Strengthening Organizational Sustainability: Challenges and Solutions for Entrepreneurial Structures

Organizational sustainability of the entrepreneurial structure is the correspondence of the organizational structure to the needs and features of its development, achieved due to the simultaneous presence of structural units (divisions or organizations) that have aggressive, innovative specialization, and units that retain traditional activities that have a stock of organizational memory and culture.

This is the part 3 of this topic “Sustainability“. Here’s the link to part 1 of sustainability and here the link to part 2 of the topic

In the above definition, one can trace the presence of the three above-mentioned signs of the stability of the organization:

• strength of connections between elements,
• redundancy (in this case, sufficiency) of mutual replaceable elements and links, and
• availability of system memory (experience of the past, availability of organizational culture).

The next group of problems of the loss of stability of an enterprise caring structure can be attributed to:

• violation of the necessary compliance ratio of own and borrowed funds,
• the growth of receivables femininity, inefficient management, and
• raider takeovers.

All this creates the risk of a crisis in the organization.

It is believed that the objective process of a market economy, based on competition, is the constant flow of capital into the most profitable areas, the redistribution of property from inefficient business entities to efficient ones.

Implemented this redistribution is largely through the procedure of bankruptcy. Therefore, in any civilized country with a developed economic system, one of the main elements of the mechanism of legal regulation of market relations is the insolvency (bankruptcy) certificate.

Bankruptcy is the result of the development of a crisis financial state when an enterprise goes from episodic to a stable (chronic) inability to satisfy creditors’ claims, including on obligatory payments to the budget and off-budget funds.

Of course, today’s economic problems have specific manifestations. However, as evidenced by common practice, bankruptcy is an inevitable phenomenon of any modern market that uses insolvency as a market instrument of redistribution of capital and reflects the objective processes of structural restructuring of the economy.

The purpose of bankruptcy is predetermined by the presence of a huge number of risks, which is always associated with some uncertainty of achieving the final results of the activities of the organization.

The sources of this uncertainty are all stages of reproduction – from the purchase and delivery of raw materials, materials to production management and sale of finished products.

In the real economy, uncertainty becomes a source of no win or loss. Moreover, the gain and super profits of more successful enterprises are formed at the expense of losses of less lucky ones.

From the interdependence of the risk factor and profit, the most important financial concept of the mechanism of occurrence of bankruptcy.

Elimination of bankrupt organizations from the market is an essential condition for the effective functioning of the market mechanism.

However, to prevent bankruptcy and to ensure long-term sustainable development of organizations is a much more important task.

The solution of this particular problem is subject to a system of measures that is supported by anti-crisis management.

Often under such control, management in a crisis or management aimed at bringing the enterprise out of a crisis state in which it is located is understood.

Based on this, in a separate control object, a stable entrepreneurial structure that tours to crises is necessary to highlight.

Resilience of the business structure to the crisis is the ability of the enterprise structure to timely respond to a negative change in internal parameters on the side, their improvement, and external conditions – the development of operational measures for its neutralization.

This definition takes into account such an important factor in increasing organization sustainability, as a variety of adaptive responses.

The third group of problems of loss of stability of business structures is associated with a lack of investment, which does not allow them to fully realize this way of increasing competitiveness, rentability, as improving the quality of products, the implementation of innovation.

Another problem in increasing the sustainability of enterprises is the depletion of stocks of idle capacities and the need to modernize and create new ones, which leads to higher costs for organizations.

Additionally, we have already illustrated the problem of using expired equipment, inflation, the presence of a large number of various risks, and the inefficiency of insurance.

The economic activity of the investment and construction industry is aimed not only at maximizing profits but is also a process of innovation, leading to disruption of the market balance.

The initiative activities of leaders in construction organizations are to carry out construction and installation work and the provision of services, and profit is an incentive for entrepreneurial activity of a construction organization.

All their actions are aimed at creating a construction production to satisfy the demand of society for specific real estate objects.

Entrepreneurial activity for a small construction company is not only the process of organizing and implementing activities but also the conquest of specific entities, creating the best conditions for managing, which is the main specific feature of entrepreneurship as a type of economic behavior. The result will be a profit reflection of realized competitive advantages.

The signs of entrepreneurial activity include initiative, risk, combination of factors of production, and innovation.

Since the activity of the construction organization is entrepreneurial, then, of course, this field of activity carries entrepreneurial risk. The problem of entrepreneurial risks in the field of construction properties is not well understood.

To date, scientific ideas about the nature and methods of business management material risks of organizations in the investment and construction sector have not yet been formed, and the currently developed toolkit does not allow fully covering the problem of business management risks.

Meanwhile, the investment and construction sector is largely exposed to risks.

Risk-forming factors are present in all major resources of the construction industry, including objects of labor, fixed production assets, investments in fixed assets, and live labor.

In addition to all of the above, the causes of crises are claims and fines for defective products, accidents at enterprises and equipment breakdowns, leakage of confidential information, breakdown of computers, and the influence of unfounded rumors.

Less common but more severe force majeure circumstances include natural disasters, accidents in power networks, fires and explosions, death of the head and leading specialists, sudden appearance of strong competitors, and unfriendly attitudes of the government and the press.

Among other reasons causing an increase in the level of risk are copyright infringement, strikes, fraudulent quality, and unfair competition.

In addition, there are also objective problems in the investment and construction sector, reducing the efficiency of host structures and increasing the level of risk in this sphere.

These problems include tendencies towards aging and shrinking of the housing stock and engineering systems, unfavorable situations with the quality of design and development of design and estimate documentation, and the need to improve the quality of construction products and competitiveness of Russian construction companies, organizations, enterprises of the construction industry, and industrial building materials.