Baltic Journal of Economic Studies

Vol. 4, No. 1, 2018

DOI: https://doi.org/10.30525/2256-0742/2018-4-1-334-344

ENTERPRISES DEVELOPMENT: MANAGEMENT MODEL

Lina Shenderivska1, Olga Guk2
National Technical University of Ukraine “Igor Sikorsky Kyiv Polytechnic Institute”, Ukraine

Abstract. The paper’s purpose is to provide recommendations for the effective managing the companies’development
taking into account the sectoral key elements’ transformation. Methodology. The enterprise profits’ econometric
simulation is conducted to determine the most significant factors influencing their development. According to
the model testing result, their multicollinearity was revealed. To get rid of the multicollinearity phenomenon from
the profit models, isolated regressors are excluded, namely, return on assets, material returns, return on equity. To
obtain qualitative models with a small error of model parameters estimation and, accordingly, high reliability of the
conclusion about the interrelation between the factors of the model and the resulting feature, factors in the income
model that are not closely interconnected, that is, not multicollinear, are included. Determination coefficients R2 and
F-criterion were calculated for model quality checking. The modern printing enterprises of Ukraine key elements,
connected with integration into the global information space, are analysed. Results. The interrelation between a
company’s development and earning capacity is identified in the study. The profit importance as the main source
for enterprise financing is substantiated. Factors that have the greatest impact on the enterprises’ development
are labour productivity, financial autonomy, working capital turnover, and the character of their influence is most
adequately reflected by the power model. Peculiarities of the enterprises’ activity include increased competition at
the inter-branch level, poorly developed industrial relations, and the own sources of financing activities shortage.
Practical implications. Based on information on the most significant developmental impact factors, directions for
perspective enterprises development for their competitiveness increase are proposed: diversification based on
the activity expansion, the enterprises’ organizational structure change, investment development. The actuality
of diversification’s activity for profit increase due to new markets development is determined. It was found
that corporations are the most acceptable organizational form for the enterprise. The urgency of investment
development for printing companies is proved connected with the production modernization’s necessity, ensuring
the manufacture of competitive products. Value/originality. To ensure the effective enterprises’ development based
on development concept, a model for managing the printing companies’ development is worked out. The model for
managing the companies’ development is prepared based on the concept that takes into account the peculiarities of
enterprise activity and priority directions of their development, improves the directions for enterprises adaptation
understanding in the competitiveness growth conditions.
Key words: earning capacity, profit, development, investment development, concept, management model.
JEL Classification: E22, L11, M11, O20

1. Introduction and is a constant search for development and economic

In modern conditions, an aim prerequisite for growth directions associated with economic changes.
enterprises functioning is their development, associated Enterprises development is first qualitative changes in
with different approaches to its essence. At the heart its activities and conditions (Hvostina, 2015). Earning
of the development process is considered the state of capacity of the enterprise is determined by the social
the economic system; various types of changes that and economic earning capacity level, requires a work’s
determine development; diversity of inter-linkages motivation, a work’s management, a working conditions
between the factors of all the enterprise’s environments. creation, an enterprise infrastructure development,
The enterprise as an object of management gets functions environmental preservation. All this is important both
that influence its development, including strategic ones, for product quality and its competitiveness. According
Corresponding author:
1
Department of Management in Publishing and Printing Industry, National Technical University of Ukraine “Igor Sikorsky Kyiv Polytechnic
Institute”.
E-mail: lina.shenderivska@gmail.com
2
Department of Management, National Technical University of Ukraine “Igor Sikorsky Kyiv Polytechnic Institute”.
E-mail: olgaguk@ukr.net

