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Romanian Distribution Committee Magazine

Volume 5, Issue 5, Year 2011

Content - Editorial: From the challenge of ensuring the interface with the structure of capitalist economy to doing meaningful Victor Greu

- Innovating the information – a modern approach to improve the knowledge based systems

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Nicolaie Mihaiescu

- What is this?

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24 Nicolaie Mihaiescu

- Penalties National Championships

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EDITORIAL BOARD Editorial Board Ion Ababii, Chişinău Nicolae Albu, Brasov Ruxandra Andreea Albu, Bucharest Levent Altinay, Oxford UK Kathleen Andrews, Colorado Springs Virgil Balaure, Bucharest Dan Barbilian, Bucharest Riccardo Beltramo, Turin Richard Beresford, Oxford Uk Dumitru Borţun, Bucharest Leonardo Borsacchi, Turin Mihail Cernavca, Chişinău Ioana Chiţu, Brasov Doiniţa Ciocîrlan, Bucharest Tudorel Ciurea, Craiova Alexandru Vlad Ciurea, Bucharest Maria Negreponti-Delivanis, Thessaloniki Jean-Sébastien Desjonqueres, Colmar Aurel Dobre, Călăraşi Luigi Dumitrescu, Sibiu Mariana Drăguşin, Bucharest Ovidiu Folcuţ, Bucharest Luigi Frati, Roma, Italy Victor Greu, Bucharest Bernd Hallier, Köln Sang-Lin Han, Seoul Aurel Iancu, Bucharest Mitsuhiko Iyoda, Osaka Mohamed Latib, Gwynedd Dong II Lee, Seoul Min-Sang Lee, Gyeonggi-Do Claude Magnan, Paris Radu Titus Marinescu, Bucharest James K. McCollum, Huntsville Nicolae Mihăiescu, Bucharest Dumitru Miron, Bucharest Dan Mischianu, Bucharest John Murray, Dublin Hélène Nikolopoulou, Lille Gheorghe Orzan, Bucharest Rodica Pamfilie, Bucharest Iulian Patriche, Bucharest Carmen Păunescu, Bucharest Mircea Penescu, Bucharest Virgil Popa, Targoviste Marius D. Pop, Cluj-Napoca Ana-Maria Preda, Bucharest Cristinel Radu, Călăraşi Florinel Radu, Fribourg Gabriela Radulian, Bucharest Constantin Roşca, Craiova Analisa Romani,Turin James Rowell, Buckingham John Saee, Virginia Beach VA

Cătălin Sfrija, Bucharest Adrian Socol, Strasbourg Eliot Sorel, Washington D.C. Mihaela-Lumini a Staicu, Bucharest Radu Patru Stanciu, Bucharest John L. Stanton, Jr., Philadelphia Peter Starchon, Bratislava Felicia Stăncioiu, Bucharest Marcin Waldemar Staniewski, Warsaw Vasile Stănescu, Bucharest Filimon Stremţan, Alba-Iulia David Stucki, Fribourg Ion Voicu Sucala, Cluj-Napoca Kamil Pícha, Ceske Budejovice Laurenţiu Tăchiciu, Bucharest Emil Toescu, Birmingham Eva Waginger, Wien Léon F. Wegnez, Brussels Răzvan Zaharia, Bucharest Gheorghe Zaman, Bucharest Dana Zadrazilova, Prague Sinisa Zaric, Belgrade

Young Editorial Board members Adalbert Lucian Banyai, Bucharest George Bobîrnac, Bucharest Stefano Duglio, Turin Marinela Hostiuc, Bucharest Darius Ilincaş, London Adrian Lală, Bucharest Irina Purcărea, Bucharest Dan Smedescu, Bucharest Constantin C. Stanciu, New York Radu Pătru Stanciu, Bucharest George Cosmin Tănase, Bucharest Oana Patricia Zaharia, Bucharest

Reviewers

Alexandru Ionescu, Romanian-American University Adriana Bîrcă, “George Bariţiu” University Brasov Nelu Florea, “Alexandru Ioan Cuza” University Iasi Alexandru Ilie, Romanian American University Ana Ispas, Transilvania University Brasov Irena Jindrichowska, University of Economics and Management in Prague Costel Iliuţă Negricea, Romanian-American University Adina Negruşa, “Babes-Boyay” University Cluj-Napoca Anca Purcărea, Academy of Economic Studies in Bucharest Monica Paula Raţiu, Romanian-American University Gabriela L. Sabau, Memorial University, Sir Wilfred Grenfell College Andreea Săseanu, Academy of Economic Studies in Bucharest


Scientific Council Vlad Barbu, Bucharest Gabriel Brătucu, Brasov Ion Bulborea, Bucharest Mircea Buruian, Targu Mures Iacob Cătoiu, Bucharest Jean Constantinescu, Bucharest Beniamin Cotigaru, Bucharest Radu Diaconescu, Iasi Valeriu Dulgheru, Chişinău Constantin Floricel, Bucharest Valeriu Ioan-Franc, Bucharest Gheorghe Ionescu, Timisoara Christophe Magnan, Montréal Pompiliu Manea, Cluj Andrei Moldovan, Bucharest Dafin Fior Muresan, Cluj Neculae Năbârjoiu, Bucharest Constantin Oprean, Sibiu Dumitru Patriche, Bucharest Florian Popa, Bucharest Dumitru Tudorache, Bucharest Ion Smedescu, Bucharest Victor Părăuşanu, Bucharest

Editor-in-Chief

Theodor Valentin Purcărea

Executive Editor Victor Lorin Purcărea Assistant Editors Dodu Gheorghe Petrescu Cătălina Poiană Raluca Gheorghe Mihaela Lumini a Staicu

Publishing Editors Petruţ Radu Ovidiu Călin

Art Designer Director: Alexandru Andrei Bejan Editorial Office P.O. Box 35-59, 35 Bucharest, România E-mail: office@crd-aida.ro, crd.rcdaida@yahoo.com Website: www.distribution-magazine.ro/, www.distribution-magazine.eu/ Copyright © 2010 Romanian Distribution Committee, Bucharest, Romania Printed at “Carol Davila” University Press, 8 Eroilor Sanitari Blvd., 050474 Bucharest, Romania Tel/Fax: +40 21 318 07 59


In May 1989, I raised the issue (in an article entitled „Requirements of intensive growth of exports”, Tribuna economică, nr. 17/1989) of the need to ensure the interface with the structure of capitalist economy. After twenty years, in 2009, I wrote that the confidence crisis invites increasing emphasis on social responsibility as a corporate marketing strategy, adopted by management which cannot choose ethical indifference. We need better rules and people, the virtue that follows science heading us down the right path towards overcoming the paralyzing insecurity of economic blood flow and shaping the complexity of current affairs drastically but correctly, in order to develop social virtues and responsibilities. We need to find appropriate answers in relation to what is authentic in addressing the crisis of confidence, who sells what and who is buying it, with the adequate mental model to break the cobweb of this distrust and regain trust. Within this framework, I quoted the father (Octavian Paler) of one of my former fellow students: “My most unpleasant thought is not knowing what’s left to hope for.” And if in April 2009, I pledged – on the special occasion of “SANABUNA” Conference (in the context of the pressure of the awareness concerning the connections between health, food and the different aspects of businesses and the imperative of identifying the right answers in the confrontation with the welfare reform, reconfiguring consistent ways with fundamental values, education being in the center of the adaptation, and solidarity could not be neglected) - for proper speech and action on the issue „food-health-welfare” opening up our mind and heightening the spirits to cross the “ocean of mistrust” whose huge waves crash against the shores of economic-social con-

structions (considering that: the „therapist” lies in each of those who commit to entering the partnership for „healthfood-welfare”, a partnership which can restore trust in life and in the market; people health lies in the centre of sustainable development and adapting the business accordingly), a month later, in May 2009, I written that: restoring the trust relationship between those who govern and those who are governed, seeking to identify ways to ensure the integrity of public policy, it is of real interest in a dramatically transformed world in which neither the markets nor the representative systems work alone; the lack of consensus regarding going out of the crisis represents a real drama of the current public policy, being necessary to acquire wisdom of the policy of public choice; competition is the key leader of performance and innovation which feeds economic growth, thanks to fair and open competition the best product winning and the market forces prevailing; the signals regarding the changing of the nature of competition intensify, that increasingly takes place inside corporate-controlled networks, emphasizing the necessity to apply in the global industrial network of some fresh engineering principles carefully building political calibrated institutions and following the approach through the whole system of human businesses, both private and public; it is necessary that the approach based on the market helps in implementing the ambitions of the social reform; the situation is even more pressing in a global context in which it is considered that calculated dishonesty and the application of the double standard, characteristic to the agreement between the political power and the financial power, raise strong barriers to the responsible intelligent decisions.

