Статья опубликована в рамках: Научного журнала «Студенческий» № 10(138)
Рубрика журнала: Экономика
Секция: Менеджмент
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THE PROBLEM OF DEVELOPMENT OF STRATEGIC AGILITY OF COMPANIES IN CONDITIONS OF AN UNSTABLE ENVIRONMENT
ABSTRACT
This article examines the specifics and shortcomings of measures to help businesses that have received negative impacts from the crisis caused by the COVID-19 pandemic. The purpose of the article is to study the problems of developing the strategic agility of the company in the conditions of instability, taking into account the existing and missing business support measures. The research methods used were a literature review and a review of publications on the topic of helping businesses in the pandemic, as well as modeling a list of recommendations for the development of resilience of company leader and the development of a special questionnaire. The result of the study is a directly developed questionnaire, which will be used in the further survey of entrepreneurs in order to obtain a clearer understanding of the aspects of the strategic agility of the company in the conditions of instability caused by the COVID-19 pandemic.
АННОТАЦИЯ
В данной статье рассмотрена специфика и недостатки мер помощи бизнесу, получившему негативные влияния от кризиса, вызванного пандемией COVID-19. Цель статьи состоит в изучении проблем развития стратегической гибкости предприятия в условиях нестабильности с учетом имеющихся и недостающих мер поддержки бизнесу. В качестве методов исследования были использованы литературный обзор и обзор публикаций по теме помощи бизнесу в пандемию, а также моделирование перечня рекомендаций по развитию резилентности руководителя предприятия и разработка специального опросного листа. Результатом исследования является непосредственно разработанный опросный лист, который будет использован в дальнейшем анкетировании предпринимателей с целью получения более четкого представления об аспектах стратегической гибкости предприятия в условиях нестабильности, вызванной пандемией COVID-19.
Keywords: business, entrepreneurship, crisis, COVID-19 pandemic, business strategy, strategic agility, resilience.
Ключевые слова: бизнес, предпринимательство, кризис, пандемия COVID-19, бизнес-стратегия, стратегическая гибкость, резилентность.
Companies operate in constantly changing environmental conditions, which in a stable economy can be described by macroeconomic phenomena, including supply and demand, the value of money, etc. In an unstable external environment, other phenomena caused by the specifics of the crisis phenomena, such as high currency volatility, are added to market fluctuations and changes. In these situations, companies should develop strategic agility to ensure that the consequences of the crisis are not critical to the survival of the company.
The peculiarity of the crisis caused by the COVID-19 coronavirus infection is that its beginning is not in the financial inflated system, and not in the real sector of the economy, but in the social system, i.e. in the final and specific market that provides the entire world economy. In order to preserve the viability of states as social systems (to preserve the viability of citizens), the governments of different countries have taken decisions to artificially reduce the activity of the economy. In medicine, this phenomenon is called an artificial coma of the body, in the modern realities of 2019-2020, an artificial coma of the economy has caused a number of consequences for business: from a sharp drop in income to bankruptcy and closure of the company.
Subsequently, governments around the world have taken unprecedented measures to support entrepreneurship and preserve the business activity of companies affected by the crisis caused by the COVID-19 coronavirus infection. Despite this, and despite the fact that medium and small enterprises are more flexible due to the mobility of assets, centralized management, nevertheless, they received the greatest negative effect, which served as a trend of global GDP decline, since medium and small businesses are the most important link in the world economy (they account for more than 80% of all business in the world, provide employment at the level of up to 70% and create 50% of world GDP).
During the development of the crisis situation caused by COVID-19, the international organization of the EAEU analyzed business support measures in different countries and revealed the following statistics on the most frequently used tools (Figure 1) [1].
Figure 1. Business support tools and measures in the world practice
As seen in Figure 1, debt financing instruments are the most common in the world in the context of assistance to SMEs, followed by employment support measures and tax incentives. The rest of the measures were not so widely represented.
Nevertheless, both the previous crises and the crisis of 2020 show that the creation of favorable financial conditions and the reduction of administrative barriers are not sufficient for the most vulnerable segments of business to be able to withstand the consequences of crises [2]. In addition, the most flexible types of business structures, including innovative startups, have the greatest difficulties in attracting additional funding during unstable periods [3].
It is also possible that companies that decide to apply for financial support during a crisis and do not take other strategic measures are managed by managers with a low level of stress tolerance.
In many countries during the pandemic, hotline services for entrepreneurs operated, which provided an opportunity to consult on financial issues, current support measures, and free services for business. But at the same time, it was possible to note the limitations of the topics for consultations. No consultations were held on such important topics during the crisis as: the validity of management decisions on financing, the entrepreneur's willingness to take measures, new strategic decisions, business development opportunities, etc.
Another problematic factor that has not been taken into account earlier in scientific and scientific-practical publications is the fact that the crisis experienced by the business at the present time differs in its logic and life cycle from all previous crises, therefore, the effect of learning and using skills in business strategies from "past" crises - does not work with the current one.