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to many scientists, social, economic, and environmental with large companies, entrepreneurship. The work
development (Bhattacharya et al., 2015; Klapper et al., (Durowoju, 2014) also justifies the entrepreneurship’s
2016; Satterthwaite, 1997) are integrated into sustainable priority, since it can provide long-term competitive
development concept. Environmental factors, in turn, advantages. A generalization is made that companies
impact economic growth, and the demographic situation, should create entrepreneurial networks for coaching,
birth rate (Varvarigos et al., 2017). mentoring in their work (Asian Productivity
The authors focus on the study of factors affecting Organization, 2007). Thus, the researchers are the
the enterprises’ development, justifying the business adherents of the competition concept as a partnership,
development ways, prove the state support urgency for allowing achieving global benefits for the market.
small and medium enterprises. Development is associated with changes that
Enterprises development is influenced by internal offer some opportunities for economic growth and
and external factors. The authors substantiated the create operational risks. Companies that implement
state policy’s importance for the small and medium breakthrough innovations are at the highest risk, as
enterprises development, suggested the actual opposed to evolutionary innovations, as they create new
state policy directions: the financial instruments markets (Goutam et al., 2015). The competition growth
implementation, information about promising markets impacts on development, therefore, there is a need for
dissemination, topical technologies, ways to save costs continuous management’s improvement by product
for the business entity (Taiwo et al., 2012). The state quality upgrading, the production costs cutting and
offers a differentiation of support programs for small and the business risks reduction. Every effective enterprise
medium businesses, distinguishes between the Program should offer an innovative product and develop a
for lending to small family businesses, programs for business model (Teece, 2010).
attracting graduates to business, micro-lending programs The latest technologies adoption ensures the better-
for the unemployed to start their business, long-term quality products production, production operability,
loans (5-10 years) to small and medium enterprises at productivity gain, and resource intensity reduction.
a very low interest rate (Oni, 2012). Eversole (2004) In (Sacala, 2014) justified the modern information
argues the micro-enterprises role fight poverty, and technology application in enterprise management,
self-sufficiency of these enterprises owners to improve identified the actual principles for constructing the
their conditions. The clusters creation is important enterprise architecture – the ability to adapt to changes,
for small and medium-sized enterprises development, build an efficient resource management system, use the
but this process is complicated over the lack of cluster Internet possibilities to integrate into the global market
sizes to compete globally, the lack of resources, an space. The current trend in information technology’s
insufficient infrastructure, and the lack of training for development is applications. Authors (Unhelkar et al.,
cluster managers (Lopriore, 2009). Conditions for the 2010) argue the relevance of applications that integrate
effective Governance in associations are accountability, or isolate basic functions relevant to consumers,
transparency, consistency, and participation (Nwankwo contact groups, business management, such as mobile
et al., 2012). broadcast, information, transaction, operation, and
Thus, to a deeper insight in small business collaboration for enterprise development, namely,
enterprises development processes, Butler (2006, meeting new consumer needs, operational activities
p. 221) substantiates the typical phases of business effective implementation, raising the competitiveness
development: the initial start-up phase of a new level. Surugiu (2012) justifies the integrated information
business, the relative stability, the growth and the system usage importance due to such advantages as
development, and the need to use different business an accelerating data processing, a speeding-up data in
models for each of these stages. Butler (2006, p. 223) real time, an optimizing the control of business costs
proves the gradual delegation of authority topicality, the distributed on cost centre.
transition from concentration to operational activity to The amount of investment affects the qualitative
strategic thinking, the constant acquisition of relevant and quantitative increase of economic value added,
knowledge and skills that will contribute to long-term invents innovation activity. In (Ricupero et al., 2001),
growth and the business sustainability; also provides a the sufficient financing for effective actions significance
recommendation for enterprise managers to apply those and the competitiveness achievement in global markets
management principles proper to the business size. has been proven. Limited access factors to credit
In the paper (Asian Productivity Organization, 2007), resources are substantiated. The progressive experience
according to the competitive impact on development, of the European Union countries in overcoming the
such indicators as effective business models and barriers in getting loans was established through the
strategies allowing to enter new markets, aspirations for creation by small and medium-sized enterprises of
leadership, an investment activity, and an innovation, are Mutual Guarantee Society, funded by its participants
identified. Promising areas for small and medium-sized and provides financial guarantees to enterprises at
businesses development are defined by a partnership their request to banks for getting credit funds. Funds

