Globalization and Business

17-23

Authors: MIKHEIL TOKMAZISHVILI

Considering the traditional fundamental process as an alternative of economic theory is increasingly insufficient in today›s reality; deficiencies of the supply and demand interconnections, as well as the complex character of their relationship that cannot be fully explained by traditional mainstreaming that is confirmed. In the aftermath of the global crisis, countries have been occurred in an eternal stagnation. The development of world economy progresses slowly. The restoration of macroeconomic stabilization and sustainable development by the old traditional monetary methods - inflation and exchange rate changes - were impossible, while by Keynesian methods the increase in stimulation of budget interventions on the supply remains limited. Economic science has been able to explain events far more than to predict the future. The issue of new industrial structural reforms only brings new questions. Today new challenges impose new tasks to economic science. Academic approaches are being used that combines historical, logical, technological, institutional, and other methodologies. Everything starts with explaining how the economy is working and how it should work. The model of economy that is efficient and balanced is a current challenge and this model has its own limitations. Introducing pluralist theories has begun, including at the universities. Development of economic science requires fundamental approach together with promoting neo-liberal course and institutional approaches, as well as explaining macro-economic events not based on Keynesian and classic methodologies, but based on combination of institutional, behavior, psychological, political, social and other sciences. It gives rise to new challenges for economics. It should also be reflected in university studies.

32-37

Authors: GIVI BEDIANASHVILI

The modern conditions of globalization and the expected long-term trends set all the countries of the world in front of special challenges. In addition to it, for all the countries having transitional economy it is very important to manage to develop the strong competitive of the social-economic systems and to transform their countries’ weak aspects (that make the countries’ processes slow down) and to promote to use positive factors in the context of globalization and globalization processes. In the above-mentioned problems the culture (as the factor), the entrepreneurial activities (as the most important resource of the economic growth of the country) and the systemic presentation of the strategic direction of the formation of the economic knowledge of the country take special places. In the paper the main directions of setting the above-mentioned issues and solving these issues are given on Georgia’s example.

45-52

Authors: NUGZAR TODUA

To provide the population with healthy nutrition is an urgent problem of any country. According to experts of the World Health Organization, one of the most important factors determining the health and well-being of the population is healthy nutrition. In the context of growing interest in healthy eating, an in-depth study of nutrition practices becomes particularly important, as food norms, traditions and habits are an integral part of everyday life. Healthy nutrition is an actual problem of modern Georgia. The nutrition of the majority of the Georgian population is unbalanced, incomplete and irregular, therefore, their food supply structure remains unsatisfactory. Under the current economic conditions, many Georgian consumers are switching from natural food products to their cheaper substitutes in order to save money. This trend has a negative impact on the health of the population as a whole. Studying the attitude of consumers towards healthy nutrition is the decisive issue of social marketing. In the literature of social marketing, much attention is paid to researching how modern life impacts on the practice of nutrition and what changes occur regarding to the nutrition in everyday life. Social marketing is the use of marketing concepts in a program designed to influence the voluntary behavior of target audiences in order to improve health in the society. Social marketing is focused on people, their wishes and needs, aspirations, lifestyle and freedom of choice aiming aggregate behavior change. Social marketing uses traditional marketing instruments to promote healthy attitudes and behaviors. One of the important factors of changing healthy behavior is increasing awareness and knowledge in food labeling among the general public. Most part of the population in the world uses the labels on food packaging to make healthier choices. For improving the healthy choice of the consumer, it is important to get the consumer into the habit of checking the label. The ability to choose prepackaged food based on information obtained on its label requires knowledge and ability to read, understand and interpret information. There are many studies about the impact of food labeling on healthy nutrition, but such studies have not been carried out in Georgian reality. To solve this problem, we conducted a marketing research. Qualitative and quantitative methods have been chosen for studying and respectively, the study consisted of two steps. At the first step the focus group technique has been choosing for the qualitative survey and hypothesis formulation. In the second step the respondents were conducted online and face to face survey through the country. A systematic random sampling method was used. The research tool we chose a questionnaire that consisted of several structured questions. The questionnaire contained the information on the consent and confidentiality of the respondent, as well the study explanation and the filling instructions. A five-point Likert scale was employed. The self-administered survey method was used to avoid errors caused by the subjectivity of the interviewer. Based on this the survey results were analyzed using statistical software SPSS for windows. Along with research methodology we used variance analysis method – ANOVA. In the work, on the basis of variance analysis, is established dependencies of the influence of consumer awareness about the appointment and requirement of food labeling, as well as the reliability of packaging information on healthy nutrition.

