Научная статья на тему 'MODELS OF MANAGEMENT OF THE COMPANY''S STRATEGIC DEVELOPMENT IN CYCLES'

MODELS OF MANAGEMENT OF THE COMPANY''S STRATEGIC DEVELOPMENT IN CYCLES Текст научной статьи по специальности «Экономика и бизнес»

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NATURALLY - SYMBIOTIC SYSTEM MODEL / PRINCIPLES OF NATURAL CO-EXISTENCE OF INDEPENDENT ELEMENTS / BUSINESS MODEL WHERE MANAGEMENT

Аннотация научной статьи по экономике и бизнесу, автор научной работы — Kozin Valery

The article considers compliance of various models of company management with the company's strategic development cycles. This article has a scientific and practical nature. Human - machine System Model is a business model where management occurs at the will and desire of a small group of people (investors, CEOs, etc.) Introduction: This work was started in 2002 as an attempt to understand and systematize dynamics of creation, organizing and development of business models of companies. For the purpose of a working hypothesis it was assunmed that any busines-system is born, develops and exists on certain regularities which stretch beyond economic science and lie in the border-line spheres of philosophy, biophysics and other sciences.

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Текст научной работы на тему «MODELS OF MANAGEMENT OF THE COMPANY''S STRATEGIC DEVELOPMENT IN CYCLES»

Независимо от того какой путь из двух представленных будет выбран в качестве критической цепи, при первом варианте снятия конфликта, общая длительность работ выйдет одинаковой. Также, в обоих случаях, после добавления к общему графику буфера на слияние путей, некритическая цепь получается, в конечном итоге, больше критической. Объясняется это тем, что возникает дополнительное время, которое можно использовать для завершения некритических цепочек работ.

При расчете длительности проекта без использования метода, срок реализации (Рис.1) составлял 80 дней. При применении метода критической цепи, и следуя советам изложенным автором, время выполнения всего «мини» проект получилось равным 70 дням. Это с учетом заложенного общего буфера в 22дня.

Рассмотренные способы расположения работ проекта в равной степени хороши, чтобы взять их за основу для построения плана. Потому,что разница между ними по отношению к буферу проекта некритична и ей можно пренебречь. Один из инструментов для улучшения ситуации - перенос самой длинной работы на более поздний

срок. Таким образом, критическая цепь будет представляться самой длинной из любой последовательности ра-бот.В свою очередь, запас времени в проектном буфере увеличится, что ещё сильнее усилит защиту проекта от влияния общих факторов изменчивости критической цепи.

Литература

1. Голдратт Э.М. Критическая цепь. М., 2012

2. Лоуренс Л. Вовремя и в рамках бюджета // Альпина Паблишерз. 2010

3. Trietsch D. From management of constraints to management of Criticalities // Human System Management 2005. № 24. С. 105-115.

4. Steyn H. An Investigation into the Fundamentals of Critical Chain Project Scheduling // International Journal of Project Management. 2010. № 19. С. 363369.

5. Schragenheim E., Dettmer W.H. Simplified Drum-Buffer-Rope: A Whole System Approach to High Velocity Manufacturing // Consortium of management professionals, 2012. URL: http://www.goalsys.com (дата обращения: 24.04.2015).

MODELS OF MANAGEMENT OF THE COMPANY'S STRATEGIC DEVELOPMENT IN CYCLES

Valery Kozin.

MBA. Director of consulting company "Kozin Workshop," teaching a course "Strategic Management" and "Operations Management" at the International Academy of Business and T. Ryskulov International Business

School KazNGU, (Almaty).

ABSTRACT

The article considers compliance of various models of company management with the company's strategic development cycles. This article has a scientific and practical nature.

Keywords: Naturally - Symbiotic System model is a business model where management is based on the principles of natural co-existence of independent elements.

Human - machine System Model is a business model where management occurs at the will and desire of a small group of people (investors, CEOs, etc.)

Introduction: This work was started in 2002 as an attempt to understand and systematize dynamics of creation, organizing and development of business models of companies. For the purpose of a working hypothesis it was assunmed that any busines-system is born, develops and exists on certain regularities which stretch beyond economic science and lie in the border-line spheres of philosophy, biophysics and other sciences.

