2013 10 1 PDF

www. j ournal . si ngi dunum. ac.
rs
Vol. 10 No. 1
P:
Singidunum University
Vol. 10 No. 1
ISSN: 2217-8090
Singidunum Journal of Applied Sciences is published biannually.
Contact us:
Singidunum Journal of Applied Sciences
32 Danijelova Street, 11010 Belgrade, Serbia
Phone No. +381 11 3093236, +381 11 3093219,
Fax. +381 11 3093294
E-mail: journal@singidunum.ac.rs
Web: www.journal.singidunum.ac.rs
Printed by: Mladost Grup, Loznica
Scan this QR code
for Website.
Access to full text articles:
Singipedia (www.singipedia.com),
SCindeks (www.scindeks.ceon.rs) and EBSCO (www.ebscohost.com).
Copyright 2013
Singidunum University, Belgrade
All rights reserved.
E B
Professor Milovan Stanii, Singidunum University mstanisic@singidunum.ac.rs
Emeritus Slobodan Unkovi, Singidunum University sunkovic@singidunum.ac.rs
Professor Alexandar Angelus, Lincoln University angelus@lincolnuca.edu
Professor Krunoslav ai, Singidunum University kcacic@singidunum.ac.rs
Professor Francesco Frangialli, UNWTO frangialli@gmail.com
Professor Gunther Friedl, Technische Universitt Mnchen gunther.friedl@wi.tu-muenchen.de
Professor Karl Ennsfellner, IMC University of Applied Sciences, Krems karl.ennsfellner@h-krems.ac.at
Professor Gyorgy Komaromi, International Business School, Budapest gyorgy@komaromi.net
Professor Vasile Dinu, University of Economic Studies, Bucharest dinu_cbz@yahoo.com
Professor Ada Mirela Tomescu, University of Oradea, Oradea ada.mirela.tomescu@gmail.com
Professor Verka Jovanovi, Singidunum University vjovanovic@singidunum.ac.rs
Professor Milan Milosavljevi, Singidunum University mmilosavljevic@singidunum.ac.rs
Professor Olivera Nikoli, Singidunum University onikolic@singidunum.ac.rs
Professor Budimir Staki, Singidunum University bstakic@singidunum.ac.rs
Professor Mladen Veinovi, Singidunum University mveinovic@singidunum.a.crs
Professor Jovan Popesku, Singidunum University jpopesku@singidunum.ac.rs
Professor Zoran Jeremi, Singidunum University zjeremic@singidunum.ac.rs
Associate Professor Christine Juen, Austrian agency for international christine.juen@oead.at
mobility and cooperation in education, science and research, Wien
Associate Professor Anders Steene, Sdertrn University, Stockholm/Hudinge anders.steene@sh.se
Associate Professor Miriam Jankalov, University of ilina miriam.jankalova@fpedas.uniza.sk
Associate Professor Blint Molnr, Corvinus University of Budapest molnarba@inf.elte.hu
Associate Professor Vesna Spasi, Singidunum University vspasic@singiduunm.ac.rs
Associate Professor Goranka Kneevi, Singidunum University gknezevic@singidunum.ac.rs
Assistant Professor Konstadinos Kutsikos, University of the Aegean, Chios kutsikos@aegean.gr
Assistant Professor Theodoros Stavrinoudis, University of the Aegean, Chios tsta@aegean.gr
Assistant Professor Patrick Ulrich, University of Bamberg patrick.ulrich@uni-bamberg.de
Assistant Professor Marcin Staniewski, University of Finance and Management, Warsaw staniewski@vizja.pl
Assistant Professor Gresi Sanje, stanbul Bilgi niversitesi, Istanbul gresi.sanje@bilgi.edu.tr
Assistant Professor Nemanja Stanii, Singidunum University nstanisic@singidunum.ac.rs
E O
Editor-in-Chief: Professor Milovan Stanii, Singidunum University
Deputy Editor: Professor Verka Jovanovi, Singidunum University
Managing Editor: Assistant Professor Svetlana Stanii Stoji, Singidunum University sstanisic@singidunum.ac.rs
Production Editor: Assistant Professor Gordana Dobrijevi, Singidunum University gdobrijevic@singidunuma.c.rs
Prepress: Novak Njegu
Design: Aleksandar Mihajlovi
This is an open access journal which means that all content is freely available without charge to the user or his/her institution. Users are allowed to read,
download, copy, distribute, print, search, or link to the full texts of the articles in this journal without asking prior permission from the publisher or the author.
This is in accordance with the BOAI deinition of open access.
III
CONTENTS
1-10 Analysis of the Application of the Concept
of Corporate Social Responsibility in Local Businesses
Analiza primene koncepta korporativne drutvene odgovornosti
u domaim poslovnim organizacijama
Milenko eha
11-17 The Legal Effects of EU Directive Through its Interpretation
Pravno dejstvo direktive Evropske unije kroz njeno tumaenje
Ivan Nikevi, Jovana Parli
18-27 Directions and Guidelines for Resolving the Crisis
(in Bosnia and Herzegovina and its Entities)
Uputstva i smernice za reavanje krize
(u Bosni i Hercegovini i njenim entitetima)
Zoran Mastilo
28-38 The Role and Potential of Global Distribution System
Amadeus for Tourism Development at the Global Level
Uloga i potencijal globalnog distribucionog sistema
Amadeus za razvoj turizma na globalnom nivou
Ljiljana Radulovi
39-45 The Pricing and Valuation of Swaps
Odreivanje cene i vrednovanje svopova
Jelena Paunovi
This is an open access journal which means that all content is freely available without charge to the user or his/her institution. Users are allowed to read,
download, copy, distribute, print, search, or link to the full texts of the articles in this journal without asking prior permission from the publisher or the author.
This is in accordance with the BOAI deinition of open access.
IV
46-53 Contemporary Approach to Education in Organizations
Savremeni pristup obrazovanju u organizacijama
Lepa Babi, Jelena orevi Boljanovi
54-60 Software Package Transp in the Function of Automatisation
of Transport Management System
Softverski paket Transp u funkciji automatizacije
sistema menadmenta transportom
Marija Matotek, Duan Regodi
61-64 Instructions for authors
1
ANALYSIS OF THE APPLICATION OF THE CONCEPT
OF CORPORATE SOCIAL RESPONSIBILITY
IN LOCAL BUSINESSES
Milenko eha*
Ministry of Interior of the Republic of Serbia
Blvd. Mihajla Pupina 2, Belgrade, Serbia
Abstract:
Modern society demands responsibility and contribution from its members.
Social responsibility in business is related to the obligation of companies
and other business organizations to increase their positive influence and
reduce their negative influence on society. Corporate social responsibility
represents a voluntary commitment on the part of an organization and
its decision to choose and apply the appropriate business practices that
contribute to the community. Nowadays, the concept of corporate social
responsibility is standardized and represents an integral part of integrated
management systems. The concept of corporate social responsibility in the
domestic market has been applied in practice since the beginning of the
process of economic transition, mostly in companies that are privatized
by foreign capital. This study presents a model for the improvement of
corporate social responsibility (CSR) in local business organizations, as
a result of investigations related to the attitudes of managers in domestic
companies regarding the question of corporate social responsibility.
Key words:
corporate social responsibility,
business excellence,
competitiveness,
quality,
business.
SINGIDUNUM JOURNAL 2013, 10 (1): 1-10
ISSN 2217-8090
UDK: 005.336.3:005.35; 005.336.1:334.72
DOI: 10.5937/sjas1301001C
Original paper/Originalni nauni rad
* E-mail: milenko.ceha@mup.gov.rs
INTRODUCTION
Modern society is placing increasing demands on
companies to take over full moral and legal responsi-
bility for their actions, especially when it comes to the
protection of consumers interests and environmental
protection. Modern business philosophy assumes that
an organization must be responsible for its actions and
deeds that afect all active members of the community.
Companies that want to be competitive should satisfy
the interests of a large number of interest groups oper-
ating within a particular business environment.
Corporate ethics has become an important re-
quirement in every business, from the management
boards of the worlds largest corporations to class-
rooms in business schools and universities world
wide. Nowadays, a large number of huge corpora-
tions are faced with having to meet the increasing
requirements for the protection of the environment.
Terefore, they should incorporate thinking based on
those requirements when managing their business.
In terms of changing attitudes of the modern
businessman towards the principle of social respon-
sibility, sir Richard Branson (2010, p.7), British entre-
preneur and innovator and the owner of Te Virgin
Group best said: As a capitalist I was confronted
with an unpleasant and dif cult question: Do I cause
damage? Afer some careful research and investiga-
tion, I discovered that it is in fact possible to be a cap-
italist and still maintain the philosophy of environ-
mental protection I have already been practicing for
some time. I created the expression Geja Capitalism
as a principle, slogan, and directive for progress.
2
Today we hear more and more about corporate
social responsibility (CSR). It represents the com-
mitment to advancing the well being of society
through discretion business practices and contribu-
tions at the expense of company resources (Kotler
and Li, 2007, p.3). Te keyword of this defnition
is discretion. It represents a willful commitment of
the organization to choose and apply business prac-
tices that contribute to the community. Te concept
of corporate social responsibility is now standard-
ized and represents an integral part of integrated
management systems.
One of the most signifcant issues in domes-
tic economy, which contributes greatly to the bad
market performance of our companies on the in-
ternational market, is the inadequate use of modern
methods and techniques of management. Tis refers
in the frst place to knowledge necessary for the ef-
fcient business management. One possible variant
for progress in business is the process of implemen-
tation of foreign experience and the expansion of
knowledge with the aim of improving the quality of
business and achieving competitiveness.
Factors such as the insuf cient experience of a
company regarding the application of modern man-
agement concepts and techniques, lack of respect to-
wards foreign experience, inadequate approaches to
marketing, as well as little or no knowledge of mar-
keting technology, lead to the fact that domestic com-
panies cannot keep up with the international com-
petitors. Acquiring knowledge in line with the world
experience represents a signifcant factor for business
advancement of the domestic companies.
Te question regarding the need for a strategic
shif in the attitudes of local managers towards ac-
cepting the necessity for continuous improvement
of labor productivity and business, based on the
application of knowledge, is not a matter of daily
politics but of business philosophy changes. Te
purpose of education in the feld of management
skills and techniques is to acquire knowledge neces-
sary for the successful management of a company
and/or its operations with the aim of increasing the
productivity of both labor and knowledge.
One of a series of problems of the local business
organizations, which is distinguished by its impor-
tance, is raising the level of social responsibility in
everyday business practices. Te problem of apply-
ing the concept of corporate social responsibility
(CSR) in domestic business organizations has not
still been understood in an adequate manner, thus
making the question of CSR a matter of manage-
ment standards set by the International Organiza-
tion for Standardization.
ANALYSIS OF MAJOR FACTORS AFFECTING
THE OPERATIONS OF A MODERN
ORGANIZATION
New economic conditions require new approach-
es to the study of organizational management, in ad-
dition to business practices. Changes in the market
area most directly afect the way of thinking related
to the company management. Also, the changes in
science and technology are quickly evolving for
instance, a products lifetime in microelectronics
is shortened to only 18 months. According to Kot-
ler (2004, p.156), any new technology is a force of
creative destruction the greatest danger for any
company is not its competition, but the use of new
technological solutions.
An organization striving to be successful and to
maintain and develop a competitive advantage in
the market must be willing to learn. Tis means that
a company must keep up with changes not only on
the market, but also in science, in order to achieve
business excellence. Te companies must monitor
not only the direct competitors, but also those who
are the best in their felds, even if they are not direct
competitors.
Business excellence means that companies should
constantly work on the implementation of the qual-
ity of business of the organization, which is based on
the increase of labor productivity and knowledge of
every employee. Japanese companies were among the
frst to accept the need for action in order to build
a successful future for themselves. Te current ac-
tivities of an organization result in efects that are
visible not only in the present, but that can signif-
cantly afect the sequence of future events. One of
the basic postulates of Japanese companies is pro-
activity. Namely, responsibility for ones own task
is the imperative for every individual, the entire
organization, as well as for all businesses and other
organizations in an economy.
In information society, knowledge becomes the
basic resource of business, which makes it possible
for the remaining three resources, consisting of man-
power, capital, and natural resources, to be produc-
tive. Knowledge becomes a tool, a means for accom-
plishing results in social and economic development.
It is understood in terms of economic knowledge,
SINGIDUNUM J 2013 10 (1) 1-10
eha M. Corporate social responsibility in local business
3
that the management will confront usual prejudices
reorganization, reengineering, new stylization, re-
defnition of own goals, searching for new purpose,
refocusing, revitalization, and revision (Tiesen et al.
2006, p.159).
Todays business can be observed as enterpris-
ing economy. Tis expression dates from the early
1990s, and it is concerned with the reality of mod-
ern economy in which dominates enterprise man-
agement. Te existence of an enterprising economy
makes way for new applications in the feld of man-
agement in new companies, small companies,
non-economic activities, small businesses, and in
the domain of system innovations. In an enterpris-
ing economy, all organizations, regardless of the
type of the task, also have to act enterprisingly and
implement the basic postulates of enterprising in
their organizational structure.
According to Adizes (2006, p.56), enterprising
is a function of creativity and taking risks. Accord-
ing to some modern opinions, an entrepreneur no
longer has to be defned as an individual who is the
owner of a business. Te entrepreneur can be a sin-
gle person who is employed by an employer, but who
must possess skills characteristic of entrepreneurial
conduct. According to Drucker (2003, p.173), jobs in
an organization have to run in an enterprising man-
ner, in order for a company to become an enterpris-
ing organization. In that sense, a model is developed
for corporate enterprise, which gives team work po-
tential, and in turn its members are motivated to
work on achieving success and accepting risks.
Modern society is based on the production and
distribution of information, which in turn demands
a high level of awareness, education, and the use of
information pertaining to all interest groups in an
area (participants). Information technology makes
it possible for the communication development pro-
cess to reach a global level in real time, and at the
same time reduces the foating information. Tat
means that business organizations have to become
aware of the demands of all segments of the public.
Furthermore, it means that business organizations
have to establish an adequate level of understanding
with all segments of social and business areas. As
can be observed, the level of understanding must be
further developed and raised to a higher standard
for every subsequent plan-cycle in order to maintain
a successful business organization.
Every business organization has signifcant infu-
ence on the environment in which it operates. An
organization afects the environment economically,
technically-technologically, ecologically, culturally,
and in a social sense. Moreover, the organization
has to carry out substantial actions for increas-
ing the positive infuence on its environment for
each of these felds. According to Miljevi (2008a,
p.173), modern nature of working in post capital-
istic organizations in the world of business, which
is based on scientifc and technical knowledge and
their results, has been accumulated and created a
new world a world of things. Tis new world of
things demands new business ethics far-reaching
responsibility ethics no matter if it is infuenced by
non-human or human nature.
CORPORATE SOCIAL RESPONSIBILITY
AND MODERN BUSINESS
Social responsibility permeates modern business.
Trends in the development of the concept of busi-
ness ethics and the implementation of this practice
to the organizational structure of a company have
been occurring for over three decades. During the
time-frame of the twentieth century, between the
two world wars, the International Chamber of Com-
merce made a certain code of conduct for this specif-
ic feld of business (e.g. International Code of Con-
duct in the feld of economic advertising was passed
for the frst time in 1937 by International Chamber
of Commerce in Paris).
Japanese managers have made a signifcant con-
tribution to the development and application of busi-
ness ethics. Namely, during the ffies, they actively
started developing concepts for quality management
based on a range of American management systems
and Japanese philosophical principles, such as kaize-
na. In this way, Japanese companies developed a per-
manently evolving system for business productivity,
concern for human resources and partners, and, on
an international level, they managed to avoid com-
petition between domestic companies compete,
yes, but exclusively in their domestic market. Te
Japanese model for developing business quality, in
addition to managing to be perceived in a broader
perspective, was copied in the USA and in Europe
at the end of the eighties. Since then, it has become
one of the most dominant management models and
has, at the same time, become a base for the wider
acceptance of corporate ethics.
According to Drucker (2003, p.53), the main re-
sponsibility of one professional was clearly defned
SINGIDUNUM J 2013 10 (1) 1-10
4
in Hippocratess oath, in an ancient Greece two and
a half thousand years ago: Primum non nocere
above all, do not harm anyone consciously. A pro-
fessional is a private person, but also a public person,
in the sense that the well being of the client sets lim-
its to his actions and words the principle do not
cause damage consciously is in fact the basic rule of
professional ethics, but also a basic rule of ethics for
public responsibility. Fayol (2006, p.45) listed fair-
ness (11th principle) as one of the 14 principles of
administration, Business ethics is defned as a set of
principles, norms and standards of behaviour used
for guiding an individual or a group in business, or
as a group of principles and standards leading to
the acceptable conduct in the business world. In the
most general sense of the word, it is understood as
moral behavior and actions (Miljevi, 2008, p.27).
Corporate social responsibility (CSR) is a con-
cept framework, in which companies integrate so-
cial interests and challenges concerning the envi-
ronment and their business in integration with all
stakeholders by freewill.
State administration in the most developed coun-
tries around the world has, for the last three decades,
been developing legislations in order to prevent
the degradation of the environment and natural
resources, improve and protect the environment,
and defne specifc guidelines for sustainable de-
velopment on a global level. Business entities have
to satisfy the goals of a greater number of interest
groups in their environment. Modern society is in-
creasingly signifying the demand for companies to
defne their social responsibility.
Social responsibility (SR) in business is related
to the obligation of the company and other business
organizations to increase their positive infuence
and reduce their negative acting on society. Accord-
ing to Eric Reinert (2010, p.200), a Norwegian econ-
omist, capitalism is based on own interests, due to
the fact that private vices can be converted to pub-
lic benefts. Conclusion of debt debate during the
time of enlightenment was that the best warranty
for public sector was to ensure that own interests
matched with social interests. Successful capitalists
earn money through imperfect competition. When
this imperfect competition is realized through new
technology, as is ofen the case, it is possible to ob-
serve the relation between one`s own interests and
social interests.
According to the World Council for Sustain-
able Development, corporate social responsibility
represents a companys commitment to contribute
to sustainable economic development through co-
operating with the unemployed, their families, the
local community, and society in general in order
to improve the quality of their lives. In the Green
Book, the European Union states that being socially
responsible is not only to respect legal obligations,
but to go further than the mere compliance with the
law and to invest even more in human capital, the
environment, and relations with stakeholders.
Tus, to be socially responsible means to look
afer the needs of individuals as well as of the com-
munity invest in health-care, human resources,
culture, and healthy environment. Simply put, it
means to develop human relations with diferent
social subjects.
Generally speaking, CSR assumes that for the
proft they have made, companies are responsible
not only to their shareholders, but also to the indi-
viduals and groups that are in any way afected by
that proft.
Corporate social responsibility represents deter-
mination for the development of the well-being of
a community through discretion business practices
and contributions at the expense of company re-
sources (Kotler and Li, 2007, p.3). Te keyword of
that defnition is discretion. It refers to the goodwill
of the organization and its decision to choose and
use business practices that contribute to the com-
munity. Some reasons for using and developing cor-
porate social responsibility are as follows: increasing
market participation, strengthening the position of
brands, strengthening corporate image, improving
the ability to attract and motivate employees, reduc-
ing operating costs, and increasing attractiveness for
investors.
According to some opinions, we can today ob-
serve six social initiatives that act upon the domain
of corporate social responsibility:
1. Promoting social goals,
2. Marketing associated with social goals,
3. Corporate social marketing,
4. Corporate philanthropy,
5. Volunteer work for the community,
6. Socially responsible business practices (Kot-
ler and Li, 2007, p.3).
Promoting social goals implies that a company
provides funding, in-kind contributions, or other
resources, to develop awareness of social order, or
to collect certain funds for the beneft of this social
SINGIDUNUM J 2013 10 (1) 1-10
5
goal. Marketing associated with social goals means
that a company is obliged to associate a certain per-
centage of income, realized by selling products or
services, with a certain social goal. Corporate social
marketing means that a company facilitates the de-
velopment and/or implementation of a campaign
for a change in conduct towards the progression of
health, security, environment, or well being of the
community. Corporate philanthropy is a practice in
which a company directly contributes to a charity
or social action; this is mostly given in the form of
grants as cash or through in-kind donations. Vol-
unteer work for the community means that a com-
pany upholds and encourages its employees, just as
employees at partnership organizations volunteer to
help local social organizations and projects. Socially
responsible business practices can be understood as
situations in which a company, in its sole discre-
tion, adopts and implements business practices that
support a cause, which should improve the quality
of life in the community and the protection of the
environment.
THE ROLE OF CORPORATE SOCIAL
RESPONSIBILITY IN ACHIEVING
BUSINESS EXCELLENCE
Te latest trend in the development of quality
management is the integration of management stand-
ards and the process of organizational management.
One of the practical ways to implement corporate eth-
ics and corporate social responsibility is the imple-
mentation of integrated management systems (IMS).
Te International Management Standards that are
published by ISO (such as ISO 9000, ISO 14000, ISO
18000) incorporate elements related to social respon-
sibility. In addition, the standard ISO 26000, which
is directly related to the question of corporate social
responsibility, is being developed. Te implementa-
tion of an integrated management system allows for
a reduction in the time necessary to create a concept
of total quality of management TQM, which creates
conditions for companies in less developed countries,
in response to the demands of the international stand-
ards, to build a business system that allows the formu-
lation of world-class products and the implementa-
tion of business excellence. Applying the concept of
IMS may be of great importance for companies com-
ing from countries undergoing transition. Instead of
the lengthy creation process of TQM, it is possible
to achieve business excellence in a shorter period of
time through the application of modules, one by one,
into integrated management systems in compliance
with the requirements of international standards ISO
9001, ISO 14001, ISO 18002 and SA 8000. Each of
these standards incorporates some of the assump-
tions of the concept of corporate social responsibil-
ity, and standard SA 8000 is directly related to the
development of this principle. Social Accountability
8000 (SA 8000) represents an international standard
for social responsibility created by CEPAA (Council
on Economic Priority Accreditation Agency) and is
intended to provide an ethical source for products
and services. Tis standard is voluntary in nature
and can be applied to any company regardless of its
size or activity. Also, this standard can replace or be a
supplement to companies or industries with a specifc
code for social responsibility. International standard
SA 8000 was created in 1997 and revised in 2001. Te
Standard SA 8000 is based on ISO 9000, but its goal
is to improve working conditions in factories all over
the world. Te diference between these standards
lies in the fact that SA 8000 includes characteristics
required in addition to the system. Namely, require-
ments in SA 8000 require from the employer not to
exploit his employees but to provide a safe working
environment, not to employ children or force anyone
to work, and not to demand from employees to work
more than 48 hours per week. SA 8000 is based on
nine elements, as follows:
1. Child labour,
2. Forced labour,
3. Health and safety,
4. Freedom of association and right to a collec-
tive agreement,
5. Discrimination,
6. Discipline,
7. Working hours,
8. Compensation,
9. Management system.
Te elements of these standards demand from
the employer not to hire children under 14 (ac-
cording to the criteria in the UN, children under
14 should not be employed), not to apply forced
labor (for example, worker has to work overtime,
otherwise he will be fred), and to organize in such a
way so that the processes are in accordance with the
need to protect the workers health. Te employer
must ensure the employee the freedom to join trade
union organizations and prevent various forms of
discrimination against workers (gender, religion,
SINGIDUNUM J 2013 10 (1) 1-10
6
race, age). Te employer must establish an adequate
level of labor discipline that does not violate the dig-
nity of the individual worker, and working hours
that are in accordance with International Labor
Organization (ILO) and the conference of the Free
Labor Union. Te employees should be adequately
rewarded for their work and their employer must
provide such a management system that complies
with the standards of the International Management
Standard.
In the policy document ISO Horizon 2010
standards for sustainable world, Central Secretariat
ISO identifed as key elements: urgent approxima-
tion towards development of social responsibility,
covering aspects of the economy, society, and en-
vironment, in which all participants in society have
their role, and in addition, companies and other
organizations create new commitments. Te Inter-
national Organization for Standardization defned a
series of standards ISO 26000 and provided guide-
lines for social responsibility (SR) at the internation-
al level. Standard ISO 26000 is directed towards all
kinds of companies, in public and private sectors, in
both developed and transitioning countries. Stand-
ard ISO 26000 has added value to the existing initia-
tives for SR by providing harmonization and global
guidelines based on an international consensus by
the leading representatives of professional groups of
stakeholders, thus promoting the application of the
best practices of SR around the world.
CORPORATE SOCIAL RESPONSIBILITY
AND COUNTRIES IN TRANSITION
Te question of the establishment and develop-
ment of corporate social responsibility is concerned
with achieving competitiveness in all developed
countries around the world. Nowadays, CSR is a
ubiquitous concept which allows companies from
developing countries to maintain and develop a
competitive position on the global market, to de-
velop understanding with stakeholders in the re-
gion. Companies from the countries in transition
still have problems with the establishment of CSR.
Te problems that economy undergoing the pro-
cess of transition faces represent the consequences
of incompleteness of the socialist economic system.
Transition represents the transformation of a na-
tional economy, from a centrally planned economy
(or socialist economy), to a market economy. Tran-
sition represents ownership, a structural and insti-
tutional change in the manner of doing business,
and improvement of the ef ciency of business in ac-
cordance with the requirements of the international
market and global market trends.
Te transition from planned to market economy
requires time. A generally accepted theory is that a
general model of transition does not exist - every
national economy has its own particular way of de-
termining the pace of economic change and the hi-
erarchy of priorities that guides the process of tran-
sition. Improving competitiveness of one national
economy in the global economy is closely related to
the economic development, the increase of employ-
ment, and efective earning which is based on the
imperative to increase productivity.
On the other hand, the global economy is reality,
and the business imperative in the global economy
is permanently increasing productivity for all key-
business resources (primarily labor and knowledge).
Te inadequate use of knowledge represents the
biggest problem for most companies coming from
countries in transition and with a capital of domestic
origin. Namely, habits inherited from the past infu-
ence the inappropriate treatment of education; espe-
cially knowledge not enough attention is paid to
the fact that knowledge represents the basic business
resource that should be constantly improved. Specif-
cally, this means that companies from transitioning
countries still do not apply all foreign business expe-
rience and modern management techniques in order
to constantly improve their business.
When it comes to the implementation of CSR, the
situation is particularly unfavourable. Ethical princi-
ples in business are still developing. Very few com-
panies apply the concept of CSR. Companies usually
choose corporate responsibility only declaratively,
while their business is solely based on personal inter-
ests. Te public interest is only a declarative category.
A particular problem for countries in transition
are branches of multinational and transnational cor-
porations that behave inappropriately in relation
to the developing market and that generally avoid
applying the integrated model of business ethics in
markets in transitioning countries. As a result, multi-
national and transnational corporations make higher
profts on the one hand and delay the development of
local markets on the other.
When it comes to competitive relationships, free
competition is only declaratively understood, while
in most countries in transition the state monopolies
still prevail (public companies). Tere are compa-
nies in transition countries that rely on close ties
SINGIDUNUM J 2013 10 (1) 1-10
7
with state administration when achieving their own
interests.
Te issue of corruption is certainly the one of the
most important issues concerning the development
of market mechanisms in countries in transition.
Corruption is more obvious and present in coun-
tries in transition, due to the underdevelopment of
market mechanisms, the degree of economic free-
dom, as well as the underdeveloped democratic sys-
tem. Te democratic system of government, market
mechanisms and legal infrastructure which is ad-
equate to economic and social development, are the
basic requirements for minimizing corruption.
Te feld of corporate philanthropy is particularly
suitable for corruptive actions in countries in transi-
tion. Namely, undeveloped market mechanisms and
the lack of an adequate tax system that clearly dis-
tinguish philanthropy from other benefts, make it
possible for certain companies from transition coun-
tries to use this form of CSR in order to achieve their
personal proft interests (the fnancing of a certain
group with the aim to achieve proft). Particularly
interesting is the case of lobbying, done by compa-
nies coming from the most developed countries of
the world, which fnance certain foundations that are
turned to political education (politicians, ofspring
of political parties, young experts, etc.). By fnancing
certain foundations, multinational and transnational
corporations attempt to achieve their own economic
interest by using individuals, or groups, who have
been of cially fnanced by foundations (training,
scholarship abroad, study visit abroad, etc.).
Competition from abroad is looking for a way
to avoid the mechanism of free competition in
cooperation with quasigovernment companies or
public companies, to enlarge proft and develop the
market. In most countries in transition, consum-
ers are inadequately protected, from both domestic
and foreign producers. It is well-known that some
large multinational and transnational corporations
have a higher quality products for developed mar-
kets and lower quality products for markets in the
transition countries.
Te issue of the protection of the environment
is still insuf cient even though there is a legal in-
frastructure. Te reason for that is that there is not
enough experience in its application, and in some
cases it is deliberately avoided. Companies from de-
veloped markets buy companies from the so-called
dirty technology sectors in transition countries to
take advantage of the existing resources and quali-
fed workforce, but also slight legislations in this
feld. Te situation is even more critical for the same
companies that were purchased by local entrepre-
neurs, who are doing their best to avoid legal norms
in the feld of environmental protection.
Workers are particularly targeted in countries
in transition. Undeveloped social infrastructure,
the absence of social dialogue institutions, and at-
rophied unions afect the domestic and foreign en-
trepreneurs behavior very inappropriately regard-
ing the globally accepted standards in the feld of
workers right.
In all developed economies, unions represent the
crucial factor for employment and problem solving
in the domain of employment. On the other hand, in
transition countries, the underdevelopment of union
organizations is evident, which in turn has negative
impact on the protection of workers rights, espe-
cially in the early stage of the transition process. It
has also been observed in the frst phases of the tran-
sition process that some union organizations look
much more like political organizations than like or-
ganizations that should represent workers interests.
Unions must have a signifcant role in the process of
privatization in order to protect workers and their
rights. Te chamber system includes almost 2/3 own-
ership (state property), and with its members (mostly
comprised of social companies) is currently exempt
from acting in tripartism.
Te near future already points out the need to
include the elements of CSR in business practices in
companies from transition countries. Tese compa-
nies are expected to take part in fair competition, the
protection of consumers interests, the protection of
workers rights etc. When speaking about competi-
tion and elements of business ethics, all developed
markets require of companies from countries in
transition to have at least one, and ofen multiple,
certifcates of the standards applied in management
(quality management system, environmental man-
agement, management of health and safety, etc.).
All exporters and food producers from countries in
transition, wishing to export to the EU, must have
food safety certifcation (HACCP), while products
incurred as a result of certain treatments that may
be harmful to the environment require certifcation
of environmental management (ISO 14000). Te
question here is not whether companies from tran-
sition countries need to deal with the implementa-
tions of business ethics, but how fast they can keep
pace with the developed world.
SINGIDUNUM J 2013 10 (1) 1-10
8
ANALYSIS OF APPLICATION OF THE
CONCEPT OF CORPORATE SOCIAL
RESPONSIBILITY IN LOCAL BUSINESS
Te concept of CSR has been applied and de-
veloped in local business organizations from the
beginning of the transition process. Te corporate
social responsibility awareness is present in Serbia,
but on the level of concept in formation, which is
just beginning to be recognized as important and
socially desirable, rather than on the level of realized
behavior with which we have experience. Tere are
signifcant barriers when it comes to promoting the
idea: many companies still do not understand the
long-term benefts that bring forth socially respon-
sible access. Namely, many businessmen and entre-
preneurs believe that they do not have enough of the
required resources or knowledge at their disposal to
engage in various strategies. Te concept of CSR is
developing in our country, and the major carriers
have so far been NGOs (e.g. Smart Collective). In
the Serbian Chamber of Commerce (which adopted
the codex of corporate behavior and business ethics
and participates in awards for CSR), the media (B92,
an economist magazine group), and scientifc insti-
tutions (universities and social institutes), have been
adopting CSR, but in practical sense, CSR has been
widely applied in companies with foreign capital.
Certain elements of the CSR concept had been
applied, both in the time before the transition pro-
cess began and several decades before that. One of
the most signifcant forms of CSR applied in Serbia
was corporate philanthropy.
Although certain forms of actions existed before
transition, the concept of CSR has actually been ap-
plied only for the last ten years and primarily by
large local government systems, such as EPS and
Telecom Serbia etc., and in corporations where
the foreign capital prevails. Te reason for this is
the fact that many local companies belong to the
group of small- and middle-sized companies, which
by defnition have no funds for investment in this
area, and no knowledge. Foreign Corporations have
the funds and the human resources necessary for
the implementation of activities in the domain of
CSR, and they also realize CSR for their own goals
related to market development.
On the other hand, it is observed, in theoretical
and methodological terms, that the concept of CSR
is still under study it is mainly studied in the the-
matic areas of management and corporate ethics, or
possibly integrated management systems. Te self-
study of CSR concept has not yet reached the local
scientifc community. Regarding this, there is a need
for a more comprehensive study of this important
area that touches both management and business
ethics and quality management.
Research on the application of the concept of
corporate social responsibility in companies oper-
ating in the domestic market was undertaken from
June to October 2010 on the territory of Serbia, in
order to obtain the opinion of managers of the com-
panies regarding the implementation of the concept
of corporate social responsibility. Some of the most
important results of the research are as follows:
Te managers emphasize the following factors
as the basic one for business advancement: up-
grading employees skills 27.6%, improvement
of the quality of business 17.3%, applying mod-
ern methods and techniques of management
11.2%, development and application of infor-
mation technology 10.2%, increasing business
productivity 8.2%,
Te essential elements for the development of
competitiveness of local companies are as fol-
lows: continuous improvement of skills and
knowledge of the management and employees
22.2%, applying modern methods and techniques
in management 21.2%, standardization of the
quality of business 15.1%, purchasing modern
technological solutions and equipment 12.1%,
the importance of investment in marketing
9.1%,
Major obstacles in development of competitive-
ness for local companies are: shortage of fnan-
cial capital 24.7%, lack of knowledge 21.6%,
obsolete equipment and technology 15.7%,
lack of resources 8.8%, insuf cient stimulation
of the business environment 8.8%,
Te most frequent activities within the domain
of CSR in the analyzed business organizations
are as follows: socially responsible business prac-
tices 37.7%, promoting social goals 26.4%,
corporate social marketing 15.1%, corporate
philanthropy 9.4%, marketing connected to
social goals 5.6%.
Most of the respondents or more precisely 81.25%
of them believe that there are local companies that
can be characterized as business executive organiza-
tions. Taking into consideration all the limitations
this model reveals, factors for the improvement of
business and elements for the development of com-
SINGIDUNUM J 2013 10 (1) 1-10
9
petitiveness as well as social initiatives in the feld of
CSR which are to be applied, local companies can
achieve certain level of business excellence.
Based on the research results, a model has been
developed for the improvement of CSR in local
business organizations and it includes the following
elements: satisfying interest groups, basic factors to
improve business, necessary elements for the de-
velopment of competitiveness in local companies,
major obstacles in developing competitive local
companies, process of organizational management,
implementation of CSR activities with the aim to
satisfy interests groups, analysis of the fulfllment
of the requirements of interests groups, and perma-
nent improvement of business.
Tis model points out the need to build strong
relations between the application of integrated man-
agement systems, the continuous improvement of
the knowledge of employees and managers, pro-
ductivity, and business excellence. Quality and CSR
are closely connected the concept of integrated
management systems contains essential elements
of corporate social responsibility, the quality edu-
cation and application of the concept of quality di-
rectly develops the concept of CSR in local compa-
nies. Te implementation of social initiatives in the
feld of CSR by a feedback system, and continuous
improvement of business, increases satisfaction of
interests groups in the environment, and thus con-
tributes to the success of the business.
CONCLUSION
Modern business requires new approaches to the
management of an organization. Social responsibil-
ity is the supreme principle in modern business. All
the corporations that are successful in global propor-
tions are socially responsible organizations. Business
practices of the worlds most successful corporations
show that there is a high degree of correlation be-
tween the positive opinions of interest groups within
the company and the quality of business. Companies
that actively and continually apply modern methods
and management techniques have a much better
chance of strengthening their competitiveness on
the global market and acquiring a stable market po-
sition with perspectives for further market growth.
Nowadays, the concept of social responsibility rep-
resents one of the most important principles of
modern business, which has a direct infuence on
the developing market position of a company and
on strengthening the competitiveness of an organi-
zation. Making a proft today is closely related to
social responsibility and socially responsible busi-
ness practices.
A recent analysis of the local market shows that
all socially responsible companies are at the same
time leaders in the feld of quality. Te improvement
of competitiveness of local companies is under di-
rect infuence of the development of the concept of
quality management and corporate social responsi-
bility. Local companies need to clearly design their
own development strategy in accordance with the
European and global integration trends, and the
application of modern methods and techniques of
management, as integrated management systems,
which represents the basic assumption of success-
ful market development. Applying the concept of
corporate social responsibility may be of great im-
portance for the companies coming from transition
countries. CSR allows for improvement and com-
petitiveness in the global market.
Te most important trends in the development
of competitiveness of local business organizations
are the adequate use of knowledge in organiza-
tions, the development of institutions in a business
environment, and the development of legislation.
Operation of domestic companies must be based
on the application of management techniques that
support competitiveness, innovations and fexibil-
ity, and the fact that CSR concept occupies a very
important place.
REFERENCES
Adies, I. (2006) Upravljanje promenama: mo uzajam-
nog potovanja i poverenja u privatnom i porodinom
ivotu, poslu i drutvu. Novi Sad: Adizes. (in Serbian)
Brenson, R. (2010) Nita nije nemogue. Belgrade: Plato.
(in Serbian)
Draker, P. (2003) Moj pogled na menadment. Novi Sad:
Adizes. (in Serbian)
Fajol, A. (2006) Opti industrijski Menadement. Novi Sad:
Kotler, F. (2004) Marketing od A do Z. Novi Sad: Adizes.
(in Serbian)
Kotler, F., Li, N. (2007) Korporativna drutvena odgovor-
nost: uiniti najvie za svoju kompaniju i za izabrani
drutveni cilj: najbolje prakse vodeih kompanija. Bel-
grade: Hesperia: Faculty of Economics, University of
Belgrade. (in Serbian)
SINGIDUNUM J 2013 10 (1) 1-10
10
Miljevi, M. (2008) Poslovna etika i komuniciranje. Bel-
grade: Singidunum University. (in Serbian)
Reinert, E. (2010) Spontani haos: ekonomija u doba vu-
kova. Belgrade: igoja tampa. (in Serbian)
Tisen, R., Andriesen, D., Depre, F.L. (2006) Dividenda
znanja. Novi Sad: Adizes. (in Serbian)
Received: May 21st, 2012
Correcton: June 22nd, 2012
Accepted: July 3rd, 2012
ANALIZA PRIMENE KONCEPTA KORPORATIVNE DRUTVENE
ODGOVORNOSTI U DOMAIM POSLOVNIM ORGANIZACIJAMA
Rezime:
Moderno drutvo zahteva veliku odgovornost i doprinos svih svojih lanova.
Drutvena odgovornost u poslovanju se odnosi na obavezu kompanija i drugih
poslovnih organizacija da poveaju pozitivni uticaj a smanje negativni uticaj
na drutvo. Korporativna drutvena odgovornost podrazumeva dobrovoljno
opredeljenje kompanije i njenu odluku da izabere i primenjuje odgovarajue
poslovne prakse koje doprinose zajednici. Koncept korporativne drutvene
odgovornosti je danas standardizovan i predstavlja sastavni deo integrisanih
sistema menadmenta. On se primenjuje na domaem tritu od poetka procesa
ekonomske tranzicije, uglavnom u kompanijama koje su privatizovane stranim
kapitalom. Ovaj rad prikazuje model za poboljanje korporativne drutvene
odgovornosti (CSR) u domaim poslovnim organizacijama, kao rezultat ispi-
tivanja stavova menadera u domaim kompanijama o pitanjima koja se tiu
korporativne drutvene odgovornosti.
Kljune rei:
korporativna drutvena
odgovornost,
poslovna izvrsnost,
konkurentnost,
kvalitet,
poslovanje.
SINGIDUNUM J 2013 10 (1) 1-10
11
THE LEGAL EFFECTS OF EU DIRECTIVE
THROUGH ITS INTERPRETATION
Ivan Nikevi
1,*
, Jovana Parli
2
1
Singidunum University, Department of Informatcs and Computng
32 Danijelova Street, Belgrade, Serbia
2
University of Belgrade, Faculty of Law
67 Kralja Aleksandra Boulevard, Belgrade, Serbia
Abstract:
Based on the interpretation of the European Court of Justice regarding
the Treaty provisions, the EU Directive creates only a vertical direct effect.
However, through judicial interpretation, the Directive achieves diverse
and far-reaching effects. Interpretation of national laws by Member States
courts, in accordance with the purpose and wording of the directive, can
directly affect private individuals and lead to horizontal direct effect. The
European Court of Justices interpretation of the case based on non- im-
plementation of the directive has created one of the general principles of
Community law, in order to mitigate disadvantages and limitations of the
doctrine of horizontal direct effect. The interpretation of the directive is
gradually expanding the scope of its effects.
Key words:
effects of directives,
interpretation,
horizontal direct effect.
ISSN 2217-8090
UDK: 340.132(4-672EU); 341.6(4-672EU)
DOI: 10.5937/sjas1301011N
Review paper/Pregledni nauni rad
* E-mail: inikcevic@singidunum.ac.rs
INTRODUCTION
Te specifcity of the European Union that stands
out most is the one regarding the judiciary. It had
a decisive role in the formation of this political ar-
rangement and it still afects this process. By ad-
dressing the ECJ
1
, and through its judgments and
rulings, the courts of the Member State undoubtedly
had and still have a crucial infuence on the con-
struction of a uniform European legal system.
As a form of secondary legislation
2
, Directive
requires Member State of European Union to at-
tain a particular goal. Tey require implementing
measures, but at the same time, they do not impose
a means for achieving those results. Once directives
are adopted, a Member State has a period of time
for the implementation. In order to achieve that
aim correctly, the state is commonly required to
innovate laws. Trough transposition, the state has
to bring domestic law in line with the objectives of
the directive. When Member State has transposed a
directive only in theory and failed to abide by the di-
rective in practice, legal action against the state may
be initiated in the European Court of Justice. Like-
wise, the legal action may initiate if the state failed
to pass the required national legislation or failed to
pass it adequately.
Te EC Treaty
3
does not provide for legisla-
tive measures to be directly efective. Following a
teleological interpretation, the European Court of
Justice created this principle and the criteria
4
that
were more clearly articulated in later cases
5
. In Van
Gend and Loos v. Nederlandse
6
, the Court gave a
broad and purposive interpretation of the Treaty of
Rome
7
, concluding that TEEC
8
has the features of a
constitutional charter of an autonomous communi-
ty, although concluded between sovereign states by
way of international agreement. Te Community
constitutes a new legal order of international law
for the beneft of which the states have limited their
sovereign rights, albeit within limited felds and the
subjects of which comprise not only member states
but also their nationals. Independently of the legis-
lation of member states, community law is also
12
intended to confer upon them rights Tese rights
arise not only where they are expressly granted by
the treaty, but also by reason of obligations which
the treaty imposes in a clearly defned way
9
Tak-
ing into consideration the wording, purpose and the
general spirit of the Treaty, provisions could have a
direct efect on individuals, for which beneft they
are primarily established.
For the purpose of this paper, direct efect will
be considered only in relation to the directive. Ac-
cording to Article 288 TFEU: A directive shall be
binding, as to the result to be achieved, upon each
Member State to which it is addressed, but shall
leave to the national authorities the choice of form
and methods. Te European Court of Justice in-
terpreted this article emphasizing the result to be
achieved, thus extending the direct efect of direc-
tives. Te binding efect attributed to directive de-
mands the possibility that the obligation it imposes
may be invoked by those concerned. Another rea-
son for direct efect is that the useful efect of a
directive would be weakened if individuals were
prevented from relying on it before their national
courts. Te efectiveness of EU law is stressed, as
such, by the doctrine of direct efect. Likewise, the
Member state that failed to adopt the implement-
ing measures required by the directive within the
prescribed period may not plead, as against indi-
viduals, its own failure to fulfll the obligations that
directive entails. Te doctrine of direct efect refers
to liability of the Member State and emanations of
the state for non-implementation of directives by
other organs of the State. Regardless of whether the
State has introduced national laws to implement
provisions, state citizens are able to enforce them
by making claims before domestic courts. Te three
conditions that have to be satisfed in order to make
it possible for an individual to rely on direct efect
are as follows:
a) the relevant provisions of the directive must
be unconditional
10
and suf ciently clear and
precise
11

