UDK
338.24
Kramar I. Iu.
Ternopil Ivan Pul’iui National
TechnicalUniversity
RESTRUCTURING AS A METHOD OF
SMALL ENTERPRISES’ DEVELOPMENT
The use of
restructuring as the
method of development of small enterprises has certain advantages, because
such enterprises are deprived of inertance, bureaucratism and clumsiness.
That’s
why before starting the use of modern business technologies on domestic enterprises, they must be properly adapted to the conditions of domestic business, mentality of
small enterprises proprietors.
The new level of business foresees high-quality, first of all, the change of
management principles.
Restructuring
of small enterprises
allows to pass to the high-quality new level of business organization. It is directed, first of all, on alteration of
control system, on a revision and rethinking of
principles
of doing business. Restructuring
is the only method of
mobilization of internal resources for small enterprises as they do not have the opportunity to
attract enough investments for the technical rearmament of production. It
should be noted that restructuring of small enterprises is difficult method of development for them because it requires the change of the way of thinking of
proprietors of the enterprise,
who in Ukraine got used to
occupy defensive position, protect the business from total power control from
various supervisory bodies, violations of businessmen rights, from a bribery and corrupted officials.
Innovative
alteration of control system during restructuring of small enterprise is done for formalization of
uncreative, constantly executable functions to be free of administrative
resource for business processes. It should be remembered that alteration of
control system is not done only to alteration of organizational structure of
management.
The aim of
restructuring is to create valuable subjects of entrepreneurial activity capable effectively to
function in the conditions of passing to the market economy and to produce
competitive products which follow the requirements of commodity markets. Thus, procedure
of restructuring can be defined as a complex of measures directed proceeding in proof
technical, economic and financial viability of enterprises.
The project of restructuring’s measures is developed in case of deciding to restructuring the enterprise. It must contain the following:
- an economic ground of the necessity of
restructuring;
- suggestions in relation
to the methods of restructuring;
- costs on restructuring and sources of
their coverage;
- measures of decision of
the financial, social and other problems related to realization of the enterprise’s restructuring project.
Restructuring
of enterprise may include such measures:
- replacement
of the
leader of the enterprise;
- dissociating of the unprofitable structural subdivisions from the enterprise;
- sale of superfluous
capital assets and equipment;
- splitting of large enterprises to small ones;
- partial or
complete privatization or
closing;
- starting the bankruptcy procedure etc.
In the
process of grounding different
kinds, forms and degrees of restructuring it is
necessary to analyse technical, economical and financial situation. First
question on which it is necessary to find an answer is to define the type of products which an enterprise will
produce after restructuring for proceeding in the potential and normal
functioning. The analysis of all directions of enterprise’s activities is preceded on the criterion of
competitiveness of products (price, quality), market part structures of costs and profitability. First of all such alternatives are analysed in such
cases:
- if
profitability of production of certain goods can not be picked up thread because of its low quality, out-of-date
technology, high prime cost, low level of the production
capacity use that makes economies of scale impossible etc., then a production is necessary
to be stopped;
- for
resources which are free
(production capacities, "know-how", administrative and labour potential), the
new perspective types of products are determined, their production will provide
necessary profitability of the inlaid capital taking into account the cost of
restructuring;
- if a
production can not be renewed even with the restructured technical requirements and retrained personnel then an
enterprise is the subject
for closing, an uneconomical
and out-of-date equipment and assets are to be sold, and floorspaces have to be leased.
Any strategy
of restructuring is necessary to be strengthened by measures after three basic
directions:
- decrease of costs and increase of production and labour efficiency, strengthening the control after products’ quality;
- modernisation or
replacement of equipment; in most cases modernisation is more advantageous on the
criterion of costs, and from the point of view of enterprise’s development strategy;
- an input of a new technology, expediency of which must
be carefully reasonable.
So restructuring foresees the
analysis of financial and economic activities of the enterprise that must contain the estimation of total value of enterprise’s property, assets and passives of its balance sheet, their structure,
analysis of debts and other liabilities and calculation of liquidity and solvency ratios which
characterize the level of the financial state of the enterprise.
On the basis
of data analysis the
conclusion is made in relation to liquidation of enterprise through the filing for its bankruptcy or announcement of restructuring.
Thus,
restructuring is the complex introduction of changes in enterprise’s management (intended) sent to the increase its efficiency and competitiveness,
adjusted of concrete subject of the economy to the changed
terms and rules.