Working out of their head office in Belgrade, they serve clients in western Europe, western Africa, Middle East and central Asia. 3lite focuses on providing highly specialized services for either investors, contractors or consultants for their specific operational or business requirements. Their team of subject matter experts targets only critical areas of a client’s business where they can save time and money. They differentiate themselves by their ability to engage in any phase of the project’s lifecycle, including situations when the project is in distress.

3lite’s core services are based on clearly defined assignments that are delivered within a timeframe of 4-12 weeks. Their services are divided into three core segments: (1) Project Consultancy – focusing on project controls, contract management and supply chain optimization for high-rise and mixed-use projects, (2) Business Consultancy – supporting companies to reach new international markets and develop business relationships with global industry leaders, and (3) Management Development – working with companies to establish their in-house staff and management capabilities for delivering large scale projects.

Чланак 3lite – Smarter Project Delivery се појављује прво на Biznis i Finansije.

What is the business logic behind the idea to venture into the making of the mobile phone which is designed to serve only for talking and sending SMS messages, in the era of smart devices, which are increasingly linking between themselves and are all the more close to unification? It may be surprising, but that logic is obviously making the profit, since the mobile phone model MP 01 of the Swiss company Punkt (Punkt.) – after appearing at the London Design Festival in September 2015. – sparked great interest and, despite a price of 295 euros, is making a constant growth in sales.

This is not a copy of the old, so-called 2G phone, but quite a unique device, says Petter Neby, the founder of the company. In addition to modern design, the phone is based on modern technology, it uses micro card, has a high-quality sound and much more space in the address book than the old phones (3.000), USB cable for communication with PCs, a battery that lasts 290 minutes of conversation, but – no internet.

The first batch is sold out, and not much copies are left from the second, and the placement of the third contingent on the market is already in the plans. Currently, the phone can be purchased in 25 stores around the world, from Paris to Hong Kong, but mostly through the online order form. Cell phone was sold in our region too, including Belgrade, but the biggest turnover is recorded in the Western European and American market. It only couldn’t be used in the countries that do not support the GSM standard – in Japan and South Korea.

Previously, this Swiss company, founded in 2008, has achieved commercial success with its model of analog alarm clock. Although in its work it uses the latest technology and – thanks to the „linked world“ – employs experts in Italy, the UK, Japan and other countries, its business philosophy is that the most important thing is to produce the device which is offering the consumers what they really need, in the competition of those who are trying to add more features to their products.

How to produce an analog device in a digital world?

Neby, who introduced his entrepreneurial approach at the Belgrade Design Week 2012, says that he manufactured the aforementioned phone primarily for himself, and then for the market. „I noticed that, with the advancement of technology, people have more trouble controlling the use of cellphones, and that they spend all day on the internet and social networks, instead to use them for better organization of their time. This is not healthy. I do not think there are many people who have developed a dependency on listening to music, but research confirms that, every second, more and more people are using Facebook or Viber. People are trying to present themselves in the best light, spending time persuading strangers how fantastic they are in this, fake, virtual world, rather than to enjoy with those who really mean something to them in real life.“

His belief that the inability to control technologies – instead of them controlling us – is a source of many personal frustrations, and that belief is confirmed by the demand for the Punkt’s products. But, already with his first venture – the making of the analog alarm clock with the modern design, whose sole purpose is to wake their owners – Neby has run into problems that were not expected, least of all in Switzerland. It turned out, in fact, that in the digital world, it is not easy to find collaborators for this type of production all throughout Europe, therefore he had to turn his eyes to China.

A similar pattern was repeated in the case of MP 01 phone, says Neby. When they started to inquire how much time was needed for its production, they received a surprising answer from the manufacturer: „If you want something like the iPhone, it takes about six months from the idea to the finished product, and a different concept requires more time.“ It turned out that it took four years to realize the idea and to go on sale. „Everybody have adapted to modern technologies to such an extent that anything different is a real challenge,“ comments Neby, who, nevertheless, didn’t want to give up from the idea that he created with the artistic director of the company, Jasper Morrison, the famous British designer.

Asked whether there were comments about the price of the phone on the market, Neby responds that those who believe that it is too expensive for the features it offers, are not their target audience. „The users of this phone understand that this is a long-lasting product, which was not designed to be replaced with a more advanced model next year. Our clients are those who understand that we do not want to engage in overproduction which has no purpose. We are producing electronic devices that people will buy because of the functions they really need, not because of a lot of the other features, for which the question is whether they would ever be used.“

Why do we need artificial intelligence when there are robotised humans?

The founder of Punkt points out that his philosophy does not mean that he is against technological progress. The problem, however, is not the technology, but – he believes – the people. „Smartphones have appeared before the users were culturally ready for them. It’s as if you took a child in a candy store and allowed him to eat as much as he wants. The child will not have a measure, because it doesn’t know that the excessive consumption of sweets may be detrimental to it’s health. This is exactly what happened to us, adults, with modern technologies. All of a sudden, we have got a lot of options without being aware of the possible consequences of their excessive use. Therefore, I always emphasize that I am not against the progress of technology, but am rather for its moderate and practical use. That approach is advocated since the inception of our company“, says Neby.

He adds that the users of smartphones and other networked portable devices often aren’t aware when their privacy is compromised. Specifically, users of 3G and 4G networks can be tapped, and applications which they use every day mainly collect data about them and their habits, usually without their knowledge. With the old phones that was not the case, as it isn’t with the MP 01, which uses the latest version of GSM, before the mobile phones were mass-attached to the internet.

The company, according to the words of its founder, aims to show the people that new technologies may also impose a daily routine if you don’t have self-control and that it can be dangerous precisely because it is not sufficiently recognized. „Very often we talk about artificial intelligence and the risks it brings. But it seems to me that it is more important to address the fact that the people themselves are becoming increasingly robotised, because, among other things, they spend more time in front of the computer in a senseless and anxious way, and so they keep forgetting that they are intellectual and creative creatures, which can move mountains if they really want to.“

Therefore, during his working hours Petter Neby also uses a smart phone, in addition to MP 01, but when he goes to home he diverts calls to his simple personal mobile phone. And e-mails and notifications, he says, can always wait until tomorrow.

Чланак The growth of interest in simple mobile phones: Less could be more се појављује прво на Biznis i Finansije.

Telecommunications are one of the most important and exciting industries nowadays. Important, because the magnitude of investments in this area is significant and spreads over decades. Telenor is still the biggest foreign investor in Serbia, having invested 1.53bn Euros in 2006. In 2014 only, Telenor has invested around 20 mn Euros in expanding its network and is investing 40 mn Euros in building the first mobile bank in the region.

