ISSN 1582-5949

ANNALS OF THE UNIVERSITY OF PETROANI

ECONOMICS

VOL. III

UNIVERSITAS PUBLISHING HOUSE PETROANI ROMANIA 2003

ISSN EDITOR OF PUBLICATION

Prof., Ph.D. Ioan-Lucian BOLUNDU
e-mail: ibol@upet.ro

EDITORIAL BOARD AND ADVISORY BOARD OF ECONOMICS ISSUES

Editor-in-chief: Prof., Ph.D. Mariana MAN Associate Editors: Prof., Ph.D. Lszl TTH Prof., Ph.D. Ioan Constantin DIMA Prof., Ph.D. Ioan COSMESCU Prof., Ph.D. Ionel BARBU

- University of Petroani, Romania - University of Miskolc, Hungary - ARTIFEX University of Bucharest, Romania - Lucian Blaga University of Sibiu, Romania - Aurel Vlaicu University of Arad, Romania

Editor Secretary: Assist. Prof. Imola DRIG

- University of Petroani, Romania

Editorial office address: University of Petroani, 20 University Street, Petroani, 332006, Romania, Phone: (40) 254/542.994, 542.580, 542.581, 543.382, Fax: (40) 254/543.491, 546.238, Telex: 72524 univp, E-mail: imola_driga@yahoo.com

Annals of the University of Petroani, Economics, 3 (2003)

Contents
pag Baron, M.; Dobre-Baron, O. Establishment of Mica company and the takeover of Ruda 12 apostoli mine undertaking located nearby Brad ............................................................................... Bleanu, V. The major influences of the organizational buying behavior at the level of the Romanian mining companies Biber, E.G. Objectives and values of a company Bojinc, M.; Szasz, M. Electronic commerce and electronic documents statute Cosmescu, I; Cosmescu, D.B. La concurrence internationale au cadre de lintentification du proces de globalisation de leconomie ... Cucu, I.; Dura, C. The elaboration of a marketing plan regarding infrastructure modernisation of Parng touristic area . Dima, I.C.; Drig, I. Considerations regarding the development of industrial technology.. Fleer, A. Loccupation de la force de travail - facteur dun developpement durable .. Flitr, M.P. The effects of services characteristics on the marketing mix for services .. Fulger, I.V. Material and financial aspects characterizing the population of Petroani in July 2002 .. Ghicjanu, M. Management control information .............................................. Ghicajanu, M.; Dolea, G. Le processus de conrle managerielle ..................... Gorski, H. Economy and management in todays electronic world .................. Iloiu, M.; Csiminga, D. Investment project evaluation NPV and IRR criteria . Ionic, A. From quality assurance to total quality management ....................... Irimie, S.; Bleanu, V.; Hodor, P. The problems of the labour market in Romania Irimie, S.; Bleanu, V.; Hodor, P. The analysis of the labour market at the level of the Hunedoara county .............................................................. Isac, A.; Isac, C. Informatical aspects regarding decision tree in decisions optimization ........................................................................................... Isac, C. Characteristic of Japanese decision making by consensus .................. Ivnu, L. Risk measurement systems 5 23 29 33 37 41 47 53 57 65 75 79 83 89 97 103 111 117 123 127

Annals of the University of Petroani, Economics, 3 (2003)

Koronka, A. The originality of Eminescus economic thought .. Magda, D. The Romanian institutional and legislative environment regarding external migration ................................................................................. Man, M.; Mihil, E.; Monea, A. Considerations regarding some external influences on the Romanian accountancy reform ................................. Mihil, E., Considerations about the fundament of prices by their comparison Mitran, I.; Mitran, C. On a ruining model in a competitional market problem . Munteanu, R., The experience of Germany regarding the economic rehabilitation of the former mining areas ............................................. Popescu, M.; Monea, A. General methodology of auditing ............................... Preda, M. Route and circuit generation in a graph with XGD&C .................. Rdulescu, M.; Buia, G. Coal - a solution for the energy of the near future Rscolean, I., Tendencies in the evolution of the expense and income structure regarding the local budgets ................................................... Semen, M.V. Optimale faktorenkombinationen in produktionssystemen der bergbauindustrie ................................................................................... Silivestru, T. Particularities and suggestions concerning agricultural credit in Romania in perspective of integration in European Union .. Silivestru, T.; Dobre-Baron, O. Proposals regarding methods used on the interests granted for agriculture purposes ............................................ Slusariuc, G. Consideration about the market of the motor industry Tiuzbian, I.N. The local income multiplier model Oxford Brookes University ..

pag 131 137 141 147 153 159 163 169 177 181 185 193 201 209 213

Annals of the University of Petroani, Economics, 3 (2003), 5-22

ESTABLISHMENT OF MICA COMPANY AND THE TAKEOVER OF RUDA 12 APOSTOLI MINE UNDERTAKING LOCATED NEARBY BRAD
MIRCEA BARON, OANA DOBRE-BARON *
ABSTRACT: After the First World War the Romanian society, its industry with the extractive industry in particular, enters a new and prolific stage of development. Within this context, the Romanian mining societies, among which Mica company are being established, with the declared purpose of extracting the riches of the underground. It shall purchase the gold mines belonging to Ruda 12 Apostoli mining association, and it shall further create a suitable framework for developing one of the most prestigious economic institutions in Romania in the period between the two world wars. KEY WORDS: period between the two world wars, mining industry, Mica company, Ruda 12Apostoli

The Union occurred in 1918 and the birth of the Large Romania pushed forward the relation built among all the Romanian provinces and settled all through the ages; it accomplished a suitable, national, economic, social and cultural framework for a rapid development of the production forces. The Union enlarged the territory and increased the demographic potential but it also gave birth to real opportunities for using different types of cultural and economic potential reached by getting all the riches into the body of the country. Economically, the Union jointed the internal market and the national economy into one whole; it allowed reaching a new stage in the social and economic development by a faster growing of the production factors. All the changes that are about to come shall speed up the industrialization in spite of all the losses produced by the destructions occurred and the economic disorganization produced by the war. The process of unification shall make possible the implementation of a long range of social and economic reforms, with favorable results for the further development of the economic society. The internal social and economic aspects
*

Assoc. Prof., Ph.D. at the University of Petrosani, Romania Assist. Prof. at the University of Petrosani, Romania

Baron, M.; Dobre-Baron, O.

together with the political issues, the strategies used, the international situation triggered the development of the Romanian society towards a certain direction who made possible a constant progress during all the period between the wars, in spite of some limitations. Gnter B.L. Fettweis claims that the mining activity has a biunivocal relationship with the social, economic, political and cultural reality as it shall act upon some of its important fields: state and politics, economy and society, science and technique, art but at the same time it is influenced by the society where it develops1. The extraction of useful mineral substances represents an activity without which the society could not develop but, at the same time, mining activity is conditioned by the social order, by the physical and intellectual ability of those who work in this field, by the evolution of science and technique and by the internal and international context. Mining in the Romanian area and also the extraction of gold and silver ores is an activity that can be proven of having taken place since the primitive era and up to present days.2 The mining activity remained one of the most important fields of economy in the period between the two world wars, and it had a very significant role in realizing the social product and the national income3. The Romanian mining activity made available for the society goods extremely important for the material production, both as raw materials, as well as fuel, goods we would have had to import hadnt we had them4. The Romanian mining activity from the period between the two world wars has a series of characteristics, which are not to be developed in the present study.5. We know that after the Unification, the leading factors of the Romanian state, political characters, specialists declared themselves in favor of a new management of the Romanian societys riches and in this context the management of the useful mineral
Gnter B. L. Fettweis, Reflexion ber den Bergbau zur Zeit des Georgius Agricola, Res Montanorum, Leoben, 1994, nr. 9, p. 7. 2 See, for example, N. Maghiar, t. Olteanu, Din istoria mineritului n Romnia, Editura tiinific, Bucureti, 1970. 3 N. P. Arcadian, Industrializarea Romniei, second edition, Imprimeria Naional, Bucureti, 1936, p. 187. The contribution of the mining industry to the national income million lei Year Gross Petrol Coal Methane Gold, silver, salt, % of the national Gas quarries, other national Income metals income 1929 196000 12480 2556 487 1520 8,25 1930 145000 12767 1784 564 1519 10,80 1931 111000 9007 1367 404 1109 10,20 1932 103000 9400 1239 341 1233 11,84 The only imported raw materials were iron, besides iron works (N.P. Arcadian, Op. cit., p. 195) and coal, mainly from Turkey bituminous coal for coke [Analele Minelor din Romnia (A.M.R.), XVII, nr. 10, 1934, p. 393]. 5 For details see, Mircea Baron, Crbune i societate n Valea Jiului. Perioada interbelic, Editura Universitas, Petroani, 1998, p. 109-130.
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Establishment of Mica company and the takeover of

substances deposits a largely debated subject, at the same time seeking and finding solutions for solving this matter. We know the fact that the judicial process of the first years after the Unification created a framework to realize both the nationalization work of art for the goods having foreign capital, especially enemy one6, of transforming the mining enterprises in anonymous Romanian companies with major Romanian leadership and capital7, as well as a better management of the states goods by selling some of the companies that belonged to it8. As many things depended on the decisions of the Peace Conference in Paris, while waiting for the signing of the peace treaties and in order to prevent the allied capitals to skip the position gained from the war, the Romanian authorities acted, first of all, by publishing the Decree - Law no. 2162 of 6th June 19199. The Decree stipulated that, until further notice, it was forbidden to grant any discoverer titles, exploration permits and exploitation agreements for the mineral substances mentioned under article 2 in the Mining Law of 189510, this decision being valid both for applications to be filed, as well as those already filed. Moreover, by the Decree - Law no. 4241 of 7th October 1919, it was forbidden, until six months after the general peace treaty has been signed to perform any transactions and transfers of mining and industrial goods generally all over the country11. In J.C.M. no. 2358/ 3 October 1919, by which it was requested the approval of this Decree Law it was shown that it sprang from the necessity to put an end to the speculations going on lately, speculations carried out by some agents, involving industrial and mining goods12). By applying a safety sequester upon the goods that now fell within the Romanian states jurisdiction were interested both the bourgeoisie of the Vechiul Regat (The Old Kingdom = Romania until 1918), as well as the Transilvanian one, therefore the Directing Council would act accordingly, deciding on the 1st April 1919 that the industrial and commercial enterprises will not be put under sequester, but under security and control13, and by Order no. 2706, of 25th April 1919, all commercial enterprises, establishments, companies and associations from the territory subject to the administration of the Directing Council who had its headquarters on the Hungarian territory, were put under its control14. Therefore control and not sequester or
C.Hamangiu, Codul General al Romniei., vol. XI-XII, 1922 - 1926, p.3-20; p. 617-678. Ibidem, p. 626-627. 8 Ibidem, p. 610-617. 9 C. Hamangiu, Op. cit., vol. IX-X, p. 73. 10 In the 2nd article of the Mining Law of 1895 there are considered as mines those deposits known as containing in layers or mass deposits; under paragraph 2 there are included metal like substances, such as: gold ores, silver, platinum, mercury, lead, iron, brass, tin, zinc, as well as precious stones (C. Hamangiu, Op. cit., vol. II, p. 706). 11 Ibidem, vol. IX-X, p. 225. 12 A.M.R., II, 1919, nr. 4, p. 345. 13 Gheorghe Iancu, Preocupri ale Consiliului Dirigent pentru reorganizarea activitii industriale din Transilvania (1918 - 1920), Marisia, 1975, nr. 5, p. 272. 14 L. Bathory, Contribuia industriei carbonifere la dezvoltarea social-economic a Romniei ntre 1919-1929 (Tez de doctorat), Cluj-Napoca, 1981, p. 27.
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Baron, M.; Dobre-Baron, O.

liquidation was the principle that would comply to the clauses of the Peace Treaties from Saint - Germain15 and Trianon16 and which would enable a new approach of the situation and of the mines future. The political parties, especially the National Liberal Party (Partidul Naional Liberal) and the National Romanian Party (Partidul Naional Romn from Transilvania), would lobby for the entrance of the Romanian capital and State into the mining companies. At the same time, another factor interested in the mining activitys development was the capital, especially the bank capital, but also the industrial one. Virgil Madgearu believed that up to 1923 the financing of the industry was done exclusively by the large banks and that the policy regarding the participation of banks in the industry, policy that determined the blending of the banks interests with the industry, was uphold over 10 years after the Unification, with positive effects for the industrial activity. The truth to be said, on the long run, for some banks this aspect of their activity was not exactly favorable17. Unlike the period before the wars, the basic activity of the big capital becomes the industrys financing, and the big banks gradually become, together with the industrial capital, the lords of a huge amount of production means, thus becoming parties of the industrial production directly interested in this18. On their turn, the industrial companies became interested in participating in the banks activities because they ensured better conditions for getting a loan and for safekeeping of values. That is why the industrial companies struggled to gain control or influence over the banks by purchasing bank shares, by increasing capital, by establishing specialized banks such as Banca Minelor, Creditul Tehnic, Creditul pentru ntreprinderile Electrice, Societatea Naional a Creditului Industrial, Banca de Credit Aurifer i Metalifer19. There takes place an increase in the industrys dependency on the foreign finance sources, phenomenon to be noticed especially at banks, thus there is an increase of the value of the industrial investments in the banks portfolio20. A special chapter of this activity is represented, in the context of a favorable legal framework and that of underlining some economical necessities social and political, the nationalization work of art carried out in the Romanian industry
Tratat de Pace ntre Puterile Aliate i Asociate i Austria. Protocol i Declaraiuni. Semnat la Saint - Germain - en-Laye la 10 septembrie 1919, Imprimeria Statului, Bucureti, 1920, p. 62 (Articolul 249). 16 Tratat de Pace ntre Puterile Aliate i Asociate cu Ungaria. Protocol i Declaraiuni. Din 4 iunie 1920 (Trianon), Imprimeria Statului, Bucureti, 1920, p. 46 (articolul 191), p. 58 (articolul 232), p. 73 (articolul 250). 17 V. Madgeru, Evoluia economiei romneti dup rzboiul mondial, Bucureti, 1940, p.438. 18 N. P. Arcadian, Finanarea industriei romneti, Bucureti, 1936, p. 10. 19 V. Axenciuc, Studiu cu privire la ntrirea dominaiei capitalului financiar n Romnia pn la criza economic), n vol., xxx, Studii privind istoria economic a Romniei, vol. I, Editura Academiei, Bucureti, 1961, p.195. 20 Ibidem, p.200.
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Establishment of Mica company and the takeover of

generally speaking, and in the mining industry especially, during the years following the Unification. The Nationalization action regarding the industrial enterprises with foreign capital, mainly of those that used to have connections with the Eastern Europe, resulted into the break-in of the major Romanian banks into hundreds of enterprises, especially in the new provinces, thus putting a break on the tendency of the French, Italian and British capitals to take over these enterprises. This activity was carried out with the support and guidance of the state and with the undisputable help of the National Romanian Bank (Bncii Naionale a Romniei - B.N.R.). The bank union involved in this process, made of 22 banks and companies together with the largest nine banks from Vechiul Regat21, accepted in 1920 to sign an agreement with the Ministry of Industry and Commerce (Ministerul Industriei i Comerului - M.I.C.) according to which it was under the obligation not to buy shares of the existing industrial enterprises in those territories and not to participate in the transformation of those enterprises into new companies Romanian capital investment, unless at least 50 % of the companys capital would be Romanian and the Board of Directors members number would be at least half Romanian and the president of the Board would be Romanian22. Forming several banking consortia most of them together with Banca Romneasc, the main bank with Romanian capital, liberal they participated in the process of nationalization23. There are to be mentioned the nationalization and the establishment of the mining companies Petroani (1921), Lupeni (1924), Valea Jiului de Sus, Minele de crbuni din Ardeal (1923) in the mining industry24, of U.D.R. (1920)25 in the mining and metallurgical industry, etc. At the same time, with the support of the bank and industrial capital, there appeared new mining companies such as Creditul Minier (1919), Creditul Carbonifer (1920), Exploatrile de mic
The nine banks were considered to be: Banca Romneasc, Banca Marmorosch - Blank, Banca General a rii Romneti, Banca Agricol, Banca de Credit Romn, Banca Comercial Romn, Banca Chrissoveloni, Banca de Scont, Banca Comerului Craiova. 22 V.Axenciuc, Op.cit., p.197, apud., V. Slvescu, Organizaia de credit a Romniei, Bucureti, 1922, p. 152. In Arhivele Naionale Deva (A.N.D.), Fond Societatea Salgtarjn, Dos. 53/1920, f. 2, are named 23 institutions that accept to take part in the process of nationalization: Banca Agrar (Cluj), Banca Agricol, Banca Albina (Sibiu), Banca Central pentru Industrii i Comer (Cluj), Banca Comercial Romn, Banca Comerului (Craiova), Banca de Credit Romn, Banca Franco-Romn, Banca General a rii Romneti, Banca Marmorosch, Blank & Co, Banca Naiunii, Banca Romneasc, Banca de Scont a Romniei, Banca rneasc, Banca Victoria (Arad), Banca Viticol a Romniei, Banca L. Berkowitz, Banca N. Chrissoveloni, Creditul Extern, Creditul Minier, Creditul Tehnic, Creditul Tehnic Transilvnean (Sibiu), Industria Ardealului (Braov). 23 xxx, Banca Romneasc. 1911 - 1920, Bucureti, 1921, p. 23-24. 24 L.Bathory, Societile carbonifere din Romnia i capitalul bancar autohton i strin (1919 - 1921), Studia Universitatis Babe-Bolyai, series Historia, fasciculus 2, p. 123 - 131. 25 Costin Murgescu i colaboratori, Contribuii la istoria capitalului strin n Romnia, Editura Academiei, Bucureti, 1960, p. 77-81; Istoricul dezvoltrii industriei petrolifere n Romnia, p. 8.
21

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Baron, M.; Dobre-Baron, O.

Voineasa (1920), Romnia Carbonifer (1920), Minele de aur Breaza - Zlatna (1928), I.R.D.P. (1919)26etc. Mica company was set up in such a context. The Romanian capital, alone or in co-operation with foreign capital, either the existing one in the companies already set up, or the one that meant to be invested, would complete the nationalization work of art. The process would rely upon the existence of the resources that were worth putting to good value, on the existing capital, on a legal and organizational framework that existed or that was to be perfected along the way, thus becoming the beneficiary of a positive attitude towards the process and upon the states interest and the Romanian societys interest, generally speaking. On the 10th March 1920, by certification no. 4772/1920 of Ilfov Court House, Notary Department and by sentence no. 124/1920 of the same Court House, I Commercial Department, there are approved The Constitutive Document and the Statutes of Mica company that becomes authorized to operate legally 27. There is a period of expectation that begins toward the end of 1919 beginning of 1920. On the 22nd November 1919 in Bucharest there is concluded a Company Contract (Contract de societate) between Societatea Romn de Industrie i Comer S.A. Bucharest, represented by its delegated managers eng Ion P. Gigurtu and Radu Bogdan, on the one hand and architect Gh. Sachelarie, on the other hand. The purpose of this contract was to set up a company on behalf of several parties (S.N.C.), Industria Pietrei, having as main activity the exploitation of construction stone quarries, limestone and granite from Albeti commune, Muscel county obtained by Gh. Sachelarie from Mathei Drghicescu and I. B. Isboiu through licensing contracts, certified at the Muscel Court House, of quarry exploit franchise as well as the exploitation of any other quarries of any kind, commerce or industry directly or indirectly related to the activity mentioned above28. This document signifies the beginning of the involvement of Societii de Industrie i Comer S.A. Bucharest, and mainly of eng. Ion P. Gigurtu29 in the mining
Vezi de exemplu: A.M.R., II, 1919, nr. 1, p. 57-62; III, 1920, nr. 8-9, p. 578, 639; III, nr. 6-7, p. 412 - 414, 427; XI, 1928, nr. 2-6, p. 190. 27 A.M.R., III, 1920, nr. 3-5, p. 281-289. 28 A.N.D., Fond Societatea Mica , Dos. 5/1922, f. 33-34. 29 Ion P. Gigurtu (1886-1959), graduated the Mining Academy from Freiberg and BerlinCharlottenburg. He will become one of the founders of Mica company and, gradually, as general Director and later on as president of the Board of Directors he will become the real master of it. He was an MP in the Romanian Parliament (1926), representative of the Ministry of Industry and Commernce (Ministerului Industrie i Comerului) during the governorship of Octavian Goga-A.C. Cuza (28 decembrie 1937-10 februarie 1938), representative of the Ministry of Public Works and Communications (Ministerului Lucrrilor Publice i Comunicaiilor - 24 noiembrie 1939-1 iunie 1940) and representative of the Foreign Affairs (Afacerilor Externe - 1-27 iunie 1940) during the governorship of Gheorghe Ttrscu, president of the Ministers Council (Consiliului de Minitri - 4 iulie-4 septembrie 1940). He was imprisoned at the Sighet prison (6 mai 1950-5 iulie 1955) (C.C. Giurescu, Amintiri, ALL, Bucureti, 2000, p. 448); see also Mircea Muat, Ion Ardeleanu, Romnia dup Marea Unire,
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Establishment of Mica company and the takeover of

11

industry. The quarries from Albeti will form part of the capital of the future Mica company30. By the document of franchise from 15th January 1920, signed between dr. tefan Cazimir and Transilvania. Banc pentru Comer i Industrie from Bucharest, transcribed by Gorj Court House with no. 282/1920, the Bank obtains, at the price of 675000 lei, to which 2750000 lei are added, the price of six carts of mica (muscovite31), that were in the quarry, the right to exploit the mica franchises and the other ores to be found within the perimeter that was property of dr. tefan Cazimir in the Lotru Mountains32. This purchase represents a very important step in order to set up the assets of the future Mica company. During the meeting of 30th March 1920 of the Board of Directors of Mica company it was approved the purchase of the franchises Stefan Casmir from Transilvania. Banca pentru Comert i Industrie. At the same time Mica company took over all the Banks rights and duties it had; the total amount of the transaction was to be paid at the certification of the franchise document, guaranteeing annual payment from the reserves fund of Mica company, and the Banks right to appoint two members in the Board of Directors and a auditor33. On the 2nd, 4th, 13th March 1920 there is signed between Aleman Oancea, owner from Brezoi (Vlcea), and the off-springs of Petru Oancea - Maria Mcelaru (born Oancea) and captain Horia Mcelaru, Traian Oancea from Bucharest on the one hand and C.V. Maltezeanu, eng. Anton Esser, eng. Ion P. Gigurtu from Bucharest, working for and on the behalf of S.A.R. ltd, in the process of setting up, Mica Bucharest, documents [separate - n.n.] of sale for wood to be cut and of franchise for
vol. II, 2nd part, Editura tiinific i Enciclopedic, Bucureti, 1988, p. 1080-1125, 1142-1318; a portrait of Ion P. Gigurtu we can find in Petru Pandrea, Madgearu, Carol II, Manoilescu, Magazin Istoric, XXXVI, 2002, nr. 4, p. 27-29. 30 The quarries will be purchased by Mica company in 1922 (A.M.R., VI, 1923, nr. 4-5, p. 438) 31 See details about deposits of white mica (muscovite) from Romnia, in the Lotru Mountains, on the border between Vlcea and Gorj counties, at David Rotman, Deposits of white mica (muscovite) from Romania, A.M.R., V, 1922, nr. 1, p. 1-18. The German occupying authorities opened the first quarry and they exploited it between March 1917 - November 1918; from the three galleries opened there were extracted 157288 kg. of mica. It is to be remarked the fact that besides Mica company, for the exploitation of the deposit from Lotru Mountains, there will be established in 1920, by Creditul Minier and eng. Vittorio Albertelli, the Exploatrile de Mica Voineasa company, with an authorised capital of 100000 lei; this company received for 29 years, the franchise for exploitation of mica ores from Stneica mountain, Voineasa commune (Vlcea) (A.M.R., III, 1920, nr. 8-9, p. 580). 32 A.M.R., III, 1920, nr. 3-5, p. 283. 33 A.M.R., III, 1920, nr. 3-5, p. 315. During the general Assembly of Mica company from 19th February 1922 the Board of Directors decision was approved as to give up the contract with dr. tefan Cazimir, for this was weighing on the company with extremely high royalties (Societatea Mica, Darea de seam a Consiliului de Administraie i Raportul cenzorilor ctre Adunarea general ordinar a acionarilor, Exerciiul 1921, Tipografia Curii Regale. F. Gbl Fii, Bucureti, 1922, p. 5)

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Baron, M.; Dobre-Baron, O.

mica and other ores quarries34 according to which they sell to be cut over 29 years, without the buyer having the right to come back for the second time, the forest on the Mnileasa mountain, Voineasa commune; the sellers give, also for 29 years, with possibility for extension for another 11 years, the exclusive franchise right for the mica and other quarry and for other ores and metals without any reserve of exceptionfrom above and underground of the entire Mnileasa mountain, the quantity of mica found on this territory becoming property of Mica company35. The conditions for the sell purchase are, basically, the same for all sellers, the amounts varying according to the size of the portion given away by each. The one that benefited most was Aleman Oancea, who sold, with 3 million lei of which the forest was worth 500000 lei, and the mining franchise 1,5 million lei half of the estate he owned himself on the Mnileasa mountain, together with the heirs of his brother Petru Oancea. This received from Mica company as follows: - 3 million lei, of which 2 million lei cash and 1 million lei under the form of 2000 shares at Mica company to be set up yet; - a royalty of 12% of the gross mica production and other products or ores to be extracted from his side of the property, or 6% of the total amount of the mountain; the total amount of the royalty is set every six months in cash or in kind, with the right to transport mica or another ore free of charge to Voineasa; for as long as the franchise lasts he should receive a minimum of 210000 lei annually, regardless if there is any activity or not, or 12% (6%) if the value of the production obtained exceeds 210000 lei; - 10000 lei annually, as compensation for degradation of the surface; - the right to be part of the Board of Directors, if he accepts shares or royalties from the Mica company, this right being transmitted to the heirs until the franchise expires; - the exclusive right to supply the workers of Mica company in the area, at the current selling price; - Mica company will rent, over the whole duration of the franchise, with 5000 lei monthly, the house owned by Aleman Oancea in Voineasa36. This way the future Mica company takes over the exploitation area of the only important deposit of mica in Romania, and in time it will increase the property by purchasing, for instance, with 80000 lei, a part of wood (45%), owned by Petru Droc
34 35

A.N.D., Fond Societate Mica, Dos. 8/1920, f. 2-5, 6-10, 20-24. On the 6th April 1920, the Cretzeanu family (Dumitru and Paraschiva - born Oancea) from Rmnicu Vlcea, decide to sell indivisible share representing 1/6 of the forest from Mnileasa Mountain and the exclusive mica franchise rights as well as other minerals and metals. This property will be sold to Mica company by Decree of Vlcea Court house from 25th March 1922 (Ibidem, f. 11-19). Thus was concluded the sell of the entire Mnileasa Mountain with all its mica reserves. 36 Ibidem, f. 3-5. During the meeting of the Board of Directors of Mica company from 30th March 1920 there will be approved the franchise documents signed between Aleman Oancea and the descendents of Petru Oancea. Aleman Oancea will become a member of the Board of Directors (A.M.R., III, 1920, nr. 3-5, p. 315; nr. 6-7, p. 459).

Establishment of Mica company and the takeover of

13

from Voineasa on Runculeul Mountain, neighboring westwards with Mnileasa Mountain37. Thus the fixed assets necessary to motivate the set up of a mining company are created. This company should deal, among other things, with extraction and sell of the mica deposit from Lotrul Mountains. We may believe, based on further development of events, that this purchase effort had in the mind of its initiators a different ending from the one initially declared, namely expansion of activity towards areas more profitable than exploiting mica deposits. But it was a necessary step for the beginning. On 10th March 1920 the Ilfov Court House approves the Constitutive Document and Mica company Statutes. By the Constitutive Document38 it is decided by Transilvania. Banc pentru Comer i Industrie Bucharest, Banca Sindicatului Agricol Ialomia Bucharest, Societatea Romn de Industrie i Comer Bucharest, dr. C.V. Maltezeanu, eng. Anton Esser and eng. Ion P. Gigurtu from Bucharest to set up an anonymous company under the name Mica S.A.R.M., with its authorized headquarters in Bucharest, Berthelot Street, no. 1039 The goal of the Company was represented by developing the mining industry in Romania and, especially, gaining quarries of mica and other minerals in order to be exploited in Gorj and Vlcea counties belonging to the company Transilvania. Banc pentru Comer i Industrie and to misters eng. Anton Esser and eng. Ion P.Gigurtu, former property of dr. tefan Cazimir and of the Oanceas The authorized capital was worth 21 million lei, divided in 42000 shares of 500 lei nominal value, being subscribed in various assessments by its founders. Of the amount subscribed 30% was deposited at B.N.R., according to the requirements of the law. It was established that this authorized capital could be increased up to 50 million lei, in one or more issues, by a simple decision of the Board of Directors40. The founders gathered together during the first General Assembly would appoint, for a period of 4 years, according to article 125 of the Commercial Code and to article 24, paragraph IV of the Statutes, 16 members in the Board of Directors, 5 auditors and 5 assistant auditors. Also, the following would be elected: gl. Alexandru Averescu, president, gl. Constantin Coand and D.Grecianu vice presidents, dr. C.V.
37 38

A.N.D., Fond Societatea Mica, Dos. 5/1922, f. 19. A.M.R., III, 1920, nr. 3-5, p. 281-283. 39 It was a temporary headquarters, The General Headquarters of Mica company being later on established in Bucharest on Calea Victoriei no. 63-65 (building purchased by Banca Sindicatului Agricol Ialomia and eng. Vasile Petrescu on 23rd November 1921 with 11 million lei; A.N.D, Fond Societatea Mica, Dos. 5/1922, f. 3-4) and on Roman Street no. 24 (building purchased in 1922; A.M.R., VI, 1923, nr. 4-5, p. 438). 40 During the meeting of the Board of Directors from 17th August 1920 it was decided the increase of the authorized capital (A.M.R., III, 1920, nr. 8-9, p. 581), the General Assembly of 17th March 1923 modified articles 4 and 5 of the Statutes approved by the Ilfov Court House on 10th March 1920; by modifying article 5, paragraph 1 (chapter III) it was decided: the authorized capital is of 50 million lei, represented by 100000 shares of 500 lei each. The shares are at the bearer (Ibidem, VI, 1923, nr. 4-5, p. 420).

14

Baron, M.; Dobre-Baron, O.

Maltezeanu and eng. Ion P. Gigurtu delegated managers, eng. Anton Esser general manager for a period of 10 years41. The statutes of Mica company are developed in 9 chapters and 41 articles42. The company was set up for an indefinite period of time between founders and those who would become owners of the shares that represented the authorized capital, for mining companies all over Big Romania and in any part of the world it would find an interest. In order to fulfill its goal (article 4) the company could: - require, buy, sell, license or participate in exploitation permits and exploitation activities for any mining object; - buy land for buildings; - set up, buy or participate in industrial enterprises; - carry out financial, commercial, land or building transactions, buy or sell such buildings related to the above-mentioned goal. This entire specification was list like and it did not impose any boundaries43 The administration of the company (chapter IV) was to be entrusted to a Board of Directors, made of 9 - 17 members, elected for a period of 4 years by the General Assembly. Form among its members, the Board of Directors would elect the president, two vice presidents and would delegate two managers. The delegated managers together with the general manager, appointed by the Board of Directors would make up the Direction Committee that would have to directly manage the company. Also there were established the followings: the procedure to call General Assemblies and their role (chapter VI), the method of drawing up the balance sheet, the method of calculating the benefits and of sharing it (chapter VII), method to wind up the company (chapter IX). Once set up, Mica company tended to extend its participation in the Romanian mining industry. The first step, which proved to be the most important one, was represented by the purchase of the mining complex near Brad, Hunedoara county, known under the name of gold mines of the mining association Ruda 12 Apostoli44. The entire
Eng. Anton Esser resigns in October 1920 from the position of general manager, and the Board of Directors of Mica company eng. Ion P. Gigurtu to fill in this position, who in his turn is replaced from the position of delegated manager by George Kapri (A.M.R., III, 1920, nr. 10, p. 713). 42 A.M.R., III, 1920, nr. 3-5, p. 283-289. 43 During the General Assembly from 17th March 1923 in order to synchronize the statutes with the new reality of Mica company, determined by the purchase of the gold mines of the Ruda 12 Apostoli mining company, paragraph 1 of article 4 of chapter II (Company goal, Operations) of the statutes was modified and in place of the text The company goal is, first of all, to exploit the mica franchises is drawn up the following text: the company goal is to exploit the price mine in the country and abroad. It would be able any industries or commerce related to the interests of the company; A.M.R., VI, 1923, nr. 4-5, p. 420 44 The name of this type of mining company comes from the participation rate = cuxa. This is a creation of the German Austrian legal life, being presented in the Austrian Mining Law of
41

Establishment of Mica company and the takeover of

15

existence of Mica company was built around this achievement until the nationalization from 11th June 1948. As we showed in the introduction of this study, after the war there was borne a major interest for the putting into good value by the Romanian capital, alone or in cooperation, of the important mineral resources contained in the underground of Transilvania and Banat. The state, but particularly the private capital created here a powerful extractive industry where the investments made situated many companies, technically speaking, at the same level with the European and world-class mining. There was a specialized labor force and all these realities imply the idea of a necessary involvement that could generate certain and important gains. The magazine Analele Minelor din Romnia, with the support of Transilvanian mining specialists, disseminated, between 1918-1920, various branches of extractive industry from Transilvania and Banat, and at the same time disseminated information about the achievements in this field, thus underlining their importance for the future of the Romanian economy and mining45. In this context, it was published the article signed by engineers V. Pucaiu, C.I. Mota, Minele de aur din Brad i Scrmb46. On this occasion a detailed presentation is done of the Ruda 12 Apostoli mining association. At that moment the property belonged to Harkortsche Bergwerke und Chemische Fabriken A.G. company from Gotha (Germany)47: the layout of the land; the rock formations; the metalliferous veins and the origin of the gold; the mines and the installations necessary for ore working. The authors of the
1854. It is a method of temporary economic organization between the anonymous company from where it borrows the franchise of the associates share and company on behalf of several parties from where it borrows the participation form which is not a nominal value, expressed in currency, but a share of the social assets. The participation in the mining association of cuxas cannot be divided between more than 128 associates. 45 See: C.I. Mota, Generaliti asupra industriei miniere i metalurgice din Banat i Ardeal, I, 1918, nr. 2 i 3, p. 36-41; V. Pucaiu, C.I. Mota, Minele de aur de la Roia Montan, II, 1919, nr. 3, p. 171-179; V. Pucariu, Anchet asupra gazelor naturale n Transilvania, II, 1919, nr. 1, p. 11-27; V. Pucariu, C.I. Mota, Uzina metalurgic de la Zlatna, II, 1919, nr. 5, p. 379-385; C. Hoisescu, Minele de crbuni din Valea Jiului (Petroani), III, 1920, nr. 2, p. 91-115; V. Pucaiu, C.I. Mota, Zcmintele de bauxit din Munii Bihorului, III, 1920, nr. 2, p. 115-122, V. Pucaiu, C.I. Mota, Minele de asfalt din Ardeal, III, 1920, nr. 3-5, p. 229-238; A.C. Sartoris, Industria fierului n Romnia, III, 1920, nr. 10, p. 643-656; nr. 11, p. 757-770. 46 A.M.R., II, 1919, nr. 4, p. 272-282. 47 The German company owner of the cuxas of Ruda 12 Apostoli mining association can be found under the name of Harkortschen Bergwerke und Chemische Fabriken zu Schwelm und Harkorten A.G. zu Gotha (Tr. Suciu, Bile de aur de la Brad, n, Anuarul XXXVIII al Gimnaziului romn greco-oriental din Brad i al coalei primare anexate acestuia pe al 45-lea an colar 1913-1914, Tiparul Tipografiei arhidiecezene, Nagyszeben (Sibiu), 1914, p. 1; Ion Rusu Abrudeanu, Aurul romnesc. Istoria lui din vechime pn azi, Cartea Romneasc, Bucureti, 1933, p. 255)

16

Baron, M.; Dobre-Baron, O.

study draw several conclusions important for the decisions to be taken later on. They accuse a possible lack of interest on behalf of the mines management for carrying on the activities under the unclear conditions from after the end of the first world war hence the necessity for the State to get involved either by putting the goods from Brad area, belonging to the German mining company under judicial sequester, or by the possibility of introducing the state monopoly for gold mines. Also the authors propose a possible re-acquiring of the cuxas, and in this context it is necessary to attract Romanian capital. During the act of nationalization of the Ruda 12 Apostoli mining association there will be found two parties interested in the destiny of this economic entity. Because the requirements of the peace treaties to be signed in Paris were not going to be favorable to capitals belonging to subjects from the states defeated during the first world war48, they would try to save their investments by agreements, either with capitals coming from the winner countries, or with the Romanian ones, concentrated especially in Vechiul Regat; the later organizing itself, as shown, in order to take over these values. For this purpose there take place negotiations between Mica company and the German Harkortsche Bergwerke und Chemische Fabriken A.G. company from Gotha in order for the later to give up its rights on the Ruda 12 Apostoli mining association from Brad49.
Over, notes 15, 16. The first testimonies regarding the mines to become part of the Ruda 12 Apostoli mining complex are dated to the mid XVIIIth century. Around 1760 the mines from Ruda became property of the Ribiczey family who exploited them with good results until the rebellion from 1784 when the mines were devastated. The mine from Valea Arsului was under the exploitation of the Erariuc who built a pond in order to capture the water necessary for the installations proper functioning. In 1791 these mines become the property of count Toldalagy and of baron Zeyk who start the Ruda 12 Apostoli and Sfntul Ioan Evanghelistul mining associations from Zdrahol. No ample works were carried out here, but during the 40s of the 19th century the Victor gallery at Barza and the Ferdinand gallery at Valea Morii were opened. They became main exploitation galleries. Unfortunately the fights during the Revolution of 1848 had negative effects on the mines around Bradului, the mining activities here entering a stage of prolonged decline. The modern development begins after 1884 when the German Harkortsche Bergwerke und Chemische Fabriken A.G. company from Gotha took over the cuxas Ruda 12 Apostoli mine, together with Ruda and Barza mines for the amount of 600000 florins, and in 1899 it took over the Sfntul Ioan Evanghelistul association together with Valea Morii and Valea Arsului mines. The German company Industriegesellscaft Geislingen will aquire Musariu and Dealul Fetii mines, as well as the mines belonging to small mining associations from around, forming a mining complex, Gewerkschaft Goldbergblau Musariu. It will have an intense extracting activity and in 1899 Gewerkschaft Goldbergblau Musariu will be acquired by Harkortsche Bergwerke und Chemische Fabriken A.G.. The Harkortsche Bergwerke und Chemische Fabriken A.G. company first took over the ore extracted from Musariu mine and the ones from around it at the stamps from Racova, then the ore extracted from Barza and Ruda at the stamps from Zdrapi. After taking over the entire complex around Bradului that gets the name of Ruda 12 Apostoli in 1899 there will be built the Gura Barza
49 48

Establishment of Mica company and the takeover of

17

Ion Rusu Abrudeanu described the context and the way the Ruda 12 Apostoli50 associations mines were nationalized. He showed that during the war few investments were made, the rich veins were exploited without making preparations of opening new works at the same time. When the war ended the difficult situation of the mines was accentuated by the uncertain situation created by the social and ethnical strains. At the same time the golds price was dropping and it was established in 1919 at 17000 de lei, while the extraction costs went up to 30000 de lei/kg of gold. Under these circumstances the Ruda 12 Apostoli mine is forced to reduce its activity, without stopping the production, for it would have risked loosing the franchise granted by the state for the exploitation of the gold and silver deposits. Ruda 12 Apostoli was forced to sell the entire gold production to the Directing Council receiving a down payment of 17000 crowns/kg, the rest of the amount was to be paid later on. As the amounts received by Ruda 12 Apostoli were insufficient to cover the expenses, the company was forced to ask important sums in German marks on monthly basis from Gotha. Also the uncertainty determined by the future clauses of the peace treaties mounted, as well as the conviction that the capital of the subjects coming from the defeated states during the first world war would be, one way or the other, punished by the winners. That is why the Gotha company would try to sell the mines in the Brad area, giving a British citizen, W.H. Hollloway51, an option that expired on the 2nd May 1920. W.H. Holloway would pass on this option to the representatives of the Mica company, eng. Anton Esser and dr. tefan Cazimir, immediately signing a sales
working plant, and the stamps from Racova and Zdrapi will be abandoned. The entire installation will be realized by the German company Friedrich Krupp Grusonwerk from Magdeburg and it will consist of 15 Californian stamps of 2 batteries of 5 arrows weighing 360 kg each, a mill with 10 arrows weighing 650 kg and related installations. In the years 18841911 this mining complex was able to produce 27918,520 kg of gold; in 1912 it obtained the largest annual production of 2002,350 kg of gold, of which 936, 324 kg from native gold, and the rest from stamp ore. Unfortunately under the circumstances imposed by the First World War, the production will decrease reaching in 1918 to 610, 934 kg of gold. The mines tended to become unprofitable (Tr. Suciu, Op. cit., p. 4, 8, 12-14; Ion Rusu Abrudeanu, Op. cit., p. 255; Nicolae Maghiar, tefan Olteanu, Op. cit., p. 215-215; xxx, 2000 de trepte n mineritul zrndean, Deva, 1979, p. 93-94) 50 Ion Rusu Abrudeanu, Op. cit., p. 258-259 51 Many considered that the involvement of W.H. Holloway in the nationalization of the Ruda 12 Apostoli mines association was nothing else but an attempt to save the interests of the German capital, hiding it behind this British citizen, and later on of the Mica company. This is the only way that the rush to nationalize the mines of the Ruda 12 Apostoli association was carried out with, the possibility given to Mica company to pay in six months time the total amount of the transaction, the eagerness with which the price was reduced from 60 million German marks (Mk.) to 15 million Mk. etc. (Constantin Murgescu, N.N. Constantinescu, Radu Paul, Constana Bogdan, M. tefan, Contribuii la istoria capitalului strin n Romnia, Editura Academiei, Bucureti, 1960, p. 83). These allegations might be true for the beginning of the process for later on the presence of the German captain at the Mica company became less significant.

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Baron, M.; Dobre-Baron, O.

contract for the mines and the installations for the price of 40 million Mk., plus 20 million Mk. for this option (it was to be divided between the three persons). However this contract was to be approved by the Board of Directors of the Mica company. Given the perspective to acquire high value assets, would basically approve of this purchase, Ion P. Gigurtu supporting the project and promising to continue the talks in order to obtain a better price. The things upon which the talks for establishing the transaction prices were based first of all upon he inexistence of the visible ore deposits without which all the installations commercial value was reduced, the impossibility to sell the gold, the political uncertainty, the existence of the workers restlessness and the debit account that increased on monthly basis. These causes forced the seller to reduce the price and the buyer to pay a minimum price considering the expenses to be made in order to set the mine to its optimum parameters. It was believed that in 1913, when the production of those years was around 1500-1600 kg of fine gold per annum, the value of the mines mounted up to 5 million lei in gold, and at the moment of the transaction, considering an annual production of 500-600 kg of fine gold, the value was reduced to one third. Under these circumstances and considering the works to be undertaken, as well as the payment of the creditors, the price could not exceed 1,5 million lei in gold or 15 million lei, considering the current exchange rate52. The talks took place in Berlin and Mica company managed to obtain a decrease of the selling price to 40 million Mk. cash, payable in Berlin at the Mittel Deutsche Kreditbank. This fact was approved by the contract signed by the two parties on 3rd May 192053. By this contract the seller, Rudaer 12 ApostelGewerkschaft, represented by its delegated manager dr. Leonard Buchrucker (from Brad) sells to the buyer, the Mica company, represented by eng. Anton Esser, general manager and dr. tefan Cazimir, authorized representative, his entire property from Transilvania54, as it is to be found today, made of mines, explorations, lands, forests, houses, rail roads, stamps and mining installations from above and underground, plans, commercial ledgers, furniture, and the stock of mining products existing on the 1st May 1920. As a basis for this we have the specification of possessions given by the seller to the buyer at the beginning of April 1920. The buyer
A.S.D., Fond Societatea Mica, Dos. 5/1925, f. 16. A.S.D., Fond Societatea Mica, Dos. 27/1927, f. 3-4. 54 The Ruda 12 Apostoli mining complex consisted in 1920, when it was taken over by Mica company of: 1762 ha of franchises for gold exploitation, situated in Brad, rel, Criscior, Bucuresci, esuri, Hrgani, Luncoiul de Jos, Luncoiul de Sus, Ormindea communes and 104 exclusive perimeters of exploitation. The gold mines from Ruda, Barza, Valea Morii, Valea Arsului, Musariu i Brdior; 194 ha of franchises for coal exploitation in ebea and Mesteacn mines ebea mine); 1803 portions of forest; cuxas at six smaller mining associations; industrial rail road with a total length of 50 kilometres; Gura Barza working plant; Gura Barza electric plant; cableway; mechanical workshop; laboratory, buildings for mining activities, dwellings for clerks and workers, etc (A.S.D., Fond Societatea Mica, Dos. 5/1925, f. 3-18).
53 52

Establishment of Mica company and the takeover of

19

has the right to give away to others these rights stipulated in the sales contract (article 1). The buyer benefits from the day of signature of the contract of the object bought [the entire possession and the works will be given to the buyer as soon as the representatives of the buyer arrive in Brad article 13] and he takes over all the rights and duties deriving from this contract; the payment of the purchase price will be done after all the paperwork is finished, as soon as the possession and the property of the sold object will be transferred upon the buyer, but no later than the 1st July 1920 (article 12). Under article 10 of the contract it is specified that this contract is signed under the condition that the Romanian Government assents to its completion and execution as such an agreement would be necessary according to the existing laws; the possible taxes, payments of damages, acquisition expenses, taxes, etc., the Romanian Government might require at the execution of this contract fall within the competence of the buyer (article 11). As a suggestion of M.I.C. that the price of 40 million Mk. would be exaggerated, new talks take place and they are finalized on 10th August 1920 with a minutes55 concluded between Ruda 12 Apostoli, represented by dr. Leon Buchrucker and the Mica company, represented by engineers Ion P. Gigurtu and Anton Esser. The two parties acknowledged the fact that the Romanian state, based upon the contract signed on 3rd May 1920 in Berlin, had given approval for Ruda 12 Apostoli company to become the possession of the Mica company, reserving however all rights regarding liquidation of all German assets in Romania rightfully his according to the Peace Treaty from Saint-Germain. Thus fulfilling the condition established by article 10 of the Contract concluded on 3rd May 1920 of authorizing the sale by the Romanian Government56, Mica company deposits in a big bank in Berlin the amount of 20 million Mk. for the benefit of the German company from Gotha. This amount will be paid after the Romanian Government withdraws its claims from the liquidation of the German companys assets from the Ruda 12 Apostoli mining association or when these assets are no longer under sequester. The Mica will give to the German company 20000 shares of 750 lei per share = 15 million lei. By these payments that were to be carried out until 1st October 1920 the latest the German company considers the price offered as being sufficient57 - under the condition that the Ruda 12 Apostoli mining associations participation should not exceed 45 million lei especially since Mica company takes over all the debts of the Ruda 12 Apostoli mining association, with a total value of 8233133 crowns (however being the owner of 81,295 kg of gold that was deposited as a guarantee in the Banca Albina Sibiu). If the Romanian Government claimed the liquidation of the German companys assets
55 56

A.S.D., Fond Societatea Mica, Dos. 29/1927, f. 13-14. The Journal of the Ministers Council no. 2255/11th August 1920, by which the special permit is granted according to the Decree - Law 2447/7th June 1920, the state reserving all the rights in the case of liquidation of the Ruda 12 Apostoli mining association (A.S.D., Fond Societatea Mica, Dos. 27/1927, f. 5) 57 Probably Ion Rusu Abrudeanu refers to this transaction, Op. cit., p. 259, when he claims that there has been a decrease of the sum to 30 million Mk.

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Baron, M.; Dobre-Baron, O.

from Romania, and Mica company would be obliged to pay the acquisition price as object of the liquidation, this can withdraw the money deposited and no longer offer the 20000 shares without the German company having any claims. Once the minutes were drawn up, Mica company formally became the owner of the Ruda 12 Apostoli association and could represent it in front of the authorities. The actual management of the company in Brad was entrusted to eng. Adolf Sieber. Ion Rusu Abrudeanu showed that new talks would take place in Berlin by a delegation made of the delegated managers eng. Ion P. Gigurtu and baron G. Capri58. The results of these new talks was represented by the conclusion of a Final Convention59 on 10th November 1920 for the completion and execution of the sale contract concluded through the documents under private signature dated 2nd May, 29th June and 10th August 1920. The sale price changes and it is fixed at 10 million Mk. payable when the Romanian state definitively gives up its possible rights of liquidation60; 10000 shares of 500 lei per share of Mica company delivered at the same date; 11027000 lei representing the debts of the Ruda 12 Apostoli association which have been taken over by Mica company in exchange of the gold deposited as guarantee at the Banca Albina in Sibiu and the right to claim from the Romanian State the difference in price for the gold successively given to the Directing Council of Transilvaniei in exchange for this down payment. Also it was established that, provided that Mica company franchises, within five years from the date of transcribing this document, the mines Ruda 12 Apostoli purchased with this document and thus would acquire a benefit, the selling company is entitled to receive 25% of the clean profit. Eng. Adolf Sieber undertook the obligation that together with a representative of Mica company to fulfill all the formalities required by the Mining Law of 1854, in effect in Transilvania, in order to transcribe the cuxas and the mining properties based on the certificate granted by M.I.C.

