Pr´actica 3: Compliancia Mec´anica y Compliancia Ac´ ustica

Agricultural enterprises. Agriculture in Serbia faces many problems, which are, among other things, a result of limitations appeared in terms of economic environment and agrarian policy conducted after the World War II until the SFRY collapsed, difficulties appeared in past fifteen years and difficulties in adjustment to market economy.7 Agriculture in Serbia is encumbered by consequences of central- planned economy regarding ownership and land use. For development is necessary a policy which can affect on productivity increase by restructuring and investments, which implies clear proprietary rights and forming the efficient land market, credits and inputs inevitable for agricultural enterprises. Previous role of agricultural enterprises reflected in the following:

ƒ Economy of scale of agricultural enterprises has enabled an appliance of modern technique and technology and establishment/development of seed production,

ƒ Professional personnel concentration has provided development of science and agro- technique and their transfer to rural husbandries,

ƒ Agricultural enterprises were a trigger for emergence and development of food industry in the same organizational frames of factory-farm type,

ƒ The state, and later on the public property, as a ground for setting up the state influence agricultural enterprises, has assigned them the role of cheap products producers in terms of basic agricultural products self-sufficiency preservation, strategic stability of the country and social safety of population,

ƒ A concept of agriculture development, which had provided a direct administrative control of courses in agriculture, gave to those enterprises a role of a mediator between the rural husbandries and food industry inputs producer, on the other hand.

As all others, the agricultural enterprises have a legal obligation to keep the books, to pay sales tax, property tax, income tax, so their formal-legal position is much more unfavourable in regard to rural husbandries position. The accent is on less working-intensive production lines and is relatively high level of specialization within some production units. The agricultural enterprises have relatively high level of agro-technical measures appliance (in regard to individual husbandries), because a size of property is not a limitation factor.

As significant limitation appears a way of agricultural enterprises' taxation. Agriculture is an unprofitable branch all over the world, but in Serbia, tax burdens are the same as for self- service markets etc. At the same time, while starting business in agribusiness, entrepreneurs face the problem of insufficiently developed agro-engineering, while technological ground significantly lags behind with up-to-date technological solutions in the world. An important

7

Serbian agriculture strategy, Ministry of Agriculture, Forestry and Water Management, Belgrade, Serbia, 2004, p. 8.

factor which affects the performances of big systems in Serbian agro-complex represents a

problem of agricultural land lease.

PKB Corporation has 22,000 ha of arable land, of which 17,000 ha of state land. Obviously, there is no possible an efficient privatization while the problem does not solve. The Law on Agricultural Land has caused, yet in the first year of its appliance, many unfavourable confrontations among the owners of registered individual agricultural husbandries and workers and management of non-privatized, i.e. workers and owners of private agricultural enterprises, owing to which is necessary a many-sided and critical analysis of some of its clauses' sustainability.8

The main weakness come out from organizational-technological and economically anachronistic provision of fragmentizing big organized land complexes in state property and devastation of extremely important assets invested in programs of arrangements and protection of the state agricultural land in past five decades. On the other side, opposite to fragmentization of organized land complexes, on organization of fragmentized and cultivation of hundred thousands hectares of non-cultivated plough lands has been done practically nothing in past years.

Owing to it, a size of agricultural production (especially livestock) is still significantly under the level realized during '80s, and today Serbia increasingly lags behind the results of neighboring countries, once far behind it. However, continuing decreasing trend of share of agriculture, forestry and fishery in the total GDP (Table 1) has not been determined by decline of agricultural production value, but development of other sectors of the national economy. In spite of it, the agriculture in 2009 – the year of the world economic crisis – had significantly contributed to revival of Serbian total economy, regarding that it had realized a positive growth of physical production size and a positive balance of foreign trade exchange. The agriculture had an anti-inflatory effect, because high production size had affected a decline of food prices and total stabilization of retail prices.