Coming to this year, it is worth considering „2011 Edelman Trust Barometer Findings” , and to start from „The Edelman Trust Barometer in retrospect”: 2001, Rising Influence of NGOs; 2002, Fall of the celebrity CEO; 2003, Earned media more credible than advertising; 2004, U.S. companies in Europe suffer trust discount; 2005, Trust shifts from “authorities” to peers; 2006, “A person like me” emerges as credible spokesperson; 2007, Business more trusted than government and media; 2008, Young influencers have more trust in business; 2009, Business must partner with government to regain trust; 2010, Trust is now an essential line of business… And then just taking a look at some Edelman trustbarometer findings concerning 2011: a) What matters for corporate reputation (Responses 8-9 on 1-9 scale; 9=highest; Informed publics ages 25 to 64): 1. Quality (69%); 2. Transparency (65%); 3. Trust (65%); Employee welfare (63%) … 8. Innovator (46%)…; b) Expectations high for business to invest in society: Corporations should create shareholder value in a way that aligns with society’s interests, even if that means sacrificing shareholder value; Government should regulate corporations’ activities to ensure business behaves responsibly; c) Repetition enhances believability, and trust protects reputation; d) Conclusions of Edelman trustbarometer: Business must align profit and purpose for social benefit; current media landscape plus increased skepticism requires multiple voices and channels; demand for authority and accountability set new expectations for corporate leadership; trust is a protective agent and leads to tangible benefits; lack of trust is barrier to change. Looking at this findings of Edelman


trustbarometer, the first thing that came to my mind was a challenging article posted by Gary Hamel (Visiting Professor at the London Business School and Director of the Management Lab) in September 2010 : „Capitalism is Dead. Long Live Capitalism”. I have noted that Gary Hamel (who believes that „the best economic system is one that rewards entrepreneurship and risktaking, maximizes customer choice, uses markets to allocate scarce resources and minimizes the regulatory burden on business”), starting from the growing consensus that rampant consumerism debases human values (a pell-mell growth imperiling the planet; an unchecked corporate power subverting democracy, the myopic, profit-besotted CEOs being as likely to destroy value as create it), argued that the real threat to capitalism is the unwillingness of executives to confront the changing expectations of their stakeholders, considering that in the way of creating a conscientious, accountable and sustainable sort of capitalism is standing a matrix of deeply held beliefs about what business is for, whose interests it serves and how it creates value. And as innovation, according to Peter Drucker, means exploiting change as an opportunity, two month lateer, in „Who’s Really Innovative?”, the same Gary Hamel argued that inventing an innovative business model is often mostly a matter of serendipity (when someone finds something that they weren’t expecting to find), and recommended the implementation of some of IDEO’s time-tested design principles (IDEO is a design and innovation consulting firm) into the business workflows: encourage wild ideas; build on the ideas of others; stay focused on the topic; one conversation at a time; be visual; go for quantity; defer judgment. Very recently, on October 17, 2011, Carolyn T. Geer, a WSJ writer in Connecticut, highlighted that according to David Kelley (the founder of IDEO; Kelley is the author of the book “The Art of Innovation”, Crown Business, 1 edition, January 16, 2001) the best way to unleash creativity is to give students an “experience,” or in “Hasso Plattner Institute of Design at Stanford” speak, a design challenge. Under his teaching model, however, students aren’t just handed a problem to solve—they must define the problem themselves through research and direct observation. And, in the opinion of George Kembel, executive director and co-founder of this School at Stanford it is behavioral change that enables students to gain innovation confidence, this being a way of thinking that you can use in every part of your life. It is also worth to underline the recommendations made by Gary Hamel (in „Who’s Really Innovative?”) for turning an innovation bumbler into a benchmark: a fundamental retooling of a company’s management processes (the way it plans, budgets, allocates resources, measures performance, hires and compensates), by re-engineering them so they facilitate rather than frustrate bold thinking and radical doing (training employees as business innovators; ensuring the access of their employees to the sort of customer and industry insights that can help spur innovation; adequately constructing the metrics for tracking innovation (inputs, throughputs and outputs); finding a proper way of comparing innovation performance across teams and divisions and so on). And coming back to „Capitalism is Dead. Long Live

Capitalism”, September 21, 2010, let’s consider the final „really important recommendation” of Gary Hamel: „If you’re eager to dig deeper into these issues, pre-order Umair Haque’s new book, << The New Capitalist Manifesto: Building a Disruptively Better Business, >> to which I wrote a short foreword”… So, let’s act accordingly, and „dig deeper” into „The New Capitalist Manifesto: Building a Disruptively Better Business”, Harvard Business Press, Jan 4 2011, written by Umair Haque. Following this pathway it was easy to see, for example, that according to „The Bankwatch” (which stated that banks have generally sufferred a great loss of trust and respect following the credit and banking crisis) the theme of the book „The New Capitalist Manifesto” can be summarised as follows: companies have been focussed on a very narrow definition of profit and value creation; this narrow focus understates real costs, and maximises short term profits - he defines this as „thin value”; the costs that are understated include costs associated with current society, future generations, and environmental impact; he proposes a framework for aligning corporations with activities and thinking that builds a broader definition of value into everything they do - he calls this „thick value”. In the final chapter, entitled „Constructive Capitalism”, it is showed that constructive capitalists (who aren’t merely seeking to be better than rivals in yesterday’s terms) are fundamentally redefining what success means to encompass the well being of people, communities, society, and future generations (to return the so-called profit “plus”, profit plus social, environmental, human, and as yet unknown – unexplored kinds of – returns). And „The Bankwatch” concluded: „It is a thought provoking and worthwhile read. Every bank needs to be thinking how they can redefine the industry.” In another book review, Mark P. McDonald says that this complex and unique book („The New Capitalist Manifesto”) gives us a progressive and comprehensive look at a future capitalist system, the author, Umair Haque, pointing out that the open-ended consumption model we have today is not sustainable, advocating for “constructive capitalism” that is based on creating close looped value cycles rather than unsustainable openended value chains, while the central argument revolves around the observation that current capitalistic practices lead to what is called „thin value” (thin from the perspective that the value created relies on exploitation in the environmental sense), encouraging, in contrast, the companies to create „thick value” (described as generating profits by activities that create value for sustainability, authentically to people). What gives the „The New Capitalist Manifesto” greater credibility, beyond some identified gaps, is the fact that the author discusses what he sees as the logical next steps for capitalism, replacing value chains with value cycles. And McDonald concluded: „Recommended reading for people who like to disrupt their own thinking and learn more by being challenged than having their beliefs confirmed.” Let’s continue to „dig deeper” and see what the author did say just a month before the publication of the book. According to the author , the real challenge consists in shifting to a model of smarter growth (an authentic, meaningful prosperity, that’s shared more


broadly, fairly, and enduringly, economic and social mobility being a key aspect of smart growth), driven by investment, not consumption, investing in the foundations of a 21st century economy being the single most powerful key to reigniting prosperity. And the fundamental challenge of 21st century economics is creating more value of higher quality, not just low quality value in greater quantity, next-level advantage being constructive (Constructive Capitalists redrawing the boundaries of disruptive outperformance, taking a quantum leap beyond industrial age efficiency, productivity, and effectiveness), not just competitive, while profit is an effect, a reward, and not a cause, not the accomplishment – which are the stuff of purpose. The result of this so-called (made together) “purpose gap” is that 90% of companies can’t craft a statement of „first principles that defines in sharp, clear terms how they will create value (instead of merely extracting it), because they don’t (or won’t) put a bigger, more enduring purpose first.” And so we come to „ponziconomies, creating little or no authentic economic value.” Umair Haque pointed out that there are five sources of constructive advantage: loss advantage, responsiveness, resilience, creativity, and difference. And to create the „thick value” (considered as being the foundation of 21st century economics) we’ve got to do meaningful stuff that matters the most, to people, society, and the future. One of the five new sources of nextlevel advantage, in the opinion of Umair Haque is the loss advantage (seen as minimizing a deadweight loss, the sum total of potential gains that are foregone in a given transaction, allocative inefficiency).

But are we really ready to create the „thick value” and to use this source of next-level advantage which is „loss advantage”? Theodor Valentin Purcărea


Abstract The paper presents an approach for the evolution consequences, in complex and knowledge based systems, as the main human activity fields and Earth ecosystem. The progress, apogee and decline stages of evolutions and circumstances are analyzed and compared, aiming to show the importance of information and knowledge innovations for the progress or survival. The complex relations between data, information and knowledge in the knowledge based society are also revealed, in order to identify the ways which the information and communications technology and generally the science and technology could provide innovations to help mankind in the permanent struggle with the time. The complex problems of data overflows and supercomputing, in many scientific and technical areas, are also analyzed, as related to the information, knowledge and management necessary innovations. Keywords: knowledge based society, information and communications technology, green technology, biotechnology, exadata, cloud computing. JEL: L 86, O3


1. A true and simple story from today to tomorrow In our days, a citizen bought some modules of metallic tiles (steel plates) for the construction of 2 balcony roofs. Following the producer’s information, the remaining cut (non rectangular) parts could not be useful (reused) in the project, because of the curved surfaces of the tiles. Trying to optimize the material at every cutting step, the citizen finally got the 2 projected roofs and a lot of remaining parts of steel plates, including a complete module. Then the citizen thought to use the remaining parts in order to double (under it) one of the 2 roofs (which was more exposed to the wind), as an aerodynamic protection. After an optimization effort, the citizen had the surprise to obtain a doubled improved roof and the complete re-use of wasted (remained) material (about 1/3 of grand total). How that was possible? By innovating the actual information! Here both emblematic terms (innovating; information) suppose also the appropriate actions to obtain the progress. The results: performance optimized Slowing down or decline In spite of the above, sometimes from progress to decline could be a short way, especially if we consider that, in many fields, when the rising is slowing down, usually the estimations are presented as a start to “decline”. The best example for this case is, as in the actual World crisis, the economical increase of the states. Another class of decline, very significant in the technology field for example, is expected when the evolution is approaching visible limits. It is sure that there is more to know every day, in order to have a knowledge based system (society), on Earth and outside (perhaps more than we actually know, in all areas), but we sometimes forget that the most important (and difficult) progress must aim the human being herself, from health to spirit and eventually her existence and progress on Earth. At this point it is interesting to observe that, in almost entire mankind history, from little to big actions, people said

project, optimal use of materials from economical and ecological point of view. As we will further show, adapted at a large scale, a such approach is one of the ways to the knowledge based society, when using green industry. 2. The Earth apogee and decline show that we need innovation more than ever Progress or apogee The distance from apogee to decline is not always so big as we are expecting, especially when we think at a diversity of processes about the Earth and mankind. Of course it is very difficult to chose some examples to illustrate the actual humankind (and Earth) apogee. We may try with the human genom decoding, the smart phones, the space robots after the Man on Moon, the Large Hadron Collider (Geneve) or the recent experiment with the possible surpass of light speed and many many more. Notice that, for accuracy, generally we should distinguish (although we above did not so), among the diversity of actual “tops”, those which satisfy the condition to be a true apogee (a state that “all we do is for the mankind well”. Unfortunately, much of the done led us to the actual challenges and possible Earth decline. The logical conclusion from this point will be to rethink all these “well intended” actions, but in an refined integrated conception. A good start, in a such complex and complicate process, it will be to analyze the main decline fields (activities), or at least some prominent of them as examples that could indicate the principles of improving them. Data or information, which is in crisis? Not only because the information is the topic, but because it is a knowledge generator, we must put it first. The last years I used to tell to my students about the near perspective of the World to collect data about every m3 of the Earth , for military and civilian purposes. I also have mentioned that 11–th of September 2001 proved, among other, the limits of the states (including USA)

closed to an upper limit), not only a present level best (a stage of progress). The last observation is crucial for understanding the essential, opportunity and pertinence of our analyze about the Earth and mankind evolution. Considering both horizontal and vertical diversity of the evolution processes, we see that the average estimations show high levels in most fields of human activity, so it is correct to appreciate that the most processes are evolving towards an apogee, but not all of them. Here we have to mention at least some prominent classes of exception, as the rate of health care efficiency versus the economical and technological progress, the social progress and last (but far from least) the ecological balance of the Earth with humankind activity (the best example being the climate changes). So we may say that there are many tops and some lacks. But it is very possible that an average person hearing all this “tops” to ask: What about Us? Although we have mentioned the health and the social progress as prominent “lacks” I think this question is the best way to open the other side of the picture to optimally manage (store, select, analyze, share and use for decision) the huge amount of information they have now. But in the future? I have thought that the future ask for heavy intellectual efforts to create new philosophies, theories, concepts and algorithms in order to optimize the management of the complex sets of data, at diverse levels, aiming the Earth progress or at least stop its probable decline.


