business economics in english

WHAT IS MARKETING ABOUT?

YOUR OPINION?

Source: Engel, James F.; Blackwell, Roger D.; Miniard, Paul W. - Consumer Behavior Seventh edition. The Dryden Press, Harcourt Brace Jovanovich College Publishers, 1993

Consumer behavior complete model

Show chart in Word

Branding

Paul S. Markovits

Brand Builder

This presentation was uniquely developed for the Bucharest ASE students and delivered on December 3rd, 2014 - © Paul MARKOVITS

Product vs Brand vs Brand experience Brand Positioning

THE BRAND


What is ... The Brand?

• A brand is a promise

• Brands exist in the mind an heart of the target


PROMISE = TRUST + DELIGHT


Source: Kevin Roberts Lovemarks


Brand communications and brand positioning


Brand Positioning

Positioning is not what you do to a product … positioning is what you do to the mind of the prospect


What is positioning?

• Brand Position: – Part of brand identity that is actively

communicated to a target audience and demonstrates advantage vs. competition.

– Positioning involves the careful synchronization of every element of the marketing mix.


Key characteristics of successful positioning

• Target audience: the brand position should target a specific audience

• Provide competitive advantage: should be setting a meaningful and valuable difference in the mind of the target audience

• Actively communicated: all marketing mix elements should be geared against clear communication objectives

• Part of the brand identity: choose key unique/important elements that represent brand essence – is usually narrower than brand identity, and can change while

identity stay the same


Why do we need strong positioning? More brands and SKUs in the stores than ever before that are

becoming commodities in consumer minds – Shifts the focus to price

Over the last 10 years, in the US, over 15,000 SKUs have been launched – Over 50% of these fail (lose 30% of distribution in Yr2)

• 40% failure rate in Laundry

• 54% failure rate in Cleaners

– Less than 5% achieve sales of >$50MM (US) • Less than 10% over $20MM

– Average cost of failure is $20MM

• Consumers consideration set is typically 150 SKUs – Makes up 80-85% of needs

• BREAKING THROUGH THE CLUTTER is KEY


Commoditization of Brands

• Study by MarketFacts found that in most categories leading brands where becoming more similar (48 of 51 categories)

– Laundry ranked 26th of 51 categories with respect to similarities • Leading brands in laundry ranked 13th of 48 categories in terms of

similarity (ie 34 categories had less similarity between brands)

– Household cleaners ranked 14th of 51 categories

• Leads to price becoming more important than brand in decision

• 27 of 38 categories analyzed rated price higher than brand, including cleaners and laundry

• “Own brand” or “Private Labels” are making inroads into the categories


Commoditization of Brands

• Recent article on “commodization” of brands cited 3 reasons behind why consumers shift between brands:

– Shift from brand building advertising to promotional programs

– Shift from informational advertising to entertainment oriented advertising

– Shift from communications focused on distinct positioning strategy to communications which focus on brand essence or

imagery.



HOW TO BUILD DISTINCTIVE BRANDS?

Kevin Keller – Consumer Based Brand Equity

This presentation was uniquely developed for the Bucharest ASE students and delivered on December 3rd , 2014 - © Paul MARKOVITS

The 3 Fundamental Questions for a Brand

• Do we have a reference frame?

• Are we using our points of parity?

• Are the point of difference enticing enough?

Source: K. Keller, B. Sternthal, A. Tybout – Three questions to ask about your brand, HBR, sept 2002,

“A brand is what a brand does.”

(Arun Sarin – former Vodafone Group CEO )


• Vodafone Mayfly

http://www.youtube.com/watch?v=6FyDSbc9XR0

Models and Schools of Thought!

Branding Models Brand/Organisation

Brand Bullseye Colgate

Brand Onion Ogilvy

Brand Pyramid GM, P&G

Brand Identity Prism Kapferrer

Brand Tree Coca-Cola

Brand Key (Customised

Model)

Unilever

Brand in a bottle

(Customised Model)

Heineken

Diamond Brand Model McKinsey

Bow Tie Model Psilogy

BRAND PYRAMID

ESSENCE

POSITIONING

PERSONALITY VALUES

FUNCTIONAL BENEFITS

EMOTIONAL BENEFITS(Brand Image/Brand Experience)

PHYSICAL/PRODUCTATTRIBUTES

MANDATORIES/OTHER ASSOCIATIONS/ATTRIBUTES

FRAME OFREFERENCE1. Macro 2. Micro

INSIGHT TARGETBRANDCONSUMER

BRANDDELIVERABLES

BRANDPOSITIONING

Models focusing on image (Kapferrer)

