Article source:up-pro.ru/library/production_management/systems/eletina-nlmk.html
What helped NLMK overcome the inertia of human thinking and how the foundation for the development of the Production System is being strengthened, we are talking with Ekaterina Yeletina, Head of Operational Efficiency at NLMK.
– Over the past few years, NLMK's production system has grown stronger. Nice results in terms of a number of indicators, your system for improving production efficiency (SPEP), which was launched at NLMK in 2008, also made it possible to obtain. What exactly did you want to achieve with it? Before 2008, what prevented the Plant from achieving its goals?
- According to the name, we wanted to achieve an increase in production efficiency, but without capital expenditures - by identifying internal reserves.
As for the barriers to achieving efficiency goals, we used to be hampered mainly by the inertia of human thinking.
– Today, SPEP forms the basis of NLMK's PS. And which parties were primarily affected by the implementation of the system? Why did the transformations begin with them?
- The introduction of new approaches began with the production sector - from where the main added value is created, and where the largest reserves are hidden. We started with improving the quality, stabilizing the technology, increasing the reliability of the equipment.
– Tell us, please, about the mechanism for launching the SPEP. Were specially created teams involved in the implementation or some other mechanism was chosen?
– The initial stages of implementation were the development of methodology and staff training. For these purposes, we have created the Production Efficiency Improvement Department (UPEP). The development of new approaches was carried out on pilot projects at the stage of pilot operation under the guidance of UPEP.
After the final debugging of the procedures, they were transferred to commercial operation and control of functioning through audits. The main mistake our first steps, in my opinion, was the introduction of a system “from below” from the level of workers, foremen, and not “from above” - from the president and general directors.
Photo 1-2. Examples of implementation of 6S approaches in NLMK OJSC
– When was the direction “Operational efficiency” (OE) opened? What are the responsibilities of an OE manager?
– The direction was created in 2009. The main responsibilities of the head of this area are the development of documented procedures for the NLMK production system, their adaptation to the conditions of the group's enterprises, and training of personnel in the procedures and principles of the production system during its implementation.
– NLMK executives have repeatedly stressed that the tools within the framework of the SPEP are selected depending on the strategic goals and objectives. What would you say about the correspondence in this chain? What problems did you solve by using certain tools? What are the results of the work?
– production system NLMK is not based on any one ideology (Lean, 6 Sigma, etc.), but selects and adapts the most appropriate best practices depending on the goal pursued. For example, to stabilize technology and quality, we use control charts (quality control charts), to increase the "useful" time of equipment operation - timing and analysis of the causes of equipment downtime, to find ways to reduce costs - A3. However, there are no strict rules on the scope of this or that tool. In each specific situation, the optimal set of tools is sought.
As for the results, they can be illustrated by the example of the implementation of the A3 methodology. We started implementing this tool in February 2013 with the development of documented procedures, training of pilot testing personnel (NLMK's Rolling Plant was chosen as a pilot project). Then there was a pilot operation, the spread of the approach to other areas of activity.
By September 2013, the economic effect from the implementation of A3 projects amounted to more than 1 billion rubles.
Photo 3-4. Work on A3 projects in NLMK production facilities
– The SPEP program includes three main areas, among them is the improvement of the system of key performance indicators (KPIs), as well as the extension of KPIs to the aggregate level. Could you give an example of cascading goals?
– You can illustrate the cascading of goals with the following example.
One of the KPIs of an enterprise is the cost of production; KPI of the production director (for example, steelmaking) - non-conforming products and defects in the shops of his competence; KPI for the head of the workshop - non-conforming products and defects by product type; Aggregate level KPI (operator) – technology stability.
As far as KPI improvement is concerned, this is the cornerstone of the entire NLMK Production System.
- It is impossible to develop the PS without constant work to involve personnel in improving the development of the PS. How do you lead her? How involved is NLMK's staff today?
– In order to involve, we have developed a system of both material and non-material motivation of the personnel. Involvement is carried out through information, visualization of goals and objectives.
In 2013, line personnel submitted more than 450 initiatives to improve the efficiency of processes, mid-level specialists implemented more than 130 A3 projects, and engineering and technical specialists implemented more than 180 projects as part of the implementation of complex programs.
- SPEP is intended not only for production - the system also applies to functional areas. What approach is taken when extending the SPEP to other areas?
– The distribution process of the Production System has not been completed. It continues. The main approach used for this is the following. In the direction, the person responsible for operational efficiency is determined. If necessary, a group is formed to introduce new approaches.
Photo 5. Operational control of technology stability using control charts (IS "SPEP") at the workplace
- There is also a third direction in the SPEP program - the distribution of the training system and the transition to the autonomous use of proven tools. What has been done to solve problems in this area?
- A multi-level training system has been built. Top managers of enterprises are trained by involved organizations (for example, Toyota Engineering Corp.). The middle managers and future internal trainers are trained by involved organizations and UPEP. An important stage in the transfer of practical skills here is the internship of trainees in the UPEP. Foremen and workers are trained by internal trainers.
As for the transition to the autonomous use of the Production System tools, it is carried out after the implementation of all the implementation stages I have mentioned above. An important step here is the consolidation of personal responsibility for the use of proven practices.
Photo 6. Training from Toyota Engineering Corp on the topic "Total Management System" (Total Management System, TMS)
– What areas of efficiency improvement will be implemented in 2014?
– The 2014 program is aimed at expanding the area of implementation of the NLMK Production System, as well as developing and implementing new tools.
– Why would you advise the heads of other enterprises to come to the LIN Summit in Gelendzhik? What do you think they will benefit from?
– The summit provides an opportunity to use the accumulated experience to reduce the time of implementation of systems for increasing operating efficiency. The question of the expediency of this event is not even discussed.
Ekaterina Yeletina
NLMK Group, an international steel company with assets in Russia, the United States and the European Union, has passed an audit of the Lipetsk site for compliance with the criteria of the Toyota Total Production System (T-TPS), one of the most effective production process control systems in the world.
The purpose of the audit was to assess the effectiveness of the NLMK Production System (PS NLMK) and obtain recommendations for its further development.
The NLMK PS has been implemented at NLMK Group enterprises since 2013. The system includes a wide range of practical tools and techniques to improve the efficiency of production and business processes. Their use made it possible to achieve a positive effect on EBITDA in the amount of USD 477 million in 2014-2015, even taking into account the impact of the negative price environment.
The NLMK Substation was audited for compliance with the T-TPS criteria by leading experts from Toyota Engineering Corporation and the TPS Certification Center (Japan). The auditors checked the work of divisions of the blast-furnace, steel-smelting and rolling industries, assessed the use of NLMK's PS tools, analyzed the processes of supply, maintenance and repair of equipment, personnel training, labor protection and industrial safety.
The auditors noted that the level of development of NLMK's Production System exceeds the average level of global steel companies. In the area of production, NLMK's assessment is in line with the best practices of European and American metallurgical enterprises.
“Experts highly appreciated the use of the A3 tool by NLMK specialists to solve problems, the level of compliance with labor protection and industrial safety requirements. Separately, Toyota Engineering Corporation experts noted the effectiveness of work to achieve the company's goals through the implementation of optimization programs. The auditors pointed out ways to develop the system to achieve the level of leaders - Japanese companies, for example, increasing the involvement of employees in the process continuous improvements. We intend to include the recommendations in the NLMK Production System Development Program for 2016-2017,” commented Yulia Venza, Director for Operational Efficiency at NLMK.
Briefly about the NLMK production system
The NLMK Production System (NLMK PS) is a methodology developed by the Group's specialists that includes a wide range of both global and unique industrial practices aimed at improving the efficiency of the main production, technological and business processes. It is a continuous, self-sustaining process of finding and implementing improvements. Full-scale and systematic implementation of PS at NLMK began in 2013.
NLMK PS tools are used to implement programs to improve operating efficiency. Thanks to the implementation of the Production System, NLMK Group has become one of the most efficient steel companies in the world.