Exadata On the other hand, now the scientists [1] have the goal to create the complete map of human brain circuitry (about 1 000 000 mm3), but 1mm3 will request about 1 petabyte (1000 terabytes), so eventually about 1000 exabytes. The expectations for Internet traffic in a couple of years count also exabytes and are exponentially growing. Thus we are going to an “exadata” age. This is the confirmation that we need a new “science” to manage all the sciences and all the human activity data in order to get the needed results in ways that, among other benefits, reduce the amount of processed and memorized data. One could say that a way would be to partially return from digital to analog processing in the scientific experiments and generally in all processes associated with the human activity (including the Universe research). Less

probable to be so. It is obvious that this new science will innovate the information and communications technology (ICT) processes, but it mainly must innovate every activity that provide data, aiming to obtain new information (final data, results and decisions) by different methods, eventually reducing the volume of processed data. It is also clear that reducing the data volume is only a part, a simpler one, of the complicate goal to optimize the data processing and use, at all levels, according to an integrated, knowledge based, management system. To optimize this knowledge based system, the most difficult part is to create a flexible but effective set of new principles, criteria and algorithms for the management of processes and circumstances. All these new theoretical instruments would add in fact innovative (new) essential information for every field of

activity, thus the data crisis is only the top of aisberg, but behind is an information crisis, which in fact leads to a knowledge crisis and then to the real challenges (apogees/limitations or even declines in the corresponding fields or circumstances). The creation difficulty will increase as the level of the system in the global (World) hierarchy is higher. The temptation is to use the power of ICT to solve this problems, but this way the paradigm usually remain the same (still, ICT could be a part within the solution as an expert system). It appears that we have just arrived in a vicious circle. The exit from such a circle is to change our thinking reference. So, the solution is to innovate the information that generates the knowledge


3. Innovations from nano to exa Naturally, the next questions are where, when and how to innovate? Difficult questions, but we don’t expect exact answers, we only try to get some tips on these complicate matter. Again we remember how long is the way through theory, but short by examples. From simple to complicate, from narrow to wide areas, lets see some prominent challenges of our days, where apogee or decline ask for innovation. Continuing the huge data case, it is interesting to count some relevant areas, in the scientific and technical fields where innovation must compensate the data overflow: simulations of complex processes (as nuclear fission/fusion, climate/weather changes and forecast etc.), real time processing, Internet and other [5], [2]. It is important to note that most of these processes need innovations not only for storage, analysis, filtering and dissemination of data overflows (exadata), but also new supercomputers (computing power/speed). The case of higher speeds is crucial because the whole world (not only ICT) depends on it, so when the nano limits of the CMOS transistors will (relatively soon) be reached, some revolutionary (perhaps biological) innovations will be requested [2]. Close to this case is the materials fading and again semiconductors have a global impact. Notice that some of these semiconductors (for example GaAs) not only are on fading, but the whole industry is relying on some single producers and this situation rises serious strategical and security problems [3]. Among other benefits, virtualization and cloud computing will provide a considerabile reduction in hard devices (materials) and power consumption. The story goes on with the “apogee” of the ICT world, the Internet, where the huge amount of users (now over 2 billions) will be crowded by the exponential growing of the number of connected devices, as a logical consequence of the information society road to knowledge based society (KBS). The Internet innovation is aiming new architectures which should better respond to these challenges. Among these new solutions, the most promising are those inspired from the biological world and

those based on information centric approaches [2]. Last, but the most important, the Earth ecological balance rise the most complex and difficult problems. The mankind versus Earth balance is on decline, mainly by the ecological changes (and all consequences) and the materials fading. Notice that material fading include not only industrial ones, but the food, water and even the air and here are requested the most complex and difficult innovations, as we already have mentioned. Water decline, for example will also affect the available energy (power), as the fossil sources of energy are any way on fading and the nuclear power has its (material) limits and risks. Those innovations are generally included in what is called “green industry” [4], but we have to innovate everything on our everyday life, as a “green life”. Here we should include water and food consuming new attitudes and more (like the social relations and learning the innovations from the nature and its history). Notice that all in biotechnology sphere must be used with much care, because the nature already made, in millions of years, its innovations and we have chances to spoil them and on the other hand, especially in the human areas, all is very complex and difficult to understand and change. Maybe the most important challenges is about to innovate the information and knowledge sharing and use, as a KBS main feature. Notice that an important part of world population is far from been connected at information and knowledge progress, but the real innovation here must include more than ICT use (education and social improvements must be first). 4. The permanent dilemma is apogee or decline Finally we may count again the tops and the “shadows” in order to see if we are at the apogee or decline. My opinion is that we are somewhere in the middle, for the only reason that our metric (for such a complex and complicate assemblage of processes and circumstances) is not only relative (or rather holistic), but variable in time as our life philosophy is changing. It is obvious that this opinion too is the result of a certain

philosophy. On the other hand, as in many random processes, when we have no certain information, we have to chose to think on a historical base (integrating the last steps). So, we have to consider that our evolution is not at the middle (between and apogee and decline), but rather close to decline, because we have to consider first the traditional principles, criteria and values (from the mankind recent history). The analyze could continue, but it is reasonable to conclude that, for an optimistic thinking (as mankind have done in the difficult moments), we must apply one more time our proposed paradigm: “innovating the information”. That is we have to reconsider, as a compromise that adapts the classic principles, criteria and values to the actual conditions and give to the Earth and mankind the chance to be somewhere after the middle and to learn how to “innovate” the knowledges in order to slow down the evolution to a global decline.

REFERENCES [1] Paul McFedries, The coming data deluge, IEEE Spectrum, feb.2011. [2] S. Balasubramaniam, K.Leibnitz, P. Lio, D. Botvich, Biological principles for future Internet Architecture Design, IEEE Communications Magazine, July 2011, vol.49. [3] Richard Stevenson, Crystal method, IEEE Spectrum, jan.2010. [4] Imran Asraf, Federico Bocardi, lester Ho, Sleep mode techniques for small cells deployments, IEEE Communications Magazine, aug.2011, vol.49. [5] M. Wehner, L. Oliker, J. Shalf, A real cluod computer, IEEE Spectrum, oct.2009.


Abstract: Nowadays, in the global business environment, telecommunications play a very important role and therefore a spectacular growth of mobile telephony and mobile internet took place in the last two decades worldwide. In this paper we are pointing out the major events that happened in the Romanian telecommunication market in the last 20 years and we are analyzing the evolution of the Romanian telecommunication sector in the same period of time, in comparison to what is happening in this area worldwide. Key words: telecommunications, mobile telephony, internet connections, mobile user, rapid growth JEL: L 86, L 96 Major events on the Romanian telecommunication market After the revolution from December 1989 a well known political analyst asserted that Romania will need about 20 years to get closer to the living standard of the developed countries. Although at that time it seemed to be an exaggeration, now it comes out that the gap is still considerable while the mentioned time interval has already passed. However, there are areas in Romania that have experienced a significant development in the last two decades and are close to that recorded in other European countries. We believe that one of these areas is the telecommunications sector. What was the starting point in this area? In 1990 in Romania there was only one fixed line operator - Romtelecom - and telephony penetration was only 9.5 telephones per 100 inhabitants. The technology used was analog, in rural areas manual telephone exchanges were used predominantly and over 300 local communities were not connected to the telephone network . A first important event on the telecom market in Romania took place in 1997 with the appearance of the first two GSM mobile operators in Romania. This can be considered as the beginning of the mobile telephony in our country, if we do not take into account the analog mobile phone system, NMT 450, which existed in Romania since 1994, but covered only the country (there were no roaming agreements) and that registered only a small number of customers. The evolution of mobile telephony users in Romania after 1997 was spectacular. Few would have imagined that in just 8 years the mobile telephony companies will attract over 10 million customers, well beyond the number of fixed line subscribers. Today in Romania are around 24.6 million mobile users, which corresponds to a mobile phone penetration of 115% .


Another important moment was the liberalization of telecommunications market in Romania. This took place in 2003 and represented the end of the monopoly of Romtelecom leading to more competitive telecom market by the appearance of alternative operators in the fixed telephone services market, television and internet. The occurrence of competition in this market has led to diversification, service quality improvement and tariffs reduction. The segment that has benefited the most from the market liberalization was the international calls segment. In just a few months after the liberalization, competition in this segment led to tariffs reduction to almost half. The evolution of the number of fixed telephone users did not have the same spectacular dynamics as the mobile telephony. 106.2

25

During 1990 - 2003, until the liberalization of the telecommunications market the number of users increased to approximately 4.3 million in 2003, which corresponds to a fixed telephony penetration of approximately 19.9 subscribers per 100 inhabitants, slightly more than twice the value registered at the end of the communist period. After market liberalization, although the total number of users increased only by about 0.2 million, there was a migration of them from Romtelecom to other alternative operators due to their attractive offers. At the beginning of 2011 there were approximately 4.5 million subscribers (21 users per 100 inhabitants) and 1.8 million of them (40%) belonged to alternative fixed telephony operators .

