European Journal - Vol 12 No 1 by Singidunum University

Vol. 12 No. 1

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Vol. 12 No. 1 Publisher: Singidunum University

Editorial Board

Professor Milovan Stanišić, Singidunum University mstanisic@singidunum.ac.rs Emeritus Slobodan Unković, Singidunum University sunkovic@singidunum.ac.rs Professor Francesco Frangialli, UNWTO frangialli@gmail.com Professor Gunther Friedl, Technische Universität München gunther.friedl@wi.tu-muenchen.de Professor Karl Ennsfellner, IMC University of Applied Sciences, Krems karl.ennsfellner@fh-krems.ac.at Professor Gyorgy Komaromi, International Business School, Budapest gyorgy@komaromi.net Professor Vasile Dinu, University of Economic Studies, Bucharest dinu_cbz@yahoo.com Professor Ada Mirela Tomescu, University of Oradea, Oradea ada.mirela.tomescu@gmail.com Professor Radojko Lukić, University of Belgrade rlukic@ekof.bg.ac.rs Professor Alexandar Angelus, Lincoln University angelus@lincolnuca.edu Professor Krunoslav Čačić, Singidunum University kcacic@singidunum.ac.rs Professor Verka Jovanović, Singidunum University vjovanovic@singidunum.ac.rs Professor Milan Milosavljević, Singidunum University mmilosavljevic@singidunum.ac.rs Professor Olivera Nikolić, Singidunum University onikolic@singidunum.ac.rs Professor Budimir Stakić, Singidunum University bstakic@singidunum.ac.rs Professor Mladen Veinović, Singidunum University mveinovic@singidunum.a.crs Professor Jovan Popesku, Singidunum University jpopesku@singidunum.ac.rs Professor Zoran Jeremić, Singidunum University zjeremic@singidunum.ac.rs Associate Professor Christine Juen, Austrian Agency for International christine.juen@oead.at Mobility and Cooperation in Education, Science and Research, Wien Associate Professor Anders Steene, Södertörn University, Stockholm/Hudinge anders.steene@sh.se Associate Professor Ing. Miriam Jankalová, University of Žilina miriam.jankalova@fpedas.uniza.sk Associate Professor Bálint Molnár, Corvinus University of Budapest molnarba@inf.elte.hu Associate Professor Vesna Spasić, Singidunum University vspasic@singiduunm.ac.rs Associate Professor Goranka Knežević, Singidunum University gknezevic@singidunum.ac.rs Associate Professor Michael Bukohwo Esiefarienrhe, University of Agriculture, esiefabukohwo@gmail.com Dept. of Maths/Statistics, Markurdi Associate Professor Nemanja Stanišić, Singidunum University nstanisic@singidunum.ac.rs Assistant Professor Patrick Ulrich, University of Bamberg patrick.ulrich@uni-bamberg.de Assistant Professor Konstadinos Kutsikos, University of the Aegean, Chios kutsikos@aegean.gr Assistant Professor Theodoros Stavrinoudis, University of the Aegean, Chios tsta@aegean.gr Assistant Professor Marcin Staniewski, University of Finance and Management, Warsaw staniewski@vizja.pl Assistant Professor Gresi Sanje, İstanbul Bilgi Üniversitesi, Istanbul gresi.sanje@bilgi.edu.tr Dr. Aleksandar Lebl, Research and Development Institute for Telecommunications and Electronics, Belgrade lebl@iritel.com Editorial Office

Editor-in-Chief: Deputy Editor: Managing Editor: Production Editor: Prepress: Novak Njeguš

Professor Milovan Stanišić, Singidunum University Professor Verka Jovanović, Singidunum University Assistant Professor Svetlana Stanišić Stojić, Singidunum University Associate Professor Gordana Dobrijević, Singidunum University

Design: Aleksandar Mihajlović

sstanisic@singidunum.ac.rs gdobrijevic@singidunuma.c.rs

ISSN: 2406-2588 The European Journal of Applied Economics is published biannually. Contact us: Scan this QR code The European Journal of Applied Economics for Website. 32 Danijelova Street, 11010 Belgrade, Serbia Phone No. +381 11 3093236, +381 11 3093219, Access to full text articles: Fax. +381 11 3093294 Singipedia (www.singipedia.com), E-mail: journal@singidunum.ac.rs SCindeks (www.scindeks.ceon.rs) and EBSCO (www.ebscohost.com). Web: www.journal.singidunum.ac.rs Copyright © 2015 Printed by: Mobid, Loznica

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CONTENTS 1-9

The impact of economic crisis and non-economic factors on the tourism industry in Zlatibor

10 - 18

Perceived work environment and job satisfaction among public administration employees

19 - 25

26 - 36

Slobodan Čerović, Miroslav Knežević, Nataša Sekulović, Dragoljub Barjaktarović, Filip Đoković

Marjan Bojadjiev, Miodraga Stefanovska Petkovska, Ana Tomovska Misoska, Julijana Stojanovska

The analysis of the effects of �inancial distress on the top management in the Republic of Serbia Dragana Rađen

Comparative analysis of Facebook and communication activities of the mountain hotels in Stara planina, Kopaonik and Zlatibor Radmila Živković, Angelina Njeguš, Marija Zlatanović, Jelena Gajić, Ivana Brdar III

37 - 42

International business: Raising cultural awareness in global negotiating

43 - 51

Predicting retail banking consumer behaviour using statistics

52 - 57

58 - 66

67 - 72

Jovana Gardašević, Jelena Vapa-Tankosić Konstantinos Agaliotis, Miroljub Hadžić

Approximate search for Big Data with applications in information security - A survey Slobodan Petrović

Project scheduling method with time using MRP system - A case study: Construction project in Libya Abdallah Ali Imetieg, Miroslav Lutovac Instructions for authors

EJAE 2015, 12(1): 1-9 ISSN 2406-2588 UDK: 005.332:338.124.2]:338.48(497.11)"2007/2014"\\ . 338.121:338.48-44(497.11-23.0 Златибор)

DOI: 10.5937/EJAE12-8160 Original paper/Originalni naučni rad

THE IMPACT OF ECONOMIC CRISIS AND NON-ECONOMIC FACTORS ON THE TOURISM INDUSTRY IN ZLATIBOR Slobodan Čerović*, Miroslav Knežević, Nataša Sekulović, Dragoljub Barjaktarović, Filip Đoković Singidunum University, Faculty of Tourism and Hospitality Management 32 Danijelova Street, Belgrade, Serbia

Abstract: Tourism has recorded a favorable development trend in the previous decades. Despite the fact that it was occassionaly exposed to adverse effects of the crises caused by numerous economic and non-economic factors, tourism has managed to recover significantly faster and record a higher growth rate compared to the entire world economy. This paper analyses the effects of the economic crisis and other non-economic factors on tourist movements in Serbia during the period 2007-2014, with special emphasis on Zlatibor as a popular tourism destination. The aim of this paper is to show that the aforementioned crisis had a major impact on the movements of domestic and foreign tourists in Serbia and Zlatibor during the analyzed period. Based on the available data, research was conducted and the results showed that the economic factors primarily led to the reduction in the number of tourists in Serbia, while the economic crisis had more impact on domestic travel than on the movements of foreign tourists in our country.

INTRODUCTION The term ‘crisis’ is widely used in popular discussions related to economic, social and political issues (Hill, 2014). A crisis represents an important event with possible adverse effects on companies, organizations or industries, and it can also have an impact on their target audience, products, services or reputation (Ketlin Fern-Benks, 2011; Gul et al., 2014; EugenioMartin & Campos-Soria, 2014). Some authors have defined a crisis as an event of small probability and with serious consequences that can endanger the work of an organization, and it is characterized by vague causes, effects and means of solving it, as well as the conviction that the decisions have to be reached fast (Jaques, 2010; Ghaderi et al., 2014). A crisis can also be defined as an event that is unpleasant and challenging for the decision-makers regarding the movements made under the conditions of high risk, lack of time and insufficient promptness (Boin et al., 2008). * E-mail: scerovic@singidunum.ac.rs

Key words: tourist movements, crisis, tourism, Serbia, Zlatibor.

A crisis can be defined as an undesirable situation that is not typical for the organization/company and is calling for a direct entrepreneurial response due to the seriousness of the event, i.e. as a situation with possible consequences on long-term trust in the organization or product (service) or impeding its normal work (Popesku, 2011). Despite the absence of a universally accepted definition, it is possible to conclude that the following elements are present with the outbreak of crisis: the key event causing significant changes or potentially being able to cause a significant change, perceived incompetence to deal with the change and threats to organization’s future survival (Henderson, 2007; Paraskevas & Altinay, 2013). The development of tourism has diverse, and contradictory economic (Zhong & Hara, 2014; Paraskevas et al., 2013) and non-economic (social, political, cultural) eﬀects (Dehoome et al., 2014; García-Cabrera & DuránHerrera, 2014; UNWTO, 2015). This paper analyses the 1

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impact of economic crisis and other non-economic factors on the movements of domestic and foreign tourist demands in Serbia for the period 2007-2014. SYMPTOMS OF THE ECONOMIC CRISIS IN SERBIA During the period from 2007 to this day, the impact of several crises could be felt in Serbia, such as the global economic crisis (Cohen, 2012), AH1N1 virus pandemic (Hanfling & Altevogt, 2012), political crises (Kosovo independence proclamation), natural disasters (floods and landslidings). These crises have been followed by change in macroeconomic indicators in Serbia (Veselinović, 2012), which directly and indirectly aﬀected the tourist movements in our country during the observed period. The following graph shows the annual growth rates of the GDP for fixed prices in our country for the period 2007-2013.

Personal expenditure is also a very important indicator of a country’s economy (Stiglitz et al., 2009). It represents a part of the overall expenditure by which each individual member of the population satisfies his/her needs. (Barać & Stakić, 2007; Paunović & Pešić-Andrijić, 2014). As regards personal expenditure in Serbia, a drastic fall can be observed in 2009 compared to 2007 and 2008, due to the ensuing economic crisis. A slight rise occured in 2010 and 2011, which was followed again by a decrease in personal expenditure in 2012.

Graph 2. Indices of presonal expenditure growth in Serbia for the period 2007-2012 (shown in %) Source: Author’s research (based on the data from the Statistical Oﬃce of the Republic of Serbia)

Graph 1. Annual increase of GDP in Serbia for the period 2007-2013 (shown in %) Source: Author’s research (based on the data from the Statistical Oﬃce of the Republic of Serbia)

GDP is not designed to measure social or economic welfare, but is commonly used as an indicator of a country’s overall performance (Kubiszewski et al., 2013; Boumans, 2014). A fall in GDP was observed in 2008 compared to 2007, followed by a radical fall in 2009 under the impact of the global economic crisis (Veselinović & Makojević, 2012), with the growth rate amounting to - 3.5% compared to 2008. Afterwards, the low growth rates continued for a two-year-period and the GDP increased for 5.5% in 2012. The expectations ensued that this growth would continue in 2013, but due to the internal economic crisis, the growth rate for the following year decreased to only 2.6% (Statistical Oﬃce of the Republic of Serbia, 2014). We can note that the direct contribution of tourism industry to the gross domestic product (GDP) of Serbia in 2013 was 1.9% (Jovanović & Vukasović, 2014). 2

When we analyse the changes in the number of employees for the analyzed period, a continued decrease in the number of employees can be observed from 2007 till today (Simić, 2011). The number of employees in 2007 amounted to 2,002,344, while it decreased to 1,697,698 in 2014 (the number of employees decreased by 15.1% compared to 2007).

Graph 3. The number of employees in Serbia for the period 2007-2013 Source: Author’s research (based on the data from the Statistical Oﬃce of the Republic of Serbia)

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The next graph shows the change of average salaries in Serbia (gross and net amount) for the observed period. A slight increase in the average income can be noticed, but we have to point out that it is followed by inflation and unadjusted to the alterations in foreign currency exchange rates (in January 2007, 1 euro could be exchanged for 80 dinars, and in January 2014 for 116 dinars (NBS, 2014).

domestic (58%), and 921,768 foreign tourists (42%) (Statistical Oﬃce of the Republic of Serbia, 2014). Thus, it is necessary to highlight that there was a greater increase in the number of foreign guests (12%) compared to domestic ones, which is best supported by the overall economic situation in the country.

Graph 4. Changes of income in Serbia for the period 2007-2013

Graph 5. The structure of tourist ﬂow in Serbia for the year 2013.

Source: Author’s research (based on the data from the Statistical Oﬃce of the Republic of Serbia)

The following part of the paper shall be devoted to the analysis of the crises and the eﬀects of the aforementioned changes on tourist movement in Serbia, with special emphasis on Zlatibor region.

The total of 6,567,460 overnight stays (3 nights per visitor) was realized, of which domestic tourists stayed for 4,579,067 (3.6), and foreign for 1,988,393 (2.16) nights. The number of overnight stays also recorded an increase of 1% compared to the same period of the previous year. The number of overnight stays by domestic guests recorded a fall of 2%, while the number of overnight stays by foreign guests recorded a rise of 10%. Although the increase in the total number of overnight stays by guests (foreign as well) was recorded, the average number of overnight stays remained almost unaltered.

TOURIST FLOW REALIZED IN SERBIA In 2013, the Republic of Serbia realized tourist flow of 2,192,435 tourists, which represents an increase of 5.14% than in the same period of the previous year. Out of the total number of tourists, 1,270,667 were

Graph 6. Tourist ﬂow realized in Serbia for the period 2005-2013 Source: Author’s research (based on the data from the Statistical Oﬃce of the Republic of Serbia)

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As can be observed from the Graph 6, an increase was recorded in the total number of tourists in Serbia for the year 2007. However, due mostly to the impact of the economic crisis in 2008 and 2009, it came to a dramatic decrease (a decrease of 2% was recorded in 2008, and a decrease of 13% in 2009, compared to 2007). This trend continued in 2010 when a fall of 1% was recorded compared to the previous year and a fall of 14% compared to 2007. In 2011, a slight rise was observed and this tendency continued during 2012 and 2013. However, the results for the year 2013 were worse than in 2008 (3.3% less visits) and 2007 (5% less tourist visits). It has to be stressed that during the analyzed period, the decrease was primarily observed in the number of domestic tourist visits, while the number of foreign visits to our country increased during the period 2009-2013. The growth rates of foreign tourists were low, but the number of foreigners in 2013 increased for 32% compared to 2007. This leads to the conclusion that the crisis had greater impact on domestic than on foreign tourist movements in our country. Therefore, the following part of this paper shall be devoted to the analysis of tourist movements in Serbia during the observed period. For the purpose of this paper, the tourist destination of Zlatibor has been chosen, as a sample representing the movement of domestic and foreign demand during the period marked by the great economic crisis, pandemic of AH1N1 influenza, internal political crisis (proclamation of Kosovo independence) and the introduction of visa liberalization. The main reasons for choosing Zlatibor include its role in Serbian tourism (it was the fourth most visited destination in Serbia in 2013, following Belgrade, Vrnjacka Banja and Novi Sad (SORS, 2014)), and its guest structure dominated by domestic visitors (90% of total traﬃc).

of the Southwestern Serbia cluster (Šušić & Mojić, 2014; Bošković & Milenković, 2012). In 2013, Zlatibor recorded the tourist flow of 114,976 tourists, which represents an increase of 3.6% compared to the same period of the previous year. Among those, 93,858 were domestic tourists (82%), and 21,118 foreign tourists (18%). According to these data, Zlatibor participates in the total tourist flow in Serbia with 5.24%, with the participation in domestic and foreign traﬃc being 7.39% and 2.29%, respectively. An overall of 455,759 nights were realized (3.96 nights per a visitor), of which domestic tourists realized 388,344 (4.16), and foreign 67,415 (3.19 nights). Although the number of visits recorded an increase of 3.6%, the number of overnight stays recorded a decrease of 1.6% compared to the previous year. As regards the total number of tourists in Serbia, Zlatibor’s share is 6.96%, i.e. 8.48% in the total number of overnight stays by domestic tourists and 3.39% by foreign tourists.

RESULTS ACHIEVED IN TOURISM BUSINESS OF ZLATIBOR

Source: Author’s research (based on the data from the Statistical Oﬃce of the Republic of Serbia)

According to the tourism development strategy, the Republic of Serbia has defined the foundations for the development of tourism till 2015. In the part of this strategy named “Competitiveness Plan”, the region of Zlatibor is, as a unique tourist destination, mentioned as “a mountainous summer-winter resort in a cluster of established steps of optimal development model for the segment of mountain vacations” (Šuljagić, 2010; Paunović, 2013). Zlatibor is also known as one of the most popular conference destinations and is one of the most developed tourist areas 4

Graph 7. The structure of tourist ﬂow in Zlatibor for the year 2013.

The next graph clearly shows that for the first nine months in 2014 Zlatibor assumed the leading position in the number of visits and overnight stays compared to other mountain areas in Serbia, which classifies it, together with Kopaonik, among the most attractive mountain destinations in this region. As we have already pointed out, the tourist destination of Zlatibor belongs to the group of the leading mountain areas in Serbia, and thus we have analysed the obtained results for the tourist activity of this destination, with the movements of domestic and foreign tourist demand being shown in continuation.

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Graph 8. The list of mountain destinations and number of visits, January 2014 Source: Author’s research (based on the data from the Statistical Oﬃce of the Republic of Serbia)

We have used the chronological series, to show the arrivals and overnight stays by domestic and foreign tourists for the period 2007-2013.

Graph 9 and 10. The arrivals of domestic and foreign tourists (total) for the period 2007-2013 Source: Author’s research (based on the data from the Statistical Oﬃce of the Republic of Serbia)

Tourist flow measured by the number of tourist visits has positive dynamics for the period 2007-2008, while a drastic fall was observed in 2009. The reasons for a decrease in the overall tourist flow in 2009 were numerous, but we consider that the most significant are the global economic crisis and

the pandemic of AH1N1 virus. The media in the surrounding countries presented Zlatibor as an infected area and addressed recommendation to potential visitors not to travel to this destination, as a preventive, although this was far from truth, which resulted in a lower number of tourists from these countries. In addition, as one of the factors causing the drop in tourist flow, we would like to highlight the signing of the agreement on visa liberalization, which enabled our citizens to travel to “the Schengen countries” without visas. Tourist agencies utilized this and oﬀered lowcost trips abroad. The designers of Zlatibor tourism policy did not react appropriately and the drop of 10% was unavoidable. After the decrease in the total number of tourist visits to Zlatibor in 2009, an increase of 12.6% could be observed during 2010 compared to the previous year. This is one additional symptom that the tourism in the area of Zlatibor “recovered” much quicker from the consequences of the crisis and influenza pandemic in relation to other industries (and in relation to movements on the national level). The positive tendency continued in 2011 with the increase of 10.9% compared to the previous year. According to the expert forecasts, this tendency was supposed to continue in 2012 and 2013, but those assumptions proved to be wrong. We deem that the causes for this were the significant economic issues that became prominent in the Republic of Serbia, due to the fact that the main body of tourists in Zlatibor includes mainly domestic tourists. We believe that the internal economic crisis primarily led to a decerease of about 5.5% in the tourist flow in Zlatibor in 2012 compared to the previous year. The following graphs show the movement and structure of tourists in the overall tourist flow for the period 2007-2013. 5

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Graph 11. Visits by domestic tourists 2007-2013

Graph 12. Visits by foreign tourists 2007-2013 Source: Author’s research (based on the data from the Statistical Oﬃce of the Republic of Serbia)

It could be observed that the structure is dominated by domestic tourists and that their number has diminished drastically for the previously analyzed period (2009-2010 and 2012-2013). On the other hand, the number of foreign tourists in 2013 increased for almost 70% compared to 2007. Moreover, the participation of foreign tourists in the total number of visits is gaining more and more significance (the participation of foreigners in the overall traﬃc was 12.29% in 2007 and 18.38% in 2013). The fluctuations also occur in the number of overnight stays made by tourists for the observed period (Graphs 13 and 14). The lowest number of overnight stays was recorded in 2009 (388,987), while in 2010 and 2011, an increase was recorded (in 2011 a track of 475,300 nights was kept), while in 2012 and 2013, a conspicuous decrease can be observed (in 2013 455,759 overnight stays were recorded). For the period of I-IX/2009, the drop in the total number of overnight stays amounted to 14.71%. With the aim of impartial and realistic observation of the movement in tourist flow, the resort “Lovac” was excluded from this analysis as it has been closed since July 1, 2009. If the hotel “Zelenkada”, which has been doing business rather badly due to the privatization issues, was excluded as well, then the total drop in tourist flow would be 10.9%. 6

Graphs 13 and 14. Domestic and foreign tourist overnight stays 2007-2013 Source: Author’s research (based on the data from the Statistical Oﬃce of the Republic of Serbia)

After this drastic decrease in 2009 (the reasons for this have been already presented by analyzing the drop in tourist flow measured by the number of visits), the overall number of overnight stays slightly increased in 2010 and 2011, compared to 2007. This growing trend was expected to continue in 2012 and 2013. However, there came to a new drop in the total number of overnight stays. According to the data from the Statistical Oﬃce of the Republic of Serbia, the local tourist organization and our study, domestic tourist demand prevailed in Zlatibor region during the observed period, and this segment of tourists participates with 85%-90% in the total number of overnight stays. The following graphs show separately the overnight stays made by domestic tourists and foreign tourists for the analyzed period. It is noticeable that the number of overnight stays made by domestic tourists drastically decreased (the number of overnight stays by domestic tourists diminished by 2% in 2013 compared to 2007), while the number of overnight stays by foreign guests increased (except for 2012 when the number of overnight stays by foreign tourists decreased as well, but to a far lesser degree compared to domestic tourists). In 2013, 70% more overnight stays were recorded than in 2007.

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Graph 16. Foreign tourists overnight stays 2007-2013

beds in hotels is growing and it would be good for this tendency to continue in future. Moreover, during the analysis and classification of these data, we have to mention that a special problem comprises tourist flow in private accommodation, since there is a vast number of unregistered guests and it is impossible to ascertain the exact information on the number of tourists and their overnight stays. The problem of inadequate capacity of accommodation and traﬃc is familiar from before and it has several aspects. The first one includes those proprietors who avoid to register their guests (or they let apartments and rooms without the authorities’ approval), i.e. those capacities are not registered as accommodation units with the tourist flow and charging of tax on stays. The second one is connected to visits to friends and relatives – this segment is also not reported nor registered. The third encompasses all those individuals staying at their own apartments or holiday houses who are not registered nor consider themselves tourists.

Source: Author’s research (based on the data from the Statistical Oﬃce of the Republic of Serbia)

CONCLUSION

One of the major causes of the decrease in the number of overnight stays by domestic tourists is certainly the internal economic crisis which has been troubling Serbia for the last several years. As we can see, tourists still visit Zlatibor, but their stays are shorter than before (due to the drop in income, the tourists shortened the duration of their stay). The lowest number of overnight stays is recorded during the nonseasonal months (February, March, October and November). The fluctuations in the number of visits and overnight stays by tourists can be best observed if we take a look at the recorded visits during the seasonal months (June, July, August, and January) and nonseasonal ones. Based on the processed data, we can conclude that the average use of categorized basic accommodation capacities does not exceed 60% (the most profitable was in 2008, with the use of 59%), but it could still be observed that the number of accommodation units in basic accommodation capacities recorded a growth during the observed years (2007 - 1,931 beds; 2010 - 2,098 beds; 2014 - 2,914 beds). One of the reasons for this below - average booking of basic accommodation capacities is certainly unfair competition from complementary accommodation capacities (private villas and apartments), but this will not be examined in this paper. It is certainly encouraging that the number of

The great economic crisis that broke out at the end of 2008, and continued till today, has had a negative impact on the tourism industry in our country. Such negative influence reflected on the results of Zlatibor tourism, as one of the most visited destinations in Serbia. The impact of economic factors on tourist flow and expenditure in Serbia is more prominent compared to the influence of non-economic factors. Based on the research results, it is evident that tourism was severely aﬀected by the economic crisis in 2009, when a more dramatic decrease in the realized tourist flow and overnight stays was recorded. Afterwards, in 2010 the tourism already showed the signs of recovery, which continued more seriously in 2011 and 2012. However, a new drop occured in 2012, which was caused primarily by the internal economic crisis. By analyzing the observed period, we reached a conclusion that the economic crisis and other non-economic factors have more significantly influenced the movement of domestic tourist demand compared to the foreign one. In 2013, the tourism once more showed resilience and the ability to recover faster compared to the movements in the national economy and other economic sectors. This is the very confirmation that tourism, in this period, as well as in the case of all previous crises, managed to recovered significantly faster in relation to the overall economy.

