BULLETIN of The Transilvania University of Brasov PDF

ISSN 2065-2194
TRANSILVANIA UNIVERSITY OF BRAŞOV
BULLETIN
OF THE
TRANSILVANIA UNIVERSITY
OF
BRAŞOV
VOL. 8 (57) NO. 1 – 2015
SERIES V ECONOMIC SCIENCES
Published by
Transilvania University Press
Braşov, Romania
2015
EDITORIAL BOARD
Editor in Chief
Ioan Vasile ABRUDAN, PhD., Professor
Co-editors:
Ion VIŞA, PhD., Professor, Director of PRO-DD Research Institute
Liliana ROGOZEA, PhD., Professor
Senior editor Series V

Gabriel BRĂTUCU, PhD., Professor
Editors, Series V
Ileana TACHE, PhD., Professor
Cristina NEESHAM, PhD, Professor, Monash University, Melbourne, Australia
Tiberiu FORIŞ, PhD., Professor
Ana ISPAS, PhD., Professor
Dana BOŞCOR, PhD., Associate Professor
Nicolae MARINESCU, PhD., Associate Professor
Marius DINCĂ, PhD., Associate Professor
Silvia SUMEDREA, PhD., Associate Professor
Secretary, Series V
Angela REPANOVICI, PhD., Professor
Ioana CHIŢU, PhD., Associate Professor
Final Technical Supervision

Lavinia DOVLEAC, PhD., Scientific Researcher
Alexandra PALADE, PhD. Candidate
Mădălina OPRIŞ, PhD. Candidate
Timea DEMETER, PhD. Candidate
English language supervision

Tania MUŞINĂ, PhD., Lecturer
Anca MAICAN, PhD., Lecturer
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SCIENTIFIC COMMITTEE
Laurenţiu-Dan ANGHEL, PhD, Prof., Academy of Economic Studies, Bucharest,

Romania
Niculaie ANTONOAIE, PhD, Prof., Transilvania University of Braşov, Romania
Oscar BAJO-RUBIO, PhD, Prof., Universidad de Castilla – La Mancha, Spain
Carmen BĂLAN, PhD, Prof., Academy of Economic Studies, Bucharest, Romania
Paolo BISOGNI, PhD, Prof., Sogenet SRL, AILOG, Italy
Constantin BRĂTIANU, PhD, Prof., Academy of Economic Studies, Bucharest, Romania
Gabriel BRĂTUCU, PhD, Prof., Transilvania University of Braşov, Romania
Javier Leon DE LEDESMA, PhD, Prof., Universidad de Las Palmas de Gran Canaria,
Spain
Constantin DUGULEANĂ, PhD, Prof., Transilvania University of Braşov, Romania
Liliana DUGULEANĂ, PhD, Prof., Transilvania University of Braşov, Romania
Sergio Moreno GIL, PhD, Prof., Universidad de Las Palmas de Gran Canaria, Spain
Dorin LIXĂNDROIU, PhD, Prof., Transilvania University of Braşov, Romania
James KEARNS, PhD, Prof., Letterkenny Institute of Tecnology, Romania
Pavel NĂSTASE, PhD, Prof., Academy of Economic Studies, Bucharest, Romania
Cristina NEESHAM, PhD, Prof., Monash University, Melbourne, Australia
George Arana PADILLA, PhD, Prof., Universidad de Las Palmas de Gran Canaria,
Spain
Ivor PERRY, PhD, Prof., De Montfort University, UK
Nicolae Al. POP, PhD, Prof., Academy of Economic Studies, Bucharest, Romania
Vasile RĂILEANU, PhD, Prof., Academy of Economic Studies, Bucharest, Romania
Ilie ROTARU, PhD, Prof., Lucian Blaga University of Sibiu, Romania
Aurelia-Felicia STĂNCIOIU, PhD, Prof., Academy of Economic Studies, Bucharest,
Romania
Ioan TALPOŞ, PhD, Prof., West University of Timişoara, Romania
Adriana TIRON TUDOR, PhD, Prof., Babeş-Bolyai University, Cluj-Napoca, Romania
Peter VAN DER HOEK, PhD, Prof., Academy of Economic Studies, Bucharest, Romania;
Erasmus University, Rotterdam, Netherlands
Nicolae VOICULESCU, PhD, Prof., Titu Maiorescu University, Bucharest, Romania
Răzvan ZAHARIA, PhD, Prof., Academy of Economic Studies, Bucharest, Romania
CONTENTS
• MARKETING ........................................................................................................... 7
Bălăşeşcu M.: Marketing solutions for Romanian retail companies ................................. 9
Bălăşescu S.: Methods of measuring the level of logistics serving in
international business ............................................................................................ 17
Bărbulescu O.: Braşov customer satisfaction as regards the collaboration with
leasing companies .................................................................................................. 25
Dovleac L.: The Role of new communication technologies in companies’ sustainability ... 33
Enache I.C., Brodský Z.: A Conceptual framework for using marketing models for
sustainable development ......................................................................................... 41
Epuran G., Tescasiu B.: Specific Euro-marketing elements in the single European
market. A Cultural approach ................................................................................. 47
Manic M.: The Rise of Native Advertising ....................................................................... 53
Neacşu N. A.: Design element analysis on juice market. Case study: Prigat .................. 59
Opriş (Stănilă) M.A., Brătucu G., Palade A.: Distribution policies and strategies for
sustainable textile products ................................................................................... 65
Ţierean O.M., Roman D. E.: Commercial breaks vs. product placement: what works
for young consumers? ............................................................................................ 71
• TOURISM................................................................................................................. 79
Băltescu C. A.: Trends driving the hotel industry global evolution. Case of Romania .... 81
Cismaru L., Ispas A.: Improving the profile of the European tourist destinations
through the European tourism indicators system .................................................. 87
Demeter T., Brătucu G., Palade A.: Dynamics of the Youth Travel Market on a
Global Level ........................................................................................................... 95
Untaru E.N., Ispas A., Candrea A. N.: An Overview of environmental education
initiatives in the international and Romanian tourism ........................................ 107
• MANAGEMENT.................................................................................................... 117
Băcanu B.: The E-commerce as a way to sustain a strategy .......................................... 119
Madar A.: Implementation of total quality management. Case study: British airways 125
Pakocs R., Lupulescu N. B.: Management strategies to reduce conception / creation
risks of intellectual property ................................................................................ 133
6 Bulletin of the Transilvania University of Braşov • Series V • Vol. 8 (57) No. 1 - 2015
• FINANCE AND ACCOUNTANCY ..................................................................... 139

Baba M. C.: Cost reduction analysis in the online retail as compared to the classic
retail ..................................................................................................................... 141
Deari F., Dincă, G.: Financial performances of Romanian wood industry companies . 147
Drumea C.: Analysis of the cost impact of the new technologies in E-tail ..................... 159
Honkova I.: The Dynamic model of choosing an external funding instrument .............. 169
Zamfir M.: The Pros and cons of budgeting system within economic entities................ 183
• ECONOMIC THEORY ....................................................................................... 193

Duguleană C., Duguleană L.: Energy efficiency and performance indicators of
European electricity market ................................................................................. 195
Duguleană L., Duguleană C.: Analyzing and forecasting the European social climate . 207
• BUSINESS AND EUROPEAN LAW .................................................................. 225
Boscor D.: Export strategies adopted by Romanian SME ............................................. 227

Grădinaru E., Brătucu G., Bucs L.: The Influence of macroeconomic indicators on the
emission of greenhouse gases. Treatment of outliers. Case study - România ..... 233
Polgár (Deszke) K.D., Duguleană L.: Characteristics of LEADER Program for rural
development in Romania ...................................................................................... 249
Tescasiu B.: Toward a macro-regional strategy for the Carpathians ........................... 257
• ECONOMIC DATA PROCESSING ..................................................................... 265

Enache C. I.: Fuzzy Logic Marketing Models for Sustainable Development ................. 267
Lixandroiu R., Maican C.: Personalization in E-commerce using profiles similarity ... 275
Maican C., Lixandroiu R.: Rapid Application Development for a Research Information
System: A Case Study ........................................................................................... 281
Petcu N.: Data mining techniques used to analyze students’ opinions about
computization in the educational system ............................................................. 289
Authors Index ................................................................................................................. 299

MARKETING
Bulletin of the Transilvania University of Braşov
Series V: Economic Sciences • Vol. 8 (57) No. 1 - 2015
Marketing solutions for Romanian retail companies

Marius BĂLĂŞESCU1
Abstract: Current developments in the consumer goods market raises important and
complex issues for all retail companies. Under increasingly strong competition, Romanian
retail businesses need to solve outstanding issues regarding the integration in market
mechanisms, the diagnose of problems faced in the competitive environment, the initiation
and development of business or the determination of any activity’s feasibility. Furthermore,
being employed in a direct relationship with market demand, retailers must permanently
know and follow its requirements and demands, phenomenon requiring multiple researches,
studies and analysis.
Key-words: retail marketing, marketing information, marketing solutions.
1. Introduction
The analysis and scientific researches highlighted the need of approaching the
distribution marketing as a standalone marketing specialization. From this point of
view it has been developed the concept of the retail company’s marketing focused
on the coordinates of individual consumer goods sale (Bălăşescu et al, 2009).
Another debated issue, brought as argument for the assertion of marketing concept
for a retail company, is the problem of using the marketing information as an
essential condition for building retailers’ marketing policies and strategies
(Bălăşescu and Bălăşescu, 2008).
The scientific approach continued with the analysis of how retailers from
Brasov city use marketing information to build market strategies. For this topic,
there were conducted 2 marketing research, a qualitative one and a quantitative one.
The researches highlighted:
- the extent to which retailers know the marketing philosophy and provide a
functional integration of the concept (1)
- the general marketing tools for managing the activities developed inside the
commercial structures (2).
1
Transilvania University of Braşov, marbalasescu@yahoo.com
10 Marius BĂLĂŞESCU
After the results interpretation, the most important conclusion was that,
overall, the retail managers from Brasov still do not think and act in a spirit of
genuine marketing philosophy.
Another significant conclusion shows that there is a clear differentiation
between small independent retailers acting locally and large retailers acting at
national or international level, in terms of marketing philosophy (marketing
information used, promoting tools, marketing activities organization etc.).
2. Marketing research results
The qualitative marketing research (conducted in September 2013) focused on

knowing the opinions of two groups of retail managers from Brasov regarding the
collection and use of marketing information.
The main research’s objective was to find the views of some retail managers from
different local companies on the process of obtaining and using marketing
information.
The qualitative research was the starting point in clarifying issues related to
the extent that some retail managers are concerned to obtain and use marketing
information for building marketing policies and strategies.
The quantitative marketing research (conducted in November-December
2013) focused on: attitudes, opinions and behaviours of retail managers from Brasov
regarding the way they use marketing information for business development.
The quantitative marketing research was survey based on a questionnaire with
38 questions, and the data was collected through the direct interview method. The
studied population was considered the total of active retail companies registered in
Brasov city. The sample consisted in 384 retail companies. The considered error was
5%. From these companies were interviewed the managers with responsibility for
marketing decisions.
The main goals aimed by the 2 researches were:
• Assessing the opinions of retail managers from Brasov regarding the
importance given to studying and understanding of the defining
characteristics of purchaser behaviour.
• The importance of designing their own market strategies.
• Identifying the sources and types of marketing information used by retail
managers and assessing the utility of this information in marketing and
management decision making.
• Determining how retailers use the services of consulting firms for solving
marketing problems.
• Identifying the sources of conflict in the retailer-supplier relationship from
the perspective of marketing information.
Marketing solutions for Romanian retail companies 11
• Finding the opinions on the impact of the current economic crisis effects on
retailers, retail and identifying the methods used by these companies to
counter fight the financial crisis effects.
3. Marketing solutions for the retail company
The researches above led us to the following categories of solutions.
A. Solutions regarding the retail company’s market

Until they clarify the profiles of markets and market segments, the retailers
cannot make effective decisions related to the products and services offer, pricing,
promotion, merchandising or any decision to support their positioning on these
markets.
Most Romanian retailers, especially the traditional ones, fail to clearly define
the market segments and to establish their positions on the market. They try to sell
an offer for "everyone", failing to properly satisfy any segment.
A solution supported by us and which contributes to a better segmentation as
well as customer loyalty, is the creation of an own database by every retailer (Bob,
1999). Databases of customers are not just some files, but a valuable commodity for
traders to know their customer better. Own marketing information is important to
develop a relationship with the consumer, so there can be made personalized offers
such as free offers of preferred products to the customer on some occasion. The
most common way to create a database in Romania is using loyalty cards or
promotions (Balaure, 2000).
In this context of segmentation and positioning, we propose emphasizing the
concerns of Romanian retailers, either directly or through their own specialists or
consulting firms, to make a correct segmentation and positioning. Without that,
failure is almost certain in the future (Bălăşescu and Bălăşescu, 2010). A correct
segmentation and positioning in the consumer goods market must lead the retailer to
adopt an effective strategy to differentiate the offer. Specifically, differentiation can
be made by: assortment expanding, own brand adoption, image and communication,
innovation.
Given the current economic climate we suggest increasing the
competitiveness of retail companies due to costs reduction.
B. Solutions for effective integration of the retail company inside the

marketing channel
One of the key marketing decisions for the retail company is to be integrated
in a marketing channel. Considering this aspect, we should analyse the situation of
Romanian companies.
Large Romanian retailers (many of them representing international retailers) are

integrated into the vertical structures of marketing channels. In these structures,
large retailers participate (along with manufacturers or distributors) or initiate
themselves, the coordination of marketing channel by mergers or acquisitions. The
large retailer can achieve an administrative coordination of the marketing channel
(Patriche, 2004). In this case, the retailer, through its financial size and strength, has
the control on the manufacturing companies in the marketing channel, too (Patriche,
2006).
Retailers belonging to small independent trade (traditional trade) have their
place, mainly within conventional marketing channels. Such firms are autonomous
economic entities pursuing their own needs satisfaction and achieving their own
goals even to the detriment of all units that comprise the marketing channel. The
conflict between the marketing channel members is a frequent reality.
In Romania the traditional trade, represented by small independent
businesses, is still preponderant and these firms are mostly placed in conventional
marketing channels (with lower economic returns reported to the vertical coordinate
structures of marketing channels). In this context, our proposal is that these
businesses find their place within vertical coordinated structures of marketing
channel. Here we refer to the type of contractual coordination that may materialize
in the creation of retailers’ cooperatives, voluntary chains, franchises etc. We
believe that the membership in such coordinated structure is the only viable option
in the long run for most small independent traders.
C. Solutions regarding the store’s spatial location

For a retailer, the store location is the key point of its ability to attract
customers. Retailers must consider many factors when making decisions about
where their stores will be located such as:
the type of store;
the location characteristics;
the general look, size and visibility of the building,
the accessibility for customers and vehicles which delivers goods;
the customer’s characteristics, purchase and location needs,
the competitors’ location.
D. Solutions regarding the store’s image, atmosphere and environment

The store’s image, atmosphere and environment are key elements in retailers’
decisions. They influence the customers’ decisions in choosing the store and the
buying experience. We consider that more attention should be given to the following
factors which contribute to the store’s image:
The store’s exterior influences the customers’ impression even before they go
in. In Romania, still less importance is given to arranging the storefront, although
this is an extremely important element contributing to differentiation and creating
commercial venue. So, we propose that for the retailers to seek the services of
specialized companies or individuals for the arrangement and decoration of store’s
windows.
The store’s indoor environment is an important element since it determines
the store’s attractiveness to the customer. The arrangement, decor, colours, lighting
and other sensory elements (as ambient music and specific smell) contributes to the
overall atmosphere – giving to the store a special feature that distinguishes it from
others.
The store must provide an environment corresponding to selected market
segments, to attract the attention and to determine the customers to buy from that
store.
Our proposal related to the store atmosphere is that retailers should strive ever
more strongly to create a "buying environment" which meets the requirements and
desires of the target market segments.
Romanian traders must consider two main variables of product policy:
assortment policy and the mix of selling and extra selling services.
In our opinion, given an offer agglomeration on most markets, the Romanian
trader must pay more attention in defining the assortment characteristics (length,
width, depth and homogeneity degree), and in products’ quality.
E. Solutions regarding product policy for retail company

Romanian retailers must consider two main variables of product policy:
assortment policy and the mix of selling and extra selling services (Bălăşescu and
Bălăşescu, 2010).
In our opinion, given an agglomeration of offers on most markets, the
Romanian retailer must be today more attentive to define the assortment
characteristics (length, width, depth and degree of homogeneity), and the goods’
quality as well.
The seller has to find new ways of being different or even unique on the
market. In this context we suggest the following differentiation and individualization
methods:
a) providing goods different from competitors (e.g. own brands involving
exclusivity agreements). Currently, there is an explosive growth of private labels for
large retailers (hypermarkets and supermarkets, cash & carry).
b) offering varieties of products that highly meet the target segments needs. For
example, retailers focused on selling clothing and accessories for babies and young
children decide to include various objects used for feeding children. Other examples
are retailers selling clothes for fat people or retailers selling organic or natural
products etc.
c) We consider that the mix of selling and extra selling services is very important
in retailer’s decision making. The seller must understand that if the assortment
policies and the policies related to quality, price, distribution and promotion can be
easily imitated, the services policy hardly can be copied. In this context we propose
an adaptation and even customization of services strictly considering the
requirements and preferences of target customers. For example, today's
supermarkets that sell food have "forgotten" about the services offered by the small
grocery stores such as: home delivery, sales based on credit and correspondence
with customers.
F. Solutions regarding pricing policy for retail company

The retailer’s pricing policy is a decisive positioning factor and must be
closely related to the targeted market segments, the range of products and services
and the competition.
Traders should pay attention to pricing strategies. Many traders will set low
prices for certain products, in order to create commercial traffic in the store. These
products will determine the overall store sales (e.g. hypermarkets and supermarkets
case). Sometimes, by setting high prices, the stores want a specific image to the
customers, e.g. specialized stores, luxury brands etc. (Bălăşescu and Bălăşescu,
2010, p. 235-236).
Our proposal for Romanian retailers in the context of the current global
economic crisis, aims to reduce costs by reducing losses due to not sold goods. This
can be done if the retail managers run a rigorous analysis of category management.
According to this strategy every inch of the store shelf must produce, and any
product which is not sold must be taken out of the range.
In recent years, due to increased sales, many retailers have purchased products
without checking on each category or type of products if their selling is profitable.
G. Solutions regarding distribution policy for retail company

In their search after turnovers and bigger profits, manufacturers excessively
have chosen and traders (including large chains of hypermarkets, supermarkets etc.)
accepted too easily using intensive distribution strategy (Costea and Săseanu, 2009).
The overuse of this strategy led to a reduction in the differentiation between both
producers and traders’ brands and offers in the commodity market. So, in order to
create a distinct image in the market, the retail company should have to invest much
more in the selective and exclusive distribution strategies.
H. Solutions regarding promotion policy for retail company

The retailers use a series of promotional tools such as publicity, personal
selling, sales promotion, promotion to the point of sale and public relations, to
attract customers (Florescu et al, 2003).
In our opinion, a solution for Romanian retailers especially in conditions of
crisis is not the reduction of promotional budgets, but keeping them. At the same
time, they should focus more on personal selling or public relations, tools that will
help increase the trader’s credibility in the customers’ eyes. Inevitably, the retail
company must make a distinction of its offer and its image in the market, given that
most of the traders use instruments that do not produce the desired effects, such as
advertising or sales promotions.
We believe that all retailers should pay very much attention to the personal
selling. Maximizing sales is possible only by properly trained personnel, which is
the "key" of the retailer business.
4. Conclusions
The marketing scope is to guide the whole managerial process of the retailer toward
the market and its requirements. In this context, we bring to your attention some
matters that will receive other dimensions on the spur of the concepts, techniques
and marketing tools (Bălăşescu et al., 2009, p.).
The transformation of marketing in a fundamental policy in the retail
company considers in particular: the permanent study and objective analysis of the
market and its evolution; evaluation of product quality and consistency with the
prices of those products; permanently change of what does not correspond,
requesting new products or services, new ways of serving and even new types of
distribution.
The transition from the intuitive leadership to a scientific management
process must be done by retailers (Patriche, 2007, p.62). Marketing considers the
simultaneity of two important requirements:
(1) the use of scientific methods in management - the systematic collection of
data, statistical analysis and economic calculations, scientific methods of
forecasting, psychological motivations, decision theory, behavioral patterns,
establishing criteria for assessing the activity etc.;
(2) the existence of personnel able to use such a complex instrumentation,
personnel who possess at the same time, the basic theoretical knowledge and
practical experience regarding the sales issues.
The approach of promoting the marketing philosophy that all actions must be
based on the market and consumer interests involves the use of new methods of
research and study.
The retail managers need to adopt a new attitude which involves knowing
better the marketing concept content and understand its principles. The marketing
function need to be integrated within the retailer’s managerial functions and a
marketing training need to be done for all the personnel.
5. References
Bălăşescu, Simona, and Marius Bălăşescu. 2010. Marketingul în comerţul cu

amănuntul. Braşov: Transilvania University Publishing House.
Bălăşescu, Marius. 2005. Distribuţia bunurilor de consum final. Teorie şi studii de
caz. Braşov: Infomarket.
Bălăşescu, Simona and Marius Bălăşescu. 2008. ”Research on obtaining and using
marketing information in commerce companies“. Management and
Marketing, 6/2008: 76-86.
Bălăşescu, Marius, Lavinia Dovleac, Carmen Anton, and Simona Bălăşescu. 2009.
”Contribution to the Definitions of the Particularities of Consumer Goods
Distribution Marketing”. International Recent Advances in Mathematics and
Computers in Business and Economics- MCBE 2009”, Prague Czech
Republic: 26-30
Bob, Constantin. 1999. Sisteme informaţionale în comerţ. Lugoj: Dacia Europa
Nova.
Costea, Carmen, and Andreea Simona Săseanu. 2009. Economia comerţului intern şi
international. Bucureşti: Uranus.
Florescu, Constantin, Petre Mâlcomete, and Nicolae Al. Pop (coord.). 2003.
Marketing-Dicţionar Explicativ. Bucureşti: Economica.
Patriche, Dumitru. 2004. Bazele comerţului. Bucureşti: A.S.E.
Patriche, Dumitru. 2006. Canale de distribuţie şi logistică. Bucureşti:
ProUniversitaria.
Patriche, Dumitru (coord.). 2007. Tratat de Management Comercial. Bucureşti:
Universitară.
Methods of measuring the level of logistics serving in

international business
Simona BĂLĂŞESCU1
Abstract: This paper raise the issue of logistics service of customers in international
markets. The study aims optimizing logistics serving using the case of a company in Romania
which has several foreign customers. The main objectives of the investigation are related to
the measurement of logistic service level for the company’s foreign clients and to an
evaluation of the present potential of the logistic serving strategy of this company. The
instruments used for the analysis are the economic outputs, information from foreign
customers and the theory about the level of logistic serving. The results of the analysis are
used for making a proposal of a set of projects aiming the improvement of the serving quality
of foreign customers.
Key-words: supply chain management, logistic service, international business.
1. Introduction
While the importance of customer service is recognized and any manager, the
concept defining is difficult due to the complexity of the involved issues.
Academics agree that logistics serving has become an essential component in
implementing strategies for creating value-added, total quality for customers and
company objectives. The companies approach regarding this concept is imperative
due to the tendency of shortening products life cycle and the "more educated" and
increasingly demanding customers.
Bǎlan C. (2004, p.24) considers that the level of customer service is the result
of the whole system of logistics activities. Its direct impact on sales and profits
should establish the logistics service level as an objective of the company's logistics
strategy. Logistics service is a part of customer service, as a result of all company
activities.
Christopher M. (1990, p. 66) considers that customer service ensure the
availability of products for customers. It assumes that the potential value of the
product becomes effective only when the customer takes possession of the product.
1
Transilvania University of Braşov, simona_balasescu@yahoo.com.
18 Simona BĂLĂŞESCU
The concept of customer service can be analysed from different perspectives:

activity, level of performance or management philosophy (LaLonde, B. and Zinszer,
H, 1976, p. 117). The activity-based approach emphasizes customer service
management. The level of performance is focused on the measurement possibilities.
Regarded as management philosophy, customer service reflects the importance for
marketing of meeting customer needs. The effectiveness of the concept of customer
service requires simultaneous consideration of three dimensions for the definition
process.
According to Blanding W. (1974, p.3) customer service is a chain of sales
activities and customer satisfaction requirements, which begins with the receipt of
orders and ends with products delivery to customers, in some cases continuing with
equipment maintenance services and other forms of technical support.
Other famous academics (foreign and Romanian) who contributed to the
definition of the customer service process: Costea, C. (2004, p.51), Kotler, Ph.
(2008, p. 145), Gattorna, J. (1999, p.67), Hines, T. (2004, p.113).
2. Measurement of logistic service level of foreign customers
In this part will be measured the logistic service level for the foreign customers of a
so called Company “X”, in order to examine its capacities and limitations, and to
identify the problems which could raise in serving certain categories of customers or
certain markets. The company faced in 2009 with a reduction in demand from
customers in foreign markets. The number of foreign orders decreased by 10% in
2009 compared to the value in 2008, while the customers number stayed the same.
Fig. 1. Evolution of foreign orders number received by Company X
Analysing the evolution of demand in each export market, we can see the reduction
tendency manifested in all three markets. The number of customer orders both from
Hungary and Bulgaria has decreased by 9% in 2009 compared to 2008, while the
number of customer orders from Greece decreased by 11% in 2009 compared to the
previous year.
Methods of measuring the level of logistics serving in international business 19
This trend can be justified by reduction of operational activity of firms due to

the crisis from recent years the international economic context. Reducing the
number of orders can also be an indication of the decrease of the logistic service
level for foreign customers.
Modest values achieved in 2008 by the three indicators measuring the logistic
service level show the low efficiency of foreign customer service in that year. The
negative evolution variation that characterizes the variation of the three indicators in
2008-2009, indicates the inefficiency of foreign customer service during 2009.
Fig. 2. Metrics for foreign customer service level of Company X
In 2008, the foreign client received the orders in complete state in 78 cases
out of 100, while in 75 cases out of 100, orders reached the customer in good
conditions, and in only 73 cases out of 100 orders were received from client on time.
In 2009 compared to 2008, the foreign client received, on average, one order less in
complete state, two orders less in good conditions, and three orders less on time.
The main problems faced by foreign customer service in 2008-2009 were the
delayed date of delivery and a wrong state of orders on the receipt moment.
The lowest performance for foreign customer service level was recorded on
complying with the date of delivery. The share of orders delivered on time in total
orders dropped in Semester I of 2009 by 3% compared to the semester I of 2008. In
semester II of 2009, the value of the same variable was 4% smaller compared to
semester II of 2008. The second problem of customer service was a wrongly state of
orders on reception time. This wrongly state of orders refers to the wrong quality of
orders and the unsatisfying state of orders: damaged packaging, damaged labels/
lipsǎ, incorrect invoices or lack of documents.
Fig. 3. Evolution of variables for foreign customer service level of Company X
The share of orders delivered to customers in good conditions in total orders

on the first semester of 2009 decreased by 3% compared to the same period in 2008,
while in the second half of 2009, the indicator dropped of 2% compared to the
second half of 2008.
In both semesters of 2009, the share of orders shipped in incomplete state
form total orders increased with 1% compared to the values achieved in 2008.
Fig. 4. Share of orders delivered on time in total orders
Regarding the share of orders delivered on time in total orders, it can be

noticed that in 2009 the level of service has decreased compared to 2008 for 2
markets and for the company subsidiaries. The foreign market less served both in
2008 and 2009 was Bulgaria, while the subsidiaries were best served. If we consider
the evolution of orders on customers’ categories, we see that the dropping trend is
present in almost all categories except the industrial manufacturers from Hungary
and logistics operators in Bulgaria, where sales recorded in 2009 an increase of 17%
and 5%, compared to 2008 values.
The factor that contributed to the decrease of foreign orders received by
company X in 2009 was the massive reduction of orders from logistics operators
from Hungary. This category has the most massive reduction of orders (43%),
followed by distributors from Bulgaria, with a reduction of orders by 16%, and the
category distributors in Greece, with a reduction of 13% of orders.
The significant differences in the level of demand from one customer category
to another, and even opposite trends expression (17% increase of industrial
manufacturers orders in Hungary, a decrease of orders by 43% in Hungarian
logistics operators) can have as major cause the problems faced by the company in
serving certain categories of customers.
To discover if certain foreign customers are less served than others, it is
necessary that the measurement process of the service level to be applied
independently for each class of customer. Both in 2008 and in 2009, logistics firms
in Hungary and Greece were the worst served compared to other categories of
customers.
Fig. 5. The share of orders delivered in complete state from total orders executed by
Company X
In the first half of 2008, for the logistic companies in Hungary, from the total
orders, 31% have been received in incomplete state. In the second half this share
increased to 35%. Logistic firms from Greece received in incomplete state 30% of
orders placed in the first half of 2008, while the share of orders in incomplete
received in the second half of 2008 was reduced to 25%. Customers least affected in
2008 by incomplete orders were industrial manufacturers from Hungary,
wholesalers from Greece and logistics operators in Bulgaria.
In the first half of 2008, the share of orders received in incomplete state in
total orders was 23% for industrial manufacturers in Hungary, 21% for wholesalers
in Greece, and 27% for logistics operators in Bulgaria. In the second semester of
2008, the share value has been changed to 22% for the first group of customers, and
to 24% for the second group customers, and 22% for the third category of
customers.
Regarding the temporal change of the indicator measuring orders delivered in
incomplete state in total orders, we can notice important discrepancies of service
between the categories of customers. The share of orders received in incomplete
state in total orders of industrial manufacturers from Hungary has declined by 2% in

2009 compared to 2008. For wholesalers in Greece, the share of orders delivered in
incomplete state in total orders increased by 1% in 2009 compared to 2008. These
opposite evolutions reflect the company's negligence in serving certain categories of
customers. This indicates considerable improvements of serving quality for certain
customers, and reduction of quality for other clients, manifested from one year to
another. In this context, it can be seen that compared with 2008, in 2009 it has been
improved the service quality for 4 categories of customers and decreased for the
other 4 categories of customers.
If the issue of orders delivery in incomplete state seriously affected only 2
categories of customers, the serving inefficiency expressed through damaged orders
seriously affected a higher number of categories of customers.
In the second half of 2008, from 100 orders made, wholesalers of Bulgaria
received 28 damaged orders; logistics operators in Greece have received 27, while
logistics operators in Hungary received 26 and the subsidiaries of company X
received only 24 damaged orders. The worst served customers category are
wholesalers of Bulgaria. In their case, the number of orders received damaged
declined in the first half of 2009 to just 26 orders of 100 made, while in the case of
Hungarian logistics operators and the subsidiaries, the number of damaged orders
was reduced to 25 and 21 orders of 100.
Fig.6. Share of orders received in good state, in total orders performed by Company X
Customers least affected by this service limit were the wholesalers in Greece.
The share of orders delivered in incomplete state in total orders, took the lowest
values, respectively 21% in the first semester of 2008 and 22% in the second half of
the year. Compared with 2008, the Hungarian logistics operators were affected in
2009 by an increase of 4% of damaged orders in total orders, while industrial
manufacturers in Hungary benefited in 2009 from a reduction of 2%. Compared to

2008, the logistics operators in Hungary in 2009 were affected by an increase of 4%
of damaged orders share in total orders, while the industrial manufacturers in
Hungary in 2009 benefited from a reduction 2% of the same indicator.
The negative impact of not delivering on time the orders affected only 2
categories of customers: wholesalers from Greece and logistics operators in
Bulgaria. Wholesalers in Greece were the worst served both 2008 and 2009. In the
first half of 2008 only 67 cases out of 100 received the orders on time, while in the
second half of 2008 and first half 2009 orders have been delivered on time in 72
cases out of 100. In the second half of 2009 orders were delivered on time in 76
cases out of 100.
Bad serving, meaning late delivery of orders, raised less problems for logistics
operators in Bulgaria, where the share of orders delivered in time in total orders
reached values of 71% in first half 2008 and 69% in the first half of 2009, while in
the second half of both years the achieved values were 73% and 72%. Customers
best served were the company subsidiaries. Of the total orders, the share of late
delivery was 22% in the first half of 2008 and 21% in the second half of 2008. In
2009, the service quality for subsidiaries was reduced but, from total orders, the
share delayed orders raised to a value of 23% for both semesters of 2009.
The indicator variation for the period 2008-2009 was favourable for certain
categories of customers, disadvantaging others in the same time. While logistics
operators in Hungary received in 2009 by 2% more delayed orders compared to
2008, industrial manufacturers in Greece received with 1% fewer delayed orders
compared to the previous year. Compared to 2008, the issue of delayed orders in
2009 improved for only 3 groups of customers, while for 5 groups of customers
intensified. We can see again the differences in quality serving from one category of
customers to another.
3. Conclusions
The analysis for measuring the level of logistic service for foreign clients of the
company X indicated a low efficiency of serving, while reducing the level of logistic
service. In order of decreasing negative impact, the main obstacles encountered by
the firm in serving foreign clients were delayed delivery and incompleteness of
orders.
In terms of export markets, the market worst served both 2008 and 2009 was
Bulgaria, followed by Greece and Hungary, markets which have reached higher
values of serving. Analysing the situation on categories of customers, was concluded
that, in terms of respecting the delivery deadline, the worst served customers were
distributors in Greece. In terms of damaged orders received, the most affected
category were the distributors in Bulgaria and in terms of incompleteness of orders,

customers most affected were the logistics operators in Hungary and Greece.
As the information given by Company X showed traffic congestion in the
factory as major cause for failure deadline, the proposed solution refers to traffic
fluidization through optimizing traffic the collecting times of orders by carriers.
The proposed solution offers to logistics processes the capacity of controlling
and reducing the bottlenecks between arriving and departing of loaded trucks from
the factory reducing unnecessary waiting time. The solution also improves the
service availability through the company's ability to manage seasonal variations in
demand.
Due to different requirements of foreign customers, the company is required
to realize in terms of order cycle duration a division of foreign markets into
segments that will be addressed by distinct strategies, based on the customer
activity type criteria.
The cycle duration is not the only component of service for whom the
company need to adopt different strategies from a customer category to another.
Failure to meet customer expectations in terms of logistics service has negative
repercussions both on sales and company image. The level of service should be a
priority for logisticians. The impact of service on sales and company profits justify
its importance.
4. References
Bǎlan, Carmen. 2004. Logistica – Funcţie Integratoare şi Factor de

Competitivitate. Bucureşti: Uranus.
Martin, Christopher. 1990. Developing Customer Service Strategies (fourth edition).
Surrey: Gower Publishing Company Ltd.
LaLonde, Bernard J. and Paul H. Zinszer. 1976. ”Customer Service: Meaning and
Meansurements”. The National Council of Physical Distribution
Management, Chicago, I11, p.117.
Costea, Carmen. 2004. Logisticǎ. Bucureşti: Uranus.
Kotler, Philip. 2008. Managementul Marketingului. Bucureşti: Teora.
Gattorna, John. 1999. Managementul Logisticii şi Distribuţiei. Bucureşti: Teora.
Hines, Tony. 2004. Supply Chain Strategies-Customer-Driven and Customer
Focused. Oxford: Elsevier/Butterworth, Heinemann.
Blanding, W. 1974. 11 Hidden Costs of Customer Service Management. Washington
DC: Marketing Publication.
Braşov customer satisfaction as regards the

collaboration with leasing companies
Oana BĂRBULESCU1
Abstract: Starting from the concept of customer satisfaction, intensely studied in the
specialist literature, this paper tries to establish to what extent the customers - legal entities,
of the leasing companies in Braşov county – are satisfied with the services provided by these
companies. To this end, we conducted a quantitative marketing research, in the period
October-December 2014, upon a sampling of 800 companies. The analysis of several aspects
that influence the level of satisfaction experienced by the people with the quality of user, in
the leasing contracts, has led to the conclusion that it ranks high; determining them to resort
several times to the services of the same leasing company; a fact which invalidates one of the
hypotheses stated in the beginning of the research.
Key-words: leasing company, customer satisfaction, financing, research.
1. Introduction
Customer satisfaction is a concept that defines the fulfillment degree or level of the
consumers’ needs and wishes.
Most experts agree that customer satisfaction can be defined as an evaluation
of the different dimensions of the product or service quality (Spreng, MacKenzie,
Olshavsky, 1996, 30).
Other authors attempt to define the concept of customer satisfaction,
depending on other dimensions than those exclusively related to quality. In this
respect, (Gordon McDougall and Terrence Levesque, 2000, 392) deem that
customer satisfaction should be operationalized and built not only based on the
dimensions entailed by quality (quality dimensions), but also based on the "value
perceived" by customers. In this way, starting from the definition of the "value
perceived" by customers as the result or the benefits received by customers, in
relation to the cost or the price they paid, we can appreciate that both the perceived
quality of the service and the "perceived value" influence customer satisfaction.
Admittedly, in this early 21st century, customer satisfaction most clearly defines both
the meaning and the real significance of the economic activities of our time.
1
Transilvania University of Braşov, oana.barbulescu@unitbv.ro
26 Oana BĂRBULESCU
In a certain light, the main purpose of the companies is to manufacture and

deliver those products and services that most highly fulfill the demands and the needs
of the consumers or of the users. For a prestigious company to offer high quality
services it is necessary to know and understand clients’ demand before services
delivery and their reaction after the delivery (Madar and Neacsu, 2013, 267).
As regards the financing services, depending on the specificity of the activity
and on the type of the leasing consumer (natural person or legal entity), each of the
characteristics of the three financing instruments – bank credit, operational leasing
and financial leasing, can turn into clear advantages for the entity whom the asset is
destined to.
In this way, the importance of customer satisfaction lies in acknowledging the
manner and the way in which the organizations generate or create "pleasures"
among the consumers of leasing services, after having identified these consumers’
needs. Therefore, the identification of the leasing form that best suits the user’s
needs is a first step in obtaining customer satisfaction.
The most important aspects that must be considered in choosing the financing
solution are: the advance payment, the manner of accounting entry, the tax on profit
or the global costs. At the same time, service quality or user safety should not be
overlooked.
Saving, cost reduction, predictability and the possibility of budgeting some
fixed monthly costs, alongside the idea of mobility, the elimination of asset resale
risk at contract termination, being taken by the leasing company, are the main
reasons for the clients of the leasing companies, generally legal entities, to resort to
operational leasing services, in order to acquire an asset. In general, big companies,
including the multinational ones, prefer to externalize all operations that are not
directly related to the basic activity. In this case, operational leasing with asset
administration is privileged, as compared to the other two financing methods.
On the other hand, medium-sized enterprises prefer financial leasing; and very
small-sized companies often choose solutions that are closer to the financial
instruments destined to natural persons.
This can be related both to a low propensity to the risk; and to the practices of
creating stand-alone companies, in the ownership of the parent company, which take
over its debts, leaving for the latter, a favourable image, in terms of balance sheet
(Drumea, 2008, 156).
2. Objectives
The pursued objectives of the research aimed at analyzing aspects such as:
usefulness of the information supplied by the leasing companies, their flexibility in
the choice of the insurance company, the diversity of these companies’ bids, in order
Braşov customer satisfaction as regards the collaboration with leasing companies 27
to determine which is the customer satisfaction level, in Braşov, as a result of the

collaboration with the leasing companies.
Within the research, we formulated the following working hypotheses:
1. The value of the leasing contracts is influenced by the turnover of the
economic agents that require financing from the leasing companies.
2. Over 30% of the economic agents in Braşov county faced difficulties, as a
result of their collaboration with the leasing companies.
3. Research methodology
In order to study this extremely important and versatile financing instrument and to
test the hypotheses herein formulated, in October -December 2014, we undertook a
piece of quantitative marketing research at the level of Braşov county on a sample
consisting of 800 companies (this sample size was established based on the data
published by the county statistics departments – the number of companies in Braşov
county, assuming a limit error rate of 5%).
Since we wanted to obtain a sample size similar in structure to the researched
population, we chose the proportionally stratified sampling (stratifying according to
the activity field: agriculture, industry, construction, trade and services; and
according to the firm size: micro-enterprises, small enterprises and medium-sized
enterprises). In order to collect data, we used a questionnaire consisting of 42
questions (we used both open and closed questions). The questions aimed at
identifying the information sources used, describing the behaviour and profile of
lease services customers, identifying issued appeared during the duration of
financing contracts as well as the possibilities of improving such services.
Questionnaires were applied by using two methods: applying questionnaires by e-
mail and by an interview operator. We used a list with the trading companies of the
county, grouped according to their field of activity and size. According to the
proportion of every stratum, we randomly (we used a random number generator)
selected from the list the companies to question.
Then, data were centralized by using the software SPSS version 19.0 for
Windows. In order to test the hypotheses, we used non-parameter correlation tests
(Spearman and Kendall) as well as tests for binominal variables.
4. Results and Discussions
The research has highlighted the information sources used by clients, when they
document themselves as regards the leasing services. No less than 39,4% of the
economic agents who requested bids from the leasing companies, declared that they
28 Oana BĂRBULESCU
had as main information source, the recommendations of the suppliers, respectively

the dealers of the goods to be acquired; 23,8% resort to the Internet; and 27% follow
the recommendations of their business partners, friends or acquaintance. In contrast,
the least used information sources are street audio billboard (0,3%) and mass-media
(9,5%); the results being, basically, perfectly consistent with reality, especially if we
take into account that these information forms are less focused on promoting the
leasing services.
According to the opinion of most economic agents in the county of Braşov
(43,53%) the usefulness level of the information contained by the offers of the
leasing societies has been catalogued as being high (level 4 on an evaluation grid
from 1 to 5) by 43,53% of the economic agents in Braşov county; whereas almost
37% thereof deem that the usefulness of the information received as a result of the
request for bids is neither too high, nor too low (level 3 on the evaluation grid).
Given that the average score, for this question, is of 3,63, we can state that, per total,
the economic agents of Braşov reckon that the information in the bids of the leasing
companies have a high usefulness level.
The leasing companies affiliated to the banks or to the manufacturers/dealers
manifest an average flexibility, with respect to the choice of the insurance company
for the goods acquired through this financing method; 36,67% of the surveyed
economic agents having catalogued, according to their own experiences, the
flexibility level, as neither too high, nor too low. Likewise, only 9,44% of the
enterprises having made the object of the study, perceive the flexibility of the
affiliated leasing companies, as being very high.
A comparative analysis, based on the calculated average values, highlights
that the leasing companies affiliated to the banks or to the producers, manifest a
lower flexibility, with respect to the beneficiary’s possibility of choosing the
company to ensure the acquired good (average value – 2,96) than the independent
leasing companies (average value – 3,25), whose flexibility level is ranked very
high, by14,66% of the economic agents in Braşov.
According to the conducted study, we note that the most requested leasing
bids by the economic agents in Braşov, are those of the companies Tiriac Leasing
(16,4%), BCR Leasing (16%) and Porsche Leasing (15%); companies which belong
to financial groups with rich history and which spread far and wide on the Romanian
market. In contrast, the bids of companies such as Rădăcini Leasing – part of the
group Rădăcini, held by the Iranian businessman Madadi Ali, or Alpha Leasing –
part of the Greek financial group Alpha Bank, are less requested by the economic
agents in the county of Braşov; one possible explanation, in this respect, being the
general drop of the economic agents’ trust in financial companies that come from
countries having faced, in the recent years, a series of difficulties of an economic,
political and social nature.
In terms of the diversity degree afferent to the bids, Raiffeisen Leasing
(average 3,91) – member of the Austrian financial group Raiffeisen, which has been
operational on the Romanian market, since 2002, Tiriac Leasing (3,89) as part of the
group Tiriac Holdings, and Porsche Leasing (3,86) – part of the group Porsche
Finance Group, are the companies which, in line with the economic agents’
opinions, hold the most diversified offer of services specific to the financial and
operational leasing. In contrast, the least diversified bid is held by the companies
Rădăcini Leasing, BT Leasing, whose majority stake has been held, ever since 2002
by the Bank Transilvania and Alpha Leasing.
The interest rate practiced by the leasing company (average of 2,50) and the
easiness in granting the financing (2,63) represented the factors that the decision to
acquire the last good in leasing system, by the surveyed economic agents in Braşov,
depended on. In their view, the reputation of the leasing company ranks third, in
terms of importance (3,40), an almost equally decisive factor, as regards the decision
to conclude a financing contract.
Following the results shown in the table below, we can see that the sales
consultant’s persuasion power or the advertising materials, promoting the leasing
company, are not influential elements on the acquisition decision of the enterprises
in Braşov (Fig.1).
Medium Score
00,006
00,005
00,004
00,003
00,002
00,001
00,000 b R Ea le b A P
y In le e y Su d w e
th te as p si as th th th ve it rs
u n in P gg e h o
e re in ta e e e e le rt th n
le st g ss co g rs d re e is so al
co ti fi co u e st as e
as ra o n in n as al p io in in ci re e
in te m n an su m e re n g e xp
o gr p io r/ s g m ty sp
g p f ci an lt an n se ad co e
co p an th n an o su n at e ri
ra y g ti y’ f p ta va m e ct e
m ct e n t s th p p ri iv n
p ic g sa lie ti n an al e ce
an th e ve ce s
e le r y
y d e s o d o
f f
Fig. 1. Factors that influence the acquisition decision
In the case of 49,86% of the economic entities in Braşov county, the satisfaction
degree, as a result of using the services provided by the leasing companies is very
30 Oana BĂRBULESCU
high; a fact confirmed by its average value, situated at 3,59 points, out of 5
maximally possible. At the same time, 35,26% of the surveyed companies consider
that, generally, their satisfaction degree, after the concluded leasing operations, is
ranked at an average level, neither too high, nor too low. It is worth mentioning that
only 3,86% of the economic agents that underwent analysis, declare themselves
discontent with the results of the leasing contract; and 2,2% consider that the use of
this financing method was a genuine fiasco, in their view.
A consequence of the high satisfaction level obtained after the use of the
services provided by the leasing companies, is that 44,5% of the surveyed
companies resorted several times to a certain leasing company; the main reasons that
underlay the repeated collaborations being the rapidity in obtaining the financing
(31%), the high attractiveness of the respective leasing company’s bid, as compared
to the bid of other companies active on the market (25,3%), as well as the easiness in
obtaining the financing (23,8%).
Likewise, we have ascertained that the reasons of the economic agents in
Braşov county, for choosing one leasing company, to the detriment of a banking
institution, with a view to obtaining a credit, also underlay the continued
collaboration with that leasing company, with a view to concluding other financing
contracts, too. One of the reasons of an economic agent, for resorting, several times,
to the services of a leasing company, can be the quality of those services and
implicitly, the quality of the financing information and solutions offered by the
latter.
Another interesting aspect, which is worth mentioning, is that the proximity of
the bank whose client is the surveyed company (6,3%), or the counseling, during the
equipment acquisition (6%), are not reasonable grounds for the economic agent in
Braşov county, to resort, more than once, to the services of the same financing
company.
At Braşov county level, the most solicited leasing companies are: Porsche
Leasing (21,7%), BCR Leasing, as part of the group ERSTE (19,1%) and Ţiriac
Leasing, a company generally resorted to by 15,3% of the economic agents of
Braşoveni. On the opposite, the leasing companies whose services are the least
solicited by the companies of Braşov are Atlassib Leasing, whose activity is mostly
based on car financing; BT Leasing Caterpillar România IFN – part of the Polish
financing group Caterpillar Financial Services Poland, which is less known on the
Romanian market; ING Leasing; Marfin Leasing etc.
Most economic agents in Braşov county (50,58%) declare themselves content
with the information supplied by the counselors of the leasing company; whereas
26,78%% consider that their own satisfaction level, in relation to the received
information, ranks at a neuter level, neither too low, not too high. Given the average
of 3,75 points, we can state that, generally, the satisfaction level with respect to the
information supplied by the counselors of the leasing companies, whom the
economic agents in Braşov county have appealed so far, ranks high.
As a result of the conducted study, we have noticed that no less than 75,8%
of all economic agents in Braşov county agree (63,4% - consent and 12,4% - in full
consent) with the statement that the sales consultants of the leasing company whom
they most frequently appealed to, correctly identify the clients’ needs and provide
adequate financing solutions. Only 3,5% of the economic agents in Braşov declared
themselves discontent with the financing information and solutions provided by the
consultants of the leasing company.
Most surveyed companies, in Braşov (87,4%) did not face difficulties,
following their collaboration with the leasing companies. As regards the economic
agents who claim the opposite (12,6%), most difficulties refer, more often than not,
to higher interest rates, throughout the financing contract (37,7%) or the
noncompliance with the delivery term of the acquired good (26,4%). Likewise, the
economic agents claim problems related to the delivery of an inadequate good
(9,4%) or to the fact that, when acquiring real estates from natural persons, the costs
are higher, in the case of the financing by leasing, than in the case of other financing
modalities (9,4%) (Table 1).
1 Noncompliance with the delivery term 26,4%

2 Delivery of an inadequate good 9,4%
3 Higher interest rates throughout the contract 37,7%
3 Higher costs, when acquiring real estates from 9,4%
natural persons, than in the case of other financing
modalities
4 Other variant 17%
Table 1. Difficulties faced within the unfolding of the leasing contracts
5. Conclusions
With respect to the first two enunciated statistical hypotheses, after the analysis of
the collected data and the conducted statistical tests, we can formulate the following
appreciations:
1. The value of the leasing contracts is influenced by the turnover of the
economic agents that require financing from the leasing companies.
As a result of testing the correlation by means of non-parametrical correlation
coefficients (we opted for this instrument, as one variable is measured on a report
scale (value of the obtained financing) and the second variable is measured on an
ordinal scale (company’s turnover)), the connection between variables is confirmed.
In terms of intensity, the connection is weaker; the value of the coefficients being, in
most cases, lower than 0,35.
32 Oana BĂRBULESCU
Under these circumstances, the hypothesis has been confirmed; the value of
the obtained financing being influenced by the turnover of the enterprise.
2. Over 30% of the economic agents in Braşov county faced difficulties, as a
result of their collaboration with the leasing companies.
The volume of the enterprises which faced difficulties, in the framework of
the collaboration with leasing companies, is lower than 30%.
Following the application of a binomial test, we note that one can guarantee,
with a probability of 95% that over 70% of the analyzed companies faced no
difficulties; in this case, we cannot reject the null hypothesis (H0).
Under these circumstances, we can state that the hypothesis has been
infirmed.
In terms of difficulties, at Braşov county level, approximately 10% of the
enterprises, faced difficulties related to the delivery of inadequate goods.
6. References
Constantin, Cristinel. 2006. Sisteme informatice de marketing. Analiza şi

prelucrarea datelor de marketing. Aplicaţii practice în SPSS. Braşov: Editura
Infomarket Braşov
Drumea, Cristina. 2008. „Rules on business ethics. Sox standard.” The Amfiteatru
Economic Journal, 10(23): 155-160.
Gordon, McDougall and Terrence Levesque. 2004. “Customer satisfaction with
service, putting perceived value into the ecuation.” Journal of Services
Marketing 14 (5): 392-410.
Madar, Anca and Andreea Neacsu. 2013. ”Service Quality Analysis – Hotel Alpin
Poiana Brasov”. Annals of ”Constantin Brâncusi University, Economy
Series, (6): 267-270.
Spreng, Richard, Scott B. MacKenzie and Richard W. Olshavsky. 1996. “A
Reexamination of the Determinants of Consumer Satisfaction.” Journal of
Marketing 60 (3): 15-32.
http://www.wall-street.ro/articol/Finante-Banci/172541/profilul-clientului-de-
leasing-operational-din-romania.html#ixzz3VC51MzEJ. Accessed
on: 20.03.2015
http://www.wall-street.ro/articol/Finante-Banci/172541/profilul-clientului-de-
leasing-operational-din-romania.html#ixzz3VCKa7N8L Accessed
on: 11.03.2015
file:///C:/Users/User95/Downloads/Master%20Anul%20II%20Publicitate.pdf
The role of new communication technologies in

companies’ sustainability
Lavinia DOVLEAC1
Abstract: As marketing communication becomes increasingly integrated with the digital

space, marketers start to understand that social media is a valuable tool to create digital
linkages with customers. This paper aim to show that social media is an appropriate tool for
companies to spread the information about sustainability issues. Consumers are taking more
factors into account when making purchasing decisions and using digital marketing and
social media help companies to increase engagement and strengthen the relationships with
customers.
Key-words: social media, sustainability, communication channel, strategy.
1. Introduction
Rapid growth of Web-based platforms that facilitate online social behaviour has
significantly modified the nature of human interactions and their perceptions over
the social and economic environment. The most important aspect of the digital
dimension is that allows individuals to share knowledge (Budden et al, 2011; Kumar
et al, 2010).
Although companies have always talked to their customers, now they are
pressured to a more digital presence because online communication tools allow
customers to respond to them (Mangold and Faulds, 2009; Borges Tiago and
Verissimo, 2014). Another reason is that consumers believe strangers within their
community more than they believe companies (Kotler et al, 2010, p.39). The
increase in popularity of applying social media in the business world has forced the
managers to change their way of business operating (Ngai et al, 2015).
Social media has the ability to change a business model in the following
areas: (1) from selling to connecting with customers, (2) from large campaigns to
small rapid actions, (3) from controlling the message to transparency, (4) from hard
to reach to available everywhere (von Scheel et al, 2015, p.379).
Social networks have a growing importance as communication channel being
adopted by companies in their marketing strategies. They are also used in terms of
1
Transilvania University of Braşov, lavinia.dovleac@unitbv.ro.
34 Lavinia DOVLEAC
relational marketing, related to the preoccupation of the companies to create and

maintain long-term relations with potential or current customers (Chiţu and Albu,
2013).
Together with the efforts of communicating the company’s offers and
promotions using the social media, comes the effort of showing the company’s
mission and values. Large social networks such as Facebook or MySpace are
effectively media owners (Chaffey and Ellis-Chadwick, 2012, p.22). So, one of the
challenges facing businesses is how to communicate sustainability in terms that
“make sense to the outside world”. This means talking about issues that are crucial
to business survival, such as resource scarcity, sustainable supply chains and energy
efficiency, in terms the public understands and cares about (Malone, 2015).
2. Digital marketing and social media – essential communication tools of

sustainable development
Andreas Kaplan and Michael Haenlein (2010, p.61) have offered the following
definition of social media: ‘a group of Internet-based applications…that allow the
creation and exchange of User Generated Content’. Another definition of social
media which comes to complete the first one is given by Sterne (2010, XVII):
”Social media allows anybody to communicate with everybody. In other words,
consumer-generated content distributed through easy-to-access online tools”.
The applications that could be used by companies and individuals for
communication are grouped in 6 categories (Harrison, 2013, p. 8): Collaborative
projects, such as Wikipedia (1), blogs and micro-blogs, such as Twitter (2), content
communities, like YouTube (3), social networking sites, such as Facebook,
MySpace and LinkedIn (4), virtual game worlds, like World of Warcraft (5), virtual
social worlds, such as Second Life (6).
Social media allow information to be transmitted across multiple platforms in
a variety of formats, including text, sound, video, games and interactive sequences.
This has encouraged organisations to attempt to heighten the impact of messages
through the use of social media to deliver material intended to shock, enthuse and
entertain.
Many companies are still approaching social media as a collection of tactics:
developing a Facebook company profile, tweeting a few links and posting some
videos on YouTube (Weinberg and Pehlivan, 2011). Acting like this, they show that
they still not understand what’s important about using social media: not being in
many places on the internet but having message content interesting for the audience
(Bright et al, 2015).
Social media is one of the major drivers in the change of the public’s
perceptions, as it allowed the spread of information and misinformation, about
sustainability issues.
The role of new communication technologies in companies’ sustainability 35
Sustainability and Corporate Responsibility Reports have been growing in

importance for companies in recent years, due to the consumers’ interest in this
matter. As online media and social media in particular have become part of the
communication mainstream, more and more companies are realising the value their
Sustainability Reports can play online (SMI, 2012).
According to a report from Sustainly (2015) global companies are
increasingly turning to social media to communicate their sustainability initiatives to
the public. A number of 273 companies were found to have some form of dedicated
social media sustainability efforts, a significant increase on the 120 recorded in
2011. This means that in 4 years the number of companies raised with 127%. The
growth highlights the need and business benefits of communicating sustainable
practices to consumers.
In Romania, the reporting rate of sustainability intentions of companies was
54% in 2011 and 69% in 2013.
3. Research results
Sustainability practitioners at first were slow to realise social media's potential to

help communicate their efforts but over the last three years they've made up for lost
time (Yeomans, 2013).
In 2012 SMI and Custom Communication found 176 major companies around
the world that had allotted dedicated resources and social media channels to their
sustainability dialogue. Together with Wizness Publisher (an online platform which
allows organizations to create interactive sustainability reports and exchange with
their stakeholders) SMI created a report named Social Media Sustainability Index.
This report presents how 100 major companies are using social media to
communicate sustainability and corporate social responsibility and offers indepth
analysis of best practice social media sustainability communication (SMI, 2012).
From this report we find that Twitter and Facebook were favorite channels for
sustainability communicators. 60 dedicated blogs or sustainability social media
magazines were published, suggesting the importance of editorial storytelling in
describing a company's practice on sustainability and corporate social responsibility.
In 2015, Salterbaxter Mslgroup realised the first study which combines
sustainability expertise, quantitative data and a complex proprietary scoring system,
proving the value and impact of sustainability communications. SB Influencers 100
measures the social influence on sustainability on three attributes in order to create a
score. The attributes are: Activity, Engagement and Reach.
Based on these attributes, the following table shows the overall score for the
first 10 companies considered the best communicators in social media, regarding the
sustainability matters. As well, this table includes each company rank for each
attribute.
36 Lavinia DOVLEAC
Source: Sustainly, 2015.

