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0ECONOMIC SCIENCES
ORGANIZATIONAL CHANGES AS A KEY COMPONENT OF THE CORPORATE STRATEGY OF
ENTERPRISE DEVELOPMENT
Pidmurniak O.
Taras Shevchenko National University of Kyiv, PhD student in Management, Master in Management (PhD student at the faculty of Economics)
Baiura D.
Taras Shevchenko National University of Kyiv, Professor, Doctor of Economics (Professor at the faculty of Economics)
Abstract
In a general sense organizational changes responsible for the environment's progress (communications, requirements, and opportunities). Organizations are always forced to adopt the climate within they exist.
The strategy by no means is stubbornness, when, despite everything, the same principles are implemented. A corporate strategy along with enterprise development strategy in contemporary reality is flexibility. It is the account of the changed circumstances. This is reformatting the procedure if circumstances require it. An intelligent design corporate strategy should always be a surprise for competitors.
There is a significant increase in the denomination of the strategy that allows a company to survive in a long-term perspective. Current entities in conditions of a robust competitive struggle shall not only focus attention on the internal state of affairs within the company but also will develop a long-term strategy, which would allow them to operate in market conditions successfully.
Organizational changes also generate changes in the external environment, developing and marketing new products and technologies that become dominant and widely spread.
At present, agile organizational algorithms become an essential factor determining the strategic success of an enterprise in the market of goods, services, and sure enough for the stability of its development. The task of this article is to distinguish critical routes, which help the organization to change faster and more qualitatively in the external environment. The specific nature of the organization's corporate strategy depends on the way of its activities, the rank of production and organizational development, the focus and volume implemented in the company and research units of the lifecycle on various types of promotions and the scope of their application.
Keywords: organizational changes, enterprise, organization's development, strategy, corporate strategy, key factors, business process, automobile, enterprise, optimization, management, change management, growth.
Development of the organization's strategy is a continuous process, which involves a constant change in the position of the procedure, which in turn is conditioned by changes in the external environment of the organization. The task of strategic management is to adapt the organization to these changes.
The strategy is the direction and scope of an organization over the long term: which achieves the advantage for the organization through its configuration of resources within a changing environment, to meet the needs of markets and to fulfill stakeholder expectations. [4]
Most markets, however, do not suffer from perfect competition. They are deficient and asymmetric. Either, the number of sellers and buyers is limited, and the products are heterogeneous, the information flows distorted. Firms have the advantage of having unique initial conditions that are not reproducible for others. Deliveries are limited. A carefully developed corporate strategy helps the company to use for its purposes the
market inefficiency that exists here due to imperfect conditions of competition and therefore well thought-out organizational changes can play a significant role in maximizing profit. In this situation, following a strategy has two vital goals.
One is related to the external positioning of the firm concerning its competitors in the industry. Correctly using the strengths and weaknesses of the company, adequately responding to market threats and opportunities, the effective corporate strategy can create a competitive advantage, bringing the company profits, above the industry average. Therefore, understanding the environment in which the corporation is competing is very important in the formulation of any strategy.
The second objective of the strategy is the internal coordination of all the firm's activities and investments. The approach provides selecting a position in the commodity market without taking into account the effectiveness.
Sign Classification
Management hierarchy 1. Corporate strategy; 2. Business strategy; 3. Functional strategy; 4. Operational strategy;
Enterprise development 1. Growth strategy: a) concentrated growth; b) integrated growth; c) diversified growth; 2. Reduction strategy; 3. Combined strategy;
Achievement of competitive advantages 1. Cost leadership; 2. Product differentiation; 3. Focus: a) on costs; b) on product differentiation;
Industry development 1. At the stage of origin of the industry; 2. At the maturity stage of the industry; 3. At the stage of decline of the industry;
Source: compiled by author on the basis of [1,11]
In our research, we would consider the impact of organizational changes on the examples of the corporate strategy in different companies. Also, we analyze the main types of corporate policies and options for their use in the automotive industry companies.