Information about NLMK Group
NLMK Group is a vertically integrated steel company, Russia's largest and one of the world's most efficient producers of steel products. NLMK Group's steel products are used in various industries, from construction and mechanical engineering to power equipment and offshore wind turbines.
NLMK's production assets are located in Russia, Europe and the USA. The company's steel production capacity exceeds 17 million tons per year, of which about 16 million tons are located in Russia.
NLMK demonstrates the most competitive cost among global manufacturers, and the company's profitability is one of the highest in the industry. The company's revenue in 2015 was $8 billion, EBITDA was $1.95 billion, and net profit was $967 million. The Net Debt/EBITDA ratio is 0.56.
Ordinary shares of OJSC NLMK are traded on the Moscow Stock Exchange (ticker symbol “NLMK”), global depositary shares - on the London Stock Exchange (ticker symbol “NLMK:LI”). The company has an investment credit rating of BBB-.
Additional information about NLMK Group at www.nlmk.ru
Information about the Novolipetsk Iron and Steel Works
Novolipetsk Iron and Steel Works is the main production site of NLMK Group, Russia's largest producer of steel and metal products with high added value, one of the most efficient steel companies in the world. The plant is the core of NLMK Group's unified international production chain with assets in Russia, the EU and the USA.
The volume of steel production at the Lipetsk site is about 18% of all steel production in Russia and about 80% of all steel products of the NLMK Group. NLMK's high-quality metal products are used in various strategically important sectors of the economy, from construction and engineering to the production of power equipment and large-diameter pipes. At the end of 2015, the volume of steel production at NLMK Group's main production site reached 12.9 million tons, the highest figure in more than 80 years of the plant's operation. Steel output at 100% utilization of steelmaking capacities increased by 2.4% compared to the previous year. Record figures were achieved at all stages of the Novolipetsk plant.
Over the past few years, NLMK's production system has grown stronger. Your Production Efficiency Improvement System (SPEP), launched at NLMK in 2008, also made it possible to obtain good results in a number of indicators. What exactly did you want to achieve with it? Before 2008, what prevented the Plant from achieving its goals?
According to the name, we wanted to achieve an increase in production efficiency, but without capital expenditures - by identifying internal reserves.
As for the barriers to achieving efficiency goals, we used to be hampered mainly by the inertia of human thinking.
Today, the SPEP forms the basis of NLMK's PS. And which parties were primarily affected by the implementation of the system? Why did the transformations begin with them?
The introduction of new approaches began with the production sector - from where the main added value is created, and where the largest reserves are hidden. We started with improving the quality, stabilizing the technology, increasing the reliability of the equipment.
- Please tell us about the mechanism for launching SPEP . Were specially created teams involved in the implementation or some other mechanism was chosen?
The initial stages of implementation were the development of methodology and staff training. For these purposes, we have created the Production Efficiency Improvement Department (UPEP). The development of new approaches was carried out on pilot projects at the stage of pilot operation under the guidance of UPEP.
After the final debugging of the procedures, they were transferred to commercial operation and control of functioning through audits. The main mistake on our first steps, in my opinion, was the introduction of the system "from below" from the level of workers, foremen, and not "from above" - from the president and general directors.
Photo 1-2. Examples of implementation of 6S approaches in NLMK OJSC
When was Operational Efficiency (OE) launched? What are the responsibilities of an OE manager?
- The direction was created in 2009. The main responsibilities of the head of this area are the development of documented procedures for the NLMK production system, their adaptation to the conditions of the group's enterprises, and training of personnel in the procedures and principles of the production system during its implementation.
NLMK executives have repeatedly emphasized that the tools within the implementation of the SPEP are selected depending on the strategic goals and objectives. What would you say about the correspondence in this chain? What problems did you solve by using certain tools? What are the results of the work?
The NLMK production system is not based on any one ideology (Lean, 6 Sigma, etc.), but selects and adapts the most appropriate best practices depending on the goal pursued. For example, to stabilize technology and quality, we use control charts (quality control charts), to increase the “useful” time of equipment operation - timing and analysis of the causes of equipment downtime, to find ways to reduce costs - A3. However, there are no strict rules on the scope of this or that tool. In each specific situation, the optimal set of tools is sought.
As for the results, they can be illustrated by the example of the implementation of the A3 methodology. We started implementing this tool in February 2013 with the development of documented procedures, training of pilot testing personnel (NLMK's Rolling Plant was chosen as a pilot project). Then there was a pilot operation, the spread of the approach to other areas of activity.
By September 2013, the economic effect from the implementation of A3 projects amounted to more than 1 billion rubles.
Photo 3-4.Work on A3 projects in NLMK production facilities
The SPEP program includes three main areas, among them is the improvement of the system of key performance indicators (KPIs), as well as the extension of KPIs to the aggregate level. Could you give an example of cascading goals?
Cascading goals can be illustrated with the following example.
One of the KPIs of an enterprise is the cost of production; KPI of the production director (for example, steelmaking) - non-conforming products and defects in the shops of his competence; KPI for the shop manager - non-conforming products and defects by product type; Aggregate level KPI (operator) - technology stability.
As far as KPI improvement is concerned, this is the cornerstone of the entire NLMK Production System.
Without constant work to involve staff in improving the development of PS is impossible. How do you lead her? How involved is NLMK's staff today?
In order to involve, we have developed a system of both material and non-material motivation of personnel. Involvement is carried out through information, visualization of goals and objectives.
In 2013, line personnel submitted more than 450 initiatives to improve the efficiency of processes, mid-level specialists implemented more than 130 A3 projects, and engineering and technical specialists implemented more than 180 projects as part of the implementation of complex programs.
SPEP is intended not only for production - the system also applies to functional areas. What approach is taken when extending the SPEP to other areas?
The distribution process of the Production System is not complete. It continues. The main approach used for this is the following. In the direction, the person responsible for operational efficiency is determined. If necessary, a group is formed to introduce new approaches.
Photo 5.Operational control of technology stability using control charts (IS "SPEP") at the workplace
There is also a third direction in the SPEP program - the expansion of the training system and the transition to the autonomous use of proven tools. What has been done to solve problems in this area?
A multi-level education system has been built. Top managers of enterprises are trained by involved organizations (for example, Toyota Engineering Corp.). The middle managers and future internal trainers are trained by involved organizations and UPEP. An important stage in the transfer of practical skills here is the internship of trainees in the UPEP. Foremen and workers are trained by internal trainers.
As for the transition to the autonomous use of the Production System tools, it is carried out after the implementation of all the implementation stages I have mentioned above. An important step here is the consolidation of personal responsibility for the use of proven practices.
Photo 6.Training fromToyota Engineering Corpon this topic"Universal Control System" (Total management System, TMS)
- What areas of efficiency improvement will be implemented in 2014?
The 2014 program is aimed at expanding the area of implementation of the NLMK Production System, as well as developing and implementing new tools.
- Why would you advise the heads of other enterprises to come to LIN Summit in Gelendzhik? What do you think they will benefit from?
The summit provides an opportunity to use the accumulated experience to reduce the time to implement systems to improve operational efficiency. The question of the expediency of this event is not even discussed.
Introduction
1 Theoretical aspects of the management of large industrial enterprises
1.1 Organization management system
1.2 Organizational structure firms
1.3 Parent company as an organizational and economic control center
2 Characteristics of the management of NLMK's activities
2.1 Organizational and economic characteristics of OJSC NLMK
2.2 Management structure of NLMK
2.3 Structure of the NLMK Group
3 Organization of management in American, Western European and Japanese firms
Conclusion
List of sources used
Introduction
Organization management is the implementation of interrelated actions of a certain type to form and use the organization's resources to solve its tasks. Management is not equivalent to all the activities of the organization to achieve the ultimate goals, but includes only those functions and actions that are associated with the formulation of tasks, with the coordination and establishment of interaction within the organization, with the motivation of employees to carry out the necessary production and other activities.
