The Leading Practice of Decision Making in Modern Business Systems

Cover of The Leading Practice of Decision Making in Modern Business Systems

Innovative Technologies and Perspectives of Optimization

Synopsis

Table of contents

(21 chapters)

Prelims

Pages i-xviii
Access restricted

Introduction

Pages 1-2
Access restricted

Part I Generalization of the Existing Experience of Decision Making in Modern Business Systems

Purpose

The purpose of the work is to develop a Russian model of decision-making in modern business systems.

Methodology

The method of modeling of socioeconomic systems and the method of formalization for graphic presentation of results of modeling are used.

Conclusions

A Russian model of decision-making in modern business systems is developed; it reflects not only the structure of managerial tools and peculiarities of its communication with business entities, that is, internal hierarchy of the business system, but also the algorithm of decision-making in modern Russian business systems, which includes six consecutive mandatory stages. The presented model showed simplicity and clarity of hierarchy of managerial staff and the business system on the whole. Due to this, authorities and responsibilities are not doubled – each business entity under the management of functional manager performs strictly determined business processes. This allows dividing any problem into a lot of subproblems, which are effectively solved by the corresponding functional managers on the basis of the mechanism of labor division. Due to this, alternatives are selected over a short period of time.

Originality/Value

It is determined that, despite multiple advantages, connected to logical succession of the process of making of managerial decisions in modern business systems, the Russian model of this process has drawbacks that are caused by stage-by-stage and fragmentary solution of problems and implementation of decisions, as well as by underdevelopment of feedback and marketing activities.

Access restricted
Abstract

The chapter studies the current tendencies of the Russian practice of decision-making in business systems by the example of a gas distribution company of the Russian Federation. In the modern Russian practice, the companies transform the system of decision-making to the process-oriented approach, which envisages decision-making and correction of decisions not according to functional responsibilities but according to consecutively performed procedures of conducted business processes.

The authors describe the procedure of formation of business processes in a gas distribution company by the example of the business process “Technological connection” and provide its characteristics.

As a result of studying foreign approaches to formation of the model of management and decision-making in companies, the authors develop a methodology of evaluation of economic effectiveness of implementation of a business process, based on the principles of management according to goals and KPI. This methodology allows evaluating the obtained results of a separate stage and of the business process on the whole.

By the example of the studied business process, a set of key indicators of effectiveness of a separate subprocess “Formation of technical condition” in a company is offered, and calculations of final results of effectiveness of this business process are provided. As a result of the final evaluation, practical recommendations for development of managerial decisions in a company are provided.

Access restricted
Abstract

Despite certain studies in the given sphere, the issues of systemic organization of management of business decisions, aimed at increase of competitiveness of products of the studied sphere, are not elaborated in the Russian theory and practice. At present, the task of formation of a completely new theoretical and methodological basis of production management, improvement of existing and development of modern mechanisms, methods, and technologies of design and efficiency management of business decisions, which allow increasing competitiveness, becomes a top priority in activities of any company. This is confirmed by active development in international practice of the systems of management and support for products’ life cycle. These technologies are oriented at flexible high-tech production with wide usage of automatized systems of production and complex technological processes. A special role in scientific development of the issue of increase of effectiveness of management of industrial companies belongs to studies on creation of integrated production systems and application of new technologies of management, which are based on increase of products’ quality. These issues are especially topical for domestic manufacturer. The key components of competitiveness of an industrial company are innovational and technological development of productions, creation, and development of new organizational and institutional forms, strategic partnership of participants of production and technological chain, and emphasis on quality and safety of manufactured products.

Access restricted
Purpose

The purpose of the research is to determine the signs of nonoptimality of managerial decisions that are made by Russian business systems and to determine the barriers on the path of making of optimal decisions in business systems by the example of modern Russia and perspectives of overcoming them.

Methodology

The information and empirical basis of the research consists of statistical materials of the World Economic Forum, RIA Rating and Samuel Centre for Social Connectedness for 2018, according to which signs of nonoptimality of managerial decisions of Russian business systems, which are observed at the macro-level, are determined. During the research, the method of systemic, problem, and logical analysis (analysis of causal connections) and the method of formalization are used.

Conclusions

It is determined that drawbacks of the process of making of managerial decisions in modern Russian model of this process, connected to the functional organizational structure, low marketing activity, and underdevelopment of internal business communications, create barriers on the path of making of optimal decisions: high expenditures for making of managerial decisions, duration of the process of making of managerial decisions, high complexity of choice of alternative decisions, and incomplete accounting of possibilities and problems during decision-making.

