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MANAGEMENT OF TECHNOLOGICAL INNOVATION PROCESSES IN AN ORGANIZATION ON THE BASIS OF COST APPROACH
Dokukina I.A., Post-graduate student Orel State Agrarian University, Orel City, Russia E-mail: irenalks@mail.ru
ABSTRACT
The process of innovation management within the intensive economic development includes a number in a sequence of scientific, technological, industrial, institutional and commercial work, leading to an increase in its profits by increasing the productivity of labor and equipment, reducing production costs and improving product quality. In turn, technological innovation is an innovation in technology, improvements in technology, the use of fundamentally new technologies in the production of manufactured product, the development of new technological regulations, new types of manufacturing equipment and tooling. Cost management of the innovation process at the enterprise assumes all functions inherent in managing any object: development (making) decisions, implementation decisions, monitoring their implementation.
KEY WORDS
Innovation; Management decisions; Process; Cost.
Innovative processes have their own specifics. They are distinguished by the diversity of regional, sectored, functional, technological and organizational features. Analysis of the conditions and factors affecting the development of innovative let us subdivide them into negative (constraining innovation development) and positive (promoting acceleration of innovation processes). Within the framework of innovation management in the organization great attention should be paid to building management system of the innovation potential and structuring the process. It’s necessary to combine theoretical and practical components of the control system as a whole. Cost management is an important factor in improving the economic result of production, because in general it is determined by the difference between the income from the sale of goods (works, services) and the cost of their production and sales. Cost management features are implemented through the performance management cycle elements: forecasting and planning, organization, coordination and management, foster and promote the implementation, accounting and analysis.
Management functions of all elements in full are the control loop of the managing subsystem (guiding) in relation to a managed subsystem (project management). Subjects of cost management in organizations are leaders and experts of the enterprise and production departments (production, shops, departments, sections, etc.). The employees of the enterprise and individuals of production departments perform the functions of cost control or actively participate in them. Facilities management costs are the costs of development, production, implementation, operation (use) and disposal of products (works, services) related to innovative processes.
MATERIALS AND METHODS
Economic category «innovation process» will include the following components (Fig. 1): form of innovation management in the organization; the process of an innovative project; development of a complete set of technical and economic documentation.
Technological innovations require high resource costs both material and labor, but the level of costs with little change in technology or changes in tooling is less resource taking process. The general scheme of interaction and cost management functions in the organization is shown in Figure 2.
I___________________________________________________________________________I
Figure 1 - Contents of technologically innovative process
Cost management is not an end in itself, but is absolutely necessary to achieve the organization of certain economic outcome, increase the efficiency of the organization and, if necessary, taking appropriate measures. Control over the functions of the management cost is their secondary goal in relation to the production, which is, to achieve a certain industrial, economic, technical or other necessary costs result. Therefore, the purpose of cost management is to achieve the intended results of the organization in the most economical way.
Management Cycle
Managem
int functions
FORECA-
STING
PLAN-
NING
SETTING
UP
COORDINATION
AND
REGULATION
I
1
Developmet of (making) decison Implementationof decisions Control
i Elements of the management cycle ill i i i
FOSTER
AND
PROMOTION
ACCOU
NTING
ANALY-
SIS
Object of management
Figure 2 - Scheme of interaction functions of cost management
Forecasting and planning costs may be a promising step to long-term planning and the current stage of short-term planning. Long-term planning task is to prepare information on expected costs during the development of new markets, organization development and production of new products (works, services), increasing the capacity of the organization.
In our opinion, the basis of the indicators, associated with the use of the cost approach, is necessary to lay the determination of the degree of coverage and costs of their own and borrowed sources of their formation, as well as the volume ratio of debt to equity. Using the methodology of this analysis reveals the compliance or noncompliance (excess or deficiency) means for formation of stocks and allows you to answer the question whether the strength organizations cover their production costs. To fully reflect the different types of sources (equity, long-term and short-term loans) in the theory of financial analysis the following calculation parameters can be performed.
1. Availability of working capital.
This indicator is calculated as the difference between equity and fixed assets and investments (fixed assets) by the formula:
Ec = Ic - F (1),
where Ec - availability of working capital; Ic - sources of own funds; F - fixed assets and investments
2. Availability of working capital and long-term sources of borrowing for the formation of reserves and costs.
Calculated as the sum of working capital and long-term borrowings:
Et = Es + K, = (Ic + K ,) - F (2),
where Et - availability of working capital and long-term sources of borrowing for the formation of reserves and costs; Kt - long-term loans and borrowings.
3. The total value of the main sources of funds for the formation of reserves and costs.
It is calculated as the sum of working capital, long-term and short-term borrowings:
E z = E t + K t (3),
where E z - the total value of the main sources of funds to generate results and costs; Kt -long-term loans and borrowings.
Based on these indicators, characterizing the presence of sources that form the inventory and costs for production and business activities, calculated values, to assess the size (sufficiency) sources to cover inventory and costs:
- Surplus (+) or negative (-) of working capital ± E c = E c - Z (4),
where Z - inventories and expenses; - Surplus (+) or negative (-) of working capital and longterm debt sources of inventory and costs.
± E t = E t - Z = (E s + K t) - Z (5).
- Surplus (+) or negative (-) the total amount of the main sources for the formation of
reserves and costs.
