Three Seas Economic Journal

40

Vol. 1, No. 3, 2020

Corresponding author:
1 Interregional Academy of Personnel Management, Ukraine.
E-mail: allaidobaiva@gmail.com
ORCID: https://orcid.org/0000-0003-0914-2710

DOI: https://doi.org/10.30525/2661-5150/2020-3-7

IMPROVEMENT OF THE ENTERPRISE MANAGEMENT SYSTEM 
BASED ON MODERN PRINCIPLES OF BUILDING BUSINESS 

PROCESSES, CONTROLLING AND RISK MANAGEMENT 

Alla Idobayeva1

Abstract. The objective of the article is to highlight and consider the main directions for improving the modern 
enterprise management system, since that in the modern market conditions, the issue of effective development 
for industrial enterprises becomes more relevant, while the fundamental bearing core of the enterprise's internal 
environment is the management efficiency. The main problem is the managerial inefficiency of an excessively large 
structure that is not well suited to the work in market conditions. Methodology. In the course of this analysis, the 
management system of an industrial enterprise was considered as a complex open system with the use of the system 
analysis methodology in the study, which made it possible to identify the main directions for its improvement. 
Results. Enterprise management is a continuous process of influencing the performance of an employee, group 
or enterprise as a whole for the best results in terms of achieving the goal, which has been set. The management 
process is provided by the trained management professionals who shape and manage the organization by setting 
goals and developing ways to achieve them. To do this, management must find an effective way to combine the 
key variables that characterize tasks and people, while taking into account the obvious and potential external 
and internal risks and threats. Setting goals and providing them with policies, strategies, procedures and rules, 
the necessary management mechanisms contribute to the solution of this task. Motivation and control also 
play a significant role in ensuring that the tasks are completed effectively. However, the key in this is precisely 
management, which is most obvious and directly related to the systematic coordination of tasks and, accordingly, 
the formal relationships of people performing them, and the correctly selected management process toolkit allows 
the enterprise to achieve the greatest efficiency. Practical implications. The performed analysis of the features of the 
functioning of the enterprise management system allows us to determine the following areas for improving the 
modern enterprise management system: improving the business processes of the enterprise, ensuring high-quality 
control in the enterprise management system, and introducing the enterprise risk-management. Value/originality. 
The use of system analysis made it possible to determine and substantiate the main directions of improving the 
modern enterprise management system. 

Key words: enterprise, controlling, business processes, risk-management, enterprise management system.

JEL Classification: D01, D22

1. Introduction
The current state of the economy, which is 

experiencing the multidirectional influence of 
environmental factors, requires the production 
sector to improve management efficiency, to 
use new management tools in business practice 
that ensure the qualitative growth of the 
industrial business and its competitiveness in 
the domestic and foreign markets. Solving the 
problem of the increase in the competitiveness 
of industrial business through improving the 

quality of enterprise management and ensuring 
the growth of the efficiency of its production 
activities is especially important in the context 
of strengthening the integration of the state 
economy into the world economy, strengthening 
the integration processes. The problems of 
coordination and effective interaction of strategic 
and tactical priorities for the development of 
industrial enterprises are currently becoming an 
urgent task. Strategic interests of the development 
of micro-level industrial economic systems are 



Three Seas Economic Journal

41

Vol. 1, No. 3, 2020

aimed at the growth of business capitalization, 
the sustainability of its development, and the 
achievement of long-term competitiveness in 
a dynamically changing environment. On the  
other hand, traditionally, the goal of the  
operational management of industrial business 
development was considered to maximize the 
current profits and economic efficiency. Obviously, 
in the context of the conjunctural and institutional 
transformation of the industrial business and 
industry markets, the need to consider new 
effective directions for managing an industrial 
enterprise to ensure its highest efficiency in balance 
with the priorities of sustainable development of 
an industrial enterprise is actualized.

