Customers' Top Expectations from Savings Products

ISSN 2534-9228 (online)
Journal of Scientific Papers
VUZF REVIEW
Volume 6, Issue 2, June 2021
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VUZF review, № 6(2) – 2021 ISSN 2534-9228
Vol. 6, №2
June, 2021
Founded in 2016 by the VUZF University
The editorial board
Editor of the publication
Ivan TKACH Prof, Dr. of Sciences, Ukraine;
Deputy Editor-in-Chief
Radostin Vazov Assoc. Prof. PhD, Bulgaria;
Igor Britchenko Prof., Dr. of Sciences, Poland;
Members of the editorial board
Mitko Atanasov
Dimitrov
Prof., PhD, Chairman of the Academic Council of the Institute for Economic Research of the Bulgarian
Academy of Sciences, Bulgaria;
Igor Britchenko Prof., Dr. of Sciences, VUZF, Bulgaria;
Daniela Bobeva Prof. Dr., Professor at the VUZF, Bulgaria;
Mariana M. Petrova Assoc. Prof. PhD, St. Cyril and St. Methodius University of Veliko Turnovo, Bulgaria;
Stanislav Dimitrov Assoc. Prof. PhD, VUZF, Bulgaria;
Julia Dobreva Assoc. Prof. PhD, VUZF, Bulgaria;
Ali Veysel Assoc. Prof. PhD, VUZF, Bulgaria;
Desislava Josifova Assoc. Prof. PhD, VUZF, Bulgaria;
Manyu Moravenov Assoc. Prof. PhD, VUZF, Bulgaria;
Petro Gudz Dr. of Science in Economics, Professor, Kujawy and Pomorze University in Bydgoszcz (Poland);
Tomasz Wnuk-Pel Poland;
Dio Caisar Darma Assist. Prof., Department of Management, Sekolah Tinggi Ilmu Ekonomi, Indonesia;
Nataliya Tanklevska Dr. of Sciences, Prof., State Higher Educational Institution "Kherson State Agrarian University", Ukraine;
Vitaliy Shapran Professor, Ph.D. in Economics, Member of the National bank of Ukraine Council (Ukraine);
Roman Blizkyi Dr. of Sciences, Prof. of the State University of Management, Member of the Institute of Professional
Accountants of Russia (IPAR), Russia;
Maksym
Bezpartochnyi
Dr. of Sciences, Prof. at the Department of Economics, Marketing and International Economic Relations
Faculty of Soft Engineering and Business National Aerospace University named after N. Zhukovsky
“Kharkiv Aviation Institute”, Ukraine;
Olena Chukurna Dr. of Sciences, Professor of State University «Odessa Polytechnic» (Ukraine);
Viktor Trynchuk Ph.D., Assoc. Prof. of Department of Banking and Insurance National University of Life and
Environmental Sciences of Ukraine (Ukraine);
Jurgita Sekliuckiene Professor of International Business, Kaunas University of Technology, Litva;
Sudhanshu Rai Associate Professor, Phd, Copenhagen Business School, Denmark;
Panagiotis Kontakos Assist. Prof. in International Business & Entrepreneurship, UCLan Cyprus University, Cyprus;
Mustafa Erdogdu Professor of Department of Public Finance, Marmara University Faculty of Economics, Turkey;
Mariam Arpentieva Grand Dr. of Psychological Sciences, Assoc. Prof., Tsiolkovskiy Kaluga State University, Russia;
Radmila Pidlypna Dr. of Sciences, Professor, UTEI Kyiv National University of Trade and Economics, Ukraine;
Andrii Nikitin PhD, Assoc. Prof., Kyiv National Economic University named after Vadym Hetman, Ukraine;
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Liudmila Bagdonienė Litva;
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VUZF review, № 6(2) – 2021 ISSN 2534-9228
CONTENT
1 Customers’ expectations from savings products
Stanislav Dimitrov …………………………….….……………………..………………….…….. 4
2 Innovation through the prism of companies using direct marketing. An
empirical example from Bulgaria
Mihaela Mihaylova ………………………………………………………………………………………………………… 11
3 Financial mechanisms of ensuring the development of business under high
interest rates
Vitaliy Shapran, Igor Britchenko ……………………………………………………………………………………… 16
4 Migration and immigration representing an unwanted ally of terrorism
Marián Mesároš, Imrich Dufinec ………………………………………………………………………………….. 24
5 Marketing competitiveness of hotel and restaurant enterprise: theoretical
approach and methods of definition
Sergiy Tsviliy, Darya Gurova, Tetiana Kuklina ..……………………………………………………………….
30
6 Factors influencing and dynamics of the agricultural insurance market
Tanklevska Nataliya, Yarmolenko Vitalina……………………………………………………………………... 42
7 Benchmarking of modernization of the economy of the world: experience
for Ukraine
Oksana Borodina ………………………………………………………………………………………………………….. 50
8 Development strategy of production enterprises to ensure competitiveness
and development of economic systems
Valentin Susidenko, Julia Susidenko …………………………………………………………………………….. 60
9 Problems of income and expenditure balance of the pension fund budget of
Ukraine
Mariya Lalakulych, Erika Yuhas, Lesya Rybakova ……………………………………………………………. 68
10 Current status of human resource management in China and EU
Liudmyla Batsenko, Roman Halenin, Wang Haibo …………………………………………………………. 80
11 Management of BAIS: Technological Trends and Digital Initiatives 4.0
Kateryna Kraus, Nataliia Kraus, Oleksandr Marchenko …………………………………………………. 88
12 Marketing analysis of information and communication technologies as a
factor of compliance function and business growth
Dronova Tetyana, Horiashchenko Yuliia ……………………………………………………………………….. 100
13 Social entrepreneurship as a factor in the development of rural
communities in Ukraine
Alla Pecheniuk ………………………………………………………………………………………………………………. 111
14 Infrastructure development potential financial market of Ukraine
Natalia Trusova, Iryna Chkan, Inna Yakusheva ………………………………………………………………. 119

VUZF review, № 6(2) – 2021 ISSN 2534-9228
15 The essence, content and role of digital transformation in development
socio-economic systems
Nina Avanesova, Tetiana Kolodiazhna …………………………………………………………………………… 129
16 The features of direct marketing and personal selling as a form of marketing
communications
Olha Matviiets, Viktoriia Kipen ……………………………………………………………………………………… 139
17 The development of electronic payment systems in Ukraine and their
security
Liudmyla Polovenko, Svitlana Merinova, Kateryna Kopniak ………………………………………….. 146
18 Contemporary leadership in the human capital of organization
Dariusz Kłak, Piotr Maziarz ……………………………………………………………………………………………. 153
19 Financial system and growth and economic development
Małgorzata Hala ……………………………………………………………………………………………………………. 160
20 Analysis of the transformation of enterprise activities under the influence of
global shifts
Larysa Syvolap ………………………………………………………………………………………………………………. 171
21 Dynamic analysis and forecast of effective development of the agri-food
sector of European countries
Robert Jurczak ………………………………………………………………………………………………………………. 182
22 The social assistance system in Poland and its financing in 2015-2018 as a
factor of the stabilization of the socio-economic policy of the state in
turbulent conditions
Piotr Frączek, Mateusz Kaczmarski ……………………………………………………………………………….. 190
23 Analysis of business activity management in the oil and gas production
enterprise development system
Danylkiv Khrystyna, Hembarska Nataliia, Khaidarova Lilia …………………………………………….. 198
24 The impact of digitalization on the formation and implementation of bank's
deposit policy
Raisa Kvasnytska, Iryna Forkun, Tetyana Gordeeva ………………………………………………………. 214
25 The formation of open economies in post-communist countries: historical
experience of Ukraine
Tetiana Bodnarchuk ………………………………………………………………………………………………………. 223
26 Immigrants in polish economy
Iwona Dudzik, Irena Brukwicka ……………………………………………………………………………………… 233
27 The burden in the social insurance system on business entities in Ukraine
and the EU
Anastasiia Kyrychenko ………………………………………………………………………………………………….. 239
28 Developing competition in the Ukrainian mobile communications market
Yurii Umantsiv, Kateryna Nikolaiets, Larysa Lebedeva, Evheniia Kononenko…………………… 245

ISSN 2534-9228 (2021) VUZF review, 6(2)
Customers’ expectations from savings products
Stanislav Dimitrov* А
A VUZF University, 1, Gusla str., Sofia, 1618, Bulgaria
Received: April 22, 2021 | Revised: May 28, 2021 | Accepted: June 12, 2021
JEL Classification: G51, G52, G41.
DOI: 10.38188/2534-9228.21.2.01
Abstract
Customers expect certain characteristics from long-term savings products. Providers are not
able to supply all of these characteristics in one product at the same time. In addition, there are
changing attitudes of the savers and the requirements to the financial institutions are evolving.
The paper is analyzing the customers’ expectations from the long-term savings products. The
manuscript is searching answer which are the most important characteristics of the savings
products from the point of view of the client. The research is focused on three main areas: which
are the customers’ expectations; what is the current environment in the market of savings
products and what developments can we expect in the coming years. One of the conclusions is
that the providers have to adapt their products to the customers’ expectations in order to
succeed and to reach further development of the markets. Another conclusion is that customer
centric products will gain greater trust among potential savers. We believe that the successful
saving product has to be simple, transparent and cost-efficient. This reflects the surrounding
environment of low interest rates, ageing population, increased informational flow,
digitalization and alternative products development. To support the savers and the providers it
is needed public help, targeting good coverage and constant efforts for active role of the
stakeholders in the savings process.
Keywords: customers’ expectations, behavioural science in savings products, trade-off between
risk and reward in long-term products.
Introduction
The research is motivated by desire for
detailed analysis of the customers’ expectations
and the real possibilities to meet these desires
by the financial institutions and the regulators.