b) the deadline for implementing the Directive
must have expired without the directive, or
the relevant part of it, having been correctly
and completely implemented into the law of
the Member State in question
c) the action must be against the State or an
emanation of the State.
However, the European Court of Justice kept
limited the impact of directives on vertical direct
efect. Tis efect was hinted in Van Duyn v. Home
Of ce
12
, where the public policy limitations have
not prevented the provision of the Directive that
provided the freedom of movement to be directly
efective. Provision was suf ciently precise and con-
ditional on exercise of independent body discretions
which are subject to judicial control.
Preventing enforcement of directives against in-
dividuals remains the sole responsibility of the state.
Directives are binding exclusively on the Member
States to whom they are addressed and require a
positive action by the national authorities, not im-
posing obligations on individuals. In contrast, hori-
zontal direct efect implies that individual may claim
its rights deriving from EU law in a dispute against
another individual.
THE HORIZONTAL DIRECT EFFECT
THROUGH INDIRECT METHODS
Te European Court of Justice has been the main
actuator of the European integration process since
its establishment. Interpretation rules are not to
be found in primary or secondary law. Te ECJ
13

has exclusive jurisdiction over the interpretation,
as a supranational court. Member State court is
obliged to guarantee full efectiveness of European
law within its jurisdiction. Te primacy of an inter-
pretation in accordance with EU law is refected in
obligation of the Member State to interpret law in
compatibility with primary law and the conformity
with secondary law. More precisely, upon expiry of
the deadline for implementation, national court is
required to interpret its law in accordance with the
directive. Establishing the principle that the courts
of the Member States should interpret their national
law in the light of the wording and purpose of the
Directive
14
, the European Court of Justice circum-
vented the limitation of the direct efect. Other-
wise excluded, horizontal direct efect may appear
through the doctrine of indirect efect. Notwith-
standing that in the Von Colson
15
Case Directive did
not meet the requiremets for direct efect, set in Van
Gend and Loos, the ECJ held that there was a duty
of achieving the result prescribed by the Directive
and the duty of ensuring the compliance with this
obligation by all concerned authorities, including
the courts. Tis way of interpretation can directly af-
fect and, therefore, disadvantage individuals. When
the party against whom the directive is sought to be
enforced is a private individual, and therefore direct
efect is not applicable, national courts are obliged
to construe provisions to comply with directives,
SINGIDUNUM J 2013 10 (1) 11-17
Nikevi I., Parli J. The legal effects of EU directive
13
and thus indirectly apply provisions to individual.
Te European Court of Justice acknowledged such
duty by formulation: [T]he Member States obliga-
tion arising from a Directive to achieve the result
envisaged by the Directive and their duty under
Article [4(3) TEU] to take all appropriate meas-
ures, whether general or particular, to ensure the
fulfllment of that obligation, is binding on all the
authorities of Member States including, for matters
within their jurisdiction, the courts. It follows that,
in applying the national law and in particular the
provisions of a national law specifcally introduced
in order to implement [a Directive], national courts
are required to interpret their national law in the
light of the wording and the purpose of the direc-
tive in order to achieve the result referred to in the
third paragraph of Article [288].
16
In Marleasing
17
case, that was litigated among private individuals,
the Court held that national courts should decide
in a way as to give efect to its obligations under the
Community law, so that the question in a dispute
is viewed through EU law. Tis duty is limited by
separation of powers by judiciary and legislature,
and the consistent interpretation must not lead to
the interpretation contrary to the national norm.
However, if the national courts cannot interpret
provisions in conformity with directives, then the
state faces the possibility of compensation by the
principle of State Liability.
THE PRINCIPLE OF STATE LIABILITY AS
A WAY TO CIRCUMVENT THE LACK OF
HORIZONTAL DIRECT EFFECT
Te Member State authorities are primarily re-
sponsible for the creation and above all, for the im-
plementation and enforcement of EU law. Tey are
obliged to take all measures necessary to ensure the
implementation and adjustment. Article 4(3) of the
Treaty contains a legal principle under which na-
tional courts are obliged to protect the individual
rights conferred by Community law. According to
Article 5 of the Treaty, the state is required to take
all appropriate, whether general or particular meas-
ures, to ensure the implementation of Community
law and to nullify the unlawful consequences of its
breach. As a result of the failure to enforce EU law,
an individual can sufer damage. A general principle
of State responsibility, for non-compliance with EU
law, was developed by European Court of Justice
in order to mitigate disadvantages and limitations
of the doctrine of horizontal direct efect. Te Eu-
ropean Court of Justice created a doctrine of state
responsibility for the individuals loss caused by non
implementation of the directive. Te full efective-
ness of EU law would be weakened if individuals
were unable to obtain reparation when the rights
granted to them are infringed by a breach of EU law
for which the State can be held responsible. Before
the national courts, an individual may invoke the
obligation of the state to compensate for damages
caused by its failure to implement a directive.
Te principle of State Liability and its elements
were created by a case in the feld of employment
rights, due to the fact that directives provide most
of the employment and industrial relations law. In
Andrea Francovich and Others v. Italian Republic
18
,
ECJ
19
based its decision primarily on the efective
judicial protection and the efect utile doctrines, as
a consequence of elementary values underlying the
EU legal order. In th is sense, the obligation of resti-
tution of damage by Member State is inherent in the
system of the Treaty. Te full efectiveness of Com-
munity law would be impaired and the protection
of the rights that they grant would be weakened,
and the more so as such a possibility of reparation
by the Member State is particularly indispensable
where the full efectiveness of Community rules is
subject to prior action on the part of the State and
where, consequently, in the absence of such ac-
tion, individuals cannot enforce before the national
courts the rights conferred upon them by Commu-
nity law.
20

