The analyse of management performance for light industries' enterprises.

Duda-Daianu, Dana Codruta ; Harangus, Daniela

Abstract: The aim of the research is to analyze and to generalize theoretical and methodological issues regarding performance management and enterprise competitiveness, assessment of trends of development of light industry enterprises management and preparing for redesign to increase their competitiveness. The main objective is highlighting the development trends and assessing the competitiveness of light industries' enterprises in the West Region in this difficult period

Key words: performance management, light industries, Mckinsey's model competitiveness

1. INTRODUCTION

Currently, the global market for light industry is characterized by a strong competitiveness. The role of developing countries is growing: in recent years is recorded the relocation of light industry production from developed countries to developing countries (Duda-Daianu, Harangus, 2009). This aspect fostered a substantial increase in the number of companies in light industry of Romania in recent years, making it to become an important branch of national economy. At the same time, the competitiveness of enterprises of light industry is still quite low due to the application, in most cases, of an inefficient management (Russu, 2003).

Starting from the expression of Peter Drucker and Richard Farmer, that there are not efficient and inefficient enterprises, but well-managed or poorly managed companies, changing management becomes the field of strategic and tactical approaches, initiated and conducted at the company level for achieving a high level of performance in a complex environment and therefore unstable (Porter M, 2001). Change management is not just a "fashion" of the period faced by enterprises of light industry, but a necessity for ensuring a high degree of competitiveness (Voiculescu, 2007).

The main objective of the research is to highlights the main directions for improving the management of light industry enterprises to enhance their competitiveness. Performance management concept proposed in this paper is based on the model "7S" by McKinsey, which would allow efficient application of business activity and improving their competitiveness.

In the same time, the research is focused on analyzing and to generalizing theoretical and methodological issues regarding performance management and enterprise competitiveness, assessment of trends of development of light industry enterprises management and preparing for redesign to increase their competitiveness. According to the purpose, the following objectives were formulated:

* Highlighting the development trends and evaluate the competitiveness of light industrial enterprises from West Region;

* The research of existing level of management in the light industry enterprises at macro and micro levels, proposing measures to transform it into a performance management;

* Improving the methodology for assessing the competitiveness of enterprises by introducing performance management component.

2. METHODOLOGY OF THE RESEARCH

An important role in the development of light industry in the country is the proper management of its, and diagnosis of light industry enterprises' management becomes increasingly important in market economy conditions (Vass, 2004). For this purpose, to make a qualitative assessment of management, we apply strategic analysis matrix management model "7S" by McKinsey, which is shown in Figure 1.

Its conceptual scheme provides seven key factors of management organization, which are components of performance management and the model name comes from the first letter "S" of each factor of seven.

[FIGURE 1 OMITTED]

McKinsey's "7S" model was applied to diagnose management light industry enterprises in the West Region. Making that diagnosis was possible after interviewing managers of a number of seven enterprises in industry.

To estimate the influence of efficient management on growing the enterprise competitiveness has been proposed a methodology based on the theory of effective competition, taking into account the specificity of the operation for local light industry and the concept of efficient/ performant management.

3. RESULTS OF THE RESEARCH

In the Western Region, the economic situation has worsened in light industry branch, the root cause being the loss of several orders under contract, financial and economic crisis that affected the national economy and unfavorable exchange rate fluctuations. Thus, we conclude the following:

* in 2001-2007 periods the volume of production in textiles has increased 2.5 times, and in 2010 it was reduced by 34.3% over 2007;

* in 2001-2007 periods the volume of clothing and fur production has increased four times and in 2010 it was reduced by 27% over 2007;

* in 2007-2008 the volume manufacture of leather products and footwear increased by 1.7 times, and in 2010 it was reduced by 34.8% compared to 2007. The largest amount is for shoe production.

Applying the 7S model, the results of each component are as follows:

* Strategy and objectives. Currently, at the micro level is promoted, by the vast majority enterprises, the development strategy based on lohn system, which ensures a very low added value, and at macro level there wasn't established a clear strategic vision on the development branch. In most companies lack well-defined and quantified objectives.

* System. Decision-making and communication systems in the light industry enterprises are characterized by the following:

** decision-making system is complicated and irrational;

** durung meetings are discussing just tactical issues;

** responsibilities and authorities are not evenly distributed among managers.

Regarding the use of advanced managerial methods in the light industry enterprises, note that, in quantitative terms, the number of systems, methods and management techniques that we use by those companies is relatively small.