2. Improving the business processes  
of the enterprise

Effective management of a production facility 
is traditionally viewed as a process based on the 
use of the modern management technologies and 
more advanced forms of its organization. The 
theory of business processes appeared at the end 
of the last century with the publication of the book 
by M. Hammer and J. Champy "Reengineering 
the Corporations: A Manifesto for Business 
Revolution", where the authors define a business 
process as “a set of different types of activities, 
within which at the entrance one or several types 
of resources are used, and as a result of this activity, 
the “output” is a product that has a certain value 
for the consumer” (Hammer, Champy, 1997). 
Today, business restructuring based on business 
processes has been adopted by almost all the 
leading companies in the world. It has been proven 
in practice by many enterprises that even a partial 
improvement of the organization's business 
processes brings an effect in the form of an increase 
in production by 10-20%, while a fundamental 
rethinking and radical design of business processes 
to achieve the fundamental improvements in the 
key performance indicators, it requires a dramatic 
tenfold increase in efficiency.

At the same time, according to M. Porter and 
V. Millar, business processes are a set of internal 
steps (types) of activities, starting with one or 
more inputs and ending with the creation of 
products that the client needs and that satisfies 
him or her at a cost, durability, service, and quality. 
Moreover, this is the full flow of events in the 
system, describing how the client starts, leads and 
ends the use of the business (Porter, Millar, 1985).

Management activity at the management 
level of an industrial enterprise based on the 
process approach is the continuous execution 
of a set of certain interrelated types of activities 
and general management functions. However, 
it should be noted that the performance of 
individual work and management functions is 
also considered as a process, i.e. a general process 
is a set of interconnected continuously performed 
actions that transform some inputs of resources, 
information, etc. to the appropriate outputs and 
results. Management, as a whole, is the fundamental 
meaning and essence of the process approach.

The meaning of the business process 
management lies in the effective response of 
the organization to the requests of the external 
and internal environment in conditions of the  
complete independence from stereotypes. 
Business process management is an increasingly 
important element of the management of 
a modern organization. The main prerequisites 
for the implementation of management based  
on the business processes include:
– understanding of the entire flow of work, their 
role and level of responsibility by the employees of 
the organization;
– providing employees with the maximum  
freedom of action;
– reliable and effective communication at the 
junctions of the elements of the business process;
– exchange of information in real time;
– the possibility of regrouping the elements of the 
business process, if required by the interests of the 
organization in solving a specific problem;
– the ability of employees to solve a wide range of 
tasks;
– liberation from management stereotypes;
– non-standard, creative thinking of the employees;
– initiative and improvisation instead of diligence;
– strong and guaranteed motivation (Robson, 
Ullah, 1997).

Improving business processes in industrial 
enterprises allows you to create a whole block of 
strategic advantages and provide a higher level of 
competitiveness:

1. The management system based on business 
processes allows you to quickly respond to changes 
in the external environment.

2. Management becomes clearer as it becomes 
possible to evaluate the efficiency at each stage of 
the production as well as the economic activities of 
the enterprise.



Three Seas Economic Journal

42

Vol. 1, No. 3, 2020

3. Allows the use of a process approach in 
accordance with the requirements of ISO-9000.

All of the above proves that the process approach 
leads to a synergistic effect, as a result of which the 
improvement of one of the business processes leads 
to the improvement of others.

In the context of the rapid growth of tension 
and instability of the external environment, 
the diversity of the market economy processes 
requires constant adaptation of industrial 
enterprise management processes to changes 
and reorientation to market needs, which in turn 
requires a systematic improvement of management. 
Improving management, first of all, should be 
aimed at optimizing the organizational structure of 
the enterprise.

The transition of an organization to a process-
based method of forming management structures 
leads to the achievement of fundamental 
improvements in the main indicators of the 
enterprise, to the creation of a more optimal 
management system, and an increase in its 
flexibility. A process-oriented management model 
(i.e. a management model focused on business 
processes) requires the allocation of business 
processes at the level of modern requirements: 
name a certain type of work, designate its beginning 
and end, find the "owner of the process" (the one 
who is responsible for the result), and determine 
the required result (including indicators of quality 
and efficiency) (Kondratev, 2007).