Graph 15. Domestic tourist overnight stays 2007-2013

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bia. Singidunum Journal of Applied Sciences. 11(2), 1-10. DOI: 10.5937/sjas11-4463 Kubiszewski, I., Costanza, R., Franco, C., Lawn, P., Talberth, J., Jackson, T., & Aylmer, C. (2013). Beyond GDP: Measuring and achieving global genuine progress. Ecological Economics. 93, 57-68. DOI:10.1016/j. ecolecon.2013.04.019 Najdić, M., & Sekulović, N. (2012). Behavior of Serbian Tourists during Economic Crisis: Two Empirical Researches. Turizam. 16(4), 180-192. Paraskevas, A., & Altinay, L. (2013). Signal detection as the first line of defence in tourism crisis management. Tourism Management. 34, 158-171. DOI:10.1016/j.tourman.2012.04.007 Paraskevas, A., Altinay, L., McLean, J., & Cooper, C. (2013). Crisis knowledge in tourism: Types, flows and governance. Annals of Tourism Research. 41, 130-152. DOI:10.1016/j.annals.2012.12.005 Paunović, I. (2013). Proposal for Serbian Tourism Destinations Marketing Campaign. Singidunum Journal of Applied Sciences. 10(2), 40-52. DOI: 10.5937/sjas10-4327 Paunović, S., & Pešić-Andrijić, M. (2014). Ekonomoketrijski model lične potrošnje. Zbornik radova Ekonomskog fakulteta u Istočnom Sarajevu, (8), 99-105. DOI: 10.7251/ZREFIS1408247P (In Serbian) Pearson, C. & Clair, J. (1998). Reframing Crisis Management. The Academy of Management Review. 23(1), 59-76. Popesku, J. (2011). Menadžment turističke destinacije. Beograd: Univerzitet Singidunum. (In Serbian) Ritchie, B.W., Crotts, J.C., Zehrer, A., & Volsky, G.T. (2013). Understanding the eﬀects of a tourism crisis: the impact of the BP oil spill on regional lodging demand. Journal of Travel Research. 1, 2013. DOI: 10.1177/0047287513482775 Sekulović, N. (2011). The Impact of the Global Economic Crisis on the Attitudes of the Citizens of Serbia towards Leisure Travel. Singidunum revija, 8(2), 111-118. Simić, V. (2011). Uticaj ekonomske krize na socijalnu politiku Srbije u periodu 2008-2011. Godišnjak br. 06, 507-520. (In Serbian) Stiglitz, J., Sen, A., & Fitoussi, J.P. (2009). The measurement of economic performance and social progress revisited. Reflections and overview. Commission on the Measurement of Economic Performance and Social Progress, Paris. Statistical Oﬃce of the Republic of Serbia. (2015). Tourism. Retrieved March 25, 2015, from http://webrzs.stat.gov. rs/WebSite/Public/PageView.aspx?pKey=180 Unković, S., & Sekulović, N. (2010). Mere za ublažavanje negativnog dejstva svetske ekonomske krize na turizam. Singidunum revija. 7(2), 181-192. (In Serbian) Unković, S., & Zečević, B. (2014). Ekonomika turizma. Beograd: Ekonomski fakultet. (In Serbian)

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UNWTO. (2015). World Tourism Barometer and Statistical Annex. Retrieved March 25, 2015, from http://www. eunwto.org/content/l407r60414k52204/fulltext?p=2e 4f3e5750404d39ab05e15641ce8756&pi=0#section=11 90844&page=2&locus=0 Veselinović, P. (2012). Izazovi ekonomske nauke u uslovima globalne ekonomske krize. Ekonomske teme. 2012(4), 433-450. (In Serbian) Veselinović, P., & Makojević, N. (2012). Komparativna analiza makroekonomskih pokazatelja Srbije, Bugarske i Rumunije u procesu tranzicije. U: Institucionalne promene kao determinanta privrednog razvoja Srbije, 135-155. Kragujevac: Ekonomski fakultet. DOI: 451‐03‐00580/2012‐14 (In Serbian)

Čerović, S. et al.  The impact of the economic crisis

Zhong, Y.Y., & Hara, T. (2014). Quantifying the Impacts of the Recent Economic Crisis on a Regional Tourism Industry and Economy. Hospitality Review. 31(1), 10. Šušić, V., & Mojić, J. (2014). Kongresni turizam kao tržišna niša poslovnog turizma. Ekonomske teme. 2014(4), 523539. (In Serbian) Šuljagić, S. (2010). Doprinos turizma razvoju regiona Zlatibor. Politička revija. 9(1), 249-271. (In Serbian)

UTICAJ EKONOMSKE KRIZE I NEEKONOMSKIH FAKTORA NA TURIZAM NA ZLATIBORU Rezime: Turizam beleži pozitivan trend razvoja tokom prethodnih decenija. Uprkos činjenici da je povremeno bio pogođen krizom prouzrokovanom brojnim ekonomskim i neekonomskim činiocima, uspeo je da se brže oporavi i beleži veću stopu rasta u odnosu na ostale segmente privrede. Ovaj rad ispituje uticaj ekonomske krize i drugih neekonomskih činilaca na razvoj turizma u Srbiji tokom perioda 2007-2014, sa posebnim naglaskom na Zlatibor kao jednu od popularnih turističkih destinacija. Cilj ovog rada jeste da pokaže da je pomenuta kriza imala ogroman uticaj na kretanja domaćih i stranih turista u Srbiji i na Zlatiboru tokom navedenog perioda. Na osnovu dostupnih podataka, sprovedeno je istraživanje čiji su rezultati pokazali da su ekonomski faktori doveli do pada u broju turista u Srbiji, kao i da je ekonomska kriza imala veći uticaj na kretanja domaćih turista nego na kretanja stranih turista u zemlji.

Ključne reči: kretanje turista, kriza, turizam, Srbija, Zlatibor. Received: March 10, 2015. Correction: March 15, 2015. Accepted: April 2, 2015.

EJAE 2015, 12(1): 10-18 ISSN 2406-2588 UDK: 331.101.32:35.07(497.7) DOI: 10.5937/EJAE12-8154 Original paper/Originalni naučni rad

PERCEIVED WORK ENVIRONMENT AND JOB SATISFACTION AMONG PUBLIC ADMINISTRATION EMPLOYEES Marjan Bojadjiev1, Miodraga Stefanovska Petkovska1,*, Ana Tomovska Misoska1, Julijana Stojanovska2 University American College Skopje 60 Treta Makedonska Brigada Street, Skopje, Macedonia 2 City Hall of Skopje, 82 Ilinden Street, Skopje, Macedonia 1

Abstract: This study examines the effects of the percieved work environment on public employee feelings of job satisfaction. Moreover, the paper will investigate the relationship between personal and job characteristics and job satisfaction. The data was collected from a sample of 169 employees working in one local government municipality in Macedonia. The results show that organizational climate and its components significantly predict job satisfaction among public administration employees. The results highlight that employee age acts as the most powerfull predictor of job satisfaction. The analysis of the perceived work environment suggests that recognition is a significant predictor of job satisfaction among public administration employees, followed by opportunities for professional advancement and work itself. The significance of this research lies in its contribution to the knowledge and understanding of determinants that could improve job satisfaction among public administration employees in developing economies.

INTRODUCTION Job satisfaction has intrigued the academic community for more than five decades. By 1976, Locke registered 3,350 articles that covered the issue of job satisfaction, while three decades later, Ghawazzi (2008) estimated that this number increased to more than 12,000 articles. Researchers highlight that the popularity of this topic is primarily triggered by its multidisciplinary nature and multidimensional structure, targeting a variety of professions, industries and disciplines. (Ferdousi, 2012; Chien, 2013). In addition, various researchers suggest that it influences behaviour (Bowling, 2010), membership-related behaviour (Wright & Davis, 2003), loyalty and tendency of employees to leave the organization (Tsai & Huang, 2008; Rutherford et al., 2009; Savić et al., 2014), as well as the employee well-being (George & Jones, 2008). Job satisfaction can be considered an important factor 10

* E-mail: stefanovska@uacs.edu.mk

Key words: work environment, public administration employees, job satisfaction, personal characteristics, job characteristics.

of work motivation, employee retention and performance, thus reducing the turnover and litigation rate (Kim, 2002). The importance of job satisfaction in managing public administration employees has been a popular area of research in the developed economies based on the belief that the motivation of public administration employees directly aﬀects the quality and content of public outputs (Perry & Wise, 1990; Kim, 2002; Bullens & Broeck, 2007). Research in this field ranged from the analysis of the relationship between job satisfaction and personal characteristics (Reiner & Zhao, 1999; Bright, 2005; Dehart-Davis et al., 2007), work preferences (Bright, 2005), eﬀectiveness of public-sector diversity management programs (Nigro & Kellough, 2003), impact of perceptions (Scott & Pandey, 2005), tendency for charitable giving (Houston, 2006), volunteering (Reed & Selbee, 2001) and socio-economic status (Goss, 1999). Since

EJAE 2015  12 (1)  10-18

the Theory of Public Service Motivation suggests that public administration employees are motivated by the commitment to the common good (Houston, 2006), researchers have investigated the importance of intrinsic vs. extrinsic rewards for this group of employees. The results suggest that public administration employees pay less attention to extrinsic motivators such as higher pay, and more to service to society and the importance of meaningful work (Jurkiewitz et al., 2004; Houston, 2006). Recognition, discrimination and external relations were the best explanatory variables for job satisfaction (Johnsrud & Rosser, 1999). All of the above mentioned studies have been conducted in developed economies. However, public administration employees in developed economies work under more favorable conditions compared to their colleagues from developing economies. While the first work in an established system, have more opportunities for professional growth, and a wider scope for exploring one's talent etc., the latter are faced with numerous constrains (Ferdousi, 2012). The purpose of this research is to contribute to decreasing the existing research gap in understanding the determinants of job satisfaction among public administration employees in developing economies.

Bojadjiev, M. et al.  Perceived work environment and job satisfaction

METHODOLOGY Research objectives and research model Research is modeled on the previous research done in the field (Kim, 2002; Smerek & Peterson, 2007). It is constructed around the following research objectives: 1. to investigate the influence of personal and job characteristics on job satisfaction, Personal and job characteristics 1. Age 2. Gender 3. Supervisory role 4. Tenure

Job Satisfaction Outcome of the work environment

2. to assess the most significant predictors of job satisfaction. The conceptual model of this research is illustrated in Figure 1. The dependent variable is job satisfaction and is considered an outcome of the work environment. Job satisfaction was measured based on the three items: 1. the extent to which the current job compares to the ideal job; 2. the extent to which it meets your initial expectations; 3. the overall satisfaction with your job. In order to address research objectives, the model outlines the role of personal and job characteristics (age, tenure, supervisory role and gender) and investigates how each of these characteristics aﬀects job satisfaction. In addition, the model incorporates eleven work environment factors and analyses their impact on job satisfaction. Research approach and sample In order to test the conceptual model of research and research objectives, a survey was administered among 169 employees working in local municipalities in the city of Skopje during the period SeptemberNovember, 2014. The research utilized a convenient sampling method that is considered appropriate for the exploratory studies underlying further research (Coolican, 2004). The distribution of survey questionnaires was done in person by a member of the research team. The respondents were asked to fill in the questionnaires and return them in a pick-up box. The survey was anonymous and no marks were printed on the questionnaires that could identify the respondents. Table 1 presents the demographic profile of the surveyed population. Instrument

Perceived work environment 1. Recognition 2. Work it self 3. Opportunities for advancement 4. Opportunities for growth 5. Responsibility 6. Good feelings about organization 7. Understanding of mission 8. Relationship with coworkers 9. Effective supervision 10. Salary 11. Presence of core values

Figure 1. Conceptual model of the research

In order to better understand various aspects of workspace environment and job satisfaction among public administration employees in the Republic of Macedonia, a questionnaire modeled on the previous research by Smerek and Peterson (2007) and Kim (2000) was used in this study. The questionnaire contained a total of 43 questions covering the area of job satisfaction, advancement and growth, responsibility, autonomy, work perception, mission and core values of an organization, supervisor 11

EJAE 2015  12 (1)  10-18

Bojadjiev, M. et al.  Perceived work environment and job satisfaction

and colleague relationships, salary satisfaction, good feelings about the organization, work/life balance, training and development. All questions from the questionnaire were measured on a 5-point Likert type scale ranging from 1-strongly disagree to 5-strongly agree. Besides these questions, a section from the questionnaire collected the following personal and job characteristics of the participants: age, gender, supervisory role and tenure. No

Percentage

Male

Gender

29.6

Female

119

70.4

under 30

16.0

30-39 years old

47.3

40-49 years old

17.2

50-59 years old

16.0

60 years old and above

3.6

Primary school

High school

9.5

College

2.4

University

131

77.5

Master’s degree

10.1

less than 1 year

3.6

1-5 years

35.5

5-10 years

45.6

more than 10 years

15.4

Supervisory role

13.6

Non-supervisory role

146

86.4

Age

Education

Tenure

Supervisory role

Table 1. Demographic proﬁle of participants

ANALYSIS OF DATA Upon collecting research data, a principal component factor analysis (PCA) with direct oblimin rotation on job satisfaction and perceived work environment was performed in order to examine the factor structure of the data. The calculated KMO value was 0.831, which was considered adequate for the factor analysis. The results indicate that the correlation matrix was adequate and that PCA can be performed. The items that did not clearly load into a single factor or did not have a minimal value of 0.7, were excluded from the analysis. A total of 43 questions from the 12

original 75, converged in eleven factors. Table 2 presents the reliability of results for each of the extracted factors. In order to test research objectives, the following new variables were constructed: job satisfaction measured by three items; recognition measured by three items; work itself measured by four items; opportunities for promotion measured by three items; professional development opportunities measured by five items; responsibility measured by four items; good feelings measured by three items; clarity of mission measured by three items; relationship with coworkers measured by five items; effective supervision measured by six items; salary measured by two items and presence of core values measured by two items. RESULTS In order to address the first research objective, a t-test analysis was conducted to analyze the relationship of gender and supervisory role on job satisfaction (Table 3). The results from the t-test of gender with the perceived work environment indicate that overall females reported higher satisfaction levels with their workplace compared to males. Females were more satisfied with nine out of eleven workplace factors. It is interesting to note that women were less satisfied compared to their male colleagues with their opportunities for promotion. The greatest gender discrepancy was found in two items: effective supervision and core values, where females had much higher scores compared to their male colleagues. The analysis indicates significant statistical gender difference for four items: clarity of mission, relationship with co-workers, effective supervision and presence of core values. Given that the assumption for homogeneity of variance was not fulfilled, we proceeded with performing the Mann-Whitney U-test of supervisory role with perceived work environment and job satisfaction. The results indicate that employees with supervisory role were more satisfied with four out of eleven workplace factors (recognition, opportunities for promotion, good feelings about the organization and effective supervision). In addition, they showed higher level of job satisfaction compared to the employees with non-supervisory roles. The greatest discrepancy was found in recognition, where employees with supervisory role had much higher scores compared to their colleagues. The analysis found significant statistical difference for two items: recognition and effective supervision.

EJAE 2015  12 (1)  10-18

Bojadjiev, M. et al.  Perceived work environment and job satisfaction

Job satisfaction (α=0.812) 1 Imagine your ideal job. How well does your current position compare to the ideal job? 2 In general, how satisfied are you with your job? 3 Consider all the expectations you had when you started your current job. Does your current job meet those expectations? Recognition (α=0.758) 4 My contributions are valued by the members of my unit/department 5 I am satisfied with the received recognition or praise for doing good work 6 In my unit/department, you always get appropriate recognition when you have done something extraordinary Work itself (α=0.847) 7 I enjoy my job 8 My job is interesting 9 My job gives me a sense of accomplishment 10 The work I do is very important for my unit/department and the Organization as a whole Opportunities for promotion (α=0.821) 11 Opportunities for promotion within the Organization 12 I know what is requested from me in order to get promoted within the Organization 13 Information about job vacancies within the Organization is readily available Professional Advancement Opportunities (α=0.798) 14 My unit/department offers the appropriate training or education that I need to prosper in my job 15 I have received the necessary training to do my job well 16 I have already had the opportunity at work to learn and grow 17 There is someone at work who encourages my development 18 My supervisor points out the training or education that I need to grow in my job Responsibility(α=0.837) 19 I have control over how I do my work 20 My opinion counts at work 21 The physical environment allows me to do my job 22 I possess necessary resources, tools or equipment to do my job Good Feelings about Organization (α=0.868) 23 I feel a strong sense of belonging to the Organization 24 I have a strong commitment to the Organization 25 I am proud to work for the Organization Clarity of Mission(α=0.922)

0.745 0.598 0.874

I understand how my work supports the mission of my unit/department and the Organization as a whole and it is at com-

0.901

26 plete service to the citizens. 27 I know what is expected of me at work . 28 The goals of my unit/department and the Organization as a whole are clear to me Relationship with co-workers (α=0.748) 29 I respect my co-workers and I trust them 30 I am consistently treated with respect by my co-workers 31 I can count on my co-workers to help me out when needed 32 My co-workers and I work as a team 33 My unit/department collaborates effectively with other units/departments within the Organization Effective Supervisor (α=0.792) 34 My supervisor effectively communicates with the co-workers 35 My supervisor is an effective decision-maker for the Organization 36 My supervisor is approachable and easy to talk to 37 My supervisor gives me constructive feedback on my performance 38 My supervisor considers my ideas and remarks 39 My supervisor deals effectively with poor performance Salary (α=0.784) 40 I am satisfied and fairly paid for what I do 41 My salary/pay rate is a significant factor in my decision to stay at the Organization Presence of Core Values (α=0.881) 42 Organization fosters values that are clear and understandable to all employees (e.g. coming to work on time, code of ethics, etc.) 43 The fulfillment of my duties and obligations is of great importance for the Organization as a whole

0.722 0.71 0.798 0.81 0.752 0.745 0.881 0.812 0.795 0.753 0.884 0.783 0.723 0.721 0.721 0.826 0.81 0.801 0.784 0.845 0.82 0.702

0.821 0.712 0.714 0.71 0.755 0.74 0.74 0.725 0.711 0.706 0.783 0.723 0.711 0.745 0.715 0.921 0.77

Table 2. PCA of perceived work environment and job satisfaction 13

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Bojadjiev, M. et al.  Perceived work environment and job satisfaction

The results of the performed correlation of age and tenure with the eleven workplace factors and job satisfaction are presented in Table 4. The age of employees has a significant positive correlation with eﬀective supervision, recognition and job satisfaction. This means that job satisfaction, eﬀective supervision and recognition increase along with the employee age. On the other hand, the longer the tenure of employees in the organization, the less satisfied they are with the opportunities for professional advancement, good feelings about the organization and presence of core values. Research results indicate that employees with tenure over 10 years had the highest level of job satisfaction and were more satisfied with five out of eleven workplace factors (recognition, salary, relationship with coworkers, responsibility) (Table 5). This group

Variable

JS recognition workitself advancement growth responsibility goodfeelings mission coworkers supervisor salary values

Gender

Mean

Std. Deviation

male

2.98

female

of employees had the same level of satisfaction with the work itself as the employees who were employed in the company for less than a year. It is interesting to note that the employees who were employed in the company for less than one year at the time of the survey, showed the highest level of satisfaction with the following items compared to their colleagues: opportunities for advancement, good feelings about organization, opportunities for growth, mission and presence of core value. The Kruskal-Wallis analysis found significant statistical diﬀerence for two items: mission and presence of core value. In order to address the second research objective, a multiple regression model was designed to evaluate the relative impact of the eleven work environment factors controlling personal and job characteristics.

Supervisory role

Mean

Std. Deviation

0.89

Supervisor

3.39

0.68

3.17

0.70

Non-supervisor

3.09

0.82

male

3.15

0.79

Supervisor

3.57

0.72

female

3.25

0.81

Non-supervisor

3.09

0.77

male

3.81

0.49

Supervisor

3.84

0.59

female

3.87

0.51

Non-supervisor

3.86

0.47

male

3.31

0.71

Supervisor

3.22

0.68

female

3.46

0.64

Non-supervisor

3.41

0.62

male

3.20

0.58

Supervisor

3.26

0.62

female

3.08

0.68

Non-supervisor

3.06

0.64

male

3.60

0.60

Supervisor

3.49

0.57

female

3.69

0.56

Non-supervisor

3.68

0.59

male

3.80

0.77

Supervisor

3.87

0.63

female

3.85

0.52

Non-supervisor

3.79

0.58

male

3.83

0.62

Supervisor

3.90

0.42

female

4.06

0.41

Non-supervisor

4.01

0.46

male

3.63

0.64

female

3.84

0.53

male

3.41

0.69

female

3.67

male female

Sig.

Supervisor

3.57

0.60

Non-supervisor

3.85

0.54

Supervisor

3.70

0.67

Non-supervisor

3.49

0.65

2.87

0.62

Supervisor

2.78

0.62

2.94

0.76

Non-supervisor

2.88

0.71

male

3.63

0.77

female

3.89

0.52

* *

Supervisor

3.63

0.48

Non-supervisor

3.84

0.62

*p<0.05 Table 3. T-test of gender and supervisory role with perceived work enviroment 14

Mann Whitney U test Sig.

0.068 .012* 0.803 0.122 0.203 0.053 0.641 0.190 0.176 0.109 0.327 0.048*

EJAE 2015  12 (1)  10-18

Bojadjiev, M. et al.  Perceived work environment and job satisfaction

DISCUSSION The regression model analyses eleven work environment factors controlling personal and job characteristics. The results indicate that the age of employees is the most powerfull predictor of job satisfaction. This was in line with the previous research done in the field. For instance, the study by Herzberg et al. (1957) was one of the first to suggest that there was a U-shaped relationship between age and job satisfaction. Latter studies have confirmed these findings (Janson & Martin, 1982; Kacmar & Ferris, 1989; Clark, Oswald & Warr, 1996). The explanation for such a relationship is that job satisfaction initially declines until workers approach early 30s since this is a period when they have the most alternative employment options.

JS recognition workitself advancement growth responsibility goodfeelings mission coworkers supervisor salary values

Afterwards, job satisfaction linearly increases until an individual approaches the end of his/her working life. This research also investigates how tenure influences job satisfaction and the perception of the workplace environment. Research results indicate that employees with tenure over 10 years had the highest level of overall job satisfaction and were more satisfied with five out of eleven workplace factors. Similar findings were reached by Sarker et al. (2005) who found there is a significant correlation between tenure and the overall level of job satisfaction. However, the research notes that age acts as a significant modifier on the eﬀects of tenure on satisfaction. As regards the workplace environment, research results indicate that the most powerful predictor of job satisfaction is recognition, followed by work itself Age

Tenure

Pearson Correlation

.171*

.047

Sig. (2-tailed)

.026

.546

Pearson Correlation

.181*

.133

Sig. (2-tailed)

.018

.085

Pearson Correlation

.049

.060

Sig. (2-tailed)

.531

.436

Pearson Correlation

.001

-.208**

Sig. (2-tailed)

.986

.007

Pearson Correlation

-.022

.082

Sig. (2-tailed)

.781

.290

Pearson Correlation

-.062

.039

Sig. (2-tailed)

.425

.613

Pearson Correlation

-.011

-.179*

Sig. (2-tailed)

.883

.020

Pearson Correlation

-.064

-.137

Sig. (2-tailed)

.406

.075

Pearson Correlation

-.021

.071

Sig. (2-tailed)

.791

.358

Pearson Correlation

.161

.134

Sig. (2-tailed)

.037

.082

Pearson Correlation

.039

.009

Sig. (2-tailed)

.618

.908

Pearson Correlation

.061

-.152*

Sig. (2-tailed)

.433

.049

**. Correlation is signiﬁcant at the 0.01 level (2-tailed). *. Correlation is signiﬁcant at the 0.05 level (2-tailed).

Table 4. Correlation of age and tenure with perceived work environment and job satisfaction 15

EJAE 2015  12 (1)  10-18

Bojadjiev, M. et al.  Perceived work environment and job satisfaction

recognition

workitself

advancement

growth

responsibility

goodfeelings

mission

coworkers

supervisor

salary

values *p<0.05

less than 1 year 1-5 years 5-10 years more than 10 years Total less than 1 year 1-5 years 5-10 years more than 10 years Total less than 1 year 1-5 years 5-10 years more than 10 years Total less than 1 year 1-5 years 5-10 years more than 10 years Total less than 1 year 1-5 years 5-10 years more than 10 years Total less than 1 year 1-5 years 5-10 years more than 10 years Total less than 1 year 1-5 years 5-10 years more than 10 years Total less than 1 year 1-5 years 5-10 years more than 10 years Total less than 1 year 1-5 years 5-10 years more than 10 years Total less than 1 year 1-5 years 5-10 years more than 10 years Total less than 1 year 1-5 years 5-10 years more than 10 years Total less than 1 year 1-5 years 5-10 years more than 10 years Total

Mean 2.89 3.14 3.06 3.26 3.11 2.89 3.18 3.20 3.49 3.22 3.88 3.79 3.89 3.88 3.85 3.72 3.57 3.33 3.23 3.41 2.73 3.13 3.10 3.23 3.11 3.46 3.69 3.64 3.73 3.67 4.11 3.95 3.77 3.69 3.84 4.28 4.08 3.90 4.00 3.99 3.33 3.82 3.73 3.88 3.77 3.33 3.56 3.56 3.85 3.60 2.92 2.97 2.84 3.06 2.92 4.25 3.97 3.64 3.90 3.82

Std. Deviation 0.69 0.64 0.81 0.92 0.77 1.00 0.81 0.83 0.59 0.80 0.72 0.40 0.58 0.43 0.50 0.44 0.56 0.71 0.71 0.66 0.59 0.67 0.66 0.64 0.66 0.43 0.60 0.61 0.43 0.57 0.62 0.54 0.65 0.59 0.61 0.33 0.52 0.50 0.35 0.49 0.37 0.62 0.61 0.20 0.57 0.86 0.70 0.73 0.38 0.68 0.20 0.83 0.64 0.75 0.72 0.27 0.62 0.66 0.32 0.61

Table 5. Kruskal Wallis test of tenure and perceived work environment and job satisfaction 16

Sig.

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and the opportunity for professional advancement. This is also in line with the previous research by McInnis (1999) and Smerek and Peterson (2007) who found that work itself is the most significant predictor of job satisfaction among administration workers. The results of the multiple regression analysis suggest that workplace environment has a much higher influence on job satisfaction compared to personal and job characteristics. Taking into account that the perception of workplace environment can be modified, managers of public administration employees should pay more attention to providing promotion and professional advancement opportunities, allowing for more work autonomy, as well as providing a system of recognition for well performing employees. CONCLUSIONS

Bojadjiev, M. et al.  Perceived work environment and job satisfaction

Goss, K.A. (1999). Volunteering and the long civic generation. Nonprofit and Voluntary Sector Quarterly. 28(4), 378-415. DOI: 10.1177/0899764099284002

Houston, D.J. (2006). „Walking the walk” of public service motivation: Public employees and charitable gifts of time, blood, and money. Journal of Public Administration Research and Theory. 16(1), 67-86. DOI: 10.1093/ jopart/mui028 Jalal Sarker, S., Crossman, A., & Chinmeteepituck, P. (2003). The relationships of age and length of service with job satisfaction: an examination of hotel employees in Thailand. Journal of Managerial Psychology. 18(7), 745-758. DOI: 10.1108/02683940310502421 Janson, P., & Martin, J.K. (1982). Job satisfaction and age: A test of two views. Social Forces. 60(4), 1089-1102. Johnsrud, L.K., & Rosser, V.J. (2002). Faculty members’ morale and their intention to leave: A multilevel explanation. The Journal of Higher Education. 73(4), 518-542.