The problem of ensuring and developing the strategic agility of companies in an unstable external environment is associated with the fact that strategic agility is a certain area of strategic management of companies, and not an abrupt act of anti-crisis activity caused by a push from the external environment.
Hunger J. David says that company strategy is not a function of time, but a function of direction. In his opinion, “... strategy allows company to focus on the main problems and discard secondary ones; determine and coordinate the company's actions to implement the mission and main goals; ways of transforming it into a new state (which business to stop, which to sell, to which one to move), as well as ways to use the resources necessary for this”[4].
Here we can agree with the opinion of this author that strategy is a constant phenomenon that has different directions in different periods of the company's functioning. One of these areas is “special agility in crisis conditions”.
L.V. Glukhikh defines strategic agility as "... the ability of a company to use favorable unexpected market situations for strengthen its competitive position and resist possible threats" [5].
In the author's statement, we can see two areas of agility: confronting threats and taking advantage of unexpected opportunities.
The development of new market niches by enterprises is a phenomenon that shows how important it is for management to have the skills not only to promptly respond to threats, but also to benefit from them. The COVID-19 pandemic showed that innovative businesses created several key new niches during this period: handling large volumes of information; registration of morbidity; disease prevention and health preservation, new approaches to educational technologies. Despite the fact that operative creating niches is included in the fundamentals of marketing, not all companies use this opportunity in crisis situations, the reasons for which are also insufficiently studied. Under the same conditions, with the same input data, one company will master a new market, the second will turn to the state for help, and the third will go bankrupt and close.
Thus, in the formation of business assistance programs in an unstable external environment, the influence of a number of factors was not taken into account, including:
- the rigidity or inability of leaders to quickly make strategically important decisions;
- the effect of the "mother's breast", i.e. that promised and a priori expected support in the crisis from the state.
Currently, a businessman is faced with an informational total notification of unprecedented support measures and the impossibility of actually meeting the requirements of the Government, Central Banks and other structures. At the same time, company leaders understand by these measures a choice of three possible options:
- get help and survive;
- do not get help and survive;
- do not get help and close.
Thus, managers do not take into account the multiplicity of options for action in a specific unstable external environment, while strategic agility or business resilience as a quality develops as a result of the interaction of the company with counterparties in a specific external environment, and this quality cannot be absolute or constant, but is viewed as an opportunity for a business to act on the assumption of several ways to solve problems. This approach allows company to significantly expand the adaptive capabilities of the business.
Vulnerability to the negative impact of the external environment of enterprises is high in those companies whose leaders cannot quickly adapt to stress and choose deliberately losing patterns of managerial behavior: taking loans when it is impossible to ensure sales, dismissing competent personnel, etc. As a result, the study of approaches to the development of the strategic agility of a company deserves special attention, incl. adapted from the psychological science of stress resistance, flexibility and resilience of the individual.
In 2014, the American Psychological Association published a list of ways to develop psychological resilience [6], which, within the framework of this article, were reformulated by us as ways of developing company agility in conditions of instability
Table 1.
Table 1. Ways to develop company agility in the face of instability
|
The way to develop psychological resilience (flexibility) |
Company’s mistakes in crisis |
A way of developing the strategic agility of a company |
|
1 |
2 |
3 |
|
Maintaining good relationships with family members, friends and the rest of the environment; |
In times of crisis, companies often cut back on purchases, raise prices for customers, and fire employees. |
Maintaining good relationships with employees, suppliers and customers. In crisis situations it is ensured through a series of negotiations to achieve a state of affairs in which neither side is the "loser". |
|
Avoiding viewing crises and stressful events as unbearable problems; |
Alarming media reports and attempts by government agencies to rescue the situation with hot lines only heighten entrepreneurs' concerns and create a sense of despair. |
It assumes a "cold and sober" calculation of management personnel about the consequences of certain problems created by the crisis and the substantiation of the degree of "endurance" to the problem. Based on the results, making decisions on preventing the most "unbearable" (risky) situations. |
|
Acceptance of life circumstances that cannot be changed; |
Often entrepreneurs try to ride a "dead horse" (native American proverb) instead of admitting that "the horse is dead." Some market niches are losing more customers than others. |
Some market facts should be accepted based on the analysis of statistical indicators: a drop in the number of sales, a decrease in the average check, a decrease in interest in a particular product. |
|
Setting realistic goals and activities aimed at achieving them; |
Often, entrepreneurs who like to “set goals”, “collect meetings” during stable periods of operation ensure the functioning of the business by the fact that customers somehow contact, and employees somehow work themselves. |
