Economy of the enterprise - Pokropivny SF

17.5 Factors of production efficiency growth (enterprise activity)

Classification and general characteristics

The level of economic and social efficiency of production (activity) depends on many factors. Therefore, for the practical solution of problems of performance management, it is important to classify the factors of its growth by certain characteristics, including:

  • Types of costs and resources (sources of increase);
  • Directions of development and improvement of production (activity);
  • Place of implementation in the system of production management (activity).

This classification is shown in Fig. 17.6.

Scheme to ensure the intellectual and personnel component of the economic security of the enterprise

Grouping of factors by the first sign allows you to clearly identify sources of efficiency : the growth of labor productivity; Reduction in capital intensity, material intensity and production capacity (saving of materialized and living labor), as well as rational use of natural resources (saving social labor costs). The active use of these sources of increasing the efficiency of production (activities) provides for the implementation of a set of measures that, in terms of content, characterize the basis for the direction of development and improvement of the production and commercial activities of business entities (the second classification feature). The defining directions are: 1) acceleration of scientific and technical and organizational progress (raising the technical and technological level of production, improving the structure of production, organizational management systems, forms and methods of organizing activities, its planning and motivation); 2) improving the quality and competitiveness of products (services); 3) comprehensive development and improvement of foreign economic activity of economic entities.

Practically the most important one should be considered the classification of efficiency factors at the place of implementation in the activity management system (the third sign of grouping of factors). Especially important is the identification of internal (intraeconomic) and external (economic) factors, as well as the division of the aggregate of internal factors into so-called hard and soft factors.

The classification of internal factors into "hard" and "soft" is rather conditional, but it is widely used in foreign business practices. The specific name of a group of factors is borrowed from computer terminology, according to which the computer itself is called "solid goods", and software - "soft goods". By analogy, "hard" factors are those that have physical parameters that are measurable, and "soft" ones are those that can not be physically sensed, but which are of significant importance for the economic management of the work of labor collectives.

Direction of action and use of individual factors

Possible areas of implementation of internal and external factors to improve the efficiency of enterprises and organizations vary in strength of influence, degree of use and control. Therefore, for the practice of management, for managers and relevant specialists (managers) of business and other types of activities, it is important to know the scale of the action, the forms of control and use of the most significant internal and external factors of efficiency at various levels of management of the work of labor collectives. A particular business entity can and should constantly monitor the process of using internal factors through the development and consistent implementation of its own program to improve business performance, as well as take into account the impact of external factors on it. In this regard, there is a need to specify the direction of action for using the main external factors to improve the efficiency of business entities.