Ibidem A.S.D., Fond Societatea Mica, Dos. 29/1927, f. 11-12. 60 For a while Mica company lived under the threat of sequester for having purchased the Ruda 12 Apostoli mining complex that used to belong to enemy capital, although this transaction was carried out with the approval of the Romanian Government and Mica company fulfilled the requirements of the Romanian Ministry of Finance paying the price of 15 million Mk. only as a deposit in a German bank. In order to be able to develop itself freely, Mica company proposed in 1925 to find a mutually convenient solution and on 20th February 1926 the Ministry of Finance, The Liquidation Department from the General Department of Payments for War Damages and of Peace Treaties passed a conclusion by which Mica company was forced to pay in 1927 to the Ministry of Finance the entire sum of purchase, giving 25000 free shares and ensuring the state a progressive participation in the benefits for a period of 15 years and the presence of two members in the Board of Directors (A.S.D., Fond Societatea Mica, Dos. 10/1920, f. 136; Ion Rusu Abrudeanu, Op. cit., p. 262).
59

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Establishment of Mica company and the takeover of

21

According to the Convention, starting with 10th November 1920 Mica company becomes the owner of the cuxas and of all the goods and assets of Ruda 12 Apostoli association. Mica company brings to the attention of the authorities, on 13th November 1920, the content of the Convention, and the Government by J.C.M. no. 5166/1920 will authorize this transaction, which becomes permanent. Based on the deposit of 15 million Mk. in a German bank on 20th October 1921, Alexander Schmidt, a banker from Berlin, as legal representative of Harkortsche Bergwerke und Chemische Fabriken in Gotha signes in Zlatna a document by which he declared that he had sold to Mica company all 128 cuxas of Ruda 12 Apostoli61 association. This fact will allow that, on 25th October 1921, based on the license granted by J.C.M. 2255/11th August 1920, the Mining Authority in Zlatna should erase the 128 cuxas of Ruda 12 Apostoli that had belonged from no. I-CXXVII to Harkortsche Bergwerke und Chemische Fabriken company in Gotha, and no. CXXVIII to Mueller Miska from Gotha. It also permitted the transcription on behalf of Mica62 company this situation being confirmed by the VIth Mining Inspectorate on 31st October 192263. Therefore we can see that the takeover was not smooth but already in June 1920 Mica company understood to exercise its authority over the mining complex near Brad. In a Notification towards the clerks and workers of the mines of Ruda 12 Apostoli, made by eng. Ion P. Gigurtu, the representative of the Board of Directors, he showed that from that moment the mines were the property of Mica company, who expected to carry on the works and the exploitations of the old mining company with the same success and to give them a further development in the near future64. This would truly happen, Mica company being during the period between the two world wars the biggest Romanian producer of precious metals with an important role, not only economic, but also social and cultural in the golden square of the Apuseni Mountains.
REFERENCES: [1]. Arcadian N.P. - Finanarea industriei romneti, Bucureti, 1936, p. 10. [2]. Arcadian N.P. - Industrializarea Romniei, second edition, Imprimeria Naional, Bucureti, 1936 [3]. Axenciuc V. - Studiu cu privire la ntrirea dominaiei capitalului financiar n Romnia pn la criza economic), n vol., xxx, Studii privind istoria economic a Romniei, vol. I, Editura Academiei, Bucureti, 1961 [4]. Baron M. - Crbune i societate n Valea Jiului. Perioada interbelic, Editura Universitas, Petroani, 1998

61 62

A.S.D., Fond Societatea Mica, Dos. 27/1927, f. 22. A.S.D., Fond Societatea Mica, Dos. 27/1927, f. 20. 63 A.S.D., Fond Societatea Mica, Dos. 27/1927, f. 21. 64 A.S.D., Fond Societatea Mica, Dos. 8/1921, f. 222-223.

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[5]. Bathory L. - Contribuia industriei carbonifere la dezvoltarea social-economic a Romniei ntre 1919-1929 (Tez de doctorat), Cluj-Napoca, 1981 [6]. Bathory L. - Societile carbonifere din Romnia i capitalul bancar autohton i strin (1919 - 1921), Studia Universitatis Babe-Bolyai, series Historia, fasciculus 2 [7]. C.Hamangiu - Codul General al Romniei., vol. XI-XII, 1922 - 1926 [8]. Gheorghe Iancu - Preocupri ale Consiliului Dirigent pentru reorganizarea activitii industriale din Transilvania (1918 - 1920), Marisia, 1975, nr. 5, p. 272. [9]. Giurescu C.C. - Amintiri, ALL, Bucureti, 2000, p. 448) [10]. Gnter B. L. Fettweis - Reflexion ber den Bergbau zur Zeit des Georgius Agricola, Res Montanorum, Leoben, 1994 [11]. Madgeru V. - Evoluia economiei romneti dup rzboiul mondial, Bucureti, 1940 [12]. Maghiar N., Olteanu St - Din istoria mineritului n Romnia, Editura tiinific, Bucureti, 1970 [13]. Murgescu C. - Contribuii la istoria capitalului strin n Romnia, Editura Academiei, Bucureti, 1960 [14]. Murgescu C., Constantinescu N.N., Paul R., Bogdan C., tefan M. - Contribuii la istoria capitalului strin n Romnia, Editura Academiei, Bucureti, 1960 [15]. Muat M., Ardeleanu I. - Romnia dup Marea Unire, vol. II, 2nd part, Editura tiinific i Enciclopedic, Bucureti, 1988 [16]. Rusu Abrudeanu I. - Aurul romnesc. Istoria lui din vechime pn azi, Cartea Romneasc, Bucureti, 1933 [17]. Slvescu V. - Organizaia de credit a Romniei, Bucureti, 1922 [18]. Suciu T. - Bile de aur de la Brad, n, Anuarul XXXVIII al Gimnaziului romn Greco oriental din Brad i al coalei primare anexate acestuia pe al 45-lea an colar 1913 1914, Tiparul Tipografiei arhidiecezene, Nagyszeben (Sibiu), 1914 [19]. A.N.D., Fond Societatea Mica [20]. Societatea Mica, Darea de seam a Consiliului de Administraie i Raportul cenzorilor ctre Adunarea general ordinar a acionarilor, Exerciiul 1921, Tipografia Curii Regale. F. Gbl Fii, Bucureti, 1922 [21]. Tratat de Pace ntre Puterile Aliate i Asociate i Austria. Protocol i Declaraiuni. Semnat la Saint - Germain - en-Laye la 10 septembrie 1919, Imprimeria Statului, Bucureti, 1920

Annals of the University of Petroani, Economics, 3 (2003), 23-28

23

THE MAJOR INFLUENCES OF THE ORGANIZATIONAL BUYING BEHAVIOR AT THE LEVEL OF THE ROMANIAN MINING COMPANIES
VIRGINIA BLEANU *
ABSTRACT: This paper reviews the influence factors that affect the buying behavior of the organizations and also identify those environmental variables that have a major impact on the level of the Romanian mining companies. KEYWORDS: organizational/industrial buying behavior; influence factors; buyclasses; analytic buygrid framework; buying center; influencers, deciders, buyers, gatekeepers roles.

According Webster and Wind [4], the factors that affect the organizational (industrial) buying behavior can be grouped into four classes: environmental, organizational, social (interpersonal) and individual influences that are represented schematically in the figure no.1. Among these, the influences of the environmental factors imply, perhaps, the most numerous problems because they are difficult to appreciate and measure, manifesting itself not only by providing information, but also through restrictions and opportunities. The environmental influences include physical variables (geographic, climatic and/or ecological), but also technological, economic, political, legal and cultural. The environmental factors determine values and standards of the seller-buyer interaction (in the relationships with the suppliers) alike those between competitors, they are influencing, as well, the information flow that enter in the organization. It is critical to understand the impact of the changes of any environmental variables in order to make the proper strategic decisions, as such the unconsidering of these influences may become very dangerous for any organization. Organizational factors are part of the company strategy, with the objectives, policies, procedures, structures and systems supposed by that. The link between strategic objectives and the behavior of the organizational buyer is obvious: finally, the buying of the products/services it happens just for organization to reach its proposed
*

Lecturer at the University of Petroani, Romania

24

Bleanu, V.

objectives, and the one responsible are paid for this. For instance, if a company is fixing as major strategic objective to take the leader position for quality on a certainmarket segment, the process of making decisions and the buying behavior will be governed by choising the suppliers whose products/services have the best quality. But, if the main objective is dominating the market through low prices (leader by costs), maximizing the sales or the profit, the most probable, the behavior of the industrial buyer will be dominate by choising the suppliers whose price offers are minimal, in acceptable quality conditions. Because in the case of the organizational behavior the buying decisions are made at the level of a buying center, that can include persons from more departments, situated on different hierarchical levels, is obvious that both organizational structure and the one specific to the purchasing department will influence its behavior.
ENVIRONMENTAL INFLUENCES The basic demand (level); the suppliers offer (delivery terms); the purchasing power; the technological changes (rhythm); economic, social, political, legislative, competitive conditions (conjuncture) ORGANIZATIONAL INFLUENCES Structural and procesual setup, the systems, policies and working procedures established in order to achieve the strategic objectives

ORGANIZATIONAL BUYING BEHAVIOR

INTERPERSONAL INFLUENCES The group dynamics and mutual influencing relationships between the members of the buying center (formal and informal: authority, status, empathy, persuation)

INDIVIDUAL INFLUENCES The personal features of the members of the buying center (age, professional background, culture, personality, position, the attitude vs. risk, personal motivations)

Fig.1. The main influences on the companies buying behavior

Source: adapted from Philip Kotler, The Management of Marketing, Ed.Teora, Bucharest, 1997 [3, p. 281]

The interpersonal and individual factors refer to the group dynamics and individual features that influence the buying process, to relationships and mutual influences between the members of the buying center, and they are, in most of the cases, extremely subtle. They depend on position/function within the organization, the formal and/or informal authority, but also on other personal features of individuals that compose the buying center. The conflicts of interests can affect the relationships, because the motivation at the level of the buying center is given by the needs of the organization, but on these are overlapped the social needs as well as the needs of respect, recognition, personal and professional security of the centers members. Thus,

The major influences of the organizational buying behavior

25

the ones that have enough persuasion power (well-seen, important relationships, invested with reward and punishment power,etc), can influence decisively the buying decision. But, according Bonoma, sometimes, the person who really has the authority is acting from shadow, is almost invisible from outside, and not always the one who has the higher position is the most influent [1]. There is, therefore, a multitude of variables that influence the industrial buying behavior in various ways, so that their identification and appreciation constitute very interesting aspects of the research. In the studies and specific literature, the standard approach is to categorize these influences beginning with macro-environmental factors and funnelling down through specific industry and organizational factors to the buying unit and finally the individuals within it. According to this approach, the research of the Romanian mining companies particular case is starting with an analysis at the industry level, considering the present conditions. Hereinafter are briefly presented some of the main aspects revealed through this primary analysis, focused on the major environmental influences. Until last decade of the 20th century, in the framework of the centralized economy, through the self-sustaining national policy in providing with mineral resources, it has dictated the opening and exploitation of all known types of deposits, no matter their feasibility. Unfortunately, the continuous and emphasized improvement of the mining industry, recorded for more than a half of a century, it was implemented through efforts oriented exclusively toward the increase of the production, without considering the real costs, much less, its implications on the environment. In the situation of the prices that were planned at the national level for the primary resources of energy, the ones of the indigenous mining products didnt represent a problem. Therefore, the purpose wasnt their alignment to the real production costs or to the external market prices. This, in the conditions of the specificity of our deposits that are particularly through complex and difficult geo-mining features (large depth of exploitation, a quite complicated tectonics, frequent insertions and inclusions of barren rock/bones in the useful formations, the hard hydro-geologic conditions, low contents of useful components, strong emission of methane in the coal deposits, etc. ). In addition, the qualitative parameters are quite low comparing with the reference one at worldwide level for non-metalliferous substances, and especially for coals. On the other hand, the refinement of the useful mineral substances is realized through classic technologies, generally appreciated as being at the level of those used on European and worldwide level. But the technical and economic performances that are achieved are inferior, just for the difficult exploitation condition of the Romanian mines, on which is overlapped, sometimes, the low reliability of the equipments. Consequently, while at the worldwide level the average value of the metallurgic products obtained from a tone of an industrial spare of ore is 17-20 USD, in our country this is much lower, varying between 5-13 USD/tone of spare [2]. According to the Romanian Constitution, the proprietary of the mining deposits is the state, which is exerting the right to commit their exploitation and management to some special organizations (companies and societies declared as being of national interest, that are subordinate to the public

26

Bleanu, V.

authority represented by the Romanian Government, by the authorized Ministries). Nowadays, within the mining industry there are 10 national companies and societies and 111 commercial societies, out of which 7 for exploitation and refinement of the non-metaliferrous substances reserves, 10 specialized in the geological research, the rest having activities additional to the extraction and mining processing. Due to the distinct peculiar conditions of the deposits and their exploitation, the national mining companies are sustained through subventions and allotments from the state budget. Therefore, it is very clear that any component of the action plan, but especially the one referring to the incomes and expenses budgets of the companies, is depending on the budgetary policy of the government, on the period of drafting and approval of the yearly budgetary projects at the level of the state institutions. In its quality of owner, the state is exerting (through the specific Ministry) the right to name and revoke the management of those companies, that is hereby, authorized and responsibilized in making of the specific decisions to situate its activities within the general strategic coordinates of the industry. In the perspective of the year 2005, it is estimating that the request for coal and metals in concentrates will be constant (at the level of 2001 achievements). Consequently, the redressing-development policy of the Romanian mining industry is aiming the coverage of this request, in competitiveness conditions, and continuance of the restructuring process on the following main directions: The rational and efficient exploitation of the reserves, by stopping the activities in the areas where the costs are very high and by keeping in function of those production capacities to which there is real perspectives of performances improvement; The emphasized reduction of the production costs until a level comparative with the one of the imported mining products, in parallel with gradual decrease of the subventions granted by state for the indigenous products; Increase the productivity and the quality of the products, decrease the pollution of the environment and renewal of the ecologic balance influenced by the mining activities through modernization of the exploitation and processing technologies; Concentrating the investment efforts for endowing with new technology for the coal pits, for the mines and pits of metaliferrous ores that are placed in the feasible areas, modernization of the treating and preparation plants and environment protection; Improvement of the legal and institutional terms so that to permit the accomplishment of these actions, as well as the long-term development of the mining industry, by encouraging the private investments, Romanian and foreigner. Consequently, the restructuring strategy and redressing-development policy of the Romanian mining sector are contouring the continuity perspective of this industry, but in completely different coordinates of economic efficiency and exclusively for those mineral substances, perimeters and units of exploitment and refinement that will prove their viability. From the strategic aspects previously presented it results that the primordial interest consist in assuring the economic reasons for coverage the internal request of mining products, from internal production. Until this point, is obvious that at the level of the mining companies from our country, there are exerting the combined influences of the environmental variables previously mentioned (the specific of the

The major influences of the organizational buying behavior

27

deposits, technologies and working equipments, the level of the request, the socioeconomic conditions, as well as the opportunities and restraints with significant political determination arisen pursuant to the status of national companies). Among these, the restrictive influences less controllable and adjustable are given by the characteristics of the deposits, which constitute in the same time the element of objective causality for other variables of influence, such as the limited level of the supply and the less favorable position of the Romanian companies in the global competition. Moreover, among the conjuncture factors specific to the Romanian transition economy, the political influences can be considered similar, through the predetermination of the others categories of conjuncture influences. Between these last ones, on the particular area of interest (buying process), arises the decisive impact of the legislative variable. Consequent to the relevance of the activities specific to the mining industry, but also to the financial support granted by state, in present, the processes of assuring the material resources and services necessary to the Romanian mining companies, enter under the incidence of legislation regarding the public acquisitions (O.U.G. no. 60/25.04.2001, O.G. no. 20/24.01.2002 and the Law no. 212/19.04.2002). According to the legislative regulations, these companies represent contractor authorities, having all the rights and obligations that result from the stipulations, standards and dispositions issued previously for their application. In order to appreciate how can be influenced the buying behavior it was realized a detailed analysis of the legal stipulations, considering the general implications on the contractor authorities (mining companies) and the concepts specific to the field, as such they are approached in literature and reflected in the results of the specialized researches. Pursuant to this demarche, has been deduced the following points susceptible of affecting the buying behavior of the Romanian mining companies: Referring to the buying process: the analysis of the procedures legally instituted demonstrates that, generally, the provided procedural phases can be assimilated with the ones included in Robinson, Farris and Wind basic model (the analytic buygrid framework). In return, the influences of the buyclasses mentioned in the buydgrid are ignored, as long as the compulsory implementation of one or other of the procedures depends on the value of the contract and not on the novelty or complexity of the buying situation (buyclass). Practical, because of the legislative stipulations, every important acquisition for the mining company contractor authority has to be approached every time as a modified rebuy, but with the obligations of treating most buyphases. The immediate consequence (proven by calculation) is the unjustified extension of the total time of completing the process, with all the negative effects that result from this. Estimating the stipulations related to the allotment criteria of the contract, the evaluation on the basis of only one criterion (the lowest price) can be considered almost outdated. That reflects, finally, the decrease of the importance given to the essential phase of the buying process the one of suppliers selection. Referring to the buying center: the structure, dimensions, and accomplishing of the buying center tasks within the mining companies can be influenced through the high degree of procedural formalization. This can overload the tasks of the specialty

28

Bleanu, V.

departments and, identically, the ones of the buying center, moving their attention from the accomplishment of the specific ones, really relevant for the company. As regards the roles within the buying center, they can be influenced by instituting the evaluation commissions and their legal attributions, that imply a cumulative focusing of the influencers, deciders and buyers roles at the level of those commissions members. On the other hand, according to the principle of free competition, transparency and equal treatment, the legislative regulations seem to limit the power associated to the gatekeepers of obstructing the information from suppliers to the center. But, the number of persons who play such roles can grow, involving even personal from outside of the contractor authority. Referring to the effects induced towards other influence factors of the buying behavior: The impact of the legislative variable on the organizational factors is obviously. This results from the necessity of adapting the jobs and departments of the contractor authorities (mining companies) implied in the process to the attributions, tasks and responsibilities instituted through the normative stipulations. Moreover, is quite likely to appear effects in the (social) interpersonal factors area too. For example, because for the assignment of every contract has to be named an evaluation commission, it is possible that the relationships (formal, informal), the behavior and motivations of the members to be much different from an acquisition to another. And, not the last, has to be accentuated the benefic effect of the institution of the electronic system aquisitions. It estimates that here, the influence of the legislative variable can manifest in two directions: on one hand, its sincere and appropriate coordination can lead to significant savings; on the other hand, it constitutes an impulsion instrument of the companies in improvement and development of the IT. Thus, it might be about a positive influence propagated and multiplied through the technologic variable. In conclusion, through general analysis of the influence factors of the buying behavior at the level of the mining companies from our country it was evidenced the peculiarly powerful impact of the environmental factors. The specific of the deposits and of the exploitation conditions, the level of the request, the socio-economic and political conditions are sending their influences from the level of the general behavior, while the influences of the legislation are direct, have an decisive impact and are sent also on the organizational, social, individual and even technologic factors.
REFERENCES: [1]. Bonoma, T.V. Major Sales: Who Really Does the Buying?, Harvard Business Review, May-June 1982, p.111-119 [2]. Fodor, D.; Baican, G. The present situation of the Romanian mining, Engineering Universe, no. 11-12, June, 2002, p.4-5 [3]. Kotler, Ph. The Management of Marketing, Teora House Printing, Bucharest, 1997 [4]. Webster Jr., F. E.; Wind, Y. Organizational Buying Behaviour, Prentice Hall, Englewood Cliffs, New Jersey, 1972 [5]. *** O.U.G. no. 60/25.04.2001 regarding the public acquisitions (approved with changes and completions by Law no. 212/19.04.2002); O.G. no. 20/24.01.2002 regarding the electronic system of public acquisitions and methodological norms of application

Annals of the University of Petroani, Economics, 3 (2003), 29-32

29

OBHECTIVES AND VALUES OF A COMPANY

EMIL G. BIBER*
ABSTRACT: In our days a company is considered to be first of all, a production agent and than integrated in social structure, thats why it has the status of a complex system founded permanently in exchange with the outside due to a multitude processes of perceptions decision and information exchange which must be synchronized with a social and economical field very instable. KEY WORDS: company, economic strategy, shareholders, managers, employees, suppliers, clients, environmental protection, customer protection, Bates model, Holt model

By a company objective we will understand that part of the economic strategy which establish the purpose of the company and convert it into a numeric component. The objectives are settled by the managers when they established the economical strategy, based on previous experience and various studies .From these, the fundamental objectify remains the same in spied of the market environment restrictions as the followings: shareholders are interested in shares value; managers are interested in growing flow of incomes and in the part allocated for development; the employees are interested in salary level and work conditions; suppliers hope in the collaboration continuity with a partner with a rising activity; clients appreciate the price of the goods against their quality; local and central administration is interested in company possibilities for paying taxes; society is interested in environmental and consumer protection. From the whole potential objectives set by a company we shall present the most frequently as: optimized capital efficiency which means optimized profit; company development reflects mangers point of view saying that is better to increase the actives based on profit instead of issuing shares or by loans. maximized profit is most encountered objectify request by sharesholders.The rising of profitableness take place in the same time with the rise of risks, which is causing the reduction of stock market. maximization of the company value is the most important objective for all investors, and much more credible than others. To achieve this objective

30

Biber, E.G.

materialized by rising of dividends and shares cost , it is necessary to respect the following requirements: engage the patrimony in investments in a high rate of profitability, ensure the preservation of patrimony by maintaining the budget balance of the company, protection against risks due to economical environment. By company value we shall understand an appreciation of a good in monetary expression. The company value size can not be evaluate only against its patrimony or its present richness (patrimony value) , it must be appreciate and evaluate also against the future projects in which the patrimony will be engaged (financial value ). When the reference value, is done strictly to a company, must be taking onto consideration the time for property transfer, fact which will assign to the value term the meaning of price for property transfer. Company stability in a limitative way, presume to find an interval of values for the negotiate price between business partners. Against all mentioned above, its useful to do a stratification between value as result of an evaluation , which is a subjective matter done by an assessor ( economical value), and the price as a result of a negotiation between buyer and seller , which has an objective character. Companies evaluation practice knows many methods, which can be group like: classic methods, which deal with companies from the followings points of view: patrimonial elements(patrimonial evaluation method), economical results(financial evaluation), both perspectives (combined evaluation method); methods based on cash flow; bourse methods; other methods. From point of view of an investment action, companys market value is measured by: size of treasury flows ( profit, dividend ) which can be obtain in the next period; 2. period of time for estimation; 3. size of risk due to investment action; Based on these elements it can be measured: benefit capacity value, bourse value. 1. Benefit Capacity Value. Benefit Capacity Value is defined as economic result expected by owner of a company, consequence of an activity in a certain period of time. According to economic utility theory, a company has value if the owner achieved a satisfaction in holding the company. Evaluation methods based on benefit capacity have in view companys capacity for achieve incomes as profit, dividend or cash-flow. Based on followed result, for companys evaluation we have: 1. Company output value, which presumes clarifications for the followings aspects: A. measure the size of profit by: - accounting data - production capacity , according to formulas: - on constant costs: p = qxpc (1
c / 1000 )( I rip / 1000) + pr 1000

where: p annual net profit q physical annual production pc selling price express in constant values c / 1000- expenses at 1000 lei income rip income tax part payment

Objectives and values of a company other corrections pr reproductive net profit - on current costs: p = q x p c (1 + if )(1 c / 1000)(1 rip ) + pr

31

where: if- inflation annual average index - based on statistic methods using average increase rate of cost-efficiency ,turnover or capital; - based on analytic calculations which begin from estimated physical production, prices and costs; B. capitalization rate can be done with one of the formulas: r=rb(1+R) where: rb base rate R Risk bonus, between 25-200% from base rate, depending on companys risk: r = rb( + rr / 100)(1 + rdm / 100) , where: rr risk index, rdm monetary depreciation rate. C. the assign of evaluation period correspond with functionality period of the company (period for which the owner wish to keep it , thus financial recovery period) 2. Company cost-efficiency value, should be calculate in two ways: a. by updated , when value is shown in constant prices according to formula:
VRE =

Dct (1 + r) t + Vrez (1 + e) d
t =1

where: Dct= dividend from t year in constant prices b. by capitalization, according to formula: VRE = dividend 3. Cash-Flow. Cash-Flow is a monetary surplus which represents the monetary cash for a designated period and can be calculated as a subtraction between input flow (net profit + redemption rate + long term loans) and output flow (investments = repayable rates + interests + rolling stock). In brief , this method consists in adding updated cash-flow susceptible to be issued by the company on the estimated period , with updated residual value on the year for which there is no estimation , according to formula:
CFa =
D , where: D annual average r

(1 + r) t
t =1

Cft

V rez (1 + r ) d

where: CFt- cash-flow estimated for year t Vrez- residual value

32 r- to update rate d- period of time for estimation

Biber, E.G.

4. Bourse Value. Bourse value is only for companies with bourse quotation. Evaluation methods are based on shares quotation and shares quotation in a previous period, companys politics against dividends, market changes which can affect shares quotations at bourse. The most common mathematical models to establish shares quotation are: - Irving Fisher model: VO =
t =1 r

Dt (1 + K )
t

Vn (1 + k ) n

where: Dt dividend paid in year t k - profitableness rate asked by shareholders t - no. of years for estimation Vn share value at the end of the prevision period - Gordon- Shapiro model (simplified): VO =
t =1

Dt (1 + k ) t

If t the model became: VO = where : g-dividend growing rate - Bates model - Holt model

Dt Kg

for K g

The last two models used PER indicator also called bourse multiplier or bourse capitalization coefficient, which shows in which amount of time the investment is recovered by buying shares based on the benefits received by the investor as dividends. The bourse value of a company is according to the relationship: Bourse value = share quotation x shares amount or Bourse value = PER x net profit per share x shares amount where: PER =
share quotatuion net profit per share

REFERENCES: [1]. Bacanu B. - Strategic Management, Editura Teora, Bucharest, 1997 [2]. Biber G.E. - Economical substantiation of investment process, Infomin , Deva, 2002 [3]. Toma M, Chivulescu M - Guidelines for companies, diagnosis and evaluation Editura CECCAR, Bucharest, 1996 [4]. Stan V.S. - Methods and usances for companies evaluation, Editura Teora, Bucharest, 1996 [5]. Buglea A - Company and financial market, Editura Marineasa, Timisoara, 1999

Annals of the University of Petroani, Economics, 3 (2003), 33-36

33

ELECTRONIC COMMERCE AND ELECTRONIC DOCUMENTS STATUTE

MOISE BOJINC, MELINDA SZASZ *
ABSTRACT: Electronic signature represents electronic information attached or associated with other electronic dates, used as identification method. To produce valid juridical effects electronic signature must: be uniquely related to its signatory, assure signatorys identification, be created through safe methods, controlled by the signatory, be related with electronic information, so any further change to be identified. A European directive regarding electronic signature requires to all members to adjust their legislation so as any commercial relation or contract signed electronically to be valid. So in the past, in doctrine electronic registration were simple copies and were not considered evidences, but now according to law 455/2001 electronic signature can be assimilated with private certificate. KEY WORDS: contract, electronic commerce, contractor, natural and legal persons, authorization, legislation, free and fair competition principle, obligations.

1. LEGISLATIVE SIGNATURE

CONCERN

REGARDING

ELECTRONIC

Nowadays in commercial relations there are used a lot of new technical methods like electronic registering. The electronic registering reproduces and transmits information and documents from any distance, facilitating communication. The electronic registering are used in book-keeping, in commercial activities and in banking system. They replace the classic paper with electronic registering, dematerializing titles. The necessity to modernize communication between business partner generates new legislation documents, like law 455/2001 regarding electronic signature, or law 365/2002 regarding electronic commerce. The new legislation is requested by the frequently use of electronic registration in commercial relations.

Assoc. Prof., Ph.D. at the University of Tg. Jiu, Romania Assist. Prof. at the University of Petroani, Romania

34

Bojinc, M.; Szasz, M.

This new legislation was, also, requested by harmonizing Romanian legislation necessity. A European directive regarding electronic signature requires to all members to adjust their legislation so as any commercial relation or contract signed electronically to be valid. 2. TO CONTRACT BY ELECTRONIC MEANS Law 365/2002 defines informatical society as any providing services or any activities that supposes to set up, to modify, to transfer or to put out civil right, activity made by electronic means. The advantage of such a contract is that the contractors do not have to be in the same place to contract. The tenderer will offer information only at individual request of their clients. When the parts contract by electronic means, law recognizes the validity of the contract as well as for any other contract. As for the civil contracts, referring to the contract signing in the case that the contractors are not present, there are a few theories (declaration system, acceptance sending, acceptance receiving, report system). For the electronic commerce the contract is considered signed when the tenderer knew offers acceptance (the report system is adopted); but law, also, let the contractors to choose another situation. The consignee contractor can accept the offer through any electronic way. The tenderer must acknowledge the receipt of the offers acceptance in 24 hours through email or any other equivalent way. The offers acceptance is considered received when the consignee contractor can access them. Natural or legal persons who offer services through an informational company do not need previous authorization (except the specific activities defined by law). These tenderers must only respect the free and fair competition principle. The legislation says it is forbidden to communicate commercial information through e-mail without consignees agreement. Even if he gives his consent he will have the right to revoke it through a simple notification. The abovementioned commercial information must identify the tenderer, present the promotional offer, the reductions and the prizes offered and make them accessible. 3. TENDERERS OBLIGATIONS: The tenderer must offer information about his identity, residence, contacts (fax, phone, e-mail), fiscal code, registration number from Trade Register and services price list (with or without delivery charges) to all his customers and to public authorities. This obligation will be executed if the information is on the tenderers web-site. The tenderers must, also, offer information about: the technical steps followed in the contract, the technical ways used to identify the errors, the language and the codes of conducts used, with special references about haw to settle a dispute amicably).

Electronic commerce and electronic documents statute

35

The tenderer must inform public authorities about the illicit activities unfolded by the contractors. The tenderer must communicate all information about contractors identity at competent authorities request. The tenderer should suspend temporary or permanent the transmission of any information (blocking the access to the information) if the measures were decided by a public authority, ex officio or as a result of a complaint made by any prejudiced person. 4. ELECTRONIC SIGNATURE In law 455/2001 electronic signature represents electronic information attached or associated with other electronic dates, used as identification method; and the electronic documents represents a collection of electronic information, connected by logical relations, who can restore letters, numbers or other characters that can be read through an electronic program. To produce valid juridical effects electronic signature must: - be uniquely related to its signatory, - assure signatorys identification, - be created through safe methods, controlled by the signatory, - be related with electronic information, so any further change to be identified. Before the appearance of law 455/2001 and 365/202 in doctrine electronic registration were simple copies and were not considered evidences. But now, according to law 455/2001 electronic signature can be assimilated with private certificate. If the electronic certificate has attached an electronic signature, based on a qualified certificate and guarantee by a secured system of creating electronic signatures, he will be assimilated with a private certificate, being considered that he is valid. This means that contracts made through electronic means produce the same juridical effects like any other written contract. The entitled party that pleads an electronic document, a qualified certificate or the secure system that creates the electronic signature must prove its authenticity. When any party to this dispute does not recognize the signature or the document, the court will verify them through a technical expertise. A qualified certificate is a collection of electronic information. This information certifies the connection between electronic signature and its holder, confirming his identity. The certificate must contain the tenderers identification information (nationality, electronic signature), the beneficiarys identification information (name, pseudonym, and personal identification number), the certificates validity and the value limits of the operations that can be made. The caterer must use only secured device to create electronic signatures and to create qualified certificates. The secured device represents that hardware or software that implements necessary information for electronic signature and who assure the

36

Bojinc,M.; Szasz, M

informations confidentiality and security. The abovementioned device protects the electronic signature against fake and blocks the access of unauthorized persons. The tenderer who sells qualified certificates must respect in his activity the principles of free and fair competition. To certify electronic signature the tenderer does not have to be previously authorized, but he must notify the authorized authorities with 30 days before the beginning of his activity. For all that, the tenderer can request an accreditation from a specialized superintendent authority to assure maximum protection to the beneficiarys rights and interests. The tenderer must keep an electronic record of all the released certificates, record that should be available to consult, including on-line
REFERENCES: [1]. Anescu R., Comerul electronic, Revista Tribuna Economic, 2003 [2]. Georgescu I.L., Drept comercial romn, Editura All Beck, Bucureti, 1995 [3]. Legislaie (L. 455/2001 privind semntura electronic, M.O. nr. 429/2001; L. 365/2002 privind comerul electronic, M.O. nr. 483/2002)

Annals of the University of Petroani, Economics, 3 (2003), 37-40

37

LA CONCURRENCE INTERNATIONALE AU CADRE DE LINTENSIFICATION DU PROCES DE GLOBALISATION DE LECONOMIE

IOAN COSMESCU, DENISA-BIANCA COSMESCU *
RESUM: La globalisation est un procs relativement nouveau qui suppose la ralisation dun march lechelle mondiale. Ce fait est possible grce au nivellement des ncessits des consommateurs et grce la standardisation des produits aussi quau dveloppement sans prcdent des communications et de la mass-mdia. Les firmes et les institutions intresses ce phnomne de la globalisation se caracterisent par une structure flexible, dynamique, ayant un contenu tout fait technologique en ce qui concerne la production aussi que la distribution des biens et des services de divers types. MOTS CLEF: proces de globalisation, concurrence internaionale, lautonomie nationale, mondialisation du capital

La globalisation est un procs relativement nouveau qui suppose la ralisation dun march lechelle mondiale1. Ce fait est possible grce au nivellement des ncessits des consommateurs et grce la standardisation des produits aussi quau dveloppement sans prcdent des communications et de la mass-mdia. Les firmes et les institutions intresses ce phnomne de la globalisation se caracterisent par une structure flexible, dynamique, ayant un contenu tout fait technologique en ce qui concerne la production aussi que la distribution des biens et des services de divers types. Parmi dautres taches, ces firmes doivent rexaminer trs souvent leurs plans pour quelles ne se trouvent pas dans la situation dtre limines de ce march fortement concurrentiel2. Et cest de ces apprciations qui regardent la globalisation appartenant de biens connus auteurs roumains ou trangers, que rsulte lattention majeure quon
*
1

Prof. Ph.D. at the Romanian-German University, Sibiu, Romania Exp. mk.

Postelnicu Gh. , Postelnicu C. , Globalizarea economiei , Ed. Economica , Bucuresti 2000, p.68 2 De Luca Gianni, s.a. , Nuovo dizionario di economia , Essestampa , Napoli, 1998, p. 315

38

Cosmescu. I..; Cosmescu, D.B.

accorde la possibilit de raliser ce procs, au reste les firmes se trouvant de nouveau au centre de lattention. Elles devront sadapter au divers modles de production et dchange imposs par ce march gant, dj form. Egalement, la littrature de spcialit, tout comme la pratique des relations conomiques internationales, soulignent le rle des communications dans lintensification de ce procs. Nous considerons quil faudrait ajouter, paralllement, la globalisation financire et celle des investissements internationaux qui, dernirement, ont domin lchange proprement-dit de marchandises. Si, auparavant, les stratgies internationales se basaient sur les exportations et sur le placement de la production au cadre du march interne , maintenant , au cadre du procs de maturisation du phnomne de la globalisation, les nouvelles stratgies combinent toute la gamme dactivits transfrontalires: exportations et approvisionnement /de lextrieur, les investissements trangers et les aliances internationales. On souligne, donc, que la globalisation ne fait pas rfrance uniquement lactivits des firmes et aux flux commerciaux quelles crent . Dans une gale mesure, elle contient aussi la globalisation financire quon ne peut pas exclure de la liste des plus puissants facteurs qui ont drermin les grands ajustements structurels dans lconomie mondiale 1 . Lide de base est la suivante : la globalisation doit tre considre une phase spcifique de la mondialisation du capital et de la mise en vidence de ses possibilits de valorisation lechelle de la totalit des rgions du monde, cest--dire partout o on puisse trouver des ressources et des marchs. Au fond, la globalisation est considre en tant que rsultat conjugu de deux moments divers mais interdpendants: dun ct, la longue dure daccumulation du capital, priode qui a commenc la fin de la premire guerre mondiale interrompue par des crises et des guerres dvastatrices , telles la seconde guerre mondiale et, de lautre ct, ladoption de quelques mesures de libralisation de la vie conomique internationale, de privatisation et de syncronisation lgislative, adopts au dbut des annes 80. Comprenant par la globalisation un procs dapprofondissement et de consolidation des liens dinterdpendance entre les acteurs de lconomie mondiale1, quelques annalistes essayent de mettre en balance les deux forces prsentes sur la grande scne de lconomie mondiale: dune part, la disposition pour la coopration et, de lautre part, la comptition dure prenant de diverses formes de concurrence, tablie entre les protagonistes de lconomie. Quelle dentre elles connait la plus grande intensit? Cest difficile de rpondre cette question cause de linexactitude et de linconsistence des notions dont on dispose lintrieur de ce domaine dactivit tellement sensible et aussi, cause de linexistance jusqu prsent dun scnario dfinitif conformment auquel on aurait pu dcrire en dtail ce mcanisme.
Postelnicu Gh., Postelnicu C., lucr. cit. , p.69 Larison Th., Skidmore D., International Political Economy: The Struggle for Power and Wealth , New York , 1997 ,p.161
1 1

La concurrence international au cadre de

39

Cependant, ce quon ne peut pas nier, cest le fait quon a vu agir depuis tout le temps, des facteurs qui ont encourag la coopration ct dautres facteurs qui ont maintenu la flamme de la concurrence flambante, concurrence qui a connu parfois des nuances conflictuelles ouvertes . Sans doute, la raison la plus importante de la persistance de la coopration conomique internationale est laugmentation du niveau de dpendance des conomies nationales (du point de vue du commerce et des investissements). Ces pays ont compris qutre tout seul dans lconomie mondiale daujourdhui cote trop. On confirme de cette faon , une ancienne thse de la thorie conomique qui soutienne que la maximalisation des revenus est possible si les nations se spcialisent dans la production de ces produits pour lesquels elles disposent des meilleures conditions , en achetant de letranger les marchandises dont la production lintrieur supposerait des cots levs . Or, cela veut dire interdpendance qui, son tour, sexprime concrtement par une coopration conomique. Une coopration tendue et le renforcement des liens conomiques tablis entre divers Etats ne suppose daucune faon lexclusion de la concurrence. Au contraire, le procs de globalisation , nourri par lampleure et le perfectionnement du mcanisme de la coopration, na pas diminu lefficacit de la loi sur la concurrence mais la intensifi, celle-ci prennant maintenant de diverses formes. Malgr la prsence de plusieurs facteurs favorables la coopration, on continue maintenir au cadre de lconomie mondiale, des forces suffisantes qui affectent les bases de la croissance de linterdpendance globale. Quelques-unes de ces forces sont des forces traditionnelles et elles sont lies la tension cre parfois entre lautonomie nationale et linterdpendance conomique. Les autres ont t dtermines par les tendances actuelles du dveloppement, telles la relative alternance de la balance du pouvoir entre les Etats et les firmes ou les changements apparus au cadre des accords commerciaux. Si le nombre des cas o les leaders politiques isolent leurs pays de lconomie mondiale , est de plus en plus rduit, il arrive de mme avec les gouvernements qui permettent que les investissements et le commerce se derroulent sans aucune rgle ou restriction. A la suite, linterdpendance cre la fois des c des relations entre les conomies nationales et le reste du monde, les stratges politiques ots et des bnfices. Donc, ce nest pas par hasard quen ce qui concerne la direction cherchent equilibrer la balance entre les cots et les bnfices cres par le procs dinterdpendence. Daprs les spcialistes, le cot politique le plus important de linterdpendance est lrosion de lautonomie nationale, visible travers : la difficult rencontre par les facturs politiques lorsquils prennent certaines dcisions, dans les conditions o ils doivent tenir compte galement des ractions des autres, ou le permanent danger que certaines changes commerciaux et dinvestissement prsentent car ils facilitent le transfrement de la technologie militaire moderne des rgions o elle ne devrait pas arriver tenant compte du comportement anti-coopration de quelques-unes. En plus, quoique le commerce entre deux pays devrait, en principe, favoriser tout les deux, on na aucune garantie quelles vont prosprer de la mme faon. Jusqu

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prsent, la ralit nous a dmontr quil est possible quune nation obtienne des avantages grce une autre travers la limitation du commerce et des investissements ralise de diverses faons. De cette ide on pourrait tirer une conclusion essentielle: linterdpendance conomique, en tant que trait descriptif de la globalisation, mne, de faon invitable, lintensification de la lutte pour obtenir des avantages nationaux paralllement avec la croissance des efforts de coopration. Deuximement, affirment les spcialistes, laccentuation de la mondialisation des marchs et de la concurrence est le rsultat de linteraction cumulative dune srie de facteurs qui ont profondemment chang limage et la structure de lconomie mondiale. Parmi ceux-ci, un rle trs important lont eu: les mesures prises pour ouvrir les frontires la circulation des produits et aussi la cration dentreprises letranger ; la transmission des modles de consommation qui ont contribu la mondialisation des gots; lapparition de firmes vocation mondiale travers lesquelles on a ralis la plupart des transfrements de technologie et travers lesquelles on a mis les bases des plus importants flux dinvestissements directs; la cration de rseaux de distribution un niveau mondial y compris ceux du domaine des services et la formation de quelques segments de clientle traditionnelle qui connaissent bien les standards mondiaux de qualit et les marques de rfrence, porteures dun message universel.
BIBLIOGRAPHIE : [1]. De Luca Gianni - Nuovo dizionario di economia , Essestampa , Napoli, 1998, p. 315 [2]. Larison Th., Skidmore D. - International Political Economy : The Struggle for Power and Wealth , New York , 1997 ,p.161 [3]. Postelnicu Gh., Postelnicu C. - Globalizarea economiei , Ed. Economica , Bucuresti 2000

Annals of the University of Petroani, Economics, 3 (2003), 41-46

41

THE ELABORATION OF A MARKETING PLAN REGARDING INFRASTRUCTURE MODERNISATION OF PARANG TOURISTIC AREA
IOAN CUCU, CODRUTA DURA *
ABSTRACT: Supplying the various forms of accommodation from Parang touristic area with water is a major problem and its settlement depends on the possibility of exploiting 10the existing potential. The advertising procedures for the services granted through this project are part of the strategy for promoting tourism in Parang Mountains. Allowing for the involvement of local authorities (the City Hall) in initiating and eventually in the running of this programme, the main axis of the promotion will be based on public relations. KEY WORDS: infrastructure modernization, SWOT analysis, target group, direct and indirect beneficiary, marketing plan, promotional mix, public relations, advertising instruments.

1. INTRODUCTION Parang touristic area is located in Jiu Valley (Petrosani municipality), a region that faces serious social economic problems due to intensive staff dismissals in the mining field, which resulted in closing down several unprofitable mines. In conclusion, the main problems that Jiu Valley faces are: the dependence almost entirely on the coal mining, the lack of some major economic activities, independent of mining, and the inadequate infrastructure (sewerage, water, gas, heat carrier), the deterioration of the environment due to coal mining, the continuously increasing number of unemployed people in a relatively small geographic area, etc. From the analysis of the social economic indicators, we can draw the following conclusions: The number of employees in 2002 went down by 40% as compared to 1997 (reference year as far as staff dismissals are concerned);
*

Assoc. Prof. Ph.D. at the University of Petrosani, Romania Lecturer Ph.D. at the University of Petrosani, Romania

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The earned income (estimated both per person and per family) is smaller giving the nation-wide average; 68% of the dismissed miners havent found a new job; About 7% of the miners who have new jobs work part-time, another 5% work on their own and only 2% work full-time; The number of mine workers represents 60% of the total of employees, while the number of those who work in the private area represents 20%; The labour power in companies with great annual losses exceeds 50%, while the number of employees in profitable companies represents only 10% of the total; The rate of unemployment in Hunedoara County was of 11.8% in august 2002 (occupying the 5th place in the country, after Ialomita, Neamt, Galati and Prahova counties), while in Jiu Valley the percentage is much higher (1733%); Thus, activities related to coal extraction and preparation continue to prevail over the economy of the region, while food and textile industries are very weak. Based on these facts, the SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) made it possible for the following neuralgic points to be identified in order to encourage the development of tourism in Parang Mountains (table no.1). Table no 1: SWOT analysis matrix
STRENGTHS Anthropogenic natural resources; Highway 7, County Road 709F and chairlift (or gravel road) which provide easy access; Touristic potential all the year round It attracts tourists with low or medium income; Available labour power; Increasing the comfort for tourists; WEAKNESSES Poor quality accommodation and touristic facilities An ominous deterioration of the environment, doubled by the lack of activities in terms of environment protection The absence of activities regarding tourism promotion in the area The lack of tourism support services OPPORTUNITIES The improvement of the infrastructure and accommodation will attract more tourists. Reshaping dismissed employees and creating new economically justified jobs in the 3rd sector. Qualitative improvement of tourism and services bring about investments in this field and in other local economic fields an important economic development. THREATS An unpleasant image of Jiu Valley and scarce tourist attractions. Low living standards of the local people. The absence of professional training courses in tourism and related services. Competing with other highly developed and promoted mountain resorts (Valea Prahovei, Poiana Brasov).

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Supplying the various forms of accommodation in the mountains with water is a major problem and its settlement also depends on the possibility of exploiting the existing potential. 2. CORRESPONDENCE WITH THE LOCAL AND/OR REGIONAL OBJECTIVES Developing the tourism sector is the most appropriate way to redirect and reconstruct local economy infrastructure, ranging among the main components of the National Plan for Development and being on the following two coordinates: 1. Axis 2: infrastructure improvement and development; 2. Axis 5: environment protection and improvement. The water supply modernization project, through its facilities and advantages, contributes to the implementation of the 5 Vest Developing Strategy, mainly the activities stipulated by Priority 2 Improving and developing the physical infrastructure that supports social and economic activities and by Measure 2.2 Developing tourism and town infrastructure. Besides, the general and characteristic objectives correspond to those of the Jiu Valley Social Economic Development Strategy, drawn up by the Romanian Government that dedicates a whole chapter to the Tourism Development Policy (4.1.4), thought to be one of major alternatives of the traditional mining activity. 3. DESCRIPTION OF THE SERVICE PROVIDED The new service provided through investments is supplying the local touristic region with drinking water at suitable parameters. This service will need to catch two water springs using drains with reverse filter when the stream flow amounts to 1.8 l/s and with quality assurance of 90%. The investment is also going to cover the necessary amount of water of 0.74 l/s. 4. THE NEEDS THAT ARE COVERED AND THE TARGET-GROUP The investment is justified, from economic point of view, by the absence of water supply in the 3 touristic sub-regions: A (the upper region), B (the far end of the chairlift) and C (the lower end of the chairlift). Only the ANEFS chalet (belonging to the National Academy of Sports) has been supplied by catching a slope spring. As a consequence, this project should be a priority, able to cover the absence of drinking water in Parang Mountains. The target-group that is going to use this water service is made up of the owners/administrators of the 132 holiday houses and chalets within the area. They will be able to use water either for their needs or for the needs of the tourists, or in order to construct new chalets or motels. The people who will get direct benefit from the results of this project are the local investors and the tourists who enjoy the forms of accommodation. The population

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of Petrosani municipality is an indirect beneficiary of this project, due to several advantages: it creates new jobs as long as the programme is running (in order to put up buildings); it re-enforces local economy by encouraging Romanian or foreign investors to start up a business which will influence and increase the rate of employment; it will bring about new unsettled financing sources, which will help solve some characteristic social problems of the region, if properly managed by local authorities, and will also lay the foundations of an authentic economy. 5. THE MARKETING PLAN The objective of the marketing plan is advertising this touristic area on the national and international market as a great holiday destination. The advertising procedures for the services granted through this project are part of the strategy for promoting tourism in Parang Mountains. Allowing for the involvement of local authorities (the City Hall) in initiating and eventually in the running of this programme, the main axis of the promotion will be based on public relations. This also implies the idea that the initiator is to get in touch with the people, with the managers of the companies involved in the project, the media and travel agencies, in order to determine a favourable opinion concerning this mountainous region and to increase the potential contribution of investors in complying with certain requests of the local people and improving their living standards. Primarily, the following activities for promoting tourism and services in the area, must be taken into account: Visiting the various forms of accommodation; Organizing press conferences around the modernization of the touristic infrastructure; Publishing interviews and speeches in the local newspapers; Creating an information and advising system to support to help new investors; Organizing seminars around the improvement of accommodation due to water supplies; Inaugurating new forms of accommodation with a full package of facilities and services and special offers in the first year. The campaign for promoting tourism and services in Parang Mountains will be completed by several traditional advertising instruments: Drawing up and printing advertising messages in the local and central papers and magazines; Local and central radio and television commercials; Placing advertising boards (with images and sights full of colour, which call peoples attention) along the main highways and railways which provide access to the area, and also in the coterminous towns and villages; Giving out leaflets containing marvellous pictures of the sights in the

The elaboration of a marketihg plan regarding

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area, which also inform people of the services provided; Creating a Website or writing Cds that contain beautiful pictures and information regarding accommodation, sightseeing and other services provided. All these are submitted to the idea Parang touristic area is a rather popular one. Although this is not an advertising catch phrase, it is a suitable theme for the campaign in order to remove any doubts in terms of services provided and prices. After materializing the investments, certain analysis and estimations can be made in order to measure the impact they have on the target-groups and how notorious the region has become, by using indicators like: the number of requests for water pipes installations, degree of precision, the average number of tourists accommodated in season and out of season and how much other resorts attract tourists. 6. THE EFFICIENCY OF THE MARKETING PLAN The efficiency of the plan can be appreciated if its objective has been achieved. It is considered to be the result of a comparative analysis between the outgoings and incomings proceeded from the services provided. Here is a detailed analysis for the first year since the programme has been running also considering advertising costs: Advertising budget - Outgoings for advertising instruments (adds, commercials, billboards) 150 EUR - Creating a website 100 EUR - Public relation costs 400 EUR TOTAL 550 EU Incomings due to the services provided have been estimated, according to financial analysis, based on 3 possible functioning scenarios: pessimist (when the price is 15000 lei/m3 of water), realistic (in case of 25000 lei/m3) and optimist (in case of 35000 lei/m3). The following annual income figures can be obtained: - the pessimist scenario: 21642 EUR - the realistic scenario: 36071 EUR - the optimist scenario: 50500 EUR Considering all the estimated incomings as part of the pessimist scenario, it comes out that the stipulated amount of advertising costs is of about 20.5% of the total income, which redoubles the advertising activities beginning on the second year of running. For the other two scenarios analysed (realistic and optimist), advertising costs represent 1.5% and 1.1% of the total income, therefore the efficiency of the marketing plan, as a cost-benefit ratio is made clear. Furthermore, some of the advertising costs (the ones covering public relations and INTERNET advertising) are expected to be brought down beginning on the second year of the implementation of the project, while concentrating on other advertising techniques is less expensive. After materializing the investments, certain analysis and estimations can be

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made in order to measure the impact they have on the target-groups and how notorious the region has become, by using indicators like: the number of requests for water pipes installations; degree of precision; the average number of tourists accommodated in season and out of season; how much other resorts attract tourists. Other estimations concerning the results of the marketing plan implementation can be done through mail opinion surveys (1000 addressees will receive a stamped post card with a series of questions referring to the touristic region and its infrastructure) and especially considering how satisfied the tourists were and the number of tourists per week or per season in the first year. The eventual steps that might be taken, as well as tourists dissatisfactions can be established reading the answers to the questionnaires filled at the end of their journey by each tourist, regarded as a feedback activity.
REFERENCES: [1]. Blaure, Virgil, Marketing, Ed. Uranus, Bucureti, 2000 [2]. Ctoiu, Iacob, Marketing Research, Ed. Uranus, Bucureti, 2002 [3]. Popescu, Adina Claudia, Marketing, Ed. Economic, Bucureti, 2002 [4]. Kinnear, Thomas, Root Ann (ed), Survey of Marketing Research: Organisation, Functions, Budget, Compensation, American Marketing Association, Chicago, 1994 [5]. Kotler, Philip, Marketing Management, Ed. Teora, Bucureti, 1997 [6]. Maxim, Emil, Gherasim, Toader, Marketing, Ed. Economic, Bucureti, 2000

Annals of the University of Petroani, Economics, 3 (2003), 47-52

47

CONSIDERATIONS REGARDING THE DEVELOPMENT OF INDUSTRIAL TECHNOLOGY

IOAN CONSTANTIN DIMA, IMOLA DRIG *
ABSTRACT: During structural changes suffered by the human society, the role of the firm alters, passing from industrial activity to global servicing. Business, technological and economic issues represent the main objectives in the activity developed by a firm. The policy of these firms reflects a nationalist attitude towards globalization which is considered a process of economic investments of foreign countries. At present, the firms must carry out a more responsible activity in order to achieve their diversified goals. The present tendency of science concentration generates questions about the threats that might hide behind top of lance technologies, such as: algenia invented by Joshua Lederbery for the new science obtained by combining biology and robotics. Such uncertainties stimulated a strong movement towards appropriate technologies.