118.4

115

100

20

5

80

61.76

15 10

120

22.9

32.4

25.4

24.6

60 40

13.3

20

7

0

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Figure 1. Evolution of the number of mobile telephony users in Romania Source: adapted from http://www.ancom.org.ro/statistici-comunicatii_2003 Another important moment was the liberalization of telecommunications market in Romania. This took place in 2003 and represented the end of the monopoly of Romtelecom leading to more competitive telecom market by the appearance of alternative operators in the fixed telephone services market, television and internet. The occurrence of competition in this market has led to diversification, service quality improvement and tariffs reduction. The segment that has benefited the most from the market liberalization was the international calls segment. In just a few months after the liberalization, competition in this segment led to tariffs reduction to almost half. The evolution of the number of fixed telephone users did not have the same spectacular dynamics as the mobile telephony. During 1990 - 2003, until the liberalization of the telecommunications market the number of users increased to approximately 4.3 million in 2003, which corresponds to a fixed telephony penetration of approximately 19.9 subscribers per 100 inhabitants, slightly more than twice the value registered at the end of the communist period. After market liberalization, although the total number of users increased only by about 0.2 million, there was a migration of them from Romtelecom to other alternative operators due to their attractive offers. At the beginning of 2011 there were

approximately 4.5 million subscribers (21 users per 100 inhabitants) and 1.8 million of them (40%) belonged to alternative fixed telephony operators . Another notable event that occurred on the Romanian telecommunication market was the acquisition of Connex by Vodafone, which was the second transaction in terms of value of the Romanian economy in the last decades. This transaction took place on 1st June 2005, and then Romania became part of the largest mobile community in the world and in our country the two biggest global mobile operators in the world, Vodafone and Orange were thus in direct competition. The entrance on the market of the third player, Cosmote, was also an important event as the Greek company adopted a very aggressive strategy, through a series of very attractive offers (by including a generous number of minutes in the subscription or extra options for prepaid, at discounted rates) thus managing to attract a large number of clients and to obtain a significant market share. Although it is still number three on the local mobile telephony market, every year it reduced the distance to the first two players, while forcing them to reduce the tariffs and this was for the benefit of customers. In terms of Internet access services we can say that Romania is at the forefront. According to a specialized website for


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Figure 2. Evolution of the number of fixed telephony users in Romania Source: adapted from http://www.ancom.org.ro/statistici-comunicatii_2003

measurements in this field (www.akamai.com), Romania ranks 4th in the world at the average speed of Internet connections and 3rd at the top speed . In the last report presented on this site, containing data from the last quarter of 2010, Romania is the first in Europe and 4th in the world at the average speed of Internet connections (it reffers to fixed Internet connections) and on the 3rd place in the world for the top speed. In the ranking based on the average speed, on the first place is South Korea with an average connection of 13.7 Mbps, followed by Hong Kong and Japan with 9.4 Mbps and 8.3 Mbps respectively. Romania occupies the 4th place in this ranking with an average connection of 7.0 Mbps. Following are the Netherlands, Latvia and the Czech Republic, with 7.0 Mbps, 5.9 Mbps, and 5.7 Mbps respectively. U.S. takes the 14th place in the world with only 5.1 Mbps and the average worldwide is 1.9 Mbps. In terms of top speed, the first place is occupied by Hong Kong with 37.9 Mbps, South Korea ranked second with 32.3 Mbps and Romania is ahead of Japan in this ranking registering 31.7 Mbps against 30.5 Mbps. According to the same site, most Internet connections in Romania are broadband (35% are over 5 Mbps, 43% are between 2 Mbps and 5 Mbps, while

only 22% are under 2 Mbps). With regard to mobile internet an important event happened in 2005 when the first 3G network in Romania was officially launched by Connex (mobile internet speeds up to 384 kbps and video call) and then followed in 2006 and 2007 by the launch of 3G+ services (3G broadband) with data transfer speeds up to 1.4 Mbps (in 2006) and 2.8 Mbps (in 2007). Starting with April 2010, Vodafone announced the launch at national level of 3G services on the 900 MHz frequency band (a first in Europe), offering mobile Internet access for 90% of the population, at speeds up to 21.6 Mbps. Regarding the evolution of the number of internet connections in Romania (including both fixed connections and mobile connections) they increased from 0.5 million in 2003, to 9.07 million at the beginning of 2011. This represents an increase in the penetration rate of Internet access per 100 inhabitants from 2.3% in 2003 to 42.2% in 2011 .


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Figure 3. Evolution of the number of internet connections in Romania Source: adapted from http://www.ancom.org.ro/statistici-comunicatii_2003 Another worth mentioning event was the mobile and fixed number portability which was launched in Romania in October 2008. This feature allows users to keep their telephone number when changing the service provider, thus contributing to increased competition in the telecommunications market, for the benefit of customers. At this moment, according to ANCOM there are over 500 thousand users who have changed the service provider but have kept their telephone number, in just two and half years since the launch of the service, most of these users (68%) being mobile telephony users . The rapid growth of mobile telephony at global level The rapid growth of mobile telephony in our country, although surprising at the beginning, is nevertheless following the global trend. According to Wireless Intelligence quoted by BBC News, there are now over 5 billion mobile users worldwide, while the world population is approaching 7 billion people. Only in the last 18 months the number of users increased by over one billion. In many regions of the world, including Europe and Romania, mobile telephony penetration exceeds 100%, meaning that in many countries there is more than one telephone per inhabitant. At the end of 2008 there were registered four billion users and specialists consider that a mobile telephony penetration of approximately 90% worldwide will be reached by mid 2012 (6 billion mobile users). At this moment the main source of growth in terms of number of mobile users is represented by the Asia - Pacific region (including India and China). At the middle of 2010 this region was recording 47% of the total number of users worldwide. In the Western Europe mobile penetration reached 130%; this could be explained by the fact that there are persons who use more than one terminal (one for business and one for home) or they use besides the telephone a laptop or an IPAD connected to the Internet through a SIM card, but also by the fact that mobile operators use to include in their statistics many users that are not really active. In the Eastern European countries the average penetration is approaching the value registered in the Western European countries, and is now about 123%, according to Wireless Intelligence. Here there is the phenomenon of using several

phones, one for each operator (or a dual SIM phone) in order to benefit from the various offers of different mobile operators and to call at more favorable rates inside the same network. Also, there is the phenomenon of giving up the old landline phone in the favor of mobile phone. In other countries or regions of the world mobile phone penetration per 100 inhabitants is as follows: USA - 96% Canada - 70.2%, China - 67.1%, India - 69.19%, Australia - 100.4%, New Zealand - 108.6%, Africa - 52%. The Internet access from the mobile phones is also growing worldwide. In the US, eMarketer predicts an increase of 25% for the mobile internet this year, as 97.3 million customers will use the internet on their mobile devices (smart phones, tablets, or laptops with USB dongles). Two in five mobile customers in the US will use mobile internet this year and this figure will grow to three in five users until 2015. Smart phone penetration is growing very fast, with 49.6% this year, and is estimated to reach 150 million US mobile users having this type of device, and this is the main reason for the growth of the mobile internet usage.

Conclusions The evolution of the Romanian telecommunication sector is in accordance with the trends in the Western European countries and in other developed countries worldwide. Fixed telephony has reached the maturity phase, the growth in this area is registered only by alternative operators, but it is stagnant overall. Mobile telephony has registered a spectacular growth, and reached 115% penetration per 100 inhabitants in just 15 years, but the growth has also slow down in the last 2 â&#x20AC;&#x201C; 3 years. The only area that is still predicted with an important growth in the next years is the mobile internet (mobile data services), which has reached only 42% penetration per 100 inhabitants, so it still has potential for a future growth, considering also the increasing penetration of smart phones and tablets.


By Nicolaie Mihaiescu Abstract Do you still remember the time when in Ceausescu era we used to produce and circulate a lot of political joke? One of those referred to a dialogue between a Romanian and a Westerner. The first asked if in west one can buy foodstuffs if only queues in a row for hours like in Romania. The answer was: queue, what is this? Then the Westerner asked if Romanians eat meat. The answer was “Meat, what is this?. In recent years Romanian economy produced a lot of moments when be either a specialist in economy or simply citizen you asked yourself: what is this? Here are two of such moments that I want to remember ( but they are so many, unfortunately)- lifting the custom barriers for import of food products and allowing all big in world retailing to destroy the Romanian home trade companies. Let me explain the reasons of recollecting these two moments. Keywords: agriculture, retail, Romania, trade JEL: Q1, F1, L81 Romanian agriculture was from centuries the biggest resource of national economy and its hope of development. The year 1938 represented one of the peaks in agricultural production and analysts said that Romania was the main cereals supplier of Europe. People had enough vegetal commodities even during Ceausescu’s regime in spite of the fact that exports were so much and sometimes one can hardly notice meat, eggs or fish on sale. Imported food was almost missing. Agriculture was a hard working domain and very few believed what the government wanted to convince us that we succeeded in making agriculture a mechanized one and thus a semi industrial branch of economy. In late 70’s, in many areas, peasants ploughed their land like their ancestors did 400 years ago. Still we had a large network of irrigated lands and good crops. After 1989 agriculture went a very dangerous path. First of all we disrupt big farms and make almost every peasant get no more that 1-2 Ha that normally cannot be worked mechanically. Then all irrigation systems were destroyed leaving million of hectares without water in dry seasons. All happens due to political reasons and it led to unprecedented chaos .Many small farms collapsed, peasants had no money to buy what they need for better result and the general picture was worst then in Ceausescu’s time. In short, Romanian peasants became poorer and less capable to cultivate the soil. It was in 2000 or 2001 when, to please Europe, the Government announced proudly that all custom duties for food imports were lifted “ so that the Romanian peasants may compete with those from all Europe “(!!??). Very few other political mistakes can equal such a stupid measure. The result is that now, 10 years after, Romanians have to import almost 75% of their foodstuff and countryside is more and more abandoned and land deserted. We did not understand how a Government can make the mistake to even think that a peasant with no money and no modern tools may compete with one fully mechanized and having enough money –subsidized- from elsewhere in Europe. Even in 2007 when it was accepted as member of European Community Romania was not prepared to make a modern agriculture and to meet higher standards. Nowadays we still cannot fight against competitors and the situation is worse than in the past. Competition ? What is this ? Second moment I wanted to remind you is about Romanian home trade which in 20 years lost almost everything and prospects are very bad. What was once state property in trade was privatized and changed, becoming day by day more efficient and mod-


