Enterprises operate in the market, as a rule, in conditions of very fierce competition. If a company is a loser in the fight, it leaves the market and becomes bankrupt. To maintain a market position, the company must continuously monitor any changes that occur in the market environment, develop its own ways of counteracting negative influences in order to maintain competitiveness.
Operating activities - this is the activity of the company, which is the main and brings the organization a significant portion of income, as well as other activities, with the exception of financial and investment. In other words, this is what the enterprise was created directly for.
The nature of operating activities is primarily determined by the specifics and characteristics of the industry to which the enterprise belongs. For most companies, it is based on trading, industrial and commercial activities, which may be supplemented by ongoing financial or investment.
Features of the concept
Operating activities are characterized by the following features:
- It is she who represents the main component of the economic activity of the company. A significant part of the company’s personnel, a significant share of all generated assets goes to service this activity. Thus, under normal conditions, the profit from it has a significant share.
- The operational activities of the enterprise is a priority in relation to other types. For this reason, the development of any other areas should not be in conflict with operational activities.
- The intensity of development of a priority type of activity is the main parameter used to assess the stages of the life cycle of a company.
- Operations are focused primarily on the commodity market, while investment or financial - on the financial market.
- All business operations related to operations are regular. According to her, the frequency of operations is the highest.
- The implementation of priority activities is associated with those funds that have already been invested in it. Future investment is the subject of financial or investment activities. Capital invested in priority activities becomes the company's operational assets. The organization’s ability to generate operating profit largely depends on the composition, speed of circulation, balance and other characteristics of operating assets.
- Operating activities consume a large amount of living labor. In financial and investment activities, the cost of living labor is negligible. Thus, the ability of a company to generate profit depends to a large extent on the qualifications and professional composition of the staff, and the adequacy of labor resources.
- The priority type of activity has specific risks (operational risks). The level of operating profit should be correlated primarily with the level of operational risk.
In the process of implementing priority activities, three types of operating profit are generated:
Thus, operational activity plays a major role in the process of generating enterprise profits. It is on the implementation of this type of activity that a significant share of material and labor resources is spent. In the event that the priority activity is ineffective, the company may become bankrupt and will be forced to leave the market.