyzing real convergence growth, comparable with the data of other countries,
were calculated and published, numerous indicators for measuring convergence, their aspects
and factors being invented and used.
35

There are several theoretical models which try to explain the process of convergence.
The neoclassical theory on growth, having as fundament Solows model (1956), according to
which poor countries should progress faster than richer countries when they find themselves
in relative points to equilibrated growth methods and when structural differences between the
countries and the endogenous theory dealing with technological change as an endogenous
variable that responds to market signals are taken into consideration.
The main focus of convergence literature has been the convergence rate, also known as
-convergence. This type of convergence was studied in depth both in developing countries,

35
Iancu, A., Convergena economic, Academia Romn Publishing House, Bucharest 2008, p. 4
78
industrialized countries and in countries within the European Community and the European
Union.
Since currently real convergence has been the subject of a great number of approaches
and researches, as well as the existence of numerous calculation methodologies, the second
section presents approaches related to the previous studies, general appreciations as well as
conclusions on eliminating disparities between countries, in other words, on economic
catching-up.
In the third section, studies of convergence indicators and model, having as example
the economy of countries from the European Union (27 countries), as well as evaluations
regarding eliminating existent disparities in these countries. The analysis takes into account
convergence rate calculation, the time frame necessary for removing disparities between the
countries, having economic growth as landmark.
Section four details the case of Romania by the possibility of achieving real
convergence with the European Union, whereas the fifth section presents the conclusions for
this study.

2. Theoretical considerations and previous empirical results of convergence
studies

The theory of neoclassical economic growth has been the fundament of real
convergence studies.
This theory is based on Solows neoclassical model according to which the level of
income per capita is influenced by certain production factors as capital, labour, saving,
population, etc.




Figure. 1 Solows neoclassical model of growth
Source: Solow, R., A Contribution to the Theory of Economic Growth, Quarterly
Journal of Economics 70 (1): 6594.


The illustrated model regards conditional convergence based on which countries
having a different initial level of capital would have the same savings and population growth
rates, or, on the contrary, poor countries points of equilibrium
36
would be different than for
rich countries and convergence will not be possible.
Using this model, Robert Joseph Barro and Xavier Sala-i-Martin discovered significant
economic convergence evidence by means of the analysis conducted within 48 states, in the
United States of America and in more than 73 European regions. Furthermore, another

36
Iancu, A., Convergena economic, Academia Romn Publishing House, Bucharest 2008, p. 8
n= population
growth rate
d=depreciation
k=capital
y= income/worker
L= labour force
s= savings
rate
79
convergence study conducted by the same authors within the 20 OECD members during
1960-1985 showed that countries growth rates are correlated to their initial status. This
happens because the countries studied are members of a more homogenous group, as for the
EU member states.
Brada and Kutan (2001, 2002), De Grauwe and Schnabl (2004) have also analyzed real
convergence in Europe and in the EU, including in Romania and Bulgaria, but not as EU
member states.
37

Although neoclassical economics theory promoted convergence, empirical evidence
was subject for debate. The conclusions drawn by Barro and Sala-i-Martin were overlapped to
detailed reviews and examinations conducted by analysts. More specifically, Mauro and
Podrecca (1994) examined the hypothesis of convergence in the case of Italian regions, using
Barro and Sala-i-Martins analysis model. Their conclusions argued those of Barro and Sala-i-
Martin (1991) for the same case of convergence, claiming that the analyzed regions reject the
convergence hypothesis.
38

Furthermore, Bernand and Durlauf (1995) suggested a new methodology using the
technique of time series for testing convergence hypothesis. In their analysis, empirical
convergence tests were applied to 15 OCDE member states economies and the results
obtained suggested the rejection of the convergence hypothesis
39
.
In response, Barro and Sala-i-Martin (1995) showed in further studies that including
proximal variables for disparities between equilibrated countries would determine a major
difference in the cross-section results for a great number of countries. Hence, when these
additional variables have a constant value, the relation between the GDP growth rate and
GDP initial value per capita becomes significantly negative according to the neoclassical
model.
Absolute convergence is valid for empirical studies related to OCDE and EU member
states, but it is not valid for non-homogenous countries. In this case, the conditional
convergence model must be applied with the purpose to determine if the growth behaviour of
heterogeneous countries can or cannot be explained.
As a consequence, the most often used models in nowadays literature are those
mentioned by Barro and Sala-i-Martin, based on the regression equation on GDP per capita
growth according to the initial GDP level and Mankiw, Romer and Weil model, pursuant to a
similar equation from Solow-Swans model.


3. Real convergence analysis withhin the European Union using econometric
models

3.1. Convergence and regression analysis. -convergence

Although argued by some economists (Friedman, 1992; Quah, 1993) as irrelevant for
the true process of economic growth convergence
40
, the concept related to -convergence was

37
Rileanu Szele, M., Romania and the EU economic convergence : A Study Based on the -Convergence
Theory, Procedings at International Conference on Applied Business and Economics, Greece, 2009, p. 134
38
Sala-i-Martin, X., 15 Years of New Growth Economics:What Have We Learnt? Columbia University, New
York, 2002, p. 4
39
Asteriou, D., Testing the convergence hypothesis using time series techniques, Article - The Journal of
Applied Research, Vol. 18, No. 2, p.126
40
Friedman emphasizes that, according to the definition, the beta-convergence indicator might rather be replaced
with the variation coefficient of IGP/capita distribution between countries/regions that takes into account inter-
temporal changes of IGP/capita between the countries.
80
still imposed in economics related literature. It has even become irreplaceable as calculation,
econometric analysis and process description instrument, when it is taken either in its simple
incipient form (absolute beta-convergence), either in its developed form (conditional beta-
convergence).
If, as I have noticed, according to the neoclassical theory on decreasing capital output,
the idea that poor economies tend to grow faster than rich ones is to be accepted, this would
mean, on the one hand, a gradual reduction of the dispersion coefficient of GDP/capita, and
on the other hand, the existence of a reverse relation between the economic growth rhythm for
GDP/capita in a time frame and the initial level of GDP/capita .
41

We will consider a dependent relation between the growth rate (in a given time frame)
and the level of development for that region (country). This dependency can be observed in a
group of regions (countries) found, at a benchmark point in time (t = 0) and at a certain
development level
42
. From the perspective of convergence analysis, the process of
approaching development levels between countries is assumed, in the sense that the
presumption regarding higher growth rhythms registered in under-developed countries is
based on statistics, but also on the economic theory that comprises key-hypotheses according
to which production factors, especially capital related factors, are important for decreasing
differences between economies.
The purpose of the regression analysis is to decide on this issue, on quantifying the
effect (GDP per capita) marginal reaction in case of cause modification (rather the condition
expressed by the relatively low level of development in the initial stage.
The suggested regression model is the following linear type:
43


(3.1)

where : y
s
= development level (GDP, for instance) in the basic period;
y
iT
= development level after T units of time;
= convergence speed in the equilibrium state;

By arranging the equation terms (1) we obtain the following equation:

=
(3.2)

Equation (2) can also be written in the following way:

=
(3.3)


Equation (3) allows estimating the regression equation:


41
Iancu, A., Convergena economic i rolul cunoaterii n integrarea UE, Study conducted within CEEX
Program Project no. 220, Bucharest, 2006 , p. 23
42
Pecican, , Study conducted within CEEX Program Project Economic convergence and the role of
knowledge for EU integration, Bucharest, no. 220/2006.
43
Rileanu Szele, M., Romania and the EU economic convergence : A Study Based on the -Convergence
Theory, Procedings at International Conference on Applied Business and Economics, Greece, 2009, p. 134


81
= (3.4)

Where the first equation term (4) is the annual income growth rate per capita in the i
economy, between 0 and t time frame, y (0) being the level of income per capita in the time
frame 0. The error terms are identical, interdependent and normally distributed. The
convergence rate is obtained by the following relation:

Convergence rate = (3.5)

- where k is the number of years in the analyzed period.
A negative relation between the GDP growth rate per capita and the initial GDP level
per capita determined a significant negative coefficient, this being the sign of a convergence
process.
The estimated value also indicates the rate to which regions reach their equilibrated
state and, consequently, convergence speed. Based on this value, we can calculate the
necessary time frame for the current disparities to be halved according to the equation :

Halving time = (3.6)




3.2. -convergence and GDP evolution in the European Union countries

For measuring convergence and the equilibrium rate for the European Union countries
on GDP per capita, the correlation between the initial level of this indicator and the growth
rate must have a significant negative value. The smaller the -coefficient, the longer it would
last for a country to reach the equilibrium state, whereas a higher -coefficient means a faster
transition to equilibrium.
Moreover, according to Fig. 3.1, the GDP per capita of poor economies grows faster
that the GDP per capita in case of rich economies, which would suggest the analysis of
economic convergence.

82



Figure 2 GDP per capita convergence level in EU-27
Source: authors calculation based on the European Statistics Institute


Latvia, Lithuania and Estonia form together a small group that does not observe norms,
due to the fact that they have high GDP per capita growth rates, but the analysis shows that
Romania and Bulgaria follow the European convergence process on per capita income value.


3.3 Unconditional -convergence

In the first stage of the analysis, we estimate a convergence rate for EU-27 in the
absence and in the presence of explanatory variables in order to see if conditional or
unconditional -convergence is applied.
In view of applying model (4), the following are taken into account:
the reference year was considered to be 2000;
y(t)
i
/y(t)
0
rapport refers to the final year 2009 and to the level of GDP per capita
growth rate

of that particular year for all the 27 countries, as well as to the GDP per capita for
these countries in the reference year.
According to the results obtained by applying relation (4) illustrated in Table 3.1, for
EU-27, unconditional -convergence can be applied. The regression model explains GDP per capita
growth rate, as compared to the initial level of per capita GDP, corresponding to the empirical works on
economic growth ( Barro and Sala-i-Martin, 2003)
By estimating parameters we obtained a negative and significant correlation between
GDP growth rate and the initial level of this indicator, indicating that EU economies are under
recovery, namely, they are convergent.






GDP per capita - 2000
G
D
P

p
e
r

c
a
p
i
t
a

g
r
o
w
t
h

r
a
t
e
,

2
0
0
0
-
2
0
0
9

83
Table 3.1
Unconditional -convergence testing in the EU-27, 2000-2009

Explanatory
variables
Esti
mated
Standa
rd error
Constant 10.5
35***
1.650
GDP per
capita
-
1.770***
0.374
Convergence
rate
2.90%
R
2
0.473

Obs :***All coefficients are significant at 1% level
The level of incomes and growth rates are based on real GDP per capita, expressed in PPS
Source : authors calculations based on Eurostat data (Appendix 1)

The rate for achieving regions equilibrium, namely the average annual average rate, is
2.90% meaning that the estimated time for reducing the difference between GDP per capita
levels for EU-27 economies being 19 years.















Figure 3 Unconditional -convergence in EU-27, 1996-2008



Source: Bower, U., EU accession: A road to fast-track convergence?,page 25


The results obtained are pursuant to the last 14 years study, demonstrated based on
Fig.3.3., the average annual GDP per capita growth rate in underdeveloped countries being
higher than for developed countries, this being emphasized by highlight on the upper left
quadrant of these poorer countries, including the Baltic countries, although countries like
Slovenia and the Czech Republic are closer to Portugal or Greece.

3.4 Conditional -convergence

According to the neoclassical model, the most important determiners of state stability
are the savings rate, population growth rate and technology. A higher savings rate or
population growth rate is expected to accelerate the convergence process. Furthermore,
84
variables are meant to describe the impact of technology on GDP, as developing human
capital or the opening towards commerce.
In order to better explain the equilibrium state and GDP growth rate for the group of 27
countries, a model containing a set of explanatory variables was introduced.
Parameter estimation in case of -convergence is based on the model:


= (3.7)


Competitiveness is evaluated based on a set of criteria considered to be relevant,
comprising economic performance indicators, government efficiency or business efficiency.
The human development indicator (HDI) classified countries on three fundamental
dimensions of human development: a long and healthy life, knowledge and decent living
conditions.
When additional explanatory variables are introduced, value increases in absolute
terms suggesting that, in the presence of structural reforms and if population number increase
has a negative value, convergence speed shall increase, according to the results obtained and
highlighted in Table 3.2.

Table 3.2
Explanatory variable set impact on GDP per capita growth rate EU-27, 2000-2009

Explanatory variables Estimate
d
Standard
error
Constant -1.326 6.556
GDP/capita -
0.414***
1.132
Imports/Exports (% GDP) 0.39*** 0.015
HDI 3.23** 1.49
Budget deficit (% GDP) 0.138* 0.09
Savings rate (%) -0.03 0.030
Ginni coefficient 0.071 0.058
HPI-2 0.023 0.042
Population average growth rate
(%)
0.606 0.470
Inflation rate (%) 0.020 0.102
Unemployment average rate
(%)
0.096 0.081
Competitiveness
44
-0.11 0.11
Convergence rate 5.93 %
R
2
0.78

Obs :***All coefficients are significant at the 1% level
** All coefficients are significant at the 5% level
* All coefficients are significant at the 10% level

44
Competitiveness is evaluated based on the data from the World Competitiveness Yearbook which classify the
countries according to 327 criteria.
85
Source : authors calculation on European Statistics Institute

According to the results we can observe as average value of imports and exports as a
GDP percentage has a positive but significant influence on GDP growth rate, the human
development index and budget deficit determine a positive but more reduced correlation.
In comparison to the unconditional -convergence model, in case of conditional -
convergence, when other variables are introduced, the increase in convergence rate is
significant. Moreover, these variables better explain the dependant variables and improve the
model.
The negative correlation between the initial GDP level and this indicators growth rate
demonstrate the applicability of conditional -convergence, for a 5.93% convergence rate and
a 15 years disparities elimination interval, being reduced with 4 years as compared to
unconditional -convergence.