ern due to the implant of some big world retailers, cash and carry and hard discounter. They start occupying the market quietly in â&#x20AC;&#x2122;92-93â&#x20AC;&#x2122; and now they dominate the trade territory. Put this together with an almost destroyed industry and an agonizing agriculture and see that home trade have few reasons to survive. During the last 15 years all governments have contributed to let the others do what they want including taking Romanian market to themselves using mainly political weapons. Cora, Carrefour, Metro and then Billa, Penny, Real, Selgros to mention the most known ones and those selling foodstuff, populated the whole country and occupied an important segment of market-big commercial structure-that normally was prohibited to Romanian investor because no one may earn enough money to build a mega store, hypermarket and even supermarket and the state ignore them all taking no steps to encourage legally or financially the promotion of Romanian capital. As I said ,some 5-6 years back ,foreign big trade world companies occupied only the upper side of the retail market leaving the rest of outlets to local investors , while struggling to each other how to conquer the biggest part of market. At that time we think that this might be a good opportunity for local people to focus on developing specialized shops and general merchandise retail units closer to residential places. This way competition was expected to bring a modern home trade to the benefit of people. Nothing happens in the mean time and many small trading companies went bankrupt .Since the most populated economic sector was the home trade one, unemployment means a lot for Romanian society. Inside this gloomy picture, less than 2 years ago, a chain of general merchandise medium store announced its presence in Bucharest and some other places. It was a happy event since the investor is a Romanian one and perhaps money came from inside Romania which is to say that something real good entered de cities. This chain of stores is called MIC.RO .Today, it is believed that the chain has around 1000 units and maybe half of them in Bucharest. Their ambition for the next 2-3 years is to reach more than 3000 units. A Mic.ro shop is an ideal proximity store selling almost everything one need in his home-food including fresh fruit and vegetables, soap and detergents, all kind of drinks including alcohol, cosmetics, bread, cigarettes and so on. Besides you can find newspapers and may drink a warm coffee. Mic.ro chain have some other new item to show, the so called shop on wheels, a specially equipped small truck that is parked on streets in crowded areas. This trucks offer a smaller variety of goods but in some places one can drink a coffee sitting like in a bar. So far they are some 500 trucks of the kind In 2010 the owner of the company Mic.ro announced the intention to expand their activity by franchising its brand in food business. They also announced they open stores in the Republic of Moldova. When Mic.ro opened its activity we all thought that Romanian companies, including the newly created Mic.ro. will be able to stay and hold the biggest part of proximity stores spread inside the dwelling areas closer to the consumer and in competition to foreign investors of the same level .Unfortunately a similar goal was undertook by Mega Image Company . There was a sudden big leap forward of Mega Image in the last 6-9 months and some said that there are 500 Mega Image in Bucharest. Such a huge investment in a short time is supposed to be supported by someone strong that is not in Romania. At a first glance such development was to help an increased competition and the result will be help-

ful for consumer. The mystery did not last too long and so we were astonished to hear that Mega Image, once a Greek possession, was bought by Delhaize company, the owner of Cora one of the biggest world retailer. This way a hypermarket owner entered another niche, one of the proximity stores that we believed will belong to Romanian companies for good. Something similar happens to other big retailers that once they entered the market tried to buy small foreign or Romanian trading companies to expand their market margin. Anyway the ever-growing Delhaize empire is now a huge capital concentration that in a normal society had to be checked by an institution called Competition Council .This has never happened and what it was supposed to be a fair trade competition proved to be a huge concentration of capital. Do you think is there anyone here in Romania strong enough to fight against Delhaize ?

Just like in the case of agriculture may I ask myself, fair competition in the trade business? What is this?


Professor MOISĂ ALTĂR and the ecosystem of professional conversation as the expression of the intelligent management By Theodor Valentin Purcărea Abstract

Key words:

In order to bring forward their own contribution to the „ecosystem” of two-way roads of the professional conversation, a Professor, considering leasure time spent in an intelligent manner and looking to become the man who demonstrates, must support his followers in what concerns identifying multiple points of content and dialogue, teaching them to analyze and prioritize, maximizing time and efforts, in trying to become relevants. It is important to share the respect for those who prove passion in serving and promoting a real culture of excellence, being accomplished mentors to model the path to excellence, demonstrating and inspiring, awakening our own expectations.

brand, ecosystem of professional conversation, intellectual coherence, entrepreneurial mathematical economist JEL: A11

An ecosystem of professional conversation created in time. Looking to become the man who demonstrates

Life is undoubtedly a process that permanently keeps us connected to the reality. As we cannot compress time and we need to connect to the future, we thought of proposing a conversation about Professor Moisă Altăr, Founding Director, Doctoral School of Finance and Banking, Academy of Economic Studies in Bucharest. Why? It is simple. Because we have been thinking about it for a couple of years now, more specifically from April 2007, when David Armano displayed in Business Week his thesis regarding „the architecture of con-

versation” needed for developing brands (conversation leading to relations and relations leading to affinity which results in communities). We thought in this context about the „ecosystem of conversation” created in time by Professor Altar Moise, which supported his followers in what concerns identifying multiple points of content and dialogue, teaching them to analyze and prioritize, maximizing time and efforts, in trying to become relevants in order to bring forward their own contribution

to this „ecosystem” of two-way roads of the professional conversation. Let’s remember some of these followers: the macroeconomist Florin Bîlbîie (Research Fellow at Nuffield College, University of Oxford, now at Sorbone), PhD at the European Institute in Florence; Anca Dimitriu, PhD, Goldman Sachs, London; Mihail Ion, PhD, President and CEO, Raiffeisen Asset Management, Bucharest; Ionut Dumitru, PhD, Treasury Research Manager, Raiffeisen Bank Romania; Otilia Ciotau, Chief Economist, Piraeus Bank Romania; Cip-


rian Dascălu, Senior Economist, ING Romania; Sergiu Manea, Trader in Interest Rate Derivatives, ABN Amro, London; George Lucian Albotă, Structured Products Trader, Bank of America, London; Valentin Ciobotaru, Money Market Broker, ICAP EUROPE Ltd., London; Sebastian Matei, Vicepresident, Bank Vontobel AG Zurich; Ovidiu Pocan, Credit Analyst, Alpha Bank Romania, Corporate Division. Not to remember others who are working in different Universities in the world or who are continuing their PhDs in other countries or other chief economists in different commercial banks, such as Nicu Chidesciuc, Dan Bucsa and Lucian Isar. Please keep in mind, for instance, that according to Carol Alexander, Professor of Risk Management and Director of Research at the ISMA Centre, The University of Reading, UK: „The Dofin MSc students rank amongst the best in the world. In my opionion the general level of Dofin students is actually better than most of the large and famous American and European business schools” (http://www.dofin.ase.ro/ different.php). Certainly, Professor Moisă Altăr took into consideration what his Professor Grigore Moisil would say to him namely, that a good professor is the one who makes all difficult things seem much easier to you, courses are free, anyone can enter and only those who can stay till the end, especially that no problem has certain borders, on the other hand any answer has many. Moreover, he even embraced the „ideal of happiness” of his Professor Moisil to live among people who judge correctly, looking to become the man who demonstrates… And about… mathematics we will be talking later on, quoting one of Professor Moisă Altăr’s favorites (Paul Krugman, who recently stated that: „Policy makers have been worrying about the wrong things, obsessing over deficits when the real problem was lack of growth”; << „Me big famous economist, you nobody” is not a valid argument >>;” So things are falling apart all over. Maybe someone should do something?”, August 4-5, 2011, http://krugman.blogs. nytimes.com/). Professor Moisă Altăr’s students are intensily discussing in the virtual world, an example being the one from January 26, 2010 („Moisa Altar this Chuck Norris of ASE…”, http://kta86. wordpress.com/2010/01/26/moisa-altar-acest-chucknorris-al-ase-ului/), mentioning: „If Moisa Altar must get to a lecture and was late, then time should pass slowly; Moisa Altar does not write books. He is frowning at the white pages and the words are assembling for fear of; Time is not waiting for anyone. Except for Moisa Altar; What would Moisa Altar do if he had to present an article at Dofin? He would write it , publish it, he quotes it ISI and presents it, all during the same day; At the National Bank of Romania, to motivate and enhance employees creativity, the management decided that they should wear on their clothes the inscription ‘What would Moisa Altar do? ‘; All descendants of Altar are automaticaly accepted at the top 100 Universities around the world...; In DEX, next to the word ‘resit’ there is a picture of Moisa Altar…” Should not come as a surprise, after all, as we have seen above, the lectures are free, anyone can enter and only those who can, stay till the end, especially that there is no problem with borders, on the other hand any answer has many…

