A Methodical Approach to Coke Enterprise   Economic Adaptability Management

Economics/ 9. Industrial Economics Postgraduate, Kolodina O.M.

Kharkiv National University of Economics, Ukraine

A Methodical Approach to Coke Enterprise

Economic Adaptability Management

Today's enterprises operate in a dynamic environment. Global integration and globalization tendencies are constantly enhancing. Business needs to be adaptive to survive. The deterioration of ukrainian coke enterprises performance indicators during the global financial crisis of late 2008 – early 2009 showed that they do not possess a sufficient degree of the adaptability. The adaptive enterprise requires the ability to change in harmony to environment changes. The enterprise economic adaptability (EEA) - the company's ability to anticipate and react to dynamic environment volatility through changes implementation while performance efficiency is staying kept. EEA management should be integrated into the enterprise management system. The enterprise economic adaptability management is a set of actions of successive systematic company management with respect to EEA management functions to influence financial and economic enterprise conditions through EEA components changes, their balanced rearrangement, connection with respect to development business. The analysis of 13 ukrainian coke enterprises (UCE’s) performance during the period of 2005-2010 reveals that their EEA level for successful surviving is manifested through the combined EEA components application such as optimal resources using, structural changes (a vertical integration) applying, the activities diversification in group framework (within the cluster), innovative thrust activities, improvement of social incentive. According to R. Daft, there are four adaptation strategies: 1) the introduction of environment observer - "diplomats" posts, 2) interorganization partnerships forming; 3) a merger; 4) joint ventures establishment [1]. The second and the fourth strategies are successfully applied in UCE’s. As a result, finance-industrial groups and unions are formed there. International capital flows let to the situation a considerable ukrainian steel assets part is concentrated in the foreign owners hands and ukrainian mining and metallurgical complex enterprises leaders and owners are in partnership. The vertical integration and company assets consolidation help them to optimize the capital movement, provide product chain within the group, distribute resources, contribute to the company learning process through the leakage knowledge.

UCE’s financial and economic activities results for 2005-2010 analysis and factor analysis method applying allowed to eliminate EEA factors. These factors are internal EEA factors in integrated ukrainian coke enterprises economic adaptability estimation indicators system. The most significant of them are revealed in Table 1.

Table 1

The Internal Factors of Ukraine Coke Enterprise Economic Adaptability

Factor	Constraint equation parameters with a factor	Factor’s title
F₁	= 0,858813X₁₆+ 0,821789X₁₅+ 0,794762X₈-0,76469X₁₉+ 0,763839X₄+ 0,683442X₁₁	enterprise performance efficiency
F₂	=0,943772X₁+ 0,926892X₃+ 0,553423X₂	social incentive
c	= 0,800711Х₁₇ - 0,784735Х₁₃ + 0,680293Х₁₂	financial well-being
F₄	= 0,87688Х₆ + 0,866201Х₁₄ + 0,560541Х₁₈ -0,530396Х₁₅	structural mobility
F₅	= 0,759214Х₁₀ + 0,717724 Х₉ – 0,609327Х₇	novation update

The factors dependence on the return on sales (ROS) (index to compare enterprises business efficiencies working on the same market) was defined as a multi-factor regression equation: Y = 4.09429 + 1.77509 F₁ – 1.36433 F₃.

The equation coefficients show the quantitative influence of each factor on others in the immutability. The factor weights hierarchy allows to determine coke enterprise economic adaptability factors priorities for internal factors group in integrated coke enterprises economic adaptability estimation indicators system. In such way, the experts views subjectivity is excluded in this part of the approach. However, integrated coke enterprises economic adaptability estimation indicators system should contain external factors also. Group of external EEA factors was formed with the paying respect to indicators proposed by Ernst & Young with Oxford Analytica companies to assess world strategic risks of doing business, world mining and metallurgical complex risks [2], AME Mіneral Economіcs - world coking industry threats [3], World Economic Forum - to assess the Country Competitiveness Index and indicators its forming [4] UCE’s PEST-analysis (with the addition of environmental component ). The weights of each internal and external factors, their criteria in integrated coke enterprises economic adaptability estimation indicators system were obtained as a result of hierarchy analysis method application proposed by T. Saaty, and experts views survey. Priority indicators depend on the degree of coke enterprises CEO management actions possibility. Factor weights and criteria in integrated coke enterprises economic adaptability estimation indicators system are shown in Figure 1, (wN - indicator weight, w_Nn - weight criterion).

Fig. 1. The Integrated Ukrainian Coke Enterprises Economic Adaptability Estimation Indicators System

Each level of integrated coke enterprises economic adaptability estimation indicators system consists of factors groups, factors - of the criteria, criteria - of the indicators. The different levels criteria factors of the system are the next: a₁ - strategic, financial, political, operational; a₂ - technological, organizational, market, macrothreats of MMC; a₃ - cost structure redistribution, final consumption changes, coke production and marketing cycle changes; b₁ - business performance improvement factors, business sophistications factors, country's competitiveness basic requirements factors; b₂ - technological, political, economic, social, environmental, c₁ - enterprise performance effectiveness, social incentive, financial well-being, structural changes, novation updates. Each indicator has a quantitative expression. As a result of using the integrated coke enterprises economic adaptability estimation indicators system manager can optimize the management decisions by analyzing and evaluating changes in business environment and its influence on EEA.

Literature:

1. Дафт Р. Менеджмент: Классика MBA / Р. Л. Дафт. – СПб.:Питер, 2007. – 864 с.

2. Ernst&Young // http://www.ey.com

3. Metallurgical Coal // AME Mineral Economics// http://www.ame.com.au

4. World Economic Forum // http://www.weforum.org/