ESTIMATION OF FLEXIBILITY OF AN ORGANIZATION ON THE GROUND OF THE CALCULATION OF PROFIT MARGIN RATE
The article deals with the problem of the flexibility of an organization as the ability to adapt effectively to the external environment. The authors have identified and investigated different approaches to estimating the flexibility of an organization on the ground of flexibility grading, calcula...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Russian Academy of Sciences, Institute of Economics of the Ural Branch
2016-12-01
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| Series: | Экономика региона |
| Subjects: | |
| Online Access: | http://www.economyofregion.com/archive/2016/63/2894/pdf/ |
| Summary: | The article deals with the problem of the flexibility of an organization as the ability to adapt effectively to
the external environment. The authors have identified and investigated different approaches to estimating
the flexibility of an organization on the ground of flexibility grading, calculation of the general index of flexibility
as well as the calculation of flexibility’s ranking score. We have identified the advantages and disadvantages
of these approaches. A new method of the estimation of an organization’s flexibility on the ground
of the calculation of relative profit margin has been developed. This method is the multifunctional assessment
tool of enterprise’s functionability in the current context of difficult and volatile economic environment.
It allows in the early stage to identify negative trends in the production and financial figures and thus, it enables
the organizational leadership to take steps in advance in order to avert a crisis in its activity. Keeping
the profit margin at the same rate at the forced contraction of output, because of the negative impact of external
factors, will confirm that the organization has adapted to the external environment and, therefore, it is
flexible. The organization can be considered with margin rate beginning to low up to zero value as an organization
with an insufficient level of flexibility that is at the “zone of crisis” and it is characterized by the depletion
of reserved funds and reduction of current assets. Loss-maker is nonflexible and the presence of loss
means that the organization has an evident sign of crisis and it can be bankrupt. |
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| ISSN: | 2072-6414 2411-1406 |