Non-compliance with directive may result from
partial, incorrect or inadequate implementation,
as well as from failure to implement the directive
as was the case in Francovich and Bonifaci v. Italy.
Italian Republics failure to implement the directive
80/987/EEC on the protection of employees in the
event of their employers insolvency had previously
been recorded by the European Court of Justice in
enforcement proceedings brought by the Commis-
sion against the Italy. In Francovich case, a group
of employees- Mr. Francovich, Mrs. Bonifaci and
33 more applicants, in the main proceedings were
owed wages by their employers, who had become
insolvent. Forasmuch as Italy failed to implement
the directive 80/987/EEC that aimed to create a
mechanism that would guarantee the payment of
the wages owed to them, the applicants brought
proceedings against the Italian Republic and argued
that the Italian state should compensate them their
arrears of wages. Te European Court of Justice de-
cided that the 80/987/EEC Directives provisions
SINGIDUNUM J 2013 10 (1) 11-17
14
are not fully unconditional, clear and suf ciently
precise to create a direct efect. Tus, the ECJ
21
con-
sidered the question of State Liability without being
brought into direct link with the doctrine of direct
efect.
Moreover, the Court
22
introduced the principle
indicating that the conditions of the principle de-
pend on the nature of the breach of EU law, giving
rise to loss and damage. Tree substantive condi-
tions are required:
a) the result prescribed by the directive should
entail the grant of rights to individuals.
b) Te content of those rights must be capable of
being identifed on the basis of the provisions
of the directive.
c) Tere must be a causal link between Member
States breach of the obligation and the loss
and damage sufered by individuals.
As to the procedural requirements, the European
Court of Justice noted that in the absence of EU leg-
islation on this matter, it is on the national law to
determine the competent courts and lay down the
procedural rules that will provide complete protec-
tion of the rights that individuals derive from EU
law, in accordance with the principles of equiva-
lence and efectiveness. Terefore, national courts
should ensure suitability of domestic tort remedies
in such cases, so that they are not less favorable than
those governing similar domestic actions. Likewise,
national procedural rules shall not render virtually
impossible or excessively dif cult the exercise of in-
dividuals rights in damages.
In the cases that followed the case of Francovich,
such as Brasserie
23
, British Telecommunications
24
and Dillenkofer
25
, the European Court of Justice
repeated its recognition of principle, recalling that
is on Member State courts to assess the amount of
damage, thus ensuring that national law makes pos-
sible for individuals to obtain reparation. In Brasse-
rie du Pcheur and Factortame, clearer conditions
were set out:
a) rule of law infringed must be intended to con-
fer rights on individuals,
b) the breach is suf ciently serious and the ques-
tion is whether the Member State has mani-
festly and gravely disregarded the limits on its
discretion,
c) there is a causal link between breach and
damage.
Te Court held that the principle of State Li-
ability was not confned to a failure to implement a
Directive but to all acts and omissions (legislative,
executive and judicial) infringing Community law,
which means breaching all EU laws, irrespective of
direct efect.
In British Telecommunications, a requirement
that the breach must be suf ciently serious had a
decisive infuence. To ascertain that this condition is
present, clarity and precision of the infringed provi-
sion has a decisive role. Tis condition, as the Court
held in Dillenkofer, is applied regardless of the de-
gree of discretion enjoyed by Member States. In
later cases
26
the ECJ elaborated the principle more
fully, and eventually spread its implementation.
CONCLUSION
According to Article 288 TFEU, directives are bind-
ing only on the Member States to whom they
are addressed and merely with regard to the result to
be achieved, leaving the choice of form and method
to state authorities. Tis would mean that the efects
of the directive can afect individuals only due to
the implementation. Te above-mentioned article
also emphasizes the diference between directives
and regulations, through the wording that only the
latter have direct applicability, both vertically and
horizontally. However, the European Court of Jus-
tice circumvented its own prohibition of horizontal
direct efect of directives or at least reduced its sig-
nifcance. Gradually and by the back stairs, the scope
of the directive (efect) is expanding. Upon expiry of
the deadline for implementation, national court is
required to interpret its law in conformity with the
directive. Te Member States duty of consistent in-
terpretation can directly afect individuals, and thus
lead to horizontal direct efect. Trough the case law,
the European Court of Justice gave efect to direc-
tives in various ways. When considering the issue
of state responsibility in Francovich case, the Euro-
pean Court of Justice has not brought it into direct
link with the doctrine of direct efect. However, the
principle of State Liability was developed in order to
mitigate disadvantages and limitations of the doc-
trine of horizontal direct efect. Tis case established
substantive and procedural conditions of the princi-
ple, thus ensuring suitability of domestic tort rem-
edies for its enforcement in such cases. A number of
subsequent, post-Francovich cases
27
, were followed
by fner and further development of the principle. It
is the interpretation of EU law institutes, in case of
their violation, that gives them the fuller meaning
and contributes to their development.
SINGIDUNUM J 2013 10 (1) 11-17
15
REFERENCES
Albors-Llorens, A. (2010) Keeping up appearances: the
Court of Justice and the efects of EU directives. Te
Cambridge Law Journal. 69 (3), 455-458.
Evangelos, N. (2005) From Francovich to Kbler and be-
yond: Te evolution of a State liability regime for the
European Community. Tesis, (LL.M.). University of
Helsinki.
Kaeding, M. (2007) Active transposition of EU law legisla-
tion. EIPAScope [online]. Available from: http://www.
eipa.eu/fles/repository/eipascope/20080313162050_
MKA_SCOPE2007-3_Internet-4.pdf [accessed 6 July
2012].
Klamert, M. (2006) Judicial implementation of directives
and anticipatory indirect efect: connecting the dots.
Common Market Law Rewiev. 43 (5), 1251-1275.
Post-Francovich judgement by the ECJ [online]. Avaliable
from: http://www.asser.nl/upload/eel-webroot/www/
documents/cms_eel_id178_1_Post.pdf [accessed 6 July
2012].
Rsler, H. (2007) Interpretation of EU law [online]. Avali-
able from: http://fds.oup.com/pdf/13/9780199578955.
pdf [accessed 9 July 2012].
Relevant case law:
Case 26/62, NV Algemene Transporten Expeditie Onde-
meming van Gend and Loos v. Nederlandse Adminis-
tratis der Belastingen (1963) ECR 1
Case C 2/74, Jean Rayners v. Belgian State (1974) ECR 631
Case 41/74 Yvonne van Duyn Home Of ce (1974) ECR
1337
Case 14/83, Von Colson and Elisabeth Kamann v. Land
Nordrhein-Westfalen (1984) ECR 1891
Case C 106/89, Marleasing SA v. Comercial International
de Alimentacion SA (1989) ECR I-4135
Joined cases C-6/90 and C-9/90, Andrea Francovich and
Danila Bonifaci and others v. Italian Republic (1991)
ECR I-05357
Case C 334/92, Wagner Miret v. Fondo de Garantia Sala-
rial (1993) ECR I-6911
Case C 91/92 Faccini Dori v. Recreb (1994) ECR I-3325
(1995) 1 C.M.L.R. 665
Joined Cases C-46/93 and C-48/93 Brasserie du Pcheur
and Factortame III (1996) ECR I1029
Case C 392/93 R v. HM Treasury, ex parte British Tel-
ecommunications (1996) ECR I-1631
Joined Cases C-178, 179 and 188-190/94 Dillenkofer and
Others v. Germany (1996) ECR I-4845
Joined cases C-397/ 01 to C-403/01, Berhard Pfeifer and
Others v. Deutches Rotes Kreuz, Kreisverband Wald-
shut ev. (2004) ECR I-8835
ENDNOTES
1 Te European Court of Justice
2 Article 288 TFEU (Treaty on the Functioning of the Eu-
ropean Union) defnes a types of legal acts (Regulations,
Directives, Decisions, Recommendations and Opinions)
European Community institutions can adopt and ex-
plains their nature.
3 Treaty establishing the European Economic Community,
EEC Treaty, signed in Rome in 1957, came into force in
1958. Te Treaty was replaced by the Treaty of the func-
tioning of the European Union, TFEU, on the entry into
force of the Treaty of Lisbon in 2009, which establish the
constitutional basis of EU.
4 Te European Court of Justice opinion in Case 26/62,
NV Algemene Transporten Expeditie Ondermeming
van Gend and Loos v. Nederlandse Administratis der
Belastingen, (1963) ECR 1, is considered to be one of the
most important decision which has resulted the develop-
ment of Community law. A private frm for transporta-
tion, named Van Gend and Loos, had imported chemical
(urea-formaldehyde) from Germany to Netherlands for
which they were billed tarifs on import, higher by 5%, by
the Dutch customs authorities. Complaint that the com-
pany sent was based on the fact that such a measure of the
customs authorities was not in accordance with Article 12
of the Treaty of Rome, TEEC, (current Article 30 TFEU)
which stated that: Member States shall refrain from in-
troducing between themselves any new customs duties on
imports and exports or any charges having equivalent ef-
fect, and from increasing those which they already apply
in their trade with each other. Customs have increased by
5%, by Dutch custom tarif which came into force in 1960.
year, compared with the year 1958. when the Treaty of
Rome previously came into force. European Court of Jus-
tice preliminary ruling under Article 177 TEEC (current
Article 267 TFEU), was about the question of whether...
nationals of a Member State can, on the basis of the Arti-
cle in question (Art.12 EEC), lay claim to individual rights
which the courts must protect. Advocate Generals opin-
ion, diferent from the judgment of the ECJ, was that some
Treaty provisions could have direct efect but that Arti-
cle 12 was not one of them. On contrary, ECJ adhered that
abovementioned article could create a personal rights for
Van Gend en Loos and so, that private individuals could
rely on it. Te ECJ decided that Dutch authorities could
not impose a higher tarif that the one that was in force
the time TEEC came into force so that Van Gend and
Loos did not have to pay higher tarifs and this right could
be enforced before the domestic courts. Treaty provision
would be directly efective if, among other, it were uncon-
ditional and did not leave any further implementation to
the member states.
5 In Case C 2/74, Jean Rayners v. Belgian State (1974) ECR
631, European Court of Justice established more precise
criteria for vertical dirrect efect. On the grounds that he
did not have Belgian nationality M. Reyners, a Dutch na-
tional, was prohibited his law practice. Such discrimina-
SINGIDUNUM J 2013 10 (1) 11-17
16
tion on the grounds of nationality was forbbiden by the
Treaty Article 43. Te ECJ opinion was that the princile
under this article was clear despite the lack of spesifc di-
rectives. For a TEEC provision to have a direct efect it is
necessary that the three conditions are fulflled cumula-
tively: a) the provision must be suf ciently clear and pre-
cise b) unconditional c) independent of further action by
the national authorities.
6 Op.cit., Te European Court of Justice judgement of 5.
February 1963.
7 Treaty establishing the European Economic Community,
EEC Treaty, signed in Rome in 1957, came into force in
1958. Te Treaty was replaced by the Treaty of the func-
tioning of the European Union, TFEU, on the entry into
force of the Treaty of Lisbon in 2009, which establish the
constitutional basis of EU.
8 Ibid.
9 Te European Court of Justice judgement of 5. February
1963.
10 Te relevant provision is not a subject of any measure, ei-
ther by the institutions of the European Community or by
the Member States, in its implementation or its efects.
11 Te relevant provision has an unambiguous meaning and
provides feasible indications to the national court.
12 Case 41/74 Yvonne van Duyn v. Home Of ce (1974), ECR
1337, Ministry of Internal Afairs of the United King-
dom has barred access to the country to Ms. Van Duyn,
a Dutch citizen, intended to be employed in the Scientol-
ogy church. United Kingdom discouraged the Scientology
Chirch for the reason of the public intrest. Te EC Treaties
guaranted the feedom of movement for workes but at the
same time allowed restriction of this freedom in the pub-
lic interest. Te conditions under which the State may in-
voke the public intrest to limit the freedom of movement
were prescribed in the relevant Directive. Issue that has
raised in this case was whether an individual coluld in-
voke the Directive before a national court in case against
the State. Te ECJ held that the limitations of this freedom
themselves do not prevent conferning rights on individu-
als, contained in Article 39(48)(para. 1 and 2.), which are
envorceable by them and which the national corts must
protect.
13 Te European Court of Justice.
14 Joined cases C-397/ 01 to C-403/01, Berhard Pfeifer and
Others v. Deutches Rotes Kreuz, Kreisverband Waldshut
ev., (2004) ECR I-8835
15 Case 14/83, Von Colson and Elisabeth Kamann v. Land
Nordrhein-Westfalen, (1984) ECR 1891. Two female so-
cial workers applied for a job in German prison. Both of
them were denied although they were placed at the top
of the list of applicants. Te main reason was that it was
considered to be incovinient that women do with mail in-
mates. Tey were dicriminated against by the apointment
of less well qualifed males. Article 6 of the 76/207 Direc-
tive on the equal treatment of men and women as regards
access to employment, vocational training, promotion
and working conditions was infringed, as they claimed.
Te compensation that could be awarded to them was in-
signifcant. Te ECJ held that the failure of German law
to provide appropriate compensation was the result of
incomplete implementation of the 76/207 Directive. Al-
though this Directive did not meet the requiremets for
dirrect efect, the duty of achieving the result prescribed
by Directive and the duty of enshuring compliance with
this obligation by all concerned authorities, including the
Member State courts, was present.
16 Ibid.
17 Case C-106/89, Marleasing SA v. Comercial International
de Alimentacion SA (1989), ECR I-4135, Te company that
has been in the role of claimant sought removal from the
register of companies under Spanish law. Tey claimed
that the sole purpose of those companies was about fraud.
Te defendant invoked the Directive 68/151, which estab-
lished the grounds under which a company could be an-
nulled. Te European Court of Justice held that defendant
could rely on abovementioned Directive for the reason it
creates an obligation of implementation.
18 Joined cases C-6/90 and C-9/90, Andrea Francovich and
Danila Bonifaci and others v. Italian Republic, (1991) ECR
I-05357
19 Te European Court of Justice.
20 Op.cit., third paragraph.
21 Op.cit.
22 Ibid.
23 Joined Cases C-46/93 and C-48/93 Brasserie du Pcheur
and Factortame III (1996) ECR I1029, Te ECJ stressed that
in a case the breach of Community law can be attributed
to a Member State legislature, in the feld in which it has a
wide discretion, individuals sufering loss or damage are
entitled to reparation when the rule that had been violated
for the had purpose of ensuring their rights, the breach is
suf ciently serious and there is a direct causal link.
24 Case C-392/93 R v. HM Treasury, ex parte British Tel-
ecommunications (1996) ECR I-1631, Te Court decided
the interpretation of Directive was given by United King-
dom in good faith, and this is way it is not considered to
be contrary to the wording of the Directive or to the ob-
jective pursued by it. Imprecisely wording by the national
courts was not considered as suf ciently serious, add-in
the fact no guidance was available to the Member State
from case-law of the ECJ as to the interpretation of the
provision at issue.
25 Joined Cases C-178, 179 and 188-190/94 Dillenkofer and
Others v. Germany (1996) ECR I-4845, Te European
Court of Justice held that failure to take any measure to
transpose a directive within the prescribed period con-
stitutes itself a serious breach and allows a right for repa-
ration for individuals sufering injury, in case the goal of
directive entails the right for individuals whose content
is identifable and there is a causal link. Te requirement
of suf ciently serious breach was evident from its facts,
although it was not expressly mentioned in Francovich.
26 With the omission of previously mentioned cases such as
Brasserie du Pcheur and Factortame, British Telecom-
munications, Dillenkofer and Others, the rest cases which
develop further the principle of State Liability include:
SINGIDUNUM J 2013 10 (1) 11-17
17
Case C-334/92, Wagner Miret v. Fondo de Garantia Sa-
larial, (1993) ECR I-6911, Te European Court of Justice
confrms the principles established in Francovich in an
obiter dictum; Case C-91/92 Faccini Dori v. Recreb (1994)
ECR I-3325, (1995) 1 C.M.L.R. 665, Member State courts
are reminded on duty to interpret national law in con-
formity with EU law. Te ECJ reformulated a requirement
for rights in restrictive way, from the result prescribed by
the directive should entail the grant of rights to individu-
als into: the purpose of the directive must be to grant
rights to individuals; Te Queen v. Secretary of State for
Social Security, ex parte Eunice Sutton (1997) ECR I-2163;
Joined Cases C-94/95 and 95/95, Danila Bonifaci and oth-
ers v. INPS (1997) ECR I-3969; Joined Cases C-192-218/95,
Comateb and Others v. Directeur Gnral des Douanes et
Droits Indirects (1997) ECR I-165; Case C-261/95, Rosalba
PalmisaniINPS (1997) ECR I-4025; Case C-373/95, Federica
Maso and others INPS and the Italian Republic (1997) ECR
I-4051; Case C-127/95, Norbrook Laboratories Ltd v. Min-
istry of Agriculture, Fisheries and Food (1998) ECR I-1531;
Case C-319/96, Brinkman Tabakfabriken GmbH v. Skat-
teministeriet (1998) ECR I-5255; Case C-131/97, Annalisa
Carbonari and others v. Universita degli studi di Bologna,
Ministero della Sanita, Ministero dellUniversita e della
Ricerca Scientifca and Ministero del Tesoro (1999) ECR
I-1103; Case C-140/97, Rechberger and Greindl v. Austria
(1999) ECR I-3499; C-302/97, Konle v. Austria (1999)ECR
I-3099; Case C-321/97, Ulla-Brith Andersson and Susanne
Wakeras-Andersson v. Swedish State (1999) ECR I-3551;
Case C-424/97, Salomone Haim v. Kassenzahnartztliche
Vereinigung Nordrheim (2000) ECR I-5123; Joined Cases
C-387/98 and C-410/98, Metallgesellschaf Ltd and Others,
HoechstAG and Hoechst (UK) Ltd v. Commissioners of In-
land Revenue and HM Attorney General (2001) ECRI-1727;
Case C-150/99, Stockholm Lindpark Aktiebolag v. Sweden
(2001) ECR I-493; Case C-118/00, LarsyINASTI (2001) ECR
I-5063; C-63/01, Samuel Sidney Evans v. Secretary of State
for Environment, Transport and the Regions and the Motor
Insurers Bureau (2003) ECR I-4447; Case C-224/01,, Ger-
hard Kbler v. Austria (2003) ECR I-10239; Case C-129/00
Commission v. Italy (2003) ECR 14637; Case C-63/01,, Ev-
ans v. Secretary of State for the Environment, Transport and
Regions, Motor Insurers Bureau(2003) ECR I-4447; Case
C-201/02, Wells (2004) ECR I-723; Case C 222/02 Paul and
Others Case C-470/04, N v. Inspecteur van de Belasting-
dienst Oost/kantoor Almelo(2006) Germany (2004) ECR
I-9425; Case C-173/03, Traghetti del Mediterraneo SpA v.
Republica Italiana (2006) ECR I-5177; Case C 470/04, N v.
Inspecteur van de Belastingdienst Oost/kantoor Almelo
(2006) ECR I-7409; Case C-300/04 Eman and Sevinger
(2006) ECR I-8055; Case C-446/04, Test Claimants in the
Fill Group Littigation (2006) ECR nyr; Case C 278/05 Carol
Marilyn Robins and Others v. Secretary of State for Work
and Pensions (2007) ECR nyr; Case C-524/04 Test Claim-
ants in the Tin Cap Group Litigation (2007), ECR nyr; Case
C-555/ 07 Seda Kckdeveci v. Swedex GmbH and Co. KG,
judgment from the 19th January 2010.
27 Ibid.
Received: July 20th, 2012
Correcton: September 27th, 2012
Accepted: November 5th, 2012
PRAVNO DEJSTVO DIREKTIVE EVROPSKE UNIJE
KROZ NJENO TUMAENJE
Rezime:
Na osnovu tumaenja Evropskog suda pravde u vezi sa odredbama sporazuma,
direktiva Evropske Unije ima samo vertikalno direktno dejstvo. Meutim, kroz
tumaenje suda, Direktiva dostie razliita i dalekosena dejstva. Tumaenje
dravnih zakona od strane sudova zemlje lanice, a koji su u skladu sa svrhom
i formulacijom direktive, moe direktno da utie na pojedince i dovede do
horizontalnog direktnog dejstva. Tumaenje sluaja od strane Evropskog suda
pravde, a koji se zasniva na neprimenjivanju direktive, stvorilo je jedno od optih
principa Komunitarnog prava kako bi se ublaili nedostaci i ogranienja doktrine
horizontalnog direktnog dejstva. Tumaenje direktive postepeno utie na irenje
obima njenog dejstva.
Kljune rei:
dejstva direktiva,
tumaenje,
horizontalno direktno dejstvo.
SINGIDUNUM J 2013 10 (1) 11-17
18
DIRECTIONS AND GUIDELINES
FOR RESOLVING THE CRISIS
(IN BOSNIA AND HERZEGOVINA AND ITS ENTITIES)
Zoran Mastlo
*
University of East Sarajevo, Faculty of Business and Economics
133 Raanska Street, Bijeljina, Republic of Srpska, Bosnia and Herzegovina
Abstract:
This is a global financial and economic crisis, which can be considered
the largest since the World War II. It has become a frequently discussed
topic by various analysts, numerous governments, and in particular, a
favourite topic of the media. We can rightly say that this is a crisis of
the neoliberal system, which has greatly increased the wealth of the rich
and impoverished the poor. Such crisis can be overcome by changing the
system. Therefore, the directions and guidelines are necessary in order to
determine the goals for resolving the crisis. The defined key objectives
must be accompanied by specific sub-objectives, followed by establishing
certain policies, which will contribute to the realization of these goals. We
need to advocate and implement policies that will assist in accomplishing
the defined goals. Some of those policies include the following: industrial
policy, fiscal policy, monetary policy, regional development policy, public
administration policy, and social policy.
Key words:
global crisis,
macroeconomic indicators,
neo-liberalism,
general well-being of a country,
fiscal policy,
industrial policy,
resolution,
directions and guidelines.
ISSN 2217-8090
UDK: 330.341.4(497.6)"2006/2010" ;
005.332:338.124.2(100); 330.101.54
DOI: 10.5937/sjas1301018M
* E-mail: zoran.mastilo@fpe.unssa.rs.ba
INTRODUCTION
Te crisis has infuenced the whole world. Tere-
fore, it has the dimension of a large global fnancial
and economic crisis, and it can be considered the
greatest crisis since the Second World War. Te fear
of further development of the crisis afects everyone,
especially the employees as it contributes to higher
unemployment rates. Te global crisis has been dis-
cussed and written about more than any other nat-
ural or social disaster that could afect the world,
such as global warming, solar fare that could hit the
Earth at the end of 2012 and revert our way of living
back to the XIX century. Likewise, frequent alleged
outbreaks of epidemics: mad cow disease, bird fu
and swine fu
1
, terrorism and similar occurrences,
1 It is said that the fnancial crisis and the swine fu virus
H1N1 were deliberately caused. Pharmaceutical lobby is
associated with the induction of all these outbreaks. It wo-
as well as numerous neuralgic points in the world
today - Iraq, Afghanistan, Iran, Middle East, North
Korea, the Balkans and others. It represents both
an opportunity and a challenge, when the economic
theories and policies are put to the test. Te ques-
tion that could be rightly asked is What is required
from the economic system? If the goal is only to
make proft and not the well-being of the society,
then such direction leads to the crisis and unsus-
tainable economic growth. It is necessary to govern
and adjust the market in order to successfully man-
age the economy. Te characteristics of the existing
systems are the lack of regulation of market def-
uld be interesting to analyze the possible intent of provo-
king a fnancial crisis. It would lead to some key managers
of fnancial institutions. For instance, one of the two lar-
gest U.S. mortgage companies, Freddie Mac, was warned
about the crisis in 2004. However, the general manager of
that company resigned, alongside with a large fnancial bo-
nus before the crisis outbreak.
19
ciencies, externalities and social inequalities. Still,
there is no complete and clear answer on how to deal
with, and how to combat the crisis. It started afer a
long period of rapid credit growth, low risk premi-
ums, high liquidity, asset price growth and pump-
ing of the actual estate prices. During 2007 and the
frst half of 2008, a shocking increase in food and en-
ergy prices occurred, which further accelerated the
global crisis. It resulted in a rapid deterioration of
the economic situation. Over 100 million people in
developing countries have been pushed into poverty.
Due to diferent levels of development and diferent
economic structure, consumption and globalisation,
such substantial increase in food and oil prices had
a greater impact on poverty increase than the eco-
nomic crisis during the 2008-2009 period, which (by
2010) pushed 64 million people into poverty (World
Bank, 2010). Since 1970 until 2008, the world has
been through 124 banking crises, 208 currency ex-
change crises, 63 debt crises, 42 double and 10 tri-
ple crises (Pollin, 2009). Charles Kindleberger states
that since 1725 up to date, fnancial crises have been
occurring in the Western capitalist economies every
eight and a half years, on average (Juri, 2011). We
can rightly say that this is a crisis of a neoliberal sys-
tem, and the resolution of the crisis should be sought
in the alternative economic - political systems.
How well are we informed about the
political-economic crisis?
Previous information about the crisis has not
been suf cient to reach a resolution. Tis has been
an attempt to analyse the crisis and overview the
environment in which it occurs.
We wonder whether the current neo-liberal po-
litical and economic system is appropriate or not.
Namely, as the basic cause of the crisis, it must have
some disadvantages.
Opinions are divided when it comes to the caus-
es of the crisis. Te fact that is even worse is that
there are various proposals regarding directions and
guidelines for resolving the crisis. It is certain that
the mortgage loans have triggered the crisis on f-
nancial markets of the United States. Tis does not
exclusively refer to the loans in general, but to the
loans colloquially called sub-prime loans (Pulji,
2009). We translate such loans as the second class
loans, while, in fact, they represent the high risk
loans, as they are granted to customers with no loan
repayment capability and adequate coverage (Pulji,
2009).
With the fall of socialism in the early 90-ies of
the last century, history seems to be defnitely sided
with liberal capitalism, marking it as the undisputed
winner and the universal model for the future or-
ganisation of the world.
THE NEGATIVE EFFECTS OF THE GLOBAL
CRISIS IN BOSNIA AND HERZEGOVINA
AND ITS ENTITIES COMPARED TO THE
INTERNATIONAL ENVIRONMENT
Macroeconomic indicators of the
environment
What remains a problem is that the unemploy-
ment rates have increased, and adversely afected the
GDP of each country; the fscal position has wors-
ened, while the public debt has increased. Croatia,
Montenegro and Romania have recorded a decline
in GDP in the past year, while in other countries,
the growth of real GDP was ranging from 0.4% in
Bulgaria to 3% in Albania. Te global crisis has not
yet fnished, but compared to 2009, the situation is
slightly better. Te infation in most countries of
Southeast Europe increased signifcantly, so that
at the end of 2010, the infation rate in Bosnia and
Herzegovina was 2%, while the highest infation was
recorded in Romania amounting up to 7.9%.
Te most positive growth trend in the European
Union was recorded in Germany, mostly due to the
increased export and fnancial stabilization. During
2010, the real GDP rose by 1.7% in the euro zone
and by 1.8% in EU27. Te recession in 2009 led
to the drop in real GDP by 4.1% in the euro area
and by 4.2% in the EU27. Te annual infation in
the euro zone was 2.2% and 2.6% in the EU27. Te
whole world is eagerly waiting for the global eco-
nomic recovery. Te most expectations were present
in 2010, but the recovery took place at a diferent
pace. According to estimates from the International
Monetary Fund, the global economic growth was
at 4.6%. Te recovery of the economy in 2010 was
more noticeable in the U.S. than in Europe and Ja-
pan. With respect to the U.S. and their economy, the
second half of 2010 can be considered the period in
which the recovery took place at a slower pace than
in the frst half of the year. Te largest problem that
remains is the high unemployment rate, amount-
ing to 9.1% in 2010 with the average infation rate
of 1.7%.
SINGIDUNUM J 2013 10 (1) 18-27
Mastilo Z. Directions and guidelines for resolving the crisis
20
Macroeconomic indicators in Bosnia and
Herzegovina (B&H) and its entities
Bosnia and Herzegovina and its entities are faced
with the strong negative efects of the global crisis.
Such adverse efects of the crisis are manifested in
a decline of GDP, rise of unemployment, reduced
industrial production, reduced foreign direct invest-
ments and public budget defcit.
Bosnia and Herzegovina and its entities need a
rapid economic recovery and development, the
macroeconomic stability. Te crisis and the reces-
sion have shaken the whole world (the EU coun-
tries, countries in the region). Tus, B&H and its
entities are faced with strong negative efects of the
global crisis. Even before the recession, the promi-
nent structural disorders and slower progress of
structural reforms (the euphemistic term that the
World Bank uses to describe unsuccessful structural
reforms) would make the cyclical recovery of B&H
much more dif cult, and much painful and longer
than in other countries, due to external and internal
failures (Hodi, 2010).
Te Governments and government measures
in the entire B&H could have and must have done
much more. We can freely say that the Government
productive measures were missing, which could miti-
gate the negative efects of the global economic crisis.
We cannot say that the governments have not done
anything, but the efects of their acts have been inef-
fcient in all segments of the society.
Tis graph shows the progress of nominal GDP
and the growth rate of real GDP in B&H for the
period 2006-2010. It is clear from the graph that the
global crisis has negatively afected GDP of Bosnia
and Herzegovina.
Te largest negative efects and the disturbances
were visible in the labour market, which has re-
mained undeveloped, and which has sufered severe
shocks, but was not completely devastated.
Rising unemployment is changing from month to