The content and set of actions and functions carried out in the management process depend on the type of organization (business, administrative, public, educational, military, etc.), its size, field of activity (production of goods, provision of services), level in the management hierarchy (top management, middle management, lower management level), functional process within the organization (production, marketing, personnel, finance) and many other factors. However, all these management processes are characterized by the presence of generally homogeneous activities.
The relevance of the topic of the course work lies in the fact that the organizational mechanism of company management has many components, but must necessarily represent single system, in which the functioning of individual elements is interdependent and interdependent. There are especially many problems in the field of management organization at present in Russia due to the peculiarities of the current state of its transitional economy.
Organizational management is a system of management actions, techniques and procedures aimed at implementing the functions of the organization, as well as the theory and practice of management, based on the priority of corporate principles and solving organizational problems. It includes: designing, creating and improving organizational structures, a clear delineation of functions, distribution of organizational tasks, duties, rights and responsibilities of structural units and individual performers, establishing relationships between them, strict adherence to established rules of organizational behavior, adoption management decisions.
aim term paper is to consider the management system of large industrial enterprises.
To achieve this goal, the following tasks were identified and solved:
consideration of the organization's management system;
study of the organizational structure of enterprise management;
consideration of the parent company as an organizational and economic management center;
analysis and study of the organization of enterprise management on a specific example.
The subject of the course work is the consideration of the enterprise management system. The object is OAO NLMK.
The information basis for writing a term paper was the work of domestic authors on the topic under study.
1 Theoretical aspects of the management of large industrial enterprises
1.1 Organization management system
Management of an organization is a continuous process of influencing the performance of an employee, group or organization as a whole for the best results in terms of achieving a set goal. “To manage means to lead an enterprise towards its goal, extracting the maximum opportunities from all the resources at its disposal,” G. Fayol described the management process in this way.
The management process provides for coordinated actions that ultimately ensure the implementation of a common goal or set of goals facing the organization. To coordinate actions, there should be a special body that implements the management function. Therefore, in any organization, the managing and managed parts are allocated. The scheme of interaction between them is shown in Figure 1.
A - control information, B - execution information.
Figure 1 - Interaction between the managing and managed parts of a business organization
The management part includes the directorate, managers and information departments that ensure the work of the management. This part of the organization is called the administrative and managerial apparatus. The input action and the final product of the control part is information. The management link is a necessary element of any organization.
At this level, managerial decisions are made as a result of analysis, forecasting, optimization, economic justification and choosing an alternative from a variety of options to achieve the goal. A managerial decision is made in order to overcome the problem that has arisen, which is nothing more than a real contradiction that needs to be resolved.
Note that the management decision is the result of collective creative work. It is always generalized. Even when the leader makes a decision on his own, the collective intelligence in an explicit or implicit form affects the process of developing an individual managerial decision.
The managed part is the various production and functional units involved in the production process. What is the input of the managed part and what is its output depends on the type of organization. So, for example, if we are talking about a business organization that manages finances, say, a bank, then cash or their substitutes (securities, bills of exchange, shares, etc.) enter it. The output is information on the management of financial flows and cash. In many cases, the bank pays out cash.
To coordinate the action of the controlled part, it is necessary to use the system of scientific management, justified by F. Taylor in his book "Principles of Scientific Management", published in 1911. F. Taylor was the first to separate the process of labor planning from labor itself, thus highlighting one of the main managerial functions. The main provisions of the Taylor scientific management system are formulated as follows:
creation of a scientific foundation that replaces traditional, practically established methods of work;
selection and training of employees based on scientific criteria;
interaction between the administration and performers for the purpose of practical implementation of a scientifically developed system of labor organization;
equal distribution of labor and responsibility between the administration and performers.
Later, G. Emerson formulated 12 principles of labor productivity related to the level of organization management, defining the true mission and purpose of managerial work:
clearly defined goals;
common sense;
competent advice;
discipline;
fair treatment of staff;
fast, reliable, complete, accurate, permanent accounting;
dispatching;
normalization of operations;
effective planning;
normalization of working conditions;
standard written instructions;
performance reward.
The tasks of managing an organization were most clearly formulated by G. Fayol, a student and follower of F. Taylor and one of the founders of the scientific theory of management. He singled out 6 areas of enterprise activity that need to be managed: technical, commercial, financial, accounting, administrative and protective. In his opinion, the most characteristic tasks of the management link are:
planning a general course of action and anticipating the end result;
"organization", i.e. distribution and management of the use of material and human resources;
issuing orders to maintain the actions of employees in the optimal mode,
coordination of various actions to achieve common goals;
development of norms of behavior of members of the organization and implementation of measures to comply with these norms;
control over the behavior of members of the organization.
Fayol formulated the characteristic features of the management process at the beginning of the twentieth century. Since then, there have been significant changes in the activities of organizations. Their structure has become more complex, the scientific and technological revolution in the field of natural sciences has led to the emergence of new complex technologies, the rapid introduction of computer technology in various areas human activity significantly influenced the technology of managerial decision-making and the procedure, which is called "control over the execution of a decision." The technology of financial management has changed. Recently, many transformations in this area are associated with the introduction of electronic payment systems and electronic money substitutes.
Thus, the organization management system includes the totality of all services of the organization, communications between them and processes.
1.2 Organizational structure of the firm
The organizational structure of the company is aimed primarily at establishing clear relationships between the individual divisions of the company, the distribution of rights and responsibilities between them. It implements various requirements for improving the management system, which are expressed in various management principles. Organizational management structures of industrial firms are very diverse and are determined by many objective factors and conditions. These may include, in particular, the size of the company's production activities (large, medium, small); the production profile of the company (specialization in the production of one type of product or a wide range of products from various industries); the nature of the manufactured products and the technology of its production (products of extractive or manufacturing industries, mass or mass production); the scope of the firm (focus on local, national or foreign markets); the scale of foreign activities and the forms of its implementation (the presence of subsidiaries abroad: production, marketing, etc.); the nature of the association of the company (concern, financial group).
The organizational structure of the company and its management are not something frozen, they are constantly changing, improving in accordance with changing conditions.
The organizational structure of the firm determines its composition and subordination system in the overall hierarchy of the firm's management.
Firms in foreign countries may consist of one firm, or may include a significant number of companies united by the so-called participation system, i.e. through participation in the share capital of other firms. The essence of the participation system is that in order to control a joint-stock company, it is enough to own a certain percentage of its shares. Hence the different types of control:
Through full ownership, when all or almost all of the company's shares are owned by one person, group of persons or one firm;
Through the majority of shares, assuming ownership of 51% of the issued shares;
Through the mechanism of subordination, when the possession of a majority of the shares of one firm, which in turn owns a controlling stake in another firm, entails control over this firm;
Through a minority of shares, when the company's shares are scattered, and it is enough to have a small percentage of them in order to have control over the company.
According to UN experts, over 60% of foreign affiliates and subsidiaries owned by American, British and Japanese firms are wholly owned by them, and more than 30% are controlled companies with majority ownership of shares. According to other estimates, 80% of related companies of American firms and 75% of English ones are either wholly owned by parent companies or controlled by them through majority ownership. In turn, 58% of Western European TNCs' direct investments in the United States are in subsidiaries wholly owned by them and 34% in companies where they own more than 50% of the shares. At the same time, it should be noted that in recent years the expansion of the ownership of TNCs, in particular American and Japanese ones, has been largely due to the acquisition of blocks of shares in mixed ownership companies, especially in developing countries.
It is important to keep in mind that the mere fact of participation of one company in the share capital of another does not always indicate the existence of a relationship of control and subordination. Control over another company is ensured only by owning a controlling stake in its shares. AT practical activities joint-stock companies, a certain minimum of a controlling stake is established, which, due to the dispersion of shares among the mass of small and medium-sized shareholders, has noticeably decreased. Usually, to control a large industrial corporation, it is enough to own 10% of its shares, and sometimes even a smaller share.