As stated in RATEL’s report for 2013, total revenues from telecom services in 2013 in Serbia amounted to 1.55 bn Euros, out of which mobile has the biggest share of the pie (57%). This means that the overall share of the Telco industry in GDP is around 5%, a figure that is rather stable over time. So far, we were witnesses of steady growth in the Telco sector, especially when it comes to mobile, Internet and pay TV markets. However, starting from this year, we see the first ever decline in total mobile market value in Serbia (approx. -3%), while in some countries in Europe even more severe declines have been visible for several years already. Besides the challenging macro-economic conditions, the main reason for such a development lies in the reduction of interconnection rates, which are regulated.

Despite all challenges, the Telco industry appears to be rather resilient in tough times. Because communication and information is one of the core human needs regardless of the circumstances people are more willing to give up other types of consumption than mobile, Internet or TV. The Telco industry is also very attractive from an employee perspective. It attracts many young talents who look for great possibilities to learn and grow in a modern, international working environment.

When talking about the Serbian mobile market, it is important to say that in terms of penetration and access to most advanced services we are pretty much on par with the more developed markets. With SIM penetration of close to 130% and availability of the full assortment of latest handsets, products and services, Serbian customers are in the same position as their peers from Western Europe and the US, for example. Even the iPhone has finally arrived to Serbia!

Talking about smart phones, their uptake is rising steadily, contributing to an overall growth of mobile Internet usage and accelerating the so called “voice to data transition”. Today, the Smartphone penetration amongst Serbian mobile users is around 35%, and constantly rising. Besides the natural demand from customers, this growth is mainly fuelled by the mobile operators who are subsidizing smart phones and thus making them more affordable in combination with postpaid contracts that offer attractive bundles of voice, data and messaging. This has shifted customers from prepaid to postpaid, which means that the prepaid base is increasingly left to customers who spend less, many of them having to further optimize their mobile spending due to economic constraints. Besides this, mobile operators always explore additional models to enable people having a Smartphone.

One other important trend we face is the significant rise of Internet based communication services such as Skype, Viber and WhatsApp. According to our market surveys conducted during 2014, approx. 80% of mobile Internet users are using at least one of these services, which is around 30% of all mobile customers. The main reasons are significant cost saving potentials as well as enhanced features and ease of use. Mobile operators around the world are still struggling to find the best approach for how to deal with that trend, ranging from one extreme like blocking Voice over IP usage to another such as offering access to these services for free. In my view, it is clear that partnership models have to be found between the Internet services players and the operators, which allow a sustainable business on both sides. Internet players need high quality access to hundreds of millions of customers, and operators need investment security to build this high quality access.

The future of telecommunications will be all about data, where also all voice and messaging services will be IP (Internet protocol) based. In addition to that, literally all people will have the desire to have access to the Internet, similar to having access to TV some 50, 60 years ago. That’s why we in Telenor follow the ambitious goal to provide Internet to all our customers, no matter where they live. On that road, operators in Serbia are facing some regulatory challenges, such as the so called technology neutrality. Technology neutrality means that the operators can chose freely which of their spectrum should be used for which technology, a prerequisite to expanding high speed Internet coverage to broader rural areas in a cost efficient way. This will not only provide benefits primarily end customers living in these areas, but also to operators themselves. On top of that, the spectrum auction for LTE (also called 4G, the latest network technology that can carry enormous quantities of data at very high speeds) is still pending, even though Serbian mobile operators are technically and financially ready for that deployment. With the growing number of mobile Internet users and smart phones, as well as volume and speed hungry services such as YouTube or online games, LTE gains even more in importance.

I’d like to finish with something less technical, at least at first sight. As in most other industries, the players strive for a unique position that meets their target customers’ needs and differentiates them from their competitors. This creates more satisfied customers, more customer loyalty and ultimately better financial results. In telecommunications, offering a state-of-the-art network will continue to be crucial and therefore stay in focus for Telenor. However, what will be increasingly important for a successful differentiation over the next years is the way how you serve your customers across the different touch points. In other words, providing a consistent, highly convenient and even seamless experience will be key when a customer is visiting our web site, using a self-service app like MojMeni, entering one of our shops or calling the customer service. To give one example: When a customer in the future visits his operator’s web site to make a reservation for an upcoming Smartphone model, she can chose to pick it up in the closest shop. Over the next days, she can check the delivery status on her personalized self-care app in real time, and gets a message when the phone has arrived. In the shop, our customer will be welcomed by her name, receive the phone, gets all her contacts installed and also receives a special offer for the latest headphone since she uses the music service Deezer on a regular basis.

I think it becomes clear that this actually requires a lot from technology and IT, providing the same information to and about the customer across all channels, and linking all these channels in real time. In addition, all employees in the whole organization need to have customer centricity in their DNA. The Telco operator who masters this customer experience the best will have the happiest customers and take the leadership position on the market. If you think about yourself as a customer I’m sure you can agree that this will apply to many other industries as well.

Author: Oliver von Gagern

The author is Chief Strategy Officer at Telenor. He spent most of his career in the telecommunications industry, with senior roles in management consulting, strategy, pricing and marketing, in different countries.

Чланак Serbian telecom market: Overview of current status and future trends се појављује прво на Biznis i Finansije.

There are several trends shaping the development of grocery retailing in Serbia and among the most important are certainly convenience and market consolidation. Convenience trend is partly responsible for persistent popularity of traditional grocery retailers in Serbia due to the fact that these retailing outlets, especially very popular independent small grocers, offer superior proximity and extended opening hours to consumers, not to mention the human warmth of doing a daily purchase in a neighboring store where the owner and his family members are usually the only employees and everybody know them very well.

Even though it might seem paradoxical at a first glance, the convenience trend is also driving the growth of modern grocery retailers. Namely, more and more convenience stores are being opened in densely populated urban areas of Serbian cities and their market share within Serbian retailing grew from 4% in 2008 to 5% in 2013. Convenience is also driving the development of smaller supermarkets that are rapidly increasing in number as well. The value share of supermarkets in Serbia went from 9% of total retailing in 2009 to 12% in 2013.

Another important trend within Serbian retailing landscape is market consolidation. We witnessed several major events in this area in last several years. Firstly Delhaize Group took over Delta Maxi doo, then Mercator purchased Familija and Agrokor Group took over Tuš. Finally, long-expected acquisition of Mercator by Agrokor Group has occurred in June 2013 and this rounds up Serbian retailing system as a duopoly.

We expect to see more international chains entering the market in next five years. Just how much the consolidation is reshaping retailing in Serbia and jeopardizing traditional grocery retailers can be seen from the fact that Serbian Traders Association (Udruženje trgovaca Srbije – UTS) was founded in the end of 2010 with the aim to protect and represent small retailers’ interests. However, this is not likely to significantly slow down the modernization of Serbian retailing. On the contrary, Euromonitor International expects to see number and market share of modern grocery retailers, especially large formats such as supermarkets and hypermarkets, growing together with emerging trends among Serbian consumers of doing weekly or even monthly purchases in huge retailing centers.

