Imacs 2016 imecs 2016 Proceedings (Preliminary version) of the 4
ON THE ISSUE OF THE MODERN PARADIGM OF THE MARKET STABILITY OF AN ENTERPRISE
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- 146.Introduction
- 147.1. Method
- 148.2. Results
- 149.Conclusion
- 150.References
ON THE ISSUE OF THE MODERN PARADIGM OF THE MARKET STABILITY OF AN ENTERPRISE145.Tatyana KlimenkoAbstract Under the modern crisis and intensification of global competition today, the indicator of efficient activity of an economy subject is the company’s ability to meet the needs and requirements of consumers, i.e., its “marketing orientation”. It can be stated that the characteristics of company’s “market mobility”, which are based on particular market indicators and can be described as an ability to promptly and safely transform under the market changes. Basing on the abstract-logic and comparative-analytical methods, the theoretical approaches to the content of the notion “market stability” were analyzed; the concept of “market sensitivity” of an enterprise was formulated; the role of “marketing orientation” for determining enterprise’s performance results was revealed. The author proposes criteria of conceptual approach to estimating the market mobility of an enterprise. The existing approach to the “market stability” notion is broadened; the company’s ability for transformation is viewed as one of the main conditions of the market stability of an enterprise; the necessity is proved to elaborate new approaches to combining and uniting the existing analytical models for estimating the enterprise’s market stability; categories of the market indicators of market stability are formulated and systematized into groups. Key words: Market stability of an enterprise, indicators of the financial stability of an enterprise, market indicators of an enterprise activity, competitiveness, consumer loyalty. JEL Code: M 21, M 31 146.IntroductionGlobal competition is the main strategic goal of all successful companies, and it is only possible under the conditions of their stable functioning in the market. One of the main factors of the market position consolidation are the competitive advantages of an enterprise, its financial potential. One should always remember that the most important fundamental indicator of a company’s efficiency is the ability of a company to fulfil the needs and demands of the customers. To define the content of such “market orientation” and the extent of its influence on the company’s commercial success is the topical task for both the theoreticians and the practical workers under the modern conditions of a dynamically developing market. The object of the research is the mutual interdependence of the stable functioning of an enterprise under the dynamically developing market, and the marketing constituents of its activity. The research objective is to prove the concept of “market stability” of an enterprise as the basis of its financial wellbeing. Abstract-logic and analytical methods were used during the research. The main result of the research includes the study of the objective influence of the market stability of an enterprise on the results of the activity of an enterprise. Scientific novelty consists in the following: the concept of “market stability” of an enterprise is formulated and the leading role of “market orientation” in the results of enterprise’s activity is shown. The practical significance lies in the proposed criteria of the conceptual approach to estimation of the market stability of an enterprise. 147.1. MethodOne of the most prominent representatives of the European school of marketing, Professor J.-J. Lambin (Lambin, 2001) pays a lot of attention to marketing criteria of the efficiency of an enterprise’s everyday functioning. J.-J. Lambin was one of the first scholars to revise the traditional schematic idea of marketing as the combination of four basic patterns (4Р), and reconsiders the role of marketing approach in the provision of an enterprise’s efficient functioning. However, in our opinion, some aspects of this issue have been left out of attention so far. The financial stability of an enterprise under the dynamic market conditions is subject, by I. Ansoff’s terminology, to “strategic surprises” (Ansoff, 2007). Consequently, the unexpected changes of the external market environment inevitably result in crises (Fig.1). Under the crisis, the company must respond immediately, and often the usual control systems and procedures do not ensure the sufficient promptness of reaction. Fig. 1. Characteristics of a crisis situation 
Thus, any emergency can prove to be critical, destroying the ordinary way of functioning of an enterprise, and require immediate response. The monitoring of the external environment allows just to state facts, trace new trends. However, one cannot say how and to what extent the traced market dynamics can influence and change the financial stability of an enterprise. In out opinion, under the modern conditions it is the most important are not the “own” indicators and the potential of an enterprise, but its “perception of the market”, sensitivity, flexibility, i.e. the ability to transform under the market changes quickly and without any harm to further functioning. Thus, the most important characteristics of an enterprise and its market stability is its mobile reaction on the changes in market processes and the consequences of “market surprises”. Several theoretical approaches can be applied to the content of the notion “market stability”, among which the following two are the fundamental: from the viewpoint of evaluating the potential of an enterprise as it is, and from the viewpoint of evaluating the market situation influencing the