KEY WORDS: the development of human society in waves, human society, appropriate technology, the pollution of the environment, biotechnological age, robotics, ecological science

The development of human society in waves, proceeding from The Third Wave (1980) by Alvin Toffler, involves technological characterization of the human society corresponding to each wave in accordance with certain changes. Essentially, in the development of human society there are some waves, such as: - The First Wave is characterized by the agricultural revolution which created the necessary conditions to accede to a superior level in the development of human society; - The Second Wave is represented by industrialization and covered a large geographic area continuing its existence even today.

Prof. Ph.D. at the ARTIFEX University of Bucharest, Romania Assist. Prof. at the University of Petroani, Romania

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Dima, I.C.; Drig, I.

It has its origin in materialism and human supremacy, emphasizing competition, auto-conservation and consumption, being the source of certain problems concerning pollution, solid offal elimination and multiple forms of delinquency. In this stage of development we are separated and we must compete. - The Third Wave, after industrialization, has an important role within modern industrialized nations proving an increasing concern towards equilibrium and maintenance power of the society. According to its development, the members of society become more sensitive to conservation, life sanctity and co-operation issues. Therefore, we are connected and we must co-operate; - The Forth Wave begins at the end of The Third Wave, integration of every dimension of life and responsibilities for the whole become the central point for society. By admitting the identity of each living system, new conditional and inter-conditional relations are able to appear that are useful both to human and other factors of production. In this stage of development, we are one and we choose to co-create. During structural changes suffered by the human society, the role of the firm alters, passing from industrial activity to global servicing. In the last few decades, business becomes the dominate institution in global culture (Hawkn, 1992) relating to other institutions of the human society (political, social) even though they are still capable of supplying certain managerial ways and means. Due to this fact business must assume the responsibility of the whole. Today, almost every firm remained from The Second Wave are hierarchical, centralized and centered on certain values, such as: profit, efficiency, dimension and development. The decline of The Second Wave occurred as a result of adopting a certain development model (meaning: survival, auto-conservation, competition defeat, victory) in which success is determined by the capacity of generating a profit and expectations concerning development involve 5-10 years. Business, technological and economic issues represent the main objectives in the activity developed by a firm and general managers answer only to shareholders. The policy of these firms reflects a nationalist attitude towards globalization which is considered a process of economic investments of foreign countries. At present, the firms must carry out a more responsible activity in order to achieve their diversified goals. The transition to The Third Wave requires a firm capable of creating values. Therefore, the business philosophy of the firm suffers important changes, meaning that firms start to focus on finding solutions that satisfy shareholders and production needs. This can be achieved facing the fact that there is a mutual relationship between employees and employers, shareholders and clients. The firms strategy must consist of anticipating independent future needs and thus business becomes a tool in ensuring the development of the society.

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Consequently, firms are preoccupied of knowing the needs of their clients, gaining new markets for their products, offering services of certain structure and quality. But, in order to achieve these goals, human knowledge has to pass from fear to trust, from the need of controlling to the lack of it, from rigidity to cultural education. In this way, the pre-requisites for passing to a society of the third millenary are created. The firm from The Forth Wave admits its role of a servant for the society all together with that of products and services supplier for privet customers. The firm changes its self-image from that of a producer into a service supplier (Harman, 1982) and acts as a leader in dealing with global issues of the society, concentrating upon those with a positive influence. Thus, the servant-management model established by Robert K. Greenleaf becomes the corporate ethos from The Forth Wave. Now, the firm is able to gain an essential part within the global responsibility if the intellectual transfer from competition defeat to citizens servicing is achieved, the main objective of the firms activity becomes identifying the real needs of the customers, the firm acknowledges the advantages of a global organizing and invests in order to achieve these advantages, the firm thinks at a global level and acts on local plane. Under these circumstances, after the World War Two, the rising of a large number of technologies ensured the growth of property, increasing, in the same time, the pollution of the environment. Although the property of the society generally represents a positive aspect, however the increasing level of pollution determined strong criticism against technology and science that generated it. Contemporary criticism, such as the perspectives typical to The Second Wave, brought to science and technology, concentrates, first of all, upon scientism and upon the necessity of an appropriate technology to time, place, culture and environment as well. The present tendency of science concentration generates questions about the threats that might hide behind top of lance technologies, such as: algenia invented by Joshua Lederbery for the new science obtained by combining biology and robotics. Such uncertainties stimulated a strong movement towards appropriate technologies. Under these circumstances, the current assessment of meeting various technologies makes a constitutive part of practice developed into The Third and Forth Wave. Appropriate technology has more meanings. Thus, under environmental context it represents a benign form of technologies which combines ecological rigors due to the fact that it involves such production ways and means that respect ecological laws, do not harm the ecosystem and protect the viability and integrity of he environment. Therefore, as appropriate technologies are developing, inappropriate technologies that endanger life and the ecosystem have limited future. Appropriate technologies are based not only on environmental reasons but also on cultural factors. In this way, when we have to establish if an invention or a new technique is suitable to certain culture, it is necessary to analyze the weight of the population belonging to that culture within the total population, to specify the

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educational level, to know the social systems. All these can be achieved by answering to the following questions: - Does this technology serve to improve the lifestyle? - Does it protect or destroy social and economic equilibrium among different social groups and nations? - Does it direct contemporary tendencies towards decentralization, power dilution and increase of personal mandate? Appropriate technologies implementation is full of moral and philosophical aspects. Thereby, biotechnologies as genetic engineering and alegina are so powerful that they become decisive for the future quality of social life and public stressing of moral limits of technology becomes essential. For this reason, the implementation of declarations with social, economic, politic and ecological impact regarding appropriate technologies is absolutely necessary. The ecological movement from The Forth Wave has an echo beyond appropriate technology tendency. It demands an appropriate technology sensitive to the fact that nature is not entirely known, putting us into a great danger. Therefore, ecologists insistently allege that technology should have a respectful attitude towards environment knowing that only in this way the concern of maintaining the equilibrium from within the natural system can ensure life. The present trend in developing new technologies providing new marketable products becomes more and more intensive. They are the inevitable consequences of technological progress, particularly the transition to the biotechnical age, meaning the period in which biology and high technology are mixing so much that the frontier between living and non-living material vanishes. The development of appropriate technologies is based on inventions, efforts to create a new device or procedure at a reasonable price that is able to make it competitive on the market. When technologies are more and more powerful and the rate of change is very high it is absolutely necessary to develop a number of prompt procedures in order to avoid possible negative impacts a technology could have upon the environment. In the same time, both population and business men should be educated regarding the assessment of new technologies. Thus, into a firm from The Second Wave debates concerning the impact of new technologies on the environment were very rare. Another demand of developing new technologies is represented by distinguishing alternatives of new technologies from intentions of what we would like to develop or be developed, excepting private technologies, such as those from chemical agriculture. This is necessary because the period in which we could act continuously without being fully aware of our actions is in the past. Industries from the Sunrise Seven System are confronted with the necessity of combining ecological relations with technologies which is a difficult procedure that will be even more complicated in the future. In such an environment of continuous search the priority of ecological awareness can be reduced if technologies that act under ecological laws can be developed. This can be achieved in the future and only

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trained engineers with ecological sensitivity could develop such technologies. This is acceptable only for the largest and most productive firms that have sufficient resources to ensure an adequate implementation of ecological science. Concomitantly with the awareness of the role of value and ethics in technology analysis adopting ethical decisions becomes very important. In this way, within the structure of the firm is created a position occupied by an employee specialized in ethics who has to analyze limitations and strategic constraint exerted upon the firm by environmental, technological, political, social and economic factors. The transition from The Third Wave concerning the creation of a value team grants the advantage of developing a more open and trustful communication between firms and offers the possibility of experimenting new technologies, allowing the increase of creativity into this field. Simultaneously with creativity stimulation, the formal structure of the value team encourages a substantial assessment of new technologies and their possible impact. Firms from this period are also using intuitive techniques in order to help employees to do a better job, more efficient and more successful. As part of the help provided to the firm so a to meet the demands of the biotechnological age intuition has an essential role, maintaining the firm on the first position in competition and ensuring prompt reactions to changes. The combination between intuition and reason is benefic both to scientists and producers. In competition the best firm in developing and using its entire human capacity gains an optimal position. Therefore, technological assessment has all the chances to become the main feature of a firm from The Third Wave. Technologies from this period are based on exploiting the technology group Sunrise Seven, retraining domestic garbage in order to obtain energy, developing robotics and algenia, ensuring, in the same time, the health of the environment. The technologies used by corporations from The Forth Wave are entirely in the accordance with appropriate technology. People from The Forth Wave are collaborating and they do not live in fear anymore, consider competition unnecessary and they have a different attitude towards information and its power. In this stage, significant progresses are made in the energetic systems based on mathematical systems that lead to energy sources that do not pollute the environment. By using fossil fuel and conventional nuclear technologies for production, electrical energy becomes limited. Algenia is going to play a major role in the combination formed between biological technologies and robotics within the biotechnological age. The acceleration of progress achieved in increasing the speed and memory capacity of computers and in understanding the human immunity system are the decisive factors in the evolution of algenia. Thus, science fiction forecasts become realities and this phenomenon is going to increase as society develops, the creativity of people and their cleverness are going to burst through mental intuitive and rational processes. Good and bad consequences of future technologies increase the concern of firms and employees towards ethics and value. It involves implementing cooperative

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technical activities, awaking the awareness of business men concerning the necessity for change, insuring the use of appropriate technology in the bio political age.
REFERENCES: [1]. Dima I.C., Constantinescu D.A., Man M., Dobrin M. Economia i gestiunea firmei, Editura Economic, Bucureti, 1999 [2]. Dima I.C., Man M. Managementul activitii industriale, Editura AGIR, Bucureti, 1999

Annals of the University of Petroani, Economics, 3 (2003), 53-56

53

LOCCUPATION DE LA FORCE DE TRAVAIL - FACTEUR DUN DEVELOPPEMENT DURABLE

ALINA FLEER *
RESUM: Lpreuve se propose de surprendre une srie daspects regardant la relation occupation dveloppement durable et les relations et les interdpendances qui peuvent apparatre entre celle ci. On veut aussi prsenter les plus rcentes objectives des stratgies europennes en ce qui regarde loccupation de la force de travail. MOTS CLEF: force de travail, dveloppement durable, soustenabilit.

Le travail cest un facteur de production originaire, actif et dterminant. Lorsque le travail manque, les autres facteurs de production sont tout simplement matire morte et neorganise, incapable de satisfaire les besoins de lhomme. De ce point de vue, le travail devient une ressource rare. ,,Chaque individu ne peut dpasser quune quantit limite dnergie et chaque unit de travail ne peut produire quun effet limit. De cette faon, si le travail humain tait disponible en abundance, il ne serait plus caractris par raret, il ne serait considr quun moyen pour loigner une absence, et par consquence, pargn. Le concept doccupation de force de travail a connu en temps plusieurs abordassions toutes diffrentes, dveloppement, compltements et additions, opinions contradictoires qui relvent, au fin, un haut niveau de complexit. Autrefois, la principale modalit de survie et dveloppement de lhomme a t ladaptation a lambiance dans laquelle il vivait, la principale condition de cette adaptation rsidait dans la plupart dans les qualits dordre physiologique rsistance physique, et une immunit augmente. A lheure actuelle, la principale modalit de dveloppement humain cest ladaptabilit lambiance conomique, sociale, culturelle et politique que lhomme la cre. Pour mieux vivre, aujourdhui, lhomme doit non seulement sintgrer dans le mcanisme conomique, technologique et social, mais aussi il doit anticiper ses volutions, il doit se prparer pour faire face des nouvelles dfis. Le concept de dveloppement durable a ses origines dans les innombrables essaies thoriques de clarifier les mcanismes de propagation du dveloppement et du
*

Prep. Univ. Universit de Petroani

54

Fleer, A.

progrs en conomie, de comprendre et mettre en accord lhomme dune ct et la nature, la socit et lui-mme dautre ct. Plus frquemment pour dfinir le concept de dveloppement durable ou soutenable, on utilise la formulation avance par le Rapporteur Brundtland en 1987, et par cela on comprend ,,le dveloppement qui russit de satisfaire les besoins des gnrations actuelles sans affecter la capacit des gnrations qui suivent de satisfaire leurs propres besoins. ,,Le dveloppement durable est conu dans lample vision de la rconciliation dentre lconomie et lenvironnement comme une nouvelle possibilit de dveloppement qui puisse soutenir le progrs humain pas seulement dans quelques lieux et pour quelques annes, mais pour un avenir prolong.1 La relation occupation - dveloppement durable comporte plusieurs aspects. Tout dabord, loccupation constitue un milieu, la force qui signifie un facteur fondamental pour tout dveloppement. Il y en a encore besoin dinvestissions dans la ressource humaine, dadaptation continue et permanente de loffre de force de travail la demande, en ce qui concerne le volume, la structure et spcialement la qualit principalement par laccroissement du niveau ducationnel et de formation professionnelle du capital humain. Dernirement, lapproche qualitative de loffre de force de travail a acquis une importance dcisive. Dans un monde qui doit faire face un procs permanent de changement, qui doit se confronter des restrictions de plus en plus diverses, lenseignement devient une ncessite permanente de chaque individu. Le verbe apprendre est remplac par les verbes apprendre dapprendre et apprendre en permanence , tout le long de la vie. En second lieu, un dveloppement durable ne peut se faire par gaspillage. Si du point de vue du capital naturel la soustenabilite implique son utilisation la plus conomique possible et son conservation pour ceux qui suivent, en ce qui concerne lutilisation du capital humain et le principe de la minimalisation des efforts a une nature toute diffrente. Dans ce cas on peut parler du minimalisation du consume de travail sur lunit de rsultat, paralllement la maximalisation du degr de participation de la population lactivit conomique. Le capital humain ne peut tre conserve pour les gnrations suivantes. Il est tout a fait prissable. Le principe de lefficience de lconomie relative de travail est mis en jeu dans notre socit seulement dans une place secondaire pour gnrer une conomie absolue du travail et principalement pour obtenir un progrs des produits. En troisime lieu, le dveloppement durable est sans doute en liaison avec la dimension du revenu. Pour la plupart des hommes le salaire cest la principale source de revenu. Dans ces conditions, loccupation, dans toutes ses formes, simpose comme un objectif stable qui peut assurer la satisfaction des objectifs sociaux sans faire appel aux procs de rpartition secondaire des revenus. En quatrime lieu, la protection de lenvironnement cest un domaine dactivit qui est ncessaire chaque conomie ; au fur et a mesure quon peut percevoir crotre le dveloppement conomique, les lieux de travail sont de plus en plus nombreux et ils sont lies la prservation du capital naturel.
1

Cmoiu C., Lconomie et le dfi de la nature, Maison ddition Economique, Bucarest, 1994

Loccupation de la force de travail

55

3,5 millions de personnes de lUnion Europenne travaillent actuellement dans des domaines qui visent directement la protection de lenvironnement et cela signifie 2,4% de la population active et a peu prs 1% de la population totale. Il ne doit pas comprendre que la soustenabilit signifie pour loccupation le maintien permanent du mme lieu de travail, dans des conditions qui nont pas souffert des changements. Au contraire, pour tre viable, loccupation suppose des efforts permanents danticipation, dadaptation, de perfection, de requalification qui doivent assurer, par les projets de travail durable, la scurit de loccupation et des revenus. En outre, on peut dire la mme chose en ce qui concerne la structure mme de lconomie. Cependant, on peut considrer plus capable lintroduction de la nouveaut, du progrs, de linnovation, et ainsi la condition de soustenabilit, de durabilit est mieux satisfaite. Les objectives rcentes des stratgies europennes concernant la force de travail. Ayant comme point de dpart la prmisse que aucun progrs ne peut se raliser automatiquement il ncessite une organisation, un engagement et une action concrte la politique doccupation de lUnion Europenne pour lanne 2001 tablit lobjectif central : la cration des conditions propices a loccupation totale, dans une socit qui a comme fondement les consciences . La stratgie globale vise une srie de plusieurs objectives horizontales qui sappuie sur quatre pylnes : 1. Lamlioration de la capacit dinsertion professionnelle par : La concentration des efforts sur le chmage des jeunes et sur celui de long dure ; les tats membres sengagent a offrir une nouvelle chance pour chaque chmeur, par formation, reconversion, consiliation individuelle- pour sintgrer effectivement sur la marche du travail, bien avant 6 mois de chmage en ce qui concerne les jeunes et 12 mois pour les adultes; Une ambiance plus favorable pour loccupation : des prestations sociales, des impts et systmes de formation; la reforme des systmes regardant les revenues et les impts, pour llimination du spectre de la pauvret et lincitation des chmeurs et des ceux qui ne travaillent dans la recherche dun lieu de travail ; laccroissement de la valeur des mesures actives (minimum 20%) et un niveau plus haut de ses mesures qui revient a chaque chmeur; La mise en application dune politique qui concerne le prolongement de la vie active: horaires flexibles, ducation et formation complmentaire pour les adultes; Le dveloppement des comptences pour une nouvelle marche du travail, qui a comme fondements lducation et la formation continue tout au long de la vie lassurance des connaissances fondamentales pour les jeunes, spcialement dans le domaine des technologies de linformation et des langues trangers; lradication de lanalphabtisme; jusquen 2010 la diminution du nombre des jeunes qui ne continuent leur formation aprs le premier cycle de linstruction secondaire; laccs des adultes a une forme dinstruction continue, jusquen 2010, cette catgorie ne dpassera 10% ; laccs a lInternet pour toutes les coles sans tenir compte de leur degr; La lutte contre la discrimination et le dveloppement de lintgration sociale par laccs un lieu de travail; 2. Le dveloppement de lesprit entreprenant et la cration des lieux de travail par:

56

Fleer, A.

Le soutien des nouvelles firmes qui veulent commencer une activit ; la diminution des frais gnraux et des ceux administratifs qui visent spcialement la fondation des nouveaux activits et des nouveaux embauchages ; la formation des patrons et des travailleurs indpendants; le dcouragement du travail au noir par des reformes fiscales qui peuvent la transformer dans une occupation normale; Des nouvelles possibilits doccupation, dans une socit des connaissances et des services, laccent spcial tant mis sur les informations et sur lenvironnement; Des actions locales pour loccupation; Des reformes fiscales pour loccupation et pour la formation; le changement de sens dans le domaine fiscale par la relchement de la fiscalit; et des prelevations obligatoires en ce qui concerne la force de travail, pour stimuler les investissions dans le capital humain; linvestigation de lopportunit pour lintroduction dun nouvel modle de fiscalit qui peut rorienter le transfert des impts vers lnergie et les missions qui peuvent produire des pollutions; 3. La stimulation des entreprises et des salaries pour laugmentation de la capacit dadaptation par: La modernisation de lorganisation du travail ; des horaires souples ; un quilibre entre la flexibilit et la scurit (la qualit) de loccupation; Le soutien de la capacit dadaptation des salaries dans lentreprise ayant comme fondement lducation et la formation continue tout au long de la vie ; chaque salarie doit avoir le droit dacqurir des connaissances fondamentales tout a fait ncessaires dans la socit des informations, jusquen 2003; 4. La consolidation des politiques dgalit des chances entre les femmes et les hommes par: La proccupation pour lintgration des femmes et pour lgalit des chances entre les femmes et les hommes; Le combat de la discrimination entre les hommes et les femmes; De la conciliation pour la vie professionnelle et familiale; Lengagement des tats membres, dassurer une occupation totale, dterminera une rate doccupation de la population qui peut travailler de 70% (60% pour les femmes), jusquen 2010 par rapport a 61,5% en 1989 ou 62,2% en 1999
BIBLIOGRAPHIE: [1]. Georgescu G. (coordonnateur) - La reforme conomique et le dveloppement durable, Maison ddition Economique, Bucarest, 1995 [2]. Mihescu C. - Population&Occupation Passe. Prsent. Avenir, Maison ddition Economique, Bucarest, 2000 [3]. Preda D. - Loccupation de la force de travail et le dveloppement durable, Maison ddition Economique, Bucarest, 2002 [4]. Bari I.- Economie mondiale, Maison ddition Didactique et Pdagogique, Bucarest, 1997

Annals of the University of Petroani, Economics, 3 (2003), 57-64

57

THE EFFECTS OF SERVICES CHARACTERISTICS ON THE MARKETING MIX FOR SERVICES

MONICA PAULA FLITR *
ABSTRACT: This paper focus on the special characteristics of the marketing mix for services. First, services are seldom highly standardized and it is difficult to develop objective standards for quality. Service organizations can set standards for satisfying internal customers and empower employees to make decisions and correct problems for clients. Services cannot be patented, so marketers must continually innovate and improve their product. Managing fluctuating demand is also an objective for marketers of services. Pricing services is tricky because they are so hard to evaluate. Both parties must be clear about what is offered. In addition, marketers may use off-peak prices to stimulate demand during slow periods. In planning distribution channels, marketers focus on finding ways to provide the services conveniently to clients. The producer of a service rarely relies on resellers to get the product to buyers. Many services are distributed through a franchising arrangement. Marketing communications, especially in the form of personal selling, is often closely linked to providing the service. The aim of the marketing communications for service is ensuring that the customers understand and appreciate what is being sold by the service organization. KEY WORDS: marketing mix, price, management of product, customers, goods, distribution, promotion

Using the marketing mix, service firms try to communicate better with the customers in order to satisfy them. As services tend to be different from goods, the marketing mix for services has some special characteristics, too. Careful management of product, price, distribution and promotion (comunications) is essential to the successful marketing of services. However, the strategies for the traditional marketing mix (product, price place and promotion) require some modifications when applied to services. For example, price become very complex in services where unit costs needed to calculate prices may be difficult to determine, and where the customer frequently uses prices as a cue to quality.
*

Assist. Prof., Romanian-German University of Sibiu, Romania

58

Flitr, M.P.

Because services are usually produced and consumed simultaneously, customers interact directly with the firms personell and are actually part of the service production process. Also, because services are intangible customers will often be looking for any tangible cue to help them understand the nature of the service experience. All these facts have led services marketers to conclude that they can use additional variables to communicate with and satisfy their customers. For example, in the hotel industry, the design and decor of the hotel as well as the appearance and the attitudes of the employees will influence customer perceptions and experience. The importance (role) of these additional communication variables has led services marketers to adopt the concept of an expanded marketing mix for services. The marketing mix for services includes, in addition to the traditional four Ps, the following elements: people, physical evidence and service process. People People are the human actors who play a part in service delivery and influence the buyers perceptions, namely: the firms personnel, the customer and other customers in the service environment. All of the people (human actors) participating in the delivery of a service provide cues to the customers regarding the nature of the service. How these people are dressed, their personal appearance and their attitudes and behaviours all influence the customers perceptions of the service. The service provider or contact person can be very important. For some services, such as counseling, teaching, medical services and other professional-based services, the provider is the service. Physical evidence The physical evidence of service includes all of the tangible representations of the service that facilitate performance or communication of the service, such as equipment, brochures, letterhead, business cards. Especially when consumers have little on which to judge the actual quality of service, they will rely on these cues, just as they rely on cues provided by the people and the service process. Physical evidence cues provide excellent opportunities for the firm to send consistent and strong messages regarding the organizations purpose, the intended market segments and the nature of services. Service process The service process consists of the actual procedures, mechanisms and flow of activities by which the service is delivered the service delivery and operating systems. The actual delivery steps the customer experiences (or the operational flow of the service) will also provide customers with evidence on which to judge the service. Some services are very complex, requiring the customer to follow a complicated and extensive series of actions to complete the process. Another distinguishing characteristic of the process that can provide evidence to the customer is whether the service follows a production-line/standardized approach or whether the process is an empowered/customized one. None of these characteristics

The effects of services characteristics on

59

of the services is better or worse than another. Rather, the point is that these process characteristics are another form of evidence used by the consumer to judge the service. The three new marketing mix elements (people, physical evidence, process) are included in the marketing mix as separate elements because they are within the control of the firm and they may influence the customers initial decision to purchase a service, as well as the customer level of satisfaction and repurchase decision. In preparing the marketing mix for services, the specific characteristics of services give rise to special needs. Because of these basic differences of services, such as: - intangibility, - heterogenity, - simultaneous production and consumption, - perishability, service managers face a number of challenges, including the complex problem of how to deliver quality services constantly, the lack of patent protection, the fluctuating demand, pricing the services, provinding the services conveniently to customers, communicating about the service. Quality of services In providing quality services, the organization must adapt (tailor) these products to the needs of specific customers. Services seldom can be highly standardized and thats why the service provider has to consider whether each transaction is a good fit with its product mix. Tailoring a service to customer needs is even more complex when the targeted market is multicultural or multinational. The intangible and individualized nature of services can make it difficult to develop objective standards for measuring their quality. It is very important to consider what customers look for in deciding whether they have purchased a high-quality service. To evaluate whether a service is of high quality, customers look for some characteristics: - reliability - customers want performance to be consistent and dependable; - responsiveness - customers must see service providers as ready as willing to perform; - competence service providers should have the skills and knowledge needed to perform the service properly; - access customers want the service provider to be approachable and easy to contact; - courtesy service providers should be polite, respectful, considerate and helpful; - communication customers want the service provider to listen to them, keep them informed and use language they can understand; - credibility - service providers should be honest, trustworthy and considerate;

60 -

Flitr, M.P.

security - customers want the service provider to protect them from danger, risk or doubt. The service provider should show customers that he or she will respect the confidentiality of personal information; - understanding - service providers should try to understand what their customers want and need; - tangibles customers look for quality in the equipment, facilities and communications materials used to provide the service. In order to see whether they are satisfying customers marketers must ask what they expect from the services received and systematically listen to them. For example, The First National Bank of Chicago asked customers what they wanted from the bank. First Chicago learned that customers want employees to return calls when they say they will and to offer an explanation when problems occur. So, the bank included these criteria in its performance standards. The marketing researchers show that the service providers fail to ask the customers how the organization is doing. Leonard L. Berry says marketers assume they know what their customers want; even when they do ask, they conduct a single survey, rather then making more consumer research. In oder to provide quality service constantly, the organizations can include quality measures in the firms performance standards and give the employees the power to satisfy the customers by solving the potential problems of the service. Lack of patent protection By introducing innovatios that can be patented, marketers of goods can set their products apart from competition. A patent gives the manufacturer exclusive rights to use the innovation for 17 years. In contrast, services cannot be patent and thats why marketers of services must continually innovate and improve. Only through continuous improvement can they continue to distinguish themselves from the competition. Managing fluctuating demand When managers plan how much of a service to make available, they think in terms of the amount of time the firm should be open and the number of people on hand to provide the service. Long hours and adequate staffing for peak periods can enable the organization to serve all potential customers. Various tactics are available for managing fluctuations in demand: - paying staff on commission helps to keep costs in line with sales; - right to operate a business under the franchisors trade name in exchange for paying a fee and operating according to a specific plan. In other words, this method of distribution is based on a contract in which the franchisor gives franchisees the right to operate a business under its trade name. In exchange, the franchisees pay a specific amount and operate the business according to a plan specified by the franchisor. Franchising is most suitable for businesses where it is possible to spell out rules for day-to-day operations. Thus, hotels, printshops, fast-food restaurants, oilchange facilities are often franchises.

The effects of services characteristics on

61

While franchising is a relatively structured type of channel, creative marketers have found ways to distinguish their franchise to provide extra value. For example, when John Tillman bought a McDonalds restaurant near the Univesity of Houston, he wanted to meet the needs of the university community. He set up a room with four copiers, three computers, two laser printers a fax mashine and a mashine for binding reports. In another room, Tillman installed a several video games. Inside the restaurant area, he used plenty of neon and gas to create an atmosphere appealing to his student customers. Communicating the service One of the greatest challenges of marketing communications for a service is ensuring that the target market understands and appreciatea what is being sold. As mentioned earlier, the intangibility of services makes them impossible to experience before buying. Thus, the burden is on the communication effort to explain what the service is and how it will affect the buyer. For example, a recent advertisment from PaineWeber describes the experience of getting financial advice: it will involve answering a lot of personal questions. Then, the advertisment goes on to explain how this is beneficial: the adviser will be able to make recommendations tailored to the individuals needs. Messages can also stress the characteristics of high-quality service, which are reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding and tangibles. Advertising Advertising some types of services, especially professional services, has been frowned on. Such professional organizations as the industry groups for medicine, dentistry and law even prohibited their members from advertising. In 1976, the Supreme Court forbade such restrictions, but even today many professionals are cautious about advertising their services. They consider such communications tactics to be ethically questionable and to cheapen their image. The negative view of advertising has led many types of services organizations to rely more on publicity. One form of publicity the public service announcement looks a lot like advertising. Public service announcements are messages disseminated at no charge by the media. Personal selling Another important method of communication for many services is personal selling: - closing the business during certain times can reduce the amount of idle time (for example, a seaside resort might close for the winter); - stimulating the demand during slow periods (for example, a beauty shop can offer a lower rate when the main majority of customers are at work); - if there is enough demand, an organization might let customers wait for service during busy periods. A salesperson can explain the service and may be a tangible representation of such service traits as professionalism and attentiveness to customer needs.

62

Flitr, M.P.

He or she can reassure prospective buyers by providing customer testimonials and other information. In some cases, the salesperson and service provider may be the same person. Thus real estate agents solicit business and also do the work of finding buyers for the real estate. Many banks have trained customer service representatives to listen for needs that the bank can meet by selling additional services, such as a new type of investment. Pricing the service One of the most noticeable characteristics of pricing for services is the many ways to refer to price in the service sector. Prices may be called charges, fees, rates, fares or premiums. Whatever the name, the price set for services is designed to cover costs and generate a profit. Because of the intangible nature of services, part of the pricing job requires making sure that both parties understand what is included in the product. The service provider must understand what the customer wants and the customer must understand what the seller is offering. Customers are pleased with the value of a service if they can look at an itemized bill and see that they got a lot of work for their money (the money they pay). Besides this economic function, pricing also influences how buyers perceive the product. When customers have few cues for judging the quality, they may evaluate it on the basis of price. Because services are often hard to evaluate, price therefore plays a particularly important role on this regard. Because of the perishable nature of services, marketers use pricing to limit idle time or time during which service providers have no clients to serve. For example, the service organization may use off-peak pricing, that consists in charging different prices during different times or days in order to stimulate demand during slow periods. Thus, a cruise line can offer a lower price during off-season and many hotels offer special service packages on weekends, when business travel is at a minimum. Distribution channels for the services Because the production and marketing of services are difficult to separate, distribution emphasizes finding ways to provide the service conveniently to customers. As mentioned earlier, the producer of services rarely relies on resellers to bring its products to buyers. Rather, the marketer seeks ways to make the services easy accessible. Examples of conveniently available services include automatic ticket mashines that enable passengers to buy a ticket in just twenty seconds, automated car washes etc. Distribution strategy can help a service provider position itself. To attract a mass-market clientele, banks can open branches in supermarkets. The branches must keep the same hours as the stores and make loans as well as checks. To support this distribution strategy, the branches can promote their service throughout the store with signs, flyers and other techniques.

The effects of services characteristics on

63

A common approach to distribution services to a broad customer market is through franchising, that is an agreement in which franchisees receive the right to operate a business under the franchisors trade name in exchange for paying a fee and operating according to a specific plan. In other words, this method of distribution is based on a contract in which the franchisor gives franchisees the right to operate a business under its trade name. In exchange, the franchisees pay a specific amount and operate the business according to a plan specified by the franchisor. Franchising is most suitable for businesses where it is possible to spell out rules for day-to-day operations. Thus, hotels, printshops, fast-food restaurants, oilchange facilities are often franchises. While franchising is a relatively structured type of channel, creative marketers have found ways to distinguish their franchise to provide extra value. For example, when John Tillman bought a McDonalds restaurant near the Univesity of Houston, he wanted to meet the needs of the university community. He set up a room with four copiers, three computers, two laser printers a fax mashine and a mashine for binding reports. In another room, Tillman installed a several video games. Inside the restaurant area, he used plenty of neon and gas to create an atmosphere appealing to his student customers. Communicating the service One of the greatest challenges of marketing communications for a service is ensuring that the target market understands and appreciatea what is being sold. As mentioned earlier, the intangibility of services makes them impossible to experience before buying. Thus, the burden is on the communication effort to explain what the service is and how it will affect the buyer. For example, a recent advertisment from PaineWeber describes the experience of getting financial advice: it will involve answering a lot of personal questions. Then, the advertisment goes on to explain how this is beneficial: the adviser will be able to make recommendations tailored to the individuals needs. Messages can also stress the characteristics of high-quality service, which are reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding and tangibles. All these considerations prove that specific features of services cause specific characteristics for the marketing mix in the services sector (services are seldom highly standardized and it is difficult to develop objective standards for quality; service organizations can set standards for satisfying internal customers and empower employees to make decisions and correct problems for clients; services cannot be patented, so marketers must continually innovate and improve their product).
REFERENCES: [1]. Cetin I. - Marketingul competitiv n sectorul serviciilor, Editura Teora, Bucureti, 2000 [2]. Churchill G.A. Jr.; Peter J.P. - Marketing. Creating Value for Customers, Austen Press & Richard D. Irwin, Inc., Illinois, 1995

64

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[3]. Olteanu V. - Marketingul serviciilor, Editura Uranus, Bucureti, 2002 [4]. Magnet M. - Good News for the Service Economy, Fortune, May, 3, 1993 [5]. Peter J.P.; Donnelly J.H. Jr. - A Preface to Marketing Management, 5th edition, (Homewood, Ill.: Irwin, 1991) [6]. Sellers P. Companies That Serve You Best, Fortune, May 31, 1993 [7]. Zeithaml V.A.; Bitner M.J. - Services Marketing, Mc Graw-Hill, New York, 1996

Annals of the University of Petroani, Economics, 3 (2003), 65-74

65

MATERIAL AND FINANCIAL ASPECTS CHARACTERIZING THE POPULATION OF PETROSANI IN JULY 2002
IOAN VALENTIN FULGER *
ABSTRACT: In this paper we intend to dwell on the aspects that clearly point out the financial and material portrait of the citizens of Petroani, in Hunedoara country. KEY WORDS: financial and material aspects, utilities, loans/borrowings, living standard, community.

1. MONTHLY INCOME, BORROWINGS/LOANS AND EXPENSES OF FAMILIES LIVING IN PETROSANI Methodologically, the following paper is based on solid informational support, all the data being taken from a quota sampling, which has taken into consideration the four areas Petrosani is divided into. The number of people the sample refers to amounts to 838 and the distribution of respondents over the areas doesnt overlook the population weight in each area. As for the main subject of this paper, it doesnt mean that we are going to confine ourselves to exposing the incomes entered by respondents in their statements, of course- based on subjective/partial opinions like very low or very high; we have also asked them to delimit their family. These incomes have increased nominally compared to the years 1998-1999, but in fact they havent met with spectacular increases or decreases.

Assist. Prof. at the University of Petrosani, Romania

66

Fulger, I. V.

Chart 1. The monthly income compared to the daily needs of the population
60% 46% 40% 20% 2% 0% very low low average high 28%

24%

The high percentage (74%) of those who claim that their families monthly income is low and very low indicates the degree of poverty in the region. In order to get a better picture of the situation we have asked the respondents to enter their families into an income category, which allows us to analyse the problem based on figures not on opinions.
Chart 2. The income categories that people of Petrosani fall into 40% 30% 21% 20% 13% 8% 0% 1-2 2,1-3 3,1-4 4,1-5 5,1-6 6,1-7 7,1-8 8,1-9 9,1-10 over 10 8% 4% 4% 3% 4% 5% mil.

The chart from above clearly shows the distribution of the monthly incomes in Petrosani. We must remind you that the minimum guaranteed income per person in

Material and financial aspects characterizing

67

2002 was/is 630 000 lei, for a family made up of 2 persons this value was of 1 134 000 lei, for 3-4 persons 1 575 000 lei and for a five-member family it amounts to 2 285 000 lei. These figures are not exaggerated if we consider the fact that in many families both spouses are unemployed (or only one of them works, most often without a record of service, which means without the protection of the law that guarantees the minimum income), they dont get unemployment wages anymore and they have to live on social security benefits granted by the City Hall or they are at the mercy of non-governmental organizations which provide, within the bounds of possibility, food and medicine packages for those in need. It is only normal that such income values should generate very different aspects. We dont mean moral promiscuity, often understood as thefts, prostitution, robberies and even murders, what we really have in mind are the money loans people are forced to make. From this point of view the situation looks like this:

Chart 3. What do you usually do?

Borrow money

71%

Lend money

29%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Therefore, we can acknowledge many of our prior statements. Poverty leaves its mark upon these people; the frequent borrowings and loans the families in Petrosani (in the entire Jiu Valley) must make are solid proof. Who do they borrow from?

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Fulger, I. V.
Chart 4. Who do we borrow money from? 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

35% 22% 14% 14%

5%

10%

work mates

acquaintances

neighbours

institutions

friends

relatives

This indicates a situation characteristic OF the areas faced with poverty: people borrow money from close friends and relatives; most of them dare not make loans from specialized institutions (banks, savings, pawn houses) because they dont have a job and personal assets to guarantee the loan with. What follows next, in this paper, is a fair and impartial argument for those stated above. In order to make the poverty of people obvious weve tried to find out what families in Petrosani spend their money on every day:
Chart 5. What do people spend their money on? 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 79% 84%

44% 28% 6% other things long-term products clothers food upkeep

Material and financial aspects characterizing

69

Their choices have been formed on a hierarchical system, which allowed them to enter choices from 1 to 4 according to priority. Therefore, long-term goods and other things are insignificant quantities compared to the percentage of food, clothes and upkeep expenses. This means that people lead a hand-to- mouth existence, they have to make do and mend, as most of their income is used on taxes and food. Because of the populations heterogeneity i.e. not all of those questioned have been laid off, or they are unemployed we wanted to find out what these people were willing to do in order to supplement their income.
Chart 6. What are you willing to do to supplement your income? 60% 40% 20% 10% 0% something work on the work in get two jobs another city else black within the market country get a job work abroad 15% 16% 30% 36% 41%

In this case, too, we have formed a hierarchical system (two choices according to their importance) in order to get a more accurate picture of the appealingness of each form of supplementing the income and their influence on people. The two choices that came out top, again, prove the degree of poverty. Get a job indicates how many people are unemployed, and Work abroad shows the fact that the area lacks job perspectives. Beyond the promises of the ruling parties and the solemn assurance of local authorities, as representatives of the former, that they are making plans to rehabilitate the region, the reality is a harsh one: misery, poverty, the lack of jobs and the accumulation of a significant quantity of social indignation which, unfortunately, bides its time to burst out. Anyway, we should see what the citizens of Petrosani would choose: an insecure well-paid job or a secure badly paid job? (here, we are referring to those who said that very often they found themselves in such straits that they had to borrow money, so now they are willing to try even unorthodox ways of supplementing their income, like work on the black market).

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Chart 7. Were you given a choice, what would it be? 60% 40% 20% 0% an insecure well-paid job a secure badly paid job 48% 52%

The percentages being very close, we cannot make a clear distinction between the two groups of people. Because the prevailing category is that of people who prefer a secure but badly paid job, we believe that we can make out two aspects of the problem, both subject to interpretation. The first aspect shows the timorousness caused by past dismissals; people are so frightened to join the dole queue that they are willing to work for nothing, as long as they are sure to have a job. The second aspect, a positive one, is that people, a great number of them, still have the courage to face the capitalist trend and to express their professional mobility, and why not their freedom of movement as they said they were willing to work in other cities within the country or even abroad, but for an amount of money that would offer them and their families a decent living and might help them set up a business of their own. 2. DWELLING PLACES AND HOUSEHOLD FACILITIES THE CITIZENS OF PETROSANI HAVE. THE STANDARD OF LIVING IN 2002 COMPARED TO OTHER TIMES We find it appropriate to describe in a few words the living conditions of the population under these aspects. Its obvious that the problem of dwellings in Petrosani is far from having improved since 1990, especially now that the heating disconnections are becoming more frequent and apartments are subject to degradation because of the flooded basements and deteriorated roofs, which allow rain to pour in. All these happened after the apartments had become private property. Even if in the beginning people could afford buying their flats, now they cannot bear the expenses of upkeep (that means doing the necessary current repair works), as they have lost their jobs. 89% of the total of respondents live in apartments, private property, while 11% live in lodgings let either by landlords or by the state.

Material and financial aspects characterizing

Chart 8. Types of dwellings according to ownership
80% 60% 40% 20% 0% private property rented 7% 25% 19% 68% 41% 40%

71

one room apartment

apartment

house

If we leave ownership aside we can have a more unitary picture of the types of dwellings, just like the one presented bellow:

Chart 9. Types of dwellings 80% 60% 40% 20% 0% one room apartment apartment house 9% 26% 65%

The type of dwelling, the ownership, the number of families it houses and the facilities it provides can be linked together. We havent made such links at this stage, but we have tried to make a statistics in order to get an overall picture of the problem. The number of houses is bigger that the number of one room apartments. The numbers are correct, considering that some districts in Petrosani like Colonie, Daranesti or Bosnia (named after the place people, especially miners came from before the communist period) are made up mainly of houses. The only thing left to analyse is the number of families living under the same roof and the living conditions.

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Chart 10. The number of families living under the same roof 100% 80% 60% 40% 20% 0% one fami two families three familis more than three families 10% 1% 1% 88%

The degradation of buildings leading to their demolition (just like in many administrative areas in Jiu Valley, among which Uricani where two buildings have collapsed), the absence of repair works in the new buildings and the continuously increasing number of families will bring about serious problems regarding housing facilities, in about a decade or in a short period of time. Difficulties will be due to several factors, one of them being the lack of financial resources that enable a young family to buy a house. Here are the answers in this respect, of families living together.

Chart 11. Why are we faced with such a problem? 80% 70% 60% 50% 40% 30% 20% 10% 0% 76%

20% 4% other reasons we have a large house insuficient financial resources

Material and financial aspects characterizing

73

The main reason for families living together under the same roof is proved to be the shortage of cash, again. We are now going to reveal the facilities and services families are provided with.

100% 50% 0%

75% 25% gas

Chart 12. Does the place you live in have? 99% 98% 97% 91% 68% 32% 2% heat Da 1% hot water Nu 3% 9% bath 56% 44% 56% 44%

Questions are raised mostly by methane gas, heating, hot water, and not so much by additions to structure. We believe that, as long as 68% of those questioned (of the entire population of the city, in a broad sense) do not have heat, and 56% of the citizens do not have hot water, we cannot talk about a civilization and everything it implies. Heating and hot water disconnections are brought about by the poverty eating away the area, the chaotic dismissals in the mining sector, which made people live a rural life in the city.
Chart 13. Facilities and appliances your family has 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 96% 75% 61% 39% 25% 16% 23% 19% 4% 84% 77% 81% 63% 37%

se t

re co rd er

vi de o

ra di o

TV

co lo ur TV

ca bl e

hi te

se tte

bl ac k& w

ca s

sa te

lli te

di sh

se t

TV

74
83%

Fulger, I. V.
93% 89% 84% 97% 66% 34% 3%

100% 80% 60% 40% 20% 0%

58% 42%

68% 32%

75% 25%

17%

7%

11%

16%

ca r re fri dg er w at as or hi ng m ac hi ne
yes no
26% 23% 10% 40% worse 60% the same

The situation looks good in the case of appliances considered indispensable (fridge, cooker, washing machine, vacuum cleaner, telephone, even colour TV sets, cable TV, radios, cassette recorders); a discrepancy can be immediately noticed when it comes to appliances/facilities considered a luxury or necessary in Romania, especially in Jiu Valley: car, personal computer, cell phone, not to mention the Internet. Before concluding our paper on the material life of the citizens of Petrosani weve asked them to compare different periods of time associated with different rules just as they were reflected in their lives.
Chart 14. The standard of living in 2002 compared to different periods of time 2002 compared to 1997-2000 2002 compared to 1990-196 2002 compared to 1989 0%

58% 51% 52% 20%

26% 38% 80% better 100% 120%

REFERENCES: [1]. Rotariu T., Ilut P, - Ancheta sociologic i sondajul de opinie public, Ed. Polirom, Iai 1997

co ok va er cu um cl ea ne r
16%

te le ph on e ce ll ph on e co m pu te r in te rn et

Annals of the University of Petroani, Economics, 3 (2003), 75-78

75

MANAGEMENT CONTROL INFORMATION

MIHAELA GHICJANU *
ABSTRACT: In this paper present significant a few elements of management control information. It is presenting necessary information for carries principal of management: planning, coordinating and evaluation or control. KEY WORDS: information, function of control, management control, standards, performance, planning, objectives, budget, program, evaluation, coordinating, goals, feedback.

INFORMATION The continuing rise of the information technologies is now exploding the information development process and expanding information concepts. Distinctions are now commonly made among date, knowledge, wisdom and information, and we need make some distinctions among related concepts of data, knowledge, wisdom, for to clarify the nature of information and its transmission. Data as distinct from information, are best viewed as facts and statistics in the from of a collection of signs and symbols, but they are raw materials from which information id developed. Data processing is the operation involved in transforming a collection of various types of date into information. Information, as suggested by its verb from to inform, is the transmitted, filtered, reorganized, analyzed and related data useful in achieving organization goals. Knowledge, as implied by its verb from to know, refers to accumulated information whether stored mentally in the mind of user or in a knowledge base in knowledge base controlled by the user. Wisdom it spans a comprehensive base for acting well beyond a management control system. For it emerge creative, judgmental and comprehensive acts. MANAGEMENT CONTROL INFOMATION For developing management control system we need make in consideration of three basic characteristics of information:
*

Assistant Prof. at University of Petroani, Romania

76

Ghicajanu, M.

1. The most useful definition of information from a management control system perspective is that it is a product that reduces uncertainty about which act to perform or reassures a decision maker about a prior action. 2. A second characteristic of information is that it may perform an awareness function. Management control system has, in addition to the primary responsibility is carried and has a responsibility for the development of organization strategies, and definition information as a process that reveals possible opportunities for organization action is a useful guide. 3. A third characteristic of information is that is serves the evaluation function. It is relevant to the aspect of management control system that discloses the extent to which planned actions and expected outcomes are realized In management control, information is used for planning, coordinating, and evaluating. Different types of information are needed for each activity and, within each, the relevant information depends on the situation, environment, behavior desired, and cost and value of the information. We shall now consider some general comments on the nature of the information that is used for the management control system Information for planning is future oriented and a significant part of it is obtained from external sources, though part experience of the organization is obviously the starting point in planning future activities. Planning frequently reveals information about a opportunity or uncertainty, about new opportunity, and all such information in new possible courses of action of organization. The management control system should monitors well the environment, it solicits ideas from everyone in the organization for new opportunities, should collect information from sources such as the, as the following: - The internal diary of organization activities (accounting, marketing and production); - Action of competitors ( advertising, cost statistics); - Developments in the industry (product improvements, modify design, new products and services, new technology, new material etc.); - Government actions (policies, treaties, decisions and regulations); - General economic conditions (price level, taxes etc.); Information for coordinating needs to be as precise as possible for to reduce the uncertainty of actions peoples (about what to do, how to do and when to do). For to be precise, coordinating information uses numbers for budgets, standards and even objectives, them includes such items as: budgets, detailed standards, job procedure manuals, statement of organization goals and objectives, authority and responsibilities, policy guidelines and detailed plans of various types. The management control system must is designed to provide appropriate actions people the information needed for coordination in the most suitable and timely from to ensure realization of organization goals Information for evaluation. Evaluation of performance always involves a comparison of actual performance with something, she is meaningful only when it is compared with a standards, which presumably to be is budget or accompanying

Management control information

77

statement if objectives or the intuitive judgment under the circumstance, amount of: cost, revenue of profit.

In the figure no.1 is presenting information flow in the control process

Goals and strategies

Standing instructions

Other information Reward (feedback) Yes

Plans and objectives

Responsibility center operations

Report actual versus plan

No

Was performance satisfactory ?