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providing financial guarantees are successfully operating country’s reputation. And in conditions of preservation,
in France, Italy, Spain, and Germany. multiplication and productive use of the nation’s
The financing enterprise development issue is also intelligence, an effective socio-economic development
explored by Luiz (2000) and proves that growth in of the country takes place and its contribution to world
production a beneficially influences the credibility of progress is ensured.
debtees; the orders inflow can be furnished through the Other types of printing products, for which the
participation in tenders for state procurements, the sales information function is determinant as well, are also
networks development, implementation of technical important. Thus, the attended printed matter provides
and organizational decisions aimed at increasing in the commodity producers with necessary information
labour productivity (Luiz, 2000). about the product; packaging is a necessary element in
Thus, speeding-up scientific-and-technological supply logistics, stationery, despite the electronic media’s
progress, changing market conditions, the need to find expansion, are irreplaceable in creating a corporate
sources of investment resources and directions for their culture and style; markings provide effective, relevant
efficient use raises theoretical and practical interest navigation, promotional materials serve as information
in the enterprises’ development. In the development in specific places and time, and so on. Such products
management process, it is necessary to strain after variety ensures the printing industry’s integration with
balanced improvement of all enterprise subsystems. all spheres of production and human activity.
Increasingly relevant in present-day conditions The printing industry is a part of publishing and
of domestic economy’s development becomes the printing complex since its activities are impossible
development management for printing companies, due without the information products or editions
to their importance to society to meet its information manufacture. Thus, the printing products market is a
needs and to ensure access to quality printing products, part of the information market, which in present-day
and several features, such as the predominantly small- conditions is characterized by the communications
scale business, affiliation with publishing activities, a complication in the information space, the products
high level of printing equipment cost, material content, distribution and sales forms diversification, increased
import dependence. market volumes and increased differentiation,
With the urgency of the enterprises’ development transformations in the culture of information
problem to ensure their earning capacity and consumption, which requires effective strategizing of
competitiveness, the authors put and executed the publishing and printing enterprises development. The
following research objectives: printed publishing products manufacturers, integrated
1) current trends in the printing companies in Ukraine into the media market, compete not only with traditional
development are described; producers of information – radio and television but also
2) the interrelation between development and earning with manufacturers, operating on Internet platforms –
capacity of the enterprise is substantiated; these are social networks, Internet TV, mass media,
3) ways of increasing the enterprise earning capacity presented on the Internet, electronic, audio editions,
development are determined; blogosphere, mobile applications, Telegram channels,
4) the management model for enterprises development online educational courses and more.
to ensure their competitiveness in the market in present- The publishing market’s structure is closely linked
day conditions is worked out. to the economic development level, the education and
culture level, on which the level of demand depends
and, therefore, the economic status, investment
2. Influence of development on increasing the
opportunities of publishing and printing enterprises.
printing enterprises earning capacity activity
Increase in demand for information products in non-
The printing industry enterprises activity is legible form raise the investment attractiveness of
commercial, enterprises are aimed at a profit, and their manufacturers level and leads to a partial capital
their specialization in the works execution to order all outflow from manufacturers of traditional printing
economic branches, in particular, the replication of products, in these conditions, both the publishing and
periodical and non-periodicals, promotional materials, printing companies’ innovation development and the
packaging, labels, blanks, etc., forms a significant need for state support grows are important. Granting
potential for development. Publishing products (books, tax exemptions, increasing the state orders volume,
newspapers, magazines) accompanying people in public investment in scientific and technical support
learning, work, recreation, development, forming its will promote an effective reproductive policy in the
outlook, the level of culture, patriotism, depth and industry, and thus attainment the European standards
breadth of knowledge, education, competence, thus, level of development.
the level of self-awareness and the nation’s intellectual We have analysed the books and brochures output
potential are formed and developed, affects the human dynamics in Ukraine to determine the production floor
welfare of the population, as a consequence, the trends for 2011–2015 (Figure 1).

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1,80

Average books and brochures output,

y = 0.048x3 - 0.5513x2 + 1.821x - 0.3393
1,60 1.53
1.36 R² = 0.8363
1,40 1.29
1.15
1,20
1.02 0.85
exemplars

1,00
0,80
0,60
0,40
0,20
0,00
2011 2012 2013 2014 2015 2016
Year

Fig. 1. Dynamics of average books and brochures output per one resident of Ukraine (exemplars)
for 2011–2016
Source: Statistical information of the State Statistics Service of Ukraine, built by the author using the MS Excel package