59-64

Authors: AVTANDIL SULABERIDZE

In accordance with the theory of demographic transition, the following article analyzes peculiarities of Georgia’s demographic modernization during XIX-XX centuries and at modern stage. Peculiarities of the impact of global and local political and social-economic factors on the modernization of demographic system are discussed according to the separate stages and the intertype period of the modern type of population reproduction.

71-78

Authors: DAVID SIKHARULIDZE, VAKHTANG CHARAIA

The article focuses on the role of FDI in Georgia’s economic development. Based on Investment Development Path, research shows that Georgia is on the second level of its development (see chart 1), which means that inflow investments are prevailing on outflow investments and the country is still progressing based on non-modern technologies based economy. It can largely explain the role of the Government of Georgia in the evolution of the competitiveness of Georgian enterprises and of Georgia as a production location. It also predicts the direction of Georgian outward FDI to neighbor countries and highlights the relevance of the two-way relationship between inward FDI and the upgrading of the country’s location advantages, on the one hand, and with the development of domestic firms’ ownership advantages on the other hand. Attracting FDI to Georgia is an issue of major importance nowadays. Georgia has a lot of advantages to promote its economy; however, the small efforts done for the promotion of local savings to transform it to the investments is hinder the economic development of the country. Foreign Direct Investment works as a locomotive to enlarge the transfer of technology, skills and access to export markets. It can decrease unemployment and increase employment; contribute to a higher GDP through higher levels of productivity.

84-89

Authors: TORNIKE KHOSHTARIA

Actuality of the research. Strategic management is a key factor of the success of any organization. At what degree managers pay attention to strategy formulation and its implementation is reflected on a company performance. The worldwide experience shows that successful companies have clearly formulated strategic choice so they reach set goals step by step. In this way, they get desired results at local or international levels. Theoretical basis of the work. Literature analysis showed that the main field of interest of strategic management is to answer the following question – what causes performance heterogeneity between competitor organizations? (Rummelt, 1994). According to the existing point of view, heterogeneity in the performance indicators can be explained by the strategic planning process, strategy formulation and the degree of the planning strategy implementation (Minzberg, 1990; Parnell, 1997). Therefore, the impact of the above mentioned three factors on organizational performance is discussed in the following research. The organizational results are measured with two mechanisms – the “Objective fulfillment” and “Relative competitive performance”. The objective fulfillment shows how an organization manages to reach its outlined short-term or long-term goals while “Relative competitive performance” shows the degree of improvement or worsening of company’s performance according to sales, profit, market share, etc. Scientific novelty of the work. It is estimated, that the manufacturing companies’ in Georgia, which are focused on a rational and comprehensive strategic planning have better results than those putting less emphasis on strategic planning. Also, it is empirically proved, that the companies adopting rational and comprehensive strategic planning in Georgia do not focus on the degree of planning of strategy implementation. Practical value of the work. Research results are important not only for those studying strategic management issues but for the managers of running enterprises in Georgia who try to succeed on a competitive market through the strategic planning process. The given study will help managers to identify impeding factors in making a strategic choice and overcome difficulties arising in this process.