Subject of study were small, medium-sized and large companies in Kazakhstan and representations of foreign companies working at the territory of the Republic of Kazakhstan, and also a number of companies in the People's Republic of China. Unfortunately, most of the companies preferred to remain unnamed in this study and demanded to use pseudonyms instead of their brand names. However, managers and scientists engaged in practical management and applied economics will easily identify with the familiar management models and case studies.

This research had following purposes:

1. Analyze existing tools for description of creation processes, development and dynamics features of business models in various stages of their existence.

2. Create and describe hypothesis; develop principles of existence dynamics of business systems.

3. Test the hypothesis and principles on working business models.

4. Recommend application.

Accordingly, the research phases were arranged in the following sequence:

1. Desk researches and analysis of previous works in the field of business development, as well as in other areas (philosophy, biophysics, a space physics, economics and others).

2. The fundamental part - includes development of hypothesis of dynamic model and its principles of construction. Determination of parameters of the object for positioning and forecasting.

3. Test of hypothesis of dynamic model of development, generalization and analysis of results.

4. Development of practical recommendations for application of the model.

Materials and Methods used in this study were as follows: First of all, the inductive technology of F. Bacon was applied: the analysis - development of hypothesis - practical test of results. Business models were considered as supersystem elements, that is, tools of system analysis were applied. For determination of parameters of measurement the tools of the regressive analysis were used. As the system principles laws of materialistic dialectics were used:

• the principle of a general relationship claiming that everything is connected with everything, and only limitation of human knowledge doesn't allow to see all existing communications;

• the principle of development proclaiming the irreversible, directed, natural change of material and ideal objects as their universal property;

• the law of unity and struggle of opposites concerning transition of things in the course of development into its own contrary (definition of concept of contrary, or a dialectic contradiction, has not been given);

• the law of transition of quantitative changes into qualitative, meaning accumulation of gradual quantitative changes by the developing objects and subsequent spasmodic transition of the last into qualitative changes;

• the law of negation of negation underlining a spirality of development and return to the previous state at higher level of development.

Analysis of existing studies. The closest to this issue is Adizes's [1] work narrating that any company passes stages of initiation, development, maturity and decline. However, this statement raises doubts in regard to duration of life cycle as there are companies with extraordinary short life cycle. There are companies with history of more than several decades. Finally, there are long-living companies like Kruzhovitsky brewery in the Czech Republic that works since 1571, and there is a company in People's Republic of China producing brushes for writing that has been successful since 1234. It means that principles of dynamics of company development exist and violation of these principles considerably reduces their life cycle. Studying stories of various companies, we can trace process of transformation of the company of the monofunctional (single-product) enterprise into large holdings and corporations with the high level of integration and diversification, and also wide geography of a marketing network. But at such transformations changes not only organizational structure, but also company management model. Naturally we can tell that this process happens under the influence of the end user who raises requirements to products (goods and services). But at the same time, as stated in works of S.E.Shnoll [2] we encounter natural oscillatory processes and transition from one state to another. For example, it proves on a number of experiences: "The "water restructuring waves" - which I made up - represent reorientation of dipoles of water at change of properties of a surface from hydrophilic to hydrophobic" [2 p. 19]. In the same work he evidentially claims: "discrete distributions are peculiar to processes of any nature from biochemical reactions to radioactive decay and that very much reflect general properties of our world in forms of the corresponding histograms. Now I think that in these phenomena reveals fluctuation of space - the time, occuring at the movement of earth in a non-uniform gravitational field" [2 p. 19].