Picture of Sender

Picture of Recipient

Inte

rna

lisa

tion

Ex

tern

alis

atio

n

Psilogy Bow Tie Model

Benefits

Insight

Reasons to

Believe

Target

Insight

Reasons to

Believe

Target

Benefits

B2

C

B2

B

Reason to

Desire

Imagery

Ratio

This presentation was uniquely

Branding Element

Brand

Identity

Prism

Brand

Onion Brand Key

Brand

Bullseye Brand Tree

Brand

Pyramid Bow Tie Hourglass

Brand Essence

Brand Personality

Brand Values

Brand Promise

Brand Role

Consumer Insight

Target Consumer

Competitive Environment

Brand Substantiators

Brand Benefits

Physique

(Consumer) Self-Image

Consumer Reflection

Differentiators

Positioning Statement

Allways

Essence The memorable shorthand of the brand

Promise or Proposition What does it offer

Emotional or Brand Benefits How does it make consumers feel

Functional or Product Benefits What does it actually do

Substantiations/Reasons To Believe Unique attributes

Brand Personality Brand Personality

Target Audience Who is it meant for

Frequently

Brand Values What does the brand believe in

Iconography Visual identity

Role/Purpose Reason to exist

Ambition / Vision Goal of the brand

Key Insight Key consumer needs that the brand is

adressing

Lect.univ.dr. Simona Agoston

• To explain what marketing is

• To differentiate between “needs” and “wants”

• To understand the fundamental marketing concepts

• To explain why and how companies learn about their customers

• To describe the main tools of marketing research

• To identify and comment on the four elements of a company’s marketing mix

• Marketing is more than a fancy image, a clever commercial, a special contest or a discount

• Name some examples of marketing questions!

• Marketing involves a lot of planning and execution in order to develop a new product, set its price, market-entry date, distribute it, promote it and convince people to buy it

• Marketing involves also understanding customers’ needs, their buying behavior, creating consumer awareness, providing customer service and maintaining long term relationships

• Product marketing• Service marketing• Place marketing• Cause related marketing

Need= a difference between your actual state and your ideal state

Wants= based on needs, but more specific

Marketers channel the customers’ needs for various products and services into wants ( the desire to purchase a specific brand) by exposing you to alternatives

E.g. need= thirst, want= Coca-Cola or Pepsi

Needs/ Wants

Relationship conceptBuilding and maintaining a long term relationship with key parties;The relationship with the customer = ongoing process , it doesn’t

end with the sale transaction

CRM = customer relationship management

Cost to acquire a new client = 5 * cost of keeping an old

client

Marketing concept

Determine the needs and wants of target markets and shape and deliver accordingly products and services Outside-in perspective

Selling conceptConsumers will buy whatever they sale

Focus on distribution and promotion

Inside-out perspective which works in a seller’s market; in a buyers’ market companies need to become more customer-centered

Product conceptRely on product’s quality, performance and innovative

features;Devote their marketing resources to make continuous

improvements

Better products # better sales

Also innovative products need marketing

Today’s customers are less loyal (more informed, more sophisticated, a greater variety, time pressure) Why satisfying customers is important?-Cost to acquire a new client = 5 * cost of retaining an old client-Long term customers buy more, are less price sensitive, take less of a company’s time-Satisfied customers = best advertisement fora product

-Dissatisfied customers may tell 20 other persons about their bad experience ( retention specialist) Periodical analysis of the customer database (e.g. Vodafone, Generali, BCR) - indicatorsSome companies promote customer loyaltyNot every customer is worth keeping

Organizational markets (larger quantities)industrial markets = companies that buy goods and services to produce their own goods and

servicesreseller markets= wholesalers and retailersgovernment market

Consumer market s= individuals and households that purchase goods and services for personal useDetailed marketing research studies - in order to understand buyer’s decision process and factors that influence the buying decision, to gather information about markets etc.Tools: Focused interviews with 6-10 persons = focus groups

Surveys and questionnairesExperimentsBlind testsTelephone or personal interviews

When used inappropriate, research can be misleading

Mystery shoppers Testing lab boutiques – observe and analyze customers’ reactions Database marketing- companies specialized in data collection can provide direct marketers with customized mailing lists that target groups with the desired characteristics Treating customer individually- one-to-one marketing - individualizing offers, different website display, birthday letters and presents etc.

Need recognition Information search Evaluation of alternatives PurchasePost-purchase evaluation

(eventually cognitive dissonance)

Buyers’ decision making process

Cognitive dissonance (buyer’s remorse)= anxiety following a purchase (when the buyer reconsiders all the alternatives rejected) that prompts buyers to seek reassurance about the purchase

Calls for a prompt reaction of marketers to reinforce the sales with guarantees, phone calls to check customer’s satisfaction, follow-up letters etc.