96-103

Authors: FARUK DAYI, YUSUF ESMER

The role of administrators on successful operations of businesses management is very high. Ability of management’s, attitudes and behaviors, and perspective on financial events are closely related to the success of the business. The highestlevel decision body in the management of the company is the CEO. He is responsible for the success and failure of enterprise. A failed CEO can cause the business to fall into financial difficulty. In that case the manager’s financial ability, risk and return balance and management of assets and resources are become importance. In order to perform these tasks, it is necessary to have CFO as senior manager. For this reason, it is developing a dual leadership model to strengthen the financial organization structure of the enterprises. CEO and CFO in the model are at the top of the organizational chart. CFO is responsible for accounting and finance units; CEO is for other units. Because the CEO and CFO in the model are at the same level, they need to make decisions together. If the decisions of the CEO and CFO conflict Executive board resolves the problem. In the model, a functional organization chart is prepared, and the authority and duties of CEO and CFO are defined. In this study, the finance-oriented management of enterprises is strengthened, literature is gained a new model which name “dual leadership: CEO and CFO”.

110-118

Authors: GOCHA TUTBERIDZE, QETEVAN PIPIA, GIVI RAKVIASHVILI

When studying the economic structure of society qualitative and quantitative methods are closely related to each other. In particular when analyzing the economic structure of society inequality indicessuch as the (generalized) Gini index, the Hoover index, the first and second Theil indices, the first and second Atkinson indicesand other are used. In this article, we investigate the relationship between these indices and in some cases prove that they can be calculated by different formulas. In addition these indices will be calculated for the following countries: Azerbaijan, Armenia, China, Estonia, France, Georgia, Germany, Greece, Iran, Israel, Italy, Japan, Latvia, Lithuania, Moldova, Russia,Turkey, Ukraine, United States.

124-132

Authors: LAMARA QOQIAURI

The work presents modern tendencies of financial markets development, it analyses basic motive powers of financial markets after 2008 financial crisis including liquidity, financial risks, fund indicators, etc. The work explains Strau’s effect, namely how sharp it is to increase the currency market influenced by the dynamic of fund markets The article explains definite factors of goods market dynamic from a different point of view, from the view of fundamental and financial investors, namely, the work studied the increasing role of non-bank organizations on the currency market, the influence of structural changes of mediators on activation of financial investors’ work; on increasing their influential spheres and on increasing the raw materials activities dynamic in the world financial market.

138-142

Authors: MIKHEIL CHIKVILADZE

This study researches the problems of Georgia›s monetary-fiscal policy and economic growth, in particular - the main indicators of economic growth assessment, certain aspects of monetary, credit, currency and investment policies; The process of tax reforms in Georgia, including changes in income tax administration, considering the Estonian model, in which entrepreneurs will be exempt from profit taxes if they reinvest part of undistributed profits (dividends); It is analyzed in this study EU-Georgia Association Agreement signed in Brussels (27.06.2014) one of the most important parts of which is an agreement about the Deep and Comprehensive Free Trade Area, which envisages liberalization of trade with the EU; The focus is on the low level of competitiveness of private sector in Georgia, inadequate human capital and deficient financial resources, undeveloped infrastructure and measures to be taken in this direction.