Oscillatory processes in economy and politics are well described in N. D. Kondratyev's works [3] "... wars and revolutions arise because of real, and first of all economic conditions ... due increase of speed and tension of economic life, an aggravation of the economic competition for the markets and raw materials ... Social shocks arise easier than all in the period of a rough impact of new economic forces.". Management-related literature fairly well describes the models of management based on administratively functional basis. The special literature characterizes them as natural technical systems. "The natural-technical system (NTS) — is a complete, ordered in the existential relation set of the interacting components which includes tools, products and the means of labor, naturally and artificially modified natural bodies, and also natural and artificial fields." "The natural-technical system essentially differs from the natural. Its major difference is in being manageable (cybernetic). Such manageable systems are the systems,which functioning is caused by the managing interactions." [4]. Respectively, natural systems also exist and are well-described. "Natural - ecological system (NEC) - the uniform natural or natural and anthropogenous complex formed by live organisms and their life environment in which live and inert ecological components are connected among themselves by relationships of cause and effect, a metabolism and distribution of a stream of energy." [5]. There is also the main principle: "The rule of internal consistency in ecology - a situation according to which activity of spicies in a natural ecosystems is directed on maintenance of these ecosystems as their own life environment." [5].

Formulation of hypothesis. Any business system exists in a spatial and time continuum under laws of dialectics. Being born in one of contraries it undergoes progressively ascending movement to the antipode and then on a spiral comes back to the initial state at a higher step of development. This hypothesis doesn't contradict to the provisions set forward by Adizes as the point of death of the company can come at any time for a number of the subjective and objective reasons in any point of a spiral. But this company will be immediately replaced by competitors, having continued the movement on a spiral. It should be noted that the stages of life cycle described by I. Adizes should be considered as consecutive elements of the spiral. The spiral in itself also reflects N. D. Kondratyev's waves. Recessions and rises should be considered not as a horizontal graph, but rather as vertical. Besides, if we assume a spiral fragment, we can see then oscillating motions similar to the ones described in S.E Shnoll's works. Describing two contraries, I believe it is possible to view the Chinese monad as a prototype in which the movement actively confronts to rest. In its principals, the condition of rest by most matches interaction of elements in naturally-ecological system. The active condition of the movement corresponds to natural-technical systems. Progressive movement of spiral is provided by a constant dissatisfaction of the consumer imposing the growing requirements to product parameters (the price, quality, complexity, functionality, properties ...). It is possible to call these parameters as quantitative. It is possible to define the income in the form of a quality indicator. The unity of producer and consumer doesn't raise doubts either. As the income of the producer is directly related to the income of the consumer. In our model we consider dynamics of the enterprise as if in separation from other elements of the supersystem; therefore, a dependent variable certainly is the

income which will be gained by the buyer of goods and services. Growth of this income increases demand, number of purchases and respectively the income of the seller/producer. Besides, the buyer, for the purpose of obtaining the same income imposes increased requirements to properties of a product, thereby providing its changes. Of course, the quantitative component is diverse and multilevel. It is con-

nected with existence and quality of raw materials, technologies, equipment, professionalism of experts, distribution geography, cost of a product, requirements of the state, mentality of buyers and number of other factors which in the regressive analysis can be accepted as independent variables. Schematically the hypothesis can be represented in the following form. Fig. 1.

Fig. 1. The scheme of development dynamics of the company by the principles of materialistic dialectics.

In order to draw more precise definitions in further description of research, the natural-technical system will be referred to as the Human-Machine Model (HMM), and it is Natural-Ecological System - the Natural-Symbiotic Model (NSM).

Quantitative indices for

Research results. 254 companies were studied. Among them large diversified corporations - 62%; medium-sized integrated companies - 26%; small business less than 5-years-old - 12%. First of all quantitative indices for each opposite state were investigated and described. Results of researches are given in Table 1.

Table 1

states company/business unit *_

№ Quantitative indices Human-Machine Model (HMM) Natural-Symbiotic Model (NSM)

1. Product New or unknown Well-known, traditional

2. Promotion Actively aggressive, involves creating demand and educating Passive, supportive

3. Geographical Distribution Small Large

4. Competition Low Large

5. Product Unique Features High Low

6. Price High Low to Medium

7. Sales Volume Small Maximum Available

8. Cost of Product High Low

9. Substitutes available Many Few

10. Buyer's Loyalty Low High

11. Production Technology New Used by Competitors

12. Equipment and Techniques New Outdated (in terms of science advancement)

13. Buyers' Preferences No preferences Settled, normalized

14. Service Level Acceptable Maximum Available

15. Resources Availability Deficient Available

16. Brand's Recognition Low High

17. Level of Borrowed Capital and Investments High Low

18. Financial Stability Low Medium to High

19. Client Base Minimal High percent of Lients

20. Profitability per Company's Expert High Medium to Low

*Of course these are not all of indices and their number will grow depending on their influence on the quantitative measure -the profitability.

