The concept of "crisis management" has several different definitions. Crisis management of an enterprise is the process of using procedures and methods that are aimed at improving the economic and financial activities of the enterprise. Crisis management is designed to provide conditions under which the current financial difficulties of the enterprise will not become permanent.
The main factors leading to crisis situations at the enterprise, which require crisis management, are divided into two groups: internal and external.
External occur regardless of the enterprise:
1. Inflation;
2. The increase in taxes;
3. Change of power, changes in legislation;
4. War or force majeure situations, etc.
Internal appear in the process of the enterprise. They can be divided into groups:
1. Management group includes: ineffective management; high degree of commercial risk; underestimation of market conditions; poor management and accounting.
2. The production group includes: not high labor productivity with high wear of the OS and high energy costs;
3. The market group includes : excessive dependence on suppliers and buyers; lack of competitiveness of products.
At the same time, crisis management is not a single panacea for crisis management, since all measures and crisis management strategies for each company are developed individually. It is very important to timely identify crisis manifestations that affect the organization. This will quickly mobilize its full potential to overcome the adverse effects.
Crisis management of an enterprise is characterized by its principles that are different from those of conventional management.
The essence of crisis management lies in the complexity of management measures aimed at preventing, diagnosing, neutralizing, as well as overcoming crisis phenomena and the causes that cause them. In other words, any active influence to ensure effective functioning, applicable in a wide and narrow sense, refers to such a management. In a broad sense, this is a system of managing an economic entity with the aim of counteracting a crisis, whereas, in a narrow sense, it is a system of managerial measures in relation to a particular enterprise that has fallen into a state of crisis, and it is imperative to establish the financial insolvency of the organization.
The essence of crisis management in management anticipating the danger of a crisis, analyzing its symptoms, using measures to reduce the negative consequences of the crisis, and also using its factors for further development.
The subject of the impact of crisis management are crisis factors, both assumed and real.
The possibility of such control is determined by:
- the human factor, namely the potential for decisive and active human behavior in crisis conditions, as well as his interest and desire to overcome the crisis, his awareness of the nature of the crisis, the nature and patterns of the course.
- knowledge of the cyclical nature inherent in the development of socio-economic systems, allowing to predict crisis situations and prepare for them.
The need for such management is expressed in the need to overcome the crisis, as well as mitigate its consequences. To realize this need can only be using special control mechanisms.
The need for such management is sometimes determined by the main objectives of the enterprise. The main thing here is to increase the professionalism and discipline of personnel, the development of new safe technologies. With management begins the solution of technical problems.
Economic crisis management is also in search - conversion, types of diversification of production.