enterprises operating in the market, as a rule, in a very tough competition.If the company was a loser in the fight, it leaves the market and becomes bankrupt.In order to maintain position in the market, firms need to continuously monitor any changes in the market environment, to develop their own ways of countering the negative impacts to remain competitive.
Operating activities - activities of the company, which is the main organization and brings a significant portion of income as well as other activities, with the exception of financial and investment.In other words, it is something for which it was created, the company directly.
nature of operations, primarily determined by the characteristics and peculiarities of the industry that owns this company.For most companies, it is based on trade, production and business activities, which may be supplemented by carrying out financial or investment.
Features notion
operating activities is characterized by the following features:
- That it is a major component of economic activity of the company.A significant part of the company's personnel, a significant share of all assets generated goes to the maintenance of this activity.Thus, under normal circumstances it is profit of considerable weight.
- operating activities of the enterprise is a priority over other types.For this reason, the development of all other areas should not be in conflict with operational activities.
- intensity of the priority activity is the main parameter used to assess the stages of the life cycle of the company.
- Operating activities focused mainly on the commodity market, while investment or financial - to the financial market.
- All business operations related to operating activities, are regular.By its operation frequency is the highest.
- implementation of the priority activities associated with the funds that have already been invested in it.Future investment funds is the subject of financial or investment activities.Capital invested in priority activities, it is operating assets of the company.The composition, the velocity of circulation, balance and other characteristics in operating assets largely depends on the organization's ability to generate operating profit.
- Operating activities consume a large amount of human labor.In the financial and investment costs of living labor are immaterial.Thus, the firm's ability to generate profit depends to a large extent on the qualification and professional composition of the staff, the adequacy of human resources.
- priority activity inherent to specific risks (operational risk).The level of operating profit should relate primarily to the level of operational risk.
In the implementation of priority activities generated operating profit of three types:
- net;
- margin;
- gross.
Thus, operations plays a major role in the formation of business profits.It is the realization of this activity a considerable percentage of material and labor resources.In that case, if the primary activity is inefficient, the company could go bankrupt and be forced out of the market.