148-153

Authors: MIRON TUGHUSHI

Unemployement is the most complex and acute socialeconomical, demographic, psychological and political problem, which has exclusively negative results. Therefore, unemployement management-regulation is the most significant task of civilized world. Experts’ calculation make it clear, that the problem of unemployement in Georgia is the most acute problem, which has been proved by recent reports of IRI researches performed in Georgia, according to which 40 percent of interviewed population considers, that «The main problem in Georgia is unemployement, and economics is on the second place by 23 percent» . According to the experts“ calculation average rate of unemployement in Georgia is within the limit of 32,0-36,0%. Some experts (I. Archvadze) fix even much higher index (39-40%), to which we agree. As for according to official statistics unemployement rate in 2017 made up in amount of 13,9 percent. In our opinion the significant difference between the rates calculated by official statistics and experts mainly is conditioned by methodological nonsenses ( to consider the owners of land as employed, who work one hour per week, or 4hours per month and 48 hours per year and etc.). It reduces the unemployement rate artificially. For example, in 2017 by official statistics in Guria was fixed the lowest unemployement rate -2,7 percent, which is ridiculous. It is clear and obvious for everyone in Georgia, that by working only one hour per day, a human being cannot earn money even for bread. By the data of International labour organization, in 2017 according to the unemployement rate Georgia had much better (lower) indexes of unemployement rate than Macedony, Greece, Spain, which is rather doubtful. To ensure an effective settlement in Georgia, it is necessary: The first: to unify the efforts of Georgian Parliament, Government, Municipalities, The Ministry of Labour, Healthcare and Social Protection of Geogia and all subordinated services around the basic national strategies which are proved by the Government of Georgia , such as: strategy of Social-economic development of Georgia - «Georgia 2020», strategy of the reform of professional education, complete implementation of «2016-2018 activity plan of the strategy of active policy of Georgian labour market and its implementation». It is rather significant that in the aims of above mentioned strategies the employement and unemployement events are sharply outlined; The second: To develop a new version of a Law project «About employement» and to present it to the Parliament of Georgia to be proved. It is factual, that in Georgia, within the period of acting of the Law «About employement» (in 1991-2006) the government has employed great part of the unemployed people, and protected the definite part of employed people from moving to the unemployed number. The third: according to the regions and considering their specifics processing and implementation of complex programs of employement, in which evaluation cryteria, terms of implementation, financial sources, executors, expected results and etc. would be outlined. The fourth: to create the desirable busness-environment and the legislation base in the country, which will encourage to attract foreign investments, to elaborate and realise effective events for the government to support ( tax benefits, to help in getting cheap credits and etc.) the micro, small and middle business activities. The fifth: To perfect the process of unemployed training, qualification raising and retraining and in general, preparing the professional staff to encrease finansing from the state budget for this purpose; Sixth: To specifying the basic tasks and competences of labour and employement policy Department of the Ministry of Labour, Healthcare and Social Protection according to the goals and demands of the new legislation «About employement» (which should be accepted). Together with developing the employement policy the Ministry should undertake the responsibility of the policy realization as well, which means coordination of the implemented activities for the purpose of employemment and unemployement regulation by the government. Hence it follows, It is not excluded that the necessity of changes of organizational structure of the above mentioned Ministry would be put on the agenda.

158-163

Authors: EKA SEPASHVILI

Globalization of the world economy has started centuries ago. The old trade roads like Silk Road or long ship journeys over the Oceans to both directions West and East are just the examples of simple forms of Globalization. Nowadays we are having more difficult form of Globalization of the world economy where political, social, cultural, environmental and military aspects are closely interconnected and deeply influence economic ones (Keohane R., Nye J., 2000). Modern globalization is the complex and tough interdependence of the regions and countries which are not immediate geographic neighbours. In such environment Knowledge becomes the key driver for global world economic development. Technology, knowledge and innovations are the key to raising the resource efficiency (Sepashvili, 2014). On current stage of global economic development high skill labour, new knowledge, developed technologies and continuous innovations will be utilized in most efficient and productive way. Therefore, national economic policy should give particular attention to education and researches, advanced infrastructure development (easy internet access, telecommunications, transports etc.). Success of the country in science and more importantly, commercialization of scientific results defines positions of national firms in the global markets and generates higher incomes. Further development and unprecedented wide spread of digital technologies together with new technologies dictates national governments to encourage and support knowledge generation and innovation creation which are resulted in profit. The policies, approaches and measures are also varying according to countries and regions.

171-175

Authors: SHOTA SHABURISHVILI

The paper considers the main theoretical approaches to understanding global fragmentation of manufacturing processand analyzes their role in the modern International business. It is emphasized that in view of the growing political and economic importance of manufacturing process glob fragmentation, today this phenomenon is in the focus of many countries and international institutions.There are analyzed mechanisms of coordination, structure, the importance of individual points and the effectiveness of possible positions of the company inglobal fragmentation of manufacturing process.