± E z = E z - Z = (E s + K t + K t) - Z (6).
Indicators of results and cost sources of their formation (± E s; ± E t; ± E z) are the basis
for the classification of the financial and economic situation of the company to the extent of
its financial stability.
When determining the type of financial stability is commonly used three-dimensional (three) component:
S = {S 1 (x 1); S 2 (x 2); S 3 (x 3)} (7),
where x 1 = ± E s, x 2 = ± E t; x 3 = ± E z.
Function S (x) is defined as follows:
S (x) = 1 if x > 0 S (x) = 0 if x < 0
We distinguish four main types of financial stability:
- absolute stability of the financial condition, when used sources cover costs are own means.
Determined by the conditions ± E s > 0; ± E t > 0; ± E z. > 0; S = (1, 1, 1);
- normal financial stability, when used sources cover costs are own funds and long-
term loans.
Determined by the conditions ± E s < 0; ± E t > 0; ± E z. > 0; S = (0, 1, 1);
- precarious financial condition, when used sources cover costs are own funds, long-
term and short-term Loans and loans.
Determined by the conditions ± E s < 0 ; ± E t < 0 ; ± E z. > 0; S = (0, 0, 1);
- crisis, financial condition, when at Business no sources cover costs.
Determined by the conditions ± E s < 0 ; ± E t < 0 ; ± E z. < 0; S = (0, 0, 0);
Development of existing methods and the inclusion of the costs of the analyzed costs associated with the development and implementation of technological innovation will allow answering the question whether the strength of the organization, along with the formation of the resources needed for current production and economic activity, and even the implementation of the chosen strategy of innovative development. In other words, this approach can analyze the innovative capacity of the organization to effectively enforce existing and newly developed technologies. To do this, when evaluating the existing and required resources to ensure the production and economic activity in the analyzed costs should also include innovative and needs that are necessary for the implementation of the economic turnover of new or basic technology (ICb) and/or improving (ICy).
Substituting in the formula for calculating absolute, normal, and the precarious financial state of development costs and the introduction of basic and / or improving innovations, we obtain values give an assessment of the adequacy of (potential) sources not only to meet current production and business inventories and costs, but also costs with the implementation of various innovative projects. In connection with this, the calculation results and the sources of the costs for the production process and innovative development take the following form:
1. Surplus (+) or negative (-) of working capital for the production process and technological innovation:
± E c = E c - Z - I C b (8)
± E c = E c - Z - I C y
where Z - inventories and expenses; ICb ,ICy - the costs involved in development of the basic or improving innovation, respectively.
2. Surplus (+) or negative (-) of working capital and long-term debt sources of industrial and economic stocks and promotional costs:
± E t = E t - Z - I C b = (E s + K t) - Z - I C b (9)
± E t = E t - Z - I C y = (E s + K t) - Z - I C y
3. Surplus (+) or negative (-) of the total values of the main sources for the formation of reserves and costs:
± E I = E I - Z - IC b = (E s + K t + K t) - Z - I C b (10)
± E I = E I - Z - IC y = (E s + K t + K t) - Z - I C y
Indicators of production and business inventories and costs as well as costs for the
implementation of innovative development strategies sources of their formation , (± E s; ± E t; ±
E z) may also be the basis for the classification of innovative financial stability, or the innovation potential of the enterprise.
In determining the innovative capacity can also use a three-dimensional (three) component:
S = {S 1 (x 1); S 2 (x 2); S 3 (x 3)}
where x 1 = ± E s, x 2 = ± E t; x 3 = ± E z.
Values of the function S (x) are defined as follows:
S (x) = 1 if x > 0
S (x) = 0 if x < 0
RESULTS OF RESEARCH
Given the determined values of S (x) is divided into four main types of innovative capacity of the organization, allowing to answer the question: Is it the strength to technological innovations in the economic turnover while ensuring the financial needs of the current industrial and economic activity? We group and show the possible types of innovative potential of a business entity in Table 1.
Table 1 - Types of control over the technologically innovative processes in an organization on the
basis of the cost approach
Sources of financing and innovation capacity index Brief characteristics of the type of innovative capacity of the organization Recommended strategy of Innovation Development
High innovative features
Proper funds S = (1,1,1) High security resources of its own. Implementation of innovative development strategies organization is able to implement without external borrowing. Leader - the development of new technologies
Average innovative features
Proper means-plus-long-term Loans S = (0,1,1) Normal production of financial security necessary resources. For the effective integration of new technologies into the economy it is necessary to use some amount of borrowed funds. Follower or leader -development or improving of new technology
Low innovative capabilities
Proper Means-plus-long-term and short-term borrowings S = (0,0,1) Adequate financial support for current inventory and costs. To implement innovative development strategies required to attract significant funding from external sources. Follower - development of improving technology
Zero innovative features
S = (0,0,0) Deficiency or absence of sources of costs. -
Formed method can become the basis for the formation of a meaningful strategy of innovative development and effective commercialization of new technologies.
CONCLUSION
In our view, applying the proposed method, there is an effective tool for evaluating innovative features in organizations, as well as the choice of management decisions implemented for technological development. At the stage of development of strategic plans, the company may exclude alternatives considered unrealistic (in terms of financial security) directions from innovative development and avoid problems in the future loss of profits caused by the freezing of innovative projects.
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