ENTERPRISE FINANCIAL POTENTIAL: KEY ELEMENTS AND MODELING PRINCIPLES
National University of Life and Environmental Sciences of Ukraine
Ph.D, Associate Professor
Ph.D, Associate Professor
Zaporizhzhya Institute of Economics and Information Technologies (Ukraine)
Financial potential is an important part of enterprise activities. The technique of the enterprise’s financial potential assessment is offered in the paper. The study defines key stages for managing the financial potential of enterprises, which allows to emphasize the elements that can be useful for economic development. It is based on strategic modeling principles of the enterprise management. The study results can be used to assess enterprise purposes and develop the formation goals of its financial potential.
There are different approaches for determining the structure of the enterprise’s potential in the latest economic researches. Many of the scientists consider the resource structure of the potential, but everyone allocates a different number of components. Some researchers include in the composition of the potential only the means of work, others – the means of work and workforce, the third – the means of work, workforce, and natural resources used in the production process, the fourth – means of work, workforce, and objects of work.
In the structure of strategic potential, the “Finance” perspective is represented by economic, investment, and financial potential. Investment potential is the implementation of the developed investment policy principles into practice. It determines the properties and dynamism of investment activity. The main condition for the justification of the term “investment potential” is the need for the enterprise to have the knowledge and the possibility of attracting investment resources together with the organization’s ability to increase the market value of the business through the implementation of investment projects. Thus, the investment potential is based on the knowledge that allows adapting the intellectual and production potential for increasing the financial potential. So, the investment potential is an opportunity for an enterprise to invest in its own development.
The authors have argued that the enterprise financial potential modeling process is aimed to solve the following problems: continuous development of the organization and production through the search, selection, development, as well as the implementation of innovative ideas; formation of the base of innovative proposals and ways for their implementation; organization of the processes of problems’ identification, that may impede the development of the enterprise, as well as the development of measures to address them; encouragement of the staff to develop innovative ideas, creating a climate of innovation.
The authors have suggested that the structure of the enterprise’s potential requires modeling of business processes and synergy effect assessment by the following stages:
Step 1. Formulate the strategic, tactical, and current goals for the entire enterprise, and for its units and individual activities.
Stage 2. Define a set of strategic resources for each goal. The necessary coordination of this process is optimizing of the structure of the enterprise’s potential with the first stage.
Stage 3. Propose an alternative variants of strategic resource sets for the purposes of the enterprise, their evaluation, the possibility of combinations of several sets. Formulating final conclusions on the choice of resources.
Stage 4. Rationally distribute the selected resources and determine their profitable direction to ensure the high competitiveness of the enterprise’s potential.
Step 5. Evaluate the results obtained after the first four stages of optimizing the structure of the enterprise’s potential.
The enterprise’s financial potential management strategy model is presented by correlating stages, where each stage is oriented to a certain task (submodels). The authors obtained the result where the main stages of the financial potential management formation model include next elements. Analysis of the enterprise’s strategy and allocation of the elements, which help to formulate the strategy of financial potential management. Development of goals, which consists of analysis and forecast of economic conditions of the environment; analysis of the enterprise’s internal environment; identification of strengths and limitations. Leading policy of adaptation to environment conditions. Searching for new sources for getting loans, and definition of financial resources’ accumulation, formation, and distribution strategies. Definition of financial potential management strategies. Financial tools, tax planning, organizational and legal execution, planning and control over cash flows and resources, along with analysis and evaluation of financial risks. Development and realization of financial potential management strategy. Financial potential management analysis and control. Using results of the analysis for the specification of the enterprise’s development strategy. This model helps to form financial potential management strategy and define the enterprise’s competitiveness.
The study results have shown the forming the enterprise’s financial potential management model, based on enterprise’s general strategy and allowing to emphasize the elements useful in the creation of financial potential.
Implementation of those results will allow developing financial potential formation goals, building forecast, separating the main directions of accumulation, formation, and distribution of financial resources as well as using of assessment of financial potential as enterprises development determinant.