181-184

Authors: GIORGI KEPULADZE

Poverty is one of the major problems that is faced by the modern society. The representatives of different fields of social science investigate poverty and develop their own perceptions regarding to the problem. Given paper investigates poverty in psychological theory because psychological factors like human behavior, decision-making and etc. could be considered as one of the most important aspects to staying poor. The development of psychological theories of poverty runs at least three periods: before 1980th psychologists were based on the individual specific of poverty explanations; in period from 1980 until 2000 the role of the individuals in poverty explanations were added by situational (social environmental) understanding of poverty existence, while after 2000 the psychologists extended the methodological boundaries of investigations and came to the multi-disciplinary understanding of poverty when acknowledged the impact of economic, political and social factors as roots of poverty. Despite the evolution of psychologists’ perspectives on the causes and roots of poverty, psychological theories of poverty are focused more on the individuals and their differences. Some of those theories, in par- ticular Intelligence-based psychological theories, consider poverty as result of cognitive deficiencies. Other theories assume psychological sickness, psychological disturbance and moral deficiencies as a cause of poverty. For example, based on the Freud’s explanations of the ego as a part of the psyche that perceives the reality of the external world through assumption of conflict between inner and outer pressures, the psychological theories explain the poor’s dependence on the state in terms of character disorders of the welfare recipients and account this psychiatric deviation as the factor that keeps the poor in poverty The article studied various theories of poverty such as: 1) Attribution Theory that is divided into internal and external attributions. Internal (dispositional) attribution explains human behavior by personal characteristic and possibilities of an individual, while an external (situational) attribution is based on the situational explanation of the human’s behavior; 2) “Depletable” self-control theory represents the conflicts between the aspirations and abilities of the human being; 3) Distancing theory which determines poverty as a psychological problem of separated classes.

192-197

Authors: MAŁGORZATA BUŁKWOSKA

The EU signed the Association Agreements with Georgia on 27 June 2014. Substantial part of this Agreement, including the DCFTA sections are provisionally applied as of 1 September 2014. The agreements with Georgia have been ratified and officially entered into force in July 2016. Under the DCFTA, the EU and Georgia removed all their import duties on agricultural products. However, it seems that more important are non-tariff barriers in mutual trade because EU and Georgia had different approaches to food safety and different regulations. The purpose of this article is to assess the impact of DCFTA UE-Georgia on the development of agri-food trade between Poland and Georgia. From the Polish perspective, Georgia is not a significant trading partner. However, for many Polish companies, the Georgian market may be a part of the export diversification strategy, which aims to reduce their dependence on sales to EU Member States. It seems that there are further opportunities for the development of Polish food export to Georgia. Poland imports from Georgia mainly wine, nuts and fruits, which are complementary to the domestic production. It can be expected that GIs protection may bring benefits to Georgian producers of wine, for which demand in the EU, including Poland, is systematically growing.

203-206

Authors: MAIA AZMAIPARASHVILI

The work refers to the opportunities of Georgia in turning into the one of the leading players of the world’s tourism market. The development of tourism in Georgia is of great importance both to the socio–economic point of view, and promotion in the world of centuries-old indigenous of Georgian nation, its history and cultural heritage. However, tourism can become a major source of replenishment of the Georgian budget and monetary resources.

215-220

Authors: LEVAN SABAURI

The paper describes the problems concerning assessment of the audit risk and its management on the initial planning and further stages of audit. It also deals with a comprehensive approach to the audit risk, which makes it possible to manage it by influencing all its determinants and the way the audit firms apply it for the sake of time-saving in the measurement of the control risk. We also developed the audit risk management logic chart.