functioning of an enterprise. For example, S.A. Kurchenko defines the market stability of an enterprise as a complex of factors adherent to the enterprise as it is: “to survive in the market environment, a firm must be efficient, stable and have high profitability” (Kucherenko, 2008). This author analyzes the market stability of an enterprise by a system of indicators grouped into the following categories: efficiency, stability, liquidity. As we can see, the market stability is evaluated here by certain “internal” parameters of an enterprise’s functioning, which describe the enterprise as a unit of market relations0. However, it is still not clear, if this enterprise, having the potential of “efficiency”, “stability”, and “liquidity” is able to promptly respond to crisis situations. We can only partially agree with such interpretation of the notion “market stability” as it remains incomplete, in our opinion. Many theoreticians have attempted to clarify the determinants of the market stability of an enterprise by viewing not only the internal, but also the “external”, market of “marketing” indicators, as well as their reflection in the financial-economic activity of the market players. For example, N.A. Navrotskaya and N.Yu. Sopilko think that the market stability of any industrial enterprise is to a certain extent influenced by the conditions and trends of development of the whole industry sector, due to the market demand in the feedback system “consumer – industry – infrastructure”, and is based not only on the industrial and financial constituents, but also on the selected marketing strategy, production, pricing and servicing policy (Navrotskaya & Sopilko, 2013). A group of authors (Agaptsov, Gryaznova, Dzhindzholiya, & Shakhovskaya, 2005; Dubova, Dzhindzholiya, & Shakhovskaya, 2014; Gryaznova & Yudanov, 2008; Злобин, 2000), developing the concept of the quality of entrepreneurial activity, clarifies the notion of the enterprise’s economic stability. B.K. Zlobin (Злобин, 2000) gives the following interpretation: “a special state of the economic system in the complex market environment, which guarantees its purposeful development at present and in the predicted future. Economic stability is a complex notion, including the following criteria as essential features: financial stability; competitiveness of production, its quality; competitiveness of technology; efficiency of production and marketing; innovative functioning; organizational flexibility; maneuver ability of production and its ability for diversification; reproductive complexity". T.V. Kramin also raises the importance of transactional cost in context of managing of company’s value. At the same time these authors imply that under the modern conditions it is the innovative character that is the most important factor of enterprises’ survival. It is highlighted that any innovative economic advantage is temporal: changing the supply and trying to outstrip the competitors, the enterprise reduces the product’s life cycle. One can assume that in this case the innovativeness determines the “sensitive” behavior the of an enterprise in the market, its market stability. P. Drucker views “market stability” differently, from the viewpoint of the conditions of the company’s survival in the market. From this viewpoint he lists some “marketing” indicators, namely: market position, innovations, labor productivity, professional training of the staff, quality of the production and financial results (Drucker, 2001). A.N. Il’chenko and Wei He consider that the market stability of an enterprise is it competitiveness, revealed in the competitiveness of its goods. The latter is the result of its efficiency (the consumer qualities of a goods), price, production and marketing costs, and the derivative of the production level, state of the equipment, raw materials, technology, quality of management, efficiency of marketing activity, and no doubt, competitiveness is a reflection of the strategic behavior of the enterprise (Г Р Таишева & Валеева, 2007). Thus, the theoretical definitions of the “market stability” notion cannot fully and unambiguously explain the term. The above text aims at registering the notions in general by induction and comparative analysis. This is the basis for further formulation of the brief conclusions resulting from the research. The market stability is viewed not so much as the ability of an enterprise to sustain its financial stability under crisis conditions, but as its ability to promptly react to these conditions without detriment to the enterprise’s activity. The main factor for the content of the “market stability” notion is selecting such market criteria, which would be able to reflect and describe the enterprise’s ability for transformation under the dynamic market. This also enhances the ability of attracting direct investments (Гумерова & Шаймиева, 2008). There is no doubt that in a broad sense the market stability of an enterprise is the overall level of its functioning. It is closely linked with the financial stability of an enterprise and depends on ability of adaptation to market risks. Usually the high market stability of an enterprise is associated with the equally high financial stability. At the same time, to ensure the market stability and to ensure the financial stability are two different tasks. There are a lot of algorithms for evaluation of the financial stability of an enterprise, which proves that there is no single universal method of solving all tasks. It is logical that by uniting several methods one can significantly increase the quality of analysis. To our mind, there is an urgent need to elaborate the new up-to-date approaches to combining and uniting the models in order to evaluate