Table 1. Top 10 companies by Social media Sustainability Index
So, although Nestle has the higher score (calculated on the 3 attributes) and is
ranked the first on this top, it isn’t the first ranked considering each attribute. Nestle
is on rank 1 only as Engagement. Nestlé achieve the highest ranking thanks to both
corporate and dedicated Twitter handles that are active on sustainability. In large
part, the consistently strong engagement achieved is due to the Twitter account
dedicated to their Creating Shared Value (CSV) sustainability strategy. This channel
balances information on the company’s approach to material issues, broader industry
initiatives the company participates in, alongside updates from live events.
In Table 2 are included the companies placed on the first 3 ranks, according to
the score achieved for the Reach Attribute. Reach assesses company-led
conversations across five different social platforms over a six-month time period.
Rank Organisation Industry

Intel Technology
1 Coca – Cola Company Food and beverage
(Score 25) Avon Products Consumer goods
McDonald’s Food and beverage
Nike Apparel
Nestle Food and beverage
2 Dell Technology
(Score 24) Microsoft Technology
Shell Oil and gas
Google Technology
3 Virgin Group Conglomerate
(Score 24) Philips Electronics
Table 2. Best scores by Reach Attribute
As we see in the following table, the brands whose sustainability posts have
the highest social reach are unsurprisingly the major consumer brands, such as
Coca-Cola and McDonald’s.
Intel Corporation’s position in this ranking is largely due to their impressive
reach across multiple social platforms. Their over 26 million Facebook fans is more
than even sports giant Nike, whilst their dedicated @intelinvolved Twitter channel
has more followers than any other dedicated sustainability channel.
In Table 3 we have the companies ranked on the first 3 places for the attribute
named Activity. This one means to identify and measure relevant sustainability
content on social media channels. The two companies that talk about sustainability
more than any other on this ranking are: telecoms and media company BT, and
retailer Marks & Spencer (M&S).

1 BT Telecommunication
(Score 40) Marks & Spencer Retail
2 Johnson & Johnson Healthcare
(Score 38)
3 Hewlett - Packard Technology
(Score 36) Cisco Systems Technology
Table 3. Best scores by Activity Attribute
Engagement measures the response to sustainability content on social media by

tracking different forms of interaction and we can see from Table 4 that the leaders
are Nestle and Intel.

1 Nestle Food and Beverage
(Score 35) Intel Technology
2 Hewlett – Packard Technology
(Score 34) UPS Logistics
Nokia Technology
3 Unilever Consumer goods
(Score 33) Virgin Group Conglomerate
Microsoft Technology
Table 4. Best scores by Engagement Attribute
After analysing all the attributes, we searched for the main industries where
companies use social media to communicate their sustainability intentions. Data
shows that most companies are from Food & Beverage Industry (14), followed by
38 Lavinia DOVLEAC
Consumer Goods (11). On the third rank are placed several industries: Technology,
Automotive and Financial Services, each one with 9 companies.
Most of these companies chose to communicate with consumers developing a
dedicated social channel for their sustainability strategies or using corporate Twitter
and they succeeded in creating partnerships and commitments this way.
The strongest characteristic of Twitter as a social network lies in its 140-
character tweet limit. About 39% of the people who took one recent survey
indicated that they’d rather hear from companies on Twitter than on any other social
platform, beating out Facebook.
In contrast to the corporate Twitter handle, Unilever (rank 3) make good use
of Facebook as a consumer-facing channel, encouraging engagement through a
variety of media. Unilever demonstrate how sustainable living and the acclaimed
Sustainable Living Plan is integrated within the business by communicating it across
multiple corporate and consumer-facing social channels. The association of Unilever
and sustainability is so widely recognized that virtually every post, tweet and video
sparks engagement.
4. Conclusions
Many companies are still approaching social media as a collection of tactics, using
mainly Facebook, Twitter and YouTube. Consumers and communities are
demanding more information about corporate sustainability and responsibility than
ever before, and they are sharing their opinions and judgments about companies
online. In many cases, the information that impresses consumers could be found in
the sustainability report but isn't mined to help demonstrate a company's true
sustainability credentials.
How and where to talk to consumers about corporate sustainability is an
evolving debate and social media channels are central to this. Some companies
communication strategy doesn’t clearly distinguish between consumers and
stakeholders, whilst others target communications using Facebook for consumers
and Twitter for a broader audience including opinion leaders and stakeholders.
LinkedIn and YouTube are little used for sustainability content.
Many companies chose Twitter to communicate because users are more likely
to be active on their mobile device than on their PC, so the company message can
reach them anywhere.
Beside Twitter, Google Plus may be an appropriate tool for business
communication, and especially for sustainable development issues. Communities are
very strong on Google Plus, so a key strategy for the companies would be to find
active communities that are related to this matter and interact with them. The idea is
to always offer value to people and understand that participation in communities is
mostly about giving. Instagram, a visual social network, is another major player in
the social networking sphere and it keeps on growing. Although is not always
preferred by companies, Instagram could be a valuable tool in ”talking” about
sustainability issues using appropriate and interesting pictures.
In social media, companies should follow the Nestle model of action which
involves 4 steps: 'listen, engage, transform and inspire'.
5. Acknowledgements
This paper is supported by the Sectoral Operational Programme Human Resources

Development (SOP HRD), financed from the European Social Fund and by the
Romanian Government under the project number POSDRU/159/1.5/S/134378.
6. References
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sustainability-social-media-storytelling.
A conceptual framework for using marketing models

for sustainable development
Ioan Constantin ENACHE1, Zdenek BRODSKÝ2
Abstract: Marketing models are becoming increasingly popular among both marketing
scientist and practitioners. In a world where data is easier to collect and analyse, the
marketing models can provide a more efficient way to gather relevant information. By
providing means to address the future, marketing modelling can become an important tool
for sustainable development. The present paper aims at providing a conceptual framework
that can guide future steps to more relevant and efficient marketing models.
Key-words: marketing models, sustainable development, strategic marketing.
1. Introduction
Marketing modelling is the best approach to market and customer analysis. The
marketing model has the unique ability to predict the future actions by using data
already available. The science of marketing is looking for better ways to extract
information and predict market change or customer behaviour. Marketing modelling
is the fourth level in the marketing management context. The first marketing
approach was based on entrepreneurial skills and flair. The second stage started to
use data to back-up the marketing decisions. Those data were gathered from internal
sources like sales reports or accounting documents. The marketers realised the
importance of the customer and its interactions with the product and its
characteristics and, in the third stage, the marketing research started to be used to
gather those information. But the information addressed present and past market
situations. The fourth stage is trying to create ways to predict the future by
combining data about past and present situations into marketing models.
Given this perspective the marketing models are the next step in marketing
research and all the data flooding is enforcing this change. But the lack of structure
of the marketing models field is an important drawback for scientists and
practitioners as well. Therefore, a better framework, correlated with the principles of
1
Transilvania University of Braşov, e-mail: ioan-constantin.enache@unitbv.ro
2
University of Pardubice, e-mail: zdenek.brodsky@upce.cz
42 Ioan Constantin ENACHE, Zdenek BRODSKY
the sustainable development can further develop the use of marketing models as
tools for an efficient growth.
2. Literature review
Theoretical modelling in marketing is a method used to create a complex perspective

on a market situation. As defined by Lilien, a theoretical model is a “set of
assumptions that describes a marketing environment.” (Lilien et al, 1992). These
assumptions can focus on all the marketing aspects and even if a model is not clearly
stated the modelling methodology is used in every marketing decision as the
marketing environment is too complex to work with all the parameters. Therefore
the market situations are simplified and verbal or mathematical models are used to
reach a conclusion. It is common to split the decision in several steps described by
different models (Enache, 2012). One of the best examples in this situation is the
customer behaviour relative to a purchase. Such behaviour can follow a five step
strategy starting with the need arousal until reaching post-purchase (Kotler, Fox,
1995). At each step a different model can be deployed:
Need arousal Stochastic Models of Purchase Incidence

Discrete Binary Choice Model
Information Search Individual Awareness Models
Consideration Models
Information Integration Models
Evaluation Perceptual Mapping
Attitude Models
Purchase Multinomial Discrete Choice Models
Markov Models
Post-purchase Variety Seeking Models
Satisfaction Models
Communications and Network Models
Table 1. A framework for classifying consumer behaviour models
(Lilien et al, 1992)
The application of models in customer analysis can lead to a better understanding of

customer lifetime value (Berger, Nasr, 1998) and it can predict customer
satisfaction, customer retention and their impact on market share (Rust, Zahorik,
1993). It is obvious that customer heterogeneity is an issue that needs careful
consideration and marketing models are using different perspectives to address the
complexity of customer typologies (Allenby, Rossi, 1999; Ho et al, 2006).
Marketing models can offer useful insights on topics like service marketing
(Rust, Chung, 2006) or strategy and policy design (Park, Keh, 2003; Wieringa,
A Conceptual framework for using marketing models for sustainalble development 43
Leeflang, 2012). It should not be forgotten that the marketing models field is still
developing and important mathematical solutions are not used in this field
(Steenkamp, Baumgartner, 2000).
Sustainable development is the current framework used to tackle the growing
problems arising from business objectives, on one side, and business impact on the
environment, on the other (Hopwood et al, 2005). This situation is also fuelled by
the changing attitudes and expectations of the customer (Dobson, 2007). In this
context, the marketing models can offer better ways to address marketing strategies.
It can sustain efforts to validate sustainable market orientation (Mitchell et al, 2010).
In the search for sustainable competitive advantage, the marketing models can offer
alternatives for benchmarking (Vorhies, Morgan, 2005). The sustainable marketing
field is based on a new approach of marketing issues. It emphasizes the importance
of a long term strategic thinking and consistency (van Dam, Apeldoorn, 1996). It
also introduces the concept of corporate social responsibility and links it to market
orientation (Mahmoud et al, 2014).
3. Conceptual framework
In order to take advantage of the analytical power of a mathematical model, the

marketers are supposed to adapt a mathematical framework to marketing issues. In
this situation there are two major challenges. First, in order to obtain correct
information about a phenomenon, the data should be reliable and correct in relation
with the model characteristic. Both the data and the model are supposed to be in
strong connection with the research objectives. It is important to note that in order to
obtain a correct model the correct data is needed. This implies that the model used
will be chosen before collecting the data and even before creating the survey.
Second, given the complexity of the marketing issues, the model should be
optimised continuously.
To address these two challenges, a framework has to contain at least three
major steps. All the actions are expected to be based on and comply with the
research objectives.
The first step in order to create a marketing model is to choose the appropriate
one for the current market situation. At this point it is important to understand the
rules that govern the market situation. This can be obtained by qualitative analysis of
the phenomenon, literature review, etc. A verbal model is sufficient as it will clearly
state the input variables and the expected results. This step should take place before
the stage of questionnaire design as all the necessary variable input should be
measured with appropriate scales. The balance between needed data and variables
characteristics can become an issue especially when the variables are nominal or
ordinal.
The second step needed in order to create a model emphasizes the importance
of the date collected. At this step the data should be cleaned, validated and analysed
by means of descriptive statistics.
The data cleaning process will improve the quality of data by removing
problems related to acquiring data and database creation. This first step will ensure
that all the available data is considered and the mistakes are either solved either
removed from the database. The problems that occur can have different sources
(Rahm, Do, 2000) but several tools can provide a framework to complete this step
(Raman, Hellerstein, 2001; Chaudhuri et al, 2003).
The validation will focus on the reliability and accuracy of the data. At this
point, the external validity of the data is questioned. The best ways to make sure that
the data is both reliable and accurate are to check the sampling method and its’
implementation and to compare the sample structure with population structure.
This second step will perform a descriptive statistical analysis of data in order
to detect anomalies. By using descriptive statistics and by creating plots for the data
previously unobserved situations, like outliners, this can be addressed and the
process of cleaning can be restarted.
By having the data in the best potential configuration, it becomes possible to
develop a mathematical model from the verbal one chosen at the first step. A verbal
model can be transformed into a mathematical one by replacing the interaction with
operators and by transforming the data into variables that can be handled by those
operators. A simple example is given by the fuzzy logic marketing models where
verbal operators like “and” or “or” are replaced by max and min. The same class of
models offers a way to transform the data by means of fuzzification.
After choosing the model, the implementation process will take place. At this
point it is important to follow the models’ characteristics and to make sure that all
the needed conditions are fulfilled. Having a first result will provide the feedback
needed to adapt the parameters in order to match the reality. This process should
rely on secondary sources of information and/or on test samples of data. For
marketing modelling the calibration process is paramount as quite often the first
model is not the best possible one.
One serious drawback of the marketing models created by researchers is the
unusual small use of their results in practice (Lilien, 2011). It seems that the
marketing models created by academic researchers are not relevant to the business
they address. Without discussing the reasons for this situation, two solutions can be
used to improve the adoption of marketing models and, therefore, their
effectiveness.
The first approach will emphasise the visualisation of the models. Too often
the models are a set of mathematical records with such a complexity that a
practitioner will not be able to follow. In this case a good image representation of
the model results can provide o powerful incentive to further question and
A Conceptual framework for using marketing models for sustainalble development 45
eventually adopt the model idea. This approach is heavily relying on statistical
software able to perform such visualisations.
The second approach will emphasise the follow up of the marketing model. A
great marketing model can take years to develop and even more time to obtain
results. For example, the marketing model created for Daimler Chrysler by Silva-
Risso and Ionova (2008) was developed in ten years but the claimed savings were
about 2 billion dollars. Given this situations it becomes paramount to plan an
optimization and calibration of a marketing model for several business cycles.
4. Conclusion
The marketing models are the latest way to address marketing situations. Their main
advantage relies on the ability to reach conclusions about future developments and
actions based on available data. The enthusiasm around big data, the development of
better ways to collect data, the better tools developed for statistical analysis are
arguments in favour of marketing models implementation.
Given the importance of the sustainable development, a tool which can predict
the impact of future decisions and can improve them, a tool that can save time and
resources, a tool that can be duplicated in a different business context, it can become
the next approach to market situations.
Acknowledgements
This work was partially supported by the strategic grant

POSDRU/159/1.5/S/137070 (2014) of the Ministry of Labour, Family and Social
Protection, Romania, co-financed by the European Social Fund – Investing in People,
within the Sectoral Operational Programme Human Resources Development 2007-2013.
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Allenby, Greg and Peter Rossi. 1999. “Marketing models of consumer

heterogeneity.” Journal of Econometrics, 89: 57-78.
Berger, Paul and Nada Nasr. 1998. “Customer lifetime value: marketing models and
applications.” Journal of Interactive Marketing, 12: 17-30.
Chaudhuri, Surajit, Kris Ganjam, Venkatesh Ganti, and Rajeev Motwani. 2003.
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Macromarketing, 16: 45-56.
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models.” Journal of Marketing.75: 196-210.
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Jersey: Prentice-Hall.
Mahmoud, Abdulai Mahmoud, Robert Hinson, and Charles Blankson. 2014.
“Market orientation and corporate social responsibility relationship with
banks’ profitability.” Proceedings of the Conference on Business and
Development. 1:135-144
Mitchell, Robert, Ben Wooliscroft, and James Higham. 2010. “Sustainable Market
Orientation: A New approach to Managing Marketing Strategy.” Journal of
Macromarketing, 30 (2): 160-170.
Park, Seong and Hean Tat Keh. 2003. “Modelling hybrid distribution channels: a
game-theoretic analysis.” Journal of Retailing and Customer Services, 10:
155-167.
Rahm, Erhard, Do and Hong Hai. 2000. “Data cleaning: Problems and current
approaches.” IEEE Data Eng. Bull., 23.4: 3-13.
Raman, Vijayshankar and Joseph Hellerstein. 2001. “Potter’s wheel: an interactive
data cleaning system.” VLLDB, 1: 381-390.
Rust, Roland and Tuck Siong Chung. 2006. “Marketing models of service and
relationships”. Marketing Science, 25: 560-580.
Rust, Roland and Anthony Zahorik. 1993. “Customer satisfaction, customer
retention and market share.” Journal of Retailing, 69:193-215.
Silva-Risso, Jorge and Irina Ionova. 2008. “A nested logic model of product and
transactio-type choice for planning automakers’ pricing and promotions.”
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3399.
Specific Euro-marketing elements in the single

European market. A cultural approach
Gheorghe EPURAN1, Bianca TESCASIU2
Abstract: European Union represents a challenge for the economists to adapt to a new
structure and a new way of doing business. It created a new type of market – The Single
European Market – and generated specific issues regarding the defining elements of this.
New standards, new types of consumers, the European approach regarding products, doing
business at the over-national level with doing the payments in a single currency are just a
few of the specific elements that motivate a new specialization of marketing, euro-marketing.
In this context, the European cultural elements influence in a specific way that has to be
considered in the European market and in the context of the European legislation.
Key-words: European integration, Euro-marketing, The Single European Market, Euro-

producer, Euro-consumer, European cultural identity.
1. Introduction
“European integration” is a complex term to define. Trying to do that, we should

take into consideration the fact that integration supposes phenomenon at the
microeconomic level – between producers – and the macroeconomic level –
between national entities. (Prisecaru, 2001) International integration might be
focused on the trade sector – integration in trade - or on goods and services –
integration of markets -; also, it might consider positive effects – positive integration
– or negative aspects – negative integration.*
Speaking about markets, The Single European Market is a big challenge for
the European Economy. The reason for that consists in the fact that European
Market is unique in the world, considering at least the following elements: the free
movements of goods, services, labour, and capitals; the European cultural values;
the differences between the living-standards in the member-states; the different level
of development of the European Union countries.
1
Transilvania University of Braşov, epuran.gheorghe@unitbv.ro
2
Transilvania University of Braşov, bianca.tescasiu@unitbv.ro
*
NB – the term “positive” and “negative are used not in the traditional meaning, but in the terms of
creation/removal of some economic aspects
48 Gheorghe EPURAN, Bianca TESCASIU
Marketing has to adapt, in these circumstances, to some specific conditions.

As a consequence the literature specifies a new specialization of marketing science –
Euro-marketing.
2. Objectives
Historically, passing over territories determined the need to cover the following
stages, specific for different times: internal marketing (exclusively oriented to the
internal market), marketing for exports (implication in the international level,
without a specific export strategy), international marketing (adapting the marketing
strategies to the international environment), multi-regional marketing (marketing
strategies adapted to specific elements of some regions) and global marketing (a
common strategy for the whole global level). (Boşcor, 2008)
The place and the role of Euro-marketing in this evolution should be specified
considering the fact that it exceeds the national level, but it does not achieve the
global level (Fig no 1). To have a complete image of its positioning we should take
into consideration two main ideas:
1. It represents a form of multi-regional marketing (we should agree about the term
of “pan-European regional marketing”)
2. It creates a special relationship with the global level of marketing (by the
implications of the Single European Market’s characteristics)
Internal
marketing
Marketing for
exports
International
marketing
Multi-regional
marketing Euro-marketing
Global
marketing
Fig.1. The place and the role of Euro-marketing
Specific Euro-marketing elements in the single European market. A cultural approach 49
3. Material and methods

3.1. Considerations upon the European single market
The Single European Market represents a new stage of integration that followed the
Common European Market. With the creation of the Single Market over 16 000 km
of national frontiers between EU members were basically disbanded, thus opening it
up, free circulation of goods, capital and labour.
The origin of this concept can be found in the requirements regarding
establishment of Economic and Monetary Union. The creation of the Single Market
was, however, stimulated by the need to eliminate the difficulties of the Community
in the 70s-80s. During that period, despite of the successes recorded in the
implementation of the Custom Union, the Community has faced real problems that
generated an unsatisfying economic growth and the unemployment rate increasing.
In 1985 the Commission presented the White Book “Finalizing the Internal
Market” – by almost 300 internal measures politically sustained by the member-
states which should have finished until 31st of December 1992.
The Single European Market represents - basically – the integration stage for
European Union, as it results from The Treaty of EU (Maastricht, 1992), following
the Common Market created for the European Community by the Treaty of Rome
(1957).
Schematically, the process could be represented as following:
Integration structure European Community European Union
Integration stage Common Market (Treaty of Single Market (Treaty of

Rome – 1957) Maastricht – 1992)
• Custom union • Free movement of
• Free movement of goods
factors • Free movements of
• Common politics services
• Harmonized politics • Free movements of
• Common institutions labour
• Common funds • Free movements of
capital
Table 1. Integration structures and stages of integration
To assure the functionality of the Single European Market the existing institutional
system was improved. The main institutional system’s goals are focused on
guaranteeing the right conditions for the Common European Politics – especially
those politics regarding competition and trade – and the free movement of goods and
labour.
3.2. Specific issues regarding Euro-marketing
The Single European Market affects the firms - in the first place because of the
market economic characteristics and, in the second place, because of the new
legislation.
Regarding the marketing-mix, there are some opinions that a standardization
of this should be advisable. It means that we should use terms such as:
• Euro-product – a product that takes care about the specific European
segment’s needs, the consumer’s attachments for traditional products,
common standards for products
• Euro-price - a price that takes into consideration different purchase power
in different countries, some regulations regarding prices adjustments in EU
• Euro-distribution – encouraged by the free movement of goods/services and
by the European transport infrastructure
• Euro-communication – sustained by a sort of standardization of the
communication process.
In plus, the Single European Market started to implement a new approach to
the concepts of “producer” – which becomes “The Euro-producer” – and
“consumer” – which becomes “The Euro-consumer”. Some specific issues for these
two concepts should be pointed:
Concept Characteristics
Euro-producer Producer that creates goods/services with national/European
identity
Producer that acts in a market without barriers regarding the free
movements
Producer that has to take into consideration specific regulations –
regarding legal aspects of firms activity, competition, types of
protection, marketing instruments
Euro-consumer Consumer that benefits of a special kind of protection assured by
the European law – in this matter it could be exemplified the
information process, harmonisations – label harmonisation, for
instance - , banking transfers, etc
Consumer that has access to products from a large market
Consumers coming from different countries with different culture
Table 2. The specific “Euro-producer” and “Euro-consumer” concepts
For a good understanding of the Euro-consumers’needs, considering the fact that

they come from different countries with different culture and values, it might be
interesting and useful to study some basic elements of culture, elements that could
influence the specific European marketing mix.
Specific Euro-marketing elements in the single European market. A cultural approach 51
3.2. The concept of “culture” in business
Culture is essential when we speak about international business. It is not about

individual behaviour, it is about shared systems of meaning within and across ascribed
(depending on gender, age, family, ethnic, national origin) and acquired (depending on
political, religious, or commercial bodies) social groups (Mercado, 2001).
There are different opinions about cultural elements that could influence the
business environment. Such important elements are:
1. The material culture – the way in which people relate to the material
possession
2. The language – spoken language (European Union recognise as official
languages all the 28 national languages) and non-spoken language (that refers
to the language of space, time, etc)
3. Family – starting from the core-family and continuing with extended family
and group affiliation
4. Religion – that provides a lot of values and attitudes that probably will be find
in the consumers behaviour
5. Education – that form values and attitudes with cultural impact
6. Aesthetics – values coming from national values (art, music, etc)
Approaching the consumer in connection with the cultural values is the
producer’s choice. In the European context the cultural differences might generate
more „heterogenity” than in other markets.
4. Results and discussions
In our attempts to find some specific cultural elements for specific Euro-consumer
segments, we established some main cultural values that might influence the buying
decision more than others and we applied them on the European clusters.
Type of economic agent Cultural values Cultural value possible influence

Euro-producer Material culture Technology – knowhow (for production
and distribution) – the possibility to
produce more efficiently (Germany and
other developed countries from Western
Union)
The absence of a common language
represents an obstacle for the producers
Language The producers have to know the
consumers education according to
European standards
Education
Euro-consumer Family A very strong value for the consumer

• In the Eastern Countries the
extended family is more
important than the core-family
(the situation is different in the
Northern part of Europe)
• The role of women is
distinguished
Even though the Bologna system offers a

common there still are differences
Education regarding the consumers’ needs
The Euro-consumer is very attached to the

national values coming from aesthetics.
Aesthetics
Table 3. Main cultural values that influence the Euro-producer/Euro-consumer
5. Conclusions
As it was presented, the Single European Market presents some specificity that is
useful to be known on attempting to do business in European Union. Some of these
refers to the cultural aspects. Cultural values may generate a heterogeneous market
even though, in the standardization process (specific to the global level) the
producers try to create common products for the whole market/segment.
The way that the producer approaches the consumer depends on several
factors. The cultural factors influence – analysed in this article most of the times
based on theoretical approaches – should be a start-point for a next qualitative
research to find and to rank the cultural values that could influence the Euro-
producer and the Euro-consumer.
6. References
Boscor, Dana. 2008. Marketing international. Brasov: Editura Universităţii

“Transilvania”.
Mercado, S., R. Welford and K. Prescott. 2001. European Business. Prentice Hall –
fourth Edition.
Prisecaru, P. 2001. Teoria integrării economice europene. Bucureşti: Ed. Sylvi.
The Rise of native advertising

Marius MANIC1
Abstract: Native advertising is described both as a new way for promoters to engage
audiences and as a new, clever, source of revenue for publishers and media agencies. The
debates around its morality and the need for a wide accepted framework are often viewed as
calls for creativity. Aside from the various forms, strategies and the need for clarification,
the fact that native advertising works and its revenue estimates increase annually transforms
the new type of ad into a clear objective for companies, marketers and publishers. Native
advertising stopped being a buzzword and started being a marketing reality.
Key-words: advertising, native, monetization, content, media.
1. Introduction
The first web banner was introduced in October 1994, in the digital version of the
Wire magazine. In the days of the third millennium, this kind of advertising became
slowly outdated, by being intrusive or simply out-of-content.
Apparently (Wasserman 2012), investor Fred Wilson first used the term
”native monetization” for the Web at OMMA Global in 2012; he was describing a
special kind of ads, “unique and native to the experience” of a website. CEO of
Sharethrough, Dan Greenberg, liked the idea and he is credited with the term ”native
advertising”.
What is native advertising? Even from the beginning, the definition of this
method of promotion is strongly debated. Promoters, companies and journalists
proposed various definitions, but failed to reach a mutual conclusion. Nevertheless,
according to the Interactive Advertising Bureau (I.A.B. 2013), native advertising is a
type of ad designed to blend in the page content, consistent with the general aspect
of the page and with the respective media platform, from an editorial point of view.
The special interest this kind of advertising developed has two main sources:
- The novelty of the product: after all, it is a major innovation in the marketing
promotion history of the last 20 years; and
1
Transilvania University of Braşov, marius.manic@unitbv.ro
54 Marius MANIC
- The estimated volumes of revenue for this type of ad, very important in the
eyes of the publicists worldwide, in a constant struggle for advertising
income.
The expectations from native advertising, within the US market, are the
following:
Fig. 1. Native Advertising Revenue (US) – estimates (I.A.B. 2014)
In the view of the next developments, every promoter and publication owner will
target a considerable piece of the 5,2 billion dollar market.
2. Types of native advertising
Taking into consideration the objectives and specific form used for the ad, native
advertising is divided into six major types (I.A.B. 2013):
- In-Feed Units: promoted articles in the normal feed section of the
publication, with or without a guaranteed placement or surrounding context,
written in standard editorial style; used disclosure language:
”Advertisement/ AD”, ”Promoted (by)”, ”Sponsored (Content)”, ”Presented
by”, ”Suggested Post”; current users: Facebook, Twitter, Yahoo, YouTube,
Linkedin, Instagram, Sharethrough, BuzzFeed, Gawker, Forbes BrandVoice,
Mashable;
- Paid Search Units: special search results on the right column or in a
different writing style (at the beginning of the result or inserted in the list),
designed to attract a little more attention and with a guaranteed placement;
The Rise of native advertising 55
commonly used disclosure language: ”Ads related to…”; current users:

search engines;
- Recommendation Widgets: sponsored ads in the column or cassette with
the recommended articles; commonly used disclosure language: ”You might
like…”, ”Recommended by…”, ”Sponsored Content by…”;
- Promoted Listings: special products in the list of results designed by the
client specifications; commonly used disclosure language: ”Ads”,
”Sponsored Products”, ”What’s this?”; current users: Amazon, Google,
Foursquare, AutoTrader;
- In-Ad with Native Element Units: ads placed outside the editorial articles,
containing relevant material and measured on brand metrics; used disclosure
language: a clearly distinguishable style from the rest of the page (different
borders, other elements that set the article apart);
- Custom elements, which are not contained in the previous types or are too
platform-specific to form a separate category.
3. The year of native advertising
In US, the year of 2014 started with a report on the state of native advertising
(Copyblogger Media 2014), based on a survey with more than 2,000 responses,
which revealed little or no implications in the area; the answers were as follows:
- Do you know what native advertising is? Very knowledgeable: 3%,
Somewhat knowledgeable: 24%, Hardly familiar with it: 24%, No, not at
all: 49%;
- What are your feelings about native advertising? Oppose it, evil: 3%, Love
it: 21%, Could’t care less: 25%, Skeptical: 51%;
- Do you (or your company) have a native advertising budget? Yes: 9%, No:
91%;
- How much of your advertising budget do you spend on native advertising?
Over $5,000: <1%, $2,001-$5,000: <1%, $501-$2,000: 2%, $101-$500: 2%,
$0-$100: 91%;
- How likely are you to offer native advertising as a service option? Very
likely: 11%, Hardly likely: 22%, Somewhat likely: 30%, Not at all: 37%;
- Does native advertising mislead readers? Yes: 39%, No: 61%;
- How much would it concern you if a corporation or advertiser reported the
news? Hardly: 12%, Not at all: 19%, Somewhat: 25%, Very much: 44%.
If 2013 was a year of discussions and debates, 2014 proved to be a year of
investment and adoption (Sebastian 2014). First, New York Times introduced
native ads in January, as an article series for Dell; then separated the team for this
kind of ads into T Brand Studio, expected to run more than 40 campaigns
annually. The rumor already made investors direct their funds into brand services
56 Marius MANIC
companies (Simple Reach and Contently $9 million each, Percolate $24 million,
NewsCred $25 million). In March the Wall Street Journal introduced their native
ads, followed by Netflix and Wired in May. In August the native model raised $50
million for BuzzFeed. In September Kraft and Linkedin declared increased
revenue, based on native ads, and in December Verizon ended their marketing
experiment (SugarString site) after only two months, as a result of a biased content
disclosure.
Finally, in January 2015, a survey report (A.N.A. 2015) from Association of
National Advertisers revealed a different set of results:
- 72% of responders said native advertising is here to stay;
- 86% of consumers said the feel ads are necessary to get free content
online;
- 63% said their companies will increase their native ad budget (but still only
at 5% of their overall ad budgets);
- 30% of those who didn’t use natives yet will launch a program in 2015;
- 33% lift in the perceived credibility for native ads on well-regarded news
sites;
- 75% said ethics must play a role in offering native ads;
- 63% said it still needs to be contextually relevant to editorial.
The major barriers to native advertising are illustrated in the following
chart.
Fig. 2. Major Barriers to Native Advertising (A.N.A. 2015)

As creators of native advertising messages, responders pointed to the:
- Content marketing agencies: 24%;
- PR agencies: 26%;
- Specialized digital agencies: 27%;
- Creative agencies: 47%;
- Media owner/ publisher: 55%;
- Media agencies: 76%.
(The difference above 100% comes from the usage of a combination of creators.)
The Rise of native advertising 57
The metrics used to measure success are shown in the next image.
Fig. 3. Metrics Used to Measure Success (A.N.A. 2015)
In the survey, 74% of respondents measure success through a combination of

metrics, therefore the sum exceeds 100%.
4. Native Advertising in Romania
In the Romanian market, the debates about the native advertising (Patranoiu 2014)
are still in place. Aside from the necessary framework for the publishers, proposals
are made for the public education and insertion of the media literacy in schools
programs (Ioana Avadani, manager, CJI). Others would like to see that a general
code of conduct for media staff is implemented (Mariana Popa, ActiveWatch). On
the other hand, there are opinions that there are special types of journalism that can
be made only with the support of sponsored content (Iulian Comanescu). Finally,
there are voices that speak for the independence of the media consumer and
especially for the constant development of the reader (Mihaela Radulescu, Innerout;
Adriana Liute, Storience).
58 Marius MANIC
5. Conclusions
With native advertising, promotional content has moved from the standard place on the
screen (top bar or side column) into the very content of the page. The ad evolved and it
is now a full story that engages the reader, offering more than a simple link to a store.
The future of native advertising is yet to be decided by both the educated consumer and
the professional publisher.
6. References
Association of National Advertisers. 2015. Survey Report: Getting In-Feed

Sponsored Content Right. New York
Copyblogger Media. 2014. State of Native Advertising. www.copyblogger.com
Interactive Advertising Bureau. 2013. The Native Advertising Playbook. New York.
www.iab.net
Interactive Advertising Bureau. 2014. BI Intelligence Estimates. New York.
www.iab.net
Patranoiu, Dana. Feb. 22, 2014. Jurnalismul versus continutul sponsorizat.
www.mediascop.ro
Sebastian, Michael. Dec. 30, 2014. The Year in Native Ads. www.adage.com
Wasserman, Todd. Sep. 26, 2012. What is Native Advertising?. www.mashable.com
Design element analysis on juice market

Case study: Prigat
Nicoleta Andreea NEACŞU1
Abstract: If at the beginning package was considered simply a package that contained a
product, now due to the development and modernization of the trade, it is a very valuable
component of the marketing policy, being a carrier of messages to the consumer. Classic
design elements that are included in any packaging refer to shape, color and graphics. The
Romanian Juices Market was marked by originality and innovation in terms of packaging
design elements. Thus, from 1998 until now the following have appeared: the first wide
mouth square bottle, the first sport opening head PET bottle for Prigat Active, the first
opening gable top box produced in our country.
Key-words: color, design, shape, graphics, juice
1. Introduction
The development and modernization of the trade, and the marketing diversification
intensified the concern of producers and retailers to expand pre-packaging
operations. We are currently witnessing an effervescence in the design of the
packaging, in which a number of talented designers seek to find new and
imaginative solutions, so their design can properly respond to the main functions of
product protection, rationalization and economy, but also to the aesthetic and sales
promotion functions. Moreover, the diversification of the cuisine/cooking habits, the
globalization of information regarding food consumption and the massive presence
in media of discussions regarding food and beverage daily consumption are factors
that favor the change in population’s attitude (Băltescu, Boşcor, 2013, 373).
The problem of creating and producing packages is no longer exclusively for
research and development of production, for new techniques and processes. It
becomes more and more related to activities of storage, shipping and transport,
marketing and advertising. Lately, (fără the) e-commerce has captured the interest of
both individual and organizational consumers. E-commerce represents a new way of
implementing the general rules of designing the activities, products and packages
(Bărbulescu Şeitan, Gherman and Bulgărea, 2010, 309).
1
Transilvania University of Braşov, deea_neacsu@yahoo.com
60 Nicoleta Andreea NEACŞU
Elements of social psychology, consumer desires and important informational

message of the package, added in order to ensure their effective protection, public
relations and advertising, ecology and last but not the least, design are the factors
that determine the complexity of the design process of creating packages (Neacşu,
N.A., Madar, A., 2014, 501). The aesthetic concept of the package must take into
account the existence of a sensorial complex, causing a manifestation of approval or
rejection of every individual’s aesthetic sense, by emotional effect triggered by the
act of buying and consumption. The freedom of choosing food products is based on
a subjective appreciation which most depends on the attraction level of the products,
on food customs and tradition and many other factors among which the nutritional
ones, that have a smaller procentage (Madar, 2006, 280).
If, at first, the package was considered simply a package containing a product,
it is currently a component body of the product and, in the marketing policy, it tends
to become a principal carrier of messages to consumers.
2. Elements of design and aesthetics
The aesthetic concept of the package must take into account the existence of a
sensorial complex, causing a manifestation of approval or rejection of every
individual’s aesthetic sense, of the emotional effect triggered by the act of buying
and consumption (Pamfilie, Procopie, 2002,84).
The formal aspect, the visual factor, is one of the main emotion factor that the
designer has to solve. Classic design elements of packaging are: shape, color and
graphics. But modern packaging is more than a sum of its components. It is
therefore vital, when designing packaging, to establish a scale of importance of
various elements, to give each element a visual weight.
Unlike previous decades, when a relative attention was given to the graphic
image of the product packaging, through modest and suggestive aesthetic qualities,
up to vague suggestions, currently, in the most developed countries of the world, the
picture is a true virtuosity of graphics aesthetic, but at the same time, a faithful
representation of the product in question.
Currently, in terms of market globalization, packaging becomes an important
communication tool with the objective of selling the same product with the same
package worldwide, while taking into account language, mentality, culture and
specific legal framework.
When the unique packaging of a product is more pronounced, the product will
be successfully recognized, distributed and purchased by consumers. So, the brand
symbol is definitely one of the most important, if not the most important, visual tool
because it represents the best way of expressing personality and international
approach of the product.
Design element analysis on juice market. Case study: Prigat 61
The form of packaging should be regarded as an aesthetic element, its

design taking into consideration the following conditions: the constraints imposed
by the product in terms of form, the conditions for the production and use, the
quality class to which it belongs; physico-mechanical and chemical protection
ability required during product flow from producer to the final consumer; (Paraian,
Pascu, 2010, 95), the importance of informational and aesthetic component in
forming products purchasing decision, that determined forms of packaging in which
they become visible; the use, for some product groups, of modular forms of
packaging which, by their great power of suggestion, are characteristic and easily
spotted; shape correlation of the package with the material used for manufacturing
the packaging, with the construction system, particularities of use. There is a great
diversity of forms of packaging, and designers still hold many possibilities of
increasing their number according to the requirements of diverse customers in terms
of tastes, traditions, customs and revenue (Neacşu, 2012, 111).
It is noted, for example, the modern concern to adapt packaging shape to
additional uses. Thus, the packaging of some baby food (sweets, soft drinks) can be
used as toys; some cardboard or plastic packages take the form of bags used for
transporting bottles or metal cans; plastic packaging for milk can then be used as
cups. One might even say that enterprises subordinate form of packaging to the
market policies promoted. There are companies that keep their packaging shape for
years (manufacturers of alcoholic beverages, for instance) and continue to be
successful on the market, but most pursue diversification as part of penetrating new
markets, attracting new consumer segments.
Color is one of the most important means that designers own to transform
packaging in an effective communication tool. But before deciding on the use of
color, their effect and their perception mechanism must be known. The color of the
packages makes a product more or less aggressive, more feminine or more
masculine, cheaper or more expensive, warmer or colder. From choosing a color for
its intrinsic features to those led by a carefully determined concern: to sell, which
makes a significant step interfering with motivation. The color will be an item for
sale, imposing the first choice to the buyer through seduction. The manufacturer felt
this value and uses it increasingly more and more for its commercial purposes.
Graphics are essential in forming aesthetic image of the package. Graphics
includes all photographs, drawings, slogans and symbols that contribute to the initial
impact that a product (or package) has on consumers and play an important role in
communicating information and impressions about the product. Modern graphics
aims to create a symbolic expression.
3. Overview of Prigat product
Prigat is the brand leader in noncarbonated beverages in Israel, with a history of

about 70 years, being established in 1940. Prigat was launched in Romania in 1993,
being the first brand that brought the concept of non-carbonated soft drink in a
market dominated at that time 90% by carbonated drinks.
In the 21 years of success on the market in Romania, Prigat constantly came
up with innovations, pleasing the consumers that have positioned it in their top
preferences. Prigat innovations are in the field of communication, products,
packaging and last but not least, in the bottling technology and all this makes this
traditional brand to always be in consumers attention.
Since PRIGAT’s launch in 1993, Quadrant Amroq Beverages (QAB) has
constantly invested in its brand. Focusing on innovation and originality, the
company approached the building of the brand and the brand promotion with an
integrated strategy, combining the implementation of the latest technologies and the
development of the product portfolio with continuous improvement of the team, of
its marketing and of its trade marketing.
In the 21 years of success on the Romanian market, Prigat constantly came up
with innovations that led to the strengthening of its leading position. One of the
innovations is the creation of a new category called still drink with pulp, the market
segment covered by this category knowing the largest growth rate on the
noncarbonated drinks market in Romania. Focusing on innovation and originality,
Prigat has supplemented the portfolio over time with various products: Prigat Light
(1998), Prigat Nectar (1999), Prigat Active (2002), Pulp Prigat (2005), Prigat
Lemonade (2011 ).
The innovation that characterizes Prigat extends to the packagings launched
over the years, all of which are firsts on the noncarbonated drinks market: the first
wide mouth square bottle, the first sport opening head PET bottle for Prigat Active,
the first opening gable top box produced, the launch of sleeve labels, first opening
gable top produced in our country. Also in 2012, Prigat launches four flavors in
Tetra Pak cardboard.
4. The analysis of the aesthetic and design elements of the Prigat juice
PRIGAT juices are packaged in different types of packaging made from various
materials and have various capacities ranging from 0,33l up to 2 liters. Depending on the
type of package, it has certain physico-chemical and microbiological characteristics.
Thus PRIGAT juices can be found in packages made of glass, plastics (PET)
or cardboard boxes. Choosing a packaging material is made taking into account the
degree of protection that it ensures for the product, transportation options, the ability
to act as sales promotion and the percentage of packaging cost in the total cost of
the product. Sealed cartons for liquids are the most common and currently used for
packaging for a wide range of liquid food products. Laminated cardboard with
Design element analysis on juice market. Case study: Prigat 63
polyethylene associated with aluminum foil is used for manufacturing tetrahedral,

rectangular shapes, for liquid UHT sterilized food. This system is called Tetra-Pak
packaging. Glass is considered the ideal packaging material because of its
characteristics and advantages it offers as a package; it is mainly used for packaging
liquid or viscous products. It is widely used in the food and pharmaceutical industry,
chemical product packaging, etc.
Thus Prigat juice manufacturing company uses all types of packaging used for
packaging fruit juice. Natural clear juices are packaged in PET containers of
different capacity 1.2L or 1.5L. Nectars are packed in two types of packaging such
as: glass packaging for small capacity (0,33l) and Tetra-Pack packaging. It produces
such packaging because fruit nectars require special storage conditions that clear,
microbiologically stable juices don’t.
Glass provides the best protection for juices. Glassware provides air tight seal.
This means that undesirable external elements (such as oxygen) cannot penetrate
into the product, and the flavor cannot escape from the bottle. The full retention of
the taste and flavor content is thus obtained. Glass bottled juices have a high
resistance to storage and the consumer can see the contents.
Packaging design features are the features that describe the packaging ie
shape, color, graphics package.
The shape of the PET bottles for packaging the classic PRIGAT juices is the
parallelepiped. Recently, for clear juice, which is packed in PET containers, a new
cylindric form has been introduced, the form being elongated and rectangular for the
Tetra-pack. Containers made of glass are smaller and have a cylindrical shape that
allows an easy use and handling.
The packaging color: the PET and glass packaging are transparent, to see the
product. The glass bottles in which the nectar is packaged are however covered by a
plastic sheet because the product does not have a pleasant look containing fruit pulp
and the liquid being thick. The Tetra-pack boxes, being white, do not allow you to
see the product, and there are images of people moving that denotes the energy
given by the product and also by the fruits from which the product is obtained.
Graphics package is suggestive because it presents fruits from which the juice
is obtained and also exposes human figures in full swing suggesting the central
attribute associated to Prigat’s brand: natural energy for daily activities. The white
background provides a very useful shelf differentiation tool, it reflects the premium
brand positioning and natural simplicity.
A difference between nectar Prigat and the competing products is that it is
also found in smaller containers than 1l, such as for example, the 0,33l glass
containers. Also, the tetra-pack packaging of the Prigat has a rectangular shape,
which is much easier to use than the ones of other competitors. Another important
difference is that the packaging material of tetra-pack cartons used for pure Prigat is
Elopak-pak. This material is of high quality and offers much better retention than other
tetra-pack. Thanks to the modern methods of pasteurization, Prigat nectar can be stored
up to 5 days after opening, unlike the products of other competitors, which have to be
consumed within 48 hours of opening, this taking place when stored in a refrigerator.
5. Conclusions and suggestions
The Romanian juices market has recorded a strong growth in recent years. Quadrant
Amroq Beverages, the company that makes Prigat Nectar, says that both periodic
market research on consumers and statistics show that in Romania there is a
changing of consumption habits in the whole food market and a trend towards a
"healthy life, calorie-free and non-carbonated products".
Companies producing and importing soft drinks are always attentive to
market trends and to the changing preferences of the consumer. Consumers are
starting to prefer foods and drinks that do not harm the body functions and bring
more nutrients (vitamins, minerals, proteins). New trends encourage natural
beverages with a low sugar content.
In the case of Prigat, the product has relied on the fact that they were the first
in Romania on the noncarbonated juice market and also on the quality of the
product, which contains no preservatives and is made by a special method of
pasteurization - hot filling. In terms of Prigat product design packaging, there were
noticed over time through innovation and originality.
6. References
Băltescu, Codruţa, and Dana Boşcor. 2013 . „Customers’ Opinions Regarding

Eating-Out in a National Type Restaurants”. Ovidius University Annals,
Series Economic Sciences, Vol. XIII(2), 2013: 373.
Madar, Anca. 2006. “The new trends in the food consumption behavior of the
population.” International Economic Symposium, Brasov: 280-284.
Neacşu, Andreea. 2012. Designul şi estetica ambalajului – element de marketing.
Braşov: Editura Universităţii Transilvania din Brasov.
Neacşu, Andreea, and Anca Madar. 2014. „ Design and aesthetic elements on the
energy drink market Case study: Red Bull”. Ovidius University Annals, Series
Economic Sciences: 501-504.
Pamfilie, Rodica, and Roxana Procopie. 2002. Designul şi estetica mărfurilor.
Bucharest: Editura ASE.
Paraian, Elena and Emilia Pascu. 2010. Designul şi estetica mărfurilor. Bucharest:
Editura Universitara.
Şeitan Bărbulescu, Oana, Cristina Gherman, and Cătălin Bulgărea. 2010
„E- Commerce with Online Payment through Bank Card”. Annals of the
University of Petroşani, Economics, vol. X part IV: 309- 316.
Distribution policies and strategies for sustainable

textile products
Mădălina-Adina OPRIŞ (STĂNILĂ)1, Gabriel BRĂTUCU2,
Alexandra PALADE 3
Abstract: The purpose of this article is to highlight the complex process of distribution for
sustainable textile products. The main objective is to establish the most effective and
sustainable distribution policies and strategies used by textile companies in Romania. It can
be said that the distribution chain has to be very short and in many cases, conducted by the
producer itself, because he has to follow the sustainable product through all its life phases.
In conclusion, it can be said that for many companies the distribution process has a great
impact on the environment, therefore it is very important to supervise the distribution chain.
Key-words: sustainable distribution, reverse distribution, textile products.
1. Introduction
The textile industry represents one of the main industrial forces of the world, but
through its production processes, has a great negative impact on the environment,
due to the activities of textile plants cultivation, dyeing and cleaning goods but also
after the product reaches the final consumer, through cleaning and maintaining
processes, even when the product ends up in the garbage.
The present paper contains a presentation of sustainable fashion. First, the
paper captures the main strategic objectives of the companies from the sustainable
textile industry. Then the attention focuses on the distribution policy which is an
important process in a sustainable industry. The last part of the paper is an analysis
of the specific distribution strategies for sustainable textile products.
1
Transilvania University of Braşov, madalina.opris@unitbv.ro
2
Transilvania University of Braşov, alexandra.palade@unitbv.ro
3
Transilvania University of Braşov, gabriel.bratucu@unitbv.ro
66 Mădălina-Adina OPRIŞ (STĂNILĂ), Gabriel BRĂTUCU, Alexandra PALADE
2. Sustainable fashion
Sustainable fashion needs informed and interested consumers, so they can be

educated to make responsible decisions concerning the environment and to respect
the workforce in the textile industry, and why not, by choosing local textile
products, to stimulate responsible production from the economic, social and
environmental points of view.
In the textile industry, sustainability is a recent and important problem,
because nowadays consumers are more and more interested in the ecological matters
and in the world behind the products they buy or consume. The first step regarding
the development of sustainability is to develop a sustainable supply chain, using
ecological raw materials in the textile industry (Shen 2014, 6236) and ending the life
of the textile product by recycling it.
Sustainable fashion can also be called eco fashion, being a part of the
sustainable development trend, with the purpose of creating a system that ensures
the existence of the human kind and other species in good environmental conditions.
This trend cannot be built and maintained on a short term, it has to be developed and
adapted in time, so that the responsible consumption of the ecological textile can
also be in trend.
The NGO Earth Pledge sustains that at least 8,000 chemicals are used to
transform raw textile into the final product, while 25% of the total world pesticides
consumption is used in growing non-organic cotton. The organization points out that
70% of the carbon footprint of a product is done after the time of purchase.
Sustainable products are the result of an integrated process, taking into
account the sustainability requirements even from the design phases, and then are
followed until the product reaches the end customer. Surely, this product is more
expensive than a mass product, because it implies additional costs and a more
difficult production process, in smaller quantities.
Sustainable products are tracked throughout the entire production process and
supply chain of the textile product. The approach should be a complex, unified one,
which starts from the moment of shaping the new product concept and ends with the
waste and recycling phase.
Lester R.Brown (2006) believes that there is a conflict between industrial
civilization and the environment, drawing attention to issues such as the importance
of recycling and the reverse distribution.
3. Strategic objective
The strategic objective of the textile, clothing and leather – shoe industry is to
increase the competitiveness of the products in the market economy with minimum
social and material cost and maximum efficiency and it is based on establishing a
Distribution policy and strategies for sustainable textile products 67
sustainable and stable business environment, simultaneously with applying measures

to accelerate structural adjustment, promoting intangible investments, industrial
cooperation and on supporting the development of SMEs, the development of
industry and business services, higher labor productivity, product advertising and
'clean' technologies, energy saving, expanding the use of indigenous raw materials
and the development of an effective regional infrastructure. In this context, the
development strategy for the textile, clothing and leather-footwear industries aims to
increase the competitiveness of products and on this basis to achieve stable
economic growth and the duration of the sub-components, in full consonance with
the environment.
Raderbauer (2011) argues that strategic sustainability is the involvement of
senior management that goes beyond compliance and efficiency to avoid risks and
minimize costs. Townsend (2013) argues that a sustainable strategy should be based
on solid pillars, so the company must grow progressively and get in the market
dominant position, and should support the sustainability concept in both short- and
long-term, and the company's mission is to correlate the company with the
environment.
4. Distribution policies and strategies for sustainable textile products
The marketing mix represents the marketing tool used by companies to achieve
marketing objectives in the target market. To achieve their objectives, companies
need to consider all variables of the traditional market, such as product, price,
distribution and advertising (Stan 2012, 32). The concept of marketing mix was first
defined by N. Borden in 1957, but he included 12 elements, such as: product,
packaging, price, brand, distribution channels, personal selling, advertising, sales
promotion, display, post-sale service, logistics, information gathering and analysis.
Carty was the one who managed to summarize the definition into four main
directions, the 4P’s: product, price, place (distribution) and promotion.
The politics of the distribution process restricts the access of the customers to
the textile products. The distribution term defines all operations and means that
ensure that the goods or services will be available to users or end consumers (Lefter
et all 2006).
The term of "distribution channel" was replaced by the term of "marketing
channel" by some authors (Lusch 1979, 12), having the purpose of enlarging the role
of the intermediaries in the distribution process (Bălan 2002, 387).
The marketing channels can be defined as a set of independent organizations
involved in the process of ensuring product availability for use or consumption
(Stern et all 1982).
When it comes to sustainable textile and clothing industry, we talk about a
short distribution channel, with a small number of intermediaries, the direct
distribution process being often preferred, by which goods are delivered directly
from the producer to the end consumer. This is not possible in most of the cases, but
it tries to create a direct link between the producers and the end consumers of
sustainable clothing, in order to control the supply chain and reduce unnecessary
consumption of fuel, energy and labor.
Channel width for industrial goods is small. It is determined by the number of
units that provides the sale of a product. As for the depth distribution channel, the
vicinity of the distributor to points of consumption is low. It can be said that within
the sustainable industry there are also hybrid distribution systems, meaning there are
multiple channels to deliver goods to one or more market segments. By using this
hybrid system companies can reach better market penetration, reduce distribution
costs through more efficient distribution channels and make customized offers.
For the distribution of sustainable textiles, exclusive distribution is preferred
due to the high degree of control, low distribution and consumption costs, but the
market coverage is reduced. As a middle solution, we can resort to selective
distribution, providing minimum market control, but bigger coverage. Exclusive
distribution involves a single intermediary, while within the selective distribution
there are a small number of intermediaries.
In order to have a sustainable distribution system, the company should respect
the criteria of transport, handling, packing and storage, so that the processes are
optimally performed and that it also does not affect the social, environmental and
economic policies.
An important aspect in the sustainable logistics is the activity of transport,
storage, sorting, handling, which should have minimal effects on the society, the
economy and the environment, while ensuring sustainable quality textile products.
Transport is an important pollutant in the textile industry therefore sustainable
transport will choose the least polluting transport channels. For example, the
transport of goods by ship from China will be preferred instead of air transport.
As shown in its activity report, H&M consumes 50% of the total CO2
emission of the company only in the activity of transportation between the factory
and the store, so the main goal is to reduce this emission. The transport of H&M
products between the storage and the stores is made in reusable boxes.
Sustainable distribution is based on two main factors, namely:
• the reduction of waste flows emerged from the distribution processes and
waste of packaging from the regular distribution channel;
• the creation and development of reverse chanels responsable for the taking
over and disposal of waste generated in all the production stages.
Reverse distribution has become a requirement for resource recovery. The
marketing dictionary defines the reverse distribution as a contemporary process of
reinsertion of reusable materials or components in the economic cycle, which are
gained from consumption of goods. The reverse distribution can be carried out on a
number of activities like:
Distribution policy and strategies for sustainable textile products 69
• Textile waste returning from the market can be returned to the factory - buy-
back campaigns in large clothing stores;
• Using recyclable or reusable packaging;
• Consumption of slightly worn goods - second-hand stores;
• Reusing parts of products used to create new products.
o For example, H&M launched a campaign to collect textile waste,
then sorted them into three categories:
• Reused clothes, which will be resold in the second-hand stores;
• Clothing that can no longer be used and will be transformed into cleaning
rags;
• Clothes to be recycled.
Since 2012, the Higgs index is used to auto-evaluate the sustainability of the
supply chain in the field of clothing and footwear.
5. Conclusions
In the sustainable marketing, the distribution process has to focus on the fair trade
principles. This means that the commercial transactions should be based on
transparency, fairness and respect for all commercial parties (Cătoiu et all 2010, 121).
The textile consumer's behavior is changing in favor of ecological textile.
Nowadays people are starting to be interested in how the product was made, what
was its impact on the environment, so the new approach of textile eco conception is
connected to the ecology of the human resource, the ecology of production and the
ecology of recycling rubbish (Răducanu 2008, 47).
The contribution this work aimed at was to identify the common distribution
policies and strategies used in the sustainable textile industry and to find different
ways to improve them.
6. Acknowledgements

Development (SOP HRD), ID137516 financed from the European Social Fund and
by the Romanian Government.
The authors of this paper would like to thank the organizations that have
already started working at some eco marketing campaigns, for the reason that they
set the ground for this project and developed consumer’s awareness on the ecologic
problems.
7. References
Bălan, Carmen. 2002. „Canale de marketing”. In: Marketing, coord: Balaure, V., p.
387, Bucureşti: Editura Uranus.
Bălăşescu, Marius. 2005. Distribuţia bunurilor de consum final: Teorie şi studiu de
caz. Braşov: Infomarket.
Cătoiu, Iacob, Diana Vrânceanu, and Alina Filip. 2010. „Stabilirea de preturi juste–
principiu fundamental al marketingului durabil”. Amfiteatru Economic, Vol
XII, Nr. 27, 117-131.
Danciu, Victor. 2006. Marketing ecologic. Bucureşti: Editura Economică.
Găvruş, Cristina. 2007. Industrial marketing. Braşov: Editura Universităţii
"Transilvania" din Braşov.
Lefter, Constantin, Gabriel Brătucu, Marius Bălăşescu, Ioana Chiţu, and Cristina
Răuţă. 2006. Marketing, ediţia a doua, Vol.II. Braşov: Editura Universităţii
„Transilvania” din Braşov.
Lusch, R. F. 1979. „Erase Distribution Channels from your Vocabulary and add
Marketing Channels”. Marketing News, pag. 12.
Niinimäki, Kirsi. 2009. „Consumer values and ecofashion in the future”.
Proceedings of the Conference“Future of the Consumer Society 28–29 May
2009, Tampere, Finlanda”,125-134.
Opriş, Mădălina A., Gabriel Brătucu, and Alexandra Palade. 2014. „The Impact of
Eco-Marketing - A quantitative research on the Brasov’s adult population”.
International Journal of Economic Practices and Theories, Vol. 4, No. 5,
2014, Special issue on Marketing and Business Development, 711-717.
Răducanu, Ileana. 2008. “Evaluation and measuring the quality of ecological textiles
corresponding to the Eco-Tex standard”. Amfiteatru Economic, Special Issue,
44-47.
Shen, Bin. 2014. Sustainable Fashion Supply Chain: Lessons from H. Sustainability,
6(9), 6236-6249.
Stan, L.C. 2012. „Marketing mix adopted by companies in textiles and leather
industry”. Annals of the University of Oradea, Fascicle of Textiles,
Leatherwork, Volume XIII, 2012, No. 2, pag. 32-38.
Stern, L.W., El-Ansary, A. I. 1982. Marketing Channels, second edition. New
Jersey: Prentice-Hall, Inc., Englewood Cliffs.
Visileanu, Emilia. 2008. „Direcţii strategice de dezvoltare a sectorului textile-
pielărie. Buletinul AGIR nr. 4, 138-142.
Commercial breaks vs. product placement:

what works for young consumers?
Ovidiu Mircea ŢIEREAN1, Delia Elena ROMAN2
Abstract: The article presents the results of a quantitative marketing research conducted on
young consumers from Braşov County regarding their perceptions about commercial breaks
and product placement during the most important reality shows. The purpose of this
research is to determine to what extent young consumers watch the evening shows and to
what extent they remember the brands advertised during commercial breaks and product
placement within the shows. For young consumers, the evening shows are time spent with
family and friends. A large majority do not watch the commercial breaks and they mostly
remember brands that also practice product placement during the shows. There is a direct
corelation between numbers of shows watched and the percentage of consumers who
remember the main sponsors for evening shows.
Key-words: quantitative research, commercial breaks, product placement.
1. Introduction
The television advertising industry in Romania accounts for 193 million euros, 63%
of the advertising industry. The first two TV broadcasting companies, Media Pro
Group and Intact, have received 80% of the 193 million euros. The combined
market share of TV stations in their portfolios accounts for 55% (Obae, 2014).
Pro TV (Media Pro Group) and Antena 1 (Intact) run the most viewed shows
in Romania. “Romania's Got Talent” (Pro TV) spring 2014 is the show that had the
largest market share in the history of entertainment in Romania. The average
audience rating was 29.7 points and the market share was 59.1%. In other words, the
show averaged in its fourth edition 5.7 million viewers across the country.
In the fall of 2014, Pro TV and Antena 1 engaged in a competition for viewers
with two singing shows (The Voice and X Factor respectively) and two cooking
shows (Master Chef and Hell’s Kitchen respectively). The singing shows had a
combined market share ranging from 35% to 40%. The cooking shows had a
combined market share ranging from 27% to 33%.
1
Transilvania University of Braşov, ovidiu.tierean@unitbv.ro
2
Transilvania University of Braşov, roman.delia@yahoo.com
72 Ovidiu M. ŢIEREAN, Delia E. ROMAN
Companies spend large amounts of money for advertising in these shows. A