However, the concept of control is not simple and is not limited to the concentration of shares in the hands of one or a few companies. To control the activities of the firm means to determine its strategy, policy, choice of long-term goals and programs, to have a decisive influence or power.
The methods and degree of control depend on a combination of many factors, among which forms of ties and dependencies with the parent company and ties with other related companies are important. Characteristically, the parent company's management control over the activities of related firms goes largely through the establishment of industrial, financial, technological, scientific, technical, economic and other types of ties.
The presence of control over a company is usually judged on the basis of a combination of various signs, including financial, personal and other ties. Using the participation system, the largest firms formed the most complex complexes of industrial, financial, trading and other companies interconnected. However, not only for large, but also for small and medium-sized companies, participation in the share capital of another enterprise remains the most convenient way to attract foreign funds to establish control of a stronger company over a weaker one.
An important role in modern conditions is played by holding companies, i.e. holding companies created for the purpose of owning controlling stakes in securities, mainly industrial firms. By controlling an industrial company that has participation in a number of other firms and financial institutions, one can fully or partially control the entire chain of these companies.
The system of participation, as a rule, is sealed by a personal, or personal, union. Personal union is manifested in the fact that the same persons occupy leadership positions (chairmen and members of the board, directors and managers) in various companies and banks. Personal union has become extremely widespread. It serves as one of the main methods of expanding the sphere of influence of large companies. Often it is used not only as an addition to the participation system, but also as an independent means of establishing control over other firms. Personal union also acts as one of the main ways of an ever more active merging of banking capital with industrial capital.
A firm that controls the activities of other companies is usually referred to as a parent company or head firm. Depending on the size of the capital owned by the parent company, as well as the legal status and degree of subordination, the firms that are in the sphere of influence of the parent company can be divided into the following types: branches; subsidiaries; associated companies (associated company - in England, affiliated company - in the USA).
The branch does not enjoy legal and economic independence. It does not have its own balance sheet, charter, acts on behalf of and on behalf of the parent company, usually has the same name with it. The solution of business issues of the branch depends on the parent company. Almost the entire share capital of the branch belongs to the parent company.
Subsidiaries are legally independent. The conclusion of transactions and all documentation of subsidiaries (drawing up balance sheets) are conducted separately from the parent company. They have a sufficient financial base and property necessary for independent economic activity. Subsidiaries hold board meetings and general meetings of shareholders separately from the parent company. The parent company does not bear any responsibility for the obligations of its subsidiaries. At the same time, the parent company exercises strict control over the activities of its subsidiaries, which ensures ownership of a controlling stake. This control consists not only in monitoring and coordinating economic activities, but also in determining the composition of the board, appointing directors, who in turn are obliged to accept instructions from the controlling firm and report to it.
Subsidiaries may own shares of other companies - grandchildren in relation to the parent company. Grandchildren companies, in turn, may also own shares in other firms, and so on.
An associate is legally and economically independent and is not under the control of the firm that owns its shares.
Using the participation system, the largest firms create the most complex multi-stage complexes of interconnected companies.
Joint firms (enterprises) in the practice of foreign countries are firms with the participation of one or more foreign partners - investors. In developed countries, as a rule, there are no special legal norms governing the creation and operation of joint firms (enterprises). These matters are governed by the rules of national legislation applicable to all registered companies, or laws on foreign investment. In addition, in some countries they are subject to regulation under antitrust or competition laws.
In international practice, a joint venture in the broadest sense is understood as a firm whose participants carry out concerted activities aimed at achieving a common goal or a specific end result. The creation of a joint company is always based on an agreement (written or oral), which defines the rights and obligations of partners in relation to each other and to third parties.
The main feature of a joint firm (enterprise) is the ownership of the final product. On this basis, a joint venture is distinguished from other types of joint venture activities. This sign is taken as a basis and determines the order of settlements of partners.
The activities of joint companies are carried out in a variety of legal forms, depending on the objectives of the activity, the size of the authorized capital, the number of founders.
1.3 Parent company as an organizational and economic control center
Strengthening the processes of concentration and centralization of production and capital on a national and international basis, occurring under the influence of an objective trend towards the internationalization of economic life and the scientific and technological revolution, leads to the growth of international production and economic complexes - TNCs, which have huge financial, industrial and scientific and technical resources and the broadest overseas production and sales base. They are characterized a complex system internal communications and interdependencies between individual units for
lines of production, financial, scientific and technical, technological, marketing and other types of relations, subject to a single intra-company planning.
The organization of intra-company management is a constantly evolving process, corresponding to the changes taking place in the material production of TNCs, which entail the strengthening of ties between its individual divisions. This is accompanied, in particular, by changes in the organizational structure, the development and deepening of management functions, and the improvement of the entire mechanism for the functioning and development of TNCs. At the same time, new, more complex organizational forms are emerging, designed for a more complete implementation of the most important management functions and designed to promote the establishment of such interaction between the divisions of the TNC, which would ensure the achievement of its tasks.
The leading role in determining the forms and nature of the relationship between the individual divisions of the TNC belongs to the parent company and depends on the type and characteristics of its activities as an organizational and economic control center.
The parent company exercises a purposeful, continuous, organizing influence on all divisions of the international structure of the company, which are related, subordinate (branches, subsidiaries, grandchildren) and associated companies, united with the parent company by the title of ownership and control mechanism.
As an organizational and economic management center, the parent company develops specific goals and general directions for the functioning and development of the company as a whole and its structural divisions; determines the means, forms and methods to ensure the achievement of these goals; monitors the implementation of its installations and makes adjustments to them; supervises the financial activities of all departments. Therefore, the main purpose of the management activities of the parent company is to ensure consistency, interconnection and interaction between the various structural units that make up the TNC as a whole. This is achieved by using such important management functions as marketing, planning, control, management, organization, which contribute to the maintenance of stable functional relationships between all divisions of the TNC. These functions are carried out by a special management apparatus of the parent company, the structure and functions of which depend on the nature and characteristics of the activities of the company as a whole.
The objective economic basis that provides the parent company with the role of the organizational and economic control center of TNCs is its ownership of the means of production.
The socio-economic relations that develop within TNCs are primarily associated with the type of property that is of a private nature, with the disposal and possession of material assets by the parent company, which acts as a single center for managing and disposing of this property. It is property that binds all economic or production relations within TNCs into a single whole. It acts in the form of the share capital of the parent company and its participation in the share capital of subsidiaries.
The parent company, which acts as the organizational and economic center for managing the activities of TNCs, invests in subordinate companies by acquiring blocks of their shares. Owning a controlling stake provides the parent company with the right to control the activities of the subordinate company. The methods and degree of control can be different and depend on a combination of many factors, among which the form of relations and dependencies of related companies on the parent company is important.
Management control by the parent company over the activities of related firms goes to a large extent along scientific, technical, production, technological and other lines. The means and methods of centralized management of the activities of TNCs largely depend on the form of organization of the parent company, which acts as an operational production or holding company. These forms of its organization have fundamental differences.
The parent operational and production company is itself engaged in economic activities, and in this case, centralized management covers all aspects of the production process from development new products and ending with its implementation. Thus, in a manufacturing company, the object of management is the production of material values and everything connected with it. At the same time, financial activity serves as a means of management and control. The management methods used by the parent manufacturing company cover all aspects of the economic activity of the subsidiaries included in the TNC.
The parent holding company does not itself engage in production activities, but only concentrates controlling stakes in itself manufacturing companies, which have legal and economic independence, but are subordinate to the holding in financially. It manages within the framework of TNCs mainly by methods of financial impact, setting for each related firm the main financial indicators: profit margins, production costs, amounts and methods of transferring dividends, methods of transferring profits. Along with financial leverage, other means are also used. An instrument of centralized management can be, for example, a technical policy, i.e. concentration of scientific research and technical developments in a single center of the parent company and targeted provision of its results to subsidiaries. Often, as such tools, the distribution between subsidiaries of the product range, the division of sales markets between them is used.