Corporate strategy is concerned with how companies create value across different businesses. It takes on
Allocation of Resources
M
Portfolio
1. Allocation of Resources. The allocation of resources at a firm focuses mostly on two resources: people and capital. To maximize the value of the entire firm, leaders must determine how to allocate these resources to the various businesses or business units to make the whole more significant than the sum of the parts.
2. Organizational Design. Organizational design involves ensuring the firm has the necessary corporate structure and related systems in place to create the maximum amount of value. Factors that leaders must consider are, the role of the corporate head office (centralized vs. decentralized approach and the reporting structure of individuals and business units (vertical hierarchy, matrix reporting, and so force).
3. Portfolio Management. Portfolio management looks at the way business units complement each other, their correlations, and decides where the firm will "play" (i.e., what businesses it will or won't enter).
aggressive approach and asks how the corporation can add value over and above that which a business unit creates by itself. Strategies require the corporation to invest in a valuable set of resources, craft the business portfolio, and design the organization structure, systems, and corporate functions to share activities or transfer skills across businesses. [5]
A HH fc
Organizational Design
Tradeoffs
4. Strategic Tradeoffs. One of the most challenging aspects of corporate strategy is balancing the tradeoffs between risk and return across the firm. It's essential to have a holistic view of all the businesses combined and ensure that the desired levels are risk management and pursued the return generation. [4]
Corporate strategy is a pattern of purpose, intention and goals, and the significant actions, policies, and plans for achieving them. A corporate strategy defines the business or businesses that a company will operate and the company it wants to become. [13]
The choice of the direction of development begins with the search for answers to three questions:
1. where should the company go?
2. how the situation in the industry will change in the future?
3. how this change will affect the position of the company?
Corporate strategy
Management
Strategic
Source: compiled by author on the basis of [14]
Corporate Strategy Essence of Strategy Type
Type
Classical Strategy The classical strategy is a strategy that many companies adopt by default. This strategy is suitable for businesses that operate in industries that are predictable. The strategists are analyzing the factors that affect the business formulate the strategy for the company, starting with goal setting. They then design the tactics to achieve this objective. Classical strategies work well for the long-term.
Adaptive Strategy In industries where new surprises frequently happen following the classic strategy would be insufficient. The adaptive strategy is more suitable for industries that are not predictable. The plan is designed to enable the company to adapt quickly to new environments. Thus unlike the classic strategy, the adaptive strategy is more likely to respond to short-term changes in the industry. The companies that fail to follow the right approach may experience big troubles and even go out of business.
Shaping Strategy Some companies can grow and strengthen their market position through changing its industry future. Companies in innovative industries like technology often adopt the shaping strategy. Microsoft Corporation is a good example of a company that shaped the future. Ever since the introduction of Microsoft Office it has been a dominant provider of office software solutions. Moreover, the company is the largest supplier of operating systems for personal computers.
Visionary Strategy Businesses that have a vision on future trends implement a vision strategy. They try to predict the future and establish a strategy that would allow them to achieve their target. Tesla Motors, Inc.(TSLA) which produces electric cars implements a visionary strategy. Elon Musk, CEO and product architect of Tesla Motors illustrates the firm's strategy with the following statement: "Our goal when we created Tesla a decade ago was the same as it is today: to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible." As indicated by its mission statement, Tesla tries to bring to the market something that is not currently available for massive production. Tesla shareholders, however, believe that electric cars are cars of the future and hope to actualize this as soon as possible.
Source: compiled by author on the basis of [9]
It still worth a try to classify three different scenarios of corporate strategy should develop:
> Growth;
> Reduction;
> Combined.
The concept of "growth strategy" is associated with the range of goods produced by the enterprise and the markets for their sales.
Growth strategy
It applies if the company pursues the purpose of expansion of sales volumes, types of products, production capacities, and this growth as a percentage has to exceed the level of GNP and inflation.
