Organizational and Economic Potential of Joint Engagement of Venture Capital and Business Process Re-engineering in the Marketing Activities of Industrial Enterprises

Adapted from [2].

Ukrainian industrialists being aware of the critical need for the innovation development faced the challenge of attracting significant funds, which are indispensable for the implementation of real, relevant projects, in contrast to the empty slogan proclamation. First, financial incentives require new technologies that can launch an entire production chain in many other sectors of the economy, create new jobs, and increase foreign exchange earnings.

Given the scarcity of funds, it is imperative to pay attention to the projects based on rapidly developing opportunities. In this sense, it is difficult to overestimate the role of venture capital. The authors carried out numerous studies and published their results, which clearly show rich prospects of engaging in venture capital to support Ukrainian industrial enterprises in the difficult period of sharp artificial congestion of the markets and the critical need to find new promising sources of filling the portfolio of contracts for the preservation and development of their enterprises. It is important that venture activities can both contribute to increasing the scientific and technical level of production and influence the dynamics of the entire economic complex. Venture companies are generators of new ideas based on extensive scientific and technological breakthroughs. These ideas and relevant innovations cause modernization and structural reorganization of the entire economy. Moreover, it is worth noting that the current crisis conditions of the Ukrainian industry can form new economic thinking, based on new technologies, new realities and new types of economic activity. Thus, our common task is to take advantage of this opportunity [3].

The key author's proposal is the exceptional need to realize that venture capital activities should not be considered only in terms of financing. Such a limited viewpoint makes it impossible to comprehend the essence of venture activities, which, in general, leads to errors in its implementation. In our opinion, principles of the organization of venture capital should be considered not only in terms of financing and risks but also in terms of marketing (from research to promotion and sale), production (scientific and technical level of venture ideas), management (specifics of organizational and managerial processes) and innovations (all aspects of the demand for the results of a particular venture) [3].

Under these conditions, the authors consider the research of such scholars as

L. M. Taranyuk, O. V. Vynohradova, T. I. Lepeyko, A. V. Cherep, N. I. Chukhray,

K.L. Potopa, V. M. Tupkalo conducted in the sphere of improvement of the competitiveness of domestic industrial enterprises through the involvement of business process re-engineering

[4] . The authors propose for consideration the scientific findings of D. S. Kobyzsky, which highlight the peculiarities and perspectives of business process re-engineering in the marketing activities of industrial enterprises for qualitative and rapid improvement of their overall economic status and strategic perspectives. The articles to be considered are “Organizational and economic provision of marketing activity re-engineering of Ukrainian machine-building enterprises” [5]; “New approaches to the development of the process of marketing strategies of machine-building enterprises in the framework of business process re-engineering” [6]; “Organizational and economic potential of business process re-engineering in the marketing activities of an industrial enterprise to ensure its effective innovation” [7].

Thus, the authors think it expedient to study organizational and economic potential of the joint engagement of venture activities and business process re-engineering in the marketing activities of industrial enterprises.

Problem statement. Analyzing the basic principles of venture business and business process re-engineering, the authors pay attention to fundamentally similar features. In the first place, both venture activities and business process re-engineering are related to the innovation activities of enterprises. At the same time, most bold innovative projects involve high risks. Consequently, progressive approaches to the risk management and innovation activity are equally needed for a successful implementation of both venture business and business process re-engineering. Also, business process re-engineering, as well as venture capital activities, require the achievement of fundamental results, since simply moderate improvements do not justify the necessary costs and risks that accompany the implementation of appropriate measures. In line with the need to raise funds, both directions are closely related to the attraction of investments. A common task is to bring domestic industrial enterprises to a new level of competitiveness, including international, to build a new model of their activities in the new markets and to ensure the sustainable development of the industry as a whole. Moreover, both directions have similar problems and obstacles for their successful implementation, such as scarcity of financial resources, lack of clear state innovation policy, economic instability, lack of economic interest of economic entities in new developments, innovations, lack of competition of scientific and technical products in the domestic market, imperfect motivational work with personnel, functional principles of organization, organizational remnants of the planned economy, outdated approaches to the principles of decision-making, and excessive organizational superstructure that does not provide benefits to key processes, etc. Thus, venture activity and business process re-engineering in the marketing activities of domestic industrial enterprises, according to the authors, represent a promising combination, where there is a potential opportunity to solve the problems of each of the directions and create the prerequisites for the future sustainable development of domestic industrial enterprises.

