Экономические науки/2. Экономика предприятия

Fourth year student in International Economics Program, Ivan Lobov

Alfred Nobel University, Dnipropetrovsk, Ukraine

PhD in Pedagogy, Galyna Miasoid

Alfred Nobel University, Dnipropetrovsk, Ukraine

Diagnosis of enterprise activity as one of the crucial aspect

of a company's development

Being a component of the evaluation activity, the diagnosis has assumed the emphasizing within a manner at the best correctness and completeness of the strong and weak points specific to an enterprise. The elaboration of a company’s strategy is established for almost all the situations within a profound analysis of all components that are in competition towards carrying out the activities. Upon basis of a diagnosis, many elements can be identified, which might determine the increasing of a company’s value or in contrary, its decreasing. The diagnosis aims to describe functionality and tendencies of evolution towards the economic body’s activity, taking into consideration the dynamic environment, where it is carrying out its activities, and also the disturbing factors, either internal or external. The diagnosis analysis might present different levels of detailing, and also might refer to different durations of time (on short, middle or long term) and are able to show different finalities, such as:

- Establishing the deficiencies of functioning and of their causes (weak points);

- Minimizing the risks to which an enterprise might be exposed;

- Ascertaining the competitive advantages of the enterprises (strong points);

- Identifying the directions of increasing the profitableness;

- Orientating the company’s development strategically;

- Estimating the impact of modifications specific to enterprises.

The diagnosis of an enterprise is accomplished by the company’s management, by its representatives, by external specialists (including the consulting companies), of mixed teams formed of internal and external specialists.

As any other activity, an enterprise’s diagnosis assumes the following:

- Establishing the problems exposed to the diagnosis program;

- Assuring the necessary information;

- Analyzing and presenting the results into a report where objectives, states, appreciations and recommendations are emphasized.

The global diagnosis, besides the financial appreciation, is also assuming:

- a juridical diagnosis;

- a diagnosis of the technical potential specific to the company;

- a diagnosis relating the trade activities and those of external business environment;

- a diagnosis of human resources and those specific to human resources management.

Diagnosing the enterprise’s activity, over fields of activity, might emphasize a series of positive aspects, which create strong points as concerns the activity and which have to be capitalized, thus representing future opportunities of enterprise’s activities. It has become necessary for an enterprise’s activity diagnosis to be performed on fields of activity, and the main characteristics aspects have to be evaluated. As it concerns the technical and production field, the diagnosis has to carry out an analysis of the activity into this field, emphasizing the performances and lack ascertained, thus appreciating the activity in critical way. The trade diagnosis will aim to look for the trading performances, a lack signalized into this field, a situation when the marketing mixture is efficiently applied; therefore, appreciations over the efficiency of the applied trade policy will be drawn. Accomplishing a diagnosis towards the organization activity will aim in particular the measurement by which the organizational structure will assure the optimal frame of capitalizing the resources of an enterprise, in a situation when the system of information and management controlling will help to leading an enterprise, to emphasizing the weak points, which might denote a degradation process or on contrary, will contribute to the accomplishment of certain efficient activities.

A particular attention has to be paid to diagnosing the social field, and looking for characterizing the social climate, of the quantitative and qualitative aspects, that might influence positively or contrariwise, of reducing the productive activity of the enterprise. An essential part of the activity’s diagnosis, which reflects a good or bad situation of the enterprise, is that regarding the financial field, which reflects by a system of value’s indicators, the level of viability to enterprise, or the measure by which the enterprise started a process of economical degradation, as result of the existing disfunctionalities into different areas of the company’s activity.

The financial diagnosis has to characterize the situation of profitableness and of liquidity, of the financial flows or the measurement, by which the structure of the financial area is such protected that it might contribute to a reflection of positive or negative results of the enterprise’s activity.

The function of diagnosis has prevalently been related to conclusions of economical and financial analysis that have been accomplished, and which synthesize the weak and strong points of the company’s activity, where finally these will underlie the survival chances. Another fact is also imposed, as concerns the diagnosis of an enterprise, which has to be regularly carried out to three-four years or even less, since it allows the managing to achieve all the elements necessary in order to establish the company’s status. An enterprise is founded, then is developed and finally reaches the maturity, but as concerns its lifetime, this might show turbulences towards its growth; these turbulences can appear under some crisis shape, often leading even to its disappearance, if there is no intervention over the elimination of causes generating the crisis.

In conclusion, the financial diagnosis supplies information regarding: current and past performance and its perspectives, the financial position and its modification, ways to manage resources and the administrative results of the management teams, the company’s ability to generate cash or equivalents of cash. Thus, the financial diagnosis becomes an indispensable instrument, capable of ensuring the identification of development opportunities, the identification of different types of risk and the optimal strategic choice.