Conditions for building contract relations in the iron and steel industry as a factor of developing the system of control over production supplies at ironworks
Danilenko N.I.Magnitogorsk Branch of Russian Presidential Academy of National Economy and Public Administration, Magnitogorsk, Russian Federation danilenko-nikolay@mail.ru
Subject Underpinning the approaches to production supply management based on assessment of the existing model of the industry vertical market and corresponding conditions for contract relations is important for building the system of control over production supplies at Russian ironworks. Objectives The study aims to review conditions for building contract relations at the raw material market of the steel industry based on the central tenets of the institutional theory of contracts, and to define types and nature of contract terms suitable for the industry, which determine approaches to production supply management. Methods We employ analytical, deductive, and scientific methods to analyze the dependence of the type and terms of contracts made by and between suppliers and customers on the market structure. The study also includes an analysis of the raw material market structure for the steel industry. Results The findings revealed the inadequacy (failure) of the vertical raw material market of the steel industry, where contract relations are being formed. The paper defines types and nature of contract terms that match this market. Conclusions It is impossible to apply logistic approaches that are based on the order point to production supply management in conditions of building contract relations, which are typical of the failed market.
Keywords: terms of contract, production supplies, market failure, vertical integration, management
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