4. Perspectives on achieving real convergence in Romania with the European
Union

Romania real economy convergence analysis with the European Union assumes in a
first stage the determination of the necessary time for eliminating differences and equalizing
the GDP per capital level of Romania with that of the EU (25 countries).
The equalization can take place in a reasonable period of time, only if Romania shall
accomplish average annual growth rhythms that are higher than those of EU-25 countries.
In order to determine the convergence period, we start from simple relations regarding
GDP/capita growth in the case of Romania and EU-25, with different initial levels and
average annual rates:
45



Romania
=
Romania
(1+
Romania
)
t
(4.1)



EU-25
=
EU-25
(1+
EU-25
)
t
(4.2)


Convergence can be accomplished when the values of the above-mentioned relations
are equal, according to the relation :



Romania
=
Romania
(1+
Romania
)
t
=
EU-25
=
EU-25
(1+
EU-25
)
t
(4.3)


After the logarithmic calculation and terms rearrangement, the time period (t) is
determined for obtaining Romanias convergence (equalization) with EU-27 on GDP/capita
level:

t=
(4.4)


45
Iancu, A., Convergena economic, Academia Romn publishing House, Bucharest 2008, p. 16

86
The results obtained, according to Table 4, represent the number of years necessary for
achieving EU-25 and EU-15 convergence, with estimated average annual economic growth
rates for Romania, ( r
1
= 5%; r
2
= 6%; r
3
= 7%), similar in size to the ones of 20002009.


Table 4
The necessary time frame (years) for achieving Romanias convergence to EU-25 and
EU-15 regarding GDP/capita

Initial GDP/capita
level r (the year 2000)
(PPS - euro)
Annual average
growth rates for EU-
25, EU-15
2000-2009
Number of years(t) for achieving
convergence on annual average growth
rate variants in Romania
EU countries
R
omania
5% 6% 7%
EU-25 =105
2
6
2.7% 61 44 34
EU-15=115
2
6
1.9% 49 37 30
Source : authors calculations based on the European Statistics Institute data


Pursuant to the data illustrated in the table, at an 5% annual average growth rate,
Romania would need 61 years to reach EU-25 level and 58 years to reach a more limited
group level, in this case EU-15. Moreover, at a 7% annual average growth rate, the number of
years is significantly reduced, being necessary 34 years for equalizing Romanias income to
those of EU-25.
In other words, we consider that on a long term basis, a series of politics that support
economic growth and limit vulnerabilities should be adopted, as well as supporting the
monetary policy by a fiscal-budgetary politics which would assure external equilibrium and
an income policy that would not have excessive pressure on demand.



Conclusions

This paper focused mainly on the quantifiable aspects of achieving convergence for
EU countries and the necessary time frame for eliminating differences between EU countries.
It was approached by various statistic and econometric methods in view of obtaining
indicators that are useful for describing the process development and alto its analysis.
According to the estimates, most EU economies are in recovery when GDP per capita
is analyzed as benchmark indicator.
What is important to know is that initial differences between countries refer not only to
the GDP/capita level mentioned previously but also to the scientific and technologic, as well
as the institutional and cultural background.
In addition, as expected, parameter estimates in case of unconditional -convergence
have shown that the 27 countries of the European Union are convergent and tend to be
equilibrated, having an estimated annual average convergence rate of 2.90% and an estimated
period for reducing differences between the GDP/capita levels of 19 years.
Luxembourg and Ireland, as well as the Baltic countries, form together a small group
that has slightly different norms, due to the fact that they have high GDP/capita rates, but the
87
analysis shows that Romania and Bulgaria comply with the European convergence process
regarding income value per capita.
Compared with previous studies on the same topic, in this case, convergence rates are
much lower, this being partially due to the current economic situation.
This statement is also supported by the European Commission, which in the
Convergence Rapport 2010 specified that countries derogated from adhesion to the euro area,
based on the world financial crisis, were affected by convergence perspectives.
From this point of view, EU supports the countries, using an explicit policy for
achieving real economic convergence, by means of cohesion funds destined for member and
candidate states found at a lower development level and by using structural funds to remove
disparities between the EU regions.
46

Convergence can also be analyzed with other indicators as the human development
indicator, the unemployment rate, the inflation rate and the population or competitiveness
growth rate. The power of the obtained connections was determined with conditional -
convergence.
By analyzing the results obtained we can state that the average value of imports and
exports, the human development indicator and population growth rate have the strongest
influence on GDP growth rate and the convergence rate of 5.93% determines a difference
removing interval of 15 years for EU economies.
Romania must register within the following years higher and higher growth rates in
order to catch up with the gap between our economy and the EU countries economy. An ideal
growth rate would be 7 because it determined a recovery time of approximately 30 years if
EU countries improve with the average rate registered in the last years. The IMF forecasts a
1.5% growth for Romania in 2011 and 4.4% for 2012 which would determine widening this
interval.
By taking into account this large difference that separates underdeveloped countries
from EU developed countries, as well as its complexity, real convergence must be studied in
depth. Furthermore, I must emphasize the fact that, according to the previous theoretical
research, real convergence is a central aspect of economic growth and helps the researcher to
set objectives, resources and mechanisms that could lead to achieving convergence and
determine the transfer of the peripheral (poor) group countries to the central (rich) one.

References

1. Asteriou, D., Testing the convergence hypothesis using time series techniques, Article
- The Journal of the Applied Research, Vol. 18, No. 2
2. Barro, R., Sala-i-Martin, X. (1995). Economic growth , McGraw-Hill, New York,
1995
3. Bower, U., Turrin, A., EU accession: A road to fast-track convergence?, Publications
for the European Communities, 2009
4. Brada, J., Real and monetary convergence within the European Union and between
the European Union and candidate countries: A rolling cointegration approach, ZEI -
Center for European Integration Studies, University of Bonn, No B 05-2002
5. Bernard, A., Durlauf, S., Convergence in International Output, Journal of Applied
Econometrics, John Wiley & Sons, Ltd., vol 10(2), pages 97-108, 1995
6. De Grauwe, P., Schnabl G., EMU Entry Strategies for the New Member States,
Intereconomics, 39 (5), September/October, 2004

46
Iancu, A., Convergena economic, Academia Romn Publishing House, Bucharest, 2008, p. 39


88
7. Friedman, M., Do old fallacies ever die? Journal of Economic Literature, 30, 2129
32, 1992.
8. Iancu, A., Convergena economic, Academia Romn Publishing House, Bucharest
2008, p. 8
9. Kutan, A., Integration of the Baltic states into the EU and institutions of fiscal
convergence: A critical evaluation of key issues and empirical evidence, ZEI Working
Papers, University of Bonn, No B 10-2001
10. Mankiw G., Roamer, D., Weil, D., A Contribution to the Empirics of Economic
Growth, Quartely Journal of Economics, vol.107 , 1992
11. Mauro, L., Podrecca B., Human Capital and the Regional Italian Development: Does
Unemployment matter?, Department of Economics and Statistics (Di.S.E.S.),
University of Trieste,1994
12. Panaite, N., Convergena economic i rolul cunoaterii n condiiile integrrii n UE,
Universitatea Alexandru Ioan Cuza Publishing House, Iai 2008
13. Pecican, , Study conducted within CEEX Program Project Economic convergence
and the role of knowledge for EU integration, Bucharest, no. 220/2006.