month with the largest number of the unemployed
(522.052 people) recorded in December 2010.
When it comes to the employment, the num-
ber of employees in 2010 had a decreasing trend.
According to the Agency for Statistics in B&H, the
Chart No. 1: Main economic indicators for the countries of Southeast Europe in 2010.
Source: www.imf.org
Table 1: Real GDP growth rate
2009 2010 2011 2012
World -0.5 5.0 4.4 4.5
USA -2.6 2.8 2.8 2.9
Euro zone -4.1 1.7 1.6 1.8
Japan -6.3 3.9 1.4 2.1
Central and Eastern Europe -3.6 4.2 3.7 4.0
Bosnia and Herzegovina -3.1 0.8 2.2 4.0
Source: www.imf.org
SINGIDUNUM J 2013 10 (1) 18-27
21
average number of employees in Bosnia and Herze-
govina in 2010 was 681.656 people.
As far as the fscal sector is concerned, we can say
that it is an unstable zone, as public budgets have
become unsustainable and are faced with very large
defcits. Te current governments do not contem-
plate on the public spending and its reduction and
do not work on bringing it in line with the interna-
tional standards. Te reduction of public spending
in such conditions can be considered as an essential
precondition for macroeconomic stability in B&H
and its entities. Te public budgets had become
unsustainable even before the crisis hit, especially
taking into consideration a set of ambitious welfare
legislations and appropriations for these categories,
which was used for obtaining the political support
for the current government at the expense of tax-
payers. Tis has led to a fnancial imbalance and
triggered the instability in B&H, as well as numer-
ous job losses.
Te global crisis in B&H and its entities afected
the industrial production as well, its efects were
negative. Tus, in 2009 the industrial production
decreased by 3.3% compared to 2008, while in 2010,
a slight increase in industrial production of 1.6%
was recorded compared to 2009. Industrial produc-
tion, as an important macroeconomic aggregate of
GDP in B&H, occupies the central position, since
it accounts for about 21% of the total GDP. Te
situation was not ideal at the beginning. Namely,
in the circumstances of the global economic crisis,
the industry showed signs of serious, hopeless dete-
rioration. However, it still managed to improve and
record a positive trend.
Entities in B&H (FB&H and RS) in the last few
years have achieved an average growth rate of in-
dustrial production of 2.9% in FB&H and 12% in
the Republic of Srpska.
When it comes to foreign direct investment
(FDI), Bosnia and Herzegovina does not excel in
SINGIDUNUM J 2013 10 (1) 18-27
Chart No 2: Nominal GDP and the growth rates of real GDP
Source: www.cbbh.ba
Chart No. 3: Progress of registered unemployment in B&H in 2010
Source: www.arz.gov.ba
22
Chart No. 4: Progress of registered employment in B&H in 2010
Source: www.arz.gov.ba
B&H FB&H RS
C-Mining 96.2 95.7 109.1
D-Manufacturing 101.9 106.9 105.1
E-Electricity, gas and water 103.7 102.4 103.0
TOTAL INDUSTRY 101.6 104.2 105.0
Table no. 2: Industrial Producton Indices (2009 = 100)
3
Source: www.cbbh.ba
this macroeconomic indicator. Te global crisis has
produced profound negative efects and foreign in-
vestors tend to avoid investing in Bosnian market.
Generally speaking, the negative efects of macroe-
conomic aggregates have infuenced adversely other
macroeconomic aggregates, mostly the GDP and the
labour market.
By comparing the investments in the fourth quar-
ter of 2011 in the amount of 130 million KM and the
FDI in the fourth quarter of 2010, it is clear that the
former was about 2.7 times higher compared to the
actual values in the fourth quarter of 2009 when the
recorded values decreased by 29.5%. Te total foreign
investment in 2011 (392 million KM) decreased by
17.2% compared to data in 2009 (473 million KM).
Te above analysis clearly shows that the level of
total foreign investments in B&H in recent years has
been in decline, which is badly assessed. Research
Chart No. 5: Annual growth rates of industrial producton, 2006-2010.
Source: www.cbbh.ba
SINGIDUNUM J 2013 10 (1) 18-27
23
shows that the investments in Albania were higher
in relation to Bosnia and Herzegovina (Albania-827
million). Te main barrier to the arrival of foreign
investors in B&H should be the political reason,
since the country has not got the political stability,
which is essential for economic development.
When it comes to competitiveness, B&H cannot
boast about that indicator, as it belongs to the least
competitive economies. Te Economy of Monte-
negro, Romania, Latvia, Greece, Croatia, Bulgaria,
Ukraine, Macedonia, Serbia, and Albania is more
competitive than that of Bosnia and Herzegovina,
thus leaving Bosnia and Herzegovina in the last place.
Tis is not surprising as B&H does not have suf cient
political stability. It took a year afer the elections held
in October 2010 to form the Council of Ministers (in
February 2012) that needs to initiate economic re-
forms in terms of economic recovery that is essential
for B&H. Now it is up to B&H and its Council of
Ministers and their actions to make the economy of
B&H more competitive.
It is very interesting to observe the GDP of Bos-
nia and Herzegovina per capita. When expressed in
purchasing power standards, it was only 30% of the
average EU 27=100 in 2010. Te situation in 2010
was worse than in 2009, when it was 31%. Te fg-
ures for Albania were 27% in 2009 and 29% in 2010,
which shows a better, increasing trend with respect
to Bosnia. Te situation is much better in other coun-
tries of former Yugoslavia (Slovenia amounting up to
88% in 2009 and 87% in 2010, while in Macedonia it
was 36% in 2009). Te most prominent example is
Luxembourg, whose GDP per capita was 283% above
the EU average in 2010, which is the highest level of
development.
Tese analyses indicate that the crisis and its
negative efects are deeply rooted in a small econ-
omy such as the economy of B&H. Terefore, we
believe that it represents a great test of politics and
economy on the global level, and likewise in Bosnia
and Herzegovina and its entities.
Macroeconomic indicators
of the Republic of Srpska
Tese indicators show the macroeconomic situ-
ation in the Republic of Srpska (RS). Te macro-
economic indicators of the Republic of Srpska are
presented here, for the period 2007-2011, which is
the period when the crisis produced adverse efects
on B&H and its entities. Te macroeconomic indi-
cators of the Republic of Srpska say much, and it is
Investment (FDI) per quarter in 2009, 2010 and 2011 amount to:
Millions of KM K1 K2 K3 K4 Ukupno
2009 -6.4 160.8 134.2 184.4 473.00
2010 57.9 23.3 6.2 48 135.00
2011 93 61 108 130 392.00
Table no. 3: Investments by quarter (in millions) in 2009, 2010 and 2011.
Source: www.dep.gov.ba
Chart No.6: WEF 2009-10:11 The least compettve European economies
Source: www.weforum.org
SINGIDUNUM J 2013 10 (1) 18-27
24
necessary to do some further work, by searching for
directions and guidelines for resolving the crisis. As
obvious from this review, the largest problem in the
Republic of Srpska is the high unemployment rate,
which increased for 13.710 people during the period
(2007-2011), which is a lot for such a small economy
as the economy of the Republic of Srpska.
If we look at a nominal value of the GDP in 2010,
we can see that it was 8.31 billion KM, while the
GDP per capita (GDP per capita) was 5797 KM,
which is something we cannot boast about.
Te rates of real GDP growth (%) for the period
(2006-2010) have variable trends. Fluctuations of
the rate of real GDP growth are dictated by the glob-
al economic crisis, which is present to a great extent
in the Republic of Srpska, taking into consideration
its economy, which is not that potent.
It is evident that the most dif cult and the most
risky year was 2009, as it was the year when the
economic crisis lef negative consequences in the
Republic of Srpska, the most negative efects of the
global crisis were felt in 2009, so that the GDP had
a negative growth rate at the time. Te efects of the
negative growth rates from 2009 can still be felt.
Solutions for overcoming the crisis
Macroeconomic indicators, primarily observed in
B&H and its entities, and secondarily in the interna-
tional environment, indicate that the crisis has pro-
duced profound negative efects. Te same situation
occurs when the negative efects of the crisis are per-
ceived globally. Tus, we believe that we should seek
Chart No.7: Gross domestc product per capita.-Purchasing power standard; -EU27-100
Source: www.bhas.ba
Indicators
Period
2007 2008 2009 2010 2011
The populaton of the RS (estmate) 1.439.673 1.439.673 1.435.179 1.433.038
Nominal GDP (000 KM) 7.350.985 8.489.287 8.243.265 8.308.120
Real growth rate (in %) 6.7% 6.2% -2.8% 0.8%
Number of employees 258.209 259.205 253.665 247.388 237.923
Number of unemployed 139.825 135.102 139.536 145.343 153.535
The average net wage (in KM) 585 755 788 784 809
Industrial producton growth rate (in %) 1.4% 16.8% 19.0% 5.0% 4.7%
Export (000 KM) 1.671.601 1.921.837 1.672.915 2.177.809 2.561.928
Imports (000 KM) 3.347.925 4.146.519 3.567.104 4.053.076 4.584.193
Balance of trade (000 KM) -1.676.324 -2.224.682 -1.894.189 -1.875.267 -2.022.265
The coverage of imports by exports 49.9% 46.3% 46.9% 53.7% 55.9%
Inaton rate (consumer prices, %) 1.1% 7.2% -0.4% 2.5% 3.9%
Foreign direct investments (000 KM) 1.946.688 165.675 104.500
Table no. 4: Basic macroeconomic indicators RS (2007-2011)
Source: www.komorars.ba
SINGIDUNUM J 2013 10 (1) 18-27
25
Chart No.8: GDP (in 000 KM) and GDP per capita (KM) 2006-2010
Chart No. 9: Real GDP growth rate (in %) for the period 2006-2010
the best possible solutions for resolving the crisis.
Such resolutions should contain clearly defned ob-
jectives necessary to be achieved. In order to achieve
such goals, the best policies and the best possible
solutions should be put into practice. Te current
economic model is a typical one, mainly because
it is based on high public spending, incurring into
debt, creating defcit, all of which lead to a debt
bondage. Terefore, we believe that the appoint-
ment of the best possible solutions should be sought
via the best possible solutions. Te well-being of the
society is everyones goal, particularly if perceived
through the political and economic prism. Tis goal
can be achieved only in the long run through the
long-term development and the equitable distribu-
tion of national income. Our frst goal, which, in
our opinion, might be a good direction to the best
solutions possible, is to raise the rate of economic
growth that will lead to the increase of employment
rate, up to its full capacities, thus further improving
the standard of living. Our subsequent goals would
be to increase the investments, production capaci-
ties, exports and reduce imports, which would lead to
overcoming the current situation, that is to say - the
crisis.
Te desirable policies in pursuing these goals
that could lead to overcoming the crisis on the glob-
al level and the level of B&H and its entities, include
the following:
Industrial policy (as the most important po-
licy, in particular the increase of domestic
production with the yet unused resources),
Regional development policy,
Fiscal policy,
Monetary policy,
Social policy,
Policy of the state administration.
SINGIDUNUM J 2013 10 (1) 18-27
26
All these policies require serious analysis and
extensive research in order to produce better solu-
tions that will serve as guidelines for resolving the
global crisis.
CONCLUSION
Te previous macroeconomic analysis of Bosnia
and Herzegovina and the international environment
clearly shows that the global crisis has had profound
negative efects on those economies. Te respon-
sibility for such a poor macroeconomic situation
could be assigned to everyone: politics, economies,
governments, academies and media. It is clear that
the neoliberal system is in the profound crisis and
that a complete transformation of the system is nec-
essary in order to overcome the crisis. Such system
has become a typical one, since it has made the rich
- richer and the poor - poorer. It is not our opinion
that the solution would be to pursue certain repairs
or changes within such system. Te main reason
lies in the fact that the system has faced a decline or
stagnation of GDP, high indebtedness, production
decrease, unemployment increase, great defcits and
progress towards debt bondage. Stabilisation of the
economy within the current model is only possible
through decreasing the living standards of already
impoverished citizens. Such a policy would burden
the people, and the badly designed policy would be
continued via the current neoliberal model (Jurii,
2011).
Directions and guidelines for resolving the crisis
are not simple and are dif cult to defne, as ad hoc
solutions, especially in the short term. It is neces-
sary to defne the goals frst, and then the policy,
which could help to achieve such goals. Te key ob-
jective should be the prosperity of society. Achiev-
ing this goal entails sub-goals to be defned in or-
der to achieve the fnal goal. High, sustainable rates
of economic growth, full employment rate with a
uniform distribution of national income are the
objectives and the conditions for achieving pros-
perous society. In order to reach the key goals and
sub-goals, it is necessary to promote and implement
policies that will contribute to accomplishing those
goals. (Jurii, 2011). Namely, the following policies
should be implemented:
Industrial policy,
Fiscal policy,
Monetary policy,
Regional policy,
Social policy,
Public administration policy.
Te implementation of these policies should start
immediately. Tey represent the guarantee for achiev-
ing the goals, but not in the short term. Terefore, it
is necessary to provide willingness, commitment and
time. Tese would be the key objectives and policies,
which should serve as directions and guidelines for
overcoming the crisis in B&H.
REFERENCES
Acocella, N. (1998) Fundations of economic policy: values
and techniques. Cambridge: Cambridge University
Press.
Agencija za rad i zapoljavanje Bosne i Hercegovne. Bilten
br. 6 [online]. Available from: http://arz.gov.ba/pub-
likacije/bilteni/?id=279 [accessed 5 July 2012]. (in
Serbian)
Auerbach, A., Feenberg, D. (2000) Te Signifcance of
Federal Taxes as Automatic Stabilizers. Te Journal of
Economic Perspectives. 14 (3), 37-56.
Babi, M. (2007) Makroekonomija. 15. izd. Zagreb: Mate.
(in Croatian)
Communication from the commission to the Europe-
an council: A European Economic Recovery Plan.
Commission of the European Communities [on-
line]. Available from: http://ec.europa.eu/econo-
my_fnance/publications/publication13504_en.pdf
[accessed 15 September 2012].
auevi, F. (2009) Globalna recesija i njene reeksije na
Bosnu i Hercegovinu. Forum Bosnae. 47 (2009), 61-81.
(in Serbian)
Dolls, M., Fuest, C., Peichhi, A. (2009) Automatic Stabiliz-
ers and Economic Crisis: US vs. Europe. Discussion
Paper No. 4310 [online]. Available from: http://fp.iza.
org/dp4310.pdf [accessed 15 August 2012].
Freedman, C., Kumhof, M., Laxton, D., Lee, J. (2009) Te
Case for Global Fiscal Stimulans. International Mon-
etary Fond [online]. Available from: http://www.imf.
org/external/pubs/f/spn/2009/spn0903.pdf [accessed
8 September 2012].
Global Economic Prospects: Crisis, Finance and Growth.
World Bank [online]. Available from: http://sitere-
sources.worldbank.org/INTGEP2010/Resources/
GEP2010-Full-Report.pdf [accessed 5 July 2012].
Global Wage Report 2008/09. Geneva: International La-
bour Of ce [online]. Available from: http://www.ilo.
org/wcmsp5/groups/public/---dgreports/---dcomm/
documents/publication/wcms_100786.pdf [accessed
15 September 2012].
Godinji izvetaj 2010. Centralna banka Bosne i Herce-
govine [online]. Available from: http://www.cbbh.
ba/fles/godisnji_izvjestaji/2010/GI_2010_bs.pdf [ac-
cessed 2 September 2012].
SINGIDUNUM J 2013 10 (1) 18-27
27
Hodi, K. (2010) Stanje privrede i mjere anticikline
ekonomske politike Bosne i Hercegovine [online].
Available from: http://unvi.edu.ba/Files/zbornici/
ZBORNIK%20RADOVAnet.pdf [accessed 1 Sep-
tember 2012]. (in Serbian)
Initial lessons of the Crisis. IMF [online]. Available from:
http://www.imf.org/external/np/pp/eng/2009/020609.
pdf [accessed 19 October 2012].
Juri, Lj. (2011) Velika transformacija za izlaz iz krize.
Acta Economica. 9 (14), 79-95. (in Serbian)
Jurkovi, P. (2002) Javne fnancije. Zagreb: Masmedia. (in
Croatian)
Kozari, K. (2009) Uticaj globalne fnansijske krize na Bo-
snu i Hercegovinu [online]. Available from: http://www.
cbbh.ba/fles/specijalne_teme_istrazivanja/sti_01_09_
bs.pdf [accessed 15 August 2012].
Kozari, K., Salihovi, A (2010) Krizno komuniciranje u
fnansijskim institucijama [online]. Available from:
http://www.cbbh.ba/fles/specijalne_teme_istrazivan-
ja/sti_01_10_bs.pdf [accessed 15 August 2012].
Pollin, R. (2009) Tools for a New Economy: Proposals for
a Financial Regulatory System. Boston Review. [on-
line]. Available from: http://www.bostonreview.net/
BR34.1/pollin.php [accessed 10 September 2012].
Pommier, S. (2006) Fiscal Shocks and Automatic Stabiliz-
ers at Work in European Countries. Rennes: Univer-
sity of Rennes 1 [online]. Available from: http://virgo.
unive.it/cide/conf/papers/p11.pdf [accessed 7 October
2012].
Pulji, M. (2009) Globalna kriza i Bosna i Hercegovina.
Acta Economica. 7 (10), 89-107. (in Serbian)
Pulji, M. (2010) Mjere vlade za prevazilaenje ekonom-
ske krize. Acta Economica. 8 (12), 125-142. (in Ser-
bian)
Spilimbergo, A., et al. (2008) Fiscal Policy for the Crisis.
IMF [online]. Available from: http://www.imf.org/exter-
nal/pubs/f/spn/2008/spn0801.pdf [accessed 18 Octo-
ber 2012].
Spilimbergo, A., Symansky, S., Schindler, M. (2009) Fis-
cal Multiplieres. IMF [online]. Available from: http://
www.imf.org/external/pubs/f/spn/2009/spn0911.pdf
[accessed 1 October 2012].
Te Efects of Automatic Stabilizers on the Federal Budg-
et. Congressional Budget Of ce [online]. Available
from: http://www.cbo.gov/sites/default/fles/cbofles/
fpdocs/121xx/doc12129/04_21_automaticstabilizers.
pdf [accessed 10 October 2012].
Te long climb. Te Economist [online]. Available from:
http://www.economist.com/node/14530093 [accessed
August 2012].
Tilman, L.M. (2009) Financial Darwinism: create value or
self-destruct in a world of risk. Hoboken, N.J.: Wiley ;
Chichester: John Wiley.
Van den Noord, P. (2000) Te Size and Role of Automat-
ic Fiscal Stabilisers in the 1990s and Beyond. OECD
[online]. Available from: http://www.oecd.org/eco/
economicoutlookanalysisandforecasts/1880834.pdf [
accessed 10 September 2012].
World Bank (2003) 2003 world development indicators.
Washington, D.C.: World Bank
World Economic Outlook: Rebalancing Growth. IMF
[online]. Available from: http://www.imf.org/external/
pubs/f/weo/2010/01/pdf/text.pdf [accessed 1 October
2012].
Received: January 15th, 2012
Correcton: March 7th, 2012
Accepted: April 29th, 2012
UPUTSTVA I SMERNICE ZA REAVANJE KRIZE
(U BOSNI I HERCEGOVINI I NJENIM ENTITETIMA)
Rezime:
Ovaj rad se bavi globalnom finansijskom i ekonomskom krizom koja se moe
smatrati najveom krizom nakon Drugog svetskog rata. To pitanje je est pred-
met rasprave meu brojnim analitiarima, predstavnicima vlasti, a naroito je
omiljena tema medija. S pravom moemo rei da je re o krizi neoliberalnog
sistema, koja je u velikoj meri uticala na porast imovine bogatih a koja je jo vie
osiromaila siromane.Takva kriza moe se prevazii promenom samog sistema.
Stoga je neophodno da postoje uputstva i smernice kako bi se definisali ciljevi
za prevazilaenje krize. Pored tih kljunih ciljeva, neophodno je definisati pod-
ciljeve, koji e doprineti realizaciji primarnih ciljeva. Neophodno je zagovarati
i primenjivati politike koje e olakati realizaciju jasno definisanih ciljeva i pod-
ciljeva. Neke od tih politika su sledee: industrijska politika, fiskalna politika,
monetarna politika, politika regionalnog razvoja, politika javne administracije
i socijalna politika.
Kljune rei:
globalna kriza,
makroekonomski indikatori,
neoliberalizam,
opte stanje u zemlji,
fiskalna politika,
industrijska politika,
rezolucija,
uputstva i smernice.
SINGIDUNUM J 2013 10 (1) 18-27
28
THE ROLE AND POTENTIAL OF GLOBAL
DISTRIBUTION SYSTEM AMADEUS FOR TOURISM
DEVELOPMENT AT THE GLOBAL LEVEL
Ljiljana Radulovi
*
A PhD student at Mediterranean University, MTS - Montenegro Tourism School
Marala Tita Street, Bar, Montenegro
Abstract:
Globalization, development and implementation of new technologies, new
consumer trends, concern for the natural environment and other factors,
have emphasized the diversity and complexity of the tourism industry.
For these reasons, the tourism industry in recent years has focused its
activities towards the information and technological infrastructure and
global electronic connection in order to overcome border barriers and
establish relationships with providers and tourists as well as with travel
agencies and tour-operators.
The development of information technology and evolution of airline
reservation systems of individual airlines have led to the development
of the Global Distribution Systems (GDS), recognized as a worldwide
computerized reservation network that electronically connects the tourist
offer with the tourist demand.
As a result of the recognized challenge tourism has been facing in recent
years, the main goal of this review would be to emphasize the role and
importance of the leading GDS Amadeus in order to highlight its po-
tential for the tourism development at the global level. The research and
methodology of this review are based on the analysis of data collected
from primary and secondary sources, through which we shall, by using
deductive approach to theoretical assumptions and analytical approach
to quantitative indicators, reach significant individual findings. At the
end of the review through summary conclusions, we shall attempt to
give a scientific justification of the research, and draw attention to the
importance of continuous monitoring and adjustment to changes in the
tourism market, in order to highlight the main potential of information
technology applications for tourism development.
Key words:
globalization,
tourism,
information technology,
GDS Amadeus.
ISSN 2217-8090
UDK: 004.7:338.48; 007:004
DOI: 10.5937/sjas1301028R
* E-mail: ljiljanaradulovic.pg@gmail.com
INTRODUCTION
Tourism can be characterized as a complex sys-
tem whose development is conditioned by constant
changes in the tourism market, which is especially
prominent due to recent changes in the technologi-
cal environment that have emphasized the applica-
tion of global distribution systems, which provide
a quick and adequate exchange of full, meaningful
and timely information to the tourism sector.
Te aim of this paper is to emphasize the role of
the GDS Amadeus, as a new technology, whose dis-
tribution and IT solutions enable interconnection of
all elements of tourism, thus providing an ef cient
business system users and unique tourist services to
end users - tourists.
Te frst part of the review points out the global
nature of tourism and predictions concerning the fu-
ture tourism development at world level, as an intro-
duction to highlight the global distribution systems
29
as a product of modern information technologies
that can be seen as an important development fac-
tor of international tourism.
Te second part of the review will cover the basic
tasks and GDS Amadeus products, which is recog-
nized as the leader of the established and extensive
network of users. It points out the basic structure
and operating results of GDS Amadeus in order to
highlight the importance of this system for the de-
velopment of world tourism industry.
Finally, we hope that the application of theoreti-
cal and practical approaches to research has resulted
in conclusions that will emphasize the importance
of implementing the product of modern informa-
tion technology as an adequate response to the dy-
namic and complex nature of the tourism industry
that requires new forms of organization and busi-
ness approach that will provide the long-term de-
velopment of tourism on a global scale.
GLOBAL NATURE OF TOURISM
Te expansion of tourism is refected in the real-
ized tourist turnover that defnes tourism as a dy-
namic category and in constant evolution. Modi-
fcation of the old and creation of new demands of
tourists for another unseen indicates the global
nature of tourism destinations. Te development of
information technology has particularly infuenced
the defnition of the world as the global space, since
moving to the farthest destinations today represents
almost no problem. Relevant information about
tourism trends indicates that the expansion of tour-
ism started in the second half of the 20th century.
Te frst international tourism statistics from
1950 show about 25 million tourists who partici-
pated in the international tourism trends worldwide
and the realized tourist consumption amounting to
2 million dollars. Tis means that tourism has grown
from relative anonymity into one of the worlds larg-
est industries. According to WTTC, it contributes al-
most U.S. $6 trillion to the global economy, with the
participation of 9% of global GDP and it provides
about 260 million jobs worldwide (100 million jobs
directly in the tourism industry).
Regular monitoring of data on international tour-
ist arrivals in certain years and regions of the world
represents the basis for conducting a thorough analy-
sis of the numerous changes that characterize the in-
ternational tourist market, and that will enable us to
reach conclusions regarding the fexibility and adapt-
ability as well as the level of resistance of tourism to
world events.
Looking at the data from Table 1, we can see the
evident growth of international tourism trends with
the exception of data in 2009. In 2000, the growth
rate was 25.06% compared to the previous fve-year
period; the growth rate of 18.64% was recorded in
2005 compared to 2000, while in 2010, the growth
rate amounted to 15.74% compared to 2005. Te
suspended long growth rate of international move-
ment in 2009 was certainly the result of the global
economic crisis refected in the tourism industry.
However, in 2010, there were over 22.5 million
of international tourist arrivals compared to 2008
and 58.5 million or an increase of 6.67% compared
to 2009. Tese data certainly indicate very rapid re-
covery of the tourism as the consequence of fnan-
cial crisis that can be viewed as a challenge in an
efort to maintain the growth of international trends
for the year, if we assume that the consequences of
the fnancial crisis are still present in many coun-
tries.
As can be seen from the data in Table 1, the
growth was recorded in 2010 compared to 2009 and
it amounted to 3.20% for Europe, 12.53% for Asia
and Pacifc, 7.6% for America, 6.33% for Africa and
5.88% for the Middle East. Also, taken from the re-
gions, we can conclude that the greatest growth of
Table 1: Internatonal tourist arrivals by region of the world (in millions)
Year 1995 2000 2005 2006 2007 2008 2009 2010
WORLD 540.9 681.3 808.3 841.9 908.3 913.0 877.0 935.5
Europe 315.0 392.4 443.9 456.9 488.0 480.8 456.9 471.5
Asia & Pacic 82.8 109.3 156.2 167.4 185.4 184.1 181.1 203.8
America 109.0 128.2 133.1 136.0 142.5 147.8 140.5 151.2
Africa 20.4 27.0 36.7 40.9 44.9 44.4 45.8 48.7
Middle East 13.7 24.4 38.4 40.7 47.5 55.9 52.7 60.3
SINGIDUNUM J 2013 10 (1) 28-38
Radulovi Lj. The role and potential of global distribution system AMADEUS
30
international tourism trends recorded in the Middle
East is as follows: 78.10% in 2000, 57.37% in 2005 and
57.03% in 2010 compared to the previous fve-year
period. Tese data confrm the predictions that the
Middle East is recognized as the fastest growing tour-
ism market, followed by Asia and the Pacifc with an
average growth rate of 35% for a period of twenty
years, Africa with an average growth rate of 33.66%,
Europe with an average growth rate of 13.63%, while
the average growth rate of America is 11.67%.
We can conclude that during the last decade the
tourism expansion has been recorded at the inter-
national level, and according to all indicators, these
trends will continue in the upcoming years. In fact,
international tourism has become a signifcant area
of economic development and the major factor in
world economic trade.
All this indicates that tourism is a phenomenon
whose impact could be felt in all spheres of econom-
ic and social life, which is why the issue of tourism
development should be approached cautiously and
deliberately.
A brief overview of trends and predictions
Travel industry today is the largest industrial
branch with over 101 million people worldwide and
gross sales of over U.S. $2 trillion, accounting for
5.5% of world GDP. It should be noted that until
2008 in almost all regions of the world the pattern
was one of a steady growth with the exception of a
plateau between 2000 - 2003, as a result of events
such as September 11, SARS and global economic
stagnation.
In 2008, slightly below the predictions of the WTO,
the number of tourists increased by 4%, while the tour-
ism industry accounted for 3.4% of the world GDP
with the participation of 8.4% of those employed in
tourism. In 2009, tourism industry accounted for 3.2%
of world GDP with the participation of 7.6% of em-
ployees.
Global tourism arrivals decreased by 4.2% in
2009 due to recession. Tourism receipts were 5.7%
below the 2008 level. Te WTO forecasts generated
U.S. $ 4.235.5 billion from tourism, which coincides
with the prediction of the actual U.S. $4.3 trillion
according to the WTTC.
Also, it is necessary to point out the forecasts of
the expected WTO U.S. $1.56 billion by 2020.
Te forecasts put an emphasis on tourism as the
major increasing factor in the world, with the real
growth rate of 5% per year and possible 50 million
of new jobs in the tourism industry.
Te data on the total international arrivals shown
in Table 2, speak in favor of the recorded growth
to a ten-year period in all regions of the world. Re-
garding the average ten-year growth expressed as a
percentage, we can conclude that the Middle East
region particularly stands out in relation to other
regions, followed by Asia and the Pacifc, Africa,
Europe and America.
If you carry out the analysis of the ten-year av-
erage growth of international tourist arrivals to the
forecasts for 2020, we can conclude that the Middle
East is also emphasized in relation to other regions,
but with a signifcantly lower rate of 105.24%, fol-
lowed by Asia and the Pacifc with 101.72%, Africa
with 70.66%, Europe with 39.97%, and the America
with 47.97%.
Ten-year average growth rate in relation to the
envisaged international tourist arrivals at the world
level would amount to 54.52%.
We can conclude that predictions about tour-
ism trends unfolding in the future are in favor of
further development of tourism in the region and
the growth of tourism indicators at the global level,
putting special emphasis on Asia and the Pacifc re-
gion and America. However, it is also necessary to
emphasize prediction as a warning to factors such
as climate change that can result in disaster, the ter-
rorist attacks and diseases such as the new virus,
which can negatively afect the fow of tourism.
Table 2: Internatonal tourism prospects: world and regional (in millions)