The theme is very interesting in the light of the
tendencies in the market of the savings
products. These tendencies include increased
flow of information, higher capital requirements
for the providers, ageing population, increased
career uncertainty, fintech development, low
interest rate environment and others. The paper
searches answer where is the balance between
the interests of the savers and the product
providers.
Material and methods
The aims of the research are reached through
the following methodology: analysis of the
customers’ expectations; description of the
current environment in the savings markets;
review of the policy in the sphere from the
European Union (EU); exploration of the
literature on the topic; discussion of the
probable trends in the savings markets.
Results and discussion
Based on the analysis reached is the
* Corresponding author: Assoc. Professor Ph.D., Head of Finance Council, VUZF University, Sofia, Head of Insurance and Pensions Research Unit, VUZF Lab,
e-mail: sdimitrov@vuzf.bg
conclusion that saving products providers have
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to adapt their products to the customers’
expectations in order to have success and to
develop the markets.
Customer centric products will gain greater
trust among potential savers. The successful
saving product has to be simple, transparent and
cost-efficient. The challenges are in the
contradictory forces: simple product versus long
term nature of the product and complex
business model; standardized features and the
discretionary of the providers; transparency and
the decision power changing within the saver;
cost efficiency versus good quality product and
service; low risk and high return and others.
CUSTOMERS’ EXPECTATIONS
Different factors influence the decision of a
potential saver to buy a saving product. Some of
these factors are security of the product, risk
profile, costs, expected investment return, trust,
income, propensity to save, alternatives, public
attitude and others.
The following figure presents the most
important characteristics of a saving product for
the potential saver.
Figure 1.
Source: VUZF study of savers’ expectations (2020),
https://vuzflab.eu/en/
The main conclusion from the figure above is
that the security of the saving is the most
important factor that influences the customers
decision when choosing a product for pension
saving. More than 67% pointed this factor
versus the investment return, the level of risk
and the price of the product. The second most
important factor is the investment return with
22.40 % from the respondents. The level of risk
and the price are with close results – around
5.20% – 5.30%.
The guarantee is wide spread in banks and
life insurance products (EIOPA, 2020).
Guarantees in products of private pensions are
developing taking into account the big social
impact of these supplementary pensions. Some
of the guarantees take the form of guarantee for
the paid contributions, minimum investment
return for certain period of time, guaranteed
amount of pension and others.
It is well known that the four most important
characteristics of a saving product are the
expected capital at the end of the contract, the
incurred costs, the affiliated risks and the
incorporated guarantees. In other words, the
saver is influenced by the product related safety,
costs and profitability.
The next question is why savings products are
so important nowadays. Part of the answer is in
the gap between the required income
replacement ration and the resources of the
public pension systems. Figure 2 presents the
expected income replacement ratio from
pensions.
Figure 2.
Source: VUZF study of savers’ expectations (2020).
The information from the figure shows that
61.5% from the respondents say that 80% is the
target income replacement ratio from pensions.
It has to be taken in mind that at the moment
(2019 figures) the value of the coefficient is
39.8% in Bulgaria. It is 58% average for the EU.
As a consequence, to the 40% from the public
pension system (PAYG system) have to be added
additional pensions to match the other 40%. The
supplementary pensions are mostly regarded as
the best appropriate additional income
(European Commission, EIOPA, OECD, World
Bank, IMF and others) for the pensioners.
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The next figure shows how much money the
savers are ready to pay in order to reach the
required income replacement ratio.
Figure 3.
Contributions between 5% and 10% from the
monthly income is the most preferred option
when speaking for the readiness to pay for
voluntary pension. 62.20% from the
respondents express readiness to pay this size of
contributions in order to secure additional
income after retirement.
As a conclusion people are ready to pay
enough for supplementary pensions. They
expect very realistic income replacement ratio.
The potential savers are saying that security is
the most important characteristic that they
require from a saving product.
CURRENT ENVIRONMENT
Let’s analyze what is the current environment
in the savings markets taking account the
customers’ expectations. The information in the
following figure presents that more than 84% of
the respondents feel that they need to save for
voluntary pension. The result is good news for
the savings product providers.
Figure 4.
It is interesting to compare the information
with the results from the 2018’study. Figure 5
presents the answers of the respondents.
Figure 5.
The figure above shows that the “yes”
answers are very close in the two studies
conducted in different years – around 84%. The
structure of the “yes” answers inclines that
people prefer to dispose with personal assets
and that they are aware the pension from the
public system will not be enough to match their
expectations for income after retirement.
As a conclusion the majority of people feel
need to save for voluntary pension. The Pan-
European personal pension product (PEPP) is
one potential product for retirement saving. The
next figure presents the people’s expectation
whether the PEPP will increase the retirement
savings.
Figure 6.
The results from the first look is a surprise -
the answers “yes” and “no” are divided 50:50. It
is valuable to see the reasons behind the
answers. Because of lack of trust 28% are not
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seeing PEPP as a driver for saving. We stress that
here the key word is “trust”. The second reason
for negative answers is the low income received
from the people. Low-income levels lead to
increased difficulty to save for future
retirement. The main reason for the positive
answers is the expectation for security to be
inherent to the PEPP.
The figure below displays information about
the answers two years ago – 2018 survey.
Figure 7.
The information in the figure shows that
security again is behind the main expectation of
a customer from personal saving product
(improved supervision).
It is interesting to see in which group of
financial institution people have higher trust
with reference of a potential savings product
provider.
Figure 8.
Pensions’ institutions come first with 40.50%
of the respondents. This result is logical because
the question implies “retirement product”.
Second are banks with close to 30%. Life insurers
are third with close to 19% and the last are asset
management companies with little above 11%.
These results vary depending on the country.
The different results are explained with the local
specifics, history of financial institutions
development, structure of the financial markets
and others.
The next figure displays information about
the preferred product for accumulating capital
for income after retirement. The results again
could be explained with the specifics of the local
markets in a given country.
Figure 9.
The highest result is for real estate with 37%
of the respondents. Second is saving in pension
fund with 25%. The results imply that people
want to have control over the saving and also,
they are inclined to trust a product that has
positive history.
The historical results are linked with the
gained trust. Standardised features could be a
way to increase the trust in personal pensions
savings. Part of this is the standardised
informational documents. Information is very
important element of the transparency. The
long-term nature of the savings products
requires transparency in order to convince the
potential saver to buy. At the same time there is
a risk of information overload. Too much
information or delivered in improper way can
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ISSN 2534-9228 (2021) VUZF review, 6(2)
confuse or raise some doubts in the potential
client. That is why you need simple disclosures.
The disclosures depend on the characteristics of
the product. It means product that is easy to
understand and to process the information. The
business model behind the product has to be
simple.
Personal savings products are retail products.
The results of personal sales depend on what
answer will be given to the questions: how well
the products are known; whether active means
of contact with consumers are used; how
convincing are the arguments of the offering
pension product; what are his/her reactions and
business behavior; how much financial and
intellectual resources will be used for personal
sales (Misheva Ir., 2016).
The positive influence of the consumers’
expectations in the product design and
informational documents content is proved
from the carried-out testing among consumers
(London School of Economics and Political
Science, Open Evidence and BDI Research, 2020)
for PEPP of the key informational document
(KID) and the benefit statement (BS) mock-ups.
It is a necessity in the process of product design
to take into account the communication design,
behavioural studies and consumer testing.
Valuable information from this testing is the
influence of particular factors in both ways alone
each other and in combination: security
guarantee; annual cost (1%); risk profile (low or
high); quality assurance (EU flag); social nudge
and reward projection.
WHAT TO EXPECT
Based on the analysis above we can conclude
that the successful savings products need to
have high protection, to be simple and cost-
effective. The low costs are connected with the
performed services, the coverage of the
insurance, the active role of the state, the
targeted investment return and the associated
risk-profile.
When referring to the risk appetite the
majority of the respondents prefers balanced
risk investment portfolio – 69.20%. The
information is presented in the following figure.
Figure 10.
The second preferred option, with very big
difference to the first one, is low risk portfolio
with 18.90% from the respondents. High risk
portfolio in searching high investment return
attracts 7%. Close to 5% of the people will rely
on the default option.
Elements of the active role of the state are
the detailed regulations, the effective
supervision, the informational campaigns, the
long-term policy in the sector, the granted tax
advantages and others.
The following figure displays information at
what extent the tax reliefs are factor in saving
for retirement (buying PEPP).
Figure 11.
More than 67% are saying that the tax relief
is a factor in buying personal saving product. It is
interesting that the two stated reasons attract
high number of votes. 39.80% are saying that
the saved tax through the product is of great
importance. 27.30% refer to the tax relief as a
sign that the state is encouraging the saving.
Another milestone for successful saving
product is that there is a need of balance
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between detailed legislation/requirements and
enough room for healthy competition. One
element of the healthy competition is the
flexibility. Example of flexibility is the option that
is behind the preferred out-payment in
retirement namely a combination between
lump sum and life annuity. The following figure
presents this information.
Figure 12.
This combined option gathers 51.70% from
the voices. Second is the life annuity with
25.20%. Term pension, as an example is shown
period of 12 years, is preferred variant from
11.90%. Lump sum collects very big percent
from the votes – 11.20%.
The digital sale of savings products creates
room for decrease in the costs. The following
figure displays information about the attitude of
the customers to buy personal savings product
through Internet.
Figure 13.
The results shown in the above figure leads to
another surprise in the study - people who are
saying that they will not buy personal saving
product through Internet are more than those
who will do it – 59% versus 41%. Nevertheless,
the reasons for the negative answers create
opportunities to overcome the threats: the lack
of personal contact (advice, service) and the
complexity of the savings product.
Conclusions
The analysis above shows that customers’
expectations have to be taken into account
when developing pension policy and framing the
design of the savings products. The potential
savers expect from the retirement products
security, transparency, cost-efficiency and value
for money. In order to achieve these in product
design, it is needed public support, good
coverage and constant efforts for active role of
the stakeholders: the state, the providers and
the savers.
