Analysis of Existing Approaches to Management of Industrial Enterprises

Author Name(s): *Anton N. Karamyshev
Author Email: antonkar2005@yandex.ru

Abstract

The management system of an industrial enterprise is the most important factor for its competitiveness. The main characteristics of the management system are the speed of making reasoned management decisions, the ability to identify the dynamics of market needs and to modify the internal environment for the purpose of producing products with the necessary characteristics within the needed times and within the limits of a determined price. There are two approaches to formation of management system: organization management (based on similar functions performed by the structural unit) and process management (based on business processes). Process approach to management involves modelling and optimization of the company’s activities, modification of the management system in order to eliminate all types of losses, increase of the company’s level of susceptibility to the market needs and increase of the rate of response on the part of the company’s internal environment in order to meet these needs. The article describes the advantages and disadvantages of these approaches to management, offers the generalized management model based on the process approach, and also identifies the factors of higher quality of process management of an enterprise within the market economy conditions. It analyses the objectives of introducing process-based technologies, the stages of formation of the process management system, its specific features, as well as it offers the basic trends in development of process-based management within the Russian companies. The shown objectives and stages of development of process management were subjected to additional analysis, determining the main approaches to their implementation, as well as their particular aspects were shown from the author’s point of view.

Introduction

Historically, the first approach to enterprise management was the organization approach. Its essence consists in carrying out similar works within the framework of a separate structural unit (department, division, bureau). The basis for structural unit management are regulatory documents which determine its goals, objectives, organizational structure, staffing and their job descriptions.

Organization approach to management has the following shortcomings [1-5]:

  • employees of structural units are focused mainly on performance of standard job responsibilities, meanwhile the necessity of performing non-standard work is often resisted by employees of structural units;
  • employees have a poor understanding of the activities carried out in other structural divisions;
  • work technologies in structural units are often hidden by employees, which makes it difficult to analyse their effectiveness;
  • there is no direct motivation to master the most advanced technologies for performing works;
  • career prospects of an employee are largely determined by the subjective assessment of the manager;
  • analysis of effectiveness of the chain of commodity production is limited only to production and service processes;
  • an employee’s performance evaluation is carried out by the manager subjectively due to the absence of objective individual performance targets related to the operational tasks of the enterprise;
  • management positions are often occupied not by the most efficient employees, but by those most in line with established institutions in the corporate governance system;
  • initiative and innovation of employees is often suppressed by managers who are afraid of career competition;
  • the right to make decisions belongs primarily to the managers, which leads to a loss of time for various approvals, meetings;
  • organization management system is quite static, which leads to a slow response to changes in market and employees’ needs;
  • distribution of the bonus fund of the structural unit is carried out by the manager on the basis of the subjective evaluation.

The advantage of this approach is a rigid intra-organizational hierarchy and discipline.

The second approach to management, which largely minimizes the shortcomings of the organization approach, is the process approach.

An enterprise is a set of interrelated types of works, each of which consumes resources of the enterprise (labour, material or information resources). The result of work is a certain product (material, information product or service); the result of the whole set of works – a marketable product, as well as services for its maintenance and servicing [1,2].

The process approach presupposes specification of all these works and definition of their interrelations on the basis of input (consumed) and output (result) products. Interconnected works at the enterprise are a network where ridges are separate jobs, and network nodes are products. Each product can be both input and output.

Conclusion

Thus, the conducted analysis revealed the advantages and disadvantages of organization and process approaches to management. Process management technology, in comparison with the organization approach, has a number of advantages that are important within the conditions of a highly competitive environment. Introduction of the process approach allows to improve the quality of the enterprise management, reduce its costs, obtain a basis for business processes automation, analyse and improve the technologies for performing business processes.

References

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