Examine current market situation:

Reviewing performance

Evaluating competition

Examining internal strengths and weaknesses

Analyzing external environment

Assessing opportunities and setting objectives:

Market penetration, new product development, geographic expansion,

diversification

Reaching a certain market share (a company’s portion of the total sales

within a market)

Developing the marketing strategy:

Market segmentation- grouping of customers with similar characteristics,

behavior and needs (using demographics, geographics,

physiographics)

Defining your target market

Positioning your product

Developing the Marketing Mix

Marketing Mix (4Ps)

Product policy•Brand•Design•Packaging•Services•Warranty

Price policy•A critical decision because in a company’s marketing mix is the only element that produces revenue •Discount and sales policy (quantity, time, loyalty, special offer)•Price bundling•Payment conditions

Place (Distribution) Policy•Distribution channels•Logistics

Promotion Policy•Advertising•Public Relation (PR)•Sponsoring•Product placement•Event marketing•Personal selling•Direct marketing•Sampling•Online communication

Source: http://brandirectory.com/league_tables/table/global-500-2012, 2012

Demystifying Human Resources

Citi Romania

Carmen Maftei & Liliana Avram, Citi HR Romania

November 2014

Business name Information Classification (choose one): [Public] [Internal] [Confidential] [Restricted]

1. HR Department Structure

2. The Principles Behind HR Roles

3. Main HR Processes

4. HR Department Role: Support or Strategic Partner?

5. Q&A

2


HR Department Structure

GCG

Global Consumer

Group

ICG

Institutional Client

Group

O&T

Operations &

Technology

Local Organizational Chart

Global Functions HR, Legal, Public Affairs, Compliance, Finance, Risk, Control

Citigroup Country Officer


Which are the main HR Functions?

5

Country HR Officer

Talent Management

Learning & Development

Recruitment

Employee Value

Proposition

Diversity

Employee Relations

Employee Assistance and

Grievances

Compliance, Health &Safety

Employee Engagement

HR Business Partner

Connects HR Functions

Compensation & Benefits

Salary

Incentives

Benefits

Equity

HR Operations

HRIS

Workforce Analytics

Service Center

The Principles Behind HR Roles


The Principles Behind HR Roles: HR Values

7

Put simply, values matter to us - they provide us with a means to navigate

increasingly complex problems, they are a lens through which to evaluate our

actions and they are a series of principles which underpin our regional community.


Main HR Processes


Main HR Processes – Performance Management

9


Main HR Processes – Talent Management

10

+

High Potential

Promotable

Expert Resource

+


Main HR Processes – Learning & Development and OD

11

People learn in 3 different ways: 70% -20% -10% rule

Learning experiences:

• Learning by doing/on the job experience

• Learning from others

• Training

Learning &

Development

What is Organizational Development?

• Organizational design changes

• Sr. Leadership Development

• Organizational Culture


Main HR Processes – Compensation and Benefits

12

• Market Competitiveness – total compensation:

- Base salary

- Performance bonus

- Short term incentives

- Benefits

- Equity

• Meritocracy – is Pay for Performance

Total compensation = Base Pay + Variable Compensation + Benefits + Equity


Main HR Processes – Shared Services

13

Provides service delivery related to all enquiries related to salary, benefits

administration, vacation, employment letters, onboarding /transfer/ off boarding,

HR systems, workforce reporting and analytics


HR Department Role: Support or Strategic Partner?


HR Department Role: Support or Strategic Partner?

15

• Understand Business Needs for HR Strategy Alignment: build business and

organizational acumen to emerge as a strong thought partner for the business, and

use connections and networks across the organization to improve decision making.

• Effectively Implement HR Strategy

• Manage the workforce market trends:

- Talent shortage (succession planning, sourcing, EVP)

- The new (networked) environment

- Globalized, multigenerational workforce

- Convergence of Talent and Business Management


Q&A

Simona Agoston

• To differentiate between several types of companies

• To identify the main organizational characteristics of companies belonging to different categories

• To identify and comment the main forms for capital raising

• To explain the concept of “franchising”

• Branch of industry

• Goods producing businesses/ service businesses

• Size (SMEs, large companies)( , g p )

• Cooperation form (strategic alliances, joint venture, cartel etc.))

• Legal form (sole proprietorship, private limited company, stock company etc. )p y, p y )

• Ownership (private, public)

Goods producing businesses• tangible goods from activities such as manufacturing, construction, agriculture etc.• capital intensive businesses – require substantial investments in buildings machinery equipment etcbuildings, machinery, equipment etc.

Service businesses• intangible products from activities such as finance, retail trade, entertainment, health care, banking, education etc.

l b i t i i d d t th k l d d kill f• labor intensive company- is dependent on the knowledge and skills of the employees

P i d d t ti tPrimary, secondary and tertiary sector

Some companies produce both goods and services

Growth of the service sectorGrowth of the service sector

K f t hi h t i th th f i tKey factors which trigger the growth of service sector:

• Consumers have more disposable income• Changing demographic pattern and lifestyle trends• Services are needed to support complex goods and

new technologygy• Specialization/ need for professional advice• Barriers to entry are low

SMEs criteria (Romania):SMEs criteria (Romania):• Average annual number of employees < 250• Net annual turnover < 50 Mio. Euro

T l 43 Mi E• Total assets < 43 Mio. Euro(IMM # SRL # SA)

In most economies SMEs prevail, representing over 98% of the companies- engine of economy

Special financial support for SMEs (e.g. European funding, Mihail Kogalniceanu credit etc.)

