Conducting a strategic risk analysis of an enterprise is determined by the specifics of strategic planning: firstly, this is a fairly long period of implementation of these plans, and secondly, this large number participants carrying out and influencing the process of planning and implementing plans; thirdly, this is the dynamism of changes in external business factors environment and the goals of the participants in the planning process themselves. The duration of the process of implementing strategic plans also implies the uncertainty of its implementation. The multiplicity of participants in the planning process, each of whom makes certain decisions and influences this process, is also a risk factor, since the deviation of each participant from their goals leads to a deviation from the planned plan as a whole. When developing a strategic plan, you should additionally highlight the risks of specific participants in the planning process.
Factors influencing the process of implementing strategic plans complicate risk analysis. In strategic risk analysis, it is necessary to examine the participants in the development and implementation of the strategy and the degree of their influence on the progress of the plan; factors influencing the process of plan implementation, and a lot of data characterizing the object. Risks exist at all stages of strategic planning, and therefore it is necessary to highlight the risks of the strategy, the risks of the SZH (strategic management zone), the risks of external business environment in general and the risks of a particular enterprise. The complexity of risk analysis is also explained by the fact that the impact of risk factors is not carried out in the sequential order of their occurrence, but in a certain combination and relationship. At all stages of the development and implementation of enterprise strategies, one has to deal with various types of risks that differ in the place and time of their occurrence, time and degree of impact, and a set of external and internal factors that influence the level and degree of sensitivity to them.
It seems that when analyzing the risks of an enterprise, it is advisable to highlight the following aspects of the analysis:
main sources of risks;
assessment of the likelihood of losses (or failure to achieve results) associated with individual sources of risks;
actions to reduce the difficulties of overcoming emerging risks.
As a rule, risks that have a single impact are rare. For the most part, all types of risks are interrelated, which significantly complicates the choice of methods for analyzing them. First of all, a risk analysis must be performed by dividing all risks into three main categories:
risks of the agricultural sector and the external business environment;
risks of a specific enterprise or internal risks;
risks of a specific project, strategy, product.
A schematic diagram of strategic risk analysis is shown in Fig. 1.
It seems to us that risk analysis should begin with an analysis of the risks of the SZH (strategic management zone), and then move on to the analysis of the internal risks of a particular enterprise and the relationship of these risks, and in conclusion, analyze the risks of specific strategies that affect the predicted result, taking into account the relationship and interdependence all the risks listed above.
Strategic risk analysis can be performed according to various schemes and with varying degrees of depth. The nature of strategic analysis, the choice of analysis method and the degree of its depth depend on many factors. The main ones are: the attitude towards risks of risk subjects, the level of acceptable risk and the financial capabilities of the risk object.
During the strategic risk analysis process, a number of requirements must be taken into account:
Rice. 1.
deviations of the evaluation criteria for implementing the strategy under the influence of a specific risk factor should be determined individually (if possible);
losses on one type of risk do not necessarily increase the likelihood of loss on another;
the maximum possible deviation should not exceed the specified parameters of acceptable risk and financial capabilities of the enterprise;
financial costs for the development and implementation of a risk optimization strategy should not exceed the possible loss of the enterprise’s potential from the impact of risks.
In this scheme, the entire block of strategic risk analysis tasks can be divided into three groups:
analytical and management;
executive;
coordination.
TO analytical and management group tasks should include: strategic analysis of an existing enterprise or type of business, identification and classification of risks, identification of sources of risk, identification of risk factors and study of the dynamics of their relationships and changes, determination of methods for analysis and risk assessment.
The executive group includes the following tasks: the sequence of actions of all participants in the process of developing and implementing the strategy, controlling actions to implement adopted strategies, forecasting unpredictable risk events.
TO coordination group include the tasks of taking urgent measures to adjust previously adopted strategies and to prevent the consequences of emerging risks, as well as identifying risk management methods.
* The scheme for performing strategic analysis and the completeness of the study of risk factors, their assessment and determination of the level of risk depend on the information base, the financial capabilities of the enterprise, the degree of sensitivity of the business to risks, and the attitude of the subjects - the stakeholders of the enterprise - to risk. In addition, the specificity of strategic risk analysis is the fact that during the development and implementation of a strategic plan, new types of risks may appear and the degree of impact of already identified risks may change. Strategic analysis involves studying the process of developing and implementing strategies together with an analysis of all the factors that determine and influence the planned result. Therefore, strategic analysis is not a discrete action, but is viewed as a continuous process that allows optimizing the degree of impact of risks.
Strategic risk analysis should also include an analysis of future uncertainty at all stages of strategy implementation in order to determine the impact of risks on the planned result or on a given goal. It can be carried out using various methods, but in its content it is advisable to highlight two interrelated and complementary aspects - qualitative and quantitative.
Qualitative analysis aims to determine the zone of risk exposure, identify all kinds of risks in the agricultural sector (strategic management zone), determine external and internal factors affecting the level of identified risks.
Quantitative analysis has the main goal of calculating numerical parameters of the level of impact of certain risks and the probability of occurrence of each of the identified risks.
When analyzing risks at the macroeconomic level, one can rely mainly on the experience of experts. Having an initial basis for assessing the degree of risk, you should constantly monitor the situation of changes in the initial data in order to quickly respond to changes that occur. When consistently analyzing options for optimizing the business structure, it becomes necessary to determine fundamental requirements for risk management.
- 1. Risk management does not always mean minimizing the impact of risk. To achieve a certain result when implementing developed enterprise development strategies, a certain level of risk is quite acceptable, based on ensuring some optimal balance between the result obtained and the level of risk.
- 2. Achieving a compromise between the profitability of optimizing the business structure with a certain level of risk is associated with additional costs. Moreover, the costs of risk management should not exceed the impact of risks on the planned result.
- 3. The need to identify priority areas of business with the proposed optimal basic parameters of the strategy and the level of risk for each of them for different planning horizons.
The methodology for strategic risk analysis may include the sequential implementation of the following stages:
analysis of risks of the distant external environment, SZH (strategic management zone);
analysis of risks of the immediate environment, industry risk;
risk analysis of an enterprise or business;
risk analysis of typical strategies.
The risks of the distant external business environment include country risk, which can be divided into two main types that require separate analysis: commercial And political risk. Commercial risk in this case, includes an analysis of the risk of insolvency and the process of its state regulation. Political risk in turn, is divided into macro risk and micro risk. Macro risk is a risk that affects all foreign entities in the country where the strategy is being implemented. Micro risks are specific risks of an industry and an enterprise. A significant part of political risk experts are confident that political events bring, along with the opportunity to lose, huge chances of developing an effective business. For strategic planning, this means that when forecasting a given risk, it is necessary to take into account not only negative, but also positive consequences.
When analyzing the risks of the distant external business environment, it is necessary to initially identify the main factors influencing the level of risk. All factors can be subdivided on direct impact factors and indirect impact factors. The main factors of direct impact in risk analysis include existing legislation, the tax system, and the activities of state and non-state bodies related to the process of implementing the strategies being developed. The main factors of indirect impact include the following: the political and economic situation in the country, international events in the world.
Risk analysis of the distant external business environment can be carried out using various methods. Most famous are the method of old acquaintances and the method of large tours. The first of them involves the preparation of a report by specialists working in this industry and who know the specifics of changes in each country. The second involves visiting a specific country by a group of specialist experts and studying the situation on the spot according to a number of criteria.
The process of analyzing such risks can be carried out in two main stages.
On I stage the main types of risks that may arise in the process of implementing the enterprise development strategy are determined.