The same approach was applied and to model of management. Results of researches are given in table 2.

Table 2

Features of management model for various conditions of company.

№ п.п. Quantitative indices Human-Machine Model (HMM) Natural-Symbiotic Model (NSM)

1. Management style Direct autocratic management Indirect management, maximum authority delegation to the entry-level personnel

2. Decision-makers TOP management Line managers, Entry level

3. Functionality of administrative personnel Single function Multiple functions

4. Process State Stable, unchangeable Innovative, continuous improvement

5. Quantity of administrative personnel Increasing or Stable High Minimal

6. Speed of making administrative decisions Slow, approval procedures Fast, line managers

7. State of business Engineering, Reengineering Small innovations

8. Delegation of authority Minimal, CEO Maximal, Line managers

9. Budget administration CEO Line manager

10. Motivation system Bonus system (for branch, partly individual) Fully individual, profit sharing.

11. Management team type Actively aggressive team headed by CEO Passive management on all levels, involvement of initiative experts in administration process.

12. Degree of freedom in making managerial decisions (middle & entry levels) Close to zero CEO - Line Manager relationship: Investor - Entrepreneur. Delegation of Authority to Line Managers.

13. Target Strategic Indices NPV, ROI ROII, EVA, MVA

14. Managerial approaches Systematic and Situational approaches Process approach

15. Partner relationships Multivariable relationships in R&D Multivariable relationships in Production, Procurement, and Sales

Short description of lines of Company's position. (See fig. 1). The AB line is characterized by entry into the local market with a new product, and gaining a market share. Start of operations and full capacity production of an integrated and diversified business. Management is dominated by Human-Machine Model. Arrival of aggressively - initiative team of management. Structural and organizational reorganization of the company. The BC line is characterized by geographical expansion of business and assortment programs. Management - Natural Symbiotic Model. Cloning of enterprises and trade representatives. Complexity of authoritative management,

delegation of authority. The CD line is characterized by product/service improvement, expansion of the product range. Delegation of operational management decisions. Active introduction of innovations. Domination of Natural-Symbiotic Model. The DE line is characterized by falling sales, "aging" of product. Increase in staff, system of coordination, "bureaucratization" of processes, outflow of initiative experts and reformers.

The analysis of this model from a position of the company profitability shows us the comparative schedule presented in fig. 2.

Change of Company Profitability with respect to type of Management Model

ЧММ 90%(G) 50%/50% ECM 90%(F) 50%/50% ЧММ 90%(E) 50%/50% ECM 90%(C) 50%/50% ЧММ 90%(A)

Eoultv. Thousand of S

0,00 20,00 40,00 60,00 80,00 100,00

1 000 и менее : 2 000 -1000 14 000 - 6 000 I 6 000 - 8 000 1 8 000 -9 990 ■ более 10 000

«Movement» НММ

И

ш

1000 and less The cost of capital/ in the year/in thous/$ pmc.2. Relation of Company's Profitability to the Company Model Positioning.

