Экономические науки/6.Маркетинг и менеджмент

Graduate student Korovina V.D.

Perto Mohyla Black Sea State University, Mykolayiv, Ukraine

STRATEGIC PLAN PREPARATION ON THE BASIS OF FINANCIAL STABILITY INDICATORS

The major problem of every enterprise operating in the market, is to ensure the survival and further development. Strategy development is the most efficient and smart way to do it, thus it is possible to consider all alternatives, chose the best one and to create an efficient monitoring system. Strategic plan should certainly be based on reliable financial indicators. It should be emphasized that stability indicators should be primarily considered while planning, as they show enterprise’s position in the market, competitive strengths and weaknesses, and areas that should be paid attention to. This issue is not considered at the appropriate level by Ukrainian scientists though it would enable domestic enterprises to develop more intensively.

The paper investigates financial stability indicators’ influence on enterprise’s development and strategic plan preparation, suggests the system of stability indicators calculation which is recommended for strategic planning.

Special attention to the analysis of enterprises’ financial condition and financial stability insurance in the market economy paid M. Bilyk [1], O. Pavlovsky, N. Prytuliak, N. Nevmerzhitsky, N. Davydenko [2] has developed effective methods for assessing financial stability, O. Zagorodny, V. Seredynskoyi [3] and I. Burdenko [4] examined in detail enterprises’ financial stability diagnostics. V. Kovalenko, [5] studied financial stability strategic management. It should be noted that most literature is devoted to concept of strategic management application, and it is not fully taken into account financial stability indicators analysys.

Strategic management is considered as an organizational management that relies on human potential as the basis of organization, directs production to consumer demand, provides flexible control and timely changes in the organization, according to changes in the external environment, and can achieve competitive advantage, allowing the organization to survive and achieve its long-term goals. Strategic management as the system becomes effective only when applied at all levels of the organization.

Based on the researches of scientists the structure of strategic management includes: environmental analysis in which the organization operates; mission formation and goal setting organization; optimal strategy choice; strategy implementation; strategy assessment and control. In order to achieve continuous growth of business enterprise should build its own development strategy. Business Strategy is considered as the process of development direction formation on the basis of new goals, matching internal capabilities with enterprise environmental conditions and the development of measures to ensure their achievements.

The types of strategies are classified according to the certain criteria that are presented in table 1.

STRATEGIES TYPES Table 1

#	Criteria	Strategies types
1	Depending on development scale	- total (general) strategy; - auxiliary (supporting) strategies.
2	Depending on activities	- marketing; - production (operating); - financial; - investment; - strategy of other areas and activities.
3	Depending on resources’ type	- formulation and manpower use strategy; - core strategy and logistics; - strategy of equity capital; - strategies to attract debt capital
4	Depending on growth rates	- accelerated growth strategy; - limited growth strategy; - strategy of status conservation; - reduction strategy.
5	Depending on ways to ensure development	- concentrated development strategy; - diversified development strategy; - integrated development strategy.

Financial stability is one of a sustainable enterprise characteristics. It is conditioned by economic environment stability in which the company operates. It depends on operational results, enterprise’s active and effective response to changing internal and external factors. There are the following types of economic stability: internal; external; hereditary; general; financial.

The main economic viability component is financial stability (Picture 1), due to which the company is able to provide marketing and personnel stability, promote industrial and technical and technological stability, support investment stability, improve the efficiency of the management.

Picture 1. Financial stability influence on enterprise’s economic viability

Financial stability of the company - it is the main component of the overall company’s sustainability that is the subject of financial management, company’s business activities and describes the state of financial resources as provision of proportional, balanced development while maintaining solvency, creditworthiness in risk tolerance.

In financial stability analysis procedures which most contribute to its effectiveness should be used. Analytical methods may include modalities, rules and measures to the most appropriate performance. In financial stability analysis method - is a combination of analytical methods and rules of business research aimed at studying the different objects of analysis, to help get the most complete assessment of financial stability and profitability.

Enterprise’s financial condition, its resilience and stability depend on the results of its industrial, commercial and financial activities. If manufacturing, financial and general strategic plans are successfully executed, it positively effects the financial condition of the company. Stable financial position is the result of competent, skilled strategic management of an enterprise.

The most convenient and highly understandable methodology of financial stability calculation is proposed by Bilyk M.D. According to this methodology is possible to target real conclusions and to develop effective proposals to draw up a strategic plan for the company.

Financial stability analysis of the company's activities is implemented through the calculation and assessment of such factors:

• financial autonomy coefficient;

• financial dependence coefficient;

• financial risk coefficient;

• maneuverability equity ratio;

• factor structure covering long-term investments;

• long-term fundraising ratio;

• financial independence capitalized sources coefficient.

The company may have different financial stability, which is divided into four types (Table 2).

FINANCIAL STABILITY TYPES Table 2

Financial stability type	Description
Absolute stability	High solvency: the company is not dependent on loans
Normal stability	Normal solvency: efficient use of borrowed funds, high yield production activities
Unstable state	Violation of solvency: necessary to attract additional sources
Crisis	Insolvency – bankruptcy stage

Effective management strategies development is possible as a result external and internal environment analysis. Financial condition indicators using is crucial in assessing the internal environment. Financial stability determining the of the enterprise directly affects the strategic plan preparation. Only factors management, that ensure the financial stability of the company, provide an opportunity to build a strategy aimed at sustainable development and reduces risks. Financial stability is an important characteristic of financial and economic activity in a market economy. If the company is financially stable, it has an advantage over other companies of the same profile and investments in obtaining loans, selecting suppliers and selection of qualified personnel. Stable financial position is the result of competent, skilled strategic management of business enterprises. The financial stability of the enterprise is the key to stable operation and development.

Therefore, the company should build its own development strategy to achieve continuous growth of business and most efficient operation. Selection and implementation of management strategy depends on the economic situation of the enterprise, which is possible if the analysis of the external and internal environment. Using indicators of financial condition is crucial in assessing the internal environment, and the definition of enterprise financial stability directly affects the development of strategic management. Only management factors that ensure the financial stability of the company, provide an opportunity to build a strategy aimed at sustainable development and reduces risk.

Literature

1. Bilyk M.D. (2005) Financial analysis: Tutorial, KNEU, 592 p.

2. Davydenko N.M. (2009) Corporate enterprises’ financial stability in agricultural sector, Visnuk KNEU, Vol. 2, p. 50-58.

3. Zagorodna O, Seredinska V. (2010) Enterprises’ financial condition and stability diagnosis, Visnuk KNEU, Vol. 3, p. 20-24.

4. Burdenko I.M. (2008) Trade enterprises’ financial stability and its providing in transforming economy conditions, Visnuk ODEU, Vol. 2, p. 40-45.

5. Kovalenko V.V. (2010) Financial stability strategic management of the banking system: methodology and practice, Symu, DVNZ “YABS NBU”, 228 p.