Organization of analytical support for strategic management

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National University of Life and Environmental Sciences

Organization of analytical support for strategic management

Lazaryshyna I.D.

Lazaryshyn Yu.V.



Introduction

An extremely high level of competition determines the constant search for innovative tools for obtaining competitive advantages through the development of the company's strengths. Strategic management accounting is so relevant in the 21st century. Combined with strategic analysis, it provides a perfect information base for making and supporting strategically-oriented management decisions.



Presenting main material

strategically oriented management innovative

The need to improve methodological approaches to the organization of economic analysis is due to the growing needs of the market and the need to find a flexible management system taking into account the principles of utility and the strategic orientation of enterprises.

Enterprises that have a clear direction and determination regarding the strategies of the relevant levels form competitive advantages in the market environment. Conceptual issues of the organization of strategic analysis in domestic and foreign literature are not considered enough, although they need their own understanding.

The organization of strategic analysis, like no other information technology, gravitates to the maximum possible observance of all the above-mentioned characteristics of the usefulness of information, which mutually complement each other, creating a universal product as a result - the corresponding strategies of the business entity. Therefore, the organization of strategic analysis should be functional - that is, the quantitative and qualitative characteristics of the analysis organization system should ensure a certain functional quality. The functional and qualitative subsystem of the organization of strategic analysis means the correspondence of the results of strategic analysis, organized according to the designed model, and the needs of users of strategic analysis and strategic management accounting.

The main elements of the functional quality of the subsystem of the strategic analysis organization, as research shows, are its functionality and functional simplicity. A strategic analysis organization requires greater costs to implement functional quality than an ongoing internal financial or management analysis organization, as it serves a wider range of needs.

The application of all the functional capabilities provided by the economic analysis organization system will mean the reproduction of the needs of users of analytical information within the maximum functional range. More often, in practice, they are consciously limited by the requirements to ensure the functional range of the organization of economic analysis that is relevant, suitable for obtaining and using in the process of management, that meets the requirements of the usefulness of economic information.

The choice among alternatives of strategic analysis organization subsystems should be made by comparing the functional capabilities and functional simplicity of the designed subsystems.

As a rule, most business entities choose an alternative that is characterized by greater functional simplicity and applicability compared to others. This especially applies to small and mediumsized enterprises with a small number of economic services.

It is possible to expand the range of possibilities due to the simplification of functional complexities. There are two options for simplification: formal and functional. According to the method of analogies regarding the organization of economic analysis, formal simplification for many business entities consists in the use of a relatively small number of analytical indicators in the process of strategic management. Functional simplification of the subsystem of the organization of strategic analysis means reducing the number of types and methods of economic analysis that are used for management and as a result leads to a decrease in the level of usefulness of economic information, which is realized in a decrease in the level of profitability according to the law of diminishing returns.

The elasticity of the ratio of functional capabilities and functional simplicity, the availability of the subsystem of the strategic analysis organization determines its quality. An increase in the quality of the economic analysis organization system is a decrease in the negative entropy characteristic of any system, an increase in the level of orderliness of the economic analysis subsystem in the management system. Qualitative results of strategic analysis are ensured through compliance with its principles, qualitative characteristics of the usefulness of economic information, which are the basis of the implemented model of the organization. The lower the level of reliability of the subsystem of the strategic analysis organization, the greater the need for duplicative organizational processes to insure the risk of receiving unreliable, untimely analytical information at the "output" of the system.

Depending on:

stage of development of the business entity (stage of the life cycle of the enterprise);

stage of evolution of enterprise management;

the size of own capital;

at the stage of introduction of strategic management accounting, the need for strategic analysis will be different.

The organization of strategic analysis should ensure:

creation of a basic strategic plan or a system of strategic plans in accordance with the "benchmarks" of strategic management accounting;

formation of corrective, flexible strategic plans.

The subsystem of the organization of strategic analysis will have certain differences, depending on whether the business entity forms a strategy for the first time, or whether the strategy is implemented during the analyzed period. Practically all existing approaches to the design of the organization of the analysis are discrete in nature and do not take into account the fact that the analysis should provide continuous diagnostics of the processes that took place at the enterprise, monitoring of the main evaluation indicators using the results of the analysis of the information bank, accumulated earlier.

When designing an organizational system of strategic analysis, it is necessary to determine which of the alternatives of strategic analysis is suitable for the enterprise in relation to its mission, goals, credo and functioning subsystem of strategic management accounting.