References
European Parliament, Regulation (EU)
2019/1238 of the European Parliament and
of the Council of 20 June 2019 on a pan-
European Personal Pension Product (PEPP),
Available at: https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=uriserv:OJ.L_.2019.19
8.01.0001.01.ENG
EIOPA (2020). Pan-European Personal Pension
Product (PEPP): Regulatory and
Implementing Technical Standards as well as
Advice on Delegated Acts – Impact
Assessment, Available at:
https://www.eiopa.europa.eu/content/eiop
a-finalises-regulation-pan-european-
personal-pension-product_en
EIOPA (2020). Proposal for Commission
Delegated Regulation supplementing
Regulation (EU) 2019/1238 of the European
Parliament and of the Council with regard to
regulatory technical standards specifying the
requirements on information documents, on
the costs and fees included in the cost cap
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and on risk-mitigation techniques for the
pan-European Personal Pension Product,
Available at: https://www.eiopa.europa.eu/
content/eiopa-finalises-regulation-pan-
european-personal-pension-product_en
E&Y (2017). “Study of the feasibility of a
European Personal Pension Framework”,
Available at: https://ec.europa.eu/info/sites/
info/files/170629-personal-pensions-
study_en.pdf
London School of Economics and Political
Science, Open Evidence and BDI Research,
(2020). “Consumer testing and
communication design work specifying the
details of the pan- European Personal
Pension Product (PEPP) Key Information
Document (KID) and Benefit Statement (PEPP
BS)", Available at:
https://www.eiopa.europa.eu/content/eiop
a-finalises-regulation-pan-european-
personal-pension-product_en
Марева, Н. (2018). Капиталовите пенсионни
фондове в България – развитие, състояние
и перспективи, Годишник на ВУАРР, том 6,
pp. 79 – 121, ISSN 1314-9113; (Mareva, N.
(2018). The Capital pension funds in Bulgaria
– development, current situation and
perspectives, Annual edition VUARR, v. 6, pp.
79 – 121,)
Мишева, Ир. Застрахователен маркетинг.
Второ разширено и допълнено издание.
София, Издателски комплекс – УНСС, 2016;
(Misheva, Ir. Insurance marketing. Second
extended and supplemented edition. Sofia,
Publishing Complex – UNWE, 2016, ISBN 978-
954-644-908-5)
https://www.fsc.bg/bg/
https://vuzflab.eu/en/
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Innovation through the prism of companies using direct
marketing. An empirical example from Bulgaria
Mihaela Mihaylova* А
A
VUZF University, 1, Gusla str., Sofia, 1618, Bulgaria
JEL Classification: O32, M31.
DOI: 10.38188/2534-9228.21.2.02
Abstract
The current article presents empirical results on the frequency and type of innovations applied
by companies in Bulgaria that are using direct marketing. The research is provoked by the
dynamic and changing nature of direct marketing. As one of the main characteristics of direct
marketing is the absence of intermediaries, the companies should constantly develop their
knowledge and competences so they can improve their contact and communication with their
customers in order to apply correctly and profitably the three approached associated with direct
marketing. They are: the personalization in dealing with customers, the establishment of long-
term relationships and the generation of customer’s loyalty, and they happen through different
media. An appropriate application of these approaches requires collection, record and analysis
of information which is being more and more executed as an automated process. The different
and new types of media, in turn, require methods and understanding that further develop or
eliminate existing practices, beliefs, and technologies. In this context, a theoretical analysis of
innovations is being first conducted. After having a structured division of innovations by their
types a brief questionnaire is being developed. As a result, the report summarizes the
intersections of the theory with the established practice in 97 companies in Bulgaria.
Keywords: Direct Marketing, Innovation, Bulgaria.
Introduction
According to OCDE a company can be
considered innovative if it has implemented any
sort of innovation in the same period it has
previously defined for this purpose (OCDE,
2005). Innovation, in its general sense, is
associated with the change and transformation
of the current state of something. It finds its
manifestations in new ideas, new products, new
processes. The goals that have been set before
the innovation can be diverse - improvement of
the current conditions, increase of
competitiveness, savings in terms of finance,
time, human resources, as well as adapting to
the new reality. On the other hand, the direct
marketing approach is a concept, which is
*
Corresponding author: Doctor in Marketing and lecturer in VUZF, e-mail: mmihailova@vuzf.bg, ORCID: 0000-0003-4379-7585
associated with the direct reach and
communication with consumers without an
intermediary and its main goal is to provoke a
reaction. This reaction could most often be in
the form of a purchase or inquiry. Direct
marketers reach consumers through a variety of
media, such as traditional postal mail, television,
radio, Internet, and based on the recording,
storage and analysis of data from the
relationships with them. Getting acquainted
with the various types of media and the
optimization of process analysis requires the
introduction of innovation - as technologies,
processes and interpretations of existing
concepts.
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Innovation is often associated with the
market orientation of the company. This is due
to the fact that market orientation contributes
to the development of an innovative culture,
which is reflected on the achieved results of the
company (Han, J., Kim, N. and Srivastava, R,
1998). Koli and Jaworski (1990) perceive market
orientation as "the organization-wide
generation of market intelligence,
dissemination of the intelligence across
departments and organization-wide
responsiveness to it". Narver and Slater (1990)
analyze market orientation in terms of a process
consisting of user orientation (relating to the
provision of additional value to the consumer),
orientation to competitors (through the
understanding of the strengths and weaknesses
of competitors, and assessing the company’s
long-term capabilities against its main potential
competitors) and coordination between
departments (with an emphasis on recognizing
the benefits of cooperation between
departments to create added value). Market
orientation is also considered to be a set of
management decisions, even “guiding behavior
and action that turns philosophy into a business
strategy” (Tuominen and Moller, 1996).
Innovation can be grouped depending on its
range and expression, and thus is being
distinguished as internal and external. Internal
innovation is associated with new and useful for
the company administrative processes,
organizational structures and production
technologies that have been introduced.
External innovations are most often expressed
through the company's products and services. In
the past company innovation is often associated
with their external manifestations - the products
or services offered on the market. This is way the
beneficial link between market orientation and
product innovation has been proven numerous
times (Wei, Y. and Atuahene-Gima, K., (2009),
Sandvik, I.L.& Sandvik, (2003)). But the scientific
interest is increasingly focused on the
association of innovation with new processes
and new types of organizational structures
within a company. This is a direct confirmation
of the importance of internal innovation, and
this is why innovation is not limited to the new
products’ development (Han, J., Kim, N. and
Srivastava, R, (1998). Damanpur (1991)
distinguishes between two types of innovation:
administrative and technological. The first
concerns the organizational structure and
administrative processes and technological
innovation refers to products, services and
manufacturing process. This allows us to
associate the administrative innovation with
internal, and the technology one as external
innovations. In addition, innovations are
perceived as a result of the knowledge
transformed through a range of available
competences (Ozkaya, H., Droge, C., Hult, G.,
Calantone, R. and Ozkaya, E., (2015). These
competences are called "skills" (Li, Tiger, &
Calantone, Roger J. (1998)) and are grouped into
several groups:
- ability to know the competitors;
- ability to know the customers;
- ability to coordinate marketing activities;
- ability to coordinate research and
development.
In this way the grouped skills form one main
category – the ability to know the market. This
report offers a graphical representation of the
process of forming innovation.
Figure 1 Innovation creation process
(Source: author’s interpretation)
Innovations could also be classified according
to the source of information creation, or in other
words – formal and informal. For Taminiau,
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Smith, and Leng (2009), formal knowledge and
its sharing are all the resources, services, and
activities created and developed by the
company or organized by the company that aid
the sharing of knowledge and exchange of
information and best practices. The informal
knowledge can be associated with each sharing
of information, which exists alongside
established forms of sharing knowledge, that is
used to facilitate the exchange of information
without explicitly being designed for this
purpose. Some authors (Freitas, I., Clausen, T.,
Fontana, R. and Verspagen, B., 2010) share the
view that the complexity of innovation activity
requires precisely the combination of informal
and formal sources of information, although this
concept requires additional research.
Frequency and type of innovations
implemented by companies that use direct
marketing in Bulgaria. Empirical data.
Methods, results and discussion.
An empirical study conducted at the end of
2018 (Mihaylova, 2018) aims to examine what
types of innovations are important for
companies that use direct marketing and how
often they introduce innovations. The sample
size is 97 companies operating on the Bulgarian
market. Most of the respondents fall into the
sector "Information and creative products,
telecommunications" - 18.95%, a large
percentage of companies using direct marketing
is observed in the sector "Financial and
insurance activities". Detailed data are
presented in Table 1.
Distribution of the sample by sectors in which the
companies using direct marketing operate in %
Transportation 6,32%
Healthcare 7,37%
Maintenance and repair 1,05%
Education 2,11%
Hotels and restaurants 11,58%
Information and creative products,
telecommunications
18,95%
Administrative activities 4,21%
Financial and insurance activities 12,63%
Culture, sport and entertainment 5,26%
Real estate 7,37%
Table 1: Distribution of the sample by sectors in which
the companies using direct marketing and operate in (%)
In order to analyze the importance of
administrative and technological innovations,
respondents were asked the following question:
Which innovation do you define as the most
important for your business? Select only 1
answer.
a. Purchase and implementation of new
software and work management programs
b. Introduction of new techniques and
methods related to the administrative structure
of the company
c. Purchase and use new technologies related
to the production cycle
Diagram 1: Distribution of the type of innovations
introduced (in%)
Source: Own diagram, based on own research
From the results obtained, it could be
concluded that there is a certain balance
between administrative and technological
innovation. As administrative innovations can
be considered both in the form of embedded
software and as such affecting the
administrative structure, the purpose of the
question, divided in this way, is to obtain more
detailed information and to facilitate
respondents' understanding as much as
possible. An explanation in the answers received
could be found in the predominant percentage
of respondents from the sectors "Information
and creative products, telecommunications"
and "Financial and insurance activities", where
administrative innovation is associated with the
implementation and development of software
and programs. The survey aims to obtain
information on the data and frequency of
innovation. The following question is asked in
this regard:
Purchase and
implementation of new
software and work
management programs; (A)
33,68%
Introduction of new
techniques and methods
related to the administrative
structure of the company (A)
23,16%
Purchase and use of new
technologies related to
the production cycle (T)
43,16%
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When was the last time you introduced or
implemented something new in your
company?
a. This year
b. Last year
c. Two years ago or more
Diagram 2: Distribution of frequency in innovation (in%)
Source: Own diagram, based on own research
“Two years or more” is the most selected
period for the implementation of innovations.