In 2014–2015, compared with 2013, the tendency of enterprises. During this period, in the total volume
was shown to reduce the average books and brochures of printing products, the newspapers’ share decreased
output and for 2011–2016 this index did not exceed from 7 to 4%, as the number of newspaper producers
2 copies, which does not contribute to the full society decreased by 30%.
development. During the analysis, the average To ensure earning capacity of publishing activities, a
circulation did not exceed 2.6 thousand exemplars, well-established system of interaction between partners
and the smallest its value was in 2015 – 1.82 thousand is required, which, as the analysis showed, changes in
copies. Small circulations stimulate printing companies the current period, complemented by the progressive
to implement technologies and equipment, alternatives communication tool advancement – the Internet,
to offset printing, which ensures the earning capacity which affects the earning capacity printing companies’
of small production output. It creates conditions development. In the unfavourable market conditions
for microenterprises’ development, guided by small context, it is necessary to look for ways to preserve the
circulations, and for industry’s cooperation development volumes of production and sales, increase the volume of
since not all entities are capable of performing a profit as the main source of development.
complete technological cycle. As the analysis showed, To determine the internal factors’ influence on the
the share of small enterprises in 2015 was 96%, which enterprises of the sector activity, we have constructed
determines the peculiarities of the printing industry, the net profit econometric models for six printing
namely, the competition high level, the shortage of enterprises (Table 1). The enterprises are chosen
resources for development. according to the following criteria: the enterprises’ size,
The earning capacity of development is influenced by the products’ range, the completeness of the production
enterprises’ innovative activity. Based on a certain share cycle – pre-print, printing, and post-printing stages,
of innovative products in the printing industry from experience in the market.
2011 to 2016, the maximum value of the innovative Factors in the model are the labour productivity (x1),
products’ share was 2.01% in 2012; the minimum is the financial autonomy coefficient (x2), the working
0.55% in 2015. This is due to the insufficient financing capital turnover (x3). The obtained power models of

Table 1
Net profit econometric models for enterprises
Enterprise Net profit econometric model
LLC “BVI-Print” у*=0.169 х11.27х2-0.789 х30.614; R2=0.9510; F true=181.108
LLC “Vistka” у*=13.057 х1-0.387х20.794 х32.569; R2=0.834; F true=46.945
LLC “Macros” у*=70.869 х10.472х2-0.21 х30.031; R2=0.773; F true=31.901
LLC “Мega-Poligraph” у*=14.67 х10.989х2-0.334 х30.057; R2=0.914; F true=98.787
LLC “Аvanpost and Partners” у*=11.187 х11.008х2-0.092 х30.115; R2=0.906; F true=90.394
LLC “Univest Marketing” у*=5.872 х11.242х2-0.025 х30.711; R2=0.9169; F true=102.955
Source: Self-developed

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net profit manage the economic content of the Cobb- justified by the diversification expediency of enterprises
Douglas production function, where the indicator activity based on its expansion.
of labour resources (L) and capital (K) are used as When choosing the enterprise’s diversification,
independent variables. To adapt the Cobb-Douglas the expected earning capacity and its duration must
function to the functioning of domestic enterprises be considered. Diversification allows solving several
conditions, we propose to express the labour resources tasks for the enterprise, namely, profits increase,
category as an indicator of labour productivity, while the operational risks reduction, the increase of capacity
capital category is an indicator of its structure (financial utilization, intellectual potential of enterprise, efficient
autonomy coefficient) and the efficiency of capital use use of investment resources. Diversified enterprises are
indicator (working capital turnover). characterized by a lower level of profit volatility (Pandya
Based on the obtained power models of net profit et al., 1998).
comparison with the Cobb-Douglas production The management of diversification process
function, it is determined that they are similar in organization requires the solution several tasks, namely:
economic terms. – management organizational structure achievement
To a greater extent, the profit of LLC “BVI-Print” is compliance with tasks to be solved with an allowance
influenced by labour productivity, which is determined for activity expansion;
based on the elasticity coefficient, whose value is 1.27, – possibilities of optimization of diversification
with the increase in labour productivity by 1%, the processes estimation at the enterprise by the rational
growth rate of net profit is equal to 1.27%, and the allocation of functions, implementation of outsourcing
smallest impact of labour productivity on profit at and outstaffing practice in practice;
LLC “Vistka” is 0.378. For all investigated enterprises, – effective motivation system application.
in addition to LLC “Vistka”, the negative value of the Improvement of management organization is
elasticity coefficient for the indicator of autonomy is occurring due to the program-target organizational
defined, with the share of equity capital increase in structures of management implementation, quality
returns of profit decreases. The elasticity coefficients, management systems, which promotes the quality
determined for the working capital turnover factor, improvement, products competitiveness, a rise in
in all enterprises is positive, prevails on the level of profitability.
elasticity of LLC “Vistka” – 2.569, a less noticeable The employees’ functions expansion requires an
effect of working capital turnover on profit at LLC appropriate remuneration, which should be taken into
“Macros” – 0.031. account by motivation system. Therefore, to build
Taking into account the priority of increasing labour an effective motivation system, it is necessary to set
productivity to increase the profit of enterprises, the fringe benefit expanding functions in the conditions of
urgent tasks are an expansion of printing enterprises diversification, to provide high-quality communications
markets both at the expense of orders’ physical growth by informing employees about the system of incentives
and more qualitative satisfaction of consumers’ and charges. Bloom et al. (2010) to progressive incentive
needs, and also updating of the enterprises’ technical systems refers the employees’ participation in profits
equipment. These measures are necessary not only to distribution.
increase the cash revenues volume of enterprises but To increase the earning capacity of enterprises
also to avoid financial losses. activity, we offer a better organization form, such as
corporatization, based on their activity’s diversification
and their own investment sources. In present-day
3. Directions to increase the earning capacity conditions, participants in the publishing and printing
of enterprises development complex are inefficiently productively interacting, thus
Substantiation of the earning capacity directions of not fully exploiting the potential of economic growth.
enterprises development depends on their current state, Publishers, without paying due cognizance to the study
promising sales markets, industry practices, strategic of demand, prefer the rights purchase to translate world
orientation of enterprises, state policy in the industry, bestsellers, which check the growth of the domestic
the relevance of a new cooperation forms development. copyright environment. To save money, publishers
The authors of the article defined such promising organize product sales on their own, and it is expedient
directions of development for printing enterprises: to delegate it to wholesale booksellers, which will help to
– the enterprises’ activity diversification; reach a promising sales chain – network supermarkets.
– the enterprises’ organizational structure change based Printing enterprises cooperate insufficiently with
on their corporatization; publishers at the technical publications preparation
– investment development. stage, which adversely influences product quality, cost,
The need for comprehensive customer satisfaction, and price. Book trade organizations pay insufficient
the search for new, more profitable sales markets, and the attention to the stock management, do not interact with
scientific and technological progress implementation are publishers for the purpose of studying the demand for