Tourist arrivals
Ten-year average
growth rate (%)
Forecast 2020
1990 2000 2010
World total 439.5 681.3 935.5 46.16 1602
Europe 265.7 392.4 471.5 33.92 717
Asia & Pacic 56.2 109.3 203.8 90.47 457
America 92.8 128.2 151.2 28.04 284
Africa 15.2 27.0 48.7 79.00 75
Middle East 9.6 24.4 60.3 150.64 69
SINGIDUNUM J 2013 10 (1) 28-38
31
In addition, the predictions point out the possi-
ble occurrence of the shock of poverty with which
the world mega centers can be confronted. Tis can
further lead to the occurrence zones of instability
and the interest of a larger number of tourists in the
national parks and protected areas, such as Bolivia
and Madagascar.
We can conclude that such forecasts are the re-
sult of numerous changes, new requirements, ways
of thinking and the need for new global markets,
that are caused by human behavior, but that will cer-
tainly afect their future behavior and consumption,
which stems from the need to constantly evaluate all
the factors to maintain harmony with the tourism
market that is constantly subject to change.
Modern information technology as a factor in
tourism development
Information technology is a complex system that
includes computers and communications technol-
ogy.
Te emergence and development of computers
have enabled fast, today almost simultaneous ex-
change of information as a fnal product of infor-
mation technology, which represents knowledge,
power and money in order to achieve adequate
communication. It has always represented the ba-
sis through which people are able to exchange and
share information, and thus understand and acquire
new knowledge.
Modern information technology is a complex
communication system that provides its customers
a wide range of diverse services and products, in par-
ticular the Internet.
Te Internet is a global computer network that
connects computers around the world and enables
direct communication between the users. Te be-
ginning of the so-called era of modern information
technology as well as the creation and implemen-
tation of automated electronic reservation systems
during the 60s of last century by major European
companies (Lufhansa, British Airways, Air France)
was marked by establishing strong links between
modern information technology and tourism.
Since then, the tourism industry has become one
of the largest users of modern information technol-
ogy.
For tourism as a service activity, information is
one of the most important factors. Te Internet, as
a product of information technology, also rep-
resents one of the most important instruments
through which we can meet the increasingly di-
versifed needs of tourists.
Te need to attract visitors, satisfy their curios-
ity and persuade tourists to buy a product, that is,
the need to produce the conditions for creation and
implementation of tourism product as well as to
provide conditions for re-return of the tourists who
adequately meet their needs, is one of the basic tasks
concerning the implementation of modern informa-
tion systems in tourism.
The interdependence of modern information
technology and tourism
Knowledge, last minute bookings, shorter but
content - rich travel, the emphasis of quality ser-
vice, good tourist product advertising on the tourist
market - are the characteristics of todays modern
tourists who have had great infuence on the change
of tourism strategies in the last ten years.
We can conclude that the contribution of mod-
ern information technology to the development of
tourism and travel industry on a global scale has
been enormous.
Te interdependence of modern information
technology and tourism can be viewed as:
Te aspects of modern information tech-
nology on tourism - which provides for the
promotion, marketing and product diferen-
tiation through rapid, open and unrestricted
access to any information anywhere in the
world. Tis has led to the changed relation-
ship with the traditional service providers
and has caused the emergence of new desti-
nations, thus increasing the competitiveness
of the tourism market.
Te aspect of tourism on the development of
modern information technology - tourism is
today one of the most dominant economic
sectors primarily owning to the growing tour-
ism economy in the last 50 years.
In order to build and maintain a comprehen-
sive database of tourism products and the com-
petitiveness of the tourism market, and create
conditions for further facilitation of interna-
tional tourism trends and avoid unnecessary ad-
ministrative or fscal constraints, it is necessary
to support the fnancial investment in further
SINGIDUNUM J 2013 10 (1) 28-38
32
development of information technolo-
gies and to encourage a series of meas-
ures related to education and training
in information technology.
(Millennium Declaration, 2001)
When it comes to applying the mod-
ern information technology innovations,
the best indicator of the implementation
of new system sofware in the tourist in-
dustry is Global Distribution Systems
(GDS), which is based on the applica-
tion of modern information and communication
technologies.
Application of global distribution
systems in tourism
Te frst computerized reservation system (CRS)
was created in the 60s of the last century by the lead-
ing airline company. It is the predecessor of todays
distribution system through which the work of
agents is facilitated and their productivity increased.
Namely, this system provides basic information con-
cerning the schedule, prices and availability of seats.
Until the appearance of distribution systems, all
tourist information and data on hotels, fights, rent-
a-car companies were monthly printed in the form
of thick brochures, which made the process of infor-
mation exchange between airlines, travel agents and
passengers much more dif cult.
Te return information process from the travel
agency to passengers lasted more than 24 hours,
which had a negative impact on service quality, pas-
senger satisfaction and the revenue of travel agencies
and airlines. Tus, one of the essential characteristics
the timely information, was not achieved.
In the mid 70s of the last century, due
to the development of information tech-
nology, airlines allowed travel agencies to
access their databases when the frst res-
ervation system emerged.
GDS represents a link which further
connects the main factors of tourism with
the intention to recognize the needs of
tourists and to ofer its customers mod-
ern information solutions that will create
an integrated tourism product. Tis will
further lead to the realization of the com-
mon goal - the pleasure of tourists and
continued profts for all tourism operators. GDS and
the Internet today represent electronic markets that
connect travelers, travel agencies, airlines, hotels and
car rental companies, with a share of U.S. $63 billion
in 2005 out of the total travel bookings compared to
U.S. $23 billion in 2001.
Tere are many distribution systems on the world
tourism market. According to the travel agency air
bookings in 2009, GDS Worldspan had a share of
11%, GDS Sabre participated with 25%, GDS Galileo
participated with 28% and GDS Amadeus partici-
pated with 33% of the global market share
Te Figure 2 presents information on participa-
tion of GDS Amadeus on the global tourism market.
Based on the presented data, we can conclude
that the continued growth of participation highlights
the leading position of GDS Amadeus in the world
tourism market. Te global distribution systems are
extremely important for the development of tour-
ism, which can be best shown through the detailed
presentation of the predominant GDS Amadeus.
With the presentation of tasks, products and results
of operations, we will attempt to give GDS Amadeus
representation on the tourism market and its con-
tribution to the tourism development in the world.
Figure 1: The functon of global distributon systems in tourism
Figure 2: Global tourism market share of GDS Amadeus in the last four
years
SINGIDUNUM J 2013 10 (1) 28-38
33
GDS AMADEUS
GDS Amadeus was founded in 1987 by Europe-
an airlines Air France (23.36%), Lufhansa (18.28%)
and Iberia (18.28%), which means that 59.92% of
the company is owned by the three founder airlines,
while the remaining 40.08% of shares are held pub-
licly.
Network and database Amadeus system is among
the largest civilian computer systems in the world
and serves over 99.000 travel agencies in 195 coun-
tries, over 500 airlines and 34.000 airline sales of-
fces, over 86.000 hotels, with 100 million overnight
stays per year, 36.000 rent-a-car businesses (over
42 car rental companies), many tour operators and
railway companies.
Te headquaters of the Amadeus system are lo-
cated in Madrid, Spain, while the center of the op-
erational functioning of the company is situated in
Erding, Germany and it is now one of the largest
commercial computer centers in the world with the
network AMANET and 15 computer centers which
divert the data fow and control the traf c.
GDS Amadeus distributes identical sofware pack-
ages to all its providers in 217 markets with 76 local
or regional of ces. Functionality and modern solu-
tions of GDS Amadeus have contributed greatly to
it assuming the leading position with respect to the
number of users, reservations and passengers.
Te data from 2009, presented in Figure 3, high-
light the leading position that GDS Amadeus as-
sumes in almost all regions of the world, with the
exception of North America (8.20%).
Asia and the Pacifc region recorded prevalence
with 71.30%, followed by Western Europe with
67.50%, Africa with 61.30% and Latin America
with 42.50%.
We can conclude that the implementation of the
GDS Amadeus leading information technology and
creation of modern products are greatly responsible
for the existence of extensive networks of its users,
as well as for developing a competitive advantage
over other systems.
Main activities and GDS Amadeus products
Te main tasks of GDS Amadeus present it as the
leading information technology service provider for
all industries that are directly or indirectly associ-
ated with tourism and travel.
Te principal tasks of GDS Amadeus are as fol-
lows:
Liaising with the travel agency through which
they allow a quick and ef cient reservation
and services sales;
Liaising with the airlines with the aim of
efective occupancy of its capacity;
Including Hotel Amadeus system to facilitate
increased sales of hotels;
Te inclusion of rent-a-car company with the
aim of expanding the network services;
Providing information center related to inno-
vation and training;
Providing commercial and technical support
to all customers.
GDS Amadeus products have multiple signif-
cance since they enable travel agencies to improve
the range of services to their passengers, increase
productivity through the use of fully automated
processes, improve business ef ciency and become
more fexible in order to adapt to the specifcs of the
tourism market.
GDS Amadeus products, such as Pro Web, Vista,
Check my trip, Central Ticketing Solution or Auto-
matic MCO have been widely applied by Amadeus
system users. Moreover, the choice of the particu-
lar product depends on the commitment and users
needs for everyday work with passengers.
Te latest in a series of GDS products that en-
countered a wide acceptance by the users
of the system is E-ticketing. It represents a
new way of publishing documents, where
the passenger does not receive a paper doc-
ument, but is electronically registered as a
buyer. Provision and payment take place as
usual at the travel agency or on the Ama-
deus Web site. Te passenger is obliged to
report his identifcation number, which will
be used during the check-up. Benefts of E-
ticketing are numerous: Figure3: GDS Amadeus - global market share leader
SINGIDUNUM J 2013 10 (1) 28-38
34
compared to the passengers in a simple and
practical procedure for the purchase;
compared to the travel agency in reducing
the time needed for paper tickets;
compared to the airlines in reducing the costs
of producing and distributing tickets.
The basic structure
of the GDS Amadeus Providers
Over the last twenty years, GDS Amadeus has
enjoyed signifcant year-on-year growth and pro-
duced wealth for providers and the communities it
cooperates with. It is extremely important to point
out that only in 2009, GDS Amadeus achieved ap-
proximately U.S. $87 billion from the sale of tickets
through all sales channels, out of which 71% came
through travel agency channel which accounted for
U.S. $62 billion.
Regarding the Figure 5, GDS Amadeus business
structure consists of the distribution of services and
IT solutions that are available to many users on line
24 hours a day, seven days a week. Tus, the system
users are able to present the updated information and
services to the entire world market.
Starting from the fact that the de-
velopment of tourism in the third mil-
lennium demands access to fast, open
technology supported by specialist ex-
pertise, we can conclude that the GDS
Amadeus has made an important con-
tribution to the achievements of the
global tourism and travel industries
as a whole by using the intelligent ap-
plication of technology and innova-
tions. Te benefts are numerous and
are refected in a signifcant number
of system users, who by using these
products, can make a considerable sav-
ings in operating costs, income generation, etc.
According to data from the Figure 6, we can see
that the intensive growth, intense competition and
pressure to make proft are the things that charac-
terize todays tourist market, which means that only
new technologies and innovative business models
may be well placed to respond to the challenges.
For this purpose, a wide range of advanced tech-
nological solutions are ofered by GDS Amadeus
with the aim of allowing all its users to have equal
share of the tourism industry market.
We would like to point out that IT solutions to in-
dividual providers are the result of the modular tech-
nology that is specifcally tailored to meet the needs
and characteristics of the products that are on ofer
to the users of the system, with a view of achieving
efective business environment that will be character-
ized by ef cient business processes and competitive
position in the tourism market.
GDS Amadeus business results
Te unique community approach to the devel-
opment of IT solutions highlights the position of
Figure 4: The range of products of GDS Amadeus
Figure 5: GDS Amadeus business structure
SINGIDUNUM J 2013 10 (1) 28-38
35
GDS Amadeus as a true partner to the customers.
Benefts that users gain by applying the latest IT
solutions are numerous and are mostly refected in
the global availability and higher value sales with
the ef ciency, target marketing and brand difer-
entiation.
According to data presented in Figure 7, we can
see that the largest number of GDS Amadeus of ces
is located in the region of Europe - a total of 55, fol-
lowed by the region of America with 42 of ces and
Asia & Pacifc region with the total of 22 of ces. We
can conclude that the established broad network of
GDS Amadeus is the result of the vision focused on
both the commitment and results to ensure the fu-
ture success of customers.
Cross-section of results achieved for the last four
years can be best presented as the total number of
reservations for all Amadeus providers, with the
proft expressed in millions of .
Table 3 contains data on the number of total res-
ervations and adjusted profts for the last four years.
Namely, there has been a decline of total reservations
from 4.35% in 2009. However, in the same year, a
growth of 8.05% was recorded for adjusted proft
over the previous year. In 2010, an increase of 2.66%
of total reservations was recorded and the growth of
22.35% for adjusted proft compared to 2009.
Tese fgures are the result of the GDS Amadeus
commitment to new product and solution develop-
ment, which recorded a growth of almost 60% for
the last four years.
Table 4 shows the full par-
ticulars of the registered growth
of fnancial performance in 2010
compared to the previous year
and to an increase of 8.50% for
distribution services and an in-
crease of 17.70% for Amadeus IT
solutions. Based on the fnancial
performance of GDS Amadeus,
it should be noted that Amadeus
allocates signifcant funds to re-
search and development technol-
ogies used in the travel sector.
Only in 2009, GDS Amadeus set aside 250 million
, and in 2010, the European Commission ranked the
investment of Amadeus as the largest in Europe by
total research and development investment in both
computer service category and the travel and tour-
ism sectors.
Today, GDS Amadeus has one of the best fare
search engines in the world powered by unique
algorithms that can process more than 50 million
transactions per day.
Te fact that the GDS Amadeus was the frst to
receive the quality certifcation ISO9001:2000 stands
in support of the continuous and systematic initia-
tives towards improving products and solutions.
GDS AMADEUS STAFF
Outstanding achievements are based on the con-
tribution of every member of staf. Terefore, GDS
Amadeus aims to improve the position of every
employee through incentives that would make it a
great place to work, a place where success is recog-
nized, where innovation is encouraged and where
employees are empowered to achieve their profes-
sional goals.
Looking at the data presented in Table 5 and 6,
we can conclude that the GDS Amadeus allocates
great attention to providing continuous training to
its employees in order to achieve ef cient operations
as well as personal development goals,
with the aim to further their careers in
the organization. It should be noted
that 77% of employees in GDS Ama-
deus hold a university degree or higher,
while 85% of the employees speak two
or more languages. Also, every year, a
large number of young graduates are to
be engaged in the GDS Amadeus, where
Figure 6: Available Amadeus providers in 2010
Figure 7: Number of Amadeus o ces by region in 2010
SINGIDUNUM J 2013 10 (1) 28-38
36
they are given a chance to achieve long-term career.
GDS Amadeus also ofers over 450 e-learning cours-
es; annual performance and development interviews
are the part of the ongoing performance manage-
ment process.
CONCLUSION
Todays dynamic environment, which can be
characterized as unstable and unpredictable, signif-
cantly afects the development of the tourism indus-
try by setting the problem of placement of tour-
ism products to the tourism market due to increased
competitive pressure caused by the globalization of
the services sector.
Te trend of globalization is a result of the om-
nipresence of the worldwide product development
and information technology. Moreover, it increases
the complexity of the tourism industry and enforces
understanding of the management of tourism de-
velopment as a process that is based on constant re-
search and ongoing analysis of the positions on the
tourism market. Te tourism sector is undergoing
constant development and progression, and thus
requires a comprehensive approach to all its com-
ponents. Afer conducting research, we have come
to the following conclusions:
Numerous changes in the demographic, eco-
nomic, psychographic, and other characteris-
tics of tourists have been recorded in recent
years, thus leading to major changes in the
tourist demand.
Quick and frequent changes that characterize
the tourism market require the appropriate ac-
tion. In our opinion, the only feasible strategy
should involve the following: adequate prepa-
ration, identifying changes in the environ-
ment, fexibility in relation to the emerging
changes and accepting changes as the chal-
lenge in order to provide a competitive advan-
tage.
Changes in technologies enable the devel-
opment of information technology and the
Internet as a distribution channel, through
which the connection between tourism sup-
ply and demand is electronically created. Te
products of modern information technology
provide for the ef cient reception, ef cient
data processing and rapid data transmission,
which further results in improving business
Table 3: The intersecton of the total bookings and adjusted prot by age (in millions)
Total bookings Adjusted prot
2007 428 281
2008 431 323
2009 413 349
2010 442 427
Table 4: Cross secton of the nancial performance of GDS Amadeus (in million EUR)
Distributon nancial performances IT nancial performances
2009 1,836 511
2010 1,992 601
Table 5: Total Amadeus workforce Table 6: Total hours of training
2008 2009 2010 2008 2009 2010
Permanent sta 7,422 7,521 7,852 134,868 142,574 151,812
Temporary sta 119 108 108
External manpower 1,338 1,759 2,31
Total sta 8,880 9,388 10,270
SINGIDUNUM J 2013 10 (1) 28-38
37
processes in numerous areas, especially in the
feld of transport and travel industry
As products of modern information techno-
logy, Global Distribution Systems are parti-
cularly important for tourism development
because they allow users to access informati-
on anywhere in the world and ofer them the
opportunity to create better and more com-
plete service through the timely launching of
products on the tourist market.
GDS Amadeus assumes the leading position
in relation to other distribution systems, pri-
marily due to the development of sofware
that is tailored specifcally to meet the needs
of individual users, allowing the availability
and exchange of quality information to a lar-
ge number of users, thus linking tourism re-
lated companies in the global networks.
Amadeus GDS has a wide range of products, dis-
tribution and IT solutions. Teir quality and rapid
transmission have enabled the presentation of tour-
ist services in the tourist market, and thus have made
the tourism products available to various groups of
customers in a simple and ef cient way. Te total
research and development investment of GDS Am-
adeus in both computer services category and the
travel and tourism sector is very important, which is
why its contribution is refected in the feld of tour-
ism industry.
Finally, we would like to emphasize that the de-
velopment and implementation of modern informa-
tion technology products, in our opinion, represent
a response to constant and rapid changes that char-
acterize the tourist market and the chance to gain
competitiveness and foster further development of
tourism at the global level.
REFERENCES
Amadeus Annual Report 2010 [online]. Available from:
http://www.cinven.com/lib/docs/092640-amadeusan-
nualreport2010.pdf [accessed 22 May 2011].
Amadeus Customer IT Solutions [online]. Available from:
http://www.amadeus.com/amadeus/x5140.html [ac-
cessed 22 May 2011].
Babu, S., Mishra, S., Parida, B. (2008) Tourism Develop-
ment Revisited: concepts, issues and paradigms. London:
Sage Publications.
Boniface, B., Cooper, C. (2005) Worldwide destination: the
geography of travel and tourism. 4th ed. Oxford: Else-
vier.
Buhalis, D., Costa, C. (2006) Tourism Business Frontiers:
consumers, products and industry. Oxford: Elsevier,
Butterworth Heinemann.
Buhalis, D., Costa, C. (2006) Tourism Management Dy-
namics: trends, management and tools. Oxford: Elsevier,
Butterworth Heinemann.
Evans, N., Campbell, D., Stonehouse, G. (2002) Strategic
Management for Travel and Tourism. Oxford: Butter-
worth Heinemann.
Goeldner, C., Brent, R. (2009) Tourism: Principles, Practices
and Philosophies. 11th ed. Hoboken, N.J.: John Wiley.
Krsti, B., Stepanovi, Lj. (2004) Avio saobraaj u turbulen-
cijama. Beograd: Goregraf. (in Serbian).
Lickorish, L., Jenkins, C. (2001) An introduction to Tour-
ism. Oxford: Butterworth-Heinemann.
Millennium Declaration. 14th session of the General As-
sembly of the WTO, 2001 Osaka. Available from: http://
www.traveldailynews.com/pages/show_page/1318-
WTO's-Osaka-Millennium-Declaration [accessed 20
May 2011].
Page, S. (2009) Tourism Management: Managing for
Change. 3rd ed. Oxford: Elsevier.
Pender, L., Sharpley, R. (2005) Te Management of Tour-
ism. London: Sage Publications.
Samipatra Das HVS International (2001) Global Distribu-
tion Systems in Present Times [online]. Available from:
http://www.hospitalitynet.org/news/4013406.html [ac-
cessed 22 May 2011].
Tourism and World Economy. UNWTO [online]. Avail-
able from: http://www.unwto.org/facts/eng/economy.
htm [accessed 01 June 2011].
Tourism Economic Research. World Travel and Tourism
Council [online]. Available from: http://www.wttc.org/
eng/Tourism_Research/Tourism_Economic_Research
[accessed 24 May 2011].
Tourism Facts and Figures. UNWTO [online]. Available
from: http://media.unwto.org/en [accessed 24 May
2011].
Tourism Market Trends. UNWTO [online]. Available from:
http://www.unwto.org/facts/eng/tmt.htm [accessed 01
June 2011].
Tribe, J. (2004) Te Economics of Recreation, Leisure &
Tourism. 3rd ed. Oxford: Elsevier Ltd.
Unkovi, S., ai, K., Baki, O. (2002) Savremena kretanja
na turistikom tritu. Beograd: Ekonomski fakultet. (in
Serbian).
World Tourism Barometer. UNWTO [online]. Available
from: http://mkt.unwto.org/en/barometer/september-
2011-interim-update [accessed 04 June 2011].
SINGIDUNUM J 2013 10 (1) 28-38
38
Received: October 6th, 2012
Correcton: December 18th, 2012
Accepted: January 10th, 2013
ULOGA I POTENCIJAL GLOBALNOG DISTRIBUCIONOG SISTEMA
AMADEUS ZA RAZVOJ TURIZMA NA GLOBALNOM NIVOU
Rezime:
Globalizacija, razvoj i primena novih tehnologija, novi potroaki trendovi, briga
za prirodno okruenje i mnogi drugi faktori, doprineli su raznolikosti i sloenosti
turistike industrije. Iz navedenih razloga, turistika industrija u proteklih
nekoliko godina nastoji da usmeri svoje aktivnosti ka razvoju informacione i
tehnoloke infrastrukture, odnosno globalne elektronske povezanosti sa ciljem
prevazilaenja graninih barijera i uspostavljanja odnosa kako sa pruaocima
usluga i turistima, tako i sa turistikim agencijama i organizatorima putovanja.
Razvoj informacionih tehnologija i evolucija rezervacionih sistema pojedinih
avio kompanija doveli su do nastanka Globalnih Distribucionih Sistema (GDS),
poznatijih irom sveta kao kompjuterski rezervacioni sistemi koji elektronskim
putem povezuju turistiku ponudu sa turistikom potranjom.
Cilj ovog ovog rada je da se prikae uloga i znaaj vodeeg distribucionog sis-
tema (GDS Amadeus), kako bi se istakla njegova uloga u razvoju turizma na
globalnom nivou. Istraivanje i metodologija ovog rada zasnovani su na analizi
podataka dobijenih iz primarnih i sekundarnih izvora, putem kojih emo koristei
deduktivni pristup teorijskih postavki i analitiki pristup kvantitativnih pokaza-
telja doi do znaajnih saznanja. Na kraju ovog rada kroz zakljuno razmatranje,
nastojaemo da pokaemo naunu opravdanost sprovedenog istraivanja, tako
to emo ukazati na znaaj kontinuiranog nadzora i prilagoavanja promenama
na turistikom tritu, kako bismo ukazali na vanost primene informacionih
tehnologija za razvoj turizma.
Kljune rei:
globalizacija,
turizam,
informacione tehnologije,
GDS Amadeus.
SINGIDUNUM J 2013 10 (1) 28-38
39
THE PRICING AND VALUATION OF SWAPS
Jelena Paunovi
*
Wiener Stdtsche osiguranje a.d.o. Belgrade
1 Trenjinog cveta Street, Belgrade, Serbia
Abstract:
Swaps are financial agreements between two parties to exchange period
cash flows and are mostly used as a tool for hedging risk and speculation.
They are derivative contracts that derive their value from an underlying
asset (the most common underlying assets are the interest rates in the
plain vanilla case, but it can be almost anything). These OTC products
(over the counter) are traded directly between the two parties or with a
financial institution acting as an intermediary.
Some banks in Serbia already offer these derivative instruments, but
the markets are still in an emerging phase. The private sector is severely
affected by credit and interest rate risk which currently lacks sufficient
knowledge and understanding of such products and their importance.
This paper aims to present and demystify the structure of these financial
derivatives by presenting their valuation methods and by showing how
they are used in practice. Ultimately, we shall discuss the credit risk the
counterparties are facing in developed financial markets nowadays.
Key words:
swaps,
financial derivatives,
OTC market,
hedging,
risk,
speculation,
financial markets.
ISSN 2217-8090
UDK: 005.334:336.764.1
DOI: 10.5937/sjas1301039P
* E-mail: jelena.paunovic80@gmail.com
INTRODUCTION
Swaps (Flavell, 2010) are private contracts in
which two counterparties agree to exchange cash
fows over a period of time according to previously
defned procedures. Te two sides of the swap are
referred to as legs, and the underlying security on
which these leg payments are based can include a
wide variety of instruments such as interest rates,
equity index, commodity, credit rating, credit de-
fault etc. As the swap is a security that involves the
exchange of cash fows of one or more underlying
variables, there is no limit to the number of difer-
ent types of swaps that can be structured. Tey are
widely used by portfolio managers to manipulate
duration of their investments, regulate interest rate
exposure and ofset risk. Fixed-income traders have
the possibility to avoid the cost of long/short posi-
tions in bonds while speculating on interest rates
as it costs zero to enter a swap and does not require
signifcant capital. Corporations that have foat-
ing liabilities can jump into swaps in order to start
paying fxed or protect themselves against falling
interest rates by paying foating and receiving fxed.
Bond issuers usually use rate-lock when they issue
fxed bonds by locking at the current rates by enter-
ing a swap which gives them time to sell the bonds
to investors.
Te frst swap contracts were introduced in 1981
when the World Bank and IBM entered into a swap
agreement. Today, they are one of the most traded
fnancial derivatives worldwide with a total notion-
al value exceeding 300 trillion $, which is more than
10 times the size of the U.S. public equities market.
40
INTEREST RATE SWAPS IN PRACTICE
Interest rate swaps are the most common type of
a swap contract. Tey are also referred to as plain
vanilla interest rate swaps. In this type of swap
contract, one company pays to the other cash fows
that are equal to the interest at a prearranged fxed
rate on a notional principal N for a certain period of
time (Price and Henderson, 2012.
It is important to note that the notional princi-
pal N of an interest rate swap is never exchanged
because the contract is based on the same notional
denoted in the same currency throughout the entire
life of the swap. At the same time, the second com-
pany agrees to pay to the frst one, in the same cur-
rency, cash fows that are equal to the interest at the
current foating rate (usually the LIBOR rate) on the
same notional principal for the same period of time.
Te reason for the existence of such instrument
is usually associated with the comparative advantage
argument, which means that some companies have
a comparative advantage in foating rate markets
and others have it in fxed rate markets. Compa-
nies usually borrow money from the market where
they have a comparative advantage. However, this
can sometimes oblige them to borrow foating when
they want to borrow fxed and vice versa, which can
cause trouble if they have an opposite exposure. Tis
is where the interest-rate swap is useful with the
consequence of transforming the foating rate loan
into a fxed rate loan. It is an instrument that allows
removing interest rate risk over a given period in the
future on a regular basis.
The LIBOR rate
As mentioned earlier, the foating rate is usually
the London Interbank Ofer Rate (LIBOR) which
is the rate at which major banks are willing to of-
fer $ deposits to each other. LIBOR is determined
on the inter-banking market and is changing along
with the business cycles. Te BBA (British Bankers
Association) polls panel banks asking them at what
rate they would loan money to other panel banks.
One reason why the LIBOR is mostly used is be-
cause it is the easiest defaultable rate and because a
vast majority of interest rate derivatives and many
bond issuances are linked to it.
As the LIBOR contains default risk, it is compen-
sated by an interest rate spread above the Treasur-
ies.
A practical example
Let us imagine an interest rate swap between the
World Bank and IBM where company wishes to
borrow $1 million for 2 years. We will assume for
now that there is no intermediary (bank) there
are no commissions. Te two companies have been
ofered the following rates:
Borrowing rates Fixed Floatng
World Bank 6,00% 6 month LIBOR + 0.4%
IBM 7.30% 6 month LIBOR + 0.9%
Assumptions:
World Bank would prefer borrowing at a fo-
ating rate linked to LIBOR.
IBM would prefer borrowing at a fxed rate.
We can see that the diference between the two
foating rates is 0.5% and that the diference between
the fxed rates is 1.3%. Te fxed rate diference is
bigger than the diference of the foating rates. IBM
pays less interest on the foating markets than on
the fxed markets compared to World Bank, which
means that IBM has a comparative advantage on the
foating market and that World Bank has a com-
parative advantage on the fxed markets. Both com-
panies can now arrange a swap to guarantee that the
World Bank fnishes with foating rate payments (as
desired) and IBM fnishes with fxed rate payments.
Te process goes as follows: Te World Bank
borrows money at 6% fxed rate (comparative ad-
vantage), IBM borrows at the 6 month Libor + 0.9%
rate. Tey can now agree to enter in a swap contract
to ensure that World Bank ends up with a foating
rate and IBM ends up with a fxed one.
Tis swap contract looks as follows:
5.9% xed rate
World
Bank
IBM
6 month LIBOR rate
World Bank pays IBM interest at 6-month
LIBOR on $1 million notional.
IBM pays World Bank interest at a fxed rate
of 5.9% per annum on $1 million notional.
SINGIDUNUM J 2013 10 (1) 39-45
Paunovi J. The pricing and valuation of swaps
41
Total cash-fows:
World Bank receives 5.9% fxed from IBM,
pays 6% fxed to the lenders and pays 6 month
LIBOR rate to IBM which is equal to a total
net of Libor + 0.1% per year, which is 0.3%
less than it would have to pay if it borrowed
money directly from the foating market at
the rate of LIBOR + 0.4%.
IBM receives 6 month LIBOR from World
Bank, pays 5.9% to World Bank, and pays
LIBOR + 0.9% to the lenders. Tis sums up
to a total net of 6.8% fxed, which is 0.5% less
per year than if the company went directly to
the fxed markets and borrowed at the rate
of 7.3%.
Te swap improves the positions McDougall,
1999) for World Bank and IBM by 0.3% and 0.5%
per year, respectively.
In an interest rate swap, the total gain is always
the diference between the interest rates that the two
companies have in fxed markets and the diference
between the interest rates they have in foating mar-
kets. In this case, the total gain is 1.3% - 0.5% = 0.8%.
In practice, the two companies usually never get
in touch directly in order to make a swap agree-
ment. Tere is almost always a bank that stands in
between as an intermediary, which means the swap
could look as follows:
I n this case, the net payment for the World Bank is:
It receives 5.9% fxed from the Bank, It pays
6% to lenders and it pays 6 month LIBOR to
BANK which equals to a total net of LIBOR
+0.1% lef to pay per annum which is 0.3%
less than it would have to pay if it borrowed
money directly from the foating market at
the rate of LIBOR + 0.4%.
Te net payment of IBM in this case is:
It receives 6 month LIBOR rate from the
Bank, it pays 6 month LIBOR + 0.9% to len-
ders and it pays 6% fxed to the bank which
equals to a total net of 6.9% fxed lef to pay
which is 0.4% less than if the company went
directly to the fxed markets and borrowed at
the rate of 7.3%.
In that case, the net payment of the bank is:
It receives 6% fxed from IBM, it pays 5.9%
fxed to World Bank, it receives 6 month LI-
BOR from World Bank and it pays 6 month
LIBOR to IBM which equals to a total of 0.1%
fxed for the BANK.
Te total gain of all parties is the same as in the
last example, 0.8%, except that here the bank takes
a commission of 0.1% by taking a higher fxed rate
from IBM (6%) compared to the one it pays to
World Bank (5.9%).
One of the two companies pays for the diference
between the fxed and the foating interest every 6
months (cause 6 month LIBOR rate is used in the
example, with semi-annual compounding). Te frst
cash fow exchange would take place 6 months afer
the swap agreement.
Te second cash fow exchange would happen
12 months afer the swap agreement, based on the
forward LIBOR rate in 6 months for 6 months etc.
(see Table 1).
If the 6 month LIBOR was 7%, the frst exchange
of cash fows would look as follows:
World Bank would pay to the BANK 0.5 x
(7-5.9)% * 1000000 = 5500$.
Te BANK would keep 0.1% commission
which is 500$.
5.9% xed rate 6% xed rate
Lenders
World
Bank
IBM
Lenders
BANK
6 month LIBOR rate 6 month LIBOR rate
6% month
LIBOR rate
+ 0,9%
6% xed
rate
SINGIDUNUM J 2013 10 (1) 39-45
42
VALUATION METHODS
In order to value an interest rate swap, the frst
option would be to consider the swap as the sum
of a long position and a short position of a bond.
We can assume that our swap in the last example
is the same as if IBM was lending to the fnancial
institution $1M at 6 Month LIBOR and the fnancial
institution lending to IBM $1M at a fxed rate of 6%
in return. Tis is the same as selling a foating rate
bond on $1M notional and buying a $1M notional
bond on fxed rate. Te value of the swap is then the
diference between the values of the two bonds. We
denote by S the value of the swap, N the notional of
the swap, and P1 and P2 the values of the the two
bonds S = P1 P2.
Te fundamental concept lying behind bond val-
uation is the net present value (NPV) of cash fows,
which simply means that money received in the fu-
ture is worth less than that same amount received
now. Te longer we wait for the payment, the higher
the compensation needs to be.
In order to price the bonds, we need to under-
stand forward rates (Howard, 2012).
Suppose we want to borrow or lend $50 million
in 18 months for a period of 18 months. We can use
a forward rate to lock in the rate now:
Te in 18month for 18 month forward rate
from now is the rate at which we can borrow or
lend in 18 months for a period of 18 months,
there is no option. We are obliged to borrow
or to lend at the forward rate.We will write that
forward rate as: 1.5f
1.5
, where 1.5 refers to a 18
month period.
Generally,
m
f
n
will denote the forward in m years
for n years.
Example:
By no-arbitrage:
( ) ( )( )
2
1 .5 .5 .5
1 / 2 1 / 2 1 / 2 + = + + r r f
with r the interest rate for year 1, semi-annualy
compounded.
Table 1: Swap cash ows (6% xed swap rate, period 5 years, oatng LIBOR rate, notonal $10M, semi-annual compounding)
Swap rate: 6%
Contract date: 1/15/2009 Notonal amount: $10M
Date Fixed Payment 6-month LIBOR Floatng Payment
Net Payment
(xed payer)
1/15/2009 4%
7/15/2009 300000 5% 200000 100000
1/15/2010 300000 6% 250000 50000
7/15/2010 300000 7% 300000 -
1/15/2011 300000 8% 350000 50000
7/15/2011 300000 7% 400000 100000
1/15/2012 300000 6% 350000 50000
7/15/2012 300000 5% 300000 -
1/15/2013 300000 4% 250000 50000
7/15/2013 300000 3% 200000 100000
1/15/2014 300000 2% 150000 150000
Table 2: Pricing a two-year swap with forward rates ($10M notonal, semi-annual compounding).
Date Time
Fixed pay-
ment
6-month LIBOR
oatng rate
Floatng pay-
ment
Expected
Floatng Payment
Net Payment (xed
payer)
1/15/2009 0
7/15/2009 6 months s/2*$10mil r
0.5
(r
0.5
)/2*$10mil (r
0.5
)/2*$10M (s/2-r
0.5
/2)*$10mil
1/15/2010 1 year s/2*$10mil r
0.5
in 6 months - (
0.5
f
0.5
)/2*$10M (s/2-0.5f
0.5
/2)*$10mil
7/15/2010 1.5 years s/2*$10mil r
0.5
in 1 yr - (
1
f
0.5
)/2*$10M (s/2-1f
0.5
/2)*$10mil
1/15/2011 2 years s/2*$10mil r
0.5
in 1.5 yrs - (
1.5
f
.5
)/2*$10M (s/2-1.5f
0.5
/2)*$10mil
SINGIDUNUM J 2013 10 (1) 39-45
43
Solving for the forward rate, we see that:
( )
( )
2
1
.5 .5
.5
1 / 2
2 1
1 / 2
(
+
= (
+
(