14. Quah, D. T., Galtons Fallacy and Tests of the Convergence Hypothesis, Scandinavian
Journal of Economics, 95, 42743, 1993
15. Rileanu Szele, M., Romania and the EU economic convergence : A Study Based on
the -Convergence Theory, Procedings at International Conference on Applied
Business and Economics, Greece, 2009
16. Sala-i-Martin, X., 15 Years of New Growth Economics:What Have We Learnt?
Columbia University, New York, 2002
17. Solow, Robert M. (1956). A Contribution to the Theory of Economic Growth.
Quarterly Journal of Economics (The MIT Press) 70 6594
18. Solow, Robert M. (1957) Technical Change and the Aggregate Production Function.
Review of Economics and Statistics (The MIT Press) 3 (3): 312320
19. The Maastricht Treaty (art. 121), Treaty establishing the European Community (art.
III 198) and The PROTOCOL on the convergence criteria referred to in Article 109j
of the Treaty establishing the European Community
20. http://hdr.undp.org/en/media/HDR_2010.pdf
21. https://www.worldcompetitiveness.com
22. http://www.eurostat.com
23. http:// www.europa.eu
















89





ANALYSIS OF THE BEER CONSUMPTION LEVEL IN ROMANIA



Drd. Alexandra Tlpu
Transilvania University of Braov





Abstract: The project presents the way beer consumption is impacted by the plastic
bottle packaging (PET), average gross salary (GS) and dwellings (D). The model
takes into consideration 15 observations, meaning 15 periods of time were taken into
consideration and 3 independent variables that influence the level of beer
consumption in Romania. All the data used in this report was gathered from several
statistical sources, the most important being: the National Institute of Statistics, the
site of Breweries Association and other annual reports.

Key words: multiple regression, beer consumption, forecast, econometric model




1. Introduction

The conceptualization and use of the consumer and the consumer concepts, from a
practical, social and economical perspective are closely related to the early classical
political economy.
This project aims to analyze an econometric model to investigate to what extent and
under what specific conditions the variable chosen - beer consumption (BC) - is influenced by
explanatory variables: the average price of beer, the plastic bottle packaging (PET), the
population of males, the average gross salary, the housing stock, the green surface, the
amount of water supplies distributed to consumers, the number of students, the volume of
advertising and the number of tourists. In other words, I will analyze the influence these
explanatory variables have on the level of beer consumption: PB - average price of beer, PET
- PET packaging, M - number of males, GS - Average gross salary, D Dwellings, G - green
area, QW - the quantity of water supplied to consumers, S - number of students, MK - the
amount of advertising done to promote beer, T - number of tourists visiting Romania on BC
explained variable, representing consumption of beer in Romania.
The analysis of the dynamic, quantitative, qualitative and structural consumption is
distinct in different moments of time. These mutations happening from one year to another
are explained by various factors of all kinds of natures: economic, geographic, demographic,
economic, technical, social, political, organizational, psychological etc. These factors impact
directly or indirectly the average price, the tastes, preferences and requirements of consumers
etc. Each of these factors has an impact and influences in a different proportion the BC. The
90
effect of their action reveals some general trends and correlations between variables: the
greater share of total active population a nation has, the wealthier that population is; as the
cost-revenue balance allows an increase in living standards, share of food expenditure tends to
decrease, due to the increase GS
47
.
The effects of economic, social and institutional transformation carried out within ten
years are strongly reflected in the level of consumption of goods and services, which perceive
the current market wealth. Representing the side of human behaviour, consumer behaviour
can be defined as a set of reactions by which an individual responds to external specific
factors
48
.
As part of people's economic behaviour, consumer behaviour has experienced over
time several approaches, most theories considering consumer behaviour as a function of
factors which is determined by the socio-cultural and the personal characteristics.
49

Beer has a history of more than 10,000 years. This drink was consumed in ancient
Babylon and Mesopotamia, while in Ancient Egypt there were many kinds of beer. In
Romania, even if sources show that the Dacians consumed a drink made of barley, the first
reference to the beer itself dates from 1366, when a brewer attended a rebellion. The oldest
Romanian brewery was built in Timisoara around 1718. The strongest beer in the world is
Eisbock, is produced in Germany and has 14% ethanol content.
According to the Breweries Association, worldwide there are over 20,000 types of
beer made by 180 methods, all based on four basic ingredients.
For the last ten years the internal beer industry had a positive development in terms of
quality, diversity of brands and total quantity produced. This was possible through ambitious
policies of foreign investors which increased the competition on the domestic market. Beer
market is a large market and grows stronger from year to year.
In Europe, the largest consumers of beer are Czechs, with 163 litres per person.
Although those who have initially brought this drink in Europe are the Germans, they are far
behind the Czechs with 117 litres per person. Beer is one of the products with a consumption
that increased steadily in Romania after 1989. By 2003, the total consumption was about 12
million hectolitres, an increase of 12% compared to 1989, and each Romanian drinking about
60 litres of beer annually.
The Romanian Breweries Associations statistical reports show that beer production
has seen a descending trend during 1993-1997 (in 1997 reaching the minimum level of 7651
thousand hl). Since 1997, when foreign Breweries entered the Romanian market, the
production of beer took an ascending trend.

2. Primary data

The project presents the way beer consumption is impacted by the plastic bottle
packaging (PET), average gross salary (GS) and dwellings (D). The model takes into
consideration 15 observations, meaning 15 periods of time were taken into consideration and
3 independent variables that influence the level of beer consumption in Romania.
X1 = plastic bottle packaging (PET), expressed in mil. hl.
X2 = average gross salary (GS), expressed in RON)
X3 = dwellings (D), expressed in thousands of properties

47
Blythe J. ,,Consumer Behaviour, Teora Press, Bucharest, 1998
48
Stanciu, M. - Consumption patterns in modern Romania Modern structures of European consumption,
Genicod Press, Bucharest, 2001
49
http://www.svedu.ro/curs/marketing/c4.html, page 2 and 4 of 10
91
All the data used in this report was gathered from several statistical sources, the most
important being: the National Institute of Statistics, the site of Breweries Association and
other annual reports.