On II stage Risk analysis identifies the main external and internal factors that influence the degree of risk of the enterprise. At this stage, the range of changes in the main indicators characterizing the factors identified at the previous stage is established, and based on the probabilistic distribution of the selected indicators for each of the factors, a model of indicator values is developed, which is most preferable for development of this enterprise. The most important thing in the process of risk analysis is the establishment of correlations between risk indicators. Based on the results of the analysis, the so-called critical variables are determined, in which the slightest deviation significantly affects the expected result of the implementation of the enterprise development strategy.
Moreover, sensitivity to identified risks is determined at all stages of the implementation of the enterprise development strategy. An assessment of the deviation of the result obtained in the process of implementing the strategy for changing risk indicators is carried out in order to identify the degree of influence of each of the risk factors on the planned result. The Delphi method can be used in the risk analysis process.
Quantitative assessment of country risk makes it possible to compare risks in different countries. Moreover, the country’s risk assessment is performed by summing the risk assessment coefficients from exposure various factors. However, this assessment is probabilistic in nature and cannot take into account all factors that reflect the specifics of country risk for specific types of business. This is due to the fact that a very specific factor is the sectoral orientation of country risks. Thus, political changes taking place in the country can lead to the fact that for enterprises in some industries the implementation of their development strategies becomes a rather risky process, while for others, on the contrary, it is very profitable. For example, the development of enterprises in the military-industrial complex in the context of interethnic conflicts is very profitable and low-risk, while the development of enterprises in civilian industries becomes a very risky process.
Consequently, the analysis of country risk is essential when developing strategies for the development of enterprises in a particular country, especially when deciding whether to choose as a SZH either a country with a transition economy, or a country with unsustainable development, or a country with sharp fluctuations in the political situation.
Analysis and assessment of risks in the distant external business environment can be carried out by comparing ratings for various enterprise development strategies and types of possible risks. Analysis of specific factors and the dynamics of their changes allows us to assess the magnitude of country risk and determine the degree of development sensitivity specific business when implementing a specific strategy, changes in these factors in order to optimize their impact on the predicted result. At the stage of strategic risk analysis, it is necessary not only to examine the risks themselves, but to first determine the factors that, according to experts, most significantly influence the magnitude of country risk.
Analysis of the risks of the distant external business environment in our country has its own specific features, associated mainly with the fairly strong influence of the political risk factor. In addition, this process is complicated by the reform of government structures and the dynamism of the lawmaking process at all levels of economic management. Moreover, quite often legislative acts are supplemented in practice by various kinds of by-laws and regulations, which makes it even more difficult to predict the level of risks.
The high degree of risk in the process of implementing development strategies for domestic enterprises is also due to the significant influence of shadow structures on business organization, which must be taken into account when developing a development strategy for any enterprise.
At the same time, in our country, in most cases, the assessment of country risk for enterprises is presented in best case scenario only in the form of a description of the political and economic environment and the dynamics of their development in the past with a probabilistic description of the near future. The latter significantly complicates the investment process for Russian enterprises, since with such uncertainty in assessing the risks of the external environment, experts consider business in Russian conditions to be very risky. Business in Russia comes into contact with the following factors:
instability of the state economic policy, including financial policy;
a rather complex and constantly changing system of taxation of domestic enterprises;
a very weak regulatory framework to protect the rights and interests of owners;
lack of business culture;
weak intellectual property protection;
insufficiently developed information infrastructure;
criminality of business.
The factors mentioned above have a significant impact on the level of risk of the developed development strategies of Russian enterprises. As a result, when developing any option for conducting a strategic analysis of the development of domestic enterprises, one should take into account a fairly high degree of country risk.
In order to reduce the level of country risk, it is necessary to carry out the following main activities:
stabilization of the political situation in the country;
establishment of a long-term tax regime;
stabilization of the functioning of the financial and banking system;
strengthening guarantees of property rights;
increasing the level of business security;
development of measures to support domestic producers;
formation of a developed information infrastructure.
When analyzing the risks that may arise in the process of implementing the development strategy of a particular enterprise or business, it is necessary, in addition to studying the risks of the distant external business environment, to analyze and evaluate the risks of the SKZ (strategic business zone). To do this you need:
determine the specifics and type of agricultural protection of a particular enterprise or business;
identify possible types of SCP risks;
determine and assess the dynamics of the level of these risks;
identify the zone of permissible action of the identified risks.
It should be noted that it is advisable to roughly divide possible risk zones into four main groups:
risk-free zone;
acceptable risk zone;
critical risk zone;
catastrophic risk zone.
The criteria for classifying an agricultural enterprise into a particular risk zone are established by the owner depending on the profitability of a certain direction of business development in this agricultural enterprise, on the actual size of resources, as well as on the personality of the owner himself.
In the process of analyzing the structure of business development, one can build curve risk, which identifies zones and indicators of acceptable, critical and catastrophic risks (Fig. 2).
Rice. 2.
Profit Revenue Own estimated estimated capital
In addition, it is necessary to highlight the methodology for analyzing and assessing the level of a specific risk, determine the level of errors and acceptable limits of deviations. Within a given SHS, it is important to determine the ability to manage identified risks. Since strategic planning for the development of an enterprise takes into account the possibility of its functioning in several agricultural production plants simultaneously, it is necessary to determine the overall amount of risk that may arise in the process of implementing the selected basic enterprise development strategy.
It should be noted that for domestic enterprises, the risks of the immediate surrounding business environment are very significant. This is due to the following main reasons: firstly, the fairly strong influence of state policy on the development of any sector of the national economy; secondly, undeveloped character market relations and the weakness of their legal regulation.
Currently, industry risks in our country manifest themselves mainly in the absence of specific programs for the strategic development of industries that reflect the priorities of state economic policy. Analysis of the occurrence of possible industry risks involves studying the following main factors over a selected period of time:
analysis of the dynamics of the main technical and economic indicators of the development of enterprises in the industry, as well as enterprises in related industries;
analysis of competition between enterprises in the industry;
analysis of specific factors characterizing the functioning and development of enterprises in this industry;
analysis of the market for products in this industry and prospects for its development;
analysis of the existing system of state regulation of the economy and the availability of government orders;
analysis of sustainability indicators of industry enterprises in comparison with enterprises in related industries;
analysis of indicators of scientific and technological progress for enterprises in related industries.
Analysis of possible manifestations risks of intra-industry competition is performed by expert comparison of coefficients for a predetermined number of indicators. Strategic analysis of a specific enterprise in our country becomes incredibly important in view of ensuring its economic security. The Ministry of Emergency Situations of Russia, together with the State Technical Supervision Authority of the Russian Federation, is developing an industrial safety declaration. This declaration presupposes the mandatory creation of a risk management system for any enterprise. Such developments once again confirm special specifics development of domestic enterprises and a fairly high degree of risk in business development in Russia. In this regard, strategic analysis of risks arising during the operation and development of an enterprise is an important component (element) of developing a strategy for its development.
It should be noted that the above factors are subject to significant changes, the nature of which can only be assessed with a certain degree of probability at the strategic planning stage. It is this uncertainty of changes in factors that forms industry risk. In table Table 1 shows the main types of this risk, which correspond to the five forces of competition according to M. Porter. For each of the types of risks given in the table, an assessment of its level for a specific enterprise should be made in the context of the implementation of strategies.
Table 1 Main types of risk of the “five forces of competition according to M. Porter”
|
Forces of competition according to M. Porter |
Name of risk types |
|
1. Penetration new competitors |
|
|
2. The threat of substitute goods appearing on the market |
|
|
3. Opportunities buyers |
|
|
4. Opportunities suppliers |
|
|
5. Competition between enterprises that have already established themselves in the market. |
|
Analyzes of risks arising in the process of intra-industry competition among enterprises can be carried out according to the criteria given in Table 2.