Milan Cakić, Contributing Analyst at Euromonitor International

Чланак Main Trends in Serbian Grocery Retailing Market се појављује прво на Biznis i Finansije.

• Serbia ranked 93rd out of 189 countries in the World Bank’s Ease of Doing Business 2014 report (Doing Business 2014), slipping from 87th out of 185 countries in the previous year, owing to lack of reforms and limited progress in its privatisation programme;
• In the World Economic Forum’s (WEF) Global Competitiveness Index (GCI) 2013, Serbia ranked 101st out of 148 economies, the lowest ranking in Eastern Europe;
• Attracting foreign direct investment (FDI) is a government priority, as illustrated by its FDI intensity averaging 5.4% of total GDP in the 2008-2012 period;
• The corporate tax rate was raised from 10.0% in 2012 to 15.0% in 2013 to tackle the stubbornly high general government budget deficit (6.8% of total GDP in 2012);
• In 2012, 12.3% of the total Serbian population aged 15+ attained higher education, which was somewhat below 14.6% for the Eastern European average;
• Despite competitive wages in manufacturing of RSD284 per hour (US$3.2) in 2012, productivity (defined as GDP per person employed) was very low at US$14,354 in 2012.

Operating environment

In Doing Business 2014 report, Serbia ranked 93rd out of 189 countries, slipping six positions from the previous year. Its lower ranking was due to lack of improvements in its overall business environment, following reforms noted in Doing Business 2013, and limited privatisation of its state-owned monopolies. Serbia ranked higher than Bosnia & Herzegovina (131st) but considerably worse than Montenegro (44th) in Doing Business 2014.

“Getting Credit” and “Registering Property” were Serbia’s best performing categories in Doing Business 2014 ranking 42nd and 44th, respectively, out of 189 countries. The former was due to “Strength of legal rights” and “Depth of credit information” being on par with the OECD average, as well as 100% “Private bureau coverage” (where a private bureau lists information on borrowing history in the past five years for individuals and companies) that compared favourably with the OECD average of 66.7%. The time and costs involved in “Registering a Property” at 11.0 days and 2.8% of property value respectively compared favourably with the OECD average at 24.1 days and 4.4% respectively.

Serbia ranked particularly badly for “Dealing with Construction Permits” at 182nd out of 189 countries in Doing Business 2014, as the time taken to build a warehouse at 269 days and costs of 1,434% of income per capita were considerably higher than the OECD average of 147 days and 84.1% respectively. The most significant movement came in “Enforcing Contracts” where Serbia slipped 16 positions from the previous year to rank at 116th, owing to an increase in legal costs from 31.3% of the claim in 2013 to 34.0% in 2014 and the large amount of time, at 635 days, that it takes to resolve a dispute versus 441 days for the Europe and Central Asia average.

Following considerable upheaval, as a result of the Balkan War of the 1990s in the former Yugoslavia, and after the ousting of Slobodan Milosevic, Serbia’s newly elected government began a path of reforms in 2000 aimed at full democratisation and the establishment of a free market economy, resulting in solid economic growth that averaged 5.1% yearly in real terms between 2000 and 2007. The ensuing global financial crisis of 2008-2009 negatively affected annual real GDP growth, which slowed to 3.5% in 2008 and contracted by 3.5% in 2009. Whilst the economy achieved positive but subdued annual real GDP growth in 2010 and 2011, real annual GDP contracted by 1.7% in 2012 because of anaemic consumer expenditure and weak exports (owing to fragile external conditions), despite a push in government spending prior to the 2012 general election. Nevertheless, greater demand for automotive exports saw real annual GDP grow by 1.8% in 2013 with 2.0% expected in 2014.

Inflation was high at 7.3% in 2012, owing to an increase in food prices, and with a 10.0% hike in domestic energy tariffs in August 2013, inflation remained elevated at 7.9% in 2013. Government finances were stretched with a general government budget deficit of 6.8% and public debt of 62.5% in 2012, partly owing to an increase in government spending in the run-up to the 2012 general election. Nonperforming loans were large increasing from 8.4% of total gross loans in 2007 to 19.2% in 2012, as most of the loans are denominated in foreign currencies and are subject to exchange rates fluctuations. However, lax bank corporate lending has also been a contributing factor to the growth of nonperforming loans. Challenges in the business environment and elusive economic growth prospects have dented business confidence.

Serbia’s ranking in the World Bank’s Political Stability and Absence of Violence Index continued to improve dramatically from 173rd out of 188 countries in 2000 to 123rd out of 203 countries in 2012, as a result of greater political stability following the Balkan War but was nevertheless still low because of episodes of violence following Kosovo’s independence in 2008 and at the 2010 Pride Parade. Its ranking was better than Bosnia-Herzegovina (143rd) but worse than Montenegro (70th) in 2012. The index measures the perceptions of the likelihood that the government will be destabilised or overthrown by unconstitutional or violent means.

In the World Bank’s Regulatory Quality Index, Serbia ranked 100th out of 202 countries in 2012 versus 121st out of 201 countries in 2007. The improvement in ranking was due to strides made in the business environment after the Balkan War but the low position can be attributed to the lack of progress in privatisation of state-owned enterprises. Its 2012 ranking compared favourably with Moldova (104th) but was below Bosnia-Herzegovina (99th) and Montenegro (95th) in 2012. This index measures the perceptions of the ability of the government to formulate and implement sound policies that permit and promote private sector development.

Serbia ranked 101st out of 148 economies in the GCI 2013 versus 95th out of 144 economies in the GCI 2012. Its ranking in the GCI 2013 was the lowest in Eastern Europe versus Bosnia-Herzegovina (87th), Croatia (75th) and Montenegro (67th), owing to the lack of business sophistication, as well as weak institutions and an ineffective legal framework for challenging regulations and dispute settlement. Indeed, whilst its best performing category was “Technological Readiness” (60th), “Business sophistication” achieved the lowest ranking at 137th.

Corruption is a major issue in Serbia, ranking 72nd out of 177 countries in Transparency International’s Corruption Perception Index 2013, although its ranking improved from 80th out of 176 countries in 2012. It equalled Bosnia-Herzegovina’s ranking but was out-ranked by Montenegro at 67th in the 2013 index. 61.0% of the populace believe that the government is unsuccessful in dealing with corruption. As well as being party to several anti-corruption conventions created by Europe and the United Nations in the 2000s, Serbia formed the Anti-Corruption Agency in 2010 to tackle this pervasive problem. The 2012 general election was fought by the Serbian Progressive Party on an anti-corruption mandate and in 2014 the state prosecutor brought charges against 63 people for corruption linked to privatisations.

Euromonitor International

Чланак Business environment: Serbia се појављује прво на Biznis i Finansije.