Setting some landmarks… We cannot speak of the „ecosystem of professional conversation” created in time by Professor Altar Moise without setting some landmarks… At the beginning of June 2009 I had the pleasure to meet Professor Moisă Altăr again, together with his distinguished wife, at the Romanian Academy, on the occasion of the public meeting during which the academic Aurel Iancu presented his speech of acceptance (http://www.crd-aida. ro/2008/10/miercuri-3-iunie-2009-in-aula-academiei-romane-a-avut-loc-sedinta-publica-in-care-academicianulaurel-iancu-a-prezentat-discursul-de-receptie-“nicholasgeorgescu-roegen-–-intemeietor/) “Nicholas Georgescu-Roegen – Founder of the School of Economics”. The opinion of Professor Moisă Altăr according to which Nicholas Georgescu-Roegen should have received the nobel Prize for Economy is well known, considering the extrordinary contributions of this remarcable personality of whom the prestigious “The New York Times”, announcing with regret that on the 5th of November 1994 “a great man of the economy science” passed away, remembered, among other things, the following: Nicholas Georgescu-Roegen collaborated closely with Professor Schumpeter in the mid 30s; spreading the popularity of Nicholas Georgescu-Roegen occured in the mid 70s when he published “The Law of Entropy and the Economic Process” (Harvard University Press, 1971); Nicholas Georgescu-Roegen stated that the trouble with the Economics of John Maynard Keynes and Professor Samuelson was that they displayed the world economy as a pendulum, while in the opinion of Nicholas GeorgescuRoegen a more suitable metaphor was an hourglass. Under the influence of the impressive speech of acceptance of the Academician Aurel Iancu, I have continued the discussion with Professor Moisă Altăr starting from one of the most significant messages that Nicholas GeorgescuRoegen had given us: “We must get to realize that an important prerequisite for a better life represents a substantial amount of leasure time spent in an intelligent manner”. We took into consideration, among others, part of the precious ideas which can be found in the Complete Works of Nicholas Georgescu-Roegen, Expert Publishing House (included in the Collection Library of the National Bank, whose coordinator is the Academic Mugur Isarescu) coordinated by the Academic Aurel Iancu (The Man and his Work; Romania’s Economy; Statistics and Mathematics; Analytical Economics; The Law of Entropy and the economic process; Energy, natural resources and the theory of economics; The Roegenian epistemology. Following this significant moment we have recorded some of these monumental ideas, that we will render in what follows. Nicholas Georgescu-Roegen stated (“Energy, natural resources and the economic theory”, Expert Publishing House, Collection the Library of the National Bank, 2006, pp. 68, 71, 256-257, 261) that: “In the context of entropy (transformation, evolution– Rudolf Clausius), every action carried out by a man or institution, even by any natural process transforms in a deficit for the whole system… If this entropic deficit would not have existed, we would have been capable of transforming work in heat and,


as it is a reversal process, to recover the entire amount of the initial work… Civilization is not the master of power. Authentic civilization involves the economics of power… To act according to the demand is the main key of any economics of power, both on the longterm and on the short-term. The man must turn from a person that wastes material and energy into a collector of material and energy… It might be that the destiny of man is to have a short life, but exciting, impressive and marked by extravagance than one that is long, uneventful and having a vegetative existance. We should then leave other species - amoebes, for example – that do not possess any spiritual ambitions to inherit a land bathed in sun.” The science is “full of splendours”, is “a living organism”, states Nicholas GeorgescuRoegen (“The Roegenian epistemology”, Book I, Expert Publishing House, Collection Library of the National Bank, 2006, pp. 11, 16, 17, 105-106, 144), and “memorising represents an intellectual effort which is more expensive than reasoning”. As “it is expected that the structure of science on the planet should change with time”. We have to remember / judge that “the main objective of the economic activity is the self-preservation of human species”, not forgetting that “of all necessities of life, only the strictly biological ones are absolutely indispensable for survival” and: “Maybe someday we will all be able to understand that man is also an instrument, the only one capable of studying human propensities. That day there will be no forgotten people...”. On August 5, 2011, Joseph Stiglitz, one of Professor Altăr Moisă’s favorites, caught our attention by saying: “…bad ideas move easily across borders, and misguided economic notions on both sides of the Atlantic have been reinforcing each other. The same will be true of the stagnation that those policies bring” (“A Contagion of Bad Ideas,” 2011-0805, http://www.project-syndicate.org/ commentary/stiglitz141/). While on August 6, 2011 Paul Krugman, another favorite personality, remembered some other interesting things: „aid to states was a way of sustaining spending, not increasing it — that it didn’t amount to net stimulus if you look at government as a whole”; „The point is that while S&P may try to give the impression that it’s just doing the math (in-

competently, too!), the math doesn’t at all support its position.”; „I have a slogan that should be blazoned on every newspaper in this country: America for the Americans! The government must not interfere with business! Reduce taxes!”; „The point is that at this point we’re not having a debate between opposing models (Krugman/Thoma/DeLong axis - Hicks/Keynes model), we’re having a conflict in which one side has a model that has been working, while the other side has prejudices, and makes stuff up to justify those prejudices” (http://krugman.blogs.nytimes.com/). As I was going through those thoughts I rembered that in the context of the discussions with Professor Altăr Moisă, when I was dealing with the hot topic of his participations at different prestigious international reunions and his meetings with Laureats of the Nobel Prize for Economy, only two of them would be mentioned more often: a) Paul Krugman, Professor Moisă Altăr emphasizing the great clarity in writing of the Professor of economics and international affairs at Princeton University, who received in 2008 the Nobel Memorial Prize in Economic Sciences for 2008, honoring his work in international trade patterns; he is the author of the book “The Return of Depression Economics and the Crisis of 2008”; b) Joseph Stiglitz, considered by Professor Moisă Altăr a class orator; the Columbia Professor of economics, and former chief World Bank economist, received the Nobel Memorial Prize in Economic Sciences, 2001; let’s remember what Stiglitz said, in January, 1999, in „Public policy for a knowledge economy”, Department for Trade and Industry and Center for Economic Policy Research London, U.K., 10.1.1.123.9173. pdf: „Knowledge is different from other goods …in the knowledge economy, the dangers of a monopolization are perhaps even greater than in industrial economies; … a partner who shares risk can encourage risk taking, a partner that shares in the successes but not in the losses is likely to discourage risk taking”; he is the one who shows, for example, in „Growth and Social Justice”, September 2008, http://la.indymedia. org/news/2008/09/220137.php, that: „The trickle-down economy does not function… Growth must be sound and stable and not based on environmental destruction, debt-financed consumer

intoxication or exploitation of scarce resources… Equality and growth do not exclude each other. Governments can promote growth by integrating more people. People are the most valuable resource of a country… a new anti-trust law is necessary”; it is worth mentioning a press release entitled sugestively: “Stiglitz is Right, Friedman is Wrong”, http://www.scoop.co.nz/stories/ WO0809/S00075.htm. The picture presents Professor Moisă Altăr together with ProfessorJoseph Stiglitz. Near the end of 2009, Stewart Hamilton, Professor of Accounting and Finance at IMD („Don’t forget capitalism’s triumphs. What we learned from the fall of the Berlin Wall,” November 2009, http://www.imd.ch/research/ challenges/TC086-09.cfm) stated that: “There is no doubt that the financial crisis has raised questions and that a new set of internationally agreed standards and parameters are needed. But it is also important not to forget how far we’ve come and how we got here.” Testimony and testimonials on Professor Altăr Moisă in a challenging PhD thesis delievered at the Faculty of the Graduate School of the University of Maryland: „Moisă Altăr, a brilliant and entrepreneurial mathematical economist known for his passion for high academic standards and proximity to the exiled mathematical economists” I noticed with pleasure a challenging confession about Professor Altăr Moisă in „Neoliberalism in translation. Economic ideas and reforms in Spain and Romania” by Cornel Ban, Dissertation submitted to the Faculty of the Graduate School of the University of Maryland, College Park in partial fulfillment of the requirements for the degree of Doctor of Philosophy, 2011. An impressieve Advisory Committee: Professors Ken Conca, Vladimir Tismaneanu, Chairs, Professor Mark Blyth, Professor Mark Lichbach, Professor Peter Murell. This Dissertation (directed by Ken Conca, Vladimir Tismaneanu, Department of Government and Politics, and „drawing on the claim made by some sociologists that ideas do not stay the same as they travel from one social setting to another, but are – translated by idea entrepreneurs called – translators”) was „about how neoliberal ideas


became the black box of elite thinking about the economy in middle-income countries where economic liberalism had been relegated to the doghouse for much of their modern intellectual history.” According to the PhD student, this dissertation (drawing on a comparative historical analysis of the spread of neoliberalism two crucial cases: postauthoritarian Spain and Romania) made three contributions to the study of political economy, arguing that: „the content of adopted neoliberal ideas is shaped by the context-specific choices made by translators who employ framing, grafting and editing as translation devices; the pace of translation is shaped by the density of transnational ties between domestic policy stakeholders and external advocates of neoliberalism; translated neoliberal ideas are likely to serve as templates for economic policies when they are shared by an intellectually coherent policy team inside a cabinet that can effectively control economic policy decisions.”

Within this challenging framework, the incisive PhD student Cornel Ban: a) emphasizes the role played by Professor Altăr in what concerns the Romanian National Bank (BNR) in a section suggestively entitled „BNR as epistemic power” (pp. 424-425): „ Like in Spain, the top economists in BNR and the governor himself were also star professors at ASE, the leading economics department… some of the biggest names in the governors’ circle of advisors (e.g. Cristian Popa) came from the same professional ecology: the elite postgraduate program run within ASE by Moisă Altăr. As the next chapters show, Altăr was the septuagenarian eminence grise of Romanian mathematical economics and one of the few Romanian economists who had become conversant in Western neoclassical finance economics during national-Stalinism. Altăr had been deeply involved with the BNR establishment: his sister ran the BNR‘s research service and he was an informal advisor to the central bank governing board. These relationships and Altăr’s own professionalism gave the BNR economists who constituted the central bank‘s epistemic core a degree of intellectual coherence that survived two decades of political and economic turmoil”; b) then introducing us to „The Altăr network and the roots of Romanian neoliberalism...” (pp. 458-462): „Historically, Romanian neoliberals came from a network of outwardlooking economists influenced by the dissenting mathematical economists who had kindled the marginalist fire during the 60s and 70s. All these men had graduated in the top of their class and worked in sheltered ecologies in academia, institutes or the technocratic vehicles of the central government, where access to Western economic literature was not very limited… During the 1980s such activities enabled these budding economic liberals to develop a counter-elite identity in the elitist seminar informally organized at the Cibernetics Institute by Moisă Altăr, a brilliant and entrepreneurial mathematical

