Profitability management as element of enterprises competetiveness improvement

Shashyna Maryna Volodymyrivna

Doctor of Economic Sciences, Associate Professor, Professor of the Department of Economics and Entrepreneurship, National Technical University of Ukraine "Ihor Sikorskyi Kyiv Polytechnic Institute", Kyiv,

Serediuk Yurii Mykolayovych

Master of the Department of Economics and Entrepreneurship, National Technical University of Ukraine "Ihor Sikorskyi Kyiv Polytechnic Institute", Kyiv

Abstract

Profitability management is an important factor in the growth of activity efficiency and contributes to the improvement of competitiveness and viability of enterprises in the long term. The efficiency of activity should be understood as the relationship between spent production factors and the obtained result, that is, obtaining the maximum possible result under the given restrictions.

In conditions of high competition, the main role in strengthening competitiveness is played by non-systemic factors. The main element of improving competitiveness is the orientation of enterprises to intensive development, which requires them to constantly search for internal sources of increased activity efficiency. Increasing the efficiency of production, the level of material and technical equipment, improving the organization and quality of management at all levels, optimizing production, improving the qualifications of personnel, optimizing the structure of assets and capital are those internal reserves that can ensure the growth of economic efficiency.

The profitability management model should facilitate the realization of the entire internal potential of the enterprise and ensure the management of the process of profit formation at all levels. It should determine potential ways and reserves of economic efficiency growth. For this purpose, the profitability management model should include an appropriate information base and a special system of indicators, which is able to reliably assess the parameters of the internal and external environment of the enterprise at any time and determine their compliance with the strategic goals of the enterprise's development, and in case of deviations, to signal about it.

The formation and implementation of the profitability management model requires its harmonious integration into the general enterprise management model and must correspond to the overall development strategy. At the same time, model development is a complex complex process that requires assessment and consideration of the influence of systemic and non-systemic factors.

Keywords: profitability management, effective functioning, profitability management model, profitability factors, enterprise competitiveness.

Анотація

Середюк Юрій Миколайович магістр кафедри економіки і підприємництва, Національний технічний університет України «Київський політехнічний інститут імені Ігоря Сікорського», м. Київ,

Управління прибутковістю є важливим чинником зростання ефективності діяльності та сприяє покращенню конкурентоспроможності та життєздатності підприємств в довгостроковій перспективі. Під ефективністю діяльності варто розуміти взаємозв'язок між витраченими факторами виробництва та отриманим результатом, тобто розуміється отримання максимально можливого результату за заданих обмежень.

В умовах високої конкуренції основну роль в посиленні конкурентоспроможності відіграють несистемні чинники. Основним елементом покращення конкурентоспроможності є орієнтованість підприємств на інтенсивний розвиток, що вимагає від них постійного пошуку внутрішніх джерел зростання ефективності діяльності. Підвищення ефективності виробництва, рівня матеріально-технічного оснащення, покращення організації та якості управління на всіх рівнях, оптимізація виробництва, покращення кваліфікації персоналу, оптимізація структури активів та капіталу є тими внутрішніми резервами, які здатні забезпечити зростання економічної ефективності.

Модель управління прибутковістю має сприяти реалізації усього внутрішнього потенціалу підприємства та забезпечувати управління процесом формування прибутку на всіх рівнях. Вона повинна визначати потенційні шляхи та резерви зростання економічної ефективності. З цією метою модель управління прибутковістю має включати відповідну інформаційну базу та спеціальну систему показників, яка здатна в будь який момент часу достовірно оцінити параметри внутрішнього та зовнішнього середовища підприємства і визначити їх відповідність стратегічним цілям розвитку підприємства, а у випадку їх відхилень просигналізувати про це.

Формування та впровадження моделі управління прибутковістю вимагає її гармонійної інтеграції у загальну модель управління підприємством та має відповідати загальній стратегії розвитку. В той же час розробка моделі є складним комплексним процесом, що потребує оцінки та врахування впливу системних та несистемних факторів.

profitability management competetiveness improvement

In the conditions of extremely high level of competition, which is characteristic of the modern economic system, the orientation of the management of the enterprise to the growth of the economic efficiency of its activities is becoming more and more important. The challenges currently faced by business entities require a constant search for ways to strengthen market positions. The rapid pace of globalization of national economies further exacerbates the competitive struggle. Domestic enterprises are particularly sensitive to the negative impact of globalization processes, because of Ukraine's relatively recent transition from a planned to a market economy, they are significantly inferior to foreign economic entities in terms of scientific, technical and financial development, which further complicates their achievement of their strategic development goals. Therefore, to ensure competitiveness and viability in the long term, it is extremely important for domestic enterprises to borrow experience from leading foreign enterprises and implement their best practices in their own activities, especially in the field of management organization, as well as scientific, technical and innovative development. Such actions will contribute to faster adaptation and transformation of domestic enterprises in accordance with the trends of globalization processes.

As you know, on February 24, 2022, Ukraine faced an unprovoked military aggression, which there is currently a significant drop in the national economy - the business activity of business entities has fallen to a critically low level. In such conditions, management's focus on economic efficiency is one of the factors of stabilizing the macroeconomic situation and ensuring the basic level of social welfare in conditions where a significant part of resources is directed to the protection of national security.

Analysis of recent research and publications

In domestic and foreign economic literature, you can find many scientific works and studies devoted to the issue of profitability of enterprises. The essence of profitability as an economic category is defined in the works of such foreign scientists and researchers as D. Galbraith, F. Knight, J. Van Horn, E. Brigham. In Ukraine, the problem of profitability was taken care of and repeatedly highlighted in his works by I. Blank, M. Ohiychuk, V. Blonska, R. Skalyuk, V. Khuda, L. Denisenko, T. Osypova, R. Antonyuk and others. However, the dynamism of the economic system, which is expressed through the transformation of economic relations in accordance with current social needs, as well as the uncertainty of its development, leaves room for further research into the issue of profitability.