If the company applies target segmentation and positioning, the following options for organizing strategic analysis are possible:

а) undifferentiated analysis, which consists in providing information on the growth of financial results and the reduction of the general level of expenses, regardless of the types of products, goods, works, and services. In terms of content, this is a traditional internal financial analysis.

б) concentrated, differentiated analysis, which involves the study of the ratio of profit, price and costs in terms of individual types of products (goods, works, services). The concept of this analysis is implemented in the methodology of management accounting and analysis, and if it is not available - through the analysis of the compliance and dynamics of the indicators provided by the financial planning system.

в) mixed, which involves the simultaneous use of both options.

In order to consciously choose a variant of the basis of strategic analysis, it is necessary to take into account the following systemforming factors:

the scope of the enterprise's operational, investment and financial activities;

the intensity of using the results of strategic analysis in the subsystem of strategic management accounting;

the technology of forming evaluation indicators;

motivation of consumers of analysis results and the dynamics of their interests;

unsatisfied consumer needs.

The two determining conditions for the existence of a strategic analysis organization system are: first, system stability; secondly, its flexibility.

The mission of the strategic analysis organization is to preserve it as a dynamic self-regulating system.

The organization of strategic analysis must provide a management system:

on the one hand: the program of strategic analysis and monitoring of its implementation;

on the other hand: the development of elements for monitoring threats and significant deviations of factors of the external environment, based on the results of which the strategy will be adjusted.

The procedural construction of the information technology of the strategic analysis organization should contain:

Formation of a system of enterprise goals and criteria for their selection.

Identification of benefits and costs of strategic analysis.

The development of a strategic analysis program that will take into account the types of strategies and the mission of the enterprise.

Creation of information banks of data relating to the external environment.

Providing the analyst with information on alternative options for innovative, social, environmental, and technological policies of the enterprise for the future.

Creation of an incentive system, stimulation of initiatives for the production of new strategies.

Acquaintance with the information bank of data from the subsystem of strategic management accounting.

Development of alternative forecasts for the development of the enterprise, taking into account individual political, legal, market, production, organizational forecasts by developing a system of scenarios.

Creation of a system of criteria (requirements) for choosing optimal strategies and strategic programs.

To increase the degree of meaningfulness of the system of scenarios and their individual types, it is advisable to use factor analysis of scenarios. A feature of such a factor analysis will be that instead of the analyzed values of the indicators of the base (past) and reporting period, actual and forecast (according to the scenario) values are used.

The consequence of planning the organization of economic analysis is the well-established technology of the analytical process. It is conditionally divided into stages.

The organization of the analysis can be conventionally divided into three stages: preparatory, main and final [1, p. 164; 2, p. 40; 3, p. 72]. This procedural and organizational construction of economic analysis has a clear logical sequence and cause-and-effect orientation and characterizes economic analysis as a technological process of processing information.

There are different approaches to the content of the preparatory stage of analytical work (Table 1).

Table 1. Content of the preparatory stage of analytical work

The name of the components of the analytical work	M.G. Chumachenko and others [1, p. 164]	P.Y. Popovych, [2, p. 40]	V.V. Osmolovsky [3, p. 72]	Authors point of view
1. Formation of the goals and objectives of the analysis and directions for the use of its results	+			+
2. Choosing an organizational strategy for economic analysis				+
3. Development of a strategic and current plan and program of analytical work	+	+	+	+
4. Development of a program of analytical work	+	+	+	+
5. Selection and determination of the general state of the subject of analysis	+	+		+
6. Development of a system of synthetic and analytical indicators that characterize the object of analysis	+	+		+
7. Selection of significant quantitative and qualitative indicators for identified management needs				+
8. Distribution of work between the analysis performers according to administrative subordination	+			+
9. Development of layouts and forms of analytical tables, graphs, schemes	+	+		+
10. Acquaintance with the order on the accounting policy				+
11. Checking the reliability of information sources and studying the materials of previous surveys	+	+		+
12. Determination of specific performers and distribution of responsibilities between them, as well as other organizational issues	+			+
13. Training				+
14. Determination of the purpose and objects of analysis		+
15. Limitation of the range of necessary information for analysis (in accordance with the selected usefulness criteria)		+		+
16. Selection, verification and preliminary processing of researched information			+	+
17. Determination of the level of significance of deviations of significant indicators				+
18. Determination of the possibilities of standardization of economic analysis procedures				+
19. Determination of the level of access to sources of information of performers by degree of subordination				+
20. Restriction of unauthorized access to analysis results by users to ensure the economic security of the business entity				+

As evidenced by the data in Table 1, the views of domestic economists on the content of the preparatory stage of analytical work largely coincide, which is due to the very logic of preparation for the analysis process. At the same time, the list of components of the preparatory stage of economic analysis should be supplemented due to the need to take into account those conceptual provisions that are determined by the transition to market relations.