The creation of parent companies in the form of holding companies is largely due to the fact that many of these companies were formed by the merger of two or more large firms, and the holding form in this case provides greater economic independence for the merged companies and at the same time makes it possible to carry out financial support for their activities. control.
The form of organization of the parent company leaves its mark on the intra-company management structure, especially if it is decentralized. In those TNCs where the parent company acts as an operational production company, production departments are usually created in the form of subsidiaries. They are endowed not only with economic, but also with legal independence and are freer in determining the strategic plans for their development. This is most typical for American oil companies, where production activities are carried out by subsidiaries specialized in the production of certain products (oil, gas, chemicals) or on a regional basis. In those firms where the parent company is purely a holding company, operational holding companies can be created to manage the activities of production subsidiaries, the purpose of which is to concentrate the shares of manufacturing firms in a certain region or industry, coordinate their business activities, finance, provide consulting and technical services.
The formation of multi-stage holdings is typical for companies in Western European countries.
The role of the parent company as an organizational and economic control center also largely depends on whether it is single-national or multinational in terms of capital ownership. In single-national TNCs, the organizational and economic control center is the parent company, which is national in terms of capital and control. This means ownership of the controlling stake in the parent company by the entrepreneurs of the home country, i.e. country of incorporation of the parent company. Ownership of a certain part of the shares by entrepreneurs from other countries does not change the matter in principle, since the parent company does not share control with them.
A feature of multinational TNCs is the ownership of a controlling stake or the entire share capital of the parent company by entrepreneurs from two or more countries.
The specific organizational structure of multinational TNCs depends on the form of their formation. In cases where the form of association is an exchange of shares between two multinational firms that retain their legal and economic independence, two parent companies remain at the head of the TNC, each of which is registered in its own country and is subject to its legislation. The organizational and economic center of such a company is a specially established joint management body, which is formed by appointing administrators from each side and exchanging shares of controlled companies in a prescribed ratio. Such a body exercises centralized operational management mainly by financial control methods and distributes profits between the controlled firms of both parent companies. It also acts as a focal point for coordinating and developing overall policy and operational guidance throughout the firm. These forms of organization are often intertwined and supplemented by various kinds of agreements: on the distribution of total profits, on the division of sales markets or areas of activity, on the exchange of patents, trademarks, technical knowledge and experience, on financial and scientific and technical cooperation.
When there is a complete merger of the capital of two multinational companies, then one joint parent company is formed, registered in the country of one of the founders. In this case, the shares are distributed among them on a parity basis, and the parent company itself acts as the organizational and economic control center.
Each of the multinational TNCs, headed by two parent companies, has its own characteristics, which are manifested primarily in the nature and methods of forming a single property, as well as in management methods.
Each subsidiary, located in the home country of the parent companies or abroad, must obtain approval for any important event that it wants to carry out as part of the overall strategy of the group. Financial control is exercised by monitoring the production costs and profit levels of each subsidiary. However, the responsibility for making a profit is also assigned to the managing groups - commodity and regional, which control all the companies of the group. Profits received by subsidiaries are redistributed by parent companies on the basis of an agreement concluded between them, providing for the payment of equal dividends to the shareholders of these companies.
Having two holding companies, each registered in a different country, enables the manufacturing subsidiaries to maintain operational autonomy, have a board of directors that is accountable to the shareholders of their country, and at the same time effectively use differences in national laws in different countries, in particular, on taxation, the export of capital and the redistribution of profits.
Each TNC, where the result of the merger was the creation of a parent company multinational in terms of capital, which acts as an organizational and economic center of management, has its own specific features in the organization of management and control.
Subsidiaries are practically autonomous in solving the most important issues of production activities, in particular, the specialization of production, updating the product range, and hiring labor. Control over their activities is carried out by the parent holding company by methods of financial influence aimed at obtaining the planned profits.
2 Characteristics of the management of NLMK's activities
2.1 Organizational and economic characteristics of OJSC NLMK
Novolipetsk Metallurgical Plant is one of the largest metallurgical plants in the world, the third largest steel producer in Russia. The company specializes in the production of steel and sheet products of a wide range.
Open Joint Stock Company "Novolipetsk Metallurgical Plant" was registered by the Decree of the Head of the Administration of the Livoberezhny District of Lipetsk of January 28, 1993 No. 50 (certificate of state registration No. 5 G of January 28, 1993).
OJSC NLMK is a commercial organization, the authorized capital of which is divided into a certain number of shares, certifying the obligatory rights of shareholders in relation to the joint-stock company and of the company in relation to shareholders.
The company was founded for an unlimited period of activity. OJSC NLMK may be liquidated in accordance with the provisions of the Articles of Association of OJSC NLMK or the current legislation.
Location. OJSC NLMK is located in the center of the European part of Russia, in the city of Lipetsk, near the largest iron ore basin in Europe - the Kursk Magnetic Anomaly (KMA), as well as in close proximity to the main regions of steel consumption. The plant is located in the region with the most developed transport network in Russia and has a strategically advantageous location for consumers.
Legal address of OJSC NLMK: Russian Federation, 398040, Lipetsk, pl. Metallurgists, 2.
The authorized capital of the company is 5,993,227,000 rubles, it is divided into 5,700,916 ordinary shares with a par value of 1,000 rubles and 292,311 type B preference shares with a par value of 1,000 rubles.
The number of shareholders registered in the register is 22,347, including 49 legal entities. Major shareholders owning more than 5% of voting shares of the company:
ZAO Credit Swiss First Boston Securities, Moscow;
JSCB "International Financial Company", Moscow;
CJSC Eastern Investment Company, Moscow;
Rosinterbiznes LLC, Moscow;
CJSC Kasmet, Moscow;
Agristall LLC, Moscow;
LLC "Lincher", Moscow.
OJSC NLMK is an enterprise of a full metallurgical cycle. The production facilities include: sinter production, coke production, blast furnace production, steelmaking production, production of hot-rolled and cold-rolled steel, rolled products with zinc and polymer coatings.
NLMK's mission is to be the main supplier of quality products to consumers and the leader in terms of profitability in the global steel industry.
The main purpose of the activity is to make a profit. The strategic goals of NLMK are:
Maintaining and strengthening leading positions in terms of profitability among steel companies;
Maintaining and strengthening our leading position in our core markets and further developing our high value-added product range;
Using the main competitive advantage of the Company, which is low-cost steel production, by increasing and modernizing existing capacities;
Search for opportunities for the Company's development through further implementation of the vertical integration strategy in the raw materials segment and in the segment of high-quality steel-rolling assets;
Maintenance and further development of high standards of corporate governance, social responsibility and security environment.
NLMK's production is aimed at meeting the demand in various areas of ferrous metals consumption. This determines the wide range of products manufactured by NLMK. Novolipetsk Plant makes its main bet on improving the quality of products, improving consumer properties and expanding the range of products.
At present, Novolipetsk Steel's products include: pig iron, slabs, hot-rolled and cold-rolled steel, galvanized and pre-painted steel, enameled steel, electrical steels and other products. Rolled sheets are made from low-carbon, carbon and low-alloy steel grades of various chemical composition, strength groups and stamping categories.
The production of metal products is carried out in accordance with the main domestic and foreign national standards: ASTM, EN, DIN, JIS, BS, API, SAE. The share of products manufactured according to foreign standards exceeds 70%.
The quality of NLMK products is confirmed by certificates from Russian and foreign certification organizations.
The main activities of the Company are:
production and sale of ferrous metallurgy products;
internal and external trade;
recycling, storage, movement, placement, burial, destruction of industrial and other wastes;
industrial, housing and communal construction;
production of building materials, structures and products, etc. other.
At present, NLMK is a highly efficient company with a balanced development strategy.
In addition to expanding its own production base, the Company's strategy provides for strengthening its position in key sales markets by acquiring high-quality rolling facilities in them.
NLMK Group produces a wide range of high quality products. The parent company of the Group, being a full-cycle steel company, produces pig iron, slabs, hot-rolled and cold-rolled steel in sheets and coils, galvanized and color-coated steel, and electrical steel.