Table 1. Macroeconomic indicators of Serbian agriculture

Jed. 2000 2001 2002 2003 2004 2005 2006 2007 2008 Share of agriculture, forestry and fishery in GDP % 18,7 18,0 13,3 11,4 11,9 10,3 9,6 8,7 in employment % 23,9 23,2 20,5 20,8 21,4 Share of food industry, beverage and tobacco in GDP 6,2 5,7 5,3 4,9 4,7 4,4 4,7 4,4 Total 87 119 97 93 120 95 100 92 108 Plant production 73 150 96 83 144 94 97 82 123 8

Sevarlić, M. (2007). Weaknesses of Law on Agricultural Land. Poljoprivreda.biz, Retrieved November 21, 2007, from http: //www.propertyexpat.org/?l=sr&a=1107

Jed. 2000 2001 2002 2003 2004 2005 2006 2007 2008 Livestock breeding 95 99 102 98 100 101 97 100 97 Share of food, beverage and tobacco in family budget costs % 54,0 58,4 49,0 47,7 45,0 41,7 43,4 45,1 45,8 Trade of agro-food products mil. € 631,0 854,1 1.133,3 1.086,2 1.316,2 1.353,7 1.713,1 2.035,5 2.327,1 Export mil. € 319,7 347,4 554,9 509,4 628,7 731,7 991,9 1.217,9 1.327,3 I mport mil. € 311,3 506,8 578,3 576,7 687,5 622,0 721,1 817,6 999,8 Foreign trade balance mil. € 8,3 - 159,4 - 23,4 - 67,3 - 58,8 109,7 270,8 400,2 327,5 Share of agro-food products in: Total export % 19,0 18,3 25,3 20,9 22,2 20,3 19,4 18,9 31,3 Total import % 8,6 10,7 9,8 8,8 8,0 7,4 6,9 6,1 6,4

Source: Statistical Office of the Republic of Serbia – different publications, Retrieved June 15, 2012, from http://webrzs.stat.gov.rs/axd/index.php.

Now cannot be denied an advantage of big organized land complexes by which manage several big agricultural enterprises and agro-systems in agriculture of Serbia. These land complexes provide, primarily, the appliance of economy of scope concept and there is not necessary many words for approving that is more economic and more profitable to produce on big land complexes, while on them can apply modern technique and technology, new scientific solutions, to build less expensive and more efficient irrigation systems, bigger and more profitable livestock farms.

Strategic planning. The strategic planning is mainly periodical activity, which overtakes in order for enterprise to face changes in the environment. A strategy is a planned decision by which, starting from goals and policy, precise a way of their realizing in enterprise's business. The strategy is a science and a skill of using a method for realizing the goals. The enterprise is obliged to learn not only on its own, but also on experience of others. Continual adjustment and progress in modern economy implies making new values for buyers, while otherwise there is no stimulus for them to buy products and services. In such conditions, a success of business making dominantly depends on ability to anticipate, understand and adequately and timely react to impulses from the environment. Exactly the environment's dynamism, in the unique way, tests the ability of the enterprise to provide its vitality. In such struggle with the environment, the enterprise finds itself between two extremes:

ƒ To initiate new trends and changes, making new products and markets through innovation processes,

ƒ To defend existing position, so the environment could stabile, i.e. to amortize its influence on its business.

First orientation implies developed system of long-term foreseeing and observance of the environment, as well as decoding the signals while they are still weak (philosophy of interactivism and preactivism), while the other prefer internal, defensive flexibility, i.e. step by step strategy. Between these extremes, de facto, is series of options which must be analyzed by the enterprise.9 There is noticeable a tendency toward activities diversification, which resort the modern enterprises with a view to provide business stability. Thereby affirms a need that, together with economy of scope realizes also economy ofwidth.Then is the most important to keep a synergy between several activities in the enterprise. During the strategy formulation should know that a growth is not a goal per se, nor can be achieved by random actions. It is necessary planned, proactive and interactive observance of the environment. In order for enterprise to be successful, there must formulate the strategies based on one extrovert approach to developmental behaviour. According to proactive and interactive acting, the enterprise must train to use and create chances timely, i.e. which, along with lower costs of adaption, avoid shocks in the environment and business. Each growth strategy must be adequately financed, because always puts a question how much money is necessary to support the enterprise's growth.10 Experience in business of modern enterprises had affected the appearance of new paradigm of strategic management, which had been considered as a process of directing the enterprise's activities by which, based on anticipating chances and threats from the environment and respect of strong and good aspects of the enterprise, set up the best balance between the goals, strategies, directions, methods and growth tempo, macro- organizational structure and the environment criteria.

