In the early 90s, when Ukraine began the process of transition to a market economy, many businesses have found themselves in a difficult position. Demand for their products from the countries of the former socialist bloc fell sharply, and the yield on the new western markets has been hampered by the low standards of quality. Reduced trade barriers have also played an important role - irruptive suddenly flooded with imports put Eastern European producers in the face of tough competition already in their local markets.
As a consequence of these processes, most of the enterprises of Ukraine became unprofitable. Sales price was less than the cost of production. There was no money to pay suppliers and creditors. Dimensions debt reached colossal proportions that instantly struck by the state budget and the banking system. [1]
The only way for companies to survive in the new conditions, it was difficult to restructure production, replacing worn-out equipment, sorting out the financial flows and establish a system of distribution of goods. Many enterprises had fully or partially shift to production of other products, a significant number of factories were forced to declare bankruptcy.
The countries of Eastern Europe in the transition to a market economy in the early 90s confronted with all the problems faced by Ukraine. Enterprises of Eastern Europe have decided to restructure production.
It should be noted that due to the correct government policy in most countries of Eastern Europe in the early 90s had established the basic conditions necessary for the restructuring:
- Privatization has made significant changes in the structure of ownership and control of enterprises.
- To develop the required legal framework.
- Held a competent tax policy.
The main problems of the enterprises and their solutions by means of restructuring can be reduced to a kind of summary table summarizing the East European experience [1]:
Table 1 Basic problems of enterprises in Eastern Europe and how to address them through restructuring
The main problems
Possible solutions
1. Property
- Increasing the share of foreign owners
- Redemption of existing managers
- Sale to a strategic investor
2. Control system
- The introduction of a financial reporting system
- The introduction of operational reporting
3. Planning
- Development of marketing plans
- Development of production forecasts
- Planning of financial flows
4. Computerization
- Installation of the base system to ensure financial and operational reporting
References
For preparation of this work were used materials from the site http://masters.donntu.edu.ua/
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