All of us in Serbia work, to a certain extent, for the profit of big players in the agribusiness, either as farmers or as consumers. In a situation when there is not a sufficient amount of serious international competition, and especially no adequate quality inspection, and while primary agricultural production is largely disintegrated and inefficient, the big are in a position arbitrarily to rank the quality of both raw material and final products, and to dictate the prices of the purchase and sale. They are, at the same time, the biggest advocates of linear subsidies for agriculture, so as to be able to continue cheaply to buy raw material, at the same time transferring part of their costs, including their irrationality in their business operations, onto the backs of the tax payers, says Radmilo Pešić, professor of the Faculty of Agriculture in Belgrade.

Is Serbia, despite the obvious consequences of the climatic changes and the major disturbances on the world food market, predestined to be self-sufficient in providing food and to have surpluses from which profitable exports can be ensured? When the myth about the bread basket of Europe and domestic food as Serbian oil is reduced to facts, they, according to Belgrade Agriculture Faculty professor Radmilo Pešić, point to the following: Serbia now undoubtedly has quality natural resources – and that’s the end of the good news.
Instead of profitable agriculture, as would be expected in view of the natural potentials, primary production is the most vulnerable link in the chain from the field to the dining table. It is disintegrated, broken up, outdated, inefficient and structurally non-harmonized with the food industry, starting from the ownership structure which, approximately, hardly exceeds three hectares, to the average age structure of agricultural producers, 45% of whom are above the age of 50. “I am afraid that the upcoming population census will show that the situation is even worse than during the previous census in 2002 – that the average size of a farm has been somewhat enlarged, but that the demographic indicators are even more alarming”.
Contrary to the atomization of agriculture, the food industry is highly concentrated, highly centralized, still quite protected from international competition, and it is also the source of profitable jobs. Asked whether, in the race with high profit, food production and processing is a logical choice of domestic tycoons and why, Pešić says that it is not only the situation on the domestic market that is playing into their hands, but on the world market as well. “This is a global trend. Along with the pharmaceutical, IT and chemical industries, bio-technology and food production are also highly profitable everywhere in the world today.
We are witnessing a major growth of the prices of food on the global market, which is primarily the result of the climatic changes, the fact that, for the first time in the history of mankind, a larger number of people live in cities than in rural areas and quite certainly the growing demand for quality food in developing countries, such as China and India, whose population no longer satisfies itself with a handful of rice per day. For this reason it comes as no surprise that, over the past five or six years, the world’s food reserves, especially of grains, have been very small and that they are constantly on the decline, especially since an increasingly large part of them, 70 to 80 percent goes into further production, primarily for meat production. All this led to serious changes in the world’s agrarian sector, and since the demand is striving to surpass the supply, the food industry, despite the growth of the prices of raw material, i.e. its own expenditures, can dictate the prices of its own products, thus drawing high profits”.

Both Farmers and Consumers Blackmailed

An additional generator of the high profits in the domestic agribusiness is the concentration of the supply of food products. The domestic food industry is in the position to dictate the prices of the purchase of raw material, but also considerably to act in a monopolistic manner in the sale of finished products on the market. “The loudest protests against the liberalization of the food market can be heard precisely from representatives of this industry, but not from farmers. The protagonists of big agribusiness are hiding their interests behind the concern that foreign competition will additionally aggravate the already bad situation in villages. However, the lack of competition guarantees profits primarily to them, and not to primary producers, who, being small and disunited, are not in the position to dictate prices. Quite indicative is the trend according to which large food producers are now endeavoring also to engage in the primarily production of agricultural raw material, in order to ensure greater stability, which is logical and in accordance with what is happening in the world”.
However, the interviewee underlined, obvious in domestic production is a lack of international players and real competition, which is additionally undermining the position of small agricultural producers. There are two solutions for this problem: either to concentrate primary production, or to centralize it. Centralization implies merging. However, that process in Serbia is proceeding very slowly and uncertainly, since, generally speaking, we are not inclined towards self-organizing. On the other hand, the concentration of production requires the appearance of new big primary product producers. In that context the state could play an important role in order to stimulate the enlargement of agricultural estates, especially those owned by young households, which should find themselves in the focus of a stimulating agrarian and rural policy.
“I am a big opponent of linear subsidies, the thing the rich like the most. Big agribusiness in Serbia often points out that the European Union subsidizes agricultural production. Why do they insist on that argument? In order to be able to continue to buy cheap raw material. Large players hope that, with linear subsidies, the state will make it possible for small farmers, as primary producers, to receive just enough to be able to survive on the market, with the big and strong becoming even more profitable. On the other hand, it has transpired that the joint EU agrarian policy is the weakest link of the European policy. Even its key creators are aware of this, and one can also hear increasingly often the opinions that, in the current crisis, the European economy would be in a much better position if the research and development of new technologies had been invested in to the extent to which investments were made in agriculture over the past few decades, due to which changes in the agrarian policy are inevitable”.
Unfortunately, today in Serbia, the claims that the state is not allocating enough for agriculture are largely motivated by the interest to protect the food lobby, which is not only insufficiently exposed to the pressure of foreign competition, but it is not under the pressure of the state as regards serious quality inspection either. This is compelling consumers to eat food that is not of good quality, but is expensive, and, at the same time, it is seriously jeopardizing our export prospects.
Due to the insufficiently organized system, the lack of relevant and independent quality control institutions, such as national laboratories, the domestic food industry is in the position, on the one hand, arbitrarily to rank the quality of raw material and, thus, to fare cheaper, while using holes in the system to trick consumers. For this reason the assessments about exceptional prospects for domestic food on the EU market are largely a deception, as this requires primarily good and stable production. Only as such can it be competitive on the EU market. And this is what we still lack, said our interlocutor resolutely. Furthermore, he added, “the subsidizing of large players in the agribusiness means transferring part of their expenditures onto tax payers. With the introduction of linear subsidies domestic consumers would be damaged twice: not only because of the spending of an increasingly large part of the family budget on food which is not always of guaranteed quality, but also because of the covering of irrationalities in business operations and the losses of those who make profit on them with their speculative activities”.
Price risks

As regards Serbia’s self-sufficiency in conditions of the increasingly radical consequences of climatic changes, despite the very bad forecasts for this part of Europe, the present resources could satisfy the population’s needs provided that the state does more to improve the agricultural infrastructure. “The fact is that this costs a lot and that, in the current economic situation, this money cannot be provided from the budget, but the existing funds could be used much more rationally, at least for preserving what we already have. I believe it is much better to invest in the maintenance of the irrigation systems, where they already exist, than to offer incentives to foreign investors. Another potential problem which our agricultural resources will be faced with is the general deterioration of the quality of the environment, present in non-urban environments as well. In the long run, this can, unfortunately, undermine our potentially good resource basis for quality production and for self-sufficiency”.
For this reason, the same general precondition applies to the improvement of domestic agriculture and agribusiness as to other industries – the development of production based on the implementation of scientific achievements and modern technologies. At the same time, the state much conduct a far more active policy of the purchase of agricultural products, which would open more constructive possibilities for conducting the agricultural policy, including the alleviation of price differences. “I believe the state should cover the price difference with an active policy of forming market reserves, and not of so-called emergency reserves for the event of natural disasters or major social instabilities. It would be good for the state, instead of subsidizing production, to conduct a long-term policy of guaranteeing the buy-up, as this would protect the primary producers who have produced something, and not subsidize everyone, including those engaged in agriculture out of speculative motives. An active policy of managing market reserves can reduce the risks coming from the world market. It is realistic to expect the prices of food to grow on the world market in the next five to 10 years. To all intents and purposes, what is happening to food today are not fluctuations caused by speculative activities on the stock exchange, but rather at issue is a long-term trend, behind which lies a combination of realistic causes. Our agrarian policy must adapt to such conditions as soon as possible”.