Table 2 Competition risk analysis
|
Forms of risks in the immediate environment |
Probability of occurrence |
|
|
|
2. Risk of a decrease in the price of products sold |
|
|
It is advisable to assess the likelihood of a particular type of competition risk based on either the method of expert assessments or the method of statistical observations. In some cases, a method for assessing the likelihood of risks based on the personal experience of senior management of the enterprise can be used.
Analysis and risk assessment of an individual enterprise or business can be carried out according to the following scheme.
I stage. Analysis and assessment of the level of identified risks and identification of external and internal factors influencing the result that can be obtained as a result of the implementation of the enterprise development strategy.
Stage II. Identification and analysis of indicators characterizing the level of influence of external and internal factors selected at the previous stage.
stage. Selection of the optimal number of indicators with the help of which the dynamics of the influence of risk factors on the planned result can be tracked.
stage. Selection of control indicators and establishment of normative limits for changes in these indicators to achieve the optimal acceptable amount of risk.
V stage. Determination of the risk analysis method (building models, expert assessment, mathematical methods for studying statistical data, choosing an analogue).
Stage VI. Development of a risk management system at the enterprise and identification of ways to optimize them.
Strategic risk analysis of an enterprise involves consideration of all types of activities and the entire range of products and services from the following positions:
market segmentation;
studying the relationship and interdependence of one type of activity or type of products (services) from another;
market attractiveness;
competitive strength of the enterprise.
The study of individual market segments allows us to assess and predict the possibility of risks arising from consumers of the enterprise's products (services).
The study of risks arising from the influence of changes in production volumes and sales of one product on the production volume and cost of production of another product is necessary to justify and select methods for producing strategically promising and profitable types of products.
Analysis of market attractiveness is necessary to reduce in the future losses from the development of production of goods sold in unattractive and unpromising markets.
Analysis of the competitive strength of an enterprise across its product portfolio allows us to determine acceptable risk limits for each enterprise.
Everyone is interested in risk because risk is associated with success. People define success differently, but no one disputes that on the way to it you have to take risks. Carrying out any activity is impossible without risk. In fact, business is all about taking risks in hopes of obtaining an acceptable reward.
Risk management is an integral part general management any organization that seeks to survive and fulfill its mission. Risk management may even be a systemic goal for some organizations. In this case, risk management can become part of operational management. For example, what is the purpose of the army in the modern world? Fight against war by all means, including military means. In this case, risk management is the main goal, and warfare is an auxiliary goal.
What does enterprise risk management include?
Risk Management Processes
Risk management is the processes associated with the identification, analysis of risks and decision-making, which include maximizing the positive and minimizing the negative consequences of the occurrence of risk events. The project risk management process typically includes the following procedures:
1. Risk management planning - selection of approaches and planning of project risk management activities.
2. Risk identification - identifying risks that can affect the project and documenting their characteristics.
3. Qualitative risk assessment - qualitative analysis of risks and the conditions for their occurrence in order to determine their impact on the success of the project.
4. Quantitative assessment - quantitative analysis of the probability of occurrence in the impact of risk consequences on the project.
5. Risk response planning - identifying procedures and methods to mitigate the negative consequences of risk events and take advantage of possible benefits.
6. Monitoring and controlling risks - monitoring risks, identifying remaining risks, implementing the project risk management plan and assessing the effectiveness of actions to minimize risks.
Risk identification
The risks are many and varied. But when determining the risk profile of any organization, analysts primarily highlight strategic risks. What is this based on?
The development of any company is impossible without tactics and strategy. Even when top managers claim there is no strategy, in reality it is a strategy for short-term adaptation to current changes. Sometimes, for example, in troubled times, this strategy may be correct. If management is simply passive, and this may be beneficial specifically to the current management, then the company inevitably begins to lose its market value under the blows of competitors and random circumstances.
Are management errors possible? Practice shows that the more aggressive the development policy and the more ambitious the company’s management, the greater the likelihood of errors. The possibility of such errors constitutes a set of errors that can be united under a single name - strategic risks.
Consider strategic risk- means taking into account the possibility of an unexpected event occurring, which reduces the possibility of an unexpected event occurring, which reduces the ability of managers to timely and efficiently develop a company management strategy and implement the management strategy adopted by management (Simons.R.A Note on Identifying Strategic Risk// Harvard Business Scool Review.1999/ November.P.1)
The management system may be unable to implement the strategy for reasons arising from:
1) from the process of doing business (operational risk)
2) from the possibility of deterioration of the company’s assets
3) from changes in the competitive situation
4) from loss of good name, loss of reputation, loss of trust.
In order to consistently protect the company from the risk of failure of the adopted management strategy, it is necessary to build a protection system based on a clear way of describing the strategy itself.
Such a tool - strategy mapping as a method of consistent, integral description of an organization's management strategy - was first proposed by Kaplan and Norton in their concept of a balanced scorecard.
The strategy contains a transition from the current state to the desired future. The construction of strategic strategy maps includes the formulation of a strategy and a system of ways to implement it. Detailed descriptions of strategy mapping methods can be found in the books of Norton and Kaplan.
The reference map of any management strategy is shown in Fig. 2.
Even without really understanding the concept, risk managers can draw significant conclusions from this structural diagram.
The assessment of the complex of strategic risks here should be carried out in relation to each element and indicator of success, in turn analyzing the specific formulation of the strategy as aggressive, moderate or non-aggressive. Starting from the top (from general to specific), the management strategy is assessed as a whole according to its degree of focus on increasing the market shareholder value of the company . The risk assessment then shifts to assessing strategies to increase revenue and productivity. Then the strategies for communicating with the clientele, the possibilities of new ideas within the company, as well as the accumulation of experience, training and the development of corporate culture under a new general strategy are analyzed. If the risks at least for the bottom element turn out to be too high, then the entire strategy may be questionable. In this case, a decision is made on the overly risky element, and then the overall strategy is evaluated and the risk indicators of all elements are re-examined.
For some elements of management strategy, techniques have been developed for detecting early symptoms of problems and opportunities. An example of such a technique is “Managing Strategic Circumstances.” Essentially, this is a preventive way to combat the risk of falling behind technological process. The method focuses on the so-called strategic gaps, which are detected by weak qualitative and quantitative symptoms that herald the emergence of new technologies.
The most important strategic risks include the risk of stopping the company's production. For some companies, it is so important that special business continuity plans are drawn up for it. One of the most important indicators of a company's risk resistance is the number of days of downtime, which turns downtime into bankruptcy and exit from business. Sometimes this indicator is difficult to calculate, and sometimes it is obvious. In any case, you need to know it both for the company as a whole and for its key divisions and elements.
Risk management methods
In conditions of various external and internal risk factors can be used various ways risk reduction affecting certain aspects of the enterprise’s activities.
The variety of methods used in entrepreneurial activity can be divided into 4 groups:
Risk Avoidance Techniques
Risk localization methods
Risk diversification methods.
Risk compensation methods.
When choosing a specific risk management method, the risk manager should proceed from the following principles:
You cannot take more risks than your own capital can allow
You can't risk a lot for a little
The consequences of the risk should be anticipated.
The most common methods in business practice are to avoid risks.
Risk avoidance methods:
Refusal from unreliable partners, refusal to participate in projects related to the need to expand the circle of partners, refusal from investment and innovation projects, the feasibility or effectiveness of which is doubtful
Risk insurance is the main method of reducing risk. Potential loss insurance not only serves as protection against bad decisions, but also increases the responsibility of decision makers, forcing them to take the development and adoption of decisions more seriously, and regularly carry out protective measures in accordance with insurance contracts.
Search for guarantors
Dismissal of incompetent workers.
