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15PECULIARITIES OF IMPLEMENTATION OF MANAGEMENT
FUNCTION IN SME Beglaryan M.A. (Republic of Armenia) Email: Beglaryan234@scientifictext.ru
Beglaryan Mane Armenovna - PhD Student, SCIENTIFIC DIRECTION: ISSUES OF THE REAL SECTOR OF ECONOMY, INSTITUTE OF ECONOMICS NAMED AFTER M. KOTANYAN NATIONAL ACADEMY OF SCIENCE REPUBLIC OF ARMENIA, YEREVAN, REPUBLIC OF ARMENIA
Abstract: the problems of SME management in Armenia are based on objective and subjective factors. The lack of managerial experience in a market economy, the imperfection of public infrastructure in countries with economies in transition and the special culture of business necessitate the development of special management approaches for SMEs. In the management of SMEs, the informal nature of the management function, limited opportunities for marketing research, and the formal nature of strategic plans, difficulties in attracting financial resources, tax planning opportunities, and other features were highlighted.
Keywords: SME, management, formal, informal, function, planning, strategy, infrastructure.
ОСОБЕННОСТИ ИСПОЛНЕНИЯ УПРАВЛЕНЧЕСКОЙ ФУНКЦИИ В МСБ Бегларян М.А. (Республика Армения)
Бегларян Мане Арменовна - соискатель ученой степени кандидата наук, научное направление: проблемы реального сектора экономики, Институт экономики им. М. Котаняна Национальная академия наук Республики Армении, г. Ереван, Республика Армения
Аннотация: проблемы управления МСБ в Армении основаны на объективных и субъективных факторах. Отсутствие управленческого опыта в рыночной экономике, несовершенство государственной инфраструктуры в странах с переходной экономикой и особая культура бизнеса обусловливают необходимость разработки специальных управленческих подходов для МСБ. В процессе управления МСБ были выделены неформальный характер функции управления, ограниченные возможности маркетинговых исследований, формальный характер стратегических планов, трудности с привлечением финансовых ресурсов, возможности налогового планирования и другие особенности.
Ключевые слова: МСБ, менеджмент, формальный, неформальный, функция, планирования, стратегия, инфраструктура.
Scientific and practical experience, as well as basic research on corporate management in a free market economy is a comparatively recent phenomenon in the Armenian reality evolved during the years of independence [1]. Already in the first years of independence, management of public entities was mostly performed by the same management staff of the Soviet period, whose knowledge on corporate management in the free market economy was mostly superficial, based on individual provisions of management theory only. Management capacities and decisions, in most cases, were of intuitive nature, mostly based on the experiences gained previously, during the Soviet period, rather than on the new knowledge obtained in the free market economy [2].
The private entrepreneurship evolved during the first years of independence were led mostly by the cooperators of the Soviet period - the so-called "speculators" and "tsekhoviks"
operating in the grey economy as per the legislation of those days, whose knowledge and competencies were mostly developed not in the field of enhancing the management efficiency, but rather in bypassing the laws, colluding with law enforcement bodies, finding a common ground with the representatives of the authorities and engaging in business operations through other devious paths. Therefore, it can be stated that during the first years of independence great shortage of experts in management was observed in Armenia under conditions of market economy. It is hard to assess the extent of impact of such shortage on the economic recession and crisis, while there is no doubt that such impact exists.
Moreover, such pattern is intrinsic to most Post-Soviet countries [3]. Study of the experience of transition and post-transition countries suggests that systems endowed with certain characteristics of corporate management are established here due determined by imperfect economic infrastructures [4]. This relates specifically to imperfect systems for protection of competition, full exercise of the property right, convergence of the business and government, and other downturns. In such situations, mechanical replication of the international management practices will not lead to the excepted outcome and, even more so, its localization will not ensure the success of its application. This is relevant also for the judicial system and other institutions for exercise of rights. Under such conditions, companies, especially SMEs with limited human and financial resources, avoid the path of re-establishing their lawful rights through court procedure, giving preference to agreements based on informal relations.