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book products. Corporatization will aid in improving development and is defined as the profit’s growth, the
the publishing and printing enterprises interaction, thus, preservation or gain of market share, the new markets’
better satisfying the consumers’ needs, as an increased creation.
competitiveness consequence, earning capacity of Companies taking part in the corporations will
development. maintain their legal independence, required since the
The need for business consolidation is due to two peculiarities of publishing and printing companies,
factors: the lack of own financial resources for large-scale which have their own material and technical base and
production and technology projects and the limited market. Integrating the participants of the corporation
target markets capacity (Kobernyk, 2012). The main involves observing such fundamental propositions
motives for the corporations’ creation are the search as common economic rules, real investments, joint
for ways to increase the earning capacity of business creation, and resources application.
operation, promising investment’s directions, market’s The uniform rules in corporations, first, need to
expansion. Based on certain motives, the structure of be established about the price and services payment
potential participants is substantiated, it is expedient provided by the participants.
to attract those partners who will strengthen or expand The association has additional opportunities for
the competitive advantages of the association and will setting discounts on prices since placing orders on one
provide an economic earning capacity. It is advisable for production facility contributes to a reduction in fixed
printing enterprises to form associations with publishers costs, and a price discount is determined in proportion
with highly qualified personnel, commercially to the amount of expenses saved.
successful publishing projects, a significant market The enterprises’ unification within the corporation
share, publishers which apply innovative technologies, into a single online platform with further centralized
provide high-quality products, and focus on consumer orders distribution taking into account the specialization,
inquiries. Bookselling establishments, preferably technical capabilities, and the enterprises logistics level,
network or wholesale with a broad sales geography allows to meet demand effectively and optimize costs,
and a payment discipline high level may be involved thus to volume own investment sources.
in corporations, which will help reduce sales costs and In the enterprises’ context unification, conditions
speed up a capital turnover. to improve the products quality arise. Development
Determining the goal, setting tasks for corporations of the quality management system is a task of strategic
is based on the results of the external and internal management level, and the formal implementation
environment analysis, allowing showing the competitive of quality standards does not guarantee the earning
advantages of enterprises, the possibility of their capacity of the quality management system (Zajarskas
implementation, and sizing the prospects for further et al., 2010). The products quality is determined by the
market development. The purpose of corporations components, parameters, subjects of quality assurance
is justified based on current and future conditions of (Figure 2).