the “market stability” of an enterprise. The great variety of algorithms makes it difficult to choose the best model basing on objective criteria. The income, the net profit, the profitability, the share of assets in the sales volume and the profitability of assets are the broadly used criteria for the internal financial activity of an enterprise. They are also participate as key indicators in investment activity (see for instance: Гумерова & Шаймиева, 2009; Салимов, 2014). It is known that the internal financial activity result from the impact the external indicators of the market activity of an enterprise. However, as it was stated above, the mentioned indicators do not provide an external, or market, idea of the efficiency of the company’s functioning. Having these results, we will not be able to say how the company responds to such external criteria, as the market growth, competitive prices, quality of the competitors’ products and services, and the degree of customer satisfaction. Hence the conclusion, that the traditional financial indicators are being excessively relied upon when evaluating the company’s efficiency and choosing the direction of its further development. To create an evaluation system of the “market stability” indicators of an enterprise (we term them as marketing indicators”) from the viewpoint of its mobility and adjustability to crises is an important task for theoreticians and practical workers. Let us view the “marketing indicators” of the market stability as a defined term, as it requires a more exact definition of its content. The marketing indicators of activity form the general strategic idea about the business efficiency. The management, determined by the market, possesses a great potential for the significance profit increase. One can conditionally assume that the market stability evaluation is based on the indicators, which are used to trace the efficiency and profitability of marketing at an enterprise. Most marketing evaluation systems were created to control income, costs, manufacturing overhead, debts, current expense and profit. However, the marketing management unambiguously states that the most important asset and the only source of positive cash flow is the customer. That causes the necessity to search or quality and quantity indicators of the customer loyalty evaluation. It should be noted that the marketing efficiency indicators are not so much an important amendment to the traditional financial efficiency indicators, but are a primary source, as they allow to ensure the market stability. 148.2. ResultsSummarizing the above, we can propose the following three criteria of the marketing indicators of the market stability:
All these indicators are important for correcting the strategy and the process of achieving the financial results by the company. It should be noted that, alongside with the above criteria, there are also the current and final marketing indicators. It is the former ones that are the leading indicators of the efficiency of market activity. The final marketing indicators are only suitable for registering the exact results, especially financial. Awareness about the product, intention to buy it, product trial, customer satisfaction (non-satisfaction), customers’ perception of the product and service quality, consumer value — all these are the current marketing indicators, the changes in which usually precede the actual dynamics of the customer behavior in the market. One can define them as the indicators of customers’ opinion and attitude, which are the most important indicators of the future customer behavior, hence, income and profit. The final marketing indicators include the market share, the product (enterprise) competitiveness, the percentage of customer outflow (or preserving the customer flow), the average bill size or average income from one customer. These indicators are, as a rule, summarized at the end of a financial period, each of them using a full range of diagnostic means. One should remember that the isolated marketing indicators are not always adequate indicators of the overall efficiency of an enterprise functioning. If we assume that the sales grow faster than predicted and the financial result appeared to be even better than expected, then such situation will be regarded as excellent by most companies. However, such marketing results may imply that the company loses its share in the growing market (i.e. the absolute growth rate of the market share is smaller than the growth rate of the market). The stable consumer traffic may be determined by the increase of the number of new customers (regarding the issues of market evaluation please refer to: Григорьев, 2005; and issues of demand elasticity: Крамин, 2004). The increase in the average bill size may be due to the overall growth of prices in the sector. Thus, without the whole set of marketing indicators a company has a very limited view on the efficiency and prospects of its activity. Summarizing the above, we should highlight that under the modern dynamically changing market conditions it is necessary to transform the idea of the enterprise’s stable development, to search for new viewpoint at this issue. One of such integrative approaches, aimed at the successful development of companies under crisis in the market economy, is the marketing approach, which implies focusing the enterprise’s strategy at forming its market stability, determined by several indicators. In our opinion, the changing of the vector of efficiency evaluation based on financial indicators to the analysis of the company mobility, their “market sensitivity”, and promptness of responding to the changes in the external environment should be a promising direction of research.
