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Economic Analysis: Theory and Practice
 

Business segments analysis as an instrument of strategic management of an organization

Vol. 13, Iss. 37, OCTOBER 2014

Available online: 10 October 2014

Subject Heading: METHODS OF ANALYSIS

JEL Classification: 

Pages: 16-24

Smirnova E.V. Orenburg State University, Orenburg, Russian Federation
uadsev@mail.ru

Tsyganova I.Yu. Orenburg State University, Orenburg, Russian Federation
iren23_83@mail.ru

Importance Modern Russian organizations operating in the conditions of economic instability and high competition face a crucial task of an adequate analytical support for making, updating and monitoring the implementation of strategic decisions that determine the prospects of business segments.
     Objectives The purpose of our study is to demonstrate the validity and universality of the developed method of segment analysis. The method bases on the integration of inter-segment generalized indicators that reflect the impact of market strategy on the profit of an organization.
     Methods We provide a definition of the segmental analysis concept and a technique of its implementation. We also identify the areas of enhancing the attractiveness of business segments depending on their current position in an organization. With the help of economic, mathematical and statistical methods we have analyzed the case of JSC "Inverter" Plant (Orenburg). We have reviewed the status of the functional areas of the business segments and the environment, and defined the aggregate indicators of their attractiveness. We have developed integral indicators of attractiveness of each business segment and identified their position based on the polygon of attractiveness. We have analyzed the relationships of the functional areas and traced the dynamics of the indicators of attractiveness in time.
     Results The analysis results enabled us to rank the business segments by an integrated index, and in the future it will be a basis for taking management decisions on their subsequent development.
     Conclusions and Relevance We conclude that under conditions of unstable external environment when changes have a direct impact on business, the segment analysis, which enables to create a competitive advantage and to ensure achieving a stable position on the market in the long run, plays an important role in the strategic management of business segments of an organization.

Keywords: business segment, segment analysis, strategic management, functional scope

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