Given the fact that the perception of workplace environment can be modified, managers of public administration employees should pay more attention to providing promotion and professional advancement opportunities, allowing for more work autonomy, as well as providing a system of recognition for well performing employees.

Jurkiewicz, C.L., & Giacalone, R.A. (2004). A values framework for measuring the impact of workplace spirituality on organizational performance. Journal of Business Ethics. 49(2), 129-142.

REFERENCES

Kim, S. (2002). Participative Management and Job Satisfaction: Lessons for Management Leadership. Public Administration Review. 62(2), 231-241. DOI: 10.1111/00333352.00173

Bowling, N.A. (2010). Effects of Job Satisfaction and Conscientiousness on Extra-Role Behaviors. Journal of Business and Psychology. 25(1), 119-130. DOI: 10.1007/s10869009-9134-0 Bright, L. (2008). Does public service motivation really make a difference on the job satisfaction and turnover intentions of public employees? The American Review of Public Administration. 38(2), 149-166. DOI: 10.1177/0275074008317248 Buelens, M., & Van den Broeck, H. (2007). An analysis of differences in work motivation between public and private sector organizations. Public administration review. 67(1), 65-74. DOI: 10.1111/j.1540-6210.2006.00697.x Clark, A., Oswald, A., & Warr, P. (1996). Is job satisfaction U‐shaped in age? Journal of occupational and organizational psychology. 69(1), 57-81. DOI: 10.1111/j.20448325.1996.tb00600.x Coolican, H. (2004). Research methods and statistics in psychology. London: Hodder & Stoughton. DeHart‐Davis, L. (2007). The unbureaucratic personality. Public Administration Review. 67(5), 892-903. George, J.M., & Jones, G.R. (2008). Understanding and Managing Organizational Behavior. Upper Saddle River, NJ: Prentice Hall.

Kacmar, K.M., & Ferris, G.R. (1991). Perceptions of organizational politics scale (POPS): Development and construct validation. Educational and Psychological Measurement. 51(1), 193-205. DOI: 10.1177/0013164491511019

Locke, E.A. (1976). The Nature and Causes Of Job Satisfaction. In M. D. Dunnette. (Ed.), Handbook of industrial and organizational psychology. Chicago: Rand McNally, pp. 1319-1328. Kellough, J.E., & Nigro, L.G. (2006). Civil service reform in the states: Personnel policy and politics at the subnational level. Albany: State University of New York Press. Reed, P.B., & Selbee, L.K. (2001). The civic core in Canada: Disproportionality in charitable giving, volunteering, and civic participation. Nonprofit and Voluntary Sector Quarterly. 30(4), 761-780. DOI: 10.1177/0899764001304008 Reiner, M.D., & Zhao, J. (1999). The Determinants of Job Satisfaction Among United States Air Force Security Police: A Test of Rival Theoretical Predictive Models. Review of Public Personnel Administration. 19(3), 5-18. DOI: 10.1177/0734371X9901900301 Savic, M., Djordjevic, P., Nikolic, D., Mihajlovic, I., & Zivkovic, Z. (2013). Modeling the influence of EFQM criteria on employees satisfaction and loyalty in transition economy: the study of banking sector in Serbia. Serbian Journal of Management. 9(1), 15-30. DOI:10.5937/sjm9-4972 17

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Scott, P.G., & Pandey, S.K. (2005). Red Tape and Public Service Motivation Findings from a National Survey of Managers in State Health and Human Services Agencies. Review of Public Personnel Administration. 25(2), 155180. DOI: 10.1177/0734371X04271526 Smerek, R.E., & Peterson, M. (2007). Examining Herzberg’s theory: Improving job satisfaction among non-academic employees at a university. Research in Higher Education. 48(2), 229-250. DOI: 10.1007/s11162-006-9042-3

Tsai, M.T., & Huang, C.C. (2008). The Relationship among Ethical Climate Types, Facets of Job Satisfaction, and the Three Components of Organizational Commitment: A Study of Nurses in Taiwan. Journal of Business Ethics. 80(3), 565-581. Wright, B.E., & Davis, B.S. (2003). Job Satisfaction in the Public Sector. The American Review of Public Administration. 33(1), 70-90. DOI: 10.1177/0275074002250254

PERCEPCIJA RADNOG OKRUŽENJA I ZADOVOLJSTVA POSLOM MEĐU ZAPOSLENIMA U DRŽAVNOJ UPRAVI Rezime: Ovaj rad ispituje uticaj radnog okruženja na osećanje zadovoljstva poslom među zaposlenima u državnoj upravi. U njemu se analizira odnos između ličnih karakteristika i karakteristika posla i zadovoljstva poslom. Podaci su prikupljeni na uzorku koji obuhvata 169 zaposlenih u jednoj jedinici lokalne samouprave u Makedoniji. Rezultati istraživanja pokazuju da organizaciona klima i njene komponente mogu u velikoj meri predvideti stepen zadovoljstva poslom među zaposlenima u državnom sektoru. Analiza radnog okruženja ukazuje na to da je priznanje najbolji pokazatelj zadovoljstva poslom među zaposlenima u državnoj upravi, kao i postojanje mogućnosti za profesionalni napredak i unapređenje. Značaj ovog istraživanja ogleda se u njegovom doprinosu širenju znanja i boljem razumevanju determinanti koje mogu pozitivno uticati na zadovoljstvo poslom među zaposlenima u državnoj upravi u zemljama u razvoju.

Ključne reči: radno okruženje, zaposleni u državnoj upravi, zadovoljstvo poslom, lične karakteristike, karakteristike posla. Received: March 26, 2015. Correction: March 27, 2015. Accepted: March 31, 2015.

EJAE 2015, 12(1): 19-25 ISSN 2406-2588 UDK: 005.332:658.14 005.591.4:005.742(497.11) DOI: 10.5937/EJAE12-7977 Original paper/Originalni naučni rad

THE ANALYSIS OF THE EFFECTS OF FINANCIAL DISTRESS ON THE TOP MANAGEMENT IN THE REPUBLIC OF SERBIA Dragana Rađen* Singidunum University, Department for Postgraduate Studies, Ph.D Candidate 32 Danijelova Street, Belgrade, Serbia

Abstract: This study aims to examine the effects of financial distress on top management structures, as well as to identify the factors affecting managerial change in the companies that adopted the reorganization plan during bankruptcy proceedings in the Republic of Serbia for the period 20092014. Out of 39 companies that adopted the reorganization plan, the top management change was observed in 21 companies after the bankruptcy filing year, or within two years following the reorganization plan adoption. Research results indicate a strong negative correlation between the company’s liquidity and the probability of change in top management structures, with the impact of other observed factors not being statistically significant.

INTRODUCTION Over the years, the empirical evidence has demonstrated that financial distress is accompanied by significant changes in top management structures. Therefore, multiple research perspectives have been developed with the aim to investigate such influence. Based on a sample of 69 companies that filed for Chapter 11 proceedings during 1979-1984, Gilson (1989) documented that 55% of them replaced their CEOs within the two years preceding the bankruptcy filing year, and 71% in the period of two years following the bankruptcy filing year. Based on a sample of 43 large companies which filed for Chapter 11 during 1979-1988, LoPucki and Whitford (1993) documented that 91% of them replaced their CEOs in the period starting eighteen months before the bankruptcy filing year and ending six months after the adoption of the reorganization plan. On a sample of 197 companies that filed for Chapter 11 proceedings during 1979-1988, Hotchkiss (1995) found that 70% of the observed companies replaced their CEOs upon the filing year. Having analyzed the sample of * E-mail: dragana_radjen@yahoo.com

Key words: financial distress, top management, reorganization.

75 companies that filed for Chapter 11 proceedings during 1982-1990, Betker (1995) documented that 51% of CEOs were replaced before the filing year, 75% just before the reorganization plan was adopted, and 91% following the adoption of the reorganization plan. On a sample of 267 German companies that faced financial distress during 1996-2004, Jostarndt and Sautner (2006) recorded that only 14% of chief executives and 22% of chief directors remained within the company four years after the company entered financial distress. Involuntary management turnovers in their sample exceeded 80%. Relying on a sample of 153 large privately and publicly held companies that filed for Chapter 11 during 2001, Ayotte and Morrison (2009) documented that 41% of CEOs were replaced within one year following the bankruptcy filing year and 70% within two years from the bankruptcy filing year. On a sample of 184 reorganized companies that filed for Chapter 11 between 1980 and 2006, Surendranath and Madura (2010) documented that CEOs were replaced in 69% of all bankruptcy cases. On a sample of 626 companies that were reorganized in Chapter 11, Bharath et al. (2013) documented increase in management turnover rates between 1980 and the 19

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Rađen, D.  The analysis of the effects of financial distress

early 2000s by 65%, and this increase was attributed to the creditors who took control over the company in financial distress. On a sample of 342 public companies that filed for Chapter 11 during 1996-2007, Eckbo et al. (2012) found that incumbent CEOs in the companies in financial distress are more likely to be forced to leave. More than half of the incumbent CEOs regain full-time employment while the other half experience an income loss with median percent value of $4 million (discounted until retirement age). There is an abundance of empirical evidence regarding the factors aﬀecting management turnover. Crain et al. (1977, pp. 1374) documented that turnover was very responsive to the profit performance of the company, and that non-profit maximization behaviour in the private sector is not typically tolerated in the market for executive services. Wagner et al. (1984) reported negative correlation between the company’s performance and top management turnover. This is supported by Healy (2011) who also determined significant negative relation between the company’s performance and the probability of a CEOs turnover. According to Fizel and Louie (1990), CEOs turnover is influenced more by internal governance structure than by profit or sale performance. Jostarndt and Sautner (2006) found that managerial replacement is more aﬀected by shifts in ownership and control, rather than absolute levels of ownership concentration or the size of the equity holdings by private investors. In the companies in financial distress, management turnover was led by banks and financial investors who took control over the company in financial distress. Kesner and Dalton (2007) and Ting (2011) found that poor company’s performance prior to CEOs succession leads to greater turnover afterwards. The same result was confirmed by Kaplan and Minton (2012). So far it has been possible to explain empirical evidence in two ways. Firstly, having in mind that poor financial performance is predominately the result of previous management decisions, turnover of the top management could be forced by owners, even if the poor performance is not the result of decisions made by incumbent management, Fisman et al. (2013). Secondly, the turnover could be forced by creditors and investors who take control over the company in financial distress (Jostarndt & Sautner, 2006; Eckbo et al., 2012; Bharath et al., 2013). The main aim of this study is to investigate the impact of financial distress on the top management and identify the factors that influence the change in managerial structures in the companies that have been reorganized in bankruptcy. Most research in this area 20

focuses on the developed countries while this is the first time that someone examines the impact of financial distress on top management structures within the companies that have been reorganized during bankruptcy in the Republic of Serbia. This influence was investigated on a sample of 39 large and mediumsized non-financial companies in financial distress that were reorganized in bankruptcy in the Republic of Serbia during 2009-2014. In order to exclude the impact of financial distress on the ownership structures, this study takes into account only the change in the top management that was not involved in the company’s ownership. Having in mind that the quality of the top management could aﬀect the survival of companies following the adoption of the reorganization plan, Bogan and Sandler (2012) claimed that this study could be used for future improvement of the existing reorganization knowledge and practice in the Republic of Serbia. Banks are particularly interested in such improvement, as they are the main creditors of the real estate sector in the Republic of Serbia. The paper is organized as follows. After the literature overview, the paper presents the methodology used. The Methodology section provides some basic information on the companies included in the sample, depicts the data used, summarizes descriptive statistics, outlines the used research methodology, employed variables, and the model used to examine the impact of the variables on the change in top management structures. The following section depicts the results, whereas the final section contains the main findings. METHODOLOGY Sample Selection Process Given the aim of this study, the sample includes medium-and large-sized non-financial companies that completed the bankruptcy proceedings through adoption of the reorganization plan during 2009-2014 in the Republic of Serbia. Bearing in mind that financial crises and failures of large and medium-sized Serbian companies started in 2009, and continued during 2010-2014, this research period could be considered representative. For the purpose of this research, a company is considered to be in private ownership if the state has less than 50% of ownership share in bankruptcy filing year. Based on the statistics of the Bankruptcy

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Supervision Agency, 42 large and medium-sized private Serbian non-financial companies adopted the reorganization plan during 2009-2014. For the purpose of this research, the plan is adopted if the court reaches the decision to adopt the reorganization plan, and such decision is final. The research included only non-financial companies in financial distress. A company is classified as financially distressed if its earnings before interest, taxes, depreciation, and amortization (EBITDA) are less than the reported interest expense, over a period of any two consecutive years, or if the EBITDA is less than 80% of its interest expense in any year, (Asquith et al., 1994). In this respect, out of the population of 42 companies, 3 companies were excluded from the final sample due to the fact that they were not in financial distress. The main features of the initial population versus excluded companies, and the final sample are presented in Table 1. Balance sheets and income statement data used in the research originate from the Serbian Business Registers Agency, while the information related to ownership, industry classification and management structure was obtained from Boniteti.rs, Poslovna.rs (electronic database) and the Serbian Business Registers Agency. The texts of the reorganization plans, and other relevant data concerning the bankruptcy proceedings were obtained from the Serbian Business Registers Agency, the Portal of Serbian Courts and/or the oﬃcial site of the companies. In order to isolate the impact of decisions made during the bankruptcy period, financial ratios used in this research were calculated based on the financial figures that stem from the end of the fiscal year prior to bankruptcy. Sample Statistics The majority of the companies in the final sample belong to the manufacturing industry (48.7%), with a significant number belonging to wholesale trade (28.2%) and construction industry (12.8%). A large fraction of the sample companies experienced a strong decline in profitability, 32 companies experienced net loss in the year preceding the bankruptcy filing year and 38 companies experienced net loss in the filing year. One of the largest problems in the Republic of Serbia is that the filings for the reorganization are late, due to long, expensive and unsuccessful private negotiations with creditors preceding the reorganization. For the same reason, most of the reorganizations are ineﬃcient and the reorganized companies file for bankruptcy within 2 years after the adoption of the reorganization plan. In the final sample, 14 of

Rađen, D.  The analysis of the effects of financial distress

the reorganized companies filed for bankruptcy until February 15, 2015, while the change in top management structures was observed in 8 companies. As regards the impact of financial distress on corporate governance, the change in top management structures was observed in 21 companies in the final sample after the bankruptcy filing year or two years following the adoption of the reorganization plan. Also, 8 companies changed their ownership structures, while in 18 companies the reorganization plan envisaged the establishment of the Board of Creditors or some other similar body with the aim to control the company’s business or monitor the realization of the reorganization plan, as shown in Table 2. In order to determine the factors that increase the probability of change in the top management structures, research considers explanatory variables demonstrated by previous research to be relevant for top management turnover. In order to analyze the impact of the variables, a model was developed in the research. Model Inputs The model developed in this research utilizes one binary dependent variable, a variable with two possible outcomes, and six explanatory variables. All analyses were performed using the SPSS software. Dependent Variable This research uses the dependent variable TURNOVER, with two outcomes: attributing 1 in the event that the top management structures changed after the bankruptcy filing year, or two years following the adoption of the reorganization plan; and 0 if no change was made in the top management structures during the observed period. Management turnover is defined as a change in the position of the company’s top executives (director, president of supervisory board and/or members of the supervisory board), which were not involved in the company’s ownership during the observed period. The change of the top executives was observed after the bankruptcy filing year and two years following the adoption of the reorganization plan. The timeframe for the top management turnover has to balance the two opposing considerations. On one hand, reorganization is viewed as a time-consuming process whose eﬀects may be felt substantially prior to or following the adoption of the reorganization plan. On the other hand, the change of the top management is not an unusual event in 21

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Rađen, D.  The analysis of the effects of financial distress

some of the companies and may not be related to financial distress. For the same reason, the choice of a timeframe, which is a quite time-consuming process, could lead to potentially misleading conclusions. Explanatory Variables The following explanatory variables were used in the research: the company’s size, financial health, change in the ownership structures and the presence of the Board of Creditors. The last two variables reflect the change in corporate governance mainly initiated by the creditors. ◆ Size. Change in corporate control is less likely to occur in large companies (Mulherin & Boone, 2000; Köke, 2001; Heiss & Köke, 2004). This can be explained by the fact that monitoring and agency costs could be greater in larger companies. Thus, larger companies employ more skilled managers who are more likely to be retained in the company upon adopting the reorganization plan. The natural log of the company’s total assets LN (AT) is used to measure the company’s size. ◆ Financial health. Strong negative correlation between the probability of CEOs turnover and the company’s performance is consistent with the previous research results. In order to examine the impact of the company’s performance on the probability of change in the top management structures, current ratio (LIQUIDITY) and debt-to-asset ratio (LEVERAGE) were employed in the research as measures of the company’s indebtedness. The current ratio (LIQUIDITY) was calculated as a ratio between current assets and current liabilities. The debt to-asset ratio (LEVERAGE) was calculated as a ratio between the total debt and the total value of assets, with the total debt including a book value of the company’s short and long-term debt. As regards this, total debt takes the total company’s liabilities and not only financial liabilities. EBITDA margin (EBITDAMARGIN) was used as a measure of the company’s profitability. The EBITDA margin was calculated as a ratio of EBITDA to sales revenue, whereby EBITDA is defined as the earnings before interest, taxes, depreciation and amortization. ◆ Ownership change. According to Graham and Smart, (2011, p. 20), managers act as agents of the owners who hired them and provided them 22

with the decision-making authority. The empirical evidence also indicates that change in the existing ownership structures might influence the incumbent top management positions. Accordingly, an assumption was made in the research that in case the ownership structure changed after bankruptcy filing year or after the adoption of the reorganization plan, new owners would most likely place new managers (intuitive conclusion). In this respect, the model used the dependent variable OWNCHANGE with two outcomes: attributing 1 in the event that the ownership structure has undergone changes after the bankruptcy filing year, or following the adoption of the reorganization plan; and 0 if no change has been made to the ownership structure. ◆ Board of Creditors. The turnover in top management could be forced by creditors and investors who take control over the company in financial distress (Jostarndt & Sautner, 2006; Bharath et al., 2013). One of the strategies for taking control over a company in financial distress is through the Board of Creditors or some other similar body established to monitor the company’s business after the adoption of the reorganization plan. In this respect, the model employed the dependent variable CREDITORS COMMITTEE, taking the value of 1 if the Board of Creditors or some similar body was established in the company following the adoption of the reorganization plan, and 0 if such a body was not established. Model The following regression analysis was used in this research to explain the impact of the explanatory variables on the dependent variable: TURNOVER = β1× LN (AT) + β2× LIQUIDITY + β3× LEVERAGE + β4× EBITDAMARGIN + β5× OWNCHANGE + β6× CREDITORS COMMITEE + ε

where ε represents random error. Binary Logistic Regression (BLR), as one of the most widely used statistical techniques, was used in this research. In the first research phase, all explanatory variables were included in the model by applying the “Enter” method. In order to verify the results

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obtained in this phase, “Forward” method was implemented in the second phase, where explanatory variable LIQUIDITY was first included in the model, considering that this variable had the most statistically significant influence on the dependent variable compared to other explanatory variables, based on the BLR estimates obtained in the first research phase. RESULTS BRL Estimates Table 3 shows the BLR estimates for the model in which the “Enter” method was applied, while Table 4 presents BLR estimates for the model in which the “Forward” method was applied. The results of the BLR estimates in both cases show that the explanatory variable LIQUIDITY has a statistically significant influence on the dependent variable TURNOVER with a significance level of 0.05. The sign of coefficient indicates a strong negative correlation between the explanatory variable LIQUIDITY and dependent variable TURNOVER. Also, the influence of other empirical variables used in the model was not statistically significant – a result confirmed in the first and second phase of the research. The signs of the regression coefficients for variables LN (AT), and CREDITORS COMMITTEE are not consistent with the assumptions made in the Model inputs section, while the signs of the regression coefficients for explanatory variables LEVERAGE and EBITDAMARGIN are consistent with the assumptions. As regards the impact of the variable OWNCHANGE, the results of BLR estimates show that this variable does not have significant influence on the dependent variable TURNOVER, while the sign of regression is negative. This is not supported by the empirical evidence and might be caused by a relatively small number of observations within the categories (i.e. small sample). The second explanation for such result could be found in the existing conditions in the top managers market. As in any other transition economy, the top managers market in the Republic of Serbia is small and undeveloped. The transition from a planned socialist economy to market-oriented economy was followed by dramatic changes in the company’s core activities and business models. There was insufficient number of experienced and educated managers that could keep pace with such changes. This led to development of the young generation of managers who were closely controlled by the largest equity holders of the company. As regards this, decisions made by the top

Rađen, D.  The analysis of the effects of financial distress

management were influenced by the owners. Given that general and specific human capital is of vital importance for the success of the company, CEOs with a high level of human capital are less likely to be replaced (Crook et al., 2011; Hutchinson & Russell, 2013). Consequently, if the new owners are not familiar with the business model of the reorganized company, they will probably be willing to keep the existing top managers with a high level of human capital and use other means of control to influence the choice of top management and provide them with incentives to improve the overall company’s performance, Evans et al. (2014). Limitations This study encounters four significant limitations. First, while change in top management is likely to be the result of involuntary turnover, some managers do leave voluntarily due to better job opportunities. At this point, it is not possible to identify the factors that caused change in top management structures. Secondly, this research does not take into account the dynamics of management change. Thirdly, it utilized publicly available data from the annual reports. Despite the fact that large and medium-sized companies in Serbia are subject to external financial audits, financial statements are burdened with hidden losses that could influence the accuracy of ratios used in the research. However, no appropriate substitute for this data could be found. Moreover, due to relatively small number of observations within the categories, the estimated significance of the variables used in the model does not allow a researcher to define a statistically defensible model. Despite the aforementioned limitations, the results oﬀer valuable insights for future research. CONCLUSIONS The paper provides evidence on the extent to which financial distress aﬀects the top management structures. It shows that in the majority of the companies in the Republic of Serbia, financial distress exerts statistically significant impact on the top management structures. In 21 companies that completed bankruptcy via adoption of the reorganization plan, top management structures changed after the filing year, or within two years following the adoption of the reorganization plan. This indicates that financial distress and reorganization may play a significant role in providing discipline to the corporate governance system as a whole. We believe that future research should be more focused on examining whether changes in top 23

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Rađen, D.  The analysis of the effects of financial distress

management structures affect the long-term performance of the reorganized companies. Despite the fact that the existing statistics are not encouraging, they could be improved by larger involvement of creditors in management of the reorganized companies. In this way, they will be more willing to provide the company in financial distress with additional financial resources. The question that imposes itself is whether socio-demographic characteristics and differences in legal regimes affect change in corporate control in the companies in financial distress. As regards this, international comparison could improve the existing knowledge and corporate governance practices in the companies in financial distress. REFERENCES Asquith, P., Gertner, R., & Scharfstein, D. (1994). Anatomy of financial distress: An examination of junk-bond issuers. Quarterly Journal of Economics. 109(3), 625-658 Ayotte, K. & Morrison, E.R. (2009). Creditor Control and Conflict in Chapter 11. Journal of Legal Analysis. 1(2), 511-551. DOI: 10.1093/jla/1.2.511 Betker, B.L. (1995). An empirical examination of prepackaged bankruptcy. Financial Management. 24(1), 3-18. Bharath, S. T., Panchapegasan, V., & Werner, I. (2013). The Changing Nature of Chapter 11. Fisher College of Business Working Paper No. 2008-03-003. DOI: 10.2139/ ssrn.1102366 Bogan, V.L., & Sandler C.M. (2012). Are Firms on the Right Page with Chapter 11? An Analysis of Firm Choice that Contribute to Post-Bankruptcy Survival. Applied Economics Letters. 19(7), 609-613. DOI:10.1080/1350485 1.2011.591721 Crain, W.M., Deaton, T., & Tollison, R. (1977). The Survival of Corporate Executives. Southern Economic Journal. 43(1), 1372-1375. Crook, T.R., Todd, S.Y., Combs, J.G., Woehr, D. J., & Ketchen, D.J. (2011). Does human capital matter? A metaanalysis of the relationship between human capital and firm performance. Journal of Applied Psychology. 96(3), 443-456. DOI: 10.1037/a0022147 Eckbo, B.E., Thorburn, K.S., & Wang, W. (2012). How Costly Is Corporate Bankruptcy for Top Executives? Tuck School of Business Working Paper No. 2012-109. DOI: 10.2139/ ssrn.2138778 Evans, J.H., Luo, S., & Nagarajan, N. (2014). CEO Turnover, Financial Distress, and Contractual Innovations. The Accounting Review. 89(3), 959-990. DOI: 10.2139/ ssrn.2130690 Fisman, R.J., Khurana, R., & Rhodes-Kropf, M. (2013). Governance and CEO turnover: Do something or do the 24

right thing? Management Science. 60(2), 319-337. DOI: 10.1287/mnsc.2013.1759 Gilson, S.C. (1989). Management Turnover and Financial Distress. Journal of Financial Economics. 25(2), 241-262. DOI: 10.1016/0304-405X(89)90083-4 Graham, J., & Smart, S. (2011). Introduction to Corporate Finance: What Companies Do? Ohio, USA: Cengage Learning. Heiss, F., & Köke, J. (2004). Dynamics in Ownership and Firm Survival: Evidence from Corporate Germany. European Financial Management. 10(1), 167-195. DOI: 10.1111/j.1468-036X.2004.00244.x Healy, J.P. (2011). The Effectiveness of Internal and External Mechanisms of Corporate Control. International Business & Economics Research Journal (IBER). 1(7), 13-28. Hotchkiss, E.S. (1995). Postbankruptcy Performance and Management Turnover. Journal of Finance. 50(1), 3-21. DOI: 10.1111/j.1540-6261.1995.tb05165.x Hutchinson, M.R., & Russell, M. (2013). Is CEO Human Capital Related to Firm Performance? In EAA 2013: European Accounting Association 36th Annual Conference. 2-5 May 2013. Paris, France. Jostarndt, P., & Sautner, Z. (2006). Financial distress, corporate control, and management turnover. Journal of Banking and Finance. 32(10), 2188-2204. Kaplan, S.N., & Minton, B.A. (2012). How has CEOs turnover changed? International review of Finance. 12(1), 5787. DOI: 10.3386/w12465 Kesner, I.F., & Dalton, D.R. (2007). Top management turnover and CEO succession: An investigation of the effects of turnover on performance. Journal of Management Studies. 32(5), 701-713. DOI: 10.1111/j.1467-6486.1994. tb00635.x Köke, J. (2001). Control Transfers in Corporate Germany: Their Frequency, Causes, and Consequences. Centre for European Economic Research Mannheim, Germany. LoPucki, L.M., & Whitford, W.C. (1993). Corporate Governance in the Bankruptcy Reorganization of Large, Publicly Held Companies. 141 University of Pennsylvania Law Review. 141(3), 699-800. Mulherin, J.H., & Boone, A.L. (2000). Comparing Acquisitions and Divestitures. Journal of Corporate Finance. 6(2), 117-139. Surendranath, R.J., & Madura, J. (2010). The long-run performance of companies emerging from Chapter 11 bankruptcy. Applied Financial Economics. 20(14), 1145-1161. DOI:10.1080/09603101003761895 Ting, W. (2011). Top management turnover and firm default risk: Evidence from the Chinese securities market. China Journal of Accounting Research. 4(1-2), 81-89. DOI:10.1016/j.cjar.2011.04.005 Wagner, W.G., Pfeffer, J., & O’Reilly, C.A. (1984). Organizational Demography and Turnover in Top Management Groups. Administrative Science Quarterly. 29(1), 74-92.