Table 2.1. The statistics underlying the econometrical model

Years
beer
consumption
plastic
bottle
packaging
average
gross salary
dwellings
litri mil. hl RON thousands
y X2 X4 X5
T1 42.1 0 0.9207 7659
T2 45.8 0 2.5322 7683
T3 45.9 0 7.6452 7710
T4 41.7 0 18.4719 7749
T5 39.2 0 27.5825 7782
T6 35.8 0 42.6038 7811
T7 34 0 84.3316 7837
T8 44.2 0 131.8605 7860
T9 49.6 0 192.1754 7885
T10 55 0 284.0449 7908
T11 54.4 0 422.0357 8107
T12 56 0.82 532.0559 8129
T13 60.6 2.37 663.7868 8152
T14 71.1 3.54 818.3317 8176
T15 70 4.77 968 8182

3. Econometrical analysis

The data presented above will be further processed in Microsoft Excel as a multiple
regression. This prediction method is used for explaining a certain variable (in this case the
beer consumption), using the values of other explainable variables. The analysis will use the
set of explainable variables, representing the scores to varied used tests, and the above
mentione explained variable, for which I plan to estimate for the next two periods of time
(T16 and T17) based on its connections with the other three explainable variables (the plastic
bottle packaging, average gross salary and dwellings).
I will further calculate the correlation coefficients, which are most easily calculated
with the a statistical calculator. The correlation coefficient may take on any value between
plus and minus one. The sign of the correlation coefficient (+, -) defines the direction of the
relationship, either positive or negative. A positive correlation coefficient means that as the
value of one variable increases, the value of the other variable increases as well; as one
decreases the other decreases. A negative correlation coefficient indicates that as one variable
increases, the other decreases, and vice-versa. A strong correlation exists when the
coefficient of r exceeds 0.50.




92





3.1. The correlation between variable

Correlation between plastc bottle packaging and beer consumption
0
10
20
30
40
50
60
70
80
0 1 2 3 4 5 6
Plastic bottle packaging
B
e
e
r

c
o
n
s
u
m
p
t
i
o
n
Correlation between plastc bottle packaging and beer consumption

Figure 3.1. Correlation between plastic bottle packaging and beer consumption

Starting with the year T12 the plastic bottle packaging was introduced on the
Romanian beer market. The correlation between plastc bottle packaging and beer
consumption is positive and strong, meaning that the quantity of beer consumption was
influenced by corking beer into bigger and cheaper packages. This type of packaging also
helped diminuishing the cost and therefore the final price.

Correlation between average gross salary and beer consumption
0
10
20
30
40
50
60
70
80
0 200 400 600 800 1000 1200
Average gross salary
B
e
e
r

c
o
n
s
u
m
p
t
i
o
n
Correlation between average gross salary and beer consumption

Figure 3.2. Correlation between average gross salary and beer consumption

93
Between the level of gross salary and the beer consumption there is a strong positive
correlation. If the salary is high than people can afford to but more alcoholic goods, such as
beer. The shape of this correlation can be regarded as linear.

Correlation between dwellings and beer consumption
0
10
20
30
40
50
60
70
80
7600 7700 7800 7900 8000 8100 8200 8300
Dwellings
B
e
e
r

c
o
n
s
u
m
p
t
i
o
n
Correlation between dwellings and beer consumption

Figure 3.3. Correlation between dwellings and beer consumption


The last analyzed correlation indicates a weak positive correlation between the
dwelling and the beer consumption, meaning that the whether or not people own their own
accommodation has a small influence on the Romanian beer consumption.
These correlations between the variables can be computed also in Excel with the
function Correl. We have correlation of order 0. Take into account, if the value of the
correlation is negative, we speak about an inverse (negative correlation), and if the value of
the correlation is positive, we speak about a positive correlation.
Another statistical indicator that can show whether or not there is a strong correlation
between beer consumption and the other three analyzed variables is the CORREL function
from Microsoft Excell. For the model presented we have the following correlations:

Table 3.1. The Correl coefficient for the explanatory variables

beer
consumption
plastic bottle
packaging
average
gross salary
dwellings
y X2 X4 X5
CORREL
COEFFICIENT 0.836329254 0.929812648 0.831049193



3.2. Econometric model

In order to establish the econometric model I used the table of regression function
from Microsoft Excel. The econometric model has the following general structure:

t t t t t t
x a x a x a x a x a a y
5 5 4 4 3 3 2 2 1 1 0
+ + + + + =
94




Table 3.2. The regression model


The Multiple R (the determinative factor) is very close to 1, having a value of 0.966;
this means a strong correlation between the dependent variable and the independent variable.
R square is equal with 0.934 meaning that the linear model is valid. The Fisher test, which
value is close to 0 indicates a globally significant regression. The values of P are very good
for all the three examined variables, being smaller that 5% and the confidence interval does
not include the value 0, meaning that they do not change their signs from - to +. The t-
Student test indicates that all the estimators are significantly different from 0. The theoretical
value for the Student test is smaller than the computed values in absolute values: -2.93, 4.78, -
3.44.
The final economic model is:
y th =688.645+(-6.947)*X1+0.023*X2+(-084)*x3

3.3. Forecasting the beer consumption for the next two years

This process allows us to establish two possible values for the level of beer
consumption for the next two years (T16 and T17) taking into consideration only the 3 factors
included in the model (plastic bottle packaging, average gross salary and dwellings). The two
values I will further calculate are theoretical values and each has a certain interval of
confidence in which it can take values. In statistical terms, a confidence interval (CI) is a kind
of interval estimate of a population parameter. Instead of estimating the parameter by a single
value, we will estimate an interval that is highly possible to include the parameter taken into
consideration. Thus, confidence intervals are used to indicate the reliability of an estimate. In
order to find out how likely the interval is to contain the parameter I will determine the
confidence level or confidence coefficient. Increasing the desired confidence level will widen
the confidence interval.
A confidence interval is always qualified by a particular confidence level, usually
expressed in terms of a percentage; that is why it is said "95% confidence interval". The two
end points of the confidence interval are referred to as confidence limits.
The formula for the interval of confidence is:
] 1 ) ( [
1 2 2 /
1
+ ' ' =
+

+ + + h t h t k n h t h t
X X X X t y ICy
c
o
o

Table 3.3. The matrix X used to determine the value of the interval of confidence
95

1.00 0.00 0.92 7659.00
1.00 0.00 2.53 7683.00
1.00 0.00 7.65 7710.00
1.00 0.00 18.47 7749.00
1.00 0.00 27.58 7782.00
1.00 0.00 42.60 7811.00
1.00 0.00 84.33 7837.00
1.00 0.00 131.86 7860.00
1.00 0.00 192.18 7885.00
1.00 0.00 284.04 7908.00
1.00 0.00 422.04 8107.00
1.00 0.82 532.06 8129.00
1.00 2.37 663.79 8152.00
1.00 3.54 818.33 8176.00
1.00 4.77 968.00 8182.00

The interval was determined following these steps:
1. x'x
2. (x'x)^(-1)
3. xt+h,(x21)
4. xt+h,(x22)
5. x21' *[(x' *x)^(-1)]
6. [x21' *(x' *x)^(-1)]* x21
7. x22' * [(x'x)^(-1)]
8. [x22' * (x'x)^(-1)]*x22

Using these formulas we have calculated the estimated interval in which the level of
beer consumption is included for the forecasted years: T16 and T17.