When preparing for conducting an economic analysis at the enterprise, it is necessary to take into account:

requirements of the order on accounting policy;

identified requirements for quality characteristics of usefulness analytical information;

time budget for its implementation;

the budget of relevant expenses.

If deviations are managed at the enterprise, layouts and forms of analytical tables are prepared at the preparatory stage, which will allow for the analysis of deviations according to the level of materiality. In the case when a business entity uses a traditional management mechanism, forms of analytical tables are formed at the preparatory stage, which allow providing management entities with appropriate, relevant analytical information.

A necessary component of the preparatory stage of economic analysis should be the limitation of the range of necessary information for analysis in accordance with the selected utility criteria.

Economic security of business entities includes, among others, an informational component. Therefore, at the preparatory stage of analytical work, the following procedures should be performed:

determination of the level of access to information sources of performers by degree of subordination;

restriction of unauthorized access to analysis results by users to ensure the economic security of the business entity.

Taking into account the above, it is advisable to perform the following types of work at the preparatory stage:

formation of goals and objectives of the analysis and directions for using its results;

choosing an organizational strategy of economic analysis in connection with the tasks of strategic management accounting;

development of a strategic and current plan and program of analytical work;

development of a program of analytical work;

selection and determination of the general state of the subject of analysis;

development of a system of synthetic and analytical indicators that characterize the object of analysis;

selection of significant quantitative and qualitative indicators for identified management needs;

division of work between analysis performers in accordance with administrative subordination;

development of layouts and forms of analytical tables, graphs, schemes;

familiarization with the order on accounting policy;

checking the reliability of information sources and studying the materials of previous examinations;

determination of specific performers and distribution of responsibilities between them, as well as other organizational issues;

instruction;

definition of the goal and objects of analysis;

limitation of the range of necessary information for analysis (in accordance with the selected usefulness criteria);

selection, verification and preliminary processing of researched information;

determination of the level of materiality of deviations of significant indicators;

determination of the possibilities of standardization of economic analysis procedures;

determination of the level of access to information sources of performers by degree of subordination;

restriction of unauthorized access to analysis results by users to ensure the economic security of the business entity;

formation of a data bank on research objects due to monitoring of the external and internal environment;

determination of directions and forms of use of the results to be obtained with the help of economic analysis;

checking the level of reliability of the analysis information base;

identification of criteria for the usefulness of analytical information in relation to users.

The second stage of analytical work - the main one - is the most responsible. Depending on the performers, the defined goals and objectives of the analysis, the functional capabilities of the analysis base, the following alternative approaches to the analysis procedures are possible: formalized, strictly regulated in time and scope; creative, creative.

At this stage, analytical processing of the studied indicators is carried out.

The points of view of scientists-analysts regarding the content of the experimental stage of the analytical process basically coincide (Table 2).

Table 2. Content of the main (research) stage of analytica work

The name of the components of the analytical work	M.G. Chumachenko [1, p. 164]	P.Y. Popovych, [2, pp. 43-44]	V.V. Osmolovskyi [3, p. 75]	Authors point of view
1. Collecting and processing the necessary information	+	+	+
2. Checking the completeness and reliability of the reported data, performing arithmetic, logical and balance summary of indicators	+	+
3. Determination of general deviations of the values of performance indicators from the basic values	+	+	+
4. Identification of interacting factors and calculation of their influence on the change in the value of indicators	+	+	+	+
5. Assessment of strengths and weaknesses, opportunities and threats in relation to the studied phenomena and processes				+
6. Identification of excess costs and unused opportunities (prospective reserves)	+	+	+	+
7. Predictive analysis of scenarios				+
8. Retro-analysis of scenarios				+
9. Systematization of accumulated materials		+		+
10. Evaluation of the efficiency of the enterprise		+

The first two components of the main (research) stage: collecting and processing the necessary information; checking the completeness and reliability of the reported data, conducting an arithmetic, logical and balance summary of indicators are in fact a set of technical operations and computational procedures and by their functional purpose should be included in the first, preparatory stage.