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TABLES Initial population

Mean characteristics and Std. deviation

Mean

Excluded companies

Std. Deviation

Mean

Final sample

Std. Deviation

Mean

Assets (EUR Million) 22.278 21.462 4.157 2.465 23.672 21.651 Sales (EUR Million) 14.603 27.634 6.230 4.349 15.248 28.582 Number of months spent in bankruptcy 11.542 10.530 5.676 2.835 11.993 10.783 No. of companies 42 3 39 Table 1. Composition of the initial population versus excluded companies and companies in ﬁnal sample

Variable/Frequency

No change in management

Frequency

Percent

Ownership changed 1 12.50 Creditors’ committee established 9 50.00 Table 2. Inﬂuence of ﬁnancial distress on the corporate governance Variable

B -4,265 -1,874 -0,625 0,180 0,229 -1,989 3,937

LIQUIDITY LEVERAGE EBITDAMARGIN LN(AT) CREDITORS COMMITEE OWNCHANGE Constant

S.E. 1,931 2,886 0,628 0,447 0,884 1,292 7,402

Change in management

Total

Frequency

Percent

Frequency

Percent

7 9

87.50 50.00

8 18

100.00 100.00

Wald 4,876 0,422 0,991 0,162 0,067 2,370 0,283

Df 1 1 1 1 1 1 1

Sig. 0,027 0,516 0,320 0,687 0,795 0,124 0,595

Exp (B) 0,014 0,153 0,535 1,198 1,257 0,137 51,272

Note: Variable(s) entered on step 1: LIQUIDITY, LEVERAGE, EBITDAMARGIN, LN(AT), CREDITORS COMMITEE, OWNCHANGE, α=0.05.

Table 3. BLR estimates (enter method) Variable LIQUIDITY Constant

B -4.006 3.404

S.E. 1.603 1.357

Wald 6.243 6.292

df 1 1

Sig. 0.012 0.012

Exp (B) 0.018 30.080

Note: Variable(s) entered on step 1: LIQUIDITY, α=0.05.

Table 4. BLR estimates (forward method)

ANALIZA UTICAJA FINANSIJSKIH TEŠKOĆA NA TOP MENADŽMENT U REPUBLICI SRBIJI Rezime: Ova studija nastoji da ispita uticaj finansijskih teškoća na top menadžment i da identifikuje faktore koje utiču na promenu top menadžmenta u kompanijama koje su usvojile plan reorganizacije u stečaju u Republici Srbiji od 2009. do 2014. godine. Od 39 kompanija koje su usvojile plan reorganizacije, u 21 kompaniji je došlo do promene top menadžmenta nakon otvaranja stečajnog postupka ili dve godine po usvajanju plana reorganizacije. Rezultati istraživanja ukazuju na postojanje jake negativne korelacije između likvidnosti kompanije i verovatnoće promene top menadžmenta, dok uticaj ostalih posmatranih faktora na top menadžment nije statistički značajan.

Ključne reči: finansijske teškoće, top menadžment, reorganizacija. Received: March 1, 2015. Correction: March 10, 2015. Accepted: March 22, 2015.

EJAE 2015, 12(1): 26-36 ISSN 2406-2588 UDK: 338.487:659.1 004.738.5:658.8 338.48-44(497.11-23.0)) DOI: 10.5937/EJAE12-8159 Original paper/Originalni naučni rad

COMPARATIVE ANALYSIS OF FACEBOOK AND COMMUNICATION ACTIVITIES OF THE MOUNTAIN HOTELS IN STARA PLANINA, KOPAONIK AND ZLATIBOR Radmila Živković*, Angelina Njeguš, Marija Zlatanović, Jelena Gajić, Ivana Brdar Singidunum University, Faculty of Tourism and Hospitality Management 32 Danijelova Street, Belgrade, Serbia

Abstract: Communication strategies with the consumers of tourism products and services have significantly transformed in recent years with the advent of social media and online information. According to numerous authors, social media represent a hybrid form of traditional integrated marketing communications with the increased effect of WOM (word of mouth) communication, which enables the exchange of information between users/consumers. The transparency of social media provides the hoteliers with necessary feedback and opens up new communication channels. Modern consumers possess greater knowledge and higher expectations than before. The purpose of the research conducted on a sample of mountain hotels in Serbia using web metrics was to determine guest perception and satisfaction with the hotels at the most popular Serbian mountain destinations. The results show that social networks can be used successfully by service providers to improve the understanding of guests’ needs, as well as to enhance business performance and revenue. By maintaining long-term relationships with guests, hoteliers can build stronger and more enduring connections that will result in new purchases and more efficient WOM (word of mouth).

INTRODUCTION In the past, marketing theory was focused more on “how to sell“, whereas today more emphasis is placed on consumers, pushing boundaries from thinking in terms of financial transactions to developing relationships. Therefore, the basic goal of marketing activities of a company doing business in the area of tourism, aside from developing products and services, innovating processes, internal and external communication, analysis of competition, etc., is to satisfy the needs and wishes of consumers/tourists in a way that secures the increase in sales of a tourist product and making long-term profit. 26

* E-mail: rzivkovic@singidunum.ac.rs

Key words: marketing communications, mountain hotels, social media, consumers.

The key strategy that tourist companies employ to learn about consumers-tourists is establishing the facts (gathering and analysing data) about their past and present purchases and the level of their satisfaction with the choice and quality of tourist products. Research and analysis of the obtained data present information and give directions for adjusting oﬀers, assessment of the possibility for increasing tourist traﬃc, designing successful communication with certain emitting markets, evaluation of the importance of some elements of the tourist product of a destination etc. From the point of view of tourist demand, there came to a change in the structure of tourists’ wishes

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Živković, R. et al.  Comparative analysis of Facebook and comunication activities

and expectations, which came out of the frame of the industrial tourist model and shaped the tourism in accordance with a new lifestyle and new values. Greater expectations of tourists have been incited by media and telecommunication, higher degree of education and previous experience and knowledge. The same factors influence faster transfer of information. The Internet facilitates comparison of destinations and hotels, and thus saves time and enables direct booking. Understanding the consumers and the decisionmaking process to purchase or use tourism products is the foundation of marketing strategy (Cohena et al., 2014; Živković, 2013; Fratu, 2011). The aim of this paper is to point to the merit and importance of online communication in tourism and hotel management in order to develop more eﬃcient marketing communication strategies and actions. The purpose of this research was to establish the perception and attitudes of guests in the sample mountain hotels in Serbia by means of web metrics. MODERN COMMUNICATON IN TOURISM AND HOTEL MANAGEMENT Modern tourists are well informed due to information technologies, and therefore can easily compare several similar oﬀers. The traditional approach used to be mostly one-directional, comprising active company and passive consumer (Minazzi, 2015). Marketing 2.0, which is the result of the development of Web 2.0 generation, is actually the consumer-oriented marketing (Kotler et al., 2010). Upon encountering this newer generation of Web, the so-called semantic web, marketing turns to personalisation and consumer engagement Marketing 1.0 Product-oriented

and becomes increasingly intelligent. As a result, it evolves into the intelligent web marketing or Marketing 3.0. The comparison of marketing generations in relation to web development is presented in Table 1. Information and communication systems enable collecting and analysing information with the aim of creating new products/services adapted to meet the needs of diﬀerent users. The advantage of such comparison is that it encourages tourist agencies to make innovations based on their strong points and key competencies, which could be further used to manage new knowledge, information and tourist experiences (Živković et al., 2012). Consumers should always know in advance about the type of tourist experience, since in the first phase of decision-making, they are those who choose destinations which reflect beliefs, feelings and attitudes on the possibilities of satisfying their specific needs as tourists (Pull factors). (Kanagaraj & Bindu, 2013; Bakić, 2010; Fjelstul, 2013) Information transfer regarding the oﬀer, via media and other marketing channels, previous experience and attitudes of tourists, combined with motivation and socioeconomic characteristics, shape the tourists’ perception/image. With the rapid advancement of technology and increase in the number of innovations, numerous important characteristics of products and services the companies want to use in market games have stayed beyond the consumers’ field of perception. It is assumed that, for the good positioning of a product or service in the market, it is necessary to possess better previous knowledge and understanding of the way the consumers are informed about rival brands. Information about the market greatly shapes the behaviour of potential consumers.

Marketing 2.0 Consumer-oriented

Marketing 3.0 Value-oriented

Goal

To sell the product in mass market

To satisfy the needs and retain consumers

To meet the emotional and rational needs of consumers

Stimulus

Industrial revolution

Information technologies

Development of World Wide Web and introduction of Web 3.0 generation

Marketers’ view of market

Mass market

Smarter consumers

Consumers with all their spiritual, emotional and rational values

Key marketing concept

Market guided by product

Diﬀerentiation

Product value according to consumer proﬁle

Value proposition

Functional

Functional and emotional

Functional, emotional, spiritual and rational

Relation of one vs. one

Mutually cooperating consumers (many vs. many)

Interaction with Mass communication (one vs. many) consumers Table 1. Comparison of marketing generations Source: Kotler et al. (2010)

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The process of collecting information in tourism is rather complex and comprises gathering information from diﬀerent sources, such as tourist agencies, internet portals, video, itineraries, catalogues and brochures on destinations, tour operators, newsletters, info desks, social networks, transportation agencies, etc. Communication messages, broadcasted via television, internet or other channels, work as a recommendation to tourists, and as such, they and their sociological role cannot be overlooked (Živković, 2013; Jansen & Schuster, 2011). The Internet has two important roles in this process: openness and the possibility of network creation. The first one relates to the possibility of an individual to participate by creating, sharing information, while the second one relates to the potential for creating more or less cohesive communities/groups – whether we talk about territorially distant groups or already established “place-based community networks”, and this intensifies the potential influence on other people (Servon, 2002). As regards this, it is necessary to stress out the impact of reference groups and thought leaders. Reference groups are used as a starting point for comparison by an individual when forming values, attitudes or behaviours. The concept of a reference group is very wide and what is common to diﬀerent reference groups is that they are all understood by consumers as points of comparison (reference) for evaluating personal actions, beliefs and attitudes. Aside from the visible influence that reference groups have on consumers’ behaviour, there is also the significant impact that a person can have on forming values, attitudes and behaviour of a group to which he/she belongs. There are strict individualists who create and nurture their own habits and lifestyle within the frame of group values (Maričić, 2011; Solomon, 2011). There are numerous reasons why people want to be present on social networks and share their knowledge and experience with other users. People usually become motivated to share important information online when they expect their experience to help or at least be useful to someone. Social psychology dictates that people are social beings who are pleased with the fact that they receive direct response for their contribution (Živković, 2014). SOCIAL NETWORKS: GOALS AND FUNCTIONAL FRAMEWORK Social networks have enabled the two-directional process of communication. Nowadays, the role of responsibility and moral support is not only upon the providers of information, but also upon the users 28

participating in the process of informing and sharing that information with other potential users. By describing their needs related to hotel services, the points of satisfaction and dissatisfaction, users give a notion to service providers about how to improve all the parameters of services. Social networks are used by providers with the aim of improving and understanding the needs of their users, and thus improving their business, increasing revenue, keeping old and attracting new users (Hoﬀman & Novak, 2009). By building marketing relations via contemporary media, hoteliers build stronger and more durable connections which result in higher sales, repeated purchases and more eﬃcient oral propaganda (Safko, 2010; Green & Lomano, 2012). The development of the new Web 3.0 generation has triggered media to set new trends. Social networks represent one of the most used means of online promotion. Social networks as tools for promotion and marketing enable access to a large number of users, comprehension of their needs, as well as adaptation (customisation) of a product or service, which further leads to creating recognisable brands that the users will repeatedly return to. The basic goals of marketing using social networks are shown in Table 2. Goals Building of relationships Building of brands Publicity Market research

Description Inbound-marketing; personalisation; engaged consumer Increase of recognition and loyalty to brend; word-of-mouth Promotions; sharing information and inﬂuencing negative perception Analysing results by using analytical tools for following social networks; learning from one’s clients; analysing consumer proﬁles and behaviour

Table 2. Goals of marketing use of social networks Source: Gunelius (2011)

There are diﬀerent levels of use of social networks. Kietzmann et al. (2011) suggested the framework containing seven functional blocks: identity, conversations, sharing, presence, relationships, reputation and groups (Table 3). Every developmental block enables comprehension of users’ experiences on social networks and their influence on companies. ◆ Identity: it comprises personal data that users post on social networks, such as their name and surname, age, gender, occupation, location, as well as false representation. Identity represents the basic core of many social media platforms (e.g. Facebook was built as an iden-

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◆

tity base, i.e. setting up of user profiles). The main issue within this block is the privacy of data. Companies can follow demographic data of their users based on their identities. Conversations: they point to the amount to which users communicate with each other on social networks. Many social networks have primarily been developed to facilitate communication between users and groups. However, the enormous number of diﬀerent communication forms and protocols is being transferred, which the companies desire to track and save in their systems. For example, Twitter was developed around the exchange of short messages which mainly represent statements in real time. Sharing: it represents the exchange, distribution and acceptance of content among users. Companies want to identify the common social goals of the users or new services that could be interesting to certain social groups. The most popular platforms for content sharing are Tumblr, YouTube, Pinterest, etc. (Stelzner, 2014; Global Web Index, 2014) Presence: it subsumes the availability of users on social networks. It also includes the recognition of the users’ location, as well as their availability, either in real or virtual environment. The user movements within and outside the network are being followed. Relationships: these show the degree of mutual connection among the users. Connection refers to whether they are friends online or they belong to the same group, whether they Name

Description

share some common interests, etc. Companies want to know how to build or maintain longstanding relationships with users. ◆ Reputation: reputation on social networks is based on trust, i.e. the degree to which users can identify each other as well as themselves. Companies choose specialised metrics to measure their reputation, for instance, to show the number of views or fans. ◆ Groups: They take into account the degree to which users can form communities or sub communities (e.g. groups of friends or fans).

WEB ANALYSIS: CONCEPT, FRAMEWORK AND TOOLS Web analytics is a tool for collecting, measuring, analysing and reporting about web traﬃc, in order to understand web users’ behaviour, with the aim of delivering personalised content, as well as grading, optimising and improving the website eﬃciency (Clifton, 2014). Web analytics tools are being largely used today for tracking the conduct of businesses and market researches. For instance, by following analytics, we can obtain answers to the following questions: ◆ Who are the visitors of websites and do they have similar characteristics? ◆ From which social networks do visitors mainly come to the website? ◆ Which campaigns increase the sales? ◆ Which websites trigger visitors to decide upon purchase? ◆ Which websites do visitors come from? Problems and metrics

Identity

Identity of user who is exposed online

Privacy of data; analysis of user’s demographic data

Conversations

To what degree users communicate with each other

Following an enormous number of diﬀerent forms and protocols of communication; analysis of consumers‘ satisfaction my means of comments

Exchange, distribution and accepting of content among users

Analysis of mutual goals of users and identiﬁcation of new services that could be interesting to users

Availability of users

Identifying user’s location, tracking their movement online or in real life

Relationships

To what degree are users interconnected

Tracking of connections with the aim of building and maintaining relations with users

Reputation

The trust which users identify with the others, and with themselves

Special metrics are used for measuring users‘ reputation, whether via ranking systems or via number of views, likes, fans, etc.

To what degree can users form communities

It does not only include the tracking of one group’s user list, but also different privilegies they have

Sharing Presence

Groups

Table 3. Functional framework of social networks with problem description. Source: Kietzmann et al. (2011)

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The issue that emerges here relates to the choice of measures and metrics. Analytical framework makes reaching these answers easier. There are two approaches to the use of web analytics: ◆ Top-down analytics (analytics from the top to bottom) first defines the goals and then identifies metrics ◆ Bottom-up analytics starts without clearly defined goals. It includes tracking the content via gathering knowledge and defining goals afterwards. In order to define specific metrics, it is necessary to define key performance indicators, and in order to establish those, it is necessary to be familiar with the business plans of a company. In order for such business aims to be realised, it is necessary to take into account targets and segments. Bearing this in mind, Kaushik (2014) suggests web analytics framework which is an indicator of quantitative content analysis (Table 5): 1. Defining business goals: In order to successfully define business goals, it is necessary to answer several questions, such as: What is the purpose of a website? Some examples of business goals are: to increase the awareness of brand existence; to improve communication and feedback systems; to improve eﬃciency of marketing and public relations; to improve customer services and operational eﬃciency. 2. Defining content goals: After understanding business goals, it is necessary to define specific goals of website content, i.e. which actions users can perform on this website. The examples of content goals are: to read an article, to leave a comment, to subscribe, to fill in a form, to download brochures, to follow someone on social networks etc. Web analytics framework

3. Defining key performance indicators (Key Performance Indicators, KPI): The following question is answered within this part: Which relevant web metrics can be used to measure the content goals? The examples of KPI indicators and goals are shown in the following table: Content goals

To read an article

Average time spent on social network

To leave a comment

Conversion rate*

To subscribe

Number of subscriptions

To download brochures To follow someone on social networks

Number of downloaded brochures Percentage of fans (followers)

* Conversion rate represents a process of turning the visitors of a website into real buyers. For instance, when a visitor wants to leave the website, the company markets a special oﬀer.

Table 4. Comparing goals and KPI indicators.

4. Defining targets: Aside from establishing goals and identifying metrics, it is necessary to understand what their values mean. For example, if the metrics shows that there are 2000 views of a page, the question that imposes is whether these figures are good or bad. If the last year’s number of views was 3000, a drop could undoubtedly be observed. 5. Segmentation: One of the most powerful functions of web analytics is the possibility of data segmentation. Here, it is considered how to segment the data according to visitor attributes. For instance, if a company has profiles on most of the social networks, and not enough staﬀ or time, it is necessary to decide on prioritising social channels in order to promote events and other services. By segmenting web

Description

Example

Business goals

What is the purpose or use of a website?

To intensify online/oﬄine marketing

Website goals

Which activities are available on a website?

Increasing the awareness of a brand online

Which relevant web metrics can be used to measure website goals during a period of time?

Traﬃc related to brand

How to measure success?

12,000 visitors per month

Key performance indicators Targets

Which visitor attributes will provide relevant business insight? Table 5. Web analytics framework with examples. Segments

Source: Kaushik (2014)

Key performance indicators

Sources of traﬃc; converted visits

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traffic according to social media sources and content type, it is possible to draw a conclusion on which social networks are the best to use for the specific type of content. For example, the response of users to some events may be higher if they are posted on Twitter, while the response to business offers would be better on LinkedIn network. Numerous vendors offer different web analytic tools on the market (Milic, 2013). In this paper, the results of Facebook reporting tools will be analysed. According to various analyses, Facebook is still the leading social network, either by the number of user profiles or by active user participation (Stelzner, 2014; Global Web Index, 2014). Some of the basic Facebook tools available are (Hines, 2014): 1. Simply Measured: it offers reports for analysing competition on Facebook. Free Facebook tool Competitive Analysis Report shows the last two weeks of a user’s activity for the maximum of 10 web profiles of the competition. Report of Facebook Fan Page Report shows performance and activity of users on web pages. Facebook Insights Report shows detailed insight into posts and likes of users. Report of Facebook Content Analysis identifies the best types of posts regarding user activity. 2. Social Bakers: enables overseeing of the company’s, or competition’s Facebook, Twitter and YouTube profiles. 3. Sprout Social: a popular tool for managing social media. It observes movement and activities of website visitors. 4. Rival IQ: it enables comparing a Facebook page with the competition, showing basic metrics such as the number of likes, posts, engagement relations, etc. A CASE STUDY: COMPARATIVE ANALYSIS OF FACEBOOK FAN PAGES OF MOUNTAIN HOTELS IN ZLATIBOR, STARA PLANINA AND KOPAONIK Tourist centres in Serbian mountains have been rapidly developing over the last several years, by making their capacities and programmes available during the whole year. Those programmes mostly consist of a set of different holiday and recreational activities, depending on the season. Besides climate, these mountain destinations are attractive to tourists for various reasons including clear air, flora and fauna,

natural beauties, local culture, history and heritage. Tourists can also take part in different sport activities – winter sports, hiking, cycling, walking tours, horse riding, etc. Since tourism operates in a highly competitive environment, with many distinguished as well as newly-established tourist destinations in region, it is clear that its development should be managed professionally (Horwath Consulting Zagreb & Ekonomski fakultet Beograd, 2005). Serbia has more than 20 skiing areas, with most popular skiing resorts located in Kopaonik, Zlatibor and Stara planina. All three destinations received certificates from the International Ski Federation (FIS), which confirms that ski resorts meet all the standards set for international competitions. Advanced skiing infrastructure enabled Serbia to achieve the level necessary for international ski destination (Vanat, 2014). In recent years, online consumers have become increasingly more aware of how precious the Internet is for comparing prices, quality and tourist experience. Technology is becoming a crucial determinant for evaluating satisfaction of hotel guests, as well as differentiation of services and claiming competitiveness (Cobanoglu et al., 2011). The following part of the paper shall elaborate on the position of hotels using Facebook social network. The data regarding 10 rival hotels belonging to similar categories and offering similar services are being compared (Table 6). The observed period ranges between January 7 and January 20, 2015. Mountain

Name of the hotel

Stara Planina Stara Planina Falkensteiner Kopaonik Zlatibor

Junior, MK Mountain Resort, Putnik, Mount Zlatibor Mona, Zlatiborska Noc, Palisad, Olimp

Table 6. List of analysed hotels

Data analysis The results of Simply Measured analytical tool show the percentage of fans per selected rival hotel (Figure 1). By analysing data, we can conclude that the total number of all hotel fans is 178,412, where the biggest number of fans belongs to hotel Mona in Zlatibor, namely 125,951 of them, immediately followed by hotel MK Mountain Resort with 33,193 fans. Hotel Stara Planina – Falkensteiner is in the third place with 5,482 fans. 31

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status has been multiplied on this social network and how often the useres have shared it with other users. According to the analysis, the highest number of active users has the hotel Mona in Zlatibor with 70%, followed by the hotel Zlatiborska Noc with the share of 14%, while hotel Falkenstenier participates with modest 2% (Figure 3).

Figure 1. Comparing hotels by number of fans

PTAT parameter (People Talking About This) represents a unique story created by Facebook users about some brand, hotel or celebrity page. By definition, the larger the number of people talking about certain Facebook page, the more popular and widespread that page is. According to PTAT parameter, the hotel Mona Zlatibor assumes the leading position with 2,062 fans talking about this hotel, while the hotel Falkenstenier assumes the 8th place with 64 fans talking about it (Figure 2). The average PTAT for these hotels is 364. The leading hotel Mona has the share of 26% PTAT.

Figure 3. Relative share of user engagement

If the user engagement is analysed in relation to the number of fans a hotel page has, the biggest number of engaged users belongs to the hotel Junior with 376 users, i.e. 40.6% of engagement in relation to other hotels. The hotel Zlatiborska Noc assumes the 2nd place with 886 active users, i.e. 39.4% share. Hotel Falkenstenier assumes the 7th place with 54 active users, i.e. with 2% share (Figure 4).