Yes

Revise plans

Corrective action

Measurement Communication

No feedback

Fig.1. Information flow in control process

From scheme aforementioned, it is remarked the fact of the management control process starts with the preparation of plans, who are made within the context of the strategies decides on the strategic planning process, and who, if realize, will contributory of realize goals of the organization. The responsibility center manager received information of the strategies planning, from standing instructions formal and informal, received information about performance acting. Performance measurement is the key to effective management supervision and control of people in organization. The aim of performance measures is to minimize losses and to reward quality performance by comparing actual performance with desired performance. Performance information focuses on key result areas and the development of suitable measures, constituted is an important factor in a management control system that seeks to ensure implementation of strategic and operational plans. Performance measurement varies with of function the goals and objectives propose, of function of the level of the organization and sometimes are not very easy. Management judgment about performance gives rise to other types of information feedback, thus:

78 -

Ghicajanu, M.

if performance real is judged good, satisfactory, information on this judgment is communicated to the responsible person , for example a responsibility center manager , with appropriate commendation or the seemly payment; - if performance real is judged unsatisfactory, are communicated signals of feedback the manager of the responsibility center for may be instructed to take corrective action or sometime the plans may be revised. The full management control process involves action. The communication of information is part of the process of control and then is ineffective if nothing happens after the information has been communicated. Although control reports are feedback devices in this processes and the responsibility center manager who adjusts operations accordingly, something if his to feel of a significant change in operations, should be made, the manager is responsible for acting, without waiting it to be communicated through the formal control reports. CONCLUSIONS May be take the stand, information in managerial control process have a big interesting factor, management must become wise with deployment operations from organization. For evaluation reports about performances, compared standards with performance real, and management operation on the base these information. In this paper have focused on information in managerial control process , and have limited our discussion to the value, amount, quality and cost of the information.
REFERENCES: [1]. Robert Antony, - Management Control Systems, Illinois, 1989 [2]. Ghicajanu M., - Methods and procedures of managerial control process, Paper doctorate, 2002

Annals of the University of Petroani, Economics, 3 (2003), 79-82

79

LE PROCESSUS DE CONRLE MANAGERIELLE

MIHAELA GHICAJANU, GABRIEL DOLEA *
RESUM: Dans cette oeuvre se prsente quelques notions significatives aux processus de contrle managerielle, parce que bien que de point de vue toretique se bien faire connaitre quoi reprsente la fonction de contrle et quoi prsume la processus de contrle, le plus bien dans la practique, non saccorde pas lattention comme il sied de cet processus. A cette cause, les firmes enregistres des mdiocres rsultats, sans perfomances et avec lefficience baisses. Lconomie de marche rclame des certaines changements dans lexercices de fonction de contrle quil fant dtre plus flexibles, plus adaptive, sans perdre tout fois la rigonrensement. MOTS CLEF: la function de contrle, contrle managerielle, les standards, la performance, la planification, les objectifs, les rsultats, la flexibilit.

LA FONCTION DE CONTRLE La connaissance et la comprhension aux fonctions de management reprsente un facteur important pur ceux qui voulont obtenir des connaissances sur science et practique du management, quils possdont plus biens les systms, les mthodes, les techniques et les practiques managerielles. Pour le premier fois, les founctions du managements etaient identifies par le franais Henry Fayol, qui dans son travail Administration industrielle et generale, Dunod, Paris,1964, les groupent en cinq fouctions principals: la prvision, la organisation, la commande, la coordonation et le contrle. La contrle comme fonction du management consiste dans levaluation et la corection dactivites du hommes pour voir si lactions entreprises et les obiectifs laquells ils se guids sont conformes avec celles tablies du prevision. Succint, le contrle mesure les performances effectives du firme , il le compare avec lobiectifs et les standards tablies par prevision, mais dans la situation lequelle se constate les digressions ou bien les dviations cettes obiectifs , se prendre des mesures pour corection et elimination tandis que possible du ceux. Cette fonction rpondre

Lassistent universitaire, Universit Petroani

80

Ghicajanu, M.; Dolea, G.

question avec quoi rsultats sont finalis le travail fourni par raport rsultats prvisions ? La fonction devalution-contrle il faut davoir dans un de plus mesure un caractre preventif, dlimin les dficiences et si cette sont produis, alors elles sont pu corcter. Dans ltablissement moderne, le contrle-evaluation de type constatatif a dispar soit remplacer avec une evaluation base sur analyse du rlations <causeeffet>, avec un contrle actif concretis en decisions et actions de conduire efficiente. Le contrle peut-tre considere comme soit la revers de planification et, voila porqoui, nimporte quoi contrle il fant se base sur projets et programmes que de pens claires et de plus dtailles, lintgrations lchelle du tous organisation, lexistence dune structure organisationelle correspondante, avec le precision des responsabilits au chaque salarie dorganisation tellement dans ce que concerne lactivit par les plans et programmes prtablies, ainsi que et les mesures rectifications qil faut prendre. LE PROCESSUS DE CONTRLE MANAGERIELLE Une part consistante aux processuses de planification et contrle dans le cadre dorganisation endoss la forme du contrle managerielle. Le contrle managerielle peut-tre comprendre que soit lansamble dactions utilis tre es par le management pout dirijer pour atteindre le buts et les obiectifs dorganisation. Le contrle managerielle peut-tre definir que soit la totalit du mthodes, procdures et moyennes, inclusivement les systems des contrls managerielles, laquelles a utilis le management pour se assurer par comprhension, subordination et considration du politiques et du stratgies dorganisation. Les systems et tehniques du contrle sont, dans l chelle dorganisation indiffrent dobjet du contrle lactivit de production, le qualit du produits, le considration du procdures de travail, lactivit des managers. Quique elles sont adapt a chaque situation, pourtant suivre une certaine mthodologie, soit recomande de se examinera attentivement les problmes attachees par la decision sur lee domaines quil fant controles. Robert J. Mockler defini ltapes essentielles processus du contrle ainsi: La contrle managerielle est un effort systematique dtabli les performances standard pendant la planification dobjectifs, de msurer les performances ralises, de construire et dexploiter les system de feed-back dinformations, par consquent les performances avec les standardes predtrmines mtre in vidence ceux deviations et ceux dimensions, adopte des mesures corectifs, par la redistribution du tablissement ressources [3]. Dans la figure nr.1 sont rendre schmatique lessentielles tapes du processus de cotrle. Le processus de contrle se droul dans les suivantes tapes : 1. La dtermination du domaines quil fant contrler. Du debut du processus de contrle, les managers out besoin des dcides qui sont les plus importans domains quils ont tre contrles, quils documenter ont le contrle sur lobiectifs du firme, sur lactivites en deroulations et sur le processus du planification. Cet choisi est ncesaire parce que le contrle du chaque aspect par le cadre du firme est difficile de ralis et

Le processus de conrle managerielle

81

lengags non agrent pas lide dtre contrles chaque pas quaoique le contrle suppose aussi le contrle des ces travaille.
La comparation de mesurager avec les standards Qui Correspondre Se continue lactivit contrle

Ltape de planification Obiectifs Standards Le mesure de performance actuelle

Non

S adopte les mesures correctifs

Fig.1. Le schme logique tapes de processus de contrle 2. La prcisation du standards. Dans le processus de contrle, les standards ont un rle exceptionnelles, parce que elles fournient les critres specifiques des evaluation au performances et le comportament du travailleurs. Les resultats lequels les managers aspirent lobtenir, il faut dfinies, detrmines et specifies en clairs termes, concises et assimiles par les personnes impliques dans le respectivement processus. Les mthodes de mesures adoptes doivent tre correspondante au performances proposes, quils assuront le prcision dinformations soit focalises dans les point dinformance de system, avec la priorit dans lactivites et loperations de base. 3. Le determination de dimension a performances. Tout coup ralise la fixation du standards, le prochain pas est la mesure des performances. Pour un standard fix, le manager il fout dcider comment dvalu la performance et combient dpais se fait cet chose. Une de plus frquentes tehnique utilis pour ajouter ltablit des standards et coordination devaluation de performance dependre des standards tablient, qui peut-tre: le nomnbre, dunitees produits, le dimension valorique du dfants identifies, la rate des rebuts, ltapes ou les procdes suivrement, le mesure du profit, la calit des rsultats, lficience dinvestitions, etc. Immdiatement avec le choisi des moyens devaluation, les managers doivent prciser qui est la frequention devaluation de performance par contrle. dans quelques cases peut-tre suffisante les rapportes du mais, trimestrielle, semetrielle ou mme annuele. La periode devaluation dpendre, en gnral dimportance respectif obiectif pour firme, de probabilit une modification trs vite de situation de difficult de correction une problme qui peut appareille et des ce cotes.

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Ghicajanu, M.; Dolea,G.

4. Le comparation des performances avec les standards. Dans cette tape se compare les performances avec les standards tablies. Les managers se basent souvent la comparation sur linformations fournises des raports qui prsente la planification et respective les resultats obtement. Ainsi des raports pent-tre prsenter oral, rdact en crit ou fournit automatique on diffrents evaluations cantitatives du performance. 5. Le idntification des dviations et reconnue de performance. Alors quand dans la derire comparations entre realisations et previsions sont dviation negatif il devait tablir un program des mesures corectifs. Quand le performance atteindre ou dpasse les standards tablisse, les managers devaient reconnaitre les resultats positifs obtenus, lopportunites de preparation ou agrandissement de salaire, avancements sur postes, etc. Cette abordation est comparable avec les thories du motivation qui accentue limportance de recompense performance pour soutenir et encourager de meilleur cette resultats. 6. Lettabisement dactions corectifs. Lactions sont orient vers performance neralis trouv les solutions qulles corctont les deviations constates. Alors quand les standards ne sont pas rspectes, les managers doivent analyses trs justement les causes et va passer chez laction de corection. pendant cette evaluation, ils verifient, frquemment, personelle, les standards et apprcient les corespondants performances, pour dterminer si cette sont rales. Cette activites peut modifier la droulement dune ou plusieurs et de procdure, peut redimensioner les resources ou changes llements de base de processus. Parfois les managers arrivent conclusion que les standards initiales sont inadques, en gnral, par suite de lechanqments du conditions de droulement dactivit et que lactions corectifs ne sont pas ncesaire. Dans les plusieurs cases, cette actions corectifs simposent dans la vue datteindre des standards fixes. 7. Ladaptation des standards sur necesities. Parce que le contrle est un processus dynamic, les managers doivent verifier periodique les standards pour sassurer que leur asociation avec levaluation du performance est relevante pour le futur . Les standars existes et evaluation du performance peut-tre necorespondance , dune par, pars quelles ont t incompatibles au dbut , dautre part pour que ont apparu les changements dans les conditions de deroule activit . Tous dans ce sens le depassement dun standard peut semnaler lexistance dunes oportunites nesuppsant, une possible augmentation des standards et/on le besoin dunes posibles ajustements dans les plans organizationelle. Dans conclusion, mme si les standards ont t atteindus, les changements du conditions, lameloration de nivele de preparation dengages, peut faire posible laugmentation des standards pour lefforts futurs.
BIBLIOGRAPHIE: [1]. Robert M., Dearden J. Management Control System , Edition sixth , Illinois , 1989 [2]. Russu C. Management .Concepts. Mthodes. Thniques. Editure Expres, Bucureti 1993; [3]. Simionescu A. Trataite de management, Editure Dacia, Cluj, 2002;

Annals of the University of Petroani, Economics, 3 (2003), 83-88

83

ECONOMY AND MANAGEMENT IN TODAYS ELECTRONIC WORLD

HORTENSIA GORSKI *
ABSTRACT: Specialists are speaking about the digital economy, the NetEconomy, the Knowledge Economy and so on. Digital technologies are changing economy, society and environment. Digital technologies have the capacity to transform the relationship between companies and between companies and stakeholders. The new economy, built on new information technology, must learn how to use technology to be creative, to find new opportunities and new ways to deal with old problems. Now, in the early stage of e-revolution, E-commerce leads to more efficient ways of doing business, and this can have important benefits for companies, consumers and employees. The Intranet, Extranet and Internet blur traditional intern and extern boundaries. The web is becoming a vital modality for new partnerships and new alliances. We are living in an information age, in knowledge age. In the knowledge economy, human capital is a companys greater asset and acquiring knowledge learning is a key resource. KEY WORDS: Digital Economy, NetEconomy, Knowledge Economy, digital technologies, e-economy, e-commerce, e-money

Digital technologies are changing economy, society and environment Predicting the future is a hazardous business. Forecasting trends in information technology is particularly tricky. Ten years ago, who could have anticipated the extraordinary development of e-commerce. We have no digital crystal balls to predict the future, but we can say that it will affect the entire economy, society and environment. In an internet age nothing remains static for long. Information technology and Internet offer possibilities for creating a new economy. Specialists are speaking about the digital economy, the NetEconomy, the Knowledge Economy and so on. One of the most powerful drivers of change within modern economies is the explosion of digital technologies. Digital technologies have the capacity to transform the relationship between companies and between companies and stakeholders. The new economy, built on new information technology, must learn
*

Lecturer at the Romanian-German University, Sibiu, Romania

84

Gorski,H.

how to use technology to be creative, to find new opportunities and new ways to deal with old problems. The development of global convergent information and communication technology environment generates a maximum migration of commerce to digital domain. E-commerce is viewed as a catalyst of economic integration. By internet, small business can access international markets. Countries, companies and consumers who adapt to and exploit e-commerce prosper. Information technology is heaving a profound effect on the way businesses are organized. The companies have to find the most efficient way to make and to sell products and services. But this is not enough! In the new economy companies must be driven by innovation and adaptation. Companies have to find new ways to generate value. In an e-world, companies should be looking for three main areas of benefit from an electronic business system. First, it should reduce the cost of goods and services, by improving the compliance of the purchasing transactions with any strategic transactions the company have made. The second advantage lies in the ability to cut overall cost of administrating the process and the third benefit is the cycle time. In todays electronic world this can be reduced dramatically. Internet in e-economy The Internet is made up of three main components: websites, email and discussion groups. Each has its own characteristics and its own set of strengths. Websites carry information in depth. They allow the user to read summaries, or dive straight down to deep-level copy, to skip around, to navigate easily to the parts of information that they seek without having to follow a logical flow. People and organizations are using e-mail. The principal strengths of email are directness and speed. Email can be used for very intimate one-to-one communication, or for broadcasting one-to-many messages. Discussion group is an open area where people can share ideas or conduct two-way or multiple dialogues. The message send to the discussion-group, goes in a public mailbox. Any member of the group can see the entire contents of the mailbox and replay to any message. So each message has a string of replies. In planning for its advertising and marketing strategy an e-business has to understand that the web in not about putting retrofit ads online. It is about using advertising to provide a useful and innovative service. An e-business does not exist without a website. A websites is a marketplace created to attract and hold the customers. Organizations cant push messages at e-customers; organizations have to let them to pull info from their website. E-commerce is a long-term game. If organizations rush out a cheap and nasty website, with poor delivery and poor customer service, they must not expect to have success.

Economy and management in todays electronic world

85

E-commerce in the information age E-commerce. E is for electronic the Internet revolution that is transforming the way we live, work and do business. Despite the boom and boost of dot-come, the underlying significance of e-commerce remains undiminished. Now, in the early stage of e-revolution, we have to admit that a very powerful transformation is taking place, in all traditional sectors that embedded digital technology within the aspects of their operations. E-commerce leads to more efficient ways of doing business, and this can have important benefits for companies, consumers and employees. Intranet, Extranet and Internet can increase productivity and can reduce the quantities of time, energy and physical materials that are needed to provide goods and services. Business-to-business (B2B) e-commerce offers more efficient business practices. Re-engineering supply chains through B2B exchanges and centralizing procurement can cut down waste and can lead to less warehousing, can make distribution more efficient and improve the utilization of vehicle capacity. With a right policy framework, e-business can create more efficient logistics and transportation systems. The combination of information technology and communications has created the potential for e-commerce to reorganize physical retailing. In value terms, B2B remains the primary focus e-commerce. B2B facilitate globalization of the production and retailing and lead to substantial innovation in the logistics sector. Opportunities for greater control and major efficiency gains lead firms to transfer supply chain management and purchasing to the Internet. Net information technology stimulate logistics to be more efficient, compress supply chains and optimize the flow of information, goods and money through the supply chain. The basic selling point of B2B e-commerce is that it cuts costs. Internet technology provides ample opportunity for e-materialization replacing the real with the virtual, reducing the costs, the energy use and increasing the efficiency of supply chains. The technology provides the potential but nothing more. To gain advantages, firms need to rethink the whole system of management and all processes. The lower costs and easier accessibility of internet-based data exchange can make critical date such as levels of inventory and orders available to all players.1 For example Tesco saves 60m from closer tight with supplier and consolidation of distribution centers.2 The reduced costs can make goods cheaper for customers. B2C e-commerce is vital in the digital economy. After a period of experimentation, B2C e-commerce settles down and focuses on entertainment, finance, travel and some retail markets. Customized marketing and strong relationships with customers became increasingly critical for service providers. Internet conferencing and e-mail are widely used to substitute business travel. E-commerce increases the power of consumers. Consumers are able to chose between a large number of suppliers, compare the price, the quality and the specify
T. Werner EDI Meets The Internet in Transportation and Distribution, June, 1999, p. 3644 2 xxx - Tesco Sweeps Up Purchasing Savings in Supply Management, 29 April 1999, p. 9
1

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requirements. E-commerce changes the relationship between companies and consumers. As consumers learn to use the computers, the Internet, they can compare different products and services (quality and prices) with a simple click of a mouse. E-commerce will also affect the relationship between a firm and its stakeholders: consumers, employees, investors, suppliers, community, government and so on. Internet is enabling conversations between people that were not possible in past. Internet enables these conversations to take place more easily. Traditional boundaries are dissolved and firms can become more transparent and more responsive to stakeholders needs. Internet changes the balance of power between firms and consumers. With a simple click of a mouse consumers can compare very easy goods, prices and quality. Firms need to find new ways to add value and to differentiate themselves from their competitors. E-commerce and teleworking The falling cost of technology could make it economically viable for more people to work at home. This would mean smaller costs for the companies, fewer journeys, less commuting and more efficient use of office space. E-commerce and teleworking reduce traffic congestion. E-economy works with e-money The new economy works with e-money: Online e-money and offline e-money. Online e-money means you need to interact with a bank (via modem or network) to conduct a transaction with a third part. Offline means you can conduct a transaction without having to directly involve a bank. There are a lot of payment methods: digital cash, digital cheques, digital credits. However, payment on Internet is still dominated by credit cards. In the digital economy, e-money and e-banking become the norm, promoting common global currencies. These days most banks are investing in electronic services delivered to their customers over the Internet and digital television. These cost less and do not require customers to make physical journey to the bank. As computers and other electronic devices become cheaper, companies are using them more and more. Learning in a knowledge economy We are living in an information age, in knowledge age. In this context, knowledge and knowledge worker became very vital resources for every company. Intellectual capital is like gold for successful companies. In the knowledge economy, human capital is a companys greater asset. Recruiting and retaining high-quality staff is very important. In the new economy, ideas, creativity and innovation are replacing physical assets as a key to competitive success. In a knowledge economy, acquiring knowledge learning is a key resource. The ability to absorb information, to process it and to integrate it in goods and services

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is very important for each organization. To have success, people have to apply their learning and to be able to transform row data into information, and information into knowledge. Information gathering is the first steep. It is not just information that must be absorbed, however, but the very learning experience itself. Anyone contemplating an entry into the e-business learn world must accept that learning is part of the process. Flexibility and adaptability in e-economy Internet has changed and will continue to change every aspect of our lives and our business on a continuous and unrelenting basis. Organizations and employees needs to be in a constant state of learning simply to stay afloat. In the new economy, organizations need to do more that just learn. They need to be flexible and adaptable. The reality is that today business world is about adapting to a new environment, and finding a space to exist. As Darwin said, it is not the strongest that survive but the most adaptable. Is very important, for organizations, to see the change coming and to put in place plans to cope with it. Partnership is a key of sustainable economy Partnership will be a key of sustainable digital economy. The Intranet, Extranet and Internet blur traditional intern and extern boundaries. The web is becoming a vital modality for new partnerships and new alliances. The success in the new economy depends on forging alliances with suppliers, distributors, clients and technology firms. Companies have to find and learn new ways of working. They need to build trust and identify common ground to explore the sustainable challenges and opportunities of ecommerce in a collaborative way. Outsourcing of activities and the formation of partnerships and joint-ventures to handle other activities are actual tendencies for modern business. Relationship are handled partially or exclusively via Internet. In e-economy, we can find virtual organizations. This relies on a network subcontractors and business partners to make and distribute goods that it sells. Virtual organizations have low administration costs. Time is a key resource in e-economy In the new economy, speed is critical to success. First-move advantage is very powerful. Firms can use technology to compress the time. New information and communication technology are changing the methods of buying. In todays world the Internet is the buying medium for almost everything, in one form or another. From online catalogs, through the complex global marketplace, the aim is still the same: it is to cut costs, eliminate overlap, compress the time and allow real-time price and quality comparisons. Organizations must try to break down the walls between departments. This is one of the biggest and most common barriers to good service and swift delivery in

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e-commerce. In the new economy, organizations have to increase the speed. To increase organization speed is not enough to implement the new information technology. Organizations need managers and employees to work quickly in small, temporary/permanent and flexible teams to solve key tasks such as order processing, complaints handling, winning new customers and developing new products/services. Customers expect replies more quickly, delivery more quickly. Instant is the byword. Making changes to speed means making changes to working practice and to workplace culture. Customer relationship management (CRM) Customers invariably want more. They want to do more, own more, achieve more. No matter whether they are a business or consumer, they have expectation they expect something from the organization. The organizations supply them with the satisfaction that they expect. The product or service is merely a vehicle for that satisfaction. In other words, customers buy benefits. Enterprise Resource Planning (ERP) integrate many complicated parts of the company, such as personnel, sales, and is the back office side of the business. Supply Chain Management (SCM) is the priority for ERP. They deal with efficiency. ERP system is considered the backbone of the organization. ERP is focused on supply chain and that is not enough. Modern organizations need also Customer Relationship Management system (CRM), which is focus on selling chain. In e-economy is very important to connect staff to consumers. Connecting staff to consumer is probably the lowest-investment, highest-return activity that an organization can embark on in an e-commerce project. Organizations have to understand that Internet is not an excuse to pretend that customers dont want close relationships with the staff. They do! They have to believe that the organization has people not just a website. It is important to understand that is not possible to establish good customer service by technology alone. An important goal in this digital age is to combine people, management and information technology to develop and maintain good relationships with customers. Customer Relationship Management must be a priority for each modern organization in the information age.
REFERENCES: [1]. Angeles R. Revisiting the Role of Internet EDI in the Current Electronic Commerce Scene, Logistic Information Management, Vol. 13, No. 1, p. 45-47 [2]. Granade C. Electronic Commerce Bulls Extrude Confidence, Financial Times, 26 oct. 2000, p.13 [3]. Moud W., Boyle D. The Customer Contact Continuum: A Model for Customer Relationship Management, The Listening Company, London, 2000 [4]. Sand D., Meyer C. Blur: The Speed of Change in the Connected Economy, Capstone, Oxford, 1999 [5]. *** What Internet cannot Do, The Economist, 19 August, 2000 [6]. www.siliconvalleygives.org [7]. www.digitalpartners.org

Annals of the University of Petroani, Economics, 3 (2003), 89-96

89

INVESTMENT PROJECT EVALUATION NPV AND IRR CRITERIA

MIRELA ILOIU, DIANA CSIMINGA
Abstract:- This paper is a about two rules used in capital investment decision-making. NVP and IRR incorporate the time value of money using a discount factor based in the firms relevant interest rate or cost of capital. Decision-makers clearly prefer IRR to NPV although NPV technique offers more practical advice for managers them IRR. Keywords: net present value (NPV), internal rate of return, investment, capital, decision-making

The ability of the firm to operate at different levels of activity is determined largely by the nature of the long-term (of fixed) assets at its disposal. For example, a firm cannot produce beyond a certain level unless it invests further funds in productive equipment; it may not be able to exploit new market opportunities if it fails to invest in new technology. These types of long-term investments constitute the basis for the firms future success, and must be evaluated in a way consistent with the firms objectives. In this paper we look at different methods available to evaluate long-term investments in such a way. We have assumed that the firms strategy is to maximize the (present value of) cash flows from its operations. In practice firms seek to do this in a variety off different ways, by employing more specific and more operational strategic aims. For example, the chairman of ICI plc, Denys Henderson, notes in his statement supporting the 1987 annual report that part of ICIs strategy is represented by a shift towards higher addedvalue, science intensive, world competitive products. The modern, competitive firm is continually on the lookout for opportunities which are consistent which are consistent with its strategy, and the stage of evaluating the financial costs and benefits of opportunities which meet strategic objectives may in

Lecturer at the University of Petrosani, Romania Asist. Prof at the University of Petrosani, Romania

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fact be of a relatively low level of importance in the investment decision process. Consider Figure 1, which offers a possible sequence of five stages in that process. The process seeks to show that capital investment decision making is not an instantaneous process. Investments do not appear out of thin air. Thus at Stage 1, ICIs search for opportunities consistent with its high value-added strategy has led to major US purchases in both paints and agrochemicals.
Stage 1

Search for investment opportunities consistent with strategy

Stage 2

Screen projects for possible further investigation

Stage 3

Define projects more clearly via initial estimates and feasible alternatives

Stage 4

Evaluate alternatives

Stage 5

Decide whether to accept or reject the alternatives

Fig.1. The investment decision process The chairman states that we are now the worlds largest supplier of paints and specialized coatings and our agrochemicals now rate as number three in the world league. We might note also that, in the same report, the chairman explains that as part of our re-shaping strategy we divested our commodity chemical business un the USA. But how do we know if the investment opportunities in Stage 1 should undergo rigorous evaluation techniques to determine their acceptability? Two intermediate steps are necessary. Before a major evaluation is undertaken, preliminary screening should try to iron out potential problems relating, inter alia, to

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the feasibility of the project, the level of risk involved and the availability of resources to carry out the project. After the project has been filtered and deemed worthy of further investigation (it has passed Stage 2), it is likely than a more detailed specification will be made. This will entail an analysis of the projects technical and financial characteristics, and will probably necessitate engineering expertise. The nature and sophistication of this analysis will, to a large extent, depend on the type of project. It is only after the investment has been found, screened and defined that the accountants functional role becomes significant. It is at the evaluation stage that the accountant draws together the cash flow analysis relating to the costs and benefits or the project and seeks to determine its financial acceptability. Information relating to production, sales, purchasing and organizational costs and the effects of external factors on these, will probably be compiled by the accountant in discussion with those in charge of the functional areas to which the project will reflect the judgements of both the sales director and the management accountant; production costs and capacity use will be determined by the production director and the accountant, and so on. If the financial analysis suggests the project is worthwhile, the decision at Stage 5 may well be acceptance of the investment. Having set out the five stage process, we should stress here that the evaluation criteria for long-term investment decision differ from those applicable to short-term decision in only one important respect. When cash flows arise in different periods, it is necessary to incorporate into the analysis a means of taking account of the differences in their timing. The methods of analysis to be used in this paper is the net present value (NPV) method and the internal rate of return (IRR) method. The biggest technical problem in long-term decision making is how to deal with the time factor (including the impact of risk and uncertainty) in the analysis. The application of the NPV method yields a cash figure, the maximization of which is consistent with the organizations assumed overall objective. In the absence of scarce resources, an organization should accept all opportunities with positive net present values and reject those with negative net present value. We can summarise the NPV decision criterion as involving the following three basic steps: Estimate the date and amount of the relevant future cash inflows and outflows (including the investment cost) arising from each decision alternative. Discount these cash flows at an appropriate discount rate. Decide whether the alternative(s) is acceptable, by use of the NPV rule. We now turn to a consideration of each of these three basic steps. Cash flows and accounting profits All cash inflows and outflows which change because of the undertaking of a project are relevant to the project, and should be discounted to determine its present value. Strictly this means that not only should all relevant operating cash revenues and costs be included, but also any changes in taxation payments and investment grants

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which arise through undertaking the project. It is very important to remember that all relevant cash flows should be included in a project assessment, on the date at which they arise, irrespective of the period to which they relate. The range of possible cash flows Because many of the cash flows associated with long-term investment decisions arise far into the future, the prediction of their exact amount is often very difficult. The use of single-point estimates of future cash lows is unlikely to be an adequate means of describing their uncertainty. We might more usefully attempt to incorporate elementary probability theory into our analysis, so as to produce expected cash flows. The percentage figures used to assess the probability of the cash flows may be based on past experience of similar projects. Alternatively, if no similar investment has been undertaken previously, as will inevitably be the case with investments at the leading edge of technology, the estimates will be best guesses which incorporate all the available evidence on factors which determine cash flows, the anticipated level of demand for the product being sold and the likely changes in the firms levels of costs associated with the investment. The impact of working capital The decision to undertake a long-term investment will frequently involve necessary outlays on current assets and current liabilities in order to support the higher level of activity brought about by the new investment. For example, additional cash may be needed to fund the higher levels of raw materials, finished goods and amounts owing by customers resulting from new activity levels: in turn, some of the finance may be provided by suppliers. If these items of current assets and liabilities (which make up the additional working capital required) are needed for the entire life of the investment, then the working capital will not be released until the project is finished, and calculations of the acceptability of the investment must incorporate the cash flows associated with changes in working capital. The cost of capital Use of the NPV method entails the determination of an appropriate interest rate of discount rate to discount future cash flows to their equivalent present value. This discount rate is usually referred to as a cost of capital; this is a simple concept to understand, but notoriously hard to measure. Indeed there are many conflicting views on just how the cost of capital should be computed. Our view is that the cost of capital should measure the minimum return required by providers of long-term funds. Most firms raise their long-term funds from two main sources, equity capital and debt capital. Equity capital represents the funds provided by the owners of the firm. Payments made to the owners of equity capital (called dividends) vary, amongst other things, according to how well the firm its doing.

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The returns paid to debt holders (called interest), on the other hand, are usually fixed by contract, and must be paid regardless of the size of the firms income or cash resources. Furthermore, much debt capital is redeemable, a date (or dates) is specified by which the capital must be repaid. If no provision is made for repayment, the debt is termed irredeemable. Failure to pay interest or repay capital on the due dates often results in control of the firm being passed to the debt holders. As debt capital and equity capital carry different levels of risk relating both to interest and dividend payments ant to capital repayment, they often have different costs. In order words, the holders of debt capital generally require a lower return than do the holders of equity capital, because the interest paid to them and the repayment of their capital both take preference over payments to the owners of equity capital. Thus to calculate a cost of capital which incorporates both the cost of equity capital and the cost of debt capital, it is necessary first to calculate the individual costs of the different sources, and second to combine them into a weighted average cost of capital. The net present value decision rule Having determined the relevant future cash flows, and derived a weighted average cost of capital, the firm is now in a position to decide whether the project should be undertaken, based on a calculation of its net present value. The following example shows how such a decision might be reached. Layer Ltd is considering the introduction of a new product to add to its present range. A feasibility study costing $7,000 has been carried out. This suggests that a selling price of $ 5 per unit should be set, at which price demand is expected to be 50,000 units p.a. manufacture requires a new machine costing $200,000, which will be worthless when demand for the product ceases in four years time. Variable costs of producing the new product are estimated at $3 per unit; aditional overheads will be $25,000 p. a. if manufacture takes place. The directors estimate that Layer Ltds cost of capital is 10% p.a. If we assume that all cash inflows and outflows will arise on the final day of each year, with the exception of the cost of the machine which will be payable at the start of the first year, we can prepare a schedule to determine the worthwhileness of the proposed investment, as in Table 1. The investment shows a discounted NPV of + $37,750 and thus is acceptable. Note that the cost of the feasibility study of $7,000 is ignored in the calculations as it has already been incurred. However, because the estimated cash flows arise over a future period of four years, the directors may wish to know how wrong they can be in their estimates of each of the variables before NPV becomes negative and the project unacceptable. This is obviously important as it may reveal which variables are most critical to the success of the project.

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Iloiu, M.; Csiminga, D. Tab.1. Schedule of future cash flows

Net cash inflows: Annual contribution $(5-3) x 50,000 Less Annual fixed costs Present value of annual cash inflows: $ 75,000 x A4 10% =$75,000 x 3,17 Net present value of investment: Present value of cash flows Less Cost of machine Net present value

=100,000 25,000 75,000 237,750 237,750 200,000 37,750

The internal rate of return The internal rate of return, or yield, method, entails the discounting of future cash flows to the present date, and as such bears some similarity to the NPV method. The internal rate of return (IRR) of a project may be defined as the discount rate at which the present value of all future cash flows, positive and negative, is equal to the investment cost of the project. Phrased differently, we may say that the IRR method, unlike the NPV method, does not seek to generate a cash figure to determine whether an investment should be undertaken, but rather it seeks to find the discount rate at which the NPV of a project is zero. It signals acceptance or rejection of an investment in percentage terms, not in cash terms. Because it is a relative measure, expressing net returns as a percentage of investment cost or of its cash returns. This is an important difference between the NPV and IRR methods. To be acceptable under The IRR criterion, a project must have an internal rate of return greater than some other rate, which we might term a hurdle or cut off rate. This rate should be the same as the discount rate suggested for use in NPV calculations, the weighted average cost of capital (WACC), which reflects all longterm sources of funds used by a firm). In general, the IRR for any project is represented by r in the following equation:
an a1 a2 + +L+ I0 = 0 2 (1 + r ) (1 + r ) (1 + r ) n

where a1, a 2 , K, a n are the cash flows at the end of years 1, 2, , n respectively and I0 is the project cost payable immediately.

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In situation where management must decide whether to accept or reject a single project, the IRR criterion always gives the same advice as NPV, provided that the cash flow pattern is orthodox (that one or more cash outflows is followed by a series of cash inflows). Next figure depicts the NPV of a project with an orthodox cash flow pattern, expressed as a function of the discount rate. The intercept of the NPV line with the horizontal axis is denoted by point r. This point is the projects IRR (the rate at which the project shows a zero net present value). For any point on the graph where the NPV is positive (to the left of point r and above the horizontal axis), the cost of capital must be less than the IRR (point r). For example, if the cost of capital is iA, the projects NPV is positive and equal to $A. Similarly for any point on the graph where the NPV is negative (to the right of point r and below the horizontal axis), the cost of capital must be greater than the IRR (point r). For example, if the cost of capital is iB the NPV is negative and equal to - $B.
NPV
($)

0 iA r iB Discount
rate (%)

Fig.2. The relationship between IRR and NPV Thus both methods, NPV and IRR, give same solutions to most normal accept/reject decision. However, there are situation in which the application of the two methods is not so straightforward, and which may lead to conflicting advice. We now examine some of these situations and explain why the NPV method is, in each case, to be preferred. We conclude this paper by reiterating why we believe the NPV method is the best available and why it should be used in all cases which demand relatively complex and sophisticated treatments. Its virtues can be expressed as follows: - It is clear, simple to understand and unambiguous. - It focuses on maximization of the present value of future cash flows, which is the objective assumed for business decision making.

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It uses a discount rate (the cost of capital) which reflects the returns required by the suppliers of funds. - It avoids the many technical problems of the IRR method, and because it accounts for the time value of money, it is superior to any non-discounting method. Even though the NPV method has not yet gained the wide acceptance by business which it deserves, this situation may change as managers come to realize that the use of method leads to optimal decision making, at least in the sense that the present value of the firms cash resources will be equal to or larger than the present value of cash resources resulting from the use of any other method.
REFERENCES: [1]. Arnold J., Hope T. Accounting for management decisions, Prentice Hall international, hertfordshire, 1990 [2]. Romanu, I., Vasilescu, I.- Managementul investitiilor, Editura Margaritar, Bucuresti, 1997

Annals of the University of Petroani, Economics, 3 (2003), 97-102

97

FROM QUALITY ASSURANCE TO TOTAL QUALITY MANAGEMENT

ANDREEA IONIC
ABSTRACT: Quality assurance is broadly the prevention of quality problems through planned and systematic activities. These will include the establishment of a good quality management system and the assessment of its adequacy, the audit of the operation of the system, and the review of the system itself. KEY WORDS: quality assurance, quality management system, culture change

1. CONCEPTS DE LA QUALITE DANS LE DASSURANCE DE LA QUALIT ET LE DAMLIORATION DE LA QUALIT

PROGRAMME PROGRAMME

Le management par la qualit signifie laptitude de lentreprise rpondre de facon efficiente aux multiples besoins du march. Il existe deux possibilts: le programme dassurance de la qualit; le programme damlioration de la qualit. Chacun de ces programmes a des avantages mais aussi des inconvnients. le programme dassurance de la qualit reprsente la rigueur. Il exige une documentation qui sert de preuve, lorsquun client la demande. Dun autre cot, si ce programme est bien suivi, il minimise les risques derreur; le programme damlioration de la qualit valorise la souplesse. Il laisse une place importante la crativit. Le risque est que si cette crativit nest pas mobilise autour de projets cibles, elle peut devenir une source de dispersion. Les lments-cls de chaque programme sont prsents dans une logique dintgration possible (Fig 1.) Le programme dassurance-qualit vise essentiellement la maitrise du systme considr et lassurance de son bon fonctionnement, par rapport un rfrentiel sur lequel lentreprise sest engage vis--vis de son client.

Lecturer Ph.D.att.eng., University of Petrosani

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Ionic, A. Pour avoir cette assurance, deux lments du programme sont essentiels: laudit qualit interne planifi et dclench selon un planning;

Audits qualit

Assurance de la qualit Revue du systme

Actions correctives

Intgrer Evoluer
Reconnaissance du personnel

Manage -ment

Plan annuel dobjectif s Amelioration de la qualit

Suggestions

Fig.1. La logique dintgration la revue du systme par la direction gnrale. Ces deux activits peuvent amener conclure soit que le systme est maitris, soit quil existe des carts entre la pratique et le rfrentiel. Le programme damlioration -qualit vise essentiellement la performance globale du systme existant. Pour progresser dans cette voie, deux lments peuvent etre utiliss: les objectifs annuels damlioration de la qualit planifi et suivis selon un planning; les suggestions volontaires, exprimes par le personnel tout au long de lanne.

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Ces deux activits peuvent contribuer lamlioration du systme, non parce quil existe des non-conformits par rapport un rfrentiel, mais du fait que le personnel se sent concern par la ncessit de faire progresser lentreprise. Ces deux programmes prsentent chacun des avantages pour une entreprise: dun cot, lassurance du bon fonctionnement du systme de la qualit, de lautre, lamlioration permanente du systme. Les deux programmes sincrivent dans Une logique de fonctionnement indispensable au management par la qualit, ou la rigueur et la souplesse doivent faire bon mnage. Le management par la qualit= Programme dassurance-qualit+Programme damlioration-qualit Bien que ces deux programmes se positionnent de facons diffrentes dans une dmarche qualit, on constate des points communs: limplication de la direction dans la dmarche; la rdaction dune politique-qualit soulignant limportance de la qualit pour lavenir de lentreprise; la formation du personnel pour se donner les moyens de cette politique; lidentification dobjectifs pour liminer par des actions correctives les causes derreur; le tableau de bord qualit pour suivre les progrs raliss et orienter les nouveaux objectifs. On peut dire que lassurance qualit est la premire tape, le management par la qualit est la seconde tape via lamlioration de la qualit. Nous pourrons dire alors: lassurance de la qualit permet de bien faire les choses, le management par la qualit permet de faire de bonnes choses pour le client, mais aussi pour lavenir de lentreprise. On peut voir quun des points communs des programmes de qualit cest limplication de la direction. La direction doit etre consciente que la dmarche qualit exige et engendre une rupture avec les schmas traditionnels de lentreprise dite taylorienne et de lconomie quantitative. 2. LE PROCESSUS DE MUTATION VERS LE MANAGEMENT ORIENT SUR LA QUALIT Les concepts cls qui sont la base de la transformation du management classique sont: le client est au centre de lorganisation; au centre est aussi le salari, cet autre client; management en amont, au niveau des causes, de la prvention, de la conception; information dcloisonne et pyramide inverse; corresponsabilits transversales par processus client-fournisseur.

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Le processus de mutation vers le management orient sur la qualit est laborieux et beaucoup de nos entreprises sont aujourdhui encore proches du management classique. Lamlioration du processus de management est le chemin qui permettra de transformer le management classique. La premire tape consite dfinir les fonctions dans lenterprise: Planification: dfinir les politiques (stratgies),et les objectifs de la qualit. Organisation: dfinir la structure - lorganigramme en fonction des objectifs de la qualit . Direction: dveloppement et croissance, communication des objectifs, satisfaction des besoins, capacit de leadership. Les auteurs du livre Management, Harold Koontz, Cyril ODonnell, Heinz Weihrich sont davis que la direction peut etre dcompose en staffing - formation et dveloppement dquipes et leadership . Controle: vrification de lxecution des activits selon les plans tablis et mise en place dactions correctives. Dans le contexte de la mutation du management, chacun sait quil faut un fort leadership de la direction, un ample faisceau de moyens organisationnels et culturels, et assez de continuit dans le temps, pour obtenir un changement en profondeur. Le management par la qualit induit des changements, or il est assez naturel de rsister au changement. Ce type de management demande plus de rigueur dans le travail. Il enlve au manager cette part de pouvoir base sur larbitraire et le gnie qui se trouve etre ce quil y a de plus grisant dans lexercice de lautorit. Quand la dmarche qualit est lance, le rsultat nest pas encore garanti. Il y a plusieurs faons de participer la vie dune entreprise: - participer aux moyens (cest--dire principalement en apportant de largent); - participer aux rsultats, cest--dire partager les bnfices (cest la participation); - participer aux processus, cest--dire lorganisation du travail: cest le management participatif. Un bon manager navigue entre les 4 types de management en fonction de ce quil estime etre bon un type plutot quun autre. (Fig. 2) Si les dmarches qualit insistent autant sur la ncessit de mettre en oeuvre un management participatif, cest quelles savent quun salari motiv et reconnu ralise un meilleur travail quun salari qui ne se sent pas considr. Le bon management est celui qui permet aux collaborateurs de spanouir ensemble dans une activit pilote par le manager. Ainsi le collaborateur travaille bien par ses qualits propres dans une voie qui est la bonne. Les types de management sont presents dans un schma en croix:

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Relations humaines fortes

Persuasif
Dcisions prises en fonction de procdures prtablies

Participatif
Dcisions non prises en fonction de procdures prtablies

Autoritaire

Dlgatif

Relations humaines faibles Fig. 2. Presentation de types de management

3. DESCRIPTION DE LA DEMARCHE QUALITE Un lment trs important pour la dmarche qualit cest la culture dentreprise. En Roumanie la culture dentreprise reste imprgne des critres de production maximale, des prix trs bas possibles, en opposition avec la recherche de la qualit considre comme plus couteuse. Ces ides sont toujours vivantes aujourdhui en Roumanie, cest pourquoi il faut changer la culture dentreprise. Le changement de culture dentreprise implique un changement des mentalits, des structures tablies, des contraintes sociales. Lorganisation verticale, autocratique doit se transformer au profit dun systme fonctionnel de direction dentreprise qui intgre la politique de la socit dans chaque activit et qui favorise ladhsion des salaris. La dcentralisation reprsente le changement de mentalit de lentreprise qui sajoute celui de lhomme. La dmarche qualit implique un fonctionnement dmocratique de lentreprise tant au niveau de son organisation que des raports humains qui laniment. Pour jouer son role social, lentreprise doit etre et sera avant tout dynamique et tourne vers le progrs. Elle assurera ainsi sa prennit par une comptitivit accrue sur le march quelle dcide de servir. Pour maintenir cette comptitivit, elle souvrirra linnovation. Le progrs scientifique doit trouver des applications rapides tout la fois dans la domaine des produits, des services et des moyens de production. En Roumanie, une reconversion mal planifie des activits des entreprises se paye par le brusque effondrement de pans entiers de lconomie, la monte du chomage et de la pauvret, une ncessit de reconversion professionnelle rapide et

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dlicate, une remise en cause des acquis sociaux chrement obtenus. Latmosphre politique et sociale du pays est fortement affecte. Lexprience des autres pays met en lumire la ncesist dun dialogue troit entre Etat et entreprise, avec la participation des tous les intresss: patrons, reprsentants syndicaux, salaris et consommateurs. Une approche plus dmocratique et participative est la base dun fonctionnement correct des mcanismes conomiques.
BIBLIOGRAPHIE: [1]. Chauvel A.M. - Mthodes et Outils pour rsoudre un problme, Ed. Dunod, Paris, 1996 [2]. Carayon P. - Qualit Gestion de Projets et Qualit Ecole des Mines de Nancy, 1997 [3]. Huberac, J.P. - Guide des Mthodes de la Qualit, Maxima, Paris, 1998 [4]. Juran J.M. - Planificarea calitatii, Editura Teora, 1992 [5]. Koontz H. - Management, Eighth edition, McGraw-Hill Book Company, 1984 [6]. Olaru M. - Managementul calittii, Ed. Economic, Bucureti, 1995

Annals of the University of Petroani, Economics, 3 (2003), 103-110

103

THE PROBLEMS OF THE LABOUR MARKET IN ROMANIA

SABINA IRIMIE, VIRGINIA BLEANU, PETRU HODOR *

ABSTRACT: This paper reviews the influence factors regarding the phenomenons and trends upon the labour market in order to remake informations for taking some decisions respecting the occupation of the labour force and fighting against unemployment by sundries measures. KEY WORDS: labour market, right to labour, institutional environment, working population, unemployment, The National Agency for the Occupation of the Labour Force, The Programme of Active Measures for Fighting Against the Unemployment (PAEM), The PAEM Labour Mediation Centers.

The labour market is defined as being the economic space in which the demand of the labour force expressed by the capital holders (the buyers) and the offer of the labour force (the suppliers) meet and negociate freely. In the Romanian Constitution the art.38 The labour and the social protection of labour paragraph (1) is specified that the right to labour cant be hemmed in. The choice of the profession and the choice of the places of work are free. But, the guarantee of the right to labour doesnt mean the employment supply, but only the possibility for every person to deploy an activity according to ones professional training and abilities. The right to labour is a concept with a complex contents and includes: - The liberty of choosing the profession and the place of work; - The right to collective and individual negotiations; - The right to an appropriate wages; - The right to social protection.

Lecturer, Ph.D. at the University of Petrosani, Romania Lecturer, at the University of Petrosani, Romania Assoc. Prof., Ph.D. at the University of Petrosani, Romania

104

Irimie, S.; Bleanu, V.; Hodor, P.

Since 1990, Romania has been a full-right member of the International Organisation of Labour, correlating its legislation with the international conventions and standards of labour. The transition process in Romania is in a tight connection with the problems of the labour market. The development and the permanent improvement of the labour market represent a priority for the transition to the market economy. This objective requires the existence of an adequate institutional environment that contributes to the evolution of the national economy on the whole. The efficient administration of the places of work as well as the prevention of the unemployment increase cant be accomplished outside a legislative environment, outside some specialized institutions of the labour market with financial-economic autonomy. The administration of the human resources, of the professional forming and improvement, and the protection of the unemployed cant constitute the exclusive attribute of the state. The sharing of the responsibilities between the state, sindicates and the employers union, the creation of some specialized institutions with a tripartite managerial system, represent a vital requirement for the continuity of the labour market reform. The main specialized institution is represented by The National Agency for the Occupation of the Labour Force and respectively The County Agencies for the Occupation of the Labour Force which have begun to function since the 1st of January 1999 and whose aim is the professional training of the labour force and social protection of the unemployed. According to the Law no. 145/1998 modified and added by the Emergency Ordinance no. 294/2000 and to its Legal Status approved by the Government Decision no. 4/1999, The National Agency for the Occupation and Professional Training, respectively The County Agencies for the Occupation and Professional Training, take over in their administration, based on a protocol, from the Ministry of Labour and Social Protection, the fund for paying the unemployment benefit, the fields, the spaces and the assets used by the County General Directions for Labour and Social Protection, respectively the ones used by the Labour Force and Unemployment Offices from these Directions. The main objectives of The National Agency for the Occupation of the Labour Force are: - the institutionalization of the social dialog in the direction of the occupation and professional training; - the application of the strategies in the direction of the occupation and professional training; - the application of the social protection measures for the unemployed. In the organizational chart of these agencies are provided departaments/offices/services with profiles specific to the labour market: labour mediation, professional guidance, psychological inquires, personnel improvement, registration, first guidance and general mediation, as well as other departaments which are directly involved upon the labour market.

The problems of the labour market in Romania

105

The advantages of the new organization are, mainly, the decentralization of the activity and the partnership between the Sindicates, the Employers Union and the State. The major disadvantage is given by the fact that the financial resources of the Agency for the Occupation of the Labour Force are limited due to the very big debts which are registered by the major economic agents. The County Agencies for the Occupation of the Labour Force and that of Bucharest have established Local Agencies to provide services for the occupation of the labour market. Besides the National Agency for the Occupation of the Labour Force, nowadays, in Romania, are more categories of organizations that deploy activities upon the labour market, organizations generic denominated mediation centers, (Unemployed clubs - Job Club, The Informing and Documentation Centers for Youth INFOTIN, Personnel consulting/ recruiting firms). The PAEM Labour Mediation Centers. The Programme of Active Measures for Fighting Against the Unemployment (PAEM) is an European Union programme (PHARE) that follows the developing of the institutional capacity for projecting and putting into practice, at a local level, some active measures for occuping the labour force. In numerous localities in Romania there have been established mediation centers. After the closure of the financing period by the PAEM, these centers will continue to function only if they succeed to assure their financial independence, trough the attraction of others financial sources. In some localities, the PAEM mediation centers continue the activity of the County and the Local Agencies for the Occupation of the Labour Force, and in other localities they represent the only institutions, which provide mediation services. No matter the organization form, the non-benefit character or the commercial society, the nature of the invested capital and of the financing sources, the mediation centers through their activity, contribute to the increase of the occupation of the labour force. Other partners with real possibilities of cooperation, fructification and development of some programmes of measures for the increase of the places of work and fighting against the unemployment upon the labour market are: the local authorities; the central authorities; the schools; the local development agencies; the Chambers of Commerce and Industry, the unions. Also, the Ministry of Labour and Social Solidarity is an important and very active institution of the labour market. In principle, the efficiency of the labour market determines itself through the analysis of its main margins on the basis of the specific indicators: the level of wages; the unemployment rate; the degree of the labour force occupation; the level of the payments received; the professional and the geographical mobility; the migration of the qualified and high qualified personnel. From the analysis of the evolution of the labour market during the transition years in Romania, one can detach the following conclusions:

106

Irimie, S.; Bleanu, V.; Hodor, P.