Economic roles of SMEs

• Provide the majority of jobs (>50%)

• Significant contribution to the GDP (55%-95%)

• Create product and service innovation• Create product and service innovation

• Provide specialized goods and services

• Support the economy during crisis time (more dynamism, flexibility and willingness to try new things than big businesses)

No. Country % SMEs of total numberof enterprises

% SMEs contribution to the GDP

% SMEs contribution toemployment

1. Austria 99.6 50.86 65.5

2. Belgium 99.8 64.49 68.9

3. Denmark 99.7 58.75 68.74

4. Finland 99.75 44.33 59.154. Finland 99.75 44.33 59.15

5. France 99.79 45.76 66.86

6. Germany 99.63 60.17 59.85

7. Greece 99.95 82.87 86.68

8. Ireland 99.59 33.02 69.59

9. Italy 99.54 71.38 80.34

10. Luxembourg 99.62 74.2 72.32

11. Netherlands 99.56 56.06 62.47

12. Portugal 99.87 66.8 78.87

13. Spain 99.89 55.3 79.45

14. Sweden 99.67 51.51 61.37

15. Great Britain 99.8 38.4 55.3

Source: CNIPMMR (2007), Cartea Alba a IMM-urilor din Romania, p.22

SMEs in Romania

Source: European Commission, 2011

The biggest companies worldwide (turnover), 2011Fortune Magazine, July23rd 2012

• Strategic alliances

• Joint Venture

• Cartel

Options Advantages Disadvantages

1. To start from scratch • Total control over your business• Doing what you enjoy• Ability to reach your full

• High risk• Higher efforts to build a reputation• Complete responsibility• Usually longer working hoursAbility to reach your full

potentialUsually longer working hours

2. To buy an existing business • Established customer and supplier base

• Many businesses are overpriced• Limited freedomand supplier base

• Functioning business system• Location• Proven product or service• Trained employees• Easier financing

Limited freedom• Risk of incompatibility between the new owner and existing employees• Unknown (covered) problems with suppliers, customers etc.

Easier financing• You can concentrate on making improvements

3. To buy a franchise • You are sure that you get a viable business

High dependence on the franchisor(He falls, you fall)

• Instant brand recognition• National advertising programs• Standardized quality for goods and services• Support from the f hi (fi i l

Restricted control over your business (sell just some goods and services, established suppliers, rules)Goods often supplied by the franchisor itself at the price he setsSmall flexibility and adaptabilityMonthly payment (royalty) to the f hifranchisor (financial

assistance, site research, training, decoration, network of suppliers, technical assistance etc.)

franchisorIf the franchisee fails to meet the minimum standards, the franchisor might terminate the license

A form of business organization in which a firm which already has a successful product or service (the franchisor) enters into a contractual relationship with other businesses (franchisees) operating under the franchisor's trade name and usually with the franchisor's guidance (http://www.investorwords.com/2078/franchise.html, 20. Oct 2011)Oct.2011).

Types of franchises• Product franchise- the right to sell trademarked goods which are purchased from the

franchisor and resoldM f t i f hi th i ht t d d di t ib t th f t ’• Manufacturing franchise- the right to produce and distribute the manufacturer’s products, using supplies purchased from the franchisor

• Business format franchise- the right to open a business using franchisor’s name and format for doing business

Cost of franchises initial fee + monthly royaltiesCost of franchises = initial fee + monthly royalties

• Venture capitalists (VCs) - investment specialists who provide money to finance new businesses with high potential and management expertise for a portion of the ownership

VCs→ the business becomes profitable→ sell to long term investorsVery selectiveOffer large amount of money

• Business angels – wealthy individuals who put their own money into start-ups with the goal of eventually selling their interest for a larger profit

Smaller amounts of money than VCs Offer their business expertise to the new business and are involved longer in the company

• IPO (initial public offering)- offering shares of ownership or stock to the public for the first timetime

Can be an expensive procedure and requires a longer period of time

• Incubators – centers that provide start-ups with various services and facilities: office space, legal and accounting advice, marketing support etc.

80% of businesses nurtured in incubators succeedOpen to all businesses, or just to some sectors Tenants→ graduates

• Crowd funding- the collective effort of individuals who network and pool their resources, usually via the Internet, to support efforts initiated by other people or organizations.

- funding of a company by selling small amounts of equity to many investors

Large businesses banks state aid European funds etc• Large businesses, banks, state aid, European funds etc.