V_>
1
1. Concentrated growth
Involves the development of a product (improvement or creation of a new one),
the construction or capture of the market, without going into another industry
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2. Integrated growth
Integrated growth is the development of firms based on the inverse, linear, horizontal integration (i.e., respectively, or the receipt of the property and the establishment of control over suppliers or distribution network, or competitors)
3. Diversified growth
Diversified growth is development based on penetration into other industries. Horizontal diversification - involves the implementation of technologically new products in the existing market;
Conglomerate diversification - the application of technically new products in new markets;
Con-centric or centered diversification - the creation of new industries that coincide with the same profiled organization.
Source: compiled by author on the basis of [1,3,6,7]
A concentrated growth strategy involves focusing on increasing market share in existing markets. This strategy is also sometimes called a concentration or market dominance strategy. In a stable environment where demand is growing, concentrated growth is a low-risk strategy. Concentration may involve increasing the rate of use of a product by current customers; attracting competitor's customers, and drawing nonus-ers/ new customers. [12]
There are also other types of growth strategies:
4. Expansion of the market - creating or capturing a new market segment, developing the market and (or) the production potential.
5. Diversification - penetration into new areas of activity:
> Strategy entry into a new industry;
> Strategy entry into related industries;
> Strategy entry into unrelated branches;
> Strategy of restructuring, restoration and economy;
> Strategy of multinational diversification.
6. Differentiation of the market - is one of the general competitive strategies of the company, which consists in orienting the enterprise's activity towards the creation of products unique in any aspect that is recognized as the most critical sufficient number of consumers.
7. Globalization of activities - when implementing a global strategy, attention should be paid to the following points: changes in exchange rates, labor costs, productivity, local opportunities, prices, which plays a significant role in solving the problem of locating production facilities.
Means either closing or selling one of its divisions, businesses; B
1. Strategy of liquidation.
The strategy of eliminating firms is used when it is necessary to close the entire business or a part of it. If you do it on time, the damage can be minimized. The strategy of liquidation of an enterprise is relevant even when the founders can not agree among themselves. Either way, the liquidation strategy is typical for crisis situations, other exits from which was not found.
2. The strategy of harvesting.
The gradual closure of production in the short term may be very profitable. The strategy of harvesting involves a systematic reduction in purchases and a reduction in staff, as well as the sale of equipment.
At the same time, the already produced product is also being actively sold, often at lower prices than before. Which companies follow the harvest strategy? Who understand that turnover is falling, development options are questionable, and it will not be profitable to sell a business because of the specifics of the current situation on the market or for other reasons.
v.
3. Strategy of production reduction.
A competent entrepreneur regularly analyzes which lines of business bring him more profits, and which fewer. The organization's reduction strategy is applied to the least profitable parts or branches.
4. Strategy of cost reduction.
This is a temporary measure that helps the company survive difficult times.
The strategy for reducing costs can be to reduce the volume of purchases, fixing salaries or firing staff, cutting budgets for marketing and advertising - until the temporary cessation of production.
The strategy of cost reduction is aimed at increasing the productivity of employees and the business as a whole in conditions of a decrease in the number of resources.
Combined strategy
It involves a combination of individual basic strategies, depending on the situation or conditions for each type of business. Makes it impossible to develop a single plan of action, which subsequently hinders coordination and management of the company as a whole.
Source: compiled by author on the basis of[1,3,6,7]
Closing specific areas often give an impetus and resources for the discovery of other, more promising ones. The strategy of reduction is the path of development, not fading. It allows in the long term to earn much more money. The approach of reducing the enterprise leads to change, but these changes are usually for the better way in the future.
The benefits of managing change are diverse and mainly related to reducing risk and improving the quality of service delivery. Managing change is necessary to obtain a high level of service quality. By effectively managing the process of implementing changes, both planned and not scheduled, and it can reduce downtime. Thus, the quality of the services provided improves,
and the cost of information minimize technology sup- However, there is a stable relationship and the opposite
port and loss due to downtime. Managing change can effect of each process to all entirely. Development of
increase the effectiveness of communications. More an effective strategy of the company begins with the
qualitative communication between users and organi- formation of a vision and choice of direction of growth.
zations brings a higher degree of understanding of the Formulated strategic vision is a necessary pre-condition
needs and priorities of both parties. By improving com- for sustainable strategic leadership. A positive image
munication, input, and access to information, users requires effective leadership and responsible decision-
would feel more capable and less disappointed at times making. It focuses the company on the future, deter-
when the operating system suspends for technical rea- mines the priority needs of customers and activities, as
sons. well as the company's long-term competitive position.