The purpose of the research is to study the organizational and economic potential of joint venture capital engagement and business process re-engineering in the marketing activities of industrial enterprises for the qualitative improvement of the competitiveness of the domestic industry. To achieve this goal, we should solve the following tasks: to analyze common features and principles of venture business and business process re-engineering of industrial enterprises and common phenomena hindering successful implementation; to explore the essence and role of the organizational structure in the field of business process re-engineering and venture activities; to study possibilities of organizational and economic model of marketing activity of the enterprise in the course of business process re-engineering and corresponding opportunities to promote the effective implementation of venture activities; to identify key aspects of organizing innovation in the business process re-engineering and the corresponding effect for the successful implementation of venture activities; to determine the principles of developing and implementing marketing strategies in terms of business process re-engineering that form the basis of planning the venture business of an industrial enterprise.

Research results.In Ukraine, only a few years ago the venture business was for the chosen people: Ukrainian programmers working for Western companies found rational ways to solve technological problems and were offering (selling) their solutions to these companies. For example, the Kharkiv programmer D. Balin, a founder of DB Best Technologist, developed a database management technology that was purchased by Microsoft in 2005. The contract was estimated at 100 million dollars. Another example is the purchase of the Ukrainian Viewdle, by Google Company (the transaction is estimated at 30-45 million dollars). The world would never have known about the invention of I. Sikorsky, which he tried to implement in Kyiv if he had not emigrated, and the American government had not allocated 3 million dollars for the development of helicopters for the US Army. Thus, we have a clear awareness that the innovative way of development requires the attraction of significant resources, which is a hindrance when it comes to the activities of small and medium enterprises. They are capable of generating the idea that they cannot be implemented due to the lack of appropriate resource potential [3].

Therefore, it is obvious that today's venture activities should not be limited to the projects for IT companies, and Ukrainian industrial enterprises have the appropriate capabilities and potential to participate in the venture business. According to the authors, while attracting investments at first hand, Ukrainian industrial enterprises should also make a significant step forward in transforming the internal organization and principles of constructing business processes for the effective use of the resources. Moreover, it is the business process reengineering that is positioned as a practical methodology for the new design of enterprises adapted to the current challenges of the business environment.

By studying the basic principles of re-engineering by M. Hammer and J. Champi [8], we will focus on the following points: business process re-engineering is closely linked to the generating of innovations, business process re-engineering is customer-oriented, business process re-engineering forms an enterprise capable of adapting to changing external conditions, business process re-engineering requires time-consuming work with personnel, in particular, selection, grouping, and organization of motivational policies, business process reengineering is not about moderate improvement and one-time profits, business process reengineering is designed to achieve strategic long-term goals of the business owner.

Similarly, defining tasks for the venture capital, we can state that profit maximization is no longer the main goal for the vast majority of economic entities. In the era of continuous automation and narrow specialization, enterprises define their main goals as follows: regular income, entry into new markets, expansion of business, etc., that is, long-term strategic goals. In addition, venture activity is designed to provide a breakthrough economy, that is, an economic activity based on investments in new business projects that will provide not only jobs for thousands of skilled workers but also allow making a historic leap in time and reduce Ukraine's lag in several decades. The way it was one in Taiwan, South Korea, Hong Kong, Singapore, Poland, Estonia. For the successful development of any activity, appropriate conditions must be created. For the venture activity, it is a venture capital market, the development of knowledge-intensive industries and the creation of conditions for the innovation activity [3]. We will focus on the development of the innovative activity of industrial enterprises.