Formulation of the goals of the article. The article aims to reveal the economic essence of the concept of "profitability management", to justify the importance of profitability management in the process of improving the competitiveness of enterprises and to propose a model of profitability management that can ensure the strategic development of the enterprise in conditions of high competition.

Presenting main material

The rapid process of transformation of the system of economic relations in Ukraine towards liberalization influenced the strengthening of market mechanisms within this system, thus improving its ability to self-regulate. Such circumstances brought with them undeniable advantages in the form of a more efficient distribution of resources, which are directed to those types and areas of activity where they can provide higher productivity. In addition, the principles of the market mechanism contribute to self-realization of entrepreneurs and their desire to improve all aspects of activity, scientific and technical progress, flexibility and adaptability of production, freedom of economic agents in choosing economic solutions. However, the market mechanism has a certain list of disadvantages, the main of which is the tendency of the market to unstable development with crises, which poses threats to the viability of enterprises, therefore ensuring the profitability of activities is one of the primary tasks that they must solve in the process of functioning.

In order to understand the essence of the concept of "profitability", it is advisable to refer to the interpretations that have already been provided by many domestic and foreign scientists and researchers.

So, for example, R. Antonyuk believes that profitability is a stable economic phenomenon, which manifests itself as the confirmed ability of an enterprise to generate a positive financial result from the implementation of both the main and all economic activities, which consists in the excess of income over incurred expenses in an amount sufficient for effective further functioning [1].

T. Osypova believes that the basis of profitability is the profit itself, which in general determines the result of the financial and economic activity of enterprises as business entities. Therefore, profit represents its results [2].

According to M. Oyichuk profitability is a type of efficiency that characterizes the performance of economic systems (enterprises, territories, national economy). The main feature of such systems is the valuable nature of the means (expenses, costs) of achieving goals (results), and in some cases, the goals themselves (in particular, making a profit) [3].

As can be seen from the above definitions, profitability is a criterion for the efficiency of activity and is inextricably linked to making a profit. However, despite the proximity of the concepts of "profitability" and "profit", they are still not identical, because the concept of profitability is much broader than the concept of profit - profit expresses the absolute effect of the enterprise's activities and characterizes its success in general, not taking into account the resources and conditions spent , for which it was obtained, while profitability expresses the relative effect of activity and directly indicates the level of quality of the obtained profit.

Such a close relationship between profitability and profit gives reason to believe that the management of the process of profit formation directly affects the level of profitability of the enterprise. The main goal of profit management is to maximize its quality and absolute value in accordance with the available potential and conditions of the market environment. In order to more broadly consider the essence of the concept of "profit management", it is worth considering the interpretations given by some scientists and researchers. For example, V. Blonska claims that profit management represents the construction of a management system that considers tactical and strategic aspects of management, aimed at increasing the final results of the business entity, which is considered as a set of interrelated elements, each of which performs a certain job, the joint action of which provides achievement of the mechanism of obtaining a profit of a given amount [4].

R. Skalyuk defines enterprise profit management as a complex process of developing and implementing sound management decisions in terms of the processes of formation, distribution, and use of profit, aimed at ensuring a sustainable increase in profitability, market value and achieving long-term economic development of the enterprise, which contributes to the successful implementation of its main goal [5].

V. Khuda, in turn, believes that profit management is a purposeful, systematic process of preparation, evaluation, selection and implementation of alternative management solutions on all issues of its formation, distribution and use at a specific trading enterprise [6].

Having considered these interpretations, we can conclude that the essence of the concept of "profit management" is the process of developing, adopting and implementing management decisions aimed at obtaining such a level of profit that is able to simultaneously satisfy the interests of the owners and ensure the reproduction of activities. However, we believe that the given interpretations require critical consideration, as well as certain clarifications and changes. Taking into account that the results of any business process are reflected in profit, and the increase in activity efficiency and improvement in the quality of profit is a consequence of their optimization, the improvement of the final result of the activity should not be achieved at the expense of the deterioration of its quality, therefore profit management should aim at the same time achieve an increase in the absolute value of profit, as well as improve its quality. It should be noted that the efficiency of activity should be understood as the relationship between the spent factors of production and the obtained result, that is, obtaining the maximum possible result under the given restrictions. An increase in efficiency can be achieved by using fewer resources to create such a result, or by using the same number of resources or greater output with relatively fewer resources to create a greater result [7]. So, based on the above, we believe that profitability management is the kind of enterprise management that can ensure the generation of profit at the level that is necessary for further effective activity and the realization of the strategic goals of the enterprise's development.

Profitability management should include a set of measures that cover all levels of the process of formation, distribution and use of profit. In the conditions of high competition, the main element of improving competitiveness is the orientation of enterprises to intensive development, which requires them to constantly search for internal sources of growth of activity efficiency. The main task to be solved by the enterprise in the process of profitability management is the minimization of the negative effects of factors that affect the economic efficiency of its activities. Characterizing the factors influencing the efficiency of activity, it is advisable to divide them into two types - systemic and non-systemic (Table 1).

Systemic factors are characterized by their ability to influence all market participants. These factors include political and legal aspects, that is, the constitutional process in the state, its socio-cultural development, natural and climatic conditions, fiscal policy, macroeconomic condition, investment attractiveness of the state, as well as its technological policy.

Table 1

Source: compiled by the authors