r
f
r
Te general formula for the forward rate in m
years for 0.5 years is:
( )
( )
2 1
.5
.5 2
1 / 2
2 1
1 / 2
+
+
(
+
= (
+
(

m
m
m m
m
r
f
r
What we just did is called bootstrapping the
yield curve using the spot rates to fnd the forward
rates (see Table 2).
In order to be able to price the swap, we have to
understand the following:
in the absence of default risk, a swap is just a
sequence of forward contracts.
it costs zero to enter a swap agreement.
the swap price refers to the fxed rate that is
exchanged with the foating rate which is also
called the swap spread.
In practice, LIBOR zeros which are needed
exist only out to 1-year.
Two ways of getting LIBOR zeros are:
1) By going to the LIBOR forward market which
is very liquid and by getting forward rates on
Bloomberg, and then bootstrapping the for-
ward curve to get LIBOR spot rates. LIBOR for-
ward rates can be found in Bloomberg terminal
as IMM Eurodollar Synthetic forward rates.
2) By bootstrapping the swap curve to get LI-
BOR zero prices and then get spot rates from
these. Te question that arises is concerned
with the spread we have to pay over the treas-
ury rate to get a fxed rate.
Te net present value of fxed cash fows should
equal the net present value of foating cash fows
which is the same as saying that the net present
value of the swap should equal zero.
Putting this into a formula (Marshall and Kap-
ner, 1993):
Te expected net NPV of an N-year pay foating/
receive fxed swap is 0:
2
/ 2 0.5 0.5
1
/ 2
1
0
(1 / 2) 2 2)
=
| |
=
|
+
\ .
N
n
n
n
n
f s
r
Tis is the same as saying:
2
1
/ 2
2
/ 2 0.5 0.5
1
/ 2
/ 2
(1 / 2)
/ 2

(1 / 2)
=
=
= =
+
= =
+
N
fixed
n
n
n
N
n
floating
n
n
n
s
NPV
r
f
NPV
r
Simplifying, it turns out to be a simple general
formula for a N year swap:
( )
2
/ 2
1
1
2

N
N
n
n
s
With:
n
the discount rate at period n (consider-
ing semi-annual compounding) which is equal to:
with r
n
: the interest rate during the period n.
2
/ 2
1
(1 / 2)
=
+
n n
n
r
and
/ 2
/ 2 0.5 .5 1
/ 2 0.5
(1 / 2)
2 1
(1 / 2)

( +
=
(
+

n
n
n n
n
r
f
r
the forward rate for n/2 -0.5 years for 0.5 years
Proof and example for a 1 year swap:
2
1
/ 2
2
/ 2 0.5 0.5
1
/ 2
1
(1 / 2) 2
1

(1 / 2) 2
=
=
= =
+
= =
+
fixed n
n
n
n
floating n
n
n
s
NPV
r
f
NPV
r
Where:
NPV(foating) =
2 2
/ 2 0.5 0.5 / 2
1
1 1 / 2 / 2 / 2 0.5
1 2
0.5 1
1 0 2 1
0.5 0 1 0.5
0 1
0 0.5 0
(1 / 2) 1 1
1
(1 / 2) 2 (1 / 2) (1 / 2)
(1 / 2) (1 / 2) 1 1
1 1
(1 / 2) (1 / 2) (1 / 2) (1 / 2)
1 1 1
(1 / 2) (1 / 2) (1
= =
( +
=
(
+ + +

( ( + +
= +
( (
+ + + +

(
= +
(
+ + +

n
n n
n n n
n n n n n
f r
r r r
r r
r r r r
r r r
1 2
.5 1
0 1 1 2
0 0.5 0.5 1
2
1
1
/ 2) (1 / 2)
1 1 1 1
(1 / 2) (1 / 2) (1 / 2) (1 / 2)
1
1 1
(1 / 2)

(
(
+

= +
+ + + +
= =
+
r
r r r r
r
SINGIDUNUM J 2013 10 (1) 39-45
44
NPV(fxed)=
2
0.5 1 1 2
1 / 2 0.5 1
1 1 1
( )
(1 / 2) 2 2 (1 / 2) (1 / 2) 2