Lect.univ.dr.Simona Agoston

• To define “shareholders” and “stakeholders” and differentiate between the two concepts

• To identify several groups of stakeholders and explain the relation between them and an organization

• To differentiate between a free-market system and a planned system

• To identify and comment the main external factors which may influence a company’s activity

Shareholder = an individual or organization (including a corporation) that owns shares in a business (contributors to the company’s capital)

Stakeholders = anyone who has a direct or indirect interest in the business entity

Shareholders/ stakeholders – different objectives and interests

Managers and employees

Suppliers

Customers

CompetitorsCredit institutions Consultants Other business

partners

Public authorities

Labor unions Society …

Sales agents

State

• Managers (top management, middle management, first line management)

• Employees

• Suppliers- entities which provide the necessary raw materials, equipment and services to a company

• Customers- domestic or foreign companies or households which buy the company’s products or use its services

Today there is a strong customer orientationB2B (Business to Business), B2C (Business to

Consumer)

Competitors- organizations that target the same customers

Direct competition- between products which perform the same function

Indirect competition- between products which are close substitutes

• Credit institutions- institutions (in general banks) which provide external capital to the company (to finance its current activity, to make investments etc.)

• Business consultants and other business partners- third parties which support/ assist the management of the company in order to reach its business goals

Outsourcing of subsidiary activities

Audit

• State- sets the legal framework for the activity of the company

• Public authorities - the institutions of the state with which the company communicates, such as Ministries, labor office, tax office etc.

• Business associations – organizations which represent the interests of the company or professional groups (e.g. Trade associations, Chamber of Industry and Commerce etc.)

• Labor unions- organizations which represent employees’ interests and defend their rights

• Civil society- represented by NGOs, universities, research institutes, initiative groups etc.

• Identify the stakeholders of the chain store Carrefour in Romania and explain their interests related to the company.

Some basic underlying questions: • How should limited economic resources be

used to satisfy society’s needs?• What goods and services should be

produced? Who should produce them?• How should these goods and services be

divided among the population?

Free market system/ Capitalism

• Individuals own and operate the majority of businesses

• They are free to decide what/how to produce, to whom/ at what price to sell

• Philosophical origins of capitalism- Adam Smith, the market as a self-correcting mechanism: “invisible hand”

Mixed capitalism- limited intervention of the state in order to influence prices and wages or to change the way resources are allocated

Planned system

• Governments control all or part of the allocation of resources

• Major goal= social equity, private enterprises and private gain is regarded as negative and exploitive

Communism

• Allows individuals the least degree of economic freedom

• Almost all resources are under government control

• Resources allocation through rigid centralized planning

• Private ownership is restricted to personal and household items

Socialism

• Between capitalism and communism

• High degree of government planning

• Partial government ownership of land and capital

• Government control over the vital industries

• In not vital industries private ownership is allowed

• High taxes

Trend towards privatization

Economic, political and social systems

Political factors

Technological factorsSocio-cultural factors

Economic factors

Company

• Political stability

• How and to which extent the government intervenes in the economy

• Tax policy

• Environmental regulations

• Trade restrictions, tariffs, quotas

• Goods and services provided by the state

• Attitude towards foreign investors and foreign products

• Economic growth

• Interest rate (cost of capital)

• Exchange rate

• Price stability/ inflation rate

• Unemployment rate

• Labor productivity

• Local economic trend

Source: Eurostat, 2014

20

(Quelle: GfK, 2009, im Internet: http://www.gfk-geomarketing.de/fileadmin/newsletter/bild_des_monats/11_2008.html, Stand: 10.10.2010)

http://www.gfk-geomarketing.de/fileadmin/newsletter/bild_des_monats/11_2008.html�




• Demographic trend/ age distribution

• Social classes

• Education

• Religion

• National and individual values

• Cultural mobility

Ageing population in Europe

Country 1990 2010 2030Germany 21,7 30,3 49,2France 20,8 24,6 39,1Italy 21,6 31,2 48,3Great Britain 24 25,8 38,7Romania 27,7EU-27 21,4 25,9 40,6

Source: Pelau, 2009

• The level of technological equipment

• The level of technology use

• The ability to adapt to technological changes

• Telecommunications

• Infrastructure

Incorporation of Companies in RomaniaRomania

Legal Framework

/Company Law no. 31/1990

Trade Registry Law no 26/1990Trade Registry Law no. 26/1990

Types of Corporate Business Entities

• Limited Liability Company (Romanian: societate cu raspundere limitata , S.R.L.)

• Stock Company (Romanian: socieate pe actiuni, S.A.); • General Partnership (Romanian: societate in nume colectiv, S.N.C.); p ( , );• Limited Partnership (Romanian: societate in comandita simpla, S.C.S.); • Partnership limited by stocks (Romanian: societate in comandita pe

actiuni S C A )actiuni, S.C.A.). Most of the companies incorporated in Romania are limited liability companies and stock companies, because of the fact that the partners/shareholders are held liable within the limits of their subscribedpartners/shareholders are held liable within the limits of their subscribed share capital.

Types of Companies:

• Person companies (Romanian: societati de persoane): general partnership, limited partnership, partnership limited by stocks, limited liability companies. These companies are established in consideration of the persons that set up the company. There are stricter rules when it comes to

f i h h d ki d i i i htransferring the shares and taking decisions in the company.