Quality parameter

Contents and relevance of

Informational Author (orderer)
publication

Quality of publication
Informational and processing, graphic design,
Technical Publishing house
readability
Quality assurance subject
Quality component

The accuracy in original

Printing
Technical reproduction, maintenance
enterprise
of a quality standard

Marketable condition of
Provision of publication, assortment of Book selling
services commodities, consultancy establishment
support

Complex of Individual perception of

components Consumer
quality

Fig. 2. The essence of publishing products quality components

Source: Self-developed

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An important role in the demand’s generation and level of management for development, an analysis of
publishing products consumption culture belongs to the enterprise’s state and the external environment is
the quality assurance subject. These are customers carried out. The functions of information provision
(authors) or publishers, who must provide relevant include the necessity determination for changes, setting
content and a quality presentation of textual and goals and tasks of management for development. At the
graphical information. Quality also depends on the second level, for rational resource provision, applications
technical parameters projected by publishers and are being developed and implemented to improve the
embodied by printing companies in the edition size, earning capacity of delivery and consumption processes.
taking into account product quality standards. Final The third level – organizational support – involves an
purchasing decision is taken by consumers with a organizational structure’s construction and, on its basis,
glance to the quality publications parameters, provided management functions, taking into account such system
by the ordering customers (authors), publishers, development of labour motivation, which will contribute
printing enterprises, and the booksellers’ service level, to achieving the goal of management for enterprises
respectively, consumers take into account general development. According to Shchekovych et al. (2013), in
parameters and individual perceptions of quality. the process of management for development, monetary,
When creating an enterprises’ association, it is non-monetary, social goals are achieved.
advisable to centralize the quality management function, The earning capacity of management for enterprises
which will encourage maintaining the common high development depends on the prospects of activities
standards of work and craft a positive image of the that are associated with the strategic directions
corporation. In the corporation, to avoid functions establishment for their development. At the heart of
duplication, it is expedient for publishing-members of modelling process of management for development
associations to delegate to printing companies the power is the concept of printing enterprises development.
to choose printing materials suppliers, to determine the Concept formulation of enterprise development
rational stock size, which will save on specific costs. involves their activities goal determination and the tasks
Another aspect of improving the earning capacity of for achieving it, substantiating directions of effective
enterprise development is investment development. enterprises development.
As analysis shows, investment development depends In unstable market conditions, as analysis shows,
on several factors, with the directions of activation the printing enterprises’ priority tasks are stabilization
of investment activity are determined. These factors of production output and profit, the market share
include the funding ratio of own sources, the cost of preservation, the product quality level, and the
debt, the enterprises’ development state, the material personnel turnover reduction. The clear strategic
and technical base level. priorities of enterprises definition contribute to their
Measures aimed at intensifying investment activity effective development.
identified innovation as investment, product quality We have defined the main provisions of the printing
improvement, enterprises investment attractiveness enterprises development concept:
upgrade, development of organizational forms of fixed – European integration processes and increasing the
assets use (lease, financial leasing, etc.), amortization use of existing production capacities based on meeting
usage for functional purposes, rational formation and the needs of the domestic market and enhancing foreign
funding sources use. economic activity;
The investment development of enterprises planning – production and certification organization under
requires determination of investments sources return, international quality standards;
the main of which are amortizations, net profit, financial – modern information technologies introduction for
expenses. Considering that the loan rate, leasing rate accelerating the orders receiving process and production
are compensated at the expense of the enterprise, the cycle;
principal bank loan payment is carried out at the expense – raising the enterprises’ innovation activity level
of net profit, and the leasing agreement provides for an based on production modernization;
additional source for compensation – amortization, so – production tides between publishing and printing
leasing increases the earning capacity of investment, as enterprises expansion, and connections within a broader
it contributes to reducing payback, compared with a structure to increase the earning capacity of activity;
bank loan. – increasing the ecology in present-day conditions
value, which stimulates environmentally safe materials,
reducing of waste production;
4. Management model – personnel deficiency of adequate qualification level
for enterprises development reduction, which is explained by the rapid change of
Management for enterprises development requires technologies in the enterprises’ economic activity.
appropriate levels of information, resource, and Taking into account the current state of printing
organizational support. At the information support enterprises development, it is necessary to reorient