2.2 Management structure of NLMK
The fundamental principles and procedures of corporate governance are formulated in NLMK's Corporate Governance Code. The Code complies with the basic principles recommended by the Organization for Economic Cooperation and Development (Principles of Corporate Governance, 1999) and the provisions of the Code of Corporate Conduct approved by the Russian regulatory authorities.
In accordance with the Corporate Governance Code, the main principles in this area are:
1. The desire to implement effective and transparent mechanisms for ensuring the rights and interests of shareholders;
2. Equal treatment of all shareholders;
3. The desire to ensure the implementation of the rights of shareholders to participate in the management of the Company;
4. Compliance with the rights of third parties;
5. Commitment to a unified corporate policy in relation to subsidiaries and affiliates and other legal entities, of which NLMK is a participant, founder or member;
6. Policy of information openness and transparency;
7. Policies for compliance with business ethics in doing business;
8. Ensuring compliance with the norms of the current legislation and international standards of corporate governance.
Recognizing the importance of corporate governance as a factor in the Company's investment attractiveness, NLMK is constantly improving its corporate governance system in order to comply with the best international practices.
The production and management structure of NLMK is very extensive (Figure 2).
Figure 2 - Management structure of OJSC NLMK
The supreme management body of NLMK is General meeting shareholders. General management of activities and determination of the Company's long-term development strategy is carried out by the Board of Directors. Executive bodies - the President (Chairman of the Board) and the Board, carry out operational management of current activities.
The Independent Auditor and the Audit Commission exercise control over the financial and economic activities of the Company. The audit of financial statements is mandatory carried out in accordance with the requirements of Russian legislation and generally accepted auditing standards in the United States.
Along with the Corporate Governance Code and the Charter, the Company has corporate documents that regulate the activities of management and control bodies: the Regulations for the General Meeting of Shareholders, the Regulations on the Board of Directors, the Regulations on the Management Board and the Regulations on the Audit Commission.
The main workshops of OJSC NLMK: blast furnace shop 1 (DTs-1); blast furnace shop 2 (DC-2); oxygen-converter shop 1 (KCC-1); oxygen-converter shop 2 (KCC-2); sinter production (AGP); coke-chemical production (KHP); nitrogen fertilizer production (ATP); sheet rolling shop 1 (LPC-1); sheet rolling shop 2 (LPC-2); sheet rolling shop 3 (LPC-3); sheet-rolling production (LPP); sheet rolling shop 5 (LPC-5); electric steel-smelting shop (ESPTs); ferroalloy shop (FSC); steel foundry (SLTs); KIPiA (control - measuring instruments and automation) and others.
2.3 Structure of the NLMK Group
OJSC "Stoilensky GOK" The supplier of iron ore is located 350 km from NLMK OJSC, in the area of the Kursk Magnetic Anomaly (KMA) deposits. The close location of the source of iron ore allows minimizing the cost of delivering iron ore products to the main production site.
OAO Altai-koks. The coke producer is located near the sources of raw coal (Kuznetsk coal basin), in the Altai Territory.
"Zhernovskoe-1". The coking coal deposit is located 70 km from Altai-koks.
OOO VIZ-Steel. The steel rolling company and the main production facilities of the group of companies Maxi-Group acquired in late 2007 are located in the Ural region of Russia. OOO VIZ-Stal is a leading producer of cold-rolled electrical steel and the largest producer of transformer steel in Russia. The share of VIZ-Steel in the world production of transformer steel is about 11%. More than 80% of products are shipped for export
Open Joint Stock Company "Studenovsk Joint-Stock Mining Company" (JSC "Stagdok") is an enterprise in the mining industry. The company is currently developing the Sitovsky site of the Sokolsko-Sitovsky flux limestone deposit. The length of the quarry is 1.5 km, the width is 0.5 km, the average depth is 46 m. According to the results of 2007, the share of Stagdok OJSC in the total volume of limestone mined in Russia amounted to about 24%, which allowed the company to take 2nd place in industries. The main types of manufactured products are flux and technological limestone of fine, medium and coarse fractions.
JSC Dolomit. The leader among Russian producers of metallurgical dolomites and the only manufacturer of this type of product in the Central Black Earth region. The company has been developing the Dankovsky dolomite deposit (Lipetsk region) since 1932. The range of products manufactured by the enterprise includes flux and converter dolomite, dolomite flour, building crushed stone and crushed stone for road works. The location of the enterprise near a developed transport infrastructure makes it strategically beneficial for consumers of products.
LLC "Independent transport company" Ensures timely supply of raw materials for metallurgical production and delivery finished products consumers both in Russia and abroad.
DanSteel A/S. DanSteel is located in Denmark. Equipped with the most modern equipment, its annual production capacity is more than half a million tons of hot-rolled plates. This acquisition (in 2005) was an important step towards strengthening NLMK's position in the global metal products market. Currently, the enterprise produces more than 0.5 million tons of thick rolled products per year. The main production assets of the company include sheet rolling production, a shipping area and its own seaport for receiving slabs and shipping finished products. The company's products are shipped to customers in Germany, Denmark, Sweden, Great Britain, Norway, France, etc. DanSteel A/S is one of the significant players in the shipbuilding steel sheet market. Thus, in particular, 25% of the needs of the North German shipbuilding sheet market are covered by supplies from DanSteel A/S. DanSteel A/S is constantly strengthening its core competitive advantages through:
reducing the time of production of an order and shipment of goods to consumers through the introduction of a new system for planning and managing production, optimizing internal logistics and updating the transport fleet of the enterprise;
increasing the production of sheet with special requirements and tests, sheet for pressure vessels;
expansion of the product range through the development of high-strength steel grades, the production of large-sized sheets with a total weight of up to 20 tons, the production of products from sheet products with high added value (segments for wind power, blanks for large-sized engineering products) and an increase in the share of heat-treated rolled products in the total production volume from 50 to 60%.
Since the end of 2006, NLMK has held a 50% stake in Steel Invest & Finance, a Luxembourg-based joint venture with Duferco Group.
Production group.
Carsid S.A. is a producer of slabs that are consumed by the Group's companies.
Duferco Clabecq S.A. is a manufacturer of medium thickness sheet and thick sheet.
Duferco La Louvière S.A. is a manufacturer of hot-rolled, pickled, cold-rolled steel, as well as wire rod.
Duferco Coating S.A., which includes two production assets: Beautor, a manufacturer of electro-galvanized sheet used in the automotive industry; Sorral S.A., manufacturer of galvanized coils and sheets and coated rolled products for the construction and automotive industries.
Duferco Farrell Corporation is a manufacturer of hot rolled, pickled and cold rolled coils and sheets.
Sharon Coating LLC is a manufacturer of galvanized steel. Sharon Coating joined SIF in June 2007. The company's facilities, which include 3 continuous hot-dip galvanizing units with a total capacity of 1.2 million tons per year, are located at a single production site in Pennsylvania.
Verona Steel S.p.a. – manufacturer of thick sheets and ingots.
distribution group.
Duferco Transformation Europe S.A., France. The DTE group includes 9 service centers located in France, Belgium and the Czech Republic. The companies that are part of the DTE Group carry out pre-sale processing, as well as distribute products.
Steel Invest Trading S.A. (SIT), Switzerland is a trading company that sells raw materials, consumables and semi-finished products to SIF companies and sells the finished products of these companies.
SIF Group companies manufacture products used in the automotive, construction and industrial sectors. The main sales markets are the EU countries. In 2007, SIF enterprises produced 2.1 million tons of steel, 4.8 million tons of finished products.
The creation of the joint venture was in line with NLMK's development strategy, which envisages expanding its presence in the strategically important European sales market, as well as increasing sales of higher value-added products. In 2007, 329 thousand tons of slabs were delivered to SIF enterprises. In the future, NLMK plans to expand its cooperation with SIF enterprises and increase the supply of slabs by 2012 to 3,600 thousand tons. In addition, in 2007 NLMK Group sold 147,000 tons of coke to SIF (Carsid, Steel Invest Trading) enterprises.