1. The configuration of the labour market was marked by the permanent pressure of the offer of places of work over the demand, continuously supplied by the natural increase of the labour resources, as well as the operation of the labour market as such. Obviously, the phenomenon isnt liniar, representing a series of territorial peculiarities, depending on the economic structure, the development level, as well as the educational-professional existing level. In the majority of the counties, the labour resources have decreased continuously due to the increase of the pensioners number, as well as the reduction of the human resources being in training. 2. The working population registrates decreases in all the counties, mainly in the processing industry, followed by the constructions industry and transport industry. The structural changes at the level of the economic branches occurred under the influence of the Territorial Fund Law, pursuant to the privatization process, through which have been created places of work in the private sector, especially in the commerce and services sector, following the restructuring of the activity in the state industrial units. An increase of the occupation of the labour force was realized in branches as: commerce, public administration, financial-banking activities, public services. The private sector had an important contribution to the increase and to the reorganization of the occupation of the labour force, this sector being, in fact, the only employer of labour force. The most numerous places of work were created in the trade companies with limited responsability. 3. Referring ourselves, to the wages as an important factor of influence in the elasticity of the demand of labour force upon the labour market, the average net wages earnings per employee fluctuated between a minimum limit of 62USD, reached in 1992 and a maximum limit of 126 USD in 2001 (table 1). 4. The unemployment phenomenon has maintained and sometimes has even emphasized itself, as a result of the quantitative and qualitative imbalance between the demand and the offer of labour force. The unemployment rate registrated different values, oscillating between 3% in 1991 and 11.8% in 1999 (table 1). Tab.1.
Years Average net wages earnings [USD/ employee] Unemploym ent rate [%] 1991 98 1992 65 1993 78 1994 86 1995 104 1996 104 1997 88 1998 117 1999 101 2000 100 2001 126

8.4

10.4

10.9

9.5

6.6

8.9

10.4

11.8

10.5

8.6

According to the data provided by the National Agency for the Occupation of the Labour Force, at the level of the entire country, the number of the unemployed registered during the period 1998 2000, is presented in table 2.

The problems of the labour market in Romnia

107

The number of the unpaid unemployed - in searching for a place of work found in the County Agencies for the Occupation of the Labour Force is presented like this: - at the end of 1998 the number of the unpaid unemployed was of 232 thousand persons. From the total of the unpaid unemployed 94.0% were workers; - at the end of 1999 the number of the unpaid unemployed was of 258.7 thousand persons. From the total of the unpaid unemployed 75.9% were workers; - at the end of 2000 the number of the unpaid unemployed was of 255.2 thousand persons. From the total of the unpaid unemployed 75.7% were workers. The real value of the unemployment rate is influenced both by the large number of the unemployed released from the evidences of the Local Agencies - apart of the County Agencies for the Occupation of the Labour Force - these not having been statistically registered, and by the possible form of disguised unemployment (leaves of absence, technical unemployment). Although in the involvment area of the unemployment enter all the categories of the labour force, some of these have proved to be more vulnerable, other more resistant. The analysis of the population being unemployed by a series of characteristics: demographic, gender, age, educational-professional, residential areas, economic (the reasons for their being unemployed, the duration of the unemployment) has occasioned a series of conclusions useful for the policies of the occupation of the labour force and of the fight against the unemployment. The most vulnerable category of the labour force is represented by the women in average 47.0% from the total number of the persons who are looking for a place of work. The reasons are multiple: some of them belong to the level of training, others to the attitude of the managers, others to a bigger rigidity of the womens labour force related to that of the men. The structure of the unemployed according to the degree of the professional training puts into evidence the existence of an important percent of the unemployed with general education, which actually arent qualified for any work, or of those ones with medium education, which shows an inadvertence between the school schedule of training in certain professions and the demand of places of work existent in present on the market. The distribution of the unemployed according to their background discloses a majority of the ones who came from the industrial units, generally from those with state capital, which because of the lack of raw materials, because of the lack of orders, or due to a poor management are forced to work under capacity. The biggest part of the unemployed come from the urban area, because most of the industrial units are concentrated in this area. The unemployed who have the residence in the rural area come from among the workers of the former Agricultural Production Cooperative that have been eliminated, among the graduates of the secondary-school, or among the former commuters who were fired.

108

Irimie, S.; Bleanu, V.; Hodor, P. Tab.2.

Specification Inpaying unemployed 793,018 367,880 871,551 400,026 751,911 348,815 310,976 291,021 221,815 92,004 Workers 592,173 249,554 635,924 261,383 532,584 216,763 233,152 209,945 155,185 54,042 Out of which: Medium University school graduates graduates 180,812 20,033 107,953 10,373 210,142 25,485 125,593 13,050 192,736 26,591 117,180 14,409 68,284 9,540 70,783 56,643 34,289 10,293 9,987 3,673

Countrys total in 1998: - out of which: women Countrys total in 1999: - out of which: women Countrys total in 2000: - out of which: women Beneficiaries of unemployment benefit 1998: Beneficiaries of unemployment benefit 1999: Beneficiaries of unemployment benefit 2000: Beneficiaries of professional integration aid 1998:

Beneficiaries of professional integration aid 1999: Beneficiaries of professional integration aid 2000: Beneficiaries of support allocation 1998: Beneficiaries of support allocation 1999: Beneficiaries of support allocation 2000: Beneficiaries of compensating payments according to EO 98/1999* 1999: Beneficiaries of compensating payments according to EO 98/1999* 2000:

95,496 85,250 390,038 445,992 391,932 39,042 52,914

57,176 49,489 304,979 341,116 289,742 27,687 38,168

33,638 30,163 78,239 96,844 94,048 8,877 11,882

4,682 5,598 6,820 8,032 8,142 2,478 2,864

* Beneficiaries of compensating payments according to the Emergency Ordinance 98/1999 are represented by the persons whose labour contracts have been disengaged as following the collective firings by the application of the programmes of restructuring, privatization, liquidation, who beneficiate of pre-disengagement services, compensating payments, length of service and unemployment benefits in the conditions of the stipulations of the Government Emergency Ordinance 98/1999, and who have been taken into the evidences of the County Agencies, the Local Agencies and of the Municipality of Bucharest for the Occupation of the Labour Force.

The problems of the labour market in Romania

109

Analyzing the structure on ages of the unemployed, one can detach the following conclusions: - the youth under 30 years old represent the category with the largest unemployment rate. They come from among the graduates, among the persons fired by the economic agents with capital of state on the basis of the criteria of the least professional experience, or among the youth who couldnt hire themselves again after the fulfillment of the military stage; - the existence of a large percent of the unemployed over 50 years old, who are less disposed to change their profession or residence, remaining unemployed after the expirying of the payment period, too. The increase from year to year of the unemployed who receive a support allocation and the ones who have finished any kind of payment, has led to the appereance of the long-term unemployment phenomenon. The persistence of the longterm unemployment is due, in a large measure, to the diminishing of the demand of the work places, but also to the behaviour of a category of the unemployed (they refuse to accept the offered places of work, preferring to work in conditions of payment without labour book). This thing has led to the maintenance and the emphasizing of the black market, very damaging for the society, degrading and unsecure for the persons. From the analysis of the available places of work registered at the County Agencies for the Occupation of the Labour Force, compared with the number of the registered unemployed, the expectations of the reduction of the unemployment are extremely fragile, and in some situations they are actually null. Thus: - at the end of 1998, the number of the places of work remained vacant was of 14.00 thousand, most of the vacant places of work continuing to be for the workers (77.4% from the total); - at the end of 1999, the number of the places of work remained vacant was of 23.4 thousand, most of the vacant places of work coming from the private sector (71.0%) and continuing to be for workers (67.9%); - at the end of 2000, the number of the places of work remained vacant was of 30.3 thousand, most of the vacant places of work coming from the private sector (79.0%) and continuing to be for workers (69.6%); CONCLUSIONS The direction of evolutions registered by the number of the unemployed and by the unemployment rate is the same both on the national level and the regional level, but contravene to the trend of increase the unoccupied places of work, to the end of each year of the considered period. The increase of the number of the persons registered since the application of the Law no 1/1991 regarding the social protection of the unemployed and their professional integration is significant lower in 2000 versus 1999 compared with 1998.

110

Irimie, S.; Bleanu, V.; Hodor, P.

There is a trend of continuous increase of the persons who use mediation services for searching or changing a place of work. A decreasing trend have also the places of work created for the graduates of the learning institutions according to the EO no 35/1997 regarding the stimulating measures of the physical and juridical persons for hiring the graduates. The most places of work created like this are in the private sector. In increase trend there area the places of work newly created due to the granting of loans in advantageous conditions to the little and middle enterprises, in the conditions of the Law no 1/1991 regarding the social protection of the unemployed and their professional integration. In conclusion, all the institutions with preoccupations connected to the labour market have to cooperate for reduction of the unemployment and increase of the degree of the labour force occupation, to change informations and to cooperate in the interest of the community.
REFERENCES: [1]. Fiman - Consulting Centre book of creation and operating, Expert Printing House, Bucharest, 1996 [2]. Fiman - The Center of Labour Mediation book of creation and operating, Expert Printing House, Bucharest, 1996 [3]. Maniac E., Popa C., ociu I. - The book of the worker from the County Agency for the Occupation and Professional Training, Lamura Printing House, Bucharest, 1999 [4]. Adkin, E., .a. - Human Resources Guide proposed by The Economist Books, Nemira Printing House , Bucharest, 1999 [5]. *** Legislativ Digest - The legislation from the labour force and unemployment field second Edition, Deva, 2001

Annals of the University of Petroani, Economics, 3 (2003), 111-116

111

THE ANALYSIS OF THE LABOUR MARKET AT THE LEVEL OF THE HUNEDOARA COUNTY
SABINA IRIMIE, VIRGINIA BLEANU, PETRU HODOR *
ABSTRACT: The paper proposes itself to present the social impact of the activity reorganization in the area of the Hunedoara county through the indicators specific to the analysis of the labour market. KEY WORDS: unemployment, unemployment rate, unpaid unemployed, unemployment benefit, support allocation, Centers of Professional Training, social protection system, active measures.

Situated in the central-western part of Romania, with an area of 7,016 square kilometers, the Hunedoara County constitutes a diverse and harmonious geographical entity. The natural environment is mountainous predominant, in the same time existing a very dense hydrographic network. The reach resources of the soil and of the subsoil have determined since ancient times the economic profile of the county: the extraction of the golden-silvery ore from the Metaliferi mountains (being exploited since the Romans time), the extraction of the iron ore from the Poiana Rusca mountains, of the coal in the Petrosani Depression, and in Hunedoara and Clan has developed the siderurgical industry. As territorial-administrative organization, the Hunedoara County is shared in 5 municipalities, 8 towns, 56 communes and 459 villages. The population of the county is of 543,109 inhabitants. The geographical position, the resources of the soil and of the subsoil and the available labour force of the Hunedoara County have decided the deploying of an intense economic activity based especially on the exctracting industry, on the processing of the ferrous ore and the constructions, to which is added the industry of the electric energy, of wood, of construction materials, the light industry and food industry. In spite of this diversity, within the county, there are monoindustrial areas, for example The Jiu Valley a coal basin with tradition.
*

Lecturer, Ph.D. at the University of Petrosani, Romania Lecturer, at the University of Petrosani, Romania Assoc. Prof., Ph.D. at the University of Petrosani, Romania

112

Irimie, S.; Bleanu, V.; Hodor, P.

Following the passing towards the market economy, due to the poor technologization, to the lack of funds and of the sales market, etc, the production has decreased, the firms being obliged to reorganize themselves and to restructure the personnel, resulting in this way a very large number of the unemployed with a high level of qualification, especially from the sector of the extracting and the siderurgical industry. In the private sector it is noticed an increase of the commercial and the manufacturing activities, in constructions and construction materials, in the light industry, the food industry, the processing of wood and public services. As a territorial-administrative structure, specialized in the sector of the administration and the protection of the labour force, the Hunedoara County Agency for the Occupation of the Labour Force is the main promoter of the occupational policies (defined as the sum of the communitary efforts in the field) and of the fight against the unemployment in the county. This institution has initiated, developed and implemented strategies and programmes to diminish the negative effects of the unemployment and to promote actions with economic support for the occupation of the labour force in Hunedoara County. The Hunedoara County Agency for the Occupation of the Labour Force has developed 14 Local Agency of providing the for occupation of the labour force and 2 Centers of Professional Training in Deva and Petrosani. Within the Jiu Valleys there are in: Petrosani, Lupeni, Vulcan, Aninoasa, Petrila and Uricani. From the data provided by the Hunedoara County Agency for the Occupation of the Labour Force one can evidence the situation of the labour force and of the unemployment during the period 1998-2000 in the coal basin of the Jiu Valley (table 1). The quantification of the unemployment phenomenon and of the labour force in the Hunedoara County during the period 1998-2000 presents itself as following: the unemployed being in evidence and payment; the unemployed registered since the issuing of the Law 1/1991 regarding the social protection of the unemployed and their professional integration; beneficiaries of the social aid according to the Law 67/1995; persons placed into work; assisted and placed persons; qualified/ requalified persons; the rates of the unemployment (in %) registered both on the total County as well on each area of the county apart, during the period 1998-2000 are presented in the table 2. It is noted that these values overpass the annual rates at national level, reflecting the much stronger impact of the collective firing especially at the Petrosani National Company of the Pitcoal. On the level of the county, during the period 1998 2000, have been organized the qualification, requalification and improving courses, in professions required on the labour market by the Deva and Petrosani Centers of the Professional Training from the Hunedoara County Agency for the Occupation of the Labour Force, according to the table 3. Unfortunately, it is noticed that during the period of reference, the number of these courses has decrease yearly as well as the number of the students and of the graduates registered. The situation of the places of work created for the graduates of the institutions of learning according to the Government Emergency Ordinance no 35/1997 regarding the stimulating measures of the physical and legal persons for the placing into work of the graduates during the period 1998-2000 is presented in the tabel 4.

Tab.1.
No. 1. 1.1. THE AREA The total of the unemployed registered and paid Beneficiaries of inpayment the unemployment benefit Beneficiaries of inpayment the professional integration aid Beneficiaries of inpayment the support allocation Demands for existent places of work (the unpaid unemployed) Beneficiaries of rights according to the Emergency Ordinance 8/1999 The number of the unemployed registered since the issuing of the Law 1/1991 Beneficiaries of unemployed benefit registered since the issuing of the Law 1/1991 Beneficiaries of professional integration aid since the issuing of the Law 1/1991 Beneficiaries of PETROANI 1998 1999 2000 8977 7318 4399 2286 1175 681 1998 4026 658 LUPENI 1999 4144 365 2000 3159 377 1998 0 0 PETRILA* 1999 2000 2352 2351 492 461 1998 0 0 ANINOASA* 1999 2000 0 684 0 97 1998 3615 637 VULCAN 1999 2000 3167 2480 559 346

1.2.

410

342

160

259

200

206

188

83

12

229

192

133

1.3. 1.4.

3227 3054

1931 3870

1582 1971

1729 1380

1057 2522

790 1758

0 0

823 849

691 1114

0 0

0 0

104 470

1486 1263

788 1628

799 1190

1.5.

28

12

2.

30821

36730

41459

16570

21099

23425

5172

7248

1503

15374

18517

20630

2.1.

14577

17955

18668

6692

7625

8152

1229

1799

208

6580

7932

8683

2.2.

1376

1913

2059

639

983

1249

427

587

65

619

878

962

2.3.

5380

4027

6700

2619

3744

4258

1807

2415

338

2412

3176

3843

2.4.

3.

3.1. 4.

4.1. 5. 5.1. 6. 7. 7.1.

support allocation since the issuing of the Law 1/1991 Demands for places of work (the unemployed without payment) registered since the issuing of the Law 1/1991 Beneficiaries of social aid according to the Law 67/1995, out of which: Active ones Number of persons placed into work since the issuing of the Law 1/1991 Out of which unemployed: Number of persons placed into work during the year Out of which unemployed: Number of persons assisted during the year Number of qualified and re-qualified persons Out of which unemployed:

9488

12835

14023

6620

8747

9766

1709

2447

892

5763

6531

7142

1506

3325

2382

717

1018

3620

1032

2262

500

762

883

1139

908 15363

1423 18315

479 19922

486 6192

761 7709

1343 9156

0 0

470 664

634 1763

0 0

0 0

317 244

362 7954

361 9349

595 10792

3857 2108 461 9272 725 396

4165 2952 308 21444 392 97

4640 1607 475 34650 431 84

2118 1328 866 5315 22 7

3068 1517 950 7890 0 0

4077 1447 1009 9688 0 0

0 0 0 0 0 0

483 664 483 1157 0 0

889 1101 408 3723 0 0

0 0 0 0 0 0

0 0 0 0 0 0

117 241 117 838 0 0

1905 1587 652 16750 90 26

2691 1395 786 18914 46 14

3237 1443 546 21107 41 7

*The Local Agencies for the Occupation of the Labour force from Petrila and Aninoasa have been established: in 1999, respectively in 2000 and, until the mentioned years they belonged to the Petrosani Local Agency

The analysis of the labour market at the level of Tab.2.

Specification COUNTYS TOTAL : Petrosani Lupeni Vulcan Petrila Aninoasa The unemployment rate (%) 1998 1999 2000 16.5 19.3 16.4 17.6 23.1 16.2 16.0 18.5 15.6 18.0 20.6 18.4 16.2 16.1 5.7

115

Tab.3.
Year No.of courses 152 106 70 Number of registered students, out of which: Total Women UnPaid emplyoed 3471 1883 1718 1753 2412 1245 547 1865 1488 859 304 1184 Total 2962 2015 1308 Number of graduates, out of which: Women Unemplyoed 1673 1417 1099 408 792 255 Paid 1545 1607 1053

1998 1999 2000

Tab.4.
Specification Total, out of which: - for the graduates of the universities: - for the secondary school graduates: - for the after secondary school graduates: - for the professional education graduates: - for the graduates of the special learning: 1998 769 241 62 56 410 0 1999 279 141 39 60 39 0 2000 145 101 23 9 12 0

These places of work were created both in the sector of state and private sector, thus: in the sector of state: 476 places of work (265 in 1998, 126 in 1999 and 85 in 2000); - in the private sectorul: 717 places of work (504 in 1998, 153 in 1999 and 60 in 2000). The number of the places of work new created during the period 1998-2000 in the Hunedoara County, due to the granting of the loans in advantageous conditions to the little and middle enterprises for creating and developing, in the conditions of the Law 1/1991 regarding the social protection of the unemployed and their professional reintegration, was of 1255, out of which 594 for the unemployed. The volume of the granted loans for the 1255 places of work new created in the Hunedoara County during the period 1998-2000, are distributed like this: in 1998 were granted loans amounted to 5,857,000 thousand lei; in 1999 were granted loans amounted to 10,023,000 thousand lei; in 2000 were granted loans amounted to 14,517,000 thousand lei. From the data presented it is noticed that for the labour market, the reorganization of the extracting activity in the monoindustrial mining area of the Jiu Valley had an impact much tougher than to the countrys level, disclosed especially through the rate of the unemployment which is significant bigger. On the other hand, the direction of evolutions registered by the number of the unemployed and by the unemployment rate is the same both on the national level and the regional level, but

116

Irimie, S.; Bleanu, V.; Hodor, P.

contravene to the trend of increase the unoccupied places of work, to the end of each year of the considered period. As it was mentioned, the major percent in offer has been held by the private sector, and, from the point of view of the training/qualification level, over 65% are from the category of the workers. In this context, the situation of the Jiu Valley reflects an extremely lower percent of the unemployed placed into work in the total number of the registered ones during the period 1991- 2000 (<14%). Related to the same basis of reference (the total number of the unemployed) the number of the labour demands hold a percent of around 36%, and the interest for the qualification, requalification and professional reconversion of the unemployed who have been graduated courses decreases from 47.84% in 1998 to 19.5% in 2000. The causes of this discrepancy can be: the supply of the labour force uncorrelated with the demand manifested upon the market; the conditions given by the private firms doesnt answer to the expectations; the inefficient functioning of the professional training centers which have to emphasize the change of the peoples mentality:To be miner from the father to son. Concerning to the number of the beneficiaries of the unemployment benefit and of the professional integration aid it is observed a decreasing trend of these, but exists an increasing trend to the beneficiaries of the support allocation and to the unpaid unemployed. In the Hunedoara county, until now, there were implemented a serie of active measures whose efficiency can be appreciated both in quantitative and qualitative terms related to the operational act, to the institutionalized relationship pattern, to the managerial or to the mediation skills, etc. The consequences of the increased unemployment rate and the economic insecurity can limit the rhythm of privatization and reorganization and can compromise the credibility of the reform process. That imposes the achievment of an appropriate social protection system, with a major role, which contributes to the maintenance of the social peace in the conditions of a high unemployment rate because one of the consequences of the economic reorganization was the increase of the number of persons who live to the limit of the poverty. Among the most disadvantaged are numbered the long-term unemployed who have lost both the their income and their chances of social reintegration. In the same time, the youth unemployment has increased a lot, those ones reaching the impossibility to assure their means of living due to the long periods of waiting a place of work.
REFERENCES: [1]. Fiman - Active measures for fight against the unemployment, Expert Printing House, Bucharest, 1997 [2]. Fiman - The Center of Labour Mediation book of creation and operating, Expert Printing House, Bucharest, 1996 [3]. Maniac, E. - The Unemploymen, Calauza Printing House, Deva, 1998. [4]. Simionescu, A., .a. - The Human Resources Management, AGIR Printing House, Bucharest, 1999

Annals of the University of Petroani, Economics, 3 (2003), 117-122

117

INFORMATICAL ASPECTS REGARDING DECISION TREE IN DECISIONS OPTIMIZATION

ALIN ISAC, CLAUDIA ISAC

ABSTRACT: Everyone makes decisions, but not everyone is a decision-analyst. A decision analyst uses quantitative models and computational methods to formulate decisionproblems, assess decision performance, identify and evaluate options, determine tradeoffs and risks, evaluate strategies for investigation, and so on. KEY WORDS: decisions under risk, decision under uncertainty, decision under certainty, tree decisions methods

In literature of specialty, decision theory is an ensemble of knowledge and analytical techniques of different degrees of formality designed to help a manager choose among a set of alternatives in light of their possible consequences. Decision theory can apply to conditions of certainty, risk, or uncertainty, means that each alternative leads to one and only one consequence, and a choice among alternatives is equivalent to a choice among consequences. In decision under risk each alternative will have one of several possible consequences, and the probability of occurrence for each consequence is known. Therefore, each alternative is associated with a probability distribution, and a choice among probability distributions. When the probability distributions are unknown, one speaks about decision under uncertainty. Decision theory recognizes that the ranking produced by using a criterion has to be consistent with the decision maker's objectives and preferences. The theory offers a collection of methods and procedures to reveal preferences and to introduce them into models of decision. It is not concerned with defining objectives, designing the alternatives or assessing the consequences; it usually considers them as given from outside. In a decision situation under certainty the decision maker's preferences are simulated by a single-attribute or multiattribute value function that introduces ordering on the set of consequences and thus also ranks the

Lecturer drd. ec. at the University of Petrosani, Romania Assist.Prof. at the University of Petrosani, Romania

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Isac, A;, Isac, C.

alternatives. The main methods, used by managers to make decisions under certainty, are: optimistic technique, pessimistic technique, proportionally by Bayes Laplace and regrets minimize technique. The main methods, used by managers to make decisions under certainty, are: additive method, global utility method, Electre methods, Onicescu method, K coefficient method etc. Decision theory for risk conditions is based on the concept of utility and the decision maker's preferences for the mutually exclusive consequences of an alternative are described by a utility function that permits calculation of the expected utility for each alternative. The alternative with the highest expected utility is considered the most preferable. In the specialty literature, the main methods, used by managers to make decisions to risk conditions are decisions tree method and mathematic hope methods. For the case of uncertainty, decision theory offers two main approaches. The first exploits criteria of choice developed in a broader context by game theory, as for example the max-min method where we choose the alternative such that the worst possible consequence of the chosen alternative is better than the best possible consequence of any other alternative. The second approach is to reduce the uncertainty case to the case of risk by using subjective probabilities, based on expert assessments or on analysis of previous decisions made in similar circumstances. Decisions are often made in conditions where there are a number of alternative courses of action and when the outcomes of these actions are uncertain. Furthermore, earlier actions may affect subsequent actions and these likely effects needs to be considered using the Decision Tree Method. A decision tree is a chronological representation of the decision process, he are a means of setting out problems of this kind. Decision tree is utilizes a network of two types of nodes: decision nodes and states of nature nodes. For the chance nodes, ensure that the probabilities along any outgoing branch sum to one. A decision tree is a flowchart that uses graphics to explain whether or not to perform certain action in a certain situation. At each point the reader must decide yes or no, then follow the appropriate path until the final goal is reached. The stages in the construction of a decision tree are: Identify decision using squares and uncertainly using circles 1. Construct tree showing decision points or nodes and choice nodes as illustrated in figure no.1 2. Assign costs, benefits or probabilities to appropriate branches 3. Analyze using the roll back method, i.e. tracing the costs and benefits back from the final point to the original objective. 4. Calculate the values of uncertain outcome nodes by multiplying the value of the outcomes by their probability.

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On the tree, the value of a node can be calculated when we have the values for all the nodes following it. The value for a choice node is the largest value of all nodes immediately following it. The value of a chance node is the expected value of the nodes following that node, using the probability of the arcs. By rolling the tree backward, from its branches toward its root, you can compute the value of all nodes including the root of the tree. The following equation is using to find the mathematic hope of decision point:

S m (Vki ) = c kij (t ) p kij

j =i

(1)

where: k decision node; i decision variant index; jt current ear order; T decisions horizon; S m (Vki ) - mathematic hope of i variant form decision node k;

Ckij the forecast consequences for every moment t nature state;

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pkij j state a peareuce probability for variant from decision node K. Because the time horizon T is a very long one it is obviously that we must care about the T time cash flow and the consequences we use in this time must be updated. For this we use compound interest the updated techniques thus the mathematic hopes formula to choose the optimum variants form k decision node becomes:

S m (Vki ) = p kij
j =i t =tk

(1 + d )

c kij (t )

(1 + d )t

iki

(2)

where: Iki investitional effort need to implement the i variant of Dk node; Tk year order of Dk node; D interest rate for the result updated. The maximum mathematic hope links to the most favorable alternatives in decisional plane.

Vk = max {S m (Vki )
where: Vk optimum decisional variant in k node.

(3)

As we showed the conclusion is that the economical mathematical models that use decision tree are in most cases, very complex models that use a very large variety of procedures. The decision trees applications can be solved all so by computer. One of the most known programs of this kind is arborist by Texas Instruments from Dallas. The software uses a graphic user interface that allow the user to see the decision tree as a full preview and by small pieces. The user introduces by keyboard all the necessary data to resolved the problems. In Romania, to, exists concerns in this fields. The BOS (Business Optimizations Solutions) offers precisions tree use a decision analysis ad in for Microsoft excell. It creates diagrams easily by selecting cells in spread sheet and clicking node buttons at the precisions tree Toolbar. Enter probabilities and pay offs directly in cells in your tree. Whit one click, precisions tree will run a power full decision analysis on your model, determining the best way to precede with your decision. The precision tree features are: Intuitive and easy to learn Fully integrated with spreadsheet model Build decision trees and influence diagrams directly in Excel Graphs and reports customized using standard Excel features

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Automatic formatting of influence diagrams and decision trees Influence diagrams show results without being converted to a decision tree Decision analysis results updated automatically as model is changed Perform Sensitivity Analyses - one-way and two-way - on any value in decision tree or influence diagram Complete Monte Carlo simulation using @RISK Policy Suggestion Graph and Strategy Region Graph (Pro Only) Easy to edit trees and diagrams Generate Risk Profile graphs True add-in, featuring toolbar interface, menu, Excel commands Standard Excel formulas used for modeling Probabilities automatically normalized in chance nodes Influence diagrams can describe asymmetric trees Access node information in spreadsheet cells Advanced features include logic nodes, reference nodes, custom VBA utility functions, linked trees True 32-bit application for Windows 95/NT Designed to work with Decision Tools Suite A decision tree model is presented in the next figure:

Fig.2.

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Another decision tree implementation was design by software developers to create accounting software. The decision tree functional element, which refers to left to right reading, can delimit the accounts by their accounting function, respective in active accounts (node 2) and passive accounts (node 3). At their sides this decision nodes allow to divide the growing and reducing operations by the accounts type.
Growing
Debiting

Active Account

Reducing

Crediting

Growing Pasive Account

3

Debiting

Reducing

Crediting

F Fig.3.
REFERENCES: [1]. Dima I.C., Dura C. Management strategic, Ed. Scrisul Romnesc, Craiova, 2002 [2]. Goodwin P., Wright G. Decision Analysis for Management Judgment, Wiley, 1998 [3]. Nicolescu O. (coord.) Sistemul decizional al organizaiei, Ed. Economic, Bucureti, 2000 [4]. Rusus E. Decizii optime n management, prin metode ale cercetrii operaionale. Probleme i studii de caz, Ed. Economic, Bucureti, 2001 [5]. Harvey G. Excel pentru toi, Ed. Teora, Bucureti, 1996

Annals of the University of Petroani, Economics, 3 (2003), 123-126

123

CHARACTERISTIC OF JAPANESE DECISION MAKING BY CONSENSUS

CLAUDIA ISAC

ABSTRACT: The Japanese decision making process is that of consensus building, which is know as ringisei or decision making by consensus. In practice, the process of seeking a general consensus in reaching a final decision is known as nemawashi during which many communications and consultations are carried out repeatedly before the formal document. KEY-WORDS: ringisei, nemawashi, decisions

Japans development after the second war, as one of the most powerful economic force of the world, has determinated a more careful analysis of the culture / management / performances relation. Although it suffered important destroys during the war, with very scarce natural resources and with a crowded population of about 126 millions inhabitants, Japan successes to reach the highest rate for economic growth, the lowest level for unemployment and to create a stimulative working climate for companies employees. The Japanese enterprise has been said to have successfully harmonized western techniques on management such as motivation theories and practices, group dynamics, marketing concepts, quality assurance etc. with their traditional systems. The most outstanding characteristics in the traditional Japanese management that claimed to have contributed to the phenomenal growth in Japanese economy and technological advances are: Decision making by consensus; Lifetime employment system; Seniority based wage and promotion system; Company based labor union; Harmonious management labor relationship; On the job training and job rotation; Important role of middle management Business welfarism;

Lecturer drd. ec. at the University of Petrosani, Romania

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Quality circles or small group activities. In hierarchical organizations, most important decisions are either made or approved by formal leadership at top management. In Japan, there are many small and medium-sized companies run from the top down by dominant owners or presidents, known as wanman. However, in many large Japanese corporation, decision making below top management is a more diffused process in which even lower-rank employees have a comparatively good chance to influence the decision process. The traditional tendency in large corporation Japanese has been to make corporate decisions from the bottom up rather than top down. Individual companies have different methods in decision make. In family-run operations headed by the founder and family patriarch, the ringisei may not be used at all. In these companies, the founder often makes all key decisions which are implemented at this command. The Japanese decision making process is that of consensus building, which is know as ringisei or decision making by consensus. Because of this emphasis on the group, decisions in Japanese business are rarely made by a single individual. Usually an important decision begins as a suggestion from a middle manager that is then circulated in document form among all persons whom it may affect. The written suggestion is called a ringi-sho, often translated as a project proposal. Those who approved of the suggestion affix their personal seal to the document as a sign of support for it and the pass it on to other persons of equal ar higher rank in the company. They then pass down the decision on whether the proposal is to be finally accepted. The link between upper hierarchical level management information (UHL) and the low hierarchical level (LHL) management ones is made by medium hierarchical level management information (MHL) (figure no.1).

U .H .L .

M .H .L .

L .H .L .

Fig.1.

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125

In the end, if there is sufficient support, the ringi-sho will be brought up through the management structure to the Council of administration or to the board of managers. When a ringi has been approved, the conclusions it embodies constitutes a supreme decision that the company as a whole is bound to put into effect immediately. In practice, the process of seeking a general consensus in reaching a final decision is known as nemawashi during which many communications and consultations are carried out repeatedly before the formal document. Nemawashi is a constant and never-ending process. Employees must develop and maintain good interpersonal relationships with their colleagues. They must share and exchange information by actively attending many meetings, some of which may not be directly related to each participants work. The Japanese decision making system are many advantages and disadvantages. It allows managers in section closest to the problem make key decisions, without upsetting the hierarchy of the chain of command. However, there is very little space for lateral consultation between members of different subsections within the company. Moreover, the ringi-sho is extremely slow when compared to direct top-down decision making. If a proposal is accepted, it is usually implemented quickly, since all relevant parties are aware of the proposal and have at least nominally approved it prior to its adoption. Successful managing strategies used in equipment building Japanese companies from sixty-seventy years has reached high position in equipment tool international market which is for a long time reserve to American and European companies. One of this companies is Toyota who has raised by specific management methods applications. Ringisei is one of this method and it has developed in this period. Following series of evaluation indicators of this decisional mechanism there is both a raising of proposals number and an amazing increasing of acceptation rate from one percent in 1965 to 94% in 1990, simultaneous with increasing of year proposal number by person from 12,5 in 1965-1970 years to 18,7% proposals in 80`s.

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94%

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1965 39%

83% 70%

86%

91%

1970

1975

1980

1985

1990

Fig.2.
REFERENCES: [1]. Burdu E. Management comparat, Ed. Economic, Bucureti, 1998 [2]. Dima I.C., Dura C. Management strategic, Ed. Scrisul Romnesc, Craiova, 2002 [3]. Nicolescu O. Management comparat, ediia a II-a, Ed. Economic, Bucureti, 2001 [4]. www.2b.biglobe.ne.jp [5]. www.geocities.com/Tokyo

Annals of the University of Petroani, Economics, 3 (2003), 127-130

127

RISK MEASUREMENT SYSTEMS

LILIANA IVNU *
ABSTRACT: All firms must have the capability to measure their risks and it is critically important to select the appropriate risk measurement criteria and to establish risk tolerance levels. The most common tools for assessing market risk are based on so called at risk measures such as Value-at-Risk (VaR) and Earnings-at-Risk (EaR). These methods may not be appropriate for all entities therefore some alternatives are sensitivity analysis and cash flow at risk. KEY WORDS: risk measurement, Value-at-Risk, Earnings-at-Risk, sensitivity analysis, cashflow at risk

All firms must have the capability to measure their risks and most firms have risk measurement systems but risk measurement involves all aspects of the capability to measure risk, not just having systems. To measure risk effectively and accurately, the firm must have accurate, relevant and timely information as to its positions, its counterparties . This information must be accurate, accessible in a timely manner and able to be retrieved from the firms computers and sent to the relevant analytical models for risk evaluation . Effective risk measurement entails several key components as they follow: - The risk measurement methodologies used must accurately measure the risks and they must reflect the risks they measure and all relevant parties must understand them. - Different kinds of firms will require different kinds of risk measures. - The firm must be able to examine its risks at any level and aggregate up or drill down to any desired degree. - The firm must be able to perform scenario and what if analysis on a real time basis for any of its risk measurement categories. - The analytical models used to measure risk must be accurate and measure the risks they are intended to measure. The models must be appropriate to the business and the products. - The inputs to the models must be accurate, clean, and timely. This applies to modelgenerated data (including the results of risk analysis) as well as historical market data.
*

Lecturer at the University of Petrosani, Romania

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- The connections between the systems must be accurate. - The systems must work automatically which saves time and resources by reducing the effort expended on finding risks and increasing the resources available to manage risks. - The firm should periodically assess its systems and their ability to perform, effecting updated capabilities when necessary. Also, it is critically important to select the appropriate risk measurement criteria and to establish risk tolerance levels. Ideally, the risk indicators would be easily quantifiable measures currently available to management. Quantifying risks is a four step process which entails : 1. Defining the risk to be measured . 2. Agreeing on a model for that risk . 3. Specifying a risk measure compatible whit the chosen model . 4. Estimating the value of that measure implied by the model . The most common tools for assessing market risk are based on so called at risk measures such as Value-at-Risk (VaR) and cash-flow-based measures such as Earnings-at-Risk (EaR). Value-at-Risk measures the possible change in value of a portfolio of financial and possibly physical assets and liabilities over a specified period, with a certain level of probability, caused by changes in market risk factors. Valueat-Risk is a powerful measure of risk that is gaining wide acceptance among institutions for the management of market risk. Its concept entails two aspects: determining the probability distribution for the profit or loss of a portfolio over a given horizon; summarizing that distribution with a single statistic, VaR being often reported as the maximum loss that can occur within a given confidence interval. In order to measure risk in a portfolio using VaR, some means must be found for determining a profit/loss distribution for that portfolio. The more complex a portfolio becomes, the more asset categories and sources of risk it is exposed to, the more challenging that task becomes . A VaR model, however, is limited because it is objective whereas risk taking is subjective. If we deny that subjectivity, we deny a role for human judgment. Some possible applications of VaR includes: determining capital requirements, capital allocation and performance-based compensation. Each process entails risk assessment, therefore each is subjective. If we wish to apply the objective tool VaR to any of these some mechanism must be found that will enable VaR to support subjective human judgment without replacing it. Earnings-at-Risk measures the possible change in earnings generated by a portfolio of assets and liabilities, with a certain level of probability caused by changes in market risk factors. To calculate an estimate of the earnings at risk it is necessary to estimate the payoffs of a portfolio of financial or physical assets for a given state of the market. The main stages involved in calculating EaR are: 1. Parameter estimation. Simulating risk factors requires estimates of the parameters that define the properties of risk factors, which can be based on historical data or, in the case of the long-term forward volatility, historical forward curves;

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2. Risk factor simulation. Once the parameters defining each risk factor have been estimated the risk factors can be stimulated as many times as necessary for the EaR calculation. To capture the true market behavior as accurately as possible it is essential that the risk simulation stage incorporates correlations between risk factors. The most important component of the EaR methodology is an efficient risk factor simulation engine which must incorporate : expected levels of risk factors, seasonal variations in risk factor statistics, seasonal variations in correlations between risk factors, known causal relationships between risk factors and structural features of the market such as peak and off-peak periods, business and non-business days; 3. Cashflow generation and aggregation. Once the risk factors have been stimulated, it is possible to generate portfolio cashflows based on the specifications of the contracts. Each set of stimulated risk factors for a portfolio of contracts can be considered to be a simulated state of market. From these and the terms and conditions of the contracts it is possible to derive a set of cashflows which has an associated date on which the payment is made and the size of the payment. In order to analyse the risk of the portfolio the cashflows from all the contracts are aggregated into time partitions for each simulation; 4. Earnings-at-Risk calculation. After the cashflows have been aggregated into the user-specified time partitions, the result is a distribution of cashflows within each time-bucket and it is then possible to calculate a variety of statistics for these distributions, or EaR measures. These methods may not be appropriate for all entities. Two alternatives are sensitivity analysis and cash flow at risk. The approach in sensitivity analysis is to imagine hypothetical changes in the value of each market factor, and then use pricing models to compute the value of the portfolio given the new value of the market factor and determine the change in portfolio value resulting from the change in the market factor. When combined with knowledge of the magnitudes of likely exchange rate or interest rate changes, these sorts of computations provide a very good picture of the risks of portfolios with exposures to only a few market factors. Their principal limitation stems from the fact that a sensitivity analysis report for a portfolio with exposures to many different market factors can easily contain hundreds or thousands of numbers, each representing the change in portfolio value for a particular hypothetical change in market rates and prices what makes difficult or impossible for a risk manager to meaningfully read and review sensitivity analysis reports for portfolios with exposures to many different market factors and assimilate the information to get a sense of portfolio risk. Cash flow at risk is arguably more sophisticated than Value-at-Risk and it appears to have a limited, but growing, number of users. Cash flow at risk measures are typically estimated using Monte Carlo simulation. However, there are important differences from the use of Monte Carlo simulation to estimate value at risk: - the time horizon is much longer in cash flow at risk simulations which is the distinguishing feature, and in fact the whole point, of cash flow at risk measures

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- the hypothetical market factors are combined with the terms of the cash and derivative instruments to compute hypothetical quarterly or annual cash flows, and their distributions - operating cash flows are typically included in the calculation which is essential if the goal of the risk measurement system is to assess the impact of derivatives and other financial transactions on companies' total cash flows. As a result, the "factors" included in the simulation are not just the basic financial market factors included in value at risk calculations, but any "factors" which affect operating cash flows. Successful design and implementation of a cash flow at risk measurement system requires a high degree of knowledge and judgment. A model of the company's operating cash flows it must be developed, determining the important operating factors and how they impact operating cash flows. Next, this model of the operating cash flows must be integrated with a model of the financial market factors and then the user must select the statistical distribution from which the hypothetical values of the "factors" (both operating and financial) are drawn, and select or estimate the parameters of that distribution. Finally, the user must carry out the computations. Embedded in even the most sophisticated and comprehensive risk measurement systems, there are a variety of assumptions whic may or may not be accurate and/or valid over time. These assumptions are necessary and are reasonable when implemented, but is important remember that the conclusions reached and actions taken by using a risk measurement system might change if one or more of the underlying assumptions were to change . All models which attempt to measure risk have embedded assumptions which ca effect the answer: in asset valuation and portfolio simulations there are assumptions about modelling the term structure of interest rates, volatility estimates, prepayment speeds. Each of these affects the calculation of the portfolios duration and convexity, total return simulations and cashflow projections; in value at risk analyses there are assumptions about the correlations across risk factors, the time horizon used, the historical period used; in liability modeling there are assumptions about policyholders response to declining surrender charges, the sensitivity of annuity holders to changes in interest rates, the amount of new business to be generated over the horizon period. Risk measurement is an inexact science. It is not possible to know what level of interest rate volatility will be experienced in the future, or to derive a model that predicts prepayment behavior with perfect accuracy. Therefore, the notion of developing risk measures to quantify the potential impact of a modeling error is an important part of the risk management process . REFERENCES:
[1]. Geske T. Evaluating the Risks of Modeling Assumptions Used in Risk Measurement, Society of Actuaries, Integrated Approaches, to Risk Measurement in Financial Services Industry [2]. Holton G., Subjective Value at Risk, Financial Engineering News, 1997

Annals of the University of Petroani, Economics, 3 (2003), 131-136

131

THE ORIGINALITY OF EMINESCUS ECONOMIC THOUGHT

ADRIANA KORONKA *
ABSTRACT: The publishing of the 17th volumes summing all Eminescus work offers to the todays readers a large view over the literary and scientific interests of our great writer. Perpessicius, continued by Al Oprea started the Academic edition of Mihai Eminescus Opere and finalized by D. Vatamaniuc. The publishing of Eminescus integral, academic edition, has from the 9th - volumes the periodicals, in which we discover the entire thought of the peerless poet. Large and profound, this opens to us in the reminded volumes, covering philosophical, economical, historical and juridical areas. Being interested in our economy, Mihai Eminescu gathers lots of information, extracts and reviews from the newspapers of the time. The years of the poets studies were very productive in this matter. Eminescus economic thoughts are mostly of German influence, national conservative, the result of the world in which he was brought up as an intellectual. KEY WORDS: Eminescus economical doctrine, the economic progress in Eminescus work concerning the struggle for existence and supremacy of the individual, Eminescus solutions regarding protecting and encouraging the positive classes, getting the economical independence, harmonizing interests

The publishing of the 17th volumes summing all Eminescus work offers to the todays readers a large view over the literary and scientific interests of our great writer. Perpessicius, continued by Al Oprea started the Academic edition of Mihai Eminescus Opere and finalized by D. Vatamaniuc. The publishing of Eminescus integral, academic edition, has from the 9th - volumes the periodicals, in which we discover the entire thought of the peerless poet. Large and profound, this opens to us in the reminded volumes, covering philosophical, economical, historical and juridical areas. Concerning Eminescus economical doctrine, framed in the economical context of the period, a multitude of studies occurred. So, in 1914, in Iasi, Florin Simion publishes the article called Mihai Eminescu as an economist.
*

Lecturer, Ph.D. at the University of Petrosani, Romania

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Koronka, A.

I. Haseganu publishes in Brasov Eminescu - economist and political thinker (1941), and in different periodicals we find articles which show us the economical ideas that Eminescu wrote in the newspapers of the time: Albina, Federatiunea, Curierul de Iasi, Timpul, Romanul, Convorbiri literare. We remind here only some of them: Eminescus ideas concerning the sociopolitical and economical problems by Mihail Ciutea (Cuvantul nostru, nr.68,1929,p.43-45), The economic and social ideas in Eminescus periodicals by I. Bulborea (Analele de istorie, 15, nr.2, 1969,p.43), The idea of the economic progress in Eminescus work by St. Staicu (Ramuri, VI, nr.11, 15 nov. 1969). But the true recover of his economic thought is due to Constantin Noica, a bols philosopher who approached Eminescu as an economist justifying through solid reasons the necessity of including these in the history of the Romanian economic doctrines. George Calinescu noted in Opera lui Mihai Eminescu, the multitude of Eminescus texts and preoccupations in the field of the social-economic sciences. Here are quoted Quesnay, Montesquieu, J.J. Rousseau, Adam Smith, J. B. Say, but also some representatives of the modern economical founding school, that G. Calinescu calls optimistic and naturalist. (G. Calinescu, Opera lui Mihai Eminescu,vol I, Bucuresti, Editura pentru Literatura, 1967). Studying Eminescus notes, G. Calinescu discovered lots of notes about some famous works belonging to the English economists, people about whom the poet finds out through Duhring. It seems that in this way, through Duhring, Eminescu oriented his interests towards the economic problems, because this published in 1873 Kursus der National und Socialokonomie, a work also read by Eminescu. Being interested in our economy, he gathers lots of information, extracts and reviews from the newspapers of the time. The years of the poets studies were very productive in this matter. Eminescus economic thoughts are mostly of German influence, national conservative, the result of the world in which he was brought up as an intellectual. The economic direction of the young poet, as a student in Vienna and Berlin, is marked by the political and social situation of the young and fragile country whose developing direction, in the administrative, economic and legislative fields is marked by the polemics between the Conservator and The Liberal parties which alternated in governing. Eminescu, independent and refractory to any form of compulsion or political enrolling, draws attention over the serious economical problems of Romania in that period of time. The weapon of his writing is pointed against the disastrous foreign influence which destroyed the national industry and wholesale trade. This attitude brought about a lot of denigrators of the great writer, that in a hurry considered him a conservator, retrograde and even xenophobe. Nothing more untrue, because Eminescu had in his sight the parasite capital. We discover in his notes about the internal state of our economy, ideas of encouragement and stimulation of the native investors, suffocated by the internal and external parasites.

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It is true that the governs of that time were interested in involving foreign capital for recovering the national economy. The intentions proved to be honorable but for the early Romanian economy some of them were unfair, even bankrupt. Eminescu exposes the lack of coherence in the economic policy in the newspaper Timpul in a review Studies over the situation (Timpul, V, nr.41, 21 February 1880). In accordance to his outlooks, the elements of economic development must continue the development in the spirit of the Romanian traditions to which the new elements must be added gradually. The national interests must be harmonized with the foreign ones so that they favor the development of a middle class, powerful from the economic point of view. Concerning the forces that undermined from inside the Romanian Economy, Eminescu points towards the foreign inhabitants of Romania, without any bonds with the land and descendents of the country, without identity of interests with the productive and positive masses and which could become the ruling element in Romania. We suppose that these words made him being seen as a xenophobe. We shouldnt forget that the author often claims for naturalizing the immigrants, for their fitting in the natural course of the Romanian economic development. He didnt want the Romanian Principalities to become a European iron in which the foreign elements to find their hospitality to the natives detriment. He is also interested in the situation of the Jews living in Romania, but only from the economic point of view, without any reflections concerning their origin or religion. Their fitting in the Romanian economic process is one of Eminescus interests, and not their persecution on ethnic criteria. The unproductive fanatics of any origin are considered the real danger for the economic development of the Romanian State. The stingy Jewry came, mostly from Israel, succeeded quite soon to grow richer, not only due to their savings, but also through the ability and lenience in doing the most unlawful and forbidden handwork through which he continuously exploits without their knowledge the easy and unpredicting citizens(art.cit.) For sure Eminescu refers here to the different ways through which the accused shirked from the paying of the taxes towards the Romanian state, declaring themselves dutifully to their origin country, not to the one that welcomed with open arms. This unbearable situation is brought to attention to the Romanian Governors and of I. C. Bratianu - the Prime Minister of the time, who suggested following the French model a dour law concerning the foreigners rights in Romania a law which provided the right of expulsion of those who offended the national interests of the country. In Eminescus works this situation concerning the struggle for existence and supremacy of the individual, and the motivational aspiration finds its solution through the idea of harmonizing interests, idea which reoccurs frequently in his works. We retrieve within this conception the influence of J.J. Rousseau whom, in his work Social Contract pleaded for harmonizing the general will with the individual one.

