Integral Evaluation of Changes at Metallurgical Enterprises

Abstract

The need for computing the integral coefficient of changes is substantiated at company and its functional subsystems (production, marketing and sale, finance, staff) level. A methodology for integral evaluation of changes at metallurgical enterprises is proposed for improving the efficiency of management. In this methodology, the system indicator of changes in the functional subsystems of metallurgical companies is constructed. This scorecard includes the chain growth rate for rolled products production, the capital productivity, the chain growth rate for net sales, the ratio of turnover to current assets, the ratio of net income to cost of sales, the financial autonomy ratio, the general liquidity ratio, the net return on sales, the chain growth rate for staff number, the labor productivity, the ratio of growth rate for productivity to growth rate for average real wages. For the raw data, the standardization procedure on the basis of reference values is substantiated. The reference values are computed using the standard values, and the averages of indicators included in the calculation of the integral coefficient of changes (the industry averages and the geometric means of the investigated enterprises indicators). The two–stage aggregation method for the standardized indicators is explained. At the first stage, the integral estimates of changes in every functional subsystem are computed as simple arithmetic means. At the second stage, the integral coefficient of changes is calculated as weighted arithmetic mean which envisages adjustment of the integral estimates that were got at the first stage on the weights which reflect the significance of every functional subsystem for the support of corporate activities. The weights are computed using the analytic hierarchy process. It is established that the first position in terms of importance for metallurgical company is taken by the functional subsystem “Marketing and sale” (weight 0.689), the second one – by “Finance” (0.139), the third one – by “Staff” (0.086), the fourth one – by “Production” (0,085). Using the designed algorithm, the integral coefficient of changes is calculated for “Dneprovsky Iron & Steel Integrated Works named after F. Dzerzhynskyi”, “ArcelorMittal Kryvyi Rih” and “Zaporizhstal”. The dynamics of the integral coefficient of changes is analyzed. It is found out that the performance of “Dneprovsky Iron & Steel Integrated Works named after F Dzerzhinsky” has fallen in practically all the functional subsystems. At the same time, “ArcelorMittal Kryvyi Rih” and “Zaporizhstal” had problems related with low returns from sales and insufficient liquidity. Recommendations for the management system improvement are given.