Table 3.3. The upper limit and lower limit for beer consumption in T16 and T17
Years y theo Low lim. Up lim.
T16 69.320 58.895 79.744
T17 64.897 60.524 69.270

4. Conclusions

Beer is certainly the most consumed alcoholic beverage. Analysing the factors
influencing the consumption of beer, we conclude that the beer industry in the last 15
years was a positive development in terms of quality, diversity of brands and production.
Beer is one of the products whose consumption has increased steadily in Romania
after 1989. Using the econometrical model, we also demonstrated that with the help of plastic
bottle packages, beer consumption has increased significantly due to ease of use
and usefulness of this type of packaging.
Acknowledgement

This paper is supported by the Sector Operational Programme Human Resources
Development (SOP HRD), ID76945 financed from the European Social Fund and by the
Romanian Government.
96



REFERENCES

1. Dugulean, C., Dugulean, L., Economie aplicat, Editura Universitii
Transilvania din Braov, 1998
2. Dugulean, C., Dugulean, L., Oprei, A., Economical Forecast-Quattro Pro,
Reprografia Universitii Transilvania, Braov, 1995
3. Pecican, ., Macroeconometrics, Editura Economica, Bucureti,1996
4. Stanciu, M., Consumption patterns in modern Romania -
Modern structures of European consumption, Genicod Press, Bucharest, 2001
5. www.bloobiz.ro
6. www.compari.ro
7. www.ccir.ro
8. www.hotnews.ro
9. www.infotravelromania.ro
10. www.insse.ro
11. www.mturism.ro
12. www.zf.ro
13. www.wall-street.ro





























97






ATTITUDES AND BEHAVIORS OF BRASOV POPULATION
REGARDING THE POSTAL SERVICES



Luminita TUDOR (Constantin), student at Marketing Policies and Strategies Master
Program at Transilvania University of Brasov
Coordinator: Cristinel CONSTANTIN, Transilvania University of Brasov



Abstract: This paper aims to find the perceptions of Brasovs population regarding
the postal services starting from their experience in using the services provided by
various operators that deal on this market. The main research purpose is to find how
people perceive the position of national company Posta Romana, especially on the
rapid mail market which is fully liberalized in Romania. The research is based on a
survey conducted on a sample of 120 respondents. The main outcomes reveal a quite
good position of this company but the satisfaction level of its own customer should be
improved. In this respect some relationship marketing strategies should be put in
practice for the next period of time.

Key words: postal services, survey, principal component analysis, homogeneity
analysis, relationship marketing



1. INTRODUCTION

Postal services have a great importance for the peoples daily life but also for
companies that need to communicate each other, to send or receive some documents or
money and other specific services (bills payment, insurance, other financial services etc.).
Even if some services like the usual correspondence have been replaced to a large extent by
electronic mail, the number of other services has been multiplied in the last years. One
example is the parcels that are sent between individuals but also between companies or
between companies and individuals. The electronic commerce has a significant contribution
to the development of these services.
Taking into account the above mentioned we conducted a survey from the perspective
of the main postal service provider from our country, the National Company Posta Romana,
starting from a problem discovered in its activity, which is related to a poor level of customer
satisfaction. Such a problem was discovered from several observation and formal discussions
with some customers, part of them preferring to use the services provided by the main
competitors like Fan Courier, Cargus and others. The main objectives of our research were to
find the Brasov population attitudes regarding the main postal service providers that deal on
98
the local market and to measure the level of customer satisfaction in relation with the
company Posta Romana.
The results revealed that Posta Romana is the most popular service provider, the
majority of researched population using its rapid mail services in spite of a lower level of
satisfaction in comparison with the main competitors. We also found that the overall level of
customer satisfaction is related to the front office personnel so that some relationship
marketing strategies should be put in practice. In this respect several recommendations have
been issued in the final part of the paper.


2. LITERATURE REVIEW

Postal services are included in the general category of services, which have some
peculiarities in comparison with the physical goods. Service companies rely on a set of
resources (employees, physical resources, technology and systems) which are made available
for the customers in order to supply the service. Thus, the purchase of services is more
complex, with different risks for buyers. Services are less tangible, making the evaluation
difficult to measure because there is no inspection of deliveries as in the case of material
goods
50
. This intangibility leads to the impossibility to separate the act of service providing by
the effective consuming of the named service. Taking into consideration all these
characteristics, in service activity it is very important to establish a direct relationship between
provider and consumer
51
.
One of the most common issues regarding the postal services in a liberalized market is
about the Universal Service Obligations (USOs), which guarantee that all consumers have
access to a basic package of services at affordable uniform prices and that the services have a
minimum level of quality
52
. In this context it is considered that a full market liberalization can
lead to an incomplete geographically coverage of the entire country territory because the
operators are likely to engage in cream-skimming activities in order to capture the most
protable areas
53
. For this reason certain regulation systems consider that the USOs should be
transferred to a national operator, which are to be protected against competition for several
basic postal services. Some authors proposed other systems to guarantee the USOs. One of
these systems, proposed by J. Calzada, is to leave the freedom for operators to deliver all
postal services but the regulation authorities have to impose minimum coverage and quality
requirements on the services provided by these companies
54
.
In our country, The National Company Posta Romana has been appointed as
universal service provider in the field of postal services until the end of year 2012. In this
respect, Posta Romana has the obligation to collect, sort and deliver domestic and
international mail items, parcels and other printed papers on the entire Romanian territory.
Additionally the company is granted the exclusive right to provide postal services covering
mail items, whether their delivery is accelerated or not, whose weight is less than 50 g,
against a price inferior to 2 lei
55
.

50
Constantin, C., Services improvement on business-to-business market, In The International Conference on Business Excellence, ICBE -
2006 Proceedings, October 2006.
51
Grnroos, Ch., Services Management and marketing, Ed. Lexington Books, Toronto, 1990
52
Calzada, J., Universal service obligations in the postal sector: The relationship between quality and coverage, in Information Economics
and Policy, 2009, No. 21, pp. 10-20
53
Eckert, S., Postal reform around the globe: Comparing the Asian and European experience, in Policy and Society, 2009, No. 27, pp. 261
272
54
Calzada, J., Universal service obligations in the postal sector: The relationship between quality and coverage, in Information Economics
and Policy, 2009, No. 21, pp. 10-20
55
Posta Romana, Annual Report 2009, http://www.posta-romana.ro
99
In the same time, the Romanian postal market has been liberalized so that the
competition became very high in the field of rapid expedition, which is very attractive for
private operators. As the national company deal in a fierce competitive market, putting in
practice proper marketing strategies is very important for the future development of this one.
Some of these strategies have to be oriented towards the relationship marketing, which is
related to building, maintaining and developing strong relationships with customers and other
stakeholders in order to obtain a high profitability
56
. Putting in practice these strategies need
some information about the customers behaviors and attitudes, which can be provided by
marketing research. In this respect, we conducted a survey among Brasovs citizens in order
to evaluate the present positions of different postal service providers on the local market.