Defining organizational changes. Implementation of marketing strategy in modern conditions requires a flexible organizational structure. That is to say, the enterprises in Serbian agrarian sector must continuously adjust its organizational design and organizational processes to fast-changing marketing trends. Accordingly, there will be analyzed certain techniques of organizational changes, which should provide to the enterprises in agrarian sector, a theoretical-methodological framework and practical instructions for conduction of organizational changes. The organizational structure of enterprises in agrarian sector in Serbia is very complex and often very dissected, and caused by development and abundance of business functions, formal-legal position, production specialization etc. The agricultural enterprises still dispose with certain capacities for storing and finishing the agricultural products, regarding that their development went in direction of big factory-farm type business systems, which has implied also development of food industry within the agricultural enterprises. Most of food industry has separated, in organizational sense, from agricultural enterprises structure into specific business systems, but some part of storing, finishing and primary processing of agricultural products' facilities have yet remained within the agricultural enterprises. Scarce, highly developed giants in Serbian agriculture (PKB Corporation, Delta Agrar etc.) are only small islands in a sea of still predominantly traditional rural agriculture. A need of their existence should not be especially proved, in regard that there is more than obvious that – only those systems can provide higher production (naturally, quantitatively) and appliance of scientific solutions, i.e. technical-technological innovations. The complex business systems consist of more organizational units for which are characteristic relatively huge scope of individual business decision-making. The most often, the complex business system is made of numerous special economic entities, enterprises which do not have a special legal and economic status (giro-account). The thing that connects

9

Milisavljević, M., Todorović, J. (1991). Strategic management. Belgrade, Serbia: Faculty of Economics, p. 257.

10

Milisavljević, M. (2002). Modern strategic management. Belgrade, Serbia: Institute of Economic Sciences, p.241.

these enterprises into the complex business system is ownership, i.e. interests of controlling shareholders. Some enterprises within the complex business systems in agro-industry are mainly mutually production-technologically connected. If there is such connection within the complex business systems, then they are mainly organized by strategic business units' principle, i.e. profitable centres. In that case, a priority goal is not a profit of individual enterprises, but maximal total profit on entire complex system scale, while it, as a rule, does not represent a simple sum of individual enterprises' maximum profits, due to synergetic connections among them. Today, the big systems in agro-complex do not face so much with a problem of investments shortage, as much as with an obligation of starting privatization processes, which demolish them by already tested fragmentation practice, by which was jeopardize also their survival. There were separated repro-chains, as well as primary agricultural production from processing, while on the market dominate traders and import lobby. There are lost all functions of one solid system which had functioned in previous period, based on big systems in agriculture around which were gathered agricultural cooperatives and small proprietors.

Initiatives for conduction of analysis of indispensable changes in Serbian agricultural sector enterprises can be started by the enterprise's management or external consultants, which should investigate a specific problem in organization. For the overall analysis is necessary teams to be formed which mostly consist of the organization's top management and external consultants. The state diagnosis is made according to some diagnostic model of the organization. The diagnosis the most often contains two steps: 1) collecting data, 2) data analysis and defining changes. Research, beside an internal focus, connected to the organization, must be also externally oriented. The organizational structure is not an independent variable in regard to conditions in which the organization functions. In other words, a concrete model of organizational structure is caused by many factors, which nature and action the concrete structure model must adjust to. Thereby should have in mind that the most expressed influence on organizational structure change origins from the external organizational surroundings' forces. Under the influence of dynamics of the external organizational environment factors, very fast can come to a disturbance on relation: acting factors – organizational structure. Whether will change happen or not depend on a level of organizational structure flexibility, i.e. from the organization's skill to form an adequate structural arrangement according to anticipated changes in the organizational environment.11 The diagnosis of the organization includes the following diagnostic variables:12

1. Environment: including market, technological, social, etc., 2. Purpose (mission) of the organization and its strategy,

3. Organizational arrangements: organizational structure (jobs division, units grouping, coordination, authority distribution), systems (planning, human resources, information systems), procedure, policies,

4. Social relations: human relations, culture, informal communication,

5. Technology: a process by which inputs transform into outputs, including design of work places and processes,

6. Physical conditions: location, spatial disposition, work conditions,

7. Results (individual and organizational), productivity, profit, sales, climate and satisfaction of employees, absence from work.