economist known for his passion for high academic standards and proximity to the exiled mathematical economists. None of these men had made the shift to neoclassical economics before 1989 but through their informal self-training the acquisition of the basic elements of this economic tradition came to be the very condition for joining this prestige group. After they were accepted, Altar made the reading of Western economic journals and books the de facto condition for acceptance in his discussion group. The capacity to debate complex economic arguments published in English by Western journals became a status marker…. After 1989 the Altăr group was the source of a veritable who‘s who of postcommunist economics… After the revolution almost all of them taught economics at ASE in between their research stints in the IMF or in Anglo-American economics departments… It took the members of the Altăr network less than one year to go from market socialism to neoliberalism…”; c) following that, highlighting the decisive contribution of Professor Altăr concerning the setting-up and the competitive functioning of DOFIN in „From Chicago to Bucharest on the cheap” (pp. 506-508): … „in 1994 Moisa Altar entered the scene yet again with a new elite formation project: The Doctorate School of Finance and Banking (DOFIN). The project departed from his frustration with the state of Romanian economics after the revolution… the role of professor Altăr (in using mathematical models in economic theory and of econometrics in all sub-disciplines, from finance to economic geography)… Endowed with this international licensing and generous funding, DOFIN adopted a constitutional rule that dissertation committees had to be chaired by economists from leading West European and American economics departments… Altăr tapped into his expatriated student networks… Their international prestige and continuing support for DOFIN further magnified Altăr’s domestic reputation as a mandarin academic and some former students even came to teach there for short periods. For the second time in fifty tears, Altăr’s intellectual and organizational entrepreneurship was de facto bringing Western graduate education home to Romania. Most importantly, through DOFIN he created an elite corpus of economists with internationally-fungible skills who during the 2000s assumed leading positions in the central bank and an increasingly internationalized financial sector… Altăr was also the mentor of central bank chief economist Cristian Popa (a DOFIN graduate) and, most importantly he has been known as the main informal advisor of the central bank governor Mugur Isarescu… In sum, the Romanian case shows that the spread of neoliberalism though academic experiences could be done not just through doctorates… but on the cheap, with local replicas of Western postgraduate programs, short-term fellowships, grants and visiting positions.” It pleases us greatly to share with our Readers our respect for those who prove passion in serving and promoting a real culture of excellence, being accomplished mentors to model the path to excellence, demonstrating and inspiring, awakening our own expectations.


by George Cosmin TÄ&#x192;nase Abstract Building strong relationships with customers has become a prime strategic objective of retail marketing. This article focuses on the paradigm of customer relationship management (CRM), regarding the principles of customer value and the constructs of customer loyalty and customer satisfaction. In highly competitive environment the relationship marketing is concerning on critical importance of clients for every business activity in market economy. The significance of customer relationship management is to lead to satisfied and loyal clients. From one side it is oriented to synchronize relations between the customers and the retail company, from the other side it is dedicated to optimize sources of information for better comprehension of consumer behavior. The CRM outline the main directions for development of cli

ent oriented products, high level consumer service and long term partnership with the company audiences and it is also an instrument of the intelligent company management in the field of customers relationship, taking into consideration the personal preferences and characteristics. This approach emphasizes the possibility to evaluate the separate clients according to their significance for business by realized sales, profitability and development potential. Also it is important to mention that in retailing the loyalty programmes are manifestations of customer relationship management. Keywords: customer, information, relationship, management, interaction, loyalty JEL: M31

Introduction Retailers face a dynamic and competitive environment. With increased globalization, market saturation, and increased competitiveness through mergers and acquisitions, retailers are seeking competitive advantages by better managing customer relationship. Traditionally, marketing has focussed on attracting new customers for a company. Today, however, companies recognize the importance of retaining current customers by forming relationships with them. This focus on relationships builds on the premise that it is less expensive to market to existing customers than to acquire new ones. Relationship marketing, a term usually used synonymously with customer relationship management, involves establishing, maintaining and enhancing long term relationships with customers. With this perspective, the managerâ&#x20AC;&#x2122;s primary task is to identify profitable and non profitable customers, focus efforts on the former and balance the cost of acquiring and retaining customers with current and potential revenue from those customers. In retailing, advances in IT and

the spread of loyalty cards have provided a means for retailers to identify a particular customer and to collect customer specific data, thus enabling individualized marketing. Compared to other industries, retailing has tremendous advantages in CRM, since it is in direct contact with the consumer. Even though the methods proposed for CRM are very heterogeneous, some common and underlying principles have emerged: - Customer information: Companies must gather reliable and detailed information on their existing and potential customers, usually stored in an IT based customer data base. - Individualisation/segmentation: A strong customer orientation leads to a targeted approach to individual customers or customer segments, instead of a standardized mass market approach to retail marketing. - Profit orientation: Not all customers are treated equally. Rather, they are classified and prioritised in terms of their profit potential for the company. Investment in customers is


undertaken on the basis of their profit ability. - Customer interaction and integration: Instead of one directional communication (such as traditional advertising), the aim is to achieve a two directional interaction with the customer, including a stronger integration in the value added process. Different stages in the relationship require different marketing approaches. In the early stages, the emphasis is on customer acquisition. In the growth stage and through maturity, the company needs to strengthen the relationship and exploit the full sales potential (customer retention). In the later stages of the relationship cycle, it is important to know which customers are at risk of defecting and to employ customer recovery measures. After customers are lost, it may be possible to reactivate them. Identifying the causes of such defection can help to win particular customers back, but also to avoid the same mistakes with others. Sending lost customers a special offer or calling them in order to allow them to complain about mistakes, might bring them back into the relationship. Through data analysis, defection behaviour might be predicted and those customers with the highest propensity to discontinue the relationship with the retailer, targeted proactively.

Customer Loyalty and Customer Satisfaction

While loyalty has become more important as a marketing objective with CRM, there is no universally agreed definition of loyalty. Two basic approaches to conceptionalise loyalty can be identified: - Often, loyalty is defined with reference to a pattern of purchases. Behavioural loyalty is measured in terms of repeat patronage, percentage of budget allocation in a category to a store, amount of switching, or purchase likelihood. - Many researchers argue that there must be strong commitment to a company for true loyalty to exist. Commitment refers to an emotional or psychological attachment to a company. Trust, which entails the confidence in the retailer’s reliability and integrity, is often seen as closely connected to it. This attitudinal loyalty can be measured by asking consumers if they like and trust the store, whether they feel committed to it, and whether they would recommend it to others. In retailing, CRM is closely connected to the loyalty schemes that are usually based on loyalty cards. Pioneers in Europe were Tesco in the United Kingdom and Albert Heijn in Holland. Many retailers now employ some form of loyalty scheme. Typically, loyalty programmes offer delayed, accumulated economic benefits to consumers on the basis of repeat purchases. Usually, this takes the form of points that can be exchanged for gifts, or vouchers. The discount value of points generally ranges between 1 and 4% of sales. The option of giving discounts in different “currencies” (e.g. cash, stamps, miles, reward points) can also offer perceptual advantages, e.g. for the retailer’s price image. In so called affinity programmes, the focus is more on the emotional bond between customer and retailer. With club memberships, preferred service, newsletters, Internet chat groups, telephone help lines and other

measures, two way communication is established so that customers can interact with the company and get to know it better. Most frequently, the ability to accrue benefits in the form of discounts on purchases, as well as the promotional offers connected to the loyalty programme, are the principal motivation for consumers for joining a loyalty scheme. However, emotional bonding and psychological relationship awards might also be important. Self actualisation is considered a basic human need and loyalty programmes can provide recognition to selected customers by giving them an evaluated status and the feeling of being special. In some loyalty programmes, the sense of being a member of a community is considered more important than financial rewards. Loyalty programme rewards depend on the cumulative spending by customers at the retailer. There are two basic reward accumulation functions. If the same share of spending is given as reward (e.g. 1 point per EUR spent), regardless of accumulated spending, this linear function might lead a consumer to distribute his spending between different retailers (without a loss for the customer). If only the relative rewards count as cumulative spending level increases (e.g. 1 point per EUR when spending is below 100 EUR, 3 points when spending is above 100 EUR), the programme becomes relatively more attractive for customers who spend more with one retailer and when concentrated spending at one retailer is rewarded. This supports a company strategy that aims to focus retention efforts on a small group of high value customers. Sometimes this is implemented with different types of loyalty cards, e.g. “normal” cards, gold cards, platinum cards. Switching costs for customers are increased, since accumulated assets can be seen as customer investment in the relationship with the retailer, which should in turn enhance loyalty. In terms of sponsorship, two types of loyalty programme exist: - single company loyalty programmes - multi partner programmes (or coalition schemes). Single company loyalty programmes are run by an individual retailer. Examples are the programmes of Boots, Auchan, Coop (Switzerland), Peek&Cloppenburg. Usually, the loyalty card carries the retail brand, and points can be accumulated at this retailer only. A benefit of multipartner programmes is that customers can use their loyalty card more often, collect points faster, and qualify for certain premiums or prizes faster. Penetration of the programme in the population is often higher than for single company programmes. Especially for retailers with a low purchasing frequency (e.g. DIY stores or consumer electronics retailers), for whom attracting customers in a proprietary programme would be difficult, participating in a coalition programme can be beneficial. While single company programmes only have data on the current customers of a particular retailer, multi partner programmes have access to far more data about shopping habits, so that the retailer can also target profitable consumers who are not yet part of his own customer basis. This facilitates analyzing customer behavior on a much broader base (within the limits of privacy regulations and customer acceptance). At the same time, the high cost of a loyalty programme can be distributed among the participating retailers. The disadvantages of a multi partner programme are that loyalty is often focussed on the coalition programme, rather than any particular retailer. Also, the loyalty scheme (e.g. rewards, accumulation function) is not designed to meet a specific


retailer’s strategy, but has to appeal to a group of retailers as a whole. One of the most successful multi partner programmes in Europe is the German Payback system with more than 30 million customer members, in which many large retail companies, such as Real, OBI, Aral, Apollo Optik, participate. The British multi partner programme Nectar has companies such as Sainsbury’s, Debenhams, BP and Hertz as partners. In France, S’Miles offers bonus points for purchases with Géant, Monoprix, Galeries Lafayette, Shell, BHV, and others.

