Management of the company and its risks: the search for an ideal model

John Smith

Management, as a process, is primarily located at the practical level. Theoretical understanding of this phenomenon always lags behind the development of management technologies, therefore, researchers are forced to record the existing experience of specific companies. However, even more general schemes can be analyzed and described.

Usually, when they say management, they understand the preservation of their certain structure, the support of the mode of operation, the realization of the program, the function of the organizational systems that have ensured the goals of the activity. That is, the main goal of management is stable and consistent development of the company.

Management is included in management because it is closely related to the specific activity of decision-making.

Therefore, the functions of management and administration overlap in many cases:

- Action planning

- Organization of business processes

- Motivation and control

- Formation of development goals

The role of the leader has been reviewed and described in detail in the literature. Depending on the goals of the company, they distinguish leaders, entrepreneurs, coordinators, distributors of resources, strategists and others. Although the most ideal option is the choice of an employee who reconciles all these roles, in practice it is very rare to find a reconciliation of all these duties.

More in demand and, at the same time, less developed management systems in Russia are corporate management (ownership of enterprises through the investment of shares) and joint management (partnership or involvement of personnel).

The general scheme of the management process is as follows: goal setting - strategy development and implementation - result. The effectiveness of the management process is determined by the last component.

The content of the components of the management cycle is described by indicators given by organizational structures - a set of management methods and rules within the company.

Currently, there are three methods of establishing an organizational structure:

- Copying an example of an already existing company

- Inviting a consultant capable of creating an optimal organizational structure based on the company's goals

- Adoption of the classic management model described in management problems

Among the classic models of the organizational structure, they distinguish four main models:

- Bureaucratic structure
It was described by Max Weber in the second half of the 19th century. He considered this point - the ideal type of the bureaucratic model, which excludes the emotional component from consideration, and the employees of these structures must perform the work in the field entrusted to them. That is why this type of management was called rational or mechanical for a long time.
It was assumed that the exact division of labor, the principle of sharp hierarchy would operate in the companies, and the system of norms and formal procedures would be specifically regulated and standardized.
This scheme is not classically applied in modern companies, therefore, it has been transformed into a functional structure.

- Functional structure
In this case, the hierarchy and the correct division of labor are preserved. In addition to all this, according to the functional principle, the division of duties is also carried out. Each unit solves a specialized task, which allows to avoid responsibility and, as a result, to ensure effective coordination of activities.
The obvious defect of this structure is the possibility of structural conflict.

- Divisional structure.
An effective management strategy for organizations that have several sales markets for goods and services. The fundamental difference from the previous structures is the cardinal resolution of the powers of the head of sales and logistics departments. On the one hand, a certain duplication of functions is returned, and on the other hand, the quality of the response to slight changes in the markets is increased due to the shortening of the chain of orders and tasks.

- Basic organizational structure
A relatively modern scheme that is poorly developed and does not have a successful implementation experience. The essence of its structure is to eliminate the principle of single leadership in order to achieve flexible behavior in the market. For the performance of each function, separate units are created that freely define the principle of action to achieve the goal that is the result of a general agreement between the structural units.

Is it possible to review everything and immediately?

It is important to consider the understanding of risks and methods of overcoming them within the framework of reviewing the specific features of management as a process. By risk in a more general plan, we understand the possibility of the occurrence of a certain favorable event that leads to various types of losses.

Risks include:

        - The possibility of avoiding the set goal
        - The probability of not achieving the desired result
        - Lack of certainty in achieving the goal (motivated risk)
        - The possibility of financial, moral and other types of losses
Risks are characterized by inconsistency (inability to adequately assess the situation), alternative (need to choose between several options), uncertainty (principle impossibility to determine the direction of development of events in advance).
There are different bases for risk classification. Depending on the type of risk and the degree of danger, various strategies for overcoming the consequences of crises are selected, which are described in detail in open sources.
 By time:
      - Retrospective — the results of previous crisis situations affecting the current state of affairs in the company
       - Current — there is a danger of a crisis arising as a result of the current state of affairs
        - Perspective — the possibility of crisis situations occurring as a result of the application and development of innovations in business processes
        - According to factors (political and economic)
        - External (not dependent on the activities of the relevant audience or the company's employees) and internal
   According to the nature of the results:
        - Pure risks are always losses for the company
        - Speculative risks can compromise both income and future income.
        - On the field of emergence (production, commerce, finance and insurance). Areas and crises that lead to additional unplanned expenses are listed.
   Risks associated with production activities:
         - Organizational risks are related to the internal organization of work
         - Market risks arise from the unstable state of the economy
         - Credit risks directly depend on the counterparty's ability to pay
         - Legal risks - are the loss of risks caused by not taking into account or changing the risks of normative - legal legislation
          - Technical-production (environmental) risks
       According to the results:
          - Allowed - can be overcome by making prompt management decisions
          - Crisis - requires obtaining a long-term agreement, causes significant financial losses, but does not pose a threat to the existence of the company in the market
          - Tragic - practically non-coordinating, causes significant damage to the company's activity and this damage threatens the existence of that company in the market
The main methods of mitigating (blocking/preventing) risks are:
        - Cases of rejection of unwanted partners
        - Insurance of risks
        - Searching for guarantors of economic stability
        - Dismissal of incompetent employees
        - Creation of venture enterprises
        - Creation of special structural divisions with a separate balance sheet for implementation of risky projects
        - Conclusion of agreements on joint activities
        - Strategic planning of activities
        - Forecasting the external situation
        - Monitoring of the social-economic and regulatory-legal environment
        - Creating a reserve system
It is necessary to understand that it is not possible to take into account all risks during the preparation of a program related to the prediction of risks and their elimination, and therefore, it is necessary to spend the costs of localization of unforeseen circumstances accompanying the business process at the time of agreeing the budget of the project.