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In his article The Austrian influence on the Romanians in the principates from the newspaper Convorbiri Literare Eminescu stated: The peoples history is a struggle between the states ideas and individualism. What is individualism? Each individual being is, to itself, the main thing, and the fellowman is secondary. Each individuals wills and aspirations are immeasurable, so that the main meaning of his life, of his heart is not the accomplishment of his will, its the will in itself. The saying states: everybody should perish, only Manea should live (Convorbiri Literare, x, No. 5, 1 august 1976). This individualism which is detrimental to progress needs to be diluted as the individual has the duty to harmonize his interests with the societys ones. Eminescu considers this harmony is not possible in Romania because the state is being ruled unilateral by the representatives of only one social class His reading of D.Ricardo is useful for putting into theory the way that intelligent as well as physical , productive work is diminished due to lack of useful work from the ruling class. Thus by the inactivity of these, by overworking the productive class, the economic progress is being slowed down. Weve seen that, in treating the economic phenomena, Eminescu starts from the incarnated Romanian, discovering what is determinative for the economic progress. In his article The Austrian influence on the Romanians in the principates he makes an incursion into the countrys history to present us the way that foreign capital from the western countries has suffocated though its aggressive entry the fable Romanian economy which was in an incipient state at the time. To maintain under her trusteeship the nations in the empire Austria had exerted a destructive economic influence upon the Romanian Principates (Convorbiri Literare, x, No.5, 1 august 1976). The functions of economic life have degenerated because under the influence of Austrian economy the Romanian bourgeois had built flourishing fortunes based on privileges. The lack of work in the equation of prosperity is though producing instability. The absence of the middle class leads to economical gaps which are filled by a foreign element- Jews. Its surprising that a young man of 26 years should make such a profound a realistic analysis. That he can express so clearly ideas in a field in which he is not a specialist. His statements in this article concerning the between the political independence and economical prosperity maintain their actuality even in our days. We should not forget that they have been made before the official proclamation of Romanian independence and thorough this we can bring about Eminescus visionary skills. We find some of the ideas in this article expressed metaphorically in his poem Emperor and Proletarian. But Eminescu doesnt limit to stating facts about the pathetic economical state, yet he proposes solutions like protecting and encouraging the positive classes, getting the economical independence, harmonizing interests. Mircea Eliade in his paper About Eminescu and Hasdeu considers Eminescu along with B.P.Hasdeu as a creator of a nationalist doctrine concerning Romanian national economy. We take into consideration the Eminescus powerful analysis and

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his subtle ability to chose among the european economical works those which support the idea that a strong national economy contributes a lot at strengthening the romanian nation. The theory of free-change sustained by A.Smith and D.Ricardo has been reinterpreted taking into consideration only the ideas that suited from his point of view the Romanian reality. Referring to states in which an industrial revolution already took place, these economic doctrines are not suitable entirely to the Romanian situation, Romanians being at the dawns of creating the unified modern romanian state. From the two philosophers he uses the theory of natural order concerning the productive work and relations concerning the land, but he rejects their free-change politics for he is convinced that a social, political, economical organizing is the result of the historical evolution of each nation and not of liberal laws Between production and trade we need to have a comparable rate as well as between the value of the commodity and the expenses made for transporting it. Its unquestionable that the base of his economical ideas is the critical analysis of the economical liberal doctrines, and perfectionists found in works belonging to A.Smith, D.Ricardo, H.Carey, Friedrich List, Karl Knies, John Stuart Mill, J.B. Say, Fr. Quesnay. Eminescu discovers that perfectionism as well as liberalism is not totally opposite theories, yet they combine in different aspects of the analysis of economical phenomena. More than this, he tries to give a definition of his own to the concept of national economy. In one of his writings who was published only in 1993 he wrote: nobody can deny that the movement of material fortunes has a very high influence on the man so that we can say that there isnt any moment in ones life that this influence is not seen. Starting from this big and unchallenged fact we come to the following theses: if the fact is truly so, if man is truly under its domination, the determination of fortunes, of gaining, of possessions, and there isnt any point in his life that he is freed from this power, then this power must contain within an organic life, which must be well perceived. Its just as certain that understanding this great fact and of its organism constitutes a science. This science of the world of fortunes is called national economy. It is the understanding raised to a science of the good life conditions, because these can be earned or lost by people because its liable to human power. This is why its called the science of fortunes. Its a new science though the fact that its referring to is as old as the world (Mihai Eminescu, Opere, no XV Bucharest Romanian Academy Publishing 1993) In her work Eminescu the economist, Alexandra Olivia Nedelcea said that: Eminescu is the creator of a Romanian political doctrine for creating a national state unitary and independent in which the economical component is essential (Alexandra Olivia Nedelcea, Eminescu the economist, Craiova and The Romanian Writing Foundation).

136 REFERENCES:

Koronka, A.

[1]. Clinescu G. - Opera lui Mihai Eminescu, vol.I, Bucureti, Editura pentru Literatur, 1967. [2]. Eliade M. - Despre Eminescu i Hasdeu, Iai, Editura Junimea, 1987. [3]. Eminescu M. - Opere, vol.IX-XIII, Bucureti, Editura Academiei, 1993. [4]. Nedelcea A.O. - Eminescu, economistul, Craiova, Fundaia Scrisul Romnesc, 2000.

Annals of the University of Petroani, Economics, 3 (2003), 101-104

101

THE ROMANIAN INSTITUTIONAL AND LEGISLATIVE ENVIRONMENT REGARDING EXTERNAL MIGRATION

DORINA MAGDA*
ABSTRACT: Preparations regarding the integration of our country in the E.U. made Romanian authorities focus their efforts on creating an institutional and legislative environment compatible with the community acquis while one of its actions aims at the settlement of the system of people and labour migration between Romania and members of the E.U. KEY WORDS: external migration, institutional environment, free circulation of people and labour, mobility, border, job, agreement.

During the 90s, the supervised and unsupervised - international labour migration from Romania towards other communitarian or extra communitarian countries has intensified. Generally, the characteristic of the Romanians behaviour consists in a low interest in external migration which, most often being judged in terms of the labour market, is associated with the lack of mobility, professional, structural and geographical rigidity. The prolonged economic crisis which determined a job crisis, plus an explosive development of higher education, as well as the opening and the fragility of the borders, were the main causes that led to temporary or definitive migrations from Romania to other countries, both for highly qualified labour power and for less qualified and specialized workers. Therefore we can consider our country to be an exporter not only of goods, services, and capital but also of human capital and competences. External migration, just like the internal one, is a form of spatial mobility of people and labour power, a complex process and phenomenon with various forms. Depending on a series of criteria way of recruiting, length of stay - external migration can take up various forms: - People and labour migration characterized by the period for which a person travels to a foreign country to study, known as the brain circulation, or to work temporarily. At the end of this period, these people come back to their homeland. Obviously, the motivation for this kind of migration is mainly economic and educational.
*

Assist. Prof. Ec. at the University of Petrosani, Romania

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Magda, D.

- A current migration consists in a quasi-continuous movement from the native country to one or many foreign countries. The motivation for such a migration is economic; the length of stay within the territories varies from one country to another and it is determined either by working conditions and earnings or by institutional factors. A part of the income is sent to and spent in the native country, this, being a great currency supply source for the native country; it therefore offers these people the necessary financial support to start up a business of their own. - The chain migration is determined by former emigrants and concerns either the members of their families, if they can offer them a decent living in the foreign country for a determined period or older people, acquaintances able and willing to work. - The trans-frontier migration is a form a commutation that implies travelling regularly across borders in order to carry on an activity in a foreign country, usually neighbouring countries because the distance is relatively short. - The brain drain consists in the fact that people leave their native country temporarily or they settle down for good in the foreign country because it can offer favourable conditions to follow a trade, to make a career, to take advantage of their competences and to reach perfection and higher salaries. An explanatory note must be made regarding the motives for Romanians leaving the country: before 1990 political and ethnic criteria were the basis of emigration, while nowadays economic and professional ones generated by the economic and job crisis, by the decline of industrial activities, the low income poverty and a bad quality education and poor health, have replaced these criteria. At present Romania has become a country in which external migration, both from and to the country, has reached an important weight; thus, the authorities are faced with a situation in which an institutional and legislative environment must be created immediately to supervise this phenomenon and to create the premises for matching the internal legislation to the one existing in the E.U., regarding people and labour free circulation and aiming at the Romanias adhesion to the E.U. Roughly speaking, the regulated legislative-institutional environment of external migration in Romania is elaborated. Along the years it has been improved, taking into account the communitarian legislation regarding the people and labour free circulation and the examples of some countries that were candidates not long ago. In the long run, many of the legal settlements have been completed and reissued (Governmental Decision no.417/1991 as to creating the Romanian Committee for Migration Problems; Governmental Decree no.102/2000 with respect to the status and polity of refugees in Romania; Law no.203/1999 on the subject of the working premises; Law no.123/2001 concerning the foreigners polity in Romania) in the attempt to cope with and respond to a wide range of external migration problems. The legislative and institutional environment of people and labour free circulation must be analysed from two points of view: the migration from other countries to Romania, with the intention of settling down within its borders or simply to use our country as a springboard for migrating to other countries, usually western countries; the free circulation of workers from Romania to western countries - the Schengen territories.

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As far as the rights to the people free circulation are concerned on condition that people observe several conditions that come within the frontier police - they have been decided upon starting with 1.01.2002 when the Romanians have earned the right to travel freely to the Schengen territories. Although Romanians can freely travel across borders, several rights associated with this free circulation are limited. They exceed the bounds of the communitarian settlements and are subject to the national settlements of each member of the E.U. Thus, art.59 of the Agreement of association between Romania and the E.U. says: nothing within the agreement can stop the members from implying the national laws and regulations regarding the crossing of their borders, residence, work, working conditions and the settling down of the foreigners, as well as the purveyance of services, on condition that these will not lead to nullity or they will not affect the benefits of the country. To shed light upon these stipulations, several rights like: the right to settle down in a country, member of the E.U., the right to work in a country, are being under control. In order to create conditions for the free transit of workers taking into account the fact that Romania has expressed its intention to be a member of the E.U.the governors have in view two perspectives: - To conclude bilateral agreements with the communitarian or extra-communitarian countries as regards the labour migration based on fields of activity, trades, qualifications and social security. This is a huge step forward, based on cooperation and mutuality towards a better monitoring of the transit from Romania to other countries, in order to transform, at least partially, a part of the uncontrolled external migration into a controlled one and moreover, watch over the working conditions, the living conditions and the social security of emigrant workers for different periods. - To create specialised institutions qualified in this field of migrations: the Labour Migration Office subordinated to the Ministry of Work and Social Solidarity, is a public institution with attributions concerning migration from two points of view: immigration and the temporary emigration of the Romanian citizens in order to work abroad and their protection (Law no.156/2000 Romania concludes agreements, conventions with similar authorities from other countries based on the following principles: equality and the application of the most favourable stipulations provided either by the Romanian legislation or by the international one- settlements through which they establish the minimum salary, the period of work and the resting time, the general working and safety conditions, the insurance against accidents, professional diseases and other risks. The diplomatic delegations and the consular office have the obligation to supervise the firms in keeping the bilateral agreements, while the Ministry of Work and Social Solidarity manages and supervises the labour exchange activity. Besides, there are also the frontier police, the Ministry of Home Affairs, the Ministry of Education and Research from which we can get information regarding the external migration phenomenon in Romania. It is considered that by creating an appropriate institutional and legislative environment, the number of emigrants who want to work abroad will increase. As this is a temporary transit with the possibility to return to the homeland, it is

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methodologically difficult to establish the dimensions of such a movement. It is estimated, without exaggerating, that this form of migration involves 100-150 thousands of people a year who work in countries belonging to the E.U. and Israel, U.S.A., Canada, Australia. Such a step would diminish the uncontrolled external migration phenomenon, which goes up to 400-600 thousands of people, most of them less trained and qualified. Another effect of an efficient institutional and legislative environment is a better protection of the Romanian workers abroad. Fig.1. Bilateral agreements between Romania and other countries regarding temporary external migration
Date of concluding the agreement Jul. 31, 1990 Agreement

The Convention with Federal Germany concerning detached workers and workers implied in carrying out certain projects May 12, 1992 The Convention with Germany concerning workers with contracts for a pre-established period of time Sep. 13, 1999 The Agreement between the Ministry of Work and Social Protection and the Federal Labour Office as to short time training and language learning courses Nov. 25, 1999 The Agreement with Switzerland regarding apprenticeship May 9, 2000 The Agreement with Hungary concerning seasonal workers Jul. 19, 2001 The Agreement with Portugal regarding contracts for limited periods Jul. 20, 2001 The Agreement with Luxemburg regarding the apprentice exchange Jan. 23, 2002 The Agreement with Spain concerning the balanced and organized flow of workers The source: the Ministry of Work and Social Protection (www.mmps.ro)

Without criticising the Romanian authorities regarding the labour migration to foreign countries, I think that efforts should be made to create more tempting jobs within our country for the native specialists and trained workers, and it is the result of their work that should be exported and not their grey matter.
REFERENCES: [1]. Oprescu G., Piaa muncii. Teorii. Politici. Tranziia n Romnia, Ed. Expert, Bucureti, 2001 [2]. Per S., Pavelescu F., imon I., Circulaia forei de munc n condiiile (pre)aderrii la Uniunea European. Deschideri. Restricii. Efecte, n Studii i cercetri economice, vol.34-35, Centrul de Informare i Documentare Economic, Bucureti, 2002 [3]. Per S., Vasile V., Negru R., Mazilescu P., Procese, fenomene caracteristice i tendine ale circulaiei forei de munc n Romnia, n Studii i cercetri economice, vol. 6-7, Centrul de Informare i Documentare Economic, Bucureti, 2003 [4]. Preda D., Ocuparea forei de munc i dezvoltarea durabil, Ed. Econ., Bucureti, 2002 [5]. Rboac Ghe., Piaa muncii i dezvoltarea durabil, Ed. Tribuna Econ., Bucureti, 2003

Annals of the University of Petroani, Economics, 3 (2003), 105-110

105

CONSIDERATIONS REGARDING SOME EXTERNAL INFLUENCES ON THE ROMANIAN ACCOUNTANCY REFORM

MARIANA MAN, EMILIA MIHIL, ALIN MONEA

ABSTRACT: The paper presents main aspects about external influences in Romanian accounting reform. Romanian accounting reform change old accounting system with a new one takes over from french. This passage to french accounting system makes in many stages beginning from 1991 until today. In the present the reform has a new values because we try to improve the system using International Accounting Standard.
KEY WORDS: accountancy law, accounting, accountancy reform, financial reports, financial statements, external politics

In Romania, after the year 1989, the main accountancy reform started in the year 1991 by the Accountancy Law nr. 82/1991, although the implementation of this law lasted longer (the Government Decision nr. 704/1993 was asking the Romanian enterprises to apply the law starting from the year 1994). As in other European countries, this reform changed the role of the accountancy and of the financial reports, from one, whichs main role was that the enterprises should offer financial statistics, to be used in setting some better budgets1, in one with a more complex set of objectives, which imply an offer of financial information for various groups of interest from the enterprises and for governors, with the purpose of estimating the taxes and formulating external politics. Our country, like other countries in transition, had to choose, deliberately, from the various models of accountancy and financial reports existing in Occidental Europe, and, generally, in the whole world. It is known that, despite the harmonization

Garrod, N., McLeay, S. Accounting in transition: The Implications of Political and Economic Reform in Central Europe, London, Rentledge, 1996

Prof., Ph. D at the University of Petrosani, Romania Assist. Prof at the University of Petrosni, Romania Assist. Prof at the University of Petrosni, Romania

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and accountancy standardization attempts, made by the European Union and by the International Accountancy Standards Bureau (I.A.S.B.), there are many settlements and accountancy practices in different countries of the world, a diversity that, in the last 30 years, generated a variety of accountancy classifications. According to the accountancys objectives and to the financial reports of the afferent enterprises, the countries can be separated in two large groups: a group that contains the Anglo-Saxon countries and Holland and a group that includes the majority of the continental European countries, and also Japan and Korea. The countries from each group are illustrating what we call dynamic accountancy and static accountancy2. Of course, in each group there are differences between countries, such is the case of some countries like France, Belgium, Germany and Italy, but the groups seem to be relatively stable, despite the international pressures to change. The problem that our country confronted was what model of accountancy should follow. Should it be followed an Anglo-Saxon accountancy model or a continental model3? If it would be adopted a European-continental model, then which continental country should offer the most useful characteristics for a country like Romania, with its own cultural and political characteristics and need for economical modernization?The answers to these questions were clearly presented in the details about the accountancy law nr. 82/1991 and the connected accountancy statements, which, among others, promulgated the Master Accountancy Plan4. Romania should have adopted a continental type accountancy, inspired especially from the French model. Romania was not the only country that followed such a model for the accountancy reform (The Czech Republic also inspired from the French model). Still, in the last period appeared a series of doubts, if that was a wise decision particularly due to the importance growth of the International Accountancy Standards (I.A.S.) at world-wide level and due to the fact that it was recognized that the capital marketswere dominated, much and much more, by the companies which are making their accountancy situations in concordance with the Anglo-Saxon accountancy model. It is difficult to appreciate how and why there were doubts concerning the justness of the choice made in Romania about the accountancy model. At this contributed many factors. Maybe the most evident was the recognition in growing measure of the fact that the French accountancy model was not well adapted to the information need of the capital markets. After the year 1990, the Romanian government started, with enthusiasm, the development of the National StockMarket, as a symbol of the market economy and as an attraction factor of the foreign investments. In addition, the recognition of the importance of American investments in Romania directed the attention to the Anglo-Saxon accountancy model, especially thru the actual or future privatization of the state enterprises. It is possible that it made a difference the

2 3

Richard, J., Les Comptabilites et leurs Practiques, Paris, Dalloz, 1996 Feleang, N., Ionacu, I., Financial accountancy, vol. I, Bucharest, 1993 4 Exchequer, Economical agents accountancy system, Bucharest, Economical Ed., 1993

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increased awareness of other accountancy systems in the Romanian accountancy community. The large international firms of accountancy services opened offices in Romania and made courses of international accountancy (compared accountancy systems) in the representative Romanian universities (especially ASE Bucharest). Of course, another factor was the increased importance of the I.S.A.B. works from the 90 years. This organism, with Anglo-Saxon accents, has over passed the European Union directives, as a force of the accountancys change and played a major influence on the result of the accord with the International Organization of Stock Market Commissions (IOSCO). No matter which were the exact reasons of the attitude change towards an accountancy reform in Romania, the accord between the External Affairs Ministry from Romania and the Great Britains Government from 1996, to have an accountancy team in Great Britain, financed by Know How Fund, regarding counseling, marked a significant change in the evolution of Romanian accountancy. As a follow-up of the discussions made with many organisms from Great Britain, ICAS chose to offer the specialty counseling. The result of the counseling and of the Romanian authorities deliberations was materialized in April 1999, in the form of the Order emitted by the Exchequer (403/1999), replaced by another one, with the same name, in February 2001 (Order nr. 94/2001). A translation in English of the Order made by the minister of finances nr. 403/1999 was published by the Know How Fund from Great Britain, in 1999. This orders name is Accountancy rules harmonized with the IVth Directive of the European Accountancy Community (EAC) and with the International Accountancy Standards. We can see that the international opening is clear. The accountancy law nr. 82/1991, republished, seems to be the pivot of the Romanian accountancy settlements, because these are applied by the large enterprises, together with other accountancy regulations grouped in four volumes. So, the 1st volume is represented, actually, by the order nr. 94/2001 and is concerning the conformitys insurance with the IVth European Directives stipulations and with the conceptual accountancy frame emitted by IASB, which is governing the form and the content of the corporations financial situations. The second volume contains the translation of the general frame of the settlement and presentation of the financial situations (also named the conceptual accountancy frame) of IASB. The third volume contains the International Accountancy Standards (IAS) and the fourth volume contains includes the professional guides. The companies which are concerned to apply the settlements, starting with the financial situations of the year 2000, are the companies rated in the stock market, the stand-alone regime and other national companies, and also enterprises which operate on the capital market (the states on the RASDAQ market). Until the year 2006, the settlements will be extended to all the enterprises considered large (defined in the terms of the IVth Directive). From the form, the content and the language of the Order can be seen several international influences, concerning the Romanian accountancy. These influences can

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be separated in four main categories. The first two influences are international and explicit: IASB and the CEEs IVth Directive; the other two influences are made by France and by the Great Britain. The IASBs influences and the CEEs IVth Directive influences Tab.1. The contents of the 1st chapter of the accountancy settlements harmonized with the CEEs IVth Directive and with the International Accountancy Standards (the financial ministers order nr. 94/2001).
Section 1 2 3 4 5 5.1 5.12 5.13 5.32 5.33 5.40 5.41 5.42 5.80 6 7 8 9 10 6.1 6.3 7.1 7.2 8.1 8.3 9.1 9.5 10.1 10.3 Articles 1.1 1.4 2.1 3.1 3.8 4.1 4.30 Content Enterprises accountancy Financial exercise Annual enterprises accountancy situations The form and the content of the enterprises accountancy situations Accountancy principles and rules Accountancy principles Accountancy treatments Alternative accountancy treatments Own capitals modifications Explicative notes and financial situations The approval and the signing of the enterprises financial situations The approval of profit distribution Administrators report Financial audit The approval and the deposit of the financial situations and of the enterprises annual report Publishing the enterprises annual report

The influence of the European Unions contributions can be easily remarked by analyzing the structure of the Order (table 1) in parallel with the IVth Directive. The financial situations nature (section 3) is followed by sections referring to the form and the content of these situations (section 4), accountancy principles and rules (section 5), explicative notes to the financial situations (section 5) and problems about the approval and the publication of the annual report (sections 6 10); this order is in a large measure the same as the one offered by the Directive. The explicit purpose of the harmonization process with the IVth Directive is, of course, the most important influence: the content of the order is correspondent with the Directive, with the exception of some points. For example, the balance sheet format is showing the relevant modalities of treatment for establishing and development expenses (when the settlements allow their capitalization), doubling the IVth Directive specification and this despite the fact that the Order allows such capitalizations, by accomplishing the conditions requested by the International Accountancy Standards (IAS).

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Maybe the most important amendment from the content of the Directive is the nature of the request to offer a trusty image. The second article from the Directive specifies the local accounts nature, mentioning that these accounts need to be settled according to the Directives rules and to offer a trusty image. If the application of the stipulations isnt enough to show a trusty image, additional information should be supplied. Finally, in exceptional cases, a Directives stipulation can be crossed, if its appliance doesnt lead to a trusty image. The Romanian settlement (Order nr. 94/2001) considerably extends these requests. First, in the achievement of a trusty image, the annual accounts include the treasury fluxes situation, and also the own capital modifications situation. Even more, the Order nr. 94/2001 mentions that the treasury fluxes situation is conceived according to one of the models stipulated by IAS 7 and at chapter III are presented two treasury table simplified schemes, settled by the direct method and respectively the indirect method. The fact that the accountancy appliers are asking that the treasury fluxes situation to be established in conformity with the international accountancy norm IAS 7, without making any other mentions, can be only an example of the IASBs influence (IAS 1 revised, paragraph 7). The second difference is referring to the fact that the Romanian enterprises were asked not only to establish these annual accounts according to the Accountancy Law nr. 82/1991 (republished) and with Order 94/2001, but also in concordance with the conceptual accountancy frame from volume II and with the International Accountancy Standards (IAS) from volume III. This fact implies the interesting hypothesis of a potential conflict between Law nr. 82/1991 and the settlements from 2001 (based on the Directives requests), on one side, and volumes II and III, on the other side (which contain the accountancy reference of IASB). Although the European accountancy Directive is considered in concordance with International Accountancy Standards (IAS), except for some evaluations, like the market value, is obvious that the device presented by the Conceptual accountancy frame emitted by IASB particularly, the definitions of the financial situations structures given by these, is very adequate (elaborated). Also the terminology used by ISAB isnt always compatible with the one used in the Directive. Thats why the Order is mentioning that if between the European accountancy Directive and the conceptual accountancy frame of IASB there is a conflict state, on the period of implementation of the accountancy systems development program, the enterprises have the possibility to choose the appliance of one of the two accountancy treaties, to ensure the presentation of a trusty image of that event. To ensure the concordance between the International Accountancy Standards included in chapter III and the Accountancy Law nr. 82/1991 proceeded to laws modification and completion5. In this way, these accountancy standards wont enter in contradiction with the stipulations (details) of the law, like it happens, for instance, in Great Britain.
5

See the Government of Romania Ordinance nr. 61/30.08.2001 for the modification and the completion of the Accountancy Law, nr. 82/1991, published in the Official Monitor of Romania, part I, nr. 531/31.08.2001.

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The IASBs influence is also seen from the Order; of course, an explicit objective of the Order is the harmonization of the Romanian accountancy with the International Accountancy Standards (IAS). Is obvious that this fact doesnt come in contradiction with the requests of the IVth Directive. Volumes II and III show this influence. The influence is also remarked in the case of some orders details. For example, article 5.22 treats the evaluation rules of the development expenses. This article stipulates that such expenses will be written in the balance sheet only in certain situations, described in volume III. This is a reference to the old Standard IAS 9, canceled in 1998. A similar influence can be remarked in the case of the maximum amortization period (of 20 years) of the (non)consolidated commercial fund. This period, noticed in art. 5.23 (b) from the Order, was, of course, the maximum period specified by IAS 22 (revised in 1993). IAS 22 from 1998 doesnt mention this maximum period. Maybe even more significant in this way is the fact that the Order stipulates the use of some accounting principles concerning the financial situations settlement, which have clearly at their origin more IAS 1 than the IVth Directive. Article 5.8 presents the non-compensation principle, which forbids the actives compensation with debts and the incomes with expenses a concept presented in IAS 1. Article 5.10 presents the significations threshold principle, a new idea in Romania, where theres a powerful connection between accountancy and the fiscal domain, because the annual accounts of the enterprises are serving for taxes evaluation, explicit accountancy information being requested. This principle is presented in paragraphs 29 32 of IAS 1. Finally, the Order contains the delicate notion of substance over form. The revision IAS 1, realized in 1997, transformed this principle into a key notion for establishing the financial situations relevance. The identification of the substance over form principle, distinctively in the Romanian rules (Order nr. 94/2001), seems to be in the IAS 1 non-revised spirit, by placing it next to the other principles. Like we suggested earlier, the inclusion of this principle in the Romanian accountancy rules introduces a potential contradiction with other component parts from this rules.
REFERENCES [1]. Roberts A., - The recent Romanian accounting reforms: case of cultural intrusion? University of Reading Discussion Papers in Accounting 2000 (adapted and republished in 2002) [2]. Accountancy rules harmonized with the IVth Directive of the European Accountancy Community and with the International Accountancy Standards, published in Official Monitor nr. 85/20.02.2001, approved by the order nr. 94 of the Public Finances Minister from 29.01.2001

Annals of the University of Petroani, Economics, 3 (2003), 111-116

111

CONSIDERATIONS ABOUT THE FUNDAMENT OF PRICES BY THEIR COMPARISON

EMILIA MIHIL*
ABSTRACT: The main condition for the insurance of a corresponding correlation on the calculations basis consists in the correct determination of the two levels of costs which are compared and which reflect, in a way, the rapport between the usefulness values of the compared products. So, there will be obtained enough reasons to appreciate the opportunity of the execution of the new product and its introduction on the market at the price proposed by correlation. KEY WORDS: prices, correlation, efficiency, costs, products, reference.

In the market economy, the cost, regarded as a price fundamental element, represents the dominant characteristic of indirect link, because the cost influences indirectly on the price formed by the market, thru the offer cost, in the price fundamented and proposed by the producer, for its negotiation with the buyers. From the demand-offer rapport, whose social dimensions are recognized thru the markets mechanism, each producers price can be smaller, equal or bigger than the price, in this way: c < p, situation met in the case where the cost is integrally covered by the price and profit is also ensured; c = p, specific to the situation in which the price entirely covers the costs and it isnt obtained any profit; c > p, situation specific in the case when the price isnt entirely covering the expenses and is generating loses; In the fundament and the establishing of prices, the following methods of prices correlation can be applied: - the correlation by the comparison of the value of products usefulness; - the correlation thru the comparison of costs or the calculations method;

Assist. Prof. at the University of Petrosani, Romania

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Mihil, E.

the correlation of the prices in the homogenous groups of products thru the standard, the calculations coefficient or the integration in the existent series of prices; - the method of the price aggregation for subassemblies, pieces, physical tools; The method of prices correlation thru the comparison of costs is the most frequently used in the fundament of prices and has as purpose the determination of the new products efficiency, based on the ante calculated production expenses differences, facing the considered product. The method should be used in parallel with the methods of comparison of the characteristics which determine the value of usefulness of the products. The main condition for the insurance of a corresponding correlation on the calculations basis consists in the correct determination of the two levels of costs which are compared and which reflect, in a way, the rapport between the usefulness values of the compared products. So, there will be obtained enough reasons to appreciate the opportunity of the execution of the new product and its introduction on the market at the price proposed by correlation. The comparison of the two products costs is based on the ante calculation established for the new product and the actualized calculation of the reference products price. In the situation in which the reference product isnt included in the fabrication plan for the current year, its costs must be actualized. The critical analysis and the actualization of the reference products costs are necessary to ensure a real comparison base of the new products cost. Parallel with the critical analysis and the actualization of the reference products prices are evaluated with anticipation the new products costs. This is realized based on some raw materials consume norms, materials, fuels, energy and their corresponding prices, based on some economical-financial normative for other expenses elements, such as: contributions for the social insurances and for the unemployed help, local taxes, stamp taxes, interests. For a long period of time, the production costs in Romania were grouped on calculation articles, to allow the delimitation of the direct expenses from the indirect expenses. After 1982 it was passed to their grouping and their evidencing also by their economical content, on basic elements, considering that this serves well as a rely point in adopting the operative measures to reduce the costs and to eliminate the causes which generate unfavorable deviations from their established level. In the present, there isnt a rule about the evidencing, following and reporting mode of costs, although from their level depends the level of the reported profit, of the profits tax for the state and even of price, in the conditions of the missing of the concurrence. From the costs evidencing mode point of view, the correlation operations have a certain specific. So, in the case of evidencing the costs on calculation articles, the correlation operations start by determining the indirect expenses for the new product, based on the same percent rates or product repartition keys of the indirect expenses used for the reference product. Next, there are determined the other elements of the

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new products price (profit, TAV, addition) still on the percent rates which are used in establishing these elements from the references price. In the case of the prices evidencing on primary elements, generally, the correlation is made starting from the total costs, using the profit percent, TAV and commercial adding, from the reference product, to establish the same price elements for the new product. After determining the two products costs, these are compared between them. The comparison of the complete costs of the two products (reference and new) represents a first factor of appreciation of the new products settlement in the general level of prices for the products from the group or the subgroup from which they will be part of. So, if the two costs are close as size, there are reasons to take the conclusion that the new product will find a suitable place among the similar products already existent in the economical circuit. When the complete cost of the new product presents considerable differences, more or less, than the reference product, it can be concluded that the reference wasnt correctly chosen and therefore it isnt the most indicated comparison element. In this situation, the correlations continuation is not useful, because the other elements from the prices structure, usually identical as a relative size, for the two products, the unbalance between the costs will be reflected also on the prices. Considering that the costs elements have been well fundament, it is necessarily imposed the choosing of a new product as a reference product. In the situation when the difference between the costs is too big, the correlation process can continue with determining the net income elements and, also, the prices for the new product. A first conclusion from the costs comparison is that the big differences between the costs will determine big differences between prices. Another conclusion from the costs comparison in the case of some big differences between these could be that the new product wasnt conceived in the most economical way. And, usually, this cost must be put in doubt. The references cost is a measure which reflects, more or less, the conditions of the production activity, depends on the way it was calculated and what was included in it. The level of the references product price is recognized and accepted by the market if the practiced price, verified by the request-offer rapport, ensures enhanced lucrativness. After determining the costs, it is passed to the phase of lucrativness of the reference product. In this case the profit is obtained as a difference between the price of the reference product and its actualized total cost; and the lucrativness rate represents the rapport between the profit and the total cost. So we will have the following relations:
Pr0 = Pp 0 CT0

(1)

Rr0 =

Pr0 100 CT0

(2)

114
where:

Mihil, E.
Pr0 reference products profit; Rr0 the lucrativnesss rate of the reference product; Pp0 reference products price; CT0 reference products total cost;

The profit for the new product is calculated by applying the lucrativness rate of the reference product at the ante-calculated costs of the new product, according to the relation:

Pr1 =
where:

CT1 Rr0 100

(3)

Pr1 the new products profit; Rr0 lucrativnesss rate of the reference product; CT1 the total cost of the new product. It must be noticed that it doesnt take place an undertaking and a mechanical transpose of the lucrativness rate from the reference price into the new products price, but there are analyzed the conditions in which the new product will be realized and its ponder in the total production, for its lucrativness to reflect these conditions. With the help of the ante-calculated cost and of the profit, it is established the proposal for the price of the new product, price which goes to the producer, according to the relation:
Pp1 = CT1 + Pr1

(4)

where: Pp1 the price of the new product; The relation (4) is identical with the next relation:

Pp1 = CT1 + Rr0 +

CT1 100

(5)

Starting from the relation (5) it can be easier calculated the stand-alone price with the help of a costs multiplier coefficient, according to the relation:

Pp1 = CT1 + Rr0

CT1 Rr 100 + Rr0 = CT1 1 + 0 = CT1 100 100 100

(6)

Considerations about the fundament of prices where:

115

1+

Rr0 - multiplying coefficient of costs; 100

In the situation in which the stand-alone price estimation is made based on the ante-calculated individual production costs, the dimensioning of the profit which must be included in price can be made according to the enterprises medium lucrativness. When the prices are established, an important role is played by mentioning the delivery condition, which means the place where the product is taken from the producer by the beneficial and of the way the product will be delivered. So, when the price proposal is made, the producer must choose also for one of the conditions de franco and packing, because these are determined by the selling expenses of the new product. For the offer price based on the costs to resist to the markets requests, and the producer to have the guarantee that, at the price accepted by the market for the new product, it will recover the costs and will realize a profit at the lucrativness level of the reference product, it would be good for him to make a supplementary calculation, for checking, starting backwards, from the markets prices towards costs. These calculations are important in the case of some products with real concurrence between producers. From this considerate, the markets price of the reference product should be influenced with a coefficient which reflects the rapport between the using value of the products (new and reference) and afterwards, from this deduced price, to deduce the profit, obtaining the maximal costs at which could be admitted the fabrication of the new product. With these maximal costs should be compared the ante-calculated costs and only if they are smaller or at most equal with the maximal costs can be considered an efficient renewing and favorable chances in the market concurrence fight. The correlation process will have very much the character of an analysis, which offers the producer the necessary conditions about the opportunity and the advantages of the new products execution, in the conditions of the lucrativness ensured, compared with the reference product. The offers price, the resulted stand-alone price, makes the object of the negotiations between the producers and the beneficiaries. The level at which the price will be fixed depends on the rapport between the demand and the offer of the product and of other similar products, existent on the market, on the position of the new product, compared to those already existent, under the performance aspect, on the negotiators arguments force, etc. In conclusion, what are specific to this correlation method are the comparisons and the costs analysis of the new product versus the actualized reference product, to justify these expenses in the products projecting phase, with the purpose of optimizing the options and of bringing the fabrication close to the real requirements of the market. The correlation based on costs is also linked with the enhancement of the products

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quality. The methods finalization by establishing the price implies the beneficiarys acceptance, referring to the resulted price level. The productions cost level is exclusively the producers problem. The establishment of the indirect linking characteristics between cost and price determines constant preoccupations for the producers, to optimize the cost, acting to reduce it, to ensure a profit as high as possible. The wrong treatment of costs priority versus price, in the case of the planned establishment of prices, leaded to a non-scientifically fundament, rigid, administrative for prices, which distanced them from their real base, generating valorical disproportions and materials in economy.
REFERENCES: [1]. Beju, V. Preuri, Editura Economic, Bucureti, 2000 [2]. Moteanu T., Floricel C. Preuri i concuren, Editura Didactic i Pedagogic, Bucureti, 1997

Annals of the University of Petroani, Economics, 3 (2003), 117-116

117

ON A RUINING MODEL IN A COMPETITIONAL MARKET PROBLEM

ILIE MITRAN, CTLIN MITRAN *

ABSTRACT: The purpose of this paper ist o present a ruining model who can be solved used the equalization principle and some basical results of the Markovs chains. KEY WORDS: equalization principle, decision process of first stage, the average duration of the game

1. The formulation of the problem and of some important results about the using of the equalization principle The equalization principle is an optimality criterion used in the theory of the decisions and which is specifical in the decisional situations of uncertainty. Let us consider a sequencial decision problem in which the deciders are formed a coalition in two coalitions C1 ,C 2 having the final state sets X 1 , X 2 which form a partition for X : X = X 1 X 2 , X 1 X 2 = We also consider the model of the following market phenomen:in their struggle for supremacy in taking hold of a certain commodity market, the deciders from C1 , intending to eliminate the deciders from C 2 which control the market, want in a first stage to take hold of at least one strategic point of the existing k in this market. Having one penetrated the commodity market, the deciders in C1 will try the complete elimination of the deciders in C 2 by ruining them. We interpret the decision process of first stage as a game made up of ksimultaneous periods. We assume that in this stage the capitals of the two coalitions

Assoc. Prof., Ph.D. at the University of Petrosani, Romania, Assist. Prof. at the University of Petrosani, Romania

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from A and B , each banking unit of a decider from C 2 can ruin m j monetary units of the A capital in the game j , j = 1,..., k . Let D1j , D2j be the set of the strategies of C1 and C 2 respectively, in the game
k 1 1 2 j , j = 1,..., k for any d1 = d1 , d12 ,..., d1k C D1j , d 2 = d 2 , d 2 ,..., d 2 C D2j . j =1 j =1

We shall have d 1j , d 2j 0, j = 1,..., k , We introduce the utility function u :

d
j =1

j 1

= A, d 2j = B .
j =1

CD
j =1

j 1

xD2j R,

k 1 1 2 u d1 , d12 ,..., d 1k , d 2 , d 2 ,..., d 2 = min m j d 2j d 1j ,0 . j =1

Let us calculate the guaranteed optimum strategy for C 2 (maxmin strategy) as well as the maxmin value of the noncooperative game between C1 and C 2 . We will use the result ([3]):
k k i i i V1 = max min min mi d 2 d1i ,0 = max min mi d 2 d1i = max min mi d 2 A d1 d1 d1 d2 d2 d2 i =1 i =1

i By introducing the partial utility function u i : D1 R, i i u i d 2 = mi d 2 A ~

( )

we shall have u i (0 ) = A = u1 (0) and hence it results (from equalization principle)

j that among the optimum strategy will be strategies of the form d 2 ,0,...,0 so that

V1 = u j d 2j
j 2

( )
1i k

m j d A = min mi d A . It will results directly that the guaranteed optimum

i 2

(where

j is

determinated

from

the

condition:

(simple) strategy for C 2 will be:

d 2j =

B mj
k

1 mj

i =1

On a ruining model in a competitional market problem

115

the maximum value beeing:

B ,0 . V1 = min k 1 m A i =1 i

For the determining of the guaranteed optimum for C1 (minmax strategy) as well as og the minmax value we shall first observe that the u efficiency function is k 1 2 concave in d 2 = d 2 , d 2 ,..., d 2 and so the V1 maxmin value for C 2 will be equal to

the value V of the game ([3],[4]): V = V1 . The minmax value is:

V2 = min min m i B A ,0 .
1i k

The minmax (mixed) strategy will be: d1j =

1 1 mj i =1 mi
k

, j = 1,..., k

as for any d 2

D
i =1

i 2

we have:

i k 1 k A mi d 2 i k 1 max A mi d 2 ,0 max k 1 i =1 i =1 mi mi mj j =1 m j j =1 B = min k ,0 = V1 1 A j =1 m j

B = max A k 1 ,0 = m j =1 j

Remark 1.1. As a result of the concavity of the u functional in relation to 1 2 k d 2 = d 2 , d 2 ,..., d 2 , the value of the game between the two coalitions will be equal

to V 2 and consequently a decision-making behavior for C 2 which is based on keeping decisions does not favor this coalition. It is very important for C 2 to obtain additional informations on the strategic behavior of C1 . Remark 1.2. The optimum solution of C1 consists in the concentration of the forces in a single game (in the j0 game in which the condition m j0 = min m j
1 j k

{ } is

realized), keeping the secret about the game in which it concentrates its forces. If C 2 has no information on C1 , it has to distribute its forces uniformly.

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Mitran, I.; Mitran, C.

2. The determining of the ruining probabilities and of the average duration of the game After the first stage, the remaining capital reserves beeing A 1 , B 1 N , the second stage, the ruining stage proper, takes place as a particular sequencial process:

X = {a, b}, a, b N , a + b = A1 + B1 ; X 0 = {A1 , B1 }; X = {A1 + B1 ,0} {0, A1 + B1 }.

n If x n X , x n = a1n , a 2 , we will have:

n n x n +1 = f n x n , d1n , d 2 = a1n +1 , a 2 +1

) (

where:

(a

n +1 1

n n n n n , a 2 +1 a1n + 1, a 2 1 , a1n 1, a 2 + 1 , d1n , d 2 D1n xD2

) {(

} (

Remark 2.1 The sequencial process described before consists on a series of null sum games, the loss of the game in the state x n by a coalition means its having to concede to the winning colaition a monetary unit aut of the available capital. At this stage ,there arises the problem of determining the mean duration of thje decision-making process as well as the probabilities of getting ruined for the two coalition if it is known that the probability of winning the game for the C1 coalition in the state x n is p = constant, n N . It results that a1n

( )

is a homogeneous Markov

chain with the state 0,1,2,..., C = A1 + B1 , and with the passing matrix:

1 0 0 ... 0 0 p ... M = 0 0 0 ... 0 0 0 ... The potential matrix R is given by:

0 p q 0 R = I 0 0 0 0

0 0 , q = 1 p q 0 p 0 0 1 0 0 0 0
0 0
1

the elements r (i, j ) of this matrix beeing:

0 0 0 ... 0 0 p 0 ... 0 q 0 0 ... 0 p ... 0

On a ruining model in a competitional market problem

115

p j p A1i 1 1, j i q q 1 , A i Ci ji p 1 p p p r(i, j) = (2p 1) 1 1 , j > i q q q q 2 j(C i), j i , j >i A i(C j), 1

The mean duration Dm of the decision-making process will be:

1 2

p=

1 2

p C p B1 q 1 q A 1 c 1 2 p 1 p C 1 Dm = r ( A, l ) = q l =1 A B , 1 1

,p p= 1 2

1 2

The ruining probability of the C1 coalition is given by PrC1 , where:

PrC1

p B1 1 1 q , p C 2 = p 1 q 1 1 A1 , p= C 2

and the runing probability of the C2 coalition will be: PrC2 = 1 PrC1 It is evidently that the ruining probabilities of the two deciders depends of the power of everyone of them( p, respectively q) and also of the financial availabilities A1 and B1 . If we know from the statistical dates that the ruining probability for C1 is Q then, using the Rolle string method, it results that:

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Mitran, I.; Mitran, C.

p < q
A1

B1 ( A1 + B1 )Q
A1

if the next condition take place:

Q (1 Q )
B1

B1 < A +B 1 1

A1 + B1

REFERENCES: [1]. Charnes, A., Cooper, W.W. - Management and Industrial Applications of Linear Programming, Vol.1, Willey, New York, 1961. [2]. Mitran, I. - Le critere de la probabilite maxime, Proc Int.Symp. Applications of Mathematics in System Theory, Brasov, Romania, pag.37-45, 1978; [3]. Mitran, I. - Co-coperative and partial co-operative decisional models, monographs, AMSE, France, 1990; [4]. Mitran, I. - Optimalite minmax, monographs, AMSE, France, 1992.

Annals of the University of Petroani, Economics, 3 (2003), 115-110

115

THE EXPERIENCE OF GERMANY REGARDING THE ECONOMIC REHABILITATION OF THE FORMER MINING AREAS
RARE MUNTEANU *
ABSTRACT: It is well known that Germany has a wide experience regarding the mining field. But as mining becomes more and more expansive, this industrial field is facing closure. This makes Germany to be in a position somehow similar to Romania. Of course, the specific conditions are different and the financial strength of Germany is higher than Romanias, but we consider that the German experience regarding the closure of mines and especially the economic reconversion is very useful to be studied by the Romanians; good ideas should be implemented in our economy, too. KEY WORDS: Ruhrkohle Aktiengesellschaft, new activities, old mines, technological park, environment

Ruhrkohle Aktiengesellschaft (R.A.G.) sustains the structural changes in the former mining areas by preparing and developing the surfaces. New, innovative companies, which provide stable jobs for the future, need a good infrastructure, offices and industrial buildings, attractive dwellings, facilities for entertainment and culture. In order to develop the area, RAG uses its experience and competence regarding the buildings. RAG has delegated its entire activityregarding the construction to RAG EVB Aktiengesellschaft, which also takes care of the services and commerce connected to these constructions. RAG IMMOBILIEN and EVB Aktiengesellschaft is dealing with 70.000 dwellings and 700 workshops. RAG EVB has about 4.200 partners and has invested 400 mil. DEM in 1998 in the mining areas. MGG, a branch of these companies, can give back to the economy about 400 ha of field which belonged to mining. 500 ha will be prepared for alternative economic use. The actions of RAG EBV do not aim only the surfaces, they also aim to prepare complete offers for services regarding the buildings and orientat to the

Assist. Prof. at the Universitatea din Petroani, Romania

118

Muntean, R.

requirements of the market. The experts in all the fields work together in order to achieve these objectives, also searching sources for funding the projects. An important point in developing the former mining areas is sustaining the reasons for their existence. Young, creative managers, having new ideas, new products and new experience will create a lot of the modern jobs so much needed in the Ruhr and Saar areas. In order to make the young managers to settle in these areas, they must be provided with dwellings, offices, industrial buildings, an adequate infrastructure and favourable lands. Montan-Grunstckgesellschaft (MGG) started an unusual project in Bottrop: a sport-center will be born, together with Alpin Center Ruhr, for mountain sports and entertainment. The main objective is a ski-slope, about 400m long and 50m wide. When it will be ready, it will provide 220 jobs. RAG is not dealing only with changing the former mining areas in aorder to create new jobs, but also with the improvement of the dwellings. The construction companies of RAG designed and built new buildings and renovated the old ones according to the tradition of the dwellings for the miners. The main objective is to create a friendly atmosphere, pozitive from social point of view, among the local inhabitants as well as an ecological and modern environment. While designing the buildings, RAG EBV emphasizes the correct combination between work and quality of life. This can be achieved by combining correctly trade, industry and dwellings. This concept became reality in the area of the former mine Auguste Victoria in Marl. The former industrial buildings are at the disposal of new industries. There is an industrial and trade center having a surface of 43000m2. In the nearby there are hostels for 87 people and 18 flats with garrages and parking places. In the dwelling park Auguste Victoria 84 flats have been built. In Aachen area, where minning is 800 years old, changing the destination of the former mining areas is taken into account. In 10 years 1300 jobs will be created and 265 out of the existing ones will be kept. In Glck Auf Haus, of Herzogenrath Kohlscheidt, face to face to the administrative building of E B V Aktiengesellschaft, there is a new center for trade and services. Ther is a center for furniture, more agencies and centers for sales, small bisines and consulting rooms. The building is 170m long and is placed in the nearby of the former Laurweg mine. Another example is the Laurweg mine. In the precincts of the Laurweg mine, the Ericsson company has developed its european laboratory for research and development. Less than 100m there is the technological park Herzogenrath, having a surface of 120.000m2 and a very modern architecture and infrastructure. In this technolgical center (second largest in Germany) thousands of jobs have been created, and so the young engineers who graduated the Technical Institute of Aachen (in the nearby) were able to create their own business. The former mining areas often have a good potential from the point of view of the logistics. They are placed in the center of the country (in Germani as well as in Romania), acces to roads, railways and sewerage. In Dortmund, Montan-

On a ruining model in a competitional market problem

115

Grundstcksgesellschgaft mbH, togeter with Fiege company, have developed a modern center for logistics on a surface of 24 ha in the Frst Hardenberg area. Near the distribution center of an international tyre producer, 14 ha logistics surface have been sold to a textile distributor and a bakery specialist. Following this succesfull pattern, 5 more logistics centers are planned in Ruhr. In the Werne mine, the concept of a handicraft center at low cost has been implemented. The former industrial building has been rented in lots at low cost, especially for the small handicraft business. Other handicraft and services parks have been created in Dortmund, at Minister Stein and in Hamm, Radbod. RAG EBV is managing, developing and offering to market mining surfaces that are no more necessary to the orriginal purpose. Thus, the surfaces are prepared according to their new destinations. In Saarland, this is done by SaarProjekt GmbH, a company bornout of Saarberg AG. In adition, SaarProjekt has another function: intermediary between Deutsche Steinkohle AG (DSK) as offerer of land, the community as buyier and the authorities of Saarland. Regional conferences are organized and problems connected to restructure are discussed between the representatives of Saarberg, DSK, land authority and community. In adition to the creation of new companies, RAG is working to restore the former mining surfaces to the nature and is dealing with structural changings in the area of Nordrhein Westfaln and Saarland. The guiding principle of Deutschen Steinkohle AG is environment and mining. As great surfaces are restored to the nature, new and attractive spaces for entertainment are offered to the population and nature gets back some of its orriginal look. In this way, a new type of co-existence between the industrial and the cultural landscape emerges, as we have in Kirchheller Heide and in Huenxer Wald in the north of Ruhr. In the spirit, Deutschen Steinkohle AG has integrated the sterile heaps in the natural lanscape. Also, artists have been called to change the look of the sterile heaps. An example is the Schurenbach sterile heap, in Essen: one can see now the creation of the artist Richard Serra, 15m high, as a sign of the new Ruhr. Another example is the 60m high steel work on the Beckstrasse sterile heap of Bottrop. This monument is not only a new orientation poit that can be seen from the distance, but also a sign of the structural change through which RAG is building its future. Restructuring begins at the top. This is why Ruhrkohle Aktiengesellschaft has started a programme for training and improving skills and new skills for the mining employees. The company is one of the greatest in the formation business in NordrheinWestfalen and Saarland. Besides, Ruhrkohle Aktiengesellschaft has developed new methods in order to provide its employees with stable jobs. Such concepts and services are developed by RAG BILDUNG GmbH.

118

Muntean, R.

As an example, RAG is sustaining in the year 2003 NRW-Landesinitiative "100 Days Working for Training" with 150 places for training alltogether 1.157 new trained persons by Ruhrkohle Aktiengesellschaft. From the beginning of the land initiative in 1996, RAG has creted almost 2.000 places for job training in the Ausbildungskonsens NRW.
REFERENCES: [1]. ***, www.rag.de [2]. ***, http://www.ragbildung.de [3]. Witcomb, A, Baxter, B. - Abandoned Coal Mine Lands in South Africa, in Mining Environmental Management, 2000, iulie, pag. 8

Annals of the University of Petroani, Economics, 3 (2003), 5-10

103

GENERAL METHODOLOGY OF AUDITING

MIRELA POPESCU, ALIN MONEA

ABSTRACT: Although audit work, especially control testing, is generally performed by an auditor, financial auditors with appropriate training, expertise, and supervision may undertake specific tasks in this area of the audit. This is especially appropriate during financial statement audits where the work of financial auditors and auditors must be closely coordinated. In this paper, the term auditor should generally be interpreted as either a financial or an other auditor. KEY WORDS: audit, financial statement audit, auditors, financial auditors, computer-related controls

The general methodology that should be used to assess computer-related controls involves evaluating general controls at the entity or installation level; general controls as they are applied to the application(s) being examined, such as a payroll system or a loan accounting system; and application controls, which are the controls over input, processing, and output of data associated with individual applications. General controls are the policies and procedures that apply to all or a large segment of an entitys information systems and help ensure their proper operation. Examples of primary objectives for general controls are to safeguard data, protect computer application programs, prevent system software from unauthorized access, and ensure continued computer operations in case of unexpected interruptions. The effectiveness of general controls is a significant factor in determining the effectiveness of application controls. Without effective general controls, application controls may be rendered ineffective by circumvention or modification. For example, edits designed to preclude users from entering unreasonably large dollar amounts in a payment processing system can be an effective application control.