3. Controlling in an enterprise  
management system

Modern conditions for the functioning of 
business entities require the improvement of the 
management processes at the enterprise. First of 
all, this concerns the optimization and streamlining 
of management influences on the economic sphere, 
the choice of alternative options for achieving the 
set goals. At the same time, the level of efficiency, 
reliability of accounting and control, the quality of 
analysis of the financial and economic activities of 
the enterprise should be so high that it becomes 
necessary to create a unified information support 
for these management functions and their 
integration into a single system.

One of the most important directions in 
the development of the theory and practice of 
management and improvement of the organization 
of planning, accounting, control and analysis of the 
financial and economic activities of the enterprise 

is the concept of controlling, the implementation of 
which allows to provide the necessary information 
at various levels of management in the right time 
and with high quality.

To date, six concepts of controlling have been 
formed:
– management accounting (80s);
– management information system (late 1980s);
– planning and control (early 90s);
– coordination (90s);
– management (late 90s);
– coordination of the decision-making process 
(2000s).

The possibilities of controlling in exercising 
control over management functions in order 
to coordinate the management system at the 
enterprise are provided through the creation of an 
information system for supporting the adoption of 
managerial decisions on the basis of data coming 
from the structures of the enterprise. These 
information flows provide the planning and control 
processes on which result-based management 
is based. The source of obtaining information 
resources is a system of quantitative indicators 
developed to set and measure the achievement of 
management goals.

On the one hand, the need to apply control 
in order to manage the results of an enterprise's 
performance is due to the need for coordinating 
control, and the need to regulate and formalize 
management procedures to achieve the desired 
results, on the other.

It is worth noting the conformity of 
management and controlling in view of the 
presence of a coordinating component in both, 
while coordination as an interregional function 
within the management process was called the 
"essence of management". Due to the division of 
the management system into two independent 
subsystems – coordination and controlling – the 
need for coordination is increasing. Although some 
management subsystems, like organization and 
planning, perform specific coordinating tasks in 
relation to the operational system, there remains 
a further coordination task within the management 
system itself as a separate management system.

At this stage, coordination is not connected in any 
way with the management system as a whole, but 
is addressed to the operational system. Moreover, 
increasing complexity and environmental volatility 
reinforce the internal differentiation of the 
management system and the need for a unifying 



Three Seas Economic Journal

43

Vol. 1, No. 3, 2020

coordination role. Under these conditions, the 
theory of controlling, rather implicitly than 
explicitly, suggests that classical coordination tools 
(hierarchy, planning, program management, and 
personal leadership) are not able to provide the 
desired result.

Consequently, there is a problem of internal 
coordination of the management system, the 
controlling of which is intended to solve it with the 
help of its instrumental and methodological base. 
Its task is to exercise control (supervision) over 
the execution of management functions in order 
to coordinate the management system and link the 
information flows of the individual structures of 
the enterprise into a single whole. In this context, 
controlling can be understood as a function of 
coordinating control based on the method of 
information support of the management by results.

As part of the implementation of the controlling 
technique, an integrated approach is required to 
determine the sources of information resources. 
The main source of data in the controlling system 
is the internal accounting information generated in 
the framework of financial and (or) management 
accounting.

First of all, the accounting information as the 
main controlling tool should contain actual data 
on costs and volumes of the turnover by type of 
product at the base date. This data, in combination 
with the estimated characteristics of the intensity 
of their measurement, is used as the basis for 
calculating the target planned indicators of the costs 
and volumes of turnover for the planned dates. In 
the course of controlling, control activities are 
carried out: the actual values of the indicators are 
compared with the planned targets. Based on the 
analysis of the identified deviations, the proposals 
are developed on the advisability of introducing 
corrective measures.