The entrepreneurial culture developed in transition and post-transition countries often doesn't match the common perceptions existing in the market economy [5]. While the profitability and the size of profit is of primary importance in the market economy, in the transition and underdeveloped countries the revenue is often seen as the key goal, as well as is often concealed. Concealing the revenue is led by the aspirations to avoid taxes, on the one hand, and by the negative attitude of the society towards the companies generating large revenues, on the other hand. For instance, in foreign professional literature and press one can often come across publications on the annual profits of companies, where profit generation is presented as a significant achievement and an object of pride. The same cannot be stated about Armenia, which is due to attitude of the public towards revenues, which is an inheritance from the Soviet period.
In a dynamic market economy, data reporting and analytical skills of company managers is crucial, since fast decoding of the data received from the external environment and using the ongoing developments to the benefit of own company, in the framework of existing regulations, is one of the key preconditions for ensuring high financial and economic performance of the firm [6]. Moreover, in large firms, as a rule, different managers are in charge of different economic aspects, such as there are managers in charge of financial, investment, tax and other aspects, while in SMEs the same person is responsible for several or all aspects. This implies that SME managers should be more comprehensive and capable, in comparison to those in large firms, where narrow specialization is possible. It creates additional challenges for the SMEs, as it is not always possible to ensure adequate level of financial incentives for the managers, with consequences ensuing therefrom.
SMEs, despite being classified as one category under the national economic policy, in fact, are very different. SMEs are characterized by a set of parameters, each of which can radically change the principles vested in the management process. Such factors include the size of proceeds and assets, the composition and number of the staff, the form of ownership, the sphere of activity, the volume, parameter and range of output goods, the sector concerned, the organizational structure, form of government control, etc.
Organizing the management of SMEs, first and foremost, requires addressing two fundamental issues. The first one relates to putting up the organizational structure of the company, while the second - to the allocation of responsibilities. In case of small enterprises there are not many options for putting up the organizational structure. In terms of ownership of labor and financial resources, small enterprises are more frequently built
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on the principle of sole management, where the owner leading the company bears the full risk of the business. In case of sole management of a small firm, the director of the enterprise independently deals with the finances, distribution, sale, pricing policy, marketing, staff recruitment, etc. Formally, these processes can be also delegated to individual staff members, however, all decisions, in any case, are made by the directors, who are informed of all developments within the firm. In parallel to the growth of the enterprise, staff members and even units in charge of individual functions come into play, moreover, as a rule, staff members who were somehow distinguished themselves in the company or persons who enjoy the confidence of the company director are in the role of such persons or units. As a result, the leadership of the company is replenished not with professionals, but with staff members with certain expertise and limited knowledge developed predominantly on the previous experience of the company, who could hardly lead the company to a new qualitative level.
In small entrepreneurship one of the integral features of management is the informal nature of exercise of the power. In small personnel the relations among the director and subordinates are immediate, where the subordinates, without any serious red-tape, can at any time get into contact with the director, discuss different issues, submit recommendations, argue or express his/her disagreements with the decisions taken. The fact of being a manager of small personnel is often not emphasized, whereas the implementation of the management function by the manager is frequently accompanied by other aspects of the activities of the firm. Henceforth, the manager, in addition to applying administrative tools for management, is in direct working-level horizontal contacts, in case of which, in a situation of bureaucratic relations with the staff members of the same level, the overall efficiency is even more enhanced, as other staff members also work with pleasure and dedication. The latter is a factor of utmost importance for the employees to demonstrate creative approach, show pro-activeness and apply innovations, as the employees see their contribution to the success of the firm [7]. Summing up the approaches mentioned, one can conclude that in SMEs the more preferred style is the one which is mostly based on informal relations, is aimed at developing an atmosphere of creativity and pro-activeness within the personnel and is output oriented.
Nowadays, the enhancement of market mechanisms and the technological developments have in more cases resulted in a situation where small firms had to compete not only with each other but also with large businesses [8]. Given the opportunities of large firms, which are much more than those of the small, as well as middle-sized companies, the crucial factor for the SMEs to resist market competition is their competitiveness, which can be ensured through rational management of the financial resources and the capital owned [9]. In this regard, ensuring the efficiency of financial management becomes crucial, the aim of which is to achieve the strategic and tactical goals at minimum costs [10]. Moreover, since the financial management in small and medium-sized enterprises is frequently delivered by the same person who is in charge of managing other domains of the firm, SME managers should have financial resource management skills.