If it is possible to clearly identify risks and their sources, apply risk localization methods. For example, by separating the most dangerous stages or areas of activity into separate structural units, you can make them more controllable and reduce the level of risk.
Methods of risk diversification involve distributing the overall risk into independent ones, thereby reducing the likelihood of the overall risk.
For example, this could be diversification (diversity) of types of activities or business areas - expanding the range of products or services provided, targeting different types of consumers, enterprises in different regions. This could be diversification of sales and supplies, i.e. working in several markets simultaneously, when losses in one market can be compensated for in other markets.
Diversification of investment project risks is a preference for implementing several relatively small investment projects
When implementing projects, this is the distribution of responsibility between project participants, a clear distribution of the scope of activity and responsibility of each participant.
Risk compensation methods
Risk compensation methods are associated with the creation of hazard prevention mechanisms. These methods are more labor intensive and require extensive pre-work to apply.
Strategic activity planning as a method of risk compensation has a positive effect if the development of a strategy covers all areas of the enterprise. The stages of strategic planning work can remove most of the uncertainty, allow you to predict the emergence of bottlenecks in project implementation, identify sources of risks in advance and develop compensatory measures and a plan for using reserves.
Forecasting the external situation, i.e. periodically developing development scenarios and assessing the future state of the business environment for project participants, forecasting the behavior of partners and the actions of competitors, general economic forecasting.
Monitoring the socio-economic and regulatory environment involves tracking current information about relevant processes.
Creation of a reserve system. This method is close to insurance, but concentrated within the enterprise. The enterprise creates safety stocks of raw materials, materials, components, reserve funds of funds, develops plans for their use in crisis situations, and does not use free capacity.
It is relevant to develop a financial strategy for managing your assets and liabilities with the organization of their optimal structure and sufficient liquidity of invested funds.
Personnel training and instruction.
When using methods of strategic planning and monitoring, it is necessary to make extensive use of information technology - acquiring and constantly updating systems of regulatory and reference information, connecting to commercial information networks, conducting one's own forecasting and analytical studies, and attracting consultants. The data obtained will make it possible to capture trends in the development of relationships between business entities, provide time to prepare for regulatory innovations, provide the opportunity to take appropriate measures to compensate for losses from new rules for conducting business activities, and adjust operational and strategic plans.
The abundance of information makes it necessary to use a specialized information system.
To automate risk management processes, various solutions have been proposed, for example, the use of relational databases and enterprise resource planning (ERP) systems. The limited adaptability of these systems to the variety of processes involved in risk management processes leads to the fact that to automate these processes, office applications are used as a maximum, which means automation of work at one workplace and cannot provide an operational picture of the work of the entire organization.
The development of electronic document management systems (EDMS) shows that the most rationally integrated solution is a combination of ERP and EDMS using WorkFlow (“Work Flow”, business process automation), with the transactional and settlement part of the processes in ERP, and the documentary part in EDMS.
The need to use EDS is determined by the presence of the following factors:
A variety of risks, methods of dealing with risks,
Information used in risk management processes can take a very different form - text files, spreadsheets, scanned documents, photographs (for example, pictures from the scene),
Many employees and departments of the organization may be involved in the processes of working with this information.
Monitoring the program and early warning system
Corporate risk-hazard monitoring systems were first created in the 60s of the 20th century. These systems were based primarily on historical data analysis and trend identification. Taking these trends into account, target figures were set as planned, upon achievement of which the system was considered normal (standard)
The next generation in the early 80s was early warning systems about dangers and opportunities, which were based on special lists of empirical and calculated diagnostic quantitative and qualitative signs. This methodology supplements the monitoring system with a map of control and diagnostic points, which are monitored and compared with standards. If an abnormal state of one or more of these points is detected, an alarm signal is issued to the control system, which must take measures to correct the situation.
Currently the last word in this area, systems for monitoring the strategic components of a risk management program (Strategic Issue Management, SIM) are considered. The main difference between this approach and the previous ones is the attempt to implement risk management of the company from the perspective of “Before” and not “After the fact”. SIM systems focus on structural changes in the company and its environment, acting as a 360-degree radar and trying to detect so-called strategic discontinuities or strategic surprises as early as possible. Added to this is “violation of the status quo” and “increasing asymmetry.” Such violations are detected based on diagnostic lists even in conditions of weak signals and unstructured information.
For this purpose, monitoring of suspicious symptoms is established and its development is monitored.
Examples of discontinuity: break-even point and point of no return. The latter can be characterized economically, financially, legally, technically, etc. A point of no return is a situation after which the process will inevitably move through a certain risk corridor. After this point, the risk can be considered accepted, and in the event of the realization of the danger that created this risk, all losses will fall on the account of the person or organization that accepted this risk. Managers can “play back”, cancel a risky project with acceptable losses up to this point, and after passing it all that remains is to hope that the risk with the accepted probability of defeat will follow the path of victory, and be ready to apply crisis or catastrophic management schemes if, Despite all precautions, the process went unfavorably.
No surprises come completely unexpectedly. Surprise is the result of ignorance, inattention, lack of equipment or inability of the observer. This is why SIM systems attach such importance to increasing risk sensitivity and diagnostic qualifications of personnel. With this approach, it becomes possible to proactively manage risks in conditions of complete uncertainty and incomplete repeatability of events.
The methodology for determining early warning symptoms of company problems is developing in different directions.
One of the most popular lists Early Symptoms Early Warning of Firm Problems was published in 1993, commissioned by the American Bankers Association, by John Barrickman. This list has become something of a classic. It is often quoted and inserted into publications on banking. The length of the article does not allow us to quote it in its entirety. Here's a short excerpt as an example:
A noticeable change in the behavior (personal habits) of the image of the company’s key personnel
Failure of key employees to clearly articulate the mission, overall and competitive strategy of their company
Problems in the family and marriage of key employees of the company
A change in the attitude of the company or its representatives towards the bank or banker, especially a decrease in interest in cooperation.
Personal non-obligation of the client (or his representative) or a decrease in the level of obligation.
The firm's inexperience in a given industry or line of business.
Changes in the company's management
Changes in the composition of company owners
Changes in the composition of key specialists
Failure to meet schedule obligations.
The return of problems that have already been solved in the past.
The company’s inability to properly plan its activities, etc.
Another direction in building a forecast of developments is by monitoring the balanced scorecard, which has already been mentioned when considering strategic risks.
The concept of Kaplan and Norton is based on the position that it is impossible to control according to one indicator - profit, just as it is impossible to control an airplane according to only one instrument. Profit is an indicator of past decisions made and does not at all indicate how events will develop further.
Through the balanced scorecard, you can simultaneously build a company strategy. The indicators will then act as guidelines for collective action.
At the same time, they can serve as indicators of how effective the actions taken are in achieving the goals. Comparison with planned indicators makes it possible to determine the direction of developments.
Building an effective risk monitoring system
How to navigate the variety of risks that are encountered in the activities of any company that decides to operate in such difficult modern conditions?
An effective risk monitoring system should have the following elements:
Clearly defined surveillance areas
A wide network of observers and agents
Filters and criteria for evaluating incoming information
Clearly defined communication channels with the company’s management and managed subsystems
Self-improvement subsystem.
What information system can provide the requirements for the operation of such risk monitoring systems?
Attempts to use relational databases or ERP (resource management) systems for this purpose were not very effective, and currently office applications are mainly used to automate risk management work. The simplicity and low cost of this solution are combined with the limitations of the system to one workstation, i.e. the control system cannot be made multi-user and reduces the capabilities of analysis.
Possibilities modern systems Electronic document management allows you to organize the collection and storage of information at all stages of risk management, create and regulate the necessary information flows.
The main advantages of EDMS for building a risk management system include the following:
1) the ability to store a wide variety of information.