Figure 2. Hotel rankings according to PTAT parameter

User engagement is a parameter representing the sum of comments, likes, and shares to other users (so-called status or post sharing). Like represents liking of somebody’s post, status, photo or video. The number of likes is an indicator of how much the users like somebody’s activity on Facebook. Comments represent the reaction of a user to a status or post and reveal the opinion of other people on this status or post. Sharing of a status represents the number of people who share certain status with other users, and the number of shares shows how many times certain 32

Figure 4. Total user engagement

When it comes to the number and frequency of status posting, it can be concluded that 10 hotels came up with 70 statuses altogether, which is approximately 7 statuses per hotel. The leading position in status posting has the hotel Putnik Kopaonik with 2.1 posts

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Živković, R. et al.  Comparative analysis of Facebook and comunication activities

a day, while the hotel Mona assumes the 2nd place with an average of 1.7 posts a day. Hotel Falkenstenier is in the 8th place with the average number of posts of 0.1, while the hotels Complex Grand Kopaonik Spa and Mount Kopaonik do not have the daily activity of status posting (Figure 5).

The number of comments triggered by posts is quite insignificant and amounts to 38, which is approximately 4 per hotel, while the number of shares is 107, averagely 10 per hotel (Figure 7).

Figure 5. Average number of hotel posts per day

Out of the total number of posts, 86 are photos, i.e. 8.6%, 25 are links (2.5%), and 3 are videos, i.e. 0.3%. Hotel Putnik combined all three types of content with 2 statuses, 1 link and 26 photographs, i.e. with the total of 29 posts. Hotel Zlatiborska Noc also combined all three types of content with 3 statuses, 2 links and 7 photographs, which comprises 12 posts altogether. Hotel Falkenstenier assumes the 7th place with the content of 3 photographs. Hotel Complex Grand Kopaonik Spa and Hotel Mount do not have daily posts (Figure 6).

Figure 6. Number of hotel posts according to type

Observation and further analysis of the average rate of activity per post can lead to the conclusion that fans are more prone to like than to comment or share content. All 86 posts recorded 5,831 likes, which amounts to an average of 583 likes per hotel.

Figure 7. Comparative engagement of fans per hotel and type

By analysing the average activity of users preceding the hotel post, the data show that hotel Mona leads with 182 likes, 1 comment and 2 shares. It is followed by hotel Zlatiborska Noc with 70 likes, 1 comment and 2 shares. Hotel Falkenstenier Stara Planina assumes the third place with 53 likes, 0 comments and 1 share. MK Mountin Resort is in the 4th place with 50 likes, 0 comments and 1 share. Hotel Palisad has 28 likes, 1 comment and no shares. Hotels with the worst engagement are hotel Putnik, hotel Olimp, hotel Complex Grand Kopaonik Spa and hotel Mount, which on average have 3 likes, 1 comment and no shares (Figure 8). It can be concluded that the posts of hotels Mona, Zlatiborska Noc and Falkensteiner are considered most interesting by the users, and thus hold the leading positions. Four hotels with the least engagement hold such positions due to users' disinterest in their posts. The analysis cannot confirm the exact correlation between the frequency rate of posts and the interest users have in a certain hotel. As regards that, the hotel Falkenstenier assumes the 8th place according to frequency of posting, and the 3rd place according to users’ interest in the hotels belonging to this group. It can be concluded that the hotel rarely posts content on Facebook, but that the users find these rare posts interesting and worthy of sharing and liking. 33

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Živković, R. et al.  Comparative analysis of Facebook and comunication activities

Figure 8. Average activity/engagement of users per hotel post

When it comes to comparing engagement/activity of fans, certain hotel posts, for the observed period, aroused engagement of over 100 users. The first post of the hotel Zlatiborska Noc was posted on January 7, 2015 with 675 likes, 5 comments and 17 shares. The second one is the post of hotel Mona, posted on January 11, 2015 with 599 likes, 12 comments and 3 shares. This hotel’s posts assume the 3rd, 4th and 5th place according to the number of likes (from 579 to 284), comments and shares. Hotel MK Mountin resort records 219 likes for the post from January 7, 2015 with 219 likes, 0 comments and 1 share. It can be concluded that these post have been most interesting to users for the given time frame and have left the most lasting impression (Table 7). The post of Zlatiborska Noc hotel generated most likes with the text “Find your own heaven, package tour for two persons from February 13-16, 2015 for €169”. The second post which aroused most attention of fans is the post by hotel Mona which has 599 likes and the text „Pieces of art on our smorgasbord. Do you like this piece?” with the posted photo of food on smorgasbord. We can conclude that 4 of 6 most popular posts belong to this very hotel, which is in correlation with the number of engaged users when it comes to this hotel. The posts of Falkenstenier hotel Hotel names

Date of posting

Hotel Zlatiborska Noc 07.01.2015 Hotel Mona 11.01.2015 Hotel Mona 14.01.2015 Hotel Mona 17.01.2015 Hotel Mona 16.01.2015 Hotel Mk Mountin Resort 07.01.2015 Table 7. The most popular hotel posts Source: www.simplymeasured.com

are not among the first 15 most popular posts according to the user engagement analysis. Analytics used (Simply Measured, 2015) also gives an insight into the posts not created by the surveyed hotels, but which mention these hotels or are addressed to them on their profiles (walls). During the observed period, there were 7 of these posts, 3 of which were addressed to MK Mountain Resort, 2 to hotel Mona, 1 to hotel Junior and 1 to hotel Falkenstenier. These posts are mostly left by the guests who resided in a hotel, of which two are related to promotion of events held in a hotel and one is a link to a hotel photo taken during the New Year’s holidays. SUMMARY Marketing is in charge of creating and delivering value for money to the consumers, and as a business function, it can be eﬀective and eﬃcient only if it cooperates with other business functions in the company on creating and delivering superior value to the consumers. It is wrong to think that attracting and keeping consumers is exclusively the task of those working in the area of marketing. The best marketing sector in the world cannot sell the products that are badly made or do not satisfy customers’ needs. Satisfaction is an important element in the process of consumer decision-making, especially in repeated purchasing of products or services. It occurs during the evaluation phase, after purchasing, i.e. using the product or service. Satisfaction (pleasure) of guests is the key for keeping the old and attracting the new ones. As a rule, the high quality of products creates and maintains high level of consumer satisfaction. The research conducted in hotels at the most popular mountain destinations in Serbia shows that social networks can be successfully used by providers to improve and understand the needs of their guests, gain their loyalty, improve business outcomes and increase revenue.

Type of post

Number of likes

Number of comments

photo photo photo photo photo photo

675 599 579 296 284 219

5 12 1 1 0 0

Number of content shares 17 3 2 12 0 1

Total engagement 697 614 582 309 284 219

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Živković, R. et al.  Comparative analysis of Facebook and comunication activities

Clifton, B. (2014). Advanced Web Metrics with Google Analytics. New Jersey: John Wiley & Sons. Cobanoglu, C., Berezina, K., Kasavana, L.M., & Erdem, M. (2011). The Impact of Technology Amenities on Hotel Guest Overall Satisfaction. Journal of Quality Assurance in Hospitality & Tourism. 12(4), 272-288. DOI: 10.1080/1528008X.2011.541842 Cohena. S., Prayagb, G., & Moitalc, M. (2014) Consumer behaviour in tourism: Concepts, influences and opportunities. Current Issues in Tourism. 17(10), 872-909. DOI: 10.4236/me.2011.25096 Fjelstul, J. (2013). Exploring Pull Factor Influences at Campgrounds by RV Association Members. Journal of Tourism Insights. 4(1), Article 2. DOI: 10.9707/2328-0824.1035 Fratu, D. (2011). Factors of Influence and Changes In The Tourism Consumer Behaviour. Bulletin of the Transilvania University of Braşov. 4(53), 119-126, Retrieved February 07, 2015, from http://webbut.unitbv.ro/bu2011/ Series%20V/BULETIN%20V%20PDF/20%20fratu%20 1%20BUT%202011.pdf GlobalWebIndex. (2014). GWO Social Q3 2014. GlobalWebIndex’s quarterly report on the latest trends in social networking. Retrieved February 05, 2015, from http://www. scribd.com/doc/248201099/GWI-Social-Report-Q3-2014 Green, E.C., Lomano, V.M. (2012). Distribution Channel Analysis: a Guide for Hotels, HSMAI Foundation. Retrieved February 05, 2015, from http://www.owners.org/ Portals/1/Documents/NDP/DCA%20Full_Part1.pdf Gunelius, S. (2011). 30-Minute Social Media Marketing. Columbus: McGraw Hill. Hines, K. (2014). 6 Facebook Reporting Tools for In-Depth Analysis of Fan Pages. Post Planner. Retrieved Feruary 05, 2015, from http://www.postplanner.com/6-facebookreporting-tools-in-depth-analysis-fan-pages/ Hoﬀman, D.L., & Novak, T.P. (2009). Flow online: lessons learned and future prospects. Journal of Interactive Marketing. 23(1), 23-34. DOI: 10.1016/j.intmar.2008.10.003 Horwath Consulting Zagreb & Ekonomski fakultet Beograd (2005). Strategija razvoja turizma Republike Srbije. Beograd: Ministarstvo trgovine, turizma i usluga. (In Serbian) Jansen, B.J., & Schuster, S. (2011). Bidding on the buying funnel for sponsored search and keyword advertising. Journal of Electronic Commerce Research. 12(1), 1-18. Retrieved February, 07, 2015, from http://web.csulb.edu/ journals/jecr/issues/20111/Paper1.pdf Kanagaraj, C., & Bindu, T. (2013). An Analysis of Push and Pull Travel Motivations of Domestic Tourists to Kerala. International Journal of Management & Business Studies. 3(2), 112-118.

Kaushik, A. (2014). Web Analytics Fundamentals: Key Definitions and Framework. Market Motive. Retrieved February 06, 2015. from http://www.marketmotive.com/training/ flash/view_flv.php?cid=741&resume=1&mov=Web_Analytics_Fundamentals_Key_Definitions_And_Framework_Curriculum&dim1=800&dim2=498&mmCatId =9&lang=en&font=Arial&csize=18&ccolor=EEEEEE& dir=/training/flash/&backcolor=888888&doc_id=0 Kietzmann, J.H., Hermkens, K., McCarthy, I.P. & Silvestre, B. (2011) Social media? Get serious! Understanding the functional building blocks of social media. Business Horizons. 54, 241-251. DOI: 10.1016/j.bushor.2011.01.005 Kotler, P., Kartajaya, H. & SetiaWan, I. (2010). Marketing 3.0: From Products to Customers to the Human Spirit. New Jersey: John Wiley & Sons. Maričić, B. (2011). Ponašanje potrošača. Beograd: Ekonomski fakultet. (In Serbian) Milic, L. (2013). Social Media Monitoring Tools and Services Report. Retrieved February, 05, 2015, from http://ideya. eu.com/images/SMMTools Excerpt FINAL 13082013. pdf Minazzi, R. (2015). Social Media Marketing in Tourism and Hospitality. London: Springer. Safko, L. (2010). The Social Media Bible: Tactics, Tools and Strategies for Business Success. New Jersey: John Wiley & Sons. Servon, L.J. (2002). Bridging the Digital Divide: Technology, Community, and Public Policy. Oxford: Blackwell Publishers. Solomon, M.R. (2011). Consumer Behavior: Buying, Having, and Being. Boston: Pearson/Prentice Hall. Stelzner, M.A. (2014) 2014 Social Media Marketing Industry Report: how Marketers are Using Social Media to Grow Their Business. Social Media Examiner. Retrieved February, 05, 2015, from http://www.socialmediaexaminer. com/SocialMediaMarketingIndustryReport2014.pdf Vanat, L. (2014). International Report on Snow & Mountain Tourism. Retrieved February, 05, 2015, from http://www. isiaski.org/download/20140517_ISIA_Vuokatti_1b_ presentation_vanat.pdf Živković, R. (2013). Ponašanje i zaštita potrošača u turizmu. Beograd: Univerzitet Singidunum. (In Serbian) Živković, R., Gajić, J., & Brdar, I. (2012). Turisti kao pokretači inovacija u turizmu. U: Turistička privreda i povezane teme: tematski zbornik radova / Sedmi naučni skup sa međunarodnim učešćem Turizam: izazovi i mogućnosti, Trebinje, 20-22. septembar 2012. Beograd: Ekonomski institut. (In Serbian)

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Živković, R. et al.  Comparative analysis of Facebook and comunication activities

UPOREDNA ANALIZA FACEBOOK KOMUNIKACIONIH AKTIVNOSTI PLANINSKIH HOTELA NA STAROJ PLANINI, KOPAONIKU I ZLATIBORU

Rezime: Komunikacione strategije sa korisnicima turističkih proizvoda i usluga su se znatno promenile tokom poslednjih godina sa pojavom društvenih medija i onlajn informacija. Prema mišljenju brojnih autora, društveni mediji predstavljaju hibridnu formu tradicionalnih integrisanih marketinških komunikacija uz uvećan efekat WOM (word of mounth) komunikacija, koje omogućavaju razmenu informacija između korisnika/potrošača. Transparentnost društvenih medija pruža hotelijerima povratne informacije i otvara nove komunikacione kanale. Današnji potrošači poseduju veća znanja i imaju veća očekivanja nego ikada pre. Cilj rada je da ukaže na vrednost i značaj onlajn komunikacija u turizmu i hotelijerstvu, kako bi se razvile efikasnije marketing komunikacione strategije i aktivnosti. Zadatak istraživanja je da na primeru planinskih hotela u Srbiji ispitamo percepciju i zadovoljstvo gostiju u posmatranim hotelima korišćenjem web metrike. Nakon sprovedenog istraživanja u hotelima na najpopularnijim planinskim destinacijama u Srbiji, došli smo do saznanja da se društvene mreže mogu uspešno koristiti od strane pružaoca usluga sa namerom da se što bolje razumeju potrebe klijenata, a sa ciljem poboljšanja poslovnog uspeha i ukupnih prihoda. Kroz očuvanje dobrih odnosa sa gostima, hotelijeri mogu da izgrade čvršće i trajnije veze koje će rezultirati ponovnom posetom i efikasnijom usmenom propagandom.

Ključne reči:

marketinške komunikacije, planinski hoteli, društveni mediji, potrošači. Received: March 10, 2015. Correction: March 22, 2015. Accepted: April 10, 2015.

EJAE 2015, 12(1): 37-42 ISSN 2406-2588 UDK: 005.574:339.1 005.44 DOI: 10.5937/EJAE12-8155 Original paper/Originalni naučni rad

INTERNATIONAL BUSINESS: RAISING CULTURAL AWARENESS IN GLOBAL NEGOTIATING Jovana Gardašević*, Jelena Vapa-Tankosić University Business Academy in Novi Sad, Faculty of Economics and Engineering Management, 2 Cvećarska Street, Novi Sad, Serbia

Abstract: The global marketplace is a fast-growing and rapidly changing field. Global negotiation is a process where each party from two or more different countries involved in negotiating tries to gain an advantage for itself by the end of the process. The process of global negotiating differs from culture to culture in terms of language, different types of communication (verbal and nonverbal), negotiating style, approaches to problem – solving, etc. The aspects of culture that are of vital importance for global negotiating are attitudes and beliefs, religion, material culture, and language. This paper should encourage better understanding of the process of negotiation: it defines the negotiation process, identifies the issues that are subject to negotiation and mentions the stages of negotiation. It discusses the importance of developing cultural awareness prior to negotiating internationally through descriptive overview of all aspects of culture. It gives examples of differences in global negotiating and doing business worldwide. The purpose of this paper is to show theoretically the connection between these terms and provide information that will prevent business people from making mistakes and pitfalls in international negotiation process.

INTRODUCTION The growth of international business has been dramatic and straightforward. When doing business internationally, communication takes place between individuals, not cultures. However, cultural awareness can help you to predict how business people belonging to a certain culture will act, negotiate, and make decisions. The first part of this work puts an emphasis on understanding the negotiation process through its definition, issues that can be negotiated and stages of negotiating. The second part is more oriented towards international negotiations and aspects of culture that make global negotiations diﬀerent. Finally, the third part is about some good practices and examples of how negotiating and business diﬀer from country * E-mail: gardasevic.jovana@gmail.com

Key words: negotiating, global negotiating, international business, culture.

to country, from region to region. Prior to initiating negotiations in another country, it is recommended to identify and overcome all communication and cultural gaps in order to enable business people to conduct their businesses more eﬃciently. It is necessary to possess relevant information on what makes global negotiating diﬀerent in order to do business successfully on a global scale. UNDERSTANDING THE NEGOTIATION PROCESS Negotiation is conceived as a process in which at least one individual tries to persuade another one to change his or her ideas or behaviour and it often involves one person attempting to persuade another one into signing a particular contract or making a 37

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Gardašević, J., Vapa-Tankosić, J.  International business

particular decision. Negotiation becomes cross-cultural when the parties involved belong to diﬀerent cultures, and thus do not share the same patterns of thinking, feeling, and behaving (Casse, 1981). Gulbro and Herbig (1996) are frequent writers in this area. One of their studies argues that negotiators must devote certain amount of time to the negotiation process, preparation, and should improve their knowledge about the other party’s culture in order to boost their odds of success. Large companies are found to be more successful in this endeavor than smaller ones (Gulbro & Herbig, 1996). Negotiating is the process you follow in order to get someone to do what you want her/him to do. It entails communicating back and forth for the purpose of reaching an agreement that is acceptable to both sides. In cases of import / export, that agreement may be related to the price you want to pay a supplier for a product or what you want someone to pay for a product that you are selling. Negotiating has to do with persuading while making sure that the other side feels good about the outcome (Capela, 2012). According to Capela (2012), although deals can be complex, there are only a few main issues you can negotiate about: 1. Territory: You can negotiate about whether you will have any limits on where and to whom you may sell the product. 2. Exclusive or nonexclusive: If you are an importer, you may negotiate over whether you have exclusive or nonexclusive distribution rights. 3. Performance: Discuss minimum performance requirements. For instance, if I am a U.S. distributor appointed by Bolivian pewter manufacturer, will I be required to meet certain sales targets during the term of the agreement? What happens if I do not meet these sales targets? 4. Products: Discuss the product covered within the agreement, including its specifications. Talk about quality, service, and training. 5. Price and payment: Set down a detailed price schedule and payment terms. 6. Shipping terms, risk of loss: Shipping terms provide information on the expenses that are the responsibility of each party in the transaction. They also indicate where title will pass from the exporter to the importer. 7. Restrictions on carrying competitive products: In this part of the negotiation process, you can 38

clearly explain what kinds of products are considered competitive products. 8. Governing law and languages: Different countries have different laws on contracts. Negotiate which country’s law governs the agreement and whether both parties will adhere to some international standards. 9. Provisions for dispute settlement: Most disputes between parties arise out of different expectations regarding their obligations to each other. The negotiations need to specify each party’s expectations in order to reduce the possibility of surprise. 10. Duration of contract and termination: Discuss the length of the agreement and the condidtions under which it can be cancelled or renewed. Capela (2012) also says that both domestic and international negotiations proceed through six stages: ◆ Research. ◆ Build a relationship. ◆ Exchange infortmation and make the first offer. ◆ Persuasion. ◆ Make concessions. ◆ Come to an agreement. When it comes to the stages of the negotiation process, Williams (1991) considers that after adopting a strategy, it is time to go in for the actual negotiation process. He identifys the four main stages during the negotiation process. ◆ Orientation and Positioning. Orientation takes place when the parties first meet, introduce themselves and exchange pleasantries. Positioning commences when either party states its offer on the negotiation table. ◆ Argumentation. Here, the argument is not a fierce one. It is the stage where each party tries to understand the position of the other party. This is where the issues related to the transactions are discussed such as the price of goods or applicable law etc. ◆ Emergence and Crisis. At this stage, parties begin to see signals showing whether they will reach an agreement or not. ◆ Agreement or Breakdown. This is the final stage where the parties either successfully reach an agreement or fail and the negotiation breaks down. It is important to state that a successful negotiation is not a ‘win-lose’ but a problem-solving approach to a ‘win-win’ out-

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come. A good outcome shall bring benefit to both parties and neither party is of the opinion that it has signed a less advantageous contract. The agreement should encourage a good relationship and be flexible enough to deal with the expected or unexpected future changes (Ghauri & Usunier, 2008). We shall move on to the planning stage of negotiation process. Planning is the process of setting an objective and identifying the courses of action that are necessary to accomplish it. It is extremely important as it provides us with guidelines and standards that could be used to measure performance. All parties in the negotiation process use the planning stage to prepare their side of the discussion with the aim of gaining an advantage by the time the negotiation is concluded. Planning negotiations is a simple four – step process: 1. Identify the issue. 2. Set up priorities. 3. Identify an acceptable settlement range - i.e., an area in which agreement is possible. 4. Develop strategies and approaches for reaching an agreement on each of the elements being negotiated, putting an emphasis on the priorities you have choosen (Capela, 2012). Steps in the negotiation process are described differently by various authors. At least three steps are traditionally identified, as follows: 1. planning or preparation, 2. negotiation, bargaining, interaction, and 3. striking a deal. Some scholars suggest other steps, such as relational positioning, identifying the problem, generating solutions, and reaching an agreement (Adair & Brett, 2005). DEVELOPING CULTURAL AWARENESS BEFORE NEGOTIATING A number of studies examine factors that determine success of cross-cultural negotiations. Different authors state different elements of culture. In this paper, we examine the traditional elements of the culture that are crucial for global negotiation process: religion, language and material culture. Some authors such as Ball and McCulloch (2002) said that legal characteristics and political structure are also the elements of culture. Religion is one of the most important aspects of culture that differs around the world. Awareness of some of the basic beliefs and attitudes of the major

Gardašević, J., Vapa-Tankosić, J.  International business

religions in the world will help you to understand better why attitudes vary from country to country, from region to region. The religion establishes moral codex, ethics, the human conduct and their working habits. It is a crucial factor for global negotiating due to its determination of national or individual behaviour, attitudes, the way of doing business, the way of wearing clothes, the way of living, the way of interacting with other people etc. The most representative religions are: Christianity, Islam, and Hinduism. Thus, before we decide to do business internationally, we need to be familiar with all global religious customs and beliefs in order to be able to decide which business strategy to use, how to communicate with potential partners and what to demand through negotiation process regarding the main issues being negotiated, as mentioned in the previous section. In order to successfully conclude a business deal, a labor agreement or a government contract with foreigners, who greatly differ from us, requires a considerable amount of communication skills. In order to successfully manage such negotiations, business people need to know how to influence and communicate with members of the culture other than their own (Saee, 2008). Kotler (2006) emphasizes that there are over 200 different languages around the world and over 3000 different language variants. One of the most important issues concerning global negotiation process is breaking the language barriers. The knowledge of foreign languages helps business people to communicate successfully and understand correctly what the other party wants to say or demand. The usage of a language is mostly seen as an international marketing concept. For instance, it is observed in advertising or branding, or even in product designing. However, its usage is most common in global negotiating and international correspondence. We can find different language structures in written documentation and presentations or use it as a verbal communication tool when meeting with our business partners. Communication can be verbal or nonverbal. Differences in communication patterns have a considerable impact on the international negotiation process. It is also necessary to identify the language used in the official version of the contract. When negotiating with individuals from other countries, we will probably notice a lot of differences in their business culture and etiquette. Cultural awareness and sensitivity facilitate the exchange of information by examining the other party, exploring business culture and building relationships with partners. 39

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These activities are part of the six-stage international negotiation process, which was mentioned in the first section of this paper. Material Culture is everything that human being creates and shapes with his/her hands and it completely diﬀers from spiritual culture – the product of one’s mind. Material Culture includes technology (how people make things) and economics (who, how and why makes). Some cultures prefer holding the material goods like the U.S. while others give priority to family relationships and friendships, as is the case in Serbia. The richer the one country is, the higher life standard it has. The higher life standard one country has, the higher the prices of products and services are. This information is crucial in the process of negotiation when we want to discuss the price and payment terms. One needs to be conversant with macroeconomics as well as with other social or cultural opportunities of one country. THE CHALLENGES OF GLOBAL NEGOTIATING IN THE CONTEXT OF INTERNATIONAL BUSINESS In spoken and written communication, the use of inappropriate words or incorrect grammar is not the only concern. The meaning of the message often depends on the context – the set of circumstances surrounding those words. Sometimes, the culture is not primarily defined in terms of national culture, but in terms of collectivist or individualist culture, or high or low context culture. In high – context culture, information is included in the context of the message, with little being communicated in the explicit words of the message. The following countries are typical examples of higher – context culture: African, Arab, Brazilian, Chinese, Filipino, Finnish, French, French – Canadian, Greek, Hungarian, Indian, Italian, Japanese, Korean, Latin American, Russian, Spanish, Thai, Turkish. If we are talking about low – context culture, the words the sender uses explicitly convey the message to the receiver. Some of the most typical low – context cultures are as follows: American, Australian, English, English – Canadian, German, Irish, New Zealand, Scandinavian (Capela, 2012). Non-verbal behaviour represents communication other than verbal. It refers to the manner in which negotiators express words rather than the words themselves. Non-verbal behaviour conveys multiple messages, many of them are responded to at a subconscious level. Negotiators frequently respond more emotionally and powerfully to non-verbal rather than 40

verbal messages. As with verbal behavior, non-verbal behaviour also differs considerably across cultures (Saee, 2008). Nonverbal communication can tell business people something that the spoken language cannot– if they understand it. It is sometimes called body language. Non-verbal behavior subsumes tone of voice, facial expressions, body distance, dressing code, gestures, timing, silences and symbols (Adler & Gundersen, 2008). Some of them shall be analyzed in this paper. Firstly, we shall talk about the gestures. For instance, American and most European citizens understand the thumbs – up gesture to mean that everything is “all right”, but in southern Italy and Greece, it transmits the message for which we reserve the middle finger. General appearance and dressing code is the next one. As we live in a material world, physical appearance is the essence of the first impression. All cultures are concerned with how they look and make judgments based on someone’s physical appearance. We should consider different cultural standards on what is attractive in dress and what constitutes modesty. In the U.S., the naked eye could see their carelessness and neglect about this matter. They are traditionally not interested in how they look and from a cultural point of view, are generally not considered a very stylish nation. On the other hand, the French or Italian have that status and etiquette (Gardašević, 2013). When it comes to posture, we can say that cultures interpret body posture in different ways. For instance, bowing is an indicator of ranking in Japan, while slouching is considered extremely rude in most Northern European countries. Having your hands in your pockets is considered a sign of disrespect in Turkey. Moreover, sitting with legs crossed is considered offensive in Ghana and Turkey, while in most Southeastern countries such as Serbia or Croatia, it is viewed as a symbol of femininity and grace (Gardašević, 2013). Other important cultural characteristics for the process of negotiation that we are going to explain are: time, individualism vs. collectivism, orderliness and conformity, communication patterns etc. We could also analyze the influence of time and pace of negotiations. Negotiation tactics are important when one party is under time constraint. Cultures differ considerably in their use of time. The American, Australian, German and the Swiss are usually fast-paced and extremely punctual, with no space for delay. A negotiation session that is to start at 11 a.m. on