• Capital companies (Romanian: societati de capitaluri): stock companies.

Incorporation of a company:

• Can last up to five working days from the submitting of the incorporation documents at the trade registry;

• It can be prolonged with 15 days when the word “Romanian” or “national” p g yis included in the company’ s name due to the necessity to obtain special endorsements;

• Certain approvals are necessary, depending on the subject of activity of the company.

Headquarters of the company:

• It is not allowed for more companies to have their headquarters in the same location, except for some specific situations (for example if they establish their headquarters temporarily at the headquarters of a law firm and they do not unfold any activities there);

• It is allowed for more companies to have their headquarters in the same building, apartment, provided that the location enables the independent functioning of more companies and that each company has at least one room that it uses solely (the room must be identified on the plan of the building attached to the application that is submitted at the trade registry);

CAEN code and object of activity

• CAEN code of the object of activity (Romanian: CAEN – Clasificareaactivitatilor din economia nationala, classification of the activities from the national economy);

• Activity field, main activity field (only one can be chosen), auxiliary activity fields (there is no limit to how many can be chosen, but it is not recommended to choose all CAEN codes because some require authorizations);

• The main activity field, as well as the auxiliary activity fields must be included in the incorporation documents of the company;

• The main activity field may be changed by decision of the shareholders;• The auxiliary activities may be extended or restricted anytime, by filling an

application at the trade registry.

List of the documents that should be submitted at the trade registry for the incorporation of a company:

• Applications (they can be found on the website of the trade i t )registry);

• Reservation of the name of the company (the name can be reserved at the trade registry, except for names that include certain words “Romanian” “national”; these require a special approval );Romanian , national ; these require a special approval );

• Proof that the share capital has been paid by the shareholders to a bank account opened on the name of the company (the capital has to be paid at least partially, depending on the type of company; for the p p y p g yp p ylimited liability company it has to be paid fully);

• Declaration of the administrator that it fulfills the conditions required by Romanian law to be administrator and that it accepts the position in the company;position in the company;

• Declarations of the shareholders that they fulfill the conditions required by Romanian law to be shareholders;

• Signature sample of the administrator;• Signature sample of the administrator;

List of the documents that should be submitted at the trade i t f th i ti fregistry for the incorporation of a company:

• Proof of the right to have the headquarters established in a certain locationfrom Romania (for example property title of the building, rentalagreement);

• Empowerments from the shareholders if they do not submit the documentsthemselves;

• Incorporation documents (articles of incorporation, constitutive act); theyshould be signed either by the shareholders or by the persons empoweredto represent them based on a special power of attorney. The substantiallyand formal requirements of these documents are included in Company Law31/1990.

Particularities of S.R.L.

• The minimum share capital is of: 200 RON; the value of a p ;social part cannot be lower than 10 RON;

• It can be established even only with a sole shareholder, either t l l l t l l l (R inatural or legal person; a natural or a legal person (Romanian

or foreigner) can act as sole associate only for one limited liability company;

• Particularity: A limited liability company cannot have as sole shareholder a company which is held by a single person;

Particularities of S.R.L

• Is managed by one or more administrators, natural or legal persons, that are empo ered to represent the compan before third partiesempowered to represent the company before third parties.

• Every share gives the right to a vote. The decisions need in principle the absolute majority of the shareholders, as well as the absolute majority of share capital. Still, it can be stipulated expressly in the incorporation d f h h h b l j i f h h i l idocument of the company that the absolute majority of the share capital is enough for taking a decision.

• Transfer of the shares in the company can be done unlimitedly among the shareholders of the company; to third parties only provided that p y; p y pshareholders holding at least 75% of the share capital agree to the transfer.

• The convening of the general meeting of the shareholders can be done by the administrator/ shareholders holding at least 25% of the share capital.

• The convening must be done 10 days before the actual meeting and the• The convening must be done 10 days before the actual meeting and the agenda of the meeting has to be transmitted to all participants.

• In case there is only one shareholder, all the prerogatives of the general meeting of the shareholders shall be exercised by the sole shareholder.

Particularities of S.A.

• The minimum social capital: 25.000 EURO; the nominal share value cannot be lower than 0,1RON; the minimum number of shareholders cannot be less than 2;

• All shares have the same nominal value and they can either be bearer stock (Romanian: actiuni la purtator) or registered stock (Romanian: actiuninominative). Stocks are divided between ordinary stocks and preference stocks (they are entitled to dividends before ordinary shares but lack the i h i h l i )right to vote in the general meeting);

• If the constitutive act does not provide otherwise, the transmission of the shares does not require the approval of the other shareholders;

Particularities of S.A.