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Thus, profitability of company is directly related to its position designated in our model. This principal should be noted: Need of compliance of management model to the position of the company on the scheme (fig. 2). That is, progressive movement of a spiral is provided by demand requirements of the consumer and that company which satisfies this demand, has to quickly reconstruct its management model as only effective management model provides profitability of the company. It is also necessary to pay attention that extreme points in peaks and recessions of each cycle are higher than previous analogs. The time factor is of great interest as various companies pass various positions of model during different periods of time. Companies usually pass lines AB and BC within no more than 3-5 years, at the same time lines CD and DE can stretch for decades. Analysis of organizational restructurings of management model of in the studied companies gives the frequency of 8,2 - 11 years, and as a rule the profitability failure falls in the same periods. But, most likely, 3-5 years oscillatory-time process is the optimum for all lines; thus providing ideal satisfaction of demand. That is, if the cycle was more than 5 years, then revision of management model was initiated under pressure of external and internal factors that led to loss of profitability management. If the company constantly positions itself according to the offered model (at least once every 2-3 years) and starts reorganization of management model systematically, but not in a revolutionary way, it will result in a better profitabilityto management and higher competitiveness of the company. The pilot projects fulfilled in five companies led to growth of profitability by 5-11%. It should be noted that systematic changes of the following factors gave the fastest effect: optimization of processes, delegation of authority, creation of reformatory management teams and so on. These projects didn't lead to mass dismissals and closing of the enterprise. Thus, the result doesn't go about straightening of profitability recessions as they are natural and inevitable, but it is rather about systematic and organized management of these states, control of profitability and minimization of time of transition from one state to another. Separately it should be noted that profitability decline in HMM is related to investments into new production or a product, and also to high expenses related to new product marketing. Therefore it is necessary to point out the inevitability of falling profits in HMM position.

First of all, these conclusions are based on comparative analysis of the similar enterprises with similar development stage (on one site of a spiral). It was amasing why one enterprise actively and dynamically develops, in certain cases even is the leader of the market, and another is the outsider. Thus the key parameter of positioning was the product (characteristics of a product as a quantitative index of process) and profitability as the quality indicator indicating a position of the company spirals. As a result of researches it became clear that the management model of the lagging behind enterprise remained invariable during rather a long period of time (5 or more years). At the leader-enterprise, on the contrary, change of management model happened no more than 3 years ago. This regularity is observed in 87% of cases of comparison. Thus it is possible to compare the companies not only like "the leader - the outsider", but also for example "above an average point - below an average point". The second option even is more preferable in the analysis of financial and economic activity of the enterprise as it gives the chance to define a tendency of the movement of the enterprise and to start changing management model without waiting for the

moment when buyers lose interest in your product and profitability (your quality indicator) starts falling.

This logic fits 87% of the companies (as it was stated). And it raises the question of the remaining 13%. This category includes the enterprises which have no analogs and there is no opportunity to compare them. But there is no opportunity to compare not only by the researcher, the Buyer has no chance to compare either. As a rule, these are companies which are for one or another reason monopolists. Sometimes these reasons are caused by natural monopolies. For example "Almaty water utility", "Almaty power supply networks" and so on. But the monopoly can sometimes develop due to unique properties of a product, for example the P&G company in the market of Kazakhstan occupied 80% of the market of detergents simply because the market not big and unattractive. However in recent years profitability of the population in Kazakhstan considerably increased (of course this is not the only factor) so the Russian and Turkish producers, and then German came to the market of detergents. Under the pressure from their products, P&G suffered considerable losses. Also the monopoly can temporarily be formed because there are no the producers capable to make a competitive product in the market. For example, three large breweries (known world brands) owned 96% of the market, also there were some small restaurant-breweries who improved qualitative characteristics and with higher price (insignificantly higher) deprived the world brands by nearly 30% of the regional market. Of course, world brands didn't suffer, but positions in the regional market were lost. That is, it is possible to stay among leaders due to new technologies, and it is possible even to join 13% of the inaccessible. But keeping the old model of management will result in falling profitability, it's just a matter of time.

As a result of research one more feature was found and expressed in the following regularity: "Change of management model leads to obligatory change of the management team". This tendency was observed in 98% of cases. First of all it is connected to the fact that the manager being formed as an administrator gains and develops a certain set of administrative skills and leadership skills, and also certain set of administrative templates. These characteristics of the manager are, as a rule, attached to one of the above described models of management. That is not necessarily the manager has to be attached to the HMM or NSM model, but domination of administrative signs is always present. For example, the manager builds daily administrative activity in an authoritative model of management, but he can realize separate functions and small projects through the temporary working groups, advisory council and so on, with delegation of part of authority on decision-making, sometimes rather big, but in insignificant monetary risks.