The main processes of risk management are collecting documents, storing and transferring them to all those who need it.
Therefore, EDMS are more suitable for carrying out such processes, which can store part of the information in a structured (like tables) form, and part - in the form of attached files. For numerical analysis methods, data can be transferred to specialized programs.
The information that is used to monitor risks can be extremely varied - WORD files (for example, expert reports), scanned images (for example, licenses), photographs from the scene, exchange rate tables, etc.
2) the presence of mechanisms for monitoring the implementation of plans
Planning actions and monitoring their execution is an important part of the risk management system. The mechanism for creating a hierarchical system of orders with the appointment of specific executors, sending reminders about the approaching deadline or that the deadline has passed and the order has not been executed, drawing up analytical reports on execution discipline makes risk management really work with minimal time spent on control processes, which gives people the opportunity to really think - have we thought of everything?
3) the possibility of functional and geographic scaling.
All experts agree on the practical impossibility of simultaneously introducing a full-scale risk management system in an organization.
As a rule, the process of implementing a risk management system begins with a pilot project in a separate, most critical area (operational risks for banks, technical risks for industry, currency risks for foreign economic activity). Having developed risk management technologies at this pilot site, risk management is expanded to other types of risk.
Deployment can proceed along a functional basis: first, only the functions of monitoring events or monitoring the execution of plans are implemented, then the drawing up of forecast scenarios for the development of comprehensive action plans, and already - as a crown - the drawing up of analytical expert generalizations with an analysis of the situation and the effectiveness of the measures taken.
The functionality of the EDMS makes it possible to carry out both geographical and functional scaling.
The Client-Server architecture allows you to connect new users and include them in ongoing processes simply by connecting workstations without making changes at the program code level.
Reliability of operation is ensured by combining servers into clusters.
To ensure the work of remote users, a replication mechanism is used. A replica is a complete copy of the database on another server, which may be located thousands of kilometers from where the original document was created. Information is transferred using the replication method - maintaining full copies of databases on two or more remote servers. With this mechanism, it is impossible to lose any message. The servers will exchange data until a complete match is obtained with the stored information in the replicated databases.
Functional scaling is achieved through the modularity of the EDMS. The sequence of input of risk management processes can be implemented through the sequence of input of EDMS modules.
The organization of the EDMS, intended for a set of works on the implementation of risk management processes, can be represented in the form of the following diagram:
The initial stage is developing a strategy and building the risk profile of the organization.
Based on the created risk profile of the organization, forecasts of developments are created.
Development of preventive action plans and mitigation plans.
A control action plan is being developed to monitor risk events.
Carrying out control activities with registration of identified risk events in a special database.
The external environment is monitored and information is recorded in the risk events database.
Forecasts and accumulated information are analyzed and the effectiveness of ongoing activities is determined.
The action plan is being adjusted.
Monitoring of the balanced scorecard system is carried out with the creation of analytical generalizations.
Based on the results, the basis of the balanced scorecard is adjusted.
And how to build analytical generalizations, what processing methods and algorithms to use - this problem is solved by risk managers in each specific situation.
Methods for constructing analytical generalizations are very diverse and their set continues to expand, as risk management is constantly evolving. New types of risks are emerging, such as the risks of doing business online. And each organization can supplement the theory and practice of risk management with its own experience.
As practice shows, a risk manager, like a doctor, has to learn throughout his life.
Strategic planning is the most important function of strategic management and its central link. It is the process of developing and specifying an organization's strategy in the form of a strategic plan.
The main task of strategic planning is to ensure the flexibility and innovation in the organization's activities necessary to achieve its goals within the capabilities of the enterprise with an acceptable level of risk that exists in any business.
Therefore, at all stages of strategic planning, it is necessary to provide for the identification, classification and development of methods for taking into account the impact of risks on the result obtained.
G.B. Kleiner, in relation to strategic decision making, gives the following definition of risk:
“Risk is the possibility of such consequences of strategic decisions being made in which the set goals are partially or completely not achieved.”
The concept of developing any development strategy assumes that future results can be determined, assessed or measured.
The main features of risk are: inconsistency, alternativeness and uncertainty. Such a feature as inconsistency in risk leads to a clash between objectively existing risky actions and their subjective assessment.
Since, along with initiatives, innovative ideas, the introduction of new promising activities that accelerate technical progress and influence public opinion and the spiritual atmosphere of society, there is conservatism, dogmatism, subjectivism, etc.
Alternativeity in risk presupposes the need to choose from two or more possible options for decisions, directions, and actions. If there is no choice, then a risky situation does not arise, and, therefore, no risk. Uncertainty is the incompleteness or inaccuracy of information about the conditions for implementing a project (decision). The existence of risk is directly related to the presence of uncertainty, which is heterogeneous in form of manifestation and content. Entrepreneurial activity is carried out under the influence of the uncertainty of the external environment (economic, political, social, etc.), many variables, contractors, individuals whose behavior cannot always be predicted with acceptable accuracy. The uncertainty of the decision and the result is due to the following factors:
- - a sufficiently long time interval between the development of the strategy and the result obtained from its implementation;
- - degree of controllability of the management process;
- - the degree of awareness of the variables that influence the developed strategy and the nature of the relationships;
- - lack of experience in the field of adoption of specific management decisions;
- - subjective approach to making management decisions.
The process of strategic choice always occurs in conditions of many variations of alternatives, each of which is inherent in one or another type of risk. The process of developing strategies and their implementation is continuous and requires constant decision-making at its different stages. This process consists of formulating a goal, formalizing the planned result, determining a method for achieving it and criteria for its evaluation, taking into account risks and selection rules. In addition, the choice of solution depends on the level of information obtained in the process of studying the problem of its level (systemic, personal, functional), the structure and completeness of the analysis, the risk management system, the psychological mechanisms of choosing a solution (volitional, intellectual, emotional, etc.). The main factors in decision making are information conditions and their uncertainty.
According to the degree of certainty, the conditions in which strategic planning is carried out can be divided into: deterministic, random and uncertain. Deterministic (certain) conditions presuppose a known outcome under various alternative choices. Random conditions involve determining the outcome for each of the alternative options with a certain degree of probability. Vague conditions do not imply a determination of the potential outcome.
In general, all risks that may arise during the activities of enterprises are conventionally divided into known, foreseen and unforeseen.
Known risks - the risks of paying fines, losing part of resources due to theft or safety violations - arise as a result of certain types of impacts or changes in factors affecting the type of business being analyzed.
Foreseen risks - loss of quality due to failure to comply with the requirements of developed standards, contractual risks on prepayment terms, certain types of currency risks, etc., the possibility of risks arising is predictable based on the accumulated experience of enterprises. Unforeseen risks - changes in the goals of shareholders, changes in the political situation in the country, etc., cannot be predicted in advance due to a lack of experience or information.
To effectively develop a risk management strategy, it is necessary to clearly and accurately define for all participants in the implementation of the enterprise strategy what is meant by the concept of “risk”. Here are the most common definitions of this concept.
A.P. Gradov, when interpreting risk, draws attention to the following aspects:
- - firstly, risk means the danger that the implementation of the project may lead to losses;
- - secondly, risk is understood as a measure of dispersion (dispersion) of the estimated indicators of the project under consideration (for example, profit, profitability, etc.), obtained as a result of multiple forecasts;
- - thirdly, risk refers to the danger associated with the fact that the goal of an entrepreneurial project will not be achieved to the intended extent.
In turn, Shannon gives the following definition of risk in relation to the need for business valuation: “Risk is the degree of certainty (or uncertainty) associated with obtaining expected future income.”
According to E.A. Utkin, risk is very often compared with certain quantitative losses of material, labor or financial resources due to the implementation of the developed action plan.