• The convening of the general meeting of the shareholders is done at least once a year and whenever else it is considered necessary. General meetings can be ordinary (for the approving of the annual financial situations) or extraordinary (for the increase of the share capital, for taking decisions on h di i i i f h ) d di h i fthe division or merging of the company), depending on the importance of

the agenda. The quorum of the general meeting varies, depending on the type of general meeting and on whether it is the first convening with the same agenda or not;same agenda or not;

• Special rules regarding the shares transactions, the increase of the social capital, other important amendments of the constitutive acts are applicable to the public listed stock companies (open companies)to the public listed stock companies (open companies).

Duration, Expenses, other related Information

• Generally, the total cost of establishment of a limited liability company amounts to Euro 200-250 (all registration and honoraria fees included);

• Stand–by companies: if a company justifies no interest in running its y p p y j gactivity on a limited basis, it has the possibility to file an application with the trade registry office for the suspension of its activity (for a max. of 3 years); as a consequence, the company is not required, within the suspension period, to submit all the financial reports as in the case of the companies who activate effectively.

Options

• In the registration file at the Trade Registry Office, the company is registered as a micro-regime company (it is subject to an income tax of 3%), unless the normal VAT regime is chosen (this can happen only if the company has a social capital of at least the equivalent of Euro 25.000 and it d f ld b ki i i i i d bli )does not unfold banking activities, ensuring and gambling).

• If the turnover of Euro 65.000 is exceeded, the V.A.T regime is automatically applicable starting with the next fiscal year.

Options

• A company remains registered with a micro-company regime, if the following requirements are fulfilled (art. 112 of the Fiscal Code):

• It has as object of activity the production of goods, services supply (except for management and consultation, which can only represent maximum 20% of the turnover) and/or trade;of the turnover) and/or trade;

• Maximum annual turnover is Euro 65.000;• The share capital is not owned by the state or local authorities.• The company that does not fulfill one of above mentioned conditions shall• The company that does not fulfill one of above-mentioned conditions shall

be automatically subject to corporate income tax starting with the trimester when one of the conditions is no longer fulfilled (the profit tax represents 16 %).)

• The company choses the micro-company regime from its incorporation and it shall only be subject of corporate income tax when the turnover shall exceed the equivalent of Euro 65.000.

Thank you!Thank you!

Daniela GrigorasDaniela Grigoras

lawyer and insolvency practitioner

0722 513 8900722 513 890

[email protected]

Insolvency of Companies in Romania

Legal FrameworkLaw no. 85/2006 regarding insolvency

/ di i lLaw no. 85/2014 regarding insolvency

Applicable LawApplicable Law

• Law no 85/2006 regarding insolvency isLaw no. 85/2006 regarding insolvency is applicable to the files that were already registered and admitted by courts for theregistered and admitted by courts for the timeframe 2006‐ June 2014

• Law no 85/2014 regarding insolvency is• Law no. 85/2014 regarding insolvency is applicable to the files that were registered and admitted by courts beginning with July 2014admitted by courts beginning with July 2014

Participants in an insolvency or b k f lbankrupcy file

• The company, which is represented by an insolvency practitioner (Romanian: practician in insolventa). If the company is in insolvency the judge appoints an insolvency practitioner to be the judicial administrator (Romanian: administrator judiciar) of the company. If th i i b k th j d i t i lthe company is in bankrupcy, the judge appoints an insolvency administrator to be the judicial liquidator (lichidator judiciar) of the company.Th dit f th h t d b l• The creditors of the company, who are represented by lawyers or by their own administrators;

• The special administrator, who is the representative of the shareholders of the companyshareholders of the company;

• The judge, who is the one that checks that the proceedings unfolds according to the law.

Insolvency and bankrupcyInsolvency and bankrupcy

• Insolvency is the state of the patrimony of a debtor that cannot pay the debts that are certain, liquid and exigible (Romanian: certe, lichide si exigibile) either in 60 days from the due date (relative insolvency) or in case it is proven the the debtor shall not be able to pay them with the available funds on the due date (imminent insolvency).

• Bankrupcy is the collective and egalitarian insolvencyBankrupcy is the collective and egalitarian insolvency proceedings that applies to a debtor in order to liquidate the patrimony of the debtor and to cover the debts of the debtor. It also includes the erasure/ cancellation of the debtor fromIt also includes the erasure/ cancellation of the debtor from the registry where it has been registered (usually, the Trade Registry).

Stages of an insolvency/ bankrupcy fileStages of an insolvency/ bankrupcy file

• The first step is filing the application by a creditorThe first step is filing the application by a creditor or by the debtor to a court in order to be declared insolvent/ bankrupt. The minimum / pamount of the receivable of a creditor in order to file such an application is of RON 40.000.

• If the court approves the request, it shall appoint a judiciary administrator or a judiciary liquidator j y j y q(depending if the company is insolvent or bankrupt).