3. RESEARCH METHODOLOGY

Our survey is based on a questionnaire used to collect data regarding different
behaviors and attitudes of Brasov citizens regarding the postal services irrespective their
providers. Thus, we have measured the respondents satisfaction regarding the services
provided by different companies and also the importance given to some criteria in choosing
the service provider.
The survey was conducted on a sample that counted 120 individuals randomly
selected, having a structure quite closed to the population one. In this respect, the majority of
the respondents were female (56%), with a median age of between 27 and 40 years old. Most
of the respondents have a medium income (39%). The main weakness of our sample is its
quite low dimension, which cannot assure a reasonable error in the statistical inference.
The data were analyzed using SPSS system and both univariate and multivariate
statistics were computed. As multivariate analysis we used Principal Component Analysis
(PCA) and Homogeneity analysis (HOMALS) in order to benefit from their advantages that
consist in the possibility to analyze simultaneous relationships between a high number of
variables
57
.
PCA uses a large set of interrelated variables that is reduced to a low number of
variables (factors), while retaining as much as possible of the variation present in the data set.
The resulted factors are uncorrelated, in comparison with the initial variables. The resulted
factors are ordered according to their contribution to the total variance of the original
variables
58
.
Homogeneity Analysis (HOMALS), also known as Multiple Correspondence
Analysis, is a method which makes complicated multivariate data accessible by displaying
their main regularities in pictures such as scatter plots
59
. It provides an easily interpreted
perceptual map that jointly shows the relationship between the categorical variables, which is
not available through the traditional method of using Chi-Squares on a bi-variate level of
analysis
60
.

4. RESEARCH OUTCOMES

The main purpose of our research was to identify the most used postal services and the
position of the main service providers according to the customers satisfaction level. A large

56
Hunt, S., Arnet, D., Madhavaram, S. , The explanatory foundations of relationship marketing theory, in Journal of Business & Industrial
Marketing , 2006, vol. 21, No.2, pp. 72-87.
57
Constantin, C., Sisteme Informatice de Marketing, Ed. Infomarket, Brasov, 2006.
58
Jolliffe, I.T., Principal Component Analysis, 2
nd
edition, Ed. Springer, 2002.
59
Michailidis, G., de Leeuw, J., The Gi System of Descriptive Multivariate Analysis, in Statistical Science, Vol. 13 (4), 1998, pp. 307336
60
Schimmel, K., Nicholls, J., Segmentation Based On Media Consumption: A Better Way To Plan Integrated Marketing Communications
Media, The Journal of Applied Business Research, Vol. 21 (2), 2005, pp. 23-36.
100
part of the analysis has taken into account the rapid expeditions, a market with a high
competition on the local market. The evaluation was made both from the senders and
receivers points of view.
In the first part of questionnaire our objectives were focused on the rapid mail
services. In this respect, the main criteria used in choosing a company for sending rapid mails
were ordered according to the importance given by the customers (see table 1).

Table 1. The order of criteria used to choose rapid mail services

Purchasing criteria Mean Score
Delivery speed 1,30
Price of service 1,86
Behavior of contact personnel 2,45
Company notoriety 2,87


A ranking scale according to a certain criterion was used, the most important aspect
taken into consideration in the purchasing process receiving rank 1 and so on. The criteria
were ordered based on a computed a mean score. The speed of delivery has been placed on
the first place, followed by the price of service. Speaking about rapid services the speed of
delivery is naturally the most important, but we can notice that the price is also very
important. Therefore, at a comparable speed of delivery a person will choose the service with
a lower price. Such a decisional process could be the explanation of the respondents
behaviors, which use the services offered by Posta Romana to a great extent (see figure 1).

Figure 1. Companies used by respondents for sending rapid deliveries

81%
55%
13%
13%
2%
0% 20% 40% 60% 80% 100%
Pota Romn
Fan Courier
Cargus
Urgent Curier
Other


In figure 1 we can see that the majority of respondents that send rapid deliveries work
with Posta Romana (81%). Fan Courier also recorded a high number of responses as far as the
services offered by the rest of competitors have been mentioned by a lower number of
respondents. As the used question has multiple responses, the total percentage exceeds 100%,
the answers being divided by the number of valid cases.
Trying to measure the level of customer satisfaction regarding the services provided
by the main companies, we have found that the mean attitudes are quite closed, Fan Courier
101
being on the first place and Posta Romana on the last place (see figure 2). Even if Posta
Romana recorded the worst mean of satisfaction, most of respondents prefer this company,
one possible explanation being the price of services. If the satisfaction levels do not differ in a
great extent, the prices used by Posta Romana are perceived as being significantly lower than
the ones of other companies.

Figure 2. Mean attitudes regarding service process and price on a 5 levels scale (5= very
high)

3.54
2.81
3.87
3.45
3.81
3.23
3.75
3.33
0.00
1.00
2.00
3.00
4.00
M
e
a
n
Posta Romana Fan Courier Cargus Urgent Curier
Satisfaction regarding the service process Price level



The most important competitor of the national company on the local market, Fan
Courier, benefits from the highest satisfaction level regarding the service process but also its
prices are perceived as being the highest ones. As a large number of people use the services of
this company, we can conclude that these ones accept to pay more for a high level of quality.
The next step in our investigation was to evaluate the level of customer satisfaction
regarding some features of services provided by Posta Romana. These ones are related to
employees competence and behaviors, as well as to physical evidence like: offices
ambience, display units and facilities. The means of attitudes towards these aspects are
presented in Table 2. The attitudes were evaluated on a numerical scale with 5 levels equally
distanced (5 = very satisfied). The results show that the issues related to front office personnel
recorded the highest scores, being situated in the positive side of scale near the level 4
satisfied. The issues regarding the physical evidence recorded lower scores, some of them
being in the negative side of scale (offices ambience and facilities inside offices).

Table 2. Means of customer satisfaction on a 5 levels scale (5= very high)

Service features Mean
Employees' competences 3,75
Employees' behavior 3,56
Display units for information 3,04
Offices' ambience 2,82
Facilities inside offices 2,71
102


Trying to find common patterns of the analyzed service features we used Principal
Component Analysis as a multivariate method, which has the advantage to reduce a high
number of usually correlated variables to a low number of principal components, which are
not correlated. Applying this method on the above variables we obtained two components that
explain 83% of the total variance. We validated the statistical significance of the correlations
and adequacy of factors using specific statistical tests such as Barlet test of sphericity and
Kaiser-Meyer-Olkin measure of sampling adequacy
61
. Both tests revealed a good adequacy of
the obtained components.



Figure 3. The correlations between variables and the principal components
-1,0 -0,5 0,0 0,5 1,0
Component 1
-1,0
-0,5
0,0
0,5
1,0
C
o
m
p
o
n
e
n
t

2
Employees_competence
Employees_behavior
Office_ambience
Display_units
Office_facilities



The first component is correlated with variables regarding the physical evidence that
characterize the local offices of Posta Romana as far as the second component is related to the
front office employees. Therefore the two components were labeled as follows: Component 1-
Satisfaction with physical evidences and Component 2- Satisfaction with contact personnel.
Trying to find whether the two components are correlated with the overall satisfaction
level regarding the services provided by Posta Romana, we transformed this last variable from
a 5-levels scale to a 3-levels one, keeping the same the middle level (neutral) and grouping
the extreme levels in two categories (dissatisfied and satisfied). The respondents, grouped
according to these three levels, were scattered in the plane of the two principal components.
The charts axes were labeled with the name of these principal components (see figure 4).