=
| |
= = +
|
+ + +
\ .
n
n n
s s s
r r r

NPV(foating) = NPV(fxed)
2
/ 2 1
1
1
2

=
=
n
n
s

( )
1
2
/ 2
1
1
2

=
n
n
s
Example:
If we have a 6 month rate r
0.5
= 4% and 1 year rate
r
1
= 5% then the swap rate s is:
( )
1
2
/ 2
1
1
2 4, 988%
= =
L
L
n
n
s
Risks associated with interest rate swaps
It is important to know that the discount rates
we use in valuing the swap should refect the riski-
ness of the cash fows. Since we are using the LIBOR
(denoted with L) as a representation of the foat-
ing rates, the risk is then associated with loans in
the interbank market.On the other hand, the use of
interest rate swaps exposes the trader to two types
of primary risk: interest rate risk and credit risk
(counter-party risk)
Interest rate risk:
As the interest rate movements do not usually go
with investors hope, swaps involve an interest rate
risk. Te counterparty that is receiving fxed profts
if the rates fall and loses if they rise. On the other
hand, the fxed payer profts if rates rise and loses if
they fall (see Chart 1 below).When the swap is put
at the money, this means the total value of fxed
interest-rate during the life of the swap is the same
as the anticipated value of the foating rate cash
fows, which is why the price to enter a swap is zero
as mentioned earlier. At the inception of the swap,
the NPV of the anticipated profts and losses should
add up to zero.
Credit risk:
Financial institutions which are highly accredit-
ed usually market-make the swaps by ofering either
fxed and foating rate cash fows to their custom-
ers. It is important to notice that when they enter a
swap, they have two independent contracts (Mar-
shall and Kapner, 1993). Tis means they have to
honor the agreement with the other company if one
defaults (credit risk). Generally, the company enter-
ing the swap would not even know that the bank has
hedged the position with another company. Because
of this, most of the large banks are prepared to store
the swaps, which means entering into a swap while
hedging the interest rate risk until a counterparty
wanting to take opposite position is found (mostly
done with rate-locking). If a swap transaction is
massive, the market maker may organize to sell it
to a number of counterparties so that the risk of
the swap becomes additionally spread and thus, the
market makers decrease their risk exposure. Te
credit risk is very small as the swap market makers
are generally highly accredited fnancial institutions
but it is still above U.S. treasury bonds.
Chart 1: Swap interest rate risk
Source: htp://www.pimpco.com
SINGIDUNUM J 2013 10 (1) 39-45
45
CONCLUSION
Te interest rate swap markets have been pre-
sent for decades in the developped world as a way
for companies to deal with their debt and they have
grown into one of the most liquid OTC markets
world-wide. Tey enable indirect access to fxed or
foating capital markets and allow the counterparties
to manage their asset/liability structure. Interest rate
swaps are commonly used by companies in order
to receive a marginally lower interest rate than they
would have been able to get without them. How-
ever, swap markets are still at an inception phase in
Serbia. We presented in this paper swap valuation
methods that rely on the net present value of cash
fows (NPC) along with practical examples. We also
introduced two types of risk that companies and
market makers face, the interest-rate risk and credit
risk, in order to emphasize the importance of swaps
for the private sector, which currently requires more
understanding of these derivative products.
REFERENCES
Buetow, G.W., Fabozzi, F. J. (2001) Valuation of interest
rate swaps and swaptions. New Hope, Pa.: Frank J.
Fabozzi.
Howard, C. (2012) Interest Rate Swaps and Other Deriva-
tives. New York: Columbia Business School.
Marshall, J. F., Kapner, K.R. (1993) Understanding Swaps.
New York; Chichester: Wiley.
McDougall, A. (1999) Mastering Swaps Markets: a step-
by-step guide to the products, applications and risks.
London: Financial Times.
Price, J., Henderson, S. (2012) Currency and interest rate
Swaps. London: Butterworths.
Flavell, R. (2010) Swaps and other derivatives. San Fran-
cisco: John Wiley and Sons.
Received: January 23rd, 2013
Correcton: February 25th, 2013
Accepted: March 8th, 2013
ODREIVANJE CENE I VREDNOVANJE SVOPOVA
Rezime:
Svopovi su finansijski ugovori izmeu dve strane za razmenu tokova novca razliitog
porekla i koriste se uglavnom kao sredstvo za upravljanje rizikom (heding) i
spekulacije.To su derivatni instrumenti ija se vrednost izvodi iz osnovne aktive
(najei tip je generiki svop ili vanila kamatni svop, ali to moe biti skoro bilo
ta). Ovim OTC (vanberzanskim) proizvodima se trguje nesposredno izmeu
dve strane ili sa finansijskom institucijom koja nastupa kao posrednik.
Pojedine banke u Srbiji ve nude ove derivatne instrumente, ali je njihovo
korienje na tritu jo uvek u zaetku. Kreditni rizik i rizik kamatne stope u
velikoj meri utiu na privatni sektor koji trenutno ne poseduje dovoljno znanja o
takvim proizvodima i njihovom znaaju. Cilj ovog rada je da pokua da prikae i
razjasni strukturu ovih finansijskih derivata tako to predstavlja metode za njihovo
vrednovanje i pokazuje kako se one primenjuju u praksi. Na samom kraju ovog
rada emo se pozabaviti pitanjem kreditnog rizika sa kojim se ugovorne strane
danas suoavaju na razvijenim finansijskim tritima.
Kljune rei:
svopovi,
finansijski derivati,
OTC (vanberzansko) trite,
heding,
rizik,
spekulacije,
finansijska trita.
SINGIDUNUM J 2013 10 (1) 39-45
46
CONTEMPORARY APPROACH
TO EDUCATION IN ORGANIZATIONS
1
Lepa Babi
1,*
, Jelena orevi Boljanovi
1
1
Singidunum University, Department of Business
Abstract:
In order to successfully meet the requirements of the knowledge-based
economy, organizations turn more and more to the knowledge they
possess, its application at the right time and in the right way, and all that
with the aim to improve their business processes, achieve efficiency and
quality in business and customer satisfaction. The topic of this research
are organizations that strive for change and that rely on their knowledge
and skills in order to become competitive, fast, and innovative, to create
efficient knowledge to maximize their success, respond to the challenges
of the knowledge-based economy and transform into a knowledge- based
organization.
Key words:
knowledge,
knowledge- based organizations,
knowledge sharing,
education.
ISSN 2217-8090
UDK: 005.94; 005.96
DOI: 10.5937/sjas1301046B
* E-mail: lbabic@singidunum.ac.rs
INTRODUCTION1
Te modern world is facing an ongoing progress
of education requirements from the standpoint of
work. If we start from the fact that an organiza-
tion is a social system with a structure, consisting
of groups and individuals who work together to
achieve a certain goal, it is obvious that an organi-
zation consists of structured social units, such as
individuals and groups that are trying to achieve a
common goal that is unreachable without additional
education, trend monitoring. Generations of adults
are inferior to generations of upcoming young people
with diferent, and more customized education. Te
demand for specialization, that is, for a specialist as
1 Tis scientifc work has resulted from the cooperation of
two projects: Improving the competitiveness of Serbia s
EU accession process, Ministry of Science of the Republic
of Serbia, No. 47028, for the period 2011-2014., and Se-
curity and protection of the organization and functioning
of the educational system in the Republic of Serbia (basic
principles, protocols, procedures and resources), Te Mi-
nistry of Science of the Republic of Serbia, No. 47017, for
the period 2011-2014.
a carrier of certain work, is growing ever more. We
may speak of a transition from mandatory educa-
tion to mandatory learning. Mandatory learning as
an intellectual need and stimulus implies a certain
level of education and competencies in the technol-
ogy of individual learning and intellectual work in
general. According to Peter Drucker (2004), knowl-
edge is becoming the only signifcant resource and
the traditional factors of production natural re-
sources, workforce and capital have not disap-
peared but have become secondary as they can be
easily obtained when there is knowledge. Excellent
organizations are those that are constantly learning
and they are very interested in education and invest
enormous funds in order to provide education and
training to as many employees as possible.
Education is no longer a privilege of those in
higher positions and professionals, but it is gradu-
ally becoming a responsibility for everyone. Radical
changes demand generative learning, which means
abandoning old and introducing new competences.
If we want to be ready for the future, we must build
a partnership between education and economy, be-
47
tween education and market economy. Due to in-
ternational competition, organizations must be very
ef cient and aware of quality issues. Te lesson for
the future is: merely good quality is not the same as
good enough (Grinberg and Baron, 1998). Te ques-
tion is how to train the employees to enable them
to successfully respond to the challenges they face,
and how to motivate them to produce or ofer high
quality goods and services. Constant education is
becoming one of the most important ways to man-
age and develop human resources. It is noted that it
is necessary to constantly improve knowledge and
competencies as an organization builds its capacities
through active and continuous learning. All mem-
bers of an organization must improve and develop
themselves, for it is a rule that the organization ad-
vances together with the development of its employ-
ees (Babi, 2009). Learning increases knowledge as
a prerequisite for efective and ef cient actions. It
is important and necessary that the organizations
and individuals in those organizations develop
mechanisms for storing and retrieving information
on what they have learned for the well- being of the
organization.
Te aim of this paper is to examine the relations
between education and success of modern organi-
zations. Terefore, we shall start from the strategic
signifcance of education for organizations; then we
shall attempt to describe knowledge-based organi-
zations, how to manage the fow of knowledge, and
which methods of knowledge sharing are in use. Fi-
nally, we shall present a model of education manage-
ment in an organization and the results of research
that imply the signifcance of education and knowl-
edge sharing in an organization.
EDUCATION AS A STRATEGIC GOAL
Continuous learning is becoming the only path
to change, innovation and development. Education
in an organization should be based on a systematic
way of acquisition and development of knowledge,
skills and attitudes that employees should have so
that they could do their job in the working envi-
ronment in an adequate or in an improved man-
ner. (Latham, 1988). Education has a greater im-
pact when it is related to the business strategy of an
organization (Tarenou et al. 2007). Tis indicates
that an organization should function as an integral
organism in which every process makes sense only
as a part of a whole. A demand for an organization
to function as a unifed whole is also confrmed by
the results of the research that the efect of educa-
tion is more pronounced when it is paired with the
overall human resource management policy (Guer-
rero and Barraud-Didier, 2004).
Scientifc organization of work is increasingly
more accepted in both science and practice. Te tra-
ditional organization of work, which emerged under
the wings of the industrial revolution, is exceeded
and a fexible organization which infuences fexible
education is being made. Modern European society
is exposed to technological, demographic and politi-
cal pressures that require changes, which creates po-
tential learning situations for everyone. In order for
an organization to be focused on learning, it must
implement the following recommendations:
learning is an integral part of the work;
skills of executors in other work activities are
also learned, in order to achieve the fexibility
of work;
communication between employees is em-
powered as a prerequisite for learning from
each other;
learning becomes an integral part of commu-
nication between employees, and managers
are increasingly assuming the role of a coach
KNOWLEDGE-BASED ORGANIZATIONS
An organization can be described as successful
if it is competitive, ready to change, fexible, global
by its very nature and future-oriented. Creating a
strategic advantage in the feld of knowledge-based
economy requires a new organization that is able to
create knowledge in order to maximize organiza-
tional competitiveness and strategic success. Mod-
ern organizations view knowledge as a key resource
for organizational existence and success in the global
market (Gupta and Sharma, 2004). Experience has
shown that a knowledge-based organization must
have four basic characteristics that are related to pro-
cess, position, purpose and perspective (Zack, 2003).
Process is related to all business activities that take
place within the organization, some of which are
directly included in production or service provid-
ing, while the others are ancillary activities. In this
sense, the organization pays special attention to the
ef cient application of knowledge that already exists
in the organization and the creation of new knowl-
edge. Position refers to organizational boundaries
which, in order to share and create knowledge, ofen
SINGIDUNUM J 2013 10 (1) 46-53
Babi L., Boljanovi . J. Contemporary approach to education
48
exceed traditional boundaries of the organization.
Organizations are becoming more and more aware
of the fact that knowledge is created and shared in
daily interactions with clients, sellers, partners and
even competitors.
Organizational boundaries are today vague, fex-
ible and dynamic. Organizations are seeking knowl-
edge, wherever it may be. Te purpose includes the
mission and the strategy of an organization, or the
way in which an organization will successfully and
proftably serve its clients. Perspective refers to social
and cultural impact that infuences decisions and ac-
tivities of an organization and relies on knowledge
as a standpoint. In order for an organization to be
successful in the knowledge economy and obtain its
competitive advantage, it must constantly increase
its value using the knowledge it possesses. Te po-
tential of an organization to create additional value,
so called KnoVa knowledge value factor, in the
economy of knowledge depends on two crucial ele-
ments: level of service an organization provides and
the intensity of knowledge usage; and the level in
which an organization uses knowledge to produce
a product or provide service. In that sense, for an
organization to be characterized as an KnoVa or-
ganization, it must have six main abilities (Tisen et
al. 2006): ability to produce, ability to respond, abil-
ity to predict, ability to create, ability to learn and
the ability to last. To KnoVa factor is important
because it shows that an organization is directed
towards service level improvement as well as the
improvement of current knowledge regarding the
activities it ofers. Te success will depend on the bi-
directional activity in which service level as well as
the level and content of knowledge are increased in
order to enable the organization to achieve higher
quality of services.
Based on the foregoing, we can reach the conclu-
sion that the basic skills of knowledge-based organi-
zation are:
innovation;
the ability to adapt to new surroundings by
adopting feedback from its clients and par-
tners, ie. responding fast to the wishes of a cli-
ent by transferring information into knowled-
ge that will be used in a way to bring new value
to the client;
applying best practices and implementing
ideas of employees which may improve the
decision- making process and contribute to
organizational ef ciency;
adopting team work as a main way of doing
business and a way of learning and knowledge
sharing;
reducing time cycles, if and when possible, ie.
eliminating unnecessary processes, and maxi-
mizing those that may contribute to the im-
provement of their ef ciency;
using technology that will improve ef ciency
and knowledge sharing, along with the impro-
vement of service quality;
establishing balance between management
and team work, but also the autonomy and
control.
MANAGING THE FLOW OF KNOWLEDGE
In order to understand the signifcance of knowl-
edge for doing business in a modern organization,
one must start from understanding the fow of knowl-
edge inside the organization and regularities of such
movements. Tis also implies greater possibilities
for successful knowledge management within the
organization in order to improve its ef ciency. Te
concept of knowledge chain (Koulopoulous et al.
2006) is crucial for understanding the movement
and development of knowledge within an organiza-
tion. According to that concept, there are four links
in the knowledge chain that afect the uniqueness,
specifcity and ef ciency of an organization. Tose
are: internal awareness, internal responsibilities, ex-
ternal responsibilities and external awareness.
Internal awareness is the ability of an organi-
zation to assess skills and competences it has in a
short period of time. Tis includes being familiar
with the talents organization has, know-how, pro-
cesses, and common practice. Te strong internal
awareness is focused not only on the challenges of
what has been done, but also on what is possible to
do in the future. Internal responsibilities include the
ability of an organization to use its internal aware-
ness. An organization may be aware of its strengths
and the requirements of the market, but if it is not
able to make adequate changes within itself in order
to meet the ever changing market requirements, its
competences are disputable. Internal responsibili-
ties discuss how quick an organization can turn its
competences into action in order to respond to the
demands of the market and customers. External re-
sponsibilities represent the ability of an organiza-
tion to meet the market requirements in the best
possible way. External responsibilities are measured
SINGIDUNUM J 2013 10 (1) 46-53
49
by the ability to respond to external chances and
threats ef ciently and on time. External awareness
is the refection of internal awareness and it repre-
sents the ability of an organization to understand
how the market perceives the value of its products
and services, to become conversant with the cus-
tomers and service users, consider their demands,
determine the market trends, government regula-
tions and other market forces that exist beyond the
organization
Te chain of knowledge in an organization is al-
ways a blend of positive and negative attributes. In
those organizations that are guided by knowledge
management, all of the listed links are fexible and
allow knowledge transfer among each other. Actu-
ally, the importance of a knowledge chain is that
through its interactions it leads to series of inno-
vations in an organization. Te greater the perme-
ability between the links, the greater the speed of
innovations within an organization. Also, the suc-
cess of an organization is measured by the speed of
knowledge fow through all four links of knowledge
chain within the organization.
KNOWLEDGE SHARING METHODS
But what happens in practice? What is the knowl-
edge fow within an organization like and what prob-
lems may occur if the links in the knowledge chain
are not permeable enough? Tere are numerous situ-
ations. For instance, a greater number of employees,
groups or departments can deal with same problems,
but none of them is aware of the actions of the oth-
er. As a result, they face the issue of duplication of
work, or it may happen that one team has developed
a highly efective system for handling the certain is-
sue, but the employees in other parts of the same or-
ganization are not familiar with this method because
there is no of cial knowledge transfer policy. As a
consequence, the knowledge cannot be used and is
quickly forgotten. Another example is the situation
when the employees failed in negotiations with a po-
tential client, but the reason for such failure has not
been documented. As a result, other employees can-
not learn from this experience. A very frequent situ-
ation is that the customer has some complaints about
services quality, but at the same time he gives sugges-
tions for their improvement. Tis kind of informa-
tion is neither stored nor accessible in an adequate
way, and thus, there is no way for it to be transferred
to appropriate departments within the organization.
As a result, information obtained in this way cannot
be used to improve the business processes. Situation
that most ofen concerns the employers and manag-
ers is certainly the one in which an employee leaves
the organization. His knowledge has not been saved,
nor transferred to other employees, and thus, it be-
comes permanently lost.
In order to avoid the above mentioned situa-
tions, it is necessary to apply some of the numer-
ous methods of knowledge management which are
being more and more used in practice. Namely,
knowledge management is the concept that puts
special emphasis on the knowledge within an or-
ganization and it consists of phases of creating, ac-
quiring, saving, sharing and applying the knowledge
(Sydnmaanlakka, 2002). Tis paper puts special
emphasis on the phase of sharing and the methods
we believe can provide formal implementation of
knowledge management programme, or at least, in-
spire the listed participants of this process to share
their knowledge and improve business in their work
felds using their creative ideas. We highlight the
following methods:
Communities of Practice (CoP) is a network of
people who share common interests or problems
in a specifc area of competences and who are re-
ady to work together for a certain period of time,
and to learn, develop and share that knowled-
ge. Briefy, communities of practice represent
a group of people who share the same passion
for their feld of business and cooperate in or-
der to learn to do their job in the best possible
way. In the feld of public administration, this
form of connecting and sharing is very useful if
certain conditions are met: active members who
are actively interested in CoP and their topics;
the existence of a specifc thematic orientation
that should be relevant and important for the
members; connection to members own practi-
ce; personal motivation and informal structure.
Even though this method of knowledge sharing
usually implies using the Internet, it sometimes
appears in practice in a form of direct meetings
of participants.
Afer Action Reviw (AAR) is a very simple pro-
cess used in teams to enable them to learn from
some previous experience or project, with the aim
to improve the overall results. Most commonly,
it is a discussion about the project or activities
conducted in the appropriate area. Tis method
gives team members an opportunity to review a
SINGIDUNUM J 2013 10 (1) 46-53
50
project, activities that have been conducted, ta-
sks that have been done, so that they could be
more ef cient in their future projects. Tis met-
hod enables the participants involved in a project
to learn from their own experience and discuss
what happened and why something happened,
what they can learn from that and what should
be improved. Te main characteristics of this
method are openness and learning, rather than
problem solving and determining the guilt.
Yellow Pages is a method of knowledge sharing
that is supposed to provide an answer to the
following question: Who is the person that has
the knowledge I need? Tis method helps the
employees to fnd other employees in their own
or some other institution, in this case public ad-
ministration that have the knowledge and skills
needed for a certain task or project. Experience
has shown that the electronic form is far more
better that the written form. It enables the or-
ganizations to know what they know. Along
with the data on employees, such as their name
and surname, position in the company, contact
information, this database should also include
information on their knowledge, skills, experi-
ences, interests, and even social and professional
associations they belong to. Tis method pro-
vides clear, concise and simple communication
between employees, which is the foundation of
knowledge-based organizations.
Exit Interviews. Employees departure represents
the common way of losing knowledge in an in-
stitution. Tis method implies an interview with
the departing employee as a way of keeping his
knowledge. If well-planned, this interview can be
a win-win situation for the organization and the
former employee the organization keeps the
knowledge of the departing employee and makes
it available to others, and the former employee
manages to defne his unique contribution to the
organization and leave his signature. Tis is a
relatively fast and not so expensive method. Te
recommended form is face to face.
Mentoring. A mentor is a person with experience
who is willing, capable and in the mood to teach
and train a person with less knowledge in a cer-
tain area due to the age, experience in another
irrelevant area, etc. Te purpose of this method
is to develop skills, improve the organization and
its culture and enable career development. Te
sole presence of mentorship in practice, not only
in organizations but in the whole society, thro-
ughout the history, confrms its good sides as a
very ef cient method of knowledge sharing.
Wikis. More and more organizations use the so
called wikis as a means of knowledge sharing.
Wikis are on-line databases that can be comple-
mented and changed easily by using any of the
existing web browsers. Te most famous wiki to-
day is, certainly, the on-line encyclopedia Wiki-
pedia. However, a large number of organizations,
from Microsof to FBI, use wikis to collect the
knowledge of their employees and create a space
where they can meet and cooperate on various
issues, from planning the meetings, documenting
the best practice, to brainstorming new products
and processes. Te strength of this method is in
the simplicity of its use and the fact that it allows
everyone to make their contribution to upgra-
ding this database (Krabina, 2011).
EDUCATION MANAGEMENT
IN AN ORGANIZATION
Education management in an organization should
be guided by objective data that could be gathered
only by using the appropriate scientifc techniques
(Babi et al. 2010). All relevant phenomena that are
being examined should be clearly defned, well-oper-
ationalized and instruments to measure them should
be found. When doing research on education in an
organization, it is necessary to prepare a model that
management would use to collect the necessary data
in the most objective way. Tis paper presents a pro-
posed model that emerged based on the research re-
sults (Babi, 2009) and that can be used in practice to
manage education by resolving the following issues:
1) Specify the position that education assumes
within an organization compatibility with
the strategy, relations with the human re-
source management policy.
2) Adjust the education programme to the needs
of employees.
3) Prepare the educators to meet the expectations
of managers, as well as the expectations of the
employees.
4) Monitor the efects of education on the em-
ployees, in particular on their:
a) knowledge and skills,
b) attitudes, values and beliefs,
c) behaviour (roles).
SINGIDUNUM J 2013 10 (1) 46-53
51
5) Monitor the efects of education on:
a) organizational climate,
b) organizational behaviour,
c) organizational performance.
Trough applying this model, the management
would have access to measurable data on diferent
aspects of the education process in diferent periods
of time and could monitor the relation between cer-
tain forms and contents of education and its efects.
For instance, it could happen that education has
excellent results in terms of expanding knowledge
and mastering skills, but that it has no impact on
the attitudes and behaviour of employees regard-
ing the use of new knowledge and skills, which is
the main goal of education. Without changes in the
behaviour, there are no efects on the organizational
level. Terefore, one must take care of three traits
that best refect the efects of education on the hu-
man resources level (Ostrof and Bowen, 2000), and
those are:
a) attitudes and motivation of employees,
b) behaviour, and
c) human capital expressed through their knowl-
edge, skills and competences.
It is assumed that the efects on the individual
level, which are relevant for the organizations busi-
ness, will also have impact on the organizational
level in terms of improving organizational perfor-
mance (Becker and Huselid, 1998). Owning to the
quantitative monitoring, one can clearly determine
the ef ciency of additional education of employ-
ees in certain aspects of the overall operations of
the organization. Tat includes the efects on the
work itself (quality and ef ciency), business ethics
(employees behaviour), team work (greater cohe-
siveness in the collective), education management
(better choice of educators, contents and methods),
and management (greater security in managing and
making strategic decisions). Quantifcation enables
the comparison of current results with prior meas-
urements. Tus, it is possible to monitor the human
resource development, development of organiza-
tional behaviour and the efects on the overall op-
erations of the organization.
RESEARCH ON EDUCATION AND
KNOWLEDGE SHARING
IN ORGANIZATIONS
Research has been conducted on the sample of
employees in two public organizations in order to
examine education management in organizations
(Babi, 2009). Out of 488 subjects examined, 39.8%
were not trained for their current position, while
47.1% did not attend any of educational trainings
for professional development. When asked about
the usefulness of those trainings they attended, 33,
6% give no answer or are not able to estimate them,
obviously because they did not attend any of such
trainings, while the majority of the remaining sub-
jects think it was very useful to participate in such
programmes. Tese data alone indicate a signifcant
lack of continuous education at workplace, as well
as the positive outcome regarding the participation
of employees in educational programmes.
Tese initial fndings are supported by the results
obtained from the questionnaire on education in an
organization. Majority of employees would like to
join programmes of professional development and
they believe that such programmes truly enable
the participants to do their work more ef ciently.
Education is considered to be the best way to get
ahead at work. We assume that the main reasons
for employees to perceive education as the path to
advancement lie in the possibilities to use education
to meet other various needs, such as the need for
improvement, curiosity, socialization, exchange of
experiences, af rmation etc. Along with the positive
attitudes that employees have about education, we
list the negative attitudes that employees have about
education discovered in this research. Namely, a sig-
nifcant number of employees are not satisfed with
educational programmes they are being ofered.
Tey consider them low quality, they perceive the
lecturers as not suf ciently conversant with the or-
ganization problems, and they do not awake their
curiosity. Te results show that the way of imple-
menting education does not increase the motivation
of employees to learn, because it does not increase
their curiosity. Tis is relevant information for man-
agers, as it is well-known that managing the motiva-
tion of employees represents the key to managing
human resources.
Te attitudes regarding the efects of education
in an organization have also been examined. Most
of the subjects think that the education is directed
towards practical problem solving, and thus, it can
be used in practice and it shows its efects in work.
However, it is interesting that, along with the posi-
tive perspective of additional education, most of the
subjects believe that they have merely wasted their
time participating in its various forms. Tis informa-
tion is also connected with the issue of motivation as
well as the conclusion that motivating participants
SINGIDUNUM J 2013 10 (1) 46-53
52
in seminars is crucial for obtaining knowledge and
skills and their implementation in practice. Surely,
it is assumed that the content of the seminars is
well-planned regarding the needs and usability of
knowledge and skills in the professional practice of
employees in an organization.
Te second research, conducted on a sample
of 131 subjects, examined the issue of knowledge
exchange among employees in organizations (or-
evi Boljanovi, 2009). Te participants included
the members of top management, middle- level
management and operative management from ten
organizations on the territory of the Republic of
Serbia. Organizations are highly technology orient-
ed and operate in the feld of telecommunications,
postal traf c, information technology and sofware.
If we start from the ascertainment that successful
knowledge sharing among employees should lead
to forming additional values for the organization
itself, then the crucial results for this paper are the
ones concerning the way in which employees share
knowledge with their colleagues and other employ-
ees within or outside the organization, the level of
knowledge exchange in their organizations, the for-
mal ways of rewarding knowledge sharing, and also
the types of problems they encounter while sharing
knowledge at their workplace. When asked about the
measures they use to update their knowledge, most
subjects decided to choose informal way of knowl-
edge sharing with colleagues (31%) and knowledge
sharing within the organization with the experts in
the same feld (31%), which confrms in theory the
frequently mentioned attitude about social nature of
knowledge. Visiting seminars, conferences and etc,
was the choice of 16% of the subjects, while 15% of
the subjects preferred formal ways of learning. Te
most common situation in practice in which there is
a need for implementing management programme
is the departure of an employee (retirement, transfer
to another company etc.), and the loss of information
that should stay within the organization. It is particu-
larly interesting to determine whether organizations
in Serbia are aware of this problem and if they have
been in similar situations. A large number of subjects
(47%) rarely encounter themselves in such situations,
20% ofen fnd themselves in such situations, while
the same number of subjects have not been in similar
situation. As far as the level of knowledge-sharing in
organizations in Serbia is concerned, 56% of the sub-
jects say that knowledge sharing in their organiza-
tion is at a very high level, while 42% consider it very
low. However, when asked about formal rewards
for knowledge sharing, 46% of the subjects said that
there is no such reward system in their organizations.
Te fact that the implementation of knowledge
management programmes is necessary in organiza-
tions in Serbia is also confrmed by the results of
the research that shows that there are situations in
practice in our companies that make the process of
knowledge sharing dif cult or impossible, which
considerably slows down the daily work perfor-
mance. Te problems of this kind that the subjects
recognized include as follows:
Te issue of duplicating work (44% of subjects
rarely encounter this kind of a problem, but 29%
have them ofen).
Situations in which knowledge cannot be used
and is forgotten in a short period of time (41% of
subjects rarely encounter this kind of problems,
while 27% of subjects deal with them ofen).
Te inability of employees to learn from the
experience of others is rare in practice according
to 47% of subjects, but is quite ofen with 33%.
According to 44% of the subjects, the situations
in which the information and knowledge obta-
ined from the customers cannot be used to im-
prove the business process are rare; while 33%
consider these situations quite frequent.
Situations in which important conclusions and
knowledge from completed projects cannot be
transferred to other projects are rare according
to 40% of subjects, 24 % consider them frequent;
while 31% have never encountered them. Lost
knowledge is a rare phenomenon for the 53%
of subjects, very frequent for 17%, while 25% of
subjects have never encountered such problem.
CONCLUSION
Organizations should be perceived as knowledge-
based organizations. Tis implies that we should take
into consideration two issues; the frst issue refers to
knowledge sharing as a necessity in modern business,
and in this sense, using methods and techniques that
could lead to creating more liberate fows of knowl-
edge within an organization; the second issue is re-
lated to managing employees education within an
organization as a strategic issue.
With respect to knowledge sharing, a necessary
prerequisite for the ef cient business of modern or-
ganizations is certainly the assessment of skills and
competencies of an organization, as well as the ability
of an organization to use its knowledge in a proper
way. We put special emphasis on the importance of
SINGIDUNUM J 2013 10 (1) 46-53
53
assessing the knowledge and skills of employees, rec-
ognition of the necessity to improve the ef ciency of
business processes, the use of best practices, imple-
mentation of innovations, etc. In order to avoid du-
plication of knowledge, insuf cient use of the exist-
ing knowledge within the organization, obsolescence
or permanent loss of knowledge, it is necessary to in-
troduce knowledge sharing as one of the core values
in an organization.
Te second issue of great importance for improv-
ing public administration is employees education
management as a strategic issue. When education
is connected to business strategy, it has a greater
infuence and can be monitored on the level of or-
ganizational climate, organizational behaviour and
organizational performance. Te contemporary ap-
proach to management is based on the use of scien-
tifc methods that guarantee precise monitoring of
certain processes, including the education, and their
outcomes. It is important to provide the connection
between education and human resource manage-
ment policy, which can be monitored through the
infuence of education on an individual. Namely, ed-
ucation shows its efects on the employees through
changes in their knowledge and skills, their attitudes,
values and beliefs and their behaviour and perfor-
mance within their work roles. Trough measuring
the efects of education, one can monitor the devel-
opment of human potentials and plan additional
training as the basic method for human capital for-
mation, which is fnally shown through the efects on
the overall business of an organization.
LITERATURE
Babi, L. (2009) Upravljanje edukacijom u organizaciji.
Belgrade: Singidunum University. (in Serbian)
Babi, L., Kordi, B., Barjaktarovi, L. (2010) Istraivanje i
merenje u kontekstu upravljanja edukacijom u organiza-
ciji [online]. Available from: http://www.singipedia.com/
content/548-Istraivanje-i-merenje-u-kontekstu-upravlja-
nja-edukacijom-u-organizaciji [accessed 15 January 2012].
(in Serbian)
Becker, B.E., Huselid, M.A. (1998) High performance work
systems and frm performance. Research in Personnel
and Human Resources Management. 16, 53101.
orevi Boljanovi, J. (2009) Menadment znanja. Beo-
grad: Data status. (in Serbian)
Drucker, P. (2004) Moj pogled na menadment. Novi Sad:
Grinberg, D., Baron, R.A. (1998) Ponaanje u organizaci-
jama. Beograd: elnid. (in Serbian)
Guerrero, S., Barraud-Didier, V. (2004) High-involvement
practices and performance of French frms. Interna-
tional Journal of Human Resource Management. 15 (8),
14081423.
Gupta, J.N.D., Sharma, S.K. (2004) Creating Knowledge
Based Organizations. London: Idea Group Publishing.
Koulopoulous, T., Spinello, R., Toms, W. (2006) Corpo-
rate Instinct, Building a Knowing Enterprise for the 21st
Century. New York: International Tomson Publishing
Company.
Krabina, B. (2011) Semantic Wiki on Cooperation in Pub-
lic Administration in Europe [online]. Available from:
http://www.iisci.org/journal/cv$/sci/pdfs/GP524EF.pdf.
[accessed 15 January 2012].
Latham, G.P. (1988) Human resource training and devel-
opment. Annual Review of Psychology. 39, 545582.
Ostrof, C., Bowen, D.E. (2000) Moving HR to a higher
level: HR practices and organizational efectiveness in
K. J. Klein, S. W. Kozlowski (Eds.) Multilevel theory,
research, and methods in organizations (pp. 211266).
San Francisco, CA: Jossey-Bass.
Syd nmaanlakka, P. (2002) An Intelligent Organization:
Performance, Competence and Knowledge Manage-
ment. Oxford: Capstone.
Tarenou, P., Saks, A.M., Moore, C. (2007) A review and
critique of research on training and organizational-level
outcomes. Human Resource Management Review. 17
(3), 251273.
Tisen, R., Andriessen, D., Depre, F.L. (2006) Dividenda
znanja. Novi Sad: Adizes. (in Serbian)
Zack, M.H. (2003) Rethinking the Knowledge Based Organ-
ization. MIT Sloan Management Review. 44 (4), 6771.
Received: February 2nd, 2013
SAVREMENI PRISTUP OBRAZOVANJU U ORGANIZACIJAMA
Rezime:
U cilju uspenog suoavanja sa izazovima koje namee ekonomija znanja savremene
organizacije se sve vie okreu znanju koje poseduju, njegovoj adekvatnoj primeni,
a sa eljom da unaprede svoje poslovne procese, postignu to veu efikasnost i
kvalitet u poslovanju, kao i da izau u susret svojim klijentima. Predmet ovog
rada su organizacije koje tee promenama oslanjajui se na sopstvena znanja i
vetine kako bi postale konkurentne, brze i inovativne. One nastoje da razviju
delotvorno znanje pomou kojeg e uveati sopstveni uspeh i uspeno odgovoriti
na izazove koje postavlja ekonomija znanja.
Kljune rei:
znanje,
organizacije zasnovane na znanju,
razmena znanja,
obrazovanje.
SINGIDUNUM J 2013 10 (1) 46-53
54
SOFTWARE PACKAGE TRANSP IN THE FUNCTION
OF AUTOMATISATION OF TRANSPORT
MANAGEMENT SYSTEM
Marija Matotek
1,*
, Duan Regodi
2
1
Singidunum University,
Department of Postgraduate studies and Inernatonal Cooperaton
2
Singidunum University, Department of management
Abstract:
This paper analyses the possibility of Transp software package for practi-
cal application in transport management. Thus, the solution for classic
transport problem has been demonstrated, which can be defined from
the aspect of operational research as follows: Transport problem is a
type of problem that requires determining the number of homogenous
units, which should be allocated from multiple starting points to multiple
destinations in order to reduce transport costs and increase the overall
income. The main goal of this research is to demonstrate the usability of
applications in companies where it is necessary to pay special attention
to the reduction of transport costs.
Key words:
transport problems,
resource optimization,
software modeling.
ISSN 2217-8090
UDK: 005.31:658.286.4; 005:007]:004.4
DOI: 10.5937/sjas1301054M
Original paper/Originalni nauni rad
* E-mail: matotek@gmail.com
INTRODUCTION
Transport management is one of the most domi-
nant logistics processes in business today. Tat is
mostly the case because these kinds of services are
ofen recommended, while their costs are signif-
cant and notable. Transport costs are included in
logistics costs in most systems. Transport manage-
ment includes planning, application and control of
transport services in order to achieve organizational
goals (Regodi, 2011).
Changes in global business have forced many
organizations to strategically manage their business
processes. One of such processes is, of course, trans-
port management process. In order to survive in the
market and do business successfully, an organiza-
tion has to fnd the way to ofer products of higher
value, or services at lower price than the competi-
tion. One solution could be to improve business
processes related to delivering goods or services. At
the same time, fast IT development enables imple-
mentation of business strategy.
Te aim of this paper is to use sofware pack-
age to solve minor theoretical transport problems,
thus presenting the advantages of computer data
processing in transport management. Te model
includes all the factors that afect processes and
performances and that will be used to respond to
the demands of users and enable the modern trans-
port manager to make functional decisions related
to transport management system.
Transport problems are the part of every econ-
omy, especially if we bear in mind the importance
of market in modern economy. As the transport
connects production and consumption, transport
costs represent a signifcant part of product price.
55
Transport task is a special case of a general task re-
lated to linear programming. Nowadays, this feld of
IT belongs to operational research, and it has been
developing rapidly in the last fve decades. Develop-
ment trends and application of transport methods
will continue in future decades with more applica-
tions related to computer programs with algorithms
of the most ef cient methods, which emerged in the
above mentioned period.
If there is a linear relationship between transport
costs and transported quantities, we can talk about
linear transport tasks. Transport methods used for
solving these tasks represent a special case of linear
programming method. Furthermore, the develop-
ment of nonlinear, network and dynamic program-
ming has led to development of various nonlinear
transport methods.
Te subject of this paper is the application of
Transp sofware package, which is used for present-
ing the automatization of calculation processes used
for the model of transport problem. Teoretical ex-
ample (a minor problem that can easily be solved
by iterative handy of sofware data processing) has
also been shown.
Tings are slightly diferent in the real world.
Tere are usually a lot of parameters, which afect
the task and its solution due to their complexity
Te given optimal solution is not always the best
one in practical application. Psychological, social,
environmental and other issues are not usually
taken into consideration, which can afect the vari-
ations of the outcome of the problem.
Based on the defned research goals, and in ac-
cordance with the problem, subject and the object
of the research, we can emphasize the following as-
sumptions:
1) Proftability and economic ef ciency of a
company greatly depends on the transport
management methods.
2) IT model used for managing transport system
enables clear and precise generating vehicle
trajectories.
3) Application of such model enables saving re-
sources and improving benefts.
Tis kind of problem requires a lot of calcula-
tions as well expertise and a relatively long period
of time required for all necessary iterations in order
to reach optimal solution. Sofware package Transp
has a wide range of functions used for manipula-
tions. Tus, depending on the applied method, the
starting solution will approximate the fnal solution
in a better or worse way.
MATHEMATICAL MODEL
OF TRANSPORT PROBLEM
Te most frequent issue of transport problem is
minimization of overall transport costs: resources,
passengers, energy, information, etc. In real condi-
tions, these issues may represent a huge expenditure
for a certain economic system. Transport task can
be defned as a problem related to defning an opti-
mal transport plan from m starting points (dispatch
station) A
i
, i=1,2,...,m to n destinations (receiving
stations) B
j
, j=1,2,...,n. Starting points could include
production plants, warehouses from which goods
are transported, etc., while destinations could in-
clude warehouses to which goods are transported,
consumer centres, etc. Te optimal criteria defned
by the function of the goal is usually minimization
of transport costs.
Mathematical model of transport task includes
the following data:
- Number of starting points m and quantity of
goods available at each starting point A
i
, i =
1,2,...,m;
- Number of destinations n and quantity of
goods required at each destination point B
j
,
j=1,2,...,n;
Transport costs per commodity unit from start-
ing point A
i
, i=1,2,...,m to destination B
j
, j=1,2,...,n,
which are marked as follows c
ij
, i=1,2,...,m, j=1,2,...,n.
Tese values can not be negative, i.e:
0, 0, 0
i j ij
a b c > >
1,2,...,
1,2,...,
i m
j n
=
=
Upon the assumption that it is the transport
of homogenous goods all available and necessary
quantities are related to one kind of commodity.
Transport problem could be formulated as fol-
lows:
It is necessary to defne the quantities of com-
modity x
ij
, i = 1,2,...,m, j = 1,2,...,n that should be
transported from starting points A
i
, i = 1,2,...,m to
destinations B
j
, j = 1,2,...,n in such a way so that
available quantities of goods a
i
, i = 1,2,...,m are
transported from starting points while required
SINGIDUNUM J 2013 10 (1) 54-60
Matotek M., Regodi D. Software package Transp
56
quantities of goods b
j
, j = 1,2,...,n are transported
to destinations. Te total transport costs should be
minimal.
Te scheme for transport problem is given in
Figure 1.
Tus, total transport costs represent the function
of the goal and can be expressed as:
( )
1 1
m n
ij ij
i j
f X c x
= =
=