March 24, 2011

Чланак Is the Agrarian Sector Serbia’s Oil? се појављује прво на Biznis i Finansije.

There was an anecdote going around in the former Soviet Union saying
that the platitude “comrades, communism is on the horizon” actually
meant that the closer you come to it the further away it is. The
exact same feeling is shared by most of the citizens of Serbia at the
very mention of a better life and of entering the EU, show the latest
public opinion polls and reactions in the media, especially in a
situation when, after a decade of poor reforms, it is only now that
the political leadership has reached the conclusion that life in
Serbia is hard. Why such a rough landing precisely at this moment,
this is a question that is easy to answer: the elections are
approaching, and the indicators of the deterioration of the citizens’
economic situation are such that they can no longer be ignored.

The real question, however, is why this issue was talked about
earlier on less than it deserved, considers Mladen Lazić, professor
at the Sociology Department at the Belgrade Faculty of Philosophy and
the author of the recently published book “Waiting for Capitalism”.
The reason for this, according to him, lies in the fact that after
the October 5th changes issues concerning the status of the state
were in the political focus, while the citizens, thanks to support
for the reforms from the outside, felt an improvement in their
standard of living relatively fast. “That was enough, especially for
the middle layers of the population, to start believing that things
were going well. It is only when the growth of the living standard
started slowing down, and then deteriorating even, that the question
that arose among the public as to why the reforms had not been
completed.

Individual scandals concerning the manner in which wealth had been
acquired in Serbia were increasingly replaced by debates on how the
structural reforms in our country were proceeding, i.e. whether or
not the system was truly being restructured”.

The information collected for the needs of the mentioned study
indicated that the reasons for the slow reforms were much more
complex than the usual perception that it was the regime that was to
be blamed for everything. One of the reasons is the fact that there
is no pressure from above for their acceleration, while pressure is
evident from the bottom for them to slow down to the benefit of
strong interest groups, so that they would be able to control them.

Unlike other countries, where this process proceeded faster, because,
at the end of the 1980s and the beginning of the 1990s there were no
internal lobbies that could manage it, while the strong pressure from
the outside led to it proceeding according to a relatively similar
pattern, the situation was quite the opposite in Serbia: the country
was isolated, with a very strong internal political and economic
group that controlled the reforms. “When the external influence
started being exerted following the change of the regime, we already
had a new, very strong economic elite, formed mostly out of old
cadre, and which started directing the further reforms towards its
own interests”, explains Lazić.

Serbian Patent: Democracy without a Market

There was no pressure also because it was not clear to the citizens
themselves what they actually wanted. Namely, according to indicators
on value orientations, practically all layers of the society, and
especially the upper and middle classes are politically liberally
oriented, but they do not share such a stand in regard to economic
liberalization. On the contrary, “people belonging to all layers of
the society, and even managers and owners of larger private companies
expect the state to continue to be the main economic protagonist”.
The mentioned controversies result from the fact that, throughout its
modern history, Serbia was a state-centric society where big jobs
were ensured through a struggle to enter the state apparatus, and
that such an “economic” tradition has survived in the present-day
system of values as well. The second key reason is the difficulties
produced by the current economic crisis. “We are witnessing the fact
that now even in countries of a traditionally liberal orientation the
state is expected to resolve problems. Therefore, precisely when a
liberal orientation started becoming more wide-spread in our country,
and not only in politics, but in economics as well, new economic
difficulties occurred having directed all the social layers towards
the state to resolve their problems: to stimulate exports, to limit
imports, to protect employees, to enable additional investments”…

The dissatisfaction is all the greater because it is now fully
visible that, when the new crisis broke out, Serbia had an enormous
baggage full of unsolved problems way back from the 1990s, i.e. that
the political elite was unable to find, in the previous decade, a way
to make up for what had been lost. “Our political elite is of poor
quality because it was formed in extremely bad conditions, in which
every political rival is equalized with a national enemy and with
corruption. When the regime changed, the political culture did not,
nor did the participants in the political game change to any
significant extent. There is no confidence here is politics being
able to service the public benefit. Priority is given to one’s
loyalty to one’s party and not to his abilities, so that our
political elite mostly consists of people of low professional and
problematic moral qualities”.

However, Lazić underlined, one must not lose sight of the fact that
the electorate in Serbia does not punish politicians for working
against its interests. “This is how it was during Milošević’s era,
and even today people vote by inertia – most people choose the lesser
evil. When you take a look at all the parties you do not have to be
an analyst to see that a reasonable person has no one to vote for. I
admit I do not see forces that would establish a relationship between
the political elite and the electorate in which the voters would
clean the political elite of the parasites who are oriented
exclusively towards their personal interests, and not towards the
public benefit“.

What prevails in Serbia is lethargy and hopelessness, but not
readiness for a social rebellion, Lazić is convinced. The situation
is very difficult, but not fateful. Furthermore, the historical
experience shows that major social upheaval takes place in
circumstances when good suddenly takes a turn for the worse. In our
case the improvement was short-lived, after which progress slowed
down and stagnated. Even though the standard of living is
deteriorating in general, the consequences are not the same for all
social groups. On the contrary, not only the richest, but also a
considerable part of the middle layer which provides for a living in
foreign companies, in the telecommunications, financial,
pharmaceutical or some other profitable branches still has a better
living standard than before.

The situation, of course, is not the same in Belgrade and in the rest
of Serbia, “but large social movements are rarely formed in the
country’s interior”, just as they are not led by the most vulnerable
either. In Serbia these are primarily old-age households in villages,
part of the employed persons, especially outside Belgrade, and
certain groups of people employed in companies that do not pay out
salaries. “These are big numbers, but a social rebellion is not
created at the bottom. You cannot expect it to be organized by the
most vulnerable as they are, at the same time, the most helpless in
every way”.

Banishment of Morality

Those whose influence is far more relevant – the middle class, are
not only disunited as regards their interests, but they are also
largely the most responsible accomplices in the failure of the
reforms. When one observes the changes in the financial position of
the three main groups of the middle class – experts, junior managers
and small entrepreneurs, unlike in the 1990s when it was experts who
fared the worse and entrepreneurs the best, the situation is now the
opposite. In this regard, the largest number of experts have found
jobs in state institutions which, by the nature of things, live off
money from the private sector and the gap has been additionally
widened due to the illogicality that the salaries in the public
sector are approximately larger than in the case of private
entrepreneurs.