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Monday will start exactly at 11 a.m. that day. On the other hand, in Latin American countries, starting the negotiation process an hour later may be considered normal and in some cases expected. The American people are preoccupied with deadlines, which can be a crucial liability when negotiating with individuals from other countries. One study focused on the eﬀects of time pressure and accountability on competitiveness of interaction and outcomes. It was found that when negotiators negotiated just for themselves, time pressure made them less competitive and a greater proportion of negotiations lead to an agreement. However, when negotiators negotiated on behalf of “constituents”, the opposite was found. Time pressure resulted in more competitive behaviour and a lower proportion of agreements (Mosterd & Rutte, 2000). Furthermore, individualism or collectivism also has significant meanings for global negotiations. The American people build their success on talking directly to the decision – maker. A negotiator usually talks to the top person who represents the company or belongs to the top management. As he/she is a decision – maker, he/she has the power to negotiate with other negotiators and make deals. Formalities help people to establish friendly relationships, which many cultures consider necessary for business negotiations. However, this can ruin good business practice if the country is not oriented towards formalities. For instance, the Japanese pay considerable attention to the presentation of business cards. They consider it extremely important for the beginning of the negotiation process. They also emphasize the relationship, as they belong to the collectivist culture and foster community spirit, and getting to know if the other person brings order and predictability to the negotiation process. On the other hand, negotiators from Canada, Germany, Switzerland, and the U.S. place greater emphasis on the content of the negotiations rather than on the procedure (Capela, 2012). CONCLUSION International business in general, especially the international negotiating, represents not only economic but also cultural and social phenomenon. The purpose of this paper is to show theoretically that all aspects of culture are of vital importance for business people and companies in their international approach to negotiating, starting from language and understanding, attitudes and beliefs, religion to the

Gardašević, J., Vapa-Tankosić, J.  International business

elements of material culture. The impact of the culture on international negotiation and decision – making process is rapidly growing, especially in the time we are living in, which is characterized by the high level of trade liberalization, market expansion, globalization, economic integration, international business and marketing – oriented companies that coordinate their decisions with the requirements of their business partners or previous consumers. We are also living in a period of the improved technologies and communication media, thus bringing greater opportunities for tremendous interaction with people around the world. However, cultural awareness will assist business people in predicting how people in certain culture will act, negotiate, and make decisions. It is essential to possess some specific communication skills and be all around in the knowledge of world culture (to know how or whether to use verbal or nonverbal communication, whether to be late or punctual, whether to speak to the top management or members of a team, etc.) Understanding how someone addresses an issue or even simply how that person goes about making decisions based on communication and cultural grounds will give you an edge. Therefore, there is a tremendous connection between global negotiating, international business and culture. REFERENCES Adair, W., & Brett, J. (2005). The negotiation dance: time, culture, and behavioral sequences in negotiation. Organization Science. 16(1), 33-52. DOI: 10.1287/ orsc.1040.0102 Adler, N.J., & Gundersen, A. (2008). International dimensions of organizational behavior. Mason, Ohio: Thomson. Ball, D.A., & McCulloch, W.H. (2002). International business: Introduction and essentials. Boston: McGraw-Hill. Capela, J.J. (2012). Import / export kit for dummies. Hoboken, NJ: John Wiley & Sons. Casse, P. (1981). Training for the cross – cultural mind: A handbook for cross-cultural trainers and consultants. Washington, DC: Society for Intercultural Education, Training and Research. Gardašević, J. (2013). Global Negotiating – Communication and Culture. Ekonomija: teorija i praksa. 6(1), 47-58. Ghauri, P.N., & Usunier, J.C. (2008). International business negotiations. Bingley: Emerald. Gulbro, R. & Herbig, P. (1996). Negotiating successfully in cross-cultural situations. Industrial Marketing Management. 25(3), 235-241. DOI: 10.1016/00198501(95)00081-X 41

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Kotler, P., & Keler, K.L. (2006). Marketing menadžment. Beograd: Data Status. Mosterd, I., & Rutte, C.G. (2000). Eﬀects of time pressure and accountability to constituents on negotiation. International Journal of Conflict Management. 11(3), 227247. DOI: 10.1108/eb022841

Saee, J. (2008). Best practice in global negotiation strategies for leaders and managers in the 21st century. Journal of Business Economics and Management. 9(4), 309-318, DOI: 10.3846/1611-1699.2008.9.309-318 Williams, G.R. (1991). Legal Negotiation and Settlement. Minnesota, USA: West Publishing.

MEĐUNARODNO POSLOVANJE: PODIZANJE KULTURNE SVESTI U PROCESU GLOBALNOG PREGOVARANJA Rezime: Globalno tržište predstavlja segment koji se neprekidno menja i razvija. U procesu globalnog pregovaranja svaka strana, iz dve ili više različitih zemalja, pokušava da stekne prednost do kraja pregovora. Ovakav vid komunikacije (verbalne ili neverbalne) varira od zemlje do zemlje, od kulture do kulture u pogledu jezika, pregovaračkog stila, pristupa rešavanju problema, itd. Aspekti kulture koji su bitni za međunarodne pregovore su stavovi, uverenja, religija, materijalna kultura i jezik. Ovaj rad ima za cilj da doprinese što boljem razumevanju procesa pregovaranja: definiše tok pregovaranja, identifikuje pitanja koja su predmet pregovora i imenuje faze u procesu pregovaranja. U radu se govori o značaju razvoja kulturne svesti pre vođenja međunarodnih pregovora kroz slikovit prikaz značajnih kulturnih aspekata. Takođe, autori nastoje da ukažu na primere različitosti koje postoje u globalnom procesu pregovaranja i međunarodnom poslovanju uopšte, kao i na izazove sa kojima se susreću učesnici međunarodnih pregovora. Svrha rada jeste da teorijski prikaže vezu imeđu pomenutih termina kao i da poslovnim ljudima iz međunarodnog okruženja pruži neophodne informacije u cilju izbegavanja grešaka u međunarodnom pregovaranju.

Ključne reči: pregovaranje, globalno pregovaranje, međunarodno poslovanje, kultura. Received: February 10, 2015. Correction: March 1, 2015. Accepted: March 10, 2015.

EJAE 2015, 12(1): 43-51 ISSN 2406-2588 UDK: 005.346:336.717 005.311.121 DOI: 10.5937/EJAE12-7916 Review paper/Pregledni naučni rad

PREDICTING RETAIL BANKING CONSUMER BEHAVIOUR USING STATISTICS Konstantinos Agaliotis1,*, Miroljub Hadžić2 Alpha Bank ad, Belgrade, Member of EB 11 Kralja Milana Street, Belgrade, Serbia 2 Singidunum University, Faculty of Business 32 Danijelova Street, Belgrade, Serbia 1

Abstract: The рurрοѕe οf any eсοnοmiс-based aсtivitу is the creation of needs. As the financial activities are not an exception to this rule, understanding clients’ necessities and their satisfaction is of primary concern for all financial institutions. Being conversant with the exact details that constitute client behaviour and the processes that lead to particular decisions, has become an advantage for financial institutions investing resources in it. Finally, it will not only pay off by satisfying the clients’ needs, but it will also secure a long-standing loyalty and relationships with them. As all relationships, the one between the client and the bank requires support and mutual understanding. Given the Serbian retail banking market, we may conclude the following: firstly, there is still potential for doing business in this filed; secondly, the particular segments of customers would accept new products; and thirdly, banks have to focus on the highest ranking clients concerning their credit worthiness. As regards the client behaviour over different product offerings, we can conclude that cash loans and credit card holders are not price sensitive, and that subsequently, the existing holders intend to increase their credit exposure.

INTRODUCTION The banking industry faces intense competition and the frequent shifting of customer base continues to be of primary concern. Focused customer segmentation for cross-selling and up-selling of products and services has become a necessity. Given the fierce competition and high customer attrition rate, modern banking requires eﬃcient tools and means to promote products and services to the existing and prospective customers, increase revenue, improve customer loyalty, and thus strengthen customer base. * E-mail: agaliotisk@gmail.com

Key words: retail banking, clients behavior, segmentation, loyalty.

Provided that there is a system that could statistically predict sales behaviour of prospective customers, each institution may benefit immensely by allocating the available resources from Above the Line sales related activities, to one-on-one based personalized actions. The research was focused on retail segment clients in Serbia with two aspects of the analysis. Namely, the first one refers to pre-selection of clients with the aim to find the least possible risky clients, on the one hand, and the most worthy ones, on the other hand. The second aspect refers to segmentation of clients 43

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Agaliotis, K., Hadžić, M.  Predicting retail banking consumer behaviour

in order to find the most attractive niche and create suitable product offer for them. The assumptions consider the standard banking environment where the objective of each retail manager is to maximize profit at minimum cost. So, the starting hypothesis is as follows: customers will behave based on the standard patterns following the pre-defined calculation methodology. The data used for the subject analysis consider only part of the retail banking business industry, i.e. overdrafts, consumer loans, housing loans and credit cards. Limitations might exist given the different credit policies applied by each financial institution running business in Serbia, as well as the different products’ primary focus of each financial institution. РERЅΟNAL SELLING AND MARKETING Although different industries have developed different selling strategies and approaches, the importance of personal selling still remains high. It is obvious that personal selling requires a two-way communication which in the case of a financial institution, includes an individual who aims at persuading the other individual to take the appropriate action (Brassington, 2010). The post purchase satisfaction cannot be ignored. It always serves as the base for building long and profitable relationships (Muller & Nordman, 2004; Storbacka & Nenonen, 2014; Storbacka & Pennanen, 2014). The marketing mix to support the personal selling depends on the parameters that define the particular consumers understanding and perception of services satisfaction (Ajzen, 2008). Many international banks see that there is no easy way to create marketing mix synergies, as standardization is always subject to different regulatory frames, cultures, languages and social perceptions. For a bank, marketing iѕ the сοnсeрt οf imрlementatiοn and aсhievement with all available meanѕ and οbjeсtiveѕ, develοрment οf сοherent and ѕatiѕfуing market ѕegmentѕ, determined and ѕeleсted in advanсe (Kumar, 2013; Rose & Hudgins, 2013). In the ѕeсοnd half οf the 20th century, the entire retail banking industry profile changed due to diverѕified banking ѕerviсeѕ, bу engaging in ѕοme οрeratiοnѕ fοrmerlу inсumbent οf ѕрeсialized bankѕ, as well as by the рrοviѕiοn οf new ѕerviсeѕ in bοrder areaѕ with οther finanсial οрeratοrs. Тhiѕ eхtenѕiοn οf banking ѕerviсeѕ aimed οbviοuѕlу at рrοfit, but simultaneously, ѕοught tο aѕѕiѕt the сlients, providing them with the aссeѕѕ tο uѕeful 44

and deѕirable services. Αrοund the 1970ѕ, bankѕ develοрed рrοgramѕ tο ѕuррοrt buѕineѕѕes and widely рrοmοte banking products and services to meet сuѕtοmer requirementѕ. THE PLANNED BEHAVIOUR THEORY The planned behaviour theory (TPB) is designed to predict and explain human behaviour within a certain framework. It was initiated in 1991 by Icek Ajzen as an extension of the reasoned action theory due to its limitations, i.e. failing to explain behaviours over which humans had limited volitional control (Godin & Kok, 2001; Conner & Armitage, 2001). The main element is one's intention to adapt certain behaviour. The intentions are recognised as the steaming power influencing behaviour, and they are the best effort indicators for humans who are about to take seriously a “call to action”. The adaptation of the majority of behaviours depends to a certain extent on the so called no generating factors which translate into the availability of opportunities and resources (Miller, 1956). These can be time, money, competences, cooperation with other etc. (Ajzen, 1991; Ajzen, 2002; Ajzen, 2008). Such parameters represent the real control of the human over the behaviour. If a human has the necessary opportunities and money, and intends to adapt behaviour, then he/she should succeed in doing so (Fishbein, 1979; Raz, 2010). The TPB sets three independent terms as the basics elements of the intentions. The first is the attitude towards the behaviour, referring to the degree to which one considers positively or not the subject behaviour. The second characteristic is the subjective norm that refers to the perceived social pressure for the adaptation of certain behaviour. The third characteristic is the level of the perceived behavioural control (Campbell & Russo, 2001; Farr, 1994; Read & Miller, 2014). The perceived behavioural control is very important for TPB. The perceived behavioural control refers to one's understanding of easiness or difficulty to adapt behaviour. The perceived behavioural control differs given different situations and environments. Therefore, it might be the case for a human to believe that results mostly depend on his/her personal behaviour, but at the same time, to believe that the possibilities to adapt the anticipated behaviour are low (Ajzen, 1991; Ajzen & Fishbein, 2010). A generic rule applying in TPB is that the more favourable the attitude and the subjective norms to the behaviour, the higher the perceived control is, in

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Agaliotis, K., Hadžić, M.  Predicting retail banking consumer behaviour

Attitude toward the behavior

Subjective norm

Intention

Behavior

Perceived behavioral control

Figure 1. Theory of planned behaviour Source: Ajzen (1991)

which case the intention of an individual to adapt certain behaviour becomes very possible. According to TPB, the adaptation of behaviour is a function that links the intentions with the behavioural perceived control (Armitage & Conner, 2001). SALES: CREDIT WORTHINESS AND SELECTION OF PRE-APPROVED CLIENTS A large volume of data was examined using primarily the “over-underrepresentation” theory that intends to identify the propensity of clients to react positively to a bank’s offer. Using the data that segment the same customers’ universe before and after the particular product offerings, we identified the likelihood of customers to either reply positively to a new product offering, or reply positively to a counter offer aiming to retain potential defectors. The first step considered all prospects being analysed primarily for their credit worthiness, and subject to their eligibility, for their willingness to apply for another product. The ability of a financial institution to penetrate the whole of a particular market is not to be overlooked. The credit worthiness eligibility of the entire Serbian population is indicatively used in order to identify the credit potentials of the whole market before entering into a behavioural analysis.

The “propensity to buy/defect” approach was also supported by the full operational analysis of the product/service offer effort, as we do not stay only at the willingness level of the clients, but we sought to identify the efficiency of all steps mediating from the positive answer of clients up to the final credit disbursement/client retention by means of a mathematical model. The business case focuses on particular products of a retail banking environment, i.e. credit cards, personal loans, debt consolidation loans and overdrafts. It is of paramount importance to detect the possibilities to “enter” an overall market. The analysis which assesses the creditworthiness of the entire population of a country, characterizing it as “bankable” or not, is essential for understanding the market perspectives, but also for positioning retail banking products using different priorities set. The criteria used for assessing the eligibility of the prospects were: Employment Status-Age-Income-Availability of Fixed phone number-Credit Bureau historic and current delays-Debt to Income Ratio-Pool Scorecard and Internal Grading. The following analysis was applied to the entire Serbian population in August 2014. It can be seen that in a certain population of 7,181,505 inhabitants of Serbia, 908,000 make up the potential “bankable population”. The most noticeable results can be divided in two groups, the employed 45

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Agaliotis, K., Hadžić, M.  Predicting retail banking consumer behaviour

and the pensioners’ prospects. When it comes to the former one, the exclusion criteria with the higher percentages are credit bureau delays (36.5%), DTI/ Scoring (29%), employment (24%), income (13.5%) and age (11.5%). The higher exclusion criteria for the latter are income (29.2%), age (27.3%), credit bureau delays (26%) and DTI/Scoring (22%).

Table 1. Bankable Population - Results 46

An in-depth one-to-one comparison between the employed individuals and pensioners needs to rely on many aspects, such as the structure of the economy, the historic evolution of public vs. private sector, the compensation strategy of the country, the infrastructure etc. A snapshot approach could definitely observe that the pensioners tend to be relatively more credit worthy based on the criteria that they can really in-

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Agaliotis, K., Hadžić, M.  Predicting retail banking consumer behaviour

fluence, see credit bureau delays and DTI/Scoring. Unlike these personal characteristics that indicate particular consumer behaviour towards credit repayments and social profile, both income and age criteria are “out of reach” and are not subject to behavioural changes. SALES: METHODOLOGY FOR PROPORTIONAL REPRESENTATION

The subject methodology is based on the over/ under representation principle in order to prove that different client categories do not only have a higher propensity to buy (see inclination to reply positively to a product’s offer), but also deliver the best final results compared to the resources used. The methodology considers the percentage split of sub - segments between two similar micro societies. A simple example can be the professions or educational levels, which make up the existing portfolio of any clientele’s database. Should the percentage representing the profession “Teachers” remain the same between the clientele’s database used for the selection of the prospects and the final disbursed credit list of clients, we may come to the conclusion that “Teachers” are not influenced by the subject product offering. If “Teachers” are overrepresented in the final disbursed credit list of clients, we conclude that the reason of their disproportional representation can only be what is mediated from their initial selection, and their final “call to action” which was the product’s offering.

It is quite the opposite reason that leads a particular segment not existing or not being under-represented in the final client list. Its’ “indiﬀerence” is explained by the prospects’ negative answer to the product oﬀering that will result in having no representative of the particular segment in the final list of clients. The outcome is defined by dividing the relevant percentage enjoyed by the particular product among the same client group, by the one resulted after the completion of the campaign. As a leading example, we could use the overdraft representation before and after the execution of debt consolidation campaign. Out of 8,760 pre-selected prospects, 31.08% were overdraft holders at the time of campaign creation. At the end, out of 313 clients that had only their debt consolidation loan disbursed, the representation of overdraft increased to 64.54%. SALES: OPERATIONAL EXECUTION At the final stage, after having “secured” both the creditworthiness and the propensity to buy of the prospects, it is important to secure the operational execution by coming to conclusions for each step of the product sales circle. The following steps represent a standard retail banking procedure for credit related products and they refer to a branch network dominated type of banking. Each and every step is an inevitable part of the process that intends to use the merits of each of the elements that participate to the maximum, aiming to sell most products while using the least possible

Figure 2. Propensity to buy methodology 47

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Agaliotis, K., Hadžić, M.  Predicting retail banking consumer behaviour

Figure 3. Products sales circle

amount of resources. As each step depends on different aspects, the best coordination and prediction of behaviour based on the historic data is the ideal objective of every business manager. The fine tuning of all sales steps is the required objective for any financial institution that aims to optimize resources and customer experience. All personalized and above-the-line campaigns that can measure branch network walk inners owe to consider the historic data series before coming to a final decision. CONCLUSIONS-PROPENSITY TO BUY AND OPERATIONAL EXECUTION The “propensity to buy” analysis performed on a sample of 33,021 clients through 24 different campaigns proved that both consumer and housing loan holders present a relative high promptness only to credit cards offering. In the case of housing loan holders, the explanation lies with the new needs created after the property purchase and the relatively low DTI ratio (debt to income) burden of credit cards to credit bureau. It is acceptable though from such client category to serve their needs even at a higher cost as their already used DTI ratio does not allow further exposure to standard amortized products. The consumer loan holders demonstrate behaviour similar to the cash loan holders and overdraft/credit cards. For them, extending the credit burden at a higher level, both interest rate wise and product’s nature wise (see revolving vs. standard amortized one) does not seem to be a preventing factor. The following four tables present the analytical results. The cells marked in grey colour in Table 5 display the client categories over-represented, i.e. indicating a higher propensity to buy for the particular product offer. 48

The analysis of sales operational execution also proved interesting behavioural patterns. The most obvious one is that the higher the response rate, the higher the commitment of the prospects to deliver the full documentation for credit assessment. The cash loans (19.07%) and the credit cards (16.58%) are the leaders in response rate followed by proportionally high retrieval rates of 48.41% and 40.19%, respectively. Unlike common sense that would suggest higher response and retrieval rates for prospects aiming for debt consolidation loans, this is not the case. The well-established opinion that the existing creditors would react higher than anybody else to the call for reducing their monthly credit obligations is not only supported by the relative low percentage of response rate (14.9%), but also by the respective retrieval one that cannot reach more than 34.37%. It is important to state that the initial hypothesis that customers will behave based on the standard patterns following the pre-defined calculation methodology proved to be correct to a great extent. The findings were threefold. Firstly, securing that Serbia is strategically still a “place to be” for retail banking business as a descent part of the population is “bankable”; secondly, identifying the particular segments of customers with the higher inclination to answer positively to a new product offering; thirdly, focusing on those that have the highest probability to reach the final credit approval stage. Different segments were identified and crosschecked for their behaviour over different products offers. We shall try to summarize by concluding that the existing cash loans and credit card holders are not price sensitive and intend to increase enormously their current credit exposure. It is also the case that

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Agaliotis, K., Hadžić, M.  Predicting retail banking consumer behaviour

Tables 2. Before the campaign commences analysis (numeric)

Tables 3. Before the campaign commences analysis (percentage)

their intentions are not time-limited to accept verbally the new product oﬀer, but they will demonstrate committment to it by showing to be very determined to deliver all required documentation for credit assessment.

Given that both products enjoy one of the highest nominal interest rates in the Serbian market, it is not unusual that they have become the most wanted segments triggering banks to argue over them. 49

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Agaliotis, K., Hadžić, M.  Predicting retail banking consumer behaviour

Tables 4. After the campaign ends analysis (numeric)

Tables 5. After the campaign ends analysis (percentage)

REFERENCES Ajzen, I. (1991). Theory of planned behaviour. Organizational Behavior and Human Decision Processes. 50, 179-211. Ajzen, I. (2000). The theory of planned behavior: Habit, perceived control, and reasoned action. Mannheim: Mannheimer Zentrum für Europäische Sozialforschung. 50

Ajzen, I. (2008). Consumer attitudes and behavior. In C. P. Haugtvedt, P. M. Herr, & F. R. Cardes (Ed.) Handbook of Consumer Psychology (pp. 525-548). New York: Lawrence Erlbaum Associates Ajzen, I., & Fishbein, M. (2002). Understanding attitudes and predicting social behavior. Upper Saddle River, NJ: Prentice-Hall.

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Agaliotis, K., Hadžić, M.  Predicting retail banking consumer behaviour

Armitage, C.J., & Conner, M. (2001). Eﬃcacy of the theory of planned behaviour: A meta-analytic review. British Journal of Social Psychology. 40(4), 471-499. DOI: 10.1348/014466601164939 Brassington, F., Pettitt, S., & McMillan, K. (2010). Principles of marketing. Harlow: Financial Times Prentice Hall. Campbell, D. T., & Russo, M. J. (2001). Social measurement. London: SAGE. Conner, M., & Armitage, C.J. (2001). Extending the Theory of Planned Behavior: A meta-analytic review. British Journal of Social Psychology. 40(4), 471-499. DOI: 10.1348/014466601164939 Farr, R. (1994). Attitudes, social representations and social attitudes. Papers on Social Representations. 3(1), 30-33. Fishbein, M. (1979). A theory of reasoned action: Some applications and implications. Nebraska Symposium on Motivation. 27, 65-116. Fishbein, M., & Ajzen, I. (2010). Predicting and changing behavior: The reasoned action approach. New York: Psychology Press. Godin, G., & Kok, G. (1996). The theory of planned behaviour: A review of its applications in health related behaviours. American Journal of Health Promotion. 11(2), 87-98.

Kumar, A. (2013). Bank Marketing Mix in today banking sector. BPR Technologia: A Journal of Science, Technology & Management. 2(1), 17-26. Miller, G.A. (1956). The Magical Number Seven, Plus or Minus Two. Psychological Review. 101(2), 343-352 Muller, C., & Nordman, C.J. (2004). Which Human Capital Matters for Rich and Poor’s Wages? Evidence from Matched Worker-Firm Data from Tunisia. DIAL Working Paper No. DT/2004/09. DOI: 10.2139/ssrn.652941 Raz, J. (2010). Engaging reason: On the theory of value and action. Oxford: Oxford University Press. Read, S.J., & Miller, L.C. (2014). Connectionist Models of Social Reasoning and Social Behavior. Hoboken: Taylor and Francis. Rose, P.S., & Hudgins, S.C. (2013). Bank management & financial services. New York: McGraw-Hill. Storbacka, K., & Nenonen, S. (2014). Learning with the market: Facilitating market innovation. Industrial Marketing Management. 44, 73-82. DOI:10.1016/j.indmarman.2014.10.009 Storbacka, K., & Pennanen, R. (2014). Solution business: Building a platform for organic growth. Cham: Springer.