In the process of implementing the management function in SMEs a number of specific features can be distinguished. All duties of the financial manager in a small firm are assigned to one person - most often to the head or the director, who also acts as the owner of the firm. Acting as the owner and the executive, he/she takes decisions also on the use of financial resources, the pricing of the output goods, the distribution of the revenue generated and other global issues. In many cases he/she does not have specific financial and even economic knowledge, while forming the behavior and the policy of the firm on the market based on the work experience in the given field and the instinct of the entrepreneur, as well as on the volume of free cash funds he/she disposes [11].
In large firms the management is targeted at increasing the returns on equity and fulfillment of other objectives of the owners. Small firms, despite their eligibility by law to issue equity shares and have different shareholders, do not undertake that step related to the
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complexity of that process, while the management is focused on maximizing the net profit of the firm or simply ensuring the zero-loss level of the production.
Large firms generally design and adopt a strategic action plan, which includes also those financial and economic indicators of the firm which are set for the upcoming years. Henceforth, the managers have clear goals and objectives, in accordance whereto the financial resources are mobilized and appropriate infrastructures are built [12]. SMEs do not design such documents or those are merely formal. The manager here deals predominantly with day-to-day and tactical issues, that are aimed at fulfillment of the personal wishes of the owner.
One of the most important areas of management in large firms is the optimization of taxation, for which highly qualified specialists are engaged to minimize the the volume of taxes paid under the law. To address this issue large firms also mobilize high-level consultancy services. SMEs often can't afford recruiting such experts and consulting companies, and focus the tax management on either excluding any tax violation or utilization of mechanisms for deliberate tax avoidance, including running dual accountancy, concluding shadow transactions, etc.
The financial output of the entrepreneurship determines the size of the profit of the entrepreneur, which acts as a most important incentive to engage in business activity. To generate revenue, one should sell such types of goods which are demanded on the market. In order to identify the demanded types of goods one needs to undertake large-scale marketing activities to reveal the consumers' preferences, the prospects for the competition and development, as well as undertake measures that boost the demand - both of these actions are resource-intensive and labor-intensive due to significant financial resources [13].
SMEs, as a rule, have limited opportunities for conducting such large-scale marketing activities, which on one hand is due to the lack of relevant knowledge among the owners of such entities (who also act as operational managers of the enterprise), while on the other hand, which can be treated as an objective reason, the absence of adequate financial resources. That's why, most often the marketing policy seen in the SMEs fits into implementation of two simple principles - to produce what is at the moment demanded on the market and produce as long as the given good generates profit. In other words, the marketing strategy in this case is based not on market research backed by scientific evidence, which are based on social surveys, estimations and the statistical methods of conceptualization, but rather on personal observations and the business intuition of the owner.
On the other hand, such mechanisms of forming the marketing policy of SMEs can be more efficient, than large-scale research exercises conducted by large firms. The fact is that large enterprises often try to promote a completely new good on the market, which has no equivalence, or they try to present it as a unique and non-substitute sample. In such conditions large companies spend tremendous resources on promotion of a good, and as practice shows, not all types of goods and services are straightforwardly accepted by the consumers enabling the authors generate large profits. In contrast, small enterprises deal with a small scope of consumers, have a clear understanding or quickly perceive their requirements, and can quickly respond to the changes on the market adding the whole volume of sales to the turnover for revenue generation.
Financial resources are needed for any enterprise to succeed. Therefore, even those managers who meet the highest standards will not be able to fulfill the planned activities and measures, unless there are sufficient funds for that. Hence, all systems for evaluation of the entrepreneurial environment attach high importance to ease of mobilizing financial resources.