The key factor here is “activity”. In a crisis, for plans and goals, it is imperative to draw up a clear program of action, appoint responsible persons and control the result, taking into account the result, correct further actions, carry out them and again control the result. It takes up to several dozen iterations of actions with probing the most winning strategies. |
|
Willingness to take decisive action in an unfavorable situation; |
In situations of an unstable external environment, an entrepreneur may decide to "wait it out", which may cost him the loss of employees, customers and assets. |
Decisive action should include a understanding the situation is unstable and; - to have to change something; - to have to part with something; - to have to negotiate with contractors and stakeholders; - to have to take risks; - can be share experiences and responsibility. |
|
Search for opportunities for self-knowledge after experiencing a loss; |
Often, companies, especially medium and small business subjects, having lost a share of sales, a large client, an asset, do not make conclusions about what this can bring to the company. |
It is necessary to consider losses as an opportunity for development: - new sales channels; - new skills of the staff; - new business processes; - development of new markets; - expansion of the product line etc. |
|
Maintaining a long-term perspective and considering adversity in a wider life context; |
Many business leaders do not know that a crisis is a cyclical phenomenon that overtakes developed countries at least once every 10 years, developing countries - once every 7-8 years (in Kazakhstan these are crises: 1991, 1998-1999, 2007, 2014, 2020- 2021). |
You should take the cyclical nature of the crisis as the norm for the functioning of the business and prepare for crisis periods in advance: - build up liquid assets; - create reserve funds; - 2 years before the crisis to develop new markets that may be in demand in the future; - to reduce costs and optimize business processes within 1-2 years during the crisis. |
|
Maintaining faith in promising prospects, positive expectations. |
Often, in crisis situations, entrepreneurs do not in any way prevent the emergence of a discouragement in the team, which causes disruptions in processes and, as a result, deterioration and subsidence of business. |
It is recommended to periodically assemble a team of leaders for “rainbow meetings” to plan for future breakthroughs after the crisis has subsided and the economy begins to pick up. |
*сompiled by the author
As seen, the psychological flexibility of an individual (resilience) and the strategic agility of a company managed by specific individuals have similar features that should be taken into account when developing support and consulting measures for entrepreneurs.
In addition, the development of tools to ensure the ability of medium and small businesses to adapt to instability caused by crises should be based on the results of analysis of information on the impact of the crisis on business, which becomes possible through interviews with decision-makers, i.e. TOP management of companies.
It is recommended to study the following important phenomena and factors of the external and internal environment of the enterprise in conditions of instability:
1. Facts about the life of the company during the crisis;
2. Assessment of vulnerability and dependence of the enterprise on the external environment;
3. Evaluation of the flexibility (resilience) of managers.
Table 2 provides an indicative list of questions for business leaders, which will show the specifics of the behavior of the business sector during a crisis, as well as highlight the important aspects of strategic agility.
Table 2.
Questionnaire for company leaders on crisis and company strategic agility
|
Directions of the questionnaire |
Questions |
|
Facts about the life of a company during a crisis |
1) What the company actually had to face (something that did not exist and appeared during the crisis), for example, a drop in sales; 2) Has it influenced changes in the work, structure, processes of the enterprise and in what way; 3) Does the company have experience in adapting to a crisis; 4) Does the company expect support from the state; 5) How did the company cope with the crisis? 6) Has the company used opportunities to improve efficiency, improve performance |
|
Assessment of the vulnerability and dependence of the enterprise on the external environment |
1) Does the company have experience in adapting, changing in different market situations? 2) How do you assess the company's dependence on stability, including: on key buyers, their welfare, on relationships with employees and suppliers? 3) Is there a risk of bankruptcy in the event of a crisis, incl. with the loss of part of the income, with the departure of staff, with the loss of assets? |
|
Evaluating the flexibility (resilience) of managers |
1) Is data and information used when making decisions? 2) Does it bring change and innovation 3) Are decisions and actions prompt 4) Is there knowledge in the field of strategic management 5) Is he psychologically stable? 6) The presence of creativity 7) What is the management style |
*compiled by the author
References:
- Мировой кризис 2020: вызовы для мира и ЕАЭС. Опыт выхода из кризиса 2014/15 годов. Аналитическая записка по состоянию на 31.03.2020// http://www.eurasiancommission.org/ru/covid-19/Documents/2222.pdf Evans Brad; Reid Julian Resilient Life: The Art of Living Dangerously. — Malden, MA: Polity Press, 2014
- Зимовец А.В., Сорокина Ю.В., Ханина А.В. Анализ влияния пандемии COVID-19 на развитие предприятий в Российской Федерации // Экономика, предпринимательство и право. – 2020. – Том 10. – № 5. – С. 1337-1350. – doi: 10.18334/epp.10.5.110126.
- Хо К., Вейль В., Му Дж. и Чабрия С. Инновации в трудные времена. Исследования в период пандемии. Март 2020// https://www.ipsos.com/sites/default/files/ct/publication/documents/2020-03/innovating-in-challenging-times-2020-ipsos-rus.pdf
- Хангер Дж. Дэвид. Основы стратегического менеджмента: учебник для студентов вузов, обучающихся по направлению «Менеджмент» (Пер). М.: Юнити-Дана, 2017. – 424 с.
- Глухих Л.В. Методология разработки и реализации конкурентной стратегии на современных промышленных предприятиях // Экономика и предпринимательство. – 2012. - № 4. – С. 199-204.
- American Psychological Association. The Road to Resilience. — 2014. — URL: http://www.apa.org/helpcenter/road-resilience.aspx
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