PREDVIĐANJE PONAŠANJA FIZIČKIH LICA KAO KORISNIKA USLUGA U BANKARSKOM SEKTORU NA OSNOVU STATISTIKE Rezime: Cilj bilo koje ekonomske aktivnost, a naročito finansijske, jeste stvaranje potreba. Kako finansijske aktivnosti nisu izuzetak tome, primarni cilj bilo koje finansijske institucije jeste razumevanje i zadovoljavanje potreba klijenata. Veoma je važno da finansijske ustanove budu upoznate sa detaljima vezanim za ponašanje klijenata i procesima koji utiču na klijente pri donošenju odluke. Na taj način će se zadovoljiti ne samo potrebe klijenata, već i pridobiti lojalnost klijenata, i uspostaviti dobri dugoročni odnosi sa njima. Kao i svaki drugi, odnos između klijenta i banke trebalo bi da bude zasnovan na uzajamnoj podršci i razumevanju. Imajući u vidu bankarsko tržište za fizička lica (retail market) u Srbiji, mogu se izvesti sledeći zaključci: prvo, da i dalje postoji veliki potencijal za poslovanje u ovom domenu; drugo, da je određeni deo klijenata voljan da prihvati nove proizvode, i treće, da banke moraju da obrate posebnu pažnju na klijente sa najvećom kreditnom sposobnošću. Što se tiče odnosa klijenata prema različitim ponudama proizvoda, možemo zaključiti da korisnici gotovinskih kredita i korisnici kreditnih kartica nisu cenovno osetljivi, te da stoga postojeći korisnici teže povećanju svoje kreditne izloženosti (zaduženosti).

Ključne reči: bankarstvo za fizička lica (retail banking), ponašanje klijenata, segmentacija, lojalnost. Received: February 15, 2015. Correction: March 22, 2015. Accepted: April 15, 2015.

EJAE 2015, 12(1): 52-57 ISSN 2406-2588 UDK: 004.424.4.056 DOI: 10.5937/EJAE12-8153 Original paper/Originalni naučni rad

APPROXIMATE SEARCH FOR BIG DATA WITH APPLICATIONS IN INFORMATION SECURITY – A SURVEY Slobodan Petrović* Gjøvik University College, p.o. box 191, N-2802 Gjøvik, Norway Abstract: This paper is a survey of approximate search techniques in very large data sets (so-called Big Data). After a short introduction, some techniques for speeding up approximate search in such data sets based on exploitation of inherent bit-parallelism in computers are described. It then reviews the applications in search related to information security problems (digital forensics, malware detection, intrusion detection) are reviewed. Finally, the need for constraints in approximate search regarding the number of so-called elementary edit operations and the run lengths of particular elementary edit operations is explained and the status of on-going research on efficient implementation of approximate search algorithms with various constraints is given.

INTRODUCTION Big Data is a common name for the advanced techniques capable of analyzing very large data sets consisting of items diﬀerent in form, stability, reliability etc. The data sources can be so large that even the theoretically eﬃcient (sub-linear time complexity) algorithms cannot produce search results within a reasonable time period (exabytes of data). The form of the data can vary – it can be text, video, image, sound etc., and the relations among data items have to be found in such heterogeneous data sets. The velocity of data can be extreme (hundreds of gigabytes per second) and some measurements producing data can give unreliable results, thus reducing the quality of decision-making based on them. Such data must be discovered, replaced and/or approximated. In the area of business, data have been treated as asset for a long time already (Pries et al., 2015). When considering big data analytics, we usually talk about the so-called 5 Vs: Volume (up to exabytes of stable data to process), Velocity (huge quantities of data per unit 52

* E-mail: slobodanp@hig.no

Key words: Big Data, approximate search, bit-parallelism, information security, constraints.

of time and the response to them has to be given in an extremely short period of time), Variety (text, video, image, sound, structured, unstructured), Veracity (incomplete, inaccurate measurements, deception), and Value (business models can be related to data – possession or analysis of data) (Berre, 2015; Pries et al., 2015). Big Data has as a task to develop eﬃcient algorithms for the analysis of such data. As regards the static data volume, and in accordance with (IBM, 2013) 2.5 quintillion (i.e. 2.5×1018) bytes of data are produced every day and 90% of all data has been produced in the last two years. The static volume by itself is no longer considered a problem even for such quantities of data. However, this is too optimistic, since static data in such analysis are treated as error-free, which is highly unrealistic. In order to analyze huge quantities of data (or queries) possibly containing errors, we need to employ the techniques of approximate search, which are much less eﬃcient than those used in exact search. In such a situation, the static high-volume data processing becomes a problem again. When it comes to the implications

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of this fact to information security in digital forensics, we have to use approximate search techniques to cope with random or deliberately introduced errors in captured data and queries. Even though the time limits in digital forensic investigations are expressed in days and not in milliseconds, the amounts of captured static data are so large that using the existing approximate search techniques for forensic analysis becomes a problem. As regards velocity, we usually consider analytics on streaming data (sound, video) (Berre, 2015), but in other applications, such as malware detection or intrusion detection, velocity matters as well. For instance, regarding network intrusion detection, even ordinary home networks deal with velocities of several gigabytes per second and very often the intrusion analysis has to be performed on group links, whose velocities reach hundreds of gigabytes per second (Eyrich, 2011; Sommer, 2011). In addition, new attacks and malware are derived from the existing ones and to avoid frequent change of signatures to detect them, we can use approximate search techniques to detect new attacks obtained by modifying the old ones. However, in order for the detection system to operate in real time, the approximate signature search algorithm must cope with huge data traffic velocities. Variety of data has attracted much attention in big data analytics, since it is very interesting in business applications where we have to find relations among data from many heterogeneous sources (Berre, 2015; Pries, 2015). Variety of data matters in information security as well, especially in digital forensic investigations, where the analysts have to efficiently find relations among data in different forms captured from many sources. Based on such analysis, it is necessary to make the decision on whether or not to present the data as evidence in the court of law. Information is often deliberately changed by the suspect at the time of recording in the memory of the computer in order to make the eventual criminal investigation more difficult. Then, the approximate search techniques come again to the scene to deal with such deliberate data alterations, whose form can range from ordinary text to images and videos. Veracity of data has to be taken into account in many applications, especially when we analyze sensor data. Nowadays, sensors are cheap and are deployed massively almost everywhere. With large machinery and transport facilities, sensors are used not only to estimate the current state of the equipment, but also to predict the future events. This phenomenon is called surprise detection (Frigessi, 2015). Similar

Petrović, S.  Approximate search for big data

approach can be used in information security in order for the security analyst to get a general idea about the monitored system, where some data can be missing or inaccurate (Gorodetsky et al., 2004). Afterwards, we need to compare data vectors where some features may be missing, which calls for approximate search in order to cope with such errors. The search must be very efficient since we need fine granularity of situation assessment in time. In order to increase the efficiency of approximate search techniques, interdisciplinary approach is needed. Not only the new sophisticated search algorithms are invented for this purpose, but also advances in hardware technologies are combined with new software techniques (parallel approximate search algorithms and their simulations on conventional hardware (Layer, 2007; Navarro et al., 2002), multi-level logic, etc.), see Section 2. In addition, we often have to introduce constraints in the approximate search algorithm. As a result, new practically useful systems for big data analytics are designed. This also includes new efficient systems for forensic analysis and malware detection. BIT PARALLELISM AND APPROXIMATE SEARCH In this section, we shall concentrate on the socalled bit-parallelism phenomenon that has been extensively used in speeding up search algorithms in the past 20 years or so (Faro et al., 2012). We first present the definitions of Deterministic and NonDeterministic Finite Automaton and then explain the bit-parallelism and its application in exact and approximate search. A Deterministic Finite Automaton (DFA) is a Finite State Machine (FSM) with a property that from each state, given the same input symbol, there is only one transition to the next state. On the other hand, a Nondeterministic Finite Automaton (NFA) is a finite state machine capable of making transitions to more than one state for the same input symbol. One possible interpretation of such behavior is that the machine makes copies of itself in such a situation, which is then parallel processing. Each copy of the NFA processes the subsequent input symbols independently. If after performing such copy making and following one of the paths, an input symbol arrives, which does not appear as a label of any edge going out from the reached state on one of the machine copies, that machine-copy is stopped. It becomes inactive. If any of the copies of the machine reaches the final state, the input string is accepted, i.e. recognized. 53

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Petrović, S.  Approximate search for big data

Any NFA can be transformed to a DFA. The general transformation algorithm has exponential complexity with respect to the length of the string determining the NFA. However, we consider a simple special case, where this transformation can be performed in polynomial time. In this paper, we assign NFA and DFA to the search pattern, which is common in search applications. Then, the input sequence comes from the search string. An NFA can be represented in two ways: with ε-transitions and without ε-transitions, where ε-transitions are transitions that do not consume any input. In both cases (with or without ε-transitions), such an NFA recognizes all the suﬃxes of the corresponding search pattern. Without ε-transitions, the NFA starts at the state 0 and remains active at least until the next symbol of the search string appears at the input (Fig. 1). Because of that, 0 is always an active state. If there is a path from the initial state to some state of the machine for a given input sequence of symbols, the final state of that path is called an inactive state. A state that is not active is called inactive state. A DFA can have only one active state at a time, whereas an NFA can have many such states concurrently.

Since an NFA of this kind (with or without ε-transitions) recognizes all the suﬃxes of the search pattern w, the corresponding DFA is so-called Directed Acyclic Word Graph (DAWG) or suﬃx automaton of w (Fig. 3) and can be obtained by means of an algorithm with polynomial time complexity (Navarro et al., 2002).

Figure 3. A Directed Acyclic Word Graph (DAWG) corresponding to the pattern w=aabcc. Figure 1. The NFA without e-transitions corresponding to the search pattern w=aabcc.

Each input symbol (i.e. the next symbol from the search string) drives creation of a new copy of the NFA, which starts at the state 0. With ε-transitions, the active states of such a machine are those that correspond to ending symbols of input sequences. For example, consider the search pattern from Fig. 1, w=aabcc. The corresponding NFA with ε-transitions is given in Fig. 2. If the input sequence is ''aa'', then the state 2 of the machine will be active after receiving this sequence. If the input sequence is ''c'', the states 4 and 5 will be active. If the input sequence is ''aba'', no state is active and the whole machine is considered inactive.

Figure 2. The NFA with e-transitions corresponding to the search pattern w=aabcc. 54

We explain the bit-parallelism phenomenon on an example. Suppose that we are given the search string S=aaabcaabcc and we are searching for the pattern w=aabcc in it by means of the NFA without ε-transitions. Each time a symbol from S arrives, the machine makes a copy of itself and starts from the 0 state. Suppose the maximum number of machines running in parallel is m=|w|, in our example m=5. This means that we simulate parallel processing on a real computer instead of theoretical consideration of unlimited parallelism. We denote by j the number of processed symbols from S. Then, we have min (j,m) machines running in parallel, for each j. After processing j symbols from S, some of these machines are active and some are inactive. Define search status in a computer word D of m bits. In our case, D=d5d4d3d2d1. We set di=1 if the corresponding machine is active after processing j bits of S. Before processing any symbol, all the machines are active (since they are all in the state 0) and consequently D=1m (all ones). The operation of such an NFA is illustrated in Fig. 4.

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Petrović, S.  Approximate search for big data

The corresponding exact search algorithm is called Shift-AND and was the first to appear back in 1989 (Baeza-Yates et al., 1989). By complementing the bit masks and the search status word D, we obtain a bit more eﬃcient implementation of that algorithm called Shift-OR. In that algorithm, the status word update formula is Dj=(Dj-1<<1) OR B[Sj] Figure 4. Operation of an NFA (see text).

As can be seen in Fig. 4, when passing from j=5 to j=6, the bit d5 disappears, since we can have maximum m machines at a time. This fact is expressed by shifting the search status word D one position to the left (d4 becomes d5, d3 becomes d4, etc.) At the same time, a new machine is created corresponding to the bit d1, which starts from the state 0 (which is always active). This fact is expressed by OR-ing the shifted word D to the left with 0m-11 (in our case m=5 so we OR with 00001). In our example, when passing from j=5 to j=6, the next symbol from S to be processed is a. If we ask ourselves which input symbol will keep which machine active, if it was active before processing that symbol, the answer in this particular case is that an a will always keep the machine d1 active, an a will keep the machine d2 active, a b will keep the machine d3 active, a c will keep the machine d4 active, and a c will keep the machine d5 active. We can use this fact for updating the search status word D automatically, after each shift and OR-ing with 1, by introducing the bit masks. The bit mask for any symbol depends only on the search pattern, not on the search string. Because of that, we can pre-compute the bit masks for all the symbols from the pattern w. Given the search pattern w=w1w2…wm, for the bit mask B[s]=b1b2…bm the following holds: if s=wi then bm+1-i=1, otherwise bm+1-i=0. In our example, since w=aabcc, it is easy to see that B[a]=00011, B[b]=00100, and B[c]=11000. We can now update the search status word D for each new input symbol Sj in the following way Dj=((Dj-1<<1) OR 1) AND B[Sj] In our example, for j=6, we have D6=((D5<<1) OR 1) AND B[S6]= = ((01000<<1) OR 00001) AND B[a] = = 10001 AND 00011 = 00001.

(2)

Following the above-explained bit-parallelism implementation principle, the fastest known exact search algorithms on average, Backward Non-deterministic DAWG Matching (BNDM) (Navarro et al., 2002) and BNDMq (Durian et al., 2009) have been devised. We now show how bit-parallelism techniques can be used in approximate search. The main idea is to design an NFA capable of encompassing error processing and then construction of a bit-parallel simulation of such an automaton is straightforward. The NFA assigned to a search pattern with errors is presented in Fig. 5 (Navarro et al., 2002). In Fig. 5, where a match is represented with a horizontal solid line (we advance 1 character in the search pattern and in the search text), an insertion with a vertical solid line (we advance 1 character in the search text but we do not advance in the search pattern), a substitution that is not a match with a diagonal solid line (we advance 1 character in the search pattern and in the search text) and a deletion with a diagonal dashed line (we advance 1 character in the search pattern but we do not advance in the search text) - this is an ε-transition. A loop in the state 0 of the NFA is used to represent waiting for the first character of the search pattern in the search string. If the NFA manages to find itself in one of the right-most states (double circled), the input string is accepted, which means that we have found the search pattern in the search string.

(1)

Figure 5. An NFA assigned to the search pattern w=annual with up to 2 errors. 55

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Petrović, S.  Approximate search for big data

The NFA simulation approach to approximate search introduced in Section 2 proved itself efficient. There are several ways to apply bit-parallelism in this simulation, of which the most important ones are Row-wise bit parallelism (RBP) and Diagonal-wise bit parallelism (DBP) (Navarro et al., 2002). The idea of RBP is to treat each row of the NFA given in the matrix form (see Fig. 5) as a separate NFA and for each of these NFAs we maintain a separate search status word. With the DBP approach we obtain a more complicated algorithm for implementation, but the worst-case complexity of the DBP approach is k times better than with the RBP approach, where k is the number of allowed errors in search. A k-error tolerant BNDM algorithm also exists (Navarro et al., 2002). Special modifications of all these algorithms are needed if wildcard search, regular expression matching or multi-pattern search is needed. APPLICATIONS IN INFORMATION SECURITY In information security, search is used for: ◆ Finding malware (known-to-be-malicious files). ◆ Finding evidence in criminal cases: - documents, - images, - sound, etc. ◆ Intrusion detection in real time, etc. Search in digital forensics must be efficient since there is short time available to collect evidence and the captured data sets can be huge and heterogeneous. For real time systems, such as malware detectors and Intrusion Detection Systems (IDS), efficiency is essential since otherwise the attacks/malware would pass unnoticed, which produces the so-called false negatives in detection. The search problem has been extensively studied in the last 50 years and several hundreds of (good) search algorithms are known. The efficiency of approximate search is a big challenge since it turns out that it is much more difficult to achieve than the efficiency of exact search. In addition, approximate search must quite often include various constraints (for example, on the total number of so-called edit operations that transform one string into another), which enables a more flexible approximate search, but it makes the search algorithms less efficient if not implemented carefully. Multi-pattern approximate search is especially interesting in intrusion detection since we rarely have to search for just one pattern in the traffic – most attack signatures consist of several patterns. 56

In order to explain approximate search with constraints, we need the definition of the so-called edit distance. Let w be a search pattern and let S be a search string. Approximate search for w in S with k-error tolerance can be considered as search for a substring of S at the distance to w less than or equal to k. The distance measure used most often is edit distance (Levenshtein, 1966), which is defined as the minimum number of so-called elementary edit operations (deletions, insertions and substitutions) necessary for transforming one string into another. Edit distance is widely used since it can be computed in an iterative way, by filling a matrix of partial edit distances. Each entry in this matrix contains the edit distance of the corresponding prefix of one string to the corresponding prefix of another string. If we initialize this matrix in a special way (the first row is zeroed), we can run the algorithm for computation of edit distance to find w in S at the distance less than or equal to k (Navarro, 2002). It turns out that this kind of computation is equivalent to simulation of NFA in the matrix form described in the previous section. In some applications (cryptanalysis of irregularly clocked Linear Feedback Shift Registers (LFSR) (Petrovic et al., 2007), matching of DNA sequences (Naor et al., 1993)), it is necessary to introduce constraints in the definition of edit distance. The constraints can be on the total number of elementary edit operations or on the run lengths of certain elementary edit operations (deletions and/or insertions) (Sankoff et al., 2000). In addition, it is sometimes necessary to reconstruct the edit sequences (the optimal sequences of edit operations that transform one string into another) in an efficient way. Other applications of constrained edit distance in information security are possible as well. Error-tolerant digital forensic search should also be considered. By introducing various constraints, we can recognize the human and/or the device that produced deliberate alteration of incriminating content of the captured device(s). Since the time complexity of computation of both constrained and unconstrained edit distance and the reconstruction of the edit sequence is quadratic in the length of the search string, it would be of interest to speed up this by simulating NFA. It has been done for unconstrained edit distance (see Section 2), but for constrained edit distance it still needs to be accomplished. There are certain difficulties related to the simulation of the operation of the NFA in the constrained context. Namely, it is necessary to track the lengths of the paths leading to every active state of the NFA, which calls for introduction of additional memory into the device. In spite of this additional memory cost, the overall efficiency of the constrained edit distance computation will be improved.

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SUMMARY In this paper, a survey of techniques used to speed up search in large data sets by means of simulating Nondeterministic Finite Automata (NFA) is given. It shows how these techniques can be applied in information security, as well as how introducing various constraints in the definition of the distance used in error tolerant search influences the eﬃciency of the search algorithms of this kind, and information is provided on the current status of the research in compensating this influence. REFERENCES Baeza-Yates, R., & Gonnet, G.H. (1992). A New Approach to Text Searching. Communications of the ACM. 35(10), 74-82. DOI: 10.1145/135239.135243 Berre, A.J. (2015). BigData Value PPP in Horizon 2020. Retrieved March 30, 2015, from http://www.sintef.no/ globalassets/sintef-ikt/arrangementer/2015-02-23_workshop_big_data/2---bdva-ppp-2402-berre.pdf Durian, B., Holub, J., Peltola, H., & Tarhio, J. (2009). Tuning BNDM with q-Grams. In J. Hershberger & I. Finocchi (Ed.) 2009 Proceedings of the Eleventh Workshop on Algorithm Engineering and Experiments (ALENEX). DOI: 10.1137/1.9781611972894.3 Eyrich, J. (2011). Drinking from a Firehose: How to get traffic to your Bro cluster? Retrieved March 30, 2015, from https://www.bro.org/bro-workshop-2011/slides/drinking-from-fire-hose.pdf Faro, S., & Lecroq, T. (2012). Twenty Years of Bit-Parallelism in String Matching. In J. Holub, B.W. Watson & J. Zdarek (Ed.) Festschrift for Borivoj Melichar (pp. 72101). Prague: Czech Technical University. Frigessi, A. (2015). Big Insight. Retrieved March 30, 2015, from http://www.sintef.no/globalassets/sintef-ikt/arrangementer/2015-02-23_workshop_big_data/4---biginsight_frigessi.pdf

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Gorodetsky, V., Karsaev, O., & Samoilov, V. (2004). On-Line Update of Situation Assessment Based on Asynchronous Data Streams. In Knowledge-Based Intelligent Information and Engineering Systems: 8th International Conference, KES 2004 (pp. 1136-1142). Berlin: Springer Verlag. DOI: 10.1007/978-3-540-30132-5_154 IBM. (2015). What is big data? Retrieved March 30, 2015, from http://www-01.ibm.com/software/data/bigdata/ what-is-big-data.html Layer, C. (2007). A Coprocessor for Fast Searching in Large Databases: Associative Computing Engine. PhD thesis, University of Ulm. Levenshtein, V. (1966). Binary Codes Capable of Correcting Deletions, Insertions and Reversals. Soviet Physical Doklady, 10(8), 707-710. Naor, D., & Brutlag, D. (1993). On Suboptimal Alignments in Biological Sequences. In A. Apostolico et al. (Ed.) Combinatorial pattern matching: 4th annual symposium, CPM 93, Padova, Italy, June 2-4, 1993 : Proceedings (pp. 179-196). Berlin: Springer Verlag. Navarro, G., & Raﬃnot, M. (2002). Flexible Pattern Matching in Strings: Practical on-line search algorithms for texts and biological sequences. Cambridge: Cambridge University Press. Petrovic, S., & Fuster-Sabater, A. (2007). Reconstruction of Suboptimal Paths in the Constrained Edit Distance Array with Application in Cryptanalysis. In O. Gervasi & M. L. Gavrilova (Ed.) Computational Science and Its Applications - ICCSA 2007: International Conference, Kuala Lumpur, Malaysia, August 26-29, 2007: Proceedings, Part III (pp. 597-610). Berlin: Springer Verlag. DOI: 10.1007/978-3-540-74484-9_52 Pries, K.H., & Dunnigan, R. (2015). Big Data Analytics: A practical guide for managers. Boca Raton: CRC Press. Sankoﬀ, D., & Kruskal, J. (2000). Time Warps, String Edits and Macromolecules: The Theory and Practice of Sequence Comparison. Cambridge: Cambridge University Press. Sommer, R. (2011). Broverview. Retrieved March 30, 2015, from https://www.bro.org/bro-workshop-2011/slides/ broverview.pdf

APROKSIMATIVNE PRETRAGE U VELIKIM SKUPOVIMA PODATAKA SA PRIMENAMA U BEZBEDNOSTI INFORMACIONIH SISTEMA - PREGLED Rezime: Ovaj rad nudi pregled tehnika aproksimativne pretrage u velikim skupovima podataka (''Big Data''). Nakon kratkog uvoda, prikazane su neke od tehnika za ubrzanu aproksimativnu pretragu u takvim skupovima podataka zasnovanih na ispitivanju inherentnog bit-paralelizma u računarima. Razmatraju se i njihove primene vezano za probleme bezbednosti informacionih sistema (digitalna forenzika, detekcija malvera, detekcija upada). Na kraju se objašnjava potreba za ograničenjima u aproksimativnim pretragama vezano za broj takozvanih osnovnih operacija za editovanje i dužinu trajanja istih, kao i trenutno stanje istraživanja o efikasnom sprovođenju algoritama aproksimativne pretrage sa različitim organičenjima.

Ključne reči: veliki skupovi podataka, aproksimativne pretrage, bit-paralelizam, bezbednost informacionih sistema, ograničenja. Received: February 22, 2015. Correction: March 16, 2015. Accepted: April 5, 2015.

EJAE 2015, 12(1): 58-66 ISSN 2406-2588 UDK: 005.81:624.04 658.5:004 657.471.1:624(612) DOI: 10.5937/EJAE12-7815 Original paper/Originalni naučni rad

PROJECT SCHEDULING METHOD WITH TIME USING MRP SYSTEM – A CASE STUDY: CONSTRUCTION PROJECT IN LIBYA Abdallah Ali Imetieg1,*, Miroslav Lutovac2 Singidunum University, Department for Postgraduate Studies, Ph.D Candidate 32 Danijelova Street, Belgrade, Serbia 2 Singidunum University, Faculty of Tehnical Sciences 32 Danijelova Street, Belgrade, Serbia 1

Abstract: Materials Requirements and Planning (MRP) is a system of production planning and inventory control, which is used to manage manufacturing processes. Most MRP systems are software-based and are used to ensure that the materials are available for production, that the products are available for delivery to customers, that the lowest possible material and product level is maintained in store, as well as to plan delivery schedules and purchasing activities. Upon completion of scheduling, begins the process of follow-up, which includes the achievement of the project goals in terms of quantity, quality and costs in accordance with deadlines. MRP system was applied to project of 5000 housing units in Solug area, which is close to Benghazi city, Libya, with the aim to provide necessary cash flow to pay dues on time without delay to all involved project sub-contractors and material suppliers, to ensure the smooth flow of operations, as well as to diminish costs by reduction of temporary storages and rented areas. There is a correlation between time and cost of each activity. If the required time is shorter than the scheduled time of the certain activity, it would demand more resources, which further leads to the increase in direct costs of the given activity. Therefore, the output of MRP is important since commands are issued through planning in order to launch the suggested orders with the required quantities and within the limited time period.

