Balancing sales and safety: A methodological approach to economic security analysis of enterprises

Abstract

© Medwell Journals, 2017. Economic security analysis requires an evaluation of potential threats to the economic activity of an enterprise. These threats may be both internal and external. They are determined by various developmental factors such as notably, political conditions, changes in product supply and demand, the state of the capital market and the labor market as well as many others. Under the influence of these factors, the activity of any enterprise undergoes fluctuations, forming a trajectory of development. Such a trajectory provides a highly useful tool for analyzing an enterprise's activity from the perspective of its economic security. The study aims to introduce a methodological approach to economic security analysis of enterprises. The need for such methodological tools has only recently become the subject of academic discussion. The approach proposed in the study is twofold. First, it involves measuring the amplitude of the trajectory of the enterprise's development with respect to a safety corridor determined by acceptable rates of sales growth. Second, it requires analyzing indicators that characterize the environment and the enterprise's activity in order to determine those that go beyond the safety corridor. The study describes two different analytic methods to address the difference in stages of growth and decline in an enterprise's business activity. This dual approach results in data that identifies upper and lower limits of the safety corridor. This information will allow the company's management to focus its attention on eliminating factors that cause indicators to go beyond the limits of the safety corridor, an approach that will result in safer and more stable development.