In addition, one of the most effective methods for 
introducing management technologies is a phased 
change in the information and control flows of an 
enterprise. Its application means the sequential 
implementation of a series of steps, the effectiveness 
of each of which can be assessed immediately after 
its implementation.

There are several stages here: goal setting, 
development of a results management strategy, 
implementation of planning, accounting, control, 
and analysis technologies.

The formation of a mechanism for information and 
analytical support for the management of enterprise 

performance, regulation and formalization 
(modeling) of management procedures for 
achieving results is assigned to controlling, which 
is a function of control (supervision) over the 
implementation of the management functions. In 
the methodological aspect, the role and place of 
controlling in the results management system is 
to determine the system of quantitative indicators 
used to describe goals in the process of setting 
and fixing them, measuring and evaluating their 
achievement.

4. Basic principles  
of enterprise risk management

The experience of leading international 
companies operating in the manufacturing sector 
has convincingly proven that the stability of business 
development and improvement of management 
efficiency are impossible without the active use of 
risk management tools as an integral part of the 
company 's management system, regardless of its 
size, scale and specifics of production or provision 
of services (Stupakov, Tokarenko, 2005).

A. Shapkin and V. Shapkin note that “the general 
conceptual approach to managing economic risk is:
– identification of possible consequences of 
entrepreneurial activity in a risky situation;
– development of measures that do not allow, 
prevent or reduce damage from the exposure 
to not fully considered risk factors, unforeseen 
circumstances;
– implementation of such an adaptation system
– entrepreneurship to risks, with the help of which 
the negative probable results can be compensated 
for, but also the chances of obtaining a high 
entrepreneurial income can be maximally used” 
(Shapkin A., Shapkin V. 2013).

The risk management system of an industrial 
enterprise should be aimed at achieving the 
necessary balance between making a profit and 
reducing losses of economic activity, and should 
become an integral part of the organization's 
management system, i.e. should be integrated into 
the general policy of the company, its business 
plans and activities. Only if this condition is met, 
the application of the risk management system in 
the enterprise should be considered effective.

The risk management system of an industrial 
enterprise should imply the creation of the necessary 
culture and business infrastructure to identify the 
causes and main factors of risks; identification, 
analysis and assessment of risks; making decisions 



Three Seas Economic Journal

44

Vol. 1, No. 3, 2020

based on the assessment made; development of anti-
risk control actions; reducing risk to an acceptable 
level; organizing the implementation of the 
planned program; monitoring the implementation 
of planned actions; analysis and evaluation of the 
results of the risk decision.

The creation and maintenance of the viability 
of an industrial enterprise of a risk management 
system will ensure the stability of its development, 
increase the validity of decision-making in risky 
situations, and improve the financial situation by 
carrying out all types of activities under controlled 
conditions.

Risk management in the industrial enterprise 
should be based on general management 
principles: scientific management, a systematic 
approach, management optimality, management 
efficiency, regulation, formalization, material and 
moral incentives, correct selection and placement 
of personnel, responsibility, continuity of 
management decisions, etc.

Special principles of risk management include the 
principle of loyalty to risks, information content, 
predictability, integration and documentation.

The content of the risk management process 
is made up of functions that represent separate 
activities in the general cycle of risk management: 
planning, organization, coordination, motivation 
and control (Bublik, Silantev, 1999).

It is important to note that risk management 
is associated with both negative and beneficial 
consequences. The essence of risk management is 
to identify potential deviations from the planned 
results and manage these deviations to improve 
prospects, reduce losses and improve the soundness 
of decisions. Managing risk means identifying 
opportunities for improvement, and avoiding or 
reducing the likelihood of unwanted developments.

Risk management implies a thorough analysis of 
the conditions for making decisions and should be 
a logical and systematic process that can be used 
to choose a way to further improve activities and 
increase the efficiency of the organization's business 
processes.

In the process of management, the parameters 
and properties of risk change, while knowledge 
about the current situation and trends in its change 
is formed, a new algorithm of actions is formed, the 
directions and means of economic activity of an 
industrial enterprise are adjusted.