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the tasks of management for development we have assortment’s expansion, new technologies introduction,
identified during the study, namely: changes in management.
– increasing the competitiveness of printing products, The diversification type depends on the conditions
comparing with substitute goods, above all, by the price and objectives of enterprises activity. In the printing
index, explained by the tendency to increase the share of industry, it is expedient to diversify in horizontal
information distributed in electronic form; and mixed directions. Horizontal diversification will
– strengthening of the domestic resource base, first, to allow developing the promising products, services,
supply consumable materials and equipment, relevant is actually in the conditions of changing the printing
since the high level of import dependence of printing products market structure. The mixed diversification,
industry; which will help control the chain of the publishing and
– balancing the industry by the scale of enterprises printing complex, is of great importance: order-supply-
and the level of mechanization and automation under production-sales, which will save enterprise costs. In the
the current market’s needs, since the technical and medium and large enterprises of the printing industry,
technological potential level of many enterprises is not which have sufficient resources for the new business
progressive, and there is also a reserve to reduce the development that is technologically not related to
product cost by economies semi-fixed costs; the main production, conglomerate diversification is
– increasing the level of the infrastructure of printing possible.
development, publishing market and the earning The second direction proposed by the authors is the
capacity of promotion of printing and publishing corporatization of enterprises. It is determined that the
products to foreign markets, since a potential for enterprises that will form a corporation will not lose
increasing the printing production competitiveness by their legal independence.
improving state support systems, public procurement, The general principles, on which the companies’
financing, logistics, integration in the scientific and cooperation within the corporation will be organized,
technical sphere etc.; are substantiated, the criteria for participants’ selection
– increasing the products consumption culture, are determined. The business associations’ creation
necessary to reduce irretrievable waste in the printing aims to increase the competitive stability of enterprises
products circulation, first, packaging, and reducing through the production scale. The permanent
environmental pollution with synthetic materials. participants’ collaboration will provide a phased
Effective implementation of certain tasks for solution of tasks of higher production capacity use of
management for printing enterprises development printing industry, increasing their activity profitability,
is possible under the following conditions: state and for publishers – searching an effective production
support and publishing, printing industry regulations, base for publishing products replication.
the publishing and printing industries integration; In present-day conditions of integration and
protection of the domestic market of printing products globalization processes, a rational distribution of
by the proper competitiveness level of domestic limited investment resources is needed, therefore,
production; taking into account strategic competitive the authors proposed a direction – investment
advantages, goods and services that provide maximum development of enterprises. Priority should be given
profit to the enterprise, thus, the specialization to such key areas as technical and technological
development and co-operation, and minimization or modernization to ensure the high-quality production
phase-out of products unprofitable types; enterprises and low cost of products, personalized orders, the
innovation activity stimulation; continuous education market expansion for non-corporative consumers;
as a trend towards improving the education quality. the advanced technologies introduction, in particular,
The conceptual management model for development digital printing, to achieve the economic earning
is proposed. The model is based on the example of capacity of production of small print runs, is an
printing enterprises (Figure 3). At the core of the equivalent of current market trends – reducing the
elaboration is the goal to improve the earning capacity products circulation; technical support for printing on
of enterprises activity in present-day conditions of difficult surfaces to enter new markets.
rapid changes at macro and micro levels, and elements Production that is compliant with international
identified such as diversification processes, change the quality standards will increase the competitiveness
organizational structure of enterprises, the whole chain of enterprises and industry, growth in incomes and
customer-producer-consumer creation and the real profits of enterprises allowing increasing financing for
investments use. production modernization, which will meet the ever-
Diversification processes are aimed at developing new changing consumers’ needs, thus reaching new strategic
markets, distribution of risks between separate areas of markets and gaining growth the capital return level
activity, higher use of existing production capacities. It through real investment in innovative development.
is determined that the diversification implementation The profit is the main indicator, which characterizes
requires an integrated approach, namely, the the earning capacity of the enterprise activity and

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Ensuring the earning capacity

of enterprises activity

Enterprises development concept

Primary areas of management for enterprises

development

Corporatization as
Investment
Diversification a voluntary association
development
of participating enterprises

Real investment
Whole economic Change the organization
space creation structure of enterprises
Innovation
development

Issue of new types Competitiveness Material and technical

of products base modernization

Product quality

Entry into new markets

Result

Fig. 3. Conceptual management model for enterprises development

Source: Self-developed

is the main source of development. To determine We have substantiated the criteria for assessing the
the prospects of investment development, we have earning capacity of investments for enterprises. In
calculated the forecast of the printing enterprises profit determining the economic feasibility of using credit
based on econometric models. The predicted value of investment resources, an indispensable prerequisite
profit decreases. As enterprises do not have enough own is the higher value of investment return, calculated
sources for financing development and are characterized with profit, without deducting the price of the loan
by a high risk of functioning in conditions of a high level payment, compared with the price of the loan. Sufficient
of competition, the objectivity importance in choosing prerequisite is to exceed the return on investment,
the best investment projects according to technical, calculated with a net profit, over the proportion of
economic criteria, etc., increases, thus, on the correct loan repayment per unit of the investment period. This
assessment of the investment project at the planning condition should be taken into account when calculating
stage, the success of its implementation depends. the market value of enterprises, in particular, by the