This could be interpreted from two aspects. The
first, and the positive one, comes down to the
fact that companies are aware of the
importance of innovations in their activities and
therefore devote time and resources to their
research, development and application. The
application of innovation is defined as “the
transition period during which targeted
organizational members ideally become
increasingly skillful, consistent, and committed
in their use of an innovation. Implementation is
the critical gateway between the decision to
adopt the innovation and the routine use of the
innovation within an organization'' (Klein &
Sorra, (1996), p. 1057). Assuming that in that
period, these activities were included, it would
be interpreted as a reasonable amount of time.
In addition, the specificity of sectors such as
“Information and Creative Products,
telecommunications and "Financial and
Insurance Activities", where a new software
application or a new financial product is
developed in collaboration with many
departments, requires a test period as well as
preliminary studies.
This may not be the case if we refract through
the prism of the negative aspect of the
interpretation. We should not ignore the
dynamics of what has been happening
lately. The modern world and business,
respectively, operate quickly and are trying to
react in a timely manner and maintain the
competitive position. In this context, a period
longer than 2 years for innovation puts the
company at a disadvantage. Given the high
percentage (11.58%) of respondents from
the hotel and restaurant sector, such a large
period may be an indicator of a lack of
understanding of the diverse form and
manifestation that an innovation can
take. Innovation is not always time and resource
consuming and the administrative innovation,
which is usually associated with the processes,
could take significantly less time and
resources. In addition, we state that regular and
small-scale administrative innovations lead to
maintaining the innovational rhythm, if planning
large-scale and technological innovations is
done in a structured and timely manner.
Conclusions
This report sets out the different
classifications of innovations, their nature and
manifestations. It presents also the frequency
and types of innovations implemented by
companies in Bulgaria that use direct marketing.
The results show a comparative balance
between technological and administrative
innovations, but also a long period of
implementation of innovations in the business,
which in most cases slows down the degree of
response in the turbulent environment in which
they operate. In order to improve the
understanding of innovations and their diverse
manifestations, a study, collecting data on the
detailed type of innovations introduced and the
reason for their introduction (user feedback,
formal or informal source of knowledge), could
be conducted.
This year,
22,11%
Last year,
33,68%
Two years
ago or more,
44,21%
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References
Damanpour, F., (1991). Organizational
Innovation: A Meta-Analysis of Effects of
Determinants and Moderators. The Academy
of Management Journal, 34 (3), 555–590.
Freitas, I., Clausen, T., Fontana, R. and
Verspagen, B., (2010). Formal and informal
external linkages and firms' innovative
strategies. A cross-country comparison.
Journal of Evolutionary Economics, 21 (1), 91-
119.
Han, J., Kim, N. and Srivastava, R., (1998).
Market Orientation and Organizational
Performance: Is Innovation a Missing Link?
Journal of Marketing, 62 (4), 30-45.
Klein KJ, & Sorra JS, (1996). The challenge of
innovation implementation. Academy of
Management Review, 21 (4), 1055–1080.
Kohli, AK and Jaworski, BJ, (1990). Market
Orientation: The Construct, Research
Propositions, and Managerial Implications.
Journal of Marketing, 5 4 (2), 1-18
Li, Tiger, & Calantone, Roger J., (1998). The
impact of market knowledge competence of
new product advantage: Conceptualization
and empirical examination. Journal of
Marketing, 62 (4), 13–29.
Mihaylova M. (2018). Market orientation of the
companies applying direct marketing in
Bulgaria. Dissertation work. UNWE.
Narver, J. and Slater, S., (1990). The Effect of a
Market Orientation on Business Profitability.
Journal of Marketing 54 (4), 20-35.
OCDE. (2005). Manuel d'Oslo. Directions for
recruitment and interpretation of innovation
data. 3 è me edition.
Ozkaya, H., Droge, C., Hult, G., Calantone, R. and
Ozkaya, E., (2015). Market orientation,
knowledge competence, and innovation.
International Journal of Research in
Marketing, 32 (3), 309-318.
Sandvik, I.L., & Sandvik K., (2003). The impact of
market orientation on product innovation
and business performance. International
Journal of Research in Marketing, 20 (4), 355–
376.
Taminiau, Y., Smith, W. and de Lange, A., (2009).
Innovation in management consulting firms
through informal knowledge sharing. Journal
of Knowledge Management, 13 (1), 42-55.
Tuominen, M. and Möller, K. (1996). Market
orientation: A state of the art review, paper
presented at the 25th EMAC Conference, 14-
17 May, Budapest.
Wei, Y. and Atuahene-Gima, K., (2009). The
moderating role of reward systems in the
relationship between market orientation and
new product performance in China.
International Journal of Research in
Marketing, 26 (2), 89-96.
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Financial mechanisms of ensuring the development of business
under high interest rates
Vitaliy Shapran* А
; Igor Britchenko B
A
National Bank of Ukraine, Instytutska St, 9, Kyiv, 01601, Ukraine
B VUZF University, 1, Gusla str., Sofia, 1618, Bulgaria
JEL Classification: A.10, A.13, E.40, E.41, E.43, E.58.
DOI: 10.38188/2534-9228.21.2.03
Abstract
In the given article the problems of choice as for the types and forms of debt and share financing
on the developing and “frontier markets” with high interest rates have been considered, the
definition of what kind of interest rates can be viewed as high and under which circumstances
nominal interest rate and in which ones – the real interest rate is important for business.
Also, the classification of debt and sharing financing is given and the comparative analysis of
such financing is made. Some close attention has been paid to the calculation of the real interest
rate according to the inflation forecast.
Recommendations concerning attracting of relatively cheap trade financing including
international financial and credit organizations, development of operation factoring, financing
from captive financial institutions of the exporters of the materials and equipment from the EU
and the US have been grounded.
The opportunity of relatively free of charge share financing through the mechanism of placing
shares IPO/SPO is emphasized, exemplified by the results of placing shares on stock exchanges
and their alternative platforms of issuing banks with businesses in Ukraine in 2005 – 2013.
As a result, the conclusion concerning the necessity of thorough analysis of financial conditions
on the developing and frontier markets before gaining such financing has been made. High
interest rates within the average indicators even on the basis of prime rates do not necessarily
mean absence of attractive conditions of financing.
Keywords: high rates, monetary policy, development markets, “frontier” markets, prime rates,
credit markets, credit market regulations, factoring, leasing, Initial public offer, IPO.
Introduction
The markets with the high interest rates
often limit economic growth and development
of business. The policy of high loan interest
rates, as a rule, causes criticism of the
economists who are eager to help the national
market to grow faster than the rest. Although
high interest rates – both nominal as well as real
ones not always mean lag in growth. For the
developing markets some market of capitals of
its own or access to foreign stock exchange is
often more important than the extent of the
* Corresponding author:
А Professor, Ph.D. in Economics, Member of the National bank of Ukraine Council, e-mail: shapranv@gmail.com, ORCID: 0000-0002-1540-6834
B
Dr. of Sciences, Professor Higher School of Insurance and Finance, e-mail: ibritchenko@gmail.com, ORCID: 0000-0002-9196-8740
interest rates.
Also, the opportunity to finance one’s own
business can influence the dynamics of prices on
the finished products on the main export
markets. For the successful development, the
right choice of financing is more than important.
The entrepreneur should have an overall view of
strategy to be chosen in the country with high
interest rates as well as know some relevant
financing variants before taking any decision.
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Determining of “High Rates”
When a businessman is aimed to be on the
credit market, he should understand what high
and low rates are and how these rates combine
with the exchange currency risk. Compellation
of interest and exchange rate risk is a classic of
the developing markets which some generations
of businessmen have faced. Interest rates within
the reserve foreign currency exchange rates
such as American dollar, euro, British pound,
Swiss franc and Japanese yen, as a rule, is lower
than the rates in the national currencies.
However, the benefit from the low interest rates
on the loans in foreign exchange currencies can
remove the exchange risks.
That is why borrower should stick to the
following rule: foreign currency should be up to
the foreign currency income (foreign currency
revenue). In a more complicated variant, the
rule is formulated like this: the portfolio
structure of currency exchange credit should be
up to the currency exchange structure income
(foreign currency revenue). In Ukraine after
crisis in 2008 – 2009 the corresponding rules
were introduced on the level of monetary
regulation. Such rules restrict the banks within
EU in their credit activity but at the same time
they stop any transformation of the exchange
risk into the credit one on the macrolevel.
The second moment which is necessary to be
taken into account for the credit borrower: what
will be the real credit rate on his/her credit. For
the calculation of the real interest rate, it is
necessary to understand that if the credit does
not involve the whole advance payment of
interest rates than the borrower will compare
his/her annual costs according to the interest
rates with the annual forecast of inflation. In
such a comparative analysis there are three
methodical problems which are difficult to
resolve in practice:
First, inflation forecasts are often too
optimistic, especially if those governments or
central bank forecasts which can have some
political character. In the same way the
forecasts of international organizations such as,
e.g., IMF, are often not precise in the countries
according to the relevant IMF program. If the
borrower has an opportunity, I would
recommend learning of preciseness of the
inflation forecast from different sources over
the last 10 years on the national market and only
after that to start calculation of the real interest
rate.