61
Malhotra, K. Maresh, Marketing Research, International Edition, 4
th
edition, PEARSON Prentice Hall, 2004.

103



Figure 4. The respondents emplacement according to their overall satisfaction in the
plane of two components

-4 -2 0 2 4
Satisfaction with physical evidences
-4
-2
0
2
4
S
a
t
i
s
f
a
c
t
i
o
n

w
i
t
h

c
o
n
t
a
c
t

p
e
r
s
o
n
n
e
l
Overall satisfaction
Dissatisfied Neutral Satisfied



In figure 4 we can see that a great part of respondents that are dissatisfied in the
relation with Posta Romana or have a neutral attitude are placed in the bottom part of the
chart, which means that they are dissatisfied by the contact personnel. In the same time part of
them are satisfied by physical evidences and other part are dissatisfied, but the points are quite
closed to the charts origin on OX axis. In conclusion, customer dissatisfaction is highly
correlated with personnel issues and a in a low measure with physical evidence issues. On
another hand, the respondents with a high level of overall satisfaction in their relationship
with Posta Romana are satisfied by contact personnel too. In this case we can find a high
number of respondents that are satisfied both by contact personnel and physical evidences, but
there are some people that are not satisfied by physical evidence, being satisfied only by the
contact personnel.
The results of Principal Component Analysis correlated with the overall level of
satisfaction revealed that the contact personnel play an import role in the relationship with
customer and their satisfaction. In this respect, an orientation towards relationship marketing
with the involvement of contact persons could be a good strategy for the National Company
Posta Romana.
Another objective of our research was to find a profile of the customers that use to
benefit from the services provided by Posta Romana. In order to achieve this objective we
used another multivariate analysis method, known as Multiple Correspondence Analysis or
Homogeneity Analysis (HOMALS). This method is applied to nominal variables, the
categories of every variable being displayed in a bi-dimensional plane. The associations
104
between certain categories are higher when they are displayed closed each other. For our
analysis we used three characteristics of the respondents (gender, income and age) and the
variable that identify the customers that used in the last year the services provided by Posta
Romana (responses Yes or No).

Figure 5. Homogeneity analysis between customers characteristics

-3 -2 -1 0 1 2 3
Dimension 1
-3
-2
-1
0
1
2
3
D
i
m
e
n
s
i
o
n

2
Yes
No
Low
Medium
High
Male
Female
18-26 years
27-55 years
over 55 years
Customer of Posta Romana
Income
Gender
Age



The chart above shows a high homogeneity of the analyzed variables as almost all
their categories are grouped in the central part of chart. An exception is the age category over
55 years that is displayed far from the group. In spite of the mentioned homogeneity we can
observe that the Posta Romanas customers (responses Yes) are placed at distance from the
one that havent used these companys services in the last year (responses No) and there are
some local associations between categories. The most evident associations are with the age
categories but also with the income ones. In this respect, the consumers of services provided
by Posta Romana are mainly people between 27-55 years old, with medium or high incomes
as far as the non-consumers are young people (18-26 years old) and people with low incomes.
As regards gender, males and females are almost equally distanced by both yes and no
categories, so there is no evident association between gender and using the services provided
by Posta Romana.


5. CONCLUSIONS

105
Postal services involve a large number of activities and many people, which lead to
high costs for the process of mail delivery. Such activities consist in picking-up the mails
from senders in special offices or from their home; an impressive logistic system meant to
sort the deliveries on destinations and to transport these ones around the country; mail
distribution to the receivers home or in the providers offices. In order to cover these costs a
postal company has to deliver a significant number of letters and parcels that can assure
enough incomes. In spite of reducing the number of letters in the last years as result of the e-
mail expansion, the competition on postal service market has intensified especially in the field
of rapid deliveries (documents, parcels) which cannot be substituted by the electronic mail.
In this context, for every postal company it is very important to know its image in the
consumers mind. Our research is connected to such initiatives, having as main purpose to
identify the image of the National Company Posta Romana in comparison with its
competitors and to evaluate the customer satisfaction in relation with this company. The
outcomes show a worse customer satisfaction regarding the rapid deliveries of Posta Romana
in comparison with its main competitors but these differences are relative low in mean values.
In the same time, the prices practiced by Posta Romana are perceived as being significantly
lower, which can explain a higher number of consumers that use the services provided by this
company.
Using some multivariate techniques, we found that the overall satisfaction level is
highly correlated with the satisfaction in relation with the front office personnel and the main
customers of Posta Romana are especially people with medium and high incomes, both male
and female with medium age.
Taking into consideration the above results and the correlation between the
satisfaction level and the behavior of the contact persons, we recommend some relationship
strategies that could be put in practice by the top management of Posta Romana. First of all,
the training of front office employees is crucial for achieving the needed professional
competences that can contribute to a high quality of services. On another hand, a good
relationship with the customers could be established by assuring the service readiness. In this
respect the company has to find solutions to reduce the time that an individual spends for
purchasing a postal service, which need to involve more employees that can serve the clients
in the most crowded period. In the same time the delivering process has to be improved by
establishing a strong relationship with the deliveries receivers. In this respect the courier
have to contact the receiver and to establish all the details regarding the best way in which the
mail could arrive to the destination. All the above mentioned strategies should be completed
with a proper relationship between the management and companys employees meant to
assure a high level of employee satisfaction as prerequisite of a high level of customer
satisfaction.



REFERENCES


1. Calzada, J., Universal service obligations in the postal sector: The relationship between
quality and coverage, in Information Economics and Policy, 2009, No. 21, pp. 10-20
2. Constantin, C., Services improvement on business-to-business market, In The International
Conference on Business Excellence, ICBE - 2006 Proceedings, October 2006.
3. Constantin, C., Sisteme Informatice de Marketing, Ed. Infomarket, Brasov, 2006.
4. Eckert, S., Postal reform around the globe: Comparing the Asian and European experience,
in Policy and Society, 2009, No. 27, pp. 261272
106
5. Grnroos, Ch., Services Management and marketing, Ed. Lexington Books, Toronto, 1990
6. Hunt, S., Arnet, D., Madhavaram, S. , The explanatory foundations of relationship marketing
theory, in Journal of Business & Industrial Marketing , 2006, vol. 21, No.2, pp. 72-87
7. Jolliffe, I.T., Principal Component Analysis, 2
nd
edition, Ed. Springer, 2002.
8. Malhotra, K. Maresh, Marketing Research, International Edition, 4th edition, PEARSON
Prentice Hall, 2004.
9. Michailidis, G., de Leeuw, J., The Gi System of Descriptive Multivariate Analysis, in
Statistical Science, Vol. 13 (4), 1998, pp. 307336
10. Schimmel, K., Nicholls, J., Segmentation Based On Media Consumption: A Better Way To
Plan Integrated Marketing Communications Media, in The Journal of Applied
Business Research, Vol. 21 (2), 2005, pp. 23-36.
11. Posta Romana, Annual Report 2009, http://www.posta-romana.ro,