According to S. M. Illyashenko, the innovative activity of the enterprise should be guided by the following principles:

- adaptability - the desire to maintain a certain balance of external and internal development opportunities (internal motivations of economic entity and external ones generated by the market environment);

- dynamism - dynamic matching of goals and incentives (activities of enterprises, managers, specialists, employees);

- self-organization - independent provision of operating conditions, that is, self-support for the exchange of resources (informational, material, financial) between the elements of the production and sales system of the enterprise, as well as between the enterprise and the environment;

- self-regulation - adjustment of the management system of production and sales activities of the enterprise in accordance with changes in operating conditions;

- self-development - independent provision of conditions for the long-term survival and development of the enterprise (according to its mission and the approved motivation of activities) [9].

Considering the above-mentioned provisions, the authors focus on the work of D. S. Kobyzskyi “Organizational and economic potential of business process re-engineering in the marketing activities of an industrial enterprise to ensure its effective innovation” [7]. According to the author's deep conviction, the export of innovations should be an integral part of the innovation activity of industrial enterprises. This is the key area of activity to achieve the ultimate goal for Ukrainian machine building - improving the economic situation through the qualitative updating of the nomenclature and the development of new export markets. It is worth noting that Ukrainian machine-building innovation is potentially demanded in foreign markets. We are accustomed to the statements about the prospects of opening joint industrial ventures in Ukraine with appropriate import of innovations, and few speak about potential export of Ukrainian innovations and the opening of joint ventures in foreign markets based on the Ukrainian technical innovation. Marketing of enterprises most of all should be interested in the development of the economy based on innovation. Moreover, an innovation of the economy should occur in the development of high-tech products (innovations), as well as in the use of innovations in all spheres and areas of activity. Therefore, marketing and enterprises, in general, should be innovative enough to meet the tasks of innovation. Innovations are of significantly higher value and importance than raw materials and low-tech products, and the export of a high-tech product or an entire production cycle is more economically attractive. To do this, a whole complex of organizational and managerial aspects that would allow for the effective implementation of the exported production should be changed in the new business environment. Thus, the scheme of innovation attraction proposed by the author, in which organizational and managerial innovations are imported for the most effective adjustment of the domestic policy of innovation development and the subsequent successful export of generated innovations on based on a new innovative organization of the enterprise, looks absolutely logical [7].

According to the author's plan, imported innovations should penetrate every business process that needs to be changed, rebuild the most optimal structure of business processes and pass the necessary number of relevant iterations of contacts with business processes of the enterprise. Thus, the re-engineering of the marketing activities of industrial enterprises can be considered as an innovation that is being imported. Therefore, re-engineering can be considered an innovation in marketing, as well as a technique for establishing effective marketing work with innovations. That is, the import of one innovation is carried out for the successful export of other innovations [7].

A similar approach, as well as the above-mentioned basic principles of re-engineering and venture business, have prompted the authors to propose an approach in which business process re-engineering acts as a managerial innovation; venture capital is involved for its implementation, and in turn, business process re-engineering ensures the construction of the enterprise with the correct organization of business processes and the construction of principles for the effective use of venture capital (Figure 1).

Such an approach is the best illustration of the definition of venture capital, as a share capital, provided by professional firms that invest with the management to create, develop or transform a privately-owned company with a significant growth potential [10].

By synthesizing the common features of venture capital activities and the principles of business processes re-engineering of the marketing activities of industrial enterprises, the authors also feature the potential of transforming the threats of the business environment to the possibility of business processes re-engineering determined by D. S. Kobyzskyi [6]. According to the authors' deep conviction, the current complicated political and economic situation, which creates conditions for doing business for Ukrainian industrial enterprises, implies the existence of hidden opportunities. Difficulties make us abandon traditional business principles, but also open up opportunities for sharp re-design of enterprises and changing vectors of strategic development. The enterprises able to use these non-obvious opportunities will form a new image of the Ukrainian industry. Thus, the authors again refer to the concept of the breakthrough strategy of industrial enterprises, which is a general comprehensive program of activities for all levels of enterprise management (corporate, business and product level). It is aimed at implementing the directions of development related to the change in its mission, reformatting business portfolios, changing the organizational structure of management and generally re-positioning the company in the market - that is, everything among the tasks of business processes re-engineering of marketing industrial areas.