(1)
Limitation system can be expressed as:
1. Te total amount of goods transported from
one starting point A
i
, i=1,2,...,m to all destina-
tions has to be equal to the availabe amount
of goods at that starting point a
i
, i = 1,2,...,m.
1
, 1,2,...,
n
ij i
j
x a i m
=
= =

(2)
2. Te total amount of goods delivered at one
destination point B
j
, j=1,2,...,n from all start-
ing points has to be equal to the amount of
goods necessary for that destination point b
j
,
j=1,2,...,n.
1
, 1,2,...,
m
ij j
i
x b j n
=
= =

(3)
3. Te quantities of transported goods have to
be non-negative:
0, 1,2,..., , 1,2,...,
ij
x i m j n = =

(4)
Figure 1: Transport problem
Tus, mathematical model of transport task is:
Find:
( )
1 1
min min
m n
ij ij
i j
f X c x
= =
=

at limitations:
1
1
, 1,2,...,
, 1,2,...,
0, 1,2,..., 1,2,...,
n
ij i
j
m
ij j
i
ij
x a i m
x b j n
x i m j n
=
=
= =
= =
= =
By comparing the total scope of ofer in all start-

ing points A
i
, i = 1,2,...,m to the scope of demand in
all destination points B
j
, j = 1,2,...,n, two cases can
be mentioned:
a) If the total supply equals to total demand and
if:

1 1
m b
i j
i j
a b
= =
=

(5)
Ten, we can talk about a closed transport
model (described in this paper). Tis model
is also known as standard or balanced model.
b) If the total supply and demand are diferent
and if:

1 1
m b
i j
i j
a b
= =

(6)
Ten, we can talk about an open transport
model, also known as nonstandard or unbal-
anced model.
Transport costs per commodity unit are usually
defned by price matrix, also known as standard
transport matrix:
11 12 1
21 22 2
1 2
...
...
... ... ... ...
...
n
n
m m mn
c c c
c c c
C
c c c
(
(
(
=
(
(

(7)
Price matrix can also be marked as follows:
ij
C c ( =

(7.1)
Variables x
ij,
which form the solution, can also be
expressed by matrix:
11 12 1
21 22 2
1 2
...
...
... ... ... ...
...
n
n
m m mn
x x x
x x x
X
x x x
(
(
(
=
(
(

(8)
Tis matrix can also be marked as follows:
ij
X x ( =

(8.1)
SINGIDUNUM J 2013 10 (1) 54-60
57
Te data used in the model of the transport task
can be presented in the table:
Table 1: Data used in the model of transport task
I II III
A
1
c
11
c
12
c
1n
a
1
x
11
x
12
x
1n
A
2
c
21
c
22
c
2n
a
2
x
21
x
22
x
2n
... ... ... ... ...
A
m
c
m1
c
m2
c
mn
a
m
x
m1
x
m2
x
mn
b
1
b
2
b
n
Limitation system includes mutually dependent
linear equations. Te system matrix range is m+n-1.
Every possible solution to transport problem has
mn components
, 1,2,..., , 1,2,..., .
ij
x i m j n = =
In that case, the solution is called non-degener-
ated solution, if the number of positive components
x
ij
equals to m+n-1. If the number of positive com-
ponents x
ij
is less than m+n-1, the solution is called
degenerated.
Te data given in the transport task are shown
in the table. Te process of task solving is carried
out using series of tables. Each table represents a
solution for one task. Every following table repre-
sents a new and improved solution. Tis procedure
stops when we come to the table showing the best,
optimal solution.
THE SOLUTION OF TRANSPORT PROBLEM
USING TRANSP SOFTWARE
Tis example illustrates the usage of Transp sof-
ware tool in solving transport problem to minimize
transport costs, relying on parameters given before-
hand. TRANSP sofware has emerged as a result of
the project at the Laboratory of Operations Research
at the Faculty of Organizational Sciences, University
of Belgrade in 1997. Te project was led by Assistant
Professor Milan Stanojevic. Tis freeware sofware
is awarded to the students of the Technical Faculty
Mihajlo Pupin in Zrenjanin as a teaching tool in
the Operations Research.
Example:
Find an optimal transport plan of goods from
the storehouses A
1
, A
2
, A
3
i A
4 to
stores B
1
, B
2
, B
3
i B
4
.
Storehouses dispose of the following quantities
of goods:
A
1
disposes of 200 commodity units,
A
2
A
3
A
4
Te stores demand the following quantities of
goods:
B
1
demands 300 commodity units,
B
2
B
3
B
4
Transport costs per commodity unit, given in
monetary units, are expressed by the following ma-
trix:
2 3 1 7
5 5 2 3
2 1 2 6
3 1 3 9
C
(
(
(
=
(
(

Te optimality criterion includes minimal trans-
port costs.
Te data given in the task are written in the table:
Table 2. Data given in the task
B
1
B
2
B
3
B
4
A
1
2 3 1 7
200
A
2
5 5 2 3
150
A
3
2 1 2 6
280
A
4
3 1 3 9
120
300 170 50 230
SINGIDUNUM J 2013 10 (1) 54-60
58
Transp sofware package enables us to enter the
data given in the table in the starting application in
the same way as shown in Figures 2 and 3.
Figure 2. Screen display while startng Transp.exe pro-
gram
Figure 3. Inital entering of number of sources and
number of gaps
Figure 4. Inital entering of price matrix parameters and
available resources
As mentioned before, this tool ofers numer-
ous possibilities. Tus, before starting, it gives us
the opportunity to calculate the starting or optimal
transport solution, iterative methods and goal func-
tions.
Figure 5. Choosing an opton for calculatng the optmal
soluton
Figure 6. Choosing a method for dening the startng
soluton
Figure 7. Choosing iteratve method
Figure 8. Choosing goal functon
SINGIDUNUM J 2013 10 (1) 54-60
59
Figure 9. Startng program
Figure 10. Table afer rst iteraton
Figure 11. Table afer second iteraton
Figure 12. Optmal soluton and arrangement that reali-
zes minimizaton of transport costs
CONCLUSION
Te basic request in economizing on transport
costs is to achieve an optimal relationship in trans-
portation between storehouses and end users, which
can cause fnancial problems and lead to undesirable
efects regarding the stability of the process itself.
Tus, optimal transport policy includes cost minimi-
zation with the continuous work of business systems
and meeting market demands. Te optimal solution
(the most ideal calculation) represents a compro-
mise between the desired goal and given limitations
that afect the opportunities for achieving extreme
solutions. Tere are numerous cases used for solving
the given problem as it is a time consuming process
that demands considerable practical knowledge and
skills. With the development of computer technol-
ogy, the methods for problem solving have become
sofware oriented and extremely ef cient, thus con-
tributing to the development of optimization.
Tis paper provides an overview of sofware solu-
tion used for the optimization of transport process.
Application of IT in this feld makes the planning
process much easier, and contributes signifcantly to
achieving the primary goals of the company: increas-
ing benefts and minimizing costs.
REFERENCES
Dundovi, ., Hess, S. (2007) Unutarnji transport i skladi-
tenje. Rijeka: Pomorski fakultet. (in Croatian)
Feriak, V., Stihovi, L. (1989) Nabava i materijalno poslo-
vanje. Zagreb: Informator. (in Croatian)
Frazelle, H.E. (2002) Supply Chain Strategy: Te Logistics
of Supply Chain Management. New York: McGraw-
Hill.
Ghiani, G., Laporte, G., Musmanno, R. (2004) Introducti-
on to Logistics Systems Planning and Control. Chiche-
ster: John Wiley and Sons.
Heleta, M. (2008) Menadment kvaliteta. Belgrade: Sin-
gidunum University. (in Serbian)
Hitchcock, F.L. (1941) Te Distribution of a Product from
Several Sources to Numerous Localities. Journal of
Mathematics and Physics. 20 (1), 224-230.
Leti, D., Jevti, V. (2001) Operaciona istraivanja: algo-
ritmi i metode. Zrenjanin: Tehniki fakultet Mihajlo
Pupin. (in Serbian)
SINGIDUNUM J 2013 10 (1) 54-60
60
Markovi, N. (2006) Poslovna logistika. Novi Sad: Cekom
books. (in Serbian)
Panteli, T. (2005) Industrijska logistika. Kruevac: Fa-
kultet za industrijski menadment, ICIM plus. (in
Serbian)
Regodi, D. (2011) Logistika. Belgrade: Singidunum Uni-
versity. (in Serbian)
Segetlija, Z. (2008) Uvod u poslovnu logistiku. Osijek: Eko-
nomski fakultet. (in Croatian)
Tadi, D., Suknovi, M., Radojevi, G. (2005) Operaciona
istraivanja. Kruevac: Fakultet za industrijski menad-
ment, ICIM plus. (in Serbian)
Zelenika, R. (2005) Logistiki sustavi. Rijeka: Ekonomski
fakultet. (in Croatian)
Received: February 18th,2013
SOFTVERSKI PAKET TRANSP U FUNKCIJI
AUTOMATIZACIJE SISTEMA MENADZMENTA TRANSPORTOM
Rezime:
Ovaj rad ispituje mogunost praktine primene softverskog paketa Transp u
menadementu transportom. On prikazuje reenje klasinog transportnog
problema koji je sa aspekta operacionih istraivanja definisan na sledei nain:
Transportni problem je takva vrsta problema za koji je potrebno odrediti broj
homogenih jedinica koje treba rasporediti iz vie ishodita na vie odredita s
ciljem da se umanje trokovi prevoza odnosno da se povea ukupan prihod.
Istraivanje ima za cilj da pokae primenljivost aplikacija u preduzeima gde je
neophodno voditi rauna o smanjenju trokova transporta.
Kljune rei:
transportni problem,
optimizacija resursa,
softversko modelovanje.
SINGIDUNUM J 2013 10 (1) 54-60
61
INSTRUCTIONS FOR AUTHORS
Singidunum Journal of Applied Sciences is a biannual, peer-reviewed journal which publishes signif-
cant original scientifc research and reviews. Te Journal is devoted to the publication of research results
in the following areas: economy, management, tourism and hospitality, computer science and law. It is
essential that authors write and prepare their manuscripts according to the instructions and specifca-
tions listed below. Te length and efectiveness of the peer review process will largely depend upon the care
used by authors in preparing their manuscripts. Terefore, contributors are strongly encouraged to read
these instructions carefully before preparing a manuscript for submission, and to check the manuscript
for conformance before submitting it for publication. Te manuscripts must be written in English using
Microsof Word (*.doc or *.docx). Make sure that your manuscripts are clearly and grammatically written.
Please note that authors who are not native-speakers of English can, to a certain amount, be provided with
help in rewriting their contribution in correct English. Te Editorial Board expects the editors, reviewers
and authors to respect the well-known standard of professional ethics.
Types of contributions:
Original papers - (about 10 typewritten pages) report original research which must not have been
previously published.
Preliminary communications - (up to 3 pages) report unpublished preliminary results of suf ci-
ent importance to demand rapid publication.
Subject reviews - (about 15-20 pages) present an overview of the authors current research with
comparison to data of other scientists working in the feld.
Manuscripts should be submitted using the Online Submission System. Te manuscript must be up-
loaded as a *.doc or *.docx fle (tables and fgures should follow the text, each on a separate page). No arti-
cles will be published without frst undergoing an anonymous refereeing procedure (please read carefully
Editorial policy). To facilitate the reviewing process, authors are encouraged to suggest up to three persons
competent to review their manuscript. Such suggestions will be taken into consideration but not always
accepted. Te editor reserves the right to make the fnal decision with respect to publication.
If you have any questions, do not hesitate to contact the Managing Editor at sstanisic@singidunum.ac.rs.
62
Manuscripts should be typed in English (standard British English) with 1.15 spacing in A4 format
leaving 2.5 cm for margins. Te template is available here. Manuscript elements:
1. Title page with:
1. title (and short title)
2. name(s) of author(s)
3. name and address of workplace(s) af liation(s)
4. personal e-mail address(es)
2. Abstract
3. Keywords
4. Text
5. Reference lists
6. Tables (each on a separate page)
7. Figures (each on a separate page).
Each of these elements is detailed below.
1. TITLE PAGE
1.1. Title (and short title)
We suggest the title should be relatively short but informative. If a long title is necessary, please
prepare an optional short title.
1.2. Name(s) of author(s)
A list of all authors of the paper should be prepared. We need full frst name and full last name.
Initial(s) for middle name(s) is optional.
1.3. Name and address of workplace(s)- af liation(s)
Authors' af liations should be indicated in this section. Either endnote or footnote are not
recommended.
1.4. Corresponding authors e-mail address
One e-mail address is needed. It will be used as the corresponding author's email address in
all contacts with the authors.
2. ABSTRACT
An abstract must accompany every article. It should be a brief summary of the signifcant items of
the main paper. Te abstract should give concise information about the content of the core idea of your
paper. It should be informative and not only present the general scope of the paper but also indicate the
main results and conclusions. Te abstract should not normally exceed 200 words. It should not contain
literature citations or allusions to the tables or illustrations. All non-standard symbols and abbreviations
should be defned. In combination with the title and keywords, the abstract is an indicator of the con-
tent of the paper. Authors should remember that online systems rely heavily on the content of titles and
abstracts to identify articles in electronic bibliographic databases and search engines. Tey are therefore
requested to take great care in preparing these elements.
3. KEYWORDS
List of keywords proposed by the authors, separated by commas. Up to 5 key terms can be selected.
We would suggest to avoid repeating the title.
SINGIDUNUM J 2013
Instructions for authors
63
4. TEXT
General rules for writing:
use simple and declarative sentences, avoid long sentences, in which the meaning may be
lost by complicated construction;
be concise, avoid idle words;
make your argumentation complete; use commonly understood terms; defne all non-
standard symbols and abbreviations when you introduce them;
Latin words, as well as the names of species, should be in italic, as for example: or e.g.
explain all acronyms and abbreviations when they frst appear in the text.
Generally a standard scientifc paper is divided into:
introduction,
main text,
conclusion.
Footnotes/Endnotes/Acknowledgements: We encourage authors to restrict the use of footnotes. If
necessary, please make endnotes rather than footnotes. Information concerning research grant support
or the assistance of colleagues should appear in a separate Acknowledgements section at the end of the
paper, not in a footnote.
5. REFERENCE LIST
A complete reference should give the reader enough information to fnd the relevant article. Te ar-
ticle should contain no fewer than 25 references, preferably published recently. Please pay particular
attention to spelling, capitalization and punctuation here. Completeness of references is the responsibil-
ity of the authors. Please avoid references to unpublished materials, private communication and web
pages. Te surname of the author and the year of publication appear in parentheses afer the citation, for
example (Fisher, 2010). If more than one publication by the same author appear in one year, they must
be distinguished by an a, b, etc., for example 2001a, 2001b. In case of quoting the actual words of another
author, the page number should be provided, e.g. (Hollard, 2010, p.23). If the name naturally occurs in
the sentence, only the year is given in parentheses, e.g. Benoliel (1999) thinks If there are two authors,
the surnames of both should be given (Fisher and Hollard, 2009). If there are more than two authors, the
surname of the frst author only should be given, followed by et al. (Wilson et al. 2008). However, full
names of all authors should be given in the list of references. Te original journal title is to be retained
in the case of publications published in any language other than English (please denote the language in
parenthesis afer the reference in the Reference list).
A complete reference should comprise the following:
Reference to a book:
Mercer, P.A., Smith, G. (1993) Private viewdata in the UK. 2nd ed. London: Longman.
Reference to a contribution in an edited book:
Jones, J.L. (2006) Sofware development. In: Lawson, F., ed. Annual review of sofware develop-
ment. New York, NJ: Sage, 400-430.
Article in a journal:
Stein, D. (2007) Te Bottom Line. Sales & Marketing Management. 159 (9), 11-26.
Online sources - a book:
Mercer, P.A., Smith, G. (1993) Private viewdata in the UK. 2nd ed. London: Longman. Available
SINGIDUNUM J 2013
64
from: http://site.ebrary.com [accessed 29 June 2011].
Online journal article:
Stein, D. (2007) Te Bottom Line. Sales & Marketing Management. 159 (9), 11-26 [online]. Avail-
able from: http://emarketing.com [accessed 10 February 2010].
Web page:
Cross, P., Towle, K. (1996) A guide to citing internet sources. Poole: Bournemouth University
[online]. Available from: http:/www.bournemouth.ac.uk/servicedepts/lis/LIS_Pub/harvardsystint.
html [accessed 10 March 2009].
Web page (no author):
Tourism in Serbia. Wikipedia [online]. Available from:
http://sr.wikipedia.org/wikiTurizam_u_ Srbiji [accessed 8 July 2010].
Conference paper:
Stone, J. (2001) Electronic spyware. 7th International online information meeting, 2-4 January
2001 Manchester. Oxford: New Information, 200-220.
If applicable, write the name of the editor of proceedings:
Stone, J. (2001) Electronic spyware. In: Gosselin, J.H., ed. 7th International online information
meeting, 2-4 January 2001 Manchester. Oxford: New Information, 200-220.
PhD thesis:
Silver,(2008) Internal Communication. Tesis, (PhD). Singidunum University.

Tables and fgures and/or schemes should not be embedded in the manuscript but their position
in the text indicated. In manuscript tables and fgures should follow the text, each on a separate page.
6. TABLES
Authors should use tables to achieve concise presentation or where the information cannot be given
satisfactorily in other ways. Tables should be prepared with the aid of the Word table function, without
vertical lines. Te minimum size of the font in the tables should be 10 pt. Tables should not be incorporated
as graphical objects. Styles and fonts should match those in the main body of the article. Tables should
follow the text on the end of the manuscript and should be numbered consecutively using Arabic numbers
and their position in the text should be indicated. Each table should have an explanatory caption which
should be as concise as possible.
7. FIGURES
Authors may use line diagrams to illustrate theses from their text. Te fgures should be clear, easy to
read and of good quality. Styles and fonts should match those in the main body of the article. Lettering
and lines should be of uniform density and the lines unbroken. Axis labels should be in bold face. Units
should be placed next to variables in parentheses. Figures should follow the text on the end of the manu-
script and should be numbered consecutively using Arabic numbers and their position in the text should
be indicated.
Mathematical equations should be embedded in the text. Complex equations should be prepared with
the aid of the Word Equation editor.
All equations must be numbered, Arabic numbers, consecutively in parenthesis at the end of the line,
as presented:
n
k k
k
NSV NP a
=
=
0
SINGIDUNUM J 2013
CIP -
,
33
SINGIDUNUM Journal of Applied Sciences:
economics, management, tourism, information
technology and law / editor-in-chief Milovan
Stanii. - Vol. 9, No. 1 (2012)- . -
Belgrade (Danijelova 32): Singidunum
University, 2012- (Loznica: Mladost grup). -
28 cm
Dva puta godinje. - Je nastavak: Singidunum
revija = ISSN 1820-8819
ISSN 2217-8090 = Singidunum Journal of
Applied Sciences
COBISS.SR-ID 188621836

2013 10 1 PDF

Transféré par

Informations du document

Titre original

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

2013 10 1 PDF

Transféré par

Droits d'auteur :

Formats disponibles

www. j ournal . si ngi dunum. ac.

By comparing the total scope of ofer in all start-

Vous aimerez peut-être aussi