Of special inteest is 2% of the managers capable to cardinal reorganization, fast transition from one model to another. These managers are the gold reserve of any company. They perfectly feel, in what conditions, what management model needs to be applied. Besides they have an administrative experience in both models. Questioning and interviewing this type of managers allowed to reveal the following features:

1. Being Line Managers within their careers, they had to work both under HMM and NSM. The experience was very bright as they felt contrast.

2. Being at the middle-career positions, the process was the same.

3. This category of managers possesses pronounced leadership skills and acquired (not natural) charisma. I would like to dwell upon the factors characterizing a managemen model. First of all, they are divided into functional groups:

> Market model of the enterprise;

> Management system;

> Process model of industrial complex or service complex;

> Administrative and organizational model. Decomposition of functional groups looks as follows: The market model of the enterprise includes:

• Place and role of the enterprise in the supersystem (branch, regional market etc);

• Client relationship system;

• Suppliers relationship system;

• Partners relationship system, service by the companies;

• Financial institutions relationship system;

• Scientific and research groups relationship system;

• Government authorities relationship system.

The management system should be understood as administrative activities including the following:

• System of planning (technologies, methods, periods);

• System of administrative and financial accountability (the organization, reliability, timeliness and completeness of information to make administrative decisions);

• System of collecting and processing external information (marketing, economic, political information etc);

• System of complex analysis of external and internal information;

• System of forecasting market situation and financial and economic activity of the enterprise;

• System of making administrative decisions and delegation of authority;

• Innovations control system;

• Quality monitoring system

The process model of industrial complex includes the following elements:

o Process model of the main production (conveyor, modular block, shop etc.);

o Model of power supply of the enterprise (full cycle, outsource, integrated into branch etc.);

o Model of auxiliary production;

o Service model (scheduled preventive system of service and repair, aggressive operation etc.);

o Model of purchases;

o Model of sales channels; o Model of sales and promotions.

Административно-организационная модель

включает в себя:

o System of selection, hiring, training; o System of document flow; o Personnel management system; o System of legal activity of the enterprise; o System of housekeeping;

o System of development functions (capital construction etc.)

Further specification based on division of properties of models is impossible in this article because of large volume, but it won't make big work if to be guided by the principles of models.

Discussion and Conclusions.

As the conclusion it is necessary to allocate the following aspects of research:

1. Change of model of management is an inevitability and conscious need.

2. The offered approach to the analysis of strategic development of the company allows to position the company on a spiral of development and to predict its further reorganization (nothing is invariable in this world).

3. Timely change of model of management allows to effectively operate the profitability of the company and will considerably reduce market risks even taking into account "the black swans".

4. The system of selection, hiring and preparation of management of the enterprise represents clear model with pronounced requirements and competences to the personnel at every moment of development of the company.

Bibliographic references

1. Itzhak K. Adizes Managing Corporate Lifecycles, Piter, 2008г., p384., ISBN 978-5-469-01523-9, 5-469-015238

2. Schnoll S.E. Cosmophysic factors in random prcesesses. Swedich physics archive. Svenska fysi-karkivet. 2009. p 390. Royal National Library of Sweden.

3. Kondratyev N. Big cycles of an environment and theory of anticipation. Selected works / Editors: Jacovetz Ju., Abalkin L., Economica, 2002.

4. http://drillings.ru/pts

5. http://www.slovarus.ru/?di=162266

ИСПОЛЬЗОВАНИЕ КОМПЬЮТЕРНЫХ ДЕЛОВЫХ ИГР ПРИ ПОДГОТОВКЕ _БАКАЛАВРОВ ПО ЛОГИСТИКЕ

Воронов Алексей Владимирович,

к.э.н., зам. Генерального ОАО Фармасевер, г. Северодвинск

Воронов Владимир Иванович

к.т.н., профессор кафедры логистики Государственного Университета Управления, Москва

Кривоносов Никита Алексеевич Бакалавр Государственного Университета Управления, Москва

Лазарев Владимир Анатольевич,

к.т.н., доцент Морского Государственного Университета, Владивосток

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