Organizational change and innovation are essen- Let's see into a matter of organizational changes and
tial for an organization's growth and development. stages and their consistency.
1
Understanding the need for organizational change
2
Definition of the ultimate goal of transformations
H
The choice of the object of organizational changes (goods, personnel, organizational structure, production processes, etc.)
Planning and development of the process of implementing changes (selection of strategy, mechanism, program of implementation of organizational changes)
Implementation of organizational transformations (distribution of responsibility for change, control of change process)
H
6
▼
Results of implementation of changes (analysis and evaluation of the results of organizational changes)
Source: compiled by author on the basis of [2,10,15,16]
3
4
5
Organizational development of the enterprise is accompanied by an intensification of the flow of changes at the enterprise along with the innovative restructuring. The implementation of any corporate strategy is associated with the inevitability of restructuring the enterprise. It is restructuring, since changing the state of at least one element leads to a change in the state of all other components. These streams of strategic move should be combined with stable, ongoing production processes. Streams of organizational changes take into account the differences in the life cycles of products, technologies, demand, goods, organization. The emerging tasks of managing the flows of organizational changes are solved on the basis of the use of fundamental management principles.
If the company is engaged in single-industry activities, then the corporate level is not available, and the strategy is developed for a strategic economic center or profit center, that is, at the business level.
Upon understanding the significant organizational change and innovation, many researchers have formulated theories related to change management. Arguments have critically analyzed with an example of British Airways. Compare strategies with the external and internal environment. The changes taking place in British Airways explores the understanding of change management is implemented in organizations. The case
study explains the dimensions of business travel and tourism and its social, economic and environmental consequences. The case study elaborates the more accessible approach of organizational change in right method with mutual trust and obligation between the employee and employer. [3]
Organizational changes have their element-wise content. The reasons and prerequisites for differences, as well as the resistance on the part of the organization's personnel to implement them, can rightfully be included in the components of organizational changes. No organizational changes occur spontaneously. There are always reasons (prerequisites) that contribute to changes in the behavior of staff. The reasons for organizational changes in the practice of staff are inextricably linked with the problems of the organization. The main issues of organizational changes can be seen in the figure below.
Organizational changes make sense of the activity of modern trade organizations. In the continually changing conditions, their development is not only a consequence of natural evolution but also the result of persistent efforts. One of the forms of development of trade organizations is organizational changes, which, in turn, predetermine changes in the content of management activities: it is less directed to administration and
The scientific heritage No 23 (2018) more - to transformation. The conditions of organizational change require "creative management", which fosters the generation of new knowledge, ideas, their subjective perception by managers of all levels and personnel. Accordingly, organizational changes become one of the most significant factors for improving the management of an economic entity, which necessitates the modernization of approaches to the management of personnel and the imparting of a new status to personnel services.
Organizational changes can be made using a variety of methods. The methods can be technological (modernization of equipment, reconstruction of an enterprise), organizational (reorganization, the creation of a progressive system of norms and norms), propaganda, educational, administrative, and economic and so forth. Below are the main problems encountered in the implementation of organizational changes.
1. Failure sharing of management roles
Negative impact on the quality and effectiveness of the activities of units and the company as a whole.
2. Difficulties with the implementation of organizational and structural
changes
The microcosm of the divisions does not correspond to the macro-world (the company as a whole) or its development trends.
3. Communication within the company is complicated
Limitation of corporate influence on subdivisions, both horizontal ("market") and vertical (managerial).