Any enterprise, including SMEs, can recourse to two core sources of financing their activities - equity capital, composed of the investments from the owners, accrued profits, reserves for depreciation and experiences means, including credit funds, grants received from government and non-government organizations, etc. In contrast to large firms, small ones often have to rely on own resources to fill their financial needs, as borrowed funds,
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specifically tax funds, in a situation of absence of loan guarantees and other means of security, become inaccessible to such firms [14]. To get a bank loan in a developed country it is often sufficient to submit an accurate business plan, based on which the banks finance 90 percent and more of the cash needed for the entrepreneurship. Despite the availability of an extensive list of professional literature to prepare a literate business plan in open sources, including the web, preparation of a business plan for persons with no economic background often leading the SMEs, is still a challenge. It should be noted that the practice of business plan preparation services delivered by consulting companies is quite well-established, however such services are quite costly and unaffordable for SMEs.
Implementation of long-term and short-term investments is one of the crucial preconditions for revenue generation. However, the perceptions on investments often radically differs between the large enterprises and SMEs. Hence, while in large firms construction of new facilities, putting in place production lines, purchase of vehicles and other similar expenditures are perceived as investments, in small enterprises purchase of a few computers only may be perceived as investment, which in a large firm would have been presented as an improvement of the working conditions. Therefore, any tangible expenditure incurred in a small firm, which is perceived as an investment, must be based on the perspective of ensuring certain profit. In such conditions the financial planning becomes quite complicated, as calculation of the return on investments is often impossible, and moreover so in case of scarce human resources available for financial planning and control in SMEs.
References / Список литературы
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BACKPACKER'S NICHE IN SUSTAINABLE DEVELOPMENT OF TOURISM AND IT'S IMPACT ON THE ECONOMY OF AUSTRALIA AND IT'S REGIONAL AREA Turenko Yе.A. (Ukraine) Email: Turenko234@scientifictext.ru
Turenko Yelyzaveta Aleksandrovna - Graduated Master of Management Organizations,
TOURISM DEPARTMENT, DONETSK INSTITUTE OF TOURISM BUSINESS, DONETSK, UKRAINE
Abstract: the article analyzes backpacker tourism as a part of sustainable tourism. It shows positive impact of it on the sustainability of the destination on the example of Australia. Definitions of backpacker and their types were mentioned from different literature sources. Likewise analyze of backpacker's statistic from Tourism Research Australia was conducted. Which showed backpackers impact on the Australian economy and tourism. Numbers of backpacker visitors to Australia was analyzed from 2007 till 2017 and compared to the non-backpacker visitors, during 2017. Number of night and spending by backpacker visitors were examined too. Graphics and tables showing statistic content were created. Keywords: analysis, backpackers, sustainability, local communities, impact, Tourism Researches of Australia.
НИША БЭКПЭКЕРОВ В РАЗВИТИИ УСТОЙЧИВОГО ТУРИЗМА, ЕЁ ВКЛАД В ЭКОНОМИКУ АВСТРАЛИИ И ЕЕ РЕГИОНАЛЬНЫХ ОБЛАСТЕЙ Туренко Е.А. (Украина)
Туренко Елизавета Александровна - магистр менеджмента организаций, кафедра туризма, Донецкий институт туристического бизнеса, г. Донецк, Украина
Аннотация: в статье анализируется бэкпэкерский туризм как часть устойчивого туризма. Он показывает его позитивный вклад в устойчивость туристического направления, на примере Австралии. Определения Бэкпэкера и их типы, взятые из разных источников, указаны в статье. Анализ статистических даны,х взятых из иточника Туристические Исследования Австралии, проведен во время написания статьи. Он показывает вклад бэкпэкеров в экономику и туризм Австралии. Количество бэкпэкеров, посетивших Австралию в период с 2007 по 2017 годы, и их сравнение с остальными туристами в 2017 году были проанализированы в разделе Анализ статистических данных. Количество ночей с днем на одного бэкпэкера и изменение сумм, потраченных бэкпэкерами в период с 2007 по 2017 годы, было проанализировано так же. Графики и Таблицы, содержащие статистические данные, были также созданы.
Ключевые слова: анализ, бэкпэкеры, устойчивость, местные жители, вклад, Туристические Исследования Австралии.