30 second spot during these evening shows costs between 1500 and 5000 euros.
With such advertising budgets, companies need to make sure that viewers see the
commercial breaks and product placements within the shows.
The aim of this article is to measure to what extent young people from Braşov
County watch the shows and the commercial breaks and to what extent they
remember the brands advertised during these shows.
Television has been one of the most powerful contacts with consumers. As one
study has noted, TV continues its global hold as a dominant contact (Jamhouri and
Winiarz, 2009). Their data captured consumers' perceptions of the influence of
advertising on their buying decisions from 38 countries from Asia, Europe and
North America from 2005 to 2008. They concluded that even if the influence of
digital media has grown, it has not caused a corresponding decrease in TV influence,
even among young people and that TV advertising is still indispensable for most
large brands.
In recent days, the role of ad-agencies became much more complicated due to
the media explosion and the number of clients demanding the services of
international ad-agencies to buy the time slot from the preferred TV channels, the
research organizations, and media owners quote different types of ratings for TV
programme viewing (Arul, 2014). So, television has to deal with them on the basis
of volume and share. A TV media owner will negotiate with a major advertiser the
advantages to get a bigger share for their total advertisement budget. This is often
done to benefit the TV company’s overall market share.
In the advertising industry, an important barometer is a periodical tracking of
the public sentiment toward television advertising (TvA). From a study which
provided a quasi-longitudinal examination of Australian attitudes toward TvA across
four time points (2002, 2005, 2008, and 2010) it was suggested that although
attitudes toward TvA are generally negative, in fact they have not deteriorated over
time (Ewing, 2013). So, attitudes toward TvA are unlikely to change dramatically in
a short term and to improve perceptions of TvA within the general community it
requires consistent and sustained efforts.
Studies were made to analyse the impact on consumer memory of the duration
and serial position of a commercial. The results indicated that duration, competition,
and the time lag until the onset of a commercial in a block have large effect sizes,
while primacy and recency have only modest effect sizes (Pieters and Bijmolt,
1997). So, placing a commercial first is better than placing it last, given comparable
costs and a goal to maximize brand recall. Also, it was found that advertisers may
receive greater value from advertisements that are placed in the last pod position
Commercial breaks vs. product placement: what works for young consumers? 73
when advertising pods are relatively long and it may receive lower value from
advertisements that are placed in the last position of short advertising pods
(Swaminathan and Kent, 2013).
The results of a study based on a large survey administered to an online
consumer panel maintained by Southwestern University in the United States had
shown that consumer socialization contributes to product placement research.
Findings revealed differences in both attitudes and behaviours across a range of
demographic characteristics, including income, gender, and ethnicity (de Gregorio
and Sung, 2010). The study provides a flexible yet theory-grounded framework by
which variation in and source factors of public attitudes toward product placement
as a practice as well as placement-related behaviours may be assessed and better
understood.
Consumers are often exposed to subtle and blatant product placements as
they watch a variety of evening television shows, so it was studied whether ego
depletion moderates the impact of subtle versus blatant product placements on
viewers' brand recognition and brand attitudes. By using experimenter-generated
television pilots as stimuli, the findings of investigation indicated that viewers are
less likely to recognize being exposed to subtly placed brands than to blatantly
placed brands, and this difference is magnified by ego depletion (Gillespie, Joireman
and Muehling, 2012). In addition, when viewers are not depleted, blatant placements
lead to more favourable attitudes than subtle placements. When viewers are in a
depleted state, however, subtle placements lead to more favourable attitudes than
blatant placements. Also, it was shown that subtle placements are more capable of
favourably influencing brand attitudes than are blatant placements, and that subtle
placements are more likely to enhance brand attitudes above those held by non-
exposed controls.
Today’s young adult audiences around the world are the main target group for
product placement because they are believed to increasingly converge in terms of
lifestyle and taste. Due to widely available global social media and communication
technology, young adults often appear to be very similar regardless of the part of the
world in which they live and can easily consume media from other countries.
A comparative study between Korean and American young adults observed
cross-cultural differences for TV product placement. In the US, materialism and
realism enhancement were found to be most powerful predictors of cognitive
response to product placement. In contrast, the attitude towards advertising and
materialism were found to be the strongest predictors in Korea (Lee, Sung and Choi,
2011). The study provides empirical evidence that culture influences how
individuals perceive and evaluate product placement in TV. Also, product placement
in television programmes may require local adaptation as audiences from different
cultures may display different perceptions towards the practice due to cultural values
and government regulations in local markets.
To capture the way young people interact with TV commercials, the authors
developed a 16 questions quantitative questionnaire. The questionnaire was created
in Google Docs and distributed over the internet for five weeks from December
2014 to January 2015 using a snowball sampling method. Although snowball
sampling is not a random sampling method, the authors managed to calibrate the
database so that in the end the gender distribution was 52.8% female to 47,2% male,
a very close distribution compared with the actual population. The same result was
achieved for the residential environment distribution: 73.6% urban to 26.4% rural,
when in fact Braşov County has a 71.19% urban population.
At the end of the five weeks planned for gathering data in the field, the
database contained 254 valid respondents that were included in the analysis. For
data analysis, the authors used IBM’s SPSS 19.0 software.
The first direction of research was the TV consumption among the young
consumers. The first question concerned what kind of TV sets respondents have in
their households. The difference between living environments was the primary
concern: in the rural area 37% of respondents still have CRT TV sets compared to
only 25% in urban areas.
Urban Rural Total
What kind of TV set do you CRT 25,4% 36,9% 28,4%
have in your household? LCD 26,5% 20,0% 24,8%
LED 21,1% 16,9% 20,0%
PLASMA 27,0% 26,2% 26,8%
Table 1. The urban-rural distribution of TV sets according to the technology used
Most young people watch TV between 1-3 hours (41%) and their favourite TV
channels for evening shows are: Pro Tv (70%), Antena 1 (52%) and Kanal D (20%).
The most important evening shows concerning product placement in the fall 2014
were: The Voice and Master Chef on Pro Tv, X Factor and Hell’s Kitchen on Antena 1.
62% of respondents watched The Voice, 57% watched Master Chef, 44% watched X
Factor and 35% Hell’s Kitchen. This means that 8% of Pro Tv viewers never watched
The Voice, and 13% never watched Master Chef respectively. Also 8% of Antena 1
viewers never watched X Factor, 17% never watched Hell’s Kitchen respectively.
Respondents from rural areas watched the cooking shows to a greater extent
whereas respondents form urban areas were drawn to the singing shows. There is no
significant difference in gender distribution between any shows whatsoever.
Respondents who have a LED TV in their households watched the competing

shows to a larger extent on Pro Tv than Antena 1: 21% The Voice vs. 17% X Factor
and 19% Master Chef vs. 15% Hell’s Kitchen. These results are due to the fact that
households with a LED TV probably use a high definition decoder. Pro Tv
broadcasts a high definition signal whereas Antena 1 does not. This is a limitation of
the research as the researchers did not include a specific question regarding the use
of high definition decoders.
61% of respondents watch these evening shows with their families, 44% alone
and 29% with friends. On all three categories there is a significant difference
between males and females, with males watching the shows alone or with friends
and females mostly with the family. The differences between urban and rural are not
so consistent. Both urban and rural inhabitants watch the shows with their family to
the largest extent. Urban inhabitants watch the shows alone and with friends more
often than rural inhabitants. Rural inhabitants also watch the shows with their
neighbours, as this does not happen in the city.
The second direction of research was the impact of product placement and
commercials during the evening shows on young consumers’ behaviour. First,
respondents were asked what kinds of brands they remember from the shows in an open
ended question. The descending order of brands mentioned is: Telekom, Orange, Fairy,
Coca Cola, Tymbark, Carrefour and Ariel. Only 296 answers were accounted for.
The following question was a multiple choice with 12 of the most important
brands that are placed in the four reality shows. 906 answers were registered from
254 respondents. The descending order resembles the open ended question, although
the frequency of response is double. The table below shows the distribution of the
brands taking into account the gender of respondents.
Gender
Total
Male Female
Brands Avon 19 35 54
Coca-Cola 72 49 121
Deichmann 35 35 70
Fairy 52 71 123
Fares 25 30 55
Giusto 19 34 53
Jacobs 28 17 45
L'Oréal 10 11 21
Metro 22 14 36
Orange 74 54 128
Prigat 13 20 33
Telekom 84 83 167
Total Count 120 134 254
Table 2. The distribution of male-female answers regarding the brands they
remembered from the shows
The valuable results for this question is to what extent respondents who said that
watched the shows remember the main brand exposed. It appears that Telekom has a
higher visibility during The Voice (72%) than Orange has on X Factor (61%). A
different example is Fairy that does product placement in Master Chef. Fairy does
product placement with competitors when in action whereas Telekom and Orange
do it with the jury and the presenters are not in action. That is why viewers who
watch the cooking show to a small extent do not remember the brand.
Percentage of viewers who Percentage of viewers who
How much of the TV
remember Telekom from The remember Orange from X
shows have you seen?
Voice Factor
0 – 25% 45.3% 32.8%
25 – 50% 64% 54.3%
50 – 75% 81.4% 70.2%
75 – 100% 88% 84.2%
Table 3. Percentages of viewers who remember Telekom and Orange
Percentage of viewers who

How much of the TV
remember Fairy from Master
shows have you seen?
Chef
0 – 25% 25.5%
25 – 50% 53.8%
50 – 75% 65.2%
75 – 100% 90.9%
Table 4. Percentages of viewers who remember Fairy in Master Chef
We draw the following obvious conclusions from the tables above: the more a
viewer watches a show, the bigger the chance he/she will remember the main
products placed. Some viewers who watched the shows to a very large extent (75-
100%) do not remember the main products placed within the shows. These are
called resistant viewers as Tiwsakul and Hackley (2007) put it. It seems that
resistant viewers account for 9 to 16%. Fairy has a smaller resistant viewers’
percentage because it is a low involvement product, whereas Telekom and Orange
sell high involvement services with large added value.
The last two questions are about the consumer behaviour during
advertisements. 4.3% watch the ads and they are all females, 35.8% leave the TV
running the ads but do something else (44% men and 56% female) and 59.8%
change the channel (52% male and 48% female). As TV commercials are targeted
mainly for urban consumers, their behaviour is even more important: 5.9% watch
commercials, 38% leave the TV running the ads but do something else and 56.1%
change the channel.
95.7% of viewers change the channel back once the commercial break is over.
Females (97%) are more consistent than males (92%). Urban inhabitants (96%) are
more consistent than rural inhabitants (92%).
5. Conclusions
The limitation of this qualitative research comes from the fact that the research did
not use a random sampling method, thus the results cannot be generalized for the
entire population.
Young consumers from Braşov County are very susceptible to TV
commercials: 71% watch TV more than an hour a day and 72% have modern TV
sets. They see the evening shows as quality time spent with family and friends. That
is why 95% of viewers do not watch commercial breaks, but return to their favourite
show once commercials are over. It does not come as a surprise that for the open
question, consumers only remembered brands that do products placement within the
shows. For the main sponsors of the singing shows there is a direct and strong
correlation between numbers of shows viewed and percentage of remembering the
brand.
With more than 95% of viewers not watching the commercial breaks, product
placement within the evening shows becomes increasingly important.
6. Acknowledgements

7. References
Arul, P. G. 2014. “Media Buying Practices of Integrated Ad-Agencies to Deliver

Advertisement Through TV Channels”. Amity Global Business Review, 9:
108-118.
de Gregorio, Federico, and Yongjun Sung. 2010. “Understanding Attitudes Toward
and Behaviours in Response to Product Placement”. Journal of
Advertising, 39(1): 83-96.
Ewing, Michael. 2013. “The Good News About Television: Attitudes Aren’t Getting
Worse”. International Journal of Advertising, 53(1): 83-89.
Gillespie, B., Joireman, J. and Muehling, D. D. 2012. “The Moderating Effect of

Ego Depletion on Viewer Brand Recognition and Brand Attitudes Following
Exposure to Subtle Versus Blatant Product Placements in Television
Programs”. Journal Of Advertising, 41(2): 55-65.
Jamhouri, Oscar, and Marek L. Winiarz. 2009. “The Enduring Influence of TV
Advertising and Communications Clout Patterns in the Global
Marketplace”. Journal of Advertising Research, 49(2): 227-235.
Lee, T., Sung, Y. and Choi, S. M. 2011. Young Adults' Responses to Product
Placement in Movies and Television Shows. International Journal Of
Advertising, 30(3), 479-507.
Obae, Petrisor. 2014. “Posturile Pro TV au luat jumatate din banii din piata anul
trecut. Intact, aproape o treime”. Pagina de media, 27 mai 2014,
http://www.paginademedia.ro/2014/05/posturile-pro-tv-au-luat-jumatate-din-
banii-din-piata-anul-trecut-intact-aproape-o-treime-asteptarile-pietei-dupa-
mutarile-din-pro-tv-si-antena-1/
Pieters, Rik G. and Tammo H. Bijmolt. 1997. “Consumer Memory for Television
Advertising: A Field Study of Duration, Serial Position, and Competition
Effects”. Journal Of Consumer Research, 23(4): 362-372.
Swaminathan, Srinivasan, and Robert Kent. 2013. “Second-by-Second Analysis of
Advertising Exposure in TV Pods: The Dynamics of Position, Length, and
Timing”. Journal Of Advertising Research, 53(1): 91-100.
Tiwsakul, R. A. and Hackley, C. 2007. “Young Thai and UK Consumers’
Experiences of Television Product Placement – Engagement, Resistance and
Objectification”. Association of Consumer Research Conference Proceedings
2007, Volume 34: 372-377.
TOURISM
Trends driving the hotel industry global evolution.

Case of Romania
Codruţa-Adina BĂLTESCU1
Abstract: The tourism field is well known for the dynamic of changes over recent years. We
witness the continous growth of the number of tourists, the increase of consumers demands,
the development of new markets and the changes determined by information technologies
implementation and adaptations and innovations supported at the level of tourism business.
Being a defining component in the tourism industry, the hotel field is individualized through
specific evolutions and significant adjustments in relation to the general rate of changes and
development trends recorded. In this framework, through this article, the author aims to
assess which are the most relevant changes recorded in the Romanian hotel industry and the
degree in which this specific activity field follow the trend of changes recorded at
international level.
Key-words: hotel industry, accommodation units, accommodation nights, trends.
1. Introduction
Over the past six decades, tourism has experienced continued expansion and
diversification, becoming one of the largest and fastest-growing economic sectors in
the world. Many new destinations have emerged in addition to the traditional
favorite of Europe and North America. Despite occasional shocks, international
tourist arrivals have shown virtually uninterrupted growth – from 25 million in 1950
to 278 million in 1980, 528 million in 1995, and 1087 million in 2013
(http://dtxtq4w60xqpw.cloudfront.net/sites/all/files/pdf/unwto_highlights14_en.pdf).
Tourism is one of the fast-growing sectors of the European Union (EU) economy. It
is also undergoing important changes, as the interests of more and more customers
shift towards the online environment (Marinescu and Toma 2012, 71).
The global dimension of the hotel field is assessed at the momento at 3,5
trillion dollars, figure directly correlated with the upward trend of tourism industry,
in general (Tewari 2010, 5). In the recent year trade barriers were reduced, markets
have globalized, product life cycle is shorter and the desires of consumers
increasingly converge (Brătucu and Boşcor 2008, 25).
1
Transilvania University of Braşov, codruta.baltescu@unitbv.ro
82 Codruţa-Adina BĂLTESCU
2. Theoretical background
The accommodation services are a necessary component of the tourism development

and the quality and diversity of this services influence the type of visitors of a
certain city. The success of any tourist destination depends on a hotel industry ready
to receive and accommodate tourists (Pop et al. 2007, 65). The offer of tourism
producers and distributors are differentiated depending on the type of
accommodation units which will host the tourist at destination and the
accommodation alternatives ensured by hotels, guesthouses, secondary residences,
camping etc., influence the other components of the tourism product acquired (food
services, for example), and the purchase price of holidays and independent tourism
services. The target of the continuous improvement of quality is the development of
the company simultaneously with satisfying and attracting loyal customers (Madar
and Neacşu 2013). Based on the preponderance of the emotional factor in relation to
the rational one in terms of tourism services, the way the potential consumer reacts
to stimuli coming from the consumption of tourism services and how he perceives
the “universe” of a destination becomes essential in creating the image of that
destination (Stăncioiu et al. 2013, 40).
The hotel is no doubt the most representative tourism accommodation unit
offering accommodation services and meals to any person who accepts to pay the
rate for the services offered, without requiring prior existence of a contract (Snack et
al. 2001, 321). In our country, according to law, the hotel is considered a reception
structure arranged in buildings, offering tourists rooms, studios and suites properly
equipped ensuring the provision of specific services, has a reception hall, reception
and, as appropriate, catering rooms (The order of National Tourism Authority
65/2013). As it is sensitive to various external environmental influences - like most
businesses, the accommodation company is now - so complex (Lupu 2010, 4).
Currently the Romanian hotel industry profile depicts a highly fragmented sector, as
the low level of concentration within domestic hotel groups and the low
international brand penetration rate show (Pop 2014, 67).
3. Research method
A study published in 2014 by Amadeus, one of the biggest global distribution

systems, study made in cooperation with Oxford Economics, shows that, at global
level, before 2006, the volume of accommodation nights by domestic travelers was
higher than for international travelers (Amadeus-Shaping-the-Future-of-Travel-
Macro Trends-Report). Around the financial crisis, the two were at roughly the same
level, but from 2009, the two began to diverge. From 2009 to 2012, international
accommodation nights grew by 20% but domestic accommodation nights only grew
Trends driving the hotel industry global evolution. Case of Romania 83
by 5.8%. The revealed issues and trends were afterwards compared with the statistic
analysis of the Romanian hotel industry.
4. Results
Based on current trends, domestic and international accommodation nights are

forecast to continue to diverge from 2013 to 2023, with international
accommodation nights growing at an annual average rate of 5.1% compared to 3.4%
in domestic accommodation nights. Table 1 summarizes the growth rates Oxford
Economics’ TDM model forecasts for the next decade as well as providing results
for the last decade.
Region Average Annual Growth [%]

2002-2012 2013-2023
Asia 8,5% 15,1
MEA 8,4% 11,9
Europe 2,1% 3,9
Americas 3,7% 6,4
Table 1. Growth in overnight visitor flows by region
(Source: Amadeus-Shaping-the-Future-of-Travel-Macro Trends-Report)
On the other hand, the evolution of international accommodation nights is

distinguished through different trends at global level, as presented in table 2.
Region Average Annual 2002-2012 Growth [%] 2013-2023

Asia 10,9% 7,3
MEA 12,9% 4,8
Europe 1,5% 3,2
Americas 5,1% 6,1
Table 2. Growth in international accommodation nights by region
Also, the same study has analyzed the situation of local accommodation nights, as
presented in table 3.
Region Average Annual 2002-2012 Growth [%] 2013-2023
Asia 11,9% 4,4
MEA -1,,9% 5,5
Europe 0,0% 2,8
Americas 0,1% 3,5
Table 3. Growth in domestic accommodation nights by region
As concerning Romania, the situation of accommodation nights within the

period 2009-2013 is presented in table 4.
Period 2013 2012 2011 2010 2009

Romanians 15884 15869 14912 13284 14657
Foreigners 3478 3297 3067 2767 2668
TOTAL 19362 19166 17979 16051 17325
Growth total 1,02% 6,6% 12% -7,5% -
overnight stays
Growth 0,01% 6,42% 12,26% -9,4%
domestic
overnight stays
Growth of 5,49% 7,5% 10,84% 3,71%
foreigner
overnight stays
Table 4. Overnight stays in tourist establishments
(Source: http://www.insse.ro/cms/files/Anuar%20statistic/20/20%20Turism_ro.pdf)
Data presented in table 4 reveal the effects of the economic crisis felt in Romanian
tourism, mainly, at the level of the year 2010, when the situation of overnight stays
has recorded significant decreases. Therefore, the total number of overnight stays
decreased with 7.5%, the overnight stays of Romanian tourists decreased with 9.4%,
the only increase being recorded at the level of foreign tourists overnight stays in the
accommodation units from Romania, in a percentage of 3.71%.
The results obtained in the year 2011 manage to overcome losses of the
previous year, and by 2013 the value of overnight stays records continuous
increases. The average annual increase of the indicator overnight stays in
accommodation units records the following values: 3.03% at the level of total
overnight stays, 2.32% the average annual increase of local overnight stays and
6.88% the annual average of increases recorded at the level of the overnight stays of
foreign tourists who visited Romania. Comparing these average values with the
similar average values recorded at the European continent level positive evolutions
of the accommodation activities from Romania are shown, at all analyzed indicators.
As results from these evolutions, the overnight stays of foreign tourists have
recorded the most significant increases, but it should be mentioned the fact that the
indicator’s absolute values are distinguished by low values, lower compared to
levels recorded in neighboring countries that we compare with as international
tourism destinations (Hungary, Bulgaria).
Several international studies show the predictive changes of the behavior of
the future tourist, so that the tourism offers, especially the hotel ones, to ensure the
necessary and normal conditions in order to prepare a coordinated adaptation.
Trends driving the hotel industry global evolution. Case of Romania 85
In this framework we witness the increase of the need to segment the hotel
offer. The tourist of the year 2020 will appreciate customized, personalized tourism
offers. The thorough knowledge of the needs and expectations of potential guests of
the accommodation units will influence decisively the repetitive nature of tourism
demand. More, the favorite term in conducting market researches in this direction is
“micro-segmentation”, namely the identification of data and sophisticated and
multiple techniques for showing and attracting customers with a similar profile with
the present guests. The statement that will mark the success of a hotel unit is "hear
me, study me, know me and remember me". The mainly operation of independent
accommodation units in Romania is a guarantee towards providing hotel services
tailored to the needs of tourists, which is well known as a prerequisite for the market
success of the units managed independently. On the other hand, the majority of these
units is small and therefore cannot guarantee high standards of quality and comfort.
Another trend shown is that of tourists who will appreciate simple travels,
accommodation and food services as simple and natural as possible, with genuine
character and cheap. The Romanian pensions located in rural regions, particularly
those who practice agro-tourism and focus on local and ecological food production
will continue to thrive in these conditions, to the extent that they will be able to
identify appropriate promotional actions. In this framework, the financial pressures
of the future years will affect the travel budget of many tourists. Also, it shouldn’t
be ignored the important number of wealthy and hard to please tourists. A trend that
is maintained is the increase in the percentage of senior tourists.
An issue that will mark the profile of foreign visitors is associated to the
significant increase of the appetite of citizens from countries almost nonexistent on
the map of tourism sender a few years ago, persons with high incomes and willing to
travel. It is about tourists coming from Brazil, Russia, India or China. The idea of
segmentation and adaptation of hotel supply is, as further evidence, a key factor in
the marketing actions of accommodation units. At least so far these categories of
tourists have not visited Romania in large numbers. In 2013 they represented only
2.5% of all foreign tourists arriving in Romania. This trend should be considered a
priority for the actions that will be undertaken by the national tourist authorities to
promote Romania as a tourist destination.
5. Conclusions
The international hotel industry records permanent developments and changes. The
lack of immediate action measures will generate undoubtedly deficiencies with
medium and long-term effects. In our country the efforts to develop the hotel offer
were sustained. They must however be continued in order to identify the
international trends as early as possible and undertake the appropriate adaptation
measures.
References
Brătucu, Gabriel and Dana Boşcor. 2008. Marketing International. Braşov: Editura
Universităţii Transilvania din Braşov.
Lupu, Nicolae. 2010. Hotelul – Economie si Management. 6th edition. Bucureşti:
Editura C.H. Beck.
Madar, Anca and Nicoleta A. Neacşu. 2013. “Quality strategies applied by the
company Star East Pet.” Bulletin of the Transilvania University of Braşov
6(55), No. 1 Series V: Economic Sciences: 63-70.
Marinescu, Nicolae and Anca Toma. 2012. “The Use of Internet Tools by Tourism
Smes: A Case Study.” Studia Universitatis Babeş-Bolyai Negotia 4: 71-81.
Pop, Cornelia, Smaranda Cosma, Adina Negruşa, Claudiu Ionescu and Nicolae
Marinescu. 2007. Romania as a Tourist Destination and the Romanian Hotel
Industry. Newcastle: Cambridge Scholars Publishing.
Pop, Cornelia. 2014. “The Current Profile of Romanian Hotel Industry: Does It
Enhance the Attractiveness of Romania as a Tourist Destination?” Studia
Universitatis Babeş-Bolyai Negotia 3: 35-78.
Snack, Oscar, Petre Baron and Nicolae Neacşu. 2001. Economia Turismului.
Bucureşti: Editura Expert.
Stăncioiu, A. Felicia, Nicolae Teodorescu, Ion Pârgaru, Andreea Botoş and
Anamaria C. Radu. 2013. “Aspects on the perception of young people
regarding balneotherapy tourism in Romania.” Theoretical and Applied
Economics 12(589): 25-42.
Tewari, R. Jatashankar. 2010. Hotel Front Office Operations and Management.
Delhi: Oxford University Press.
The order of National Tourism Authority 65/2013. Available at http://
http://turism.gov.ro/wp-content/uploads/2013/05/Ordin1.pdf.
http://dtxtq4w60xqpw.cloudfront.net/sites/all/files/pdf/unwto_highlights14_en.pdf.
Accessed on 22.03.2015.
http://www.amadeus.com/documents/Thought-leadership-reports/Amadeus-
Shaping-the-Future-of-Travel-MacroTrends-Report.pdf. Accessed on
22.03.2015.
http://www.insse.ro/cms/files/Anuar%20statistic/20/20%20Turism_ro.pdf. Accessed
on 24.03.2015.
Improving the profile of the European tourist

destinations through the European tourism
indicators system
Laura CISMARU1, Ana ISPAS2
Abstract: Within the most recent European Policy for Tourism, the competitiveness of the
European tourism industry is directly linked to the image of Europe and to its perception, as
a collection of sustainable and high-quality tourist destinations. In such context, improving
the profile of the European tourist destinations has become a main target. During the last
years, the European Commission focused on the sustainable development of tourist
destinations. Several projects were developed, the most recent one introducing a practical
tool - the European Tourism Indicators System (ETIS) for the sustainable development of
destinations. The present paper advances the idea that such tool can be successfully used in
order to achieve the goal of improving the profile of the European tourist destinations.
Key-words: sustainable development, tourist destination competitiveness, EU Tourism

Policy, ETIS Project.
1. Introduction
All EU Policies for tourism address the sustainability issue in the most responsible
way, as being a matter of key importance in this field. According to the most recent
Tourism Policy adopted by the European Commission in 2010, the main
differentiation trait of the European tourist destinations has to be their sustainable
way to develop (COM 2010, 5). Various instruments were created during the last
years at EU level in order to support the responsible management of tourism
businesses, such as the EU Eco-label or the Community eco management and audit
scheme (EMAS), but, unfortunately, the response and efforts from tourism
businesses across Europe were very different in this direction. Maybe because of
this lack of congruence, during the last years, the EU Commission focused on the
sustainable development of tourist destinations.
1
Transilvania University of Braşov, laura.cismaru@unitbv.ro
2
Transilvania University of Braşov, ispasana@unitbv.ro
88 Laura CISMARU, Ana ISPAS
2. Profiling the sustainable tourist destination
The tourist destination was defined as „the main place of consumption of tourist
services and, therefore, the location and place of activity of tourist businesses”
(COM 2001, 5). As the European Commission underlined, nowadays tourists
“identify the product with (…) the destination visited” (COM 2001, 5). Therefore,
the destination can be actually considered and treated as a complex tourism product;
it is the tourist’s overall experience (COM 2001, 24). In the last three decades, in the
tourism literature, many studies approached issues like tourist destination image or
branding. An authentic perspective started to coagulate regarding the possibility to
view a tourist destination as a living entity. Using the analogy of destinations with
human beings, interesting concepts were formulated such as tourist destination’s
personality, soul, spirit (del Bianco 2008) or profile.
2.1. The concept of Destination Profile
Most studies address the concepts of “destination profile” and “destination

evaluation” as synonyms (COM 2013, Crotti and Misrahi 2015, COM 2010). In our
opinion, “profiling” is a step forward compared to “evaluating” because a profile has
to spotlight those specific characteristics which are essential for the research topic,
while an evaluation is a comprehensive investigation of the destination. For
example, a competitiveness profile should emphasize the traits which position the
destination as a more or less competitive one. By consequence, profiling tourist
destinations supports the positioning process. The positioning of a tourist destination
means “to identify dimensions of destination representing positions that could be
developed to differentiate the destination in a meaningful way to consumers” (Pike
and Ryan 2004). The communication of the correct profile helps the destination
positioning in the mind of consumers through image formation. By consequence, the
destination profile also supports the process of image formation. Destination images
are produced by people’s mind, following a process of synthesis and simplification
regarding the various pieces of information associated with a specific destination
(Pike and Ryan 2004). The conceptual clarification regarding all the above
mentioned notions is presented in Figure 1 below.
Positioning of a tourist destination is the process concerned, first, with market
segmentation followed by “the selection of a destination’s features to emphasize”
(Alford 1998, 53-54). Therefore, according to this theory, the destination profile
should resemble the profile of its targeted tourists. In this context, within the process
of positioning sustainable tourist destinations, the first key step would be to
correctly understand the profile of Sustainability Oriented Tourists (SOTs) (Iunius et
al. 2014, 102-103). But, as Dolnicar et al. noticed (2008, 197) there is little
consensus at present about who SOTs actually are.
Improving the profile of the European tourist destinations through the European tourism 89
Evaluation Profiling Image creation

is an exhaustive spotlights specific is a simplification
analysis characteristics process
Business Environment
Cultural Resources and Business 7
Safety and Security
Travel
6
based on
5
Natural Resources Health a
4
3
comprehensive
2 H
t Service Infrastructure
1
0
sets of
d and Port Infrastucture IC
Air Transport Infrastucture Prioritiz
indicators Environmental Sustainability International Openne
Destination Destination Destination

Report(s) Dashboard Image
Positioning
Fig. 1. Destination profiling - conceptual clarification
In the above mentioned context, in order to match the sustainable destination’s

profile with the profile of its consumers, we support the idea (Dolnicar et al. 2008,
197-210) that further research is needed in order to provide a deeper understanding
of the Sustainability Oriented Tourists’ Profile.
2.2. Specificity of a Sustainable Destination’s Profile
Profiling a sustainable tourist destination refers to the use of its characteristics in

order to determine whether the tourism industry develops in a sustainable way and
to identify areas where interventions and improvement are needed. As depicted in
Figure 1 above, profiling a sustainable destination should always be based on a
comprehensive evaluation of its development. Also, a destination profile has to be a
useful tool for destination management stakeholders; therefore it has to be depicted
in an attractive visual form. In Figure 1, we included the spider web/web chart/radar
chart because we consider it is one of the most useful graphical methods of
displaying data for a destination profile. The World Economic Forum (WEF) used
the same graphical method within its most recent Report regarding the
Competitiveness of Travel & Tourism. Since 2007, WEF has released six Reports
regarding the Competitiveness of Travel & Tourism. These documents are
comprehensive studies regarding the tourism performances of more than 100
countries, analyzed as tourist macro-destinations. Each Report issued a hierarchy
using the Travel & Tourism Competitiveness Index (TTCI). As it has been stated
within the last Report, the TTCI “aims to provide a comprehensive strategic tool for
measuring the set of factors and policies that enable the sustainable development of
the Travel & Tourism sector, which in turn, contributes to the development and
competitiveness of a country” (Crotti and Misrahi 2015, V). An example of
destination profile used by the WEF is displayed below in Figure 2. Because the
present paper refers mainly to Europe, as a macro-tourist destination, we processed
data and included in Figure 2. the profile of Europe, from a competitiveness and
sustainability perspective.
Fig. 2. Europe’s Profile within the Travel & Tourism Competitiveness Report
released by the World Economic Forum in 2015 (Crotti and Misrahi 2015, 10-11)
Another great tool which offers the possibility to both evaluate and profile the
sustainable development of world destinations (not necessary tourist destinations) is
the Sustainability Dashboard developed in 1990 by the Consultative Group on
Sustainable Development Indices (CGSDI) and the Joint Research Center (JRC).
The Sustainability Dashboard can be easily implemented because a specific software
application has been developed for that purpose, allowing the synthesis of “a wide
variety of data and environmental, economic, and social information in a single
graphical and numerical evaluation form” (Scipioni et al. 2009, 366). The graphic
representation is attractive and therefore “offers great visual impact” (Scipioni et al.
2009, 366). It also offers significant benchmarking opportunities. Because the
graphical representations used in the Sustainability Dashboard are very colored, we
decided not to include an example within the present paper.
3. Profiling European Tourist Destinations as Sustainable Destinations
The European Commission has recently stated that tourism competitiveness “is
closely linked to its sustainability, as the quality of tourist destinations is strongly
influenced by their natural and cultural environment and their integration into a
local community”. As recently noticed “the relationship between the sustainable
development and the competitiveness of the European tourism industry can be seen
as one of direct determination” (Cismaru 2015). In order to offer real support to
European tourist destinations, the European Commission has developed in the last
decades several policies and tools for the sustainable development of tourism. These
initiatives can also be considered important instruments which actively contribute to
the image and profile improvement of European destinations.
3.1. Europe – the no 1 Tourist Destination of the World
In June 2010 the European Commission communicated the new Tourism Policy
called “Europe, the world's No 1 tourist destination – a new political framework for
tourism in Europe”. International tourist arrivals to Europe in 2008 confirmed its
position as the most visited region in the world (COM 352 final 2010, 3). But, as the
European Commission highlighted, tourism is an increasingly competitive industry
at a global level and, in such context, Europe, as a macro-tourist destination, “must
offer sustainable and high-quality tourism, playing on its comparative advantages,
in particular the diversity of its countryside and extraordinary cultural wealth”
(COM 352 final 2010, 5).
The entire action framework aims four priorities: (1) Stimulate
competitiveness in the European tourism sector; (2) Promote the development of
sustainable, responsible and high-quality tourism; (3) Consolidate the image and
profile of Europe as a collection of sustainable and high-quality destinations and (4)
Maximize the potential of EU financial policies and instruments for developing
tourism.
By consequence, in 2010, the European Commission established that the two
most important strengths of tourism at EU level were sustainability and high-quality.
In order to be able to use these comparative advantages over its competitors, the
European Union needed to focus on uniformly and consistently develop tourism in a
sustainable way in most European tourist destinations. Therefore, following the
adoption of the last Tourism Policy in 2010, special attention has been given at EU
level to the creation of efficient instruments to be implemented by interested
destinations in order to develop in a sustainable way and accordingly promote their
efforts.
3.2. The European tourism indicators system for the sustainable development
of destinations
In 2013, the European Union launched the European Tourism Indicator System for
Sustainable Destinations (ETIS). ETIS includes a number of 67 indicators (27 core
and 40 optional), grouped into four categories: (1). destination management
indicators, (2). indicators related to economic value, (3). indicators related to social
and cultural impact and (4). indicators related to environmental impact (COM 2010,
18-20). As stated in the implementation toolkit, ETIS was conceived to be an easy
and useful instrument for tourism stakeholders which “aims to contribute to
improving the sustainable management of destinations” (COM 2013, 3).
We consider that the process of profiling tourist destinations is an iterative one
(Figure 3.), continuous monitoring being needed, including reevaluating and
reprofiling the destination.
Reprofiling
Destination
Destination
Reevaluation Destination
Evaluation based on
ETIS Toolkit
Improving Destination
specific Profiling
indicators
Destination
Benchmarking
Fig. 3. Destination Profiling - Iterative process
Also, we support the idea that when the simple evaluation process develops into a
benchmarking approach, important strategic options may appear. Therefore, after the
destination has a profile, benchmarking is the next necessary step to take in order to
completely and correctly understand its strengths and weaknesses in a highly
competitive environment.
ETIS actually provides a theoretical sustainable development model for

tourism which European destinations can use on a voluntary basis. It is an evaluation
tool which can be developed into a profiling and benchmarking tool. Following the
above mentioned example of the Sustainability Dashboard Project, we support the
idea that creating specific software for the implementation of ETIS might be a very
useful approach. Also, we consider that an attractive graphical method should be
included, the spider web being a suitable one.
4. Conclusion
Being based on a comprehensive evaluation, followed by benchmarking and

improvement of specific indicators, the profiling process of European destinations
founded on ETIS can be a truly efficient one. But, as we mentioned above in section
3.2., further research and support are needed in order to create proper software for
implementation. In this context, we advance the idea that such tool can be
successfully used in order to achieve the goal of improving the profile of the
European tourist destinations.
Analyzing the strategic approach of the European Commission regarding the
sustainable development of European tourist destinations and the struggle to develop
the image of Europe as a collection of sustainable destinations, an interesting
discussion can be advanced on its real strategic goal: does the European
Commission aim to adapt the supply (destination) to the demand (SOTs) or is it a
strategic attempt to educate the consumer of tourism products, as well as the
provider of tourism products, the authorities and the local communities in the spirit
of sustainability oriented behavior (Năstase et al. 2011, 58)? It is a direction for
future research into the process of profiling sustainable tourism destinations which is
important for the correct implementation of ETIS in European tourist destinations.
5. Acknowledgements
This paper is supported by the Sectorial Operational Programme Human Resources

Romanian Government under the Project number PODRU/159/1.5/S/134378.
6. References
Alford, Philip. 1998. “Positioning the destination product-can regional tourist boards
learn from private sector practice?” Journal of Travel & Tourism Marketing
7(2): 53-68.
del Bianco, Paolo. 2008. “The Spirit of Place between the Intangible and the
Tangible.” Paper presented at the 16th General Assembly and International
Scientific Symposium, Quebec, Canada, 29 September - 4 October 2008.
Cismaru, Laura. 2015. “European Tools for Managing and Monitoring the
Sustainable Development of Tourist Destinations.” Review of General
Management, 2015(1).
Commission of the European Communities (COM). 2001. Working together for the
future of the European Tourism. Brussels: COM 665 final.
Crotti, Roberto and Tiffany Misrahi (eds.). 2015. The Travel & Tourism
Competitiveness Report 2015. Growth through Shocks. Geneva: World
Economic Forum.
Dolnicar Sara, Geoffrey I. Crouch and Patrick Long. 2008. “Environment-friendly
tourists: what do we really know about them?”. Journal of Sustainable
Tourism 16(2): 197-210.
European Commission (COM). 2010. Europe, the world's No 1 tourist destination –
a new political framework for tourism in Europe. Brussels: COM 352 final.
European Commission (COM). 2013. The European Tourism Indicator System
TOOLKIT for Sustainable Destinations. Luxembourg: Publications Office of
the European Union.
Iunius, Ray F., Laura Cismaru and Gabriel Brătucu. 2014. “Contribuţia unui sistem
de tip DSS conceput pentru turiştii orientaţi către sustenabilitate la dezvoltarea
durabilă a industriei ospitalităţii din cadrul euroregiunilor. In Sustainable
Economic and Social Development of the Euro-regions and the Cross-border
Areas, edited by Paduraru, T, Tacu, G. and Doncean, M., 101-113. Iaşi:
Tehnopres.
Năstase Carmen, Adrian Liviu and Carmen Chaşovschi. 2011. “Educating and
informing tourism consumers in the context of sustainable development.”
Journal of Tourism 12: 53-59.
Pike, Steven, and Chris Ryan. 2004. “Destination positioning analysis through a
comparison of cognitive, affective and conative perceptions”. Journal of
Travel Research 42(4): 333-342.
Scipioni, Antonio, Anna Mazzi, Marco Mason and Alessandro Manzardo. 2009.
“The Dashboard of Sustainability to measure the local urban sustainable
development: The case study of Padua Municipality”. Ecological indicators,
9(2), 364-380.
Dynamics of the youth travel market on a global level

Timea DEMETER1, Gabriel BRĂTUCU2, Alexandra PALADE3
Abstract: The segment of young tourists has been considered a niche market and was
treated as a branch of the tourism industry. In the past 10 years, however, its market value
has began to increase significantly bringing real benefits to the companies adapting to this
segment by developing appropriate strategies and policies. Therefore, the aim of this project
is to analyse the dynamics of the youth travel market, on a global level, taking into
consideration the international youth arrivals, youth accommodation units and the
behavioural habits of young tourists, serving as a starting point in the strategy development
process.
Key-words: youth tourism, market, marketing, market dynamics, tourism, global level.
1. Introduction
As part of the tourism industry, the segment of young tourists has been considered a
niche market and has not drawn the attention of researchers or marketing specialists
for many years. In the past 10 years, however, its evolution has been remarkable,
generating a yearly revenue of over 170 billion dollars. This aspect raises the
question if this market can still be considered as being small, or should it be treated
as a market worth giving attention to, and for which there is the need to develop
specific policies and strategies.
In order to develop the appropriate policies and strategies it is necessary to
observe the current dynamics of the market to gain a better understanding of it and
to predict its evolution in future.
Market dynamics is closely linked to the customers who represent the demand, and
whose behaviour must be studied in order to build the products and services that will
satisfy their needs, as well as possible.
1
Transilvania University of Braşov, timea.demeter@unitbv.ro
2
3
Transilvania University of Braşov, alexandra.palade@unitbv.ro
96 Timea DEMETER, Gabriel BRĂTUCU, Alexandra PALADE
Therefore, the aim of this project is to analyse the dynamics of the youth travel
market on a global level, taking into consideration the international youth arrivals,
youth accommodation units and the behavioural habits of young tourists.
This paper provides an insight to researchers, tourism companies and
marketers into the 10 year long evolution of the youth tourism market, and may
serve as a starting point in developing policies and strategies that can contribute to
the further development of this field.
The young people began travelling after the Second World War, with the purpose of
study, self-development, and developing a broader mind-set that allows a better
understanding of other cultures. However, there was only a small group of wealthy
young people who had the possibility to travel, therefore, not much attention was
given to this segment and it didn’t represent a significant source of income to any
destination.
From the scientific point of view, this subject was first mentioned by
Krippendorf (1971, 51) followed by Cohen (1973, 89).
In 1987 tourism packages for the young tourist were beginning to be implemented,
however they were proven as inappropriate to satisfy the needs of this segment.
(Kale, Mcintyre and Weir 1987, 23). Following these publications, researchers
began to study the youth travel market in their country of residence or countries with
which they were in contact with. Resulting in researches for Croatia, Yugoslavia
(Horak, Crnkovi and Míkaci 1989), France (Méréo 1992, 20), Mexico (Garibaldi
and Rebora 1995, 12) Australia (Reisinger, Mavondo and Weber 2001, 65) and
Great Britain (Mintel 1991, 2000 and 2001)
In 1990 Hudman (1990, 42) introduced the concept of youth tourism, as we know it
today. Point in time, after which several researches were published considering the
motivations and preferences of young tourists (Bonvecchio 1991, 161) the dynamic
of youth arrivals, demographics and other related trends. (Jefferson 1991, 73)
The importance of Youth tourism was also recognized by Horak and Weber (2000,
38) who conduct the first thorough research at the level of the entire European youth
travel market.
The behaviour of the young tourist was studied in detail by Neil Carr, who published
9 studies on this subject.
After the year 2002 international organisations, such as: The World Youth and
Student Travel Confederation, began to recognise the importance of youth tourism,
and developed in 2003 global studies by Richards and Wilson (2003, 2), Richards
and King (2003, 23) followed by Conrady and Buck (2012, 5) and WYSE Travel
Confederation (2013, 2)
The dynamics of the youth travel market on a global level 97
The World tourism organisation conducted, as well, studies regarding the dynamics
of the youth travel market (2009, 3), and defined most specifically the term “youth
tourism” as independent trips for periods of less than one year, undertaken by people
aged 16-29 who are motivated, in part or in full, by a desire to experience other
cultures, build life experiences and/or benefit from formal and informal learning
opportunities outside their usual environment. (UNWTO – WYSE 2011, 7)
3. Analysis of the market dynamics
During the years, it has been referred to the youth travel product as a one destined
for a niche market. However, the size of this market reached, in 2012, the number
of 196 million arrivals worldwide, and generated 173 billion dollars (Vetrak 2012,
3), in 2011, representing an increase of 37 billion dollars in 7 years. (Richards 2008,
2) Therefore, raising the question if it can still be referred to as a “small market
segment”.
As shown in Figure 1 since 2004 the number of international arrivals of the
young people, had a steady growth, with a small decrease in 2009, the year when the
effects of the economic crisis could be mostly felt.
It is estimated, by the World Tourism Organisatio, for this market to reach 300
international arrivals by 2020 (UNWTO – WYSE 2011, 6).
Fig. 1. Dynamics of youth arrivals on global level 2002-2011

Source: Vetrak 2012; UNWTO 2011
It can be noted that the dynamics of the youth travel market is connected to the
increase of low-cost airline services that are introducing more routes covering a
larger area then 10 years ago.
Another factor influencing the changes that occur in this market is the
accommodation facilities where the youth can stay during their trip. From this
perspective, the hostels are the favourite accommodation booked by young
travellers, used by 65% of them (WYSE Travel Confederation 2013,14), due to the
low prices.
According to Figure 2 This trend shifted after the years 2009 and 2010 until
the youth was using Hotels as the main paid accommodation method.
In 2007, 63% of the young travellers marked hotels as the accommodation
method used by them, while 50% chose hostels. During a 6 year period, this trend
changed, Hostels exceeding Hotels with 7% percent.
According to IPK International (2014, 21) tourists younger than 25 tend to
choose hostels over hotels while the youth over this age are more likely to book
hotels.
Fig. 2. Evolution of the Hotel and Hostel usage among the youth on a global level
2007-2013
Source: Vetrak ,2012; WYSE Travel Confederation 2013
Aside from budget accommodation, 36% of the youth prefer to stay with friends and
family (Richards 2007, 3). Due to their price sensitivity, and their desire to
economise money, they are more likely to request the service of local businesses,
having therefore a higher local economic impact than other types of visitors.
(Richards and Wilson 2003, 28)
On global level, the main purpose of the trips that the youth take is leisure,
which has the form of relaxation and free time, followed by the desire to learn
languages, study and work. Almost half of the young people who were questioned in
2013, regarding their reason to travel, said that it was to have fun and relax. The
motivation behind these travels is mostly the desire to explore new places, meet new
people and learn about different cultures. (WYSE Travel Confederation 2013, 13)
Fig. 3. Distribution of the purpose of the trips taken by the youth in 2013
Source: WYSE Travel Confederation 2013
The ranking established by the youth regarding the purpose of their trip and
their motivation to travel, remained the same during the period of 2002-2013. The
percentages of the elements has slightly changed from one period to another,
however these changes not being high enough for the motivational elements to
surpass each other. It can be noted, however, that the percentage of travellers for fun
and relaxation has slightly dropped in the recent years, change that can be attributed
to the desire and need of the youth to travel for work or education. (IPK
International 2014, 20)
According to Richards (2007, 3) women are more motivated by the idea of
increasing their knowledge, while men have a higher desire for relaxation and fun.
Regarding age differences, tourists’ under 20 are more motivated by having
fun and relaxing, while tourists aged between 20 and 29 have a higher desire to
explore, and gain experiences.
As the years pass, the experience of the young tourists is increasing when it
comes to the number of countries visited in their lifetime. While in 2002 the average
number of countries that the young tourists visited, was equal to 6, by 2013 this
number raised to 10. According to Figure 4 there was a significant increase of 3

points between 2007 and 2013, while between 2002 and 2007 the evolution was
only one point.
Fig. 4. Evolution of the average number of international trips taken by the youth
in their lifetime 2002 - 2013
Source: Richards and Wilson 2003, Richards 2007, WYSE Travel Confederation 2013
The youth from Asia-Pacific and North America are traveling more than they did 10
years ago (WYSE Travel Confederation 2013, 13), while the frequency of European
travels is steadily increasing. Therefore the increase in the overall average is mostly
influenced by the changing behaviour of the non-European regions.
On a yearly timeframe, in 2013 the youth has made in average 1.2 short trips
and 1 long trip. (WYSE Travel Confederation 2013, 13). This average declined
compared to 2007 when the worldwide average was 1.9 in case of short and 1.7 in
case of long trips. (Richards, 2007)
The yearly average is the highest in case of Latin America, followed by
Europe and North America.
The young tourists want to travel as cheaply as possible, this being the most
important factor that influences their travel decision. The age group of 18-29 years is
very price sensitive due to the fact that they don’t have highly paid jobs yet, or don’t
have jobs at all.
The cheap travel requirement is followed by the desire to explore the
destination as widely as possible, and by the desire to feel safe at the chosen
location.
It is also important to the young tourists to have the ability to do non-tourist

activities, to have contact with local people, and to have the flexibility to change
their travel plans.
Criteria like meeting other travellers, speaking other languages and going to a
different place than homeland, are least important to them.
In spite the fact that many young people travel with the purpose of getting
into contact with other cultures, they marked the elements (meeting other travellers,
speaking other languages) that are part of this experience as not very important
when making their travel decision.
According to Figure 5 the main information source used in the trip planning
process is the internet is mentioned by more than 80% of the respondents and
increased its popularity with 9 percentage points since 2002.
Fig. 5. Evolution of the information sources used in the trip planning process
2002 - 2007
Source: Richards and Wilson 2003, Richards 2007
The second most used information source are family and friends, however they are
beginning to be replaced by review websites that provide a broader perspective, vast
amount of information, and a higher number of options for the tourist to choose
from.
Travel agencies were consulted by more young people in 2007 than in 2002,
while the guidebooks and newspapers are losing their popularity.
Considering the overall ranking, the tv/radio broadcasts and the newspapers
are the least consulted sources during the trip planning process, therefore using them
as an advertising channel to promote tourism among youth is inefficient, while the
most efficient channel is, and will remain, the internet.
In case of travel websites, the most important feature for the young tourists is
the possibility to compare prices from different companies, followed by providing
information about the destinations. Significantly less importance is given to the
aspects regarding the possibility to book the entire trip on the website, the existence
of youth travel products, and the feature of the website to save the enquiries.
The number of information sources used in the trip planning process increased
during the years. In 2002 the young traveller consulted an average number of 3
information sources (Richards and Wilson 2003, 35) while after 10 years the
average tripled to 9 sources. (WYSE Travel Confederation 2013, 14). This increase
was registered in the last 5 years, and it is most likely a result of the high amount of
information that the youth have easy access to.
It can be also noted that the number of information sources that are used in the
planning phase is directly proportional with the length of the stay and the level of
experience that the tourist has. A longer trip implies a risk (concerning time and
money), while a traveller with more experience identifies more elements that need to
be reviewed in order to have a successful trip then the less experienced ones.
Therefore, the youth with high travel experience, who intend to spend more than 7
nights will use over 9 information sources.
Most commonly used booking method is online, being used in more the 50%
of the cases. Over 60% of the youth is using online methods to book their
accommodation, 51.7% to book their air travel, while surface travel is booked online
by 48.6% (Richards 2007, 26). Travel agencies are mostly used for booking tours,
insurance and in some cases surface travel.
It can be noted, that the booking are made on an average 6.5 weeks in advance
in case of air travel, and 4.6 weeks ahead in case of accommodation. (Richards and
Wilson 2004, 12)
As previously shown in this paper, young tourists are very price sensitive, this
being the elements that influences 94.3% of them when making touristic
arrangements. The feature regarding the quality of information and services
provided by travel agencies is placed at a highly significant distance from the price,
and was mentioned by 37.6% of the respondents, followed with similar percentages
by the reputation and quality of the travel products, flexibility to change the travel
plans, and the ability to book online. Least important factors are buying a well-
known brand and having a travel agent close by. (Richards 2007, 27)
Areas such as South East Asia, Australasia, Central America, China/Japan and
North Africa are becoming more and more popular and there has been a significant
increase in the preference of young tourists towards these destinations since 2002.
However the most preferred tourist destinations remain Southern Europe, Northern
Europe, North America and Eastern Europe. (Richards and Wilson 2004, 11)
The top 4 destinations are usually visited by less experienced travellers, while more
experienced travellers prefer visiting South America, China/Japan, the Indian Sub-
continent or Central/Southern Africa. This phenomenon can be explained by the fact
that they have already visited the most popular destinations while building their
travel experience, and now have the desire to explore other places, that are not
characterised by mass tourism.
The top 3 countries that were visited by the youth, during their trips in 2007,
are Australia, U.S. and France, exceeding by over 4% the other countries. (Richards
2007, 25) Australia is known for its promotional efforts and facilities that are aimed
towards the youth entertainment, and which highly contributed to its title as the most
popular destination for youth tourism.
Getting to the destination is most often achieved by Bus, this method being
used by 31% of the respondents, followed by Car and Rail travel. Air travel
represented 16% from the total in 2007 while its usage increased with 10% by 2013.
(WYSE Travel Confederation 2013, 14).
Fig. 6. Distribution of the traveling methods used by the youth in 2013

Source: WYSE Travel Confederation 2013
Air travel is used mostly for long distances, by more experienced travellers who
have a higher income, while busses are used by students and younger travellers with
lower income. (Richards 2007, 24) The car is used usually by tourists with a high
income or when travelling in groups of 4-5 people.
In 2002 the youth took fewer trips, than in the years to come, however their
duration was longer. The average length of the main trip was 65 days in 2002
(Richards and Wilson 2003) and decreased to 53 in 2007, followed by an increase to

58 in 2013. (WYSE Travel Confederation 2013)
The total travel budget averaged 3000 euros in 2013 being a significant
increase since 2007 when the average spending was equal to 2142 euros, which
reached this value from 721 euros calculated in 2002. (Richards 2008, 2) Naturally,
the total spending is highly influenced by the chosen destination and the length of
the stay.
According to Richards (2007, 24) the total travel budget is divided 31.5% for
transportation to/from the primary destination, 18.1% accommodation, 15.1% Food
and drinks, 11.2% activities and entertainment, 9.5% transportation at the
destination, 4.1% for communication and 10.6% on other activities.
Due to their price sensitivity, the youth try to access as many discounts as
possible from witch the most used ones are student discounts and discounts on air
travel. (Richards and Wilson 2003)
According to their preferences it would be most important to them to receive
discount on accommodation and travel services.
4. Conclusion
The market of youth tourism has grown beyond its definition as a niche market, and
it is forecasted to have over 300 arrivals worldwide, by 2020. The main
accommodation type booked by the youth is the hostel, which became more popular
after the year 2010, exceeding hotels, due to the lower prices offered together with
the possibility of socializing with other travellers.
The young people travel with the purpose of leisure, however travelling for study
and work is becoming also an often mentioned motivation.
Due to the increasing number of facilities that are available, the young tourists are
becoming more and more experienced having visited an average of 10 countries
during their lifetime.
The trip planning process is becoming more complex, the tourist using, on
average, of 9 sources, the main one being the internet which became the most
efficient promotional channel to address them.
It is also very important to note that this segment is very price sensitive, this being
the most important criteria influencing their travel decision, however due to the
length of the trip, their average spending reaches 3000 euros, contributing
significantly to the development of local tourism related businesses.
Therefore, developing policies and strategies based on the dynamics of this
market can bring real value to companies operating in tourism, value that will
contribute to the overall development of the country’s economy.
5. Acknowledgements

