Distinction between Anti-Crisis Management and Strategic ManagementArticle posted on
Lately, it can be easily noticed that anti-crisis management not only becomes similar to strategic management but is pretty much identified with it in the context of the majority of articles published on the Internet and in books. From what I can see, it is crucially incorrect.
The remarkable thing is that anti-crisis management differs from traditional techniques, forms and technologies of management in several distinctive features:
- the primary objective of anti-crisis management is to maintain a foothold at the market as well as steady and sound finances of an enterprise in case of any economic, political and social changes in the country;
- the employed managerial tools can be used only for remedying of temporary financial problems and for solving of other current problems of an enterprise;
- quick and effective response to significant changes of the environment in reliance on the previously developed alternatives which provide for various transformation in this field, depending on the circumstances that unfold;
- process of continuous and consistent innovations on all levels and in all business processes of enterprises is at the heart of anti-crisis management;
- anti-crisis management is designed in such a way that even if an enterprise finds itself in a challenging situation (on the edge of bankruptcy), it is feasible to put in place such management and financial mechanisms which enable any enterprise to overcome difficulties with minimum losses.
Anti-crisis management comprises the following phases:
- scanning of external business environment and evaluation of internal and external potentials of enterprise for choosing of measures of prompt response;
- comprehensive analysis of financial standing and economic status of enterprise for identifying of methods of its financial recovery;
- preliminary diagnostics of the root causes of crisis in economics and finance of enterprise;
- business planning of financial recovery of enterprise;
- procedures for anti-crisis management and control of application of such procedures.
It is easy to notice that there is a certain similarity in phases of the works that are carried out as part of strategic and anti-crisis management. Thus, scanning of the internal and external business environment forms the basis of goal setting in strategic management. At the same time, it serves for the identification of problems which have resulted in the occurrence of a crisis. This similarity can be used in order that as early as in the phase of implementation of anti-crisis transformations, we could focus on the strategic objectives of further business development.
Because of the above, I can conclude that anti-crisis management is a reasonable application of anti-crisis procedures at the micro-level. Such application is aimed at preventing possible complications in the course of business activities and at ensuring steady and profitable economic management of the business.
It should also be noted that anti-crisis management is a category of microeconomics and reflects industrial relations established at the level of an economic entity when applying measures of restructuring (recovery) or liquidation.
The process of implementation of anti-crisis procedures with respect to activities of corporate debtors is known as the anti-crisis process in the publications on economics. The international experience shows that the anti-crisis process in the market economy environment is a controlled process which includes two sets of procedures: anti-crisis management and anti-crisis regulation.
The process of development of a market-driven economy in the advanced countries demonstrates that crises occur at all stages of enterprise lifecycle. They are expressed in a swing in production, arising of difficulties related to sales of products, overgrowth of tax debt, etc.
Implementation of the entire set of anti-crisis management procedures commences only at a particular stage of enterprise lifecycle: under the conditions of a sharp slowdown in output growth which is characterized by long-lasting inability to pay.
Anti-crisis management is based both on common patterns inherent to management processes and on specific features related to the implementation of anti-crisis procedures. Selection and setting up of objectives are the starting point of any management process, including the process of anti-crisis management. However, a system of control and early detection of a future crisis is a specific attribute inherent to the process of anti-crisis management.
All the measures aimed at recovering business from a crisis can be broken down into strategic and tactical.
Strategic measures involve analysis and assessment of the position of enterprise on the market, identifying of business potential, development of production plans, income policy and innovations and designing of a general concept of financial recovery of an enterprise.
Tactical (operational) measures aimed at recovering from crisis include determining of current losses, finding out of internal reserves, involving of experts, changing of personnel, raising of credits, strengthening of discipline, etc. These can be, in their turn, subdivided into protective (curtailing of expenses, shutting down of business units, reduction of staff, cutback in production and decrease in sales) and offensive (active marketing research, high prices for products, tapping of internal reserves, modernization and improvement of management) measures.
The anti-crisis process involves imposing of survival proceedings or liquidation procedures on the corporate debtor. This process starts with an assessment of its financial standing and economic status. If diagnostics of the reasons of insolvency is not carried out, inappropriate anti-crisis procedures can be imposed. This can result in a liquidation of quite potentially productive enterprises, reorganization of insolvent enterprises and to an escalation of conflict between interests of debtors and creditors.
The main phases of anti-crisis management in terms of tactics are as follows:
- diagnostics of financial standing of enterprise and assessment of prospects for development of its business potential;
- assessment of gravity of financial and economic crisis of enterprise;
- development of business plan for financial recovery of enterprise;
- control of the process of financial recovery of enterprise;
- assessment of efficiency of measures for financial recovery;
- selection and implementation of anti-crisis procedures.
As for anti-crisis regulation, it implies an impact on the corporate debtor at the macro-level. Anti-crisis management includes measures for organizational and economic implications and regulatory effects on the part of the state aimed at protecting of enterprises from crises, preventing of bankruptcy or liquidation in case of inefficiency of its further operating.