Originality/Value

Perspectives of overcoming the determined barriers are connected to the usage of outsource during the making of managerial decisions, refusal from functional organizational structure of managerial staff, usage of means of authomatization of making of managerial decisions, and development of systemic feedback and marketing. According to the studied practical experience of the largest and well-known Russian business systems – Rosneft, Lukoil, Gazprom, and Sberbank – these perspectives (2018) are not implemented in Russia.

Access restricted
Purpose

The purpose of the research is to study the successful global experience of managerial decisions in modern business systems.

Methodology

The authors use the method of systematization, logical analysis (analysis of causal connections), and formalization. The information and empirical basis of the chapter includes the materials of research of an international consulting company Hay Group, devoted to evaluation of effectiveness of decision-making in companies of Europe, Russia, and other markets and compilation of the global ranking of the best companies for leaders in 2018, as well as statistical data of Samuel Centre for Social Connectedness and World Economic Forum for 2018.

Conclusions

The studied and analyzed successful global experience of decision-making in modern business systems showed that the key factors of successful managerial decisions are complexity of organizational structure, characteristics of organizational culture, level of marketing activity, and personal qualities of leaders (business managers). However, the influence of these factors is contradictory – they stimulate observation of certain criteria of optimality and hinder observation of other criteria.

Originality/Value

It is determined that observation of all criteria of optimality of managerial decisions is not guaranteed by any regional model of business systems. Emphasis on certain criteria (e.g., speed of decision-making in countries of Asia) leads to decrease of general results (global competitiveness and ecological effectiveness of business systems).

Access restricted

Part II Technologies of Support for Decision Making in Modern Business Systems

Purpose

The purpose of the work is to determine the role and functions of mediator in the process of decision-making in modern business systems.

Methodology

The methods of systematization, classification, structural and functional, comparative and logical analysis, and formalization are used.

Conclusions

Six types of mediator are used: state regulator or independent organization, regulator of integration association, psychologist and pedagogue, business consultant, top manager, and auditor (controller). It is shown that the role of mediator in the process of decision-making in modern business systems consists in quick overcoming of emerging contradictions with their functioning and development and preventing their turning into conflicts and crises. Mediator can perform the following functions in the process of decision-making in modern business systems: provision of balance of interests of business and society, provision of balance of interests of business system and integration association of which it is a participant, management of conflicts of interests of employees during collective decision-making, provision of balance of interests of employees and business managers, solving contradictions of interests of business managers, and monitoring and control over observation of laws and interests of business owners. A generalized structural and logical scheme of mediative solution of contradictions during decision-making in a modern business system is compiled.

Originality/Value

It is substantiated that mediation could be in high demand by modern business systems, as it allows for successful overcoming of their internal and external contradictions.

Access restricted
Purpose

The purpose of the research is to determine perspectives and spheres of application of innovational managerial technologies of decision-making in the sphere of digital medicine in modern business systems in the interests of improvement of the healthcare system.

Methodology

The methods of systemic, problem, logical, and structural & functional analysis and the methods of modeling of economic processes and systems and formalization are used.

Conclusions

It is shown that the most perspective innovational managerial technologies include digital marketing, digital collection of feedback, digital selection of models of managerial decisions, intellectual technologies of decision support, and digital monitoring and control over making and implementation of managerial decisions. The spheres of application of digital technologies in the sphere of digital medicine include collection of feedback from patients, collection of feedback from medical workers, usage of successful experience of other medical organizations, automated selection of managerial decisions, automated selection of the optimal decision of the existing alternatives according to the set criteria, and electronic reports of medical organizations and its administration.

Originality/Value

Wide opportunities of usage of innovational managerial technologies of decision-making in the sphere of digital medicine in modern business systems are determined; they allow improving the healthcare system. These technologies could be applied at all stages of the process of making of managerial decisions. A conceptual model of application of innovational managerial technologies of decision-making in the sphere of digital medicine in modern business systems is developed.

Access restricted
Purpose

The purpose of the chapter is to study the possibility of applying modern intellectual methods and technologies of decision-making for managing complex poorly structured systems.

Methodology

The methodology of the chapter includes fuzzy cognitive approach, analysis of causal connections, dynamic modeling with application of the impulse processes tools, sustainability analysis of the studied system, and scenarios analysis.

Results

The authors offer fuzzy cognitive approach to modeling the risk management system of commercial Bank POS-loaning processes. The simulated system is represented as a fuzzy-oriented weighted multigraph with a pulse action transmitted through it. The modeling process is implemented in the form of successive execution of the following stages: determining the goal, formation of fuzzy cognitive map, dynamic modeling with application of impulse processes tools, and scenarios analysis of development situation and selection the best.