150.ReferencesAgaptsov, S. A., Gryaznova, A. G., Dzhindzholiya, A. F., & Shakhovskaya, L. S. (2005). Predprinimatel'stvo kak innovatsionnaya sistema khozyaistvovaniya v sovremennoy ekonomike: Monografiya. Moscow: UNITI-DANA. Ansoff, I. H. (2007). Strategic Management: Classic Edition. Hampshire, UK: Palgrave Macmillan, 272. Drucker, P. (2001). Management Challenges in the XXI century: HarperBusiness. Dubova, Y. I., Dzhindzholiya, A. F., & Shakhovskaya, L. S. (2014). Metodologicheskiye osnovy vnedreniya marketinga territoriy kak rynochnogo metoda khozyaistvovaniya. Volgograd: VolgGTU. Grigor'ev, R. A. (2005). Ob odnoj iz metodik postroeniya krivoj sprosa. Izvestiya vysshih uchebnyh zavedenij. Problemy ehnergetiki., 11-12, 53-57. Gumerova, G. I., & SHajmieva, EH. SH. (2008). Faktory, vliyayushchie na privlechenie pryamyh inostrannyh investicij v ehkonomiku regiona (soglasno teorii P. Tesha). Regional'naya ehkonomika: teoriya i praktika(9), 36-42. Gumerova, G. I., & SHajmieva, EH. SH. (2009). Pryamye inostrannye investicii i tekhnologicheskie innovacii: sushchnost', dinamika, vzaimodejstvie, regional'nyj aspekt: Kazanskij gos. universitet. Kramin, T. V. (2004). K ocenke potenciala i struktury sprosa na uslugi sotovoj svyazi v regionah Rossii. Problemy sovremennoj ehkonomiki, 1-2, 152-154. Kramin, T., Fatkheiv, A., Kramin, M., & Grigoryev, R. (2015). Developing the Corporate Management Model on the Basis of State-Private Partnership in Energy Supply to the State and Municipal Budget Organizations. Mediterranean Journal of Social Sciences, 6(1S3), 105. Kucherenko, S. A. (2008). Prognozirovaniye bankrotstva sel'skokhozyaistvennykh tovaroproizvoditeley s ispol'zovaniem metodov diskriminantnogo analiza. Ekonomicheskij analiz: teoriya i praktika, 12, 73. Lambin, J. (2001). Strategiczne zarządzanie marketingowe, przekł. J. Adamczyk et al. Warszawa: Wy-dawnictwo Naukowe PWN. Navrotskaya, N. A., & Sopilko, N. Y. (2013). Transformatsiya investitsionno-proizvodstvennogo prostranstva kak usloviye ekonomicheskoy intergratsii. Voprosy regional'noy ekonomiki, 15(2), 63. Salimov, L. N. (2014). Investicionnaya aktivnost': sushchnost', ocenka i analiz vliyaniya na social'no-ehkonomicheskoe razvitie regiona. Taisheva, G. R., & Valeeva, YU. S. (2007). Strategicheskaya orientaciya upravleniya konkurentosposobnost'yu predpriyatiya. Vestnik Kazanskogo gosudarstvennogo agrarnogo universiteta, 6(2), 23-28. Zlobin, B. (2000). Koncepciya ehkonomicheskoj ustojchivosti hozyajstvennyh sistem. BK Zlobin.− M.: OAO NPO “EHkonomika.
Klimenko Tatyana Igorevna Institute of Economics, Management and Law (Kazan), Russian Federation 42 Moskovskaya Str., Kazan, Tatarstan, Russian Federation klta@mail.ru
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