225-227

Authors: GIVI BAKRADZE, NANULI DZIMTSEISHVILI

In accordance with the international practice, procedures for preparing and submitting reporting on governance reporting and payments made to the state are introduced. The mandatory structure of governance reporting is not established. However, the law defines the component reporting component and defines the list of information that is obligatory in each component. It is recommended that the management report only contains the information that will be essential for the reporting users. Based on the experience of developed states, we can think that the preparation and the publicity of the management report will positively affect the company›s sustainability and improvement of financial and non-financial indicators. It should also be taken into consideration that the disclosure of the governance information does not hinder the commercial secrets of business.

231-237

Authors: NINO QOQIAURI

The article highlights the main methodology about the elaborating prognosis resulting from actually of prognosis on the development of scientific –technical and innovative sphere. About their principles; if shows models of prognosis of innovative development, peculiarities of tasks that should be solved while choosing and fulfilling instruments, also specifies of original information and kinds of factors. The article has studied versions of macro economical development of prognosis, main stages of compiling prognosis and structural models. The work has examined and presented conclusions about main directions to support a state in innovative business, about completing the mechanism in innovative funding.

242-245

Authors: EKATERINE BAKHTADZE

The aim of the article is to identify Georgian consumer behavior characteristics and touristic motivators in case of both inbound and outbound travel. We tried to create simple tourist typology base on VALS segmentation system and summarize main internal and external motivators and factors influencing tourist’s behavior and decision making. According to the research results Georgian residents belong to consumers, who are driven by external motivators and factors. Georgians have good possibilities to travel in Georgia as its various natural and cultural resources give good opportunities to develop different tourism products. During recent years, domestic trips have been decreasing because of reasonable prices offered by competitive countries and existing Free Visa Regimes with EU and other countries.

249-253

Authors: TEA UDESIANI, TATIA UDESIANI

The paper deals with the main objective of the audit activity which is expressed in determining compliance with the normative acts of financial and economic operations carried out by the economic entity. The main goals of financial reporting are: Confirmation of reporting credentials; During the inspection period the reporting the enterprise’s activities, checking the completeness, accuracy and accuracy of the revenue and the financial results; Equity, liabilities, assets, reflecting the methodology of evaluation, and reporting laws and normative documents regulating the protection of control; Identify and utilize reserve funds, financial reserves and loan sources of their own. The achievement of the financial statements audit requires a segment of audit that can be carried out in the international practice through the subjective and cyclical approaches. In the audit process it is also important to assess the audit’s risk correctly, which is carried out by the following In the audit process it is also important to assess the audit’s risk correctly, which is carried out by the following three components: the risk of risk, the risk of control and the risk of invisibility. The official certificate presented by the management of the audit object is as follows: “In total, the financial statements are presented in accordance with the basis of the fair presentation of the fair financial statements”, in fact the existence of certain the evidence in the financial statements. The auditor uses the assertions to evaluate risk assessment by considering the potential inaccuracies that may be allowed to work and develop audit procedures that will assess the risk assessment. The components of financial reporting have different risks, which are essential for auditing. Consequently, when considering a component, the auditor should be able to determine which claim is predominant. For example: the evidence of the existence on assets is more important than completeness. The completeness of earnings in turn is more important than determining whether this operation was implemented or not. This may be individual for each audit taking into consideration the relevant specific risk.

259-262

Authors: TENGIZ VERULAVA

Primary health care has an important role in the organizational arrangement of health care system. Without a fundament of primary health care system it is impossible to build anything. The primary health care system reflects on the quality population health, the availability of health services and the cost of spending on the health care. The family doctor›s institute and primary health care system in Georgia have not been developed with regarding international standards. The lack of primary care system in Georgia indicates that the referral to outpatient medical facilities is considerably lower than the European countries. The reason for this is the lack of confidence in primary care institutions and the absence of comprehencive primary health care system in the country. It is nessesery to develop a family doctor›s institute in Georgia. This requires the promotion of continuous medical education of family doctors, optimal geographical distribution of primary health care institutions.