• After the judiciary administrator is appointed itAfter the judiciary administrator is appointed, it shall draw a table of the creditors of the company and they shall make up the assembly of the y p ycreditors of the company;

• Depending on the economic state of theDepending on the economic state of the company, the judiciary administrator shall draw a reorganisational plan describing how the g p gcreditors shall recover their receivables from the debtor or at least part of their receivables;


• If such a reorganisational plan is not drawn orIf such a reorganisational plan is not drawn or is not approved by the creditors, the debtor company shall enter into bankrupcycompany shall enter into bankrupcy proceedinds, meaning that all the assets of the company shall be sold and the money paidthe company shall be sold and the money paid to the creditors, according to the preference order of the creditors (for example creditorsorder of the creditors (for example, creditors that have guarantees from the debtor are preferred to the rest of the creditors)preferred to the rest of the creditors).

Advantages of entering insolvency dproceedings

• From the opening of the insolvencyFrom the opening of the insolvency proceedings all judiciary actions, enforcements and extrajudiciary actions against the debtor are suspended;

• The opening of the preceedings suspends prescription of those actions;

• The opening of the insolvency prohibits the adding of penalties or interest to the receivables of the creditors.

Disadvantages of entering insolvency dproceedings

• The control of the company does not longer p y gbelong to the administrator of the company. His actions have to be approved/ supervised by the judiciary administrator and/ or the creditors ofjudiciary administrator and/ or the creditors of the company;

• In case the reorganisational plan of the company is not approved by the creditors, there is a risk of entering bankrupcy and losing all the assets of the company;the company;

• The risk for the former administrator to be held liable for the bankrupcy of the company.

Thank you!Thank you!

Daniela GrigorasDaniela Grigoras

lawyer and insolvency practitioner

0 22 3 8900722 513 890

[email protected]

Lect.univ.dr.Simona Agoston

• To define “shareholders” and “stakeholders” and differentiate b t th t tbetween the two concepts

• To identify several groups of stakeholders and explain the relation between them and an organizatione at o bet ee t e a d a o ga at o

• To differentiate between a free-market system and a planned system

• To identify and comment the main external factors which may influence a company’s activity

Shareholder = an individual or organization (including a corporation) that owns shares ( g p )in a business (contributors to the company’s capital)

Stakeholders = anyone who has a direct or i di i i h b i iindirect interest in the business entity

Sh h ld / t k h ld diff tShareholders/ stakeholders – different objectives and interests

Public th iti

Labor i Societyauthorities unions Society …

Sales agents

State

Managers and employees

Suppliers

Customers

CompetitorsCredit institutions Consultants Other business

partners

• Managers (top management, middle management, first line management)

• Employees

• Suppliers- entities which provide the necessary raw materials equipment and services to a companymaterials, equipment and services to a company

• Customers- domestic or foreign companies or g phouseholds which buy the company’s products or use its services

Today there is a strong customer orientationToday there is a strong customer orientationB2B (Business to Business), B2C (Business to

Consumer)

Competitors- organizations that target the same customers

Direct competition- between products which perform the same function

Indirect competition- between products which are close substitutesclose substitutes

C d ( l b k )• Credit institutions- institutions (in general banks) which provide external capital to the company (to finance its current activity, to make investments etc.)

• Business consultants and other business partners- third parties which support/ assist the management of the company in order to reach its business goals

Outsourcing of subsidiary activities

Audit

• State- sets the legal framework for the activity of the company

f• Public authorities - the institutions of the state with which the company communicates, such as Ministries, labor office, tax office etc.

• Business associations – organizations which representBusiness associations organizations which represent the interests of the company or professional groups (e.g. Trade associations, Chamber of Industry and Commerce etc )Commerce etc.)

• Labor unions- organizations which represent employees’ interests and defend their rightsemployees interests and defend their rights

• Civil society- represented by NGOs, universities, hresearch institutes, initiative groups etc.

• Identify the stakeholders of the chain store Carrefour in Romania and explain their interests related to the company.

Some basic underlying questions: • How should limited economic resources be

used to satisfy society’s needs?Wh d d i h ld b• What goods and services should be produced? Who should produce them?How should these goods and services be• How should these goods and services be divided among the population?

Free market system/ Capitalism

• Individuals own and operate the majority of businesses

h f d d h h• They are free to decide what/how to produce, to whom/ at what price to sell

Phil hi l i i f it li Ad• Philosophical origins of capitalism- Adam Smith, the market as a self-correcting mechanism: “invisible hand”

Mixed capitalism- limited intervention of the state in order to influence prices and wages or to change the way resources areor to change the way resources are allocated

Planned system

• Governments control all or part of the allocation of resources

• Major goal= social equity, private enterprises and private gain is regarded as negative and exploitive

Communism

• Allows individuals the least degree of economic freedom

• Almost all resources are under government control

ll h h d l d l• Resources allocation through rigid centralized planning

• Private ownership is restricted to personal and household items

Socialism

B t it li d i• Between capitalism and communism

• High degree of government planning

• Partial government ownership of land and capital

Government control over the vital industries• Government control over the vital industries

• In not vital industries private ownership is allowed

• High taxes

Trend towards privatizationTrend towards privatization

Economic, political and social systems

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