To ensure the systematicity of the study of phenomena and processes, it is expedient not only to assess the dynamics and nature of trends of indicators that characterize these socio-economic, financial and economic phenomena and processes, but also to determine their strengths and weaknesses, opportunities and threats, which is relevant from positions of strategic orientation of the enterprise.

In addition, if traditionally at the main stage a study of individual indicators was carried out, in connection with the increase in the number of multi-alternative decisions, a necessary element of this stage is a retrospective analysis of scenarios, the implementation or deviation of which caused such a level of evaluation indicators and their dynamics, which are observed at the enterprise.

An objectively necessary component of the main stage of the analytical work of economic entities is the predictive analysis of scenarios. With its help, by selecting the identified indicators, an expert assessment of the most acceptable, optimal option for further actions and processes takes place in accordance with the selected management tactics and strategy.

Summarizing the above, we believe that the main stage of organizing analytical work should include the following works:

collecting and processing the necessary information;

checking the completeness and reliability of the reported data, conducting an arithmetic, logical and balance summary of indicators;

determination of general deviations of the values of task performance indicators from basic values;

identification of interacting factors and calculation of their influence on the change in the value of indicators;

assessment of strengths and weaknesses, opportunities and threats regarding the studied phenomena and processes, taking into account the information base of strategic management accounting;

identification of unnecessary costs and unused opportunities (promising reserves);

predictive analysis of scenarios;

retroanalysis of scenarios;

systematization of accumulated materials;

assessment of the efficiency of the enterprise;

research of the technology (methodology) of the formation of evaluation indicators in order to comply with the condition of their comparability;

monitoring of internal and external environmental threats.

Organizational and procedural construction of the final stage of economic analysis should include, according to most scientists [1, p. 164-165; 2, pp. 44-45; 3, p. 77], the following elements:

carrying out a final assessment of activity and summarizing the results of the analysis;

development of conclusions and proposals based on the results of the analysis in accordance with its goals and objectives;

the development of organizational and technical measures to eliminate shortcomings, increase the efficiency of the use of identified reserves and opportunities;

preparation of executive acts, appointment of persons responsible for the implementation of decisions;

control over the introduction into production of proposals that were put forward based on the results of the analysis.

The gradual transition to market relations in Ukraine necessitates the need at the final stage of the analysis to convey its results to the owner and to the management staff of the business entity, who has access to this information.

In addition, the effectiveness of the economic analysis at the final stage will increase if the threats identified at the previous stage are neutralized.

If the company has created or is creating a financial monitoring system, replenishment of the information bank should be a mandatory component, the result of the analytical work.

Summarizing the above, we believe that the following types of analytical work should be performed at the final stage:

determination of strengths and weaknesses, opportunities and threats in relation to the objects of analysis, taking into account the information base of strategic management accounting;

systematization of the results obtained at the previous stage;

generalization and detailing of determined indicators in accordance with needs;

replenishment of the information bank of data on the internal and external environment of the enterprise;

development of measures aimed at minimizing or eliminating negatively acting indicators;

determination of optimization directions for individual economic phenomena, processes and their results, as well as financial and economic activity as a whole, taking into account the priorities of tactics and strategy of the enterprise;

appointment of persons responsible for the implementation of measures;

if necessary - preparation of relevant organizational and administrative documents;

control over the implementation of measures;

making corrections to the order on accounting policy;

preparation of analytical information for publication (in accordance with the requirements of current legislation).



Conclusions

The economic analysis organization system will be perfect when the costs associated with its implementation and operation will be compensated by increasing the level of solvency, financial independence, profitability, increasing the value of business, and increasing the competitive advantages of the business entity. The modern system of organizing economic analysis in the conditions of martial law and post-war economic recovery should be aimed at solving these issues.



References

1. Economic analysis: Study. manual / M.A. Bolyukh, V.Z. Burchevskyi, M.I. Gorbatok, etc.; Under the editorship Acad. NASU, prof. M.G. Chumachenko. - K.: KNEU, 2001. - 540 p.

2. Popovych P.Y. Economic analysis of business entities. Textbook. - Ternopil: Economic Opinion, 2001. - 454 p.

3. Theory analysis economic activities: Teaching / V.V. Osmolovsky, L.I. Kravchenko, N.A. Rusak and others; Under Society _ ed. V.V. Osmolovskyi. - Plural: New knowledge, 2001. - 318 p.

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