However, the problem does not lie in the difference of interests,
“but rather in the fact that there is no elementary feeling of
responsibility towards the public interest. This was also very clear
during the recent strike of teachers, whose trade union leaders made
it clear that they do not care how the state will provide money and
how others live, but rather they are only concerned with having the
salaries of teachers raised.

That is catastrophic, that is that naked egoism which is increasingly
recognizable in our society, but which is very dangerous. The request
should have been for the state to find a way to improve the business
conditions for the private sector in order to improve the overall
economic situation and, thus, also the living standard of those
living off the budget. If the teachers’ trade unions are so
indifferent towards the public interest, it is hard to expect others
to be more responsible in this regard. If the most educated people
are not interested in the general benefit, then there is no one else
to be”.

From all this one can conclude that Serbia is in a stale-mate
position. On the one hand we have a state apparatus which, ever since
it has existed in Serbia, has been formed according to the principle
of loyalty, arbitrariness, family and regional ties, instead of one’s
expertise and professionalism. In this sense, different today is only
the rhetoric, standing behind which is the same psychology, totally
opposite of what is being declared and what the state should be doing
– protecting the public interest from individual aspirations that can
endanger it.

“In such a managerial structure the minister can be the most capable
person, but he will not be able to do anything of major importance”,
says the interviewee. On the other hand, the electorate which still
fails to understand that democracy is impossible without relying on a
market economy, including the middle class “which has totally failed
in this respect”, so the ultimate result is the fact that both the
authorities and the citizens – even though the individual
consequences are different, are accomplices in the same job: to halt
changes in Serbia and for the state the continue with a policy in
which “the market serves only as an auxiliary instrument”.

What is the solution then? For Serbia, Lazić considers, extremely
important is the fact that it is included in international
institutions, “which are not ideal, but are far better regulated than
ours and the more included in them we are the rules that are
established will be relatively firmer and will regulate a majority of
the processes in the society. I believe that for us, being as we are,
it is truly very important to enter the EU, because it imposes rules
and creates a framework which is also necessary for shaping the
conduct of people. It is only in such a situation that our creativity
can produce results, instead of turning into destruction”.

Zorica Žarković

May 5, 2011

Чланак Waiting for Capitalism се појављује прво на Biznis i Finansije.

Although progress was registered in the past six years in the
development of domestic statistics, serious weaknesses are still
obvious. How does one explain, for instance, the fact that it is not
possible to obtain an overview until a specific date regarding the
exact amount of the stocks of steel in Serbia? “In the state we have
one big producer and several wholesalers for this important raw
material. We have records on imports and exports of steel. We have a
serious demand for steel, to mention only the automobile industry.

Why is it then so difficult to obtain an overview of the state of the
stocks?”, says Belgrade Economics Faculty Professor Slobodan
Aćimović, speaking about the state of the domestic statistics. The
mentioned example becomes even more absurd if one bears in mind the
fact that there is a multitude of institutions in Serbia offering
statistical data: the Republic Office of Statistics, the National
Bank, ministries and their administrations, chambers of commerce,
business associations, local bodies of self-government and individual
companies. The information is so diversified that the collection,
sorting and crossing of data is literally a painstaking job,
describes the interviewee. “We had a lot of problems while working on
the project of the City Green Market to obtain data on how much fruit
and vegetables is produced, imported and exported from Serbia. When
we tried to cross the data from so many different sources, we had to
abandon the idea and to apply the methodology of anticipation
according to the consumer basket. We gave up because, on the basis of
the collected data, we obtained a calculation which is strange, to
say the least. For example, that an average citizen of Serbia eats
daily two kilograms of string beans!?”

The manager for relations with state bodies at Japan Tobacco
International, Vuk Pribić, believes that one can, nevertheless, rely
on certain information. “If we are speaking about data referring to
the growth of consumer prices at the end of a period – for example at
the end of 2010, it is noticeable that the data of the Office of
Statistics, the Finance Ministry and the National Bank of Serbia
coincide. This is also the case when you analyze the growth of the
GDP in the previous year, so that the mentioned sources are assessed
at our company as being competent for drawing up and planning
business activities”, says Pribić.

Companies expect data on foreign trade, the unemployment rate, the
structure of the labor force, on average wages and so on to be
equally reliable. However, a deeper analysis of the available data
points to weaknesses, for which Pribić gives the following example:
“The data on the growth of consumer prices for the previous month are
published in the first two weeks of the current month, which is
alright, while, for example, the data on the consumer basket for
January of the current year have still not been published even though
we are in April”.

What Do We Not Know

It is obvious that Serbia has a problem with the updating of
information, agrees Violeta Jovanović, executive director of the
National Alliance for Local Economic Development (NALED) and proposes
that institutions additionally charge their processing, but, in
return, to do the job up to date, precisely and to ensure the
availability of information. “What is missing from the information,
but which is very important for companies are detail market analyses,
including the trends of salaries, public revenues and public
spending, the level of investments, operative costs, the index of the
economy’s local burdens… These reports are mostly prepared by
business associations at the request of their members from their own
or from donors’ funds, depending on the topic. Of importance for the
economy and for new investors is concrete information on how far have
things gone, what is being planned in regard to the realization of
infrastructure projects and in which period”, says Jovanović.

The owner of the Petite Geneve Petrović company, Sava Petrović,
speaks the least favorable of all the interviewees about the quality
of domestic statistics. “It seems to me that sometimes totally flat
data and estimates are used, for which I sometimes ask whether they
have anything to do with reality?” The interviewee added that he
would be very interested in knowing the share of the state debt
towards the economy and the citizens in the total claims, but the
state, which does not even have complete records of its own assets,
treats this issue as an image in the mirror – how big the claims
against the citizens and the economy are.

At a time of transition, all sorts of things are being presented as
world standards, without even the elementary ones being fulfilled,
says Professor Aćimović, giving as an example the fact that “until
several years ago certain automobile importers did not have precise
data about the number of imported vehicles”. On the other hand,
certain new legal solutions are contributing to statistical
confusion, such as the new rules of the Law on the Protection of
Competition, where one commercial company must not reveal to another
how many pieces of a certain commodity had it obtained from a third
company. “We can understand that the price or discount can be treated
as a secret, but why can’t the information about amount be public?
This is statistically important information. Domestic companies do
not publish a lot of the information which their colleagues abroad
are glad to share with the public, from the volume of production, to
the income and number of employees”, stated Aćimović.