* Structure. Flowcharts of light industry enterprises are addressed based on complexity, their standardization and centralization. They also depend on firm size, technology used. Organizational structure in most enterprises of light industry has the following features:

** is characterized by a high level of centralization and complexity;

** has many hierarchical levels and require high administrative costs;

** there is an obvious direction of production;

** prevents effective delegation of responsibilities.

* Employees. Industry faces a drastic shortage of labor, which is caused by several reasons, namely: massive migration of people, mostly women, in highly developed countries (Italy, Spain, etc..) looking for better jobs highly paid, low employee motivation and lack of social protection, work instability, which implies total dependence and interruption of customer orders in their absence, insufficient training of specialists in educational institutions in the field.

* Skills. In case of light industry enterprises in West Region, employee' competence assessment is based on working results directly from work, using informal assessment system, based on observations and examinations of senior managers.

* Corporate Culture. From the investigations conducted regarding the management style used by managers of light industry in West Region was found that prevailing authoritarian and bureaucratic style of management.

Theory of effective competition was used for evaluating the competitiveness. The results are collated in Table 1. According to the theory mentioned, the applied formula was as follows:

Ci = 0,26 Ep + 0,40 Sf+ 0,34 Emv (1)

In order to increase the competitiveness of all industrial enterprises, including those in light industry needed a new management system based on specific stock market economy.

4. CONCLUSIONS AND PROPOSES

Management evaluation model based on light industry enterprises "7S" by McKinsey showed us that there are reserves to improve the existing organizational structures. In the study of organizational charts of several enterprises of light industry in the West Region, propose measures for their optimization, especially for medium-sized enterprises, namely: the reorganization of the Department of Marketing and Sales functions and geographically, forming the Department of Human Resources modern type, reorganization of the Department for Economic and Financial department budget creation and passage of the Department of Human Resources Salary, Production Department reorganization by shifting supply function of the Department of Marketing and Sales Department, Production and revision of the number of polling personnel auxiliary.

Comparing the situation in the previous period and the base shows that during the years 2001-2007, the share of light industry is growing most macroeconomic indicators, which speaks of raising the importance of this sector to the national economy and improvement of key economic situation branch's financial business. During the period 2008-2010, the situation changed because the world economic crises.

Regarding the forecast for the next three years, we believe that the agenda is the need for the concept of sector development, and future action plans. The forecasts presented are three options to increase competitiveness.

In the first variant, the pessimistic, negative trends are reflected development branch, which will practically disappear. Only factory-leaders will stand due to proper management and market penetration in certain niches.

Under the second scenario involves restructuring the state level and the levels of development based on key success factors, and, most importantly, increasing social importance of the sector. This approach will enable companies to formulate their development directions. At the same time, state support will be granted only to those companies that have high potential and major business opportunities.

A third variant, the optimistic, involves the developing of a radical development concept for domestic light industry.

Of course, light industry development scenarios of will not be possible to implement without a proper management of the industry both at micro and at macro level.

The theoretical significance of research is to develop the concepts of performant management and competitiveness, with respect to light industry enterprises. Have been identified the problems regarding management issues related to both at branch and enterprise level and their influence on the competitiveness of enterprises. Have been formulated and economically justified recommendations to improve the management of light industry enterprises by redesigning each components provided the model "7S" of McKinsey.

The paper highlights the main directions for improvement the management of light industries' enterprises to enhance their competitiveness. The concept of efficient/performant management proposed in this paper is based on the model "7S" by McKinsey, which would allow efficient application of business activity and improving their competitiveness.

5. REFERENCES

Duda-Daianu D., Harangus D. (2009). The role of organizational culture improvement for increasing the the competitiveness of Romanian enterprises on foreign market, Proceedings of the 6th International Conference Management of Technological Changes, 23-27 august 2009, Alexandroupolis Greece, ISBN 978-960-89832-8-1 Democritus University of Thrace Publischer

Porter M and Sakakibara M. (2001). Competing at Home to Win Abroad: Evidence from Japanese Industry, Review of Economics and Statistics, volume 83, p.310-322

Russu C. (2003). Competitivitatea industriei sub impulsul cercetarii, Tribuna Economica, no.7, p.46-47, ISSN 1223-5180

Vass A. (2004). Competitivitatea, interactiune comert--concurenta", Revista de comert, no. 4, p. 14-18, ISSN 1582-0424

Voiculescu D. (2007). Competitivitatea intreprinderilor si a natiunilor. Intact Publisher, ISBN 978-711-001-3, Bucuresti