The lack of a generally accepted definition of the concept of “risk” is primarily due to the diversity of the risks themselves, the varying degrees of their influence on business development and the varying degrees of sensitivity to these risks. Risk is objectively present in any area of human activity, including in the process of implementing strategic plans for the development of enterprises.
It seems to us that in this field of activity, risk should be understood as the possibility of not achieving the value of the evaluation criteria in the process of implementing the basic or functional development strategy of the enterprise.
An indicator of the impact of risk on the implementation of a strategy is the assessment of the consequences of failure to achieve the goal. Influence can have both negative and positive effects. However, the presence of various obstacles and risk factors in the implementation of the developed strategies reduces the attractiveness of these developments or makes them completely unattractive. Factors influencing risk and its consequences are divided into objective (factors of the external business environment) and subjective (which are directly related to the activities of the enterprise and its resource potential).
Risk subjects should include either those who assume the risk fully, partially or indirectly, or those who manage the risks. In accordance with this, all stakeholders of an enterprise can be considered risk subjects, since they are associated with the implementation of the strategy of a given enterprise and have the opportunity to influence the course of its implementation. Stakeholder is a fairly wide range of people related to the enterprise. The main stakeholders of the enterprise are:
- - investors who invest their capital in a company with a certain amount of risk in order to generate income on it;
- - creditors;
- - enterprise managers;
- - employees of the enterprise;
- - suppliers;
- - consumers (customers of the enterprise);
- - public and government organizations.
Often, the acceptable risk limits of one subject may not coincide with the risk assessment of other subjects. Already at the goal-setting stage, it is necessary to reach a compromise in understanding the risk.
The enterprise needs to find the optimal values of the given boundaries according to an established and agreed upon set of basic strategy indicators, and determine the boundaries of its acceptable level. Coordination of such parameters is one of the the most complex tasks strategic risk management.
When developing enterprise development goals, risks may arise. At the stage of formulating the goals of the strategic development plan of the enterprise, it is necessary to collect maximum quantity reliable and reliable information, which in turn will reduce the influence of the subjective factor and the choice of the most optimal solution in a specific risk situation.
Information can be reliable, which is obtained from reliable sources of both official and unofficial nature (the degree of reliability largely depends on the stakeholders), relatively reliable and unreliable, which is obtained with a certain distortion.
For the purpose of risk measurement, it is necessary to initially examine all possible risks, identify them and classify them. In this regard, a detailed classification of risks becomes extremely important.
Initially, the risks that must be taken into account when justifying and developing an enterprise development strategy are divided according to the scale of their impact:
- - catastrophic;
- - critical;
- - significant;
- - moderate;
- - insignificant.
According to the degree of sensitivity to risks various groups stakeholders, the following types of risks can be distinguished:
- - acceptable;
- - acceptable;
- - unacceptable.
Of particular practical interest is acceptable risk, which assumes that in order to achieve the chosen strategic goal, it is always possible to find a solution that provides a certain compromise level of risk that corresponds to a certain balance between the expected benefit and the threat of loss.
Risks are also divided into systematic and unsystematic. And they can be:
- - predictable and unpredictable;
- - obvious and hidden;
- - measurable and immeasurable;
- - predictable and unpredictable;
- - direct and indirect.
By the nature of accounting, risks are divided into external (macroeconomic risks of the distant environment and risks of the near environment) and internal (objective and subjective).
1. Macroeconomic risks of the distant environment include political, economic (financial), environmental, production, and risks associated with the occurrence of unforeseen force majeure circumstances. Political risk is the possibility of losses or reduction in profits resulting from government policy. Thus, political risk is associated with possible changes in the government’s policy, changes in priority areas his activities. Taking into account this type of risk is especially important in countries with unstable legislation, lack of traditions and culture of entrepreneurship. Political risk is inevitably inherent in entrepreneurial activity; it cannot be avoided, it can only be correctly assessed and taken into account. Political risks include mainly the risks of unfavorable socio-political changes in the country, as well as risks of business security in the country (vandalism, unemployment, terrorism, sabotage, etc.). Economic (financial) risk takes into account government regulation in the field of taxation, pricing of natural monopolies, land use, rent standards, export-import, foreign economic activity. This is the risk of loss (change) of the predicted result due to inflation, changes in the convertibility of the national currency, changes in government regulation of the banking and financial system, etc.
Production risks are those associated with government regulation of the development of specific industries, enterprises or regions, the possibility of government policy to support its own manufacturer, or the creation of conditions for a possible invasion of the domestic market by a foreign manufacturer. Environmental risks are direct threats to the external business environment, since environmental protection activities are regulated by the state. Unexpected government regulatory measures in the field of environmental protection can significantly affect the deviation from the predicted result. Risks associated with unforeseen force majeure circumstances. These types of risks include natural disasters.
It should be noted that the above classification of risks in the external business environment is not exhaustive. Unforeseen changes in any of the parameters listed above represent a threat or uncertainty in achieving the desired result.
The risks of the immediate environment include industrial, scientific, technical, and socio-economic. Production risk:
- - the risk associated with the possible loss of production capacity due to changes in the needs of the sales market or a decrease in the quality of the goods produced;
- - the risk of non-fulfillment of the planned volumes of work, increased costs, planning deficiencies;
- - scientific and technical risk - the risk of losing the competitive advantage of an enterprise caused by a decrease in the performance of the main technological equipment, including its complete shutdown;
- - the risk of obsolescence of fixed assets and technologies, investment risks, reconstruction risks, risks of the emergence of new technologies or types of activities, etc.;
- - the risk of developing new, more economical technologies for product production;
- - socio-economic risks - the risks of pursuing a pricing policy that is unfavorable to the enterprise, the absorption of one enterprise by another by using its monopoly advantage in the sales market or by acquiring shares, the risks of an unfavorable social climate of the enterprise, bankruptcy, etc.
- 2. Subjective internal risks include the risks of making management decisions at all stages of planning and implementing the strategy (in particular, the risks of erroneously chosen goals, gaps in strategic, tactical and operational planning, violation of the hierarchy of subordination of goals and plans, etc.).
Objective internal risks include risks associated with various areas of the enterprise’s activities - environmental, legal, economic, marketing, financial, personnel risks, circumstances.
The above classification of risks is quite conditional, since it is difficult to determine clear boundaries between different types of risks.
The environmental risks of an enterprise include natural disasters and the risk of floods, fires and others that arise as a result of violations of environmental laws, due to the lack of licenses and permits, reduced efficiency of treatment facilities, etc.
Legal risks of an enterprise are risks caused by the lack of licenses to carry out activities that require its existence, non-compliance with patent law, failure to fulfill contractual obligations, and the occurrence of lawsuits with external clients.
Economic risks - risks of loss of profitability of the enterprise, risks of loss of assets of the enterprise, decrease in liquidity and financial stability enterprises, a decrease in the volume of equity and an increase in the amount of borrowed capital, risks of lower prices for product sales, changes in market conditions for basic raw materials and energy resources, etc.
Marketing risk includes risks from unsatisfactory advertising, the emergence of new competitors or the emergence of substitute products, incorrect assortment policies and incorrectly selected pricing policies. They are associated with the loss of markets for products, changes in consumer requirements, changes in consumer demand, etc.
The risks of inflation, increased refinancing rates, changes in the taxation system, rising energy prices, loss of financial resources to service the debts of natural monopolists are financial risks.
Personnel risks are associated with insufficiently qualified personnel management, employee motivation, loss of highly professional personnel, and ineffective remuneration system.
Risks of circumstances are unpredictable changes in the conditions of economic activity, as well as specific risks in violation of technology and safety regulations. All risks are interconnected, changing and complementing each other both in the direction of increasing the impact of risk factors and in the direction of weakening such impact.