Second, the level of the real interest rate will
not always have some practical value for the
borrower. Thereby, the deeper level of
specialization of the borrower, the more
possible it is that the real interest rate will not
reflect the exact load on his/her circulating
assets.
When calculating the interest rate, you
deduct the nominal interest rate of inflation
and, therefore, you come over to the calculation
based on the average quantity which is the
inflation rate proper. There is a great
opportunity that prices on your finished
products and services will not grow in
proportion to the inflation in strict terms. Let’s
say that inflation is 5% of the price of finished
products or services may fall up to 2-3%. That is
why when using the real interest rate for the
analysis, it is necessary to understand, how your
income depends on the forecast inflation.
Third, in different countries there are
different approaches to choosing the interest
rate for the best borrower, the so-called prime
rate. As a rule, such an interest rate is defined as
the minimum interest rate in the bank, as the
low credit risk means that bank will have the
least interest rate of writing off of amounts.
However, the banks on the developing markets
use prime time as advertising approach. For
instance, the bank sets the interest rate as 5%
per year. But none of the borrowers can get such
a rate as he/she does not match the strict
requirements concerning the best borrower.
Therefore, veracity of such interest rates when
compared in different countries can vary, let
alone that in practice borrowing from the bank
at the fixed interest rate will be difficult.
Let us consider the countries from TOP-20 list
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based on the size of nominal interest rates. The
three leaders: Brazil, Zimbabwe, and Angola are
evidently in the difficult macroeconomic
situation. However, it is impossible to overlook
the fact that in Angola the real interest rate is in
minus (Table. 1).
Table 1. TOP-20 countries with the highest credit
interest rates Prime Rate, as of March 2021
№
п/п
Country
Prime-
Rate
Current
inflation
Inflation
forecast
if IMF in
2021
Real
interest
rate
1 2 3 4 5 6
1 Brazil 40,07% 6,10% 2,70% 37,37%
2 Zimbabwe 32,11% 241% 3% 29,11%
3 Angola 18,70% 24,85% 19,60% -0,90%
4 Tanzania 13,96% 3,20% 3,70% 10,26%
5 Liberia 12,44% 10,39% 8,00% 4,44%
6 Kenia 12,00% 6% 5% 7,00%
7 Ukraine 11% 8,50% 5,80% 5,20%
8 Bahamas 9,69% 1,20% 2,50% 7,19%
9 Egypt 9,50% 4,50% 8% 1,50%
10 India 8,80% 5,52% 4% 4,80%
11 Jordan 8,33% 0,40% 1,40% 6,93%
12
New
Zealand
8,30% 1,40% 0,60% 7,70%
13 RSA 7,00% 2,90% 4,30% 2,70%
14 Filipins 6,54% 4,50% 3,30% 3,24%
15 Australia 6,51% 0,90% 1,20% 5,31%
16 Russia 6,02% 5,79% 3,30% 2,72%
17 Thailand 6,00% -0,08% 0,70% 5,30%
18 Bolivia 5,83% 1,40% 3,80% 2,03%
19 Chile 5,80% 2,90% 2,90% 2,90%
20 Sri-Lanca 5,76% 4,10% 4,80% 0,96%
Source: tradingeconomics.com, IMF / World
Economic Outlook, October 2020
The high nominal interest rate does not
always presuppose high real interest rate. It is
evident, for example, when comparing the
interest rates in Angola and Liberia. Interesting
situation is in Egypt: the nominal interest rate is
9,5%, the real interest rate because of the high
inflation is just 1,5%, and the real interest rate
was less only in Angola and Sri-Lanca.
Nevertheless, the conditions of crediting in
Egypt I would not call the best ones as products
and services of major part of business in this
country were not responsive to the inflation.
Probably, the long period of high inflation and
low real interest rates on credits could change
the structure of industrial markets of some
developing countries but there is no certainty
that such changes would be useful for these
countries. Therefore, the issue of choice
between the nominal and real interest rate is
still disputable.
In my opinion, both situations when the
nominal and real interest rates are still high, are
bad for business. High inflation can be a signal
for the banks to raise interest rates and as
crediting of business is not restricted only for
one year then with the low interest rate, we will
get its increased growth due to the banks’
reaction to the inflation.
As an indicator of high interest rate, I would
single out the situation where the most part of
the year there was a nominal or real interest
prime rate on the level of not more than 5%. In
the economies where the inflation grew more
than 10%, I would not analyze the interest rates
as the situation next year can change because of
high inflation. Such economies require analysis
on the basis of the long-term period. On the
other hand, one should take into account that if
on the industrial markets there are no anormal
factors, then maintaining profitability of sales
more than 5% will be very difficult, especially
under competitive markets circumstances. That
is why the best will be those markets where the
real interest rate will be kept up on the level of
2-3 %as long as 5 to 10 years. Stability of low
interest rate load on the basis of stable and not
high profitability from sales which is more that
the paid interest rates is an ideal situation where
an undertaker needs crediting of his/her
business.
The effect of being in the group
Thinking over the scheme of financing of
one’s own business it is necessary to correctly
adapt the general statistics on the market. At
prime rate of 10% and average rate on the
market of 15% you can be in such an industry of
business in which it is impossible to get a credit
even at 27%. As an example, I can give the
official statistics of the National Bank of Ukraine
according to the dynamics of average interest
rate on the market and rate of the banks for
micro-business with the turnover up to 50 000
euro (Graph 1).
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On the graph there are some effective
interest rates on the credits, but the rates
calculated are based on the accrued interest
income of the banks, i.e., excluding commission.
Historically it has been so that the less the
segment in which there was a company, the
higher interest rates there were in Ukraine.
However, in 2020 the given tendency was
broken due to some state programs of support
5-7-9%, which influenced the overall statistics
very much. In some cases, the state program
decreased the interest rates for micro-
companies even below the average interest rate
on the market.
It is necessary to understand that this kind of
program was the first one in Ukraine and its
introduction was impossible to be forecast and
its influence on the credit market in the national
currency for micro-companies was very difficult.
As a result, this segment was in the situation
when a part of very small companies could get
credits at 5% a year, i.e., the real interest rate on
such credits in 2020 was almost zero, but in 2021
along with the connection of inflation it became
negative.
If we generalize the situation in Ukraine all
over the region than business could be given a
piece of advice: before signing some credit
agreements it is better to get to know if there
are some special programs of financing. Such
special conditions of financing are not always
supported by the state. In practice I met some
subsidiary leasing companies of aviation
holdings that sold airplane at 0,5% a year at the
market interest rates of 4–5%, and financial
companies, refinancing of local banks for
automobiles purchases at 0,1% and so on. Some
special proposals for business can really change
your standard industry conditions to which you
are used to. Also, it is worth paying attention to
the aim of your financing, if for instance, those
are automobiles and equipment, then it can very
well be that it is a targeted financing of the
seller’s bank that will provide you better
conditions which cannot be compared to
anything like the country market where you
have your business. Types of financing are so
various that they require some special
consideration.
Figure. 1. Dynamics of interest rates on credit in
Ukraine in 2019 – 2020.
Source: National Bank of Ukraine
Choice of debt financing type
When business chooses how it can make
financing, as a rule, on the very first stage it is
necessary to clarify whether it will be debt or
share financing, i.e., whether the company will
borrow or share, i.e., get a partner in business so
to speak. Types of financing are shown in
enlarged font in Figure 2.
Figure. 2. Types of kinds of financing
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When debt financing is chosen, then as a rule,
the analysis begins with the credit in the account
bank. Credit manager, having looked through
the turnover on the account, can suggest the
optimum credit product choice and point out
possible expenses on the credit. It is necessary
to understand that the nominal conditions of a
credit will differ from the effective rate which
includes all the commission. It is also worth
comparing the conditions of different credit
products of one and the same bank. For
example, crediting on overdraft can be far more
profitable than opening of a credit line. If the
demands in financing are not permanent and
make up to not less than 5–10% of turnover
resources of the company then probably it is
better not to exceed the overdraft limit.
If the company buys, for example, the auto
transport, expands its aviation park, or buys
agricultural machinery, then in this case it is
better to clarify if the seller could offer such
products on credit as they will turn to be more
profitable at the leasing or financial companies
that globally follow the brands all over the
world.
If you are aimed at buying the equipment,
machinery, and other main funds or even
intangible assets which are necessary in the
production process then evidently the most
profitable offers will be from those producers
that are supported by the banks for purchasing
their equipment.
The analysis of bargains in the segment of
APC in Ukraine showed that the cost of the
resources for the buyers of German or French
equipment would be almost the same as for the
purchasers of the EU. It is worth taking into
account that the trade financing from the EU,
Japan, and the USA could have very long-term
horizons – about 10-15 years but it will be
available only for the Ukrainian exporters, i.e.,
for the enterprises that have foreign currency
income.
Only when all the first 5 variants of cost
financing of a price unit have been calculated it
is worth paying attention to the issuing of bonds.
The bonds on the national markets are good
because they, as a rule, allow the issuing bank
offer a higher level of profitability for the
depositor giving an opportunity to borrow from
those who have deposits in the banks but
without the bank services.
Minus of this type of financing are still high
transaction expenses: emission of bonds
requires registration at the Securities Market
Regulator. The company will have to go through
the listing on the stock exchange and pay for the
maintaining by the custodian and so on.
In every country there will be its own level of
profitability of issuing bonds, e.g., in Ukraine
public issues will be profitable at the volume of
30-50 mln hrn. In my opinion bonds should be
issued for essential filling up of the current
assets and expanding of business including the
purchase of the main funds but it is necessary to
remember the following. It is not worth using
the bonds too much as they are the instrument
of debt financing. Bonds are the ideal source of
financing if a leasing, factoring or any other
credit company that is an intermediary between
the different participants of the debt financing
market. Those companies that work in the
sphere of APC or black metallurgy (for example),
should not use bonds. It can so happen that
trade financing will be more effective than the
bonds, and not only because of the economic
positions but because of the reputation of the
company on the debt financing market.
