Desktop version

Home arrow Computer Science

  • Increase font
  • Decrease font


<<   CONTENTS   >>

EXTERNAL CONDITIONS OF PROFITABILITY OF BUSINESS MODELS OF HIGH-GROWTH ENTERPRISES

Geographical Conditions of the Functioning of High-Growth Enterprises

Developing enterprises are of fundamental importance for improving the condition of modern economies. That confirms the special role of high- growth enterprises (HGEs) in increasing the level of productivity after recession. Even more so, as the enterprises growing faster than the average contribute significantly to the increase in employment and economic development of individual regions (Grinberger and Nehrebecka, 2015).

Business models are seen as important factors in building competitive advantage and creating value for business entities. The type of the adopted business model is determined by many elements such as the near and far environment of an enterprise. New conditions resulting from a dynamically changing environment are the basic cause of the evolution of business models. The conditions are primarily determined by the place of business. Location in a specific place in space determines access to production factors, final recipients, infrastructure, and fiscal solutions.

"Die following research problem was formulated:

"Die location of enterprises has a significant impact on their results, and therefore functioning in a given voivodeship translates into the profitability of high-growth business models adopted by enterprises. Research shows that the geographical location of enterprises affects the possibilities in terms of generating knowledge, for example, due to the availability of highly specialized and qualified employees (Stawiarska, 2019).

Financial Condition of High-Growth Enterprises in Poland

Research conducted in Poland shows that the frequency of occurrence of Business Gazelles in individual voivodeships does not differ significantly from the indicators describing entrepreneurship in individual regions of Poland. Studies also show that among Polish Business Gazelles, the majority are companies of a mixed nature, often combining production and trade activities. Additionally, the fact that 23% of the surveyed companies declare activity related solely to production means that the enterprises with a production profile clearly dominate in the population of business entities (Krasnicka and Glod, 2016).

"Die financial condition of enterprises is connected with the effectiveness of their activity. Economic effectiveness refers to the economic and, in particular, financial results of the functioning of an enterprise and is usually reflected in the relationship between costs and revenues. Effectiveness can be considered in two dimensions: market and economic. In the market dimension, effectiveness is customer-oriented and is seen as the ability to offer products with characteristics ensuring full compliance with customer preferences.

The economic dimension of effectiveness focuses on activities and related costs. Determining the effectiveness in the general sense is based on comparing effects and outlays (Kowalska, 1993). In economic terms, effectiveness expresses the effect-expenditure relationship, and achieving a high level of effectiveness is possible through optimal shaping of the size of material and information streams, as well as the structure of processes. Considering processes in terms of profits and outlays makes it possible to build a system where goals are achieved through making the right decisions. The assessment of effectiveness understood in this way is important from the point of view of business models, because its goal is to contribute to increasing customer satisfaction and reducing costs, and thus to increase the competitiveness of the company. The subject literature often indicates the need and significance of measuring effectiveness (cf. Skrzypek, 2000). It can be discussed in the operational or short-term dimension, and it can be presented in the form of turnover profitability ratios, assets, and capital (Skowronek, 2010). The financial result and revenues from the activity of an enterprise determine the profitability of turnover, and the ratio of revenues to the average state of assets determines the productivity of the resources involved. The impact of the completed activities on the profitability of turnover is connected with the reduction of costs and increasing the efficiency of processes affecting the increase in revenues and strengthening the market position. Increased productivity may occur as a result of increased revenues and rational shaping of resources, that is, inventory, receivables, cash, and infrastructure involved in the functioning of the business. Therefore, effectiveness is considered primarily in terms of financial indicators. The business model, on the other hand, is treated as the architecture of the business activity, which can bring an organization’s effectiveness by generating income (Knop and Brzoska, 2016). A special emphasis is put on the profit-making nature of the enterprise and the related need to comply with principles of economy as the basis not only for survival but also for the development of the enterprise in the market. The indicators of a company’s performance can include net sales growth rate, operating profit margin, investments in fixed assets, investments in working capital, income tax rate, competitive advantage, and cost of capital (Jablonski, 2016).

 
<<   CONTENTS   >>

Related topics