The result of management influence on risk is 
a new ratio of favorable and unfavorable events, 

a new value of the probability of each of them 
occurring. At the same time, the likelihood of 
adverse event outcomes decreases.

When using risk as a resource, it is assumed that 
measures are taken to expand the range of the 
entrepreneur's capabilities to respond to changes in 
the external environment.

It should be noted that “risk management cannot 
be viewed as a one-step decision or action, even 
if it is detailed and well-grounded. In the case of 
a rapidly changing business environment, such 
a static point of view would contradict the principle 
of performance. Therefore, risk management is 
a dynamic process, being an integral and important 
element of the overall management. Consequently, 
it must meet all the requirements of agility and 
flexibility for making business decisions” (Ioda, 
2007).

5. Conclusions 
The results of our research prove that 

industrial organizations, according to the general 
logic of development, evolve and constantly 
develop in order to improve their activities and 
increase stability while facing an unpredictable 
transformation of the external environment. 
Successful functioning of an economic entity 
is based on the implementation and quality 
execution of all components of the system of 
business processes, the individual effectiveness 
of which should be assessed through a specific 
contribution to the achievement of the goals of 
the entire organization. Thus, the performance 
of the enterprise is achieved by a collective 
effect, since individual processes can differ in 
their effectiveness. In the current environment of 
a sharp increase in competition, the management 
of the industrial structure is called upon to carry 
out adequate measures that allow obtaining the 
greatest return.

At the same time, comprehensive risk 
management will allow an enterprise to take into 
account internal and external risk-forming factors 
in its activities more fully, to determine ways to 
ensure the stability of an economic entity, as 
well as its ability to withstand adverse situations. 
In the context of the dynamic transformation 
of the operating environment of an industrial 
enterprise, uncertainty and instability of the 
macroenvironment, there is an objective need 
for a regulated effective risk management 
methodology. The main goal of the risk 



Three Seas Economic Journal

45

Vol. 1, No. 3, 2020

management system of an industrial enterprise is 
to ensure the successful functioning of a business 
unit in conditions of risk and uncertainty. This 
means that even in the event of economic damage 
in certain areas of activity, the implementation of 
risk management measures should provide the 
organization with the possibility of continued 
existence and stability of the corresponding 
cash flows, maintaining profitability, as well 
as achieving other goals. At the same time, 
the greatest efficiency of this process can be 

achieved provided that the risk management 
program, being built into the general system 
of making management decisions, will be of 
a service, subordinate nature in relation to the 
implementation of the general strategy of the 
organization, and the goals and objectives of the 
risk management system will be consistent with 
the goals and the mission of the enterprise, as 
well as the methods of dealing with risks included 
in the general algorithm will be adequate to its 
economic activities.

References:
Hammer, M., & Champy, J. (1997). Reengineering the Corporations: A Manifesto for Business  
Revolution. Saint Petersburg: Saint Petersburg University.
Porter, M., & Millar, V. (1985). How Information Gives You Competitive Advantage. Harvard Business 
Review, no. 85, ( July-August), pp. 149–160.
Robson, M., & Ullah, F. (1997). A Practical Guide to Business Process Reengineering. Moscow: Audit, 
UNITY.
Kondratev, V. (2007). We show business processes. Moscow: Eksmo.
Stupakov, V., & Tokarenko, G. (2005). Risk management. Moscow: Finance and Statistics.
Shapkin, A., & Shapkin, V. (2013). Economic and financial risks. Valuation, management, investment 
portfolio. Moscow: Publishing and Trade Corporation "Dashkov and Co".
Bublik, N., & Silantev, V. (1999). Risk-resource: Problems of venture-stochastic activity. Ufa: Publishing 
house. Center "Bashkir Territorial Institute of Professional Accountants".
Ioda, E. (2007). Risk management of innovative activity in the region. Tambov: Avtograf.