2010 turned out to be another good year for global steel producers, although it was characterized by some
a slowdown in the growth rate of apparent consumption of metal products (6.8% against 8.8% in 2009).
NLMK takes an active part in integration with foreign companies. Thus, in 2007, NLMK and the Chinese company Tebian Electric Apparatus Stock Co., Ltd, (TBEA) launched a project to organize a joint Russian-Chinese center for processing and selling electrical steel, as a result of which NLMK was able to strengthen its position in the largest and a strategically important market that consumes about 30% of the world's production of transformer steel, and TBEA is a stable supply channel for the main raw materials for the production of transformers.
In the future, NLMK will strengthen its position in the world market as a supplier of high-quality steel products that meet the requirements of our customers.
3 Organization of management in American, Western European and Japanese firms
The management structure of large industrial firms is formed under the influence of various factors. On the one hand, these are the requirements put forward by the growth in the scale of production, the strengthening of its diversification and the sophistication of products; expansion as a result of internationalization of the territorial disunity of production. On the other hand, it bears the imprint of the historical features of the formation and development of specific firms. Here, the predominance of traditionally established types of companies in individual countries is directly affected; difference in the legislation regulating economic activity of firms; the connection of firms with the military-industrial complex, etc. Although each of these factors has independent significance, it is their combination that determines the features of the organizational structure of both a particular firm and firms in individual countries. Therefore, although there are many common features inherent in the management structure of large firms, nevertheless, it is important to take into account and study the specific features of the organizational structure that have developed in specific conditions.
To the greatest extent, the features of the management structure of modern TNCs are determined by the historical conditions of their formation and development and bear the imprint of the type of enterprises that developed at the early stages of the development of the company. This, in particular, finds expression in the nature of the relationship between the production departments of a modern firm and determines the place and role of production departments in the organizational structure of the company.
In modern conditions, Western European and Japanese companies have acquired many common features with American firms in applying the principles of decentralization in management. This is due to the intensification of the processes of concentration and centralization of production under the influence of the scientific and technological revolution and the aggravation competition on the world market. First of all, there is an increase in the size of Western European and Japanese companies, which are approaching American ones in terms of turnover.
The growth in the scale of economic activity led to the reorganization of management carried out by most Western European companies and the use of American experience in the formation of the organizational structure of management. Of great importance is the departure of both Western European and Japanese firms from the narrow specialization of production and their transformation into highly diversified complexes. This was reflected in the management structure, as within the companies, production departments or groups of departments were created for various types of diversified products and areas of activity.
However, along with many common features, American, Western European and Japanese TNCs have their own characteristics in the organization of management, which stem primarily from the historical conditions for the development of certain types of companies in different countries. American firms at an early stage of their development were created in the form of trusts. Therefore, in such companies as, for example, General Motors, Chrysler, Ford Motor, industrial enterprises that are part of the production departments are deprived of any independence. The directors of such enterprises are completely subordinate to the orders of the management of the production departments to which they belong. In particular, this concerns the issues of removing old products from production and switching to the production of new ones, setting prices, acquiring equipment, etc. The production department in such companies distributes orders between enterprises, provides logistics, monitors the implementation of production plans, monitors the implementation of such plant functions such as planning, quality management, equipment maintenance, staffing, etc.
In companies in Western European countries and in Japan, production departments play a slightly different role. With the transition to a decentralized form of management, production departments act as coordinators of the activities of their subsidiaries, which have operational, economic, financial and legal independence. At the same time, subsidiaries themselves act not only as profit centers, but also as responsibility centers. The latter means that they independently develop strategic directions of production activities within the framework of the product range assigned to them, conduct research and development, identify potential consumers of products, carry out its production and marketing, provide the necessary capital investments for the modernization of production, organize the material and technical supply of their enterprises. . As profit centers, they are fully responsible for the rate of return set by the management of the concern, maintain independent balance sheets and have separate profit and loss accounts, which are drawn up in a single form and are included in the consolidated balance sheet of the company. The functions of the production department include the control and coordination of the activities of the subsidiaries assigned to it, usually in the following most important areas: research, production, marketing, finance.
Due to the close ties between individual companies of a production nature, Western European concerns (especially German, French, Swedish) are usually referred to as "industrial groups" or simply "groups", regardless of whether they are headed by operational production companies or holding companies.
The presence in the majority of German concerns of a large number of legally independent subsidiaries with a high degree of operational independence, geographically dispersed and at the same time highly specialized in the production of products assigned to them, requires the coordination of their activities through the functions of centralized management, providing a unified and comprehensive management of the activities of subsidiaries. companies and subordinating them to a single goal set by the top administration.
The organizational structure of American, Western European and Japanese companies is very diverse and almost every company has its own distinctive features.
In the 1980s, there were significant changes in American management that led to the transition to new management structures and a redistribution of priorities in making managerial decisions. The tasks of strategic planning based on the setting and implementation of long-term goals are now coming to the fore in the largest companies. These goals and objectives are largely based on the development and implementation of fundamentally new products that not only meet the needs of the market, but also adapted to the requirements put forward by the legislation of their country and other countries in the field of price regulation, investment control, environmental protection, safety in operation, energy conservation, as well as numerous measures developed within the framework of international economic organizations and approved by national authorities. These and other trade and political measures have led to significant changes in the conduct of the economic policy of many American companies.
A characteristic feature of the entrepreneurial activity of American companies in modern conditions is the systematic restructuring of organizational structures as a result of the intensification of the process of acquisitions and mergers.
The following are put forward as the goals of such reorganizations:
further diversification of production by acquiring a company that has accumulated significant scientific, technical and industrial experience, supplementing its own base;
the desire to increase the efficiency of the scientific and technical complex through the integration of specialized firms capable of optimizing the structure of the parent company;
changing strategic priorities to gain a foothold in new markets, increasing flexibility in the company's operational activities.
The process of mergers and acquisitions required the restructuring of organizational management structures. In the first half of the 1980s, 56% of American companies out of 500 industrial giants changed the management structure.
It should also be noted that the American management style differs significantly from the Japanese. Thus, in American companies, the responsibility of each employee is clearly defined and each manager is personally responsible for the implementation of established indicators in terms of directive planning, while in Japanese companies collective responsibility is provided for the development, adoption and implementation of decisions. Another feature is that foreign affiliates of American corporations more freely use the capital, technology, organizational and managerial experience of the parent company. Legally, the vast majority of foreign firms of American TNCs are subsidiaries subject to local laws, while Japanese TNCs are dominated by branches with 100% Japanese capital and full control of their activities by the parent company.
A feature of the organization of management in Japanese companies is that they attach paramount importance to the improvement of the style and methods of management. Japanese companies tend to be more centralized than American and Western European ones. However, within the framework of high centralization, the principles of coordination, coordination of actions, development and adoption of decisions after their careful preliminary discussion and approval by the executive level are widespread. It is believed that the Japanese style of management based on group decision making is more effective because it involves:
participation of the middle management in the development of decisions by coordinating and discussing draft decisions not only with managers, but also with the personnel of the relevant departments;
observance of the principle of unanimity in decision-making;
lack of clear job descriptions that define the scope of the employee's responsibilities; it is assumed that the content of the work of each employee can constantly change and they must be able to perform any work within their competence;
the use of a specific personnel management system, which mainly provides for lifetime employment of employees, promotion and promotion wages for years of service social Security old age and sickness;
continuous improvement of the art of management, including the quality of products, the effectiveness of marketing activities; control over the production process.