  • Technology . Technical innovations, especially modern forms of automation and information technologies, have the most significant impact on the level and dynamics of the efficiency of production of products (services). According to the principle of chain reaction, they cause significant (often radical) changes in the technical level and productivity of technological equipment, methods and forms of labor processes, training and qualification of personnel, etc.
  • The equipment belongs to the leading place in the program of increasing the efficiency, first of all, of production, as well as other activity of business entities. The performance of the existing equipment depends not only on its technical level, but also on the proper organization of maintenance and maintenance, the optimal period of operation, the change of work, loading in time, and so on.
  • Materials and energy have a positive effect on the level of efficiency of activities, if the problems of resource saving, reducing the material intensity and energy intensity of products (services) are being solved, rationalizing the management of the stocks of material resources and the sources of supply of enterprises.
  • Products . The products of labor, their quality and appearance (design) are also important factors in the effectiveness of the activities of business entities. The level of the latter must correlate with the useful value, that is, the price that the buyer is willing to pay for a product of the appropriate quality. However, to achieve high efficiency of management, only the utility of the product is not enough. The products offered by the enterprise (organization) for sale must appear on the market in the right place, at the right time and at a well-considered price. In this regard, economic operators should ensure that there are no organizational and economic obstacles to the necessary marketing research.
  • Workers . The main source and determining factor in the growth of performance are employees - managers, managers, specialists, workers. Business qualities of employees, increase in the productivity of their labor are largely determined by an effective motivational mechanism at the enterprise (in the organization), which supports a favorable social microclimate in the work collective.
  • Organization and systems . The unity of the work collective, the rational delegation of responsibility, the appropriate standards of control characterize the good organization of the enterprise (institution), providing the necessary specialization and coordination of managerial processes, and consequently, a higher level of efficiency (productivity) of any complex production and economic system. At the same time, the latter, in order to maintain high efficiency of management, must be dynamic and flexible, periodically changing in accordance with the new tasks arising in each new market situation.
  • Methods of work . In conditions of the prevalence of labor-intensive processes, better methods of work become quite promising for increasing the efficiency of the enterprise's operations. Continuous improvement of labor methods involves the analysis of the state and certification of workplaces, the improvement of the skills of the staff, the generalization and use of positive experience accumulated in other related enterprises.
  • The style of management , combining professional competence, efficiency and high ethics of relationships between people, affects virtually all areas of the enterprise. It depends on it, to what extent external factors of growth in the efficiency of production at an enterprise are taken into account. Consequently, the proper management style as an integral element of modern management is an effective factor in increasing the efficiency of any enterprise, any entrepreneurial structure.
  • State economic and social policies significantly affect the efficiency of social production. Its main elements are: a) the practical activities of power structures; B) different types of legislation (legislative activity); C) financial instruments (activities and incentives); D) economic rules and regulations (regulation of incomes and wages, control over the level of prices, licensing of certain types of activities); E) market, production and social infrastructure; (E) Macroeconomic structural changes; G) privatization programs for state enterprises (organizations); H) commercialization of the organizational structures of the production sphere.
  • Institutional arrangements . In order to continuously improve the efficiency of all economic entities, the state must create the appropriate organizational prerequisites that ensure the permanent functioning of special institutional mechanisms at the national, regional or sectoral levels - organizations (research and training centers, institutes, associations). Their activities need to focus on: 1) solving key problems of increasing the efficiency of various production and economic systems and the country's economy as a whole; 2) the practical implementation at all levels of management of the strategy and tactics of the development of the national economy. Now in the world there are more than 150 international, national and regional centers (institutions, associations) for productivity and management.
  • Infrastructure . An important prerequisite for increasing the efficiency of production at enterprises is a sufficient level of development and active activity of various institutions of the market, industrial infrastructure. In modern business, enterprises use the services of innovation funds and commercial banks, stock exchanges (commodity, raw materials, labor, labor) and other institutions of market infrastructure. The direct development of the production infrastructure (communications, specialized information systems, transport, trade, etc.) has a direct impact on the performance of the enterprise (organization). Critical to the effective development of all structural elements of the economy is a sufficient network of social infrastructure institutions (see Chapter 12 of this textbook).
  • Structural changes in the society also affect the performance indicators at various levels of management. The most important are structural changes of an economic and social nature. The main of them occur in the following areas: a) technology, research and development (proportions of imported and domestic technologies, developments accompanied by revolutionary breakthroughs in many fields of knowledge); B) composition and technical level of fixed assets (fixed capital); C) the scale of production of small and medium-sized enterprises and organizations; D) the model of employment of the population in various branches of the production and non-production spheres; E) the composition of staff by sex, education, qualifications, etc.

Only the skilful and integrated use of the entire system of the above factors ensures sufficient growth rates of production efficiency. At the same time, compulsory accounting of external factors is not as severe as internal factors of performance.

Questions for self-study in depth

  • Increase in the role of the financial activity of the enterprise (organization) in market conditions of management.
  • Factors and reserves for profit-taking of business entities (entrepreneurial structures).
  • Distribution of profit and dividend policy of the enterprise (organization).
  • Specificity of determining the taxable profit of the enterprise (organization).
  • Optimization of the capital structure of an enterprise (organization).
  • Scientific validity of methodological approaches to determining the financial and economic state of the primary business entity.
  • The choice of a strategy for stabilizing the financial and economic state of the enterprise and other business entities.
  • Legitimacy and validity of identification of economic categories of efficiency and production activity of enterprises and other business structures.
  • Problems of the formation, definition and application of generalized indicators of the effectiveness of economic entities.
  • Methodological bases of definition of efficiency of separate groups of actions of social character.
  • Scientific and technical and organizational progress as determining the growth of production efficiency at the enterprise.
  • Organizational and economic mechanism of action of internal factors of growth of production efficiency at this or that enterprise.
  • Necessities and forms of state intervention in the development of the economy in the market economy.
  • Generalization of advanced foreign and domestic experience in improving the efficiency of management at the enterprise.
  • Influence of infrastructure institutions (systems) on production efficiency in a market economy.