Faskhiev A.A.,
chief specialist of the department
strategic development
and business planning
OSJSC "Russia"
Strategic management, risk management and company survival
When Russia integrates into the international economic space, companies need to either grow significantly, raising funds in financial markets, or sell to competitors. The global liquidity crisis created additional problems by significantly increasing the cost of borrowed capital.
Russian companies have to compete for funds from investors who try to minimize risks by investing only in highly efficient, sustainable and promising business. As the liquidity crisis develops, many of them are completely freezing investment funds. In this regard, effective strategic management aimed at increasing (and perhaps simply preserving) the value of a business acquires special meaning for Russian companies.
In corporate credit ratings and the GAMMA rating (the target audience of which is investors making long-term investments in shares) of Standard & Poor’s, great importance is given to the strategy, strategic process and strategic risk management of the company being assessed. However, does strategic management really play such a serious role in the long-term development of an organization?
Some experts express the opinion that the destruction of an organization is a natural stage in its development and is not associated with an incorrectly chosen strategy or lack thereof. McKinsey experts Richard Foster and Sarah Kaplan, based on a study of the activities of more than a thousand corporations from 15 industries over 36 years, concluded that management aimed at survival does not at all guarantee the shareholders of even the best and most reputable companies long-term investment performance. It is difficult to establish a direct relationship between the survival of a company and its strategy. However, the results of another study led to the conclusion that many leading companies are planning for the distant future and establishing processes that allow them to evaluate growth initiatives over time.
Ram Charan wrote in the study Why CEOs Fail: “Yes, strategy matters. A good, clear strategy is necessary for success - but not sufficient for survival...” Perhaps strategic management cannot serve as a guarantee of a company's survival, but it gives it very real advantages.
The benefits of strategic thinking and conscious strategic management (as opposed to free improvisation, intuition or inaction) are: ensuring the entire organization is focused on achieving strategic goals, efficient allocation of resources, investing them in strategically sound projects, the ability to integrate the decisions of managers at all levels of management related to strategy . In addition, creating an environment that encourages active leadership and discourages passive responses to changing situations forces managers to respond accurately to new opportunities and threatening trends. The latter is especially valuable from a risk management point of view.
Formalization and methodologies of strategic planning
The problem of a company's survival is often related primarily to poor strategy implementation. Fortune's Walter Keechel argues that less than 10% of well-formulated strategies are effectively implemented. “In most cases (about 70%), the real problem is not poor strategy, but poor execution.” A McKinsey study found that a significant number of respondents expressed concern about strategy execution. About 28% said that the strategic plan developed by the company reflects the company's goals and objectives, but is not effective. Another 14% said that in their companies the strategy and plans for its implementation are not coordinated with each other. However, development and implementation are inseparable parts of one process, and the success of any strategy depends on how it was developed and how the process is structured in the company strategic management how the company's strategy is formalized. What is “formalization of strategy” and how necessary is it?
Translated from English, the word formalize means “to formalize; to give a certain shape, to put in order." “Formalization is the presentation of any content area (reasoning, evidence, classification procedures, information retrieval scientific theories) in the form of a formal system or calculus."
The formalization of a company's strategy usually means the transformation of a business idea available to the owners and managers of the company into a balanced and implementable development strategy. But is it possible to do without formalizing strategic planning? Do the benefits gained from formalization really outweigh all the time, financial, labor and other resources spent on this process? Among strategic management gurus, views on this issue vary widely.
The authors of the “Strategy-Focused Organization” concept, R. Kaplan and D. Norton, are sure that it is impossible to manage what cannot be described. Henry Mintzberg believes that the formal planning process is unable to replace strategic thinking, since the first is analysis, and the second is synthesis. Therefore, it can only contribute to the description of an already existing strategy, but is not capable of creating it. Strategy is born in the minds of management, and not necessarily at formal meetings to discuss strategy; the process of creating a strategy cannot be put on a conveyor belt. At the same time, Mintzberg recognizes that strategic plans can serve as a tool for communication and control, and strategic planners can be useful as analysts, act as “catalysts” and contribute to the search for strategy.
Formalization of strategic planning provides a structured methodology for thinking and analysis when solving complex strategic problems, stimulates a long-term vision of strategy, it can be useful in terms of regular monitoring of strategy execution, coordination, communication and involvement in strategy development (formation of strategy “owners”).
Based on the above arguments in favor of formalization, we can conclude that formalization of strategic planning is necessary in large companies, since it is there that the problems of coordinating and communicating strategy and monitoring its execution are especially relevant. The need for formalization is not so obvious for small and medium-sized businesses, where the voiced problems are not so acute, and resources, on the contrary, are very limited. Moreover, the existence of a strategy not in the form of formalized plans and tasks, but, for example, in the minds of managers and company specialists can provide flexibility small companies and, as a consequence, their greater ability to survive in a dynamic external environment. Naturally, in this case, the company must have a strong corporate culture that supports the strategy, be characterized by a low degree of bureaucratization, and employees must have a high degree of teamwork and initiative, which is difficult to achieve in a large company.
The development and formalization of a strategy always requires clear methodological tools. The traditional approach to strategy development is based on the analysis of external and internal environmental factors, setting goals and choosing a development strategy (which is often based on a comparison of strategic scenarios). Strategy development models are widely known and described in different times such authors as M. Porter, I. Ansoff, K. Andrews, K. Omaye, as well as consulting companies BCG, McKinsey. These models enable analysis and help formulate strategy, but they do not answer the question of how to implement that strategy.
To date, the most developed concept linking strategy formulation and its implementation is the concept of a balanced scorecard (BSS). This is probably why it has gained such popularity in scientific and business circles. Harvard Business Review called it one of the most important management concepts of the last 75 years, and its popularity not only in the West, but also in Russia is emphasized by the fact that even the uncontrollable RFU used strategic maps when developing a strategy for the development of Russian football. The main advantage of the BSC is that it allows you to connect strategic and operational management, translating strategy into the language of indicators. Based on the analysis of strategic indicators, it is possible to evaluate the execution of the strategy and adjust it, as well as plan operational initiatives and programs (Fig. 1).
In addition, translating the strategy into a balanced scorecard (up to personal KPIs) allows you to communicate the strategy to each employee and concentrate their efforts on achieving strategically important indicators.
Resistance to change and risks of non-implementation of strategy
Risks of non-implementation of a strategy arise already at the stage of developing this strategy. Attempts to formalize a company's strategy often encounter resistance from employees. The reasons for this resistance may vary. American researchers J. Kotter and L. Schlesinger classified them as follows: 1) selfish interest; 2) low tolerance to change; 3) misunderstanding of the goals of the strategy; 4) different assessment of the consequences of implementing the strategy. The first two reasons (selfishness and fear of innovation) are natural for humans, and the last two are caused by a lack of information or its incorrect perception. This can happen due to a lack of understanding and awareness among employees of the value of strategy and a strategic approach, especially if the company has not previously engaged in strategic management properly. The use of complex strategy development techniques can be off-putting to non-strategic planners. At the same time, the participation of internal experts from various departments in the strategic planning process is essential to obtain a high-quality, viable strategy.
Only constant training and gradual involvement of employees in the strategic planning process can help overcome resistance. To do this, you can first implement the strategy development cycle according to a simplified scheme. An example of a possible approach to strategy development is presented in Fig. 2. However, the use of simplified strategic planning schemes is justified only during the initial formalization of the strategy. Subsequent cycles of strategy revision and refinement should take maximum account of advances in the theory and methodology of strategic management.
Having formalized the company's strategy, it is important to build a system that would ensure its effective implementation. It is necessary to broadcast the strategy and ensure control over its execution, to overcome resistance to change in the organization.