11

Simić, I. (1999). Flexibility of organization in terms of organizational transformation. Proceedings: Managing the key aspects of enterprise transformation, Kragujevac, Serbia: Faculty of Economics, p. 116.

12

Janićijević, N. (2002). Organizational changes and development. Belgrade, Serbia: Faculty of Economics, p.39.

Components or methods of reliable diagnosis can understand as complementary or substitutes. The enterprise can use one or more diagnosis methods. Managing directors often do interviews of main stakeholders of the organization. The key stakeholders are: main stakeholders, unions, banks-creditors, suppliers, main buyers and distributors, Government, etc. A managing director in discussion with them reveals causes of changes and has a task to determine their attitude on eventual directions of changes. If the managing director is not capable to make a diagnosis in the organization, special teams of external consultants engage to do the diagnosis. It is more qualitative because the consultants are objective, impartial, unburdened by experience and heritage of the organization and its internal relations. They have expert knowledge, necessary for diagnosis. The diagnosis can do through special working teams, too. In many situations, the diagnosis should not be left only to the external consultants, but it is necessary to do it in the enterprise. Internal experts are burdened by their experience, relations and connections in the organization, but, at the same time, they dispose with great knowledge on the situation and history of the organization by which do not dispose the external consultants. They can organize so called diagnostic seminars. The external consultants are best used when they do not bring only necessary expert knowledge into a diagnosis process, but also when they structure and lead a process of diagnosis in which an active role have internal experts and managers. Such seminars outside the enterprise, in duration of two-three days, can be very useful, not only for determining of crisis' cause, but also as a mean for the organization “thawing”. In these seminars should take part experts from different functions, but also mid- and top-management.

For determination of indispensable changes in domestic organizations can use also

benchmarking studies, by which collect information on competitors or similar enterprises performances and those performances compare with the enterprise's performances. The benchmarking studies aim to determine a gap between the enterprise and its competitors, as well as to reveal sources of that gap. For complete recognition of problems which the organization faces, there conduct the organizational climate researches. This part of diagnosis should determine a pleasure and motivation of employees as possible source of problems which led to the crisis. There also use: simulations, scenario models, heuristic model, detailed analysis of previous data. In diagnosis can be used also sophisticated mathematic and statistical methods in order to reveal causes of the problem. With trends analysis of productivity, costs, sale, profit is possible to reveal causes and to get an idea on possible directions for coming out of the crisis. Previous analysis point out to existence of customary mistakes for changes actions in the organization. The most often are the following13: surrender to excessive pleasure, negligence in forming sufficiently powerful leading coalition, underestimation of power of vision, allowing obstacles to block a new vision, negligence in realizing long-term successes, early victory announcement, changes which have not been steadily rooted into the company's culture. The enterprises in Serbian agrarian sector must adjust their organization to trends in the environment. Of modern tendencies in organizational design should surely mention the three dominating. Those are: tendency of forming the teams, tendency of hierarchy minimizing and forming so called “flat” organizations and tendency of networking.

Conducting the organizational changes. After the analysis of necessary changes in the organizations, it is necessary to define a plan of changes realization. The most important elements of the plan are:14

ƒ Determining priorities (time chronology and inter-dependence, resource support, engagement and responsibility of management),

13

Koter, D., P. (1998). Change management. Belgrade, Serbia: Zelnid, pp. 14-28.

14

Jaško, O., Petrović, D. (1997). Managing organizational changes. Proceedings: Management and strategies of enterprises transformation, Belgrade, Serbia: Faculty of Economics, p.242

ƒ Adjustment with current activities of the organization,

ƒ Determining parameters of realization course control,

ƒ Appointment of changes management (by directions and phases),

ƒ Suppressing a resistance to changes (strategy and tactics, management style).

When all necessary preparations were come to an end, there realized an intervention which can last from several days to several months. In this phase of changes is necessary to do three tasks: 15

1. Tracking the intervention effects. During the whole process of intervention conduction is necessary to track constantly its effects. Very often, an agent of changes has an obligation