Academic journal article Academy of Strategic Management Journal

Topical Issues of Influence of "Contraction Reengineering" on Structure of Business Management

Academic journal article Academy of Strategic Management Journal

Topical Issues of Influence of "Contraction Reengineering" on Structure of Business Management

Article excerpt

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The aim of the paper is theoretical and methodological study of topical issues on influence of "contraction reengineering" on company management structure. Under present conditions, virtually every enterprise undergoes to a greater or lesser degree a phase of the up-to-date need in reengineering as a radical re-evaluation of its competitive advantages. This phase will be marked by us as a "contraction reengineering", i.e. a process aimed at revealing viable, cost-creating mechanisms which perfectly meet the requirements of the legislation. As practice shows, the consequence of this trend is the restructuring of all activities, involving the previously unused resources in order to survive, preserving market position or further sustainable development taking into account the changing environment. As a result of the "contraction reengineering", consequences of external and internal turbulent factors impact (Bagautdinova N.G., Safiullin L.N., 2014, p.55) are harmonized that allows the company not only to survive but also to develop.

In the ideal econometric model, the development of a company, its financial and economic efficiency with all the positive externalities tends to infinity. This is possible in the conditions of stable external and internal environments, the balance of constant and variable factors, and stagnation of changes that is realizable only in the theoretical model (Shigabieva A.M., Safiullin L.N., Mazitov V.M., Saipullaev U.A., 2014, p.388-391). Up-to-dating of "contraction reengineering" is a signal that it comes a restrictive phase in this direction of the development, or "contraction phase". The contraction phase replaces the "expansion phase" of processes deployment and their in-depth introduction, with errors and permissible admissions. On this basis, we should recognize that for any definition of the development process it always has a limit. And the most proven and effective methods of management and development are replaced by innovative, "breakthrough" ways which in the period of adaptation may be evaluated even as provocative to some extent. (A.I. Podgornaya, S.I. Grudina, S.G. Avdonina, 2015, p.519) As approaching the "contraction" phase, to the limit, revenues and sales fall, costs rise, the impact of competition increases. During this period, the "contraction reengineering" is relevant when one competitor approaches to the limit of its development, and other competitors explore alternative processes with a higher limit on the basis of previous experience and the integration of new knowledge.


We have used methods of financial and economic analysis, methods of strategic management, innovation management methods, methods of management diagnostics, methods of business reengineering as a tools. We used scientific methods such as analysis and synthesis, systematic approach to the study of the external and internal environments of enterprises, socioeconomic phenomena and processes, as well as methods of forming generalized criteria and operating rates for enterprises of various spheres of activity.


Let's consider theoretical preconditions of origin of reengineering. Category "Engineering" has originated from the term close to "technics", "technical art" and may take in some cases the meaning of the word "design". "The business engineering should be understood as the system of methods and techniques used to create a business that meets the goals set by the organization". The studied category may include a number of components. For example procedures for re-engineering of business processes, ratio analysis which allows measuring the effectiveness of investments in the facility and its profitability, as well as innovative style in the process design. In general terms, reengineering expresses restructuring or reorganization of the enterprise on stream (Kabaale, E., Kituyi, G.M., 2015, p. …

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