Share financing: the necessity and dreams
When all the types of debt financing have
been analyzed and there is some understanding
that the company cannot cover the credit risks,
e.g., the expenses of servicing the debts is too
high, then it is worth of thinking about drawing
some share capital. The world practice gives
several variants: search of “a temporary
partner” up to the synthetic financing with the
help of special instruments. Temporary partners
in business can be your partner in the field – for
example, the supplier of raw materials and
materials, as a rule, who can be interested in the
buyer to continue buying their products.
As a temporary partner in business there can
be also a Fund of Direct Investments (FDI). In
most situations FDI can be in business for the
purpose of selling it afterwards with a profit.
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First of all, it should be paid attention to FDI
which work within the international financial
organisations and made by EBRD and IFC. Often
on such markets of Central and Easten Europe it
is possible to see PEF, made by the citizens and
government of the USA. Interesting can be
offers from PEF that work with the ecological
projects. PEF are subsidiary structures of local
businessmen, as a rule, that have high
requirements of profitability and that is why
projects with profitability less than 20% are not
taken into account.
Using the stock exchange or IPO is a very
important step in the development of company
business. It is necessary to prepare for that if the
size of drawn resources presupposes sales of
more than the third part of the company.
However, it is worth considering that under the
primary placement, as a rule, the investors
usually are not unanimous and it is not obvious
that they will vote in similarly at the meeting of
shareholders.
In some situations, for the owner of the
company the primary (IPO) or secondary (SPO)
placement of securities (SPO) can be more
attractive than work with FDE where there is a
strict norm of profitability, concentration of the
securities and sometimes strictness of the
corporate management which bring the
additional discomfort.
The research of IPO of issuing banks in
Ukraine gave an opportunity to make a number
of different conclusions.
First, 60–70% of issuing banks took the
primary placement as relatively free access to
the capital, i.e., issuing bank at the moment of
placing did not think of future quoting of
company shares, but it took the means from the
investors (here and now).
Second, a number of issuing banks were
caught in nonsystematic evasions of paying
dividends. During work of the Verkhovna Rada
of Ukraine of the 8th Session there was an
anomalous situation when the majoritarian
owner of the issuing bank was wanted by the
Polish Power concerning the lawsuit of one of
the nongovernment pension funds and could
not be judged as he was the deputy of the
Ukrainian Parliament.
Third, less than the third of the issuing banks
of IPO were ready for SPO, i.e., they were
remembered for some reason by the investors
from Poland, Great Britain, and Germany.
Practically all the issuing banks were on the
alternative platforms due to the very low
capitalization, i.e., they were Small Cap
Segment. In fact, because of their very small size
issuing banks were allowed into the main
markets where actively worked some pension
funds.
All in all, the issuing banks of Ukraine drew in
the period of 2005–2013 about 1,8 bln. dollars
of the USA investments, since 2013 IPO/SPO
have not been made abroad, and a part of
companies could not make it up to 2020 (table
2). In 2021 the first expected IPO on the stock
exchange market in Ukraine – IPO of football
club Veres.
Table 2. Main results of placement of the shares of the issuing banks with business in Ukraine
Name of company
Year
ІРО
Platform
(stock
exchange)
Capitalization at
the placement
moment
Approximate
capitalisaion on
01.01.2020
Ukrproduct Group (о. Jersy) 2005 AIM (LSE) £22,05 mln. £1,58 mln.
XXI Century Investments 2005 AIM (LSE) £225,0 mln.
Торги остановлено в
2013 году
Astarta Holding (Netherlands) 2006 WSE $158,17 mln. $157,95 mln.
ТММ Real Estate Development
(Cyprus)
2007
Deutsche
Borse (Entry
Standard)
€516,12 mln. €1,53 mln.
Dragon—Ukrainian Properties &
Development Plc
2007 AIM (LSE) £116 mln. £12,90 mln.
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Ferrexpo (Switzerland) 2007 LSE £847,72 mln. £1491,57 mln.
Kernel Holding S.A. (Luxemburg) 2007 WSE $613 mln. $1049,26 mln.
Miron bread product, MHP SE
GDR (1 GDR =1 share)
2008 LSE £812,43 mln. £948,30 mln.
Avangardco Investments PLC GDR
(10 GDR=1 share)
2010 LSE $940 mln. $17,91 mln.
AGROTON PUBLIC LIMITED
(Cyprus)
2010 WSE $207 mln. $19,44 mln.
MILKILAND N.V. (Netherlands) 2010 WSE $333 mln. $4,14 mln.
Sadovaya Group (Luxemburg) 2010 WSE $120 mln.
$1,34 mln. (trading
was stopped 08.2015
and resumed 04.2018)
AGROLIGA GROUP PLC (Cyprus) 2011
NewConnect
(WSE)
$12,34 mln. $1,13 mln.
KSG Agro SA 2011 WSE $121,2 mln. $3,55 mln.
INDUSTRIAL MILK COMPANY S.A. 2011 WSE $123,75 mln. $119,9 mln.
WESTA ISIC S.A. (Luxemburg) 2011 WSE $183,85 mln.
Trading was stopped
in February of 2017
OVOSTAR UNION N.V.
(Netherlands)
2011 WSE $198 mln. $173,16 mln.
Coal Energy S.A. (RPA
"Mechanic")
2011 WSE $320 mln. $3,98 mln.
KDM Shipping (Cyprus) 2012 WSE $67,89 mln. $4,42 mln.
CEREAL PLANET PLC (Cyprus) 2013
NewConnect
(WSE)
$8,7 mln. $4,44 mln.
Arricano Real Estate PLC (Cyprus) 2013 AIM (LSE) £153 mln. £42,42 mln.
Source: Data from stock exchanges and depositary BNYM
Access for private and public placements on
the stock exchange of EU and USA is open for
any kind of companies of Central and Eastern
Europe. The Ukrainian experience, though is
sad, but a part of issuing banks continues trading
in London and Warsaw, i.e., under favorable
conjuncture these issuing banks can return to
the idea of SPO on those platforms where they
are already known.
Recommendations for the monetary powers
As it is evident from the example of Ukraine,
getting of financing below the average price
business should make a lot of analytical efforts.
There are the projects of the USA from the USA,
EU, and Japan which come to Ukraine with the
low rates, there are some state programs,
essentially lowering the rates, there are
proposals of the big European banks for special
programs of crediting for 5-10 years and so on.
Nonetheless, if the general surroundings offer a
consumer the effective rates on the level of 20-
25%, and good proposals are necessary to be
found – it is an idea for the monetary powers to
think over what namely is going on the market
and what kind of methods should be used to
change the situation for better. To solve this
problem several recommendations could be
given:
1. It is necessary to constantly reconsider the
effectiveness of transmission mechanism.
Monetary transmission works very badly if the
depositors do not have an alternative
opportunity of entering the credit market of
micro-companies and credits for the population,
for example, through the bonds of financial
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companies. One of the factors which shows that
the channels of transmission are stopped, it
raises the level of the bank margin. If the banks
gather deposits at 10% per year, and are
credited at 20%, and the condition of their credit
portfolios is getting better, it is time to think
about the reasons of such matters.
2. The powers should put maximum efforts to
develop non-banking credit market and not to
regulate it too much by the norms and rules of
accruing the reserves. For the developing
markets it is very important as when there is not
a good protection of rights of the creditors,
leasing companies can take the leading positions
in financing business. The advantages of leasing
even before the bank crediting at a mortgage
are obvious: a leasing company remains the
owner of the machinery and equipment before
their purchase by the leaseholder.
3. The powers should not admit the essential
concentration of bank capital and weakening of
competition on the bank market as it will break
work of transmitting mechanism, and even
under the low-key rate of central bank interest
rates for business and population in the banks
can be very high. The most dangerous
concentration of capital in the banks is the
concentration of capital in the banks with the
biggest number of branches.
Conclusions
It should be noted that country conditions of
drawing financing differ significantly from one
another not only globally but also on the
regional level of Central and Eastern Europe.
Even in those countries where financing
remained the major problem, more or less
available for business there are main types of
financing: bank credit, leasing, factoring, trade
financing, issue of bonds, using FDI, IPO/SPO
and so on. Nonetheless, there is some specifics:
1. Business should more thoroughly pay
attention to different proposals of the market.
Cost of financing form the bank; leasing
company or trade financing can differ as much
as twofold or threefold. If it is a matter of
purchasing the main funds or intangible assets
then it is worth studying the different variants of
debt financing.
2. Even when learning the opportunity of
filling up the current means, it is worth looking
through all the variants available in the region.
Overdraft with grace-period, special program of
country government on credits in the national
currency and other innovations can decrease
the interest rates.
3. It is worth paying attention to the
sensitivity of one’s own income towards
inflation and look at the real rates of the local
banks. It can be so that the credits in the
national currency can be cheaper that the
foreign one when taking into account the
inflation and foreign exchange risk.
4. If the company has outgrown even the
issue of bonds, then it is worth to think about of
IPO as there are no essential barriers for issuing
banks not only from EU but also from Ukraine
for placing those in London, Frankfurt, or
Warsaw. The given source of financing of
business is proven by practice and remains a
good working variant.
References
IMF (2020). World Economic Outlook.
Shapran V.S. (2021). The Influencing the "virus"
crisis on the monetary policy of Ukraine in
2020. Center of research on name of
Razumkov, 112-115.
Shapran V.S. (2020). Changing the share of state
in the bank system of Ukraine as a way to
consolidate liberal reforms in the financial
sector of the country. Center of research on
name of Razumkov, 85-91.
bank.gov.ua
tradingeconomics.com
adrbnymellon.com
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Migration and immigration representing an unwanted ally of
terrorism
Marián Mesároš * А
; Imrich Dufinec B
A, B
University of Security Management in Košice, Košťova 2373/1, 040 01 Košice, Slovakia
JEL Classification: J18 J28 Z18.