Recommendations

The developed model of management system is a basis for analyzing the tendencies of various situations development that appear during work of banks in the express loaning segment. It allows forecasting and modeling the strategies of behavior as a reaction to external influences and to determine trajectories of management that allow reducing the internal risks of commercial Bank POS-loaning processes. Fuzzy cognitive approach is an effective tool for decision support during risk management in activities of a commercial bank and could be used for modeling and analysis of functioning and other poorly structured socioeconomic systems.

Access restricted
Abstract

The chapter reviews the structure and functional area of decision support systems (DSS) for managing complex social and economic systems (CES). Particular features of building DSS to regulate the labor market in the context and with regard to peculiarities of the rural population, including pensioners are reported. Analytical models are provided in the form of differential equations describing the laws of changing SES performances under study due to migration of the population. The application of cognitive approach to build an analytical subsystem of DSS is substantiated. The peculiarities of building DSS for environmental and economic management are shown.

Access restricted
Purpose

The purpose of the chapter is to study the possibilities of systemic intellectual support for managerial decisions in modern business systems and perspectives of authomatization of this process on the basis of intellectual technologies.

Methodology

The methodology of the chapter includes the methods of systemic and problem analysis, analysis of causal connections, modeling, and formalization.

Conclusions

Advantages of usage of technologies of intellectual support for decisions in modern business systems are substantiated; they are connected to multitask character, full determination of possibilities and problems of the business system regardless of employees’ involvement in this process, and “scale effect” during making of managerial decisions. Also, drawbacks of intellectual support for decision-making in modern business systems are determined: incompleteness of authomatization of the process of making of managerial decision, foundation primarily on digital data, necessity for complex digitization of the business system, and the problem of security of digital data and intellectual technologies.

Originality/Value

Large opportunities of systemic intellectual support for managerial decisions in modern business systems and wide perspectives of almost full authomatization of this process on the basis of intellectual technologies, accessible at all stages of the process of decision-making, are determined. For this, an algorithm of complex intellectual support for decisions in a modern business system is offered. The obtained results allow determining intellectual technologies of support for managerial decisions in modern business systems as a perspective direction of improving this process.

Access restricted

Part III Recommendations for Improving the Process of Decision Making in Modern Business Systems

Purpose

The purpose of the chapter is to determine the perspective directions of improving the process of decision-making in business systems by the example of modern Russia.

Methodology

The scientific and methodological platform of this research is the Russian model of decision-making in modern business systems. For determining the perspective directions of improvement of the process of decision-making in business systems according to this model, the methods of systemic and problem analysis, modeling, and formalization are used.

Conclusions

It is shown by the example of modern Russia that perspectives of improving the process of decision-making in business systems are connected not to usage of alternative regional models of this process but to modernization of own models by usage of new organizational tools and innovational technologies. The perspective directions of improving the process of decision-making in business systems of modern Russia include development of systemic feedback and marketing with the help of outsource, increase of flexibility of organizational structure with the help of mediation, and usage of means of authomatization of managerial decisions with the help of intellectual technologies.

Originality/value

The compiled improved Russian model of decision-making in a modern business system showed the advantages of practical implementation of the offered perspective directions, connected to the most complete solution of the problem and implementation of possibilities of the business system, accelerated practical implementation of managerial decisions, and reduced the load on business managers. The presented example of improving the Russian model of managerial decisions in modern business systems reflects the possibilities and perspectives of improving other regional models.

Access restricted
Purpose

The purpose of the research is to develop a universal mechanism of highly effective decision-making in modern business systems in any business environment.

Methodology

The methods of logical analysis, modeling of managerial processes, and formalization are used.

Conclusions

A universal mechanism of highly effective decision-making in modern business systems is developed – it could be applied in any business environment and any business system. The mechanism is based on the interactive algorithm of decision-making in modern business systems that allows adapting the process of decision-making to the current situation in the business system and the business environment in view of the changing complexity of problems and criteria of optimality of managerial decisions. The tools of implementing the mechanism are outsource, mediation, and intellectual support for managerial decisions. These tools are used as an addition to traditional tools – organizational structure, organizational culture, and leadership. The result of implementing the developed mechanism is high probability of making of optimal managerial decisions and supporting sustainability and stability of the business system.

Originality/Value

The developed mechanism of highly effective decision-making in modern business systems allows selecting the best model of decision-making depending on current needs and possibilities of the business system instead of following one selected model in all situations. That is, the key advantage of this mechanism is its interactive character, which ensures high flexibility of the process of making of managerial decisions together with sustainability of the business system.

Access restricted
Purpose

The purpose of the chapter is to develop a framework strategy of highly efficient decision-making in modern business systems, which defines subjects, conditions, limitations, and resources that are necessary for successful practical implementation of the mechanism of highly efficient decision-making in modern business systems.

Methodology

The set goal is achieved with the help of the methods of strategic modeling of dynamic economic systems and the method formalization.