V_y
Source: compiled by author on the basis of [1,6,7]
Implementation capabilities are more important to the outcomes of major change efforts than they were three years ago. But to complicate matters, the results suggest that the very nature of change efforts is evolving. More than half of respondents say their organizations' most recent major transformations involved the implementation of digital solutions. The results suggest that digitization poses new, and meaningful, disruptions to implementing organizational change. One such challenge is the scope and scale of digital transformations. Seventy-five percent of respondents whose companies have undertaken them say their change efforts span more than one business unit or function, compared with 64 percent who say the same about traditional transformations. [9]
McKinsey estimates that 70 % of change programs fail to achieve their goals, in large part due to employee resistance. Other studies come to similar findings. If a handful of people resist, maybe something is wrong with the people. If broad resistance from employees continuously topples change programs, then maybe it is not the people that need fixing, it's the change model. These flaws of the traditional change management model are themselves a symptom of a larger problem. Many organizations are simply not set up for agile change. While managers are busy relentlessly communicating about the change imperative, the design of many organizations slants the playing field toward controllability, stability, routinization, risk-avoidance, zero-tolerance for error, or deference to authority. It's like pushing the accelerator and the breaks at the same time. The result is friction, fatigue, and cynicism. If we
push change onto an organization that is built for stability, nothing good will come of it. Pushing harder won't do the trick. If instead, we get the organization ready for change, we must worry about resistance much less. [11]
Organizational changes involve a change in one or more elements of the organization (goals, structure, tasks, technology and human factor). Changes may apply to any component of the organization process (level of specialization, methods of grouping, control range, division of powers, coordination mechanisms). The classification of changes is necessary for the development of a more justified strategy for managing organizational changes in an enterprise that operates in a rapidly changing environment. The designation allows us to choose a more successful mechanism of strategic regulation of organizational changes based on the consideration of the causes and factors that cause them, which helps increasing the level of development of a strategy for managing organizational changes in general.
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FEATURES OF DEVELOPMENT, IMPLEMENTATION AND CERTIFICATION OF BUSINESS
MANAGEMENT SYSTEM
Kolchurina I. Y.
Siberian State Industrial University, Novokuznetsk, Russia, assistant professor,
Bazite K. V.
Siberian State Industrial University, Novokuznetsk, Russia, student
Abstract
The article considers the business management system, the features of its development, that is, the implementation of the review of the requirements for the created business management system, specialties its implementation - the integration the documentation of the business management system in the organization, as well as the rules of certification of the system for IRIS:2017.
Keywords: business management system, certification, development, implementation.
Currently, the creation, implementation and certification of the business management system (BMS) for compliance with the requirements of ISO/TS 22163:2017 is one of the priority tasks at the railway industry enterprises-suppliers. JSC " EVRAZ ZSMK " has been developing cooperation with JSC" Russian Railways " for many years and to meet the requirements of a main customer, the organization carries out the modernization of production and introduces the BMS in order to ensure the transport security of our country and the quality of rail transport.
BMS is a set of interrelated elements, the main of which is the system of goals and indicators, business processes, models and process structures, as well as development the system of measurable indicators (KPI), on the basis of which the management of business processes, staff motivation and continuous improvement of the enterprise are implemented.
Due to the fact that BMS can be successfully developed both in organizations that have implemented a quality management system (QMS) and an integrated management system (ISM), the management of JSC "EVRAZ ZSMK" decided to develop BMS on the basis
of the existing ISM, which are founded on ISO 9001, ISO 14000 and OHSAS 18000 [1].
In General, the creation of the business management system can be presented in the form of three main stages: development, implementation and certification [2].
The 1 of June 2017 the European railway Association, UNIFE has officially published rules for the certification according to IRIS standard:2017, which include aspects related to the methodology of evaluation the management system and the certification procedure. The global purpose of certification is providing of trust by all parties that the management system meets the requirements.
The technical specification ISO/TS 22163:2017 and rules of certification according to IRIS standard constitute a system of certification IRIS - IRIS Certification™ Rev.03 system, which includes three items:
- system containing the requirements and rules of certification according to the standard IRIS™:2017;
- reference to regulatory documents;
- tool, with the help of which the IRIS certification is provided.