Lecturer at the University of Petrosani, Romania Assist. Prof. at the University of Petrosani, Romania

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Popescu, M. Monea, A.

However, this control cannot be relied on if the general controls permit unauthorized program modifications that might allow some payments to be exempt from the edit. Application controls are directly related to individual computerized applications. They help ensure that transactions are valid, properly authorized, and completely and accurately processed and reported. Application controls include programmed control techniques, such as automated edits, and manual follow-up of computer-generated reports, such as reviews of reports identifying rejected or unusual items. Both general and application controls must be effective to help ensure the reliability, appropriate confidentiality, and availability of critical automated information. DETERMINING PROCEDURES THE NATURE AND EXTENT OF AUDIT

The nature and extent of audit procedures required to assess computer-related controls varies depending on the audit objectives and other factors. Factors to consider include the nature and complexity of the entitys information systems, the entitys control environment, and particular accounts and applications that are significant to the financial statements. The information systems auditor and financial auditor should work cooperatively to determine what review work is necessary. When performed as part of a financial statement audit, an assessment of computer-related controls is part of a comprehensive effort to evaluate both the controls over and reliability of reported financial data. The following pages provide an overview of the tasks involved in reviewing computer-related controls for a financial statement audit. REVIEWING COMPUTER-RELATED CONTROLS IN FINANCIAL STATEMENT AUDITS Financial statement audits are intended to play a central role in providing more reliable and useful financial information to decisionmakers and improving the adequacy of internal controls and underlying financial management systems. Computer-related controls are a significant factor in achieving these goals and in the auditors understanding of the entitys internal control structure. Computerrelated controls should be considered during all four phases of the audit: the planning phase, the internal control phase, the testing phase, and the reporting phase. The most evaluation of computer-related controls will take place in the planning and internal control phase, the results of which will affect the nature, timing, and extent of substantive testing in the testing phase. Audit activities pertaining to computer-related controls during each phase of a financial statement audit are discussed below.

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115

Planning Phase During the planning phase, the auditor gains an understanding of the entitys computer-related operations and controls and related risks. In view of these risks, the auditor tentatively concludes which controls are likely to be effective. If the controls are likely to be effective and if they are relevant to the audit objectives, the auditor should determine the nature and extent of the audit work needed to confirm his or her tentative conclusions. If the controls are not likely to be effective, the auditor should obtain a sufficient understanding of related control risks to (1) develop appropriate findings and related recommendations for corrective action and (2) determine the nature, timing, and extent of substantive testing that will be needed. Internal Control Phase During the internal control phase, auditors obtain detailed information on control policies, procedures, and objectives and perform tests of control activities. The objectives of these tests are to determine if controls are operating effectively. The auditor first tests entity- or installationwide general controls through a combination of procedures, which include observation, inquiry, and inspection. The auditor may also reperform a control being tested to determine if it was properly applied. If these controls are operating effectively, the auditor should then test and evaluate the effectiveness of general controls for the applications that are significant to the audit. If general controls are not operating effectively, the application-level controls are generally not tested. Without effective general controls, application controls may be rendered ineffective by circumvention or modification. In such cases, the auditor should develop appropriate findings and consider the nature and extent of risks, since these risks are likely to affect substantive tests. However, if an audit objective is to identify control weaknesses with an application where more employees may have the potential to take advantage of a weakness, an assessment of the application controls may be appropriate. Also, when weaknesses exist mainly in general control areas having a less significant impact on application-level controls and the financial statements, and general controls having a more significant impact are effective, such as access controls, testing of application controls may be warranted. If general controls are determined to be adequate for the relevant applications, the auditor then proceeds to test the application controls that the financial auditors, with assistance from information systems auditors, have identified as critical to the reliability of the data supporting the financial statements. These controls are generally designed to prevent, detect, and correct errors and irregularities as transactions flow through the financial information systems. The objectives of these controls are specific to the applications they support. However, they generally involve ensuring that data prepared for entry are complete, valid, and reliable;

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Popescu, M.; Monea, A.

data are converted to an automated form and entered into the application accurately, completely, and on time; data are processed by the application completely and on time, and in accordance with established requirements; and output is protected from unauthorized modification or damage and distributed in accordance with prescribed policies. The auditor evaluates and tests the effectiveness of application controls by observing the controls in operation, examining related documentation, discussing the controls with pertinent personnel, and reperforming the control being tested. Testing Phase The testing phase of a financial audit focuses primarily on substantive tests. These tests generally involve examining source documents that support transactions to determine if they were recorded, processed, and reported properly and completely. An auditor may assist financial auditors in identifying and selecting computerprocessed transactions for testing, possibly using computer audit software. However, such assistance is not detailed in this version of the manual. Reporting Phase During the reporting phase, the financial auditor draws conclusions and reports on the financial statements, managements assertions about internal controls, and compliance with laws and regulations. Regarding internal controls, the auditor expresses an opinion on managements assertions about whether the internal controls in effect at the end of the period are sufficient to meet the following control objectives, insofar as those objectives pertain to preventing or detecting losses, noncompliance, or misstatement that would be material in relation to the financial statements: Assets are safeguarded against loss from unauthorized acquisition, use, or disposition. Transactions are executed in accordance with budget authority and with laws and regulations tested by the auditor. Transactions are properly recorded, processed, and summarized to permit the preparation of financial statements and to maintain accountability for assets. The combined evaluations of the entitys internal controls form the basis of the auditors opinion on managements assertions on internal controls. The auditor develops an opinion by concluding as to the effectiveness of controls and comparing this conclusion with managements assertions. In evaluating the audit results and developing the opinion on managements assertions, the financial auditors and the IS auditor should work together so that computer-related control evaluation results are adequately considered and properly reported. In concluding on the effectiveness of controls, the auditor should determine if any weaknesses identified are significant enough to be reportable conditions and if any of these reportable conditions represent material weaknesses.

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The auditor may report weaknesses that do not meet the criteria for reportable conditions in a letter to management or orally to an appropriate level of the entity. The auditor may include suggestions for corrective action for these less significant weaknesses if enough is understood about their cause. audits is presented in Report. Regardless of where they are reported, computer-related control weaknesses should be described clearly in terms that are understandable to individuals who may have limited expertise regarding information systems issues. In this regard, the report should clearly define technical terms and avoid jargon and acronyms. The report should discuss each weakness in terms of the related criteria, the condition identified, the cause of the weakness, and the actual or potential impact on the entity and on those who rely on the entitys financial data. This information helps senior management understand the significance of the weakness and develop appropriate corrective actions. In many cases, auditors will have detailed information on control weaknesses that is too technical to be meaningful to most senior managers and other users of the audit report but may be valuable to the entitys technical staff in understanding the precise cause of the weaknesses and in developing corrective actions. The auditors generally should provide this information to the entitys technical staff in briefings. The substance of the weaknesses reported to technical staff should be the same as that reported to senior management.
Planning the Audit

Planning is key to a quality audit, with the computer-related portion a significant part of the overall process. To be effective, the IS auditor and financial auditor should work together and coordinate information during this effort. Planning allows the auditor and senior members of the audit team to determine effective and efficient methods for obtaining evidential matter needed to assess an entitys computer-related controls. The nature, extent, and timing of planning vary according to the entitys size and complexity and the auditors knowledge of the entitys operations. Although concentrated at the beginning of an audit, planning is an iterative process performed throughout the audit. This is because the results of preliminary assessments provide the basis for determining the extent and type of subsequent testing. If auditors obtain evidence that specific control procedures are ineffective, they may find it necessary to reevaluate their earlier conclusions and other planning decisions made based on those conclusions. During the planning phase, the auditor gains an understanding of the entitys operations and identifies the computerrelated operations that are significant to the audit, assesses inherent risk and control risk, makes a preliminary assessment on whether general controls are likely to be effective, and identifies the general controls that will be tested.

118

Popescu, M.; Monea, A.

The evaluation of computer-related controls should be planned in conjunction with other aspects of the audit.
REFERENCES [1]. ACCA - The Audit Framework International Stream, BPP Publishing, London, 1999 [2]. GAOS Office - Financial Statements Audit, GAO, Washington D.C., 1999 [3]. GAOS Office - Financial Audit Manual, GAO, Washington D.C., 2001

Annals of the University of Petroani, Economics, 3 (2003), 115-118

115

ROUTE AND CIRCUIT GENERATION IN A GRAPH WITH XGD&C

MIRCEA PREDA *
ABSTRACT: The great number of relations that arise in production process, in exchange and many other activities, set us the task of analyzing and studying the characteristics of the relations between partners, phenomena, processes or activities with a view to rendering the activity efficient. Modeling these relations leads to graph notion and automatically to studying and analyzing the fundamental elements in the graph: type, routes, circuits, the route and circuit length, etc. that eventually lead to the optimization problems. The analysis of graph characteristics, the working-out of binary matrices of routes existence of length k, of matrices with the number of routes of k length and the effective construction of routes and circuits is an arduous activity, which often presents theory from being into practice. The XGD&C application (Route and Circuit Generation) is an information product, realized in Management System of Relational Data Base (MSRDB) FoxPro 2.6, that enables the generation of fundamental matrices used in the graph theory, interactive visualization of results in a Data Base (DB) with a view to analyzing their characteristics. The calculations, which make a large part of the problems specific to the graph theory be put into practice more easily, are performed automatically by XGD&C. KEY WORDS: computing, graph, routes, circuits, binary matrix, Latin matrix

1. PROBLEM PRESENTATION Being given a large business unit which has in its structure more subunits with their own economical management, we write down with X={x1.x2,x3, xn} the set of these subunits. We mention that in their activity there occurs exchange relation which entail settling the equivalent value of the exchange relation. Because of lack of ready cash generated by existing financial difficulties, paying off these liabilities ready money is impossible, but at least a part of them can be resolved in a different way, namely : - direct compensation, where the relation is mutual;
*

Lecturer, Ph.D. at the University of Petrosani, Romania

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Preda, M.

finding out the exchange circuits of length greater than 2 and setting off the minimum value; In order to solve the point tow, all the information regarding the exchange between subunits is needed and it has to be tackled in a centralized manner. Nevertheless, the standard approach of the problem would generate big costs and efforts, which have to be resumed monthly. Although we set out from a concrete situation mentioned at beginning ( xi were the components of a large unit) for solving the problem at point two it is not absolutely necessary that the units involved should be subordinated to someone, yet among them should be relations alike that already mentioned. For this reason, we close to tackle the problem based on computing, using results of graph theory. 2. PROBLEM MODELING Let G = ( X , ) a graph in Konig and Berge sense, defined on X set by the binary relation, where: X={x1,x2,x3, , xn } is a finite set of elements called nodes or peaks. : XX V is a binary relation by which to each pair ( xi , xj ) is associated the number vij , that represent the value of relation between xi and xj which can mean (exchange value, distance, duration, quantity or speed between xi and xj). For the construction of G graph we take into account the fact that the information is found in practice under the form: xi node e.g. code/owners name; xj node e.g. Code/ owners name / suppliers name; relation value vij - e.g. exchange value; other information necessary for identification. Starting from this elementary information, which is found at the respective units under the form of lists, files or Data Base, the X set and relation between its elements are to be constructed so as to be able to apply the already known and verified graph theory. It can be noticed that the problem is amenable to an approach the angle of the general graph theory, but only after same activities of getting the information ready in keeping with its demands and those of computer processing. In order to generate routes and circuits of length k in the G graph certain steps have to be followed: 3. SOLUTION STEPS 1. initial preparations which are reduced to: the formation of X set and corresponding codification of nodes; establishing the dimension of relation n; building up the data base TABLE with structure in 5. 2. basic element generation

Route and circuit generation in a graph with XGD&C

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corresponding value matrix V; binary matrix of initial relations B; Latin matrix of generating peaks L; Latin matrix of the initial arcs L2 3. for routes of maximum requested length roads: matrix generated Dk of number of routes of length k is generated; the binary matrix Bk for routes and circuits of length k is generated; the Latin matrix Lk of routes and circuits of length k is generated; the ROUTE Data Bases with routes and circuits of length k with structure from 5 is generated. 4. listing the circuits of the desired length between 2..k and the values involved in the circuits including the circuit minimum value. As it can by noticed from the steps to follow, most operations are reduced to operations with normal, binary or Latin matrices, and the description of the notations used is given in the following paragraph; 4. THE DESCRIPTION OF NOTATIONS AND MAIN OPERATIONS 1. the exchange value matrix of the relation: V = { vij | vij the exchange value between xi and xj } 2. the binary matrix of the relation: B = { bij | bij = 1 if vij # 0 and bij = 0 if vij =0} 3. the matrix of route numbers of k length: Dk = Dk-1xB = { dij | dij = cik. bkj ;cik Dk-1} D1 = B 4. the binary matrix of routes of k length: Bk = binary transform of (Bk-1x B ) or Dk; Bk = { ij | ij = 1 if dij#0 , ij = 0 if dij = 0 } 5. the Latin matrix of generating peaks. We mention that the Latin matrix notation was introduced by A.Kaufman and J. Malgrange where elements are series of characters. L = { ij | ij = j if vij # 0 ; ij = if vij = 0 } 6. the Latin matrix of initial arcs: L2 = { lij | lij = i;j if vij # 0 ; lij = if vij = 0 } 7. the Latin matrix of routes and circuits of length k>2:

118

Preda, M. Lk = Lk-1 x L where, Lk = {sij | sij = uik*kj cu uik Lk-1 i kj L }

The operation * is not one of multiplication , but of concatenating series of characters which is defined bellow, and is the sequence delimiter which appears after each non-null concatenation operation, practically end of route. The notion of matrix multiplication is maintained because it observes the formal way of multiplication of line i by column j, but in keeping with those mentioned above. The peaks that have the same property P and which follow one another in the graph G order are said to form a route generating sequence. Let s1 , s2 the tow series of characters, that are having the property P: s1 = xi1,xi2,xi3,,xim s2 = xj1,xj2,xj3,,xjn we shall say that: s1*s2 = xi1,xi2,xi3,,xim,xj2,xj3,,xjn (3) (1) (2)

is a concatenate of s1 with s2 if xim=xj1 and if (3) sequence has the property P. If one of the above conditions is not fulfilled it is said that s1*s2 = , that is it is null. The fallowing properties are verified : si*= ; *si= ; *= ; (s1*s2)*s3 = s1*(s2*s3) - associative ness; (4)

In transposition the above in the algorithm we take into consideration the P properties which lie in : the sequences in which a peak is repeated (therefore the route is not elementary), will be considered null except the case when the first coincides with the last, therefore is an elementary circuit; if a circuit intervenes in the concatenation operation, it will generate a sequence that does no longer fulfill condition 1, therefore it will generate a null sequence. All properties (4) and (5) are included in a validation function of the elements which are to be concatenated. If the result of validation is true, the concatenation of the tow elements ia made, if it is not the result is null. In calculation process it is found that in the circuits generated, many of them are permutation of the same sequence and in this case they have to be eliminated, the operation being done in the listing stage.

Route and circuit generation in a graph with XGD&C 5. THE STRUCTURE OF THE DATA BASE USED

115

As it results from 3, the application at the entrance accepts the relation recorded in the TABEL data base from which are generated the elements descript in 4, the final result is kept in ROUTE data base, which is used in consulting stage. We can notice that the remainder of the calculations is made in the memory, which leads to at increase of the performance speed. The structure of the two data bases is: 1. TABEL data base of exchange values: internal code xi incident towards the exterior; the list { vij } with relation values j=1..n ; exterior incident total value. 2. ROUTES data base of generated routes, circuits: element type ( road/circuit); initial peak code; final peak code; route length; sequence of indices in the route; exchange value list; minimum value of route. 6. THE APPLICATION STRUCTURE The application is realized in FoxPro 2.6 and is composed of a main module that coordinates the whole process and it has three options: Route generation, Consulting, Finish. The first two options entail over 13 procedures and functions that have the task of carrying out those described in 3 and 4 and which are: Pr_gmv generates the value matrix V; Pr_gmb generates binary matrix B; Pr_lmat lists the given matrix B; Pr_pmat calculates C=A*B the algebraic multiplication of the matrix; Pr_gmdgenerates the initial arcs matrix, starting from B; Pr_gmdp generates matrix L of arcs generated from B; Pr_mdx generates Latin matrix of k order; Pr_wdrum writes the routes in Lk in ROUTES; Fv-drum validates sequences that are to be concatenated; Fc_tmat transfers matrix A in matrix B; Pr_glised the procedure generates the ordered list of circuit elements and it eliminates the multiple ones; Pr_l1drum realizes the consultation and the listing; Fc_lis the function that permits the generation of report R with the lodging of the result in the text file and the printer set up with the parameters in S.

118 7. EXAMPLE

Preda, M.

Here are the results obtained in an example of relation of 13 degree for a part of C.N.H.Petroani units. 1. The binary matrix of relation B
1 2 3 4 5 6 7 8 9 10 11 12 13 1 0 1 1 1 1 1 1 1 1 0 0 1 1 2 1 0 1 1 0 1 1 1 0 1 0 1 0 3 1 1 0 1 0 1 1 1 0 0 0 1 1 4 0 1 1 0 0 1 1 1 0 0 0 1 0 5 0 1 1 1 0 1 1 1 1 1 0 0 1 6 0 0 0 0 0 0 0 1 0 1 0 1 0 7 0 1 0 1 0 1 0 1 1 0 1 0 0 8 0 1 0 1 1 1 0 0 1 1 0 0 0 9 1 1 0 1 0 1 1 1 0 1 0 0 1 10 1 1 1 1 0 1 1 1 1 0 0 1 1 11 0 0 0 0 0 1 1 1 1 1 0 0 1 12 1 0 1 0 1 0 1 1 0 0 0 0 1 13 0 1 1 1 1 1 1 1 1 1 0 0 0

2. The generation result Route Length Circuits Routes 3 50 614 4 327 4294 5 2390 29800 3. The matrix with routes number D2
1 2 3 4 5 6 7 8 9 10 11 12 13 1 4 7 5 7 3 8 7 9 4 6 1 4 4 2 3 6 4 5 3 6 5 7 4 2 1 5 4 3 2 5 5 5 4 6 5 7 4 4 1 4 2 4 3 3 2 4 2 4 3 5 2 3 1 3 2 5 4 7 4 7 2 8 6 8 4 5 1 5 3 6 2 2 2 2 2 2 2 2 2 1 0 1 2 7 2 3 2 3 1 5 4 5 2 5 0 3 2 8 3 4 4 4 0 5 5 6 2 4 0 4 3 9 2 6 5 6 3 7 5 7 5 4 1 5 2 10 4 7 5 7 4 8 7 9 4 5 1 5 4 11 2 5 2 5 2 5 3 5 4 4 1 2 2 12 1 6 3 6 3 6 4 5 5 3 1 2 3 13 4 7 4 7 1 8 6 8 4 5 1 5 4

Route and circuit generation in a graph with XGD&C 4. The matrix of the routes number D3
1 2 3 4 5 6 7 8 9 10 11 12 13 1 26 49 35 49 21 57 45 60 34 36 7 37 27 2 21 37 28 38 19 44 37 48 25 31 5 26 22 3 22 38 26 38 15 44 36 47 25 29 5 27 24 4 13 26 20 25 13 30 25 32 19 19 3 19 16 5 25 43 33 43 20 51 42 56 29 33 6 35 25 6 8 17 12 17 7 19 16 20 11 12 2 11 10 7 15 26 19 26 12 29 23 32 19 18 4 20 15 8 18 31 22 31 16 35 28 38 21 20 5 24 17 9 25 39 28 39 16 46 39 51 24 31 5 30 25 10 26 49 36 49 22 57 46 61 34 37 7 36 28 11 17 29 22 29 11 35 29 37 19 24 3 23 17 12 19 33 24 33 11 40 33 43 20 29 4 25 18 13 25 43 33 43 21 51 42 56 29 33 6 35 24

115

5. The peak generating matrix L'

1 2 3 4 5 6 7 8 9 10 11 12 13 1 2 3 4 5 6 7 8 9 12 13 2 1 3 4 6 7 8 10 12 31 2 4 6 7 8 12 13 4 2 3 6 7 8 12 5 2 3 4 6 7 8 9 10 13 6 8 10 12 7 2 4 6 8 9 11 8 2 4 5 6 9 10 9 1 2 4 6 7 8 10 13 10 1 2 3 4 6 7 8 9 12 13 11 6 7 8 9 10 13 12 1 3 5 7 8 13 13 2 3 4 5 6 7 8 9 10

6. The Latin matrix of initial arcs L2

1 1 2 3 4 5 6 7 8 9 10 11 12 13 2 3 4 5 6 7 8 9 10 11 12 13 1, 2; 1, 3; 1, 4; 1, 5; 1, 6; 1, 7; 1, 8; 1, 9; 1,12; 1,13; 2, 1; 2, 3; 2, 4; 2, 6; 2, 7; 2, 8; 2,10; 2,12; 3, 1; 3, 2; 3, 4; 3, 6; 3, 7; 3, 8; 3,12; 3,13; 4, 2; 4, 3; 4, 6; 4, 7; 4, 8; 4,12; 5, 2; 5, 3; 5, 4; 5, 6; 5, 7; 5, 8; 5, 9; 5,10; 5,13; 6, 8; 6,10; 6,12; 7, 2; 7, 4; 7, 6; 7, 8; 7, 9; 7,11; 8, 2; 8, 4; 8, 5; 8, 6; 8, 9; 8,10; 9, 1; 9, 2; 9, 4; 9, 6; 9, 7; 9, 8; 9,10; 9,13; 10, 1;10, 2;10, 3;10, 4; 10, 6;10, 7;10, 8;10, 9; 10,12;10,13; 11, 6;11, 7;11, 8;11, 9;11,10; 11,13; 12, 1; 12, 3; 12, 5; 12, 7;12, 8; 12,13; 13, 2;13, 3;13, 4;13, 5;13, 6;13, 7;13, 8;13, 9;13,10;

118

Preda, M. 7. The compensation circuits list

for reported relations and sums on Date:27/08/2003 Nrc. Ci Cs Name P Sum of relation The initiator:E.M.Vulcan ;Circuits by l=4 *- - - - - - - - - - - - - - - - - - - * 1. 7 8 E.M.Vulcan 25604672 2. 8 9 E.M.Paroseni 1222565 3. 9 13 E.M.Lupeni 4403205 4. 13 7 E.M.Cimpu Lui Neag 41360000 1. 7 8 E.M.Vulcan 25604672 2. 8 10 E.M.Paroseni 7483647 3. 10 9 E.M.Barbateni 4223424 4. 9 7 E.M.Lupeni 25730000 1. 7 8 E.M.Vulcan 25604672 2. 8 10 E.M.Paroseni 7483647 3. 10 12 E.M.Barbateni 4320000 4. 12 7 E.M.Anina 35978000 1. 7 8 E.M.Vulcan 25604672 2. 8 10 E.M.Paroseni 7483647 3. 10 13 E.M.Barbateni 5464603 4. 13 7 E.M.Cimpu Lui Neag 41360000

8. CONCLUSIONS This application enables us to use more conveniently the applications that lead to graphs and optimization problems. From the above example, we can see what manual effort would have been necessary for making all the calculations involved accurately. Although the test was carried out for a relation of 20 degree and circuits of length 6 were generated, the results of a relation by 13 degree and circuits of length 4 were introduced in the paper for lack of space, and it has been found that the number of circuits and routes increase from one length to another by 9,5 times, which leads to the time and space necessary. The paper is useful for students and teaching staff, both in research and in teaching activity for results testing, and also in the economic activity for optimization and simplification.
REFERENCE: [1]. Knuth D. Fundamental algorithmas, E.T. Bucharest 1974 [2]. Ionescu T. Graphs, applications, E.D.P. Bucharest 1973 [3]. Documentation of FoxPro 2.6 produce

Annals of the University of Petroani, Economics, 3 (2003), 111-119

119

COAL - A SOLUTION FOR THE ENERGY OF THE NEAR FUTURE

MONICA RDULESCU, GRIGORE BUIA *
ABSTRACT: The crude oil prices and fluctuations during the oil crisis lead to a new evaluation of the energy sources. If taking into account the financial disasters due to the oil crisis, with acute effects in various field of the social life, besides accepting the idea of energy raw materials diversification, it is necessary to perform an objective evaluation of the existent reserves, in the context of the nowadays economic necessities. KEY WORDS: coal, technologies, production, consumption.

Introduction. Before the oil and natural gas were discovered and massively exploited, wood was the most used fuel, followed by coal at the beginning of the new industrial era, meaning the end of the last century. Coal was heavy and dirty and, once the gas and oil begun to be used, coals quality as domestic fuel decreased dramatically. Today, coal plays a major role in the energy production and metallurgical industry. High rank coal and oil as well, form in periods of time much longer than the consumption rate. From this point of view, coal can be regarded as a nonregenerable resource. Still, compared with oil, coal as resource will last longer in time. Moreover, oil prices and its fluctuations during the oil crisis lead to a new evaluation of the energy sources. Taking into account the financial disasters due to the oil crisis, with acute effects in various field of the social life, besides accepting the idea of energy raw materials diversification, it is necessary to perform an objective evaluation of the existent reserves, in the context of the nowadays economic necessities. The coal appears in more than 200 sedimentary basins all over the world and most conservatives estimations based on actual and future consumption rates state about 200 years until the reserves will be exhausted.
*

Lecturer, Ph.D, eng, at the University of Petrosani, Romania Professor, Ph.D, eng, at the University of Petrosani, Romania

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Rdulescu, M; Buia, G.

Coal appears all over the continents , including Antarctica, but 86% of the total resources and 56,5% of the technically recoverable resources are found in USA, Russia and China. Coal reserves are estimated more precisely than natural gas due to various reasons. First of all, coal is a solid, so it does not migrate. It is found in sedimentary rocks where it formed. It wont be looked for in volcanic or metamorphic rocks. It appears as individual layers, easier to localize than the oil and gas reserves. And, because coal it was formed by plants which does not exist earlier than 400 millions of years ago, coal is not to be found in older formations. World coal reserves are about 1040 tec (1 tec = 1 tone equivalent coal, calorific power 7000 kcal/kg or 29302 Mj/kg).There is, still, a significant difference between the physical coal quantities existent in the crust (geological resources) and the coal which can be extracted in favorable conditions at present( economically exploitable reserves). We can affirm that the Earth crust can still offer new elements regarding the coal reserves, including the areas difficult to access at present and the less studied tertiary formations. Nowadays, there is a continuous preoccupation regarding detailed information about coal genesis, petrology and classification, with direct repercussions in the exploitation process. Environmental impacts. The major inconvenient of coal use is represented by the devastating coal mining and burning environmental effects. These effects became evident since the XIX-th century and generated environmental protection actions. During the XX-th century, significant and multiple regulations were imposed regarding the coal mining and use but, in the same time, the coal remained a major energy source. With the economical growth of the human society, it is most essential to focus on the environmental effects created by coal extraction and use. For a society relying on the energy consumption, the environmental protection and management represent objective necessities, no matter the cost. This cost is represented by coal extraction and use by environmentally friendly means, compatible with the economy of the human society. Coal clean technologies. New coal technologies were implemented, aiming to mitigate the pollution produced by coal use and combustion. These technologies were designed to reduce the SO2, Nox and particulates emissions with 50% to 99%. Nevertheless, none of these technologies was able to reduce drastically the CO2 emission. Coal combustion in thermal centrals represents the cheapest method to obtain energy in most of the developing countries- where the environmental impact is overlooked most of the times. As a consequence, the coal clean technology, implemented in the industrialized countries, have to be implemented as well in the developing countries, where the atmospheric pollution due to coal combustion exceeds the admissible limits. Economic and politic considerations. Strict estimations state another 200 years of coal use at the present rates of use, based on the feasible deposits. The countries with significant coal reserves will be willing to get significant economical

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and political benefits from these reserves. Important amount of money and influence will be spent to maintain coal as fuel resource on the energy agenda. Once the environmental regulations will become more restrictive, the clean coal technologies will be implemented on a larger scale. The major problem still to be resolved is the CO2 emission. Further considerations. Although it is considered to be a dirty fuel (due to the SO2, CO2, NO2, ash emissions), coal represents an important, cheap and accessible energy source for the XXI century. The further trend of coal use supposes as well the compliance with the environmental regulations and efficiently energy production with clean technologies. Clean technologies will use more efficiently the coal production and consumption by combustion, able to mitigate the environmental pollution. Some of the clean technologies, as coal gasification, for example, are current in a demonstrative state and it is possible to become commercially feasible in a short time. The carbon dioxide problem and the global climate change could generate a reduced consumption of fossil fuels. In 1992, the International Conference regarding the reemplacement of coal thermal centrals was hold in Amsterdam. The discussions focused on the chemical processes which could be used by the thermal energy centrals in the future (Chester, in Cartledge, 1993) The most promising process refers to coal gasification in oxygen in order to obtain CO2 and H, followed by steam processes, to produce more H2 and CO2. By this way, the CO2 emission could be reduced with 88% and the energy price increase would be of only 25%. At present, the specialists study other processes able to separate the CO2 by H2 prior to combustion. For example: 1. CO2 adsorption into a solvent or chemical reactive 2. compression or refrigeration for cvondensation process 3. separation with diffusion membrane If none of these processes will be feasible, than an alternative source of energy able to reemplace the coal use will have to be found- a very difficult challenge for the future. If these processes will be used on a large scale, practically applied, the coal production will focus on the petrochemical industry. World coal production. Coal is, by far, the most abundant fossil fuel, appearing on more than 100 locations around the globe. The total world reserves estimated in 2001 shown 1040 tec, economically accessible with the present mining technologies. Half of it is high rank coal (anthracite and bituminous coal). USA and Russia posses 23% of the world reserves, China 11% and in Europe 10%. Other countries with significant reserves are Australia, India, Germany, South Africa and Poland. As stated in 1996, the world coal reserves will last for another 225 years. Anyway, it is most probable for other feasible reserves to be discovered in the future. In the meantime, new and advanced technologies will make the actual nonfeasable economically deposits feasible in the future.

118
1996 tons 3 861 292 618 881 212 701 4 742 505 319

Rdulescu, M; Buia, G. Tab.1. World coal production between 1996-2000

1997 tons 3 864 584 626 888 111 956 4 752 696 582 1998 Tons 3 833 906 558 862 739 681 4 696 646 239 1999 tons 3 620 370 181 855 798 425 4 476 168 606 2000 tons 3 519 900 135 859 784 254 4 379 684 389

Mineral Superior coal Lignite Total

Tab.2. World hierarquy of main countries producing high coal in 1999-2000

Position in 2000 1 2 3 4 5 6 7 8 9 10 28 Position in 1999 ( 2) ( 1) ( 5) ( 3) ( 4) ( 6) ( 7) ( 8) (11) (12) (28) Country SUA China South Africa India Australia Russia Poland Ukraine Indonesia Kazakhstan Romania Production in 2000 (tone) 975 700 000 880 000 000 292 400 000 280 000 000 244 000 000 178 000 000 103 172 000 81 050 000 76 465 000 72 429 500 3 037 344 Percents 27,72 25,00 8,31 7,95 6,93 5,06 2,93 2,30 2,17 2,06 0.09

Tab.3. World hierarquy of main countries producing lignite in 1999-2000

Position in 2000 1 2 3 4 5 6 7 8 9 10 11 REFERENCES: [1]. World-Mining-Data 2002 Volume 17, Wien 2002, Federal Ministry for Economy and Labour of the Republic of Austria. Position in 1999 ( 1) ( 2) ( 4) ( 5) ( 7) ( 3) ( 6) (10) ( 8) ( 9) (13) Country Germany Russia Australia Greece SUA Turkey Poland Czech Republic Yugoslavia China Romania Production in 2000 (tone) 167 691 000 80 000 000 64 960 000 64 026 457 62 000 000 61 314 974 59 460 000 46 280 000 46 000 000 40 000 000 26 043 100 Percents 19,50 9,30 7,56 7,45 7,21 7,13 6,92 5,38 5,35 4,65 3.03

Annals of the University of Petroani, Economics, 3 (2003), 111-111

103

TENDENCIES IN THE EVOLUTION OF THE EXPENSE AND INCOME STRUCTURE REGARDING THE LOCAL BUDGETS
ILIE RSCOLEAN *6
ABSTRACT: In the democratic states, the local administration is based on the principles of decentralisation and local autonomy relying on adequate legislation and mechanisms regarding the local public finances. KEY WORDS: local budgets, administration, the local autonomy, principles, incomes

The local communities represent human collectivities, their territory being bordered administratively, and their public authorities differing from the state ones. In the democratic states, the local administration is based on the principles of decentralisation and local autonomy relying on adequate legislation and mechanisms regarding the local public finances. The general problems of the local autonomy for the European states are the subject of the European Charter of Local Autonomy. Written by the Council of Europe on the basis of a project proposed by the Permanent Conference of the European Local and Regional Authorities, the European Charter of Local Autonomy was open to approval according to the agreement signed by member states in October 1985 and it contains general principles like: - the financial resources of the local communities must be proportional to the responsibilities established by the Constitution or law; - at least some of the local communities financial resources must come from local taxation at a level established by the local authorities according the law; - the resources which are a part of the financial system belonging to the local communities must be sufficiently varied and dynamic to allow as much as possible the follow up of the real evolution of the exercise costs of their own competence;
*

Assoc. Prof., Ph..D. at the University of Petrosani, Romania

118 -

Rscolean, I.

to the purpose of financing their own investment objectives, according to the law, the local communities must have access to the capital market. Considering the territorial and demographic differences of each country, at present there have been established a big variety of systems depending on many factors: - the status of the local collectivities; - the number of local public administration levels; - the distribution of responsibilities; - the local finances administration. In Europe there are three major patterns which influenced the administrative organization of the European states: - the French pattern; - the German pattern; - the British pattern. From the administrative law point of view, the systems of local organization can be classified according to: - complete autonomy; - limited autonomy; - trusteeship. Concerning the formation of the local income, there are also three possibilities: - the constitution of own income necessary for expense covering, by exercising the right of collecting the tax; - completing own income with deducted amounts from some of the revenues from the state budget; - complete financing from the central budget. The modern judicial regime of the local budgets in our country is acknowledged through legal provisions mentioned in the law of local public administration no. 215/ 2001, as well as in the law regarding local public finance no. 189/ 1998 which will be replaced starting with the year 2004 with the Urgency Government Ordinance no. 45/ 2003. The local public administration law declares the local autonomy as a principle of public administration in the administrative territorial units, also declaring at the same time the competence of local council boards to adopt the local budgets as well as local tax and special tax, on a limited period of time, according to the law. In Romania every commune, city, municipality, sector of Bucharest, county and also Bucharest will establish their budget under the condition of autonomy. Between the budgets of the local council boards and the budgets of the county council boards there is no subordination. The local budget is a document where the income and expenses of the administrative-territorial units are predicted and approved every year. The projects for local budgets are elaborated according to the projects of the local public administration as well as the ones made by local subordinate institutions and public services. The local council boards will approve the projects for local

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budgets, and their execution is insured by the executive power, the mayors being principal credits ordinators. For acknowledging the budgetary revenues and expenses, they are classified unitary and mandatory according to their fundamental similarities. The revenue and expenses are also presented in homogeneous categories with the purpose of pointing out their nature, composition and effects. Thus, local public incomes and expenses are classified according to the public finance indicators, classification made by the Ministry of Public Finance. The incomes are structured by chapters and sections, and the expenses are structured by parts, chapters, sections, titles, articles and also alignments and paragraphs, is needed. The incomes of the local budgets are made out of: - own income formed from taxes and dues, contributions, other incomes and shares deducted from the income tax; - deducted amounts from some of the state budget revenues; - subsidies received from the state budget and the other budgets; - donations and subsidies. Also in the income structure of the local budgets there can be found revenues from contracted loans or reimbursement of these loans. The local budget expenses are classified as the following: - general public services; - social-cultural expenses; - services and public development, tenements, environment and water; - economic activities; - other activities. At present, the income and expense structure of a representative local budget for municipalities with approximately 50.000 inhabitants and an unemployment rate exceeding the countrys average is presented as the following: - own income of 50,0% out of the total income, and as part of these, the deducted rate from the income tax is 34,9%; taxes and dues from the population are only 4,6%; and taxes and dues from legal persons are 11,0%; - the deducted amounts from some revenues of state budget represent 46,7% from total income, but the most important part are the deducted amounts from the added value tax (for personnel expenses regarding the pre-university education), which are 30,4% from the total revenues. Though the budgetary revenues, especially those from taxes and dues, loose their personification at the moment of their cashing. There has to be mentioned also that, according to the laws (Urgency Government Ordinance no.45/ 2003 regarding the local public finances), a part of the added value tax and the indirect tax owed to the state have a special destination. The taxation from the state budget also includes, in big amounts, the following revenues: - amounts deducted from the income tax for balancing the local budgets (which are also used for covering a part of the expenses regarding the guaranteed

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minimum income granted to the persons with low income), representing approximately 10,3% from the total revenues of the analysed budget; - amounts granted by the county council board for balancing the local budgets (1,2%). The subsidies received from the state budget have the destination of developing the power system (1,8%), and the subsidies received from other budgets have the destination of financing the programs for temporary occupation of the labour market. The expense structure of the local budget is: - expenses regarding the executive authorities (town halls own expenses) are approximately 7,9% from the total expenses, including: personnel expenses, material expenses and services, capital expenses; - the bigger part of the social-cultural expenses are the expenses for the educational system (36,4%). The social-cultural expenses also include social assistance, an expense percentage of 13,5% for covering: welfare, canteen and personal assistants for handicap people; - expenses for services and public development are an important percentage of the budget, 39,1%, and they include: maintaining and repairing the streets, public illumination, networks, stations and thermal units, introducing natural gas. The authorities from the local public administrations are facing certain problems with covering some expenses of local public interest, the main cause being not collecting the expected incomes, to this purpose normative acts have been approved so the local authorities must cover the various expenses from the local budgets, especially for social protection like: - a part of the thermal power expenses; - paying the personal assistants for handicap people; - welfare; - a part of the water expenses (for the towns in Jiu Valley); - paying the blood donors; - maintenance and repairing expenses for the schools. Although a part of these expenses are covered with the deducted amounts from the certain revenues from the state budget, the contribution from the local budget is considerably large and often to the detriment of the current and normal expenses of local interest.
REFERENCES: [1]. Moteanu T. - Budget and Public Treasury, Tribuna Economic Publishing House, Bucharest, 2002 [2]. Rscolean I - Financial Administration in the Public Institutions, Universitas Publishing House, 2000 [3]. *** - Urgency Government Ordinance regarding the local public finances, published in the Official Gazette no. 431/ 2003.

Annals of the University of Petroani, Economics, 3 (2003), 115-111

111

OPTIMALE FAKTORENKOMBINATIONEN IN PRODUKTIONSSYSTEMEN DER BERGBAUINDUSTRIE

MANUEL-VIOREL SEMEN *
ABSTRACT: The theme of orientating the process organization of the mining industry towards an as complete as possible optimization by means of investigating the efficiency of its combination of factors is one of capital importance for the theory, the praxis and the future of the mining economics. The present paper tries first of all to clarify the list and the content of the production factors involved in the mining processes; it attempts then to name the most important possible criteria for estimating to which extent a combination of factors is actually optimal; finally, it makes a series of basic statements on the history and evolution of the combinations of factors in the mining industry on its way towards optimality. KEY WORDS: mining, optimal, criteria production, process, factors, function, combinations,

1. PRODUKTIONSFAKTOREN DER BERGBAUPROZESSE Die Bergbauproduktion reprsentiert eine besondere Art der industriellen Produktion. Obwohl alle grundstzlichen Behauptungen der Produktionstheorie daran angewandt werden knnen, und obwohl der Prozess der Bergbauproduktion die Einstze aller von dieser Theorie anerkannten Produktionsfaktoren kombiniert, gibt es immer noch Unterschiede bezglich der Art und Menge, wo deren Einsatz vorkommt; das auch ohne die Existenz bestimmter wissenschaftlichen Quellen zu erwhnen, die auch die Teilnahme eines einzigartigen Produktionsfaktors erkennen, das nirgendwo anders in der Welt der industriellen Produktion zu finden ist. Zahlreiche Autoren, die sich mit diesem Thema befasst haben, empfehlen verschiedene Formen und Mglichkeiten fr eine Gliederung dieser Produktionsfaktoren. Edmund Heinen z. B. betrachtet auf einer Seite die repetitiven Produktionsfaktoren (Verbrauchsstoffe, Brennstoffe, Energie) Faktoren, die durch eine materielle Teilnahme in der Struktur des Endproduktes charakterisiert werden, die Wissenschaftlicher Mitarbeiter an der Universitt Petroani (semen_m2000@yahoo.com)
*

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in groem Ausma teilbar sind, und die wegen ihres schnellen Verbrauchs whrend des Produktionsprozesses relativ bald erneuert werden sollen; und auf der anderen Seite die potentialen Produktionsfaktoren (Maschinen, maschinelle Einrichtungen, Grubenbaue), die schwer- oder gar unteilbar sind, die dem Produktionsprozesses fr eine lngere Zeitperiode zur Verfgung stehen, und die ein greres Nutzungspotential verkrpern, das nur infolge einer systematischen und wiederholten Verwendung konsumiert werden kann. Erich Gutenberg schlgt eine alternative Gliederung der typischen Faktoren der Bergbauproduktion vor, und zwar, in elementare und dispozitive Produktionsfaktoren. Whrend die elementaren Produktionsfaktoren einen relativ leicht erkennbaren und messbaren Beitrag an dem Produktionsprozess leisten, ist der Beitrag der potentialen Produktionsfaktoren eher qualitativ, aber mit einer quantitativen Wiederspiegelung in dem Output oder Endprodukt. Es ist zum Beispiel mglich, fr zwei identischen Unternehmen, mit gleichen Einsatzmengen der elementaren Produktionsfaktoren, sehr unterschiedliche Ergebnisse nur durch den unterschiedlichen Einsatz der potentialen Produktionsfaktoren (Fhrung, Planung und Organisation des Produktionsprozesses) zu erzielen. Die weiteren Betrachtungen werden der von Gutenberg empfohlenen Gliederung folgen. 1.1. Der Produktionsfaktor Arbeit Der Mensch und seine Fhigkeit, Arbeit zu leisten, stellen den wichtigsten Faktor des Produktionsprozesses dar. Diese Realitt hat sich auch gegenwrtig nicht gendert, die technologische Entwicklung der Gesellschaft erfordert aber die Anerkennung der neuen Rolle und der wachsenden Bedeutung der menschlichen Arbeit und Leistung in der industriellen Realitt. Die menschliche Leistung stellt einen nicht leicht zu definierenden Produktionsfaktor dar, deren Kombinierung mit den anderen Produktionsfaktoren (Lagersttte, Technologie, Organisation) durch ernsthafte Probleme sich erschweren lassen drfte. Die menschliche Arbeit selbst reprsentiert einen komplexeren Bereich von Zusammenhngen, deren Studium eine systematische Betrachtung erfordert. Aus dem physischen Gesichtspunkt kann Arbeit als die erforderliche Leistung definiert werden, um eine bestimmte Masse in eine bestimmte Richtung zu bewegen. Wird diese Leistung in eine bestimmte Zeitperiode eingesetzt, so wird sie zur Produktivitt. Im Rahmen einer betriebswirtschaftlichen Vorgehensweise, ist Arbeit die konjugierte, bewute und geplannte Zusammenwirkung der Leistungen von Menschen, Technologie und Organisation, um ein bestimmtes Ergebnis, kontinuierlich oder stufenweise, zu erzielen. Anders ausgedrckt, kann der Begriff Arbeit mit dem Einsatz der physischen und psychischen Fhigkeiten des Menschen in Richtung eines bestimmten industriellen Ziels in Zusammenhang gebracht werden.

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1.2. Der Produktionsfaktor Kapital Eine richtige Betrachtung dieses elementaren Faktors stellt von Anfang an begriffiche Probleme mit Bezug auf seinen Inhalt. Zahlreiche Fachbcher erwhnen die getrennten Produktionsfaktoren Betriebsmittel und Energie, als Einflugren auf die Menge, Qualitt und Kosten der Produktion. Andere Autoren, wie E. Gutenberg, betrachten nicht die Energie als unabhngigen Faktor oder als Teilnehmer im Rahmen des elementaren Faktors Kapital; sie konzentrieren aber ihre Aufmerksamkeit auf eine besondere Betrachtung der Komponente Verbrauchsstoffe als Bestandteil dieses elementaren Faktors. Die erste Betrachtung erscheint dennoch als besser angepat zur bergbaulichen Realitt: die Mechanisierung und Automatisierung der Abbauprozesse hat in den letzteren Jahrzehnten auch ein explosives Wachstum der Energieverbruche und deren Bedeutung verursacht, durch eine enge Kupplung zwischen den Komponenten Betriebsmittel und Energie innerhalb des Produktionsfaktors Kapital. 1.3. Der Produktionsfaktor Lagersttte Das Bergbauunternehmen ist ein kohrentes Mensch-Maschine-Natur System; innerhalb dieses Systems erscheinen spezifische Wechselwirkungen, so dass die menschliche Arbeit, kombiniert mit und verstrkt durch die maschinellen Leistungen und die dazugehrende Logistik, die notwendigen Elemente (Rohstoffe) der industriellen Entwicklung aus der Natur herausreien. Um diese mineralischen Rohstoffe aus der Natur zu bekommen, drei sind die Hauptaufgaben des Bergbaus: geologische Erkundung der Lagersttten in der Erdkruste, Gewinnung des Rohgutes und Aufbereitung des Rohgutes in eine vermarktbare Form. Die Lagersttte und ihr Inhalt bernehmen im betriebswirtschaftlichen Sinn innerhalb der Bergbauunternehmen die Rolle der Roh- und Verbrauchsstoffe aus der Fertigungsindustrie, die einen direkten Beitrag an der Fertigung des Ensproduktes leisten. Diese Rohstoffe sollen aber nicht mit den Verbrauchsstoffen verwechselt werden, die als Teilnehmer des Abbaubetriebs und Bestandteile des Produktionsfaktors Betriebsmittel funktionieren. Die betriebswirtschaftliche Betrachtung des Produktionsfaktors Lagersttte soll unbedingt die zwei Seiten seiner inhaltlichen Substanz hervorheben: erstens, als Input des Gewinnungsprozesses, und zweitens, als Output, Endprodukt, Trger von Kosten und Erlse. 2. KRITERIEN DER PRODUKTIONSFAKTOREN OPTIMALEN KOMBINATION VON

Um die optimale Kombination von Produktionsfaktoren nachforschen zu knnen, soll zunchst eine einfache Frage gestellt und beantwortet werden: welches sollten die Kriterien (Planungsziele oder Zielfunktionen der Modellierung) fr die Bewertung der optimalen Kombination der Faktoren von Bergbauproduktion sein?

