Investment as a factor
of increasing competitiveness
In today's economy, many companies are cutting production and sales
volumes, respectively, declining cash flow, which ultimately leads to a general
deterioration of the situation on the market. This process can be a stage of
the life cycle of the enterprise. The negative dynamics of indicators shows a
decline in the competitiveness of enterprises. In order to solve the problem
the company needs to develop a strategy for its further development in the
short and long term. One of the constituent elements of the strategy is the
investment policy, which largely determines the competitiveness of enterprises.
Investing - a complex on the content and dynamics of the process, which
the company released in a relatively independent production and financial
activity and is called investment activities.
Investments (Latin investire -. Clothe) - investment in objects of
entrepreneurial and other activity for profit or achieve a positive social
effect. In a market economy, profit is the motive for investing activities.
This goal is mediated by the production of specific goods, provision of
services, which are recognized in the market; without this investment will be
useless. Motive is enhanced if the reduced taxes, including income, especially
if the property is legally entitled. This profit is expedient to refinance, t.
E. To send it to a certain extent on the development of production.
In the economic literature investments are considered as an act of
rejection of consumption goods for the sake of momentary better meet the needs
in the coming years by investing in the objects of entrepreneurial activity. It
is deeper in content definition, linking the two sides of understanding of
investment - both invested capital and how capital that can achieve the
intended result.
Thus, in a market economy is the essence of investment in a combination
of two aspects of the investment process: capital costs and results, the
comparison of those elements is the basis of economic evaluation of investment
theory. Investments are made in order to obtain a certain result (profit) and
become useless, if this result does not bring.
Competitiveness is a complex economic category. It can be defined as a
single or multiple factors. At this point in the science and practice, there is
no single indicator of competitiveness. Therefore, the competitiveness can be
determined by a combination of several indicators characterizing the economic,
financial, marketing, innovation, technical-technological and social sphere of
the enterprise. In particular, the company's competitiveness indicators may be:
- The profitability of production;
- The share of the enterprise market products;
- Solvency of the company;
- The rate of renewal of the material and technical base;
- Capacity utilization, etc...
The level of performance is largely dependent on investments in
industrial and financial activities. The investment climate in the region has a
significant influence on the activities of individual companies. External
factors have a negative impact on the competitiveness of the enterprise. In
many situations, enterprises solve this problem at the expense of lower prices.
But the decline in prices is caused by the cost savings that could eventually
directly affect the quality of products. A certain percentage of consumers
willing to buy products of low quality at low prices, but there are also those
for whom the priority is quality. In general, all this leads to a decrease in
the competitiveness of enterprises. In such a situation the company needs
change.
Any changes occurring in the enterprise require investment. Investments
can be directed to:
- The modernization or replacement of material and technical base,
research and development;
- Retraining of personnel structure;
- market research;
- Hiring from professionals;
- Diversification of production;
- Reorganization of the management system, and so on..
Invested funds will contribute to the development of the enterprise. To
do this, of course, it requires a certain time. FMO shall identify priority
issues, to conduct extensive market research to study the actual needs.
According to the results of research to begin to develop new products or
improve old ones. Also, great attention should be paid to the price of the
product, it is only at the competent pricing to market policy will be
successful.
For purposes of analysis, planning and investment can be classified in
several ways, which makes it possible to better understand the nature of
investment. The most common is the following classification:
According to investment projects:
- Financial investment - an investment of money in securities, stocks,
bonds, debt law on deposit accounts at the bank under a certain percentage;
- A real investment - investment in its creation and development of
production;
- Investments in intangible assets - an investment in research,
training, advertising, purchase of new technologies for the use of licenses.
The relationship between the real and financial investment should be as
follows. At the initial stage of development of the company the bulk of
investments goes to the real sector, and in the future - also for the purchase
of shares of enterprises serving the enterprise and supplying it with raw
materials (financial investment).
For the duration of the investment:
-kratkosrochnye (up to 1 year);
-dolgosrochnye.
The main instruments of short-term investments are bank deposits, notes,
certificates and marketable securities.
Long-term investment - an investment in the real sector. These include
long-term financial investments, such as shares in subsidiaries in the charter
capital of other companies.
The goal of long-term investment is the augmentation of fixed and
current assets of the company.
As forms of reproduction in the real sector:
-on the creation of the object of business activity;
-on the expansion of production;
-on reconstruction, modernization.
The structure of investments in these areas depends on the stage at
which the enterprise is located. The initial investments are made to create an
object. At a time when the product is in demand on the market, the investments
are directed to the expansion of production. It all depends on the scale of
production and market conditions. As the wear of the growth of fixed assets
there is a need in their reconstruction and technical re-equipment.
Depending on the outcome:
-on production growth;
-on improving the quality of products;
-on resource savings;
-on an increase in the number of jobs.
According to ownership:
-Private;
-State.
According to sources of funding:
eigenvalues (amortization, profit);
-zaemnye (loans);
Attraction (by issue of shares).
The ratio between own and borrowed investment generates financial
soundness indicators. Normally, when their own funds when investing about 70%,
loans - 30%. Different sources have different value to the enterprise. It is necessary
that the relation between the investment sources is optimal. The main task - to
reduce the costs associated with the investment.
Thus, the competitiveness - a complex economic category, which depends
on many external and internal factors. The investments can lead to such
results:
- A new, updated technical and technological base;
- The necessary staff, ready to change;
- Increasing product sales volume;
- Gradual strengthening of the market;
- Financial performance;
- Financial stability and solvency of the company.
However, it should be noted that the investment process is a complex
mechanism, which requires the management of quality management and a certain time. In case of failure, the company should review all
stages of decision-making, and to find the reasons for this result.