Development POSDRU/159/1.5/S/137516 financed from the European Social Fund and
by the Romanian Government.
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An overview of environmental education initiatives in

the international and Romanian tourism
Elena-Nicoleta UNTARU 1, Ana ISPAS 2, Adina-Nicoleta CANDREA3
Abstract: Environmental education in the tourism field has benefited in recent years from
the attention of various specialists, due to its potential influence on raising individual
awareness about environmental issues, as well as on their environmentally friendly attitudes
and behaviors, both at home and in a holiday setting. Given these issues, this paper aims to
achieve an overview of some of the existing environmental education initiatives in tourism,
both internationally and in Romania.
Key-words: environmental education, tourism, initiatives.
1. Introduction
Education is an essential tool for achieving sustainable development and solving

environmental problems (Jickling and Spork 1998; McKeown 2002; Thathong
2010). Environmental education is a process that recognizes the value and clarifies
many concepts in order to develop skills and attitudes necessary to understand and
appreciate the relationships between man, culture and the environment.
Environmental education includes decision-making practice and the formulation of a
code of conduct on environmental quality (Bălăceanu 2013).
The concept of "Education for Sustainable Development" (ESD) was first
defined as "education that allows people to acquire the values, knowledge and skills
to participate in decisions about how individual and collective actions, both locally
and globally, will improve quality of life without damaging the environment "(Aziz
et al. 2012). ESD goal is to make individuals and communities understand the
complex nature of the natural and built environment resulting from the interaction of
biological, physical, social, economic and cultural issues (UNESCO-UNEP 1978).
In the tourism field, sustainable education is of particular importance as it
helps to inform individuals, but also to increase their awareness on environmental
issues, while exerting a significant influence on their environmentally-friendly
1
Transilvania University of Braşov, elena.untaru@unitbv.ro
2
Transilvania University of Braşov, ispasana@unitbv.ro
3
Transilvania University of Braşov, adina.candrea@unitbv.ro
108 Elena-Nicoleta UNTARU, Ana ISPAS, Adina-Nicoleta CANDREA
attitudes and behaviors. Based on these considerations, the aim of this study is to
investigate some of the environmental education initiatives in tourism,
internationally and in Romania.
Sustainable development is defined as "meeting the needs of the present without

compromising the ability of future generations to meet their needs" (WCED 1987,
43; Abu-Goukh et al. 2013; Al-Rawahy 2013). A more comprehensive definition of
sustainable development includes the environment, people and economy, and the
interactions between them (Abu-Goukh et al. 2013; Benkari 2013).
The main cause of existing environmental problems in the world is the lack of
information regarding ecosystems. For example, in the case of Turkey (a developing
country, like Romania), one of the reasons underlying the emergence of
environmental problems is the lack of public awareness about the environment and
people's participation in actions to support it. Hence, the importance of
understanding the purpose of environmental education (Hamalosmanoglua 2012).
The purpose determined by the United Nations for sustainable development is
to integrate education into all curricula of values such as "sustainable development",
but also to stimulate the development of changes in people's behavior. Various
specialists (Miller and Kato 2006; Davis 2009; McGregor 2009) have tried to
achieve this goal through the importance they have given to the integration of
sustainable development issues in education today. McGregor (2007) outlines the
imperative need for the reconceptualization of individuals’ environmental education.
In this sense, four elements were considered, namely society, economy, culture and
environment (Clugston 2004; McGregor 2010).
According to the Tbilisi Declaration (UNESCO 1977), ESD includes five
components, namely: awareness, knowledge, attitudes, skills and participation.
Based on these components, the education of the teacher is a very important
requirement since they will be the ones that provide ecological education of
pupils/students (Hamalosmanoglua 2012).
In the current context of globalization and the global economic crisis, the
greatest challenges of education institutions are linked to their capacity to promote
social values and offer pupils/students a sustainable education (Teodoreanu 2014).
School, as a provider of education, is the ideal place to provide pupils/students
knowledge and skills, but also to develop their positive attitudes towards sustainable
development (Alwi et al. 2012; Aziz et al. 2012; Teodoreanu 2014).
In the education system, education is dominated by a mechanical paradigm. If
you attach importance to education for sustainability content, education attaches
importance to sustainable values and skills acquired, promoting learning for change.
In most schools in Romania, the main difficulty is the transition from education to
An overview of environmental education initiatives in the international and Romanian ... 109
the multidisciplinary cross-disciplinary education for sustainability or sustainable

education (Szitar 2014). Therefore, the main problem to be solved is to integrate all
these components into school curricula, overcoming the barriers that may arise at
different levels (individual, social, institutional).
Environmental education is an ongoing process. Despite its objectives, the
means of implementing it are still unsatisfactory, as the impact of education is not
sustainable (Urker et al. 2012). An example of good practice on environmental
education is the University Kebangsaan Malaysia (UKM), which is committed to
sustainable development since 1994 by establishing the Institute for Environment
and Development which conducts research on the environment (Derahim et al.
2012).
In order to achieve sustainable development in the future it is necessary to
include in the school curricula certain disciplines which are based on
interdisciplinary sustainable development. However, there are many obstacles in
achieving this. Many European universities promote sustainable development in
their teaching processes, allowing the introduction of compulsory courses,
multidiciplinary courses and cross-disciplinary ones. Curricular reform should be a
priority for higher education institutions wishing to integrate the concept of
sustainability into their programs (Szitar 2014).
Developing the ability to identify environmental problems, to make decisions,
to implement solutions to prevent and resolve the issues identified cannot be
achieved only through education for sustainable development. The introduction and
use of the concept of sustainable development/sustainable in the school curricula of
educational institutions in Romania is a sine qua non requirement for ensuring
economic growth and social development. In Romania, relatively few studies have
focused on the environmental education of young people. Some of these studies
consider implementing education for sustainable development among primary
school children (Marcus 2011). Other studies have focused on topics related to the
environmental opinions and attitudes on a healthy natural environment of pupils,
students or employees from different companies (Olteanu 2012). But most of the
studies identified are methodological guides for teachers in primary education
(James 2007), which examine environmental education in the context of voluntary
environmental protection (Nedelcu et al. 2003) or consist of contests in elementary
schools or kindergartens (Stoian et al. 2010).
Education and training are vital to the tourism industry in terms of providing
a foundation of knowledge and study for those young people who wish to enter the
tourism industry as a careeer; continuing professional development is also vital for
those already employed in the tourism sector (Horner and Swarbrooke 2004, 261).
Tourism education is an important link to the national education. Also, studies
show that practicing various forms of tourism determines the development of
positive behaviours, creative and innovative, which contributes to society
development, in general. In this respect, a new form of tourism occurs and develops:
the educational tourism. In Romania, the supply of tourism courses has grown
considerably over the past two decades. Such growth has been fuelled by the rapid
expansion of the industry and the recognition by governments that tourism
significantly contributes to local and national economies, fact proven by the record
revenues obtained worldwide in 2012 (Arionesei et al. 2014).
3. An overview of international and Romanian environmental education

initiatives
Investigations conducted on organizations involved in educating the public on

measures to be taken to protect the environment in the context of consumption of
tourist products and services from different destinations reveal an increase in their
concerns in this area. This is demonstrated by the large number of associations,
projects, guides, etc. existing both internationally and in Romania which have been
created in order to increase people's awareness of the importance of protecting the
environment, and to encourage greater involvement of their environmentally
friendly activities in different tourist destinations. Some of these organizations,
projects and guidelines which we identified are presented below.
Mountain Riders is a French non-profit organization and it works to inform
and to raise awareness of all the actors of the mountain on environmental issues and
for the promotion of sustainable development in the mountains. Also, it informs the
general public on attitudes to adopt, at home and on the mountain; concerning waste,
transport, water usage, energy and sports, raising children’s awareness, raising
professionals’ awareness on climate change, ecological footprint and sustainable
development. The main events this organisation has realised so far are: annual slope
cleanings by picking up waste under the lifts; an eco festival, an eco guide to
mountain resorts to evaluate resorts actions in favour of sustainable development in
France and all over the world for customers to choose their resort on sustainable
criteria; an eco guide to mountain gear, an eco guide to events, national charter in
favour of sustainable development in mountain resorts; a concrete agenda for the
21th century, to put resorts on the road to sustainable development and pedagogical
campaigns.
The Eco Guide consists of a summary of knowledge accumulated by
Mountain Riders. This eco guide highlights how manufacturers and brands find new
ways to reduce environmental impact while being socially responsible from the time
a product is manufactured to the end of its usefulness. Since 2001, Mountain Riders
has worked to promote sustainability in the French mountains. It aims to support
public and private organizations and the 20 million regular skiers towards concrete
and long lasting actions. Its actions were: spring cleaning campaigns to clean up and
raise awareness regarding the issue of rubbish and waste in the mountains;
educational activities for schools programs: waste, climate change, ecological
footprint, project support; conferences/training sessions on sustainable development

in Mountain regions, climate change, eco design, eco events or governance; raising
awareness to inform and guide people and riders to change and round-table
conferences.
Sustainable Travel International is an organisation which aims to support
communities, hotels, airlines, cruise lines and governments to plan responsibly — to
chart their road maps for responsible growth so that they can continue to protect
their most vital and vibrant aspects while contributing to the economic and social
well-being of the many people whose lives and livelihoods depend on the world’s
wanderlust. Sustainable Travel International offers extensive education and training
programs around the world. Their curriculum and courses give tourism
professionals, destinations, and educational institutions of all experience levels an
overview of sustainable tourism, and an understanding of how to apply it to their
roles on a daily basis.
Planeta.com was created in 1994 by Ron Mader and is a handcrafted website
maintained in old school code with a smattering of social web niceties. It invites
locals and visitors to share practices of eco-friendly, people-friendly and place-
friendly travel.
Argeş Group for Education and Ecology (G.E.E.A.) is a non-governmental
organization whose primary goal is the implementation of educational, ecological,
cultural and social development projects in different areas of interest both locally,
nationally and internationally. G.E.E.A. presents itself as a group dedicated to
protecting natural areas and promoting green spaces and ways of living balanced in
nature, leaving a footprint as small as possible on the environment. Through its
environmental policy, G.E.E.A. supports reduction, reuse and recycling, as well as
any other method which can generate less waste. Among the projects completed to
date by the organization the most important are:
• "Let's Do It, Romania!" - the largest project of social involvement in Romania
which aims cleaning of waste the areas outside the cities in one day!;
• "Plant good deeds in Romania" - is a national project whose mission is to mobilize
society, the public, the private sector and the media to protect and increase forest.
Afforestation actions will increase the area covered by forests in Romania, and
this is done in compliance with technical standards in the field. The project is
addressing mainly to the informed public in the field (environmental NGOs,
tourism, clubs/guiding schools) and the public which is sensitive to forest related
issues (tourists, students from Forestry/Geography, media specialist readers of
specific publications - exploration/discovery of the natural environment).
• "Environment Day at Dârmăneşti " – a project for educating and involving
children in the community by organizing a seminar of environmental protection
entitled "Respect nature and it will respect you!" as well as different ecological
actions.
The main objective of the Lunca Mureşului Natural Park is to protect the
landscape, habitats and specific meadow species by managing sustainable human
activities so as to represent an ideal space for environmental education and
ecotourism activities. One of the completed projects conducted in this natural park is
"Ceala, a greener forest", aimed at reducing human pressure on this protected area
by promoting ecotourism.
Ţara lui Andrei (Andrew’s Country) is a social responsibility project
initiated by OMV Petrom. The main projects which were financed so far include:
• The project "Active for a clean environment", which aims to motivate and involve
young people in the town Mereni, in order to protect the environment, improve or
find solutions to environmental problems.
• The project "Brăila on two wheels" aims to increase the number of citizens who
use bicycles as a means of green transport in the city of Brăila.
• The project "Eco-mountain cycling" proposes the design of three trails for
mountain biking and cycling in order to promote tourism in Porţile de Fier Natural
Park.
Kogayon Association performs volunteer projects, for example, installing a
billboard on a thematic route, building a gazebo for educational activities with
children, transportation of materials and reconstruction of a tourist refuge,
Curmătura Builei, building a small park in the courtyard of a rural church or making
a promotional add for educational activities.
The environmental education program "National Park Junior Ranger
Buila-Vânturariţa" primarily aims to involve children in appreciation and
conservation activities around the park. The Junior Ranger program includes
presentations of the park (photos, video) made by the association volunteers in local
schools, environmental education lessons conducted by volunteer specialists of the
association, hiking and excursions in Buila-Vânturariţa National Park and its
surroundings. Other projects completed to date are: monitoring of protected species
representative for the Buila-Vanturarita area, Junior Rangers - friends of Buila-
Vânturariţa, promoting natural areas protected by local youth etc.
The "Center for Ecological Education and Tourism Promotion" project
aims to develop cross-border tourism on environmental issues through the exchange
of experience and good practices among young people in Romania and Serbia , aged
between 16 and 25 years.
The project entitled "Creating thematic route and educational activities"
was implemented in the Ţarcu Mountains protected area in order to create the first
thematic route in the region which can raise awareness among visitors, support
educational activities and boost eco-tourism activities.
The project entitled "Habitats plant species and traditions of Piatra
Craiului National Park presented in an alpine garden and photo exhibition"
aimed at achieving a garden-exhibition in the vicinity of the Piatra Craiului National
Park Visitor Centre and a permanent photo exhibition inside the building, in order to
raise public awareness and environmental education (adults and children). The
project objectives include: making a school botanical garden, an outdoor exhibition
highlighting protected species characteristic to the area, as well as five interpretative
panels; achieving a permanent exhibition in the Visitor Centre, composed of a series
of five photo montages; involvement of students and the local community in the
project area park.
4. Conclusions
Specialized studies conducted so far in environmental education, particularly in the

tourism field, particularly reveal the impact that this can have on individuals. In the
tourism industry, environmental education has an important place as it exerts a
significant influence on increasing the awareness of individuals, but also on their
attitudes and behavior towards environmental issues. The present paper overviewed
the issue of environmental education, including the one related to tourism, and
highlighted some of the environmental education initiatives both internationally and
in Romania. Further studies might highlight the extent to which environmental
education activities conducted in schools or through various associations exert a
significant influence on changing individuals’ tourism-related attitudes and/or
behaviors. Also, future studies can make various comparisons between individuals,
developing segmentation based on several criteria aiming to highlight the degree of
involvement in environmentally friendly activities. Finally, other studies can analyze
the impact that introducing the concept of environmental education in schools can
have on individual tourist behavior.
Acknowledgements

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MANAGEMENT
The e-commerce as a way to sustain a strategy

Bogdan BĂCANU1
Abstract: The study explores the impact of the new e-commerce techniques on the business
strategy, guided by the idea that it could entrench a possible outcome in diminishing costs.
This potential effect is discussed using the present concepts on strategy coined and
established by academics. The discussion is based mainly on accustomed opinions about the
new form of commerce, stating that the cost figures have a minor relevance in defining
strategy. The findings pinpoint that cost leadership could be a strategic option, but the
differentiation remains to be discussed as alternative while new forms of retail may
perpetrate to redefine strategic approach under challenging times.
Key-words: e-commerce, strategy, cost leadership, differentiation.
1. A link between e-commerce and strategy?
Understanding and studying the ways of expression and the economic aspects of the
e-commerce becomes easier if it is connected to addressing the strategies of
nowadays companies. Assuming that the theory behind these strategies is coherent, a
large number of statements can be made in relation to the business’s evolution
associated to the e-commerce. Basic strategic concepts which this study refers to are
inspired by the current literature and are to be seen as valid.
The e-commerce becomes visible mainly through sales volume expansion of
existing products in a mature market, which would correspond to the so-called
penetration of the market, according to Ansoff (1965). To a lesser extent we also
find elements of the strategy of market (or product) development – based on the
typology by the same author - which leads to the idea that e-commerce occurs as a
consequence of technological maturity of an economy or a market.
In terms of competitive advantage, as introduced by Porter (1985), the use of
the new technologies seems to be guided by the idea of lowering the costs (mainly
through staff costs reduction). This impression is induced by the fact that
e-commerce tends to exclude direct involvement of personnel in some segments of
the business processes.
1
Transilvania University of Braşov, b.bacanu@unitbv.ro
120 Bogdan BĂCANU
More specifically, e-commerce materializes in trading a product with known

or readily recognizable features, based on images, and proposed at an attractive price
for the buyer. We can envisage, more realistically than the generic Porterian scheme
on strategies, that a firm would choose such ways to sustain its offer, because its
value is perceived by the seller as better than the classic one. Similarly a
presumption can be made related to the buyer: he opts for this type of exchange only
when the price-quality ratio appears to be better than in the classic transaction case.
The price becomes significant when e-commerce reduces the number of
features on which the buying decision is made. For most products the price seems to
be decisive when the choice is made. This assumption will guide both strategy
formulation and the research path on the impact of e-commerce.
On the other hand, the new forms of e-commerce are the result of a
technology development, so the “push” aspect of the company’s strategy (called
technology push) becomes predominant. The advantages related to the operational
costs are offset by the marketing costs involving a cultural conversion of the buyer.
In this context, the main focus of the study is given by the relationship
between the e-commerce and the costs incurred to the companies that apply them.
More specifically, it is to be seen whether e-commerce are a way to support a
specific strategy, probably that falls into the generic cost leadership category.
2. Outlook methodology for a realistic approach on strategy
The research of the main topic of this study is carried out by analyzing generic
examples of business models that use e-commerce. Studying these business models
is focused on key issues about strategy.
Basically the study is exploratory, based on a qualitative analysis of some
aspects related to strategies and revealed by academics and experts. Clearly there is
a lack of detailed data from companies in the designated area, but trends are picked
up from studying the prices evolution for a given good.
The study is made in terms of the theoretical guidelines given by Yin (2003)
for the study case. Case studies are used in a way that exemplifies Porter's generic
strategies. Specifically, it is used the originator’s initial style for the theoretical
approach, and not any subsequent methods brought by the enthusiastic followers of
the "positioning school" inspired by the same author.
It could be stated that the data collected are relatively scattered and form a
puzzle of information on which, nonetheless, extrapolations can be made on the
strategies being followed and their affiliation with cost leadership.
Investigating the visible aspects that reflect the alleged strategy was preferred
as tool to an approach based on surveys, which would record opinions on the
investigated phenomenon rather than real facts related to it. As most research on
e-commerce use the IT technologies - as online questionnaire seems to be quite in
The e-commerce as a way to sustain a strategy 121
fashion - a return to an approach guided by the economic truth seemed, a priori,

more applicable to a study on strategies.
3. Findings in business literature and discussions over some conservative

strategic approaches
Literature research is conducted on the idea of identifying the link between a certain
type of business strategy and e-commerce, related to the company’s interest to
reduce the costs.
When discussing a business strategy with the intention to focus on costs
research, then the easiest reference consists of so-called generic strategies and value
chain, put forward by Porter (1980, 1985). He argues that obtaining a competitive
advantage can be based either on low cost or on differentiation. Henceforward
appears the label of generic strategies such as cost leadership strategy and
differentiation strategy. Porter (1980) also claims that organizations that follow one
of these strategies can show above average performances in the long-term, while
firms that are stuck in the middle perform less well.
Following the opinion of the same author, a cost leadership strategy aims for a
firm to be a low-cost producer in the industry. Firms following this strategy place
emphasis on cost reductions in every activity of the value chain. Implicitly, the firm
will seek to cooperate with other entities following the same strategy and to
integrate value chains which aim to support a reduced price through reduced costs.
On the other hand, a strategy is designed to reduce the business risk. Business
risk can be defined as the relationship between the company’s sales and its earnings
before interest and taxes (EBIT). Although operating leverage is an important factor
affecting business risk, two other factors also affect it – revenue stability and cost
stability. Cost stability is concerned with the relative predictability of input prices
such as labour and materials (Keul and Drumea, 2009). Some fiscal consequences
could be mentioned in the case of mergers (Baba, 2012).
Laudon and Traver (2014) explain that there are four basic elements
associated with costs and price: a) the internet reduces search and transaction costs,
b) input and marketing costs are reduced by new technologies associated with a
different type of business system , c) prices can be scaled down due to the fact that
firms designed from the start to work online ensure a higher reaction speed,
following the first-mover category strategies and d) in the case of some industries,
the use of e-commerce allows eluding intermediaries, including classic retails, and
establishes a direct linkage between the producer and the final consumer.
However, there are disadvantages, and all hopes related to certain positive
developments have not occurred in the sense of a decisive leaning of the balance to
rule out the offline, classic retail. Among the authors that point out such
disproportionate expectations related to the effects of a low-cost strategy, a
122 Bogdan BĂCANU
particular position is taken by Brynjolfsson. Brynjolfsson and Hitt (1996),

Brynjolfsson and Smith (2000 ) and Brynjolfsson, Dick and Smith (2004) point out a
number of issues which shows that price is not the only element that guides the
consumer in his purchase process. Price is counterbalanced by elements associated with
differentiation strategy, such as: trust, brand, reputation, experience or delivery speed.
On the same line of questioning benefits related to a low-cost strategy, Phau
and Poon (2000) show that online companies must use price aggressively, even
without basing this on low costs, in an attempt to obtain consumer’s fidelity.
Consequently, the question that arises is whether the price dispersion is rather a
reflection of a differentiation strategy, materialized in different levels of quality of
service, while the traded products fall within the category of those with converging
technical standards (Pan, Ratchford and Shankar, 2002).
In parallel to the “push” technological component that setups retail, it is to assess
the behavioural component of the individual consumer and the one of a consumers
mass. It should be pursued, for example, a mass of consumers associated to a State or
an entity bind by homogeneous characteristics at a cultural and legal level. A research
hypothesis in the field literature is the existence of behavioural differences between
buyers in Eastern and Western Europe or other similar segmentations of consumers. It
is obvious that e-commerce seems to better develop in some Asian countries such as
South Korea, than in countries like Romania or Bulgaria.
In this area of individual behaviour, one might find an explanation for
ineffective expectations associated to e-tail and the new technologies. This might
also explain the failure of some ideas or companies. These could become case
studies suitable for tempering the enthusiasm of entrepreneurs inclined to take
overstated risks.
Regarding the implicit assumption of this study, that e-commerce is a tool to
ensure a more attractive price for a given offer - associated to the cost leadership
strategy (Porter, 1985), the mentioned studies revealed a significant emotional
constituent: loyalty to a brand or confidence associated to a certain retailer.
This conclusion is in line with the consistent criticism to the Porterian concept
of "stuck in the middle" strategy. Some authors (Hambrick, 1983; Jones and Butler,
1988) consider that between the two strategies - differentiation and cost leadership -,
there is a continuum of combinations. Other authors (Murray, 1988) argue that
simply such a combination confers a competitive advantage to the firm. Miller and
Dess (1993), Johnson, Scholes and Whittington (2011) consider "hybrid" strategies
as feasible and profitable, bringing about logical arguments, as well as examples
from practice.
But the vast majority of studies are carried out in countries with developed
economies, which indicate the existence of an infrastructure that promote
e-commerce. In the emerging economies of Eastern Europe, such as Romanian
economy, enlightenments on the e-commerce phenomenon are only in their early
stages.
The e-commerce as a way to sustain a strategy 123
4. Conclusions
The effect on overall costs, difficultly depictable in an accounting way can be seen
from the expansion of industry and of various strategic groups in retail according to
similar reasoning as Porter’s (1980, 1985). For large firms listed, those judgments
can be supplemented with data from financial and market analysis, as well as
statistical data on consumer’s behaviour from various geographical areas in the
context of new retail formats expansion. The latter demonstrates, even if there is
some fear and resistance to innovation in certain areas or even if the global
infrastructure of the economy is not favourable to e-commerce, however new forms
of retail that have a positive, sometimes explosive evolution.
The puzzle of information from the current reality of retail industry has been
formatted by the benchmarks given by the field literature, enabling the authors to
then use them for a number of deductions on the firm’s strategy. The results of these
inferences are implicitly validated by the associated retail statistics. Statistics mark
the expansion of new technologies, reported by the existence of the subject itself,
but also by the explosive evolutions of growth indicators in different retail sectors
under discussion.
In parallel, the strategic behaviour of firms, reflected their financial results
demonstrate that there is a concern to support an aggressive growth of the turnover,
based on both lower prices as well as on the construction of a new type of customer-
seller relationship. In establishing this relationship the new technologies play a more
visible role in differentiation rather than into operational costs reduction, as one
would have thought at first evaluation. Taking into consideration the companies that
survive in the market, it is found that although there are signs that new technologies
and e-tail do generate lower costs per unit, there is not enough substantial evidence
that this is the manifestation of a cost leadership strategy.
The subsequent research direction would be the pursuit and analysis of the
way that classic strategies fail or succeed to keep the pace in terms of methodology
with an e-tail reality which already gained a self-contained dynamic and to which
business models must adapt quickly and reinvent themselves by sometimes
contradicting patterns validated by previous economic realities.
5. References
Ansoff, Igor H. 1965. Corporate Strategy. New York, NY: McGraw-Hill.

Baba, Mirela C. 2012. "Merger strategies of Economic Entities: Fiscal and
Accounting Consequences." Ovidius University Annals, Economic Sciences
Series, 12.2: 987-992.
124 Bogdan BĂCANU
Brynjolfsson, Erik and Michael D. Smith. 2000. Frictionless Commerce? A

Comparison of Internet and Conventional Retailers. Management Science,
46(4): 563-585.
Brynjolfsson, Erik and Lorin Hitt. 1996. Paradox Lost? Firm-level Evidence on the
Returns to Information Systems Spending. Management Science, 44 (4): 541-
558.
Brynjolfsson, Erik, Astrid A. Dick and Michael D. Smith. 2004. Search and Product
Differentiation at an Internets Shopbot. Center for eBusiness@MIT
Johnson, Gerry, Richard Whittington and Kevan Scholes. 2011. Exploring Strategy,
9th ed. Harlow: Financial Times Prentice Hall.
Keul, Melinda and Cristina Drumea. 2009. "Risk and Profitability as Capital
Structure Determinants." The Annals of the University of Oradea Economic
Sciences, XVIII (3): 237-240.
Jones, G.R. and Butler, J.E. 1988. “Generic Competitive Strategies: An Analytical
Approach. Academy of Management Review, 13(2): 202-13.
Laudon, Kenneth C. and Carol Guercio Traver. 2014. E-commerce. 10th ed. Upper
Saddle River, NJ: Pearson Education
Miller, A. and Dess, G.G. 1993. Assessing Porter’s (1980) Model in Terms of its
Generalizability, Accuracy, and Simplicity. Journal of Management Studies,
30(4): 553-585.
Murray, Alan I. 1988. A Contingency View of Porter's "Generic Strategies”.
Academy of Management Review, 13(3): 390-400.
Pan Xing, Brian T. Ratchford, and Venkatesh Shankar. 2002. Can Price Dispersion
in Online Markets Be Explained by Differences in E-tailer Service Quality?.
Academy of Marketing Science Journal, 30 (4): 433-445.
Phau, Ian N. and Sui Meng Poon. 2000. Factors Influencing the Types of Products
and Services Purchased over the Internet. Internet Research, Electronic
Networking Applications and Policy. 10(2): 102-113.
Porter, Michael E. 1980. Competitive strategy: Techniques for analyzing industries
and companies. New York: Free Press.
Porter, Michael E. 1985. Competitive advantage: Creating and sustaining superior
performance. New York: Free Press.
Yin, Robert K. 2003. Case study research: Design and methods. Thousand Oaks,
CA: Sage Publications.
Implementation of total quality management

Case study: British Airways
Anca MADAR1
Abstract: Total Quality Management (TQM) has an important role in any company, since
the implementation of this program companies can continuously improve their performance.
Thus, organizations will be able to considerably meet their internal and external clients'
needs in terms of services and products quality, and they will also be able to develop an
efficient and profitable business. The paper analyzes how this concept was implemented by
the British Airways airline, since it is among the first companies that have implemented such
a program.
Key-words: quality, management system, services, products, efficiency.
1. Introduction
The methods to ensure the quality of products and services have evolved
continuously in accordance with the rapid technological and socio-cultural changes,
that have marked the evolution of society, especially in this century. (Băltescu, C.A.,
Boşcor, D., 2014, 65)
Also, in the European Union, the consumer protection policy should be
regarded as a horizontal policy aimed to promoting consumer interests. In addition,
this policy has significant effects on other EU policies such as: Common
Agricultural Policy, environment, transport and energy policy which include rules
regarding consumer rights. (Neacşu N.A. 2011, 52)
These requirements taken into account, integrated quality assurance concepts
have been implemented since the 80s. The starting point of these strategies was the
"new philosophy" defined by Feigenbaum: Total Quality Control.
Of these, particular interest is the concept of total quality managemt used in
parallel, or in relation to the "total quality."
In the definition of total quality management (TQM) more guidelines can be
highlighted.
1
Transilvania University of Braşov, ancamadar@unitbv.ro
126 Anca MADAR
a) The vast majority of authors agree that TQM is, above all, a new
philosophy, a new model of enterprise culture, with the aim to orient towards
customers all its activities and processes and optimize them so that they could bring
long-term benefits.
According to Drummond (Drummond, H 1992, 13), for example, TQM is a
business philosophy based on customer satisfaction through quality orientation of
the entire organization.
Koller (Koller, J., K 1995) defines TQM as representing a systematic way of
managing an organization's results. TQM involves new management strategies,
changes in culture and infrastructure, tools and techniques to determine all members
of the organization to collaborate and enable continuous improvement of quality
defined by the client.
b) A number of authors point out, defining TQM, besides its philosophical
dimension, the technical and social aspects that are involved in this philosophy.
In Oess’s opinion (Strauss, B. 1994, 202), for example, TQM must be
approached as a two-component system, including a technical and a social
subsystem of inter-relationships being established between them.
c) According to another orientation (Kélada, J. 1990, 36-37), TQM is a three-
dimensional concept, a management philosophy based on a certain logic that
involves the use of specific methods and techniques, resulting its third dimension,
the technical one.
In essence, TQM is a philosophy of business management dealing with
getting continuous improvement of customer satisfaction through quality
management products and services, led in the entire company. TQM is a new
approach to corporate management by applying total quality ideas across the
organization.
The advantages of implementing TQM are:
- Improving the company's reputation - faults and problems are identified
quickly (the "zero defects");
- Significant improvement in quality of products or services;
- Customer satisfaction increase, which leads to additional sales;
- A significant decrease of resources waste;
- Increased productivity because the staff use the time more efficiently;
- Increasing the market share on the long term;
-The workforce is motivated by additional responsibilities, teamwork and
involvement in decision-making on TQM;
- Lower costs;
- Focus on continuous improvement.
Implementation of total quality management Case study: British Airways 127
2. British Airways overview
British Airways is the national airline of the United Kingdom, the operational
headquarter being based in Waterside. The airline is a founding member of the
Oneworld alliance with American Airlines, Cathay Pacific and Qantas. British
Airways is one of seven airlines that fly to all six inhabited continents.
British Airways carry passengers, cargo and letters from Heathrow, Gatwick
and London City airports. It has expanded its network in more than 500 destinations
through joint business agreements with American Airlines and Oneworld alliance
members. The carrier manages a fleet of over 240 aircrafts, consisting primarily of
Airbus and Boeing. In 2013, British Airways has taken delivery of its first of 42
Boeing 787s, with the first of its 12 Airbus A380s due to touch down in the UK July
4. British Airways is the largest Boeing 747-400 operator in the world. (Low
Teacher)
In 2010 British Airways and Iberia have merged and created International
Airlines Group.(Slideshare, 2013)
To survive both short-term and long-term on global market, where there is
fierce competition between airlines, British Airways had to focus on a variety of
goals and objectives.
In this respect, the general objectives of the company are divided into three
categories: (UK Essays)
Global - for all passengers - whether they are traveling just for pleasure or on
business.
Premium - ensure that passengers receive the highest quality services.
Air - focuses on aviation; owning the best equipment, products and services.
Also, British Airways is considering four strategic objectives:
First airline customers top choices - to remain the first choice when it comes
to premium international flights, cargo, economy or short flights.
Quality service - to provide the best service to passengers on all routes and in
all classes of aircrafts during flight and to improve online services.
Global expansion - to continue to expand its list of destinations, through
partnerships with other airlines.
Satisfying customer needs - to explore the latest features and products to
enhance customer loyalty.
The main competitors of British Airways are:
1. Deutsche Lufthansa AG - Air Ambassador of Germany, Lufthansa offers
flights to 209 destinations in 81 countries worldwide. (Bilete-avion). It manages a
fleet of over 300 aircraftsfor passengers.(eSKY) It is also a market leader in
international air transport through Lufthansa Cargo. Other major segments of the
group are the maintenance, repair and overhaul by Lufthansa Technik services, air
catering services by LSG Sky Chefs, and IT services through Lufthansa Systems.
128 Anca MADAR
(Tourismguide) Lufthansa is a founding member and leader of the Star Alliance, the
largest alliance of airlines.
2. Continental Airlines, Inc.-Continental Airlines is the world's fifth largest
airline. Continental, together with Continental Express and Continental Connection,
has more than 2,600 daily departures throughout the Americas, Europe and Asia,
serving 132 domestic and 137 international destinations. Continental is a member of
Star Alliance. (Makemytrip, 2015)
3. United Air Lines, Inc. - A leading passenger and cargo airline, United
serves more than 230 destinations in some 30 countries. The airline, which also
offers regional services via subsidiary United Express, operates a fleet of some 700
mainland aircraft. In addition, it leads the Star Alliance, a marketing and code-
sharing group that includes Continental and Lufthansa. (Hoovers, 2015)
3. Implementation of total quality management at British Airways
In order to practice TQM, the main focus was on the British Airways transformation
from an engineering based company in one dictated by the market. There are four
key factors that contributed to the success of the company, namely:
1. Continuous reduction of costs;
2. Focus on providing excellent customer service at a premium price;
3. Cover growing market through alliances and partnerships;
4. Maximize return on individual flights by investing in computerized
reservations. (Law Teacher)
In 1987, the year when the company was privatized, the company
management believed that to be the best and to be a world-class organization, they
have to use the strategies and processes that should create vision and inspire the
employees to gain their trust. This could only be possible by implementing TQM
program. It was implemented in British Airways' Technical Workshops. The
Technical Workshops (hangars) of British Airways are responsible for the overhaul
and the repair of aircraft components.
In order to be the best in this industry, the management team of British
Airways Technical Workshops decided that they must win through teamwork,
customer satisfaction, profitability and reputation.
Along the "path" to implement TQM, there were identified the following key
steps:
1. Conducting a study to diagnose the current position within the technical
workshop and reporting results;
2. Obtaining support and a full commitment to TQM concept from all levels
of management;
3. Educating staff according to the principles of TQM and facilitate necessary
changes in management style;
4. Changes in policies, procedures and work practices that would fit and
would facilitate new organizational culture required;
5. Starting the quality improvement process;
6. Reviewing progress made and fostering a sustained commitment from all
levels of the organization.
In order to examine the controversial issues and problems facing the staff, a
survey was distributed among employees from technical workshops, among
customers and in supplying areas. To do this, an analysis of the cost of quality was
made.
The approach taken by the company in collecting quality costs was the
breakdown of employees activities related to quality in three main activities,
namely:
1. Anticipation - activities that provide performance "right first time";
2. Assessment -activities that check if the concept of "right first time" is done;
3. Failure - activities resulting from the failure of the concept "right first
time".
Each manager or team leader was asked to make an assessment of how their
subordinate staff spent time during activities related to quality. Knowing how to
bear the cost of quality has had a significant contribution in educating staff on the
concept and principles of TQM. It also helped of strengthening and justification of
need for training personnel in accordance with TQM, to overcome any skepticism
about TQM, to promote considerable debate on this issue and to ensure that the
improvement of individual projects activity can be measured. (Rawlins A. R. 2008)
Data collected from the survey was introduced in a diagnostic report and
seven improvement activities have been identified:
1. The way the employees view the company's management;
2. Managerial style;
3. Implementation of changes;
4. Communication;
5. Systems and procedures;
6. Facilities and conditions;
7. Attitude of employees.
They held some courses for managers for three days. These courses have
conceptually explained TQM philosophy and revealed findings of the report.
Managers were encouraged to submit ideas and action plans for staff involvement in
improvement process. This required some changes in managing style.
Similar courses were held for all employees. Delegates of each course were
taken from different areas of workshops to facilitate the exchange of ideas between
departments. Quality improving groups, each involving up to 12 people, actively
conducted projects for improvement.
130 Anca MADAR
Examples of projects: improved methods for sorting aircraft test equipment to

ensure ease localization and certification control, an improved library for storing
approved technical publications and a design of new measures regarding the
workshop performance, so that the figures which provide performance to be
meaningful and easy to understand.
British Airways Technical Workshops are recognized as the best in the
aviation industry, by customers, competitors and even by British Airways itself.
Benefits began to appear Two years after the launch of TQM. There have been
positive changes in measures of higher level, which were used to report progress to
the directorate. These measures included the proportion of components which are in
good condition, the number of units that are not in good condition in the workshop
and the number of units produced per month. British Airways launched their TQM
program in September 1988 and by the end of 1999 the benefits of the program were
visible. (Law Teacher)
It is important to note that after implementation of TQM, British Airways
continued to apply total quality management on employees, the processes and
customers, and the result was successful, as shown in Table 1: turnover increased by
23%, the number of employees fell by 3.153 people, increased the number of
passengers who used the company's services, passenger load factor increased from
79.1% to 81.3% and aircraft fleet has grown to 33 aircraft. Although profit has
declined and losses were recorded in the period 2008 - early 2010, after this date
there is an important increase of this indicator.
2008 2009 2010

2010 2011 2012 2013
Mar Mar Mar
Turnover (£m) 8,758 8,992 7,994 6,683 9,987 10,827 11,421
Profits
(profit/loss 694 −358 −425 170 672 84 281
after tax) (£m)
Number of
employees 41,745 41,473 37,595 35,778 36,164 38,761 38,592
(average FTE)
Number of
34.6 33.1 31.8 24.1 34.2 37.6 39.9
passengers (m)
Passenger load
79.1 77.0 78.5 78.5 78.2 79.9 81.3
factor (%)
Number of
aircraft (at year 245 245 238 240 245 273 278
end)
Table 1. The key trends for the British Airways (wikipedia 2015)
4. Conclusions
British Airways, founded in 1935, which is the subject of the case study, is the
national airline of the United Kingdom of Great Britain, founding member of the
Oneworld Alliance and one of the seven airlines that fly to all six inhabited
continents.
The carrier manages a fleet of over 240 aircraft, consisting primarily of
Airbus and Boeing.
Total Quality Management was implemented by British Airways in
September 1988 from the technical workshops in the desire to improve and
contribute to the success of the organization.
TQM program was characterized by customer focus, full participation,
process improvement and process management and planning. TQM implementation
process was a very long-term procedure.
Thus, in only two years of program implementation, benefits began to appear
(e.g. positive changes took place in the top-level measures).
The company also had to experience many changes made on TQM program
requirements and extensive market research that identified customer expectations for
the standards to be served by an international airline known as British Airways.
5. References
Băltescu, Codruţa Adina, and Dana Boşcor. 2014. “The Assessment of Hotel
Services in Poiana Braşov Resort”. Bulletin of the Transilvania University of
Braşov, Series V, Vol. 7(56), 17-22.
Drummond, H. 1992. The Quality Movement. What Total Quality Management is
Really All about! London: Kogan Page.
Kélada, Joseph. 1990. La gestion intégrale de la qualité. Pour une qualité totale.
Québec: Edition Quafec.
Koller, J. K. 1995. Total Quality Management in Service Industry, European
Masters Programme in Total Quality Management. Germany: University of
Kaiserslautern.
Neacşu, Nicoleta Andreea. 2011. Protecţia Consumatorului (Consummer
Protection). Braşov: Transilvania University Publishing House.
Rawlins, Ashley R. 2008. Total Quality Management (TQM). Author Publishing
House.
Strauss, B. 1994. Qualitätsmanagement und Zertifizierung. Von DIN ISO 9000 zum
Total Quality Management. Wiesbaden: Gabler Verlang.
132 Anca MADAR
British Airways should focus on their quality standards

http://www.lawteacher.net/free-law-essays/business-law/british-airways-
should-focus-on-their-quality-standards-business-law-
essay.php#ixzz3VbvNLWht. Accessed on: 6.03.ora 19.38
Strategic management in services organizations. Available at:
http://www.slideshare.net/ilyasbouhad/case-study-british-airways. Accessed
on: Accessed on: 6.03.ora 19.33
British airways. Available at:
http://www.ukessays.com/essays/aviation/british-airways.php. Accessed on:
6.03.ora 19.40
Information about Lufthansa. Available at:
http://www.bilete-avioane.ro/bilete_avion_companie_lufthansa.html.
Accessed on: 6.03.ora 19.30
About Lufthansa. Available at: http://www.tourismguide.ro/x/lufthansa/. Accessed
on: 6.03.ora 19.35
Airline Lufthansa. Available at: http://www.esky.ro/companii-aeriene/Lufthansa.
Continental Airlines. Available at: http://us.makemytrip.com/flights/continental-
airlines-co.html. Accessed on: 6.03.ora 19.49
United Airlines Inc .Company Information. Available at:
http://www.hoovers.com/company-information/cs/company-
profile.United_Air_Lines_Inc.5ea6fd1816caf8ab.html. Accessed on: 6.03.ora
19.52
British Airways. Available at: http://en.wikipedia.org/wiki/British_Airways.
Management strategies to reduce conception/creation

risks of intellectual property
Ramona PAKOCS1, Nouraş Barbu LUPULESCU2
Abstract: This paper is focused on finding the best management strategies to reduce
conception/creation risks of intellectual property. For this we performed a SWOT analysis of
conception /creation risks of intellectual property, which was analysed in a Brainstorming
session, where several management strategies for risk reduction were found. Then a multi-
criterion analysis was conducted which resulted in finding the best management strategy to
reduce conception/creation risks of intellectual property.
Key-words: risk analysis, strategy, performance, intellectual property.
1. Introduction
According to ISO 31000 (ISO / FDIS 31000: 2009, 6) among the main goals of risks
treatment of an efficient risk management that any organization wants to implement,
are as follows:
¾ Identification of opportunities and threats within the organization;
¾ Application of specific legislation in accordance with the requirements, both
nationally and internationally;
¾ Using all resources for treating risks and minimizing losses.
2. Objectives
In our context, in order to reduce the risk of conception/creation of intellectual

property, the main objectives of risk management must be adapted. For this, we will
perform a SWOT analysis of conception / creation risks of intellectual property,
after which we will identify opportunities and threats.
In previous studies (Secară, Fântână 2010, 311) related to intellectual property, the
most important risks of conception/creation were identified, namely:
¾ Risk of failure to protect inventions in design/research/development;
1
Transilvania University of Braşov, ramona.pakocs@unitbv.ro
2
Transilvania University of Braşov, nouras@unitbv.ro
134 Ramona PAKOCS, Nouraş Barbu LUPULESCU
¾ Risk of failure to protect utility models in design/research/development;

¾ Risk of failure to protect industrial drawings in
design/research/development;
¾ Risk of failure to protect topographies of integrated circuits in
design/research/development;
¾ Risk of intellectual theft;
¾ Risk of failure to pay the original creation applied;
¾ Risk of unfair contract terms;
¾ Risk of failure to protect the software of the company;
¾ Risk of counterfeiting;
¾ Risk of piracy;
¾ Risk of forgery.
The application of the SWOT analysis on the risks of conception/creation is necessary in
order to identify the most effective solutions for reducing them and to capitalize
intangible assets of intellectual property in a market that is constantly changing. The
scheme of SWOT analysis on conception/creation risks is shown in Table 1.
In order to find the best management strategies, after performing the SWOT analysis
of conception/creation risks, we organized a Brainstorming session with experts in
the field of intellectual property.
After the Brainstorming sessions, the following strategies have been proposed to
reduce the conception/creation risks of intellectual property, namely:
¾ Strategy of conception/creation risks prevention by applying all forms of
intellectual property protection;
¾ Capitalization strategy of intellect property assets through assignment
contracts, licenses etc.;
¾ Simulation strategy of intellectual property risks reducing their negative
effects.
In order to determine which conception/creation risk reduction strategy is more
effective, a multi-criteria analysis was proposed.
The first stage of the multi-criteria analysis is to establish the criteria, in our case,
the characterization criteria of conception/creation risks of intellectual property.
The characterization criteria of conception/creation risks are:
1. The probability of capitalization of drawings - industrial models without the
consent of the authors. Abuse- according to (Law 129/1992, Art. 10)
(PVDMI).
2. The probability of reproducing integrated circuit topographies for marketing
without the author's agreement. Counterfeiting infringements - according
(Law 16/1995, Art. 40) (PRTCI).
Management strategies to reduce the risks of conception / creation of intellectual ... 135
3. The probability of counterfeiting utility models. According to (Law

350/2007) (PCPMU).
SWOT ANALYSIS OF CONCEPTION/CREATION RISKS OF INTELLECTUAL

PROPERTY
STRENGTHS: Methods of WEAKNESSES: Methods of
operation: reduction:
-application of risk -late identification
management - Implementation of of conception/ -implementation of an
principles within the an effective creation risks of IP efficient management
company; management of IP (it can have serious of IP;
-preventing negative risk, a management of consequences on -knowing the
impact events; IP; the company); prevention and
-explicit approach of -application of -inexistence of protection legislation;
uncertainty; protection measures confidentiality - permanent review of
-Once identified, their to reduce the risk of contracts between internal documentation
reduction is conception / creation; the company and of IP, in order to
facilitated; -training the employees; maintain their
-their reduction helps company’s staff on - contradictory protection;
the development and how to protect against legislation on IP -permanent monitoring
continuous the risk of rights. and IP analysis of
improvement of the conception/creation; competitors in order to
company. -taking the right avoid infringement of
decisions of IP rights.
protection, as required
by law.
OPPORTUNITIES Methods of THREATS: Methods of
operation: reduction:
- IP capitalization by - the company’s
specific -conclusion of bankruptcy; -knowledge and
documentation issued assignment contracts - the increase in the application of the law;
by OSIM. with other companies number of -application of all
in order to obtain competitors/ forms of IP protection,
long-term profits. imitators on such as:
internal/external - Utility model
market; certificate;
- the risks of - Certificate of design -
conception/ industrial design;
creation listed - Integrated circuit
above. topography certificate;
- Patent certificate etc.
Table 1. SWOT analysis of conception / creation risks of intellectual property.
The characterization criteria of conception/creation of risk of intellectual property

being identified, the weight coefficients of each criterion will be calculated, using
the formula (Bobancu 2012, 63):
(1)
where:
p = sum of points obtained (on line) by the item taken into account;
∆p = the difference between the score of the item taken into account and the
score of the item on the last level; if the item taken into account is the one
on the last level, ∆p results with the value 0;
m = the number of criteria outclassed (outdated in terms of score) by the
criteria taken into account;
Ncrt = the number of criteria taken into account;
-∆p` = the difference between the score of the item taken into account and the
score of the first item (resulting in a negative value); if the item taken into
account is on the first level, -∆p` results with the value 0.
Weighting coefficients values are shown in Table 2, as follows:
PVDMI PRTCI PCPMU Points Level Yi
PVDMI 1/2 1 1 2.5 1 4.66
PRTCI 0 1/2 1 1.5 2 8
PCPMU 0 0 1/2 0.5 3 0.33

Table 2. Determination of the weight of each criterion.
According to our study, few variants (management strategies) were chosen to reduce
the risk of conception/creation of intellectual property, namely:
Variant 1:
The strategy of prevention of conception/creation risks by applying all forms
of intellectual property protection.
Variant 2:
The strategy to capitalize intellectual property assets through contracts of
assignment, license, etc.
Variant 3:
The simulation strategy of intellectual property risks reducing their negative
effects.
Management strategies to reduce the risks of conception / creation of intellectual ... 137
After identifying the variants, grades will be given to each variant according
to each criterion, as it can be seen in Table 3.
PVDMI PRTCI PCPMU

Variant 1 10 10 10
Variant 2 8 8 9
Variant 3 9 9 9
Table 3. Giving a grade to each variant.
Each variant will be analysed, in order, in Table 4, in terms of each criterion, until
all variants are exhausted and this table is also called the "Matrix of consequences".
C1 C1*Y1 C2 C2*Y2 C3 C3*Y3 Total
V1 10 46.6 10 80 10 3.3 129.9
V2 8 37.28 8 64 9 2.97 104.25
V3 9 41.94 9 72 9 2.97 116.91

Table 4. Raising grades with importance coefficient.
According to Table 4, the grades for each variable in Table 3 were multiplied with
weight coefficients for each variable, and finally all the sums obtained by the
multiplication for each variant added up.
Following the calculations that were made in Table 4, it was found that the
highest amount (129.9) ranks variant 1 on the first place followed by variant 3 on the
second place with a score of 116.91, and variant 2 on the third place with a score of
104.25.
Following the interpretation of the results, it is seen that the variant with the
highest score is variant 1, namely: The strategy of prevention of conception/creation
risks by applying all forms of intellectual property protection.
According to OSIM nationwide and WIPO internationally, the main reduction
forms of conception/creation risk of intellectual property are:
¾ The utility model certificate;
¾ The certificate of design - industrial design;
¾ The integrated circuit topography certificate;
¾ The Patent certificate.
Awareness at the management level of the organization on the risks of

conception/creation of intellectual property is the first step to prevent them, but this
should be done by complying with the rules of professional conduct, in order to
transfer the rights under the law in force.
Although obtaining these intellectual property rights through various forms of
protection listed above can be considered expensive, in time they will bring long-
term profits and economic security.
On a market with an increasing number of competitors/imitators, an efficient
management should include all methods and strategies to reduce the risks of
intellectual property and The strategy of conception / creation risks prevention by
applying all forms of intellectual property protection is recommended to avoid
losses and eventually bankruptcy of the company.
5. Conclusions
According to the multi-criteria analysis applied to our study, it resulted that the most
efficient strategy to reduce risk of conception/creation of intellectual property is the
management strategy of conception/creation risks prevention by applying all forms
of intellectual property protection within the company.
6. Acknowledgements
„This work was partially supported by the strategic grant

POSDRU/159/1.5/S/137070 (2014) of the Ministry of National Education, Romania,
co-financed by the European Social Fund – Investing in People, within the Sectorial
Operational Programme Human Resources Development 2007-2013”.
7. References
Bobancu, Şerban. 2012. Creativity and Invention. Course Notes. Braşov: electronic
publication.
International Standard ISO/FDIS 31000:2009. Risk management – Principles and
guidelines.
Law 129/1992 on protection of industrial designs. Art. 10.
Law 16/1995 on protection of topographies of integrates circuits Art. 40.
Law 350/2007 on utility models.
Secară Gheorghe, and Raul Sorin Fântână. 2010. General Management. Bucharest:
Publisher Pro Universitaria.
FINANCE
AND
ACCOUNTANCY
Cost reduction analysis in the online retail as

compared to the classic retail
Mirela Camelia BABA1
Abstract: The industry of retail has been segmented by new technologies, but the financial
performance of every segment is far from explaining the market share. An exploratory study
is necessary in order to explain the appeal for entrepreneurs. A comparison between two
new forms of retail is used to understand the business models in this industry. Due to the fact
that the maturity of the new segment of retail is different in various countries, the study
cases focused on some leading firms from USA, China and Romania ) are important to
design a probable trend for the online commerce. General theoretical benchmarks, validated
by current practice are used in case studies, as well as innovative approaches and well-
known examples of successful retail companies.
Key-words: e-commerce, performance, strategy, cost leadership.
1. Introduction
Retail industry can be divided into several segments in order to facilitate the study of
one component. Laudon and Traver (2014) discussed the seven segments (durable
goods, general merchandise, food and beverage, specialty stores, gasoline and fuel,
mail order/telephone order (MOTO), and online retail firms); as seen, the list
includes the online retail, which held in 2012 in the US (according to the US Census
Bureau) only 6% of the total retail. Each segment uses new technologies in its own
way, and this is rapidly changing under the pressure of innovation. Alongside, it is
to be noted that the quality of the human capital is crucial for any company, enabling
it to maintain a competitive advantage in this knowledge economy era, away along
with technology and innovation (Drumea, 2012).
Online retail is closely related to another segment, the mail order/telephone
order (MOTO), which is actually a predecessor of e-commerce. The companies in
this segment have created the experience of rapid delivery of small orders, and some
have developed their own business online. In line of this "legacy" there are now
"pure" online retailers, which do not own any “physical” store, as well as so-called
“multichannel” retailers that combine the online approach with the classic retail
through their own stores.
1
Transilvania University of Braşov, mirela.baba@unitbv.ro
142 Mirela Camelia BABA
Essentially, an online retailer is a seller who exhibits his products through

internet images, which facilitates consumer’s information and the whole ordering
procedure and payment is then made using again the internet’s specific tools. This is
how the transfer of information is made, in order to facilitate the buying decision,
covering an unlimited area (actually limited by the existence of communication
networks), despite of the "physical" way between consumer and provider. For many
of the standardized products, such as books, this type of information is sufficient to
trigger the buying decision.
2. Costs and associated elements in online and classic retail
The issue of the "physical" transfer of the product to the consumer is retained. It
requires intermediaries such as postal service providers, as well as the existence of
logistic facilities for the online retailer or the intermediaries. The chain of
maneuvers involving human input is intact, but the consumers can possibly save
some time in the buying process. For maneuvers performed by a "professional"
instead, the consumer pays.
The organization naturally seeks ways to become more competitive in its
sector, exploiting all possible sources of competitive advantage (Drumea, 2014). It
may be inferred that every potential consumer will compare the costs incurred by the
act of buying from a classic retailer with those from an online retailer. The consumer
will also compare other associated elements, such as satisfaction in choosing and
buying or the confidence in the seller. In this context, the online retailer will have no
choice but to implement a strategy that responds to the consumer’s aspirations,
namely to render technical and economic conditionality that ties out. The economic
conditionality would translate into the assertion by the retailer of a "fair price",
which objectively leans on low costs. It is why the transport costs, on top of the
retailer's price list, can become exasperating to the extent of not being able to offset
the other facilities offered by this online system.
A minimum of maneuvers rendered by the consumer defines the online retailer
as being "pure" (in the sense depicted above), meaning that he eliminates the physical
facilities of exposing the products. Larger maneuvers define the so-called brick-and-
mortar retailers, who keep stores in the classical format but perform the physical
transfer of merchandise in specific combinations, but not to the consumer's place.
3. Findings in the world of online retail leaders
Emblematic for the pure online retail is the American company Amazon. The study
of its evolution suggests the main clouts used for the survival, expansion and
dominance of American retail industry. Aside this giant, thousands of pure online
Cost reduction analysis in the online retail as compared to the classic retail 143
retailers were created and disappeared, leaving behind a list of interesting successes
and spectacular failures. Online retail repeats thus the evolution of other industries
such as the automobile or computers at the beginning and the end of the twentieth
century, respectively.
Jeff Bezos, founder of Amazon said that his company is set to "offer the
Earth's biggest selection and to be Earth’s most customer-centric company where
customers can find and discover anything they may want to buy” (Laudon and
Traver, 2014). Beyond this strategic vision, there are three directional elements: the
lowest/exclusive prices, the best selection, and convenience (which translates into
feature-rich content, user-generated reviews of books and products, fast and reliable
fulfilment, and ease of use). It means there is a huge supply of goods readily
available for the consumer, at a low (sometimes lowest) price. Aside the asking
price, another trigger of the buying decision is offering short-term or even deliveries
at a specified time.
For Amazon the service is called „Prime now” and it has just being released in
the week before Christmas 2014; it promises "delivery in 1 hour", which can be
misleading in the sense that delivery will not necessarily occur in one-hour time
from the clicking order, but it guarantees a certain time (i.e. a point in time)
delivery, but certainly the same day. The services is only available in US, provided
underwriting an annual subscription - Amazon Prime for $ 99. But the competition
is fierce: for same-day service, users of Google Express must pay $ 95 per year. The
idea which led to the creation of Prime now is not the original, as it has been
previously implemented by eBay, who dropped the "now” service in 2014 while
Amazon plans to expand it in 2015 for all major cities in US. The tangible result of
this initiative was, as Jeff Bezos announced that "customers ordered more than 10
times as many items with company’s same day delivery over the same period in
2013" (according to www.cnet.com). For Western Europe, the same service now
only promises "free two-day shipping" for the same value of the subscription.
An analysis of the evolution of the Amazon stock shows that the low price
does not reflect a reduced cost basis, but, contrary to the Porterian theory, is a
strategic goal in itself. The stocks fluctuated from $106 in 1999 to merely $6 in
2001, then between $ 50 and $ 90 in 2003-2009, so that it reached in 2013 a peak of
$ 312. Although revenues increased from $ 600 million in 1998, to $ 61 billion in
2012, reflecting an aggressive growth strategy, the profitability got forfeited. From $
1.1 billion profit in 2010, Amazon reports a loss of $ 31 million in 2012, given that
the increase of the turnover between 2010 and 2012 doubled the operating expenses
- from $ 33 billion to $ 60 billion. We conclude then that shares’ price reflects the
market confidence in the company's growth strategy, rather than the immediate
satisfaction of shareholders for the dividends cashed in.
So Amazon is forcing the turnover increase and enlargement of its market
share by reducing prices and by product portfolio diversification, while
compromising the idea of reducing costs. The mentioned diversification and the
sophistication of the IT platform linked to internet, as well as reducing prices appear

to rather be an industry benchmark of differentiation more than a cost leadership
strategy in the sense given by Porter (1980). In the future, a cost reduction is
probably expected due to the economies of scale and economies of scope, associated
to the impressive size of the firm’s operations system. A partial conclusion is that in
this case there is no reason to consider e-tail as associated to a cost leadership
strategy.
Amazon case must be studied simultaneously with other large online retail
companies in China, such as its homologue Alibaba, as well as with other US click-
and-mortar companies as Walmart, Sears or Home Depot.
Since its creation in 1999, Alibaba has enjoyed the advantage of a huge
national market, as well as local suppliers with competitive labour costs and extreme
versatility. Local suppliers obtain economies of scale by increasing their volume of
production, part of which is subsidized by the State for export. The subsequent result
for a large retailer is that he can have low entry prices that allow him to impose
selling prices below those of competitors.
Chinese online retail development is stimulated by the explosive development
of national communications infrastructure, so Alibaba operates on a huge market,
and in a dominant position, thus enjoying benefits from both sides. Its position
counts for 80 % of the national online retail, with a record of daily sales of $ 9.3
billion in November 11, 2014 (according to CCTV), and it is the result of a first
mover strategy rather than a cost leadership strategy.
Large US companies like Walmart, Sears or Home Depot have developed
alongside traditional retail, an online retail business segment. This segment has
enjoyed several types of advantages: on one hand the advantages of scale related to
the initial businesses, as well as network benefit of brick-and-mortar stores and the
huge products portfolio in order to achieve cost advantages. On the other hand a
more important advantage was conferred by the image of their respective
companies, which generated the consumer’s aplomb to try the click-and-mortar
version.
Prior US statistics show that there is a tendency of accelerated growth of the
new retail, probably as a response to the pressure of new technologies and the
expansion of IT devices. Statistics on Asian countries, especially China, India and
South Korea, show that this trend is reflected in this geographic area as well. What
is significant for the research direction addressed in this study is that the number of
mobile phone users is triple as compared to the PC holders and that out of the 1.4
billion mobile phones, about a third are smartphones (Laudon and Traver, 2014).
Hence it seems that a light internet will be installed to boost all forms of e-
commerce.
It should also be noted that US and Chinese companies, as well as the
Japanese or South Korean enjoy outstanding communication infrastructures that
facilitate payments, but particularly the physical transfer of the product, thus giving
Cost reduction analysis in the online retail as compared to the classic retail 145
to the consumer the requested trust in the online retail. Even so, shipping costs are
significant and seem unreasonable for many products. As US Post is somewhat
"legendary" for its services and the use of rapid post as UPS or FedEx induces even
higher costs, then the delivery problem becomes interesting (Frischmann, Skiera and
Hinz, 2012). This becomes even more significant when the shipping cost influences
the final price to the consumer.
4. Romanian online retail
In Romania the online retailing is quite at the beginning, but there are optimistic
opinions expressed by Euromonitor (www.euromonitor.com). So far there are still
collateral issues, notably the quality of transport infrastructure and Post services, as
well as deliveries by courier.
The most important online retailer is eMag (turnover of 260 million euros in
2014), owned by a South African company, which covers a third of the market. In
order to obtain economies of scale eMag expanded to the neighbours in Bulgaria and
Hungary. The main source of cost advantages is reducing the staff thus cutting
payroll costs, but the company still holds brick-and-mortar stores that are intended
to strengthen consumers’ trust in the company’s name and the online brand.
According to the local market specificity the payment is made on delivery, cash or
by card, after checking the product. It should also be noted that the eMag executives
consider that the Romanian market is not attractive for Amazon, (although the latter
has already created a "bridgehead" for future business) or for eBay, given the local
difficulties related to infrastructure and consumers behavior.
In Romania, we find several possibilities to obtain a low cost advantage in an
online activity, which would induce a differentiation based on prices (Băcanu,
2008).
A comparative study of the products prices for books for example, shows that
the use of low prices in order to win customers is a practice, even if it is obvious that
profits are compressed to the maximum. The inference is based on knowledge of
input prices, especially in the case of some "certified partners" of the eMag.
It can be concluded that eMag is pursuing a growth strategy in the area, by
taking advantage of the early stage of development of online retail in Romania. It is
evident that attractive prices are a tool to win out customers, but this is the result of a
massive initial investment without being clear that a management focused on
reducing costs is put in place. There are a number of other "ingredients" put in place
to support attractive prices and aggressive promotions. So eMag tries to combine a
price leadership advantage with some features that provide a differentiation, as
described by Băcanu (2010).
5. Conclusions
The common denominator of the three leader companies in the online retail in the
US, China and Romania, is represented by an aggressive growth strategy based on a
combination of differentiation elements with supporting low prices, even if
profitability is affected. Differentiation is reflected in the product portfolio extension
to a superior rate as compared to direct competitors, simultaneously with building up
the confidence into the corporate brand. There is nothing consistent to be reported
about actions that would trigger cost reductions in order to define the
implementation of a cost leadership strategy. This would rather create a
differentiation approach in strategy, although constituting elements might suggest
the use of cost leadership.
6. References
Băcanu, Bogdan 2010. “Differentiation vs. low cost strategies in Romania.”