Analysing Customer Data

In CRM, data mining techniques are used to analyse customer information. Since the results of the analysis and the forecasting of customer response can be used to develop marketing measures and the subsequent behaviour of specific customers can be tracked and evaluated, a learning system can be created that studies the specific behaviour of each customer and can also detect changes in behaviour over time. An important potential advantage of CRM is that the success and the profitability of marketing measures can be evaluated in an experimental approach, by comparing the purchasing behaviour of the targeted customer group with a control group, based on incremental sales or contribution margin. However, up to the present, the huge amount of data collected through loyalty cards (often millions of data sets daily) results in an inadequate usage of the data, because IT capacity and methods of data analysis develop at a slower pace than data availability. Customer segmentation is a core task of data analysis. In theory, retailers employing loyalty programmes could segment their customer base down to individual customers, but in practice, the number of segments used is generally limited to between 10 and 30. Segmentation criteria include purchasing volumes, demographic characteristics, geographical aspects, shopping motives, attitudes and lifestyles. The options start with very simple segmentation criteria. ABC analysis is used to categorise customers by their annual purchases. Very often, a 20/80 rule is used that 20% of the customers (“A” customers) account for about 80% of retail sales volume. Even if the ratio is often not that extreme, it has frequently been shown that the relevance of different customers for a retailer varies considerably. While customer purchase behaviour is a backwards oriented criterion, total customer lifetime value can serve as a very sophisticated basis for segmentation. Such customer value oriented segmentation shows what customer groups a retailer should focus on, but it does not show how to approach the customers. Segmentations based on such consumer behaviour as shopping motives or attitudes are better suited to develop tailored marketing. Many different customer clusters have been proposed in the literature. For instance, customers can be clustered into “price oriented”, “quality oriented”, and “service oriented”, or fashion customers into “fashion enthusiast”, “style seekers”, “classics” and “timids and uninvolved”. The customers’ stage

in the family cycle (e.g. young singles, young couples, couples with young children, older, retired couples) is usually a good predictor of purchasing behaviour. Based on their own customer data, retailers can, however, use a combination of methods to establish customer segments that are tailored to the retailer’s specific needs. Using Customer Data Individual customer information provides insights into consumer behaviour that can be used to bring about a general change in a retailer’s marketing. In such a case, the customer data is used to change macro variables of retail marketing, such as the merchandise mix, pricing, promotion, or location decisions. For example, before a product is delisted due to low sales, an analysis can be conducted to determine who still buys it. If, for example, only 20% of customers purchase the product, but those are most valuable customers in the store, keeping this product in stock is important for retaining these profitable customers. CRM, on the other hand, focuses on micromarketing (or one to one marketing) which targets specific consumers or consumer segments based on knowledge of their behaviour. The retail service (such as the merchandise offered in advertising, promotions, services offered) is tailored to certain segments or individual customers. Since the store itself is still standardized for all visitors, CRM often does not take place in the store offer, but through marketing communication with specific customers. Measures include the following: - Addressed direct mailings: Customized direct mailings to customers’ homes are used in almost all retailer loyalty programmes. The prime communication channel in loyalty programmes is some kind of (tailored or segmented) product catalogue, often with targeted promotions. - Email marketing: Direct customer mailings have increased tremendously with the advent of email, which is used to distribute customized advertising and newsletters to customers. Distribution costs are much lower and customizing more flexible and cheaper. - Instore multimedia kiosks: Similar to the Internet, multimedia kiosks in retail stores can be used to communicate with each customer individually. At electronic point of sale terminals, loyalty card holders can (among other functions) check their point account, order rewards or print out value checks with which they can pay their next purchase. - Mobile marketing: Some retailers already use the customers’ mobile phones as communication devices, for example for providing coupons by SMS or MMS. - Personal shopping assistants: Digital shopping assistants that a customer can carry or attach to the shopping cart are still in the testing stage. Based on his loyalty card, such a device can guide the customer interactively through the shopping process in real time. Shopping lists can be displayed, the customer led to certain products, or recipes recommended, including the necessary ingredients and their location in the store. A higher level of CRM and one to one marketing can be employed in Internet shopping. In addition to the purchases, total purchasing behavior can be observed with web usage mining. Over and above the data that can be collected with


loyalty cards in store retailing, an electronic retailer can track the date and duration of each visit to his web site, the time a customer spends looking at a specific product, products viewed but not purchased, the sequence in which products were viewed or web sites browsed. In contrast to stores, the individual data can be employed to tailor the entire retail marketing process to a specific customer, from the basic merchandise offer, prices and promotions, to the store design.

Conclusion

Retail companies seek to maximize relationships with customers. Thus, a shift in organizational thinking is necessary as retailers embrace a ‘‘customer-centric’’ focus and implement strategies to support this focus. This shift in organizational culture challenges retailers to revise organizational systems and processes, identify customer-related metrics, and identify areas of strategic advantage. Over the last decade, many retailers have shifted their focus to CRM and introduced loyalty card programmes as a tool. The costs of such a programme are often substantial, including those of incentives, IT systems and administration of the programme. Furthermore, the success of loyalty marketing campaigns can usually be measured more accurately than that of traditional marketing campaigns. CRM must be compatible with the company’s broader strategy. If a primary goal is to achieve market leadership by gaining customers from its main competitors and grow rapidly, the maximum number of customers should be attracted. A focus on only the most profitable customers will not be appropriate for the company’s strategic objectives. This example illustrates that customer relationship marketing is an increasingly relevant marketing approach in retailing. However, as with all functional strategies, alignment with the overall company strategy is crucial. Some retailers, such as ASDA, Aldi or Lidl, believe that adhering to their core strategy is more important to establish and build loyal customers, than creating a loyalty programme. While this is certainly true, for many other retailers, CRM offers a universe of options for interacting with their customers. All in all, the potential gains of analyzing detailed customer data and targeting consumers, especially with new media which lower the communication costs of tailored marketing communication, still seems enormous.

References [1] BECHWATI, N.; ESHGHI, A. (2005): Customer Lifetime Value Analysis: Challenges and Words of Caution, in: The Marketing Management Journal, Vol.15, No.2 [2] BROWN, S.; GULYCZ, M. (2002): Performance Driven CRM, Etobicoke/ON [3] CUTHBERTSON, R.; LAINE, A. (2004): The Role of CRM within Retail Loyalty Marketing, in: Journal of Targeting, Measurement and Analysis for Marketing, Vol.12, No.3 [4] HANSIOTA, B.; RUKSTALES, B. (2002): Direct Marketing for Multichannel Retailers: Issues, Challenges and Solutions, in: Journal of Database Marketing, Vol.9, No.3 [5] HOMBURG, C.; SIEBEN, F. (2005): Customer Relationship Management (CRM), in: HOMBURG, C.; BRUHN, M.(Eds.): Handbuch Kundenbindungsmanagement, 5th ed.,Wiesbaden [6] UNCLES, M.; DOWLING, G.; HAMMOND, K. (2003): Customer Loyalty and Customer Loyalty programs, in: Journal of Consumer Marketing, Vol.20, No.4 [7] REINARTZ, W.J. (2006): Understanding Customer Loyalty Programs, in: KRAFFT, M.; MANTRALA, M. (Eds.): Retailing in the 21st Century: Current and Future Trends, Berlin et al. [8] ROWLEY, J. (2004): Loyalty and Reward Schemes: How Much is Your Loyalty Worth?, in: The Marketing Review, Vol. 4, No. 2 [9] ZILIANI, C.; BELLINI, S. (2004): Retail Micro Marketing Strategies and Competition, in: The International Review of Retail, Distribution and Consumer Research,Vol.14, No. 1 [10] ZENTES, J.; MORSCHETT, D.; SCHRAMM KLEIN, H. (2007): Strategic Retail Management, GWV-Vieweg


By N. Mihaiescu Abstract Announcing a winner is always a real challenge. The connoisseurs know why. When the criterion is the number of claims and money collected as fines and penalties for nonobservance of trade rules, the ranking becomes even more challenging. Keywords: Romanian market, customers claims, rules, competition. JEL: M14, M31 We are not pleased at all to announce the winner: Carrefour Romania. One of the most important actor within the Romanian market and the holder of a huge retailing turnover is number one in a classification worked out by the National Authority of Consumers Protection according to the controls they made during the first half of 2011 and number of claims and money collected as fines and penalties for nonobservance of trade rules. Usually, only big entities are mainly noticed in what they do because they are more exposed to both the consumers and the authorities. So what, many may say about this. There is nothing unusual to walk the rules line when selling such a tremendous volume of goods to such a big number of people. The problem is in what concerns serious violation of rules we talk about. Much to our regrets inspectors found rotten foods on sale and this is the worst point that can make us forget all others like one price on the shelves and another one at the cash registers, mistakes in labeling and so on. Nobody knows in what degrees the inspectors were proceeding correctly in calculating the amount of money of their fines and penalties but sometimes such governmental workers tend to attack softer in case of a wealthy foreign victim. The connoisseurs know why!! Even so Carrefour had 151 customers claims accepted as right and true by inspectors and the total amount of money paid was about Euro 35,000. Here is the complete ranking of big super and hyper markets for first 6 month of 2011 in what the number of consumers and authority claims is concerned: -

Carrefour –number of claims – 151 and an amount paid of abt. Euro 35,000 Kaufland – a number of 143 claims and abt. Euro 25,000 Real (Metro Group )– 122 claims and abt. Euro 40,000 Praktiker - 60 claims Auchan- 57 claims and Dedeman – 58 claims Rewe group – 53 claims and the biggest amount of penalties and fines- abt.Euro 170,000

It is also to mention a member of Delhaize Group, Mega Image chain that paid more than Euro 20,000 fines and penalties. All these figures have been disclosed by Mr. Constantin Cerbulescu the President of National Authority for Consumers Protection in a press conference recently .He also mentioned that from the total claims received from consumers as well as those declared by the respective inspectors 51 % were accepted as correct and true and 34% were solved amiably. One may say that such number of complaints is produced by the Romanian stuff they employ. This may be one of the reasons. But in my opinion it is also true that here in Romania such big companies shown trade practices that in their country of origin are forbidden. As you noticed already, among the 8 names of companies shown above only Dedeman is a Romanian one and all others are foreign. This is easily justified by the position such companies hold on the local market and, as I said before, due to the huge volume of goods they handle . This also speaks about who occupies the Romanian market today. Romanian capital is still losing the field and cannot resist the competition.


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Volume 2, Issue 3, Year 2011  

committe, distribution, issue 7, magazine, romanian,INBAM, 2012, 2013, Management Journals, Conference, Network,Restructuring, Managerial Pr...

Volume 2, Issue 3, Year 2011  

committe, distribution, issue 7, magazine, romanian,INBAM, 2012, 2013, Management Journals, Conference, Network,Restructuring, Managerial Pr...

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