Academic journal article European Research Studies

Development of Methodological Approach to Enterprise's Financial Strategy Based on Comprehensive Evaluation of Its Strategic Potential

Academic journal article European Research Studies

Development of Methodological Approach to Enterprise's Financial Strategy Based on Comprehensive Evaluation of Its Strategic Potential

Article excerpt

1. Introduction

In modern conditions of the market economy for domestic industrial enterprises there is a problem of finding flexible and efficient rapid ways to respond for constant changes in the environment, on the one hand, and improve the financial--economic activity, as well as the formation of long-term competition policy--on the other. Currently, the Russian economy is determined by:

--complexity and instability of the environment;

--globalization, which has aimed to integrate of domestic corporations in the world economic system;

--need to increase the rate of development and innovation, aimed at meeting the interests of consumers.

These factors lead to the necessity of creating and implementing a financial strategy focused on creating competitive advantage, enabling the company to conquer the leadership in the domestic and world markets, to increase the cost of business, to strengthen the financial position and meet the interests of stakeholders.

Improving the efficiency of industrial enterprises will contribute to the formation of financial strategy, the ability to adequately adapt to the changing situation in the economy and to promote the rational use of available human, material and financial resources.

Therefore, for financial science becomes an important method of integrated assessment of the industrial enterprise's strategic potential, which defines priorities for the implementation of the financial strategy.

2. Methods and Materials

2.1. Main approaches to the definition of the enterprise's financial strategy

Determining the nature of the industrial enterprise's financial strategy, factors and mechanisms for its development and implementation currently has both theoretical and practical interest. Problems of effective formation and realization of the enterprise's financial strategy devoted a considerable amount of different sources of economic literature, while generally considered some aspects of its design and implementation or methodological apparatus, which is not enough exhaustively describes the essence of the studied categories.

The place and role of financial strategy development which is estimated in the economic literature has been characterized as ambiguous.

Theoretical analysis of the various economic literature sources is allowed to identify the following approaches to the definition and scope of the industrial enterprise's financial strategy (Table 1).

The most cited definition of an enterprise's financial strategy has seen as an important part of the development strategy, along with other types of functional strategies. In particular, Goritskaya N.G. (2005) considers the financial part of the overall strategy of economic development strategies, consistent with the goals and directions of the latter. Ilysheva N.N. and Krylov S.I. (2004), Thalassinos et al., (2014) and Thalassinos and Liapis (2013) discuss the financial strategy as part of the overall concept focused on the competitive environment.

Many authors emphasize in their definition of the relationship with the corporate financial strategy, as in the present conditions of market relations, it is the basis for sustainable development of the enterprise.

An analysis of existing approaches to the definition of the company's financial strategy led to the conclusion that, despite the apparent differences, they all contain the same type of distinct elements. Performing semantic analysis allowed to identify the following key points included in the definition quoted in the different approaches (Table 2).

Based on the specification of the financial strategy's main elements it is possible to synthesize the author's definition of it: financial strategy is part of the enterprise development strategy, one of the most important types of functional strategies, and is a reasonable concept of formation, coordination, distribution and use of financial resources, associated with risk and uncertainty, taking into account the conditions of dynamism and change in external and internal environment, which aims to develop an effective enterprise, the creation of competitive advantage and maximize the value of equity generated in the framework of the mission and long-term financial goals and objectives. …

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