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Einige erste Hinweise darauf knnten durch das Studium der Gestaltung der gesamten und funktionalen Planungsziele der Industrieorganisation (Tabelle 1) gefunden werden:
Tab.1. Typische Gestaltung der gesamten und funktionalen Planungsziele der Industrieorganisation Organisationsmanagement Allgemeine Ziele der gesamten Organisation: Maximalgewinn Minimale Gesamtkosten Eine gute Liquiditt der Organisation Produktion/Logistik Absatz Funktionale Ziele: Funktionale Ziele: Niedrige Produktionskosten Groe Umstze Groe Kapazittsausnutzung Groe Marktanteile Niedrige Zahl der Groe Auswahl von Organisationsalternativen Produkte Maximale Produktion Kurze Lieferungsfristen Groe Deckungsbeitrge Versorgung Finanzen Funktionale Ziele: Funktionale Ziele: Minimale Versorgungskosten Hohe Liquiditt Rechtzeitige Versorgung mit Niedriges Finanzrisiko notwendigen Verbrauchsstoffen Mglichst kurzfristige Freiheit der Auswahl von und niedrige Kapitalanlage Lieferanten

Die obendargestellten Ziele der Industrieorganisation knnen weiter entsprechend der Merkmale des Produktionssystems und deren Fhrungsphilosophie zu nachgesuchten Kriterien konvertiert werden. Im Falle der Bergbauproduktion knnen mehrere Kriterien identifiziert werden, die eine Bewertung der Effizienz von Organisationsalternativen (oder Faktorenkombinationen) fr die Entdeckung der optimierenden Alternative ermglichen knnten. Diese Kriterien, die einen objektiven Mastab als Ergebnissindikatoren fr die Planungsziele des Organisationsmanagements feststellen sollten, werden im Bergbau auf die zwei produktiven Hauptprozesse gegliedert und studiert: a). Optimierungskriterien fr die Organisationsalternative des Abbauprozesses: Maximale Gesamtproduktion des Abbaus, gemessen in Outputeinheiten (Tonnen Rohgut) je Abbauzyklus; Minimaler Gesamtverbrauch von Arbeitsleistungen, in Arbeitseinheiten (Personen-Schicht) fr die Gewinnung der bestimmten Produktionsmenge in einer bestimmten Zeitperiode; Minimale Abbauzyklusdauer in Zeiteinheiten;

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Minimale Gesamtkosten des Abbaus, bewertet in Geldeinheiten je Kalkulationszeitperiode; Minimale Durschnittskosten des Abbaus, in Geldeinheiten je Outputeinheit; Maximale Arbeitsproduktivitt, in Outputeinheiten (Tonnen Rohgut) je Einheit der Arbeitsleistung (Personen-Schicht). b). Optimierungskriterien fr die Organisationsalternative des Grubenbaueund Streckenvortriebsprozesses: Maximaler Fortschritt per Zyklus,in Outputeinheiten (Meter Grubenbau); Minimale Gesamtkosten des Grubenbaus , in Geldeinheiten; Minimaler Gesamtverbrauch von Arbeitsleistungen fr den ganzen Grubenbau, in Arbeitseinheiten (Personen-Schicht); Minimale Gesamtdauer des Prozesses , in Zeiteinheiten (normalerweise Tage); Minimale Durschnittskosten fr eine Grubenbaueinheit, in Geldeinheiten je Outputeinheit (Meter Grubenbau); Maximale durschnittliche Arbeitsproduktivitt, in Outputeinheiten je geleistete Arbeitseinheit (Meter Grubenbau je Personen-Schicht); Maximale durchschnittliche Vortriebsgeschwindigkeit, in Outputeinheiten je Zeiteinheit (Meter Grubenbau je Tag). Zwei Schlufolgerungen ergeben sich aus das Studium dieser Liste von Kriterien: erstens, die meisten dieser Kriterien sind nicht unabhngig von einander, sondern direkt oder indirekt zusammengebunden (z. B. direkt Arbeitsproduktivitt Produktionsmenge, oder indirekt Produktionsmenge Zyklusdauer); zweitens, es besteht immer die Mglichkeit von Kriteriendivergenzen (z. B. nicht immer eine maximale Produktionsmenge bedeutet auch minimale Gesamtoder Durschnittskosten). Es stellt sich also immer die Frage, wie soll die Unternehmensfhrung zwischen unterschiedlichen Gruppen von Kriterien auswhlen, so dass die davon resultierende Planung und Organisation des Produktionsprozesses in engem Zusammenhang und bereinstimmung mit dem allgemeinen Wirtschaftlichkeitsprinzip steht. Normalerweise ist die Anwendung derjenigen Kriterien produktiver, die mehr mit der wirtschaftlichen Effizienz und weniger mit den Volumen und Quantitten zu tun haben (Minimierung von Kosten und Vebruche statt Maximierung der Produktionsmenge). 3. OPTIMALE KOMBINATIONEN DER PRODUKTIONSFAKTOREN IM BERGBAU In der industriellen Geschichte und Erfahrung der Menschheit haben sich die Produktionsalternativen durch eine steigende Anwendung von Werkzeuge und Maschinen gleichzeitig mit einer Reduzierung der Leistungen von menschlicher Arbeit entwickelt. Diese Entwicklung liefert den Beweis der Existenz in der industriellen Realitt von mindestens einer geringer Zahl von Verfahren und Prozesse,

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charakterisiert durch unterschiedliche Kombinationen von Faktoren Arbeit und Kapital. Die Tatsache sogar, dass in Rahmen der individuellen technologischen Alternativen und unter den Bedingungen des technischen Vorsprungs, immer weniger Arbeit und immer mehrere Maschinen eingesetzt wurden, ist ein Hinweis darauf, dass diese technologischen Alternativen durch steigend mit der Abnahme von Abszissenwerte entwickelnde Produktionsfunktionen graphisch dargestellt werden knen. Ein guter Beweis dafr liefert auch das Studium der Entwicklung von Abbautechnologie der Steinkohle: vier historische Hauptformen der Mechanisierung knnen in der Geschichte des Bergbaus unterscheidet werden, die in Tabelle 2 und Abbildung 1 an dem Beispiel einer Produktionkapazitt von 1500 T/d durch empirisch besttigte Daten dargestellt werden: Tab.2. Spezifische Kombinationen von Produktionsfaktoren fr verschiedene technologischen Abbaualternativen
Technologische Alternative 1 Keilhauengewinnung mit Holzausbau 2 Bohrhammergewinnung mit Holzausbau 3 Mechanisierte Gewinnung mit individuellen Ausbau 4 Mechanisierte Gewinnung mit Schreitausbau Arbeitskrft Initialinvestition e [Personen] [Tausende GE] 1 000 400 100 30 200 5 000 20 000 50 000 Kapitalintensitt [GE/Arbeitsplatz] 200 12 500 200 000 1 500 000

Diese Kombinationen werden in Abbildung 1 graphisch dargestellt: Kapital [106 GE] 50 40 30 20 10 [Personen] 200 400 600 800 1000 Arbeitskrfte
4

3 2 1

Abbildung 1. Typische Produktionsfunktion der Abbautechnologie

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Die in Abbildung 1 dargestellte Kurve (durch Punkte 1 4) der mglichen Faktorenkombinationen zeigt die Form und Merkmale, der in der Produktionstheorie beschriebenen konvexen Produktionsisoquante. Obwohl diese graphische Darstellung etwas beweist, kann ein bestimmten Einwand nicht ignoriert werden: es handelt sich hier um eine geringe Zahl von Alternativen, jede davon mit limitationalem Charakter aus dem Gesichtspunkt der Substituibilitt von Produktionsfaktoren. Dieser Einwand ist insbesondere relevant im Falle von isolierten Produktionseinheiten wie z. B. individuelle und isolierte Strebbaue. Auf der anderen Seite ist es auch richtig zu behaupten, dass eine Zunahme der Zahl von technisch mglichen Alternativen (seien sie sogar limitational) die Sachen nher an dem Zustand der kontinuierlichen Substitubilitt von Faktoren bringt. In der Praxis der Bergbauunternehmen kann dieser Zustand auf zwei Wegen erreicht werden: entweder stammt das Output gleichzeitig aus mehreren Produktionsabteilungen ab, mit unterschiedlichen angewandten technologischen Alternativen (mit der Konsequenz einer greren Zahl von Punkten auf die graphische Darstellung der Produktionsfunktion der Unternehmen), oder unterschiedliche Alternativen werden an die sukzessiven Stufen des Produktionsprozesses angewandt. Die in Tabelle 2 angezeigten Werte der Einsatzmengen von Faktoren sollten nur als tendenzielle, verfahrenstypische Werte betrachtet werden. Das Studium der przisen Werte soll individuell auf jede Fallstudie durch eine Betrachtung der konkreten Lagersttten- und Faktorenmarktbedingungen erfolgen. Trotz dieser Begrenzung knnen die angezeigten Werte relativ przis die gegenseitigen Zusammenhnge der typischen Produktionsfaktoren fr die vier Alternativen annhern. Die eventuellen Abweichungen wegen der ungenauen Schtzungen oder der instabilen wirtschaftlichen Bedingungen verursachen keine entscheidenden nderungen der grundstzlichen Form der Isoquante. Man kann fr den Steinkohlenbergbau die Existenz einer Produktionsfunktion mit einer bestimmten, obwohl begrenzten, Substituibilitt der Produktionsfaktoren, vermuten. Diese Tatsache besttigt die Anwendbarkeit bestimmter Prinzipien der Produktionstheorie fr das Studium der optimalen Kombination von Produktionsfaktoren. Das Problem der optimalen Kombination endet aber nicht hier, sobald die technologischen Verfahren und Alternativen studiert wurden und die wirtschaftlich optimalen von diesen Alternativen gem bestimmten Optimierungskriterien ausgewhlt wurden. Der Grund dafr kann man durch das Studium der Merkmale und der Ausdrcksmglichkeiten des Produktionsfaktors Arbeit entdecken: eine Darstellung der Einsatzmenge von Produktionsfaktor Arbeit als Zahl der Personen, die an dem Produktionsprozess teilnehmen, sagt uns nichts ber seinen effektiven Nutzeffekt oder seine Leistung. Mehr dazu, die Leistung und Einsatzmenge des Faktors Arbeit sollten in engem Zusammenhang mit deren des Faktors Betriebsmittel oder Kapital studiert werden, eventuell in Rahmen eines indirekten Verhltnisses vom Typ Faktorinput Output (gutenbergsche Produktionsfunktion Typ B).

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Durch die Anwendung des Begriffs Arbeitsorganisation (als Unterschied zwischen zwei identischen Arbeitergruppen, die mit identischen Ausrstungen unter identischen geologisch-bergbaulichen Bedingungen unterschiedliche Ergebnisse erzielen), knnte die quantitative Betrachtung der optimalen Kombination (wieviel von jedem Produktionsfaktor eingesetzt werden soll) durch seine korrekte qualitative Betrachtung (wie soll eigentlich dieser Einsatz erfolgen) vorteilhaft ergnzt werden. Anders ausgedrckt, sollte die Konzeption der optimalen Kombination aus quantitativem Gesichtspunkt der Produktionstheorie durch eine Konzeption der optimalen Organisation dieser Kombinierung aus qualitativem Gesichtspunkt ergnzt werden. Es handelt sich hier um eine optimale Plazierung in der Abbaufront der Mitglieder der Arbeitsgruppe, um die Harmonisierung der Ausfhrung von Handarbeit mit den mechanisierten Ttigkeiten der Betriebsmittel, um die Vermeidung von Unterbrechungen und Koordinationsprobleme zwischen den Faktoren Arbeit und Kapital usw. Eine korrekte Vorgehensweise des Studiums sollte seine Instrumente auch jenseits dem engen Rahmen der Produktionstheorie suchen: zustzlich zur Anwendung der Produktionsfunktionen und der Betrachtung der Einstze von Elementarfaktoren und des Beitrags von dispositiven Faktoren, sollte diese Vorgehensweise auch eine breite Reihe von Kenntnissen aus der Industrieingenieurwissenschaft, Bergbauingenieurwissenschaft, Arbeitsstudium und Normung, mathematische Modellierung, Management und seine Funktionen usw., einsetzen. Je nach Spezifikum drften fr jeden Prozess der Bergbauproduktion kontinuierliche, vorsichtige und detailierte Forschungen der Arbeitsorganisation als gerechtfertigt erscheinen einschlielich mit der Anwendung von kreativen Fhigkeiten ingenieurwissenschaftlicher, betriebswirtschaftlicher und fhrungswissenschaftlicher Art.
LITERATURVERZEICHNIS: [1]. Fandel G., Produktion I, Springer Verlag, Berlin, Heidelberg, 1991 [2]. Gutenberg E., Grundlagen der Betriebswirtschaftslehre Band I: Die Produktion, Springer Verlag, Berlin, 1983 [3]. Heinen E., Industriebetriebslehre, Gabler Verlag, Wiesbaden, 1991 [4]. Ntstaller, R., Zur Frage der geeigneten Bergtechnik fr Bergwerksprojekte in Entwicklungslnder, Dissertation Montanuniversitt Leoben, 1982 [5]. Schotter, A., Microeconomics A Modern Approach, 3. Auflage, New York, 2000 [6]. Wahl S. v., Bergwirtschaft Band I, Verlag Glckauf GmbH, Essen, 1990

Annals of the University of Petroani, Economics, 3 (2003), 111-110

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PARTICULARITIES AND SUGGESTIONS CONCERNING AGRICULTURAL CREDIT IN ROMANIA IN PERSPECTIVE OF INTEGRATION IN EUROPEAN UNION
TRAIAN SILIVESTRU *
ABSTRACT: The lack of capital and the reduction of state facilities in Romanian agricultural credit impose the necessity of following this phenomenon. The particularities of this special credit through the nature of the credit object, through the periodicity of agricultural cycles generates few suggestions, few new points of view, resulted from the analysis of the specific factors of this credit, and also from the rich experience achieved in working in ex Agricultural Bank. Some of these aspects, considered more important, I will present in this article. KEY WORDS: social capital, workable surface, activity field, capital rotation, liquidity degree of guarantee, creditworthiness of economic agents.

A characteristic of this period in Romania, is the lack of capital. It isnt the agricultural exclusive preserve, being in competitions with the other sectors from the capital investment market, and the profitability of Romanian agriculture in this phase is lower and the scientific problems are more difficult. The creation and function of the capital market is a major problem for the transition period, through this market it creates a permanent interaction between the demand and offer of capital and the efficient utilization and the correct allocation of the economical available resources. Along with the positive effects there can also appear the negative effects, such as speculation and domination, like J.Z. Muller said: The market is a fertile field for the blossoms of thousands and thousands flowers, but also for the birth of many weeds. In the capitalistic developed countries, in the economic mechanism, the role of the state has substantially increased, looking both for the amplification of the positive effects generated by the capital market and the limitation of the negative ones. About
*

Assoc. Prof., Ph.D. at the University of Petroani, Romania

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this, the French economists Mattei Dogan and Dominique Pelassy said: The actual economic system from the Western Europe is based on two axioms: the first refers to, keeping the market, in the name of efficiency and liberty, and the latter to the compensation of insuficiency of this market, by installing an intervention and a state control, underestimating the role of the state in the modern market economies it has also negatively rebound on our transition to such an economy. The fact that the state has not implicated enough has weighed in favour of perpetuation and acceleration of many imbalances at the national economic scale, the extension of anarchy and the proliferation of antisocial facts in every domain of economical life. As N.N. Constantinescu said: the democratic state must have an active and positive economic role in todays modern economy market that must be corrected and reinforced. The main contradictions that have appeared, after 1990, in the market economy, concerning agriculture, resume to the following: the contradiction between the agriculture production cycle, against with its development cause by its delay, and the promotion of some measures of reforming agriculture, hence some major production loss; the contradiction between the certitude necessity, concerning the land proportions( first of all the property ones) and existing incertitude, because of the insufficient clarity of the land policy; the contradiction between the amount of money existing on the market, and the goods that are fewer, to which we can add the few existing services; the contradiction between the growth of unproductive imports (including those taken on credit) and the exports that are decreasing. the contradiction that the privatization takes place, first of all, in the commercial field, and the production of goods is omitted that leads to the growth of the speculative phenomenon and implicit the black economy; the contradiction between the payment movement (uncontrolled) and the rapid movement of the prices, which generates social problems. After 1990, in Romanias agriculture, like in the entire economy, the capitalism crises of the economic agents, crisis created by the lack of capital or by the predomination of very expensive capital has been felt, therefore the Romanian economy has got itself moving with an intense frequency on the road of economic steal and of primitive accumulation of capital. Under these circumstances, the proportion between the demand and offer has balanced in the negative way because both have decreased, the demand because of the reduction of population purchasing power and the offer because of the reduction of labor productivity and production, instituting the so called balance of the poverty status. Considering all the deficiencies created by the exaggerated control of the agriculture credit practiced by the state in socialist period through a super- centralized

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economic policy and that leaves on second position the profitability and rationalizes of the banking system, through which this credit was rolled. The banks were treated as simple instruments of the states in applying the banking policy in Romania, we can say without fear that in this period the bank has not lent money properly. Unfortunately the agriculture credit system, directed by the state, has maintained in the last few years which has had some unfavorable effects concerning: the maintaining in agriculture of some economic agents that are not viable ( with state capital); the emphasized loss of capital and the bank weakness, which have given credit to agriculture. We can say without fear, that giving credits has been made in some circumstances not on the base of calculation concerning the creditworthiness of the clients that applied for credit ( although these calculations were already existing at the crediting banks), and on the basis of some administrative measures (available for all the credits given with the agreement of the government), those were actually representing the continuation of old financing credit methods that have nothing in common with economic market. The cause of maintaining this anachronistic situations is the following of a primitive conception concerning the subsidy of agriculture. It is certain the agriculture must be supported, subsided, but more efficient solutions and ways of solving this problem must be found, not those used until now that have proved inefficient. I consider that subsidies for agriculture can not remain in the same forms practiced until now, some others priorities must be established, another way of supporting the agriculture, because it needs support, but not pumping again hundreds and thousands milliards of ROL in the state property giants. The support must be given, first of all, to the small producer, that by using intensively the surface of the land, the production and the capital will become a farmer, the owner of a middle farm which will have a commodity character. A full support must be also given to the organization and development plan to the agricultural corporations and private agricultural associations, this taking into account the advantages that these forms of organization present and that assume respecting the following principles: the principle of unconditional adheres and free consent or the one of open door, meaning that anyone must have the right to adhere or leave a co-operative; the principle one man one vote, that represents the essence of the democratic character of the co-operative ignoring his participation; the principle of zero rent that emphasis the essential difference between a co-operative and an enterprise according with this principle the speculative function is excluded from the co-operative activity; the principle of exclusivity, that refers to the limitation of the activity object of co-operative;

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the principle of double quality according to which you can not use the services of a co-operative unless you are not a member; the principle of territoriality that makes the limitation of the action geographic area of a co-operative possible. Concerning the capital, in a co-operative, a part of the resources that are for the investment is formed by the members of the co-operative in the following way: the financial infusion can be used as guarantee for loans; a co-operative member can take his capital back when he leaves the cooperative but in very restrictive reimburse conditions; the capital or the infusion of a member of the co-operative can not be transferred or sold. Concerning the profit in a co-operative we meet the following situations: the profit is owned by the members of the co-operative proportional with their participation with capital; many co-operatives can not actually give the incomes (profits) to their members, this can be transferred in a general reserve for new investments or in a credit given by the co-operative to its members. The main assignment of a banker is to act, in every circumstances, with professionalism, and with knowledge (in the appliance of the legal and traditional norms), with prudence (without exposing himself to out of line risks), and with diplomacy, in a moderation and balanced way that are considered to be opportune by the Swiss banking behavior code. The level of interest rate for the given credit must be as close as it can be to the resource cost, without the expense and the bank profit adding, because we can say that in Romania a real competition in given credits already exists, due to the functioning of the capital market and in it the existing of a high enough number of universal commercial banks that give all types of credit, taking out the so called banking monopoly in agricultural credit. In the last few years there have been used various ways of given credit to agriculture, with lower interest rates, based on fix rates (15%) or based on percentage subsidy of the interest rate of 60-70% type of the market interest rate. According to this forms of these interest rate subsidies I come and say that this practiced interest rates percentage were established in an arbitrary way by the existing governments and were also used as governments dictate for the rolling of these credits directed by the banks which at that moment had the most expensive resources, practicing the highest interest rates. According to the presented situation, I consider, that the interest rate practiced for the agriculture credit must be calculated and influenced taking into account the following factors: the growth of the economic agent social capital in agriculture; the width of the workable surface and the number of animals, starting from the idea of the optimum surface and the optimum number of animals (profitable economic agents);

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the activity field in agriculture, the capital rotation, the liquidity degree of guarantee; the creditworthiness of economic agents. Let us analyze these factors: 1. The amount of the economic agent social capital in agriculture The graduation can be used with the increasing interest rate for the agricultural credit, for the stimulation of small economic agents, as it is shown below:
Parts of the social capital Interest rate 0 10 % 5n 10 20% 10 n 20 - 30% 15 n 30 - 60% 20 n 60 - 100% 30 n > 100% 60 n

For the credits given in agriculture it can be also used the graduation with a decreasing interest rate for the stimulation of getting into in the productive circuit and the support of the privatization activities, as it results from the following situation:
Parts of the social capital Interest rate 0 10% 30 n 10 20% 25 n 20 30% 20 n 30 60% 15 n 60 100% 10 n > 100% 5n

n is a variable according to which the commercial bank together with the economic agent in agriculture adopt a position of increasing or even lowering the interest rate, taking into account the existing factors (restrictions) at the moment of negotiating.

If we summarize the correlation between the interest rate percentage with the amount of the economic agent social capital in agriculture this can be shown more simplified below:
Social capital Major social capital Middle social capital Minor social capital % interest the lowest the lowest + 5% the lowest + 10% Score 3 2 1

2. The width of the workable surface and the number of animals in the context of the profitability degree of the land exploitation forms and the existing numbers of animals Taking into consideration the profitability degree of the exploitation forms I suggest the following: the existence of highly profitable exploitation forms with profits that vary between 15-20 %, the existence of medium profitable exploitation forms with

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forms that vary between 8-15 % and the existence of minor limit of exploitation form with profit that vary between 1-8 %.
The profit amount Highly profitable economic agents Medium profitable economic agents Minor limit of profitable economic agents % interest the lowest the lowest + 5% the lowest + 10% Score 3 2 1

3. The activity field in agriculture We deal with: the actual animal and vegetable production, the machining and industrialization of the vegetable and animal production and the selling of the animal and vegetable end products. Taking into consideration this group we propose that the variability of the interest rate percentage for the given credit in base of this classification to be the following:
Activity field The actual production The machining and industrialization The selling % interest the lowest the lowest + 5% the lowest + 10% Score 3 2 1

4. The capital rotation The correlation between the interest rate percentage given to the agriculture credit and the capital rotation, has a special role taking into consideration the fact that in agriculture one of the minor capital rotation takes place. This is due to the fact that in agriculture, the capital rotation is tight to the animal and vegetable specific technology processes of these sectors, processes that mainly depend on the natural conditions. Hence we can synthesize that an optimum capital rotation in agriculture will be the following:
Vegetable sector Vineyard and Big crop orchard Capital Rotation 1 year 1 year Animal sector Goat, Pigs sheep 1 year 1 year

Cattle 2 years

Poultry 6 months

Taking into consideration this group I propose that the interest rate percentage of credits should be:

Particularities and suggestions concerning agricultural credit

Capital rotation Optimum % interest the lowest the lowest + 5% the lowest + 10% Score 3 2 1

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5. The liquidity degree of guarantee Taking into account that the guarantees that banks pretend when giving credit is a strong point for giving them and taking also into consideration the particularities that the credits given to agriculture have, I consider that the liquidity degree of the guarantee to which they have to appeal for getting back the given credit is very important. Summarizing those above, the level of the liquidity of guarantee is: - 100% for the deposits in Romanian lei and currencies, guarantee banking letters, guarantees presented by special funds that guarantee the credits; - 70% for mortgages for real estates (land, house), pledge without deprive contracts ( on the guarantee good); - 50% for the multiple lien and the good taken on credit. 6. Taking into consideration this criterion we suggest the following interest rate variation:
The degree of liquidity 100% 70% 50% % interest the lowest the lowest + 5% the lowest + 10% Score 3 2 1

The correlation of the interest rate percentage used for agriculture credit, with the guarantees liquidity presented by the debtor, meaning that at high liquidity of guarantee as they were presented above it applies a lower interest percent and then it can grow along with the decreasing liquidity degree of the guarantees. We suggest that we should take into account the thinking of the Romanian peasant, who gives in extreme conditions as guarantee his house when he applies for a credit. Therefore we consider that he must be stimulated through this lower interest rate, because for those that came in guarantee with their houses the risk of not reimbursing the credit is very low, meaning that they will do everything in their power to reimburse the credit. 7. The creditworthiness of economic agents Taking into account this criterion we can group the economic agents from agriculture like this:

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Silivestru, T. with good creditworthiness economic agents that are classified in standard and in observation category; with medium creditworthiness economic agents that are classified in substandard category; with poor creditworthiness economic agents that are classified doubtful and loss category.

According to this classification I suggest that the interest rate variety for the given credit should be:
Creditworthiness Good Medium Poor % interest the lowest the lowest + 5% the lowest + 10% Score 3 2 1

This analysis along with the achieved experience gained during the time that I have worked in the ex Agricultural Bank, both direct in the agricultural credit system, and also in the administration of this bank, institution that has rolled the major majority of credits directed to the Romanias agriculture, I reached the conclusion that these ideas can successfully apply in a new vision concerning the agricultural credit promotion.
REFERENCES: [1]. Silivestru T. The role of the credit in the development of Romanian agriculture Ed. Sigma Plus, 2001

Annals of the University of Petroani, Economics, 3 (2003), 111-110

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PROPOSALS REGARDING METHODS USED ON THE INTERESTS GRANTED FOR AGRICULTURE PURPOSES
TRAIAN SILIVESTRU, OANA DOBRE-BARON
ABSTRACT: Handling bank interest according to the main factors considered to influence the credit for agriculture: 1. size of the authorised capital of the trade agent from agriculture; 2. size of the cultivated area and of living stock, having as starting element the idea of optimum areas and of optimum living stocks (profitable trade agents); 3. field of activity in agriculture; 4. speed of turnover; 5. liquidity of guaranties; 6. trustworthiness of trade agents. KEY WORDS: size of interest percentage, credit for agriculture, influencing factors.

Considering the situation created in agriculture after 1990 with respect to the change in land ownership form, change in the land use, liberty to establish prices for agricultural products, as well as the disturbing processes that arisen in economy regarding inflation, an important place in this context has been taken by the liberty of the credit for agriculture and the interest, liberty that appeared as a result of the high level of inflation. Tab.1. The monthly average rate of inflation
Total 1991 1992 1993 1994 1995 1996 10,3 9,6 12,1 4,1 2,1 3,8 Food goods 12,0 10,2 11,6 4,2 1,9 3,7 Non-food goods 9,0 9,3 12,9 3,7 2,0 4,0 Services 9,1 8,4 11,8 4,7 2,9 3,6

During this time, as a result of the high level of inflation there are two trends as far as handling the credit for agriculture and the interest are concerned: high rates of
*

Lecturer Ph.D. at the University of Petrosani, Romaania Assist. Prof. at the University of Petrosani, Romania

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interest and short credit reimbursement periods. Both trends are contrary to the needs of agriculture, characterised by yearly or longer production cycles and higher coefficients for the payment back terms of large investments. This situation is very expressively reflected in figures 2 and 3.
70 60 50 40 30 20 10 0 inflation interest rate

Fig.1. The inflation rate and the passive interest rate at commercial banks Among the causes of the financial blockage, which has been increasing since 1990, we could mention the use of extremely high interest rates for credits by all commercial banks. These interest rates varied between 50 and 160% per annum. This situation produced damages, losses in the trade agents balance sheets, on the accounts that were increasing and where the percentage of 5 to 15% was the result of the influence of the bank interests. It is noticeable that the volume of the bank interests is above the absolute level of the losses from the trade agents balance sheet from agriculture, which means that precisely the high level of the interest rates was the cause of the unfavourable financial results. Related to the situation presented above, I consider that the interest of the credits for agriculture should be calculated and influenced taking into account the following factors: the amount of the authorised capital of the trade agent form agriculture, the size of the cultivated area and of the living stock, starting from the idea of the optimum area and of the optimum living stock (profitable trade agents), field of activity in agriculture, speed of turnover, liquidity of guaranties and trade agents trustworthiness. Let us analyse these factors: 1. The amount of the authorised capital of the trade agents from agriculture. The division of increasing interest rate can be used for credits granted for agriculture in order to stimulate the smaller trade agents, as illustrated in the following situation:

Proposals regarding methods used on the interests

Parts from the authorised capital The interest rate (%) 0-10 % 5n 10-20 % 10 n 20-30 % 15 n 30-60 % 20 n 60-100 % 30 n

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Over 100% 60 n

The division with decreasing interest rate can also be used for credits granted for agriculture in order to stimulate the attraction into the productive circuit and in order to support the privatisation activities as illustrated in the following situation:
Parts from the authorised capital The interest rate (%) 0-10 % 30 n 10-20 % 25 n 20-30 % 20 n 30-60 % 15 n 60-100 % 10 n Over 100% 5n

n is a variable according to which the commercial bank together with the trade agents from agriculture take a position in the sense of increase of the interest rate or even decrease of the interest rate according to the factors (restrictions) existing when the negotiation takes place. If we synthesise the correlation of the interest percentage with the trade agents size of the authorised capital this can be shown under the following simplified form:
Authorised capital Large authorised capital Medium authorised capital Small authorised capital % interest The smallest The smallest + 5% The smallest + 10% Score 3 2 1

The smallest interest rate refers to the percentage used by the Romanian National Bank (namely, the official discount tax). Small authorised capital = minimum required by the law (namely 2.000.000 lei for Ltds and 50.000.000 lei for plcs). Medium authorised capital = of the maximum. Large authorised capital = the authorised capital is to cover for all the current needs for funds of the company without making loans. 2. The size of the cultivated area and of the living stock according to the degree of profitability of the land exploit methods and of the living stock. Considering the degree of profitability of exploit methods, I propose the existence of the following: 1. Very profitable exploit methods, whose profit varies between 15-20%; 2. Medium profitable exploit methods, whose profit varies between 8-15%; 3. Methods of exploit situated at the inferior limit of profitability, whose profit varies between 1-8%.
Authorised capital Very profitable trade agents Medium profitable trade agents Trade agents situated at the inferior limit of profitability % interest The smallest The smallest +5% The smallest + 10% Score 3 2 1

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3. Field of activity in agriculture. We have to deal with the following: 1. the actual production area: plants and animals (productive cycle); 2. the area of processing and industrialising the animal and plant agricultural products (light industry and food industry); 3. the area for trading the animal and plant final products (retail and whole sale trading). Considering this group, we propose for the interest percentage variation for credits for agriculture granted based on this classification to be:
Authorised capital The actual production Processing and industrialising Sale and trade % interest The smallest The smallest + 5% The smallest + 10% Score 3 2 1

4. Speed of turnover. The correlation of the interest percentage for credits for agriculture with the speed of turnover has a very important role, if we consider the fact that in agriculture there is one of the slowest speeds of turnover. This is due to the fact that in agriculture the speed of the turnover is tightly knit to the technological processes specific for the animal and plant sector, and these processes are largely based on natural conditions. Baring in mind this fact we can synthesise that the optimum speed of turnover in agriculture would be the following:
Large crop Spped of turnover Plant sector Vineyards and orchards 1 year Horned cattle 2 years Animal sector Sheeps and Swine caprinae 1 year 1 year

Fowls 6 months

1 year

Taking into account this group, I suggest that the variation of the interest percentage related to credit to be:
Authorised capital Most propitious Overfulfilment with until 6 months Overfulfilment with until 12 months % interest The smallest The smallest + 5% The smallest +10% Score 3 2 1

5. Liquidity of guaranties. Taking into account the fact that the guarantees required by banks for granting credits are one of the string points for granting credits and taking into consideration the characteristics presented by granting the credits for agriculture, I consider that the degree of liquidity that needs to be called upon in order to recover the credit is extremely important. Synthesising the facts presented above, the degree of liquidity is: - 100% for deposits in lei and hard currency, letters of credit, guarantees presented by the special funds for credit guarantee;

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70% for mortgagees on fixed assets (land, house), guarantee contracts without dispossession (for the guaranteed goods); - 50% general guarantees and the goods purchased with the credit. According to this criterion, we propose the following variation of interest:
Authorised capital 100% 70% 50% % interest The smallest The smallest + 5% The smallest + 10% Score 3 2 1

Correlation of the interest percentage, used to grant credit for agriculture, with the liquidity presented by the one who borrows, in the sense that at high rates of liquidity as presented to apply a lower percentage of interest and then, this should be increased as the degree of liquidity lowers. Here we propose to also take into consideration the Romanian farmers way of thinking, who, in extreme conditions, uses his house as a guarantee in order to approach a credit. That is why, we believe that he should be stimulated also by this low interest percentage, because the risk of not reimbursing the credit in the case of a person who uses his house as a guarantee is very low, in the sense that he would make any sacrifice to reimburse the credit. 6. Trade agents trustworthiness. Considering this criterion, we can group the trade agents form agriculture like this: - with a good degree of trustworthiness the trade agents classified in the standard and under observation groups; - with a medium degree of trustworthiness the trade agents classified in the substandard group; - with a low degree of trustworthiness the trade agents classified in the doubtful and loss groups. According to this classification, I suggest for the variation of the interest for granted credits to be:
The degree Good Medium Low % interest The smallest The smallest + 5% The smallest +10% Score 3 2 1

For the applicants for credits that draw up an accountancy balance sheet, the level of the main financial indicators of trustworthiness should fall within the following limits:

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Silivestru, T.; Dobre-Baron, O. 1. Current rate (liquidity): CURRENT ASSETS 2 < ----------------------------------< 1 CURRENT LIABILITIES 2. Rate of the debt: CLEAN PROFIT 5 < --------------------------- < 1 PRIVATE CAPITAL 3. Rate of liquidity: TOTAL ASSETS 2 < --------------------------- < 1 TOTAL LIABILITIES 4. Rate of general profitability: CLEAN PROFIT 10 < ----------------------------------------------- < 1 TOTAL AMOUNT OF EXPENDITURE 5. Degree of debt: TOTAL LIABILITIES ----------------------------- < 1 PRIVATE CAPITAL

The sources the data necessary for calculating these indicators and from where these data are extracted are: - Current assets - Patrimony status; - Current liabilities (bonds, credits and short term loans) - Patrimony status; - Total assets (fixed + current assets) - Patrimony status; - Total liabilities (debts) - Patrimony status; - Clean profit - Financial results; - Total expenditures - Financial reserves; - Private capital (clean assets) - Patrimony status. Trustworthiness represents the trade agents financial performance and it is expressed by these indicators using as basis the data from accountancy forms presented according to the period when it is determined: - annually accountancy sheet and profit and loss account; - quarterly - Patrimony status; - monthly balance sheets. The scores for these indicators are given in the table below:

Proposals regarding methods used on the interests The score of indicators

20 points 15 points Liquidity > 2:1 2-1,5:1 Solvency > 2:1 2-1,5:1 Rate of general profitability > 10% 10%-5% Rate of private capital > 5% 5%-3% profitability 5 Degree of debt 0-0,3 0,4-0,6 6 Rate of remaining credit 0 0,1-10% Source: The handbook of credits from The Agricultural Bank 1996 No. 1 2 3 4 Indicators 10 points 1,4-1:1 1,4-1:1 4%-1% 2%-1% 0,7-1 10-20%

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5 points under 1:1 under 1:1 under 1% under 1% >1 > 20%

For client with a profitability rate private capital that is negative (losses), at this particular indicator there will be given no points (the total score being 0 at this indicator). Fitting a trustworthiness group, according to the total score obtained of each trade agent with legal status will be done as follows: Group I (A) 90-100 points, standard (minimum risk); Group II (B) 89-70 points, under observation (normal risk); Group III (C) 69-51 points, substandard (possible risk); Group IV (D) 50-26 points, doubtful (accentuated risk); Group V (E) 25-20 points, loss (certain risk). As a conclusion, we could say that the establishment of the interest percentage used to grant credits for agriculture is done taking into account the 6 criteria mentioned and the score obtained for each as follows: - 3x6 =18 points (maximum score) reference interest rate 6 criteria x number of points - 2x6 =12 points (medium score) reference interest rate+5% - 1x6=6 points (minimum score) reference interest rate +10%

Therefore, between 12-18 points reference interest rate (minimum interest which, in fact, represents the discount tax); between 6-12 points + 5%
x 6 = + 30% (medium interest); between 1-6 points + 10% x 6 = + 60% (maximum interest). Changing the interest rate from minimum to maximum is done step by step according to the points established by the program.
REFERENCES: [1]. Brbulescu G., Doande V., Tudorache D. - Credit for Agriculture in Romania, Cripton Alimit SRL Publisher, Satu Mare, 1992 [2]. Roca T., Ciobanu D., Opritescu M. - Credit and Interest in the Economic and Financial Mechanism, Scrisul Romnesc Publisher, Craiova, 1987 [3]. Roca T. - The Reform of the Credit System: How?, Tribuna economic nr. 38/1990 [3]. Silivestru T. - Credit, an Opportunity for Agriculture, Sigma Plus Publisher, Deva, 1999

Annals of the University of Petroani, Economics, 3 (2003), 115-110

115

CONSIDERATION ABOUT THE MARKET OF THE MOTOR INDUSTRY

GABRIELA SLUSARIUC *
ABSTRACT: The motor industry is now the worlds largest single manufacturing activity. The automotive industry is a huge consumer of energy and raw materials. Ii is also a vast source of employment. KEY WORDS: production activity, employment, investments, the motor industry, market saturation.

The motor industry is now the worlds largest single manufacturing activity. In 1990, the industrys most recent peak, it produced more than 50m vehicles worldwide. Al the end of 1993, there were estimated to be more then 470m cars in use worldwide. Seventy-five per cent of these are in the US there are 600 cars per 1000 people, while in Europe there will be 500 per 1000 by the end of the 1990s. The growth rate of the parc, the number of vehicles in use, has been equally spectacular. In the UK there 108 cars for every 1000 people in 1960. By 1991, there were nearly fourtimes that many. Three-quarters of the vehicles produced are cars, the remainder vans, trucks end buses. Of the50m vehicles produced in 1990, each contains at least 5000 individual parts of widely varying materials. These are made least 5000 individual parts of widely varying materials. These are therefore by highly specialized factories throughout the world. There are therefore 250 billion parts of original equipment needed when the originally-fitted equipment wears out or is damaged. There is also a range of businesses that that focus on vehicle distribution and sales as well as a massive network of industries involved in the supply of fuel, finance and insurance, without which the car park itself could not function. The automotive industry is a huge consumer of energy and raw materials. Ii is also a vast source of employment. At an average cost of $20000 a car, the value of the new vehicle industry alone is $1000 billion a year, roughly equivalent to the economies of France, the UK or Italy in 1990. It is twice the size of the Spanish or Brazilian economies, four times the size
*

Professor, Ph.D at the "Constantin Brncui" University of Trgu Jiu, Romania

Assist. Prof. at the University of Petrosani, Romania

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of South Koreas or Mexicos and nearly 20 times the size of Russias Even then, this estimate only accounts for the original equipment or new vehicle market-the part of the industry directly served by the vehicle manufacturers themselves. It ignores the aftermarket and the parts and accessories sector. Adding these in broadly doubles the total. It also ignores the used-car sector, the dealers, the distributors and the service and repairs businesses. There are many other sectors that benefit from vehicle product that are not included either the insurance companies that cover drivers in the event of theft or accident, the oil producers that generate the fuels and lubricants, the banks that finance the sales and investments and the hospitals that deal with those injured in motor vehicle accidents. All directly depend on the production and use of motor vehicles accidents. All directly depend on the production and use of motor vehicles in one way or another. When all of these and other relevant sectors are included, it becomes clear that this in one of the largest and most important industrial segments in the developed world. Like an engine itself, the motor industry is directly responsible for turning the wheels of many other business sectors. It is therefore one of the worlds largest generators of wealth and employment. This wealth and employment is almost exclusively concentrated in a small part of the globe. Throughout its history, the motor vehicle market has been dominated by the US, Europe and latterly, Japan. Even today, more than 80% of the worlds motor vehicle production and sales come from these Triad markets.

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This dependence on the Triad is not likely to change for many years. While there are manufacturing satellites in less-developed countries, their total impact is small. Similarly, although sales of cars are increasing rapidly in hugely populated countries like India and China their weight relative to the Triad is also minimal. Because of their size and potential, these countries are frequently cited examples of how the motor industry is becoming less dependent on the Triad. Yet, as we shall see, this is simply not much greater than that of the new ones that the industrys dependence on these will continue for very many years to come. The car will essentially remain a product for the affluent. Figure 1 shows the regional breakdown of production over the first 75 years of the industry.

Market saturation and low growth are perhaps the most obvious challenges for the industry in the future. In the main markets today, the comparatively slow pace of economic development, and market saturation, are limiting further growth in sales. Some forecast regional economic growth rates are given Figure 5.7. Although in most of the developed markets the numbers of vehicles in use will continue to rise for some time, the period when annual sales continued to grow rapidly has gone. The forecast for next decade is for annual growth of only 2,4% worldwide. While some regions will clearly grow more quickly, the largest markets are expected to experience very low growth rates indeed 1,2% a year in Europe, 1% a year in Japan. Although the growth rate may be slightly higher in the US, the is driven by short-term

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recovery. The US market is already saturated and mature it has been so for many years. Figure 2 shows the pattern in growth rates over the last 47 years.

Figure no.3 Growth rates over the last 47 years One of the most serious problems is that vehicle manufacturers have become used to long-term growth. Their shareholders certainly have. The changes in market growth rates mean that suppliers will have to find new ways of meeting the needs of their shareholders - they must find some means of continuing to grow, even though the market is virtually stagnant.
REFERENCES: [1]. De Banviille, Chamaron Vers un Systeme automobile Europeen, Ed. Economica, Paris, 1991

Annals of the University of Petroani, Economics, 3 (2003), 5-10

THE LOCAL INCOME MULTIPLIER MODEL OXFORD BROOKES UNIVERSITY

IOAN NICOLAE TIUZBIAN *
ABSTRACT: The analysis of the wider economic effects of introducing a major new source of income and employment into a local economy can be carried out using several different techniques. The three methods most frequently used are (a) the economic base multiplier model, (b) the input-output model, and (c) the Keynesian multiplier. The income multiplier model used in this study is described by means of a series of mathematical equations. The equations incorporate each of types of expenditure arising from the Universitys activities, and model the effects of this expenditure as it works its way through the local economy. KEY WORDS: resources, scenario, analysis, multiplier, input, output, expediture, uncertainty, staff, equations, variabels.

1. INTRODUCTION The analysis of the wider economic effects of introducing a major new source of income and employment into a local economy can be carried out using several different techniques. The three methods most frequently used are (a) the economic base multiplier model, (b) the input-output model, and (c) the Keynesian multiplier. The economic base multiplier is founded on a division of local (and/or regional) economies into basic and non-basic activities. Input-output models provide a much more sophisticated approach. An inputoutput table is a balancing matrix of financial transactions between industries or sectors. For several reasons - primarily related to the availability of appropriate data at a local level - the Keynesian multiplier approach has been used in several studies. The Local Income Multiplier Model is based upon a series of mathematical equations that incorporate the different types of expenditure which arise from the operation of the University. Universities can have very significant impacts on their local economies.

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The income multiplier used in this study by A. Chadwick & J. Glasson (1998) is a slightly modified version of that used by Armstrong et al (1994) in their study of Lancaster University. This model was in turn based on that originally developed by Bleaney et al (1992) in a study of Nottingham University. The model allows estimates to be made of the impact of the University on two different measures of local income: gross local output and local disposable income.Gross local output is a measure of the monetary value of all goods and services produced in a local economy - in this case, the Oxfordshire economy. It is essentially the local equivalent of national income or gross domestic product (GDP). The University makes a contribution to gross local output both directly and indirectly. Its direct contribution arises as a result of the Universitys expenditure on staff wages and salaries (most of which are received by Oxfordshire residents) and local goods and services (purchased from businesses in Oxfordshire). The University also makes an additional indirect contribution to local output. This arises in various ways, primarily through the local spending undertaken by the Universitys staff and students. An additional stimulus to local output also results from the spending undertaken locally by the employees and owners of those businesses with which the University and its staff and students spend their money. These additional indirect impacts on local output comprise what is known as the local multiplier process. The second measure of local income specified in the multiplier model is local disposable income. This is a more restrictive definition than gross local output, in that it measures the net - or disposable - income accruing to local residents (including those employed at the University). This measure of local income recognises the fact that much of the stimulus to local output provided by the University does not find its way into the pockets of local people, but leaks out of the local economy as various deductions. These include direct and indirect taxes, and (employer and employee) pensions and National Insurance contributions. These leakages must therefore be deducted to arrive at a measure of the effect of the University on the disposable incomes of local people (Chadwick, A. 1988). 2. A DESCRIPTION OF THE MULTIPLIER MODEL. The income multiplier model used in this study is described by means of a series of mathematical equations. These equations incorporate each of types of expenditure arising from the Universitys activities, and model the effects of this expenditure as it works its way through the local economy. The first equation in the model concerns the Universitys direct expenditure: The initial expenditure injection (E): E=L+G, where L = the cost of staff employed by the University; and G = the value of goods and services purchased by the University The initial expenditure injection is sometimes refereed to as the Universitys expenditure base.

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Y1 = ( L L1 ) + ( A A1 ) + hG First-round disposable income ( D1 ) : D1 = (1 t )( Y1 ihG ), Second-round gross local output ( Y2 ) : Y2 = vZ Z1 + wcD1 + xcN , Second-round local disposable income ( D2 ): D2 = (1 t )(1 i )Y2 ,
First-round gross local output ( Y1 ): Full multiplier for gross local output:

Y f / Y1 = 1 + Y2 / [1 wc(1 t )(1 i )]Y1 ,

where Y f = final gross local output (after all rounds of the multiplier process). Full multiplier for local disposable income:

D f / D1 = 1 + D2 / [1 wc(1 t )(1 i )] D1 ,

where D f = final local disposable income (after all rounds of the multiplier process) and L1 , A, A1 , h, t, I, Z, v, Z1 , w, x, c and, N is described in Table 1. 3. SCENARIO Assume that Oxford Brookes University has applied for planning permission to develop a fourth campus that will boost student numbers from 10,000 to 12,000 by the year 2001. A total of 200 extra staff will be employed in addition to the current staff of approximately 1,600. Assume that University staff costs and the proportion resident in Oxfordshire are comparable on a pro-rata basis to the figures for 1995-96. The campus will involve an additional annual consumable expenditure of approximately 8 million. In an attempt to ensure that the proposal is received favourably by the planning authority assume that the Vice Chancellor has pledged to increase the proportion of non-payroll expenditure by the University within Oxfordshire to one third. The above scenario supposed that Gross wage of University staff (L) increases to 40.12 million in 2001 because that a total of 200 extra staff will be employed. Number of staffs increases at 1.125 times (12.5%) (Tab.1). Gross wages of University staff not resident in Oxfordshire ( L1 ) increases to 6.33 million. Value of goods/services purchased by the University (G) increasing with $8 million and reached to 32.54 million. Additional staff earnings (A) increase to 1.04 million and Additional staff earnings of staff not resident in Oxfordshire ( A1 ) increases to 0.21 million. Proportion of non-payroll University expenditure within Oxfordshire (h) will be 0.333. Total expenditure by students (Z) will be 44.20 and Expenditure by students accruing as revenue to the University ( Z1 ) up to 9.26 million because number of students increase at 12,000 that means a increase of about 20%. Disposable income of University staff not residents in Oxfordshire (N) also increase to 4.00 million. Direct tax rate applicable to University staff earnings (t), Indirect tax rate applicable to non-payroll University expenditure (I), Proportion of student expenditure in Oxfordshire (v), Marginal propensity of staff to consume additional income (c),

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Proportion of expenditure by University staff in Oxfordshire, Resident outside Oxon. and Proportion of expenditure by University staff in Oxfordshire, resident in Oxon. is not change (Table 1 in Appendix 1). In conclusion, Initial Expenditure Injection, (E), increase at 72.660 million and Expenditure base multipliers (Df/E) increase and reach at 0.748. Final local disposable income (Df) is estimated at approximately 52.709 million - this represents the additional disposable income in the pockets of Oxfordshire residents as a result of the Universitys activities bigger with almost 10 million than 1995-96 academic year that means Df is very good for University. Once all rounds of the multiplier process have taken place, final gross local output (Yf) generated by the Universitys activities in 2003-04 is estimated at 106.81 million bigger than 1995 Yf (84.5 million) (Equation 1 in Appendix 2) 4. ANALYSIS The multiplier model requires estimates for a large range of variables and whilst some data are based upon actual figures from the University accounts (e.g. L, University staff costs, G, University non-payroll expenditure and h, local University purchases of goods and services) most of the values used in model are estimates and therefor subject to a degree of uncertainty, as shown in Table 2 (Appendix 2). Given the uncertainties in some of the data incorporated in the model, it is worthwhile undertaking a sensitivity analysis to test the extent to which the models output responds to changes in the values of the parameters in the model. In this case it is likely to be must useful to limit the analysis to the parameter's subject to the greatest uncertainty e.g. A and A1 , w, x and v, Z and Z1 . Summary of sensitivity analysis results on the income multiplier model is in Table 3 (Appendix 3). Changes in the values of certain parameters appear to have very little effect on the multiplier results. For instance, a doubling of the value of additional staff earnings (A and A1 ) would result in only 1.63 % increase in the estimated values of local disposable income (Df). Doubling the local spending proportion for staff living outside Oxfordshire (x) has roughly the same - negligible - effect. Uncertainty about the correct values of these parameters is therefore unlikely to affect the robustness of the multiplier results. Changes in other parameters in the model have a more significant effect on the estimated values of Yf and Df. For example, a 10% reduction in the value of either w, v, or Z would produce a reduction in local disposable income (Df) at about 12.57 %. Changes in the values of Z1 (the amount of on-campus student expenditure) are less important to the multiplier results - for example, a 10% increase in the amount of oncampus spending would produce only a 1.08 % reduction in the value of Df. All of the above changes are relatively modest, with few significant effects on the estimated effects on the estimated values of gross local output (Yf) or local disposable income (Df). In all the tests carried out, the estimated value of gross local output remains within the range of 10%.

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Table 3 Summary of Sensitivity Analysis Results on the Income Multiplier Model Parameter A A1 x w v Z Z1 w v w v Z Z Z1 w v Z Z1 Original Value 1.04 0.21 0.124 0.666 0.796 44.84 9.34 0.666 0.796 0.666 0.796 44.84 44.84 9.34 0.666 0.796 44.84 9.34 Revised Value (for sensitivity analysis) 2.08 0.42 0.248 0.599 0.716 40.36 10.27 0.599 0.716 0.599 0.716 40.36 40.36 10.27 0.599 0.716 40.36 10.27 Change to Value Used 100 % increase 100 % increase 100 % increase 10 % reduction 10 % reduction 10 % reduction 10 % increase 10 % reduction 10 % reduction 10 % reduction 10 % reduction 10 % reduction 10 % reduction 10 % increase 10 % reduction 10 % reduction 10 % reduction 10 % increase Original Df 54.380 54.380 54.380 54.380 54.380 54.380 54.380 54.380 54.380 54.380 54.380 New Df 55.267 54.380 54.660 52.201 52.133 52.346 53.795 50.053 48.304 51.762 47.745 % Change 1.63 0 0.51 -4.17 -4.31 -3.88 -1.08 -8.64 -12.57 -5.05 -13.89

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REFERENCES:

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[1]. Armstrong, H.W., J. Darral & R. Grove-White (1995) Measuring the local economic and environmental impact of a university; methodological; issues. Paper to Cities of earning conference, Lancaster University. [2]. Chadwick, A & J. Glasson, (1998) Oxford Brookes University Local Economic Impacts. School of Planning Working Paper No 174. [3]. Harris, R.I.D. (1997) The impact of the University of Portsmouth on the local economy. Urban Studies. [4]. Morris, P. & R. Therivel (1995) Methods of Environmental Impact Assessment

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Index of Authors
B BARON M. () BLEANU V. (5) BIBER E.G. () BOJINC M. (11) BUIA G. () C COSMESCU I. (15) COSMESCU D.B. (15) CSIMINGA D. () CUCU I. (18) D DIMA I.C. () DOBRE-BARON O. () DOLEA G. () DRIG I. () DURA C. () F FLEER A. (82) FLITR M.P. (87) FULGER I.V. G S GHICJANU M. (57) H HODOR P. (180) I ILOIU M. (98) SEMEN M.V. () SILIVESTRU T. () SLUSARIUC G. (148, 190) SZASZ M. (11) T TIUZBIAN I.N. () IONIC A. () IRIMIE S. () ISAC A. () ISAC C. (34, 102) IVNU L. () K KORONKA A. () M MAGDA D. (110) MAN M. (42) MIHIL E. (114) MITRAN C. () MITRAN I. (126) MONEA A. (137, 165) MUNTEANU R. () P POPESCU M. () PREDA M. () R RDULESCU M. () RSCOLEAN I. ()