INTRODUCTION Materials Requirement Planning (MRP) refers to production planning, scheduling, and inventory control software systems used to manage manufacturing processes. Namely, it aims to enable the company’s management to plan the product parts and control the inflow of these parts to fulfill the service or product within the scheduled time period. MRP is a system that has proven its success within the controlling and 58

* E-mail: imetieg67@yahoo.com

Key words: Materials Requirements and Planning (MRP), cost, quality, scheduling process, project management, Libya.

planning field on the inventory and production. It has become currently possible to realize the process performance objectives represented in cost mitigation, document submission, high quality, materials and other productive forces of optimal use (Ram, 2006). This system provides a relatively quick, real and eﬀective treatment of scheduling problems, diminishing cost production of orders due to minimum inventory mitigation, time accuracy of materials and parts reception by the working centers whenever they are needed and delivery of orders within the scheduled

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time (Parsaei, 2013). The project implementation of projects has specific characteristics related to their size, complexity and contribution of different parties, including financiers, designers, consultants, contractors, material suppliers, equipment lease, and implementation systems. This matter represents a great challenge for those in charge of the management process and implementation of engineering projects in different fields. The success of any of these projects depends mainly on the existence of effective management that plans, controls activities, correctly conducts timetable for the project and makes necessary procedures to hasten the accomplishment of certain activities in order to accomplish the project within the scheduled time. Certain modern technologies have been selected for the purpose of this research to plan and control construction projects by applying the MRP in order to be implemented on constructing 5000 housing units in the area of Solug, Benghazi, Libya. The paper highlights the increased importance of network analysis studies in project planning at the global level and low inclination culture towards such studies among several researchers in the Arab states including Libya. The researcher's intention to investigate the reasons behind that and the attempt to resolve the given issue have considerably affected the choice of the research topic. RESEARCH PROBLEM The paper deals with the problems of time, cost and optimal exploitation of available resources to achieve the project objectives and meet the required quality standards. In light of this and through the follow-up of implementing 5000 housing units in Solug area, Benghazi, Libya, the problem concerning time evaluation and exploitation of available resources by the company concerned with project implementation was initially observed. Therefore, the researcher deals with this issue using the most common techniques in the operations research, namely MRP, in order to prepare and make the project timetable and control the implementation process. The research problem lies in the fact that the company concerned with project implementation lacks the project scientific planning method and timetable. This can lead to several unexpected risks which can hinder and block the project implementation or perhaps lead to its termination. This matter requires determining the possible project risk, its sources, various diagnostic methods and the most important strategies that can be

Imetieg, A., Lutovac, M.  Project scheduling method

adopted to handle the risks. Accordingly, the research problem can be restricted to an essential question of “How can the project be planned and controlled in general, and the study project in particular, by using MRP for the aspects of time and cost and plan the need for materials while reducing the risk rate and fulfilling the required quality?” RESEARCH HYPOTHESES The research is based on the main hypothesis that the multi-tiered global supply-demand network system with its diverse methods (such as MRP) is able to achieve the real level of quality, in the shortest possible time and at the least possible cost, in the implementation of housing units in the area of Solug, Benghazi in Libya. RESEARCH OBJECTIVES The research aims to investigate the impact of Materials Requirements Planning system in reducing the costs of production, procurement, as well as to save time and improve delivery time and service in the project of 5000 housing units in Benghazi, Solug, Libya, in order to achieve the objectives with the least possible time and cost, taking into consideration the required quality. RESEARCH APPROACH The theoretical part of this research relies on the deductive approach. The descriptive analytical technique is used for the purposes of data analysis besides the fieldwork section related to project accomplishment in the area of Solug, Benghazi, Libya. The applied section for project implementation of the research project used the project scheduling method MRP, which is required in all steps and phases of the project. This research focuses on the (Win QSB) program to analyze the MRP project. DATA COLLECTION SOURCES AND TECHNIQUES The research fieldwork depends on the data and information issued by the development department of all administrative centers in Libya, utilities and housing implementation body, the National planning council for housing policies, publications of the public 59

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Imetieg, A., Lutovac, M.  Project scheduling method

information authority. It also relied on the available records and documents about the time and costs of project activities implementation issued by the AlMada Consultative Services Bureau in charge of the engineering supervision. It also depends on the data and information from the Chinese limited company for communication and construction, in charge of the project implementation. THE CONCEPT OF MATERIAL REQUIREMENT PLANNING SYSTEM There are several definitions and concepts that have handled the concept of material needs planning system (Ptak, 2011). Orlicky, who is one of the early system designers, defines MRP as a group of sequencing, integral and logical procedures through designing special restrictions to translate the main production scheduling to the needs of each element of the inventory and identify suitable methods for them. This system is defined as a group of sequencing, integral and logical procedures to translate the main production scheduling to the component parts of the final product, so that it includes the issuance of purchase or manufacture orders in order to execute main scheduling according to the determined amount and required time (Segerstedt, 1998). The researcher believes that this system is an inventory controlling and production planning software-based technique. It can predict the number of final products with the independent demand in order to define necessary components and required amounts distributed over diﬀerent time periods. This can be done through identification of the gross and net material needs issued, while taking into consideration the previous inventory review. Based on that review, the amount whose supply order is issued can be increased, reduced, cancelled, deferred or its reception time amended (Gomes da Silva, 2014). MRP SYSTEM EMERGENCE AND DEVELOPMENT MRP is a well-known method of production management whose application heavily realies on computers. This method was proposed in 1965 by Joseph Orlicky and was supported by the American Production and Inventory Control Society in the 1970s. Several amendments and supplements have been made to this system over the last two decades, particularly in relation to the computer ability to process information and the system’s increasing use in the service 60

and production processes (Powell, 2012). This system has witnessed three development forms (MRP0, MRP1, and MRP2). The first one (MRP0) is related to the emergence of material needs planning systems in 1960s. The second one (MRP1) indicates that it is a system used to control production and inventory as it is used as an information system to plan and control inventory and productive power (Kassim, 2004; Zaher, 2014). This type scrutinizes the production issued orders to ascertain whether or not there is adequacy of productive power to handle such orders. The third type (MRP2) was developed in 1979 to merge the computation of productive cost and needs planning, and was afterwards renamed into manufacturing resources planning. Thus, MRP2 includes planning of material, financial and human resources and accordingly, the conformity and interaction among different administrative functions (O’Grady, 2012). MRP SYSTEM OBJECTIVES The MRP system aims to reduce the inventory level and cost, improve production scheduling effectiveness and use of materials, as well as to enable quick response to market changes. It helps the production management to accurately identify and state each element of the final product in terms of the required parts and components of identified products in the main production table whose purchase is desired, the purchase required amounts or their production parts, purchase orders issuance or work order of these parts and components to be available when needed. ADVANTAGES AND DISADVANTAGES OF MRP SYSTEM The MRP system output provides suitable information for inventory and production managers (Panizzolo, 2013). It supports the process of inventory planning and controlling through answering the questions related to what, how much, and when to order and when the production should be scheduled and products delivered. It determines the detailed planning of power and required material to meet the requirements of the main production table. It has an effective role in planning the production priority or purchasing according to the planned orders to be launched for the product components and parts. It helps the statistical prediction with product components and preserves inventory to ensure receiving

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materials within the scheduled time. It focuses on long-term material planning, and handles production fluctuations using safety inventory. It is characterized with elasticity as it interacts with demand and plans according to the changing demand. It uses human specialized skills and helps to improve the benefited parties’ service in terms of adherence to the scheduled time. It lessens the damage rate in the product subassemblies due to using the correct parts. It is related to a number of other functions including engineering, purchases, finance, sales, accounting, maintenance and distribution. MRP system has several advantages. Namely, it is a method of planning production without inventory as it preserves the time horizon to produce certain amounts and issue purchase or production according to the scheduled time. It does not require production reorganization, but it allows for the use of available technology (Kim, 2014). One of the most important results that prove its reliability is that it lessens inventory by a rate ranging from 25% to 40%, mitigates direct production costs by a rate ranging from 5% to 10% and mitigates structure costs by 40% (Wincel, 2013). In spite of its benefits, the MRP method was severely criticized which reveals its shortages or limitations. Its execution consumes a long period due to qualitative basis and the large size of data, a matter which requires a large database. It assumes unlimited power in all working centers. However, the reality asserts that some working centers may constitute what is called congestion or bottleneck as they cause congestion of the productive process. This may smash the accuracy of which it is characterized to plan production needs of materials and make power planning and control ineﬀective. MRP TYPES The following are the patterns of the material needs planning system according to the development of the system inputs (Mula, 2006): ◆ Regenerative approach: according to this approach, needs computations are fully upgraded on a weekly basis in line with the regular time intervals. Therefore, it plans needs of the product parts in terms of quantity and delivery due date. This approach is used when the production cycle is long, manufacture and production occurs in stable environment and when the engineering changes are planned to be reduced to minimum (Rom, 2002).

Imetieg, A., Lutovac, M.  Project scheduling method

◆ Net change approach: according to this technique, part of the planned needs is upgraded after identifying the parts subject to changes related to operating data due to the occurrence of defects or delayed arrival of the produced or purchased materials or their unavailability, without the need to entirely reschedule needs planning. This technique is used when the design change or the engineering changes of the technical structure are repeated, as well as when the operation period for several short products and product design is difficult (Landry, 2013). Notably, the material needs planning system is a dynamic system. It faces the variables of the industrial environment and processes them using total computation and net computation technique. These variables should not be numerous and tracked in a way that the system cannot assimilate, as this may lead to confusion. USING MRP SYSTEM FOR SCHEDULING Scheduling refers to time order to perform tasks by allocating different production means for each task. It comes after recorded orders management in the main production table in a way that allows to estimate the best term by devising the processes orders for each machine. It works to manage inventory in the best way and within the optimal time period (Sarkar, 2014). After completing the scheduling process, the execution starts with the tracking process that includes achieving a range of production objectives in terms of quantity, quality, terms and costs. The inputs of MRP include main production scheduling, main inventory file and the materials bill. The materials bill means that for each element of the main production scheduling, there is bill of materials. The bill of materials defines all raw materials, components, sub-assemblies and assemblies necessary for element production. The MRP computation system is connected to the file of bill of materials to determine which elements and quantities are required to accomplish a certain element (Zoraghia, 2015). The main inventory file contains detailed information related to the number and quantity of each required, existing element or there is commitment to use it in different time periods. The MRP system is connected to the main inventory computer file to determine the available quantity to be used within the certain time period. The most important MRP outputs are order 61

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Imetieg, A., Lutovac, M.  Project scheduling method

issuances through suggested or planned orders. The scheduling process shows the required quantity of each material within the certain period of time. In addition, there are other reports on changes, exceptions and facilities that constitute outputs. Orders include (Jodlbauer, 2012): ◆ purchase orders: They refer to the purchase official offer or official order issuance for suppliers to purchase according to certain models issued by the organization including all main data that are related to the required materials such as names, types, standards of each type, required quantity, supply required date agreed upon price, place of supply and the purchase order signed by the purchase manager. ◆ Work orders or contracts: include issuance of producing the required quantity of the products based on the demand within the specified period of time. ◆ Planned order report: includes devising a plan of all orders that will be issued in the future. It is a report determining whether the main production scheduling is possible or not. The Figure 1 shows the material needs planning system (Ram, 2006).

MATERIAL AND HUMAN PROJECT REQUIREMENTS MRP Process: Starting with end items, the MRP process goes through the following steps: 1. Establish gross requirements. 2. Determine net requirements by subtracting scheduled receipts and on-hand inventory from the gross requirements. 3. Time phase the net requirements. 4. Determine the planned order releases. The planned order releases aggregated over all the end items will result in the gross requirements for level one item, the gross requirements for these items are then netted and time phased to determine their own order releases. The process continues until all the items have been explored (Jonsson, 2009; Fernandes, 2011). The project associated with a specific timetable represents the demand for materials needed for the project, and it can be adjusted according to the available capacity. Also, it will depend on the point of suﬀocation to determine the available capacity of the project at all stages. The suﬀocation point for the project matches the critical path. Consequently, the yearly and monthly power of the supply chain from materials and manpower are also given in Tables 1-4:

Demand forecast

Master Production schedule

Firm Order

Inventory master file

MRP System

Bill of materials file

PARCHAE ORDERS

Figure 1. Illustrative model for material requirement planning (MRP) system Source: Benton & Whybark (2002), p.140

WORK ORDERS OR CONTROCTS

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Steel type

2009

2010

2011

18 mm

10606

16 mm

11511

14 mm

Imetieg, A., Lutovac, M.  Project scheduling method

2012

2013

Total

10606

53032

11511

57559

2177

10888

12 mm

6053

30265

10 mm

4582

22912

8 mm

1706

8534

Total

36638

1830193

Table 1. The annual Steel quantity average of a construction and building project of 5000 housing units in the Solug area, Benghazi for the period 2009-2014 Source: Based on the available project data

Cement type

2009

2010

2011

2012

2013

Total

Sulfate-resistant cement (unpacked)

57996

289981

Port-Thai normal cement (unpacked)

153759

768796

Port-Thai normal cement (packed)

64735

323679

276491

13802457

Total

Table 2. The annual Cement quantity average of a construction and building project of 5000 housing units in the Solug area, Benghazi for the period 2009-2014 Source: Based on the available project data

S/N

Description

Quantity

2009

2010

2011

2012

2013

Agitating Lorry

Batching Plant

Block Machine

Bulldozer

Diesel Air Compressor

Diesel Emergency Lam

E.Roller

Electrical Generator

Eps Production Line

10.

Excavator

11.

Weigh Bridge

294

137

Total

Table 3. Solug 5000 Housing Units Project, Equipment & Machinery List Source: Based on the available project data

Month

Gross requirements

105

110

130

150

120

115

Schedule receipts

140

Net requirements

120

170

150

130

Time-phased net req.

110

120

135

145

160

145

115

Planned order releases

120

Table 4. Final MRP Report 63

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Imetieg, A., Lutovac, M.  Project scheduling method

RESEARCH RESULTS AND RECOMMENDATIONS

◆ There are reversal relationships between the application of needs planning systems of MRP and timely project accomplishment, at the lowest possible cost and with the required level of quality. ◆ MRP is a computer-based production programming technique used to enable the company management to plan the product parts and control the inflow of these parts to fulfill the service or product within the scheduled time. ◆ Materials requirements planning (MRP) system has a significant impact on reducing the costs of production, procurement, as well as saving time and improving delivery time and services in the project. ◆ The application of material requirements planning (MRP) system in the project management leads to full automation application. ◆ The MRP inputs consist of Master production schedule, Bill of material (BOM) and inventory status file. ◆ The MRP helps to determine the material net requirements for the project gross requirements in each time period. ◆ Besides on-hand data and required materials inventory, as well as the awaiting period for each part and amounts of planned order receipts, the logical procedures of MRP system are also based on master production schedule and project structure and components. ◆ The MRP system is embodied in the priority planning or purchasing according to planned order release for the project parts and components. ◆ The number of workers fluctuates during the phases of the project between 2450 and 2640. ◆ Sudden cease of cement supply as most cement factories in Libya are old. This has led to to machine defects and production suspension, further resulting in cost increase. In the light of the mentioned findings, the research recommendations are as follows: ◆ The need for a responsible senior management to supportive material requirements planning (MRP) system due to its high eﬃciency in the provision of materials in terms of quantity and time. 64

◆ Using the bill of materials in calculating the total requirements for each element of the project element starting from the zero-level element. ◆ Using the bill of materials and the inventory status file to determine the dates, orders and the orders amounts for each element necessary to achieve the project mastering schedule. ◆ The reproduction of the MRP system on the basis of changes in the project master schedule or the priorities of orders. ◆ Organizing more training courses for those working in the project management field. ◆ Optimal exploitation of human power especially when this power is unemployed at some project stages. CONCLUSION The main hypothesis is that the network analysis system Materials Requirements and Planning (MRP) was used to achieve the required level of quality in the shortest time possible and low cost in the implementation of 5000 housing units in the area of Solug, Benghazi in Libya. To conclude on the outcome of the propositions, the relationship between the time needed to execute the project and the cost is a linear relationship, so that costs can be changed with every proportional change in the period of implementation of each activity. This paper shows that the overall repair process of completion time can be reduced, that it depends on the resources available on time, which can be controlled and planed using computational techniques such as MRP, in order to provide the necessary budget to pay all clients on time. It is worth noting that the inflation and price rising of materials and services interfere with the process of project accomplishment and rise in the foreign currencies exchange against the Libyan Dinar, which resulted in new financial commitments. However, administration and management may be in the position of trade-oﬀ between the savings resulting from the implementation of the project that required less time than it is allocated and the increases in costs arising from the use of additional resources.

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REFERENCES Fernandes, F.C.F., & Filho, M.G. (2011). Production control systems: Literature review, classification, and insights regarding practical application. African Journal of Business Management. 5(14), 5573-5582. Gomes da Silva, G., & Maia, C.A. (2014). On just-in-time control of timed event graphs with input constraints: a semimodule approach. Discrete Event Dynamic Systems. DOI: 10.1007/s10626-014-0200-z Jodlbauer, H., & Reitner, S. (2012). Material and capacity requirements planning with dynamic lead times. International Journal of Production Research. 50(16), 4477-4492. DOI:10.1080/00207543.2011.603707 Jonsson, P., & Mattsson, S.A. (2009). Manufacturing, planning and control. New York: McGraw-Hill Higher Education. Kassim, N. (2004). Application of MRP1 System in the Libyan Public Company for Manufacturing Investments. Journal of Economic Research Benghazi. 15(1), 456. Khatib, S.M. (2008). The impact of the potential application of the planning system resource requirements to control inventories. MBA, Faculty of Management and Economics, University of Baghdad – Iraq, p. 37 Kim, K. (2014). Material Resource Planning (MRP): Will You Need MRP without the Customer? Open Journal of Social Sciences. 2(4), 1-5. DOI: 10.4236/jss.2014.24027 Landry, S., & Beaulieu M. (2013). The Challenges of Hospital Supply Chain Management, from Central Stores to Nursing Units, In B. T. Denton (Ed.) Handbook of healthcare operations management: Methods and applications. New York, NY: Springer. 184, 465-482. Mula, J., Poler, R., Garcia-Sabater, J.P., & Lario, F.C. (2006). Models for production planning under uncertainty: A review. International Journal of Production Economics. 103 (1), 271-285. DOI:10.1016/j.ijpe.2005.09.001 Obeidi, A.I.H.A. (2007). Adoption of the MRP system in organizational performance improvement using a balanced scorecard technology. BSC-Master technology operations - Management Technical College- Baghdad - Technical Education. p.173 O›Grady, P.J. (2012). Putting the Just-In-Time Philosophy into Practice: A Strategy for Production Managers. New York. Springer Science & Business Media.

Imetieg, A., Lutovac, M.  Project scheduling method

Panizzolo, R., & Garengo, P. (2013). Using Theory of Constraints to Control Manufacturing Systems: A Conceptual Model. Industrial Engineering and Management. 3(3), 1-9. DOI: 10.4172/2169-0316.1000111 Parsaei, H.R., Sullivan, W.G., & Hanley, T.R. (2013). Economic and Financial Justification of Advanced Manufacturing Technologies. Amsterdam: Elsevier. Powell, D., Alfnes, E., Strandhagen, J.O., & Dreyer, H., (2012). The concurrent application of lean production and ERP: Towards an ERP-based lean implementation process, Computers in Industry. 64(3), 324-335. Ptak, C., & Smith, C. (2011). Orlicky›s Material Requirements Planning. New York: McGraw-Hill. Ram, B., Naghshineh-Pour, M.R., & Yu, X. (2006). Material requirements planning with flexible bills-of-material. International Journal of Production Research. 44 (2), 399415. DOI: 10.1080/00207540500251505 Rom, W.O., Tukel, O.I., & Muscatello, J.R. (2002). MRP in a job shop environment using a resource constrained project scheduling model. Omega 30(4), 276. DOI: 10.1016/ S0305-0483(02)00033-6 Sarkar, B., Gupta, H., Chaudhuri, K., Goyal, S.K. (2014). An integrated inventory model with variable lead time, defective units and delay in payments. Applied Mathematics and Computation, 237, 650-658. DOI:10.1016/j. amc.2014.03.061 Segerstedt, A. (1998). Cover-Time Planning: A Less Complex Alternative to MRP. Advanced Models and Methods for Production Planning. Berlin: Springer. DOI: 10.1007/9783-662-03742-3_3 Wincel, J.P., & Kull, T.J. (2013). People, Process, and Culture: Lean Manufacturing in the Real World. London: CRC Press. Zaher, H., & Zaki, T.T. (2014). Optimal Control Theory to Solve Production Inventory System in Supply Chain Management. Journal of Mathematics Research. 6(4), 109-117. DOI: 10.5539/jmr.v6n4p109 Zoraghia, N., Najafib, A.A., & Niaki, S.T.A. (2014). Resource Constrained Project Scheduling with Material Ordering: Two Hybridized Meta-Heuristic Approaches. International Journal of Engineering.

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Imetieg, A., Lutovac, M.  Project scheduling method

METODA PLANIRANJA PROJEKATA U U FUNKCIJI VREMENA KORIŠĆENJEM MRP SISTEMA – STUDIJA SLUČAJA GRAĐEVINSKOG PROJEKTA U LIBIJI

Rezime: Sistemi za planiranje materijalnih potreba preduzeća (MRP) su sistemi koji omogućavaju efektivno planiranje proizvodnje i kontrolu zaliha, a koji se koriste u upravljanju proizvodnim procesima. Većina ovakvih sistema bazira se na softverskim rešenjima. Njihova funkcija jeste da obezbede raspoloživost materijalnih resursa za proizvodnju, dostupnost gotovih proizvoda klijentima, kao i minimalno zadržavanje zaliha u magacinima i radnjama, a sve to za potrebe planiranja rasporeda isporuke i aktivnosti nabavke. Nakon izrade rasporeda slede aktivnosti koje bi trebalo da ispune očekivane projektne ciljeve u smislu količine, kvaliteta i troškova u skladu sa vremenskim rokovima. MRP sistem primenjen je na projektu od 5000 stambenih jedinica u Solug oblasti u blizini grada Bengazi u Libiji, sa ciljem pružanja neophodnog novčanog toka kako bi se isplatili svi podizvođači na projektu bez odlaganja i osiguralo nesmetano poslovanje i izbegli nepotrebni troškovi smanjenjem broja privremenih skladišta i iznajmljenih prostora. Postoji korelacija između vremena i troškova za svaku aktivnost. Naime, ako je potrebno vreme za određenu aktivnost kraće od planiranog, to će zahtevati veću količinu resursa, što dovodi do povećanja direktnih troškova date aktivnosti. Učinak MRP sistema je od velikog značaja zato što se naredbe izdaju kroz planiranje kako bi se pokrenule očekivane nabavke prema zahtevanim količinama u ograničenom vremenu.

Ključne reči: Sistemi za planiranje materijalnih potreba preduzeća (MRP), troškovi, kvalitet, raspored, upravljanje projektom, Libija. Received: February 10, 2015. Correction: March 24, 2015. Accepted: April 15, 2015.

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EJAE 2015

Instructions for authors

c. Journal article from an online database Format: Author(s). (Year of publication). Article title [Electronic version]. Journal Title. Volume (issue), range of pages. Retrieved date of access, from name of database. doi. Example: Czajgucki Z., Zimecki, M., & Andruszkiewicz, R. (2006, December). The immunoregulatory effects of edeine analogues in mice [Abstract]. Cell. Mol. Biol. Lett. 12(3), 149-161. Retrieved December 6, 2006, from PubMed database on the World Wide Web: http://www.pubmed.gov. doi: 10.2478/ s11658-006-0061-z. d. Newspaper article (no author) Format: Article title. (Publication date). Journal Title. page. Example: Amazing Amazon region. (1989, January 12). New York Times, p. D11. 3. Other formats a. Web page Format: Author/Sponsor. (last update or copyright date). Title. Retrieved date of access, from URL. Example: Walker, J. (1996, August). APA-style citations of electronic resources. Retrieved November 21, 2001, from http://www.cas.usf.edu/english/walker/apa.html. b. Lecture note Format: Author(s). (Date of presentation). Lecture title. Lecture notes distributed in the unit, at the name of the teaching organisation, the location. Example: Liffers, M. (2006, August 30). Finding information in the library. Lecture notes distributed in the unit Functional Anatomy and Sports Performance 1102, University of Western Australia, Crawley, Western Australia. c. Patent Format: Author. (Year). Patent number. The location. Issue body. Example: Smith, I. M. (1988). U.S. Patent No. 123,445. Washington, D.C: U.S. Patent and Trademark Office. d. Standard Format: Issue body. (Year). Standard name. Standard number. The location. Example: Standards Association of Australia. (1997). Australian standard: Pressure equipment manufacture. AS4458-1997. North Sydney. e. Computer software Format: Author(s). (Year). Title [computer software]. The location: Company. Example: Ludwig, T. (2002). PsychInquiry [computer software]. New York: Worth. 71

EJAE 2015

Instructions for authors

Tables and figures and/or schemes should not be embedded in the manuscript but their position in the text indicated. In manuscript tables and figures should follow the text, each on a separate page.

6. TABLES Authors should use tables to achieve concise presentation or where the information cannot be given satisfactorily in other ways. Tables should be prepared with the aid of the Word table function, without vertical lines. The minimum size of the font in the tables should be 10 pt. Tables should not be incorporated as graphical objects. Styles and fonts should match those in the main body of the article. Tables should follow the text on the end of the manuscript and should be numbered consecutively using Arabic numbers and their position in the text should be indicated. Each table should have an explanatory caption which should be as concise as possible.

7. FIGURES Authors may use line diagrams to illustrate theses from their text. The figures should be clear, easy to read and of good quality. Styles and fonts should match those in the main body of the article. Lettering and lines should be of uniform density and the lines unbroken. Axis labels should be in bold face. Units should be placed next to variables in parentheses. Figures should follow the text on the end of the manuscript and should be numbered consecutively using Arabic numbers and their position in the text should be indicated. Mathematical equations should be embedded in the text. Complex equations should be prepared with the aid of the Word Equation editor. All equations must be numbered, Arabic numbers, consecutively in parenthesis at the end of the line, as presented:

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CIP - Каталогизација у публикацији Народна библиотека Србије, Београд 33

The EUROPEAN Journal of Applied Economics / editor-in-chief Milovan Stanišić. - Vol. 12, No. 1 (2015)- . - Belgrade : Singidunum University, 2015- (Loznica : Mobid). - 28 cm Dva puta godišnje. - Је наставак: Singidunum Journal of Applied Sciences = ISSN 2217-8090 ISSN 2406-2588 = The European Journal of Applied Economics COBISS.SR-ID 214758924