Trap for Investors

The lack of reliable statistical data is discouraging investors, our
interviewees agreed. “The most serious problem is the lack of
adequate statistical projections for the period of three to five
years, except the memorandum on the budget and certain NBS
projections. Most important of all for every foreign investor is the
predictability of the economic environment, so that precise
projections of macroeconomic indicators are crucial for a successful
and competitive economy”, emphasizes Vuk Pribić of JTI.

However, the diversification of the sources is also a major problem,
assessed Professor Aćimović, describing such a situation as a
veritable trap for investors. “When interested investors realize how
difficult it is to obtain reliable information the regular way, they
are often compelled to address structures of power. This is, of
course, something all the authorities like because, if the investment
is realized, the political benefit will go to the one who had
“hosted” the investor at his institution, and provided him with
information which clerks collect, more or less successfully, ex
officio”. Information is power, and the situation in Serbia is such
that every important piece of information is perceived as an
opportunity for holding a monopoly on information, even within the
same institutions or companies. For this reason, Aćimović concluded,
it will be possible to judge a business environment and society also
on the extent to which our statistical data are regulated, reliable
and available.

Milica Milovanović

April 7, 2011

Чланак What Purpose Does Domestic Statistics Serve? се појављује прво на Biznis i Finansije.

The Infoterm, company of Niš, taken over last year by the MME GmbH
holding company from Rosenheim, owned by three three Mikulović
brothers and Mr. Ehmeier, is the only company in Serbia producing the
prototypes of measuring devices, hardware and software for the hot
processing of metal in the industry. With a branch in Leskovac,
through its mother company, it sells products and services to renowned
automobile producers, such as Mercedes Benz, Volkswagen, Man, Fiat,
Ford, Opel, but also to companies such as Bosch, Linde, Siemens, DATEV
or Astrium. The company is also present with its products on the
markets of the countries of the former Yugoslavia, Romania, Russia,
Ukraine and China.
Cooperation with numerous foreign partners gives a more realistic
picture of the state of the domestic industry. First of all, that
Serbia has no special competitive advantage over other countries in
the region, says Tatjana Brkanović, head of Infoterm’s accounting and
legal service. The partners are interested in the quality of the
products, the delivery deadline, a competitive price and how the basic
business rules are respected, so if these criteria are met, the issue
of the company seat becomes irrelevant. As the size, level of
development and expansiveness of the domestic market, as well the
degree of its integration in the broader regional and European space,
is negligible, it remains for Serbia to make use of the high
motivation of enthusiasts in the scientific and technological spheres,
which do not wish to leave the country, but are endeavoring to use
their knowledge on the global market and further to gain knowlegde.

Rapid Water-Heater

At Infoterm all the 15 employees have adequate professional
certificates, and for the purpose of ensuring adequate personnel, the
company is also intensively cooperating with the Faculty of
Electronics in Niš.The deficiency of technical personnel is not so
pronounced as in highly industrialized countries such as Germany, but
many other problems are evident. Unlike develop markets, on the
domestic market there are no clear rules regarding the trends of the
prices of work in accordance with the level of education and
profession, but also no guarantees that adequate quality truly stands
behind the degrees. That is why experts in Serbia, faced with such a
situation and with mass unemployment, mostly accept the first and,
therefore, also the lowest offer. On the other hand, employers must
invest a lot more money and time in order to educate the people they
have employed and enable them to do practical work. For this reason,
the thesis that highly educated and cheap labor is a “Serbian brand”
is totally wrong, as if we had a “running boiler” that receives water,
but gives oil, says Tatjana Brkanović.
However, an even greater obstacle to the development of business in
Serbia are bureacratic regulations and legal procedures which are
often in colision, the non-transparent public procurements and the
under-development of the industrial market, and, thus, the small
demand for high-tech development projects. “Despite this, we believe
the state is making certain efforts to help open new jobs and to
support, with certain projects, the business operations of small and
medium-sized enterprizes. We are endeavoring to contribute, in every
way, to the improvement of the overall business climate, so we are
actively participating and cooperating with KLER, local self-
government units, the regional chamber of commerce, we support the
development of clusters and technology parks”. However, none of the
local regional or republican initiatives recognize enough the needs of
the economy, nor is the profession and the business community
consulted sufficiently in their conceiving and in the setting of
development goals, Brkanović pointed out.
Micro Business is Maxi Spending
Infoterm provides 90 percent of the funds for financing the rendering
of its services to the mother company and the companies it unites.
However, due to the consequences of the economic crisis, the achieved
income of nearly 500,000 euros was smaller than expected. “This year
we are registering a mild growth, but every new slowing down of the
world economy will probably have an effect on the level of the income
in the next few years as well, as well as in the entire domestic
industry”. The biggest share in the company’s expenditures are the
costs of production material and the services of sub-contractors for
making the trial series of development projects, the employees’
salaries, training and education. Most of the employed are constantly
referred to work, training and advance training to one of the
holding’s companies or to their ultimate buyers. On the other hand,
the expenditures for wages and the paying of various taxes and
administrative procedures account for almost a tenth of the total
income, so it is not difficult to conclude why it is hard to provide
sufficient funds for the further development and for increasing the
volume of production. The company has not fully realized the panned
investments projects, because it was assessed that, in such
circumstances, the planned investments would not only no pay off, but
it would also call into question the sustainability of the business.
Infoterm has become eligible for subsidized funds, but has given them
up. When asked why, Branković says: “The problem lies in the fact that
the terms in the Decree and the Agreement on awarding funds for direct
investments differ, so an investor planning three-year investments
must, upon the granting of funds, submit, within three months’ time,
submit a request for the payment of at least one tranche, whose
conditions are the conclusion of a contract on the leasing or purchase
of land and the provisions of a bank guarantee. And in three months’
time, in view of the valid regulations and the duration of
administrative procedures, it is not possible to ensure the conditions
for the conclusion of contract on the leasing or purchase of land. As
regards commercial credits, for a company such as ours, which has
stable sources of financing and foreign founders, the conditions under
which the commercial banks here grant credits are pointless. They do
not negotiate, but rather dictate the conditions. Being used to sure
clients, a non-liquid economy that was forced to be their hostage and
a solid number of physical persons employed in budget institutions,
they operate outside the basic financial principles”, assesses
Brkanović.
Infoterm operates successfully also thanks to very good cooperation
with local companies – from the purchase of production material to the
development of trial series. Our interviewee points out that this also
implies the strict respect of the agreed on payment deadlines, which
is truly rare in the present economic circumstances in Serbia. It is
precisely quality partnership relations at the international and local
levels and the knowledge that is presented through them that enables
this company successfully to operate despite the economic crisis and
the domestic bureaucratic labirynth.

December 19, 2011

Чланак Infoterm, Niš : Awake among the Sleeping се појављује прво на Biznis i Finansije.