Management & Marketing 5(2): 135-142.
Băcanu, Bogdan. 2008. "Using strategic management study cases in Romania."
Annals of Faculty of Economics 4.1: 61-65.
Brynjolfsson, Erik and Micael D. Smith. 2000. “Frictionless commerce? A
comparison of Internet and conventional retailers.” Management Science
46(4): 563-585.
Drumea, Cristina. 2012. "An Analysis of the Human Capital Management
Effectiveness, as Key-factor of the Organization’s Performance." Ovidius
University Annals, Economic Sciences Series 12.2: 1085-1089.
Drumea, Cristina. 2014. "Staff performance evaluation in public organizations",
Bulletin of the Transilvania University of Brasov. Series V: Economic
Sciences 7(2): 133-138.
Frischmann, Tanja, Oliver, Hinz and Bernd Skiera. 2012. ”Retailers' use of shipping
cost strategies: Free shipping or partitioned prices?.” International Journal of
Electronic Commerce 16(3): 65-87.
Hambrick, Donald C. 1983. “An empirical typology of mature industrial-product
environments.” Academy of Management Journal 26(2): 213-230.
Laudon, Kenneth C. and Carol GuercioTraver. 2014. E-commerce, 10th ed. Upper
Saddle River, NJ: Pearson Education.
Porter, Michael E. 1980. Competitive strategy: Techniques for analyzing industries
and companies. New York: Free Press.
Porter, Michael E. 1985. Competitive advantage: Creating and sustaining superior
performance. New York: Free Press.
Financial performances of Romanian wood industry

companies
Fitim DEARI1, Gheorghiţa DINCĂ2
Abstract: The purpose of this study is to analyze financial performances of 40 selected

Romanian companies for the 2009-2013 period. The selected companies operate in the wood
industry and we have used panel type data to perform a quantitative analysis. We have found
that companies with higher total assets, current assets, average inventory and accounts
receivables have higher sales. It seems larger companies with higher total and current assets
(especially accounts receivable) are more profitable than their counterparties. Similarly,
larger companies with lower current assets, average inventory and accounts receivable have
lower assets turnover. Companies with lower average inventory have higher ROA and assets
turnover. Larger companies have more total and current assets, net profit, average inventory
and accounts receivable than their counterparties, however they seem to display lower assets
turnover and current to total assets ratio. Companies with higher current to total assets ratio
have higher assets turnover and ROA.
Key-words: ratios, correlation, financial performance, wood industry
1. Introduction
“Accounting “is not an end in itself,” (SFAC No.1), but an information system that
measures, processes, and communicates financial information about an identifiable
economic entity” (Needles and Powers, 2005, p. 4). Accounting prepares financial
statements to communicate them to internal and external users or to decision
makers. Furthermore, accounting information users employ financial statements to
analyze past or coming decisions. Financial statements are products of the
accounting process and serve as data source for financial analysts combined with
other data and information sources.
The balance sheet can be viewed as a photo, whereas the other three
statements (the income statement, the statement of owner’s equity and the statement
of cash flows) can be viewed as motion pictures. Balance sheet denotes the balance
1
Faculty of Business and Economics, South East European University Tetovo, Republic of
Macedonia, f.deari@seeu.edu.mk
2
Transilvania University of Brasov, gheorghita.dinca@unitbv.ro
148 Fitim DEARI, Gheorghiţa DINCĂ
sheet equation expressed as Assets = Liabilities + Equity at a specific point in time

(such as in Romania as of December 31-st).
On the other hand, the income statement expresses the firm’s financial
performance (revenues and expenses) over a given accounting period; the statement
of cash flows lists cash flows from operating, investing, and financing activities over
a given accounting period; and finally the statement of owner’s equity shows
changes in owner’s equity over a given accounting period. This is the reason why in
the income statement, the statement of owner’s equity and the statement of cash
flows is written “as for the year ended at December 31-st”, and not “as of December
31-st” as in case of balance sheet (financial position). However, at the end of
accounting period the income statement, the statement of owner’s equity and the
statement of cash flows link up to the balance sheet. Hence, the balance sheet is the
financial aggregate statement.
Financial statement analysis follows the published financial statements.
Financial statement analysis should be view uniquely in the context of the entity which
is analyzed, of time, related environment and other conditions. Hence, there is no single
formula and answer for a particular case. However, financial statement analysis really
helps the decision making process. As Bernstein and Wild (1998, p. 3) stated
“financial statement analysis reduces our reliance on hunches, guesses, and intuition,
and in turn it diminishes our uncertainty in decision making.”
Financial performance is object of study for many internal and external
accounting information users. For example, a manager is interested whether the
company has satisfactory level of liquidity, solvency, profitability, assets utilization,
etc. On the other hand, a creditor is interested whether an approved loan will be
repaid according to the contract. These and many other questions get answers
analyzing and assessing past and current financial performance and position.
The new investment and business decisions are founded answering to
question such as: is there any improvement comparing past and current ratios, what
trends say, what are future periods indicators, is accounting information enough for
a sound decision making process, what industry norms say, and so on. Thus
financial performance analysis detects the entity’s economical and financial
strengths and weaknesses. As a result, it determines a required therapy the entity
needs to use.
The rest of this paper is organized as follows. Section 2 presents literature
review. Section 3 presents data, methods and empirical results. Section 4 presents
conclusions and finally we have the references.
The literature concerning the main financial and non-financial measures used to
evaluate companies’ performances is vast and there is no unitary approach to their
Financial performances of Romanian wood industry companies 149
essence and structure (Cardinaels and van Veen-Dirks, 2010; Kotane and Kuzmina-
Merlino, 2012).
In their paper, Kotane and Kuzmina-Merlino (2012) manage to synthesize the
different approaches of researchers concerning the use of economic and financial
measures to evaluate company results. Along the traditional financial measures other
measures can be used according to the specific and nature of the business
(Fernandes et al., 2006, Cardinaels et al. 2010). Dinca (2001) realizes a
comprehensive study regarding the financial and non-financial measures used to
assess companies’ performances, grouping measures into traditional and modern,
respectively for the investment and current activity.
Some researchers have analyzed the economic and financial company
performances as well as the entrepreneurial strategies using return on invested
capital (Johansson and Yip, 1994; Busija et al., 1997; Dess et al., 1997, Dinca and
Gîdinceanu, 2011).
Delios and Beamish (1999) have explored the transactional, institutional and
experience effects upon the investing strategies for a series of Japanese companies
using the return on equity (ROE) measure.
Zajac et al. (2000) employs the return on assets (ROA) to analyze the
investment and efficiency strategies of different companies.
Höbarth (2006) has studied the relationship between a series of economic and
financial measures and companies’ performances stating there are a series of general
factors, crucial for ensuring company success.
Dwi Martani, Mulyono, Rahfiani Khairurizka (2009) have emphasized the
relevance of accounting information in explaining the evolution of shares on the
financial market.
Recent studies address the relationship between the social and environmental
responsibility and the financial performances of the companies (Roberts and
Dowling, 2002; Gallego-Alvarez et al., 2013).
3. Data, methods and empirical results
In our study we have analyzed data from 40 Romanian wood industry unlisted
companies, using 200 observations. The data were collected from the published
financial statements of the 40 companies and are organized as panel data, for the
2009-2013 period. Data processing was done mainly using Stata software package
and Office Excel. The companies have between minimum 11 and maximum 19605
employees. Distributions per code and firms are presented in table 1 below, which
shows that the majority of the selected firms have the 161 and 1621 codes,
respectively 66% of the overall sample.
The analysis performed in this study includes accounting items from the
balance sheets and income statements. Following Bernstein and Wild (1998) assets
turnover is calculated as Sales/Assets; return on assets (ROA) as income (here Net

Profit)/ Assets; profit margin as Income (here Net Profit)/Sales; accounts receivable
turnover ratio as net sales on credit (here Sales)/Average accounts receivable;
accounts receivable collection period as 360/Accounts receivable turnover; days to
sell inventory ratio as 360/Inventory turnover. In case of inventory turnover ratio at
the numerator we used Sales (instead of Costs of goods sold) divided by average
inventory. As Bernstein and Wild (1998, p. 423) stated “sales is often used as the
numerator in a “modified” ratio.”
Using a vertical analysis is found the assets composition (current vs.
noncurrent assets). Hence, current to total assets ratio is calculated as current assets
divided by total assets.
Firm’s size is measured as logarithm of sales. This calculation is based on
Bevan and Danbolt (2002), Huang and Song (2002), Ramalho and Silva (2006),
Saeed (2007), Correa, Basso and Nakamura (2007) which used the natural logarithm
of sales.
This study starts from the general related financial performance lines in order
to come later to some specific findings. Hence, the deductive and result-oriented
approach is used. We have used case-study as a research method because we analyse
only Romanian companies from the woody industry for the 2009-2013 period. In
table 1 we present the companies grouped according to the CAEN code.
caencode comindex [%]

21 10 5%
161 65 33%
201 30 15%
230 5 3%
1610 5 3%
1621 65 33%
1622 10 5%
1623 10 5%
Total 200 100%
Table 1. Sample composition
Source: authors’ calculations
Table 2 presents summary (descriptive) statistics for the selected variables. Sales,
net profit, total assets, total current assets, average inventory, and average accounts
receivable are expressed in Romanian Lei.
Assets turnover is calculated as Sales divided by Total Assets. It expresses
how many Lei of sales generates one Leu invested in the company assets. The
results show that one Leu of assets has generated a turnover situated between a
minimum of 0.18 and a maximum of 5.05 Lei of sales. The average value is of 1.21
Lei of sales for 1 Leu of assets.
Profit margin is calculated as Net profit divided by Sales. This ratio shows
how many Lei of profit generates one Leu of sales. On average, selected firms have
operated with negative profit margin, i.e. -0.01.
Return on assets (ROA) is calculated as net profit divided by total assets. On
average, each Leu of assets has generated 0.01 Lei of net profits.
Variable Observations Mean Std. Dev. Min Max

sales 200 156000000 342000000 1205768 2080000000
netprofit 200 7095271 51600000 -90400000 431000000
totalassets 200 216000000 556000000 2842795 3540000000
assetsturn~r 200 1.21 0.68 0.18 5.05
profitmargin 200 -0.01 0.14 -1.29 0.35
returnonas~a 200 0.01 0.10 -0.42 0.32
totalcurre~s 200 56900000 122000000 976292 874000000
averageinv~y 200 24000000 39700000 85566 220000000
averagear 200 21000000 40800000 537880 248000000
numberofem~s 200 720 2899 11 19605
arcolectio~s 200 69 60 10 629
arturnover~x 200 8 6 1 36
inventoryt~x 200 8 6 1 35
daystosell~o 200 81 78 10 700
currentass~s 200 0.47 0.21 0.09 0.99
firmssize 200 17.71 1.33 14.00 21.45
Table 2. Summary statistics

Firms have collected accounts receivable on average in 69 days, or 8 times per year.
Accounts receivable turnover ratio display the same values as inventory turnover
ratio. On the other hand, in average firms needed 81 days to process and sell
inventory (Inventory conversion period).
Figure 1 presents mean of account receivable collection period and days to
process inventory for the period 2009-2013.
Accounts receivable collection period has a negative trend line expressed with
equation:
y = -3.8x + 82.685 (R² = 0.4746).
Days to sell inventory ratio has also a negative trend line expressed with equation:
y = -3.42x + 92.975 (R² = 0.3703).
As descriptive statistics expressed firms need in average 69 days to collect money

from customers whereas to process and sell inventory 81 days. Hence, the inventory
conversion period is longer than accounts receivable collection period.
100
80
60
Days
mean of daystosellinventoryratio
mean of arcolectionperioddays
40
20
0
2009 2010 2011 2012 2013
Fig. 1. Mean of A/R collection period and days to process and sell inventory
Figure 2 presents the mean of account receivable collection period and days to
process and sell inventory for the 2009-2013 period.
Accounts receivable turnover ratio has a positive trend line expressed with
equation:
y = 0.2329x + 7.455 (R² = 0.4577)
Inventory turnover ratio has a negative trend line expressed with equation:
y = -0.0329x + 7.79 (R² = 0.0142)
In case of the inventory turnover ratio the R-square is enough low.

10
8 6
Times (x)
mean of inventoryturnoverratiox
4
mean of arturnoverratiox
2
0
2009 2010 2011 2012 2013
Fig. 2. Accounts receivable and inventory turnover ratio

Source: authors’ calculation
Figure 3 presents the scatter of A/R collection period and inventory conversion
period. As figure 3 shows the majority of firms need around 200 days to collect A/R
and to process inventory. Outliers are observed for A/R collection period and days to
process inventory.
800
600
400
200
0
0 200 400 600 800
A/R colection period (days) Days to sell inventory ratio
Fig. 3. Scatter of A/R collection period and days to sell inventory

Table 3 presents Spearman’s rank correlation for selected variables. Sales are
positively significantly correlated with net profit, total assets, total current assets,
average inventory and accounts receivables, and of course the companies’ size. This
means that companies with higher total assets, current assets, average inventory and
accounts receivables have higher sales. Sales are negatively significantly correlated
with current to total assets ratio. This can be explained as the ratio gets higher, sales
decrease. Moreover, sales are negatively significantly correlated with assets
turnover. According to assets turnover ratio formula as sales are increased or assets
decreased by definition this ratio should increase. Thus, this ratio may is decreased
as assets are increased. This is proved by the negative correlation between total
assets and assets turnover.
Net profit is positively significantly correlated with total assets, profit margin,
return on assets, total current assets, average accounts receivable and company’s
size. This means that larger companies with higher total and current assets
(especially accounts receivable) are more profitable than their counterparties. Higher
net profit does not necessary implies that more money is collected (cash flow vs.
income approach).
Larger companies with lower current assets, average inventory and accounts
receivable have lower assets turnover. Companies with lower average inventory
have higher ROA and assets turnover.
Larger companies have more total and current assets, net profit, average
inventory and accounts receivable than their counterparties. Larger companies have
lower assets turnover and current to total assets ratio. Companies with higher current
to total assets ratio have higher assets turnover and ROA.
sales netpro~t totala~s assets~r profit~n return~a totalc~s averag~y averag~r curren~s firmss~e
sales 1
netprofit 0.3079* 1
totalassets 0.9047* 0.1822* 1
assetsturn~r -0.2469* 0.0751 -0.5845* 1
profitmargin 0.0827 0.9120* -0.0287 0.1546* 1
returnonas~a 0.0396 0.8685* -0.1165 0.3079* 0.9651* 1
totalcurre~s 0.8984* 0.2208* 0.9168* -0.4346* 0.011 -0.0552 1
averageinv~y 0.8605* 0.1288 0.8914* -0.4367* -0.0811 -0.1512* 0.9274* 1
averagear 0.7691* 0.2383* 0.7470* -0.2801* 0.0487 0.0077 0.8417* 0.7103* 1
currentass~s -0.4260* -0.013 -0.5822* 0.5540* 0.066 0.1698* -0.2563* -0.3501* -0.1807* 1
firmssize 1.0000* 0.3079* 0.9047* -0.2469* 0.0827 0.0396 0.8984* 0.8605* 0.7691* -0.4260* 1
Significance level = 0.05; Assets turnover = Sales / Total assets; Profit margin = Net profit / Sales; Return on assets (ROA) = Net
profit / Total assets; A/R collection period (days) = (Average A/R / Sales) x 360; A/R turnover ratio (x) = Sales / Average A/R;
Inventory turnover ratio (x) = Sales / Average inventory; Days to sell inventory ratio = 360 / Inventory turnover ratio; Current assets
ratio = Current assets / Total assets; Firm’s size = Logarithm of sales
Table 3. Spearman’s rank correlation

4. Conclusions
The purpose of this study was to analyze financial performances for 40 selected
Romanian companies for the 2009-2013 period. Selected companies belong in wood
industry.
ROA (return on assets) is one of the most significant profitability measures
for industrial companies as it presents the profit generated as a result of using the
entire portfolio of company assets. The values generated for the analyzed companies
reveal a problematic situation, with average values around 1%, indicating that many
companies do not succeed to ensure a proper use of their assets and hence they have
problems rewarding the capital offered by their investors.
The situation can be explained by the poor values recorded for both total
assets turnover, respectively profit margin. Low levels of total assets turnover reveal
that past investments made by the analyzed companies did not generate enough sales
to justify themselves, whereas the poor profit margins express operational efficiency
related problems.
The low profit levels can also bring into discussion some legal tax avoidance
tendencies, common in the Romanian economic context of the past 3-4 years.
Actually, the legal tax avoidance practices can be correlated with the low assets
turnover levels such as some companies make new investments in order to avoid
paying profit tax, without very sound ex-ante analyses.
The study also revealed the following evidences:
– On average, selected companies have operated with negative profit margin.
– Companies with higher total assets, current assets, average inventory and
accounts receivables have higher sales.
– Larger companies with higher total and current assets, and accounts
receivable are more profitable than their counterparties.
– Larger companies with lower current assets, average inventory and
accounts receivable have lower assets turnover.
– Companies with lower average inventory have higher ROA and assets
turnover.
– Larger companies have more total and current assets, net profit, average
inventory and accounts receivable than counterparties.
– Larger companies have lower assets turnover and current to total assets
ratio. Companies with higher current to total assets ratio have higher assets
turnover and ROA.
The paper has its own limitations regarding the number of firms and the period
analysed. Hence, the paper provides evidence which cannot be generalized. As a
result in our future studies the analysis will be focused on following aspects:
increase the sample size, extension the period, analyzing other industries and
including the financial crisis effects.
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$file/Final_Thesis.pdf [accessed January 7, 2011].
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Reporting by Business Enterprises” (Norwalk, Conn.: Financial Accounting
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Zajac, Edward J., Matthew S. Kraatz, Rudi K.F. Bresser. 2000 “Modeling the
dynamics of strategic fit: a normative approach to strategic change”. Strategic
Management Journal (21/4), 429–453.
Analysis of the cost impact of the new technologies

in e-tail
Cristina DRUMEA1
Abstract: The impact of new technologies on retail is studied in terms of costs. Starting
from the idea that reducing costs should have a significant effect of the new technologies in
retail, it is investigated the possibility that it actually constitutes the basis of a new facette of
the cost leadership generic strategy. Exploratory research tracks some automation effects on
transaction costs and labour costs in retail. General business models in the field are
analysed, with a focus on some concrete ways of implementation in retail, particularly as e-
tail. In the background we grasp and discuss the aspects of the financial flows related to
trade. Even when those issues may prevail, one cannot elude discussing the cultural and
ethical standards associated to the trade new features induced by e-tail and the new
technologies.
Key-words: E-tail, new technologies, business models, cost leadership, pricing.
1. Introduction to the real new world of retail
It seems obvious that the ultimate metric, in any commercial activity, is the profit.
Many definitions, approaches and statements that elude this simple truth were put up
front over the time – such as society benefit and welfare, environment care, social
responsibility and so on, but the ultimate expression of success remains, for a
company, the profit as a simple equation that involves Revenue and Expenses (as in
costs and taxes).
It is the same old balance that drives the company’s efforts and resources
towards achieving a positive financial flow after reimbursing all the factors that
intercede in the process. It works for all kind of activities, but for the retailer area,
with its often narrow margins, it seems to be even more challenging.
The retailer will obviously work steadily at increasing its revenues and at
reducing its costs. On the income side, unless new and revolutionary products are
brought to market, we consider the revenues as being approximately inelastic, at
least in the short term (on the hypothesis that the venue is fixed, the market
positioning is relatively stationary, and the prices cannot be increased suddenly).
1
Transilvania University of Brasov, cristina.drumea@unitbv.ro
160 Cristina DRUMEA
The most important costs for a retailer are the cost of the merchandise itself,
the cost of labour, management overhead, and transaction costs. Technology push
can be proven helpful in all the items above, in various proportions, maybe less of
course when it comes to taxes. Of all the area cited, the labour costs seem the most
sensitive to technological positive inputs, as more prone to improvement in terms of
reducing costs overall, due to automation hence less physical presence and
involvement of the employee in the business processes. That would materialize in a
reduction of direct labour costs, as well as transaction costs. Other costs should
follow the same logic of the cost per unit reduction, associated to the sales growth,
leading to a scale effect brought by the new technologies. It is why this type of retail
expansion is supposed to be based more on achieving a low cost than on
differentiation in respect of Porter’s terminology.
Summarizing these considerations it can be established that e-tail and new
technologies appear to be a viable source to sustain growth in sales volume since it
can entrench the reduction of transaction costs (Williamson, 1985). For the seller,
these costs are weighed along with operating and system implementation costs. For
the buyer, the transaction costs enter into a subjective balance in association with the
emotional side that accompany the act of the purchase.
2. Approach and considerations on costs in retail. Literature review
The reduction of the operating costs is one of the main advantages offered by e-
commerce for retailers, besides the optimization of the supply process and inventory
management, the improvement of marketing activity and the opportunity of expansion
on international market (Bărbulescu Şeitan, Gherman and Bulgărea 2010).
Cost reduction in the retail based on new technologies is made possible by the
standardization of products and/ or the standardization of the purchase act. The first
category includes books (e.g. Barnersandnobles.com) and some clusters of
electronic products. In the second category there are groups of services - significant
through volume of sales - such as touristic services (e.g. Expedia.com) or financial
services. Standardization increases the bargaining power of the customers and the
new technologies provide more information that leads to lower search costs (Porter,
2001). Directly and indirectly, the existence of more information increases the price
competition among the sellers, as observed by Bakos (1998) for electronic products.
For example, the study of a start-up e-tail depicts a number of cost advantages
that arise from the beginning due to the creation of a different value chain than for
offline retailers.
Various researches related to the impact of new technologies onto retail are
accompanied by statistics on the industry evolution in recent years. In countries with
developed statistical systems there is data that permits settling an image on the
evolution of different segments of e-commerce, including new technologies impact
Analysis of the cost impact of the new technologies in e-tail 161
on retail. As in many other areas of management, the US statistics show significant

trends. The mentioned data must be correlated with studies focused on some
particular issues of e-tail and the impact of new technologies on retail. Even though
these studies are mostly related to the US economic area, they have the same
guiding value as the mentioned statistics.
Laudon and Traver (2014) underlined that the US retail market is estimated in
2013 at about $ 3,900 billion. Since any user of modern devices, such as tablets or
smartphones connected to internet is a potential customer, there is a significant
growth area. From the afore mentioned amount, it is believed that about $1,300
billion represents trade "influenced by the internet”, and from the latter, Business to
Customer (B2C) e-commerce would be approximately $420 billion, that is 11% of
total retail. Data on revenues associated directly or indirectly to the American e-tail
can be pooled with the ones regarding the expansion of devices linked to internet.
Such devices generate the "demand" for e-tail and in fact engender a new
development of the internet infrastructure. They include tablets, smartphones, light
laptops and mobile platforms associated with so-called mobile e-commerce (or m-
commerce), part of which is the e-tail (Khansa, Zobel and Goicochea, 2012). The
estimate is that in 2013 the US population holds 363 million mobile devices, while
the prospect is of 400 million in 2017. On the same page, mobile e-commerce
exceeded 40 billion in 2013, but it is to be observed that, even if the amount seems
slight, it has actually doubled as compared to 2012.
Finally it is to be emphasised that e-tail is marked, as e–commerce is, by the
same thorny issues related to ethics, political and social facets. Given its expression
that is more "tangible" for this form of e-commerce, these issues enhance
behavioural aspects of the participants to the sequence, especially consumers. More
specifically it is likely that relational characteristics between consumer and retailer,
as well as the social ones, associated to the purchasing act counterbalance the purely
economic aspects related to price, for example.
In terms of research methodology is noteworthy that the afore mentioned
aspects are studied in most cases by conducting online surveys, using the same tools
put in place by the new technologies associated with the internet. In essence, the
e-tail related to corporal goods and some categories of services, as well as the use of
new devices in transactions generates difficulties related to the use of intermediaries
for the actual delivery, as well as for maintaining the consumer’s confidence in this
system.
The actual transfer of property from the seller to the buyer generates a distinct
cost. Its management is part of the retailer’s strategy (Frischmann, Hinz and Skiera,
2012), in such way that the "gross price" paid by the consumer (that is the sum of
the net price and the distribution costs) has to appear to the latter as affordable as
possible. In addition, the e-tailer exploits the so-called zero-risk bias. Thus the
customer’s satisfaction associated with such transactions translates into loyalty and
confidence in the online environment and consequently into the e-tail company. In
162 Cristina DRUMEA
such way, the retailer’s efforts aiming to “recover” a customer after a complaint
about delivery for example, will improve the perception of the relationship between
costumer and e-tailer (Pizzuti and Fernandes, 2010).
Henceforth, some of the cost reduction induced by new technologies is
partially offset by the existence of logistic costs related to delivery. Also, the
management of the relationship with a customer that has been affected by distrust in
the system prompts out additional costs.
It should also be noted that offline/classic retail is in itself a form of
behavioural expression and socialization. This is studied by psychologists and
sociologists interested in the syndrome of shopping mania. The e-tail strategists
could be interested by this syndrome only to an extent: that social networks such as
Twitter or Facebook and, more generally, social e-commerce does not completely
replace the need for networking with other buyers and the pleasure of choosing and
buying. Ono, et al. (2012) shows the existence of a distinct motivation to browse the
classic stores, linked to the satisfaction of direct purchase. Changing this engrained
behavioural expression brings up again additional costs to the seller, but also to the
consumer.
This study is empirical, based on a qualitative approach and analysis of the
main aspects related to the costs evolution under the impact of the new forms of
retail. Cost-generating elements are considered, as well as their reflection onto the
specific behaviour induced to consumers.
Studying some business models that arise from immediate reality is focused
on key issues such as cost evolution and the influence of various factors (as in IT
tools utilization and associated behavioural aspects) on the asking prices and costs.
The latter are studied in terms of economic sustainability of a real business that
operates using these models. Attention was focused on emblematic cases, either of
positive or negative nature.
The study of generic examples of business models and companies that use
them require the employment of a case study methodology. This approach is made
in terms of the theoretical guidelines given by Yin (2003) for this research tool.
3. Outputs of automation processes in cutting retail’s transaction costs
It is well known that retailing is generally a labour intensive activity thus any
reduction in its cost is poised to significantly influence the bottom line. Basically
stated, its replacement with capital cost is the main use of technology ever since the
first market was invented.
It is a simple as that and there are metrics in place determining to which point
the cost of the automation of a process is worth in terms of replacing or at least
reducing the human labour and its associated costs. The golden rule is that the cost
of acquisition of the machine replacing one employee has to be less or equal to the
annual salary of the employee being replaced, all benefits included. We cannot of
course objectively quantify, nor predict the hazard related to the employee’s
attendance, such as sick leave, temporary work incapacity, maternity or simply lack
of productivity. Technology seems ready to take over these risks and provide
continuous and faultless “service” by automating processes and even out the
businesses baseline in a given industry. Is it then interesting to see on which other
features the competition shall be driven on. This issue will be addressed in a
separate section.
Introducing the concept of retail “self-service technologies” (SST) consists in
the use of information and communications technologies to substitute the human
labour. The customers themselves play then the role of service employees with the
support of new information systems and electronic tools. The business processes
change from one where the retailer serves all customers to one where the customers
serve themselves (Meuter, Ostrom, Roundtree and Bitner, 2000).
Such technological advances are already mainstreamed in: radio tagging of
merchandise, autonomous units for shelving, high speed scanners both optical and
radio based, automated shelf stocking, automated inventory tracking, smart vending
machines for goods that are standardized, small enough, and which do not need
individual examination, automated delivery services with less people needed,
alternative payments methods (pay by bonk, google wallet, apple pay, PayPal check-out,
Near Field Communication enabled credit cards (NFC), and of course automated check-
out points and self-checkouts. The checkout stations will ask the customers to scan the
barcodes of their products, make the payment and pack the merchandise without any
intervention of service employees (Schliewe and Pezoldt, 2010).
Self-service technologies bear an acceptancy rate among customers,
depending on cultural dimension of the economic area that they are introduced to.
Lim, et al. (2004) show that individualism and uncertainty avoidance are important
to consumers’ acceptance of innovations in different cultures. Thus, the Asian
cultures have a significantly higher inclination towards new technologies in retail as
compared to the more conservative European countries. The lack of “human touch” as
part of the trading process seems to be an issue in the “old European” space, while the
over technologized South Korea, Japan or (recently) China embrace relentlessly
technological changes in retail and integrate them into new business models.
According to Kelly, Lawlor, and Mulvey (2010) there are 29 different self-
service factors that influence the adoption of SSTs. Among them, the personal
characteristics have been identified as significant psychological determinants for the
technology reception. These characteristics include mainly social pressure, estimated
self-efficacy and technology anxiety (Eastin, 2002; Mulaomerovic and Trappey,
2013; Schliewe and Pezoldt, 2010). Societies that are culturally more inclined
towards individualism, and presenting a high degree of uncertainty avoidance
(directly linked to estimated self-efficacy and technology anxiety) will have a lower
rate of acceptance of the new technologies in retail.
164 Cristina DRUMEA
Another significant transaction cost is related to the price discovery. How to

determine the price of a new item offered for sale? The retailer is basing it on the
cost of the raw materials or merchandise and of the labour involved. For more
sophisticated ones, the equipment depreciation is to be factored it. In addition, a
“fair” margin shall be added. The opportunity and replacement costs will not figure
somewhere in the ledger, but should be taken into consideration as well.
In reality, the market might not bear a specific price. The task of the retailer is
to rapidly find out what the accepted price is and then adjust closely to it. If the
market sentiment changes then the asking price should adapt immediately so that no
order will be discouraged.
It is considered that the best way to determine a price is by the auction
mechanism. For some items, the auction might be impractical and it is difficult to
draw the line.
Another mechanism will be needed then to determine what the clientele
prefers. It is where technology intervenes again and can support the heightened price
volatility easily enough with automated inventory tools and electronics tags for
example. The real limit is then imposed by the retailing rules which are outside of
scope.
In such conditions, the retailer should be making the list price as a cluster of
mere suggestions allowing the clients to offer whatever they prefer. In a liquid
market it should not take long to find out the accurate price for everything.
“Accurate” means in this instance the price for which the market clears i.e.
everything gets sold. The example of eBay comes to mind. The other online retail
formulas run however on fixed and announced prices, but with high volatility given
by the existence of online transparency, and high adaptability to consumers
preferences.
4. The new technologies in retail and their impact on costs
It goes without saying that a company needs to fulfil its clients’ expectations if it
wants to survive and prosper. But, as practice often shows, it is not sufficient to have
something to sell that someone else wants to buy at an agreed price. The client will
be won by the lower price and/or the easiest operation - the one with the least
transaction costs. A fiscal effect is also to be taken into consideration (Baba, 2012).
A company has now means to reduce the transaction costs by incrementally
improving the processes of the conventional retailing or it can introduce completely
new ways of reaching the customer and insure delivery to his place.
There are several modalities that can be put in place in order to obtain and
maintain a low cost advantage in an online activity; for markets and activities
oriented towards price-dependent buyers, this would induce a differentiation based
on asking prices to the merchandise or services in question (Băcanu, 2010).
We consider that the maximum efficiency of the human labour in retailing is

largely attained. Any additional investment in labour is likely to fall under the law of
diminishing return, in other words this investment will actually reduce the labour
efficiency after a tipping point is reached.
There is the question of what is happening at the margin when, say, the labour
union wins some new benefits for its members or when the government, at the
request of the same labour unions or public pressure, is raising the minimum wage
or is expanding the benefits.
The consequence will be an improved welfare package for the unions’
members (with some spill over to other parts of the society). But, as Bastiat (1845)
shows, one should examine not only the visible (thus evident) side of a situation, but
also the unseen one, as this could become critical in the overall analysis.
The chain of reasoning goes as follows: the increases gained by the labour
need to arise from somewhere. It is either from the customers (increased prices) or
from the shareholders (reduced profits, reduced amortization, reduced investments,
etc.). But it is known that the seller will sell b the maximum price that the market
bears, in other words, the demand at that price level is inelastic (at least short to
medium term). That leaves only the profits as the source for the labour’s gains. The
shareholders will thusly see their cash flow worsen, threatening their own welfare
while possibly the existence of the company itself might become a going concern.
The company is then compelled to reduce the costs. But it is very difficult or
even impossible to reduce the headcount. So, the path chosen by many is to invest in
capital goods, in automation. This is improving the efficiency while flattening the
costs. This posture is further improved by the natural attrition of the workforce.
After several cycles, the companies are producing more with less labour; the overall
participation rate is decreasing, while it is to be expected that the labour costs are
increasing.
In the new IT era, Moore’s Law (1965) observes that the computing power of
microprocessors doubles approximately every 18 months, even if this rhythm will
not be possible to maintain indefinitely, as the author himself later pointed out. The
automation is dependent on computing power so we can infer that its power and cost
is in lockstep with the microprocessors’ one.
The cost of a given automation solution is then bound to fall through the same
curve that computers’ prices are taking. It gets more and more inexpensive to
implement automation in retail (and not only) – almost independently of which
technological path is exactly chosen. The yearly cost of implementing, amortizing
and supporting an automation solution has a tendency to decrease.
Per a contrario and as stated above, the cost of labour has a tendency to
increase mainly due to political pressure of Unions and almost independently of the
productivity, as it would be standard.
These two tendencies will cross at some point in time. It was suggested that
when the yearly cost of an employee performing a job goes above the yearly cost of
166 Cristina DRUMEA
the automation performing the same job, an economic singularity will occur. This
singularity will not occur at the same time across the entire global economy but it
will rather be a drawn out radical change of means of production associated with yet
unknown social effects. However, the most positive effect would be that this process
goes to the stage of widespread joblessness associated with an abundance of cheap
products.
Hon Hai Precision Industries better known as Foxconn - the producer of the
iPhones, started investing in automation and replacing the human labour ever since
the labour pool was exhausted and the labour compensation flew, in 2000. The
production increased but the headcount did not.
The criticists of the automation in general and in retail in particular deplore
the technological advances and dread them, as avoiding uncertainty is human and
understandable to a point. But society is growing richer only by doing more with
less, freeing labour for other yet unimagined jobs, and increasing, for example, the
leisure opportunities.
The automation in retail will absolutely reduce the need of human labour.
This is a setback for those currently employed in retail but they will be freed to
pursue different lines of work. Ultimately, the benefits to the consumers will be
unimaginably vast and they are by rights outdoing anything else.
5. Conclusions
The study of the impact of new technologies on the costs of retail companies which
decide to implement them was conducted in two main areas: methods of
implementing new technologies in e-tail and their measurable impact on transaction
costs and overheads. The approach meant confining the research directions and
focusing on relevant elements. Thus it has been avoided operating with a massive
volume of information that would have had an effect of overload and distortion on
investigating the relationship between the propensity to new technologies and
general behaviour of the firm, the said strategy.
Facts and their associated reasoning show that there is a positive impact of the
new technologies on the retailer's operating costs, especially labour costs; this is
associated mainly with the predictability of the automation costs versus the relative
unpredictability of the labour costs on one hand and the pervasive efficiency of
automated processes in relation to fluctuating productivity of the personnel on the
other hand. The stated impact of the new technologies is shown by the increase in
segment represented by those who adopt a technological solution and invest in
automating their processes. The same type of impact and mechanism is detected in
terms of transaction costs.
The impressive evolution in terms of turnover of some giants of e-tail (such as
Amazon) has demonstrated that e-commerce can flourish due to and based on new
technologies. This has given room to creating new business models that allow
expansion and in the long run have proven to function with slight or null margins,
thus eliminating competitors that could not adjust as fast as necessary to the new
reality outlines. This goes to the contrary of the consecrated theory stating that no
business can survive in the long run with null margins, especially due to fixed costs
that burden the profit equation.
While this is still very much valid for the classical business models, new
technologies and their use in creating automated processes have made possible some
lenience over constraining strategic actions to be taken when focusing on
undercutting pricing strategies.
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The dynamic model of choosing an external funding

instrument
Irena HONKOVA1
Abstract: Making a decision about using a specific funding source is one of the most
important tasks of financial management. The utilization of external sources features
numerous advantages yet staying aware of diverse funding options is not easy for financial
managers. Today it is crucial to quickly identify an optimum possibility and to make sure
that all relevant criteria have been considered and no variant has been omitted. Over the
long term it is also necessary to consider the category of time as changes made today do not
affect only the current variables but they also have a significant impact on the future. This
article aims to identify the most suitable model of choosing external funding sources that
would describe the dynamics involved. The first part of the paper considers the theoretical
background of external funding instrument and of decision criteria. The making of financial
decisions is a process consisted of weighing the most suitable variants, selecting the best
variant, and controlling the implementation of accepted proposals. The second part analyses
results of the research - decisive weights of the criteria. Then it is created the model of the
principal criteria Weighted Average Cost of Capital (Dynamic model WACC). Finally it is
created the Dynamic Model of Choosing an External Funding Instrument. The created
decision-making model facilitates the modeling of changes in time because it is crucial to
know what future consequences lies in decisions made the contemporary turbulent world.
Each variant features possible negative and positive changes of varying extent. The
possibility to simulate these changes can illustrate an optimal variant to a decision-maker.
Key Words: Dynamic Model, External Funding Instrument, Weighted Average Cost of
Capital.
1. Introduction
Making a decision about using a specific funding source is one of the most
important tasks of financial management. The utilization of external sources features
numerous advantages (Petřík, 2009) yet staying aware of diverse funding options is
not easy for financial managers.
1
University of Pardubice, Faculty of Economics and Administration, Irena.Honkova@upce.cz
170 Irena HONKOVA
Today it is crucial to quickly identify an optimum possibility and to make sure that
all relevant criteria have been considered and no variant has been omitted. Over the
long term it is also necessary to consider the category of time as changes made today
do not affect only the current variables but they also have a significant impact on the
future. This article aims to identify the most suitable model of choosing external
funding sources that would describe the dynamics involved.
2. Theoretical foundations
The making of financial decisions represents a process of choosing the optimum

variant of obtaining money and capital and their use with regard to the principal
financial goals of business activities while taking into account a number of
restricting conditions (Tetřevová, 2006). This process consists of weighing the most
suitable variants, selecting the best variant, and controlling the implementation of
accepted proposals (Paták, 2006).
The variants involved in this decision making process are individual external
funding instruments: issue of shares, bank loans, financial leasing, issued bonds,
obligations to suppliers, advances received, factoring and forfaiting. (These variants
were identified by summarizing economic knowledge (Wohe, 2007), (Melicher,
2007), (McMenamin, 1999), (Valach, 2006), (Hrdý, 2008),(Synek, 2003) and then
verified in the research conducted.)
Making a decision about the selection of an external funding instrument is a
multi-criteria decision-making issue. The criteria involved are numerous and one of
the tasks to be solved is the summarization of the most crucial criteria that will be
assigned a decisive role.
According to expert knowledge (Kislingerová, 2004), (McMenamin, 1999),
(Fabozzi, 2011), (Synek, 2003) the principal criteria are Weighted Average Cost of
Capital (WACC).
Hrdý (2008) defines WACC as the individual kinds of capital that a company
must pay for the acquisition of the respective kinds of capital.
However, WACC does not include only expenses but also hidden costs of
equity as shown by the following formula (Brealey, 2000):
WACC = nck * (1-t) *CK/K + nvk * VK/K (1)
where
nck is the cost of loan capital,
t is a corporate tax rate,
CK is loan capital,
nVK is the cost of equity,
VK is equity and
K is total capital.
The dynamic model of choosing an external funding instruments 171
Therefore, WACC denotes weighted average cost of both types of capital; i.e.
the obvious cost of loan capital and the hidden costs of equity.
In general, the cost of equity can be determined either according to market
approaches, or according to methods and models based on accounting data. The
basic methods used to estimate the cost of equity are the following (Dluhošová,
2006):
• CAPM - Capital Asset Pricing Model,
• APM - Arbitrage Pricing Model,
• Dividend growth model, and
• Build-up models.
The CAPM model shows that expected risk changes in direct proportion to
the beta coefficient which expresses the measure of a specific market risk by
balancing it against the sensitivity of a share to changes in the market portfolio
(Kislingová, 2004).
The APM model also belongs to the market valuation of assets but unlike
CAPM it represents a multi-factor model. It considers both macroeconomic factors
(e.g. gross domestic product or inflation) and microeconomic factors (return ratio,
debt, liquidity, size) (Kislingerová, 2004).
The dividend model is used to value shares where the market price of a share
is given by the current value of the future dividends from the share in individual
years.
The build-up valuation of the cost of equity is based on a company’s
accounting data (Dluhošová, 2006):
Nvk = RF + Rbusiness + Rfinstab + RLA, (2)
where:
RF is a risk-free interest rate,
Rbusiness is a risk margin for business risk,
Rfinstab is a risk margin for risk ensuing from financial stability,
RLA is a risk margin that characterizes a company’s size.
There is even a methodology that describes a specific calculation method as the sum
of a risk-free rate, a risk margin for equity, a risk margin for that characterizes
profitability, a risk margin that characterizes liquidity and a risk margin that
characterizes a company’s ability to pay interest expenses on generated profit
(Kislingerová, 2004).
172 Irena HONKOVA
3. Research
Synthesis of theoretical knowledge (Kislingerová, 2004), (McMenamin, 1999),

(Fabozzi, 2011), (Synek, 2003) led to the specification of the following criteria:
weighted average cost of capital (WACC), cost of capital, obligation to pay interest,
possibility not to pay dividends, need for securing, rate of the acquisition of capital,
possibility of early repayment and restriction upon the right to manage.
Furthermore, research was conducted to identify (or to verify) the proposed
variant and criteria obtained through the synthesis of economic knowledge. Another
objective of this research was to determine the weight of the individual criteria.
Research concerned a defined basic set of entities comprising joint-stock
companies active in the field of civil engineering and having their seat in the Czech
Republic. This form of business allows for the use of all existing types of external
financing, including the issue of shares.
The building industry was chosen for the research of long-term funding
because it utilizes a large number of fixed assets, its funding is based mainly on
foreign sources (ČSÚ, 2011) and the sector currently faces a difficult period with the
possible reduced availability of popular bank loans (Stuchlík, 2011). The building
industry is characterized with the specific drawing of loans and the subsequent
number of related failures (Stuchlík, 2011). The business organizations in this field
are likely to need an alternative method of external funding.
Because data were investigated nationwide the form of written questionnaire
was used. The course of investigation survey, definition of the basic set, preliminary
choice and calculation of a representative sample were discussed in another article
by this author (Honková, 2013).
The investigation survey verified the proposed variants and criteria. The
decisive weights of the criteria were determined – see Table 1. It was confirmed that
the most relevant criterion was the weighted average costs of capital (WACC) with a
weight of 0.27 (%); meanwhile the right to manage criterion with a weight of 3 %
was immaterial.
Variable Average Median Modus Frequency Min Max Variance
WACC 0,271 0,25 0,00 13 0 0,90 0,234
Securing 0,211 0,20 0,10 12 0 0,50 0,143
Rate of the acquisition of 0,212 0,20 0,20 11 0 0,80 0,181
capital
Possibility of early repayment 0,099 0,10 0,10 17 0 0,30 0,082
Right to manage 0,036 0,00 0,00 43 0 0,50 0,100
Obligation to pay interest 0,067 0,05 0,00 26 0 0,25 0,077
Possibility not to pay 0,070 0,00 0,00 44 0 1,00 0,199
dividends
Cost of capital 0,030 0,00 0,00 48 0 0,50 0,09
Other criteria 0,000 0,00 0,00 56 0 0,00 0,00
Table 1. Decisive weights of the criteria
4. Additive method
The additive method was chosen as its transparency and simplicity make it one of
the most frequently used methods.
With the additive method the values of the criteria must be homogenized to
one dimension. Then, the partial utility of the individual criteria Uij must be
determined.
It is advised to combine both operations into one and directly transform the
value of the criteria xij to partial utility Uij.
The dependence of amount x and utility U is selected according to the sense
of the criteria involved. The linear dependence of amount and utility is often
applied: (Roudný, 2004)
(3)
where:
D is the lower limit of the amount with no utility U = 0,
H is the upper limit of the amount, where utility is maximum U = 1.
The resulting utility of the linear aggregation of the variant i is: (Roudný,
2009)
(4)
where:
m is the number of criteria kj and
vj refers to the weights of criteria.
5.1. Creation of a WACC model
Because our research confirmed the essential nature of the WACC criterion, it deserves
close attention.
Unlike the cost of loan capital that can be determined quite easily, for instance in
terms of interest on a provided loan or on a subscribed bond (Dluhošová, 2006), the
determination of the cost of equity is rather complex. As stated above, there are globally
recognized methods of determining the cost of equity on the basis of market approaches.
Initially, a WACC model (Honková, 2012) based on market approaches was
compiled. This article deals with the combination of the CAPM and APM methods that
are based on a so-called risk premium (Jindřichovská, 2001). The model adopted the
macroeconomic factor of inflation, the microeconomic factors of indebtedness and total
financial stability from the APM method. The model considered the quantity of bank
174 Irena HONKOVA
interest rate as a variable dependent on bank profitability, risk-free rate, a company’s

financial stability and inflation. Because the dependence of a company’s financial
stability on a bank interest rate is not known, this model was modified and as of now the
bank interest rate is considered to be an independent variable determined as weighted
average of bank rates and interest-bearing capital.
The final WACC model (Fig. 1) stems from a build-up method of determining the
cost of equity; from the idea of adding up individual risks. However, the addition does
not include risks derived from accounting data but market values as they better
correspond to the current market situation; i.e. the risk-free rate and business risk in the
sector.
cost of loan ratio of loan
capital to total
capital capital
total capital
risk free rate tax rate

cost of WACC
equity loan capital
ratio of equity
business risk equity
to total capital
in the sector
Fig. 1. Model WACC
The initial values of the independent variables are depicted in the arrows in the boxes in
Fig. 2. These values can be modified arbitrarily in order to observe resulting WACC
changes. As stated in the introduction, emphasis is put primarily on dynamics, which is
why a change was introduced into the model, specifically an increase in equity by
subscription of new shares from the initial value of 2 million by an annual increment of
200 000. As shown in Fig. 2 the increase in equity led to an increase in WACC.

capital to total
capital capital
5.5 total capital

3.5 cost of 19
WACC
equity loan capital
2M
ration of
equity to total
Business risk capital equity
14.6
Increase in
equity
WACC
20
17.5
15
12.5
10
0 1 2 3 4 5
Time (Year)
WACC : Current
Time (Year) 0 1 2 3 4 5
WACC 11.2775 11.6024 11.8977 12.1674 12.4146 12.642
Fig. 2. Running model WACC – Change in equity

176 Irena HONKOVA
Another change was introduced into the WACC model (Fig. 2), leading to WACC
reduction consisting of an annual gradual decrease in business risk of 1%. Fig. 3
illustrates the effect of the two contradictory changes on the final WACC. Over 5 years
WACC fell by 1.63%.

capital to total
capital capital
5.5 total capital

3.5 cost of 19
WACC
equity loan capital
2M
ration of
equity to total
Business risk capital equity
Increase in
Decrease in equity
business risk
WACC
20
17
14
11
8
0 1 2 3 4 5
Time (Year)
WACC : Current
Time (Year) 0 1 2 3 4 5
WACC 11.2775 11.0786 10.8068 10.4717 10.0813 9.642
Fig. 3. Running model WACC – contradictory changes

Now the initial WACC model has to be extended with further criteria in order to obtain a
model that would solve the decision-making task regarding the selection of an external
funding instrument, which was the objective of this paper. Because we deal with a multi-
criteria decision-making system, it was necessary to use a decision-making method from
the same area.
5. 2. Creation of a decision-making model about the use of an external funding

instrument
The procedure of creating an extended model is shown in Table 2 which also provides
instructions on how to enter individual criteria into the model.
All criteria are defined as minimizing; i.e. the smaller the entered values are, the
more advantageous a certain criterion is.
Criteria Minimum/ Unit Weight Value *

maximum weight
limit
WACC 0 /100 % 0,27
Securing 0/100 % of the new capital 0,21
Acquisition of capital 0–… Days 0,21
Possibility of early 0 or 100 Yes/No 0,10
repayment
Restriction upon the right to 0 – … % Ratio of the new issue 0,04
manage to equity
Obligation to pay interest 0 or 100 Yes/No 0,07
Possibility not to pay 0 or 100 Yes/No 0,07
dividends
Cost of capital 0– … % Ration of the cost to 0,03
the new capital
Total 1
Table 2. Entering of the values in the dynamic model of choosing an external

funding instrument
Figure 3 shows the modeling of WACC during a gradual increase in equity by

subscription of new shares and a simultaneous decrease in business risk.
In order to solve the decision-making problem in concern it is necessary to
perceive the utility of the external funding instrument of share subscription from the
standpoint of more criteria than WACC alone.
Criteria according to Table 2 were entered into the model in Fig. 4: the criterion
of securing that equals 0 as it is not required for the subscription of shares; the rate of the
provision of capital by the subscription of shares equals 60 (days); the limitation of the
right to manage at a ratio of 10 (%) to new capital; without the obligation to pay interest;
178 Irena HONKOVA
and the cost of the provision of capital at a ratio of 10 (%) to the capital provided. A
change was simulated for the criteria of possible early repayment and of the possibility
not to pay dividends.
Cost of loan Ratio of loan

capital to total
capital capital
5.5 total capital
Risk free rate tax rate

3 Cost of 19
WACC
equity loan capital change in
loan capital
ratio of equity
to total capital equity
Business risk
change in equity
Change in business risk
securi
ng
0
Utility
Rate of
Acquisition
60
Possibility to early
Change into repayment
possibility
early
repayment
restriction upon the
right to manage
10
obligation
pay interestto
0
Change in possibility not to
possibility
not to pay
dividends pay dividends
cost of capital
Utility
40
35
30
25
20
0 1 2 3 4 5
Time (Year)
Utility : Current
Time (Year) 0 1 2 3 4 5
Utility 26.2774 25.6205 24.9442 24.2511 23.5432 22.822
Fig. 4. Dynamic model of choosing an external funding instrument – share issue
The result of the model is the values of utility as a minimizing criterion over the
upcoming five years. These values are then compared with the values of the utility of
other variants – external funding instruments. It is recommended to choose the variant
with the least utility.
6. Discussion
The aim of this paper was to create a decision-making model for the use of an external
funding instrument.
The results of the conducted research confirmed the proposed external financial
instruments and decision-making criteria and indicated the weight of decision-making
criteria.
180 Irena HONKOVA
In addition, weighted average cost of capital (WACC) were modeled,

emphasizing the calculation of the cost of equity as this cost are not taken into account in
many companies.
The WACC model was extended with remaining criteria and provided a decision-
making model for the selection of external funding instruments in which various
changes of values can be simulated by a decision-maker. The weight of the individual
criteria is also only indicative and the decision-maker can thus employ different (own)
preferences.
7. Conclusions
The created decision-making model facilitates the modeling of changes in time because
it is crucial to know what future consequences lies in decisions made the contemporary
turbulent world. Each variant features possible negative and positive changes of varying
extent. The possibility to simulate these changes can illustrate an optimal variant to a
decision-maker.
Decision-making regarding the selection of an external funding instrument is no
longer a random process, often motivated by choosing the way of the least resistance.
On the contrary, it is supported by rational considerations.
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The pros and cons of budgeting system within

economic entities
Mariana ZAMFIR1
Abstract: The budget is a key instrument of management control. Today it is found that all
businesses or organizations, except perhaps some craft enterprises, establish a budget. The
purpose of this research is to find solutions for increasing the efficiency of budgetary system
within economic entities. The first part of the article highlights the advantages of
implementing budgets and budgetary control in enterprises. The analysis continues to
highlight their criticism. The last part of the article proposes measures and actions that
should be taken to limit the negative aspects and to achieve an efficient budget system, so
that the budget to be conceived as a management tool, integrating into a broader overview
performance assessment.
Key-words: budget, responsibility, forecasts, budget control.
1. Introduction
To manage a business, an enterprise, means to plan, organize, command, coordinate,

control. Planning is the first function of management and it is the process by which
the company objectives are set and also the means (resources, actions) by which the
objectives will be achieved. Forecasting is the essence of management and it
includes both assessment of the future and making predictions on it (Simionescu et
al, 2006, 120).
Some managers consider planning as the basic function of management
because by all managerial actions of organization, management and control, it is
seeking the enforcement of planning decisions. Budgeting is the last stage of the
planning process, following the operational planning, and it consists of detailing the
business objectives for the first year of the operational plan. Through the budget,
there are determined the work programs for a period of one year and there are
allocated the necessary resources for carrying out the programs.
Sometimes praised, sometimes criticized, the budget remains a major tool of
management control. The pros and cons are highlighted below.
1
Valahia University of Târgovişte, mery.radu@yahoo.com
184 Mariana ZAMFIR
2. Pleading for the budgeting syste
Over time, many authors have tried to define the budget. Anthony defined it as “a
plan for the following year usually expressed in monetary terms” (Anthony, 1988,
17). The word “budget” is a generic term covering short-term plans of any kind. The
budget, by its monetary dimension is the most practical way to express the size of
the inputs and outputs predicted (Anthony 1988, 94). It facilitates the convergence
of goals, improves the effectiveness and efficiency of the organization (Anthony,
1965, 45).
Budgets are, by definition, forecasting situations (Dupuy & Rolland, 1991,
35). Budgets coordinate actions within the enterprise, through them is performed the
forecasting management allowing the company to prepare for the near future.
A budget can be considered as a coherent set of assumptions and forecast
figures fixed before the beginning of the accounting year, describing the company’s
overall business. The most important data are the objectives to be achieved, which
should be ambitious but realistic, defined as a result of a dialogue between the
responsible persons, regardless of their hierarchical level. Budget allows clarifying
responsibilities, performance, means and action plans consistent with the actions of
different actors within the company in decentralization (Selmer 2009, 2).
A budget is valuing a work program resulting from an action plan adopted by
the company. Through it, there are structured missions to be accomplished in order
to improve the performance of companies, intervening to regulate any malfunction.
The budget shows how profit will be obtained. It allows the identification of its
generating factors so that responsible can act on controllable elements that influence
the achievement of this priority objective (Aslău 2001, 133).
The budget is both a prediction tool, that enables the implementation of a
proactive development policy (annual declination of strategic plans), but also a
vertical coordination tool (between management and those responsible for various
services) and horizontal (between different services or functions), it concerns and
harmonize the requirements and constraints of each, from purchase to sale.
The budget is a privileged instrument of management control (Albu & Albu
2003, 18). The budget is both a management tool for the budgeting control and also
a means of organizing the responsibilities and transmitting orders – or objectives –
the latter term being considered more motivating (Burlaud & Simon 2003).
Alain Burlaud and Claude Simon define budget as “a set of digital, realistic
and voluntary predictions” (Burlaud & Simon 2003). It is a set of predictions whose
horizon is generally annually. The figures are both composed of physical data
(quantities produced and sold, number of staff etc.) and value. It must be realistic,
meaning to consider external (competitors, market development etc.) and internal
constraints (production capacity, financial constraints etc.). But the budget is not just
an anticipation of the future, it is more a voluntary action plan that reflects business
objectives.
The pros and cons of budgeting system within economic entities 185
The budget provides, in financial expression, sizing the objectives, costs,