Japanese TNCs focus on the functioning of the parent company, but they tend to pay more attention to the activities of the corporation as a whole. Decisions on the appointment of managers to senior positions, the determination of the product range, the volume of investment and production, the development of new products are made by the top management of the parent companies or jointly with the top management of the branch. The parent company and its senior management have also become more focused on development prospects, more boldly put forward and make strategic decisions that are implemented in a top-down manner. At the same time, there is an expansion of the use of economic methods in intra-company management with a simultaneous strengthening of centralized principles. So, the parent company usually takes upon itself the determination of the price level for parts, parts, components exported to its subsidiaries abroad, ensures a higher level of profit. The parent company exercises strict control over the transfer of the latest technology to its foreign affiliates for fear of leaking secrets through local partners. According to the law, Japanese TNCs are now required to publish consolidated financial statements, which will allow a deeper and better understanding of the economic mechanism of Japanese management.
It is noteworthy that the Japanese are also transferring their management style to subsidiaries of foreign TNCs based in Japan. Thus, the subsidiaries of the American corporations "IBM", "Xerox" located in Japan use the Japanese style and management experience, product quality control. This is ensured by the fact that Japanese management specialists are fluent in English language, know how to use the Japanese management style, and are highly competent. The Japanese branch managers are transferring technological expertise from the American parent company. They are regularly sent to the parent company for retraining. This is especially true of top managers, who in most cases are Japanese. The number of American representatives on the boards of directors is insignificant, which is due to the difficulties of mastering Japanese management methods and mastering the Japanese language. For many countries, it was the Japanese, and not the American, system of management organization that became the standard. Japanese workers are distinguished by a high level of education, technological experience and stability! Japan creates a unique infrastructure based on the most advanced technologies, is a leader in the field of product quality, and has outstripped all other countries in terms of labor productivity growth.
Conclusion
The management system (MS) of an organization includes a set of all services of the organization, all subsystems and communications between them, as well as processes that ensure the specified functioning.
Management of an organization is a continuous process of influencing the performance of an employee, group or organization as a whole for the best results in terms of achieving a set goal.
The organizational structure of the company is aimed primarily at establishing clear relationships between the individual divisions of the company, the distribution of rights and responsibilities between them. It implements various requirements for improving the management system, which are expressed in various management principles. Organizational management structures of industrial firms are very diverse and are determined by many objective factors and conditions.
These may include, in particular, the size of the company's production activities (large, medium, small); the production profile of the company (specialization in the production of one type of product or a wide range of products from various industries); the nature of the manufactured products and the technology of its production (products of extractive or manufacturing industries, mass or mass production); the scope of the firm (focus on local, national or foreign markets); the scale of foreign activities and the forms of its implementation (the presence of subsidiaries abroad: production, marketing, etc.); the nature of the association of the company (concern, financial group).
Strengthening the processes of concentration and centralization of production and capital on a national and international basis, occurring under the influence of an objective trend towards the internationalization of economic life and the scientific and technological revolution, leads to the growth of international production and economic complexes - TNCs, which have huge financial, industrial and scientific and technical resources and the broadest overseas production and sales base. They are characterized by a complex system of internal ties and interdependencies between individual divisions along the lines of production, financial, scientific and technical, technological, marketing and other types of relations, subject to a single intra-company planning.
The predominance of certain types of economic relations within a TNC depends primarily on the nature of its activities as a whole, on the scale and complexity of production, as well as on the territorial dispersal of individual units.
NLMK is one of the world's leading steel producers and one of the largest steel companies in Russia. The main production facilities are located in Russia, the USA and the EU.
NLMK Group companies specialize in the production of flat and section steel products. In 2010, NLMK Group supplied its products to more than 70 countries around the world, with about 63% of steel products sold for export. The share of NLMK in the world market of slabs is more than 11%, transformer rolled products - more than 16%.
NLMK is a vertically integrated group that controls the entire production and marketing process, from the extraction of raw materials to the delivery of finished products to end consumers. The optimal structure of the Group, diversification of activities, a competent marketing policy, as well as high technological equipment allow minimizing the impact of negative trends in the sales markets and achieving high financial efficiency.
The NLMK Group includes both Russian and foreign assets. The parent company of the Group is located in Lipetsk, located in the center of the European part of Russia, 450 km from Moscow.
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NLMK Group, an international steel company with assets in Russia, the United States and the European Union, has passed an audit of the Lipetsk site for compliance with the criteria of the Toyota Total Production System (T-TPS), one of the most effective production process control systems in the world.
The purpose of the audit was to assess the effectiveness of the NLMK Production System (PS NLMK) and obtain recommendations for its further development.
The NLMK PS has been implemented at NLMK Group enterprises since 2013. The system includes a wide range of practical tools and techniques to improve the efficiency of production and business processes. Their use made it possible to achieve a positive effect on EBITDA in the amount of USD 477 million in 2014-2015, even taking into account the impact of the negative price environment.
The NLMK Substation was audited for compliance with the T-TPS criteria by leading experts from Toyota Engineering Corporation and the TPS Certification Center (Japan). The auditors checked the work of divisions of the blast-furnace, steel-smelting and rolling industries, assessed the use of NLMK's PS tools, analyzed the processes of supply, maintenance and repair of equipment, personnel training, labor protection and industrial safety.
The auditors noted that the level of development of NLMK's Production System exceeds the average level of global steel companies. In the area of production, NLMK's assessment is in line with the best practices of European and American metallurgical enterprises.
“Experts highly appreciated the use of the A3 tool by NLMK specialists to solve problems, the level of compliance with labor protection and industrial safety requirements. Separately, Toyota Engineering Corporation experts noted the effectiveness of work to achieve the company's goals through the implementation of optimization programs. The auditors pointed out ways to develop the system to reach the level of leaders - Japanese companies, for example, increasing the involvement of employees of enterprises in the process of continuous improvement. We intend to include the recommendations in the NLMK Production System Development Program for 2016-2017,” commented Yulia Venza, Director for Operational Efficiency at NLMK.
Briefly about the NLMK production system
The NLMK Production System (NLMK PS) is a methodology developed by the Group's specialists that includes a wide range of global and unique production practices aimed at improving the efficiency of key production, technological and business processes. It is a continuous, self-sustaining process of finding and implementing improvements. Full-scale and systematic implementation of PS at NLMK began in 2013.
NLMK PS tools are used to implement programs to improve operating efficiency. Thanks to the implementation of the Production System, NLMK Group has become one of the most efficient steel companies in the world.
Information about NLMK Group
NLMK Group is a vertically integrated steel company, Russia's largest and one of the world's most efficient producers of steel products. NLMK Group's steel products are used in various industries, from construction and mechanical engineering to power equipment and offshore wind turbines.
NLMK's production assets are located in Russia, Europe and the USA. The company's steel production capacity exceeds 17 million tons per year, of which about 16 million tons are located in Russia.
NLMK demonstrates the most competitive cost among global manufacturers, and the company's profitability is one of the highest in the industry. The company's revenue in 2015 was $8 billion, EBITDA was $1.95 billion, and net profit was $967 million. The Net Debt/EBITDA ratio is 0.56.
Ordinary shares of OJSC NLMK are traded on the Moscow Stock Exchange (ticker symbol “NLMK”), global depositary shares - on the London Stock Exchange (ticker symbol “NLMK:LI”). The company has an investment credit rating of BBB-.
Additional information about NLMK Group at www.nlmk.ru
Information about the Novolipetsk Iron and Steel Works
Novolipetsk Iron and Steel Works is the main production site of NLMK Group, Russia's largest producer of steel and metal products with high added value, one of the most efficient steel companies in the world. The plant is the core of NLMK Group's unified international production chain with assets in Russia, the EU and the USA.
The volume of steel production at the Lipetsk site is about 18% of all steel production in Russia and about 80% of all steel products of the NLMK Group. NLMK's high-quality metal products are used in various strategically important sectors of the economy, from construction and engineering to the production of power equipment and large-diameter pipes. At the end of 2015, the volume of steel production at NLMK Group's main production site reached 12.9 million tons, the highest figure in more than 80 years of the plant's operation. Steel output at 100% utilization of steelmaking capacities increased by 2.4% compared to the previous year. Record figures were achieved at all stages of the Novolipetsk plant.
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