DOI: 10.38188/2534-9228.21.2.04
Abstract
Migration and immigration as phenomena of the 21st century have a clear connection with
terrorism, namely not only as its result, but also its reason. The main reason is represented by a
doctrine of the world superpowers in their effort in gaining capital and looking for crude oil, and
is also a result of the colonial past of the majority of the European countries. The individual world
religions are experiencing breaking the armistice resulting in armed conflicts and illegitimate
interfering of the world powers even without the UNO authorization to do so. Though the United
Nations Organisation has a noble mission, its activities do not correspond with the content of
the mission. Even the embargo imposed on the Russian federation cannot force anybody to think
Russia is interested in solving the problem and does so only in favour of its interests. As has
already been stated above the USA has its own interests and maybe also the feeling of guilt as
the majority of the so-called Islamic state, just like opponents of the regimes in Lybia, Syria and
Egypt, had to undergo training programmes and were armed by American specialists who asked
for their Judas services a lot of money. Research tools used to write this article was analysis,
analysis, synthesis of available information, reports, scientific articles on the subject and
subsequent deduction to identify conclusions.
Keywords: migration, immigration, terrorism, religion, politics, globalization, absence, following
human rights, incompetence.
Introduction
One of the most frequently used words at the
present time is “SAFETY”. (Mesároš, 2012) This
word refers to the safety of a person, a group of
persons, nations, nationalities, countries or a
group of persons of the same religion. Fear for
one´s safety usually refers the environment not
protected enough. Attacks on social and/or
personal safeties have been promoted to an
important strategy of achieving not only
personal, but also group interests. World
economy globalization and desire for wealth
result in war conflicts that are frequently
reflected in religious and/or racial forms of
fanaticsm. It is remarkable that countries not
being in immediate need for solving such
A
Dr.h.c. prof. Ing., DrSc, MBA, MSc., Vysoká škola bezpečnostného manažérstva v Košiciach; Rektor, e-mail: vsbm@vsbm.sk,
B
Dr.h.c. prof. Ing., CSc. University of Security Management in Košice, Slovakia, email: imrich.dufinec@vsbm.sk
problems employ/use the third countries in
favour of both presenting themselves as “peace
makers” and building and renewing what was
destroyed by war conflicts. It is not necessary to
be familiar with this fact as much as Eric
Margolis is to understand that designating
possible enemies as allies of Al-Kaida represents
a way of how to withhold their political and
human rights and make such enemies illegal.
A similar conception was created by Israel,
namely a conception aimed at Palestinians.
However, it has been not confirmed up to now
whether Al-Kaida that was so much glorified and
at the same time condemned was really so
powerful and whether it was not only a creature
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of the western world representing a kind of a
bridge enabling by the UNO authorisation
trouble free entering this country full of crude
oil and huge mineral resources.
Other examples of how a propaganda can
become a reality can be provided by Egypt. The
majority of the population of this country
elected its government voluntarily, namely in
favour of stabilizing political and social lives.
Those brave men who decided to bear the
burden were immediately designated as
terrorists and the country trying to stabilize its
position was destabilized again. It is not
necessary to look for the reason of such a
problem as a similar situation, however bloodier
can be observed both in Syria and close to the
frontiers of Slovakia, namely in Ukraine.
Research tools used to write this article was
analysis, analysis, synthesis of available
information, reports, scientific articles on the
subject and subsequent deduction to identify
conclusions.
Migrants and immigrants – a protected
species
Designating migrants and immigrants like this
not only expresses the situation in an apt way,
but at the same time frightening. Such a
designation of human beings, i.e. protected
species, as a result of their effort to save their
lives is unsuitable but not dignified. However,
characterizing the migration (in the future being
compared to the migration period – the end of
the 4th up to the beginning of the 7th century)
necessitates to mention the fact of the existence
of the present time humankind, namely also as
a result of migration.
After homo sapiens evolved in Africa (about
150 000 years ago), it managed to occupy the
whole African continent. However, the
appearance of the then Africa was absolutely
different, i.e. living conditions were excellent,
that is why the designation SPECIES is suitable
and apt (Mesároš, Lošonczi, 2019). This already
quite stabilized species decided to leave Africa
80 000 years BC. The journey was absolutely
different from the journey of the current
migrants and immigrants. On their way to the
New World the then migrants discovered
unknown kinds of mineral resources, new crafts
were coming into existence and agriculture was
being perfected. People got to Europe through
Asia 40 000 years ago, and started occupying
America 20 000 years ago. Such a demanding
and complicated mission reached its top
through the technical revolution in the 18th and
20th centuries.
It seems that the present humankind (7
thousand million people) will quietly live and
reproduce. However, it was not so in the past
and it will not be so in the future either.
Reasons of human migration and
immigration
Through the increase of relative welfare, one
started dividing labour and personal property as
well. Rich people started exploiting poor
people, which many times resulted in various
riots and war conflicts. Modern political
scientists confuse and wrongly compare the
migrations from Europe to America (19th and
20th cent.) with the present migration and
immigration (beginning in 2015). Migrants who
came to America 80 000 years ago were blessing
for the continent, a driving force of the next
development. Many of the migrants stayed in
the new continent, however a lot of them went
back and brought not only money, but also
invaluable knowledge in science and
technology. So those who went back tried to
give back to their home countries what these
lost through leaving of their people to the New
World.
It is very necessary to ask the following
question: What is the reason so many migrants
and immigrants leave their home countries and
who has caused or contributed to such a
situation? The answer is there cannot be just
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one culprit, as for example, if one wants to cause
any body moving, what is necessary is the first
impulse that can be accidental or intentional,
however followed by other impulses.
All those of us dealing with foreign safety
policy realize the intention of such an impulse at
the present time has consisted in economic
globalization, whatever its form may be. Striving
for profit knows no frontiers and is characteristic
of searching for weak points of opponents and
their abusing even through a political way.
Desire for the power of the individual political
parties, mainly of the third world countries,
represents a nutrient medium for the world
powers, which they can properly use as well.
Forms of abusing instable states have a long
tradition and are supported by desire for power
and personal benefits.
Similar, sometimes even funny, events
happened in the former Czechoslovakia as well,
namely as a result of the then regime.
Unparalleled was flattering of the government
representatives in the 1950s, e.g. when
shoemakers of the USSR (Union of Soviet
Socialist Republics) came gaining new
experience in shoe industry. In the Czech town
Gottwaldow (now Zlín) the Soviet shoemakers
could see a huge banner saying: “Soviet shoe
industry – example to us”. However, the Soviets
politely asked the management of the Czech
industry to remove the banner.
Why does this story blend in with the topic of
migration? The American world “policeman”
repeatedly looking for suitable places for
enhancing his capital draws attention to
countries willing to obey him. The ways of
drawing attention are of different forms; the
author of this paper does not want to, for
example judge the nuclear weapon tests in
North Korea, however it is necessary to stress
the UNO has not yet determined the date of a
meeting in favour of solving the serious
problem, while an American aircraft carrier has
already sailed to the coast of the Corean
peninsula (Mesároš, Lošonczi, 2020).
As the author of this paper completed an
intership in one of the biggest military aircraft
schools in the world, namely in Colorado, the
USA, in 1998, he will forever keep in his memory
the words at the front of the academy: “Welfare
and happiness of the US has to be fought
outside”. This exactly blends in the conception
of the present migrations. Foreland for the
migration and immigration waves towards
Europe has been created following destruction
and disruption of the legitimate regimes in
Libya, Egypt, Syria and other countries, and has
been rather underestimated by Europe itself.
One can only hope the new US government sets
a policy worth the 21st century.
Migrants and immigrants of the 2020s
Based on the relevant researches it is
possible to observe 90% of migrants and
immigrants are people younger than the middle
age. They are not ashamed of taking young
children and old people (even 100 years old)
with them. It is one of calculations of the Arabs,
namely to arouse compassion of the
Europeans. To a certain extent they have been
successful. After one year, however, it has been
found out the 90% of migrants and immigrants
(nearly 1 million) in Germany do not have any
work skills, as in their home countries the
migrants and immigrants lived a very good life.
In Europe they have no relatives, they are
believers and not able to respect laws and rules
of countries where they wanted to get
(Germany, Sweden, Great Britain).
Preliminary estimation of German
employment specialists says the majority of
migrants and immigrants will only be able to be
employed as early as in 10 years. Though until
2019 there is a presupposition of other 2,5
million of migrants and immigrants to come,
there is not a specialist that would estimate
costs of tax payers for covering the life of
migrants and immigrants during the 10 years.
However, politics and electing representatives
of Germany for the next period is of more
important priority than fear of the near future.
In favour of running economics in Germany it
is necessary to have 47 million workers of
productive age within 2050, which may be called
solidarity with migrants and immigrants.
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Typology of terrorism
Relation between migration, immigration
and terrorism is being dealt with by many
studies (Rоžňák, Hrala, Drotárová, 2020; Wright,
Brodeur, 2019; Križovský, Kavečanská,
Drotárová, 2020; Light, Thomas, 2021).
However, it depends on the type of terrorism.
Development tendencies of terrorism impact on
all parts and systems obliged to fight it. Every
type of terrorism has a particular reason,
substance and conditions, for example religious
terrorism is experiencing its increase as a result
of interfering external influences in its
complicated running. No interfering in the
running of the religions in general has been
declared by Pope Francis in his New Year´s Day
speech; at the same time, he has demanded
tolerating the individual religions.
The argument about the existence of the
only god people worship and believe in, though
having a different name, has not been a
sufficient argument for, e.g. the well-known
French daily Charlie Hebdo resulting in a
terrorist attack. However, the next issues of the
daily following the attack prove the journalists
have not been taught a lesson and preferred the
profit on sales.