revenues and results in the management centres and finally, evaluating economic
efficiency by comparing the results with their budgeted level (Verboncu &
Nicolescu 1999, 357).
The budget is also defined as “a stable plan for a certain period, expressed in
financial terms and that specifies the resources allocated to achieve the objective of
that period, and also the responsibilities entailed for achieving that objective” (Russu
1993, 328).
Anthony (1988, 94) summarizes the aims of the budget and budget
preparation process:
1. motivating managers;
2. informing managers about what is expected of them;
3. obtaining a commitment of managers;
4. coordinating the various activities of an organization;
5. providing standards for judging the actual performance.
For a better pursuit of the objectives set, the annual budget can be divided into
budgets for short terms, such as quarters, months, weeks and even days. The
budgeting process should be seen as a step to achieve the long-term plan. The
budget plays an essential role of coordination and communication within the
company and serves as an instrument of delegation and motivation.
The existence of a single budget across the entire enterprise and the analysis
of the results made on the basis of this general budget do not make it possible for
decision-making organs to know which are the businesses operating efficiently and
which are the deficient ones that reduce the enterprise results. The implementation
of a budget system requires primarily the development, within the company, of a
management structure based on responsibility centres to deal with the optimization
of using resources and making profit. Each centre will have its own budget, thus
being able to know who is responsible for any negative results. So, each
decentralized entity must be equipped with budgetary targets on prediction, which
will guide management leadership throughout the period covered by the budget. The
minimal coordination between functions such as policy production articulation
based on storage policies and objectives of sale is made while constructing the
budget. The budget is a calculated short-term plan, allowing the allocation of
resources and responsibilities. Thus, the budget is part of the tasks of all responsible
engaged in managerial activities, in relation to the delegation entrusted.
The budget indicates the parameters to be achieved (the sales and production,
the costs to achieve them), thus representing a framework for judging and analyzing
performance. The budget commits managers of responsibility centres to foresee the
consequences of decisions they make. The budget shows the ways to be followed for
achieving goals set for the next financial year. For the next year’s budget to be
reliable, it is necessary to know the exact characteristics of the current period and
the conditions under which the current activity operates.
186 Mariana ZAMFIR
A tool of management control, the budgeting system, with all its components,
is not for external users, but it serves the domestic needs of the enterprise. The
budget does not fulfil its role, however, without going through the stage of
controlling the achievements to forecasts. In addition to forecasting, which
represents an undeniable advantage of the budget, using budgeting in the enterprise
management has many benefits, including: communication, coordination, authority,
responsibility, mobilization, motivation, support in decision making.
The budget remains a management tool par excellence. Today it is found that
all businesses or organizations, perhaps except the craft enterprises, set a budget.
Optimization of budget preparation and planning practices brings management
(Selmer 2009, 2-3):
- enhanced efficacy in its daily mission;
- better defining and implementing the strategy;
- increased relevance of forecasts.
The budget enables the company to improve communication with investors, to
strengthen its credibility and thus to obtain confidence on the market. An effective
budget–plan process improves stock performance.
3. Critical analysis of the budgeting system
By decentralizing the objectives and the control over their implementation, the
budgeting management appears as an effective system, which is why almost all large
organizations have appealed to it. However it has certain limitations that should be
mentioned.
The first criticism of the budget was formulated in 1930 in a study of the
“National Industrial Conference Board” which indicated that budgets imposed may
do more harm than good and may cause dissatisfaction among managers. Budgeting
systems are sometimes mistakenly addressed, without taking into account the
increasing role of the human factor. This aspect can cause antagonism and
determines performers’ low morale and motivation.
Argyris (1952, 3) points out that this instrument is in the centre of behavioural
problems of individuals. He makes severe criticism against it and reveals its
negative effects: managers’ stress, short-term orientation, cooperation obstacles etc.
Participation to the budgeting process could remedy some frustrations regarding
budgets.
Jensen (2001, 95) points out that the budget is a joke. Budgeting takes time
from managers, forcing them to take repeated and lengthy meetings, and engage in
tense negotiations. He encourages managers to lie and to cheat, to minimize
objectives and to inflate results and sanction when telling the truth. It turns decisions
into a game and provokes colleagues against each other, leading to mistrust and
resentment. It produces distortions in providing incentives, motivating people to act

in a way that is against the interest of the company.
Alain Burlaud and Claude Simon mention that one of the criticism is based on
the fact that budgeting involves cutting an enterprise into centres of responsibility
(profit centres, cost centres, turnover centres etc.) to which objectives are assigned
and those responsible are judged depending on their achievement, on the compliance
with the budget. In this context, everyone defends their own objectives, even if this
is done at the expense of other centres in the same undertaking. Qualitative aspects,
in general insufficiently considered in budgetary techniques, such as periods or
quality, tend to be managed by each depending only on their own incidence within
results. In other words, budget management responds to the postulate – questionable
– that the public interest is reducible to the sum of particular interests. Many times it
denies solidarity, interferences or transversality and strengthens selfish behaviour.
Internal transfer prices often reflect the most acute problems, the difficulties of their
fixing show the fragility of the balance between responsibility and cohesion
(Burlaud & Simon 2003).
Another criticism results from the fact that complying with the budget often
becomes an end in itself. In activities of structure or support in which spending is
essentially discretionary and the activity is difficult to assess, responsible,
considering their own interests in entities concerned, tend, on the one hand, to try to
obtain a maximum budget amount and on the other hand, fully consume this
amount. Activity management strives to provide some solutions to this type of
malfunction.
Budget controlling is also blamed for the fact that deviations from budgeted
values sometimes occur due to changes in real conditions of activity compared to the
ones considered when developing budgets, due to poor forecasts or poor
management performance. Among the causes that give rise to such deviations we
can indicate changes in prices of raw material supply over which enterprises have no
authority to act and that lead to production costs different from those of the budget.
In operational activities, the budgeting management often has a tendency to
break initiatives and innovations and this is because any change leads to deviations
which must be further analyzed, explained and justified; thus, it generates an extra
cost often considered as prohibitive.
Another criticism stems from the fact that the budgeting cycle which is
usually annual, with monthly or quarterly control of the way of making predictions
is often bad adapted to the economic cycles of businesses. The budget tends to
shorten the horizon of management and to generate behaviours that favour short-
term at the expense of the long-term. Implementation of quality procedures is often a
favourable response to this type of dysfunction difficult to detect and correct
(Burlaud & Simon 2003).
Lack of long-term vision and strategic perspective is undoubtedly one of the
major limitations of traditional budgets. Often, the budget is not in line with the
188 Mariana ZAMFIR
strategic plan of the company. The existence of long-term plans sometimes causes
company’s stiffening, not allowing it to adapt to opportunities that arise during the
year. The existence of well-documented programs may lead to inertia and lack of
flexibility in adapting to changes. Developing budgets shall be done in accordance
with existing structures of the company (with current organizational chart) that may
be inappropriate for the current situation. Also often budgets are an extrapolation of
the past, they integrate few elements of change or reflection.
Everyone recognizes the effectiveness of traditional budgeting (incremental
budgeting) as long as it is about direct production expenses. This is not the case for
overheads and indirect expenses much more since it appears that the share of
overheads and indirect costs in the full cost becomes higher. For these expenses,
budgets obtained by this method serve as a basis for analyzing deviations, but this
analysis can never have the same relevance as it does for operational services, for
many reasons:
- it is always difficult to assess the real usefulness of the work done and if the
benefits from the activity of such services justify their costs;
- it is difficult to find criteria for measuring the performance of such services.
Generally it is impossible to determine standards and to identify units of work and
sometimes it is not even possible to make predictions because activities are not
always repetitive;
- the relationship between effort and performance is never very clear;
- to limit the risk of reducing budgetary allocations, heads of functional
services are tempted to note in their draft budget at least the same amount that they
obtained in the previous year, although funding needs are less compelling;
- they are also tempted to “swell” currency to protect themselves against
possible risks. Subsequently amounts thus allocated are a great temptation to be
spent.
This budgeting reduces the flexibility of the organization, which is not ready
to cope with change. Incremental budget is criticized because it is inconsistent with
the principle of budget planning, which involves anticipating future goals. It
identifies short-term variable costs, but it does not accurately identify costs with
logistics and distribution, marketing and sales, design and development. These non-
production costs are treated as fixed or recurring charges (Caraiani 2004).
Incremental budget shows the nature and not the purpose of spending, it does
not refer to the level or scope of activities. Another weakness of this budgeting
technique is that it does not address the concepts of efficiency, effectiveness.
Incremental budgets are prepared for the use of production capacity expected in the
year of budget which often is less than 100%. Incremental budgeting is a simple
method, easy to perform, which saves time, but it is also a “lazy” method and often
less accurate. It is a method that works well on short-term and where there is great
complexity of activities. This budgeting technique is good for stable organizations,
where radical changes do not occur from one year to another.
The budget is perceived as an artificial instrument developed for use by

financial officers and management controllers, leading to unjustified provisioning
and shift spending from year to year. The budget seems like a less operational tool
and poor decision-making aid. It is estimated that preparing the budget requires
spending too much time and consumes too much energy at the expense of other
activities related to their profession. Negotiating objectives has no consequence,
discussions are extended too far, decisions are deferred and budget does many
shuttles between the general direction, management controller and competent
services (Selmer 2009, 218).
Some budget roles are incompatible and its use for different roles may lead to
contradictory effects. There are two major conflicts:
- budgets used for planning should be set at a realistic level to allow the
allocation and coordination as if they are used to motivate, they must be fixed so as
to be more challenging. There is thus a contradiction between the desire to
objectively foresee the future and the desire to determine managers to commit to
ambitious goals. Objectives are false, management no longer has a forecasting tool
nor a system of mobilization (Bouquin 2000b, 55-66).
- budgets used to motivate must be fixed in general. On the contrary, the most
effective budget for evaluation should be designed and implemented so as to
consider the impact of uncontrollable or unpredictable events (Barrett & Fraser
1977, 115). Barrett and Fraser hypothesize that an effective budget is an accurate
budget, meaning it takes into account the factors on which the responsible cannot
act. They assume that organizational justice favours performance. By using this type
of budget might still reduce the motivation of managers if they know a priori that
they will be held responsible for uncontrollable things.
Finally, superiors’ and subordinates’ interests vary according to the role that
is given to the budget. Thus, if the budget is primarily used for a purpose of
planning, the controlled people have an interest in obtaining higher budgetary targets
to have extra resources. If the budget is used for the purpose of motivation, the
controlled people will seek to minimize their goals for increasing opportunities to
achieve them (Barrett & Fraser 1977). To reduce conflicts due to budget functions,
Barrett et Fraser proposed to introduce sliding budgets.
4. Solutions for an effective budgeting system
In order to limit the negative aspects and to achieve the success of budgeting and
budgetary control some requirements are required and they are highlighted below.
It is important, first of all, to have a clear definition of objectives and
responsibilities, by establishing clear guidelines so that every employee knows what
to do. The requirements are the following: the involvement and support of top
190 Mariana ZAMFIR
management in budgeting, a realistic organizational structure, with the involvement

of responsibility centres managers in all aspects of budgeting.
A budget leading to growing the company’s performance is the budget that
reveals the origin of figures, by giving up incremental budgets, completing financial
data with operational elements and integration, during the preparation of budgets, of
complementary analyzes. An important role in making budgetary control is assigned
to an adequate accounting and information system allowing accurate and timely
reporting of achievements in comparison with forecasts and correlation of
expenditure and revenue records with responsibility (Simionescu et al 2006, 407).
Budgeting period should not be seen as a time to do calculations, but as a time
when decisions are made. The complex calculations overload should be avoided at
all costs, (Selmer, 2009, 218), by limiting steps of budgeting and establishing
precise procedures of budget drafting, procedure to be known to all participants at
the budgeting process.
For budgetary system to increase the company’s performance, it appears
necessary to build a system of interactive planning and using long-term budget for
articulating long-term with the short term. Managing budgets in a flexble manner is
also important, allowing budgets reviewing when necessary. An incremental
budgeting improvement is brought by flexible budget. Prepared for further
utilization of production capacity, the budget takes into account possible fluctuations
in the period for which the budget is drawn up, it adapts to predictable changes that
may occur in the volume of activity of the undertaking. It becomes an important tool
of management, both in terms of control and analysis of the conduct of business and
in terms of knowing the causes of deviations (Epuran et al 1999, 287).
The proposal of several budgeting versions becomes necessary, in order to
meet the diverse requirements of management and ownership and disposition of
forecasting tools allowing the simulation of these different assumptions. Integrating
budgeting and budgetary control within a data processing system to enable speed
and flexibility becomes imperative for an effective budget.
Gervais (1994, 24-25) mentions that the actions taken by the company’s
management, aiming to increase the motivation of employees, must take into
account some rules. Rewarding success (premiums, promotions etc.) should take
place when it (success) occurs; thus strengthening the staff commitment to the
company.
Generous rewards made constantly lose their impact because the staff expects
to receive them. Unpredictable and intermittent rewards are those that work better.
Also, small rewards are more effective than larger ones. Large rewards have as
negative effects intrigues and a struggle to get them. They discourage those who
never get them, though they think they deserve them.
A better response from employees is obtained by using several different kinds
of incentives, of financial and non-financial nature, rather than by using the same
kind. It is preferable to choose incentives to act on a still unmet need than on needs
partially met. Too harsh assessments should be avoided because when a person
receives a “looser” label, he or she tends to behave as such. It is essential that this
person clearly perceive that, for a given performance, he or she has the chance to get
the reward provided. The time that elapses between finding performance and
receiving reward should not be too long.
Everyone needs to give meaning to his life and for this they are ready to make
many sacrifices if the organization where they work asks for this. When a
company’s management is careful with the wishes and concerns of people, leaving
them a minimum of initiative and control over their work, their adhesion to the
company is reinforced.
5. Conclusions
After analyzing the pros and cons of the budgeting system, I believe that the budget
remains an essential component of the functioning of the company, with which it is
possible to ensure the consistency of local actions with overall performance of the
company. The budget is a tool to support the decision. Often, before establishing the
final budget, managers measure the impact a decision can have on the forecast
outcome.
I believe that the benefits obtained by using budgets exceed almost always the
costs of organizing the budgetary system and that budgeting management, with all
the criticism, should not be rejected, but should be conceived as a management tool,
integrated in a broader performance assessment, more diverse and often more
qualitative.
6. References
Anthony, Robert N. 1965. Planning and control systems: a framework for analysis.
Boston: Harvard Business School.
Anthony, Robert N. 1988. The Management Control Function. Boston: The Harvard
Business School Press. Trad. franç. 1993. La fonction contrôle de gestion,
Paris: Publi-Union.
Albu, Nadia, and Cătălin Albu. 2003. Instrumente de management al performanţei.
Control de gestiune. Bucureşti: Ed. Economică.
Argyris, Chris. 1952. The Impact of Budgets on People, New York, School of
Business and Public Administration, Cornell University, p. 3., quoted by
Samuel Sponem in the PhD thesis „Diversité des pratiques budgétaires des
entreprises françaises: proposition d’une typologie et analyse des
déterminants”. Université Paris Dauphine, 2004, p. 9.
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Aslău, Titus. 2001. Controlul de gestiune dincolo de aparenţe. Bucureşti: Ed.

Economica.
Bouquin, Henri. 2000b. “Du contrôle de gestion au pilotage“. Expansion
Management Review, Septembre, 58-66.
Barrett, Edgar M. , and LeRoy B. Fraser. 1977. Conflicting Roles in Budgeting for
Operations, Harvard Business Review, July-August, 136-147. reprinted and
translated into Les contradictions du contrôle budgétaire, Harvard-
L'Expansion, in summer 1978, 110-119, quoted by Samuel Sponem in the
PhD thesis „Diversité des pratiques budgétaires des entreprises françaises :
proposition d’une typologie et analyse des déterminants”. Université Paris
Dauphine, 2004, 214-215.
Burlaud, Alain, and Claude Simon. 2003. Comptabilité de gestion. coûts/contrôle,
3e édition, Editeur : Vuibert.
Caraiani, Chiraţa. 2004. Bugetarea pe activităţi - o nouă dimensiune în gestionarea
performanţei întreprinderii, revista Contabilitate şi audit, nr.7/2004.
Cucui, Ion; Vasile Horga, and Mariana Radu. 2003. Contabilitate de gestiune.
Bucureşti: Ed. Niculescu.
Dupuy, Yves, and Gerard Rolland. 1991. Contrôle de gestion. Paris: Dunod.
Epuran, Mihai; Valeria Băbăiţă, and Corina Grosu. 1999. Contabilitate şi control de
gestiune. Bucureşti : Editura Economică.
Gervais, Michel. 1994. Contrôle de gestion par le système budgétaire, 3e édition.
Paris : Librairie Vuibert.
Grigore, Aurelia, and Radu, Mariana. 2011. „Towards an operational and
foreseeable administration accounting”. Internal Auditing and Risk
Management, no 2 (22): 73-80.
Jensen, Michael C. 2001. “Corporate Budgeting Is Broken - Let's Fix It”. Harvard
Business Review, vol. 79, n° 11, November, p. 94-101.
Nicolescu, Ovidiu, and Ion Verboncu. 1999. Management. Bucureşti, Ed.
Economică.
Russu, Corneliu. 1993. Management. Bucureşti: Ed. Expert.
Radu, Mariana. 2009. Metoda standard cost. Aspecte teoretice şi practice.
Târgovişte: Valahia University Press.
Radu, Mariana. 2011. „The budgetary process – reason for dissatisfaction”. Annals
of the University of Petrosani, Economics, vol XI, part. IV: 255-262.
Radu, Mariana. 2013. „A general look at the budget control”. Valahian Journal of
Economic Studies, volume 4(18), no 1/2013: 41-48.
Selmer, Caroline. 2009. Construire et défendre son budget. Outils, méthodes et
comportements. 2e édition. Paris, Dunod.
Simionescu, Aurelian, Florian Buşe, Nicolae Bud, and Ion Purcaru Stamin. 2006.
Control managerial. Bucureşti: Ed. Economică.
ECONOMIC
THEORY
Energy efficiency and performance indicators of

European electricity market
Constantin DUGULEANĂ1, Liliana DUGULEANĂ2
Abstract: The electric power system plays a vital role in the development of every country,
ensuring the “fuel” which feeds its economic motor. The efficient functioning of this motor is
essential for economy. The efficiency and the performances of electric power systems are
reflected on the living level of population, through the money spent and the satisfaction level
of their needs. The continuity of power distribution process, the good communication
between the suppliers and consumers, the promptitude of interventions, the environment
protection - all these are aspects characterizing the performance level of power distribution
systems. The paper analyzes the evolution of quality indicators of power distribution systems
both for countries’ level and for population on European market of electricity.
Key-words: power system, environment, efficiency, market performance indicators.
1. Introduction
The Europe 2020 Strategy has as main purpose to attain a smart, sustainable and
inclusive growth, and the transition to a resource efficient economy.
Having the same level of economic activity based on less energy inputs,
means a technical way to obtain energy efficiency. Saving energy through
efficiency, also addresses the reduction of consumption through a behaviour
changing, in the spirit of avoiding its waste.
The only way for the security of energy supply is ensuring the energy
efficiency. In this way the energy efficiency is considered to be in itself, a big source
of generating energy. The energy efficiency can contribute to the reduction of
emissions of greenhouse gases and of other pollutants.
The EU legislation for liberalization of energy markets constitutes the legal
frame for the action of energy efficiency. The third legislative package in 2007,
completed in 2009 with the 20-20-20 targets, has been transposed into national laws
starting with 2011. The targets of Europe 2020 Strategy are: to reduce EU
1
Transilvania University of Braşov, cduguleana@unitbv.ro
2
Transilvania University of Braşov, ldugul@unitbv.ro
196 Constantin DUGULEANĂ, Liliana DUGULEANĂ
greenhouse gas emissions of at least 20% below 1990 levels, at least 20% of EU
gross final energy consumption and at least 10% of transport final energy
consumption to come from renewable energy sources, and a 20% reduction in
primary energy use compared to projected levels, to be achieved by improving
energy efficiency.
2. Objectives
The main objectives of the paper are to present:

– the indicators of energy efficiency of national power systems, as: energy intensity
and energy productivity, but also
– the way of considering the consumers’ satisfaction as a measure of performance
of the electricity on European market.
The analysis of these indicators shows the status of fact in European Union
using data until 2012, in correlation with the targets of EU Strategies for future
development.
3. Material and Methods
Using the data from Eurostat, the study is divided into two parts: the analysis of
efficiency indicators of power systems and the analysis of indicators of energy
market performance.
The first part contains the evolutions of efficiency indicators of power
systems at European Union level, during the period 2001-2012.
The analyses of the efficiency indicators of power systems are also presented
and commented at EU countries level, for the period 2001-2012.
The analysis of share of electricity from renewable sources in gross electricity
consumption, of the share of renewable energy in the final energy consumption, and
of the share of electricity consumption of households in the electrical energy
consumption – all these aspects emphasize the efficiency of energy production.
The second part of the study analyzes the evolution of electricity consumption
in households, at EU level, during 1990-2012, and at EU countries level, in 2012.
Monitoring the performance markets indicators includes also the electricity
market at national level and at European Union level.
Modelling the perceptions of customers for the electricity market of EU,
conduct to few models of consumers’ satisfaction about electricity market, in 2012,
at European Union level.
Energy efficiency and performance indicators of European electricity market 197
4.1. Energy efficiency indicators in European Union during 2001-2012
An indicator for measuring the energy efficiency is the energy intensity. It is

obtained dividing the gross inland consumption of energy in kilograms of oil
equivalent (kgoe) to GDP in constant prices of year 2000. The unit measure of
energy intensity is kgoe per EUR 1000. This indicator should decrease if the
economy has performance.
Using the data from Eurostat, the calculated average changing rate of energy
intensity is negative for all the European countries, for the period 2001-2012.
The chart in Figure 1 shows the level of energy intensity in 2012 and the
countries positions in 2012, depending on their potential of decreasing, during the
period 2001-2012.
Fig. 1. Energy intensity in European Union and Norway, in 2012
The countries’ position shows their effort in reducing the energy intensity, saving
energy for each 1,000 Euro of GDP.
The countries from the fourth frame have low levels of energy intensity in
2012. Ireland, Denmark, United Kingdom, Germany, Malta and other countries form
a group with low energy intensity. Here is another group formed by Austria, Italy,
Norway, Netherlands, Greece and Luxembourg also with low levels of energy
intensity, but without making efforts to decrease it.
But it is important to mention that the structure of economy is very important.
There are economies with low energy intensity due to the lack of industries, which
are highly energetic consumers.
The intersection of axes meets the means of both variables: energy intensity
on OY axis and the annual average rate of changing on OX axis.
The countries from the first and the second frame are placed over the mean
level of energy intensity for the analyzed countries in 2012. These countries are later
entered in EU: Estonia, Czech Republic, Latvia and Poland, Romania, Bulgaria and
especially Slovakia and Lithuania – the last two countries have made huge efforts to
reduce the energy intensity during 2001-2012.
In Figure 2, it is presented the evolution of energy intensity for the EU 28
countries, including Croatia, during 2001-2012.
Fig. 2. The decreasing evolution of energy intensity at EU level, during 2001-2012
The effect of economic crisis can be seen on the chart in 2010, when the level of
energy intensity increased, and then in 2011, when its decreasing tendency
continued.
Energy productivity is an indicator of energy efficiency which is the inverse
of energy intensity; dividing the GDP in million EUR or million Purchasing Power
Standard (PPS) by gross inland consumption of energy in thousand tonnes of oil
equivalent. The unit measure can be either EUR per kg of oil equivalent or PPS per
kg of oil equivalent.
The inverse correlation between the two indicators will show the increasing of
energy productivity during 2001-2012, in Figure 3.
Fig. 3. The evolution of energy productivity at EU level, during 2001-2012
The energy efficiency supposes the efficiency use of natural resource and the
environmental protection.
Energy saving ways are: renovation of public and private buildings,
development of heat products with energy performance of the components.
Introducing an energy efficiency criteria in public spending and for utilities is an
effective way of saving energy. The transport and industry have energy efficiency
requirements for industrial equipment. Introducing the energy audits and energy
management systems for SMEs may improve the efficiency of power and heat
generation.
The economic performance of each country must be considered for the target
of renewable energy, because the development of energetic sector starts from
different levels.
Figure 4 presents the share of renewable energy in the gross final energy
consumption, the share of electricity from renewable sources in gross electricity
consumption and the share of electricity consumption by households in electrical
energy consumption.
Fig. 4. Shares of renewable energy and electricity, in EU during 2004-2012
Share of electricity from renewable sources in gross electricity consumption

are greater than the share of renewable energy in the final energy consumption, but
the share of electricity consumption of households represents around 30% from the
electrical energy consumption.
4.2. Electricity consumption in households of EU countries, during 1990-2012
The households consumption can vary as result of a range of factors, which can be
clasified in:
- personal factors: monthly income, number of family members, habits,
education level;
- national level factors: culture, structure of economic activities, labour
productivity, degree of technologisation of industries, degree of dependence on
imports, urbanisation degree, proportion of rural/urban, weather, geographical
position;
- other factors of conjectural nature: economic international competition,
liberalization of energy market at European Union level, globalization process.
A proportion of 20-31% of total household consumption expenditure is spent
for housing, water, electricity, gas and other housing fuels. The evolution of
electricity consumption of households in the countries of EU, during 1990-2012, is
presented in Figure 5.
Fig. 5. Electricity consumption of households in EU28, during 1990-2012
Analyzing the level of electricity consumption of households for the countries of

European Union, Norway and Iceland, in 2012 and the potential of development
during 2004-2012, it results the chart from Figure 6.
Fig. 6. Level and potential of EU electricity consumption of households

There are well developed countries with higher numbers of population, such
as France, Germany, United Kingdom, Spain, which have high levels of households’
electricity consumption. The average rate of changing the households’ electricity
consumption in Spain is more than 3% per year. In Germany and United Kingdom,
the annual decreasing rate shows that the population is making efforts for saving
electricity.
Belgium, which is a small country, also has saved electrical energy of
households. At the other end, it seems that the households in Romania are not
preoccupied by the electricity saving. But the truth is of other nature. Romania is
placed at the same level of electricity consumption with the group of small
countries: Bulgaria, Estonia, Cyprus, Lithuania, Latvia and Iceland, which have
dynamic rates between 2% and 4%. But in Romania the living standard of
households is still undeveloped as compared to the other countries.
A deeper analysis can show that some countries are great producers of
electrical energy. Also, the patterns of obtaining electricity from nuclear energy
plants, power stations using combustible fuels (natural gas, coal and oil), and
electricity generated from solar and wind turbines - can offer interesting
conclusions.
4.3. Analyzing the consumers’ satisfaction about electricity market, in 2012
Starting with 2010, EU assesses the performance of goods and services' markets.
There were organized monitoring surveys of consumer markets to ask the opinion of
consumers from EU, Iceland and Norway about the 51 markets' performances.
The assessments are very different between countries, not only because of
market performance but also because of cultural and economic differences of
consumers. Their expectations are influenced by the education, age, gender, the
confidence in national policies of government, movements of prices, unemployment
etc. The purpose of monitoring surveys is to find the functioning ways of markets
for ensuring the outcomes desired by consumers.
The questionnaires for each market have contained mostly the same eight
questions respecting the following aspects:
- comparability - refers to the ability of consumers to compare the outcomes
of the different suppliers on the market; it comprises comparisons of price and
quality;
- trust – refers to the confidence accorded to suppliers, existing rules,
regulations and organization actions for the consumers’ protection;
- consumer problems and complaints – they count the occurrences of
problems and their severity, the possibility of complaining and the results of the
complains;
- expectations – refers to the satisfied desires of customers;
- choice - means that the customers can choose the providers in a certain
market;
- switching – refers to the situation when customers have an on-going contract
and how they make a choice for other suppliers.
Last two characteristics: "choice" and "switching" cannot be applied on all the
markets. For electricity market even there exists the possibility to choose from more
providers, sometimes is difficult because of geographical distribution of electricity
companies which have monopoly status for their origin regions. In Romania, for
electricity market also "switching" seems to be very difficult.
The answers are receiving marks between 0 and 10; then there are calculated
average levels for all respondents, for a certain market. The results are presented as
scores in a normalised way, for ensuring the comparability and to eliminate other
influences over the Market Performance Indicators, MPI.
The MPI scores are normalised to the average score of the analyzed market,
whereby the average score equals 100 and it is named nMPI. Some markets may
have a better performance than the average of all markets in their respective group
and so they can receive more than 100. The markets under the average level, receive
a score below 100.
The base of comparison is important to be considered. When analyzing all the
markets in a certain country, the normalization operation will be to the average of all
markets within that country and when there is analyzed a single market at EU level,
the average will be for all the countries having that market. In different points of
view the MPI scores of a market can be different depending on the areal criterion.
The MPI is a measure of the extent to which the market responds to the
desires of its customers. It is calculated as a composite index including the four key
components: "comparability", "trust", "problems and complaints", and
"expectations". The weight for each component is equal with 1/4. The mean of the
answers of all respondents for the characteristics: "comparability", "trust" and
"expectations" - is therefore always a number between 0 and 10. The component of
"problems and complaints" is calculated based on the answers for problems
experienced and for the complaint behaviour.
The nMPI is calculated using the formula: nMPI = MPI – Average MPI +100.
In the report on 2012, the market of electricity services is the 46th in
descending order of nMPI scores of the 51 analyzed markets, having nMPI = 96.3.
The MPI for electricity market was obtained based on the nMPI of each EU
country, Iceland and Norway. The MPI in descending order is presented in Figure 7.
Trying to modelling the perceptions of customers for the electricity market of
EU, we considered the scores nMPI of analyzed countries depending on its influence
factors.
(Source data: ”Monitoring consumer markets in the European Union”, GfK EU3C, 2012)
Fig. 7. The electricity market nMPI by EU country, Iceland and Norway, in 2012
It has resulted only one important factor, Overall Life Satisfaction Index (OLSI).
The regression equation has the determination coefficient R2=21.7%:
, where
(11.16) (2.74) (*) – t Student, P=95%
Considering the OLSI as a measure of customers’ satisfaction, the obtained

multiple linear models are the following:
•
(21.55) (-2.03) (-3.39) (1.99)
(*) – t Student ratio, , R2=54.03%, for probability P=90%, where:

- = correlation coefficient between the electricity consumption of
households and Human Development Index (HDI) during 2005-2012, for each
country, i. It signifies the measure of correlation showing how electricity
consumption contributes to HDI;
- = the energy intensity for each country (kgoe per 1,000 EUR);
- = share of renewable energy in gross final energy consumption (%),
for each country.
•
(27.23) (-2.96) (-2.26) (-4.52)
(*) – t Student , , R2=60.4%, for probability P=95%, where:

= the annual dynamic rate of electricity consumption of households

during 2005-2012, for each country.
The econometric modelling has used also other indicators, as: the electricity
prices in EUR per kWh, share of electricity generated from renewable sources
expressed as % of gross electricity consumption, the energy productivity in PPS per
kgoe and HDI. But the two models presented above were the only significant.
5. Conclusions
The analyses presented in this study can contribute to the evaluation process of the
state of energy indicators, efficiency of energy consumption, sources of energy
producing, environment protection, consumers’ satisfaction and energy market
performance.
The paper presented some statistical coordinates about the energy efficiency
in the European Union, in the last decade. Statistical methods to analyze the
electricity consumption in the households of EU countries, during the period 2004-
2012 revealed aspects about the positions of countries depending on their
development potential, the trends of renewable energy share and share of electricity
generated from renewable sources.
The satisfaction of customers is subject to monitoring each year.
Modelling of the evolution of market performance indicators cannot be
validated only with data of three years for the period 2010-2012.
Monitoring the satisfaction of customers on the electricity market can be a
good estimation for the well-being of population.
All these aspects are the bases of attaining the EU targets, established by its
strategies.
In January 2014 the European Commission established energy and climate
objectives for 2030. The targets are: 40% cut in greenhouse gas emissions,
compared to 1990 levels and at least a 27% share of renewable energy consumption.
For energy efficiency it was not established any specific target.
In order to attain a low-carbon economy and energy system, EU prepares
forecasts until 2050. These targets have strategic importance to ensure a competitive
and sustainable economic growth in the future.
6. References
Household Budget Surveys. 1999. Available at: http://epp.eurostat.ec.europa.eu/

statistics_explained/index.php/Glossary:Household. Accessed on: 20.10.2014.
“Monitoring Consumer Markets in the European Union”, Final report - contract

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Analyzing and forecasting the

European social climate
Liliana DUGULEANĂ1, Constantin DUGULEANĂ2
Abstract: The paper uses the results of the sample survey Eurobarometer, which has been
requested by the European Commission. The social climate index is used to measure the
level of perceptions of population by taking into account their personal situation and their
perspective at national level. The paper makes an analysis of the evolution of social climate
indices for the countries of European Union and offers information about the expectations of
population of analyzed countries. The obtained results can be compared with the forecasting
of Eurobarometer, on short term of one year and medium term of five years. Modelling the
social climate index and its influence factors offers useful information about the efficiency of
social protection and inclusion policies.
Key-words: social climate index, unemployment rate, corruption perception index,

econometric model, forecasting.
1. Introduction
The literature about the effects of economic crisis emphasized some convergence
trends between the richer and poorer country members of European Union countries
during the last decades, as recently mentioned in the report “Social cohesion in
Europe after the crisis” (Dethlefsen, Emmanouilidis, Mitsos et al., 2014). The future
of Europe is subject of important research projects financed by European
Commission, interested about the main concerns of European citizen on long term,
their hopes and fears and their choices and perceptions of the main issues of well-
being in Europe (Quintana-Trias, 2010).
European social climate is a framework concept for characterizing the well-
being of European citizens. Considering the social climate as a barometer of well-
being in each country, the European social climate is more than a result of a simple
aggregation operation of the national social climate indicators of EU countries. It
enhances also the relationships between the EU countries and covers complex issues
related on emigration phenomenon and social investments of European Union
1
2
Transilvania University of Braşov, cduguleana@unitbv.ro
208 Liliana DUGULEANĂ, Constantin DUGULEANĂ
institutions. The subtle effect of sustainability principle appears as a basic

explanation of the holistic approach of European social climate, as a key element for
the future of European Union.
The literature on European social climate consists mainly on the reports of
Eurobarometers (European Commission, Special Eurobarometers: 349, 2010; 370,
2011; 391, 2012; 408, 2013). The aspects envisaged by the Eurobarometers surveys
considered the dimensions identified in the literature on the well-being in Europe.
The AUGUR project of the EU was the main instrument for funding research
for the period 2007-2013 (Tancioni, 2013). The reports of the research projects
established as important dimensions: Well-being of society in future, Personal well-
being, Health services – priorities for spending, Education – priorities for spending,
Employment/ income – priorities for spending, as mentioned by the reflection
project “Well-being in 2030” (TNS Qual+, Eurobarometer Qualitative studies,
2011), undertaken in eight EU member states, in 2011: Estonia, Germany, Greece,
France, Poland, Romania, Sweden and the UK.
For the personal well-being, the conclusions of the aggregate report
emphazised the key factors as being the interrelated areas: health, education and
employment. Employment offers access to health and education. Education is
important for employment and “a good health is fundamental to being able to
function in society and thus is fundamental to well-being.” (TNS Qual+, 2011).
In a conclusion of the report “Social cohesion in Europe after the crisis”
(Dethlefsen, Emmanouilidis, Mitsos et al., 2014, p. 31), ”health was pointed to as
the most important element influencing the quality of life” based on the respondents’
views in seven EU member states concerning the crisis and the future of Europe.
Certain expected general directions were perceived, as: promotion of prevention
behaviours, development of healthcare structures, extension of publicly funded
treatments, and investment in medical research. The private healthcare system was
perceived as being a discrimination of the poor (TNS Qual+, 2011).
Concerning the employment / income – priorities for spending, the report
(TNS Qual+, 2011) offered the main directions: reducing unemployment, economic
growth and increasing competitiveness.
The factors influencing the well-being are considered important in the same
measure and they are interrelated; the changes to one impact on another (Pompili
and Miccadei, 2010). The social well-being for European citizens is influenced
mainly by the social inequality and economy (Wolleb and Daraio, 2013).
The economic growth may conduct to decreasing unemployment and may
relax the social inequalities ensuring good healthcare and education. The view until
year 2030 was obstructed by the actual economic crisis (TNS Qual+, 2011).
The social climate refers to the aspects of social well-being taking in
consideration: health, education, recognition, social inclusion and employment and
income equality “as a condition for social cohesion and long-term development”
(Wolleb and Daraio, 2013).
Analyzing and forecasting the European social climate 209
2. Objectives
The main objectives of this study are to establish an approach of analysing the
multidimensional qualitative concept of Social Climate in order to forecasting it at
European level.
The scientific approach aims to validate the real value of Overall Social
Climate Index (OSCI) to validate the obtained results of forecasting on short term of
one year. The comparison with the Eurobarometer data validates the proposed
econometric model and offers scenarios of OSCI evolution on medium term, until
2018. The obtained results may offer scientific bases for funds’ allocation according
with the European strategies for ensuring a better European social climate.
The first step of methodology was an analysis of the main features in the evolution
of Overall Social Climate Index (OSCI) during 2009-2013.
In the second step, considering the appropriate quantitative indicators for the
main qualitative aspects of SCI, the multivariate descriptive analyses revealed the
same principal components: the socio-economic development and the labour market,
both for 2012 and 2013. In the third step, the econometric models resulted from the
explanatory approaches conducted to significant variables of the already identified
components. In the fourth step, the econometric models were used to forecasting
OSCI at European level.
The results of the descriptive and explanatory approaches have conducted to
the principal components and the significant explanatory variables, which have
explained the differences between the expectations of European population about the
social climate.
4.1. European population perceptions about social climate, during 2009-2013
After the financial and economic crisis began, in 2008, it became obviously the
importance of studying the European population’s attitude about the current and
future situation both of personal life, in general, the perceptions at national level,
and about social protection and inclusion. European Union, being concerned about
the existing and future social climate in European countries, has financed
Eurobarometer surveys starting with 2009.
The five waves of surveys unfolded each year during the period 2009-2013,
envisaged 15 aspects of the three directions: personal life, national picture and social
protection and inclusion. Further analyses offered overviews and comparisons of the
social climate in EU.
The respondents were asked to answer at two questions: one about the
satisfaction related to their personal life and the second about judging the current
situation related to fourteen social and economic aspects, in their personal
circumstances and of national interest, within their countries. The answers of the two
questions were given on a scale with four points from “very satisfied”/ “very good”
to “not at all satisfied” / “very bad”, as presented in Table 1.
Question 1: Satisfaction with the life Question 2: Judgement of current

you lead situation in 14 areas
Very satisfied 10 Very good 10
Fairly satisfied 3,33 Rather good 3,33
Not very satisfied -3,33 Rather bad -3,33
Not at all satisfied -10 Very bad -10
Don't know Not scored Don't know Not scored
Source: SOCIAL CLIMATE, summary, TNS Opinion & Social at the request of Directorate-General
Employment, Social Affairs and Inclusion, Special Eurobarometer 408, October 2013, pp. 4
Table 1. Scales for the Eurobarometers’ questionnaire
The social climate index is calculated as a mean of all answers of each

respondent, for each question, for each country, and also for EU27 until 2012, and
for EU28 in 2013, after Croatia joined EU at 1st July 2013. The evolution of overall
social climate index during 2009-2013 is presented in Figure 1.
Fig. 1. Evolution of OSCI in EU countries, during 2009-2013

The values of overall social climate index for the current situation, even close
to 0, are negative for the entire period. The slow increasing in 2011 was followed by
a decrease of the social climate index, in 2012, which continued in 2013.
Figure 2 presents some components of overall social climate index, which can
be grouped in two parts respecting the two main questions of the questionnaire.
Fig. 2. Evolution of some aspects of OSCI in EU countries, during 2009-2013
The first part reflects the satisfaction about personal circumstances, like: life in
general, personal job situation and financial situation of household. The second part
refers to the satisfaction about the current situation in their country: cost of living,
economic situation, employment and administration.
It is interesting to notice that all the aspects concerning the personal
circumstances are positively appreciated by the European population and meantime,
the satisfaction about all the aspects related to their country, is negatively evaluated.
The way how the public administration runs in their country is better
evaluated than the other aspects like those about the economic situation, the
employment and the cost of living. The explanation could be that some of
respondents or members of their families are themselves employed in public
administration. It is the only component who recorded a slowly constant decreasing
from one year to another. All the other analyzed aspects had oscillating values
during the five years. The interconnection between all the analyzed aspects of
satisfaction at general level of perception makes the respondents to be less contented
about the public administration, each passing year. The satisfaction about
employment situation in their country is the lowest face to all other aspects and this
could also be a cause for the slowly decrease of satisfaction about the way the public
administration runs in their country.
The amplitude of the negative evaluations for current situation in their
countries is greater than the positive amplitude of satisfaction at personal level. The
values of overall social climate index, being a mean of all the analyzed aspects, both
at personal level and at national, are negative. The positive values of the personal
situation are attracted downwards by the negative values for satisfaction evaluation
at national level. The overall social climate index is comprised between 0 and -1 for
the entire period.
The Overall Social Climate Index can be a good indicator because it expresses
the expectations of European population, which really influence the economic
behaviour. Negative expectations have negative consequences on the economic
development of their countries for the future period.
Because the human nature makes the people too critic with others than with
themselves, their opinions can be completed with other analyses for aspects related
to the national situations in their countries, having influences on personal level.
4.2. Multidimensional approach of the European social climate, in 2012
In order to characterize the social climate in European countries, there were chosen
the some indicators for each country, in order to cover all the dimensions of
satisfaction which can influence the overall social climate.
For the year 2012, the following indicators were used in SPSS software in
order to offer an image of European social climate: the Human Development Index
(HDI), GDP per capita ($2011 PPP) (GDP_c), education index (ed_idx), health
index (hlth_idx), unemployment rate (%) (unempl), Harmonized Consumer Price
Index (2005=100%) (HCPI), people at risk of poverty or social exclusion (% of total
population) (pov_risk), Gini coefficient (Gini), people living in households with
very low work intensity (% of total population) (low_work), total employment rate
(%) (empl_rate), severely materially deprived people (% of total population)
(sev_deprive) and early leavers from education (%) (leave_ed).
Using Principal Component Analysis (PCA) for the mentioned variables of
the year 2012, the model with two components is found after three trials.
The first model explains close 69% of the entire variance of the EU27
countries. The rotated components show the coefficient correlation between each
variable and the identified component. The variable belongs to that component, for
which the correlation with this one is the highest. It means that the variable
contributes to define that component with which it is more correlated.
The variables which are not correlated with any components are eliminated
from the next PCA. A better model is obtained if there are kept only the variables
correlated with the two components. The second model explains 87% of the whole
variance between the European Union countries, in 2012 and even a better model is
obtained if the variable of severely materially deprived people is eliminated. The last
model explains 88.64% of the units’ variation in 2012. The first component explains
close to 53% and the second component, close to 36%, so that both components
explain a cumulated variance of about 89%. The two resulted components can be
defined depending on the variables the most correlated with them, as they are
presented in Figure 3.
Fig. 3. Circle of correlations, for 2012
The first component has HDI and health index at one side, opposite to HCPI,
meaning that the countries with high values of HDI, have good health care systems,
but when the inflation is stable. Increasing of prices could imbalance the HDI and
the expenditure for a healthy life. The component can be called that of socio-
economic human development. The second axis opposes the total employment rate
to the unemployment rate, and it can be easily called the employment component.
The two identified components: first component of socio-economic
development, determined by HDI with its three dimensions: education, health and
economic development per capita, amplified by the health index and having the
increasing of prices at the opposite side, together with the component of employing
process characterized by the axis of employment – unemployment – signify all that
threaten individuals. The social climate in European Union can be defined by the
dimensions of these components.
Keeping the last model, there can be represented the coordinates of the
countries face to both components. Figure 4 is the graphic of individual units, shows
the positions of the European Union countries face to the two identified components.
The positions of these countries show the social climate in Europe, in 2012.
Fig. 4. Analysis of social climate in European Union countries, in 2012
Figure 4 presents some groups of countries in the four frames of the chart. The
positions of countries faced to both components can offer information about the
level of socio-economic climate depending on employing process.
Interpreting the positions of countries is related to the position of variables
which determine the two components. Greater projection of an axis shows a greater
importance of that component for a certain country. The countries placed to the
positive side of a component, show the performance of its content and the countries
situated at the other side, oppose them, showing rather the negative aspect of the
component.
The group in the first frame comprises the countries with both positive
coordinates, placed in an interval between the average level of first component plus
one standard deviation. The HDI for these countries is greater than the average level
and their health care systems represent an important element of HDI. Ireland has a
greater projection on the first component, even better than Sweden, Germany,
Netherlands and France. The countries from the first frame have greater employment
rates than the EU average level.
The two groups of countries situated at the other side of the first component,
both in the second and the third frames, consist of the first group with the countries:
Estonia, Lithuania and Hungary – here placed at more than one negative standard
deviation face to the average level, and the second group: Latvia, Bulgaria and
Romania, characterized by low level of HDI and poor healthcare systems. The
second group is placed at more than one even at two negative standard deviations
face to the average level. Both groups are representative for HCPI, meaning the
inflation increased in these countries, in 2012.
There is a central group of countries which is placed at the intersection of both
axes, meaning that they are representative for average levels of the components.
Malta is the country placed very close to this intersection.
Regarding the second component, the conclusion is that almost all the
analyzed countries are placed at one standard deviation, face to the average level, in
plus – for the first and second frames or in minus – for the countries in the third and
fourth frames. There are some developed countries, better placed than the others,
like: Netherlands, Germany, Austria, Denmark and Sweden.
There are also two countries: Spain and Greece, which having well values for
the first component, but they recorded high unemployment rates in 2012. These two
countries are placed between two and three standard deviations compared to the EU
average level of employing degree.
4.3. Characterizing the social climate in European Union, in 2013
Making the same analysis of PCA, the same variables result in defining the social
climate in 2013.
The obtained model considers the same two components which seem to be
defined in the same way, as in 2012; it explains even better, the variation between
the countries of EU28, including Croatia. The two components explain together 90%
of all variation. The second component which is that of employing process gained in
importance compared with previous year. In 2013, the first component kept the same
weight of variation, more than 52% and second component explains more than 37%.
The variables which define the components, in their same order can be seen
on the chart of correlations from Figure 5.
The chart of countries in 2013 is presented in Figure 6. No significant changes
and slow movements of countries’ positions can be seen in 2013 compared with
2012.
Fig. 5. Circle of correlations, for 2013
Fig. 6. Social climate in European Union countries, in 2013
The countries have kept their positions, meaning that the social climate cannot
change dramatically from one year to another. Croatia positioned at the same level
of socio-economic development as Poland and Slovakia, but with higher
unemployment. High HCPI and low value of HDI and health index placed Romania
at the other end of the first component. Latvia had in 2013, an employment rate over
the average level of the European Union countries. Ireland declined the
unemployment in 2013; the developed countries from first frame seem to be closer
between them, slowly above one standard deviation than the average of second
component. Croatia entered in EU with high value of unemployment, which
changed the average rate for EU 28, and some seemingly better positions are caused
by this fact.
4.4. Econometric modelling of social climate index in European Union
The econometric modelling considered the perceptions of people from European

Union countries in 2012, as interesting variable, expressed by the Overall Social
Climate Index (OSCI) of evaluation for current situation (Special Eurobarometer
349 - 2010, Special Eurobarometer 370 - 2011 and Special Eurobarometer 391 -
2012) and as influence factors in 2012, being: the HDI (x1), unemployment rate
(x2), HCPI (2005=100%) (x3), people at risk of poverty or social exclusion (%) (x4),
Gini coefficient (x5), people living in households with very low work intensity (%)
(x6), total employment rate (%) (x7), early leavers from education (%) (x8) and
Corruption Perception Index (CPI) (x9).
CPI is a measure for corruption in public administration as perceived by the
people of each country. It is calculated since 2002, by Transparency International
organization for 177 countries, as a value between 0 and 10. Since 2012 the
methodology was changed and CPI is calculated on a scale 0 – 100; a higher value
meaning a better perception of population for a low level of corruption. Due to this
update of methodology the CPI scores before 2012 are not comparable with the CPI
from 2012 and 2013
(http://countryeconomy.com/government/corruption-perceptions-index).
In the process of building the econometric model, mostly all variables were
eliminated, ones because were too correlated between them, other because of lack of
significance face to Social Climate Index (SCI).
The econometric model of SCI in 2012 contains only two significant
variables: unemployment rate in 2012 and the CPI in 2012.
(t Student ratio) (-4.19) (-3.84) (6.68)
The determination coefficient shows that the linear model explains 81.54% of
the entire variation of SCI in 2012, for EU27 countries, depending on the
unemployment rate and the CPI.
Building the econometric model of SCI for 2013, as dependent variable and
the independent variables in 2013, being: HDI (x1), education index (x2)
(http://hdr.undp.org), health index (x3) (http://hdr.undp.org/en), unemployment rate

(%) (x4), HCPI (2005=100%) (x5), total employment rate (%) (x6), coefficient of
human inequality (x7) (http://hdr.undp.org/en), income inequality (%) (x8), CPI (x9).
Income inequality is the ratio of the total income of the richest 20% of a
country’s population to the total income of the poorest 20%; it is also known as
income quintile share ratio.
The econometric model of SCI in 2013 contains the same only two significant
variables: unemployment rate in 2013 (x4) and the CPI in 2013 (x9).
(t Student ratio) (-4.59) (-4.62) (7.30)
The determination coefficient shows that the linear model explains 85.42% of
the entire variation of SCI in 2013 of EU28 countries, depending on the
unemployment rate and the CPI. It is interesting to notice that even the exogenous
variables were different for the two analyzed years, because of disposable data,
although the econometric models for each year had the same significant variables to
influence the Social Climate Index (SCI).
In Table 2, the confidence intervals for each estimator, in both years, are
covering in a high measure, so that even without testing the significance of
difference between estimators there can be concluded that there are not different
significances between the models in the two years.
Model 2012 2013

coefficients Lower 95% Upper 95% Lower 95% Upper 95%
a0 -8.161 -2.778 -7.382 -2.809
a1 -0.275 -0.083 -0.246 -0.094
a2 0.071 0.135 0.068 0.122
Table 2. Confidence intervals for the estimators in the econometric models
Comparing the values of SCI in 2013 with 2012, there were found 16 countries from
EU27 with pessimistic perception, meaning that SCI values in 2013 were less than
those expressed in 2012. Comparing the adjusted values of SCI in 2013 with the
adjusted values of SCI in 2012, there was found the same number of 16 pessimistic
countries from EU 27 in 2013, than in 2012.
The interpretation of both models is available for each year, and for the
number of EU countries. The negative sign of the coefficient of the variable
unemployment rate shows that at its increasing with 1%, SCI decrease in average
with 0.17 points. The positive sign of the coefficient of CPI shows that for every
increasing point – meaning a cleaner society – SCI is increasing in average with 0.1
points. The negative sign of intercept shows the actual negative perceptions of SCI,
its average level, without considering the influence of the two mentioned and
considered variables: unemployment rate and CPI.
Using each model to estimate the social climate index at European Union
level for 2012 and 2013, the obtained results are, as in Table 3:
Years Econometric Models Adjusted SCI

values,
2012 -0.780 -0.8
2013 -0.866 -0.9
Table 3. Estimating the Social Climate Index in EU, in 2012 and 2013
The calculated values of SCI at EU level were obtained using the unemployment
rate of 10.4% in 2012 and 10.8% in 2013 and the average of CPIs of the 27 EU
countries in 2012 and of 28 countries in 2013.
The two theoretical values of SCI have validated the obtained econometric
models. The calculated rounded values with one decimal are equal with real values
recorded by Eurostat and also presented in Figure 1. Both in 2012 and also in 2013,
the calculated values are equal with -0.8, respectively -0.9.
In this way, there was established a type of model for characterizing the social
climate, which was tested for two years, at EU level.
4.5. Forecasting the European social climate for 2014 and until 2018
Considering the previous econometric models, it is sufficient to forecast the

unemployment rate, because the CPI is assuming to increase; so in the most
unfavourable situation it can remain at the actual levels. CPI will be kept at the same
level, as in 2013.
Trying to make forecasting for unemployment rate, it conducts to other
econometric models. The indicators of investments by institutional sectors as share
(%) of GDP: the Gross Fixed Capital Formation (GFCF) expressed as a percentage
of GDP for the government and that for businesses for EU Euro Area (17 countries)
- proved to be significant for explaining the variation of unemployment rates, in
European Union, during the period 2000-2012.
Two scenarios for GFCF for Government investments and Business
investments are presented in Figure 7, respectively in Figure 8.
The pessimistic model of Government investment, which explains 78.4% of
the variation of these shares depending on time, is:
.
The optimistic scenario considers an average of shares of GDP for

Government investment during the period before the crisis 2000-2007, as seeing on
Figure 7.
Fig. 7. Pessimistic and optimistic scenarios of Government investment forecasting
The pessimistic scenario for shares of Business investment depending on time

and a dummy variable for the years of declining 2009 and 2010, is the econometric
model: . (R2=0.915). The
optimistic scenario considers the average of shares of GDP for Business investment
during the period previous the crisis 2000-2008, as seeing on Figure 8.
Fig. 8. Pessimistic and optimistic scenarios of Business investment forecasting

The econometric model of unemployment rates depending on the evolution of

two analyzed indicators of investments either made by Government or in Business
domain, also includes a dummy variable for considering the year 2006, 2007 and
2008, when the recorded unemployment rate declined:
. Determination coefficient
of 94.6% shows a very good model, having significant all the estimators and good to
make forecasting of unemployment rates. Figure 9 shows the two scenarios of
unemployment rates obtained using the econometric models with the future values
of shares of Government and Business investment in GDP.
Fig. 9. Pessimistic and optimistic scenarios of EU unemployment rates forecasting
After determining the future values of EU unemployment rate, the econometric

model of the Social Climate Index can be used. From the two equations of year 2012
and 2013, presented in Table 3, the third equation can be obtained by calculating its
coefficients as average of the corresponding estimates of the mentioned two models,
as can be seen in Table 4.
Years Unemployment rate (%) CPI
Optimistic Pessimistic Optimistic Pessimistic
2012 10.3 10.3 63.67 -0.8 -0.8
2013 10.34 10.8 63.71 -0.8 -0.9
2014 10.33 13.8 63.71 -0.8 -1.4
2015 10.33 16.4 63.71 -0.8 -1.8
2016 10.32 19.6 63.71 -0.8 -2.4
2017 10.31 23.5 63.71 -0.8 -3.1
2018 10.31 28.2 63.71 -0.8 -3.9
Table 4. The two scenarios of SCI on short and medium term
The values of SCI, calculated for 2012 and 2013, already validate the
pessimistic scenario. The future values of SCI in EU are also presented on the chart
in Figure 10.
Fig. 10. Pessimistic and optimistic scenarios of Social Climate in EU
The optimistic scenario will keep constant value -0.8. If the pessimistic scenario of
SCI will happened, the main aspects will be related to the economic situation in their
country, the employment and the cost of living – elements of SCI, already situated at
la lower limit of the intervals, for the period 2009-2013, presented in Figure 2.
5. Conclusions
The perceptions of European population about their personal situation and about the
national situation in 14 areas in their country are measured starting with 2009, by the
Overall Social Climate Index, SCI. The human behaviour is slowly changing. This is
proven by the evolution of some of the perceived aspects of SCI in EU countries,
during 2009-2013. The extreme values of SCI were between -0.6 in 2011 and -0.9 in
2013, showing “rather bad” judgment of current situation in their countries and
rather ”not very satisfied” with their personal situation.
The national situation is generally lower evaluated, than the personal
situation. It is also a human characteristic to perceive the personal situation better
than the overall situation; being an aspect of hope and optimistic behaviour.
The analysis of countries’ positions depending on some indicators chosen in
order to characterize the overall social climate, determine two principal components:
that of socio-economic development and the labour market. For the two analyzed
years 2012 and 2013, the two identified components have explained the variation
between the EU countries, showing that their positions are quite the same; small
changes are not significant.
The econometric models of SCI in 2012 and 2013 clearly led to the same
result, that the unemployment rate and Corruption Perception Index are the main
factors which influence the perceptions of European population about the social
climate. The theoretical values obtained were equal with the obtained values by
Eurobarometer.
The component of employment/unemployment is that which differentiates the
socio-economic development between the EU countries. This idea was successfully
proved by the results of econometric modelling of SCI. For making forecasting of
SCI, it is sufficient to forecast the unemployment rate, because CPI remains
constant, in the most unfavourable situation.
The influence factors of unemployment rate in each EU country are the
investments made by government and in business medium. Using the econometric
methods there are obtained the future values of Government and Business
investments as shares in GDP, offering two scenarios of pessimistic and optimistic
approach. Using them within the econometric model of unemployment rate, there
are obtained its future values for both scenarios.
The forecast of SCI uses the future values of unemployment rate and the
existing CPI in 2013, to offer the two scenarios. The intervals for future values of
SCI are determined by the lower limit of pessimistic scenario and the upper limit
could be the optimistic scenario.
The conclusion is very clearly defined in this paper: the social climate in EU
countries depends by the national policies of labour market and the investments
policies both at national level and also at EU level. The EU financing programmes
could contribute to efficiently using the resources with direct consequences on the
overall social climate.
6. References
Dethlefsen K., J. A. Emmanouilidis, A. Mitsos et al. 2014. Social cohesion in

Europe after the crisis. Available at:
http://www.newsocialcohesion.eu/wpcontent/uploads/2014/02/Social_Cohesi
on_in_Europe_after_the_Crisis.pdf. Accessed on: 27 August 2014.
Quintana-Trias, Octavi. 2010. The future of Europe. Available at:
http://www.augurproject.eu/ IMG/ pdf/ 13-Octavi_Quintana-
Trias_The_future_of_Europe.pdf. Accessed on: 26 August 2014.
Pompili, Marco and Carlo Miccadei. 2010. Well - Being in the Global Economy:
Concepts, Measures and Data Sources. Report AUGUR Challenges for
Europe in the world in 2030. Project no. SSH-CT-2009-244565,