Conclusions

A framework strategy of highly efficient decision-making in modern business systems is developed. The presented strategy has the following advantages as compared to the existing strategies, based on regional models of this process: flexibility of subjects of making of managerial decisions, presence of limitations, consideration of the time factor during organization of the process of making of managerial decisions, and mandatory connection to current conditions in which the business system functions.

Originality/Value

The developed strategy showed importance and necessity for increasing the flexibility of management of modern business systems for supporting their competitiveness, sustainability, and high effectiveness in the changing business environment. In view of the fact that the presented strategy is oriented at high volatility of the conditions of the business system, it should be applied in practice at the downward phase of the economic cycle – that is, in the period of economic crisis and post-crisis restoration of economy.

Access restricted
Purpose

The purpose of the chapter is to study possible approaches to determining the notion “business system” and to describe possible optimization models of decision-making in modern business systems from the position of these approaches.

Methodology

The methodology of the research includes systemic analysis, discrete event approach in simulation modeling, modeling of complex hierarchical system on the basis of turning criteria into a generalized indicator with the help of functional Kolmogorov mean, and mathematical tools of the Theory of games.

Results

The authors study possible variants of modeling of business systems from the position of various approaches: commercial, practice-oriented, and organizational. Within the commercial approach to defining the notion “business system,” the discrete event approach to simulation modeling on the basis of Markov chains was compiled. A model of starting a certain new commodity in sales was compiled for determining the long-term strategy in the market. Within the practice-oriented approach, evaluation of effectiveness of personal as a component of business system is modeled. Within the organizational approach, two competing companies are modeled on the basis of the positional game.

Recommendations

Finding the optimization model of decision-making in modern business systems is impossible without of the system approach – that is, without considering possible definitions of the term “business system” and compiling the corresponding models. Only the systemic approach will allow for objective and comprehensive modeling of behavior of business systems. The offered methodologies will allow modeling evaluation of the current state of business system, changes of the system in dynamics, and its relations with other business systems.

Access restricted
Purpose

The purpose of the chapter is to model the process of decision-making on selection of a certain process depending on the investing strategy.

Structure/Methodology/Approaches

The work includes consideration of the project on the basis of a simplified simulation model. Modeling is performed by the Monte Carlo method. Criteria of evaluation of the investment project are net investment value and profitability index.

Results

The authors model the process of decision-making by the example of analysis of an investment project. The process is implemented on the basis of the simulation model in the Mathcad program. Three cases of investing are considered: constant, change by linear law, and changed by non-linear law. Criteria of evaluation of investment project are selected, and risks are determined. The corresponding conclusions are made.

Originality/Value

The performed research is of the applied value and could be used for modeling real business processes at a company.

Access restricted
Abstract

The energy efficiency policy is a priority component of the overall economic policy of different countries striving to ensure the competitiveness and sustainability of national economic development. The improvement of energy efficiency represents an important economic task for the post-Soviet countries, characterized by excessive energy intensity of the economy, and the solution of this task requires proper information and analytical support: a system for accounting and analyzing energy consumption indicators. The present research is aimed at developing the tools to support decision-making in the sphere of evaluation and estimation of performance of the State energy efficiency policy of territories and testing these tools on the example of Russian regions. The study has been carried out using the methods of statistics, economic, mathematical and econometric modeling, structural, dynamic and comparative analyses. The following tools have been proposed: the method for differentiated accounting of various factors’ influence on the dynamics of energy consumption in the regions and for estimating the index of technological efficiency of electricity consumption; the method for the empirical classification of territories by types of their energy and economic development. We’ve revealed the general trend and typological features in the dynamics of electricity consumption efficiency indicators in the constituent entities of the Russian Federation and carried out the decomposition factor and comparative analysis of energy consumption patterns of the Volgograd region over 2005–2014 on the basis of the proposed tools.

Access restricted
Abstract

The aim of the chapter is to form a set of accounting and calculation tools to reflect information about production losses, ensuring the adoption of operational management decisions. Application of methods of observation, system analysis, classification, and grouping provided the possibility of modernization of existing methods and methods of data generation in the segment of information space management of economic entities of manufacturing industries. Improvement of methodological approaches of structuring and use of information base of development of management actions from subjects of management of the enterprises of processing industries for the purpose of reduction or elimination of production losses allow, with a high degree of efficiency and reliability, to manage production resources of the organization, to increase efficiency of production activity.

Access restricted

Conclusions

Pages 177-178
Access restricted

Index

Pages 179-185
Access restricted
Cover of The Leading Practice of Decision Making in Modern Business Systems
DOI
10.1108/9781838674755
Publication date
2019-12-02
Editors
ISBN
978-1-83867-475-5