Though terrorism must not be retreated,
such purposeless provoking results in increased
risk of danger and senseless attacks causing
death of people not involved in the economic
profit. The mass media should have a certain
amount of tolerance and should also be able to
guess safety risks.
As terrorists do not appreciate their own life
and prefer a dream paradise instead, no safety
measures can prevent terrorist attacks.
Typology of terrorism is in close connection
with the form of its manifestation. The forms
can be divided according to the means used by
terrorists and can be represented by
assassinations, politically motivated kidnaps,
taking hostages, hijackings planes and other
means of transport, bomb attacks and using
explosion systems or weapons of mass
destruction.
In favour of adding more information, we
provide a survey of the most frequent types
of terrorism (Mesároš, Lošonczi, 2019; Light,
Thomas, 2021):
1. Criminal terrorism – is based on a close
connection between an organized crime and
terrorism. This type of terrorism primarily
focuses on personal material advantages or
profit and is used by various gangs, groups
and in some cases also individuals. Some of
such groups may change the character of
their activities, namely from the political
activities to criminal ones or vice versa.
2. Pathological terrorism – This form of
terrorism is carried out by individuals and
should lead to their psychic satisfaction. Such
terrorists do not have a particular political
motive, they carry out terrorist activities for
pleasure of hurting other people. A common
example of the pathological terrorism is
shooting in schools.
3. Political terrorism –uses violence in
favour of achieving a particular political aim.
Immediate physical effect does not have to
be a primary aim of this form of terrorism.
Political terrorists terrorize and intimidate
a particular group of people. This type of
terrorism can be subdivided as follows:
- Ultra right-wing terrorism – is connected
with ethno-nationalist terrorism supported
by various extremist, racist, xenophobic and
neofascist organizations. This type focuses on
intimidating or even killing immigrants, Jews,
antifascists etc. Terrorists of this type seldom
use stabbing and/or cutting weapons, they
mostly use bottle bombs and/or firearms and
seldom booby traps. An example of
adherents of the ultra-right-wing its the
movement skinheads.
- Ultra left-wing terrorism – can be
divided in anarchistic, communist ones etc.
Nowadays this type of terrorism is seldom
spread. If an attack of this type were
committed, a circle of possible offenders
would be considerably reduced to individuals
or small groups.
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- Ethnic and territorial forms of terrorism –
Ethnic terrorism enforces interests of
a particular ethnic group perceived as a
marginalized one, i.e. an inessential part of
a particular society. The aim of the territorial
form of terrorism is to get out of the domination
of a particular country, to separate from it, e.g.
the armed Basque nationalist and separatist
organization ETA (Euskadi Ta Askatasuna). This
type of terrorism is frequently designated as
a separatist one. Ethnic and territorial forms of
terrorism are of step interconnected.
- Religious terrorism – is considered to be the
greatest threat. Its aims are often
interconnected with other ideological elements,
such as ethnic, territorial or political ones. This
form of terrorism includes various religious
sects and radical, extremist, traditionalist and
fundamentalist groups. The religious terrorism
can be divided into fundamentalist and
eschatological ones. Fundamentalist terrorism
represents a violent form of religious
extremism. Nowadays its most dangerous form
is represented by the Islamic fundamentalist
terrorism. The ideology of this form of terrorism
consists in disrespecting and unaccepting non-
Muslim countries, whereas this form of
terrorism tries by using violence to prevent the
globalization from getting into the Islamic
world. In many cases the attacks of the religious
terrorism primarily consist in the revenge for
the wrong Muslim countries suffered from in
the past or at the present time on the part of the
non-Muslim countries. Eschatological terrorism
is used by various sects declaring the world to
be bad and necessary to be destroyed for the
purpose of creating a new one. Such a world will
be meant only for the chosen people and
members of the sects, whereas these are trying
for “salvation of the world” by means of
terrorist attacks where they do not hesitate to
use weapons of mass destruction. Except, the
sects manipulate their members and force them
to commit a mass suicide.
- Ecological terrorism – concerns
environmental topics. It tries to point to the
protection of nature and environment. There
are two kinds of ecoterrorists, namely
ecosocialists and ecoanarchists. Ecosocialists
consider capitalism to be culprit of the
environment crisis. They are for the
abolishment of capitalism and introduction of
socialism, whereas the common property shall
be used in favour of humankind. Ecoanarchists
think anarchy and decentralization of the
society can contribute to the harmony of the
coexistence between people and nature.
Ecoterrorists usually choose a nonviolent way of
presenting themselves, e.g. protests, blockades,
occupation of factories etc., that is why their
actions are not always regarded as terrorist
ones.
- Cyber terrorism – A relatively new type of
terrorism represents a computer terrorism.
Vast cyber-attacks are increasing at an
alarming speed in the whole world (Plotnek
Jordan, Slay Jill, 2021).
This type of terrorism represents attacks on
technical, communication and information
objects, servers and equipments. It is many
types connected to thefts of information,
blackmail or causing a computer equipment(s)
dysfunction.
Conclusions
The most serious question the European
Union, i.e. the individual member countries
(approximately 500 million people) have to deal
with is the protection of the individual countries
including the Schengen area. One cannot
believe the world powers are interested in
helping their new competitor. Even the
embargo imposed on the Russian federation
cannot force anybody to think Russia is
interested in solving the problem and does so
only in favour of its interests.
As has already been stated above the USA has
its own interests and maybe also the feeling of
guilt as the majority of the so-called Islamic
state, just like opponents of the regimes in Lybia,
Syria and Egypt, had to undergo training
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programmes and were armed by American
specialists who asked for their Judas services a
lot of money (Mesároš Marián et al., 2011).
There is of course no recipe for solving this
problem, however, one can sum up the efforts
and willingness of the EU member states so far
as follows:
- common dialogue and procedure,
- no quotas in sharing migrants and
immigrants,
- strict protection of the Schengen area as
early as in entering the particular countries,
- building collecting places in the individual
countries,
- earmarking money for supporting buffer
countries (Greece, Italy, Turkey, Balkan
countries),
- reinforcing safety units of the individual
countries if the external frontiers of the
Schengen area fail,
- strict checks of applicants for asylum,
- accept only applicants for asylum a
particular country is interested in,
- it is necessary not to forget Slovakia is
getting old and so is in need of new and loyal
people who could solve this problem.
References
Mesároš Marián, 2012. Ochrana osôb a majetku
v kontexte ochrany ľudských práv a
chránených záujmov, (Protection of persons
and property in the context of the human
rights protection and protected interests) č.
3924. Bratislava: VEDA, 399 s. ISBN:978-80-
224-12407.
Mesároš Marián, Lošonczi Peter, 2019. Migrácie
v kontexte princípov terorizmu. (Migrations
in the context of the principles of terrorism)
Košice: VŠBM v KE, tlačiareň: VAŠKO Prešov,
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ISSN 2534-9228 (2021) VUZF review, 6(2)
Marketing competitiveness of hotel and restaurant enterprise:
theoretical approach and methods of definition
Sergiy Tsviliy* А
; Darya Gurova*B
; Tetiana Kuklina C
A, B, C
National University «Zaporizhzhia Polytechnic», 64, Zhukovskoho Str., Zaporizhzhia, 69063, Ukraine
JEL Classification: B23, C38, D21, D41, L22, L83, M31, O14.
DOI: 10.38188/2534-9228.21.2.05
Abstract
The article considers topical issues of marketing competitiveness of hotel and restaurant
business enterprises. The product marketing complex and the service marketing complex have
been modernized by including the "period" element in the list of their components. The list of
marketing functions of the manufacturer of a complex hotel and restaurant product has been
supplemented with the function of implementing the time policy. The stages of the product life
cycle are divided according to the principles of achieving effective interaction between producer
and consumer based on cost structuring. The model of a complex hotel and restaurant product
is presented. The principles of using a comprehensive approach to identifying different types of
services in the process of integration in the direction of "producer-consumer" are formulated.
An algorithm of effective actions of a hotel and restaurant enterprise to develop a marketing
strategy to increase the level of competitiveness is proposed. The method of marketing
assessment of the level of competitiveness of the hotel and restaurant enterprise on the basis
of substantiation of quantitative criteria is developed. It is concluded that the role of digital
services in the growth of a certain level of marketing competitiveness of the hotel and restaurant
enterprise is growing rapidly. The priority directions for effective marketing management of the
level of competitiveness of the hotel and restaurant enterprise are determined. The types of
effects from the implementation of the results of the study in the practice of hotel and
restaurant business are identified and grouped.
Keywords: marketing, competitiveness, customers, complex product, enterprise.
Introduction
Changes in the political, economic and social
spheres of life of Ukraine, its integration into the
European Community, the introduction of new
technologies necessitate the improvement of all
areas of enterprise management (Danko et al.,
2020). Global factors of the crisis, including the
action of factors COVID-19, the transformation
of the tourism economy have strengthened
competition, identified the need to diversify the
implementation of elements of the marketing
mix and apply a qualitatively new approach to
A PhD, Associate Professor of Tourism, Hotel and Restaurant Business, e-mail: 0994300103@ukr.net, ORCID: 0000-0002-1720-6238
B PhD, Associate Professor of Tourism, Hotel and Restaurant Business, e-mail: daryazntu@gmail.com, ORCID: 0000-0002-3180-0348
C
PhD, Associate Professor of Tourism, Hotel and Restaurant Business, e-mail: kyklinatatyana@gmail.com, ORCID: 0000-0003-1637-3509
marketing management of hotels and
restaurants. Hotel and restaurant enterprises,
unfortunately, rarely resort to scientific
approaches, methods and means of marketing
in order to reduce the level of risk; practically do
not implement such necessary for the successful
development of marketing functions as digital
monitoring of environmental factors, including
the study of priority consumer needs, research
on the postcoronavirus market, strategic trends
in certain segments, etc (Mazaraki, 2019).
30

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