Collaborative Project, SP1-Cooperation, Background Paper (WP7). Available
at: http://www.augurproject.eu/IMG/pdf/1-_Well_being_First_ Deliverable_
Rev-1_March_2011.pdf. Accessed on: 26 August 2014.
Tancioni, Massimiliano. 2013. European Well-Being Scenarios based on an
Econometric Model. Report AUGUR Challenges for Europe in the world in
2030. Project no. SSH-CT-2009-244565, Collaborative Project, SP1-
Cooperation, Background Paper (WP7). Available at:
http://www.augurproject.eu/IMG/pdf/Massimiliano_Tancioni_European_well
being_scenarios_based_on_an_econometric_model_AUGUR_WP7.pdf.
Accessed on: 26 August 2014.
Wolleb, Guglielmo and Alessandro Daraio. 2013. Dimensions of Well-Being in
Europe: Issues and Scenarios. Available at:
http://www.augurproject.eu/IMG/pdf/G-_Wolleb_A-
_Daraio_Dimensions_of_wellbeing_in_Europe_Issues_and_ scenarios_
AUGUR_WP7.pdf. Accessed on: 26 August 2014.
GfK Polonia. 2014. A Quantitative Study Conducted in Bulgaria, the Czech
Republic, Finland, Germany, Greece, Poland and Spain. New Sources of
Cohesion in Europe. Available at: http://www.newsocialcohesion.eu/.
European Commission. Special Eurobarometer 349 (2010). Special Eurobarometer
370 (2011). Special Eurobarometer 391 (2012). Special Eurobarometer 408
(2013). Available at: http://ec.europa.eu/public_opinion/index_en.htm.
World Bank. 2014. World Development Indicators database. Washington D.C.
Available at: http://data.worldbank.org. Accessed on: 7 May 2014.
TNS Qual+. 2011. Well-being in 2030, Aggregate report. Available at:
http://ec.europa.eu/public_opinion/archives/quali/wellbeing_aggregate_en.pdf
Accessed on: 30 May 2014.
European Commission. (2013) Well being and living conditions. Available at:
http://www.augurproject.eu/spip.php?article7. Accessed on: 26 August 2014.
http://countryeconomy.com/government/corruption-perceptions-index. Accessed on:
26 August 2014.
http://hdr.undp.org, http://hdr.undp.org/en/data. Accessed on: 26 August 2014.
http://ec.europa.eu/social/main.jsp?catId=1039&langId=en. Accessed on: 26 August
2014.
http://epp.eurostat.ec.europa.eu/portal/page/portal/gdp_and_beyond/quality_of_life/
context. Accessed on: 26 August 2014.
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Living_standard_statistic
s. Accessed on: 26 August 2014.
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Unemployment_statis
tics. Accessed on: 26 August 2014.
BUSINESS
AND
EUROPEAN LAW
Export strategies adopted by Romanian SME

Dana BOSCOR1
Abstract The purpose of the present paper is to analyze the export strategies adopted by
Romanian small and medium sized enterprises, strategies based mainly on market niches.
The paper applies a conceptual approach combined with analyses of statistics and secondary
material and presents the importance of focusing on quality, branding strategies, innovation.
The government has also an important role in supporting these companies to approach
international markets.
Key words: export strategies, differentiation, innovation, market niches.
1. Introduction
The most important objectives of the National Export Strategy in the period 2005-
2009 were: the focus on high value added products like ecological agriculture, rural
tourism, IT niches, the use of field branding strategies, the increase of export
promotion activities and more transparency in selecting companies benefiting from
support for participation at fairs and exhibitions.
Analyzing the structure of Romanian exports in 2013 (table 1) it can be
noticed that the products of the machine building industry and transport equipment
have the highest share in total exports, followed by metallurgy and wood processing.
This result is also linked to the objective of the National Export Strategy 2014-2020
of stimulating high value added investments in strategic fields as: machine building,
agriculture, electronics, IT, food industry and renewable energies.
Categories Share in total exports
Products of the machine building industry and transport equipment 42.5%
Metallurgy and wood processing 33.6%
Food products 7.1%
Chemical products 6.1%
Raw materials 6.1%
Fuels 4.6%
Table 1. Structure of Romanian exports 2013
Adapted from www.minind.ro/strategia_export/SNE_2014_2020.pdf
1
Transilvania University of Brasov, dana.boscor@unitbv.ro
228 Dana BOSCOR
Regarding the evolution of services, the fields that have recorded increases of
the turnover in last years were IT services and road transport, the other fields like
constructions, communications, accounting and law consultancy, publicity,
marketing and financial services recording negative evolutions as it is shown in
table 2.
Indicator 2011 2012 Jan.-April 2013
Total balance of other -154 -25 131
services
Communication services 162 122 21
IT services 330 460 295
Consultancy -327 -144 0
Publicity and marketing 217 199 153
Financial services -294 -228 -38
Constructions 76 -85 16
Table 2. The evolution of the balance of other services
Adapted from www.minind.ro/strategia_export/SNE_2014_2020.pdf
In 2011 foreign direct investments had a share of 71.4% of the total exports
and have developed a lot of small and medium sized enterprises as suppliers with a
positive effect on the economy through technological transfer and employees
training.(Tescasiu,2012,p.174).
Companies continue to search the advantages of cost reductions, being more
involved in outsourcing activities. Romania has important advantages in terms of
low labor costs and has attracted a lot of multinationals which produce in Romania
and export in other markets. 50% of the export is made by companies with foreign
capital or joint ventures, like Renault, Draxlmaier, Cargill, Schaeffler. MNEs in
Romania have predominantly chosen to invest in the recently liberalized service
industries as: telecommunications, gas, energy and trade and in manufacturing
industries where technology transfer is important : automotive, electrical appliances,
shipbuilding, electronics and chemicals. (Haar,Marinescu,2014).
Another important objective of the National Export Strategy for the period
2014-2020 is the development of rural tourism, organic agriculture, furniture,
textiles, wine industry and handicrafts. This objective could be achieved by
supporting small and medium sized enterprises having business in those fields.
SMEs are well suited to tourism. They provide the interface and contact between
local culture and tourists and thereby contribute in communicating the particular
characteristics of their destination. In our country the small and medium-sized firms
account for 99.8% of the total units acting on this market (Băltescu 2009, 576-577).
Export strategies adopted by Romanian SME 229
2. Objectives, materials and methods
The objective of the research is the identification of export strategies adopted by

Romanian SME, companies facing tough global competitors.
The creation of business alliances and marketing associations will help SME
to better approach the foreign markets and to reduce costs of promoting products
overseas. Romanian exporters will have to develop quality management and to align
at advanced certification standards required by international markets. Particular
attention is given at present to the strategy of continuous improvement. It is
considered an integrating strategy, across functional strategy of the enterprise and it
envisages gradual, continuous improvement of products and services quality, as well
as productivity and competitiveness, with the participation of all staff. (Madar.
Neacsu, 2014) Being an iterative process, quality improvement becomes, in fact, a
continuous improvement of quality. The target of the continuous improvement of
quality is the development of the company simultaneously with satisfying and
attracting loyal customers. That is why, taking into account the objectives and the
existing resources, it is essential that each company should plan in advance a certain
quality strategy. (Madar, Neacsu, 2013)
Another strategy adopted by Romanian SME could be to focus on the markets
with large Romanian communities like Italy, Spain, Canada, Israel, Greece where
Romanian products and brands can be promoted. Companies in the field of tourism,
handicrafts and wine should also collaborate for creating a better image based on
tradition.
According to the National Export Strategy for 2014-2020, the consumers will
have more decision power by gathering information about products and services.
The social responsibility of companies, market reputation, relationships between
companies and individuals and quality management will become key assets of
companies and sources of competitive advantages. (www.minind.ro/strategia de
export).
The most important advantages of SME are: innovation capacity, flexibility,
capacity to adjust in a short time at new market conditions.
Barriers encountered by companies in the process of globalization are: lack of
capital required for direct foreign investments, low expenditures for marketing,
salaries and product adaptation, difficulties in finding funds from different
institutions, difficulties in finding the best specialists.(Horn, Faulkner,2010, p.118)
Factors that can help small and medium sized enterprises to overcome barriers
in global expansion are: offering differentiated products difficult to copy or replace,
attracting capital for development, developing partnerships with local companies
from the host market.
230 Dana BOSCOR
Romania does not have at the moment enough resources for the promotion of exports,
for consultancy and support offered to exporters. (Chitu, Tecau, 2012). That is why,
the partnerships between exporting companies could be a solution to this problem, as
it happened in Chile, where wine producers made an association to promote exports of
wine. In New Zeeland, all wine producers are members of the wine institute and are
developing promotional activities on different foreign markets like: Germany, USA,
Canada and Australia. In order to promote wine exports, a government agency was
offering 1/3 of financing, the difference of 2/3 being covered by producers from a tax
imposed on sales. Through these efforts the image of the country was promoted and
the promotional message was ”the treasures of a clean and green land”. The export
strategies of the companies from New Zeeland was a combination of individual and
collaborative efforts. In the wine field, Romanian companies should improve quality
and focus on a better promotion in order to create well known brands. The
development of a country brand for wines, the participation at different fairs and
exhibitions and a better access at financing through European funds could help SME
to increase their exports of high quality wine. Some market niches could also be
approached. An example is the segment of older black women living in the southern
part of the US who prefer the Romanian sweet wine.
In order to enter in foreign markets like China and USA, the Romanian wine
companies must develop cooperative strategies for promoting Romanian wines.
(academyofwinebusiness.com)Wine, food and culture should be combined and
Romanian wine producers should organize visits at vineyards and create an interest
for tourists to know its cultural heritage.
Similar to the wine industry, in the field of furniture the Romanian companies
realized that the association between furniture producers can help them to divide the
expenditures linked to market research, new models design and access at financing.
An example of this strategy is the Simex group, including five companies in the
furniture field and having more than 1000 employees. Having experience and skilled
labor the company has approached the segment of classic, art furniture in the
markets of Russia and Ukraine but at the moment the company is targeting the
markets of Germany and Holland because of the difficulties faced by eastern
markets. The furniture produced by Simex has a high value added because it
involves a lot of manual operations, performed by experienced employees.
Therefore, experience, high quality raw materials, qualified staff can help Romanian
companies to use a successful export strategy, targeting even the most developed
countries in the world, with sophisticated consumers and high expectations.
In the IT field, Romanian companies have already built well known brands
and have adopted differentiation strategies based not only on innovative products
but also on ease of use, installation, upgrading and post-implementation services.
Romanian software companies have focused on innovation and creativity and now
Export strategies adopted by Romanian SME 231
they are focusing on the way the user is interacting with the technology. Companies
like Softwin, Total Soft and Siveco have developed global strategies targeting the
most developed markets in the world. They have understood customers’
expectations, have conducted market researches and have adopted different
strategies for each market. For example, for the antivirus programmes, the American
market is focused on price while the german customers are looking for efficiency
and the acquisition process is very long. (Rosca C.,2014, P.18)
The sale of software products takes into account the feedback of consumers
from different markets and the professional groups and social media can promote the
brand better than the producer by using classic advertising strategies. The customers
are more and more part of the development process for new products, so that social
consumers can influence the development of new functions of the product. The
customers become consultants, designers, developers and innovators, being involved
in customer communities or operating on their own. Customers can support and
promote the brand and they share their opinions with media and social markets,
giving credibility to what the company is trying to portray from the brand.
(Vandermerwe, 2014, p.51)
Technology allows the producer to have a close relationship with the buyer
and to use personalization strategies for a large number of customers. In this respect,
Romanian companies can develop applications that support a better relationship
between the producer and the customer.
The Romanian company Siveco has developed its own ERP solutions, based
on eLearning, eHealth, eAgriculture and eCustoms and at the moment is exporting
in 27 foreign markets. The target markets for the IT field are: Germany, Great
Britain, France, USA, Japan.
In the field of cosmetic products, Romanian companies adopt also a
differentiation strategy, taking into account the differences in cultures, consumer
behavior and climate. For example, for the Asian markets products must be adapted
to the customers requirements of a whiter skin, while in Europe there is an
increasing demand for innovative products. For example, the cosmetic line Gerovital
is sold in more than 30 countries from Europe, North America and Africa, being an
anti-aging product well known for its quality.
Ivatherm, another Romanian cosmetics producer has started with the
Romanian market and expanded later in foreign markets like China, Egypt and
Ukraine. Its products are sold in drugstores and have the advantage of using the
thermal water from Herculane, with a lot of benefits for health. The company has
participated at several fairs and exhibitions in China, Japan, Turkey and Abu Dhabi
and has used Romanian resources and French technologies to create high quality
products and to fight with the multinationals in this market segment. Ivatherm has
used a niche strategy by focusing on the market of antiallergic products , taking into
account that in the future, the number of persons suffering from different allergies
will increase significantly.
232 Dana BOSCOR
4. Conclusions
Romanians SME should try to export high value added innovative products based on
new technologies, should develop export brands and create associations between
exporters for increasing power and should involve in promising fields like rural
tourism, handicrafts and renewable energies. New markets like China, India, USA
and United Arab Emirates should be approached with IT products, cosmetics,
tourism and food products.
5. References
Băltescu, Codruţa A. 2009. “The Influence In Romanian Hospitality Industry Of

Small Medium-Sized Firms And Their Specific Means To Improve
Performance.” Analele Universităţii din Oradea, Ştiinţe Economice, XVIII
(IV): 575-579.
Chiţu, Ioana Bianca and Alina Tecău. 2012. “Consultancy services in marketing and
management- growth factor for small and medium enterprises competitiveness”.
Journal of Applied Economic Sciences, 2012, vol VII, p. 366.
Haar, Laura and Nicolae Marinescu. 2014. “Entry Modes and Firm Performance in a
Transition Economy: Evidence from Inward FDI to Romania”. Journal of
East West Business, published online
Horn S., David Faulkner. 2010. Understanding Global Strategy, Ed. Cengage
Learning
Madar, Anca and Nicoleta A. Neacsu. 2014. Qualification of staff as a quality
strategy for S.C Schaeffler Romania, Bulletin of the Transilvania University
of Braşov Series V: Economic Sciences • Vol. 7 (56) • No. 1
Madar, Anca and Nicoleta A. Neacsu. 2013. Quality Strategies Applied by the
company Star East Pet, Bulletin of the Transilvania University of Braşov •
Vol. 6(55) •No. 1,
Rosca C. 2014. “Produse românesti care au cucerit lumea”. Revista Business
Magazin
Tescasiu, Bianca. 2012. The Importance of the Foreign Investments and the
Transnational Companies Activity. Proceedings of the Sixth International
Scientific Conference, Sofia
Vandermerwe, Sandra. 2014. Breaking Through. Implementing Disruptive
Customer Centricity. Ed. PalgraveMacmillan.
www.minind.ro/strategia_export/SNE_2014_2020.pdf. Accessed on: 8.03.2015.
www.dce.gov.ro. Accessed on: 15.03.2015
www.zf.ro/zf-24/producatorul-roman-de cosmetice-ivatherm. Accessed on: 10.03.2015
academyofwinebusiness.com/wp-content/uploads/2013/04/Nakata-Antalis.pdf.
Accessed on: 10.03.2015.
Series: Economic Sciences • Vol. 8 (57) No. 1 – 2015
The influence of macroeconomic indicators on the

emission of greenhouse gases. Treatment of outliers
Case study - România
Evelina GRĂDINARU 1, Lorant BUCS2, Gabriel BRĂTUCU3
Abstract: This paper implements the multiple linear regression method in order to
determine the correlation between a number of independent variables and a dependent
variable. It begins with a brief introduction explaining the purpose of this analysis, and
continues with the implementation of the econometric model in order to calculate the
coefficient of determination that the four significant macroeconomic indicators, namely the
amount of energy produced from renewable sources, gross domestic product (GDP), the
price of Brent oil barrel on the European market and the energy intensity of the economy
have on total emissions of greenhouse gases in Romania. The final part will expose the
conclusions of the present analysis.
Key-words: econometric model, regression, renewable energy, greenhouse gases.
1. Introduction
This paper aims to achieve a detailed analysis of the significant impact of several
macroeconomic factors on greenhouse gas emissions. The need for such an analysis
comes from a major concern that is currently observed both at a global, national and
multinational level, for achieving the aspirations of sustainable ecological and
economic development. Therefore, it will be demonstrated further along that
apparently independent factors have a significant influence on each other with a
decisive impact on environmental quality.
2. Objectives of the analysis
It is well known that global warming is a phenomenon whose magnitude has

taken alarming proportions, both nationally and globally. Ultimately, the quality of
1
Transilvania University of Braşov, evelina.gradinaru@gmail.com
2
Transilvania University of Braşov, lorand.bucs@unitbv.ro
3
234 Evelina GRĂDINARU, Lorand BUCS, Gabriel BRĂTUCU
life of each individual depends on the quality of the environment and human
influence was noted through its rather negative than positive effects. In order to
correct this injustice brought to the planet, a series of measures are being
implemented in order to improve the current adverse effects of human lifestyle on
the environment.
One of the most important challenges is represented by global warming
caused by emissions of greenhouse gases in the atmosphere and measures such as
limiting emissions from industry and transport or looking for alternative sources of
energy became mandatory in most countries.
The European Union is one of the strongest supporters of reducing
greenhouse gas emissions and Romania, as a member of this organization, aligns
with European environmental policies. If in some areas, such as GDP and energy
consumption, there are still noticeable differences between our country and other
member states, in other sectors, such as renewable energy, the results are more than
satisfactory. To support this assertion, there is a relatively easy to calculate indicator:
the amount of energy produced from renewable sources per GDP. Thus, while the
EU average is around 14 tons of oil equivalent energy to 1 million euro GDP, in
Romania this value reaches approximately 38 tons.
Given these considerations, the objective of this analysis is to calculate the
coefficient of determination that the four significant macroeconomic indicators,
namely the amount of energy produced from renewable sources, gross domestic
product (GDP), the price of Brent oil barrel on the European market and the energy
intensity of the economy have on total emissions of greenhouse gases in Romania.
3. The econometric model
The study considers representative data for the period 2004 -2013, in order to
determine the extent to which exogenous variables considered here the production of
energy from renewable sources (x1), GDP (x2), oil prices (x3) and the energy
intensity of the economy (x4) explain variations of the endogenous variable, which
is the production of renewable energy (y).
The table below shows the values of the indicators referred to Romania:
The influence of macroeconomic indicators on the emission of greenhouse gases. 235
Greenhouse Production of Energy

gas energy from European intensity of the
emissions renewable GDP[mil. Oil Price economy [kg of
Year
[1000 tons sources [1000 Euro] FOB [US $ oil equivalent
CO2 tons of oil / barrel] per 1000 euro
equivalent] equivalent] GDP]
y x1 x2 x3 x4
2004 141.221 4.593,60 60.800,00 38,26 515,9
2005 141.314 4.984,20 80.225,60 54,57 491,3
2006 144.777 4.831,00 98.418,60 65,16 471,4
2007 142.804 4.717,70 125.403,40 72,44 441,5
2008 139.812 5.336,10 142.396,30 96,94 409,9
2009 119.917 5.274,60 120.409,20 61,74 387,4
2010 115.799 5.708,40 126.746,40 79,61 394,6
2011 121.514 5.027,50 133.305,90 111,26 393,7
2012 118.764 5.242,20 133.806,10 111,63 378,8
2013 116.626 5.500,00 144.282,20 108,56 371,7
Table 1. Data on analyzed indicators

Source: Eurostat
Fig. 1. Greenhouse gas emissions between 2004-2013 in Romania

Fig.2. The production of electricity from renewable energy in Romania between

2004-2013
It can be seen that the positive trend is accompanied by frequent adjustments

in production, so there can be observed both positive and negative variations from
year to year in the considered period.
Fig. 3. Evolution of GDP in Romania between 2004-2013
Romania confirms its emerging country status with high potential for development.
Its GDP recorded a strong growth in the considered period, 2004-2013. However,
the economic crisis registered in the middle of the considered period produces larger
corrections for Romania.
Fig. 4. Energy intensity of Romania's economy
In terms of the energy intensity of the economy, Romania is out of the EU average
with values exceeding even 3 times the energy consumption per unit of GDP,
confirming the highly energy-intensive economy status compared to EU average.
Unfortunately, although the trend described by this indicator is similar to the
European one, the degree of efficiency of energy consumption is much less evident,
further widening the gap of efficiency of our country.
Fig. 5. Oil prices in Europe between 2004-2013
In terms of oil prices, for the purpose of this analysis we considered as reference oil
price in Europe, given the strong degree of Romania energy interconnection to the
European market for oil.
Considering the indicators included in the data analysis, graphics to highlight
correlations between each exogenous variable and the studied endogenous variable
were done.
Fig. 6. Correlation between greenhouse gas emissions and energy production from
renewable sources in Romania
Fig. 7. Correlation between greenhouse gas emissions and GDP in Romania
Fig. 8. Correlation between greenhouse gas emissions and oil prices in Romania
Fig. 9. Correlation between greenhouse gas emissions and energy intensity of the
economy in Romania
As expected, the strongest influence on the evolution of green house gas emissions
is made by the production of energy from renewable sources, and by the energy
intensity of the economy. The correlation between the endogenous variable studied
and GDP is not to be neglected as well, knowing that value is generated through the
consumption of production factors and energy is one of the most important.
4. Results of the research
Using the above data, the regression analysis was made resulted in the following
regression table.
SUMMARY OUTPUT
Regression Statistics
Multiple R 0,9753
R Square 0,9513
Adjusted R Square 0,9123
Standard Error 3697
Observations 10
ANOVA
Significance
df SS MS F
F
Regression,
4 1333887896 333471974 24,3950 0,0018
SSE
Residual, SSR 5 68348404 13669681
Total, SST 9 1402236300
Standard Lower Upper

Coefficients t Stat P-value
Error 95% 95%
Intercept -87957 63969 -1,3750 0,2275 -252393 76480
Production of
energy from
-5,7820 5,7580 -1,0042 0,3614 -20,5833 9,0193
renewable
sources
GDP 0,6171 0,1345 4,5884 0,0059 0,2714 0,9628
Oil prices -112,9329 98,8792 -1,1421 0,3051 -367,11 141,2442

Energy intensity
434,5546 75,9150 5,7242 0,0023 239,4088 629,7005
of the economy
Table 2. Regression model with 4 variables
The first part of the table reveals that the regression model is well chosen,
explaining in a proportion of about 95% the variation in greenhouse gas emissions -
the dependent variable y (R2 = 0,9813). The value of R indicates a very strong
correlation between the endogenous variable y and exogenous variables x1... x4.
The table ANOVA exposes the variation of the x variables and evaluates the
overall significance of the regression, reflecting in a globally significant regression
with 4 variables, as follows:
SSE (sum of squared regression factors) is greater than SSR (sum of squared
residual factors)
F theoretical (for α = 5%) = 5,19 is less than the calculated value for
F* = 24,3950 for a significance threshold of 0,18% (Significance F = 0,0018)
The third part of the table highlights our regression model identified based on
the data used, as follows:
t= -87957-5,7820 x1+0,6171x2-112,9329x3+434,5546x4
Also, in addition to the global significance test, the regression table does a test
of importance for each of the individual exogenous variables.
The Student Ratio (t Stat) for each regression coefficient (in absolute values)
is compared with the theoretical t Stat, which for this model has a value of 2,57 (for
α = 5% and 5 degrees of freedom).
t Stat Theoretical t Stat P-value α

Intercept -1,3750 2,57 0,2275 0,05
Production of energy from
-1,0042 2,57 0,3614 0,05
renewable sources
GDP 4,5884 2,57 0,0059 0,05
Oil prices -1,1421 2,57 0,3051 0,05
Energy intensity of the
5,7242 2,57 0,0023 0,05
economy
Table 3. Significance test for each individual exogenous variable
It can be seen that the constant Intercept and the variables “renewable energy
production” and “oil prices” fail the test of individual significance. Firstly, student
ratio values are below those of the theoretical value of this indicator, and secondly,
the indicator P-value for the constant and the two variables indicates a too high
significance threshold, respectively 22,75%, 36,14% and 30,51% (this threshold
should be less than 5% for the value of the estimator to be significantly different
from zero with a probability of 95%).
The confidence intervals for the five estimators for the coefficients of the
explanatory variables are shown in the table below:
Lower 95% Upper 95%

Intercept -252393 76480
Production of energy from
-20,5833 9,0193
renewable sources
GDP 0,2714 0,9628
Oil prices -367,1100 141,2442
Energy intensity of the economy 239,4088 629,7005
Table 4. Confidence intervals for the estimators of the 4 variables
It is obvious that for the variables GDP and energy intensity of the economy the sign
of the coefficient is maintained throughout the confidence interval (+ for both,
corresponding to a direct link with greenhouse gas emissions), while the estimators
for the constant Intercept and for the variables which have failed the test of
significance (renewable energy production and oil prices) pass from negative to
positive, which means they can be even zero, while the margins indicate values
significantly different from zero.
Therefore, from the new regression model explaining the variation of y will
no longer contain the constant Intercept and the variables “energy production from
renewable sources” (x1) and “oil prices” (x3):
t= 0,6171x2 +434,5546x4
The table of regression for the new model with two explanatory variables and
constant ZERO, looks like this:
SUMMARY OUTPUT
Multiple R 0,9992
R Square 0,9984
Standard Error 5843
Observations 10
ANOVA
df SS MS F Significance F
Regression, SSE 2 170889676845 85444838422 2503 0,0000

Residual, SSR 8 273133263 34141658
Total, SST 10 171162810108
Standard P- Lower Upper

Coefficients t Stat
Error value 95% 95%
Intercept 0 #N/D #N/D #N/D #N/D #N/D
GDP 0,1622 0,0477 3,4032 0,0093 0,0523 0,2721
Energy
intensity of
the economy 261,9942 13,2984 19,7013 0,0000 231,3282 292,6603
Table 5. Regression model with 2 variables
The resulting model indicates a very strong correlation between the explanatory
variables and the endogenous variable, the multiple correlation coefficient in this
case being very close to 100%. Also, the linear model is valid, as confirmed by the
coefficient of determination (R square = 0,9984).
The resulting regression is globally significant, the Fisher test indicating an
F* much higher than the theoretical value (4,46), for a significance level of 0%.
The test of significance for the new estimators relative to the null value
indicates coefficients significantly different from zero, the value t-State being higher
than the theoretical value calculated for a significance level of α = 5% (2,31) at a
significance level below 5% (P-value). Virtually all estimators are different from
zero with a probability of nearly 100%. This is evidenced also by the confidence
intervals for the estimators obtained because none change their sign (no null values)
over the entire determined interval.
t= 0,1622x2 +261,9942x4
See below the table and graphical representation of greenhouse gas emissions
determined with the two models obtained (4 or 2 variables) compared to the actual
values:
Greenhouse gas Greenhouse gas emissions Greenhouse gas

Year emissions [1000 tons [1000 tons CO2 emissions [1000 tons
CO2 equivalent] equivalent] CO2 equivalent]
y y theo t1 y theo t1
2004 141.221 142.868 145.025
2005 141.314 140.065 141.730
2006 144.777 142.335 139.468
2007 142.804 145.827 136.011
2008 139.812 136.239 130.488
2009 119.917 117.224 121.027
2010 115.799 119.737 123.941
2011 121.514 123.756 124.769
2012 118.764 116.307 120.947
2013 116.626 118.542 120.786
Table 6. Real greenhouse gas emissions and adjusted greenhouse gas emissions
determined using the two regression models
Fig. 10. Greenhouse gas emissions in Romania, real and adjusted
5. Outliers
The purpose of this analysis is to identify the correlation between greenhouse gas
emissions and European oil prices, the latter being one of the most representative
benchmarks that define the demand for renewable energy worldwide.
Greenhouse gas Greenhouse gas

Oil prices
Year emissions [1000 tons emissions [1000 tons Deviations
[dollar/barrel]
CO2 equivalent] CO2 equivalent]
y x3 y theo ei
2004 141.221 38,26 142.024 -803
2005 141.314 54,57 137.442 3.872
2006 144.777 65,16 134.466 10.311
2007 142.804 72,44 132.421 10.383
2008 139.812 96,94 125.537 14.275
2009 119.917 61,74 135.427 -15.510
2010 115.799 79,61 130.407 -14.608
2011 121.514 111,26 121.514 0
2012 118.764 111,63 121.410 -2.646
2013 116.626 108,56 122.273 -5.647
Table 7. Data regarding greenhouse gas emissions and oil prices before eliminating
the outliers
Previously confirmed by fig. 8, an inverse determination is noted between the

two indicators so that a drop in oil prices will lead to increased emissions of
greenhouse gases. However, in this case there are certain "extreme" points that
deviate from the regression line, which will be highlighted and subsequently
removed using the following regression model.
Multiple R 0,5851
R Square 0,3423
Standard Error 10737
Observations 10
ANOVA
Significance
df SS MS F
F
Regression, SSE 1 479967588,2 479967588 4,1634 0,0756
Residual, SSR 8 922268711,4 115283589
Total, SST 9 1402236300
Standard Lower Upper

Coefficients t Stat P-value
Error 95% 95%
Intercept 152774 11529 13 0 126187 179361
Oilprices -280,9628 137,6977 -2,0404 0,0756 -598,4942 36,5686
Table 8. Regression model with 1 variable
The first part of the regression table highlights that oil prices explain the variation on
greenhouse gas emissions at a rate of only 34,23%.
The regression ANOVA table reflects a reduced global significance, as
follows:
- SSR is greater than the SSE
- Theoretical F (for α = 5% and degrees of freedom 1 and 8) = 5,32 which is
greater than the calculated value F* = 4,1634 for a significance level of 7,56%
(Significance F = 0,0756)
The third part of the table highlights our regression model identified based on
the data used, as follows: t= 152774 - 280,9628xt
The Student Ratio (t State) for this model has a value of 2,31 (for α = 5% and
8 degrees of freedom) and highlights that oil prices are not a significant explanatory
variable for the variation of greenhouse gas emissions. Also, P-value is greater than
5% which means that the probability of the variable xt taking a coefficient
significantly different from zero is below 95%, a fact emphasized also by the
confidence interval that has margins of different signs.
The above detailed indicators show the existence of so-called "outliers", as it
could be seen from the graph that shows the correlation. In order to precisely
identify them, calculations have been made in order to reveal the differences
between the value of the variable y resulting from the regression model (y theo) and
the actual values (see Table 7).
Fig. 11.Correlation between greenhouse gas emissions and oil prices in Romania
after eliminating the outliers
The graphic representation of the correlation reflects a higher concentration of

cloud points around the regression line and thus a stronger correlation between the
greenhouse gas emissions and European oil prices.
The model obtained shows a more significant overall regression of 81,64%,
and a stronger correlation between the two variables studied, of more than 90%.
Also, the sum of the squared regression factors (SSE) is much greater than the
sum of squared residual factors (SSR) and F*>Ftheo (6,61 for α = 5% and degrees
of freedom 1 and 5) for a significant overall regression starting from the threshold of
0,53%.
The regression model identified, namely: t= 162904 - 378,9609xt can be
considered good considering the significance of the variable xt given by the student
test and an almost 100% probability that its coefficient is significantly different from
zero. The confidence interval finishes with negative values on both sides.
6. Conclusions
The everyday activity of the modern man requires constant energy consumption. We
refer here not to each person's own energy, but to that external energy so necessary
in the daily life, be it in the form of economic, recreational or creative activities.
Unfortunately, we are still dependent on traditional energy sources, and while we
make every effort to get this energy from long-term, sustainable sources, the needs
of humanity are constantly expanding, due to a growing population but also due to
the economical development of more and more states.
To reflect the impact of human activity on the environment we used as the
analyzed variable greenhouse gas emissions. This was then placed in conjunction
with a range of macroeconomic indicators reflecting on the one hand the level of
development (GDP) and the energy necessary to produce it (energy intensity of the
economy), and on the other hand the efforts to extract energy from alternative
sources (that are also environmentally friendly - energy production from renewable
sources) and the cost of the one of the most traditional and well known energy
source (oil price).
The result of this analysis was that all the indicators selected are globally
significant in determining how much greenhouse gases are left in Romania’s
atmosphere. Going further into detail, we could observe some inconsistencies in the
influence of oil prices that seem to have a direct influence on the emissions (which
is invalid both logically and economically, considering that if oil prices decreased,
this should result in an increase in exhaust emissions due to increased demand for
this resource and the zero economic advantages for the use of renewable energy).
And indeed, the coefficient of the variable “oil prices” would go from negative to
positive, with a significant probability of being even zero. In this case it is clear that
the significance of regression is adversely affected by this variable. The same line of
reasoning applied, somewhat surprisingly, for the variable “energy production from
renewable sources”.
The constant Intercept had the same flaws, the result being a significant
increase of the functions validity if the curve obtained should pass through the origin.
The resulting model had a significance of above 99%, which validates the
claim that in Romania the emissions of greenhouse gases is explained in a very high
proportion by GDP and the energy intensity of the economy.
The presence of GDP is totally explainable among the crucial variables
because, although its impact on the environment is not directly quantifiable,
obtaining it requires a great deal of energy, which is the greater as GDP increases.
Given the fact that from the final equation oil prices were eliminated, we
attempted to make a further analysis considering only this variable and its influence
on greenhouse gas emissions but eliminating the outliers affecting the correlation.
The result was that removing a relatively small number of values from the initial
statistical series, the regression has become increasingly significant, being one of
obvious indirect influence. Nevertheless, a correlation of such low intensity between

these two essential indicators (and apparently very tight connected) was quite
surprising, demonstrating furthermore that the interconnections which govern the
factors with a significant impact on the environment are much more complex (and
sometimes unexpected) than we think.
7. References
Anghelache Constantin, Mitrut Cristina, (coordinators), Bugudui Elena, Deatcu

Catalin, Dumbrava Madalina. 2009. Econometrie. Teorie, sinteze si studii de
caz., Bucharest, 3rd Edition, Artifex.
Duguleană, Liliana. 2012. Statistica în cercetare. Brasov: Transylvania University
Press, PhD School.
Duguleană, Liliana. 2011. Metode de previziune economică. Brasov: Transilvania
University Press.
Petcu, Nicoleta. 2009. Statistica. Brasov: Transilvania University Press
http://ec.europa.eu/eurostat
Characteristics of LEADER program for

rural development in Romania
Klára - Dalma POLGÁR (DESZKE)1, Liliana DUGULEANĂ2
Abstract: The LEADER program is the fourth axis of European Agricultural Fund for Rural
Development (EAFRD). The paper presents its time scheduling, the importance for
development of the rural areas in European Union and in Romania, the measures of
financing and its double role as a component fund of EAFRD, and also as a delivery
mechanism for measures of the other three axes of EAFRD. The paper shows the way of
implementing LEADER program in Romania, during 2007-2013. The state of implementing
of the Romanian contribution from EAFRD is presented for the entire period and until the
end of 2014.
Key-words: LEADER program, financing measures, rural development, local initiatives.
1. Introduction
The Europeans are united in their quest to achieve common objectives and to
promote unity, peace and prosperity, so that the whole continent to become richer in
diversity of cultures, traditions and languages of the peoples of European Union.
Creating European Union contributes substantially to improving the quality of
life of local communities. The efficiency of this process is based on initiatives in the
local community and any kind of success of local initiative included in the process
of integration into the local development strategy of the community.
In perspective, the results can complement the public policies, making the
provisions of European Union Institutions becoming effective.
2. Objectives
The main objectives of this study are to shortly present the LEADER Program as
part of European Agricultural Fund for Rural Development (EAFRD), the
1
Doctoral student, TRANSILVANIA University of Braşov, polgarklaradalma@yahoo.com
2
250 Klára - Dalma POLGÁR (DESZKE), Liliana DUGULEANĂ
scheduling, its importance, its content and the double role of a financing fund but
also as a delivery mechanism for the measures of the other three axes of EAFRD.
The paper emphasizes the implementation of LEADER program in Romania,
its management and importance for the future economic development.
3. Methodology
The analysis of LEADER program from the beginning and the historical timing of
LEADER phases, is presented in a comparative way at EU level and at country level
for Romania.
The Romanian contribution from EAFRD was implemented with its own
three axes using the organizational structure financed by LEADER, the fourth axis.
The measures of the three axes were implemented in Romania by the projects in
rural areas within LEADER program.
The deepening of analysis for LEADER program shows the importance for
rural development in Romania. The structure of Rural Development Program at
national level offers the reasons for LEADER in following phase 2014-2020.
4.1. LEADER Program for Rural Development Funding in European Union
The LEADER program (Liaison Entre Actions pour le Développement de

l’Economie Rurale) begun in 1991. European Commission has designed it as a tool
of implementing the reforms of the Common Agricultural Policy, in the direction of
the sustainable rural communities’ development. It was a ‘Community initiative’
financed from the EU Structural Funds. Until now there were recorded five
generations of Leader program.
Timing of LEADER program comprises the following periods: LEADER I
during 1991-1993, LEADER II for 1994-1999, LEADER+ during 2000-2006,
followed by the periods 2007-2013 and 2014-2020.
LEADER I, in 1991, has experienced first time the ‘bottom-up’ approach of
the pilot initiative in the implementation of business plans and decisions on funding
at a local level for projects of rural development.
LEADER II started in 1994, as part of the strategy for rural areas in the
National Development Plans. The main objectives were acquisition of skills and
development the animation for business plans in the rural areas.
The funding round 2000-2006 through the LEADER+ was seen as a sub-
measure of the regional operational programs. During this time, the Member States
had had Leader programs as separate funds of EU level financing.
Characteristics of LEADER program for rural development in Romania 251
Starting with 2007, the LEADER approach was mainstreamed within in

national and regional rural development programs. LEADER program became part
of overall EU rural development policy. It was supported by the EU, alongside with
other rural development axes. From 2007, the European Agricultural Fund for Rural
Development (EAFRD) supports each Member State with financing for the
LEADER axis within the national financial envelopes
(http://ec.europa.eu/agriculture/rur/leaderplus/pdf/factsheet_en.pdf).
LEADER program is the fourth priority direction for financing European
Agricultural Fund for Rural Development - EAFRD and it consists in implementing
local development strategies for improving governance level administrative areas.
The LEADER approach is applicable in rural areas of the European Union.
More than half of the EU’s population lives in rural areas, representing over 90% of
the European Union territory (http://ec.europa.eu/agriculture/rurdev/index_ro.htm).
Regulation no. 1698/2005 of the European Council approved for the next
period 2007-2013 as each national rural development program to have a LEADER
component for implementing the local development strategies. The national
LEADER funds were used to develop Local Action Groups (LAGs). The LAGs
have elaborated the local development strategies, based on initiatives of local
communities and on the local development plan.
The local development strategies, are integrated in the local plans of rural
development, which contain “one or more of the three thematic axes, the
cooperation projects between them and the capacity building necessary for the
preparation of local development strategies and the animation of the territory”
(http://ec.europa.eu/agriculture/statistics/rural-development/2011/ch4_en.pdf).
The local plans of rural development are integrated in the National Strategy
Plans and then in their Rural Development Programs (RDP) which contain the 4
axes. The Member States have selected LAGs, based on their local development
strategies and in accordance with the priorities of their national strategies and Rural
Development Programs (RDP) for the mentioned period.
Projects which may be funded by the LEADER program are addressing the
following strategic directions:
• Increasing the competitiveness of the agricultural and forestry sector and related
processing industry in the territory (1st Axis),
• Improving the environment and countryside through support for land
management, increasing of rural SMEs competitiveness (2nd Axis),
• Enhancing the quality of life in rural areas and promoting diversification of
economic activities, ensuring preservation, promotion and enhancement of
natural and cultural capital of the territory (3rd Axis).
The Regulation of the European Council established a required minimum of
funding for each axis: 10% for Axis 1, 25% for Axis 2, 10% for Axis 3 and 5% for
Axis 4 of LEADER program. It also established for the new Member States a
phasing-in at least 2.5% is reserved for Axis 4 LEADER over the period, in order to
build the structure of LAGs for the program to become operational.
In this way the LEADER axis is a delivery mechanism of the measures of the
three axes. It overlaps with the minimum funding of these axes; the minimum
spending of 5% for the LEADER axis may correspond to the minimum of 10% of
expenditure of Axis 1.
The Axis 4 - LEADER program envisages the strategic objectives: promoting
the endogenous potential of territories and improving the local governance, through
the following measures corresponding to specific objectives:
- 41 Implementing local development strategies, including cooperation between
territories, (75% of 4th Axis budget) through the measures:
- Measure 411 - Competitiveness,
- Measure 412 - Environment/land management,
- Measure 413 - Quality of life/diversification,
corresponding to the three axes and the other specific measures:
- Measure 421 - Implementing cooperation projects and
- Measure 431 - Running the local action group, skills acquisition, animation:
- 431-1. Building public-private partnerships, (5%)
- 431-2. Functioning of LAGs, skills acquisition, territory animation (20%).
To the 43 measures of EAFRD proposed for the Member States, there were
added two additional measures specifically available for Bulgaria and Romania:
measure "143 -Provision of farm advisory and extension services in Bulgaria and
Romania" and measure "611 - Complements to Direct Payments for Bulgaria and
Romania".
Fig. 1. Structure of EAFRD, during 2007-2013

The importance accorded by the European Council in the structure of EAFRD is

presented in Figure 1, during the analyzed period.
RDP 2014-2020 emphasizes on cross-cutting nature of the LEADER program
and its innovative character. LEADER Program will support innovative projects in
line with the types of activities eligible for support from the RDP 2014-2020 and
local community development goals.
4.2. LEADER Program in Romania
Leader+ program was not available for Romania, during 2000-2006, being before
accession. There were established some partnerships based on Leader approach,
prior to the accession.
In Romania, the implementation of Leader program started with the Rural
Development Program (RDP) for the period 2007-2013. The Ministry of Agriculture
had implemented structures and administrative capacity for the Leader approach.
The selection of the Local Action Groups has been unfolded in two sessions in 2011
and 2012, based on the selection of their Local Development Strategies (LDS)
(http://ec.europa.eu/agriculture/rur/leaderplus/memberstates/romania.htm).
In Romania, during 2011-2012, 163 LAGs were accepted, covering
approximately 142.000 km², which represents 63% from the eligible territory and
58% from the eligible LEADER population (http://ec.europa.eu/agriculture/rural-
development-2014-2020/index_ro.htm).
In Romania rural area consists of all communes with its own local
administration and urban villages belonging to local government. Our country's
population density index is 94.8 inhabitants / km², and specifically in rural areas is
half of that amount (Vincze, 2000, p. 9). In reality, however, this difference is not so
precise, for the planning and development which require a measurable difference.
Projects funded for rural development meet the requirements of local
communities, identified by the operational structures of type LAG, through
appropriate measures specific to each county.
LAG's task is to develop rural development plan at the local level, which
should take into account the priorities set by the EU Common Agricultural Policy:
implementation of new procedures and technologies to increase competitiveness of
rural products and services, improving the quality of life in rural areas, adding value
to local products, identification of natural and cultural resources.
The funding of Local Development Plan has been secured by organizing local
beneficiaries’ sessions of project applications, such decisions on rural development
were all taken locally.
In Figure 2 it can be seen the authorized LAGs in 2011, with green colour and
in 2012, coloured yellow.
Fig. 2. LAGs map in Romania

(http://www.madr.ro/docs/dezvoltare-rurala/Axa_LEADER/harta-gal-romania-update-2013.pdf)
Juxtaposition of the word "rural" with agricultural sector, currently, has

acquired other meanings; focus shifted to other sectors of the economy.
LEADER has taken important steps towards diversification of rural
households under a plan developed and approved in advance by public and civilian
actors from the rural area.
4.3. Romanian Experience with Leader Program during 2007-2013
In Romania, the RDP contribution from EAFRD was 8.022 billions euro. At the
beginning of period, the Ministry of Agriculture and Rural Development has
established the structure for the four axes and the measures 511 and 611, as it
follows:
- 3.17 billions euro (40%) for improving the competitiveness of the agricultural and
forestry sector (1st Axis),
- 1.8 billions euro, (22.7%) for land management and environment (2nd Axis),
- 1.97 billions euro (25%) for diversification of economic activities (3rd Axis),
- 0.3 billions euro for measure 511 and 0.5 billions euro for measure 611 (both
approximate 10%),
- 0.188 billions euro (approximate 2.5%) of the RDP was allocated for LEADER
program to support the rural development projects of local communities in public-
private partnerships (4th Axis).
The measures "511 – Technical assistance" and "611 - Complements to Direct
Payments" are separately emphasized on the chart from Figure 3, which shows the
effective structure of RDP on Axes, at the end of 2014.
At the end of period, the effective structure was that presented in Figure 3.
Fig. 3. Structure of RDP in Romania, during 2007-2013
The differences between the effective structure and the programmed one
prove the importance of continuing the implementing processes of Leader approach.
Meantime, the structure of Romanian contribution of EAFRD can be
compared with the structure of EAFRD during 2007-2013, from Figure 1. The
differences emphasized the corresponding fields of the axes which characterize the
rural profile of Romania.
5. Conclusions
Romanian rural areas have some specificity in the rural economy, demographic
features, of health, education, culture etc. (Bădescu, Cucu Oancea, i e tean,
2009) which is a major cause of the disparities between town and countryside.
The optimal solution to reduce these disparities is to elaborate of a joint
development strategy, whose starting point is to identify local needs by involving
local people. This could generate a dynamic development that on long term plays an
important role. Exactly, the LEADER program supports counties in Romania,
enabling the rural population to fulfil their ideas, for the place where they live to
become more viable (http://ec.europa.eu/agriculture/statistics/rural-
development/2013/index_en.htm). In addition to the jobs creation and providing
local food, LEADER program aims protection the environment, preserving cultural
values and images of rural territory and traditions of particular rural areas.
The LEADER scope target is micro-region as a new administrative unit,
whose establishment may be an impulse for the development of even the most
backward areas of the country.
RDP for 2014-2020 established new coordinates of rural development based
on innovation, on integrated approach of projects, networking and cooperation
between areas, and local financing and management. Transferability and

sustainability are two keywords for the new LEADER development phase
(http://ec.europa.eu/agriculture/rural-development-2014-2020/index_ro.htm).
The LEADER program can achieve the most important objectives of
territorial development in Romania and the European Union.
6. References
Bădescu, Ilie, Cucu Oancea, Ozana and Şişeştean, Gh. (2009). Tratat de sociologie
rurală. Bucureşti: Ed. Mica Valahie.
Vincze, Maria. 2000. Dezvoltarea regională şi rurală. Idei şi practici. Cluj-Napoca:
Presa Universitară Clujeană.
Agriculture and rural development. Available at:
http://ec.europa.eu/agriculture/rurdev/index_ro.htm. Accessed on: 30.03.2015.
European Commission (2006). “The LEADER approach. A basic guide”. Available
at: http://ec.europa.eu/agriculture/rur/leaderplus/pdf/factsheet_en.pdf.
European Database of Leader+ Good Practices Available at:
http://ec.europa.eu/agriculture/rur/leaderplus/gpdb_en.htm. Accessed on:
30.03.2015.
Regulation nr. 1305/2013 of European Parliament and Council, Official Journal of
European Union, 20.12.2013, L 347/494, art. 31, p. 7
Romanian Yearbook 2013, table 2.31 (2011), Population and Housing Census,
Available at: www.insse.ro, Accessed on 28.03.2015.
Rural Development in the European Union - Statistical and economic information
2013. Available at: http://ec.europa.eu/agriculture/statistics/rural-
development/2013/index_en.htm. Accessed on: 30.03.2015.
“Socio-economic Analysis of Romanian Space”. Available at:
http://www.madr.ro/docs/dezvoltare-rurala/Descrierea_generala_a_situatiei_
economice_actuale_4_11_2013.pdf. Accessed on: 30.03.2015.
http://ec.europa.eu/agriculture/rur/leaderplus/memberstates/romania.htm. Accessed
on: 30.03.2015.
http://ec.europa.eu/agriculture/statistics/rural-development/2011/ch4_en.pdf.
http://ec.europa.eu/agriculture/rural-development-2014-2020/index_ro.htm.
http://enrd.ec.europa.eu/enrd-static/leader/en/leader_en.html. Accessed on:
30.03.2015.
http://ec.europa.eu/agriculture/statistics/rural-development/2013/ ch36_ en.pdf.
http://www.madr.ro/docs/dezvoltare-rurala/Axa_LEADER/harta-gal-romania-
update-2013.pdf. Accessed on: 30.03.2015.
Toward a macro-regional strategy for the Carpathians

Bianca TESCASIU1
Abstract: One of the most important European Policy is the Regional Policy. With the
deepening of integrationist European Regional Policy, its objectives have changed and
oriented according to new priorities. One of these priorities determined the appearance of
new concepts, such as the “macro-region” one. In order to contribute to the development of
regions that exceeds the national borders, European Union focused on new elements
regarding the over-national strategies – integrated strategies sustained by different states.
This article tries to motivate the necessity of developing a macro-regional strategy for the
Carpathians and to open some technical discussion about the situation of implementing such
a strategy.
Key-words: macro-region, over-national governance, regional strategy, integrated

strategy.
1. Introduction
The European Union’s Regional Policy represents one of the most representative
European policies. During its evolution this policy knew new themes of researching,
new directions of approaches, because of the challenging regional context.
Since the Treaty of Rome European countries declared the Community’s
objective to achieve a harmonious development by reducing disparities between
regions. Regional problem was better taken into account with the Single European
Act (1986), which introduced the concept of economic and social cohesion. This
concept - fundamental for the EU - defines the declared objective of the Community
to reduce the gaps between the member states.
With the deepening of integrationist European Regional Policy, the objectives
have changed and orientated according to new priorities (Chiţu, 2006). In terms of
socio-economic and cultural aspects it implies the existence of specific macro-
regions. This orientation results from the fact that macro-regions include regions
from different countries with different levels of development, with different social
problems and with cultural differences.
1
Transilvania University of Braşov, bianca.tescasiu@unitbv.ro
258 Bianca TESCASIU
2. Objectives
Europe 2020 strategy - to promote smart, sustainable and inclusive grow up - set
five objectives (relating to employment, innovation, climate change, education and
poverty) that help to maximize the expected useful effects. Achieving these
objectives it requires a greater involvement of the regions through a better
mobilization of regional and local authorities.
In this context, from a scientific perspective two issues could be highlighted for
analysis:
a) New directions - oriented towards regional strategies
One of the new guidelines on regional strategies has been the creation of macro
region and its specific strategies. Regions involved in a macro-region become
more involved in their own development.
b) Institutional aspects
Aspects of effective institutional mechanisms are increasingly concerned over
national and supranational authorities, since it is known that only an efficient
institutional architecture can support the implementation of strategies, even more so
those of supranational dimension.
Illustrative in this is the introduction of an additional criterion for accession to
the Madrid (1995), criterion according to which candidate-states must have the
institutional capacity to support its accession to the European Union.
This article focuses on main issues regarding a possible macro-regional
strategy for The Carpathians.
3. Material and Methods

3.1. Considerations upon the European Cooperation
At the European Union level, the cooperation has one of the most significant roles in
the Regional Policy. The main forms of the cooperation between regions and
countries consist in the main following directions:
1) European Territorial Cooperation
• Cross-border cooperation – which take into consideration the challenges
from the border regions with the development of European Union
• Trans-national cooperation – which creates a new type of cooperation, by
adding an important extra European dimension to the regional
development, through
Toward a macro-regional strategy for the Carpathians 259
¾ Innovation, especially networks of universities, research institutions,

SMEs;
¾ Environment, especially water resources, rivers, lakes, sea;
¾ Accessibility, including telecommunications, and in particular the
completion of networks;
¾ Sustainable urban development, especially polycentric development.
• Inter-regional cooperation – in order to create networks to develop good
practice and facilitate the exchange and transfer of experience by successful
regions
• Regional development co-operation programmes outside EU - instruments
available to support regional development along the EU's external borders
with countries which are either candidates for EU membership or potential
candidates, and also with so-called third countries
• European Grouping of European cooperation – which allows to set up
cooperation between regional and national authorities by grouping in legal
entities
2) Macro-regional strategies - integrated strategies for regions that include areas
from different countries located in the same geographical space (The Danube
Sea Strategy, The Baltic Sea Strategy, The alpine Region Strategy, The
Adriatic and The Ionian Strategy)
3) The international cooperation - programmes of cooperation with non-EU
countries (Brazil, China, Japan, Ukraine, Russian Federation) and
international organizations (World Bank, United Nations, Forum of Global
Association of Regions)
3.2. European Macro-Regional Strategies
Until now, European Union had some preoccupation on macro-regional strategies.