In large companies, strategic planners often play a leading role in solving these problems. However, the best they can do is
competently determine the channels for broadcasting the strategy, distribute roles and functions in the process of analyzing and monitoring its execution. Strategic planners cannot enforce strategy and therefore have no real power to overcome resistance to change. In addition, over time, strategic planners become participants in internal political processes and may remain silent about the real problems associated with strategy execution in order to avoid disturbing the status quo. At the same time, they may seek to compensate for their inability to influence the execution of the strategy by strengthening their role in its development. This can also be facilitated by managers seeking to shift responsibility for creating a strategy onto the shoulders of strategists. As a result, in large, bureaucratic companies, the implementation of strategy can be replaced by a process of continuous improvement.
Perhaps that's why in lately There was a trend towards reduction of strategic planning departments. For example, the largest oil and gas companies (Shell, BP, ExxonMobil) reduced the number of strategic planning departments several times between 1990 and 1996. Does this mean that companies no longer need the services of strategists? Hardly. These companies were reducing their overstaffed workforces, but did not abandon the strategic planning function. Strategic planners play an important role in collecting and analyzing strategic information, identifying
strategic issues, coordinating the process of reviewing and approving strategic plans.
What strategists lack in power must be made up for by the support of top management. Attempting to overcome resistance without adequate support will most likely lead to collapse. In overcoming routine resistance, the main problem may simply be a lack of power.
An important and often underestimated reason for failure in strategy implementation by managers is its inconsistency corporate culture prevailing in the organization. If the values and work practices of employees contradict the strategy, then the company is unlikely to be able to implement it. Therefore, before launching strategic plans, it is necessary to make sure that the company has the “right” corporate culture and the new strategy supports it. In this case, the effect of its implementation can be enhanced. Otherwise, it will be reduced to nothing.
“The fundamental distinguishing dynamic of time-tested great companies is that they preserve and protect a cherished core ideology while at the same time driving progress and change in everything that is not it.” However, in Russian conditions, it is often necessary, in parallel with the development of a strategy, to implement measures to improve the corporate culture: without these actions it is impossible to change the worldview of employees who are accustomed to working the way they have always worked, and no other way.
Even without planning or special effort, any company gradually develops its philosophy as people observe and learn through trial and error “the way we do things around here.” However, the management system must be based on a top management program aimed at creating (or reforming) a sound fundamental philosophy of the company.
The problem of forming and reforming corporate culture is very relevant for Russia. Especially these days. On the one hand, most Russian companies are still very young. Even those of them who survived the “ideological impasse” and the crises of the 1990s are not even 20 years old. On the other hand, old companies also survived, retaining echoes of Soviet era. Both of them have to integrate deeper and deeper into the global economic space shaken by the crisis. The moment of truth is coming for Russia and its businesses: what will be Russia’s role in the global economy? What will be the role of the global economy in the life of Russian companies? This will largely depend on the chosen strategy and the ability to implement it both at the enterprise level and at the country level.
Literature
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4. Foster R.N., Kaplan S. Creative destruction // The McKinsey Quarterly. - 2001. - August.
5. Charan R., Colvin G. Why CEOs Fail // Fortune. - 1999. - June 21.
6. Thompson A., Strickland A. Strategic management. - M.: Banks and exchanges, 1998.
7. Kiechel W. Corporate Strategists Under Fire // Fortune. - 1982. - Dec. 27.
8. Improving strategic planning: A McKinsey Survey // The McKinsey Quarterly. - 2006. - September.
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11. Robert S. Kaplan and David P. Norton. Strategy Maps. Converting Intangible Assets into Intangible Outcomes // Harvard Business School Press. - 2004. - Feb. 2.
12. Mintzberg H. The Fall and Rise of Strategic Planning // Harvard Business Review. - 1994. - January-February.
13. Johnson G. Scholes K. Exploring Corporate Strategy: Text and Cases. Financial Times/Prentice Hall. 2006.
14. Materials from the site http://www.sports.ru/blog/manager/3392856.html.
15. Robert S. Kaplan, David P. Norton. The strategy-focused organization: How balanced scorecard companies thrive in the new business environment. - Harvard Business School Press, 2001.
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There are three groups of strategic management objects corresponding to three structure-forming levels of the organization: enterprises, strategic business units (SBU) and functional zones of the organization.
1.Enterprise as a whole(group of enterprises, concern, independent plant or factory).
2.Strategic field of management(business), i.e. a set of product and market segments and types of activity of an enterprise, allocated for the implementation of independent production, technical, commercial and regional policies. The strategic business field of large multi-product enterprises, as a rule, is divided into strategic business units. A strategic business unit is an intra-company organizational unit responsible for developing the firm's strategy in one or more target market segments.
The concept of strategic business units has had a significant impact on the formation of management systems in large firms around the world and is therefore considered as an important element of strategic management.
The basis for identifying strategic business units is the concept of market segmentation. A segment is a defined part of the market where the company’s products can be sold. Objects included in a segment must have common characteristics.
The identification of strategic business units is largely a matter of subjective choice. The following criteria for identifying business units can be proposed:
O strategic business unit has a certain circle of clients and customers;
O the business unit independently plans and carries out production and sales activities, logistics;
O The performance of business units is assessed on a profit and loss basis.
The main task of a strategic business unit is to achieve the strategic goals set for it (introduction into a new market, reducing costs, increasing market share, developing new products, etc.).
3.Functional area of activity, or division, - structural divisions of an enterprise, focused on performing certain functions and ensuring the successful operation of strategic business units and the enterprise as a whole (R&D, production, marketing, finance, etc.).
One common view of strategic management is that strategy is the exclusive purview of top management. However, without the broad participation of all personnel, it is impossible to develop or implement effective strategic decisions. Therefore, almost everyone organizational level An organization's management system can be considered an object of strategic management.
In accordance with the identified levels of the organization's management system and, accordingly, depending on the selected object of strategic management, they distinguish: corporate strategy - the organization as a whole; business strategy - a separate strategic business unit of the organization; functional strategy - functional area of management, operational strategy - implementation of specific production and economic functions. Examples of corporate strategies include mergers and acquisitions, formation strategic alliances.
First mover strategy means that the company is the first to offer an original product or service to the market. Its advantage is based on the fact that one is the first in a given business, in a given territory or in a new market.
The original strategic objective of the pioneer- rapid growth, when strategic efforts are aimed at expanding the market by stimulating purchases by consumers who have not previously used this product, but have a positive attitude towards new products, are able to evaluate the real benefits of the product and have the means to purchase it. The competitive strategy is to gain advantages over follower firms through the fastest possible development of new segments and the creation of new distribution channels
The pioneers are innovative companies Sony, Motorola, Microsoft, General Electric and others.
Achieving leadership is easier than maintaining it. Therefore, such leading firms spend large amounts of money on scientific and technical research and these costs are compensated by high prices for new products, or they set monopoly high prices for their products.
The main features of the competitive advantage associated with the first mover strategy are the following:
1. This competitive advantage is based on the use of innovations (product, technological, organizational).
2. It involves significant risk, but if successful, it provides high profits and possibly excess profits due to the establishment of a price monopoly.
4. When using innovations, it is difficult to plan, since in this case it is impossible to use past experience, i.e. extrapolate trends established in the past into the future.
Key characteristics of a first mover strategy:
1. Lack of analogues of products.
2. The presence of potential demand for goods offered on the market.
Disadvantages (dangers):
High costs and high commercial risk associated with new products;
The danger of imitation - the rapid development of similar products by competitors;
Unreadiness of the market to accept the proposed new products;
Lack of distribution channels for new products;
Design, technological or other defect of a new product.