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method of economic value added (EVA). Accordingly, the effectiveness of which depends on the resources
the earning capacity assessment of investment is based availability, their use efficiency, the achieved state of
on absolute indicators such as profit, economic result, development. The effective development of enterprises
net present value, and relative indicators, in particular, policy is determined by the peculiarities of enterprises
investment return, which takes into account the sources development, including the product quality level,
of investment return. demand volume, activity scale, integration processes,
The economic earning capacity accounting of the investment attractiveness level, etc. Over 90% of
proposed management model for enterprise development enterprises are small scale, this limits their financing
performed on the printing enterprise example is typical possibilities from their own and attracted sources,
for the industry because of its small business scale; reduces the level of operational stability. Printing
promotional products profile, which will save on the sale enterprises carry out orders for corporate and individual
of a new product by offering it to existing customers; is customers, and enterprise development requires a client-
a promising outlook for joining the corporation. For oriented approach based on meeting the consumers’
implementing the horizontal diversification strategy, needs in terms of production and supply efficiency and
the volume of investments is 400 thousand UAH. The ensuring product quality.
enterprise has a shortage of own financing sources; The analysis of the state and trends of printing
therefore, is foreseen to conclude a leasing agreement enterprises’ development showed that the perspective
at a price of 16% per year. The payment to the lesser of directions of enterprises development are:
the principal of the loan is due to the deprecation cost diversification based on activity expansion, change in
and 60% of net profit. The cash flow is discounted, the the enterprises’ organizational structure, investment
upper limit of the discount rate, recommended for the development. Creation of corporations will be based on
economic conditions of Ukraine, is adopted and is 20% an integrated structure for effective achievement of goals
per year. The net present value is calculated: and solving common tasks. Creation of corporations,
86.5 88.5 90.5 119.1
modern121.7
methods of work introduction will reduce
NPV = 84.6 + + + + + production − 400 = 118.8� �thousandUAH
� .
(1 + 0.05) (1 + 0.05) (1 + 0.05) (1 + 0.05) (1 + 0.05)5 time and receipt of products in the
2 3 the
4

market will help increase its competitiveness, which

5 90.5 119.1 121.7 requires consideration of the life cycle of goods, which
+ + + − 400 = 118.8� �thousandUAH
� .
05 ) (1 + 0.05) (1 + 0.05) (1 + 0.05)
2 3 4 5
in present-day terms is short and depends primarily on
The project payback period is 1.5 years. For the demand offer for goods. Increasing the earning capacity
first year of the project, 240 thousand UAH will be of printing enterprises requires their investment
reimbursed, for the next six months – 160 thousand development, in which innovation is the main form of
UAH. It is also necessary to pay lease price, charged on the investment, and investment development is directed
balance of the debt, its total amount for 1.5 years is 59.5 primarily at modernizing the material and technical
thousand UAH. Based on the calculations performed base of enterprises.
on the printing enterprise example, it is determined that The printing enterprises development concept,
implementing the proposed development directions which defines the goals, tasks, and directions of small
will ensure an increase in net income of the company and medium business enterprises development, is
by 1410 thousand UAH or 22.3%, a net profit of 270.2 proposed. For the successful implementation of the
thousand UAH, 33.7%, comparing to the level of the concept, organizational changes to the development
base year, the expenses’ profitability will increase by 0.4 management process are required.
percentage points. Based on of the concept, a model management for
The all tasks fulfilment related to the management for enterprise development is proposed, which takes into
printing enterprises development will promote to: account the directions of effective management and the
– ensuring the products high competitiveness in the peculiarities of the printing industry enterprises and
domestic and foreign markets, high productivity the need for constant and complex adaptation to the
and rhythmic production; investment activity external and internal environmental conditions, and is
intensification; aimed at increasing the earning capacity of activity. The
– corporate culture and the level of labour-management model predicts the commodity producers’ corporations
enhancement; creation based on uniform economic rules for all
– the enterprises’ social image making; enterprises of the industry.
– rational use of resources; Additional expenses directed at a complex of
– providing information security of the country. directions on management improvement realization for
enterprise development amount to 400 thousand UAH.
Their expediency is evidenced by the lower estimated
5. Conclusions payback period of investments – 1.5 years, compared
The internal and external environments instability to the normative – 5 years, and the positive net present
causes constant management of changes in enterprises, value of 118.8 thousand UAH.

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Vol. 4, No. 1, 2018
The enterprises of the industry effective activity conditions improvement, stimulation of labour,
will allow realizing all conceptual directions of productivity increase, competitiveness of production
development, and this will promote working increase.

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