As a result, 4 macro-regional strategies were created and implemented:
1. The Danube Region Strategy
2. The Baltic Sea Region Strategy (EUSBSR)
3. The Alpine Region Strategy (EUSALP)
4. The Adriatic and Ionic Strategy (EUSAIR)
To express the concerning for the macro-regional strategies, the European
Commission elaborated a document – “Report From The Commission to the
European Parliament, The Council, The European Economic and Social Committee
and The Committee of the Regions - concerning the governance of macro-regional
strategies” (May, 2014),
260 Bianca TESCASIU
In this document the Commission points the importance of a better governance

to improve integrated strategies of macro-regional cooperation.
According to the Commission, the European countries should take into
consideration the following main aspects, in order to establish macro-regional
strategies:
a) Using the good practices from the current macro-regional strategies,
already implemented by European Union (as added value for EU)
b) Establishing a much more complete meaning for the “better governance”
concept (using the capacity of regional institutions and the smarter use
of the existing funds)
c) Establishing levels of governance for the next strategies
Political leadership Coordination Implementation

and ownership (Who is (Who should lead
(Who gives the responsible for day-to-day
strategic direction) overall implementation)
administrative
coordination)
Fig. 1. Level of governance for macro-regional strategies
At the end of this process the over-national institutional structure is able to lead
to a proper strategy implementation.
4. Results and discussions. Considerations upon the Carpathian macro-regional

issues
Carpathian Region involves the geographical area with a length of 1500 km along
the following countries: Austria, Czech Republic, Slovakia, Poland, Hungary,
Ukraine, Romania and Serbia.
This region has made the object of the international concerns, but not for
integrated strategies - strategies macro-regional type - but especially in terms of
tourism development. The Carpathian Convention may be mentioned in this regard.
The objectives included in the Carpathian Convention are related to the
following:
1 favourable conditions for the development of sustainable tourism products

and services, including the promotion of the Carpathians as a single
destination
2 development of innovative tourism management, integrating the needs of
local communities and maintain natural and cultural capital
3 development of a continuous process of awareness, education and training at
all levels for sustainable tourism. Nowadays, it is quite acknowledged the fact
that tourism must develop in a controlled and sustainable manner which must
be materialized in a well-established plan (Albu, 2005, pag. 160).
4 biodiversity conservation in The Carpathians
5 the arrangement of the territory
The Carpathian Convention is a sub-regional strategy which has been ratified by all
seven signatory states, each state will adopt plans for its implementation.
A macro-regional strategy assumes that the elements that compose it aims to
integrate several strategic areas: economic, social, cultural, energy, transport,
environment, sustainable development (Epuran, 2006). The macro-regional
approach subordinate general objectives such as helping economies with low-
carbon dioxide to climate change.
In order to develop such a strategy and its effective implementation requires
an efficient institutional system, a system that satisfies the requirements of the
decision at regional and macro-region level (a multi-level governance system). In
this respect, a system must be designed to take into account both the interests of the
regional and macro-region.
Based on this, we appreciate that the Carpathian Region has some features
that could raise the difficulty of developing regional strategies. The main difficulty
is that the countries that compose the macro-region are heterogeneous in terms of
level of development. It includes both developed countries (Austria, Czech
Republic, Slovakia, Poland and Hungary) and developing countries (Romania,
Ukraine and Serbia). In addition, not all countries that compose it are European
Union member-states, even more, some are not even candidate countries. These
issues can hinder the implementation of a strategy in this macro-region. Examples of
good practice at European level have shown, however, that in terms of heterogeneity
can create and implement regional strategies.
Another difficulty arises from the fact that the European Union's experience
shows that across regions Convergence objectives, despite Community and national
concerns, have been achieved, but with certain limitations. It can be appreciated that
certain regions responsiveness is not always expected, leading to the necessity of
creating strategies to consider in greater local and regional attitude. Also, to improve
the implementation at local and regional level is the need for better coordination
between levels involved (community level - national level - regional and local) (Fig. 2)
262 Bianca TESCASIU
Community level
National level
Regional/local
level
National level
Regional/local
level
Fig. 2. Levels involved in a macro-regional strategy development
These levels of the macro-regional governance system is sustained by the

following principles:
- Integration
- Cooperation
- Coordination
- Partnership
The current stage shows us the fact that despite of the theoretical approach about
the Regional Policy, the inter-regional cooperation is not so well approached in

theory. It could be specified the fact that the European Commission was preoccupied
to establish some general directions in documents, such as: „European Territorial
Cooperation – Building Bridges Between People”, „Reports of the Governance of
Macro-regional Strategies”)
5. Conclusions -
Elements needed to build a macro-regional strategy in the Carpathians
Starting from the existing macro-regional strategies and knowing the specific
elements of The Carpathian region listed above, we can appreciate that a Macro-
regional Strategy for the Carpathians would be a good initiative. Its main goals
should cover benefits, such as:
- Added value for the region – without necessary creating new institutions or
new funds
- Development of Trans-European Networks
- Improvements of environment aspects
- Development of other European Politics inter-related with regional matters
- A better integration and coordination
In order to accomplish the strategy objectives, the following methods and
instruments of scientific investigation should be used:
– Documentary analysis based on secondary data in order to obtain some
conclusions about the current approaches of the territorial cooperation
between regions in European Union and the level of institutional
involvement in the macro-regional European strategies.
– Quantitative research using the method of survey among the employees
from the institutions involved in the regional matters, with the objective to
find the potential impact of a macro-regional strategy in the different
regions involved
– Qualitative marketing research using the method of focus-group, which
should approach to different categories of groups – specialists from the
academic environment, representatives of the business environment and
representatives of public authorities.
264 Bianca TESCASIU
6. References
Albu, Ruxandra G. 2005. Managementul dezvoltării turistice durabile la nivel

regional. Braşov: Infomarket.
Chiţu, Ioana Bianca. 2006. Dezvoltarea comerţului din mediul rural în perspectiva
integrării României în Uniunea Europeană. Braşov: Ed. Universităţii"
Transilvania".
Epuran, Gh. „Strategia de dezvoltare durabilă în perioada postaderare”. Analiză şi
prospectivă economică, ASE Bucuresti, nr. 6/2006, 102-110.
Conventia Carpaţilor
(http://documents.rec. org/publications/ carpathian_handbook_romanian.pdf)
Report from the Commission to the European Parliament, the Council, the
European Economic and Social Committee and the Committee of the Regions
- concerning the added value of macro-regional strategies - 27.06.2013
(http://ec.europa.eu/regional_policy/sources/docoffic/official/communic/baltic
/com_added_value_macro_region_strategy_en.pdf)
Report from the Commission to the European Parliament, the Council, the
European Economic and Social Committee and the Committee of the Regions
concerning the governance of macro-regional strategies - 20.05.2014
(http://ec.europa.eu/regional_policy/sources/cooperate/macro_region_strategy
/pdf/gov_macro_strat_en.pdf, )
ECONOMIC
DATA PROCESSING
Fuzzy logic marketing models for sustainable

development
Ioan Constantin ENACHE1
Abstract: Fuzzy logic offers a different approach to describe economic and marketing
phenomena. By providing a replacement for crisp values the fuzzy sets proved to be efficient
alternatives for customer behaviour analysis. These advantages can provide a new way to
address sustainable development issues. The present paper aims at presenting the main
characteristics of fuzzy models and their main advantages. Evidence on how to implement a
fuzzy model and what are its strong points are provided based on previous research and
published scientific papers. It is concluded that fuzzy logic gives a different view on a wide
range of topics.
Key-words: fuzzy logic, marketing models, sustainable development.
1. Introduction
Fuzzy logic gained an important role in the scientific field of marketing as soon as
the advantages of working with membership functions instead of crisp values
became obvious. The best ways to use fuzzy logic and fuzzy reasoning proved to be
in relation with marketing models. Marketing models are the final step in a
marketing research initiative (Lilien et al., 1992). The models can be used to better
understand marketing variables like customer behaviour and customer satisfaction,
to model response for price or product policies or to provide useful information
regarding marketing strategies.
The synergy between fuzzy logic and marketing models can deliver powerful
tools for marketers. The advantages of not needing crisp values, of using if-the rules
and the ability to plot results in a relevant manner led to a new kind of market
analysis – fuzzy logic marketing models. These new models are able to provide
reliable and sustainable tools for business development.
By using marketing models in business development the institutions can
strengthen their capacity to respond to market fluctuations and they can increase
their flexibility in relation to market changes. Combining fuzzy logic with marketing
models can further improve these advantages.
1
Transilvania University of Braşov, e-mail: ioan-constantin.enache@unitbv.ro
268 Ioan Constantin ENACHE
Since Zadeh presented the fuzzy sets for the first time (Zadeh, 1965) the fuzzy
theory proved to be an extension of the classical crisp theory and provided a
background for changing a bivalent, boolean view on systems to a better,
multivalent perspective. The main advantage of the fuzzy sets is the ability to use
linguistic formulations. The basis of this ability is the use of the if-then rules
(Jantzen, 2007).
The if-then rules are using fuzzified variables, membership functions. The
membership function can have different shapes, the most common ones being
triangular, trapezoidal, gaussian and singleton (Enache, 2012). An example of
gaussian membership functions is presented in figure 1. The membership functions
are being processed by the if-then rules in a new fuzzy set that describes the
obtained result. The result can be achieved by using different methods like Mamdani
(Mamdani, 1977, Mamdani 1976) or Takagi-Sugeno (Sugeno, 1985). For an
educational marketing research, the if-then rules and their result is presented in
figure 2.
In the field of marketing, fuzzy logic applications were deployed in various
research situations. A strong contribution was made in customer behaviour and
customer satisfaction where it has been proven that a fuzzy system can model
customer behaviour (Martinez-Lopez, Casillas, 2009; Casillas, Martinez-Lopez,
2009) and the interactions with on-line shops (Casillas, Martinez-Lopez, 2004). In
relation with customer satisfaction the fuzzy logic offered different perspectives on
the correlation between needs and product and service attributes (Ertay, Kahraman,
1999), on the SERVQUAL analysis (Abdolvand, Taghipouryan, 2011) and its
applications (Afkham et al., 2012), and on the evaluation (Deng, 2008) and
improvement of the quality system (Temponi et al., 1999). By offering a method to
deal with natural language statements the fuzzy logic had several important
contributions to product and service evaluation (Chen et al., 2011; Maruvada,
Bellamkonda, 2010) and group analysis (Cheng et al., 2011). Other important
contribution to marketing field were made in customer segmentation (Ou et al.,
2009), decision planning (Weber, Sun, 2000; Li, Li, 2010), strategy design (Li et al.,
2002), product policy (Susanto et al., 2006; Vasant, 2004), price policy (Xiong,
2010; Sadjadi, 2010) or marketing mix (Aly, Vrana, 2005).
Sustainable development became an economic topic as soon as the academia
realized the importance of providing efficient ways to promote and sustain growth
(Hopwood et al., 2005). It is argued that the change should happen on different
levels and sustain a shift in behaviour and attitudes (Dobson, 2007). Sustainable
development marketing approach elicits a great emphasis on imperfect knowledge
attached to marketing decisions (van Dam, Apeldorn, 1996) and new topics, like
sustainable marketing orientation (Mitchell et al., 2010) or sustainable competitive
Fuzzy logic marketing models for sustainable development 269
advantage (Vorhies, Morgan, 2005), are expanding this new field. In relation with
these new demands, the use of fuzzy logic can provide a better way to increase the
information gathered from a marketing analysis.
3. Methodology
In order to provide a better outlook of the advantages provided by the fuzzy logic
application on marketing analysis two fuzzy logic marketing models are going to be
analysed. First one uses the fuzzy applications in the educational marketing field
(Enache, 2012). The second one is developing a framework to understand the
customer perception on a restaurant (Enache, Gruia, 2015). Both papers used o
combination of descriptive and inference statistic to set a basis for the fuzzy model
and both reported relevant information gathered by this type of modelling.
4. Discussion and conclusions
First step in creating a fuzzy logic model is to transform the linguistic variables in
membership functions able to grasp the meaning of the variable in a fuzzy way.
Each membership function represents a linguistic variable, and defines a fuzzy set
associated with a certain parameter. The membership function can have different
shapes according to the research needs. In figure 1 five gaussian membership
functions are describing the students’ perception on tuition fees (Enache, 2012).
Fig. 1. Membership functions (Enache, 2012)

Having defined the fuzzy sets it becomes necessary to define the if-then rules
that describe the interaction between the fuzzy sets. If the antecedent proposition has
more than one part, a fuzzy operator is used to create the connection. Several
solutions can be deployed at this point; the most common ones are max for “and”
operator and min for “or” operator.
The antecedent proposition will shape the consequent using rules like maxmin
or maxprod. Finally, all the consequent propositions are aggregated in a final fuzzy
set. The final step of this process is to transform this fuzzy number in a crisp value,
using different techniques like centroid, bisector, middle of the maximum, smallest
of the maximum or largest of the maximum. In figure 2 a fifteen rules fuzzy model
is presented. The aggregation method is max and min, and the defuzzification
technique is centroid.
Fig. 2. If-then rules plot (Enache, 2012)
All the data obtained with a fuzzy model can be plotted in a three dimensional space
that covers all the possibilities for two input variables and one output variable. The
plot is describing all the possible situations and all the interactions that occur
between these three variables. The dependent variable uses the z axis, while the
other two are represented on x and y axes. All the axes are defined based on the
membership functions describing the phenomena. The shape of the plot is given by
the interactions modelled by the fuzzy operators. In figure 3 and figure 4 several
interactions can be observed. Figure 3 plots the connection between quality and
tuition fees perceptions, as independent variables, on student satisfaction, as
dependent variable. In figure 4 it is represented an interaction between perception on
food taste and food presentation and their impact on restaurant perception.
Fig. 3. Interaction between quality and tuition fees perceptions and student
satisfaction (Enache, 2012)
By comparing the two fuzzy models representations it becomes obvious that the
outcomes are different. The first model is describing a situation where the maximum
for the dependent variable has more chances to be obtained. This first model is
describing a situation where it is advantageous to use a step-by-step strategy designed
to move the institution from a lower to a higher plateau. The main drawback in this
situation is that the results are detectable only when a critical point is reached. The
second model is describing a phenomenon that is best to tackle in a continuous manner.
The effort invested in improving the independent variables has an immediate result.
The main drawback of this situation is the difficulty of reaching the peak.
But there are several similarities also. Both models have obvious plateaux that
need to be overcome. These plateaux are generated by a lack of correlation between the
perceptions. The figure 3 is presenting an extreme example of the impact of the
correlation lag. Another common characteristic is that the models are reaching a peak that
is not the maximum as described by the fuzzy set. This situation should imply that
business decisions are going to help improve the business situation only to a certain point.
Fig. 4. Fuzzy correlation between food taste, food presentation and restaurant
perception (Enache, Gruia, 2015)
For a sustainable development approach the fuzzy logic marketing models offers a
different perspective. This model category has several advantages. One of the most
important is that it offers a clear, step by step method to deal with linguistic variables.
For business intelligence this is an advantage that can dramatically improve the data
analysis. By using flexible operators the fuzzy logic models are able to adapt to various
market or customer situations. But probably the main advantage is the ability to plot the
interactions and the results in a relevant manner. The fuzzy logic marketing models are a
powerful tool for a sustainable development of companies and institutions because it
encapsulates strong marketing model conceptualisation in a linguistic and reliable
presentation.
Acknowledgements
This work was partially supported by the strategic grant POSDRU/159/1.5/S/137070

(2014) of the Ministry of Labour, Family and Social Protection, Romania, co-financed
by the European Social Fund – Investing in People, within the Sectoral Operational
Programme Human Resources Development 2007-2013.
5. References
Abdolvand, Mohammad Ali, Taghipouryan and Mohammad Javad. 2011.

“Evaluation of Customs Service Quality by Using Fuzzy SERVQUAL and
Fuzzy MCDM.” American Journal of Scientific Research, 35: 88-103.
Afkham, Leili, Abdi, Farshid, Komijan and Alireza Rashidi. 2012. “Evaluation of
service quality by using fuzzy MCDM: A case study in Iranian health-
centers.” Management Science Letters, 2: 291-300.
Aly, Shady, and Ivan Vrana. 2005. “Fuzzy expert marketing-mix model.”
Agricultural Economics, 51: 69-79.
Casillas, Jorge, and Francisco Martinez-Lopez. 2004. “Fuzzy association for
estimating consumer behavior models and their application to explaining trust
in internet shopping.” Fuzzy Economic Review, 10.
Casillas, Jorge and Francisco Martinez-Lopez. 2009. “Mining uncertain data with
multiobjective genetic fuzzy systems to be applied in consumer behavior
modeling.” Expert Systems with Applications, 36: 1646-1659.
Chen, Yuan Ho, Ming-Lang Tseng, and Ru-Jen Lin. 2011. “Evaluating the customer
perceptions on in-flight service quality.” African Journal of Business
Management, 5: 2854-2864.
Cheng, Yi-Lin, Lin, Yu-Huei and Tseng, Ming-Lang. 2011. “Analysis of Hotel
Service Quality Perceptions using Fuzzy TOPSIS.” Progress in Business
Innovation & Technology Management, 1: 90-109.
van Dam, Ynte and Paul Apeldoorn. 1996. “Sustainable Marketing.” Journal of
Macromarketing, 16: 45-56.
Deng, Wei Jaw. 2008. “Fuzzy importance-performance analysis for determining the
critical service attributes.” International Journal of Service Industry
Management, 19: 252-270.
Dobson, Andrew. 2007. “Environmental Citizenship: Towards Sustainable
Development.” Sustainable Development, 15: 276-285.
Enache, Ioan-Constantin. 2012. “Modelarea în marketingul educaţional. Aplicaţie
pentru învăţământul superior românesc.” Phd Dissertation.
Enache, Ioan-Constantin and Gruia, Romulus. 2015. Understanding the restaurants
customers. Food choices and business implications. Accepted for publication.
Ertay, Tijen and Cengiz Kahraman. 2007. “Evaluation of Design Requirements
Using Fuzzy Outranking Methods.” International Journal of Intelligent
Systems, 22: 1229-1250.
Hopwood, Bill, Mary Mellor, and Geoff O’Brien. 2005. “Sustainable development:
mapping different approaches.” Sustainable development, 13: 38-52.
Jantzen, Jan. 2007. “Foundations of fuzzy control.” John Wiley & Sons, Ltd.
Li, Shuliang, Barry Davies, John Edwards, Russell Kinman, and Yanging Duan.
2002. “Integrating group delphi, fuzzy logic and expert systems for marketing
strategy development: the hybridization and its effectiveness.” Marketing
Intelligence & Planning, 20(5): 273-284.
Li, Shuliang and Jim Zheng Li. 2010. “Agents International: Integration of multiple
agents, simulation, knowledge bases and fuzzy logic for international
marketing decision making.” Expert Systems with Applications, 37: 580-587.
Lilien, Gary, Philip Kotler, and Sridhar Moorthy. 1992. Marketing models. New
Jersey: Prentice-Hall.
Mamdani, Ebrahim. 1976. “Advances in the linguistic synthesis of fuzzy
controllers.” International Journal of Man-Machine Studies, 8(6):669-678.
Mamdani, Ebrahim. 1977. “Application of fuzzy logic to approximate reasoning
using linguistic synthesis.” Computers IEEE Transactions on, C-26(12):
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Martinez-Lopez, Francisco and Jorge Casillas. 2009. “Marketing intelligent systems
for consumer behavior modeling by a descriptive induction approach based on
Genetic Fuzzy Systems.” Industrial Marketing Management, 38: 714-731.
Maruvada, Devi Prasad and Bellamkonda, Raja Shekhar. 2010. “Analyzing the
Passenger Service Quality of the Indian Railways using Railqual: Examining
the applicability of Fuzzy Logic.” International Journal of Innovation,
Management and Technology, 1: 478-482.
Mitchell, Robert, Ben Wooliscroft, and James Higham. 2010. “Sustainable Market
Orientation: A New approach to Managing Marketing Strategy.” Journal of
Macromarketing, 30 (2): 160-170.
Ou, Chin-Wen, Shuo-Yan Chou, and Yao-Hui Chang. 2009. “Using a strategy-
aligned fuzzy competitive analysis approach for market segment evaluation
and selection.” Expert Systems with Applications, 36: 527-541.
Sadjadi, Seyed. 2010. “Fuzzy pricing and marketing planning model: A possibilistic
geometric programming approach.” Expert Systems with Applications, 37:
3392-3397.
Sugeno, Michio. 1985. “Industrial applications of fuzzy control.” Elsevier Science
Pub. Co.
Susanto, Sani, Vasant, Pandian, Bhattacharya, Arijit and Fransiscus Rian Pratiko.
2006. “Fuzzy LP with a Non-Linear MF for Product-Mix Solution: A Case-
Based Re-modelling and Solution.” Proceedings of the 9th Joint Conference
on Information Science.
Temponi, Cecilia, John Yen, and Amos Tiao. 1999. “House of quality: a fuzzy
logic-based requirements analysis.” European Journal of Operational
Research, 117: 340-354.
Vasant, Pandian. 2004. “Optimization in Product Mix Problem Using Fuzzy Linear
Programming.” Department of Mathematics, American Degree Program,
Available at www.generation5.org/content/2004/data/productMix.pdf.
Retrieved in 20.03.2015.
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for Sustainable Competitive Advantage.” Journal of Marketing, 69: 80-94.
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for Marketing Decision Support.” International Journal of Intelligent
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Personalization in E-commerce using profiles

similarity
Radu LIXANDROIU1, Cătălin MAICAN2
Abstract: Understanding the use needs is one of the key factors of an online project. If these
needs are quickly identified, the customer can be offered the best products immediately.
Creating profiles allows the identification and communication of needs efficiently and
effectively. Basically if these profiles are well established, it remains to identify just which is
the closest profile to the online client. Profiling is a useful tool in marketing, increasing the
functionality of sales application. These tools fall into customer-oriented tools, together with
the analytical techniques ones and those suggesting the desired products.
Key-words: web personalization, customer profile, e-commerce.
1. Introduction
Before the sales process takes place, an important step can be established consisting
in understanding the user needs on different levels or purposes. There are many
ways to identify user needs, such as interviews, discussions or supervision.
However, an increasingly important role has lately been represented by the use of
client profiles. (Chen Yi-Shin et al.,), (Calabria 2004)
This article aims to make an analysis regarding the methods for creating and
analysing client profiles.
Profiles are human archetypes that are characterized by the specific needs of
online customers, which may be extended to a group of users based on common
goals or personal characteristics. User profiles identify motivations and goals that
lead them to a certain behavior. Although profiles are fiction, they identify
characteristics of real users. (Schubert), (Sin Liem Gai et al.), (Calabria 2004)
2. The advantages of using profiles in online marketing
New Internet marketing techniques based on customer profiles focus on goal,

customizing the information for each user groups.(Trajkova, Joana et al.)
1
Transilvania University of Braşov, lixi.radu@unitbv.ro
2
Transilvania University of Braşov, maican@unitbv.ro
276 Radu LIXANDROIU, Catalin MAICAN
Among the benefits of using customer profiles in Internet marketing, we may

identify:
• The users’ objectives are grouped, with a focus on client profile;
• Marketing focuses only on the creation and design of a set of representative
profiles for a large number of customers, quickly identifying common
needs;
• The efforts are concentrated only around client profiles;
• The evaluation can be done only to the user profile, thus lowering costs.
It often happens that products or services do not meet customer needs, which
is why the act of purchasing is not completed successfully. This is because customer
expectations are not correctly predicted by the sales team the person interacts
with.[8]
The analysis focuses on user profiles and their activities. Usually this is done
by recording options for certain criteria that the customers provide by means of
interviews or observations.
Many believe that customer profiles are similar to market segmentation, but
still there are some notable differences, the most important one being that marketing
segmentation is not based on needs identified for online applications. For example,
marketing segmentation identifies that a 30-35 years person wants to buy a travel
insurance online, while the corresponding customer profile tells us that people prefer
to pay cheaper for the insurance using a credit card.
Market segmentation is a very important step in profiling, but it is only an
intermediate stage, when the data are not refined.( Degemmis et al.)
3. Creating a small number of representative customer profiles
The first question that arises here is: is a small number of profiles enough to cover
the needs of a large population? Assuming a large population and analysing each
individual’s needs, we will reach a wide variety of desires without priorities.
Profiles having more levels of details remove confusion created by market
segmentation. They allow users to identify discrete sets and create unique designs
that represent each group.
3.1. Data analysis to identify profiles
A very important element is the written information of each user, such as their
location, age, gender, hobbies etc. On the other hand, a crucial role is the "wish list"
which supplements the information already controlled about the client.
Personalization in E-commerce using profiles similarity 277
In practice, there is no ideal number of profiles that can represent the

population of clients better. However, most applications based on profiles use a
relatively small number of profiles (considering that are sufficient 4-5 profiles). Too
many profiles can create confusion.
Customer Profiles are designed to react to a product or service. Basically, they
help in achieving the best possible customer advisors related to their preferences, as
they are closely related to the generation of audience, with focus on different goals
and customer scenarios.(Trajkova et al.), (Butler 2013).
For defining the customer profile we believe that an important factor is the
purpose and details regarding the act of purchase.
3.2. The main factors when creating a client profile are:
• Purchases already made by the client - for example, an application may

analyse products ordered by someone and then suggesting that client should buy
other products already bought by other people who acquired the original product.
• Wish lists - Many e-commerce sites allow you to create wish lists which can
then be saved, viewed later or distributed to people you know.
• Analysing the browsing history - for example, Amazon stores all browsing
data of its customers - what products were added to cart, what products were
added in the Wish list or abandoned baskets (not paid)
• Possibility of creating top members – these users receive certain discounts or
promotions. In this case, it was noticed that, by being granted additional benefits,
maybe financial ones, some customers have ordered more than in the period
when they were not classified as top customers. Also, they were more willing to
provide additional personal information to complete their user profile and thus
get better sales advice.
• Completion of personal data by registering on the site - in addition to a
number of traditional information such as personal identification or address (for
delivery for online stores), various online applications may require additional
information regarding personal preferences, popular product categories
etc.(Schiaffi et al.)
• Rating and Review – they bring more value to the customer’s personal profile,
suggesting exactly what they want. (Butler 2013)
The sale based on customer profile is successful, but has better results when
the client’s personal profile is completed by the customer himself. This helps the
clients get what they want in a shorter time, making the buying decision much
easier.
Basically, in online applications, the sales services are oriented towards
customer wishes. They become more useful as more clients provide personal data,
do more orders or browse online. The worst case-scenario is the lack of any
information about the client, which leads to the inability to offer any suggestions
(Bajarin 2011).
The whole process of customizing the online information is based on the idea
that it is more useful to suggest specific products or services to the clients and not
wait for them to look for these products/services using search engines available in
the e-commerce site.
All the data collected should be used in the analysis to describe the customer
needs as accurately as possible. Some data are used to attract new customers to the
site, while others are used to determine that, once entered in the site, the user will
buy a large volume of goods/services.
For example, in order to attract customers in the online store, automatic email
messages are sent, based on certain groups of interests. Similarly, the data can be
used in retargeting by promoting products that customers have missed or have added
to their wish lists.
4. Using similarity index – the Jaccard index to create customer profiles for
online shops
The Jaccard index or coefficient of Jaccard similarity index is a statistic index used
to compare the similarity of several sets. The Jaccard index of similarity is defined
as the intersection of the sets divided by the sample sets meeting:
If A and B are empty, we define J (A, B) = 1
The Jaccard distance measures the degree of similarity between sets of items.
This value is complementary to the Jaccard coefficient and it is obtained by
subtracting the value of the Jaccard index from 1.
It is worth noting that a client does not belong entirely to a single profile and
therefore that client should be matched with the highest index available. Once we
identified the profile channel based on the customer specific products and services,
this channel will meet the maximum requirements to that client.
Personalization in E-commerce using profiles similarity 279
Subsequently applying the model can measure the degree of belonging to the
previously identified group by comparing the number of products purchased with
the initial situation, or comparing the wish list with the list of products purchased.
For example, one can consider the creation of a representative number of 5
different profiles for an online store. The individual portrait of the client can be
achieved using the data filled directly by the client when creating the account on the
site, their history site navigation, viewed products, products added to the wish list
and the products which are found in abandoned baskets.
This picture of the client is then compared to the representative profiles
already identified for our clients. The application calculates which profile is the
closest to the real one based on the Jaccard similarity index.
Option 1
Option 2
Option 3
Option 4
Option 5
Option 6
distance
Jaccard
Jaccrd
Profile A 1 0 1 1 1 1 index
0.80 0.20
Profile B 1 1 0 1 1 1 0.50 0.50
Profile C 0 0 1 1 1 1 0.60 0.40
Profile D 1 0 1 0 1 0 0.40 0.60
Profile E 0 1 0 0 0 1 0.20 0.80
Client 1 0 1 1 0 1
Fig. 1. The Jaccard index for profiles
Therefore, for the above example, based on the Jaccard index profile, we can say
that the nearest profile to the customer’s options is Profile A (0.80).
5. Conclusion
Profiling for online sales must provide information about users and their purchasing
decisions, assisting the sales team to focus on the products and services the customer
needs and also on their expectations as well.
If a visitor matches a profile, an associated personalization will be offered to

serve the personalized content. This way a highly relevant, engaging and enhanced
user experience is provided, causing a significant increase in the conversion rates
and revenue.
6. References
Chen Yi-Shin, and Cyrus Shahabi. “Improving User Profiles for E-Commerce by
Genetic Algorithms”. Available at: http://infolab.usc.edu/DocsDemos/
YodaGA.pdf., Accessed on: 04.01.2015
Degemmis, M., P. Lops, S. Ferilli, N. Di Mauro, T.M.A. Basile, and G. Semeraro.
"A Relevance Feedback Method for Discovering User Profiles from Text"
http://www.di.uniba.it/~ndm/publications/files/degemmis04sawm.pdf
Degemmis M., Lops P., Ferilli S., Di Mauro N., Basile T.M.A., Semeraro G.
"Learning User Profiles from Text in e-Commerce". Available at:
http://www.di.uniba.it/~ndm/publications/files/degemmmis05adma.pdf,
accessed on: 04.01.2015
Schiaffi, Silvia, and Analía Amandi. “Intelligent User Profiling”. Available at:
http://www.exa.unicen.edu.ar/catedras/knowmanage/apuntes/56400193.pdf,
accessed on: 04.01.2015
Schubert, Petra. “A Project Method for the Personalization of E-Commerce
applications in SMEs”. Available at: http://www.academia.edu/2829192
A_Project_Method_for_the_Personalization_of_E-
Commerce_applications_in_ SMEs. Accessed on: 04.01.2015
Sin Liem Gai, and Ria Purnamasari. An. “China E-Commerce Market Analysis:
Forecasting and Profiling Internet User”. Available at:
http://www.researchersworld.com/vol2/issue3/Paper_1.pdf. Accessed on:
04.01.2015
Trajkova, Joana, and Susan Gauch. “Improving Ontology-Based User Profiles”.
Available at: http://citeseerx.ist.psu.edu/viewdoc/download?
doi=10.1.1.59.2598&rep=rep1&type=pdf. Accessed on: 04.01.2015
http://www.experiencesolutions.co.uk/questions/what_is_customer_profiling.php
Butler, Cristopher. 2013. “Don’t make me search”. Available at:
https://www.newfangled.com/dont-make-me-search/, accessed on: 04.01.2015
Calabria, Tina. 2004. “An introduction to personas and how to create them”.
Available at: http://www.steptwo.com.au/papers/kmc_personas/, accessed on: April
15, 2015
Bajarin, Tim. 2012. “Why Tablets are Important to eCommerce”. Available at:
https://techpinions.com/why-tablets-are-important-to-ecommerce/5249.
Accessed on: 04.01.2015
Rapid application development for a research

information system: a case study
Cătălin MAICAN1, Radu LIXANDROIU2
Abstract: It can be argued that research is what makes science advance and that higher
education institutions are in the frontline of developing and promoting research projects and
making their results public by means of articles. But the projects and articles have to be
managed at institutional and national level. This paper proposes an implementation case
study: the first part makes a short introduction with an emphasis on the existing research,
the second part presents the implementation objectives, while the third part details the
development and the implementation process.
Key-words: research information system, application development, performance.
1. Introduction
Quality in higher education represents a difficult and multidimensional

concept, which explains why a single and all-encompassing definition of the term
„quality” is lacking. Consequently, an agreement related to “the best way to define
and measure service quality” (Clewes, 2003) does not exist as yet because there is
no consensus on the exact objectives of higher education (HE): production of
qualified manpower, training for a research career, the efficient management of
teaching provision or a matter of extending life chances. This paper discusses
quality from the point of view of research, debating it as research information
management.
Studies related to research and research information management in higher
education institutions (HEI) have been conducted since the wide-spread of HE.
More than a decade ago, Kemp (1999) has defined a policy framework for research
and research training in higher education, his proposals aiming at benefiting people
who participate in the generation and application of research (Kemp, 1999). Another
researcher has examined the applicability of the knowledge management concepts to
higher education institutions in the United Kingdom (Rowley, 2000), as the research
in HE is the base for advancing science. Rowley identifies a number of existing
1
Transilvania University of Braşov, maican@unitbv.ro
2
Transilvania University of Braşov, lixi.radu@unitbv.ro
282 Cătălin MAICAN, Radu LIXĂNDROIU
facilities, systems or projects which contribute to knowledge management in

higher education (libraries, electronic collections of learning materials and
others), although, from her point of view, while knowledge based organizations
might seem to have the most to gain through knowledge management, effective
knowledge management may require significant change in culture and values
(Jennifer Rowley, 2000).
Cullen, Joyce, Hassall and Broadbent (2003) discuss concepts of accountable
management in HE and their relation to performance measurement. More recently,
Tight (2012) has made a meta-analysis on 567 articles published in 15 leading
higher education journals in 2010, demonstrating both the high interest in higher
education research across the academy and variations between disciplines in the
themes researched, the methods and methodologies employed and the theoretical
perspectives applied. More related to the practical aim of this paper, Waddingtona et
al (2013) have found out that there is limited harmonization in reporting requests
made on institutions and researchers, resulting in duplication of effort and limiting
the potential for the reuse of the information, their paper describing the landscape
for research reporting in the United Kingdom.
A European Union funded project entitled euroCRIS emerged first as a simple
standard similar to a library catalogue card or the present DC (Dublin Core Metadata
Standard). It provided CERIF, a data model intended as a data exchange format. It
was based on records describing projects, with persons and organisational units as
attributes, intending to answer questions similar to: How many articles has author X
published in 2015 as a first author? / How many times have articles by author X
been cited by the end of the previous year? / Did author X publish with
institutionally external authors? / In how many FP7 projects does/did organisation Z
participate? and many more. An open source project implementing euroCRIS was
developed by Cineca and was published using various DSpace versions and the
latest CERIF version. Also, according to Clements and McCutheon (2014), two
research-intensive universities in the UK, St. Andrews and Glasgow, have worked
together to develop their institutional research management systems, based on
euroCRIS-CERIF, in order to deliver services to support the rapidly evolving needs
of funders, institutional policy makers and management and of the researchers
themselves.
2. Objectives
The necessity of implementing the software presented in the current case-study

appeared as the need of implementing the methodology of allocation of budgetary
funds for base and supplementary financing of state-funded higher education
institutions for the year 2015 (CNFIS, 2015). For implementing this methodology,
each HEI must provide a series of indicators related to its teaching, research and
Rapid application development for a research information system: a case study 283
administrative activities (e.g. teaching – number of students for each domain and
program of study, research - quality indicators related to human resources and
research, like the degree of fulfilment of the latest minimal CNATDCU
requirements for conferring academic titles in higher education). According to this
methodology, a criterion is considered fulfilled by an assistant/lecturer if one meets
all the minimal required criteria for the academic title of associate professor, while
an associate professor and a professor have to meet the current required minimal
criteria for the academic title of professor. The difficulty of implementing this
methodology consists in collecting the data, because each professor has to provide
detailed, opera omnia data that might fit in the current CNATDCU standards.
Currently there are 33 standards for the teaching staff part of Transilvania
University of Brasov, divided and supervised by multiple consultancy-committees,
with a total of over 950 possible items that could be filled. It should be noted that
there are cases when certain professors met in the past that-time minimal
requirements for acceding to the next academic degree, while they do not meet the
current minimal requirements any longer.
An implementation of DSpace with euroCRIS-CERIF was not possible,
although it was evaluated, due to the very short time span available to implement the
software and to the time necessary for the teaching staff to fill in the data.
3. Methods and results
In order to develop the current requirement, the following possibilities have been
considered:
• Collecting data manually: in this case, teachers would have to collect their data
in Word documents, meaning that the data would be totally unstructured,
and organizing and summarizing them would have been an administrative
nightmare;
• Collecting data in Excel documents: for each standard multiple sheets should
have been created, and each sheet should have had its validation features, so
that only the required data could have been entered. Because Excel could be
likened to a semi-structured database, this was one of the possibilities taken
into account. What lead to the use of a centralized application was the fact
that each sheet had to be designed and validated, while the data
summarization from multiple files was not a strong point;
• Designing a centralized, web-based module with similarities to the currently
implemented application was the best approach, because of the distributed
data-entering capabilities of the web and data centralization.
The requirements for implementing this web-based application were: 1) rapid
development; 2) fast implementation; 3) good performance and 4) resemblances
with currently implemented applications for research reporting (Maican, 2009).
The fast/rapid application development (RAD) took places using commercial

tools (Visual Studio) and ASP.NET Web Forms. Using them, we were able to
design the modules in a reusable manner, also creating a framework inside another
framework in the end (Figure 1).
The base framework consists of the open source content management system
(CMS) DNN Software (DNN) from which we used its module development
methodology, security and integration. Figure 1 shows that there are a lot of other
modules and applications built over DNN, like the student management application,
the students’ and teachers’ portal, modules for the university web site. The
integration through authentication (similar to Single Sign On) with the e-learning
(Moodle) platform is also based on DNN.
Fig.1 The existing framework based on open source software.
Because of the very different criteria from one CNATDCU standard to another, there
was no possibility to develop separate modules for each standard. The approach we
took was to build a data-editing module that generates its interface dynamically at
runtime, based on configuration data. After an analysis, we took into consideration the
following end-user controls: textbox with a required validator for regular strings (title
of an article, title of a book etc.), a numeric textbox for numbers (it is able to accept
only integers/decimals, rejecting other characters – e.g. number of authors for a certain
item), a date picker for dates (when an article/book was published), a checkbox for
Boolean typed data (e.g. the article/book was published after publicly defending the
user’s Ph.D.), a “masked” textbox for entering data in special-format fields (e.g. ISSN,
ISBN etc.) and a list for the user to choose from predefined values (e.g. the database
where a journal is indexed), as depicted in Figure 2.
This picture shows that, for the given example, we use multiple reusable
elements, the case of Citations being the most obvious one. In this case we use
references from both journals and books, the requirements and some of the standards
not making differences between the types of the material where the citing article
appears. However, there are criteria that explicitly state the differences, and in this
case, the implementation is different for citations in books vs. citations in various
kinds of journals.
Journal Article Book Citation
Title - textbox Cited article
Journal - textbox Publishing House

Citing article
Journal ISSN - masked Book ISBN
Publishing date - date
Number of authors - integer
Fig.2. Example of criteria and their corresponding user-interface objects
A minimal algorithm for implementing this is presented below:
Page initialization (Page_Init):

get calculation formula from CriteriaConfig root
foreach element in CriteriaConfig
get element type (textbox, numeric textbox, date picker,
checkbox, list)
create element dynamically
add validation according to configuration for the current
element
add help tooltips
end foreach
cache the element for faster creation, so that for the same
element the data is retrieved from cache and not from database
Another requirement that had to be met was the fast implementation. There
were over 950 criteria to be implemented: they had to be written in a structured
manner so that they could be read by the application. The decision to choose
between JSON and XML as data configuration fields was led by the human factor,
as the implementers had to write the configuration manually. As JSON is more
verbose than XML and not very user-friendly (Figure 3), the entire configuration
was written using XML. The entire configuration and formula validation for all the
criteria lasted 48 hours, with an average of 18 criteria/hour. Based on this data, we
consider that the implementation was accomplished in a reasonable amount of time,
so that the teachers could fill in the data for the appropriate criteria.
Fig.3. XML and JSON for criterion definition.
We may also note the formula attribute of the root element. A value, based on this
formula and on the data entered by the end-user, is calculated using ciloci
FormulaEngine open source tool.
The requirement referring to good performance was accomplished by using
two methods (Meier et al, 2004): application caching and compressing the web page
before its way to the client, at the same time moving the ViewState to Session. We
implemented the application caching by adding the criteria configuration to cache,
and reading it from that collection, if it still existed there, so that we avoided
additional reading from the underlying data layer, according to the following
algorithm.
on Insert/Update to database
> set Cache for criterion X
get X=criteria X from Cache

if X == null
read from database
set Cache for criterion X
additional processing for criterion X
Moving the ASP.NET WebForms ViewState to the session variable was

accomplished by using a PageStatePersister that could move the ViewState to
either Session or (NO/SQL) database, with various performances, the best

performance being obtained by using in-memory Session state. By moving the
ViewState, we reduced the page size sent to the client to about 50% from the
original size, especially when editing items, because the ViewState was not required
on read-only (display-only) operations.
We acquired resemblance with the existing research management application
by keeping the same user interface on display-only operations and reusing the proofs
already uploaded by users for the yearly research reporting, with the differences
stated above, differences appeared due to specific requirements for this application.
We may observe this resemblance in Figure 4.
Fig. 4. The existing application for research reporting (up) and the new application
(down).
This picture shows the resemblance in styling the user interface, how the
items/criteria are displayed.
4. Conclusion
Developing a module for research management is possible with RAD tools, also taking
performance and existing applications into consideration. The existence of important
projects like euroCRIS is important for HEIs, as they could be seen as a base for policy
making, evaluation of research based on outputs, documenting research activities
and output and assistance in project planning. Also, they constitute a formal log of
research in progress (euroCRIS). The integration between the application we
presented with tools developed in such projects would benefit both the users using
the software and the HEI management.
5. References
Clements, Anna, and Valerie McCutcheon. 2014. “Research Data Meets Research
Information Management: Two Case Studies Using (a) Pure CERIF-CRIS and
(b) EPrints Repository Platform with CERIF Extensions”. Procedia Computer
Science, 33:199-206.
Clewes, D. 2003. “A student-centered conceptual model of service quality in higher
education”. Quality in Higher Education, 9: 69-85.
CNFIS .2015. http://www.cnfis.ro/raportare-ic2015/, last checked 3.04.2015.
Cullen, John, John Joyce, Trevor Hassall, and Mick Broadbent. 2003. “Quality in
higher education: from monitoring to management”. Quality Assurance in
Education, 11(1), 5 – 14.
euroCRIS (Current Research Information System), home page
http://www.eurocris.org, last checked 3.04.2015.
Kemp, D. 1999. “New knowledge, new opportunities: a discussion paper on higher
education research and research trening”, Australia,
http://hdl.voced.edu.au/10707/94042.
Maican, Cătălin. 2009. “Integrated university management system based on open
source tools”. Fourth International Conference on Internet and Web
Applications and Services, 2009. ICIW'09.: 626-631.
Meier J.D., Srinath Vasireddy, Ashish Babbar, Mariani Rico, and Alex Mackman.
2004. Improving .NET Application Performance and Scalability, Microsoft
Corporation.
Rowley, Jennifer. 2000. “Is higher education ready for knowledge management?”,
International Journal of Educational Management, 14(7): 325 – 333.
Tight, Malcolm. 2012. “Discipline and theory in higher education research”,
Research Papers in Education, 29(1): 93-110.
Waddingtona, Simon et al. 2013. “Feasibility Study into the Reporting of Research
Information at a National Level within the UK Higher Education Sector”.
.New Review of Information Networking, 18(2):74-105.
Data mining techniques used to analyze students’

opinions about computization in the educational
system
Nicoleta PETCU1
Abstract: Both the educational process and the research one, together with institutional
management are unthinkable without the information technologies. Through them, one can
harness the work capacity and creativity of both students and professors. The aim of this
paper is to present the results of a quantitative research regarding: the scope of using
computers, the importance of using them, faculty activities that involve computer usage,
number of hours students work with them at university, Internet and web-sites usage, e-
learning platforms, investments in technology in the faculty and access to computers and
other IT resources. The major conclusions of this research allow us to propose strategies for
increasing the quality, efficiency and transparency of didactic, scientific, administrative and
communication processes.
Key-words: computerization of educational process, quantitative, statistical tests, decision

tree.
1. Introduction
Increasing the usage of information technologies would play a major role in

connecting the education system to the requirements of a society based on
knowledge. In the current situation, where the fast evolution of information
technology makes way in all areas of work, the education system needs state of the
art informatics systems. They, in its turn, have to adapt on an ongoing basis to the
dynamic of nowadays technology. In order to achieve the computerization of the
educational process some new organizational structures, new management methods
and new ways to use information technology are needed (Strajeri, 2009). Acquiring
new knowledge and using it in highly qualified training relies on recent discoveries
from the area of information technologies and communication. For the European
countries the knowledge society has required a computerized educational system. A
report of the European Commission from 2001 mentioned that: „the embodiment of
information and communication technologies in the educational systems is a process
1
Transilvania University of Braşov, nicoleta.petcu@unitbv.ro
290 Nicoleta PETCU
that will have major implications for organizing education and teaching methods, on
the long run.” (European Commission, Annual Report 2000/01). This has moved
forward the development and validation of strategies and instruments that can
improve the efficiency of the educational system for a larger number of beneficiaries
(Cucos, 2006,30). ”All EU states are in the process of integrating the digital in the
educational system, e-books and digital pedagogy are the new challenges for the
ministers of education. The computerization of the education system is a pedagogic
strategy adapted/adaptable at the policy level. This happens in the context of a
postindustrial, computerized cultural model. From a technological perspective one
has to address the managerial issue, at a system level (monitoring the resources,
designing the curriculum for the educational plan, global evaluation, the
institutionalization of a databases etc) and the process (the curriculum design of the
programs and school books, stimulating the intensive learning/ self-learning,
development of assessment tests)’ (Cucoş, 2006, 28).
2. Quantitative research – general data
The current paper aims to identify students’ opinions regarding: the importance of
using computers at the university, the activities for which they use them, the number
of hours at which students use computers at the university, the usage of Internets and
different websites, the e-learning platform, investments in technology in different
faculties.
Data collection was made through an online, structured survey made out of 26
questions. This took the form of a link that was then sent to all the faculties from the
Transilvania University. It resulted in 192 filled-in surveys. The data from these
surveys was then analyzed using SPS and SPSS Clementine.
Fig.1. Respondents distribution on faculties

Data Mining techniques used to analyze students’ opinions about computization in … 291
Most of the respondents came from the Faculty of Economical Sciences and
Business Administration (39,13%) and from Law and Letters (16,1%)
2.1. General hypothesis of the research
1. The majority of students use computers at university for: solving some

exercises, writing documents (Word), Power Point presentations, and data
collection from the Internet.
2. Generally, students use information from the Internet to write their projects
because they have access to a larger volume of information and they save time.
3. A considerably high percentage of the students consider that the following
websites are the best for project writing: scribd.com and regielive.ro
4. Most of the students have access to the Internet and use the e-learning platform.
5. A relatively low percentage of students have noticed that the university has
made investments in IT technology.
3. Results
Among the students that have either courses or seminars where they use computers:
38,40% use them to solve assignments or to make PowerPoint presentations, 18%
use them for writing documents, 15,10% use them to create databases, 10,9% for
Internet searches, 10% use them for programming, 7,5% for printing, 48% have said
that they use computers for at least two subjects, 90,22 % use the Internet to write an
essay or a project and the most accessed site is www.google.com. The new
technologies and instruments help students to learn faster and easier according to
75% of the respondents. This means that ¾ of them know and use the E-learning
platform. Students’ opinions regarding this platform have revealed the following:
81% have been satisfied and very satisfied of being able to see their grades, 42,5%
have been satisfied and very satisfied of being able to see the courses, 19,2% have
been satisfied and very satisfied of being able to communicate with their professors,
64,4% have been satisfied and very satisfied of being able to see the payment
situation.
Considering students’ recommendation for using computers at the university,
they have marked as important or very important the following issues (cumulated
percentages): one should give students more basic knowledge about computers
25,5%, one should have enough computers/projectors at the faculty level 51%, one
should acquire licensed software 40,1%, students should be allowed to use
computers even when not during classes 45,8%, the faculty should stimulate
students’ interest for developing practical abilities related to computers and IT
37,5%.
292 Nicoleta PETCU
Hypotheses testing
Hypothesis no. 1
H0: At the university level at most 60% of the students take part at courses/seminars
where computers are used.
H1: At the university level more than 60% of the students take part at
courses/seminars where computers are used.
N Mean Std. Deviation

Do you have courses/seminars where you
192 .81 .395
use computers?
One-Sample Test
Test Value = 0.6
95% Confidence Interval of
Sig. (2- Mean
t df the Difference
tailed) Difference
Lower Upper
Do you have
courses/seminars where you 7.263 191 .000 .207 .15 .26
use computers?
We will accept the alternative hypothesis H1 (Sig. (2-tailed) < 0,05): with a
probability of 95% one can say that, at the university level, more than 60% of the
students take part in courses and seminars where they use a computer.
Hypothesis no.2
H0: At most 80% of the students use the e-learning platform.
H1: More than 80% of the students use the e-learning platform.
N Mean Std.
Deviation
Do you use the e-learning platform:
192 .76 .428
http://portal.unitbv.ro ?
One-Sample Test
Test Value = 0.8
t df Sig. (2- Mean 95% Confidence
tailed) Difference Interval of the
Difference
Lower Upper
Do you use the e-learning
platform: -1.282 191 .202 -.040 -.10 .02
http://portal.unitbv.ro ?
We will accept the null hypothesis (Sig. (2-tailed) > 0,05): with a probability
of 95% one can say that, at the university level, at most 80% of the students use the
e-learning platform.
Hypothesis no.3
H0: The access to the e-learning platform is independent from having access to the
university’s IT resources.
H1: There is a dependency between accessing the e-learning platform and having
access to the university’s IT resources.
Could you use the IT Total

resources/computers at the
faculty when you needed to?
Nu Da
Do you use the e-learning No Count 0 22 22
platform: Expected
.8 21.2 22.0
http://portal.unitbv.ro? Count
Yes Count 4 81 85
Expected
3.2 81.8 85.0
Count
Total Count 4 103 107
Expected
4.0 103.0 107.0
Count
Chi-Square Tests
Value df Asymp. Sig. Exact Sig. Exact
(2-sided) (2-sided) Sig. (1-
sided)
Pearson Chi-Square 1.075a 1 .300
N of Valid Cases 107
a. 2 cells (50.0%) have expected count less than 5. The minimum expected count is .82.
b. Computed only for a 2x2 table
We will accept the null hypothesis H0 (Sig. (2-tailed) > 0,05), the two variables are
independent.
Hypothesis no. 4
H0: At most 70% of the students from Transilvania University use the Internet to
write their projects.
H1: More than 70% of the students from Transilvania University use the Internet to
write their projects.
N Mean Std. Deviation

Do you use the Internet when writing a project? 192 .91 .292
One-Sample Test
Test Value = 0.7
t df Sig. (2- Mean 95% Confidence Interval of
tailed) Difference the Difference
Lower Upper
Do you use the Internet
9.779 191 .000 .206 .16 .25
when writing a project??
294 Nicoleta PETCU
We will accept the alternative hypothesis H1 (Sig. (2-tailed) < 0,05), ), with a
probability of 95% one can say that, at the university level, more than 70% of the
students use the Internet when writing a project.
Decision trees used in multidimensional classifications

The decision and classification trees are one of the main Data Mining
techniques. Analyzing decision trees allows forecasting the affiliation of some
objects/instances to different categories, starting with their rates depending on one or
more predictors2.
Objective – forming homogeneous subgroups from the point of view of the Y
dependent variable.
The decision and classification trees can be:
• Classification trees, when the prediction result is the data affiliation
class;
• Regression trees, when the forecast result can be considered a real
number (oil price, the price of a house);
• CART (C&RT) Classification And Regression Tree (Breiman, 1984) –
combines the two cases mentioned above.
Growing a decision tree - The root node divides the collectivity into groups
depending on the Y dependent variable. The first segmentation variable is chosen
and it results in son-nodes. If a son-node is homogenous, it becomes a pure node (a
leaf node); if it is not, a new segmentation variable is chosen and the process
continues until the tree ends in leaf nodes.
Segmentation (partition) evaluation measures – Information theory

One of the evaluation measures for segmentation (partition) could be
Informational Gain.
Shannon Entropy – the quantity (amount) of information for knowing Y values

p
n ⎛n ⎞
E (Y ) = −∑ i. ⋅ log 2 ⎜ i. ⎟
i =1 n ⎝ n ⎠
Conditional Entropy – the quantity (amount) of information for knowing Y values
that are conditioned by the values of X
q n p n ⎛ nij ⎞
E (Y / X ) = − ∑ ∑ ⋅ log 2 ⎜ ⎟
.j ij
j =1 n i =1 n. j
⎜n ⎟
⎝ .j ⎠
Informational Gain - G(Y / X ) = E (Y ) − E (Y / X )
2
Gorunescu F., DATA MINING , Ed. Albastra, Cluj-Napoca, 2006, pg. 142
Normalized Informational Gain (Gain Ratio) - which considers the marginal
distribution of X.
G(Y / X )
GR(Y / X ) =
E( X )
where
q n. j ⎛ n. j ⎞
E ( X ) = −∑ ⋅ log 2 ⎜⎜ ⎟⎟
j =1 n ⎝ n ⎠
One can differentiate among the methods by considering the variable type: if
the dependent variable is quantitative (range) a regression tree will be generated; if
the depended variable is qualitative (categorical) a classification tree will result.
Classification and Regression Tree – a node that generates a decision tree

with which one can predict or classify future values. The method implies using a
recursive partitioning by splitting the recordings from an exercise cluster in
segments, diminishing impurities at each step. The dependent and independent
variables can be either quantitative or categorical, the separation is a binary one (one
two subgroups are created).
C5.0 –the optimal splitting is made using the informational gain method.
The dependent variable must be a categorical one (Petcu, 2010, 93).
For the first segmentation model we used the C5.0 technique and the
following question was considered: ”Please rank the following recommendations
regarding computer usage at the faculty, considering their importance to you
(assign 1 for the first place, 2 for the second as importance etc)
...Offer students more basic training for using computers
...To have more computers/projectors at the faculty
...Acquire licensed software
...Allow access to computers even when not at class
...Stimulate students’ interest for developing practical abilities related computers
and IT.
Variables included in the model:
) Target variable Y – a new variable was generated that divided the students in two
groups, Economic Sciences students and students from other faculties.
) The entry variables were the response options to the question presented above.
296 Nicoleta PETCU
The root node stands for the following distribution of students: 75 from
Economic Sciences and 117 from “Other faculties”.
The first and most important segmentation variable, at this stage, was
selected: “Stimulate students’ interest for developing practical abilities related
computers and IT ". Two groups resulted: one that consisted of 107 students
(55,73%), out of which 51 from Economic Sciences and 56 from “Other faculties”,
that rated this recommendation as very important and important; a second group that
consists of 85 students (44,27%), out of which 24 at Economic Sciences and 61 at
other faculties for which other response variables were important.
The tree analysis has lead to the framing of the following rules, which
characterize the groups of students that form the nodes:
• The first group also considered as important the following response
options: Allow access to computers even when not at class, Acquire
licensed software, offer students more basic training for using computers
• The second group has considered as important the following response
options: have more computers/projectors at the faculty, offer students
more basic training for using computers
The second segmentation model was build using the question from the survey
related to the e-learning platform. The C&RT technique was used. Only the students
that use the e-learning platform were selected.
1Totaly 2 3 4 5 Very satisfied

unsatisfied
Grade visualization 4 2 21 48 71
Courses visualization 26 23 35 41 21
Communication with professors 31 33 54 20 8
Payment visualization 9 16 27 45 49
ERASMUS 27 32 50 31 6
Table 1. How satisfied are you with the information offered by the e-learning
platform?
The first and most important segmentation variable, at this stage, was:
“payment visualization". Two groups of students have resulted: one that consists of
94 students (64,38%), out of which 51 from Economic Sciences and 43 at Other
faculties, that consider this service as important and very important; one group that
consists of 52 students (35,62%), out of which 14 from Economic Sciences and 38
from other faculties for whom other response options are more important.
The tree analysis has lead to the framing of the following rules:
• From the first group 72 students (49,31%), out of which 37 from Economic
Sciences and 35 from other faculties, have stated that they are not satisfied
with communicating with professors through the e-learning platform but they
are satisfied with grades’ visualization. Part of these (40) was unsatisfied
with course visualization;
• From the second group 52 (35,61%), out of which 14 from Economic
Sciences and 38 from other faculties have stated that they are not satisfied
with payment visualization, ERASMUS. Part of these (46) was also not
satisfied about communicating with professors.
4. Conclusions
This research has analyzed the attitudes and opinions of the students from
Transilvania University regarding the computerization of the education system.
After analyzing the data, one can draw the following conclusions: the students are
aware of the fact that investments have been made at the university level in IT
technologies; most of the students use computers for: solving exercises, writing
documents (Word), PowerPoint presentations, data collection from the Internet;
most of them have at least 2 subjects where they use computers at the university.
Students use the e-learning platform especially for grade and payment visualization.
Some of the respondents are discontented with matters such as communicating with
professors and courses visualization thru the platform
After using data mining techniques to analyze the data, we draw the following
conclusions: students have ranked on the first three places the recommendations-
Acquire licensed software, Allow students to use computers at the university even
when not at class, Stimulate students’ interest for developing practical abilities
related computers and IT.
These results can inform decision making that will improve the efficiency of
the informational learning process: increasing the efficiency of teaching time;
storing information on an electronic device; working on projects at a higher level of
specialization; the teaching system is easier; developing communication
competencies and individual study.
Connecting this study to the computerization of teaching at Transilvania
University, several support activities for the educational system can be coined for
“the Internal Evaluation- Annual Report of quality for the year 2013-2014”:
carrying on with the process of maintaining the material basis for students, that was
developed in the period 2006-2008; consistent informational interconnectivity, at
current standards in the fields, and ensuring a high performance of the Internet
network, Point-To-Point Motorola Canopy 600 wireless equipments, fulfilling
UTBv objectives regarding the informational infrastructure, which are:
implementing and running the metropolitan educational network, with direct
reference to having access to high speed Internet connection, long distance learning
and e-learning, voice intranet services (Voice over IP – VoIP) and video
(videoconferences) as well as administrative apps distributed in the network.
298 Nicoleta PETCU
6. References
Cucoş, Constantin. 2006. Informatizarea în educaţie. Aspecte ale virtualizării

formării. Iaşi: Polirom
Gorunescu, F. 2006. DATA MINING concepte, modele şi tehnici. Cluj-Napoca: Ed.
Albastra.
Griffith, Arthur. 2010. SPSS for Dummies - 2nd Edition, Indianapolis: Editura Wiley
Publishing Inc.
Noveanu Eugen., and Dan Potolea. 2008. Informatizarea sistemului de învăţământ
Programul S.E.I.- raport de cercetare evaluative EVAL S.E.I 2008,
Bucuresti : Ed. Agata.
Petcu, Nicoleta. 2010. Tehnici de data mining rezolvate în SPSS Clementin. Cluj-
Napoca. Editura Albastră.
Petcu, Nicoleta. 2003. Statistica teorie si aplicatii in SPSS. Brasov: Ed. Infomarket.
Radu, Ion T. 2000. Evaluarea în procesul didactic. Bucuresti: Editura Didactica si
Pedagogica.
Stoetzel, Jean, and Girard Alain. 1975. Sondajele de opinie publică. Bucureşti: Ed.
Ştiinţifică şi Enciclopedică.
Strajeri, Mihaela Luminiţa. 2009. Invăţământul superior românesc şi necesitatea
schimbării”. Curentul National.
http://ec.europa.eu/dgs/education_culture/index_en.htm, European Commission,
Directorate General for Education and Culture. Basic Indicators on the
Incorporation of ICT into European Education Systems. Facts and Figures.
2000/01 Annual Report
http://www.unitbv.ro/Portals/0/Hotarari/HS%20nr.%2033%20din%2013.02.2015.pd
f Raportul anual de evaluare internă a calităţii anul universitar 2013-2014
AUTHORS INDEX
B L
Baba M.C. .....................................141 Lixăndroiu R. .........................275, 281
Băcanu B. ......................................119 Lupulescu N.B...............................133
Bălăşescu M. .....................................9
Bălăşescu S. .....................................17 M
Băltescu C. ......................................81 Madar A. ........................................125
Bărbulescu O...................................25 Maican C. ..............................275, 281
Boşcor D. .......................................227 Manic M. .........................................53
Brătucu G. .........................65, 95, 233
Brodsky Z........................................41 N
Bucs L. ..........................................233 Neacşu N. A. ....................................59
C O
Candrea A.N...................................107 Opriş (Stănilă) M. A ........................65
Cismaru L.........................................87
P
D Pakocs, R. ......................................133
Deari F............................................147 Palade, A. ..................................65, 95
Demeter T. .......................................95 Petcu, N...........................................289
Dincă G. ........................................147 Polgar (Deszke) K.D.......................249
Dovleac L. .......................................33
Drumea C. .....................................159 R
Duguleană C. .........................195, 207 Roman D.E ......................................71
Duguleană L. ................. 195, 207, 249
T
E Tescaşiu B. ..............................47, 257
Enache C.I. ..............................41, 267
Epuran Gh. ......................................47 Ţ
Ţierean O.M. ...................................71
G
Grădinaru E ...................................233 U
Untaru E.N. ....................................107
H
Honkova I ......................................169 Z
Zamfir M ...........................................183
I
Ispas A......................................87, 107

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ISSN 2065-2194

TRANSILVANIA UNIVERSITY OF BRAŞOV

VOL. 8 (57) NO. 1 – 2015

SERIES V ECONOMIC SCIENCES

Senior editor Series V

Final Technical Supervision

English language supervision

©All rights reserved

Laurenţiu-Dan ANGHEL, PhD, Prof., Academy of Economic Studies, Bucharest,

• FINANCE AND ACCOUNTANCY ..................................................................... 139

• ECONOMIC THEORY ....................................................................................... 193

• BUSINESS AND EUROPEAN LAW .................................................................. 225

Boscor D.: Export strategies adopted by Romanian SME ............................................. 227

• ECONOMIC DATA PROCESSING ..................................................................... 265

Authors Index ................................................................................................................. 299

Marketing solutions for Romanian retail companies

Key-words: retail marketing, marketing information, marketing solutions.

2. Marketing research results

The qualitative marketing research (conducted in September 2013) focused on

3. Marketing solutions for the retail company

The researches above led us to the following categories of solutions.

A. Solutions regarding the retail company’s market

B. Solutions for effective integration of the retail company inside the

Large Romanian retailers (many of them representing international retailers) are

C. Solutions regarding the store’s spatial location

D. Solutions regarding the store’s image, atmosphere and environment

E. Solutions regarding product policy for retail company

F. Solutions regarding pricing policy for retail company

G. Solutions regarding distribution policy for retail company

H. Solutions regarding promotion policy for retail company

Bălăşescu, Simona, and Marius Bălăşescu. 2010. Marketingul în comerţul cu

Methods of measuring the level of logistics serving in

Key-words: supply chain management, logistic service, international business.

The concept of customer service can be analysed from different perspectives:

2. Measurement of logistic service level of foreign customers

Fig. 1. Evolution of foreign orders number received by Company X

This trend can be justified by reduction of operational activity of firms due to

Fig. 2. Metrics for foreign customer service level of Company X

Fig. 3. Evolution of variables for foreign customer service level of Company X

The share of orders delivered to customers in good conditions in total orders

Fig. 4. Share of orders delivered on time in total orders

Regarding the share of orders delivered on time in total orders, it can be

state in total orders of industrial manufacturers from Hungary has declined by 2% in

manufacturers in Hungary benefited in 2009 from a reduction of 2%. Compared to

category were the distributors in Bulgaria and in terms of incompleteness of orders,

Bǎlan, Carmen. 2004. Logistica – Funcţie Integratoare şi Factor de

Braşov customer satisfaction as regards the

Key-words: leasing company, customer satisfaction, financing, research.

In a certain light, the main purpose of the companies is to manufacture and

to determine which is the customer satisfaction level, in Braşov, as a result of the

4. Results and Discussions

had as main information source, the recommendations of the suppliers, respectively

Fig. 1. Factors that influence the acquisition decision

1 Noncompliance with the delivery term 26,4%

Constantin, Cristinel. 2006. Sisteme informatice de marketing. Analiza şi

The role of new communication technologies in

Abstract: As marketing communication becomes increasingly integrated with the digital

Key-words: social media, sustainability, communication channel, strategy.

relational marketing, related to the preoccupation of the companies to create and

2. Digital marketing and social media – essential communication tools of

Sustainability and Corporate Responsibility Reports have been growing in

Sustainability practitioners at first were slow to realise social media's potential to

Source: Sustainly, 2015.