First, cold drinks, then sandwiches and French fries, pies and hot
beverages and, finally, ice cream. This is the obligatory order when
laying out food for guests, on a platter. Potatoes are salted
exclusively in the form of an extended letter M, and all the
sandwiches in the restaurant, if they are not sold, are thrown away
after 10 minutes. This is so at all the McDonald’s restaurants, in all
the countries of the world. The appearance of the restaurant is
precisely determined, while the rules of work and the procedures for
the employees are defined to the very last detail. McDonald’s
represents one of the most famous franchise conditions for doing
business in the world. In order to open a McDonald’s restaurant, the
franchise owner must pay 60 percent of the costs of the facility’s
construction and another 45 thousand US dollars as the starting price.
In order to be taken into consideration for a McDonald’s franchise an
individual must possess a minimum of 200 thousand US dollars and sign
a 20-year contract.
The European franchise market, according to the publicly available
data, is worth 80 billion euros, and the companies operating according
to this model employ around 900,000 people. Practice has confirmed the
fact that, in the first few years of operation, around 90 percent of
the formed small and medium-sized enterprises fall the ruin. In the
case of franchises, only five percent of the companies experience
failure. In Serbia as well, the percentage of those who close down a
franchise job is much smaller than in the case of independent
entrepreneurship.
This statistics was crucial for some when deciding to start a business
even at the time of a crisis. One of them is Saša Milutinović who has
been, since recently, the agent for the franchise of Husse, a company
engaged in the sale of pet food. A survey showing that, over the past
five years, the demand for pet food increased by 65 percent, was
enough for him to decide to purchase this franchise.
“For six months, I kept weighing out whether to engage in the job or
not. My sister and brother-in-law live in Sweden, where this franchise
originates from, which was an additional reason in favor of this, says
Milutinović. The job started in August, and he is satisfied for now:
he has the full help of the franchise provider, and the contract has
precisely regulated who has the rights and obligations. This franchise
is charged according to the number of inhabitants, around 0.005 euro
cents per inhabitant of the territory for which the franchise is being
taken.
Ivana Šaljić, currently a housewife in Belgrade, recently started
negotiations with the owners of the Dve Šmizle company.
“For the beginning, they requested that I equip their store according
to their design. To start with, I also have to purchase goods in the
value of around 3,000 euros, and the monthly franchise is another 50
euros”, explains Ivana Šaljić.

For that money Dve Šmizle offers a margin whose difference between the

selling and purchasing prices leaves enough space for paying all the
expenses and for acquiring profit, for the training of salesmen, and
for support in crisis periods…
The initial sum that needs to be allocated differs from franchise to
franchise, but these are certain tentative expenses. At the signing of
the contract one pays the initial fee and expenses. The amount that is
paid to the franchise owner for the know-how or for the business
system is most often irretrievable. One occasionally also pays the
price of the royalties, expressed in percentage points in a certain
period compared to the gross wage. Every initial calculation should
also include the costs of the leasing, construction and equipping of
the business space and inventory. Then there are also the costs of the
operating license and insurance. Certain providers also request a fee
for the “ceremonial opening” so as to promote, with the franchise
receiver, the new selling place, while others offer this within the
franchise package. Also, the costs of advertising are paid quarterly
or annually into a joint coffer. Such an approach to the whole chain
gives strength and security, because it possesses more money than each
individual link. The expenses are paid in at a certain percentage of
the total business operations. This is the advantage of the franchise
business, as it provides small franchise receivers with the same
volume of advertising and the entire chain. Royalties, i.e. the
license fee are the costs for the use of the provider’s name, brand
and visual identity. However, quite a few franchise owners do not
request them. At issue are mostly franchises in which the provider
sells certain products as well.
“All the surveys have shown that very rarely does the launching of a
business in the franchise system fail to succeed, and even when this
does happen, it is most often because the provider did not abide by
the work system and procedures. The provider has already passed
through the learning process and has acquired experience through the
method of attempts and mistakes, and has learned the secret of success
for specific business operations. In the franchise form of doing
business the provider’s entire experience is passed on to the
receiver. This is the main reason for the purchase of a franchise –
reducing the risk and choosing the best possible opportunities for
success, says Marica Vidanović, independent advisor at the Franchising
Center of the Serbian Chamber of Commerce.
Experts believe that there is yet another reason in favor of opting
for a franchise – the fact that all the financial costs of such a
business can be foreseen in advance. When one is starting a business
alone, these are mostly “blind business operations”. Practice has
shown that a franchise business leads to fast growth because it is
easier to obtain capital for expansion. As the contents of the
franchise broadens, the name becomes increasingly recognizable, and
most people link size with success.
“Franchises are good, because they are already tested recipes and,
essentially, they request a smaller amount of investment funds. Here,
entrepreneurs, by entering the franchise chain, obtain an already well
known brand, the know-how and a developed business system.
Practically, in their hands are tools for launching a business without
major investments, believes Boris Popovski, trade advisor at the US
embassy in Belgrade.
He believes that franchising can play a useful role in the
strengthening of commercial ties between Serbia and the US. This was
one of the reasons for the American embassy to support to founding of
the Franchising Center within the Serbian Chamber of Commerce. The
goal of this institution is to be in the function of a channel between
US franchisers interested in the Serbian market and Serbian
entrepreneurs willing to establish their businesses by purchasing the
American franchising concept.
Nevertheless, the fact that not everything is “rosy” on the
franchising market is confirmed by the Fornetti company, dealing with
the sale of pastries. The crisis is felt, they say, but not so much in
the sale of the franchise as in the sale of the final product.
“Before the crisis, the buyers of our franchise needed a week, at the
most, to decide whether to start the job or not. Today, as much as ten
or so days pass from the moment when they call us to inquire about the
terms. After that period we call them, then we talk some more, and as
many as 20 or so days pass until they decide to enter the business”,
explains Kornelia Šild-Ferenc, the company’s commercial director.
“A double-edged sword” in the franchise business can also be the
specificity of different markets. In practice, what proved to be
successful on one market does not have to be successful on another.
“The very fact that the franchise receiver possesses the basis for
business, the know-how and technology, does not guarantee his success.
The choice of the right personnel, enthusiasm, knowledge, team work,
motivation and the recognition of business opportunities are also
important for finding the right road towards an optimal balance of
knowledge and technology on the given market”, says Obrad Sikimić,
chairman of the management board of the Serbian Association for the
Development of Franchising.
However, good will and money are not enough for a franchise to be
obtained. “The most frequent reasons for the franchise provider to
refuse the request of someone who would like to launch a job is the
assessment that the person is not “sufficiently inspired” by the
concept. Secondly, many would like to start a franchise job along with
a multitude of other jobs, but sometimes the company providing the
franchise does not like this and requests that the investor be engaged
only in its business”, says Edita Bečić, a franchise consultant.
The most frequent form of franchising in our country is the
franchising of the distribution of products. In Serbia there are now
around 50 franchises, 80 percent of which are foreign.

December 1, 2011

Чланак Franchises in Serbia: 50 examples се појављује прво на Biznis i Finansije.